Saturday, February 12, 2011

Segregated Chicago

An interesting article by Steve Bogira in the Chicago Reader (h/t Dish) discussing segregation in Chicago and wondering why it hasn't been a topic of discussion in the mayor's race contains this informative graphic and write-up:
But most African-Americans are clustered in two areas, as they were in the 1960s: a massive one on the south side, and a smaller one on the far west side. The south-side section, between Western Avenue and the lake, stretches more than a hundred blocks north to south, from 35th Street to the city limits at 138th. This African-American subdivision of Chicago includes 18 contiguous community areas, each with black populations above 90 percent, most of them well above that. The west-side black section includes another three contiguous 90 percent-plus community areas. Fifty-five percent of Chicago's 964,000 African-Americans live in these 21 community areas, in which the aggregate population is 96 percent black. Two-thirds of the city's blacks live in community areas that are at least 80 percent black.
The segregation of Chicago is pretty stark, but Dayton is pretty similar.

The Two-Headed Calf

My favorite poem, by Laura Gilpin.  I probably shouldn't mention this since I have a cow due in the next week, but it is a cute poem.

Big Brother gets bigger

From McClatchy (h/t mistermix at Balloon Juice):
The Obama administration's Justice Department has asserted that the FBI can obtain telephone records of international calls made from the U.S. without any formal legal process or court oversight, according to a document obtained by McClatchy.
That assertion was revealed — perhaps inadvertently — by the department in its response to a McClatchy request for a copy of a secret Justice Department memo.
Critics say the legal position is flawed and creates a potential loophole that could lead to a repeat of FBI abuses that were supposed to have been stopped in 2006.
The controversy over the telephone records is a legacy of the Bush administration's war on terror. Critics say the Obama administration appears to be continuing many of the most controversial tactics of that strategy, including the assertion of sweeping executive powers.
This issue is ready-made for a link up between the Tea Party and liberal civil liberties types.  If this isn't already dealt with, the 10th anniversary of the September 11 attacks would be the perfect point to plan for the end of the war on terror.  The idea that worthwhile information can be gleaned from all the data collected by the government is foolish.  Let's try to return to normal.  As a side note, after that anniversary, I would like to see someone push a bill to rename September 11 from Patriot Day to Terrorism Victims Memorial Day or something, and while we are at it, let's get rid of the Patriot Bonds.  These names are way too Orwellian for me.

Update: Glenn Greenwald addresses the Tea Party civil liberties possibilities and difficulties. (h/t The Dish)

Penn National and Ohio

image downloaded from Beulah Park
This week, Penn National announced plans to close race track operations at Raceway Park in Toledo and Beulah Park in Columbus, and move those operations to Youngstown and Dayton respectively.  This gives them the opportunity to establish new slot machine operations in communities which were shut out of the gambling referendum which passed in 2009, establishing one casino each in Cleveland, Cincinnati, Columbus and Toledo.  This proposal keeps them one step ahead of the state in the slow, governmentally deficient process of establishing casinos in Ohio. 

Nothing which has occured throughout this mess has put any portion of the state government in a good light.  The legislature never took up the initiative to write rules which would establish issuance of gambling permits through competitive bidding and establishment of tax rates and targeting of revenue.  They left that up to gambling interests which continued to push statewide referendums establishing their own monopolies and taxation rates.  It was clear these operators were going to continue pushing initiatives until they won.  Governor Strickland granted the Ohio horse tracks the rights to put in slots.  Nobody addressed whether these operations could relocate, and no other entities got the opportunity to bid for operations. 

Now, 2 of the 4 casinos and 2 of the 7 racetracks are owned by Penn National.  They plan to move the racetracks from the cities in which their casinos were located, to cities which didn't have facilities.  They've announced plans in Dayton to redevelop the closed Delphi facility on Needmore Road.  This proposal takes aim at Governor Kasich's lukewarm, "under study" stance on the slots-at-tracks issue.  They have enlisted supporters in the Dayton region, and the brownfield redevelopment is a brilliant strategy to put pressure on the Governor.  They will probably take advantage of state brownfield redevelopment money in the process, considering they have been blackmailing Columbus for infrastructure improvements.  State officials, in their efforts to placate religious conservatives who dislike gambling, have consistently been behind the 8-ball on this issue.  It was clear from the start that Ohioans have no qualms about travelling to neighboring states to gamble.  It was stupid to let the industry drive the bus on this issue, and the state has gotten run over.

NASA photo of the day

One of the cool photos posted at the NASA site.  This is Simeis 147, a supernova remnant.
click to enlarge

Cavs Win

Congratulations to the Cleveland Cavaliers for breaking their 26 game losing streak, ending up tied with the 1976-1977 Tampa Bay Buccaneers for the longest losing streak in professional sports.  They may even be able to make it two in a row when they take on the Wizards on Sunday, since the Wizards have yet to win a road game this season.

