Wednesday, October 29, 2008

Mastery of the trivia

WMUR TV sponsored debates between Sununu and Shaheen, Horn and Hodes, and Buckley and Shea Porter, the NH Senatorial and US representative candidates. I watched them all. Arggh.
Sununu spoke well, made good points and supported them. I gained a knowledge of what Sununu would do in office.
The rest of them were terrible. They used the statewide TV exposure for vague generalities, spectacular accusations of obscure misdeeds and platitudes. Republican Jennifer Horn failed to point out Paul Hode's complicity in the Fannie-Freddie disaster that caused first the housing market crash ans second the stock market crash. Shaheen sounded like she was campaigning against Bush, who isn't standing for re election, rather than for US Senator from New Hampshire. Hodes came across as a middle aged weasel. Shea Porter and Buckley did themselves no good.

Friday, October 24, 2008

The tax man cometh.

I hear Obama and McCain each claiming that their tax plan will be better than the other guy's tax plan. Unfortunately the US personal income tax is so complex and loaded with gotcha's and loopholes that nobody knows what will happen, no matter who wins. All we taxpayers can figure is the man who wants to spend more will raise taxes more. So far, Obama is miles ahead on the spending front. He plans to offer free health insurance to everyone. That's gonna cost so much it will bankrupt the country.
All of Obama's tasty goodies will have to be paid for some how. Once a federal goodie is offered , it can never be revoked, so each of Obama's pricey goodies will burden us taxpayers for ever and ever. We will have to pay for them somehow, taxes, borrowing, or just plain printing the money, none of which is good for the economy.
Obama's goodies mean taking money away from industry, investment, research and development and just consuming it.

Will a one hour speed bump save the market?

The Dow is down 400 points and the market has only been open for 20 minutes. There is talk about a one hour timeout of trading should the market drop 1100 points. Will just one hour allow enough time to reset all the computers (which sell when the market drops) and reset the investors who will be in solid panic mode?

Thursday, October 23, 2008

Alternative Energy subsidies

Interesting NYT article here. Apparently nuclear energy enjoys a $1.59 per Megawatt hour subsidy where as wind and solar get $20 per Megawatt hour. Let's see, I pay $160 per Megawatt hour up here. So the 1% subsidy doesn't make much difference. The $20 for wind and solar seems a bit much, especially as neither wind nor solar goes into my car or my furnace, my big energy costs.
What does hurt is the green anti nuclear stand. I'm still paying off the damage they did to the Seabrook nuclear plant back in the 1970's. "Stranded cost recovery" right on my electric bill every month, thanks to the Clamshell Alliance. Plus a whopping big share of the cost of a nuclear plant is the humungous pile of paperwork the greens have saddled the industry with.

$150 million "alert system" scratched

An unnamed Homeland Security system to provide unclassified but sensitive warnings of terrorist threats to first responders and all levels of government has been "put on hold". With luck Congress may be able to kill the entire $150 million boon doggle.
The way you pass threat warnings is by email. Everyone reads their email. If the contents are sensitive, or even classified, encrypt the email. Problem solved.

Let's get petty

The MSM are now trashing Sarah Palin over the cost of her wardrobe. How petty (and sexist) can you get? She has to appear in public daily, travel (which clothes hate) and as a national political candidate she has to appear well dressed. Of course she needed more clothes to campaign in.
Plus, women have to work harder than men to appear well dressed. A dark suit, clean white shirt, well shined shoes and a tie and a man is good to go. Women's dress is infinitely more complicated. Any reasonable woman would need more decent outfits to campaign nationally.

Wednesday, October 22, 2008

Roasting Ratings Agencies on Wall St

Sen. Henry Waxman, that bald headed twit, held hearings today to roast Moody's, Standard and Poor's and the other bond rating services. The raters gave AAA ratings to "mortgage backed securities" which later tanked and took down the financial markets. Although the roasting is well deserved and fun to watch, it misses the point.
The goodness of the "mortgage backed securities" was no better than the goodness of the mortgages backing them. There is no way a bean counter in a Manhatten office can know how good a mortgage in California or Florida is. To evaluate a mortgage, you have to know the value of the real estate (which requires a visit to the property and local knowledge) , the income of the borrower (which is privacy protected) and interview the borrowers. No way a bean counter at a rating agency can do this.
The buyers of the "mortgage backed securities" should have known this. Once a mortgage maker knows he can sell the mortgage for cash, and all the risk is passed to the buyer, then he will make a mortgage to anyone with breath in his body. We should close the entire secondary mortgage market because it is impossible to know the soundness of any mortgage backed security.

