Another Economist

Some dude in the Wall Street Journal has written a piece on “Nine Reasons To Love Your Mortgage.” It doesn’t give his resume or CV, so we don’t know his qualifications, but he must be an economist, because he knows nothing whatever about finance.

1. “It's your cheapest way to borrow,” he says, which actually makes sense but would be a bit more logical if he didn’t start by saying that, “I'm not crazy about carrying debt.”
2. “It's a negative bond,” which seems to me like a bad thing and not a reason to “love it.” He pretty much confirms that thought by saying that “it might make sense to sell bonds to pay down your mortgage.” That’s hardly something you would do if you “loved your mortgage.”
3. “It leverages your entire financial life,” hanging like a financial anchor over every investment you want to make, every financial plan you have, every… Seriously?
4. “It's a backup source of emergency money,” which is where the nitwit doesn’t know the difference between the mortgage and the property which is secured by the mortgage. One can get some extra money from the equity in one’s home if the mortgage is low enough and is one can show ability to repay, but one cannot get extra money from the mortgage itself. And if you lose your job, good luck borrowing additional money against your house.
5. “It makes inflation your friend,” because inflation makes the price of your house increase forever and ever, amen. First of all, that has nothing to do with the mortgage. Secondly, a lot of people found out in 2008 that that theory is bullshit.
6. “It lets you profit from falling interest rates,” by playing the refinance game, except that eventually it no longer works.
7. “It's an effective way to build wealth,” which is a redux of #5 and was debunked in 2008.
8. “It's your default investment.” How many investments need to be repaired to the tune of $14,000 that you just spent for that new roof?

The last one is the zaniest one yet, equating to the insane guy who said that he was beating his head against the brick wall because it felt so good when he stopped doing it.

9. “Paying it off can drastically reduce your cost of living.” Not having it at all would have allowed you to have the lower cost of living to begin with.

California Water, Part 2

I’m still pondering the severity of our water crisis compared to 1977, when things were so bad, apparently, that one could be fined for failing to capture and reuse the condensation from one’s air conditioner and a green plant in your yard was a hanging offense. According to the twit from the water department, we aren’t in that bad of a condition this time around.

Bruce commented that we have supposedly learned to use less water per capita, which is a good point. Hizzonner the governor says we have a goal of using 20% less water per person, but I’m not sure than anyone thinks we’ve met that goal. The water bill for my HOA has gone from $1500/mth ten years ago to $5000/mth now and we have exactly the same lawn area that we did ten years ago. I have been agitating to reduce lawn area and relandscape to lower water usage and have done nothing other than make myself unpopular.

According to the best numbers I can come up with, we had 88 km3 of water in storage for each one million population in 1977, which was regarded as disastrous and required that all green landscapes be allowed to die. If we have, as Bruce suggests, learned to use 20% less water, then a comparable number today would be 70 km3 per one million people, but we don’t even have that. What we have today is 56 km3 per one million people.

If that doesn’t qualify and an “oh shit” moment, I don’t know what does.

Making Things Up

CBS Evening News is always good for some light entertainment. They said last night that Russia is providing heavy weapons to the Ukrainian rebels and that the equipment is “identical to the equipment used by the Ukraine army so that the rebels can claim they captured it.” Let’s think that concept through for a moment.

A third party is trying to determine where the equipment came from and is told by the rebels that, “No, Russia didn’t give these tanks to us, we captured them from the Ukraine army last week.” So the third party goes to the Ukraine army and asks, “Hey guys, are you missing any tanks?”

The minute that the Ukraine army says, “No, we aren’t missing any fucking tanks,” the jig is going to be up on that little story about where the tanks came from. Somebody is making shit up, and if it isn’t CBS News then they are incredibly gullible.

California Water Wars

Lying and distorting facts is not limited to the federal government; state government can come up with some real gems of altered reality too. From the Los Angeles Times we get an article headlined “Major California reservoirs below 50% capacity as drought wears on,” in which California Department of Water Resources spokesman Ted Thomas says that, “When all 12 of the major reservoirs are combined, the average is at 60%.”

Here are the twelve major reservoirs and the current status for each.

I don't know where the water department twit gets that 60%, because if you take the average for each lake, add them together and divide by twelve, you get 40% which is nowhere near the 60% he apparently pulled out of his ass.

But even if it did come to 60% or somewhere close to it, it would not tell a true story, because the size of the reservoirs makes a lot of difference, and California's reservoirs vary enormously in size. When you have a tiny little reservoir that is 90% full, and a monstrous big reservoir that is 10% full, they do not average out to give you 50% of your water capacity.

