Sitting on a sofa on a Sunday afternoon,
Going to the candidates debate ...
A presidential election between Hillary Clinton and Rudy Guiliani would give us a choice between two candidates completely unqualified to be president based on their experience and personal integrity. This would be the ultimate "lessor of two evils" election. Maybe our worst option since Nixon-Kennedy.
Here's a look at some of the other possible elections.
The polar opposite of this would be a race between two "nice" guys - Obama vs. Huckabee. They also lack experience but at least we would not have to listen to Hillary and Rudy shriek at each other for months.
If somehow Iraq becomes the central issue and we want to elect a president that actually has some ideas regarding Irag and some foreign policy experience then the choice could be McCain vs. Biden. Both of these candidates at least thought about what to do next in Iraq.
If the election becomes a choice between management and leadership skills and experience then Mitt Romney becomes the obvious Republican choice. For the Dems the choice is less obvious. If you were an investor in a Fortune 500 company which one of the Democratic candidates would you want to run that company? The answer may be Bill Richardson or perhaps John Edwards.
If each party was most concerned about electability then they would each choice a white, male, Protestant that was either a sitting president, governor, former vice president or war hero and was not from the north-east. Did you know that there since World War 2 we have elected only one senator, only one North-Easterner and only one person who was not a Protestant? All three exceptions were JFK, 1960.
This 'electability' eliminates all of the Senators and Guiliani. It also eliminates Romney. That leaves Bill Richardson vs. Mick Huckabee. I could live with that choice.
Monday, December 31, 2007
Wednesday, November 21, 2007
Here Comes The Sun
It seems that the dialog about global warming and climate change is very different than it was a year ago.
No longer is there a serious disagreement or debate on (1) the earth is getting progressively warmer, (2) there is a statistical correlation between green house gasses and the earth's temperature, (3) there is a causal relationship between burning fossil fuels and green house gasses, (4) therefore the earth's rising temperature is caused by the action of humans over the last 50 years, and (5) the trend will continue unbated at least in the short term, probably for 5-10 years.
Now the conversation is about medium term adaptations and longer term solutions.
It seems to me that some of the news (again medium to long term) is positive. Alternative energy solutions abound and as the direct cost of oil increases and the indirect costs of burning oil and coal become more objectionable then these other alternative sources will become economically viable. For example, I would not be surprised to see solar panels as a routine addition to residential housing or average car efficiency exceeding 50 mpg.
Someone once posited that in time George Harrison would be remembered as one of the major figures in bringing eastern religion and philosophy to the attention of the West and ,oh, by the way, he was also a musician.
Perhaps Al Gore will be chiefly remembered as one of the main figures who changed perceptions about climate change and ,oh, by the way, he was once close to being the president of the US.
No longer is there a serious disagreement or debate on (1) the earth is getting progressively warmer, (2) there is a statistical correlation between green house gasses and the earth's temperature, (3) there is a causal relationship between burning fossil fuels and green house gasses, (4) therefore the earth's rising temperature is caused by the action of humans over the last 50 years, and (5) the trend will continue unbated at least in the short term, probably for 5-10 years.
Now the conversation is about medium term adaptations and longer term solutions.
It seems to me that some of the news (again medium to long term) is positive. Alternative energy solutions abound and as the direct cost of oil increases and the indirect costs of burning oil and coal become more objectionable then these other alternative sources will become economically viable. For example, I would not be surprised to see solar panels as a routine addition to residential housing or average car efficiency exceeding 50 mpg.
Someone once posited that in time George Harrison would be remembered as one of the major figures in bringing eastern religion and philosophy to the attention of the West and ,oh, by the way, he was also a musician.
Perhaps Al Gore will be chiefly remembered as one of the main figures who changed perceptions about climate change and ,oh, by the way, he was once close to being the president of the US.
Friday, November 9, 2007
What's Going On
Some ideas about the economy and markets. I have been thinking about the macro trends in the economy and have wondered how we can maintain these trends:
The US government spends more money than it raises each year.