Tuesday, October 21, 2008

Strange Capitol

So, now we come to really strange forms of "capitol". In return for US taxpayer money the bailed out banks are required promise to sell their stock to the government at today's (depressed) price, sometime in the future. The idea being that the taxpayers are entitled to a cut of any of the bank's future earnings in return for putting up barrels of money. The paperwork to do this is called a "warrent". We used to call them stock options in industry.
According to a Wall St Journal article, these "warrents" would be carried on the books of the bank as "capitol". Wow. First of all, the warrents aren't readily saleable, which makes them questionable as capitol. Second of all, the government owns the warrents, not the bank, so I fail to see how they contribute to the bank's capitol whatsoever, neglecting matters of proper pricing and liquidity.
Then the WSJ writer goes on to worry about how fluxuations in the value of these warrents would make the bank's capitol fluxuate.
Something does not compute here.

Bank Capital?

So, let's run a bank. We accept money from depositors and buyers of bank stock. We lend this money at interest. Question, how much money can we lend? All of it? Not hardly, someone will make a withdrawal and we have to have cash in the till to pay out. Sometimes a loan won't be paid back, and a decent bank can't fail just 'cause one lowlife stiffs them on a loan. So, how much money do we keep on hand as protection against rainy days?
Experience and federal law suggest a bank ought to keep about 10% on hand as "capital" or "capital reserves". The commercial banks adhered to this. The "investment banks" aka stock brokerage houses, ignored this rule, went down as low as 3%, and are now all dead. RIP Drexel Burnham Lambert, Merrill Lynch, Lehman Bros, Bear Stearns, and company.
Now keeping plain old cash in the vault is secure, but that's a lot of cash that isn't earning interest. Can we count ultra safe securities, T-bills say, as "capital reserves"? Well OK. How about blue chip stocks and bonds? Perhaps. How about riskier stuff like mortgage backed securities? Well, we allowed that to our sorrow.
Next question, after we demand that banks keep a certain amount of capitol on hand, and after we allow things other than cash to serve as "capitol", how do we count said capitol? Do we count the stocks and bonds and riskier stuff at purchase price or at current market value? Speaking as a depositor, I say count every thing at current market value. The purpose of the capitol is to pay off depositors and cover bad loans. To do any good, the capitol must be converted into cash, the stocks and bonds sold. "Capitol" that cannot be sold at all, or only sold for very little money is worth little to nothing when it comes to paying off the bank's obligations.
Hence the "mark-to-market" rule which banks hate. Under "mark-to-market" the bank must count as capital only the market value of securites. The rule was put in after the Enron scam which involved carrying worthless stuff on the books at purchase price.

Monday, October 20, 2008

New York Times strikes out again

Columnist writes about the hardships of a career in science and engineering. He bemoans lawyers starting salaries of $145000 whereas he claims a physics PhD starts at a mere $45,000. I don't know what universe this commentator lives in, both in the real world, a bachelor's degree in chemical, electrical, mechanical or civil engineering starts at $50K or better, right out of school, and reaches $100K with just a few years industry experience. For every lawyer starting with a big firm right out of college, a hellofva lot 'em work part time and never rise much beyond doing residential real estate closings.
Engineers get to design the next Iphone, the next game machine, space ships, aircraft, buildings and every thing else that gets made. It's more rewarding than doing closings.

Wednesday, October 15, 2008

Campaign Sign Maintainance

Got a call from down state yesterday, someone defaced one of our scarce 4 by 8 foot McCain Palin signs, the one down at Clark's Trading Post. So I drove down to inspect. Ran right thru Franconia Notch in the strangest weather ever. A low low cloud scraping the ground and flowing up thru the notch like water.
Found the defaced sign. Some highly mature and principled person had written a rude word across the sign in black spray paint. Their spray can must have been low on paint 'casue they only defaced one side of the sign. So I drove into North Woodstock and bought a can of white paint at the NAPA auto parts store, along with some masking tape. About 10 minutes work of masking and spraying refreshed the white lettering, and the sign, if not good as new, as least looked OK from the road.
Let's say it's just some kids...

Radar Recon on the Taliban

The RAF is taking delivery on their new recon aircraft, Astor, named after the radar rather than the airframe. (Airborne Standoff Radar). It's a twin engine jetliner (a Bombardier Global Express) with the radar mounted in a canoe shaped pod underneath the fuselage. It is said to be sensitive enough to detect men walking on the ground. It's a smaller and cheaper version of the USAF Jstars and Rivet Joint. Size reduction comes from leaving off the 20 odd flying radar observers and just data linking the radar "take" to a ground station, resulting in a much smaller aircraft overall.
The computers onboard that do all the work are running Windows. Aviation Week interviewed a British official. He said "There are lots of things we would like to do better-- such as faster boot times...." Later one he admits that rebooting the Windows computers can take as much as finve minutes. That's Windows for you, sluggish and crashprone.

