99 Bottles of Perspiration

Gold: Getting Fuzzy?

2009-11-19T06:31:00.000-08:00

Gold: Getting Fuzzy?: "

OK, it’s not quite the

I picked this up over at ritholtz.com/

Source:

Cats for Gold

http://www.catsforgold.com/

Google's social class detector

2009-11-13T11:12:00.000-08:00

This article from today's Dallas Morning News Technology blog is amazingly great:

Google's social class detector: "
Blogger Ben Casnocha explores how Google's automatic search suggestions vary by your phrasing (and the level of education/social class your phrasing implies):

There are some remarkable contrasts between 'dumb' searches and 'smart' ones. People who start their search 'how 2' are more likely to search 'how 2 get pregnant' or 'how 2 grow weed.' People who start their search 'how one might' are more likely to search 'how one might discover a new piece of music' or 'how one might for the rise of andrew jackson in 1828.'

The post has a very funny screen grab of the different suggestion lists you get when you type 'Is it wrong to' instead of 'Is it ethical to.'

The second suggestion for 'Is it ethical to' is 'conduct research on animals when it causes immense pain and discomfort.'

The second suggestion for 'Is it wrong to' is 'sleep with your step father after your mother dies.'

Some may initially accuse Google of elitism here, but as I understand it, the lists are automatically generated based on the most common words from past searches.
"

Darrel Issa is my new favorite Congressperson

2009-11-03T05:40:00.001-08:00

I have a new politi-crush on Darrel E. Issa, Representative from California’s 49th Congressional Distric. This guy has been tearing it up over the AIG fiasco.

The short version of the story is this: Goldman Sachs was AIG’s largest pre-bailout counterparty. At the time Treasury Secretary Henry Paulson was former chairman and CEO of Goldman Sachs. AIG had been in negotiations to reduce its payouts to Goldman and other large counterparties, when suddenly the New York Fed steps in and decides that Goldman and others would be paid 100%. Must be nice to have friends in high places.

An excerpt from a letter to the President of the Federal Reserve Bank of New York:

On September 16, 2008, the FRBNY extended AIG an $85 billion line of credit, effectively nationalizing it. According to news reports, late in the week of November 3, then-FRBNY President Timothy Geithner, along with the U.S. Department of the Treasury and the Federal Reserve Board in Washington, took over negotiations with AIG’s counterparties.

News reports indicate that Mr. Geithner’s team circulated a draft term sheet to set the terms under which AIG would settle its CDS obligations, including a blank space in which the haircut for creditors was to have been inserted. However, the haircut provision was reportedly crossed out and, after less than a week of secret negotiations between the FRBNY and the banks, FRBNY ordered AIG to pay its creditors at par – 100 cents on the dollar – not 60 cents as AIG had been attempting to negotiate.

Thus, behind closed doors and with no approval from Congress, the FRBNY may have added an additional $13 billion of debt on the backs of taxpayers.

These allegations, if true, amount to nothing less than a backdoor bailout of AIG’s creditors, including Goldman Sachs, Merrill Lynch, Société Générale and Deutsche Bank.

The lack of transparency and accountability in this transaction is disturbing enough. However, there is evidence that this $13 billion expenditure was entirely unnecessary. According to Janet Tavakoli of Tavakoli Structured Finance, “There’s no way they should have paid at par. AIG was basically bankrupt.”
Another expert has said that the typical outcome in cases like this involves counterparties being forced to accept haircuts of anywhere from 30 to 50 cents on the dollar.

This suggests that the FRBNY may have paid AIG’s counterparties at par to surreptitiously provide another bailout for large financial institutions. According to Donn Vickrey of Gradient Analytics, “Some of those banks needed 100 cents on the dollar or they risked failure.”

However, another source close to the transaction suggested the FRBNY may have paid AIG’s counterparties at par out of pure expediency: “[S]ome counterparties insisted on being paid in full and the [FRBNY] did not want to negotiate separate deals.”
Furthermore, many of AIG’s counterparties reportedly hedged their exposure to the troubled insurance giant, obviating any need for a taxpayer bailout of these large financial institutions. According to Goldman Sachs’ Chief Financial Officer, “There would have been no credit losses [at Goldman Sachs] if AIG had failed.”

All of this begs the question why the FRBNY would not drive a better bargain for the American taxpayer. If the FRBNY thought it was necessary to provide another taxpayer bailout of AIG’s counterparties, it should have come to Congress and made its case that this action was necessary. However, if the FRBNY simply paid AIG’s counterparties at par out of expediency, it raises serious questions about its judgment and motives.