Admitting mistakes

Matthew Yglesias has a post based on what he reports was the main applause line for Tim Pawlenty at CPAC.  It involved criticizing the President for running around the world apologizing for our country.  Matt follows with:
This is interesting, in part, because I don’t even remember the president apologizing for our country. That conservatives are really pissed off at Obama for raising taxes is explained, in part, by the fact that bills he’s signed into law do in fact schedule large tax increases. But rage at the president’s non-existent habit of apologizing is a pure psychological manifestation of acute sensitivity around this issue. It’s a very pure distillation of the raw, hysterical, absurd atavistic nationalism that lies at the core of contemporary conservatism.
I mean, I assume Pawlenty doesn’t raise his kids to never apologize for their conduct. Apologizing is the right way to respond to wrongdoing. Sometimes I make factual errors in my posts and I try to apologize for them. I stepped on a woman’s foot by accident yesterday and apologized. That’s life. You apologize. Is it seriously an article of faith of the American conservative movement that the American government has never done anything worth apologizing for? That’s the official view of the political movement that allegedly thinks the other movement is too statist? When I heard that tear gas that Egyptian police fired at protestors in Tahrir Square was made in America and purchased with my tax dollars, I felt kind of sorry. But evidently real rightwingers are devoid of human compassion or any ethic of responsibility.
I'm not sure what to make of this conservative inability to admit mistakes or apologize.  To me, the strangest thing about the Bush administration was it's complete inability to admit any mistake, or apologize for such.  I can't decide if they feared looking weak and giving their opponents something to take advantage of, or if they really didn't believe that they made mistakes.  Heck, the Pope has the mantle of Infallibility to point at, and the last couple of Popes have done a lot of apologizing, though still not enough.
Sometimes it was painfully obvious that politics trumped common sense with the Bush Administration.  Throughout 2005 and 2006, as Iraq spiralled out of control, the administration claimed that there were enough troops in Iraq.  Immediately before the midterm elections, we were assured that there was no need to change course.  Immediately after the Republicans lost control of Congress, Rumsfeld was sacked, and planning began for the surge.  Curious timing.  I guess I can't take a party seriously as a governing party if they don't have either the confidence or the self-awareness to admit mistake. 
President Obama has been a breath of fresh air in this regard.  Even in minor matters, like the 'Skip' Gates affair, the president is willing to take blame for overreacting.  In the health care debate, he didn't just point fingers at Republicans, he took blame for the bill stalling.  I think the man has some sizable flaws, he has taken over many of the worst aspects of the Bush administration, and even made some worse, but his willingness to question himself and admit mistake is a great improvement from Team Bush.

Naked Capitalism Link of the Day

Today's link: Former Fox News employee: Stuff just made up posted at the RawStory.  I'm just shocked.  According to the source:
"Like any news channel there’s lot of room for non-news content," the former employee continued. "The content that wasn't 'news,' they didn't care what we did with as long as it was amusing or quirky or entertaining; as along as it brought in eyeballs. But anything - anything - that was a news story you had to understand what the spin should be on it."
"If it was a big enough story it was explained to you in the morning [editorial] meeting. If it wasn’t explained, it was up to you to know the conservative take on it. There’s a conservative take on every story no matter what it is. So you either get told what it is or you better intuitively know what it is."
I can sometimes watch Fox News for a few minutes, but the spin is always amazing to me.  I often go and look up the story at a reputable site so that I can actually understand what they are talking about.  The Fox take on the story is usually so slanted that if a person goes somewhere else and gets the facts, the Fox story is clearly a misrepresentation.
Actually, the last post was also in the links. I forgot that in my excitement to find out that another decent, Midwestern state is being run by a blowhard.

Sounds familiar

Looks like Wisconsin and Ohio elected a set of siblings.  I don't understand where all this bluster and arrogance comes from, but to this independent it is pretty off-putting.  I hope that the small business people appreciate that a certain percentage of their customers work in the public sector, and that cuts in their pay will show up in revenues.  There may be some discrepency in pay between the public sector and the private sector which arose from tax windfalls during the stock market boom, but drastic cuts are going to cascade through local economies.

Friday, February 11, 2011

Gotta have something to bitch about

From the Drover's CattleNetwork, Farmers prosper now, face higher property taxes in the future:
  While high corn and soybean prices, increasing land values and growing incomes mean good economic times for grain farmers, the very factors raising farm income eventually will increase farm property taxes, according to Purdue University agricultural economist Larry DeBoer.

"Farmland prices are rising, but that's not the reason property taxes will rise - at least not directly," DeBoer said. "Farmland is the one major type of property that is not assessed for tax purposes based on predicted selling prices, or market value."

Instead, farmland is assessed by a formula that starts with a base rate, or dollar value per acre, set by the Department of Local Government Finance. The base rate is then multiplied by a productivity factor that is determined by the soil's corn-growing ability. The productivity factor varies from about 0.5 to 1.3...."Farmers may not get much sympathy from other Indiana residents," DeBoer said. "The rising tax bills result from the same factors raising farm incomes and property values. And in rural communities, if farmers pay more, homeowners pay less. Homeowners are the majority in every Indiana county.

"When times are good, perhaps the best advice for farmers is to hold some back for taxes, because taxes will go up - four years later." 

Our county in Ohio adjusted the CAUV (Current Agricultural Use Valuation) this year.  My taxes went up approximately 180%, from about $4 per acre to around $11 per acre on bare ground.  Not bad for land that would bring at lease $150 an acre in cash rent right now.  The only concern will be how sticky that number will be on the way down when times aren't as good.

Cincinnati Reds-2011 edition

I was given the chance to bet over-under on 89 for Reds wins this season.  I took the over.  I'm getting the feeling in my gut that I just cursed them to have a miserable season.  Sorry, fellow Reds fans.

US Chamber of Commerce = mafia?

Matthew Yglesias comments on Think Progress breaking a couple of stories about the US Chamber of Commerce discussing with security companies some Nixon-style dirty tricks and intimidation plans that could be used against their progressive foes.  While I don't doubt that such schemes are considered on both sides of the political divide, I expect more from the "religious" conservatives.  I know, business interests and religious conservatives are locked in a marriage of convenience, but I see the so-called "Christians" who support the business interests in these actions are being hypocrites. I like how Matt puts it in his post:
I assume Barr would tell you he’s just doing his job. He has a duty to make as much money for HB Gary as possible, never mind the consequences. And folks at Hunton and Williams would tell you that they’re just doing their job. They have a duty to serve the interests of the Chamber of Commerce as zealously as possible. And folks at the US Chamber would tell you that they’re just doing their jobs. They have a duty to make US public policy as beneficial as possible to US Chamber of Commerce members, never mind the consequences. And executives at Chamber-member firms would tell you that they have a duty to maximize the profitability of their firms, never mind the consequences. So if you need to engage in a little public disinformation campaign or peer into people’s “Jewish church” activities, so be it. After all, it’s small potatoes compared to earning your daily bread by poisoning the environment.
But personally I’m old-fashioned and I think the concept of individual ethical responsibilities has traditionally served the country well.
Well put. Trying to push conservative values ought to actually involve practicing said virtues.

