Thoughts In Grey

Brief Greek notes

Well, we've moved on from Facebook and Greece has returned to the headlines.

• Repurcussions of Greece withdrawing from the Eurozone? For starters, several thousand TV pundits will need new jobs.
• Jeff Matthews got the Facebook thing dead right. Anybody who thought of this as a long term investment has nobody but themselves to blame.
• Just ordered a couple of pieces to complete my old Rosenthal china set from Replacements Limited. I've been looking for the pieces for a while and had not found them, but became aware of this retailer after this piece about their support of gay marriage was published. Quite happy to have gotten the items I want while supporting their business.
• My cat likes popcorn. And potato chips. She's sometimes quite weird, but I've been trying to make the most of it with cat videos.
• "Combat Rock" remains one of the most geopolitically significant albums of my lifetime. "Should I stay or should I go?" and "Rock the Casbah" almost could have been written yesterday, though I suppose the background lyrics on the former would have to be in Arabic not Spanish.
• Still having a bit of fun playing with the iOS development environment, but still no idea what I'll do with it besides just being more familiar with how things are done in the mobile world.
• At the same time, looking forward to my friend Nurit's "Design Sustainability" class at UCLA starting next quarter. Was wildly well reviewed the first time.
• With Amazon Prime, why should I ever leave the house anymore?
• And to end with an oldie but a goodie: Apparently the Greeks have decided to repay their  debt to the Eurozone. In order to do so, they've had a huge wooden horse delivered to the Bundesbank.

 

Credit for College Kids?

"Same as it ever was"

- The Talking Heads

Interesting discussion on CNBC earlier, about a rule embedded in "Financial Reform" which demonstrates to me how far we've come in 20 years and how far back we need to go in order to restore some sense of financial sanity to our lives and financial institutions.

But to understand how far off the rails we've come, we need to look back 20+ years to when I was in college. As a college student, for the most part, I couldn't get any credit of my own. After all, I had no real income and little disposable income. I did have one card off a parent's account for use in emergency situations, but for the most part I got by with cash and my Debit/ATM card. I was, admittedly, better off than many of my peers, but even for me the general rule was that if I didn't have the cash for it, I couldn't buy it.

A Physicist and an Economist Are On a Desert Island...

Today's news from the world of physics is both exciting, disturbing and potentially highly-disruptive. Even a low-level science buff like myself can get excited about the fact that the Standard Model -- long the mainstay of theoretical physics -- has been shown to have a major potential flaw.

But even amongst physicists whose work is inherently tied to the existing model, there are no put-downs, no dismissal of the work, no personal criticism of the scientists who claim the conflicting discovery. Rather, there is a true sense of inquisitiveness, a desire for greater proof and a recognition that if the discovery proves to be true, it will force the dismissal of formerly-held beliefs, but will in the end advance the field, not retard it.

Try presenting a similar type of observations to a bunch of economists. Bring a flak jacket if you do.

Weekend notes

• The report on The Age of Denial in New Scientist is fascinating. Thanks to Barry for passing it along.
   
• One of the most common misconceptions echoed in some of the comments is that if something is false, it will be dis-proven and by extension, everything that can't be dis-proven is fact. This is the veneer that many deniers of various sorts cling to. In fact many, probably most, statements can't be proven true or false. Say I told you there is intelligent life on Venus. Prove me right OR wrong. You can't. What if I made the same statement about the U.S. Congress? You'd still be hard pressed either way.
   
• Yesterday I commented about junk mail. Today the junk phone has started in earnest, with a robocall from mostly-forgotten bloated actor and activist Ed Asner. I wonder who is really that desperate? (I didn't stay on the line long enough to find out.) Ed Asner? He's supposed to be the voice that will influence somebody in 2010?
   
• I realize that due to a quirk in law, my participation in the "no call" list run by the FTC doesn't restrict political parties, campaigns and some other "special" groups. But it doesn't prohibit them from honoring it if they choose to and it would probably behoove them to choose to. Calling people who have clearly expressed an interest in not being called is only going to piss us off. There is no more certain way of ensuring that I won't support you than hitting me with a "junk call."
  
