Showing posts with label economy. Show all posts
Showing posts with label economy. Show all posts

Monday, November 27, 2017

Always a Sucker for Analogies

One of these days I will outgrow my susceptibility to analogies. Until then I will be charmed by quotes like this, coming from Chris Whalen:

The idea of the Greenspan Put was that lower interest rates would cure the market’s woes. Unfortunately, the FOMC has since fallen into a pattern whereby longer periods of low or even zero interest rates are used to address yesterday’s errors, but this action also leads us into tomorrow’s financial excess. As one observer on Twitter noted in an exchange with Minneapolis Fed President Neel Kashkari:
“Central Bankers are much like the US Forest Service of old. Always trying to manage ‘nature’ and put out the little brush fires of the capitalist system, while they seem incapable of recognizing they are the root cause of major conflagrations as a result.”

A traveler in the western states gets to experience a real forest fire every now and then.

Wednesday, November 22, 2017

A Moral Quandary at the McDonald's Kiosk

This wasn't the first kiosk at McDonald's that I had ever seen. But the first time, it had been optional to use it. Rest assured that I ordered and paid the old-fashioned way.

But today I wasn't even given the choice. The young punk was loud and aggressive about it. I dutifully walked over to the kiosk. But then something deep-within began to express itself.  I starting digging in my heels. Of course he thought that a stupid old man just couldn't figure the thing out, so, before my moral protest had time to get properly organized, he came over, asked the usual questions, and pushed the appropriate buttons.

So why couldn't he have done all that at the cash register -- the old-fashioned way? His final question was, "Pay with your card here, or with cash?" I actually paused and started to get curt. But he assured me that paying cash was still an option, although we had to walk to a special cash register to do it. Why couldn't we have done that right from the beginning!?

Before the young punk came over to push the buttons for me, I was deciding whether I would submit to this nonsense, or throw up my hands, cuss out loud, and storm out of the McDonald's. Alas, now we will never know.

He hasn't live long enough in this old world of ours to realize that 95% of change is aimed at extracting more dollars from his wallet, in exchange for fewer goodies. Then it puffs up as progress, leaving you to dutifully submit, with no questions asked.

We can guess McDonald's motivations. Much of it is outside their control. They will certainly lose a lot of business with geezers, who were probably their least profitable customers, anyway. 

It all happened so fast that there was bound to be missed opportunities. At least I had time to appreciate that I was staring into the abyss of moral and cultural decay...

...and that once this threshold was crossed, there would be no going back.

Friday, May 27, 2016

Perfection at 'Experiencing a Book'

Perfection has never been my ideal. Not everybody thinks like that. Many people may remember Curly's (Jack Palance's) speech about the beautiful woman backlit by the sun, in "City Slickers". Or consider the climax of "The Red Violin". There are other examples of worshiping perfection as an ideal from the days of chivalry, religious devotion, or military courage.

All I can say is, they are welcome to it, if that is what they want. For my part, I will continue to believe in the semi-universal S-shaped curve for Benefits versus Costs. (Notice the 'semi'.)

But it is always fun to make an exception. My recent problems with a broken leaf spring on my trailer resulted in a perfect experience of a certain type.

It was so easy to admire the competence and usefulness of the mechanic who drove the tow truck to my trailer, and then repaired it. He knew where to get the replacement part quickly, whereas I would have bounced around on the internet for hours, spending most of that time reading half-truths and advertisements. 

He managed to get the trailer onto the flat bed of the trailer, with one inch of space on the side of the trailer's wheels. (Recall, it has outboard wheel wells.)

He was not chatty, but neither was he grumpy. He was simply taciturn in a professional sort of way.

In contrast, consider the dispatcher at the towing service, Coachnet. Both the service and the young man dispatcher were excellent at their jobs. But why so much extraneous information? Is that all the world amounts to anymore: a bunch of cubicle-thralls entering unnecessary information into a computer system? 

The dispatcher's job was somewhat squishy and subjective, whereas the mechanic's job had more objective criteria. There is no guessing about whether he succeeded or not.

The dispatcher was a bit better spoken. Was he a college boy? Is his job an example of a 'knowledge worker', of the type that our service economy is supposed to need? The dispatcher was not wearing grease-stained coveralls as the mechanic was. So he is a 'white collar' worker.

Do you really believe that the dispatcher is as skilled as the mechanic?

This is the perfect example of what Matthew Crawford was writing about in "...Working with Your Hands...", a book that I had just finished before this leaf spring problem happened.

One more thing: the young mechanic might end up owning the auto garage someday. It is the only one in town. The dispatcher will never own Coachnet.  He will spend his whole life in fear of downsizing. But since insurance companies don't really compete with Chinese labor -- and why don't they? -- he may survive. He might even become a manager there someday. Whoopee.

Perhaps I should collect some of Crawford's juicy quotes, which encourage a more favorable view towards skilled professionals who work with their hands, instead of automatically assuming the superiority of white collar, college-educated Nobodies, who are really nothing more than petty clerks.

Sunday, January 24, 2016

The Yukkie Reality Under the World of Appearances

The other day I went to "Poop Central" in Quartzsite, that famous modern equivalent of Cloaca Maxima of ancient Rome.  I expected to pay 80% as much to dump a 5 gallon porta-pottie as you would pay to dump a 75 gallon tank in a Class A motorhome. That's how things work in this country. Much to my relief (bad pun), the cost was entirely reasonable.

I brought a flexible sheet of plastic along, to make a funnel out of, in order to dump the porta-pottie into the 4" hole without spillage. It was strange the way they brushed me off, just as a busy auto mechanic dismisses the emotional anecdotes of a female motorist who is describing her car problems. The worker at Poop Central pulled up a manhole cover, and told me to just hurl it in.

What? Hurl it in? What was going on down there, anyway? After a couple seconds my eyes adjusted to the shadowy netherworld under the superficial world of appearances, and I saw a milk crate a couple feet below. Why would a milk crate be there?