As a nation we import more than we export each year.
As a nation we consume more than we produce each year.
As a nation individual house-holders spend more than they make.
Some individuals borrow more than they can repay.
So he have a huge and growing national debt. Living it up ..
The concern of foreclosures is leading to a tightening of credit and leading financial losses for the financial services companies and a slowdown in home-building.
And, lastly, a huge and growing deficit in the balance of payments. Let's start there.
The trade imbalance means that China ends up with lots of US dollars that they do not spend on US goods and services. What happens to the money? It goes into savings and investment accounts denominated not in Chinese Yuan but in US dollars. So the money has to be invested in either US dollar financial assets, e.g. stocks or bonds, or the Chinese investor can exchange the US dollar for some other currency. Since China has so many USD they primarily invest in US Treasury bonds, e.g. they are buying the bonds the US government has to issue each year since the US government spends more than it collects in taxes, fees, etc. So China is lending the US government money to finance the war in Iraq, tax cuts for the wealthy, and bridges to nowhere.
When the Fed reduces interest rates, short term T-Bills will pay less in interest and and inflation may grow. If we get inflation the value of long term bonds will decrease. Both of these make buying USD financial assets less attractive. So holders of USD trade them for more "stable" currencies such as the Euro, British pound, etc and then buy financial assets dominated in these currencies.
For this currency trading, if someone is selling Euro for USD they will play less for the USD as the number of sellers increases. This is just basic supply and demand combined with the financial risk of owning USD. So what happens, the USD gets cheaper in relationship to other currencies, the price of imported goods and services increases. The price of oil may exceed $100 a barrel before I finish writing this.
So what does this all mean?
The bond market is worried about inflation.
The stock market is jittery.
Stuff, especially imported stuff will cost more. Since we import oil this means the cost of energy will go up so the cost of US produced goods will also increase. In a word, inflation will increase and eventually interest rates will go up.
We will have to buy less stuff. This means a "reduction in the standard of living". I put that in quotes because it does not mean a reduction in the quality of life for most of us. It just means less stuff.
This could be a good thing. We spend less on imported stuff and maybe more on local goods and services. We use less energy. We create less waste. We buy only what we can afford because of the increase in the cost of borrowing. Maybe we save a little money from time to time. We visit the Blue Ridge or Rocky Mtns instead of the Apennines. Maybe we ask Dad for some money.
Maybe the Chinese economy slows down and they slow down a little in the pollution of the planet. Maybe the US government balances the budget.
In the meantime if you are an investor, invest in stocks not bonds especially not bonds in USD. Invest in natural resources as a hedge against the USD continuing to getting weaker.
Lastly and most importantly, Don't Panic.
It's just stuff and mostly harmless.
The US government spends more money than it raises each year.
As a nation we import more than we export each year.
As a nation we consume more than we produce each year.
As a nation individual house-holders spend more than they make.
Some individuals borrow more than they can repay.
So he have a huge and growing national debt. Living it up ..
The concern of foreclosures is leading to a tightening of credit and leading financial losses for the financial services companies and a slowdown in home-building.
And, lastly, a huge and growing deficit in the balance of payments. Let's start there.
The trade imbalance means that China ends up with lots of US dollars that they do not spend on US goods and services. What happens to the money? It goes into savings and investment accounts denominated not in Chinese Yuan but in US dollars. So the money has to be invested in either US dollar financial assets, e.g. stocks or bonds, or the Chinese investor can exchange the US dollar for some other currency. Since China has so many USD they primarily invest in US Treasury bonds, e.g. they are buying the bonds the US government has to issue each year since the US government spends more than it collects in taxes, fees, etc. So China is lending the US government money to finance the war in Iraq, tax cuts for the wealthy, and bridges to nowhere.
When the Fed reduces interest rates, short term T-Bills will pay less in interest and and inflation may grow. If we get inflation the value of long term bonds will decrease. Both of these make buying USD financial assets less attractive. So holders of USD trade them for more "stable" currencies such as the Euro, British pound, etc and then buy financial assets dominated in these currencies.