If you look at the our major reservoirs, the biggest reservoirs are at 36%, 37% and 26% full, while down in the southern part of the state Pyramid Lake is at 92% of its teacup-sized capacity. If you add up the total capacities and the total contents, the total percentage of water stored in those "12 major reservoirs" is only 36% of the total capacity.

Ted Twit Thomas goes on to say that “That's puts the state in a far better position than it was 37 years ago, when a crippling drought brought the statewide reservoir average down to 41%.” Well, it would if his 60% was an actual number rather than an imaginary one, but in this universe 36% is actually less than 41%.

Not that it really matters, because he’s actually saying something to the effect of “my apple is better than your orange” because the reservoir capacity and population are both just a little bit different now than they were 37 years ago. The population in 1977 was in the close vicinity of 20 million and is about 38 million today, so it has grown something like 90% in the past 37 years. The reservoir capacity has grown from 4300 km3 in 1977 to about 6000 km3 today, or about 40% growth in the same period.

So, to recap, we have 36% of a capacity which has grown 40% to serve a population which has grown 90% but we are in better shape now than we were when we had 41% of capacity back then. Brilliant.

Ivory Tower Economics

Here’s a sterling example of the manner in which economists are disconnected from the real world. They sit in their ivory towers and totally ignorant as to how real people live, and therefor do not have the slightest clue of what they are talking about. Dean Baker is talking today about the “wealth effect” of housing on consumer spending, and he says,

If a homeowner owed $100,000 on a home whose price dropped from $300,000 to $200,000 (leaving them with $100,000 in equity), we would expect them to cut back annual consumption on average by between $5,000 and $7,000.

Oh really? Why would you expect that, Dean, and why that amount?

The “we” there is presumably him and Paul Krugman, because any person who works for wages and owns a house with such a mortgage would not really expect that homeowner’s consumption to change at all. Those of us who live in the real world know that the equity in our homes cannot be spent until we take that equity out of our homes. I have no earthly idea where Baker gets the idea that someone will spend $5000 to $7000 more per year, regardless of income, simply because of untapped equity in his house.

My wife and I may or may not be typical, probably aren’t, but the equity in our home went from about $50,000 when we bought it, to about $400,000 at the peak of the market, and then down to about $280,000 at the 2008 slump. Want to know how much our spending habits changed throughout those fluctuations? Right. Zilch.

The “wealth effect” of overvalued houses was not that people would spend a lot of money merely because they had a high-priced house, as Dean Baker seems to think. The effect was caused by people taking that equity out of their houses in the form of refinancing and second mortgages and using that money for consumer spending.

The reduction of spending when home values collapsed was not due to some sort of psychological trauma inflicted on the homeowners involved; it was the result of there being no more equity available to take out in the form of spendable cash. If Dean Baker would come out of his ivory tower and meet some real people, he would know that.

Helpless Little Children?

I keep seeing claims that humanitarian concerns demand that we shelter and take in these 52,000 children at our border because they are "helpless little kids." Really? These kids travelled more than a thousand miles through rather hostile climate on their own, riding freight trains and foraging for food. There are one hell of a lot of American adults who could not accomplish that. Whatever these kids are, "helpless" they are not.

Maybe we should take them in, maybe not, but let's not play silly word games.

Detroit Water Wars, Part 2

I do not advocate the water should be shut off to those who legitimately cannot pay their bill. What I am saying in my earlier post is that liberal arguments against such shutoffs are hypocritical and bogus. Relief for such homeowners should be provided as part of a taxpayer funded safety net on the same basis as extended unemployment relief. Government should provide assistance on the same basis that it assists with payment for food and, with the new "health care reform," for health insurance.

The argument that the city, or any other service provider, should continue to provide service without the customer paying for that service is absurd. That they receive assistance in making that payment is entirely reasonable, but let's quit making the case for this being a nation that insists on free lunch

Detroit Water Wars

The people, and unions, in Detroit voted in favor of the “grand bargain” in resolving the city’s bankruptcy, resulting in reduced pensions and retiree healthcare benefits. I don’t have any real opinion on that because the published arguments have not included any actual numbers, but I have been following the Detroit “water wars” with some interest.

Seems people in Detroit have not been paying their water bills, which the UN regards as “exorbitant,” and so the city is shutting off water to nonpayers, which the UN says is a “human rights violation” because access to water is a "basic human right." Weird.

My water bill for the past two months was $154.68 in San Diego. The same bill would have been $114.29 in Detroit. There are some very good reasons why water is more costly in San Diego, but I would hardly say that Detroit water rates are “exorbitant.” And, while I can’t argue with the UN that access to water is a basic human right, I don’t think that access to purified water delivered under pressure directly to your home is a basic human right. I think there is a certain amount of hyperbole being engaged in here.