Have you ever had somebody responsible for an RV dump explain to you what ridiculous things people hurl down a 4" hole? It clogs things up. It is one of the reasons that it gets harder to find an RV dump every year. Soon free ones will be a things of the past. What an elegant solution it was to catch those solid objects with a milk crate, lift it up now and then, and throw the solid trash in a dumpster.

I found this experience a bit amusing. It is one more example of how little we understand of the world as it really works. Nobody lives on farms anymore, but food magically appears at the grocery store. Few people have seen a tree made into a 2 X 4, or toured an automobile assembly plant. How many people appreciate all the steps needed to convert the black gook called petroleum into gasoline?

Today we walk into the customer lobby of the Economy-in-General, fill out some annoying paperwork, whip out a credit card, and watch television to kill time, while somebody else deals with ugly, yukkie, physical reality.

Perhaps a better connection with the realities of the world is one of the benefits of travel. Imagine a Manhattanite who has gotten interested in growing herbs and flowers in a couple pots on her roof patio; then she drives through wheat fields in Saskatchewan for the first time, and sees a bulldozer-like tractor pulling a harrow a hundred feet wide. Or a land-locked midwesterner squatting on a dock -- as I did once -- and being awakened in the middle of the night by the horn of a tugboat, who guided oil freighters into a giant refinery.

In the case of Quartzsite, its claim to fame, its world-class status, is poop-on-wheels! How fitting that I had this experience here.

Ahh dear. If only it was easier to have thought-provoking experiences when traveling. If only there was more freedom and trust between visitors and locals, between professionals and amateurs. And fewer regulations and restrictions. We could better learn how the world works, and what other people have to do for a living. 

Saturday, October 17, 2015

Asymmetric Warfare When Playing Chicken

While detesting the neo-con/Israel-first/Republican/Rapture Christian doctrine of permanent war, I still have an interest in being an 'armchair general' or military strategist. Yes, it is inconsistent, but if consistency is your hobgoblin, you are at the wrong blog.

The world seems to be beating Washington's pants off lately, with a Russian/Syrian/Iraqi/Iranian axis building up in the Mideast, and China becoming more assertive about its reclaimed islands in the South China Sea. One way to see these developments is as a growth in a new type of asymmetric warfare, aimed straight at the least trusted government on planet Earth.

Do any readers know of any good articles or books about asymmetric warfare? The Wikipedia article is a good place to start. They give several famous examples in history.

What if the world is learning to exploit the fragility and hollowness of the American economy to play 'chicken' with Washington, and to win? Washington's rivals around the world have more weapons than they used to have. They now have Permanent Zero Interest to exploit. If instability starts the American consumer tipping into a recession, the Federal Reserve can't lower interest rates like they used to -- the rate is already zero.

The presidential election cycle is another weapon for America's rivals. Anything that freezes consumer spending tends to tip the country over into a recession, which means that the party that occupies the White House will probably lose it to the other side. 

Losing an election is not something that you can be a 'good sport' about, anymore. Washington's laws, regulations, subsidies, taxes, loopholes, contracts, court nominations, and economic favors are simply too important to surrender to the other political party. The truly private economy rots into insignificance. 'What's good for Washington is good for America.'

Permanent bubble-blowing is an integral part of America's economy, as is high unemployment -- properly measured -- and even higher under-employment. That means ever-increasing vulnerability because everybody besides Federal employees is hanging onto their job (and their ability to make loan payments) by their fingernails.

An oil exporter such as Russia should win a game of chicken with an oil-importing country like Washington. During threats of war in the Mideast, the price of oil will go up, to Russia's advantage.

But it seems that Washington's rivals are just learning how to exploit these vulnerabilities. In general, this is a development that much of the world can be cautiously optimistic about. 

But I have a lot to learn about this subject, and won't be offended if commenters point that out to me.

Monday, September 7, 2015

Watching the Automotive-Bubble Drive Home

I really don't know what to believe about the liquidity bubble built by most of the world's central banks since 2009. I have become numb, and simply shake my head in disbelief.

But a recent article on Zero Hedge got me thinking about a more concrete manifestation of the liquidity bubble. They think the motor vehicle bubble is ready to pop. In particular, there are millions of leased cars and trucks that will be turned in soon, creating a glut of 3-year-old used cars and trucks.

Since I think the used truck market is even more over-priced than the new truck market, their prediction is mouth-watering, even more so considering that circa 2013 trucks are likely to be as good as trucks ever get. Of course they could start making smaller pickup trucks, but don't hold your breath.

Have you seen the ridiculous numbers that CAFE, the government-imposed fuel economy requirement, is demanding in the years ahead? What are they planning on doing?  Much of the low-hanging fruit has already been picked. For each incremental unit of complexity that is added to modern vehicles, you are going to see the fuel economy improve by 0.3 miles per gallon here, and 0.2 there.  

But I enjoyed thinking about this article on the day that the masses head back to their hamster wheels. At the McDonald's of a crossroads town in a touristy area, you can watch the most amazing parade of motor vehicles, trailers, and toys. Why, I almost felt sorry for the poor losers who had huge pickup trucks pulling house-sized fifth wheel trailers, because other people had super-crew pickup trucks pulling fifth wheel trailers with three axles.

It's a wonder that we aren't seeing three-row pickup trucks by now! Or how about quartz kitchen counters in motorhomes, now that granite counter-tops have become so common and declassé.

Think of all the trends in the automobile industry, during a long lifetime, that came out of nowhere and went crazy: giant fins in the post-Sputnik era that were supposed to make the car look like a jet; muscle cars in the late 1960s; Pintos and Vegas after the oil shock of 1973; minivans in the 1980s so that baby-boomers wouldn't feel like their parents driving a station wagon; truck-based gas-hog SUVs in the early 1990s that allowed Mom to avoid a minivan; and now the super-crew, four-wheel-drive monster pickup truck that allows cubicle-bound, suburban husbands to feel like real men. 

