Maggie's Farm

When I was in my teens, my scout troop did quite a bit of hiking and camping.  Spam was part of our menu for longer trips, usually longer than a weekend.  It's easy to carry and prepare.  It's understandable that during WWII it was a food of choice for the troops.  I also understand why my step-father, a WWII vet, never touched the stuff even as I scarfed it down.

I doubt I'd ever touch it today, unless I visited Hawaii where it's seen on menus regularly.

But happy birthday to an American icon.

Some of my friends sit around every evening
And they worry about the times ahead
But everybody else is overwhelmed by indifference
And the promise of an early bed
You either shut up or get cut up - Elvis Costello "Radio, Radio"

I've had to deal with a number of issues lately, some good, others not so much.  Last August, I was introduced to a phrase, when Irene knocked out our electricity for 4 days.  Dealing with no electricity, or the limited capacity provided by a small generator, was annoying.  Eventually, though, things went back to normal.  My son, during the blackout, kept repeating "First World Problems" every time one of us complained of inconvenience.

The phrase refers to things which are meaningless to most people and occur only in industrialized nations.  The ennui of life leading to kids not bothering to change a channel even though they have the ability to click a button.  The disappointment of a latte, after realizing you really wanted a cappuccino.  It's a phrase usually used in a snarky fashion, but it can have meaning in a larger sense.  After the Derecho that passed through Ohio and some Mid-Atlantic states, I once again uttered the line as we cleared my father's property of fallen trees and branches in stifling heat.  First World Problems are things which never occur to a Papuan jungle tribe member or even a denizen of Rio's "City of God".  In fact, trying to explain these things could yield quizzical looks and questions about what we view to be important in our lives.

An interesting dilemma has presented itself to the world's bankers.  For years they have been misguided in believing that forcing money through the system is the only way to keep economies running.  Ignoring the nature of economic cycles, and trying to centrally manipulate positive outcomes, typically called 'soft landings', has led to a number of unintended consequences.

A slowing economy is one which needs savings, because in a heated economy, too many people are spending.  At some point, the investment cycle can only be completed by having more people save.

We are, and have been for some time, at this stage.  But the Federal Reserve (and other central banks) have all tried to manipulate consumption  and spur borrowing by lowering interest rates.  At some point, we've borrowed too much.  At what point is that?  At the point where we begin to charge for the 'privilege' of saving money.  This is a Keynesian solution to a problem, but a problem that is misunderstood.  During the Depression, rates were raised.  This was the correct approach to handling the issue.  But they were raised too far.  Keynes did not deal with the issue of scale, just the issue he felt was problematic, which was a lack of consumption.  Lack of Consumption is a very real problem, but lack of savings is an even worse problem.

The truth is, with interest rates as close to zero as they can be, and bank fees reaching levels that rival extortion, the US has been in a Negative Interest Rate situation for almost 3 years.  We just haven't made it official the way Denmark has.  It's not a good thing, either (though Denmark claims it is). 

Interest rates have been negative once before - for reserves by banks at the central bank in Sweden in 2009.  Even the US is considering this approach to get banks to lend more.

At some point, the massive credit expansion the Fed has employed the last 4 years will create inflation.  We've been lucky so far, as a reserve currency, that most of this inflation has been exported to smaller nations.  But that time is coming to an end, as is our reserve status.  This, combined with negative interest rates, will no doubt spark the inflationary fires as consumption takes place and dollars are repatriated when interest rates go up. 

It's worth noting, as well, that the US has been in a Negative Real Interest Rate situation for quite some time (inflation is greater than interest rate payments = negative real interest rates).  Negative Real Interest is not rare, and is usually what leads to increased consumption (and has no doubt kept our economy struggling along rather than forcing us to do what we need to do).  Which explains why Jim Rogers has been deeply invested in commodities.

Several years ago, my wife purchased a gift card as a Christmas present for my parents.  It was for a meal at Rat's Restaurant on the Grounds for Sculpture in Hamilton, NJ.  My parents used the card 2 years ago, they have since returned twice.  Their third visit was two weekends ago, and we joined them.  Unfortunately, some personal issues limited our time on the grounds prior to dinner, but for 45 minutes we wandered among the artwork.  What we saw was impressive and enjoyable.