Governor Kasich's charm offensive

I would probably use offensive, in more ways than one.  Check out the Statehouse News Bureau audio here.
I must confess, I don't have any experience dealing with Chinese businessmen or government officials (and I don't know how much difference there is between the two).  I would think that the way to try to convince them to invest in Ohio would not be to lead off by telling them that we don't like them, we don't like the way they manipulate their currency and the way they use unfair trade practices to steal jobs from us.  Then to follow up by saying, "You want us to like you, bring some money to Ohio..." just blows me away.  The first thing I could think of was the guy in high school or college who tells the insecure girl that he doesn't like her because she's kind of fat and she's annoying, but he'll like her if she has sex with him.  I always considered that character a douchebag, but I must admit, he often got laid.  I guess we'll have to wait to see how well that works in the governor's bid for economic development in Ohio.

Naked Capitalism Link of the Day

Today's link: Commodities are Overbought:Marc Faber, at CommodityOnline.  From the story:
Commodities: Faber is concerned about commodities, as they are currently very overbought by almost any measure. He goes on to say that commodities seem to have reached the parabola stage--going straight up, which is usually the very end of the move. Yes, it could last longer than anyone expects, but at some point prices will collapse again, as they did back in 2008.

This cycle, Faber notes, always occurs as higher prices lead to an increase in supply, which eventually overwhelms the market causing prices to fall. The cycle is longer for industrial commodities compared to agricultural prices as it is harder to build a new copper mine than it is for a farmer to plant more soybeans.

This cycle will play out even with the Fed's money printing. Investors should prepare for some downside volatility in commodity prices.
That's just a warning from a very large, well-known investor.  I tend to agree that once things go parabolic, it is a wild ride up and a wild ride down.  I usually sell pretty early in the steep rise, and don't have much left to sell at the top end.  Oh well, so it goes.  Two other things of note: One, this is the third straight farm post, which may be a record, and two, there were way too many colons in the opening of this post.

Update:  The more stories you see like this, the closer we are to the top.

More Corn Subsidies?

So wonders Stan Collender:
That's why this story in yesterday's New York Times about size of corn reserves caught my eye.  The story says that, because of increased use by ethanol producers, the demand for corn in the U.S. is so high that reserves are at their lowest level in 15 years and prices are going up significantly (Note: the ethanol folks deny this). This is expected to affect consumer prices both on products that include are corn itself -- chips, creamed, on the cob, salsa, etc. -- and those where corn is a major component like soft drinks and gasoline.
So my federal budget self is wondering how long it will take before someone, or perhaps lots of people, start calling for some type of new federal tax break to encourage additional production of corn and, therefore, whether current budget estimates will have to be revised to account for the higher deficit from the revenue loss (I know: I really need to get out more).
Never mind that the higher prices themselves should provide all the incentive growers need to increase production, shift their efforts from another crop with a lower yield to corn, encourage research into farming methods that allow more to be grown per acre, etc.  Let's put aside the fact that higher prices should reduce demand and, therefore, that the market should stabilize on its own.  The fact that there are substitutes for some uses of corn (I can get salsa without black beans, can substitute some other complex carb when I cook, and can use whole wheat instead of corn tortillas, for example) that will allow consumers to reduce the impact of the higher prices on their lives.  And let's forget about the existing tax subsidies for ethanol.
The economic theory may well be beside the point.  I hope I'm wrong, but it looks to me as if there's a potential broad coalition of producers and consumers that could come together to push for some type of new federal corn subsidy.  It's worth watching.
I find this doubtful.  I think politicians will seriously consider cutting the direct payments, and very possibly the ethanol subsidy, if prices remain this high or continue to climb.  I find it interesting that Washington insiders are paying close attention to farm subsidies right now, and weighing whether it makes sense to continue them when farmers are doing so well, and the federal budget is doing so poorly.  This will be the point where the rubber meets the road for rural, Tea Party Republican politicians.  In general, farmers are old and conservative, and in general, older conservative folks are more likely to vote than younger, less conservative folks. Just sayin'

Farmland investment

A fellow farmer and former co-worker passed on this Colvin & Co. report analyzing what investors should consider when purchasing farmland as an investment. As the report states:
We believe that Midwestern U.S. farmland provides investors the best opportunity and risk to reward. Farmland may be acquired at a cheaper price in other regions of the world, but these opportunities may not have the same soil quality, transportation infrastructure, or government that supports property rights.

Only 7% of the Earth's land surface is suitable for cultivation, the remainder is either too hot, too cold, too salty, too steep, or too stony. Roughly 50% of the contiguous United States is suitable for cultivation according to Richard E. Lyng, former Secretary of Agriculture.

To understand why U.S. farmland is the best investment, you must analyze these following factors:
·                  Soil Content
·                  Growing Season
·                  Infrastructure
·                  Property Rights
·                  Government Support
In other words, land may be very expensive in the US, but the Midwest corn belt has awesome soil and temperate weather, rail and barge transportation, good highways and elevators, the government won't steal your land, and they subsidize agriculture.  I really liked this map and write-up.

There are twelve types of soil taxonomy in the world. Of the twelve, the most naturally fertile soils are mollisols, according to Robert McLeese, soil scientist for the Natural Resource Conservation Service (NRCS). Mollisols are predominantly found in only four places on Earth: in the U.S., the Pampas region of Argentina, the steppes of Ukraine and Russia, and in areas of Northeast China.

To translate, the green areas on the map are what we like to call monkey dirt, soils so fertile that monkeys could grow bumper crops on them.  People often suggest that our capitalist system and democratic government made us the most prosperous nation on earth.  They were significant factors, but having some of the richest farmland in huge areas which receive plentiful but not extreme precipitation and ideal growing conditions also played a large role in that status.

Update: This report was written in January 2010, prior to a large increase in farmland value.  I personally think that land values are outrageously high, but some people forecast food shortages which will drive up commodity, and thus land prices for the foreseeable future.  Some people also said that home prices never go down.

The Worst Hard Time, ctd.

