The only economics-related aspect of this post is that the author is a former MN Fed Reserve employee. He quit his job to become a travel writer, and his blogs are both informative and fun to read:
http://www.leifpettersen.com/
In another life, I think I want to be a travel writer. Here is my favorite post so far--love the pictures, especially of the gold Buddhas (Wat Traimit):
http://www.leifpettersen.com/leifinasia3/bangkok.htm
"And if an epitaph be my story, I'd have a short one ready for my own: I had a lover's quarrel with the world." -- Robert Frost
Thursday, November 6, 2008
Wednesday, November 5, 2008
Earnings Estimates
Bloomberg is reporting that earnings estimates are finally being lowered:
Bloomberg Story
Once analysts reduce earnings per share, we will still have problems with predicting earnings from financial companies, but stocks themselves will be more attractive. People will still buy prescription medication, Coca-Cola, TVs, and McDonald's, and a host of other products even if their debt levels increase or if their houses are not worth as much.
Bloomberg Story
Once analysts reduce earnings per share, we will still have problems with predicting earnings from financial companies, but stocks themselves will be more attractive. People will still buy prescription medication, Coca-Cola, TVs, and McDonald's, and a host of other products even if their debt levels increase or if their houses are not worth as much.
Economic Plans
For the lawyers and policy geeks out there, I present to you the following:
Here is the Paulson plan (TARP Capital Plan), which was not passed:
http://paul.kedrosky.com/archives/2008/09/20/text_of_paulson.html
Here is what ultimately passed--the Emergency Economic Stabilization Act of 2008 (EESA):
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/28/AR2008092800900.html
More to come from our government, I bet. One question--if Sarbanes-Oxley didn't solve the problem of lying CEOs, what makes anyone think more regulation is going to fix our current problems? I don't know how to fix our economy, but I am surprised more condo/townhouse complexes aren't renting rather than trying to sell vacant units. I am also surprised that government officials are not talking more about assisting apartment complex owners and renters. If rents fall low enough, people can walk away from their houses and rent at reasonable prices. Then, the housing crisis becomes a matter of banks lowering housing prices to a level where it makes sense for prospective homeowners to buy. Perhaps I am missing something, but if I were Congress, I'd pass a $5,000 rental tax credit for families whose houses were underwater. I bet the banks would quickly start negotiating better terms for the current homeowners to convince them to stay or would keep the houses on their own books and start renting them to the current residents.
Here is the Paulson plan (TARP Capital Plan), which was not passed:
http://paul.kedrosky.com/archives/2008/09/20/text_of_paulson.html
Here is what ultimately passed--the Emergency Economic Stabilization Act of 2008 (EESA):
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/28/AR2008092800900.html
More to come from our government, I bet. One question--if Sarbanes-Oxley didn't solve the problem of lying CEOs, what makes anyone think more regulation is going to fix our current problems? I don't know how to fix our economy, but I am surprised more condo/townhouse complexes aren't renting rather than trying to sell vacant units. I am also surprised that government officials are not talking more about assisting apartment complex owners and renters. If rents fall low enough, people can walk away from their houses and rent at reasonable prices. Then, the housing crisis becomes a matter of banks lowering housing prices to a level where it makes sense for prospective homeowners to buy. Perhaps I am missing something, but if I were Congress, I'd pass a $5,000 rental tax credit for families whose houses were underwater. I bet the banks would quickly start negotiating better terms for the current homeowners to convince them to stay or would keep the houses on their own books and start renting them to the current residents.
"Yes We Can"
President-elect Barack Obama won the election and delivered an inspirational speech that left Oprah and Jesse Jackson in tears. Prior to Obama, John McCain delivered a speech that confirmed he's one of the most honest ("The American people have spoken...and they have spoken clearly.") and dignified politicians in American history.
98% of the results have been tallied, and the popular vote breakdown is as follows:
Obama 53%/ McCain 46% / Other Parties 1%
I predicted 53% / 44% / 3%, so I wasn't too far off. I overestimated the support the Green Party, Libertarians and Ron Paul write-ins would receive.