Liberals have mastered the art of inconsistency, and this issue compared to the liberal position on healthcare is a case in point.

For one thing, liberals seem to have missed the point that what is being paid for is not the water, but the services of purifying and delivering the water under pressure to the private homes. Even the UN does not claim that there is any “basic human right” to those services.

Part of the argument for “health care reform” was that the cost of health care was being driven up, causing those who paid for health care to pay higher prices, because of people who did not pay for health care because they did not carry insurance. Liberals subscribed to this argument as much as conservatives did, but in the case of Detroit’s water crisis they do not want to argue that the cost of water delivery is being driven up for people who do pay for it by people who receive water delivery and don't pay for it.

Liberals did not argue that people who could not pay for health care should have their health care paid for by those who could pay for health care, but they are now arguing that Detroit citizens who cannot pay for water delivery should continue to receive it for free, with the service being paid for by higher rates on people who can pay for the service. Hardly what anyone would call consistent.

Further, liberals have had no problem with the solution to the problems caused by people not carrying health insurance being a law that requires them to carry health insurance, albeit with the government picking up part, but not all, of the cost. They do not, however, welcome the solution to Detroit’s water crisis being to require people who are not paying for water delivery to actually pay for water delivery.

This despite the fact that even if the city stops delivering it, those people can still have all the water they want. They just have to go down to the river and get it for themselves, and then boil it before they drink it. Which people did for centuries before Detroit began the delivery service.

We Don't Need No Steenkin Proof

From the Wall Street Journal today, "U.S. officials say they now suspect that Russia supplied the rebels with multiple SA-11 antiaircraft systems." (emphasis mine) The officials are, of course, not named, the basis for their suspicion is not provided, and evidence is entirely absent. They could as easily report that "A California blogger suspects that the airliner in question was shot down by space aliens."

It goes on the say that "U.S. officials believe the systems were moved back across the border into Russia following the shoot down of the jetliner." Once again the officials are not named, but they are probably the same ones who claimed we didn't find Saddam's weapons of mass destruction in Iraq because he secretly shipped them to Syria before we invaded.

"The assumption is they're trying to remove evidence of what they did," said a senior U.S. official briefed on the latest intelligence.

That's a brilliant deduction, arriving at that conclusion after being told...
Ah, to hell with it. Needless to say, I have a slightly (slightly?) different set of assumptions.

Update: No, I don't actually suspect the airlainer was shot down by space aliens. It just happens to be a suspicion which conveniently suits my agenda of having us not go to war with Russia. The "US officials" are making shit up based on their agenda, which is the opposite of mine.

Maybe Not So New

The “mysterious” Siberian hole is rapidly becoming less and less mysterious as scientists arrive at consensus that it is yet another result of a warming planet. It increasingly appears that frozen underground gas vaporized and popped this hole like a cork popping out of a wine bottle.

What’s interesting to me is what appears near the hole as the helicopter flies over the area. The “mystery” hole is in the upper left, but look in the lower left at what appears to be a perfectly circular water-filled hole. Question. What is the mystery hole going to look like a few dozen years from now, once the “ejecta” has worn away and the hole has filled with water? Right. It’s going to look a whole lot like that circular water hole.

This process may have been going on longer than we know.

This Is Not "Defending Itself"

There is a quote from Rabble In Arms by Kenneth Roberts that I have cited many times that goes, “They go to war, these young men, not to die for their country, but to place their precious lives between their home and the forces which would destroy it.” The point is that men, and today women, do not fight for abstractions like patriotism or freedom. Dying is not on their agenda. They fight because their homes have been threatened and they are determined to defeat the threat.

For the Palestinians from the West Bank, and especially from Gaza, this quote no longer applies. The “forces that would destroy their homes” has already done so and they no longer have any homes to defend. They have reached a position of such bleak desperation that the only option they have left is to die as visibly as possible to call the world’s attention to the plight of their people. And dying they are; men, women and children.

“WP” writes a brutal history of the Israeli occupation’s treatment of the Palestinians at Sic Semper Tyrannis and describes the current state of that affair. It is not pretty, and he pulls no punches. He says, for instance, that, “people worldwide will increasingly believe that Israel has become a monster nation with no interest in anything except further extermination of the Palestinian people,” a belief that I reached many months ago.

