Prime Rib for Everyone!

It’s actually frightening to think that there are people who really think a viable solution is to have the government monitoring what and when I eat. What do they want, ration cards and government run grocery outlets? How about we inject a monitoring sensor in everyone to proactively monitor and meter what people are consuming?

People will have to be rationed to four modest portions of meat and one litre of milk a week if the world is to avoid run-away climate change, a major new report warns.

The report, by the Food Climate Research Network, based at the University of Surrey, also says total food consumption should be reduced, especially “low nutritional value” treats such as alcohol, sweets and chocolates.

[From Meat must be rationed to four portions a week, says report on climate change | Environment | The Guardian]

The author is correct about one fact, that voluntary change is difficult to achieve, especially when these same people then read about PM Browne hogging down 18 dishes over 8 courses and 5 wines for lunch and dinner at a single event. If you want to bring about change it is often helpful to begin at the top, but irrespective of that factor it is not impossible to create conditions that encourage changing behaviors, just look at how far we have come with recycling.

The mind bender in all of these reports is the seriousness by which they are presented, as if something positive is being achieved with shock value. Instead what happens is the that vast majority of people who hear about these reports completely discredit the authors as being serial nut cases not bound by the pedestrian laws of common sense and reasonable thinking that the rest of us are expected to adhere to. As a result of this, their message is completely lost in the noise and they have self-inflicted defeat by proposing measures that are completely unreasonable and even just unthinkable by rational people.

The Beltway Crash

I tweeted as much yesterday, in addition to a supposed financial crisis we have a crisis in government. It’s not about Democrats vs. Republicans, but rather the American people against a political system they have little confidence in. Not only did the American public not believe the pronouncements of the severity of this downturn in the credit markets, they also don’t believe that government will be successful at doing anything about it, either party.

The Washington elite have failed, completely failed in the eyes of the average American and that’s reflected in across the board polls that show 3 in 4 people surveyed disapprove of the job Congress is doing, worse than the President and that’s a pretty low bar to not meet.

America has survived a feckless political class in the past, and it will again after this week. But Monday’s crash and burn of the Paulson plan on Capitol Hill reveals a Washington elite that has earned every bit of the disdain that Americans have for it. This crowd can’t even make sausage.

[From The Beltway Crash –]

The political class has been wrong on this housing and credit market issue for 10 years, Democrats were wrong to use Fannie/Freddie for a social agenda and Republicans were wrong to hitch up to the same social agenda and then whisper calls for reform yet not make them a priority when they controlled Congress. Why should the average American believe that the very people who colluded with Wall St. to create the problem will now fix it, seriously, the same people down to a person – Sen. Dodd and Rep. Frank in particular? Hell, at this point it would be no surprise if they appointed Master of Disaster Jamie Gorelick to lead this debt buyback agency.

This last week we have been inundated with televised talking heads and politicians who say the problem is the credit markets AND the housing market. As I watched this pundits and participants it occurred to me that none of these people are talking about this in a fashion that connects the two together from the standpoint of relief, in other words it’s easy to say why bad loans unpinning housing properties not worth what the borrowers speculated on is resulting in a raft of bad debt on the balance sheets of investment banks and lenders, but how exactly will buying thinly traded assets that have impaired value help homeowners?

If the problem is housing, what will this plan do to help the housing market? The answer, we are told, is that lenders will once again lend but that’s not entirely true. Anyone who does not meet more stringent qualification requirements will not get a loan, period. Furthermore, for many in today’s real estate market the value of their property has been reduced to the level where there is little equity to tap into, and/or essentially trade into a different property. If anyone really believes that loosening credit markets will result in appreciating home values they should go on the record, but nobody will because that is exactly what caused this most recent bubble to begin with, just as the dot-com bubble in the 1990’s, it has been supply driven.

A significant amount of the lending that underpinned our economy for the last 15 years should not have happened in the first place and it won’t happen in the future. We have permanently shifted perspectives here and for the foreseeable future lending will not be a function of asset valuation but ability to pay and what that means is that the market for homebuyers just got a lot smaller and/or asset valuations will remain impaired through an entire economic cycle.