For this currency trading, if someone is selling Euro for USD they will play less for the USD as the number of sellers increases. This is just basic supply and demand combined with the financial risk of owning USD. So what happens, the USD gets cheaper in relationship to other currencies, the price of imported goods and services increases. The price of oil may exceed $100 a barrel before I finish writing this.
So what does this all mean?
The bond market is worried about inflation.
The stock market is jittery.
Stuff, especially imported stuff will cost more. Since we import oil this means the cost of energy will go up so the cost of US produced goods will also increase. In a word, inflation will increase and eventually interest rates will go up.
We will have to buy less stuff. This means a "reduction in the standard of living". I put that in quotes because it does not mean a reduction in the quality of life for most of us. It just means less stuff.
This could be a good thing. We spend less on imported stuff and maybe more on local goods and services. We use less energy. We create less waste. We buy only what we can afford because of the increase in the cost of borrowing. Maybe we save a little money from time to time. We visit the Blue Ridge or Rocky Mtns instead of the Apennines. Maybe we ask Dad for some money.
Maybe the Chinese economy slows down and they slow down a little in the pollution of the planet. Maybe the US government balances the budget.
In the meantime if you are an investor, invest in stocks not bonds especially not bonds in USD. Invest in natural resources as a hedge against the USD continuing to getting weaker.
Lastly and most importantly, Don't Panic.
It's just stuff and mostly harmless.
Sunday, November 4, 2007
Nowhere Man
I inadvertently blocked all comments. You would think that someone who has worked with computers for 30 years would be able to figure this out. Thanks Tom for the heads-up.
Friday, November 2, 2007
Money for Nothing
You all knew I would post something about baseball and with the end of the season it seems a good time to reflect on the Yankee's situation.
It has not been fun being a Yankee fan the last few years. It's not about the results. I don't expect them to win the World Series every year or even be in the World Series every year. For most baseball fans and for most teams the Yankees recent results would be more than satisfactory. They have been in the playoffs every year since 1996 and they have won 10 division championships, 6 AL pennants and 4 World Series. In addition the team is exciting to watch. Attending a game at Yankee stadium recalls the atmosphere at a rock concert.
It has not been fun being a Yankee fan the last few years. It's not about the results. I don't expect them to win the World Series every year or even be in the World Series every year. For most baseball fans and for most teams the Yankees recent results would be more than satisfactory. They have been in the playoffs every year since 1996 and they have won 10 division championships, 6 AL pennants and 4 World Series. In addition the team is exciting to watch. Attending a game at Yankee stadium recalls the atmosphere at a rock concert.
We have also had some continuity - what my friend Barry calls "real Yankees" - players so familiar we only need to use their first names; e.g Bernie, Derek, Andy, Mariano and Jorge.
So what's the complaint?
It's hard to have fun routing for a team that is stupid.
The Yankees have more resources and spend way more than anyone else. I don't have the exact numbers (maybe Dave will do the research) but I estimate that they spend $40 million more than the #2 the Red Sox. That's an enormous advantage. Ir is equivalent to replacing Jeter and A-Rod with minor leaguers. Their advantage over the other teams such as the Indians, Tigers, Angels, Marlins, D-Backs is even more striking. In some case, the Yankee spending advantage was over $100 million. BTW - those are the other teams the Yankees have lost in the post-season this decade.
To me with an advantage that large the team should be odds-on favorites every year to win the World Series. They may not win every year but if the lose it would be considered an upset. That's not what we are getting. The 2007 and 2004 Red Sox, 2007 Indians, 2006 Tigers, 2005 Angels have been as good as the Yankees. And it is clear now that the Red Sox are better. They were favored to win this year and they avoided their former habit as a team that folds in the second-half.