Sunday, October 12, 2008

The Great Chipmunk Escape

Chipmunk spent a day lurking under the washing machine. Cat's attention span wavered, and last night chipmunk scurried across the living room and dove under a bookcase. It must have gotten hungry, there isn't much worth eating in the cellar. Any how cat got another tour of chipmunk guard duty, but never scored.
This morning, while cat was out, chipmunk reappeared. I was able to herd it out the open front door and back into the woodpile. I do hope it finds something to eat and drink after a day long fast under the furniture.

Gm, the Bad and the Ugly. Buying Chrysler.

GM senior management just demonstrated yet again a complete lack of common sense. They have a car company that has too many factories, too many over paid workers, too many dealers, no decent products, worthless stock, a credit rating in the toilet, and money is running out. And they are wasting time dickering to buy Chrysler, a second car company in just as bad, or maybe worse shape? For what?
Chrysler is so worthless that Daimler gave it away to Cerberus. If memory serves Daimler paid $30 billion for Chrysler ten years ago and they dumped it for a couple of billion in stock, not cash last year. That's 'cause Chrysler's liabilities in terms of plump UAW pensions far outweighed any money it could ever make.
GM cannot afford it, hell, GM can't afford to buy toilet paper for the company restrooms. Why in the name of all that's holy are they thinking of making their problem bigger? GM needs to fire all their senior management starting with CEO Rick Wagonner and going down about three levels from there. The GM suits have performed one disaster after another, going back 20 years when they threw away billions of dollars just to get Ross Perot off their board.

The Good news from GM, Volt is coming

A long article on the coming Chevy Volt in Popular Science. The project is real. The battery will be lithium ion. They have two battery suppliers, both of which have delivered prototype batteries to GM. A123 Systems from Massachusetts and Compact Power Inc from Korea. The battery specs call for 40 mile range, weight less than 400 pounds, push the car from 0 to 60 in 8 seconds, a ten year 150000 mile service life, and store 16 kilowatt hours, which is close to the electricity my house uses in a day.
Ten "Mali-volt" test vehicles (Volt drive train in a Malibu body) are running around GM test tracks. The first Volt prototypes will hit the track this month. The batteries are under test, both charge/discharge cycling and oven testing to evaluate life. Battery life is critical, the battery is the most expensive part of the car. If it fails under warranty GM will loose money, if the car gets a reputation of battery dying at 50000 miles resale value will nosedive.
The Volt project is real, not vaporware. GM will bring the car to market in 2010. If it works properly, it ought to sell for something in the mid thirties, which is Prius money. Prius sells briskly even though it's too costly to make economic sense. With a 40 mile battery range, plenty of Volt owners could go for months on just electricity, no need to buy gas at all.
With luck, Volt will give GM a real product, something that people buy 'cause they like it.

Saturday, October 11, 2008

Why I won't vote for Obama

1. Obama has promised repeatedly to pull the Army out of Iraq as soon as possible (ASAP). That will turn Iraq over to Islamist extremists, Al Queda, the Taliban, the Wahabis, the Iranians, there is no lack of them. Once that happens, the rest of the middle east will follow. With the exception of Israel, no middle east government has the strength to resist the call to Jihad. Without American support, the tender young government in Iraq will fall, and the Islamists will win. The Iranians will get nukes, and dominate the region. The Saudi's will collapse and Amadinajad will own all their oil. Once this catastrophe happens, there is no recovery. We will have to live with world oil supplies controlled by our enemies.

2. Obama will turn today's stock market crash into a long lasting depression. He and his people believe in the goodness of government furnished health care, housing, easy mortgage money, education, child rearing, alternate energy and countless other expensive goodies. They don't understand that the money to furnish all these goodies has to come out of taxpayers and industry. He doesn't understand that squeezing the necessary funds out of taxpayers will cripple our economy and turn the US into Europe, a place with no growth, 10% unemployment, a declining birth rate and a hostile underclass.

3. Who will Obama appoint to the Supreme Court? Tony Rezco? Jeremiah Wright? Bill Ayres? Does Obama have any friends who aren't leftwingers? The country is stuck with Obama's choices for thirty years.

An Obama administration will damage the United States in ways that cannot be repaired for a generation.