It is also disturbing that, at the time this secret deal was made, FRBNY Chairman Stephen Friedman, a member of the board of Goldman Sachs, purchased more than 50,000 shares of Goldman Sachs before knowledge of the FRBNY’s bailout of Goldman Sachs and other AIG counterparties became public knowledge.
According to news reports, this transaction has earned Mr. Friedman over $5 million in profit.

If you are not pissed about this, then you are not paying attention.

A big thank you goes out to Congressman Issa. I don’t know what the rest of your politics are like, but I sure do appreciate some one out there going junkyard dog on the NYFRB. It sure isn’t going to be one of the limp puppet heads from my district.

(hat tip: Mish)

Weezer Snuggie Infomercial Promo For New Album

2009-11-03T05:00:00.000-08:00

Weezer Snuggie Infomercial Promo For New Album:

Introducing the new Weezer Snuggie. Order now and they’ll throw in the new Weezer album “Raditude” for free.

And don't forget the "Making Of" video:

hat tip Laughing Squid

Do you love your country?

2009-10-26T19:04:00.001-07:00

Do you have the following items in your cupboard?

Bananas
Hershey’s Dark Chocolate Bars
Coconut marshmallows
Ginger Snaps

If so, please run (don’t walk!) to your nearest fireplace and make s’mores using these ingredients immediately.

The future of America depends on it!

DFW or Iran?

2009-09-28T08:09:00.001-07:00

The Dallas Ft. Worth metroplex has approximately the same GDP as Iran. Wow. This delectably interesting fact and many more available in this fascinating chart:

(hat tip: CARPE DIEM)

Kick Off Your Sunday Shoes

2009-09-28T06:31:00.001-07:00

Today’s shirt.woot:

Depressing Chart of the Day: When Will the Housing Market Reattain Peak Pricing?

2009-09-18T15:05:00.001-07:00

This chart is just really, really depressing.

Ever wondered when your state might reach peak housing prices (probably last seen in 2005 or so)?

Angry about High Frequency Trading

2009-09-18T08:08:00.001-07:00

I couldn't agree more with Barry Rithotlz's searing rant on high frequency trading:

The Securities and Exchange Commission has proposed halting high frequency and flash trading.

In response, Nasdaq (and others) are now prohibiting flash orders. Supposedly, the NYSE is also considering banning the practice.

This was a given. The real question that remains unanswered and demands a thorough investigation is this: WHAT EXCHANGE OFFICIALS APPROVED THIS? WHO BELIEVED THAT ALLOWING FAVORED FIRMS TO FRONT RUN OTHER INVESTORS WAS OK?

Quite bluntly, the clueless dolts who allowed this to occur need to be publicly excoriated, fired from their job as exchange officials, and driven out of town on a rail. Oh, and, all the gains from this organized theft should be clawed back from all the front-running firms that stole this money — THAT’S RIGHT, ITS THEFT — one quarter cent at a time. Put the recovered ill-gotten gains into the SIPIC fund that compensates investors who have been defrauded by their stock brokers.

Stop for a moment to consider what sort of massive disregard for the investing public is required to permit this kind of trading. The sheer hubris that finds no problem in this exchange permitted encouraged theft is hard to fathom.

One of the problems with the most recent crisis is that there have been no shaming of the responsible parties, no disgorgement of ill gotten gains, no perp walks. We need to change that pronto.

Hope Oil Doesn’t Go Back Over $80

2009-09-17T06:26:00.001-07:00

Steven Kopits explores the link between the price of oil and recessions:

The US has experienced six recessions since 1972. At least five of these were associated with oil prices. In every case, when oil consumption in the US reached 4% percent of GDP, the US went into recession. Right now, 4% of GDP is $80 oil. So that’s my current view: If the oil price exceeds $80, then expect the US to fall back into recession.

(hat tip: Naked Capitalism)

How Strong Are Retail Sales?

2009-09-17T06:21:00.001-07:00

Barry Ritholtz shreds the recent Retail sales numbers:

Look at the raw Retail sales numbers, and you might think we were in a full blown recovery. Month over month for August, it was up +2.7% versus consensus expectations of a 1.9% increase.

The source? A huge 10.6% jump in motor vehicle sales, due to the $3 billion dollar, government sponsored, cash for Cash-for-Clunkers program, as well as a slate of state sales tax holidays.

