Cliff Diving

So, apparently, spending cuts aren't necessary to stave off the latest fiscapocalypse. We can just jigger tax rates and keep spending and accumulating debt forever!

At least that's what politicians in DC seem to think. Admittedly, I have no great skill in managing a large and disparate nation, but then again, judging from results, the current collection of elected idiots officials don't either. I have, however, seen the results of spending and indefinite debt accumulation on personal finances. The path either ends in bankruptcy, for people who care about the niceties, or what fancy policy-wonk types call 'debt repudiation'. For us low-class folks out in the hinterlands, 'debt repudiation' just means you quit paying the people you owe.

These options aren't the same on a national scale, mainly because sovereigns do not declare bankruptcy. It is now, as always, good to be the king. When you are the king, you engage in debt repudiation. You tell everybody who owes you money to get fucked. Since you, as sovereign, control the courts, police, and army, it makes it a little difficult for your shafted creditors to get much recourse.

I don't think I'd be putting a bunch of money in Treasury securities right now. Even if the Bernanke does manage to hold it all together with currency devaluation (Quantitative Easing Forever!), they aren't a real good bet.

The Penn State Scandal, A Different Perspective

I've been reading with a little interest some of the reaction to the horrific situation at Penn State. I'm not going to go into the details of the story here, the news is full of it; however, I do notice one angle that has been widely overlooked. There has been a lot of shock registered at the reaction of Mr. Sandusky's colleagues, including the lack of follow through taken by Messrs. Paterno and McQueary after making an internal report to supervisors and University officials, but not to law enforcement. It now appears that Mr. Paterno intends to retire at the end of the season. Frankly, I'm surprised at all the surprise.

For all the talk about "success with honor", why would anyone be shocked that these individuals would refuse by omission to disgrace one of their own? These men have reached a remarkable level of success in a field that has a history of treating its own as above the rules. Why would the rules suddenly matter in this case? Do they even understand what the rules are? In a world that pulls aside young boys who exhibit a talent for playing a game, and exempts them from all of the conventions of normal society...honestly, why is anyone surprised?

Think about it. Once a boy in his teens shows a talent for football (or any sport for that matter, but especially football), he becomes a singular focus, and is made worthy of great praise. Coaches pay special attention, parents reward and foster (because they see future wealth and fame), and there is a great benefit and self-esteem boost to all involved for increasing the talent of the player. In many cases, the young athlete is taught that nothing else matters but the sport. School no longer becomes a focus, teachers are pressured to grant grades not earned, and bad behavior is covered up or mitigated because the athlete is integral to the team. Only the results on the field matter. The individual becomes secondary.

There is a lot of recruiting hype for high school athletes. Most "star" players are catered to at a level unfathomable to a boy of 17 or 18. Most of us know a high school athlete who could barely read but got a full ride to a major university. How many football scholarships are granted to young men who lack the academic capability to succeed at the school that is paying for his "education"? Judging by college graduation rates by football players, many. College is about the sport for these guys. Many college classes are designed for them (most colleges have "football majors"), they have special tutors to keep them eligible, and they are above the realm of traditional students. If they get caught committing crimes or behaving in ways that might get traditional students expelled, the situation is handled, usually without real punishment to the player. They are a special class in a closed society. In many cases, they're not even truly connected to the University at large.

While few of these young men are actually drafted into their professional league, some go into coaching at various levels, and some go home to obscurity. Many of those who do not find success in the sport which has carried them their entire lives to this point, suddenly find themselves subject to the same mundane lives as the rest of us. And...some turn out just fine. But, many don't understand this new normal and turn to drug use, or some various type of illegal escapism. Everyone who knows that dude who can't stop going on and on about when he was a high school football star may be able to identify with the type. The former college football star who doesn't make it is often far worse. Some spend their lives trying to get a break into the NFL via lower leagues. Most don't make it. Many are never productive, and just become pathetic ruins of people.

Those who do manage to maintain success with their sport, whether the route be the pros or via coaching, maintain this exclusive a society within themselves. They are the exalted ones. I don't think we need to discuss NFL salaries or all the reports of unpunished crimes by pro athletes. The highest compensated state employee in Texas is the Head Coach of the University of Texas Football team. Most people will tell you that Coach Paterno was a far more important figure than the President of Penn State. And as people who have had this level of success have spent most of their youth and all of their adulthood in this protected class, they don't know anything beyond protecting the class. Again, they are special. It is them, their fellow players, and then everyone else. They protect their own as they have always been protected. Results on the field are all that matters, and everything else is just minutia.