Congress also controls tax policy and one measure that would be certain to increase investment in the markets would be to zero out the capital gains tax on housing, bond, and equities held for specific periods of time. Countries all around the world do this to stimulate investment in their economies, at what point did Congress start believing that taxes on long term investments were good? How about creating the conditions where capital once again moves into the market, which is especially important in a period of extreme volatility and low interest rates. We have to create the incentives for a broader cross section of the population to invest instead of losing money in a checking or money market account.

But I think the Average American understands far more than politicians give them credit for and they understand that if the Federal Reserve and Treasury want to open up the credit taps they will do exactly what they are doing right now without a debt buyout plan, lower interest rates and flood the credit market with money. This is where Washington is wrong, they behave as though they don’t owe an explanation to the public (Paulson’s original $700b plan was literally 2 pages) and then they patronize us by saying “we have to do this and it’s complicated so just trust us”.

Back in July I wrote about mark-to-market issues and said at the time that I was undecided on what to do next. I think now that suspending mark-to-market is a good thing for the same reason that I would violate traffic laws while rushing my child to the hospital. Rigidly adhering to accounting rules that have contributed to the destabilization of the markets is insane, but more on point we simply need a better way to value derivative instruments that rely on hard to value assets that have the capacity to be thinly traded.

Lastly, destabilization of the banking sector is a real concern as a result of eroding depositor confidence is a real issue but here again the Feds can do something about it. The FDIC already expanded their reach by assuring investors that money market funds would be insured, so Increase the FDIC insurance threshold to $250k per depositor. The FDIC is facing a liquidity crunch itself but that’s as a result of bank failures increasing, and as we saw with IndyMac, WaMu, and Wachovia, the propensity for banks to fail increases as confidence declines and that can be stemmed by the FDIC, which also can sell more bonds itself to finance themselves as opposed to taxpayers writing the check.

The credit market crash should be renamed The Beltway Crash because if nothing else is clear it is that Americans have lost confidence in Congress, the Administration, and Federal agencies to manage markets, taxpayer dollars, and even to just do the basics like get along. Someone asked me if I had contacted my representative in Congress… my response was “yeah, on the first Tuesday in November”.

Why Do Consumers Buy Crap?

I ran across this article a while back and it stuck with me. In a nutshell the author examined the shift from quality to fashion for consumer goods, and then examined some of the influences.

One part is particular resonated:

“As human beings we’ve been socialized to buy and save,” Nissanoff says. “In times not as prosperous as today, when we didn’t know where our next food or source of supplies would come from, our ancestors bought things with the notion of holding on to them for as long as they could and then passing them on to the next generation.”

In essence: Our forefathers were poorer than we are, and yet they had better stuff, relatively speaking.

But appreciation for quality craftsmanship has been swept aside by freely available consumer credit and high-end design on low-cost merchandise, says Dayana Yochim, personal finance writer at The Motley Fool.

“Credit cards let us instantly satisfy our retail desires,” Yochim says. “Our grandparents had to delay that gratification. They figured that if they had to save for it, they’d better get the best they could. Now retailers want to catch that fleeting desire.”

Obviously given the events of the last week it would be easy to pin consumer culture on cheap credit, an argument that could be extended by those who rail against these things, globalization. My point is about neither.

But first let me say two things, I’m not one who suggests that “in the good ‘ol days things were better” as a general rule. Some things yes, but I’ll take my 2008 F-150 over a 1968 any day, not only is it more reliable but also comfortable, better on the environment and a hell of a lot safer to drive around in. Similarly, many products, especially durable goods, not only feature extensive feature enhancements but also have better reliability… but obviously not all things.

The Maytag Neptune washer/dryer that we bought 6 years ago were crap and I just replaced them (LG Steam washer/dryer if you are interested) while my parents had their 25 year old Maytags running strong until last year. Technically the Neptune models were better than older models but failed well before they should have which means they were ultimately inferior and a bad value that soured me on the Maytag brand.