The anecdote I quoted in this post was continued later in the book:
In early April the two black men who had been sitting in the Dallam County jail for three months were brought back to the courthouse for trial.  The railroad agent again told how he found the men, on the coldest of nights, looking for food and shelter, and looking in a place that happened to be property of the Rock Island Railroad.  The judge asked the men if this was true and they said, yes sir, we were hungry and cold and saw that little haven of warmth and food and we pushed open the door and helped ourselves to something.  With this admission, the judge found the pair guilty of criminal trespass and sentenced them to 120 days in jail.  But he wanted one more thing.
"Dance," the judge said.  The two men obliged, and as the Texan reported the next day, the tap-dancing Negroes made for a good laugh for judge, prosecutor and the Rock Island Railroad agent.
Again, I have a hard time imagining how such things occured. It does make me think of this post, though.

Thursday, February 10, 2011

They can pour it faster than I can drink it

The Bottoms Up Beer Dispenser from GrinOn Industries. Apparently, there is a rim at the bottom with metal or a magnet in it. A/Another magnet covers the hole in the glass that the dispenser goes through. Then the magnet seals it back up when it is removed. They also offer the opportunity to advertise on the magnet. (h/t Yglesias)

Chicago-market for the Midwest

Early Warning has an interesting post riffing on a David Brooks column about Chicago and Rahm Emmanuel.
My own take is that what a metropolitan area needs more than anything is a core competence in a growth export industry.  In the SF Bay area, the core competence is designing high technology products.  In LA, it is the entertainment industry.  In New York and environs, it's the financial industry.  When a city has that kind of core competence, firms in that industry can grow more easily because they can attract experienced and talented employees.  Meanwhile, people with skills in that field are drawn to that city because there is a diversity of employers.  The firms in the core industry export their products or services globally, and the resulting income then can support all manner of other commerce with a more local orientation (eg health care providers, grocery stores, construction businesses).

When a city's core competence is in decline, then the city is likely to be in trouble - think Detroit and similar manufacturing cities in the rust belt, suffering as US manufacturing has struggled to compete with Asia.

My assumption is that Chicago's core raison d'etre has always been managing the financing, trade, and export of the output of the world's greatest industrial agricultural belt - the US upper midwest.  In an era of high food prices, that's probably a decent position to be in.  On top of that, it has managed to build an unusually diverse set of industries that take advantage of the large and skilled population.
The entire post is worth a read.  The graphics are pretty cool.

The Worst Hard Time

I am currently reading The Worst Hard Time, by Timothy Egan.  It is an amazing story.  It covers the wheat boom prior to the Dust Bowl, and then the Dust Bowl and it's aftereffects.  There are so many fascinating facts and anecdotes from the people who lived through that period.  Today it is hard to imagine that in 1930 there were people on the Plains living in sod dugouts and heating them by collecting and burning cow chips, when temperatures could drop 70 degrees in hours and the winds would howl nearly constantly.  There are a ton of stories I'd like to quote, but I came across this one today, and it stunned me:
The sign at the edge of Dalhart (TX)-"BLACK MAN DON'T LET THE SUN GO DOWN ON YOU HERE"-was strictly enforced. In February, a norther came through the High Plains, sending the mercury plummeting to seven degrees. The hazy, arctic air hung on for a week.  When two black men got off the train in Dalhart, hungry and nearly hypothermic, they looked around for something to eat and a place to get warm.  They found a door open in a shed at the train depot.  Inside was some food and shelter from a cold so painful it burned their hands and feet like a blowtorch.

Naked Capitalism Link of the Day

Today's link: Discover the Network Out To Crush Our Public Workers, at  It is interesting to see one think tank outing a bunch of others.  Regardless, as the Republicans take the battle to Ohio public workers, it is interesting to take a look at the man behind the curtain once in a while. Often, the folks who are back there have a huge fortune to protect.  They are pretty comfortable with cutting down middle-class lives while keeping their own extravagances.

Weekly unemployment claims at 383,000

Lowest since July 2008.  Calculated Risk has more.

Wednesday, February 9, 2011

The Farm Bill

Direct payments versus food stamps.  Guess which way rural, conservative congressmen want to cut.  Yglesias tees off on Roy Blunt:
Representative Roy Blunt (R-MO), for example, wants to make sure that we take food out of the mouths of poor children rather than cutting farm subsidies:
Blunt says nutrition funding – which could account for 75 percent of ag spending in the next Farm Bill – should not be exempt.
“Are there better ways to deliver the food assistance programs without assuming that they just are untouchable and we’ll just look at the 25 percent that impacts direct payments and farm families and rural communities and cut that and take everything out of that?” Blunt offers.
Blunt says direct payments are lower now because of higher commodity prices and he advocates keeping programs in place that encourage farmers to continue to compete in the marketplace.
Note that giving customers money with which to buy food ends up enhancing farmers’ income. In that respect, it’s no different from offering farmers direct payments to grow food. The difference is that nutritional assistance specifically helps poor people as well as farmers, while “direct payments” specifically help “producers with eligible historical production of wheat, corn, grain sorghum, barley, oats, upland cotton, rice, soybeans, other oilseeds, and peanuts” along with consumers of those products. Ultimately, this program does a lot to serve the interests of large landowners whereas nutrition assistance can help people in need.
Actually, I would say that direct payments to farmers end up with landowners, while food stamp money ends up with food processors and grocery stores.  The main increase in income to farmers from the government the last few years has been through the ethanol and biodiesel subsidies and the financial bailout, each of which put pressure on the commodity markets, and have dramatically driven up prices.  None of these programs have been very efficient.