  As Coach Wooden once said: "Consider the rights of others before your own feelings and the feelings of others before your own rights." These robocallers may have the right, but would do well to consider my feelings on the matter first.
  
  
• My brother's garbage disposal jammed on broken glass and could not be revived. We replaced it with a simple drain that also opened up lots of extra storage space under the sink. What's so difficult about just tossing stuff in the trash can anyway?
   
• My experiment with Foursquare is over. I have been still playing around a bit since my last comment on the matter and it was interesting to try, but until I see some utility to it -- either because my friends are on there or they build in new capabilities that provide capabilities that are interesting -- I'd rather spend my time and bandwidth on other things. For now I've killed the app on my iPhone and moved on.
   
• My brother's going to both Europe and Asia this summer. From a currency perspective, it's the best time in years. But somehow I'm not particularly drawn to either. Too many trails I haven't ridden and rivers I haven't run, and they're all just a few hours from home.
   
• Lazy Sunday. Cleaning up a bit.

mg

Brief Notes

Stuff that's on my mind, which is tending to wander this morning:

• The Europeans continue to founder. I've been critical of much of what this country did when the financial crisis hit us, but I'd have to argue that sometimes doing anything -- even just having a coordinated "no comment" -- is better than doing nothing. At this time the Europeans are doing nothing, or at least nothing that is coordinated in any way. As noted in yesterday's Brief Notes, this European unraveling may undo decades of capital mis-allocation and be a good thing in the long-term, but the short term pain resulting from an apparent lack of any stabilizing force is going to be painful for the entire world.
   
• Why do I have a feeling that what they're going through is something we will go through as well?
   
• Why do I also have a feeling that we will see the same results here, where the strong sections of the country will have to bail out much of the rest, but that severe cuts will be needed?
   
• And if that's the case are you better off being in one of the places that gets bailed out? (Somewhat speaking my book here, as I'm in California, which probably tops the "needs to be bailed out" list.)
   
• Incidentally, this may very well make the whole immigration question somewhat moot. Historically, immigration has been an issue at the end of booms. When the economy is growing, nobody cares and once it's stopped growing for a while, the problem tends to go away because the immigrants (largely motivated by jobs) stop coming. Combine that with a Mexican birthrate that has been dropping like a stone in recent decades (7.3 children/woman in 1962, 3.1 in 1990, 2.1 today) and one has to wonder if the whole thing is worth the debate.
   
• As noted a few days ago, Germany's actions just reinforce the fact that government wasn't doing their job in the first place. Wasn't naked shorting already illegal? If it was (as it is most places), why do we need new laws? This is much the situation as existed here two years ago and to a large degree still exists: laws on the books are unenforced until a crisis hits, and the sudden re-enforcement of those laws during a crisis just makes things worse.
   
• Historically, situations like the current one have represented good opportunities to invest in Korea. It's a binary bet: either tensions get diffused as they have been every time since the Korean War and Korean stocks rebound, or we get a war that wrecks much of the world's economy in which case you have to be holding gold, oil and dollars. The case against investing in Korea can best be summed up as "North Korea has gotten crazier than they were before and are willing to commit collective suicide this time."
  
• I don't believe that Kim Jong-Il wants co commit suicide, even post-stroke. I do believe that those around him are jockeying for position and are willing to provoke the outside world to prove their worth. For that matter I don't think the Iranians are suicidal either. They just know they have the upper hand at the moment and are willing to press their bets as far as they can, realizing that their situation is likely to be temporary.
   
• Of course, the folks in Pyongyang and Tehran are all quite happy to have suicidal loons elsewhere who are willing to do their bidding. We should not make the mistake of presuming that their support of suicidal loons means that they are willing to put themselves in the same position. They all live far too well.
   
• Bet for the rest of the day? With nothing on the table either way and little conviction, I think they'll close the market above the February intraday low at 1044 on the S&P. I have less conviction that they'll hold above it for long.
   