The Grounds for Sculpture opened in 1992, the vision of J. Seward Johnson (of the Johnson & Johnson family).  He took 42 acres, formerly the NJ State Fairgrounds, and transformed it into part botanical garden and part sculpture garden and museum.  Johnson creates some of the work, though most is provided by other artists.  It is an eclectic mix of styles, designed to fit within the existing environment, although at times the environment is altered slightly to work with the art.

In 1984, J. Seward Johnson, sculptor and philanthropist, envisioned a public sculpture garden and museum in Hamilton, NJ. His desire was to make contemporary sculpture as an art form more accessible and to offer people from all backgrounds the opportunity to become comfortable with contemporary art. Grounds For Sculpture was conceived as a place where audiences could experience sculpture in a familiar, accessible, and informal setting.

(more below the fold)

I read the headline of this article, and expected to see a discussion on why Wall Street is indispensible.  Instead I found a discussion on the election and specifically Romney.  It's clear he's going to be the Republican nominee, so it's probably best to start cleaning up his somewhat tarnished image.  I agree with much of the commentary.  But there are a few comments and insights which should be shared. 

First, the economy can function without Wall Street.  You don't need a capital market in order to have a functioning economy.  It's useful to have a capital market, it makes acquiring capital for progress much easier.  In fact, stock corporations were originally performed to raise revenues for large projects which were determined to be 'outside the scope' of government responsibility.  What most people are critical of is the very concept that Wall Street considers itself indispensible, and uses that as a lever to charge very large fees and pay outsized salaries.  These are not required for a fully functioning economy.  I'm not opposed to a person making, or earning, whatever he or she can.  But even the corporate titans of the Gilded Age put some of their more public displays on hold during times of economic duress.

Second, as a Libertarian, I'm usually opposed to the government regulating anything.  But I admit there are some instances where oversight and enforcement are required.  The question is - what KIND of oversight and enforcement?  Certainly not the kind we're seeing out of this administration:

Ross refers to the Dodd-Frank Act as "at best a very generalized blueprint" that addresses regulators' concerns, and he worries that the Consumer Financial Protection Bureau, which was established as part of Dodd-Frank, will have unforeseen consequences for Wall Street and Main Street.

"I think the regulatory uncertainty and the growing fear that this agency (CFPB) will be witch-hunting are definitely impeding bankers' willingness to make loans," he says.

Sarbanes-Oxley has done nothing to stop the fraud it was supposed to stop.  It has added several weeks of work to the audit process in many companies, though.  In other words, usually regulations result in nothing but increased costs of doing business.

Finally, I was amused to see Bain Capital misspelled as 'Bane' at one point.  I would hate to say this is deliberate, but given my cynicism toward journalists today, I am likely to believe it was.  Then again, spelling isn't a strong point with journalists these days.  It's a rather unfortunate sign of the times.

The other day, a woman walked into a mall.  She visited several stores, among them Macy's, Starbucks, Nordstrom's, an interior design shop, a paint store, and finally the Apple store. 

She didn't buy in each one, but in cases where she did, she gave quite a bit of information about herself to the store in order to make her purchase.  In fact, she gave quite a bit of information to each store and she didn't realize it.  It wasn't long before she was inundated with coupons, offers, ideas for purchase, calendar of sales, and various other items related to her trip to the mall.  It was as if she returned to her car and found all this under her windshield wiper.   These coupons and offers were from the stores she visited, but from other stores that offered the same or similar products.  At first she wondered, "Is someone following me?"  At that point, her smartphone buzzed, and she had an email.  Target was letting her know there was a sale on dresses from a designer she had recently purchased.