Mighty Hunter has struck out

Yesterday I'm sitting on the deck, soaking up some Indian summer warmth before the winter starts. From under the deck comes the crash of falling firewood. Damn, I think, that cat is getting clumsier than ever. A few minutes later cat trots up the stairs with a chipmunk in it's jaws. Musta been hiding in the woodpile. As usual, cat heads right into the house, planning to disembowel and eat chipmunk on the living room rug. I move to intercept cat. Cat drops chipmunk on the rug.
Chipmunk has been doing a good job of playing dead. Comes to life and runs for it. It's fast, and leads a merry circus around the house, cat in hot pursuit. Instead of zooming out the open door, chipmunk dashes down the cellar stairs. I turn on the lights and find cat patrolling the washing machine. Chipmunk has more patience than cat, it's still in the basement. Cat is still doing occasional washing machine patrol, but so far without success. That's why it's name is Stupid Beast.

Thursday, October 9, 2008

Knight Rider meets Baywatch

Watched this revival of the old (70's? 80's?) TV action adventure show. Like the original, the show features a hunky secret agent driving a talking car. In the original show the car had an impressive voice, deep, well modulated, calm, and knowledgeable as Mr. Spock. Michael, the good looking male lead, had a deep relationship of trust and friendship with the car. To the exclusion of girls it seemed.
The revival fixed that right up. Michael now has two girlfriends, one who he has been sleeping with, and a real cutie who wants to start sleeping with him. The scene is California beach/surfing, with the car, (black Mustang) simmering in a sandy sun struck beach parking lot while Michael, and his cutie, step over acres of bikini clad tanning girls and rub elbows with hunky surfers. I kept wondering if the Mustang's upholstery would melt after parking all day in the sun.
The plot is a bit difficult to follow. After a shoulder launched anti tank missile strikes home on the car, there is an explosion, fire, smoke, and then the camera closes up on a smoking crater where the car had been. They cut to commercial. After the 5 minute commercial break, the show returns, and we are underwater, looking at the car, converted to a cozy minisub, with Michael and the cutie inside. Just how the car got over the 500 foot cliff and into the water, ahead of the missile, without so much as a splash is left to the viewer's imagination. The dialog is weak on proper names, so I missed the name of the first girlfriend and the gorgeous Asian American cutie.
I may watch it next week to see if the cutie is still in the show. Her bikini was cute too.

Fake Science goes unchallanged

Fox & Friends was interviewing an anti childhood vaccine person this morning. This person first said "one in six American children has a developmental disorder". Oh really? I personally know better than 100 children and only two of them suffer from "developmental disorders". That's less than one in fifty, a far cry from one in six.
Then the person went on to call mercury "the second worst neurotoxin known to man". Right. Cobra venom, cyanide, arsenic, sarin, and mustard gas move over, mercury is the new king of poisons. The mercury amalgam fillings in my teeth have been there a hellova long time and they ain't killed me yet.
Needless to say, the Fox newspersons never challanged any of this, or even asked for evidence.
Want to bet none of them ever took high school science, let alone college level science?

Wednesday, October 8, 2008

The fundamentals of the economy are sound

At least they were when McCain said this. Fundamentals are GNP growth (2.7%) and unemployment (6%). Exports are up. Despite Obama's mockery, these are good numbers. If GNP is growing, we aren't in a recession. Six percent unemployment used to be considered normal.
The financial world is sliding down the chute, but the real economy is still doing reasonably OK.

Things McCain should have said last night

1. Name a few names responsible for the Wall St disaster and promise vengeance. Start with Barney Frank and Chris Dodd, then add some targets of opportunity.
2. Point out there are only two exit strategies from war, victory or defeat. He wants victory, what does Obama want?
3. His $5K tax credit plan puts the self employed, who have to purchase their own insurance, on the same footing as the corporate employee who gets his free.
4. In response to the "what will you cut now that the USA is broke" question, suggest ending all farm subsidies, ethanol subsidies, federal highway construction, energy bills, and earmarks. Close down the education dept since education is a state matter, like wise health and human services cause welfare is a state matter.
5. Produce a list of reforms to prevent the Wall St disaster from happening again.

Tuesday, October 7, 2008

Do we need the "secondary mortgage market"?