The rest of us only feed this insanity. The professional athletic society is rarely held accountable for poor behavior, so why do we expect them to suddenly open their inner sanctum and behave properly? Why do we feign great shock when these people hide the misbehavior of one of their own? Their own misbehavior has likely been hidden their entire lives. We as outsiders hold these people up as heroes and role models...because of a GAME. Because the ideal is so superficial, we should not feel loss when the fiction is revealed. The only fault of the athlete is that he believes the hype we bestow upon him. The true and greatest fault is with all of us.

Perhaps if we would treat what they do with the perspective it actually deserves, we wouldn't be having the Sandusky conversation today. We reap what we sow.

PetFlow: Pet Food Delivered on Your Schedule

So, I'm the resident dog food freak. I get it...crazy, but my dogs definitely have better nutrition than I do. If I look at a food or treat ingredient list, and don't see words that look like the type of food that you or I would buy at the grocery store (e.g. duck, chicken, rabbit, potato, carrot), my dogs aren't getting it from me.

I got my first Westie from a backyard breeder, and as most Westies not professionally bred, she had every allergy in the book. Food allergies are one of the worst, because as anyone who has a dog with food allergies knows, you'll find a food that works, then after a couple of years of smooth going, suddenly, the scratching, the chewing, and out comes all the hair.

I had to educate myself about canine nutrition out of necessity, and luckily, my vet at the time was a fantastic resource. After I had exhausted about everything out there, he suggested that I try the old BARF diet. As unappetizing as it sounds, for us it worked, and I became a true believer. About every 6 or so weeks, I'd take a Sunday, grind meat, fruit, veggies, offal, and all the other ingredients, and freeze enough single portions of food to last her. As a result, all of her skin problems, ear problems, scratching, and misery were gone for the remainder of her life.

We have very healthy youngsters, but now that our dog to human ratio is 2.5:1, home making dog food is a little overwhelming. If time and money were no object, I would probably continue to make the raw diet at home like I did for so many years. But you know, with a full time job and 5 times the mouths to feed, for us, it just isn't feasible. Plus, food selection is different than it used to be, and honestly, there are a lot of great and convenient options. We use biologically appropriate raw kibble, but I still make treats at home.

So, because we have to buy about 60 pounds of dog food every 6 or so weeks, we're trying out this service called PetFlow. The idea is that you can set up food delivery on whatever schedule you choose, and PetFlow automatically ships the grub. The service is available for dogs or cats. There are no commitments and you can change the service at any time. It's kind of like the book of the month club, except it's dog food, and you've told them exactly what you want and how often.

They carry a very comprehensive variety of food, and surprisingly carried pretty much everything we use. As far as price, it was about a wash for us. We blend food because I like a large variety of protein sources, and a couple of the bags were $2 or so less and one was $2 or so more. The shipping is flat rate, $4.95 regardless of quantity, although signing up today got me a free shipping deal, but the absence of sales tax did cut the price back down to slightly cheaper than what I'd buy in the store.

One of the most attractive aspects of it for me though is the fact that we don't have to make special trips out to haul the 60 or so pounds of food from the shop to the car, and from the car to the house. I believe this will be a huge time and energy saver for us. I have learned that a lot of people don't place that huge a premium on their time, but we have no choice, and having dog food show up on my door on a regular schedule should be a huge convenience. I'm pretty happy about the find, but if it sucks, I'll let you know.

No Mo' Mittens

Well, Mittens and his magic underoos might as well figure out something else to do beside try to be President. Since Mittens wants the job so damn bad, he's obviously not the right guy to have the job. However, most people think political ambition is a good thing, despite all the countervailing evidence, so that won't kill his chances.

On the other hand, the ongoing "fiscal train wreck" he bequeathed the state of Massachusetts is something most voters will care about, especially in two more years.

Unintended Consequences Lead To... Thuggishness?