Well, I don't want to deprive anyone else of what they like. But for my part I want the pickup truck market to crash and burn. I will be there to salvage something at a decent price.

Wednesday, August 26, 2015

Financial Turmoil As Opportunity to Crawl Out of the Information Gutter

If our consumption of information was analogous to food-diet, what diet plan would we be on? What is the informational equivalent of vegetarianism, veganism, paleo-carnivorism, or Old Roy dog chow? It is hard to see all the analogies. But one can be seen: most people are on an information-diet analogous to eating all of their food out of gas-station-convenience stores. That is, their informational junk food comes from the mainstream media, mainly television.

What a shame. The financial turmoil going on now should be an opportunity to ask fundamental questions about our banking and political systems. At the very least, the general public should learn how our system really works, not just in theory, but the brutal and unseemly realities of it. 

Who is benefiting from the basic policies?

What are the incestuous relationships between banking and political power?

How do they hide it or at least deodorize it from the general public?

Why are the losers so complacent to the winners?

Why is debt held up as the magical path to prosperity? 

How could the chairman of the Federal Reserve ever get such god-like powers in a country that sees itself as a "democracy" and a "republic"?

Could these bubbles and busts ever get so bad that the country reassesses its basic policies towards debt, banking, and political influence? Or will the crises just be used for a bigger dose of the policies that caused the problems in the first place?

From time to time I read editorials that make me think I have learned something fundamental about "our" money-and-power system.  But the editorialist never has to answer questions from the other side, so it isn't really a genuine discussion. But at least it's not the informational junk food of minute-by-minute, play-by-play, ups-and-downs in the stock market.

Tuesday, February 24, 2015

Both Real and Phony Benefits from a Bigger "House"

Do most people see economics as an arcane subject? At other times it might turn them off because they can easily spot the political ideology hiding underneath the surface of mathematical pretense. They should have the experience that I just had.

There is always a tweak or two that can benefit any RV.  Because my "RV" is a customized cargo trailer rather than a 'suburban house on wheels,' I am free to get out the tools and blast away at it as I please. 

There was a noticeable pinch spot in the little cargo trailer that could be felt many times per day. It only took an hour of sawing and orbital-sanding to eliminate the pinch.  

And yet how much material had been removed? Compared to the overall area (square footage) of the trailer, one part in 500 had been removed. In volume, one part in 3500. In weight, one part in 10,000.

Despite such small numbers, I actually felt a temporary euphoria similar to what a salary-slave feels upon getting a 2% raise, after being told by the boss that the office average was 1.9% (and glossing over real cost-of-living inflation of 8%.) 

Looking at my new-found freedom of movement was like topping a saddle/pass on my mountain bike, and being surprised by the noble expanse of land on the other side:

High grasslands near Datil, NM.

Finally out of the vertical confines of the San Juan mountains, near Gunnison, CO.

Apparently it is a trait of our species to respond strongly to tiny changes, not only of the "before versus after" kind, but also static comparisons of different types, such as Smith's pickup truck with a "zQ" decal on its rump, versus Jones's "zQi" insignia.

Is it beneficial to us to have brains that work like that? It makes us prone to Envy. It also means that the objective reality of anything is less important than our prior Expectations. 

But it is helpful too, since small differences contain "time sensitive" information when we avert danger, seize opportunity, hunt, identify sexual advances, react to changes in clouds, ice forming at the edge of the lake, the irruption of bugs, the first symptom of a disease, the incipient bloom of a plant, etc.

The bigger McMansion we live in, the less likely we are to be strongly affected by a one hour project. And retirement age people are becoming desperately impoverished with respect to "hours." The sheer size of a house has little marginal utility to someone whose grains of sand have mostly run down through the hourglass. Why then do they still act like having "lots of space" matters to them? Hours or square footage -- which has the greatest "marginal utility"?

After being impressed by the movie version of "The Fountainhead," I am rereading the book. Here's a quote from the book about the un-heroic character, the beginner architect, Peter Keating:
"He had forgotten his first building, and the fear and doubt of its birth. He had learned that is was so simple. His clients would accept anything, so long as he gave them an imposing facade, a majestic entrance and a regal drawing room, with which to astound their guests. It worked out to everyone's satisfaction: Keating did not care so long as his clients were impressed, the clients did not care so long as their guests were impressed, and the guests did not care anyway."

An intense appreciation needs a noticeable shortage beforehand -- something that bites a little. And yet the pursuit of the Large gobbles up most lives, even as the value of  'A Bit Larger' declines to zero.

At any rate, it would be lucky for a new student of microeconomics to have a strong experience like I just described, rather than thinking that the field was just a bunch of jargon and spread-sheet arithmetic.

Thursday, October 16, 2014

How Can Morale Be So Good in Some Large Businesses?

Once upon a time, perhaps up to a decade ago, Walmart was a winner. You could feel something amongst its employees. But how would you ever have proved it was real instead of subjective and impressionistic? But I was convinced of an elan vital amongst all those low-wage employees in that giant corporation. But in the middle Aughts, it seemed that spirit started draining out of Walmart.

Today I went to Walmart for a routine oil and lube job. There were no long lines, which was a pleasant surprise. Or was it? The first thing they started doing was fumbling with those handheld gadgets that supposedly "manage information" about your rig: real rocket science stuff, like your name, address, and odometer reading. I've yet to see one of their employees use these gadgets without struggle and delay.  No doubt these handheld gadgets were sold as "productivity enhancers" by some executive in the I.T. (information technology) department, back at corporate headquarters.

The next thing they told me was that my tires were worn on one side and they weren't willing to rotate them. Furthermore 'I was to blame,' and so the tire company  wouldn't cough up some money for not living up to the guaranteed mileage. That argument was perhaps correct for two out of the four tires in question. In any case, it was asserted so quickly and aggressively that I became suspicious. 

Inside the store I was asked to sign too many legal disclaimers, avowing that I had been warned by Walmart that I needed a couple new tires.