• The only certainty into the close is that there will be at least one cat sleeping through it on my desk when it happens.
   
• Actions for today: continue making a list of stuff I'd like to buy as the sale continues and gets better. Top on the list are the kinds of companies Jeremy Grantham would call "High Quality" value: Microsoft (NasdaqGS: MSFT), Pfizer (NYSE: PFE), HP (NYSE: HPQ), A-B Inbev (NYSE: BUD). Will also be looking into NCR in the wake of David Einhorn's investment. Some guys are worth watching.

mg

Brief Notes

A few new thoughts, a few follow-ups on things I've written about before.

• This article in the LA Times neatly sums up a lot of the reasons I think Foursquare has pretty limited appeal in a way that I couldn't quite put my finger on when I wrote about it. Even if you could get all my friends and venues on the service, it would be of limited use given the local logistics. Of course, the effect is circular: nobody's on it because it's of limited use, which makes it even less appealling and therefore less useful.
   
• Is Facebook really going to adjust in a meaningful way? Actions will tell, as I don't at this point trust their words. As I noted a couple of weeks ago, combining granular controls with easy controls is not impossible, as others have done it. The most important thing I take from this is their concession that giving me an easy way to block all third-party sharing of data is a feature that is desired. After all, even my bank gives me this option (not as easy to exercise as it should be, but it's there as a matter of law), and so do the credit agencies for a nominal fee.
  
  In fact, I think this could be a source of income: want a completely free Facebook? Give up some degree of info to get it. Want complete privacy? Pay a fee for the service. This idea actually lets the market work things out, as it lets a customer know what Facebook thinks the ability to share your information is worth and you can make a fair economic judgement about how you choose to pay for the service: directly or indirectly. This isn't all that different from allowing paid subscribers to not be subject to popups and other annoyances.
   
• Strippers Declare Inflation Dead! Business headline writers need to have fun too.
   
• Though, on that note, an old neighbor who moonlights as a "gentlemen's entertainer" tells me that even in the usually impervious Westside L.A. market, demand for her "services" is extremely slow these days.
   
• Transparent ratings are the kind of thing my friend Dennis at Institutional Risk Analytics has been promoting for some time. I'm not sure if Bloomberg's move into this business is good for him, but it certainly is good for us. Removing the importance given to the incompetents at the big ratings agencies would be a plus for everybody except those who are in on the sleazy "AAA" rated deals.
   
• One of the more interesting things I've read recently is a piece by Charles Gave, forwarded by John Maudlin. I won't reproduce copyrighted stuff here, but the upshot of the commentary is that the European crisis is a good thing, as it'll end the severe mis-allocations of capital that went along with the notion of a "single Europe." As he notes, ending the mis-allocation of capital into places like Greece is no different from ending the severe mis-allocation of capital into Miami condos that we experienced. Eventually the crisis forces us to start doing the right thing. The downside from my perspective? There's a lot of pain to be felt before the positive benefits of capital reallocation are realized.
   
• Spring has sprung, though it apparently snowed in the mountains here last night as well as in my "home" mountains outside of Salt Lake. Sadly, I think I'm done with skiing for the year. Might change my mind if Memorial Day plans fall through though.
   
• My best advice for energy efficiency in warmer climates? A simple ceiling fan. I just replaced mine yesterday after more than five years of good service. The new one is super-efficient, quiet and drops the temperature in the place 5-10 degrees. Been putting my money where my mouth is: installed one in each room for my brother and having them put into mom's place in Manhattan during her renovation.
   
• I've been grilling lots of lean meats and veggies. Because I'm on a diet? Well, a bit. Mostly because now that the weather is nice, it's pleasant to grill and the grill is so much easier to clean than the kitchen.

Now, if only the wind would calm down a bit so I could get the kayak out for the first time this spring.

mg

Confidence Lost

So our friends in Europe have jumped in today to halt trading activities that are harming the Euro and their big financial institutions. They seem to think this will restore confidence. They should have learned from us, or from the many, many times in history that this has failed, as it did today.