So, the accountants over at AT&T read the new heath care bill and figured they were in for a screwing. So, in accordance with well-established law, the accountants have to disclose the event and what the cost will be or else the SEC will go after AT&T. All okay so far, right? If AT&T did their math wrong and our fabulous attempt at health care deform doesn't cost them as much as they think, well, they can always restate the financials right?

Alternatively, some jackass in Congress can request AT&T corporate officers appear before that august body because he doesn't think their assessment is correct. I mean, hell, Henry Waxman (D-emagogue) knows more about how the new law is going to affect AT&T than AT&T does, because he's a congresscritter, right?

I'm not AT&T's corporate counsel, but in the absence of a valid subpeona, I'd tell Rep. Waxman to go piss up a rope.

The Apocalypse Arrived Early

So, I first read last week sometime Social Security was going to pay out more money than was taken in this year. The carrier pigeon from the hinterlands finally arrived in New York, and the Times took notice.

Now we've been blogging about the upcoming death of SS for years. One of my standard talking points has always been a simple bit of math.

1946 + 65 = 2011

In other words, once the boomers retire the system would begin to collapse. I freely admit it's a simplistic way to drive the point home. And it was apparently too optimistic. The end is nigh a year ahead of schedule.

Let me see how this sounds:

DOOM!
DOOM!
DOOM!

It helps if you imagine James Earl Jones doing the reading.

An Open Letter To American Express

Dear American Express,

You don't know me, and I don't know you. Yet for the past 20 years at irregular intervals you have besieged me with correspondence about how we should get better acquainted. In all that time, you have probably sent me hundreds of pages explaining how wonderful you are. Frankly, it bothers me a little bit that you are so needy that you harass random strangers trying to get them to have a relationship with you.

In any event, out of all the correspondence you have sent me over the years, sooner or later it would have dawned on you that I have never, not once, responded to any of your letters. At some point, it must have occurred to you that I'm not interested. Yet you still keep sending me extravagant promises of how my life will be better if I pay you money so I can spend my own money. Or is there something I'm missing in there about what, exactly, you'll do for me?

No matter. Whatever you think it is you have to offer, I don't want. Please quit sending me letters. Thanks.

Sincerely,
T

More Mortgage Messiness

Johnny L. continues his quest to point out how stupid policy contributed to the mortgage crisis.

Ken Lewis isn't going to go gentle into that good night, either. I can't say as I really blame him, either. He got strong-armed into the Merrill Lynch deal and now they're going to try to bust him for it? I'd go scorched earth on Treasury and the Fed in a heartbeat.

Court Pwned

Well, Amazon made a mind-blowingly stupid decision some months ago. Aside from the immediate fallout, the courts have now piled on. Amazon is paying $150,000 to some kid who got his homework ganked along with his copy of 1984. As part of the settlement, Amazon agreed they won't take your books back except in some very limited conditions. This goes some way towards making me think kinder thoughts about the Kindle, but not far enough to make me buy one. Given the initial blunder, this is probably the best recovery Amazon can make. Of course, now that Amazon has entered into an agreement with the court as to the terms of the deletion policy, things will go much worse for them if it happens again.

As an aside, I can't think of any homework assignment I've done in my life that was worth $150,000 dollars. Hell, my entire college education (both degrees) didn't cost that much.

A Short Note On Health Care

The issue concerning me right now is this bizarre assumption in the debate that insurance magically equates to health care. This is not now, nor has it ever been true.

What most people apparently want is the government to magically shit them healthcare without charging them anything. I am reminded of the old joke about going to heaven: Everybody wanst to go to heaven, but nobody wants to die. Similarly, everybody wants to go to the doctor but nobody wants to pay. Somebody has to pay. Somebody always pays. We are not yet living in the magical post-scarcity universe posited by Iain M. Banks or Charles Stross, and we should all know what that means. There ain’t no such thing as a free lunch.

So, let’s ask the question everybody wants to dance around. Why should someone else pay for your health care? Given that health care isn’t a true public good, why is it even the government’s business? If somebody could answer these two questions, I’d appreciate it.

Madness, Redux

So, back when the whole housing crisis started to implode in late 2007, I offered some advice. With the benefit of crystal clear hindsight, we can now see my advice was not followed.

Anyhow, somebody else thinks we shouldn't have done a damn thing and the .gov should probably stop doing the myriad idiot things it's doing to "help". Obviously, this man is a genius and you you should dote on his every word. He agrees with me, and what more proof do you need of his genius? However, he has rather better academic credentials than me on the subject and argues more eloquently and with less use of profanity. You should go read the whole thing.