(I had a flashback at what happened when I bought these lousy tires at Walmart a couple years ago. The employees seemed like real losers. When I got home I popped off the hubcaps and found that 2 nuts out of 8 had not been tightened.)

Hmm, what should I do? It had been years since I bought tires at one of Walmart's competitors. I drove over to Big O Tires. They showed a completely different attitude. The employee who grabbed me at the door did everything: helped me select a tire, gave me a sale price, helped me park in a rather crowded parking lot, and did the installation without making me unhitch the trailer! You know, air-wrenches and floor jacks!  He even finished up with the typical computerized cash register fumble, without handing it off to another employee. 

I was amazed that one employee "owned" me through the entire process. Typically the customer talks to a "customer's man" at the front desk. The guy typically know little about anything automotive or mechanical, but he dresses in cleaner clothes, speaks college-boy English, and is a little more personable. (Or thinks he is.)

The customer might have a pertinent piece of information: the symptom occurs after X, but not Y. Do you think any of that is going to be passed to the guy who actually repairs your car? I once had a repair job become a nightmare because of a poor information-hand-off like this.

The employee at the Big O Tire then helped me learn about a possible upgrade to my trailer tires. Once again, he immediately jumped in with a can-do spirit, infused with experience and skill.

So how would you analyze this company? Would you really learn anything by looking at a financial spreadsheet, subtracting column C from B, and then dividing by column R, ad infinitum? Even if you came up with the perfect formula, have you really explained anything? Can it predict anything? It seems to me that spreadsheet arithmetic merely confirms the Effect, without elucidating the Cause.

We live in an age when something must be scientific to be intellectually respectable. And to look scientific, it must be mathematical, or at least, numerical, countable, measurable. But what if the Cause of a company's success is about cultural values in the corporation? How do you measure or quantify those?

Monday, August 4, 2014

Just Discovered a New Blog about Consumer Culture

We all get into ruts on the internet, reading blogs that talk about the same thing every time, or are thinly disguised infomercials, or are mere boob-toob level entertainment.  I just found a great blog on consumer culture, money, and financial independence called Living Stingy. It is intelligent, acerbic, and full of common sense. Why did it take so long to find this blog?

The title of the blog is unfortunate. The writer really doesn't allow comments, which I think is a mistake. Well too bad, it is fun to read and written with mordant wit.

Admittedly I am a bit prejudiced when it comes to style. I like to see a writer observe concrete things that seem bizarre to him. Then he must try to explain those things, and in the process of doing that, the blog post moves towards more general and universal principles.

At any rate, give this blog a try and tell me what you think of it.

Thursday, December 12, 2013

Some Wise Men Versus the False Prophets of the RV Blogosphere

On one of the tabs at the top of the screen I take issue with the False Prophets of the RV blogosphere. (Must I take the time to point out that many bloggers, including myself, have flirted with asceticism; and it is the Idea, not somebody in particular, that I'm planning on having some tongue-in-cheek fun with.)

The world is divided into three camps on the issue of  'How much crap does a person need to own?' But most people close their minds to the topic. When they hear any criticism of Insatiable Consumption, as promoted in TV commercials, they probably take it as criticism aimed at them

But that makes no sense; they, as individuals, did not invent the consumer culture that we have. They, as individuals, were merely swept along in the rising trends, brought on by advertising and tax policies. So there's nothing personal in merely going along with the prevailing consumer culture.

But there could be something that dignifies the Individual when they rebel against this consumer culture. The question is what form that rebellion takes.

A rebel gets off on the wrong foot by thinking purely in terms of negation, downsizing, and pseudo-holiness. You aren't going to prove anything by trying to out-gandhi Gandhi. Nor is Margaret Bourke-White (looking like Candace Bergen in the movie version) going to come and take iconic photographs of you at your spinning wheel, for Life magazine. The copyright on this type of moral posturing has already been taken out. And yet the RV blogosphere is full of such poseurs.

The Buddha finally came to the conclusion that the 'middle way' was best. Aristotle preached the Golden Mean in his Nicomachean Ethics. St. Benedict replaced the ostentatious asceticism of the Desert Monks with his moderate and balanced Rule. Such men were wise, but vague, because they lived before the principle of Diminishing Marginal Utility was widespread. Thus we have an enormous potential advantage over the Wise Men of old, if only we would cash in on that potential. 

Charles Hugh Smith writes about this topic from time to time, and he did so again today. It fired me up.
To those with no shoes at all (a common enough occurrence in the 1930s Great Depression), the utility of one pair of shoes is extremely high: the utility (i.e. the benefits) resulting from owning that one pair of shoes is enormous.
The retailer attempting to persuade this consumer to buy a 25th pair of shoes must overcome the diminishing utility (i.e. marginal utility) of yet another pair of shoes. This is accomplished by offering a "deal you can't pass up" or appealing to the always pressing need to jettison last year's style in favor of this year's "new thing."
Here's the critical point of this dynamic: to the consumer who already owns so much stuff that he has to rent a storage facility to store all the surplus goods, the utility of any additional purchase is low. In practical terms, the utility has declined to the thrill of the initial purchase and the initial wearing/use of the new item. Beyond that, it's just another pair of shoes in the closet.
The $3,000 I could spend on a replacement bike for the perfectly serviceable bicycle I bought used 15 years ago for $150 is of marginal utility; the better-quality parts and lighter frame, etc.--all the benefits that would flow from spending $3,000 for a "better, more modern" bike are extremely marginal to me, even though I put well over 1,000 miles a year on my bike. All those improvements are too modest to matter.
Here is the real benefit of the RV Lifestyle: you have a chance to rebel against the Consumer Culture, but in a way that is constructive and rational, rather than ostentatious and sophomoric. Nobody is less helpful than those "documentary makers" who want to film people living in their vans, without toilets or showers, and brag them up as the new Gandhis. These frauds are just taking advantage of people's desire for '15 minutes of fame.'