The mall the woman walked into was the internet, and there was somebody following her.  But that somebody wasn't just one person.  It was a large number of people.  Faceless, nameless people collecting data on sites she visited so they could tell what she was interested in from her clicking, what online stores she visited, on her purchase decisions, whether she got to that store by clicking on an ad, as well as other data points.  If this had happened in real life, as described above, how would you react?  Certainly there are laws against this, you'd think?  Not really.  If I chose to sit in the mall and just pay attention to where you went, then visited each store to peek and see what you purchased, and then leave coupons on your car, you are limited in your ability to stop me.  Laws exist to prevent stalking, but if I'm sneaky enough, you may never even notice me.

A gorgeous couple of days in New York City give me the opportunity to wander around and see how people are enjoying themselves.  Central Park is a great place to take it all in.  I started on the southwestern portion of the park, at its Columbus Circle entrance.  Plenty of people just resting, looking at the flowers blooming in the Circle, or eating lunch.

Central Park is 843 acres.  More below the fold -

Apparently, the record high temperatures and wonderful weather we're having in most of the United States is just a 'good to have' moment.  That is, if you're tired of winter and enjoy spring, a state of mind I'm currently in.  The issue isn't 'Global Warming', though I'm sure this is something we'll hear about (because the Huffington Post and Daily Kos won't let us forget).  The issue is simply the Jet Stream, which is following an odd path at the moment.

The freak October snowstorm, which caused many problems in the Northeast, didn't mean a long, difficult winter was approaching, so there is no reason to believe we are in for a hot summer.

Apparently, even though Al Gore and many others have assured us there is a guarantee of warming, there are none on offer:

"There's a tilt in the odds toward a warmer summer for the southern two-thirds of the country, but it's not a guarantee," Halpert told OurAmazingPlanet. "We don't give guarantees in the climate business."

In media, connectivity is all about getting content out in as many ways possible, as quickly as you can.  There is no worrying about how information is processed.  When there were limited forms of media outlets, the ability to add discussion (Op/Ed pieces in print, news shows on TV) created some context and helped the information flow.  With the myriad resources available today, and the speed at which information arrives, context is being pushed to the side in favor of raw data.  The medium is no longer the message.  The message predominates.

How is this impacting youth?

It's troubling question, leading researchers to address the different potential outcomes.  There are indications that people's brains are becoming 'wired' differently.  But whether that wiring is improving decision making or analysis is open to question.

My point of view is that shortened attention spans and more breadth of knowledge (exchanged for less depth) is the likely outcome, which is not necessarily beneficial.

the immersive nature of 24/7 connectedness creates the illusion that Millennials can somehow tap into a form of collective intelligence just by being online, while looking impatiently for messages every three minutes.

The best you could say is that he at least defends Limbaugh's right to speak.  Beyond that, this is a very pale attempt to sidestep outrage at his otherwise outlandish and clearly misogynist use of language.  He claims because he gets a laugh, it's fine to use words that demean a woman.  What he's really saying is it's fine to use those words regarding Sarah Palin or any woman on the Right who he dislikes, especially if it gets a laugh.

The bit I did about Palin using the word c-, one of the biggest laughs in my act, I did it all over the country, not one person ever registered disapproval, and believe me, audiences are not afraid to let you know.

The outrage regarding Fluke was about the use of the word, and had little to do with context.  That, somehow, just using it was wrong.  Limbaugh didn't use it to label all women, it wasn't a misogynistic commentary.  He did not show hatred or distrust toward women in general.

Maher was not misogynistic, either (to be fair, my original statement above was meant to be sarcastic).  But he cannot distance himself from Limbaugh on this.  Both of them utilized language and imagery that is inappropriate.  Getting a laugh, I have been told by my Human Relations Department, does not make something okay to say.  Now, Maher lacks an HR Department, but common sense is clearly lacking if he thinks that just because people laughed, his jokes were acceptable.  And being a "pottymouth" doesn't make it okay, either.

We all use words, from time to time, we wish we hadn't.  Limbaugh apologized for using his.  Maher tries to rationalize his.

Well, the OWS Movement didn't last through a rather mild winter.  They may have some vigor left as the election cycle heats up, but for the most part the press has ceased to be impressed with their value.

It seems the Fed isn't all that impressed, either.  While I'm no fan of the Fed as a manager of the economy, they do some fine research.