Back out autos, and sales were up 0.7% MoM — still better than consensus expectations of +0.4%. August was the best month since February 09, and ends a five-month string of flat-to-negative results.

David Rosenberg of Gluskin Sheff also notes that seasonal factors used by Commerce were the most aggressive in five years and helped give the data bit of a boost — in fact, one-quarter of that 2.7% gain came just from the more generous-than-usual seasonal factor.

Saving the World at Work

2009-09-16T19:16:00.001-07:00

Tim Sanders, one of my friends from broadcast.com, is relaunching his book Saving the World at Work. For every book purchased, Tim is donating $2 to the National Association of Urban Debate Leagues!

Tim is a firecracker, and is a real treat to see in action.

Here’s a teaser excerpt from his book:

In December 2006, footwear maker Timberland held its wholesale account reps sales rally in New Orleans, fifteen months after the city had been ravaged by Hurricane Katrina.
Timberland’s event planners always inject a local community service component into the agenda, so on the conference’s first evening, local leaders were asked to talk to the group about the battle to rebuild the city. On the second day, two hundred sales reps were taken by bus to New Orleans’ historic Central City district to work on a neighborhood restoration program.
The specific project they were assigned to was renowned chef Dukey Chase’s restaurant, a Central City neighborhood anchor, whose reopening meant a great deal to the area. So Timberlanders performed demolition, planted trees, hauled trash, and cleaned up a nearby playground, all working side by side with local volunteers.
In just a few hours, the Timberlanders made a difference in the restaurant and Central City’s restoration. But feeling the reps needed to understand more about New Orleans’ dismal situation, meeting planners decided to give them a tour of the Ninth Ward, one of the city’s most devastated areas. Jubilant while working so well at the Central City work site, the Timberlanders now became somber, realizing that even though one eatery had been spruced up, many parts of the city remained utterly uninhabitable.
At the end of the tour, the buses parked to allow the reps to get out and walk around the neighborhood. As they did, one rep noticed a makeshift community gathering spot constructed of tarps and rotted wood where a middle‐aged man in a baseball cap was taking notes on a clipboard. The sales rep started a conversation with the man and soon discovered that he was a volunteer community organizer who had lived in the Ninth Ward pre‐Katrina.
Moved by the moment, the rep asked the volunteer what the community center most needed.
“Shoes,” the volunteer replied, pointing to a chalkboard that listed shoes at the top of the Please Drop Off list. “Used ones, new ones—we need shoes.” He then explained that many of the community service volunteers were working in flip-flops and soleless shoes in an area littered with rusty nails and splintered boards.
The Timberland employee immediately bent down, unlaced his boots, and handed them to the volunteer. He then walked barefoot back to the buses, where employees were loading up for the ride back to the hotel.
A coworker, who noticed the sales rep wasn’t wearing his boots, asked why. “That man there told me that they needed shoes,” the sales rep replied, pointing to the community center. “I gave him mine.” The coworker stood up, left the bus, and gave the volunteer his shoes, too. The others watched, and acted: In the next ten minutes, the buses emptied out as all two hundred sales reps walked to the community center and donated their shoes or boots to the Ninth Ward, even though, for many of them, these Timberland boots were prized possessions.
The volunteer, overwhelmed, scrambled to keep pairs matched together, tucking laces into boots and organizing them by size. All he could muster was a repetitive “Thank you, thank you” to every Timberlander. The trip back to the hotel was silent, as employees reflected on what they’d seen that day. A senior meeting planner later recalled, “It was the quietest twenty‐minute bus ride I’ve ever been on.”

Most Frugal Cities in America

2009-09-16T07:43:00.001-07:00

Mint.com posted this killer map of the most frugal cities in America (as ranked by YoY declines in descretionary spending).

(hat tip: PaulK)

Too big to fail? Getting bigger!

2009-09-15T16:38:00.001-07:00

Rolfe Winkler of Reuters posted this great animated pie chart showing the share of bank deposits held by the top four (too big to fail) banks.

I can’t believe I just said these four words in a row “great,” “animated,” “pie,” and “chart.”

(hat tip: PaulK)

Unemployed for more than half a year? You are in good company.

2009-09-12T06:50:00.001-07:00

Brutal chart posted on ritholtz.com, showing the number of people unemployed for more than half a year. This is painful to watch.