Of course Gandhi-on-Wheels gets his compensation by visualizing Mobility as a consumer good and a status symbol, and then falling in love with the insatiability of mobility.  So it really is just a re-incarnation of the very thing he thinks he is rebelling against.

Tuesday, October 1, 2013

Part III, A Retro-grouch Goes Pickup Shopping

I was going to be kind and gentle in writing about the pickup truck insanity of modern America. This post was going to start off by discussing several recent trends in the motor vehicle industry that I think are quite positive: 
  • anti-lock brakes (ABS) as standard equipment across the entire fleet.
  • brake-based traction control systems as standard equipment, since 2010. This eliminates the need for mechanically complex four-wheel drive trucks for the vast majority of suburban cowboys.
  • the replacement of heavy, truck-based, gas-sucking SUVs by lighter, unibody-framed "crossovers".
  • the venerable Ford Econoline full-sized van is being replaced by a unibody-framed "Transit" van.
  • small diesels are being added to the light pickup truck line.
And then the bad luck hit. I happened to be driving around a dreadfully congested city (Durango, CO). It was impossible not to notice something weird when driving downtown, with the narrow streets and diagonal parking: full-sized pickup trucks are so long that they stick out into the street! A passing driver must take care not to ram the back end of these ridiculous vehicles. I wonder who would get blamed for the accident?

I also noticed new Toyota Tundra crew cab pickups with rear doors wider than the front doors. Oh great, that can be the latest and greatest trend towards making pickup trucks even longer! Nothing 'exceeds like excess.'

There can only be one explanation for this insanity, and it is the same explanation that is behind most of the ludicrous trends in modern times: easy credit. The financialization of society. The Federal Reserve's zero interest policy (ZIRP). The endless expansion of debt causes bloat in one sector of the economy after the other, be it 4000 square foot McMansions for retirees (who watch 16 hours of television per day), diploma and college-cost inflation, medical procedures and their costs, the military sector, and the number of government employees in general.

Thursday, November 22, 2012

Will the Windows/Nokia Phone Succeed?

"Postscript": At the end of the day I noticed that NOK stock had gone up 13% in European trading. Gosh, I didn't know that this blog had so much clout! Being a "market mover" is just too much responsibility. (grin) 

People who have no interest in the world of investments are missing out on a fascinating part of our culture. What's worse is that they are doomed to poverty in old age since we will probably be in a Zero Interest environment for many years to come, while real inflation cruises along at two to three times what the government officially admits to. People tend to underestimate the damage that inflation can do to their standard of living. (Unlike cynical ol' Boonie, a true optimist and positive thinker would hope to die before too many years of negative real interest rates reduced him to panhandling.)

Readers know that I'm not a qualified investment adviser, so they must promise not to take anything I say as the basis for buying or selling a stock. But any amateur is "qualified" to write about what interests them -- and that is all. Besides, my money-back guarantee for daily infallibility is restricted to the rather narrow field of sex, politics, and religion. (And camping aesthetics.)

Without a doubt Windows Phone 8 and Nokia is the business/investment situation that interests me and many others, at the moment. Wireless internet has been a rapidly growing area over the last few years and no doubt it will continue to be so. But the industry is just plain bizarre.

Since the wireless carriers (e.g., Verizon, ATT, Sprint, and some smaller fry) are so consolidated, they are in a strong position to squeeze the suppliers who actually make their telecom equipment, e.g., Qualcomm, Alcatel, Nokia-Siemans, Cisco, "Motorola" (Google), Tellabs, etc. Most financial analysts would agree about the unenviable position of the telecom equipment makers.

Here is what seems strange to me: isn't Apple just another supplier (of the wireless carrier oligopoly) that needs to be squeezed? Why then do the wireless carriers permit Apple's iPhone to be in such a strong position? Isn't it high time for Apple to be taken down a notch or two? The wireless carrier oligopoly subsidizes the purchase of iPhones to the tune of several hundred dollars for each customer who signs a two year contract. That must sting!

In olden times (2007) when the iPhone first came out, ATT had a monopoly on selling it. It was worth it to ATT to subsidize the iPhone, because smartphones caused more bytes to be consumed than dumb-phones, and with customers whipped up into a horny frenzy by Apple's brand cult, they could be distracted from the poor coverage of the ATT network. Without the sexy iPhone monopoly, most customers would have chosen Verizon in preference to ATT.

All well and good, but that's ancient history now. Google's Android has made the smartphone a commodity, although every other television commercial screams about this or that hot new phone model being unbearably cool and necessary for you to buy. Aren't they living in the past?

What isn't a commodity (I think) is seamless integration with office reports, spreadsheets, or anything else you do with your Windows office desktop computer or laptop. Although I do read many tech reviews, I still don't know if, say, the average cubicle rat in the metropolis could connect his Windows Phone 8 smartphone to a thumb drive or his Windows 8 office computer, and peck away at reports or office email while he sits in traffic.

In any case, you'd think that what would matter today is which phones the wireless carrier oligopoly chooses to subsidize. Don't they have a vested interest in promoting Windows Phone 8 and its Nokia embodiment in order to take Apple and Google (Android) down a notch or two, and make for smaller cellphone subsidies? And Microsoft wants a success in "mobile" so bad that the wireless carrier oligopoly should be able to soak It for some of the advertising expenses. Microsoft has tens of billions of dollars in the piggy bank earning squat.

Tech reviewers have a hard time believing that Microsoft/Nokia can ever get their groove back, at least in the mobile arena. They will also have a hard time believing that Apple has already reached its high-water mark. 

After writing this post I did a little more homework on, and found some articles by George Kesarios on this Windows Phone 8/Nokia 920 theme. You might enjoy reading the link for corroboration from a professional analyst.

Friday, November 16, 2012

A Twinkies Bailout Coming?

You can easily imagine president Obama taking a few days off, maybe even a vacation, after a hard-fought reelection campaign. That's not to say that the next four years don't look frightening enough; in fact, "winning" the White House in 2012 might ironically turn out to be a curse for his party, or for the other one if it had won. But still, shouldn't he be able to act like a human being and soak it up for awhile?