Income inequality should not be vilified, and public policy should encourage people to move up the income distribution and not penalize them for having already done so.

Sadly, I can't find the video, but a classic SNL skit for the season.  One of the best minute and a half seasonal sketches.  Belushi was a great talent, unable to tame his demons.

Last night, I helped my son prepare an Op-Ed piece for his high school class on Economics and Financial Literacy.  He chose the Durable Goods report, and we sat down to dissect and discuss what it told us.  As a neophyte, he naturally saw discussion of "Shipments rising" and "Orders increasing" and asked "this means things are getting better, right?  We're in an uptrend?"  Linear thinking is easy.  Being human, we do it all the time.

Yes, I told him, but there's much more to the report.  I pointed out that Inventories were growing rapidly, Unfilled Orders were increasing, and while Shipments were increasing, the rate of increase was slowing.  None of these are particularly good signs of future activity.  More importantly, Capital Goods, the building blocks of future productivity, were declining.  At best, we decided, the report was neutral, showing that things may have improved somewhat, but many other signs were indicating a stall or slowdown.

Most importantly, I pointed him to the Inventory-to-Sales Ratio, which is a harbinger of true economic activity.  A rapidly climbing ratio does not forebode good times, but rather difficulty with pricing and sales in the future.  As consumers, we rarely pay attention to what goes on 'behind the veil' with items like inventories.  We like our answers pat, easy and predictable.  It's a shame they never are.

The International Center of Photography is running a retrospective on Weegee, also known as Arthur Fellig, who was known for his stark black and white photos.  His story is very inspirational, but most interesting was how he remade himself in the midst of the Depression.

Some economic historians observe that while crises might make it riskier to strike out on one’s own, by depressing pay they also lower the opportunity costs of leaving a job.

Weegee had an eye for the presentation of America's social life.  It was generally optimistic, tinged with dark humor.  This developed only after he redirected his career as a studio photographer into one following a police radio, and is the portion of his career the retrospective focuses on in "Murder is My Business."  As this career path began to fade, Weegee recreated himself again by documenting society and individuals in an America that was enjoying itself.  The mythology surrounding him was primarily of his own creation, which today adds an extra dimension to what makes him so fascinating.

One of his pieces of work become the model for Mad's Alfred E. Neuman.

The story of Arthur Fellig is the story of individual American exceptionalism.

I'm sure Isaac Asimov was not a fan of capitalism, let alone the Republican Party (or even Libertarians).  The movie I, Robot was based on his series, primarily his work on the Three Laws of Robotics and some outcomes that may occur with their implementation.  In some ways, the movie was a criticism of corporate culture and government becoming too interlaced.  US Robotics becomes an overly powerful organization with deep ties to government, ultimately making the robot takeover very difficult to slow or stop.  On the other hand, it's a criticism of Progressive overreach.  Perhaps unknowingly.

There is one scene which reminded me of our current government's goals.  The idea that we have politicians or bureaucrats who 'know better', and can guide us to a better place.  All we have to do is agree to let them, and while many will be harmed, it will be for a 'better good'.

The sports news in New York has been dominated the past week and a half by Jeremy Lin.  A city overwhelmed by Super Bowl mania has quickly moved on to basketball and a great story in an overlooked point guard who has raised his game and put his team back in the race for the playoffs.

One of the difficulties, however, has been the racism which has been glaringly evident in the coverage.  Saturday Night Live did a wonderful send up of this last night, showing the double standard which exists in media today.

Lin is the NBA's Tim Tebow.  He has brought a wonderful story to the pros, an inspiring, unlikely, and unexpected story.

One of the most annoying situations you can run into at the office is inertia.  The belief that something is done, or happens, just because "that's the way it happens."  I've lived my corporate life (for better or worse - usually worse, for me) in a relatively idiosyncratic fashion.  I have never enjoyed being a 'Yes Man', and if I sensed groupthink, I'd usually ask a question designed to break the logjam, even if I agreed with the emerging groupthink pattern:

don’t be intimidated by high-level obstructionists who temporarily impede progress.  If it is an idea whose time has come, obstructionists can be overcome by engaging high-level sponsors or they can be circumvented. Bureaucratic inertia yields to an aggressive parallel approach— quick, precise and simultaneous action.