Honest Ben

2009-08-27T19:03:00.001-07:00

(hat tip: ritholz)

John Hussman Slams Ben Bernanke

2009-08-25T08:11:00.001-07:00

I heart John Hussman. His blistering takedown of the Fed Chairman is beautifully written. My only request is that his site needs to support RSS feeds!

Solving economic problems, to our Fed Chairman, is as easy as throwing money out of helicopters. Not surprisingly, throwing money out of helicopters has been the basic core of his strategy during this crisis. This does not involve complex thought about debt restructuring, moral hazard, incentives, equitable distribution of resources, or other factors. All it requires is the three second tape playing in Bernanke's head - "We let the banks fail in the Great Depression, and look what happened." And then the tape repeats. Never mind that the cause of the upheaval was not the failure of banks per se, but the disorganized Lehman-style failure of banks. The tape isn't long enough to encompass such nuances.

Ben Bernanke (like Tim Geithner and his predecessor Hank Paulson), shows no hesitation in diverting the real resources of the American public to defend and compensate the bondholders of mismanaged financial companies who made reckless loans and who should have (and equally important, could have) been expected to write down principal or swap debt for equity as an alternative to receivership. This is not decisiveness. It is timidity and poor stewardship. Worse, the underlying problems are not healed - only band-aided temporarily by a flood of public money.

Unfortunately, the resources used in the recent bailout were not just free money tossed out of a helicopter. Only a partial-equilibrium economist thinks that way. No, this was an allocation of trillions of dollars of real resources that could be spent improving access of poor families to health care, finding cures for life-changing diseases, providing better education, and reversing the crowding-out of productive private investment. A public servant willing to act this carelessly with the resources entrusted to him, and so strongly in defense of fellow bankers, frankly does not deserve the job. Most likely, we will face the same credit issues a few quarters from now, given that the lull in the adjustable-rate reset schedule is near its end. We continue to expect a fresh acceleration of credit losses as we enter 2010. It would be best if we faced these challenges with more thoughtful leadership.

Meanwhile, Harvard economist Martin Feldstein (who was the likely alternative for Fed Chairman when Bernanke was appointed) noted last week “I think we'll see a positive number in the third quarter, but what will it be driven by? Fiscal stimulus, Cash for Clunkers, and some inventory building. But the question is what happens next – in the fourth quarter and into next year – and I think there's a real danger of a double dip.” Elsewhere, Alan Greenspan concurred, saying “We're OK for the next six months. We are getting a recovery… but the process doesn't have legs to it.”

(hat tip: Mish)

Second worst rave I’ve ever been to

2009-08-24T06:30:00.001-07:00

More humor from Sorry I Missed Your Party, a hilarious blog written by a guy who trolls new photos on Flickr tagged “party” and writes great captions:

Dear “not computer people”

2009-08-24T06:24:00.001-07:00

Today’s XKCD is another timeless classic:

Twitter Spam

2009-08-20T12:21:00.001-07:00

Laugh of the day comes from Contrast, the blog.

Australia’s Healthcare System: Public vs. Private

2009-08-20T08:30:00.001-07:00

John Hempton at Bronte Capital just posted this outstanding article on the Australian healthcare system’s split between public and private. I was very impressed with the article, so be sure to read it in its entirety.

There are basically two ways Australia gets much better outcomes per dollar than America. They are the unimportant (but nice) one and the important one. Given Australia produces better health outcomes at spending maybe 7% of GDP less this is a very substantial economic issue. Translated to America those savings would be about a trillion dollars per annum. [Observation: getting this more-or-less right would be one of the most important things any government would ever do…]

The unimportant (but nice) way of getting lower health care costs in Australia

The advocates of the Australian system will note that lots of primary medical care is very cost effective. For instance pap smears stop cervical cancer. Cholesterol testing might lead to better lifestyles.

The primary health care is cheap compared to the cancers and the heart conditions. If you do better primary health care you can save money in aggregate.

I believe this – and it is important from a social perspective – but I remember chatting to the Treasury health care guys (a decade ago) and they thought that this was (at best) about 1 percent of the (then about) 7 percent cost advantage Australia had. [It may be very important though in the outcome advantage…]

The important way of getting lower health care costs in Australia

By contrast the main way getting lower health care costs in Australia is to squeeze the suppliersusing government controlled and often government monopoly buying.