Alas, political life can be cruel. His post-election Era of Good Feeling is already cut short by the crisis at hand. I'm not referring to the General Petraeus scandal or the Israeli invasion of Gaza. Those are just sideshows. I'm referring to the liquidation of Hostess Brands, the makers of Ho Ho's, Ding Dongs, and Twinkies.

Although it's good to see that a crisis of this gravity is being given proper attention by the business media, nobody is yet discussing the necessity of a bailout. (Perhaps in a day or two, we'll see pro-bailout editorials by Paul Krugman and Robert Reich.) It must be quite a moral quandary to good liberals about the proper course of action. On the one hand there are thousands of union jobs at stake. But surely they wouldn't want to help the purveyors of some of America's worst junk food -- what would Mayor Bloomberg say!

The current occupant of the Oval Office must also look past the current crisis; he must look to the future of his party and to his own legacy. Micromanagement of food is the next place for a huge expansion in federal regulatory powers, assuming that carbon taxes are blocked by the Republican-led House of Representatives. After all, look at how much junk food costs "our" national health care system. Mayor Bloomberg's New York is already leading the way. And the number of government sector union jobs at stake could dwarf the few thousand jobs lost at a mere private-sector union. All progressive thinkers accept the fact that government sector unions are the Present and Future of the Democratic party. As for private sector unions, well, the days of John L. Lewis and Walter Reuther are long over.

And that's the president's challenge. It takes a true statesman and a visionary to avoid the small issues of the crisis du jour, and to march boldly into the mega-trends of the Future. Besides, even though Hostess Brands, proper, is a goner, pieces of it can be gathered up, salvaged, and repackaged in some new financial entity. Twinkies might still be sneaked in to public schools, literally in a brown paper bag, and eaten in the school lunch room -- at least if teacher or surveillance camera supervision is lax. Perhaps Bain Capital will help in the restructuring.

Friday, August 10, 2012

"Of Two Minds" Rocks!

This morning I had the pleasure of reading the best financial post in a long time, on "Of Two Minds." Why doesn't the destruction of middle class wealth by the ratholes of health care, higher education, and housing get more attention than tanned female Olympic athletes frolicking in cheeky leotards or exultant NASA nerds imitating Olympic victory celebrations for their latest successful Giga-boondoggle?

Saturday, August 4, 2012

What a 25 year old SHOULD Do

With the exception of a doctor repairing our body, is there anything that relieves us of worry like getting our motor vehicle repaired? I thought about this after a long-distance tow to town, recently. Both the van and the trailer were towed, so I could sleep overnight in the repair shop's parking lot. Being stranded at an inopportune place could cause a lot of worry for an RVer.

I envied the owner of the repair shop. He did a job that was tangible and crucial to his customers. Contrast that with some insignificant college boy in a cubicle at a large organization, wasting his life by writing reports that no one will read, attending useless meetings, following arbitrary organizational rules, laughing at the boss's jokes whether they are funny or not, and hoping to dodge layoffs in middle age. Of course there are a number of reasons why my mechanic might think that running a car-repair business is a hard way to make a living. Do you think he subscribes to the one-time American Dream of sending his son to college, as if that really were a step up in the world? (Maybe it used to be.)

Maybe my mechanic would be happier to be an employee rather than a business owner. Well, at least he has that choice. Joe SalaryMan, in the cubicle of a corporation or government agency, probably doesn't. My mechanic will never have to worry about which country the car is designed or built in; same with the parts. His job can not be replaced with slave labor in East Asia.

A specialized college degree might force it's victim to work where ever the job is, rather than where he really wants to live. He'll probably end up at corporate headquarters in some ghastly megalopolis. Over the course of a lifetime, literally years of his life will be squandered fighting metropolitan traffic. In contrast, the auto mechanic could probably find a job in any location. (Thanks for pointing this out, Sondra.)

An automobile mechanic is also in harmony with a societal megatrend. There seems to be no limit to how complex and expensive automobiles will be legislated to become, in the future. The soccer moms in the suburbs hear that Candidate X wants to mandate higher fuel economy standards; so she thinks, "Gee, what a nice guy. He wants to protect the environment." Meanwhile another government agency, the safety Nazis, mandate yet more safety equipment. (And the suburban soccer mom says, "Gee, what nice folks, they want to protect the Children.") Generally safety equipment increases the weight of the vehicle, which cancels the effect of the fuel economy mandates.

So who wins, besides government regulators? They have turned a mechanical contraption into a financial and bureaucratic "perpetual motion machine." (Eric Peters writes a lot about this issue.) 

As the average length of motor vehicle "mortgages" increases, the financial arm of the automobile companies will rake it in. But many people will go into sticker shock over the price of a new pickup truck and will refuse to take out a long term mortgage on it. Instead, they'll plow several thousand dollars per year into repairs for their older, high-mileage vehicle. So your mechanic wins.

This trend seems endless. A mindset has overtaken society; it doesn't ask about Benefits versus Costs. It doesn't even consider the concept of Diminishing Returns. It looks at environmental and safety issues as holy, religious things. Although he isn't responsible for this insanity, the guy who will laugh all the way to the bank is your auto mechanic. And that, young man, is what you should do for a living. Don't go to college.

Monday, July 30, 2012

If You Were Starting Off at Age 25...

I read on Mish Shedlock that the birthrate has fallen to a 25-year-low, in part because young adults are having such a hard time finding jobs. Mish believes that America is in for a decade or two of structurally high unemployment. I certainly don't envy young people starting off in life today, since greedy and irresponsible Baby Boomers -- America's Worst Generation -- have stacked the odds against them. But what advice would you give to a frustrated and discouraged 25-year-old today about making a living? 

We must guard against the tendency of oldsters to get suckered into 'grass is greener on the other side of the mountain.' Otherwise we will tend to romanticize a dream job as an antidote to decades of frustration and disappointment suffered in a real job.