So my peeve is that the Yankees throw away this advantage because they make stupid decisions. We have to hold Cashman responsible. He's the problem not Torre. I have played in a Rotiss league for about 20 years. In this league each team has equal resources and you gain advantage by using your resources effectively. Csshman and the Yankees throw away their enormous advantage by consistently overpaying for players. The most typical examples are paying for players past their prime, e.g. John Damon, Mike Mussina, Bobby Abreu, Randy Johnson, Matsui, etc. This clogs the roster with untradeable players if their performance slips as can be expected. This is compounded by the inability to evaluate talent. The moves that Cashman made before the 2005 season may represent the worse off-season by any GM in memory. That was the year Cashman brought in Pavano, Wright, Tino Martinez and Tony Womack. Money for Nothing.
And nothing is being learned. The Clemens deal proved Cashman is hapless. It was evident that if they were lucky they would get a mid-level starter who was a 6-inning pitcher and who had a huge downside due to injury risk.
Last year the Yankees added the useless-Igawa while the Red Sox acquired Dice-K and Okajima. And that is symbolic of the main worry. The Red Sox will also spend but they may have a clue. They had the Rookie of the Year, the best Rookie starting pitcher and the best Rookie setup man. They are better than the Yankees and they are younger.
My only conciliation is that I don't have the YES network.
Monday, October 29, 2007
Pity the Poor Immigrant
It disappoints me that the debate over immigration lacks some fundamental aspects.
1) Facts seems to me to be missing.
Some of the economic data surrounding the impacts of illegal immigration will be incomplete and some will be based on estimates. Estimates could easily be subjective - economic models are complex. I find it difficult to understand any estimate unless the study tells me specifically the assumptions included in the study.
But can we agree on this?
- Illegal immigrants provide cheap labor.
- Consumers and Employers of the good and services produced by cheap labor are both potential beneficiaries. If the illegal immigrant labor was supplied by US citizens and/or legal immigrants the costs of the labor would rise since the supply of labor would be reduced. But it is not clear to me how much the consumer benefits and how much the employer benefits.
- This supply of cheap labor dampens the salaries of legal workers especially low-skilled workers who compete with illegals.
So there is an impact on labor rates, costs of goods and services and probably unemployment. But who benefits and who does it hurt? How much of the cost savings are passed on to the consumer? For low-skilled workers does the cost savings compensate for lower wages?
The other economic impacts are really difficult to estimate. How much public money is spent providing services to illegals for education, health care, etc.? How much money is lost due to crime or uncollected taxes? How much is paid in taxes by illegals who end up with no legal claim to the public services paid by those taxes? I have no idea but shouldn't this be an integral part of the debate?
2) Assumptions are not verified.
We can't deport 12 million people. We hear this all of the time. Is that true?
If we had a policy of finding and deporting all illegal immigrants how would we do it? Some steps could be that for anyone who gets a parking or traffic ticket they must present a valid driver's license. If one can't be produced than there is a second charge and the person must provide some identification.
Likewise anyone charged with a crime must provide some identification.
If the person cannot provide identification that are held in jail without bail (due to flight risk). If the person is convicted and still has no identification they are deported and anything property they own is confiscated. Their employer is also notified and may be subject to an investigation about hiring illegals. Remember that hiring illegals is also against the law.
Wouldn't measures like this have the impact of (a) reducing the stream of illegals and (b) convincing some to go home? I am sure that there are any number of measures that would change the risk-reward profile for employers and workers.
Now I am not arguing for any specific measures but I am questioning the assumption that we cannot deport illegals. This would do more to stem illegal immigration than a fence. As T. always tells me, you need to deal with the problem on the demand side and the supply side.
3) Desired outcomes are not expressed.
On each side of the debate, what is the desired outcome or end state? Shouldn't an immigration policy be based on goals about population growth, goals on the composition of annual immigration based on skills, education, age, and nationality? The issue of fairness and nationality is central to the debate. Should we favor Mexicans and our brothers from Latin America over Asians, Europeans and Africans?
If there are resources that deal with the debate in a realistic way - let me know - since I am still undecided about a "comprehensive" immigration bill.
1) Facts seems to me to be missing.