 Sometimes these approaches don't work, and you don't win friends this way.

I've lived in the New York City metropolitan area for 26 years.  I take many things about New York for granted.  I still haven't been up to the top of the Empire State Building, and I haven't been to the Statue of Liberty.  I did (back in 1982, when I was in college) get to the World Trade Center, and I've been to Windows on World for dinner.  I've also been to the Top of the Rock and the Rainbow Room (which I preferred to Windows on the World). 

None of these really compare to Central Park, though.  It's just a great place to hang out, and thankfully is very close to my office.

(more pics below the fold)

The Fed has kept interest rates at an historic low in an attempt to help 'heal' the economy.  Fed Governors have no fear of dead weight in assets, in the form of declining values and poor potential returns.  The assumption is that with economic expectations so low, inflation is not a risk, and that rates can be used to 'fix'  things by keeping rates low indefinitely. 

This artificial approach to soothing our economic woes is a dangerous game.  The economy has, in many respects, become unlinked from the stock market.  In pursuing the current path, the Fed has gambled on some concepts which have been tried before, though in different conditions and with varying results.

Does this sound familiar?  Because if it doesn't, remember that the current situation was caused, in part, by the creation of bundled mortgages, an existing tool which was utilized to try something new, with the assumption of safety baked in.  In theory, the level of risk was limited.  The problem with them was related to the nature of the individual loans themselves.  Each bundled group offered had varying degrees of risk involved.  Despite the levels of risk, many high risk assets were given very good ratings.  In the end some failed, which put all at risk.

Groupon released their first earnings report, and to say the least, they underwhelmed.  I had shared some of my thoughts about Groupon several months ago.  But something new is afoot.

In the last week, we've seen Facebook file for an IPO.  It's been talked about incessantly, and there are many interesting things within the filing which have caused people to begin sharing opinions about it.  Since Facebook is in my industry, I find this discussion intriguing and certainly have my own point of view, particularly since I use Facebook.

Originally, I didn't want to join Facebook.  Several friends emailed me invitations to join in 2007.  I wouldn't accept.  Finally, I joined just to stop the invitations.  At first, what I found fascinated me.  It's actually a terrific picture sharing facility.  On the other hand, as Betty White famously said on Saturday Night Live about when she was younger, "We had PHONEBOOK...seeing pictures of people's vacations was a punishment." 

Earlier, The News Junkie posted a great piece on the kerfuffle surrounding Obamacare and birth control.

I was 'lucky' enough, at roughly the same time, to see a friend post this on their Facebook page:

Interesting, I thought.  I had always been taught that abstinence was affordable.  Can anyone tell me when it stopped being affordable?

By now, you've all heard the good news.  It's been on the news everywhere, and the market jumped dramatically.  This morning, the Bureau of Labor Statistics announced that job growth exceeded everyone's wildest expectations.  243,000 jobs were added, far more than the expectation of 140,000.  More importantly, 257,000 private sector jobs were added, while 14,000 government jobs were lost.  Unemployment dipped from 8.5% to 8.3%.  All of this is very good news.  Even those who oppose the president and his methods of handling the economy will not serve themselves to disparage this growth.  I certainly won't.  What I will say is that the general media is great at reporting headlines, but not digging into the numbers or providing historical context.

The media won't dig in, but others have in order to see what the numbers behind the numbers say, particularly since the CBO's report earlier this week was so lackluster.

The first bit of perspective comes from the Democrats, who spent most of the early 2000's disparaging the job growth of the Bush years as "McJobs".  I notice none of them are speaking right now.  Which is odd, because while we added about 90,000 very good paying jobs, over 113,000 of the jobs added were clearly "McJobs", or low wage labor.  Any job growth is good, so I'm not saying this is a bad thing.  I just want to know why "McJobs" were bad 9 years ago, but good now?  If any Democrats would like to comment on this, they are more than welcome.