McCain's choice of Palin may be viewed as a poor decision by future historians; however, the theory in picking her was sound. Republicans have two competing strains--one is libertarian-ish, wanting lower taxes, fewer earmarks, less government spending, and smaller government; the other is Christian, wanting religion and their version of family values to be recognized. McCain believed he could attract the libertarian side by himself, so he chose Palin because he thought she could steer the Christian side to his camp. Theoretically, it might have worked, but he was left with what many people thought was more of a political Frankenstein than a perfect compromise.
If Palin really does get enough money to run for election in 2012, I predict another eight years of Democrats in the White House. The road to the American presidency goes through California, New York, Texas, Pennsylvania, Florida, and/or Illinois. It decidedly does not go through Alaska, Arizona, Oklahoma, Kentucky, or Alabama, most of which are losing residents while the less religious states gain residents. Using this electoral vote angle, Hillary Clinton supporters might admit that choosing Barack Obama over Senator Clinton was a wise choice--New Yorkers would vote Democrat anyway, and Obama would guarantee Illinois. The Republicans are now in a poor position--Jeb Bush is political kryptonite because of his family name, and there are few Republican politicians other than Senator McCain and Ron Paul who inspire Americans.
Let this be a lesson to the Republican party: you have to choose sides. Either you return to the prestige and integrity of Eisenhower, Goldwater, or Jefferson, or you take the American people into a religious era in a country that has wisely favored separation of church and state since its inception. In short, does the Republican party want to be the party of freedom and fiscal responsibility, or a conservative Christian party? It is time to choose.
Update on November 6, 2008: Greg Mankiw has similar thoughts on where the Republican Party should go:
http://gregmankiw.blogspot.com/2008/11/youth-vote-and-gop.html
___________________
Obama's victory speech:
CNN Transcript (Obama)
McCain's concession speech:
CNN Transcript (McCain)
http://www.cnn.com/ELECTION/2008/results/president/allcandidates/
98% of the results have been tallied, and the popular vote breakdown is as follows:
Obama 53%/ McCain 46% / Other Parties 1%
I predicted 53% / 44% / 3%, so I wasn't too far off. I overestimated the support the Green Party, Libertarians and Ron Paul write-ins would receive.
McCain's choice of Palin may be viewed as a poor decision by future historians; however, the theory in picking her was sound. Republicans have two competing strains--one is libertarian-ish, wanting lower taxes, fewer earmarks, less government spending, and smaller government; the other is Christian, wanting religion and their version of family values to be recognized. McCain believed he could attract the libertarian side by himself, so he chose Palin because he thought she could steer the Christian side to his camp. Theoretically, it might have worked, but he was left with what many people thought was more of a political Frankenstein than a perfect compromise.
If Palin really does get enough money to run for election in 2012, I predict another eight years of Democrats in the White House. The road to the American presidency goes through California, New York, Texas, Pennsylvania, Florida, and/or Illinois. It decidedly does not go through Alaska, Arizona, Oklahoma, Kentucky, or Alabama, most of which are losing residents while the less religious states gain residents. Using this electoral vote angle, Hillary Clinton supporters might admit that choosing Barack Obama over Senator Clinton was a wise choice--New Yorkers would vote Democrat anyway, and Obama would guarantee Illinois. The Republicans are now in a poor position--Jeb Bush is political kryptonite because of his family name, and there are few Republican politicians other than Senator McCain and Ron Paul who inspire Americans.
Let this be a lesson to the Republican party: you have to choose sides. Either you return to the prestige and integrity of Eisenhower, Goldwater, or Jefferson, or you take the American people into a religious era in a country that has wisely favored separation of church and state since its inception. In short, does the Republican party want to be the party of freedom and fiscal responsibility, or a conservative Christian party? It is time to choose.
Update on November 6, 2008: Greg Mankiw has similar thoughts on where the Republican Party should go:
http://gregmankiw.blogspot.com/2008/11/youth-vote-and-gop.html
___________________
Obama's victory speech:
CNN Transcript (Obama)
McCain's concession speech:
CNN Transcript (McCain)
http://www.cnn.com/ELECTION/2008/results/president/allcandidates/
Tuesday, November 4, 2008
92 Yr Old Woman Votes in Ambulance
This voting story just about sums up the intensity of this election--click on the link to read more:
AP Story
The line that stood out the most?