In truth, there's not much wrong with what they did. It's how they did it and the selective nature of enforcement that is causing the problem. Last I checked, naked shorting was illegal in Europe as well as here. Enforcing that law is a good thing. But letting it go on unabated then selectively enforcing the law with regards to ten "blessed" financial institutions does not help "restore confidence." It sends the message that something is really, really wrong with those institutions, that in fact something is so wrong that it justifies sudden and selective enforcement of laws that were ignored until now.

And much the same is true of the restrictions on naked CDS trades. There's little if any justification for the existence of these conduits for expanding risk with no benefit to any actual holder of the underlying asset. But to suddenly and selectively prohibit a few CDS products from trading sends the message that there's something seriously wrong.

I hate to harp on Taleb the second time this week, but his Ten Principles for a Black-Swan-Robust Society, (reproduced as Postscript VIII in the second edition of The Black Swan) makes the point quite bluntly:

Only Ponzi schemes should depend on confidence. Governments should never need to "restore confidence."

...Governments cannot stop the rumors. Simply, we need to be in a position to shrug off the rumors, be robust to them.

Easier said than done.

Taleb should stay off TV (and we're all worse for it)

Taleb was on TV briefly yesterday. I actually turned up the volume on CNBC to hear what he had to say. I should not have bothered.

Not because Taleb doesn't have a lot to say, he most certainly does. Not even because his involvement with one Universa Investments, who may or may not have had something to do with last Thursday's momentary crash, prevents him from commenting on some things that might be interesting.

Taleb shouldn't go on TV because there's just no point. Taleb's ideas are as complex as the financial mess the world finds itself in right now. Inviting him in to discuss one point in time, or to try to draw simple cause-effect conclusions just doesn't make much use of him or provide any illumination for the viewers. It's most likely why he's spent a good chunk of time recently avoiding TV appearances altogether, he knows that the vast bulk of media consumers just don't want to hear that the problem is far more complex than any one individual can possibly understand or solve.

Taleb and others like him are where the solutions -- or at least the pieces of the solution -- lie. Whether it's the world of finance, healthcare, immigration or just about anything else that plagues us right now, the situation is complex and the solutions will be too. That just doesn't come across well in a media world that has conditioned us to believe that meaningful content can be shared in 140 characters or that every question has an answer in a 20-30 second sound bite.

Unfortunately, Television and most of our media falls for what Taleb calls "The Ludic Fallacy," which is the notion that everything has an anecdotal and easy to follow explanation. The TV medium as it has been constituted today is simply unsuited for doing much beyond "telling a story." When the story fails to follow a clear "plotline" with obvious cause-and-effect relationships, it fails and is forced to grasp for something else, as the interviewers on CNBC did.

When I present this problem to some people, the response is that the people with the good ideas will need to adjust. They'll need to figure out how to explain complex and multidimensional problems by splitting them into little 20 second bits. I take the opposite view. Our problems are going to continue to escalate until we are willing to recognize that there are no easy solutions and that sound bites won't save us. I suspect further crises will need to happen before we get to that point.

It's too bad, but until we are willing to dispense with the notion that there are always simple solutions, Taleb should stay off TV. Those of us who want good analysis of the realities of the world have to look elsewhere, which is too bad.

mg

A Taxing Change of Paradigm

Amazon and Colorado are in a bit of a tiff over sales taxes. Colorado wants Amazon to either collect sales taxes or report them for purchases by everybody in Colorado. They'd also like reporting about payments to amazon affiliates and everybody else who might earn a bit of money from Amazon.

This is likely to be coming soon to New York, California and many other states as well.

The problem is a simple one: While states have the right to assess sales taxes on anything delivered to a buyer in the state, they have no jurisdiction to demand that an out-of-state seller actually collect the tax on their behalf. And with the proliferation of small online sellers -- including many who sell through Amazon, Google, eBay and others -- it's tougher and tougher to police this. State officials believe they're losing a lot of sales tax income because while they're entitled to collect the tax, it's not practical to track bill each individual purchaser for each out-of-state purchase.