It is easier to say what you wouldn't start off in, if you were 25 today. Manufacturing is ancient history in our post-industrial society, of course. And yet I'll bet colleges still teach useless subjects like math, chemistry, engineering, and physics. But it could be counter-argued that most of the industrial sector's decline has already happened and that it has bottomed out because of government protection, which preserves a sticky post-industrial residue such as military industries, "Government Motors", green energy, and the like.

The last few decades most of the employment growth was in health care, education, debt engineering (aka finance), and law enforcement. But as always, it might be risky to assume that these trends will "grow to the moon." It was amusing to run into this quote from Seneca yesterday:
Yet nothing involves us in greater trouble than the fact that we adapt ourselves to common report in the belief that the best things are those that have met with great approval,--the fact that, having so many to follow, we live after the rule, not of reason, but imitation.

It is the example of other people that is our undoing...
Our 25-year-old must try to do more than merely extrapolate the hot trends of the last few decades; otherwise he will fall into the classic trap of thinking some idea is safe because everybody accepts the idea, which ironically makes the idea past its prime and therefore dangerous. "Conventional" does not mean "safe." 

Take health care. Emotion runs high on "government versus private," so much so that it hogs attention from the mathematical fact that, at 18% of the economy, health care increases have to slow down. This might be hard for people to believe since health care has seen inexorable growth for decades now.

Another long-running trend our 25-year-old must be cautious about is becoming a government employee, especially at the local level (school teachers, police, firemen, etc.) This category of workers has evolved into the upper class of the American labor marketplace. In the endlessly downsized private sector, employees live in fear that, when quarterly earnings are announced, the figure will come in at 49 cents per share compared to Wall Street's prior expectation of 50 cents per share, and thus another 5-10% of the jobs will be eliminated or outsourced. In contrast the local-government employees must only worry about a serious recession that erodes the local tax base. If they are even shrewder they have gotten onto the federal payroll; wouldn't that make them virtually layoff-proof? After all, the federal government runs a deficit decade after decade. Apparently it can stay in business by printing unlimited amounts of money to cover any shortfall of funds.

Since these government jobs must be done in the USA they haven't felt competition from China; the jobs have been so safe that strong unions have grown up in the government sector, in contrast to the inexorable decline of unions in the private sector. I remember a unionization drive with university employees around 1980 by -- get this! -- the United Auto Workers. You must give the UAW leaders credit for having the perspicuity to see that their union was doomed in the automobile sector because of competition from Toyota and the rest, and that they needed to move into a quasi-government sector like education, where politicians will see to it that you can borrow yourself blind for inexorably higher education costs.

The recent recall election in Wisconsin and several municipal bankruptcies in California should be a warning to our 25-year-old that (unionized) government employees are about to get their long overdue come-uppance. 

The private sector has largely eliminated "defined benefit" pensions in lieu of "defined contribution" plans, such as 401K and IRAs that are the individual's responsibility to manage. Only the government sector still gets "defined benefit" pensions. Politics aside, it is a mathematical impossibility to pay the "defined benefit" pensions that the recipients expect. These pension plans are based on actuarial tables and the assumption of earning 7-8% on the pension fund investments. How do you do that when Bernanke is running a multi-year Zero Interest Rate Policy (ZIRP)? 

The construction industries were red hot for many years. Besides the political and financial hangovers from the sub-prime housing bubble, recovery will be held back by demographics: young adults (permanently unmarried) will be forced to live in the basements of their parent's home, as they shuffle from a part-time job at a restaurant to a part-time, benefit-less job at the dollar store until they're middle-aged, at which point they get laid off because they're earning 70 cents per hour more than the minimum wage.

This post is starting to sound like a gloom-and-doom, anti-government, financial newsletter. I've chosen to focus on 'what not to do' first because the negative side of the ledger is usually more tangible and concise. Next post I'll talk about what our frustrated 25-year-old should do.


Friday, June 29, 2012

Gasoholics Should Stay on the Wagon

Springerville AZ, the White Mountains. James Howard Kunstler must be furious. American gasoholics (virtually all of us) feel that 'happy days are here again,' now that regular gasoline has plummeted to $3.50 per gallon. Let's hope they are still making money on snacks, cigs, or the 40 ounce buckets of fructose fizz they are known for. Gee maybe it's time to bring back the Hummer?

Has Kunstler ever written an essay about the RV industry? It would be amusing to read it, if you could handle his goose quill, dipped in venom. For my part I think that RVers have their work cut out for them if they want their lifestyle to continue long into the future in a way that is recognizable. Sure, they could camp in one place forever and drive around town in a tiny "towed", but too much of that would represent a completely different lifestyle. 

Despite the recent -- and no doubt temporary -- relief at the fuel pump I continue to press against promiscuous driving, that is, the sort of driving you do mindlessly out of habit, or just for the sake of entertainment. More concretely, my driving is limited to one shopping trip per week. At first this seems like punitive abstemiousness -- a self-imposed guilt trip. But, as with any form of abstemiousness, it is best to consciously dwell on the positive program instead of on 'thou shalt not,' since that just provokes rebellion against the discipline.

And indeed there are pleasant surprises when taking one trip per week. I want to keep pushing on finding more benefits of this project. 

It's a project that can't help but have some nostalgia wafting in the background. Our rural ancestors only a generation or two ago looked forward to "market day", Saturday. They usually took a full-body bath only one day per week, and then went to town for a movie or a dance.

It's surprising how much fun it is to go to town and see everything from the perspective of a wide-eyed hillbilly who is astonished by it all. For instance the dogs and I were in McDonald's loading up on 99 cent, plain McDoubles. The lad who waited on me was so well-spoken and intelligent that I couldn't believe it. He spoke quickly and in complete sentences, and with wit; almost too much wit for a young whippersnapper. I normally expect nothing more from such workers than a perfunctory, corporate-programmed greeting. Occasionally they might venture an 'uh-huh' or 'OK'. But they are barely sentient hominids, raised on mental junk food such as MTV rap videos.