 As a tie-in to this post, I figure I should include this story my former employer sent me last week.
It's hard to quantify the effect of a professional sports team on a city. Some of it is financial, but much is symbolic. What would have happened if Portsmouth had been able to hold on to the Spartans? In 1930, the first year that Portsmouth played in the NFL, the town's population was more than 42,000; the reasons that number has been more than cut in half have little directly to do with football. The big steel manufacturing plant closed down; other manufacturers also left town. Still, though, the civic leaders in Portsmouth today think that if the NFL had remained, the trajectory of the town might have been altered for the good.
"This was a booming shoe town," said the Chamber of Commerce's Carver. "There were four or five shoe factories here. One by one, they closed up. And, of course, when Detroit Steel left, everyone in the county felt the effect. You can't help thinking that if we still had an NFL team, people around the country would think of Portsmouth the way they do of Green Bay."
The Spartans, during their brief NFL life, had some pretty good years. In 1932, they tied for first place in the league with the Chicago Bears. The teams met for a playoff game in Chicago to determine the championship. Heavy snow and freezing temperatures necessitated moving the game indoors, to Chicago Stadium. The contest was played on a shortened 80-yard field, and was won by the Bears on a touchdown pass from -- how's this for big names? -- Bronko Nagurski to Red Grange. The Spartans came that close to bringing the championship of the National Football League home to Portsmouth.
The Spartans ended up moving to Detroit and becoming the Lions.  One of the unique things about the NFL is that there were so many small town Midwestern teams at the beginning of the league.  Canton had the Bulldogs, Dayton had the Triangles, the Decatur Staleys moved to Chicago and became the Bears.  The left-behind cities generally haven't fared well since.  Unfortunately for these towns, if the teams had remained, the league would have folded, just like many of the industries in those towns.  Economic evolution sucks for those who have industrial extinction foisted on them.

Mismanagement not short sales

Barry Ritholtz tees off on a New York Times author:
The author is somewhat clueless about shorting. He writes:
“Companies have long complained that short-selling can lead to stock manipulation. In the financial crisis, managers at Bear Stearns and Lehman Brothers accused large investors of spreading rumors that sent their prices plummeting and created liquidity problems for the investment banks.
At the time, several countries — including the United States, Britain, Germany and France — banned the practice for shares in certain companies. Since then, the bans have largely been lifted.”
Its hard to imagine that in 2011, a financial journalist could actually write something like that — it is a shockingly ignorant repeat of the false claims made by those insolvent firms. Beyond merely one-sided and dumb, it ignores the facts as they became known after the collapse, as the truth came out.
Yes, it is true, the managers of BSC and LEH made those accusations. But it is also true that both of these firms had insufficient capital levels, enormous amounts of leverage. massive exposure to sub-prime mortgages, vast derivative risks, and in the case of Lehman Brothers, regularly engaged in accounting fraud, $50-100 billions at a clip (via the infamous Repo 103).
Some things should be repeated and repeated until people can't forget.  Wall Street was terribly managed, and they are mainly at fault for the tremendous recession we are in.  The government and the general public were also at fault, but in a secondary role.

Is this the week?

Will the Cavs finally win their first game since December 16?  They've got 19-33 Detroit tonight at home, followed by the 19-32 Clippers Friday at home, with 13-37 Washington coming to town on Sunday.


For those of you who care, Boston College will be playing Northeastern in the Beanpot final on Monday.

Peak Oil in Saudi Arabia?

Via Econbrowser, Stuart Staniford on more Wikileaks cables in the Guardian:
However, Sadad al-Husseini, a geologist and former head of exploration at the Saudi oil monopoly Aramco, met the US consul general in Riyadh in November 2007 and told the US diplomat that Aramco's 12.5m barrel-a-day capacity needed to keep a lid on prices could not be reached.

According to the cables, which date between 2007-09, Husseini said Saudi Arabia might reach an output of 12m barrels a day in 10 years but before then – possibly as early as 2012 – global oil production would have hit its highest point. This crunch point is known as "peak oil".
I always figured that when oil prices hit $140 a barrel in 2008, the Saudis didn't raise production because they couldn't.  That might not be right, but it seems closer to right than I could have known.  This is a major concern for the long-term viability of industrial ag, let alone for the auto culture of the US.

Rich not fleeing high-tax states

Yves Smith posts on a study about whether people relocate based on income tax increases:
A solid paper by Cristobal Young and Charles Varner, “Millionaire Migration and State Taxation of Top Incomes” (hat tip Matt) helps debunk the idea that high income individuals will pull up stakes if their taxes go up. The case study is an interesting one: New Jersey’s tax increases on top earners. New Jersey made the biggest increase of all US states, and also has the distinction of having a low income tax state (Connecticut) nearby, meaning that tax-sensitive residents had an option of moving not all that far to escape the increase, which presumably would allow them to maintain family ties...
The study results might be labeled “Millionaires are People Too.” Economists and lobbyists love to stress often base their arguments upon economic rationality and contend that everyone is out to maximize his personal bottom line. But moving is a hassle and costly, and most people’s social lives are grounded in their community and their workplace. Relocating is likely to result in a longer commute for those still employed, would cause disruption to any children still in school and would weaken many existing social relationships. The study also provides a survey of the literature, noting findings in Switzerland, for instance, of communities in neighboring cantons with even wider taxation differences and little evidence of tax-driven migration.
This is a very sore spot with me.  It is accepted as economic fact that people flee Ohio because of the income tax.  Since we don't have oil royalties like Texas, Ohio politicians (mainly Republican) claim Ohio will grow significantly if we defund our schools and local governments, slash Medicaid and get rid of the income tax.  Often, they say that is why old people flee to Florida.  I'll go with the fact that it is currently 10 degrees outside.  They generally say Indiana is some sort of low-tax paradise, albeit one without a lot of paved roads.  When I was in Minnesota this summer, people claimed South Dakota was the destination of frustrated Minnesotans in the newspaper letters-to-the-editor.  My favorite claim is that businesses less than 5 years old create most new jobs, and Ohio must lower tax rates to attract those entrepreneurs.  I'll go out on a limb and guess that most start-up businessmen begin where they are living, because they need the developed support system of their existing community when taking such a large risk.  I know I would want to stay close to the people I know in such a situation, and not shop around to relocate for a small tax arbitrage advantage.