Some of the economic data surrounding the impacts of illegal immigration will be incomplete and some will be based on estimates. Estimates could easily be subjective - economic models are complex. I find it difficult to understand any estimate unless the study tells me specifically the assumptions included in the study.
But can we agree on this?
- Illegal immigrants provide cheap labor.
- Consumers and Employers of the good and services produced by cheap labor are both potential beneficiaries. If the illegal immigrant labor was supplied by US citizens and/or legal immigrants the costs of the labor would rise since the supply of labor would be reduced. But it is not clear to me how much the consumer benefits and how much the employer benefits.
- This supply of cheap labor dampens the salaries of legal workers especially low-skilled workers who compete with illegals.
So there is an impact on labor rates, costs of goods and services and probably unemployment. But who benefits and who does it hurt? How much of the cost savings are passed on to the consumer? For low-skilled workers does the cost savings compensate for lower wages?
The other economic impacts are really difficult to estimate. How much public money is spent providing services to illegals for education, health care, etc.? How much money is lost due to crime or uncollected taxes? How much is paid in taxes by illegals who end up with no legal claim to the public services paid by those taxes? I have no idea but shouldn't this be an integral part of the debate?
2) Assumptions are not verified.
We can't deport 12 million people. We hear this all of the time. Is that true?
If we had a policy of finding and deporting all illegal immigrants how would we do it? Some steps could be that for anyone who gets a parking or traffic ticket they must present a valid driver's license. If one can't be produced than there is a second charge and the person must provide some identification.
Likewise anyone charged with a crime must provide some identification.
If the person cannot provide identification that are held in jail without bail (due to flight risk). If the person is convicted and still has no identification they are deported and anything property they own is confiscated. Their employer is also notified and may be subject to an investigation about hiring illegals. Remember that hiring illegals is also against the law.
Wouldn't measures like this have the impact of (a) reducing the stream of illegals and (b) convincing some to go home? I am sure that there are any number of measures that would change the risk-reward profile for employers and workers.
Now I am not arguing for any specific measures but I am questioning the assumption that we cannot deport illegals. This would do more to stem illegal immigration than a fence. As T. always tells me, you need to deal with the problem on the demand side and the supply side.
3) Desired outcomes are not expressed.
On each side of the debate, what is the desired outcome or end state? Shouldn't an immigration policy be based on goals about population growth, goals on the composition of annual immigration based on skills, education, age, and nationality? The issue of fairness and nationality is central to the debate. Should we favor Mexicans and our brothers from Latin America over Asians, Europeans and Africans?
If there are resources that deal with the debate in a realistic way - let me know - since I am still undecided about a "comprehensive" immigration bill.
Sunday, October 28, 2007
Forever Young
K and I went to see Steve Forbert in concert in downtown Hendersonville. Back in the day Steve Forbert was part of the "next Bob Dylan" conversation. Which really meant the "Voice of the Next Generation". Also in the conversation were John Prine, Loudon Wainwright, and yikes Joni Mitchell and Leonard Cohen.
We now know that Dylan was not the voice of a generation but just a singer/songwriter looking for Essence. We also know now that Leonard Cohen is a poet and Joni Mitchell a mystic. Performers like Steve Forbert moved in the penumbra, still visible behind the shadow of their early hope and promise.
Back to the present, he sang a song called Middle Age and one of the keeper ideas in the song was that we will never be younger again than we are right now.
So right now we have more experience than we have had before.
So right now we will never again be as young as we are this moment.
So right now we are all at the best point in our lives - balancing youth and experience. And, as we move through the vector of time this will remain true.
We now know that Dylan was not the voice of a generation but just a singer/songwriter looking for Essence. We also know now that Leonard Cohen is a poet and Joni Mitchell a mystic. Performers like Steve Forbert moved in the penumbra, still visible behind the shadow of their early hope and promise.
Back to the present, he sang a song called Middle Age and one of the keeper ideas in the song was that we will never be younger again than we are right now.
So right now we have more experience than we have had before.
So right now we will never again be as young as we are this moment.
So right now we are all at the best point in our lives - balancing youth and experience. And, as we move through the vector of time this will remain true.