Amazon has responded to Colorado's new law by cutting off all Amazon affiliates in the state. As noted earlier in the Huffington Post, this is more likely a matter of bringing political pressure than anything else.

But whatever the political maneuvering, the dispute is just the tip of the iceberg, indicating a much, much greater problem lurking below and increasingly undermining our entire tax system.

Stimulating Thoughts

I didn't say much about the stimulus 1-year anniversary, because there was not that much to say. I've thought from the start that this "stimulus" was neither particularly stimulative nor particularly helpful to anything in the long run. It's not that the idea was a bad one, it's that the idea as executed had little to do with the idea as promised. As executed, it did little more than perpetuate an unsustainable situation, and thus any "stimulus" was ephemeral and unlikely to last.

A year later we're seeing the reality. The stimulus sent huge amounts of money to the states and cities that have been facing shortfalls far greater than the Federal Government. In effect, it was the Federal Government borrowing to sustain jobs and benefits in the cities and states because the cities and states no longer can do so. It fails, because as the stimulus dollars run out, the cities and states find themselves right back where they were. All the Federal debt bought us was a temporary reprieve from the inevitable.

California, of course is a great example. Spending has far exceeded population growth and inflation combined. Much of this has been shoveled into ever-increasing pensions and benefits for government employees at all levels. Services haven't increased that much (unless you consider throwing non-violent offenders into prison for life a "service"), but the costs of delivery have increased disproportionately. Absent a Federal bailout masquerading as "stimulus" this deadweight spending would have had to have been addressed. The Federal government gave California a 12-18 month reprieve. Now that reprieve is up.

Utah Roadtrip: Images of Retrenchement

I wasn't really thinking about a photo log of the Great Utah Roadtrip of January 2010, but somewhere around Barstow, the thought came to me and it seemed like a nice way of documenting what's going on out there right now.

As I drove through, the word that most came to mind was "retrenchment." Hotels closing, housing developments being scaled back, even casinos shut down entirely.

Among "green" circles in Los Angeles I'm constantly hearing about the need to get people to break the cycle of overconsumption, waste creation, water overuse, etc. Get just an hour outside of Los Angeles and you find that the cycle is bending fast, if not completely broken. Retrenchment and doing with less is what you see everywhere. Perhaps not enough to satisfy the "green" desires, but enough to suggest that our economic problems are far from over.

Click through on any of the images to get to the full set of photos on Flickr.

 

A long time ago, a water park in Newberry Springs, halfway between LA and Las Vegas seemed like a good idea. It's been abandoned for some time, a victim of higher speeds and maybe a faster pace of life. The water rights that made it possible are most certainly more valuable elsewhere today. It probably hasn't helped that the Vegas hotels now all have their own water attractions, so a stopover at a water park just no longer makes much sense, if it ever really did.

It stands today as a reminder from the past that not every boom has a happy ending. Sometimes the ending is just abandoned structures in the desert where somebody's dreams once grew, however briefly.

 

Zzyzx Road is a mainstay along the road to Vegas. Named for a resort at nearby Soda Springs started by an eccentric real-estate scammer, radio evangelist and would-be doctor who tried to use government land as his own. Today, the only thing remaining in the area are some of the old resort buildings now owned by Cal State University.

The Citi Catch

I just got a new Home Depot (NYSE:HD) credit card.

Really, I don't need a Home Depot credit card, because I shop there infrequently and almost always for small stuff that will never justify a dedicated store credit card. But I was buying some paint last week and was told that the $20 can of paint (the most expensive item) would be free if I opened an instant credit account.

I tend to be fairly strategic about applying for credit. As a non-homeowner, non-student loan holder, and generally non-debtor in most ways, I have found that keeping my credit score up in the mid-700s takes some effort. Why care if I don't use credit much? Well, because someday I will want to buy a place, or have an employer check up on me, or do something that will require a good score. So I make some effort to keep things in good standing, usually by taking loans I don't quite need or opening credit facilities I'm rarely going to use. For example, the past couple of times I've bought vehicles, I've taken on small auto loans at super-low rates just to have some longer-term credit activity in addition to my credit card accounts that are paid off monthly.