Naked Capitalism Link of the Day

Today's link: House fails to extend Patriot Act Spy Powers, at Wired:
The House failed to extend three key expiring provisions of the Patriot Act on Tuesday, elements granting the government broad and nearly unchecked surveillance power on its own public.
The act was hastily adopted six weeks after the 2001 terror attacks. Three measures of the act are set to expire at month’s end, and the House’s lack of a two-thirds vote on Tuesday failed to move the sunsetting deadline to Dec. 8, as proposed. The vote was 277-148.
The failure of the bill, sponsored by Rep. James F. Sensenbrenner Jr. (R-Wisconsin), for the time being is likely to give airtime to competing measures in the Senate that would place limited checks on the act’s broad surveillance powers. The White House, meanwhile, said it wanted the expiring measures extended through 2013.
These included the "roving wiretap," "lone wolf" and "business record" provisions of the Patriot Act. Maybe now that a Republican majority in Congress faces the use of these powers by a Democratic President, the Republicans will find the civil liberties religion and join some Democrats in leading us back away from a police state.

Update: As Conor says here, Republicans have a long way to go, even though some Tea Partiers stepped up.  He highlights a great quote from Dennis Kucinich, partially making up for his olive pit lawsuit from a couple of weeks ago:
"The 112th Congress began with a historic reading of the U.S. Constitution," Kucinich said. "Will anyone subscribe to the First and Fourth Amendments tomorrow when the PATRIOT Act is up for a vote? I am hopeful that members of the Tea Party who came to Congress to defend the Constitution will join me in challenging the reauthorization."
Indeed, 26 Republicans voted to oppose the extensions.

About Privatization

There are at least 3 things I think should not be handled by for-profit corporations: prisons, hospitals and schools.  Each of those activities operated for profit have perverse incentives which I think act against the common good.  Ohio currently has 2 for-profit prisons operating, and Governor Kasich appointed a managing director of the for-profit prison company CCA.  Ohio had some serious difficulty with a private prison run by CCA in the past:
“In 14 months of operation, the Northeast Ohio Correction Center in Youngstown, Ohio experienced 13 stabbings, 2 murders and 6 escaped inmates. In reference to the Youngstown facility, Peter Davis, director of the Ohio Correctional Institution Inspection Committee said, “There is nothing in Ohio’s history like the violence at that prison.”16 Reviews of the correctional facility determined that the problems occurred due to inadequately trained staff and the improper acceptance of maximum-security offenders to the medium-security facility.
In March 1998, Youngstown filed suit against CCA on behalf of all the prisoners alleging that prisoners were put at risk by being sheltered with maximum-security prisoners in a facility not designed for containing them. The court ultimately ordered the removal of 113 inmates deemed maximum-security offenders by an independent consultant.
This story from Pennsylvania increases my concern:
It's been called the biggest legal scandal in Pennsylvania history: a pair of state judges charged with accepting $2.6 million in bribes and kickbacks in exchange for sending thousands of juvenile offenders to two private detention centers. Well, one of those former judges is now on trial in Scranton, as NPR's Joel Rose reports....
ROSE:Mishanski stood outside the federal court in Scranton, Pennsylvania, where Ciavarella is now standing trial for his alleged role in a conspiracy dubbed kids for cash. In opening statements this morning, federal prosecutors said Ciavarella treated his office like a money-making machine.
Along with another ex-judge, Ciavarella is accused of accepting bribes and kickbacks from friends who got government contracts to build a pair of privately-owned detention centers.
And Ciavarella is accused of funneling hundreds of kids as young as 10 years old into detention even when their crimes didn't warrant it. Wilkes-Barre defense lawyer Barry Dyller says his clients couldn't get a fair hearing in Ciavarella's courtroom.
I would prefer to see the state look at privatizing prisons as an absolutely last resort, after considering alternative sentencing, easing harsh sentences and letting prisoners go.  The potential for corruption in for-profit operations is too high to risk public trust on.

Tuesday, February 8, 2011

Give credit where credit is due

Governor Kasich reviews district-switch felony conviction:
Ohio Gov. John Kasich has asked the Ohio Parole Board to determine whether the felony conviction of an Ohio woman who used her father's address to enroll her children in a neighboring school district was an appropriate punishment. Forty-year-old Kelley Williams-Bolar of Akron spent nine days in jail after a jury convicted her of falsifying documents in order to enroll her daughters in the Copley-Fairlawn schools from 2006 to 2008. The felony record precludes her from following through on plans to become a teacher.
After a legal team review, Kasich said Tuesday that he believes the case merits Parole Board attention. The panel will determine whether to let the conviction stand, reduce the charge or pardon Williams-Bolar.
Good for him.  I'm always in favor of using common sense in the legal system.

But it's cold in Arizona

Via Ritholtz:
Record low sea ice in January (NASA)

Fantasy baseball

I try not to jinx any of the Reds by picking them up for Fantasy Baseball.  If you aren't superstitious, here are some suggestions.

American Rust

I just finished reading American Rust, by Philipp Meyer.  I highly recommend it.  It was very well-crafted.  The setting in the Mon Valley is interesting and also haunting.  Living in the Dayton region, and seeing the effects of losing 13,000 or so Delphi jobs, 4,000 GM jobs, and at least 1,000 Navistar jobs in the region, I can't imagine the impact of the late 70's and early 80's in Western Pennsylvania.  Check out the profile of Meyer at Amazon, his life story has been anything but dull.

The end of Medicare?

Ezra Klein on Paul Ryan's Medicare reform:
This might make sense if Ryan and Rivlin had a much more plausible explanation of how their program would save Medicare money, but they don't. As CBO says (pdf), seniors will have to "purchase less extensive coverage or pay higher premiums" under Ryan-Rivlin. And it's actually worse than that, as Medicare is cheaper than private insurance, and so forcing seniors to buy private plans rather than Medicare will mean they pay more for the same health-care coverage. Here's CBO again:
Medicare’s current payment rates for providers are lower than those paid by commercial insurers, and the program’s administrative costs are lower than those for individually purchased insurance. Beneficiaries would therefore face higher premiums in the private market for a package of benefits similar to that currently provided by Medicare.

So Ryan's plan is to hold down costs in Medicare by giving seniors less money to purchase more expensive private insurance. If you could make that stick, it would indeed hold down costs. But it's a lot more painful, and it includes many fewer mechanisms for cost control, than the Affordable Care Act. And yet when it comes to the ACA, Ryan firmly believes that seniors will quickly and successfully force Congress to reverse any reforms that degrade their Medicare experience. That's a fair enough concern, of course. What's confusing is why it isn't doubly devastating when applied to Ryan-Rivlin.