Cash Only, Please

Banks won't be taking the IOUs California is giving out. Kinda puts a kink in the works, doesn't it? I can't say I'm sorry to see this happen.

More Chicanery

Tim Cavanaugh, fresh off his win at the L.A. Press Club Awards, is on fire today when discussing the idiocy being promoted by Timmy the Tax Cheat and Larry Summers. More regulation will make everything all better! Yeah, not so much. But I'll let Mr. Cavanaugh savage the stupid:

This is horse pucky. The crisis in confidence and trust is the cure, not the disease. Banks are not lending because there are are too many bad risks out there. People aren't getting loans because they can't establish their creditworthiness. And the reason for that isn't some baloney about mass psychology or people needing to be protected from themselves. It's because about 20 percent of Americans have demonstrated that they must never be loaned money on any terms.

I know the people he's discussing. I have seen the failure of risk management in the lending industry up close. Somebody has never pointed out to the banks an 18% loan interest rate is great for cash flow, but it doesn't mean shit if the borrowers don't have the money to pay you back. Or, more accurately, the borrowers will mismanage their financial affairs to the point that you are one of several competing entities trying to get $15K a month out of a guy who only makes $5K a month. It just doesn't work.

Plus, let's be honest about the impact on the financial industry:

it will succeed in regulation's oldest, truest goal of propping up existing players and creating new barriers to entry for anybody who might challenge them. Rest assured that Goldman Sachs and JPMorgan Chase will make noise about how the new liquidity, reserve and reporting requirements are tough, challenging and a step in the right direction. Editorial boards will swoon that "even industry leaders agree" on the need for the new regs. Things will look a little different if you're not either owned by or on a first-name basis with the secretary of the Treasury.

Plus, it will do absolutely nothing to prevent the next meltdown. The law of unintended consequences being what it is, we'll have a failure of the exact same systems brought on in large part by the shiny new regulations designed to prevent a failure. I mean, it's not like we haven't been watching the same scenario play out over the past year.

I Want A Challenger

Failing a Challenger, I'll take a Charger. SRT package on either one I receive, thanks. I figure it's the least the .gov and Chrysler owe me for involuntarily propping up the zombie of a corporation. Since Chrysler isn't giving the money back, we should be getting free cars. Oh, wait an 8% share of the revenant is supposed to adequately compensate the US Treasury for the $7,200,000,000 we pumped into the dying dreams of the UAW.

Let me see. Some quick math is necessary here. For 8% of the new improved undead automaker to be worth $7.2 billion, that implies the entity going forward is worth $90 billion. Fat fucking chance. GM's assets were barely worth that much at year-end, and they ain't now. Chrysler sure as hell doesn't have that much on the balance sheet. Alternatively, some schmuck is thinking there's a reasonable chance Chrysler will start making money again and that 8% will someday be worth the money we paid. Well, hell, that's easy math. It's a net present value proposition, right? How much money does Chrysler need to make for the UAW Employment Plan to be worth what we paid for it? Well, assuming a discount rate of 4.25% (the latest number for 30 year T-Bonds) we can just about break even if our 8% of the profits is $430 million a year for the next 30 years. Over a shorter time horizon, the number goes up. Of course, I've never seen a discount rate that low out here in corporate America, either. The number goes up if we assume a higher discount rate, too. Figure the odds of that happening. I'm not even going to try because I'm well aware of the computational limits of my machine and software.

Now, keep in mind I got my engineering and business degrees from state school here in Texas, so I might not be up to the minute on the fancy financial thinking emanating from DC. All I can see from out here in the sticks is we, as unwilling taxpayers, are getting shafted to benefit somebody else. If I can figure this out, surely your beneficient elected leaders in DC have someone around who has noticed as well. So they must not give a rat's ass. Yay!

Short answer: all the rest of us taxpayers just got screwed to benefit the UAW and some Italians. Hope and change my pasty white ass.

Stupidity Resurgent

The level of dumb going around right now is just staggering, and hopefully not contagious. I catch a case of the retard like so many others in our body politic and it's on. I'll start believing whacko conspiracy theories and take a more direct approach to politics.