This is one of the more moronic aspects of our system. If you have no credit accounts out there, you're considered a bad risk even if you do have the income and/or assets to support whatever loan you want to take out. If you have lots of credit cards but a history of not using them much, you're considered a good risk because you have supposedly shown that you know how to manage (ie, not use) it well. No matter that in case of a life-changing event all those credit cards will be drawn on to the max, maybe to the point of your being unable to pay for anything. If I were a banker I'd be looking for people with lots of assets and income, but with as little outstanding credit as possible that might impair their ability to pay me back. But finding such people would require real work, like detailed examination of income and asset records for several years. Compare that to just looking at a credit score which is mostly automated and work-avoiding. Whatever else has happenned in the past 20 years, bankers doing everything possible to avoid real work is an immutable constant.

Roll Over, Get Tough, or Sell Me What I Want?

Like many Time Warner Cable subscribers, I spent the weeks ahead of the New Year hearing that I had two choices in my cable rates. I could either back Time Warner in "getting tough" with the local Fox affiliates, or I could "roll over" and submit to the higher fees for programming that Fox was demanding.

This is another place where the truth is in the "grey area" between the two warring parties. The truth is that the real value for the Fox programming would become evident if I were actually allowed to vote on what programming I want to receive and pay for. I can state with 100% confidence that my expense for Fox local affiliates in that scenario would be absolutely zero, because I would not pay a penny for the schlock that is offered on most local broadcast TV, or most cable TV networks for that matter. [Nothing personal to my friends at Fox, except that this time they were the ones involved. I'm equally indifferent to the other three broadcast networks and their useless programming.]

The resolution, predictably, was a "fair" deal, the details of which they won't disclose, which will inevitably mean my rates go up. In the end, despite the hoopla, the only real issue on the table was which of these corporate behemoths gets which share. We won't get better programming, we won't get better service and we won't get the choice of telling them "take those awful networks and shove them."

But that's the one thing that both of these business organizations are unwilling to even consider, despite the fact that it's what most of the customers would like.

What Will the Neighbors Think?

I've posted this elsewhere before, but it seems worthy of being the first post after the "hard launch" of this blog in the New Year.

About 40 years ago, my grandfather, who was a successful entrepreneur and made enough of a fortune to give me a great start in life, wanted a car. Not any car. He wanted a Jaguar. I think one of those really cool classic 1960s models.

My mom's cousin, who worked for him at the time, occasionally went to the showroom with him to look at them. My dad did too. Clearly he could afford it and one could argue that he had earned it. But he never got the Jaguar.

Why? My mom's cousin told the story of his simple explanation:

"What will the neighbors think?"

My grandfather was a creation of the great depression whose business ventures failed more than once before he and my great uncle evntually succeeded. He knew the meaning of money and he didn't waste it or show it off. It was too important for that. I suspect that the "neighbors" were an excuse. The neighbors, by that point were mostly family and old friends, many of whom also did quite well for themselves over the years and none of whom would have begrudged him a bit of luxury. He just didn't think it was appropriate to show off.

To his way of thinking "bling" was something for people you wouldn't want to be associated with. "Pimps" and their "pimped out rides" were not "cool," they were criminal and anti-social. People who were sucessful could be content in their success without flaunting it. People who flaunted it were suspect.

We've come a long way, and not in the right direction.

What do the neighbors think today?

They have a tough time seeing why I've downsized and downscaled my cars each time over the past 15 years.  I can afford it, most of them seem to think, so why not buy it?  Why should I drive today's logical equivalent of my grandparents' 1973 Dodge Dart? (Sadly, today's logical equivalent made by a Japanese company, as nobody's been more focused on promoting chrome plated bling than the folks in Detroit.)

They have a tough time seeing why I don't bother with HBO or any other premium TV, and don't even have a DVR.  As if there was anything on TV all that important or interesting to justify the fees charged.