He describes Gaza as, “now a death camp. The Gazaians are on an involuntary diet, subject to a malicious coriander blockade that deprives their entire society of any hope,” and goes on to say that, “Israel bombs and attacks helpless people with impunity, teased on by fireworks rockets that nearly never kill. Truly, Israel plays the role of the ultimate bully.”

I will undoubtedly be called an Anti-Semite for recommending this piece, something which I am not, but I do recommend it. Read the whole thing. It speaks truth to power; power most horribly and brutally abused.

Interesting

Interesting and rather alarming headline on Huffington Post today, and a totally false one. Turns out the article is in reference to the eminemt restart of the Sendai power plant reactors 1 and 2 on the southern tip of Kyushu Island, about 700 miles away from Fukushima.

Update, 7:40am: They have changed the headline. It now reads "Japanese Nuclear Power Plant Deemed Safe By Regulators, Clearing Major Hurdle For Restart."

Update, 10:00am: They also ran a story about the alarming number of people adopting cheetah cubs as pets, headlining it with a picture of a leopard. Sigh. The comments consisted mostly of an argument about what the picture was, running about half and half cheetah vs. leopard.

Wise Gambler

When Kenny Rogers says that "you never count your winnings when you're sitting at the table," he is not talking about a poker game. He's talking about life. If you go through life constantly keeping track of what you have done and what others have done for you, you are not going to live a happy life. You play each hand as it is dealt to you, and enjoy that you are still in the game.

Chopping Onions

If you watch cooking shows you have seen this method for cutting onions. It is, the chef tells us, the only proper way to dice onions, and it is “super easy.” He is full of crap. Making a very similar series of cuts in a different sequence is vastly easier, faster, produces precisely the same results, and presents far less chance of cutting yourself.

First chop off the head of the onion as shown in picture #1, but also chop off the roots in precisely the same way. Chop the onion in half as shown in #3 except, of course, you won’t be cutting through the roots.

Now remove the outer skin from each half of the onion. This is the first part of it being easier, because having cut off the root there’s nothing holding the skin on and it’s a lot easier to remove it. I remove the first layer under the skin as well, since it tends to be a bit tough. Now for the dicing part.

What they show next is a set of horizontal cuts that must be made very carefully because they are being made underneath and very close to your hand, which is flat on top of the onion. Note also that it says, “Try to keep the cuts the same width apart.” Not easy when you can’t see what the hell you’re doing.

A second set of cuts is then made vertically, also with care to keep them carefully the same width apart, and finally a third set of cuts is made across the rest, providing the diced onion. That’s three sets of cuts, two of which need to be made very painstakingly.

Now the better way is to simply make a set of crosscuts, the same direction as the cut you made chopping off the root and head, which result in slices of onion. Hold those slices together as you make the cuts so that they are “flying in formation” when you are done and look like a half onion.

Now turn that assembly 90 degrees and make a series of cuts which result is diced onion. With each cut angle the knife just a bit so that you are making the cut nearly perpendicular to the surface into which the knife is cutting. At the center the knife will be vertical and at each end it will be angled slightly outward.

You now have the same results with only two sets of cuts that the silly chef achieved with three sets of cuts. You didn’t look as good as television, but then you aren’t on television; you are simply making dinner.

Oh yes, how do you avoid tears while chopping onions? Put the onion in the refrigerator for a couple of hours before chopping it.

What's New?

About twenty years ago there was a big thing about “fifty is the new thirty,” which had to do with aging. Since age thirty was in my drinking days and my memory of those days is cloudy at best, I never knew quite what it meant, but I can tell you right now that seventy is not the new fifty.

Today there is “orange is the new black,” and I have no clue what that means. I was in a church the other week and the minister’s outfit still looked black to me, so it’s not that. Maybe we’re supposed to keep an eye peeled overhead for orange helicopters?

Which brings us to “Syria is the new Afghanistan” and, yes, I just made that up based on watching the news and reading newspapers. They are pressing very hard to make us afraid of this new combined force of terrorists named ISIS and the territory they have occupied, which they are referring to as a “safe haven.” They are telling us that this terrorist army can “spread it’s agents throughout Europe and the United States” where they will be able to “mount small attacks,” and that if they maintain this “safe haven” long enough they will be able to use it for “planning 9/11 scale attacks.”

Because “9/11 scale attacks” can only be planned in “safe havens.” They cannot be planned in, say, downtown Hamburg, Germany. Oh, wait. The attack of 9/11 was planned in downtown Hamburg, Germany. And so, of course, we invaded and occupied Afghanistan.