Saturday, October 27, 2007
Across the Universe
We have seen this movie three times so far. This film is getting some mixed reviews and I can understand that. I think you will find that it is either the best movie of all time or maybe just in the top 10.
Wednesday, October 24, 2007
Don't Let Me Down: Presidents and Character
This started with a dialog on where I stand on issues and how my views compare to the current presidential candidates. My answers to the questions on issues suggested that I was a Populist-Liberal and that none of the candidates agreed with me on the majority of the issues presented.
I made a comment that issues were not the only factor in deciding who to support and maybe less important then management and leadership skills, experience and character. And that raised the issue of character.
Is it important? And, can we make judgements about the character of the candidates?
I think the answer is sometimes and I'd like to look at some examples.
On the positive side I think it was reasonable based on the evidence to favorably judge the character of Jimmy Carter and Gerald Ford. I think we knew enough about them when they ran for President. Both men served with integrity and honesty.
On the other side I think it was reasonable based on the evidence to suspect the characters of Richard Nixon and Bill Clinton. In 1968 we knew Nixon was mean-spirited, quick to anger, ruthless and overly ambitious. In 1992 we had strong evidence that Clinton was personally dishonest in his relationships. Basically both men were liars.
Interesting parallel - Nixon and Clinton. There may be a book here. In contrast to the men of high character mentioned above they were re-elected! But in their second term Nixon's ruthlessness and ambition led to his forced resignation and Clinton became only the second president in our history that was impeached by Congress. Now, I know that Clinton supporters think that his lying under oath to a grand jury was not impeachable in accordance with the constitution. That may be so. But it was a disgrace related to his basic character faults. So both Presidencies were spoiled by their respective character faults.
Infamous quotes:
"It depends on what the meaning of the words 'is' is." –Bill Clinton.
"I am not a crook." - Richard Nixon
Nicknames:
Tricky Dick
Slick Willie
Last Nixon-Clinton parallel. Despite the second term failures both men have followers to this day who think that on balance they were good presidents! The idea that anyone could consider Nixon a good President baffles me. For Clinton we need more evidence. For example, how much focus of terrorism was lost due to the impeachment.
So for me, character matters. Agreed sometimes it is hard to judge but when you have evidence it should be a factor.
I made a comment that issues were not the only factor in deciding who to support and maybe less important then management and leadership skills, experience and character. And that raised the issue of character.
Is it important? And, can we make judgements about the character of the candidates?
I think the answer is sometimes and I'd like to look at some examples.
On the positive side I think it was reasonable based on the evidence to favorably judge the character of Jimmy Carter and Gerald Ford. I think we knew enough about them when they ran for President. Both men served with integrity and honesty.
On the other side I think it was reasonable based on the evidence to suspect the characters of Richard Nixon and Bill Clinton. In 1968 we knew Nixon was mean-spirited, quick to anger, ruthless and overly ambitious. In 1992 we had strong evidence that Clinton was personally dishonest in his relationships. Basically both men were liars.
Interesting parallel - Nixon and Clinton. There may be a book here. In contrast to the men of high character mentioned above they were re-elected! But in their second term Nixon's ruthlessness and ambition led to his forced resignation and Clinton became only the second president in our history that was impeached by Congress. Now, I know that Clinton supporters think that his lying under oath to a grand jury was not impeachable in accordance with the constitution. That may be so. But it was a disgrace related to his basic character faults. So both Presidencies were spoiled by their respective character faults.
Infamous quotes:
"It depends on what the meaning of the words 'is' is." –Bill Clinton.
"I am not a crook." - Richard Nixon
Nicknames:
Tricky Dick
Slick Willie
Last Nixon-Clinton parallel. Despite the second term failures both men have followers to this day who think that on balance they were good presidents! The idea that anyone could consider Nixon a good President baffles me. For Clinton we need more evidence. For example, how much focus of terrorism was lost due to the impeachment.
So for me, character matters. Agreed sometimes it is hard to judge but when you have evidence it should be a factor.
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