Secondly, I do not subscribe to the notion that made in China (or Korea or Japan or Indonesia or Thailand, etc.) is anything to scoff at. I’ve done a lot of business in that part of the world and my wife runs a company that manufactures in China for metals, plastics/resins, and stitch-and-sew, and her clients (name brand luxury fashion goods firms) tell her they simply can’t find domestic manufacturers that can meet her quality. If it can be manufactured it can be manufactured to high specs in Asia, and there are only a few categories where this does not apply.

However, there is a difference between quality in manufacturing and quality in design and on this point there many shortcomings in modern products. In their drive to reduce prices the designers of many products rely on inferior components that simply don’t hold up over time, but in a perverse demonstration of self-reinforcing logic these same manufacturers suggest that because the product is cheap you can just go replace it and therefore it’s a good value. Any product that fails because a cheaper part was spec’ed that causes a systems failure is a human failure that could have been avoided.

I am also somewhat curious about what point in time people stopped having things repaired. Is it a deep seated fear that once one part breaks you have crossed a precipice upon which repeated failures are a certainty? Why don’t many power tools have the ability to replace the motor brushes? Is it because people won’t do it therefore why incur the design and mfg cost to build it in, or is it because manufacturers don’t expect you have something long enough to wear out brushes?

Then there is a weird pricing dynamic that manufactures take advantage of, for example, I have an Milwaukee cordless drill that I use instead of the old power cord model that I’ve had since I was a teenager, but the cordless gave up it’s fancy lithium ion battery recently and the cost to replace is half of the cost of the drill itself. Given that one battery has died, it’s certain the other is not far behind but the cost to replace two batteries is almost as much as buying a new kit, therefore what I will do is discard the drill and two batteries (recycle them) and buy a new drill that includes 2 batteries. That’s wasteful and emblematic of what has gone haywire in our consumer culture, we throw away perfectly good things just because of expediency and bundle pricing strategies.

But consumers alone are not to blame on this issue, as I have no doubt that some fresh out of school Wharton MBA grad worked up a pretty compelling pricing model that Milwaukee uses to maximize total unit shipments. In other words, two batteries really can’t be equivalent in cost/price to two batteries and a complete drill, right? Beyond the cost issue, what good is cordless technology bringing the market in this instance if the technology isn’t capable of delivering more than 2-4 years of use?

I’m not sure what conclusion I would draw but I think we are at a threshold which will determine how we value products and brands in the future. Will we pursue low cost at all costs or deviate into a longer ownership expectation that runs counter to current culture trends. I have a glimmer of hope that consumers will once again value products on something more than what it costs to buy them. I believe, if not just out of pure hope, that what we are experiencing on Wall St. this last year will trickle down o to Main St. not with simply greater responsibility in how we use credit but also a greater appreciation for value.

Senate Passes Bill Creating ‘Copyright Czar’

I’m surprised people seriously refer to these positions are “this or that czar”… there’s a reason he was called Ivan the Terrible, but even the modern history of czars is less than complimentary.

Oxy U.S. lawmakers approved the creation of a cabinet-level position of copyright czar as part of sweeping intellectual property enforcement legislation that sailed through the Senate on Friday.

[From Senate Passes Bill Creating ‘Copyright Czar’ | Threat Level from]

The Hugo Chavez Irony Meter

200809280836.jpg The little big man down in Venezuela fully pegged the irony meter this week by first claiming that capitalism has destroyed the United States and that we should write a new constitution that frees us from the “dictatorship of the elite” that is banks and big corporations… and then placing an order for a bunch of laptops for schools that are made by a big U.S. corporation that is in many ways the poster child for capitalism. I guess Chavez is behind on his reading and hasn’t heard of One Laptop Per Child.

The computers, which the government started distributing in Portuguese primary schools this week at a subsidised price of 50 euros , will be delivered to Venezuela from December. They cost 285 euros in stores in Portugal.