Krugman on grain prices

Here and here.  From the second post:
By the way, the article says that China is largely self-sufficient in grains, which is true. But in recent years China has become a huge importer of soybeans, which compete for land and other resources with grain production; that’s how Chinese growth puts pressure on world food prices. If China has to import wheat, too, that’s seriously ungood.
I think there are both fundamental and technical reasons for the grain price run-up.  First, the Russian drought started moving the markets up, that drew the attention of the funds.  It was pretty clear after Bernanke rolled out QE2 that money started pouring to commodities, as the dollar started to slide.  That made exports go up, since they were cheaper.  Thus, more demand. Wash, rinse, repeat.

What I mean to say

E.D. Kain on Civil Societarianism:
There are more important freedoms than economic freedoms and even economic freedoms can be understood in different ways (not just the freedom to choose what to buy or how to run your business, for instance, but the freedom to be able to afford to buy things like healthcare in the first place). Public education, public libraries – these are essential pieces of our society that we can’t put a price tag on. In the red and black ink-stained columns of our little theoretical ledgers, all we can see is their cost, not the value they create. Which is why education is one of the first places we see cuts, then healthcare for the poor, then libraries and other ‘non-essential’ public services. And this worries me deeply.
The disdain for all things government really bothers me.  Luckily, in the last budget cycle, when libraries were on the chopping block, there was some pretty serious outcry from this generally radical conservative part of Western Ohio.  I really wanted to tell people that if you really want to complain about the state cutting funding for libraries, encourage your representatives to quit cutting taxes.  But on WLW, Mike McConnell was bitching about why in the hell libraries still existed.  He was asking, why didn't the poor folks buy books or rent movies at the video store?  Luckily, quite a few people called in to take the other side of the argument.

Land Prices are Crazy, ctd.

This will not end well:
 The rise in Kansas agricultural land prices appears to be accelerating in response to the incredible jump in the price of many agricultural products since mid-2010. A recent survey by Farmers National Co., a national brokerage for farm and ranch land, showed that non-irrigated crop land in central Kansas averaged $3,000 an acre, up 50 percent since June. Irrigated farmland in central Kansas was up 15 to 20 percent since June, for an average of $3,500 an acre.
Other Midwestern states saw increases of 10 to 20 percent, according to the company. Farmland on the coasts may actually have fallen in value in recent years because development prospects have dried up.

Taxes at 60 year low

As a percentage of GDP, federal taxes are at their lowest rate since 1950:
Actually, as a share of the nation's economy, Uncle Sam's take this year will be the lowest since 1950, when the Korean War was just getting under way.
And for the third straight year, American families and businesses will pay less in federal taxes than they did under former President George W. Bush, thanks to a weak economy and a growing number of tax breaks for the wealthy and poor alike.
Income tax payments this year will be nearly 13 percent lower than they were in 2008, the last full year of the Bush presidency. Corporate taxes will be lower by a third, according to projections by the nonpartisan Congressional Budget Office.
So why do we have a giant budget deficit? Hmm...

Way to go, Cavs

25 straight.  Two more and they can beat Tampa Bay.

Naked Capitalism link of the day

Today's link: 10 Things Conservatives Don't Want you to Know about Reagan at Alternet.  I would argue that #3 resulted directly from Volker's fight against inflation, as well as the dismantling of the steel industry and the auto industry as foreign competition caught up with excess out-of-date capacity.  Also, I think calling the Social Security tax increases progressive might be a stretch.  I think something should be said.  Reagan was definitely a serious conservative, but today's so-called conservatives are fools to say taxes should never ever be raised.  As the story points out:
Conservatives seem to be in such denial about the less flattering aspects of Reagan; it sometimes appears as if they genuinely don’t know the truth of his legacy. When liberal activist Mike Stark challenged hate radio host Rush Limbaugh on why Reagan remains a conservative hero despite raising taxes so many times, Limbaugh flew into a tirade and demanded, “Where did you get this silly notion that Reagan raised taxes?

Some people never learn

From Simon Johnson:
In a column now running on Bloomberg, I review the recent statements of Robert Benmosche (AIG) and Bob Diamond (Barclays).  Their views are not encouraging.  They want to run bigger, more global and extremely complex financial institutions.  They also appear to favor a great deal of leverage (high debt relative to equity) wherever possible.
Steve Eckhaus – a top Wall Street compensation lawyer (he will get you your bonus) – articulated the underlying view with great clarity to Saturday’s Wall Street Journal, “To blame Wall Street for the financial meltdown is absurd.” (p.B13 of Feb.5-6 print edition).
The absurdity here is that we have created Too Big To Fail banks (and insurance companies) and that we are allowing them to become Too Big To Save – while our political elite blithely looks the other way.

Monday, February 7, 2011

A cool picture and an interesting story

Bruce Holmes on a project he worked on at NASA in the early days of computers.

The heritage of the picture starts under Jimmy Carter's Administration -- not a fact that would leap off the page for most of us. Carter, a peanut farmer from Georgia, brought to Washington D.C. a person who spent some time at NASA Headquarters, advocating for research that could help farmers with a vexing problem involving aerial applications (or crop dusting in the vernacular). The problem was that the flow behind the aircraft wing disrupts the desired even spread of seeds or chemicals and can carry spray to places that cause trouble (streams, for example).

Reagan and today's GOP

Stan Collender on Reagan's legacy:
My question is whether, in spite of the deification, Ronald Reagan would fit in with today's Republican Party as well it wants us to believe.
There's no doubt that some of Reagan's actions would be a perfect fit.  The big increases in military spending, his tax cut, and his firing of the air traffic controllers when then went on strike are three perfect examples of policies and actions that would go as well today as they did 30 or so years ago.
But I have serious doubts that the three tax increases Reagan signed, or the compromise he negotiated with House Speaker Tip O'Neill (D-MA) on Social Security would be held in as high regard.  In fact, the three tax increases he agreed to back then would be considered a combination between political heresy and apostasy by most elements of what the Republican Party has become.
I don't think anyone can govern effectively and meet the requirements of what amounts to a cult.  When proveable facts are routinely ignored, you can't do much in the way of argument.