A very large part of the difference – the biggest single part when the Treasury guys took it apart – was that doctors were paid less in Australia. Doctors (not specialists) are middle income in Australia now – earning about 1.5 times average earnings. Thirty years ago doctors earnings were maybe 5 times average. The medical schools are now majority female reflecting in part the career aspirations of women versus men. General practice for instance can be performed part time (whilst the kids are school) and is thus a common women’s career. In regional areas Australia clearly does not pay doctors enough. Australia often imports doctors to work in remote areas and lack of doctors is a problem in aboriginal communities, mining towns and drier inland centres. Queue rationing is particularly bad in places that are less attractive to live. [As I live at the beach and have private health insurance queue rationing is not an issue for me – but it is a pivotal issue in many areas.]

Suppliers in general get squeezed. For instance the Australian government pays considerably less for most pharmaceuticals than is charged in the US. Margins in lots of research driven pharmaceutical would be squeezed. Badly.

Its not all bad though. Universal coverage means that volumes go up. A drug company may sell at a thinner margin – but the volume can offset this. In most prescription drugs the incremental costs are only about 10 percent – gross margins are 90 percent. Volume matters for profitability.

The most interesting thing to me is this bit: “Doctors (not specialists) are middle income in Australia now – earning about 1.5 times average earnings.” A family friend doctor says that after adjusting for malpractice insurance and time spent wrangling health insurance paperwork, this is actually in line with what General Practitioners earn in Dallas, Texas. This (older) story from Morning Edition corroborates: Primary Care Doctors Suffer Income Slide.

Job postings per unemployed person

2009-08-18T06:57:00.001-07:00

Pretty bleak look at the top 50 job markets, from Indeed.

My home town of Dallas, Texas ranks 24th with 1 job posting for every 5 unemployed persons.

I guess I should be glad we're not living in Detroit, with one post per 18. Ouch.

(hat tip: carpe diem)

Look out below!

2009-08-17T21:06:00.001-07:00

Yves at Naked Capitalism simply nails it in this debunking of the current market rally:

I don't believe in market calls, and trying to time turns is a perilous game. But most savvy people I know have been skeptical of this rally, beyond the initial strong bounce off the bottom. It has not had the characteristics of a bull market. Volumes have been underwhelming, no new leadership group has emerged, and as greybeards like to point out, comparatively short, large amplitude rallies are a bear market speciality.

In addition, this one has had some troubling features. Most notable has been the almost insistent media cheerleading, particularly from atypical venues for that sort of thing, like Bloomberg. Investors who are not at all the conspiracy-minded sort wonder if there has been an official hand in the "almost nary a bad word will be said" news posture. Tyler Durden has regularly claimed that major trading desks have been actively squeezing shorts. There have been far too many days with suspicious end of session rallies.

The fall in the markets overnight, particularly the 5.8% drop in Shanghai, seems significant in combination with other factors

He goes on to list many of the same economic boogie men that I have been watching this year: banking problems (especially commercial real estate), the tired consumer, rising foreclosures, an increasingly ineffective Federal Reserve, and more.

Battle of the Sexes, Unemployment Edition

2009-08-10T05:30:00.000-07:00

If you felt a little uneasy about the rah-rah-rah following last Friday's drop in unemployment, then look no further than this chart for validation.

If the number of unemployed people stays the same, but the total number of folks you are counting drops precipitously, your percentage improves. Go figure.

Dave Rosenberg summarizes this neatly:

To be sure, the drop in the unemployment rate was a surprise, but it was all due to the slide in the labour force — the employment-to-population ratio gives a more accurate picture of the slack in the labour market and the hidden secret in today’s report was that this metric slid to a 25-year low of 59.4% from 59.5% in June and 61.0% at the turn of the year. Of those unemployed, 33.8% of them have been unemployed now for over 27 weeks — a record amount (was at 29.0% in June and was at 17.5% at the start of this recession).

(hat tip: Mish)

What I find fascinating, is that the employment/population ratio begins a steady upwards trajectory beginning in the 1960's. My unvalidated assumption is that this is because an increasing number of women are entering the workforce.

Mark Perry over at Carpe Diem has written extensively about the "Mancession," this recession's tendency for job losses to hit men disproportionately.

If you pair these together, then it paints a pretty clear picture that increases in the employment/population ratio from 1965 to 2000 were driven largely by increases in women's employment, and the decrease in the employment/population ratio since 2000 has largely been driven by increases in men's unemployment. I would love to see some further analysis on this.

My other car is ...

2009-08-05T07:26:00.001-07:00

best. bumpers sticker. evar!