One of the advantages of a Mencken or a Kunstler is that they can get away saying things that many people think, but are afraid to say out loud. One of these troubling thoughts is that miscegenation is taking place in America, and on a vast scale. If it isn't literally biological it's at least cultural.

And yet, this particular lad belied the general trend. Is it because northern Arizona is greater Utah, and he is at least affected by Mormon culture, even if he isn't part of the church? Whoever would have thought that a perfect stranger could evoke such a pleasant and hopeful feeling in another person?

At any rate it was great fun to watch my 17.1-year-old miniature poodle dance up and down on the passenger seat as I dispensed tripes of the fast food industry to him. We drove back to our campsite in the high country, thoroughly pleased with our weekly bacchanal in the big city.

Thursday, May 17, 2012

Oddities in Rural Living

Glenwood, NM. What time is it? My cellphone comes on and looks for service without finding it. Thus it won't display the time. Perhaps the first lifestyle adjustment you must make when living in remote towns is turning the clock back to the day when we all wore wristwatches.

Imagine how tired waitresses get (in towns like this) when outsiders make weird dietary requests. One city slicker won't eat meat; another eats nothing but meat. None of them is happy with canned goods off-loaded from the Sysco truck or Little Debbie's fine baked goods, which is all there is to rural cuisine. They must wonder if there is anything that isn't against somebody's food ideology.

James Howard Kunstler would be amazed with places like Glenwood. He sees America as a dispersed and ugly strip-civilization of fast food joints and big boxes. Our suburban nation is based on cheap oil, but rural areas are even worse. It is staggering to consider how much malinvestment there is in America which has no future since the Cheap Oil Era is over, or so he argues.

And yet look around you at rural homes and hobby ranches; look at their full complement of small engine-equipped machinery; look at the monstrous size of the pickup trucks. Somehow life goes on. How do you keep all these engines and vehicles in good repair when the nearest repair shop is 50 miles away?

By doing it yourself? Well sure, in remote rural areas boys know how to change the spark plug on the weed whacker by age 4. But the nearest auto parts store is also over 50 miles away. How can you fix any challenging problem on a vehicle or a house without making multiple trips into auto parts and hardware stores? Also, it used to be easier for a backyard mechanic to effect repairs on vehicles that were purely mechanical. Today you can't fix everything by grabbing for a socket wrench -- it has too many electronic components.

Perhaps, I am underestimating the compensating advantages of remote rural living. For instance, their use of their own land is not hobbled by dozens of meddling, micromanaging zoning laws; so they can have a storage shed  -- or even a barn -- filled with what looks like detritus, but is in fact the stockpile that they draw on to avoid driving to a "parts" store 50 miles away.

Perhaps their daily habits adjust more than I think. They are probably less perfectionist than the city dweller; thus they can distinguish the repairs that can be postponed (to the next grand shopping trip to town for 30 things) from those that absolutely must be solved now. Many of these urgent problems can perhaps be solved temporarily by some inventive improvisation.

But still, there must be an effect of high petroleum prices on "country dream" living. Whenever I've interrogated rural-tanians on this, they deny that the End of Cheap Oil is having a huge effect on them. Kunstler would be disappointed. Perhaps the questioner needs to ask more gently, and not come off as a prosecutor moving in for the kill.

There are other ironies and incongruities in remote rural areas, besides the aforementioned one of trying to base a culture on giant pickup trucks after the End of Cheap Oil. Anyone who is prone to fluttering his eyelashes at the idea of remote country living must be disappointed when he sees the omniscient satellite television dish hanging on the side of buildings which would otherwise be charming and picturesque.

For instance, when I got back on the road last August my first stop was in Mogollon NM, just a few miles from where I am now, in Glenwood. It practically broke my heart to see satellite TV dishes on the quaint old mining buildings up there. After all, if life was such an escapist dream there, why would they need something like television? Why not just live in a normal boring place? The TV would be the same.

It's no secret that remote rural areas have a lot of Bible Christians. And yet they watch satellite television for many hours per day, despite its smut and idiocies assaulting their Christian values during every minute of TV programming and commercials. How can they tolerate this?

Nevertheless it's an observable fact that the "mental" culture of remote rural living is centered around satellite television 6 days per week. On the seventh day the Bible takes precedence. Of course a family of chubby rural-tanians must squeeze into the full-sized pickup truck and drive to the Bible Church, with all the transportation expenses involved.

Sunday, January 1, 2012

2012 Resolution: Radical Consumerism

Recently I got my mountain bike serviced in Phoenix. When picking it up I walked into the wrenching end of the shop and spoke to the young mechanic. He seemed proud of improvising on the bracket, thus relieving me of staying in the Phoenix area for a long time while waiting for a special order to come in. I was happy to stand there and be his appreciative audience.

He also installed a new chain. They don't last as long as they used to, in part because they are narrower and thinner and cocked at weird angles to accommodate the 10 (!) gears in the back; with the 3 in the front, it makes for a 30 speed bike. We commiserated about faster wear and tear, and more finicky adjustments. 

No sooner did 30-speed bicycles become obligatory for any serious cyclist than a hot new trend arose: single speed bikes with no derailleurs whatsoever. Only really tough, cool guys bought these, and it was for practical reasons, if you were to listen to them. How and why did consumers allow themselves to get sucked into extraneous expenses and hassles, all for the sake of some phony progress?!

Later I was at a Walmart. Both their stores and their website are starting to lower the number of regular DVD movies available. They are trying to railroad the saps (aka, the customers) into buying more expensive blu-ray players and disks. I hope they fail; maybe we'll know by the end of 2012.

These are only two examples of the same process that eats up a human life. We are just members of an anonymous tribe/horde of mindless consumers who are swept along by whatever trend is supposed to be hot. Why don't we get angry about it and resist? Whose money is it, anyway?!

As we look forward to 2012, peering into the future a little bit, let's be hopeful that the consumers (and voters) will start to rebel.