The chain gang

Joe Posnanski on the absurdity of chain gangs in footbal (h/t the Dish)l:
The chains in football: Yes, it's a pretty worn down gag already about how absurd the chain gang is. Twenty-two people crash into each other, an official kind of guesses where he should spot the ball, it's about as imprecise as it can possibly be ... and then they measure the thing to a hundredth of an inch. I mean, it's ludicrous. And as I have pointed out before, what often happens then is that they throw the football across the field and re-spot it ... I say bring the chains back out. Sometimes you will see a center move the ball up a couple of inches before he snaps it ... I say bring the chains out yet again.

But Michael brought up a great point I had never thought about: Chains? Really? That's the measuring device we are using? When was the last time anything was measured by chains? What was that, about 160 BC? "Spartacus, he's about 20 links tall now." Chains. You have to be kidding me. It's so much a part of football we NEVER think about it, but it's absolute ludicrous. This is the most successful sports league in America, and they're measuring with perhaps the least precise measuring tool available. It's like the Flintstones. Seriously: How do they keep the chains in a perfect straight line? If they're not in a straight line, then you might be measuring less than 10 yards. How hard do you pull the chain to make it exactly 10 yards? They couldn't use a tape measure or a laser or something?

We were just imagining someone explaining football to a foreigner and saying: "And then, to be sure they moved the ball 10 yards out, the officials bring out chains to measure the distance?" And the foreigner might reply: "Chains? This is America? Isn't Apple and Google in America? You still use chains to measure distance?"
Now having worked with surveyors, I think some guys were using Gunter's chains into the 60's or 70's.  But this was similar to an observation made by one of my roommates in college, and it was quite possibly the wisest thing he ever said.

Naked Capitalism link of the day

Today's choice: Arizona tries to retain status as craziest state in the union. From the Daily Kos.  I'm glad I don't live there, for a number of reasons.

Sunday, February 6, 2011

Ohio's New Governor

George Will features Governor Kasich in today's column.  This section of the article puzzled me:
Kasich is considering privatizing some prisons and selling or leasing the Ohio Turnpike (Republican Gov. Mitch Daniels leased Indiana's). Today, Kasich says, there are people getting paid $66,000 a year to collect tolls that machines might collect. He says that the turnpike revenue does not come to the state and he is puzzled about where it does go.  (my emphasis)
A quick google search for Ohio Turnpike Commission brought me to the Commission website, where I found this:

Toll charges

Costs for Turnpike construction and maintenance do not come from federal taxes as they do for other major highways. The Turnpike covers its own costs through tolls, restaurant and service station concessions, and similar earnings. The Turnpike also receives about $2.7 million a year from a portion of the state tax on fuel sold only at Turnpike service stations. This money is allocated to bridges and overpasses to state routes.
Toll charges are based on the number of vehicle axles and the height over the first two axles in addition to distance traveled.  A new toll collection system was implemented on the Ohio Turnpike on October 1, 2009.  This changed the way in which vehicles are classified and compressed the number of vehicle classes from 11 to 7.
Since the Turnpike opened in 1955, the Consumer Price Index has increased 657%, while the Ohio Fuel Tax per Gallon increased by 460%, yet the Ohio Turnpike tolls for passenger car travelers increased by only 242%.
Ok, Governor, that should answer your question.  If you want more detailed financial information, here is the link to the 2009 Annual Report.  It is disconcerting to me that the Governor is considering privatizing the Turnpike, but doesn't even know how it operates, and hasn't taken the time to look at the Turnpike Commission's website. I know the actual details of leasing the turnpike will be handed over to some investment bank who will charge large fees, and I know the Governor wouldn't actually get on his own computer and look this shit up.  But I would think he would try to keep from saying something in a nationally syndicated column which makes him look like a total moron.

I will go out on a limb and predict that if the turnpike is privatized, the percentage increase in tolls will quickly approach the state fuel tax increase mentioned above.

Go Pack Go!

I really hate the Steelers, so my prediction for the game is Packers 24-Steelers 20.

Michael Lewis Ireland follow-up

Also from NC's links today. Michael Lewis [NONSENSE] on Ireland.

Naked Capitalism link of the day

Today's link: Koch Brothers now at heart of GOP Power.  These guys seem to have their hands in everything.  To me it is disconcerting that it appears that it takes so little money to influence Congressmen, when there could be such a giant payoff for the brothers and others:
The new committee members include a congressman who has hired a former Koch Industries lawyer as his chief of staff. Another, Rep. Morgan Griffith of Virginia, won a long-shot bid to unseat a 14-term moderate Democrat with help from Americans for Prosperity, which marshaled conservative activists in his district. By some estimates, the advocacy group spent more than a quarter-million dollars on negative ads in the campaign. "I'm just thankful that you all helped in so many ways," Griffith told an Americans for Prosperity rally not long after his election.

Perhaps the Kochs' most surprising and important ally on the committee is its new chairman, Rep. Fred Upton. The Republican from Michigan, who was once criticized by conservatives for his middle-of-the-road approach to environmental issues, is now leading the effort to rein in the EPA.

Upton received $20,000 in donations from Koch employees in 2010, making them among his top 10 donors in that cycle, according to the Center for Responsive Politics.

I'll take the Packers

DougJ at Balloon Juice trying to determine which team in today's Super Bowl represents Real America better:
I’ve had a long running discussion with a friend of mine about which team this year, the Pack or Pittsburgh, better represents Real America. On the one hand, the Steelers are owned by an Obama-loving soshulist, on the other, the Pack is community-owned, which is hardly better since all sports teams should be owned by heroic Galtian individuals. Pittsburgh has a lefty mayor, but Green Bay’s mayor is a member of Mayors Against Illegal Guns. The quarterback situation is tricky too: Rodgers is a Berkeley alum and hence a hippie while with Roethlisberger, it’s hard to say if he’s the self-indulgent product of 60s sexual mores or an upstanding victim of feminazi persecution.