Secondary, as in a mortgage trading market, like the stock market. Fannie and Freddie started the thing and look how it turned out. Used to be, up until about 1980, that banks and savings and loans wrote mortgages with their own money. Since their own money was at risk, they used to check out the borrowers pretty closely to insure that the loan would be paid back.
Once a secondary market exists, the original lender can sell his mortage thus avoiding all risk. Which encourages writing riskier mortgages, 'cause once sold, you don't care anymore. Up til now the secondary market has encouraged a whole lot of people to sign mortgages too big to pay off, financed speculators buying houses to flip them, jacked up the price of housing, and financed building acres of houses that can't be sold. And pushed the entire economy over a cliff into the next great depression. Do we need this?
We could eliminate the entire secondary mortgage business with a simple law stateing that mortgages are non transferable. A mortgage is a contract between a single borrower and a single lender, and cannot be sold. As a mortgage holder I like this. I sign a mortgage with the XYZ bank, and that's that. I don't have to worry that XYZ will sell me and my mortgage to someone awful.
The banks, real estate people, builders, and contractors all claim that they need the secondary market to raise the cash to do the mortgages. In effect, the banks borrow the cash on the secondary market and then lend it out again. I say that banks can raise all the money they need by just paying decent interest on savings deposits.
Eliminate the middle man. Make the banks responsible for writing mortgages that will get paid off. Cut the price of mortgages and put all the secondary mortgage market people to work doing something of real economic value.

Monday, October 6, 2008

Dow is down 400 points by 10:30. Click too fast and post twice


Dow is down 400 points by 10:30


Regulation? Isn't Sarbox enough?

We shouldn't let the Democrats get away with calling for regulation as a cure for the $700 billion bailout problem. There was plenty of regulation, with Sarbanes Oxley the latest installment. Sarbox has reduced the number of initial public offerings to zero, and driven the merger and acquisition business off shore. Plus it has made the bean counters rich and the rest of us poor. Republicans have tried to regulate Fannie and Freddie since 2003 but Democrats, fearing to loose the gravy train of Fannie and Freddie money, defeated all attempts. Today's $700 billion disaster is the direct result of that Democratic policy.
Used to be, before Obama, that deregulation meant ending government price fixing. Over the years regulation (price fixing) of ground freight rates and air fares was phased out. Deregulation brought mass air service at good prices, and vastly cheaper shipping. Every thing we buy got shipped from somewhere, so lower freight rates benefit us all.
The Obama folks now blame the $700 billion catastrophe on "Republican Deregulation". That happens not to be the truth. The $700 billion was caused by democratic opposition to regulating Fannie and Freddie, not by lowering freight rates and air fares.

Sunday, October 5, 2008

Health Care vs Obama & McCain

McCain wants to level the playing field between employees and the self employed. Right now employees get health insurance thru their company and it's tax free. The self employed have to buy their own health insurance with their after tax dollars. McCain wants to even this out. Everyone gets a $5K tax credit (subtract $5k from your income tax bill), and the employees pay income tax on their health insurance benefit , just like they do for their salary. So both the employed and the self employed get the SAME tax treatment for health insurance.
Obama has been attacking McCain's proposal saying it would cause employers to drop health coverage. I fail to see the logic of this argument.
Speaking as one who has worked as an independant contractor and as an employee of big corporations, McCain has a fair plan. It's unfair to give corporate employee's favorable tax treatement and deny it to the self employed.

Everyone wants McCain PALIN signs

We get a lot of traffic at the Republican election HQ. Everyone asks for yard signs and bumper stickers with Palin name on them. We have made a couple of resupply runs down country, but cannot keep up with demand. Most of the time they have to settle for a plain "McCain" sign, of which we still have a goodly number left over from the primary.
Palin is wildly popular up here. Although surely Palin was nominated to appeal to women, in actual fact she is immensely appealing to men as well. The men walking into HQ uniformly admire Sarah, saying a woman that cool and that tough is just what the country needs.

Friday, October 3, 2008

Sarah Palin Debate

I watched it. Sarah was great. Poised, confident, feisty, and speaking some real substance. Biden was smooth, but his words just sounded good with no real substance behind them. I guess 30 years experience allows one to reel off platitude upon platitude without skipping a beat. I'll score it even. Sarah did not crush Biden, but heh, you can't have everything. Biden keep quoting damning "facts" which need some serious fact checking. For instance Biden repeatedly rapped John McCain for a "$4 billion tax break for Exxon Mobil". I never heard about that one. I do know Biden voted for the last "energy bill", and we all know that was a package of goodies for the oil business.
I thought Gwen Ifill's questions were poor, that pastor at Saddleback had much better ones. For instance "What decision do you regret the most". That's a job interview classic, which gives a dumb jobseeker an invitation to confess to bad stuff. Sarah at least knew the standard response for that one. Or "Which situation is worse, Iran or Pakistan". Hell, we all know the answer to that one, both are disasters with no good solutions in sight.