The laptop is based on Intel Corp’s Classmate PC, a cheap computer that has been adopted in various formats in countries such as Brazil and Indonesia.

[From Chavez says crisis-hit U.S. needs new constitution – Yahoo! Singapore News]

Paul Newman, 1925-2008

Dr. Martin Luther King Jr. said that ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy, I suppose it would be appropriate to adapt that for Paul Newman and say the ultimate measure of a man is the consistency of his character throughout his life.

I was sad to read that Newman passed away yesterday from cancer. While not much of a Newman film fan, I remain a fan of the man and the good works he did for others less fortunate. A lot of celebrities talk about doing good and giving back, this guy did it big and never made the cause himself.

“Paul was an unadorned man,” Mr. Hotchner said. “He was simple and direct and honest and off-center and mischievous, and romantic and very handsome. All of these qualities became the generating force behind him.” He added: “He was the same man in 2008 that he was in 1956 — unchanged, despite all the honors and the movie stardom, not a whisper of a change. And that’s something, the constancy of the man.”

[From Newman Remembered as a Good Neighbor and a Good Friend –]

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I’m Schocked!

I feel like Capt. Renault in Casablanca… “I’m shocked, shocked to find that gambling is going on in here! ” only in this instance it’s not gambling but rather self-dealing in the bailout package working through Congress. This is exactly why there should be extensive debate – open and televised – on this bill.

I have read Dodd’s proposed statute and in some respects, it is far worse than has been reported. Senator Dodd has placed a loophole in the bill that is explicitly designed to siphon off tens or hundreds of billions of dollars to the Housing Trust Fund and the Capital Magnet Fund even if there are no net profits in the $700 billion venture.

[From The Volokh Conspiracy – –]

Found the clip:

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Political conventions showcase newspapers’ multimedia tricks

The DNC and RNC were exciting events for us, newspapers really grabbed on to the notion of feed aggregation and immediacy as a service for their readers. We aggregated over 200 political blogs, wire service content and Qik streaming video direct from the conventions.

The Post and Pioneer Press might have been helped by widget technology supplied by NewsGator Technologies to lead users back to their respective sites.

Every MediaNews Group property ran a dedicated widget during the conventions and if readers clicked on a particular link, it would take them to The Post or Pioneer Press Web site.

“We actually saw quite a bit of traffic from that widget every day from Media-News Group papers,” said Clonts.

[From Political conventions showcase newspapers’ multimedia tricks]

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FeedBurner May Not Be Hearing Your Pings

This is actually a bigger deal than simply an inconvenience. Many media publishers are now relying on RSS to not only take inbound content but also publish it out and when latency is introduced in the plumbing it creates larger problems for publishers.

RSS is an infrastructure and when providers of the services fail to provide optimal performance it really harms everyone else in the business by introducing a confidence issue.

NewsGator serves content to publishers not only through widgets but also through our platform services that are either instantiated as applications or APIs that are used to drive custom apps. We go to great expense and effort to ensure that our clients are experiencing a level of performance that not only meets but exceeds their expectations and SLAs in our contracts keep us honest on this point. All that work becomes moot though when the actual publisher of the feed fails, as was the case here, because while we republish search as feeds and make additional content available as original feeds, the bulk of the content we deliver is being published not by us.

If FeedBurner decides to take its sweet time in delivering the news, that’s bad for bloggers. Unfortunately, that’s what’s happening right now. We’ve been seeing delays of up to 20 minutes between posting to our site and our posts appearing in our FeedBurner feeds. That’s a pretty serious problem and we’re not alone in experiencing it.

[From FeedBurner May Not Be Hearing Your Pings – ReadWriteWeb]

Maltese Falcon Sails in SF Bay

If you are into such things, there is an extraordinary boat sailing into SF Bay today tomorrow, the Maltese Falcon owned by Tom Perkins. While an awkward week to have such a conspicuous display of wealth, I think you have to look beyond the money to see this boat for the technical achievement that it is. There’s really nothing like it anywhere in the world, it’s a true one-of-a-kind that sets a benchmark all it’s own.