They are amused and sometimes amazed when I inform them that I often ride the bus or use my bike for minor errands and commutes. They're shocked that my brother and I can't see the point of waiting 20-30 minutes in our cars for the privelege of paying $15 to park at Dodger Stadium when we can park free in Chinatown and walk up in less time.  (During the playoffs when it can take over an hour just to get out of the lot, our method is much quicker!) They're amazed that we sit in the $28 seats when we could afford so much better, but as my brother asks "would you really enjoy the game three times more if you paid for the 'better' seats?" Judging by the number of people in those $100 seats who show up in the third inning and leave at the seventh inning stretch, I'd have to guess that many of them are more interested in bragging about the great seats they got than they are about enjoying the game.

Some of my business school colleagues can't see why I often shun opportunities to participate in "high end" events: the ones that are designed to show all the other people in the world how much cooler than them I am. Somehow they don't get that I'd prefer to take a hike in the mountains with a few friends rather than spend the day acting "cool" and getting drunk on the golf course. They can't understand why a guy like me who can afford such stuff would nonetheless find it unnecessary.

And they think I'm downright crazy for actually knowing how to do anything for myself. Stupid stuff like changing a tire, painting a wall or installing a ceiling fan. Stuff that everybody in America used to seem to know how to do.

Despite the current economic climate, few of the "neighbors" seem to conceive of the fact that life without bling is not only possible, but might actually be desirable. Living without bling means you live for yourself rather than for whatever your friends and neighbors think about your possessions. My grandfather and the "neighbors" of his generation knew that. Today's neighbors spend all their time worrying about what possessions the others have that they don't.

My grandfather's generation left this country with a fortune. Today's "neighbor-watchers" have squandered it showing off to each other. Fixing it is going to require a whole different way about looking at many of the things we have taken for granted.  We're slowly moving in that direction and it can't happen fast enough.

Since the first time I put these thoughts down a few years ago, I've considered that my grandfather may have missed something too. There's nothing wrong with buying something you really want, can afford and will use just because somebody might mistake you for showing off. Depriving yourself of something useful and elegant because of what "the neighbors" might think is just as mistaken, though clearly not as stupid, as going into debt and buying something you don't want and won't use just to move their thoughts in the opposite direction.

I'm glad that I don't much care what the neighbors think. My life's a lot happier that way.

mg

Quote of the Day

From my friends at Institutionl Risk Analytics, by way of Barry Ritholtz' Big Picture blog:

It is pretty clear from the leaks that populate book’s such as David Wessel’s fine tome, In Fed We Trust, that the decision process at the Fed is entirely short-term and reactive. We could take some comfort were the players at Treasury or the Fed or even the White House really purposeful, ideological socialists. But instead we have a group or politicians who collectively are almost entirely ignorant of American history or economics making structural decisions about the US economy based entirely on today’s crisis or expediency.

Christopher Whelen inadvertently brings up a point I've often made in the past year or two, as charges of "socialism" get tossed around. My grandparents were socialists when they met in the 20s. Back then, this manifested itself in demands for better worker safety, an end to child labor and de-facto indentured servitude and other reforms that arguably improved both the lot of workers and the economy overall. In latter years my grandfather described his early political leanings as well meaning but a bit naive. Probably a good description of socialism, and probably many other political ideologies that speak to how things should be, but fail to be grounded in how they are.

What they, and other "good socialists" never would have advocated for, is giving trillions to bail out banking institutions that had failed, along with their bondholders and employees.  They never would have suggested that bailing out those people who bought investment properties they never planned to live in, or who took on loans with no money down hoping for a "quick flip" would have been good social policy (my grandfather built his own house and never had a mortgage).  They certainly would not have considered that tax breaks for huge blingy vehicles were good policy.  These things may be interventionist and stupid, but socialism they are not.

So, as Whelen does, let's distinguish this hypocritical, kleptocratic, crisis-driven, "live for the moment and forget the future" mess from socialism. It's an offense to all the naive, but good-minded socialists everywhere.

mg