However, the stupid is just everywhere. So last week, the n00b decided taking over student loans was the next brilliant idea. While his codependent enablers in Congress haven't bought off on it yet, I have no doubt they will. I mean, why wouldn't they? They already helped take over the auto industry and the banking industry. Why not get back into student loans?

So what does this week bring? Some jackass using these examples to suggest the government get into credit cards! Seriously, are all you people retarded? Please tell me this is a joke and we're all not that goddamned dumb. Otherwise, I'm going to have to to step up my plans for world domination just to keep all y'all ignuts in line.

Feed the Beast

Have you voluntarily complied with the intrusive questioning and money grubbing of your federal government today? Do you feel good you're helping pay for the bailout? I know I do.

Anyhow, here's an article about book thieves for no reason other than I thought it was interesting.

Stop Writing Checks

Back a few years ago, when welfare reform was a hot-button issue, I had a friend who proposed the simplest welfare reform imaginable: stop giving people welfare checks. His theory was that those who didn't really need welfare would do something, and alternative approaches would pick up the rest. While I support the idea in theory, the practical aspects of it disturbed me. It always seemed you would need some time to transition.

Anyhow, someone who is far more familiar with the world's biggest welfare basket case than I has come to a similar conclusion. The interview is long and detailed, and she makes a lot of sense. Therefore, there's no hope in hell of it ever happening.

Although, given budgetary constraints among the G20 brought on by the crappy economy, now is the perfect time to try to convince people to quit giving money they don't have to corrupt third-world politicians.

GM Bankruptcy

The n00b has finally figured out that GM may require bankruptcy, but some super-special different kind of bankruptcy rather than the normal, stodgy, old-fashioned kind.

Let's quickly review some pertinent numbers and basic accounting, shall we? GM's most recent balance sheet is here. GM has negative equity, a fairly impressive achievement in and of itself for a company with $91 Billion in assets. However, this pales in comparison to GM's liabilities of $177 Billion.

So, in simple terms, GM owes $177 Billion on $91 Billion worth of stuff. You would have to have a 200% loan-to-value ratio on your house to be this far upside down. That's okay, though. You can have a balance sheet this fundmentally lopsided, even in your personal life, if you've got enough income to cover the notes and maybe pay off some principal.

So, what's GM's income look like? GM had a gross profit last year of -$332 Million. Plus, they're bring in 35% less money now than they were last year. GM doesn't have the income to do anything about the catastrophe that is their balance sheet. The numbers may have varied slightly in the details over the past several months while everybody dithered about what to do.

Short answer: GM is losing money every minute, and owes twice what the company is worth. There is no restructuring plan on earth that can save them that does not involve bankruptcy court. Pouring more tax money into GM cannot fix the numbers above, unless you just want the feds to write a check for $177 Billion so GM can be debt-free.

It's taken this long for the chattering imbeciles in DC to figure this out. Smart people we have serving in Congress and the Executive.

This sucks, too, because I really did want a new car this year.

Many Call It Conspiracy

The CFR comes and goes as a conspiratorial organization. Yesterday, Timmy the Tax Cheat was speaking to them and apparently endorsed a one world currency approach. Oh noes! The Obamanauts will sell us out to the UN! Novus Ordo Seclorum! FEMA Takeover! Internment Camps! National Sovereignty loss in 3... 2... 1...

Well, maybe not so much. Here's the transcript. As an aside, it's hard to be conspiratorial when you're posting transcripts on the web. As I read this, somebody is asking a question about the Chinese central bank's proposal for... something. I lack the background to know exactly WTF is being discussed. Geithner, not wanting to piss off the guy who's holding the largest amount of US debt, says there may be something useful in the proposal, but I haven't read it. Strangely, this statement triggered the buttons of the paranoids. Nobody seems to give a damn about his multiple statements that the government is going to do whatever it takes for however long it takes to get us out of this crisis. Which one worries you more? The thought that the Chinese may have some thoughts on the current crisis which may contain some utility, or the thought that the government is going to fix this crisis by any means necessary?

I know which one disturbs me more, and the Chinese are by far not my biggest concern.

For another take on the effectiveness of the bailout, try here.

Say It Loud

Shorter Jake DeSantis: Screw all y'all backstabbin' bitches, I'm out.

Honestly, can you blame him?