Another bit of news that went overlooked was the surge in part-time and temp work.  Again, any job growth is good.  I have nothing but good feeling for people who have been out of work but have managed to wrangle a paycheck.  But if Obama's goal is "An Economy That Works", I'm sure he didn't mean "Works Temporarily and Part-Time"

A third, though somewhat justified question, is why the BLS has actually increased job growth estimates by a very large amount over the course of 2011.  It's possible preliminary numbers were low, but by 23%?  Revisions are always needed - by why so many positive adjustments?  Usually it's "seasonal fluctuations".  Which means...?

I've always been 'Green'.  Not "I recycle and you should stop driving an SUV and if you don't you're evil" Green.  I'm more of a constructive 'green'.  In my youth I did ecological projects with the Boy Scouts, planting trees, cleaning parks, learning about nature by hiking the Appalachian Trail.  I figure it's better to improve than scold, and you should start at home anyway.  It's better to be concerned about how you do things and let other people worry about how they choose to live.  If people want to be 'green' because they fear Carbon Dioxide, that's their choice and I'm OK with it.  I don't agree with them, and I really don't appreciate when they decide their way is better and want to force me to do things their way.

My teen years were marked by two contrived events now known as "The Energy Crisis".  Political situations had led to a belief that oil prices would rise forever and we'd run out of fossil fuels by 2000 (technically, we were supposed to hit Hubbert's Peak in 1979 - but Hubbert didn't count on various factors which extended his timeline).  All kinds of crazy stories in the 1970's drove many to the point of hysteria.  Not dissimilar to what we're being told today, except back then the world was cooling, not warming.  It doesn't matter which way the temperature was going, because ecological consciousness was, and is, part of the 'correct' cultural identity.  As I matured, I learned it's not just about ecology.  It's about efficiency.

Yesterday, Warren Buffett did something that was, in my opinion, outlandish and childish.  He says he felt guilty for his comment about needing to pay more in taxes, so he took it upon himself to offer a dollar for dollar match for every extra payment a GOP member of Congress makes.  Except for Mitch McConnell, who he will match 3 to 1.

Buffett is mistaken on several levels.  First, as the linked article points out, why weren't Democrats and Obama included in this dare?  Clearly this is Buffett's partisan nature and bias showing through.  He is seeking to demonize one party over the other, without justification.  I haven't seen Democrats lining up to make extra payments, nor have I seen Obama going 'over and above'.

Secondly, and more importantly, I shouldn't have to see anybody making extra payments.  Not Buffett, not Democrats, not Republicans, not Obama.  Making these payments is a personal decision, not a public one.  Buffett went public with his statement last year that the wealthy should pay more taxes.  Maybe they should, but I don't think that's a real issue.  If Buffett wants to pay more, and T. Boone Pickens doesn't, let one send in the extra check as he sees fit, while the other chooses not to.  Buffett went public, so he is turning this into a game.  It's a game I'm not interested in, unless it is done fairly.  Buffett rigged this game from the start.

He is more interested in making certain politicians look bad.  I think it makes him look bad.

Several months ago, I stumbled onto a baseball article which intrigued me.  In probably the best example of how an exchange of product and services doesn't have to have a winner and a loser, Major League Baseball witnessed a trade in 2009 that ultimately benefited every team involved.  What is particularly odd about this trade is that there were more than two teams involved.

Three teams executed a trade which, over time, involved a fourth team.  The three involved were Detroit, the New York Yankees, and Arizona.  A player involved in the original trade passed through 4 more trades before landing with the St. Louis Cardinals.  Essentially, this turned out to be a trade which allowed 4 teams to improve enough to reach the playoffs.  Sure, it took 2 years, but at least everyone benefited. 

As the saying goes, one person's trash is another person's treasure.  It is sometimes assumed that there has to be a winner and a loser involved in every trade.  But the networked nature of exchange can lead to net gains for all involved.  In an example of Metcalfe's Law, 4 teams showed how markets can benefit everyone, even in baseball where there are usually winners and losers.

http://www.thepostgame.com/features/201109/perfect-trade-how-yankees-tigers-and-diamondbacks-all-got-steal