I’m not particularly worried that ISIS is going to build massive airfields in northern Iraq or eastern Syria, from which they will launch massive Trans-Atlantic air strikes against the United States. What I am concerned about is that if enough people talk about a “safe haven” long enough, then Obama will feel compelled to launch another war to “deny them space in which to plan their attacks,” which we have been doing in Afghanistan for more than twelve years now.

Because Syria is, apparently, the new Afghanistan.

Has Anyone Ever Heard This?

CBS Evening News last night said that Gaza "was created in 1949 for the Palestinians after the Israeli war for independence." Has anyone ever heard it called that before? A "war for independence?" Is Isreal now the Middle East version of "American Exceptionalism?"

Fine Lines

From a comment at another venue, in which opinions were being offered on the situation between Israel and the Palestinians, along with commentary as to what America should do about it. As to the last, unfortunately, all too few properly opined that we should do nothing. Anyway, one commenter said to another that,

You should make a number of predictions based on your current knowledge: they will all prove wrong. Why am I certain of that? Because you are describing your own thoughts, not a situation in the actual world. Your hard headed "realism" is actually a reflection of your satisfaction with your own limited thinking.

You and Wolfowitz think alike. His predictions, too, were all wrong.

Write them down, [name omitted]. Write them down before you forget.

I was rolling on the floor. In reality, of course, he describes the nattering of pretty much the entirety of public discourse.

The Usual Numbers

As usual, the only number they showed us was that 288,000 new jobs had been created, and used that number to claim that the economy is gaining speed. If your goal is consumer purchasing power, perhaps that conclusion is a little optimistic.

They did they mention, for instance, that in that same report is a same message that part time jobs, voluntary and involuntary, soared by 1,115,000 in the same month that saw 288,000 new jobs. That means that using the best case scenario in which all of the 288,000 new jobs were full time jobs, then 827,000 other full time jobs became part time jobs. That's roughly equivalent to a loss of 413,500 full time jobs, which outweighs the 288,000 jobs created, and means the job market actually shrank by the equivalent of 125,500 full time jobs.

Because part time does not have the consumer spending power of full time.

Not a "Great Liberal"

Elizabeth Warren is widely hailed as the perfect liberal, or progressive as they are called today, and the ultimate champion for the working class, and a growing number of blog denizens are clamoring for her to run for president in 2016. They claim that she is to the left of the Democratic party and is as much an enemy of the corporate state as you and I are.

I’m somewhat less optimistic. We elected a one-term Senator who had a gift for passionate rhetoric once before, and how did that work out for us?

The latest video making the rounds is one where she “unloads” on Chris Matthews, something that in itself I applaud regardless of who does it. Consensus is that she kills the topic of how we should put the working class back to work, but what I hear from her is a bunch of hackneyed partisan cliches and an avoidance of the actual solution.

First she chants Obama’s mantra about education, but we have a plethora of highly educated unemployed people already, and more education is going to do nothing in terms of putting people back to work. Then she speaks of roads and bridges, another Obama mantra, but her angle is that they are “investments which allow small businesses to grow.” Oh, please. Then she comes to the 1980’s when “Republicans changed the way we manage our economy” and a distorted, abbreviated view of the admittedly nonsensical “trickle down” economic theory, but she omits entirely the Clinton dual policies of “global free market” economics which resulted in our manufacturing jobs being sent overseas and of financial deregulation which began on his watch but which Democrats all blame on George W. Bush.

In rebuttal to his accusations that Democrats have been talking the game but not walking the walk, she goes into a self righteous tirade about how every time Democrats bring up their programs the Republicans claim “there’s no money” to implement those programs and yet Republicans will not “give up those tax loopholes.” What she fails to admit is that Democrats had control of both houses of Congress for four years and did not even make an attempt to get rid of those tax loopholes themselves.

What she fails to face up to is that even when they controlled both houses of Congress they were unable to prevent Republicans from passing their own agenda. Republicans, with a minority in both houses of Congress were able to get their bills passed, and yet Democrats, with a minority in only one house, are unable to pass anything at all.

Warren, like other Democratic politicians, is so blinded by her partisanship that she does not recognize the impact of her own words. “The Republicans are blocking us.” So when the Republicans are in control they get their agenda. When the Democrats are in control the Republicans get their agenda. So, what value does it have to put the Democrats in control?

Wild Variance

San Diego does not experiance wild swings in its weather this time of year; forecasters actually have a rubber stamp with which they can execute their duty in a matter of seconds and then go to the beach. The ten-day forecast reads "clouds, then sunshine" every day except one, so we are bracing ourselves for a wild weekend. On Saturday we are apparently going to have one of our major weather swings, because for that day they are projecting "clouds giving way to sunshine." I imagine we will be able to cope.