"She cast a straight Democratic ballot Tuesday."
2008 will go down in history as one of the most turbulent times in America. We had a stock market collapse, more deaths in Iraq, a sitting President who lost respect domestically and abroad, Russia's invasion of Georgia, crude oil reaching $120/barrel, and a nationwide housing crisis. I don't know about you, but I will be so happy on January 1, 2009.
AP Story
The line that stood out the most?
"She cast a straight Democratic ballot Tuesday."
2008 will go down in history as one of the most turbulent times in America. We had a stock market collapse, more deaths in Iraq, a sitting President who lost respect domestically and abroad, Russia's invasion of Georgia, crude oil reaching $120/barrel, and a nationwide housing crisis. I don't know about you, but I will be so happy on January 1, 2009.
Vote Today
It feels exciting to be a part of an election where both candidates are competent and respectable. I can barely remember the last time I felt genuinely happy about our presidential choices. Usually, we joke that our choices are between Tweedledee and Tweedledum, but this time, we have two honorable, dignified men in the race.
Based on my own informal survey, many young people (18 to 25 yrs) have not voted. One reason is because young people are more transient than the general population--they move for a job, for college, etc. As a result of this transience, it's harder for them to pro-actively register to vote. Without registering, a citizen cannot vote.
I predict a popular vote of 53% to 44%, with 3% voting independent/libertarian/Constitution/Green, in favor of Obama. If Obama wins, I will be very interested in whether the Democrats gain enough Congressional seats to prevent the Republicans from filibustering. As much as I like Obama, I don't want the Democrats to have unchecked power in Congress and two branches of government.
Based on my own informal survey, many young people (18 to 25 yrs) have not voted. One reason is because young people are more transient than the general population--they move for a job, for college, etc. As a result of this transience, it's harder for them to pro-actively register to vote. Without registering, a citizen cannot vote.
I predict a popular vote of 53% to 44%, with 3% voting independent/libertarian/Constitution/Green, in favor of Obama. If Obama wins, I will be very interested in whether the Democrats gain enough Congressional seats to prevent the Republicans from filibustering. As much as I like Obama, I don't want the Democrats to have unchecked power in Congress and two branches of government.
Stocks Update (November 4, 2008)
I haven't done a "Stocks Update" in a long time. To save time, I am going to list only the individual stocks I own in retirement accounts that exceed 2,000 dollars. As of today, November 4, 2008, here is the list:
Dominion Resources, Inc. (D)
EMC Corporation (EMC)
Swiss Francs ETF (FXF)
Intel Corporation (INTC)
U.S. Preferred Stock Index (PFF)
Swiss Helvetia Fund Inc. (SWZ)
Vanguard Pacific Stock ETF (VPL)
Utilities Select SPDR (XLU)
Yahoo, Inc. (YHOO)
I wish I owned more General Electric (GE) and Johnson and Johnson (JNJ). My strategy in my retirement accounts is to own stocks or ETFs with high dividend yields. So far, my biggest loser is Yahoo (YHOO). I am losing around $1,100 dollars on the stock, which isn't terrible, but certainly not ideal. I just saw a prominent Microsoft (MSFT) ad on Yahoo's front page, so perhaps Microsoft and Yahoo are on more cordial terms these days, which may lead to some form of a buyout.
Dominion Resources, Inc. (D)
EMC Corporation (EMC)
Swiss Francs ETF (FXF)
Intel Corporation (INTC)
U.S. Preferred Stock Index (PFF)
Swiss Helvetia Fund Inc. (SWZ)
Vanguard Pacific Stock ETF (VPL)
Utilities Select SPDR (XLU)
Yahoo, Inc. (YHOO)
I wish I owned more General Electric (GE) and Johnson and Johnson (JNJ). My strategy in my retirement accounts is to own stocks or ETFs with high dividend yields. So far, my biggest loser is Yahoo (YHOO). I am losing around $1,100 dollars on the stock, which isn't terrible, but certainly not ideal. I just saw a prominent Microsoft (MSFT) ad on Yahoo's front page, so perhaps Microsoft and Yahoo are on more cordial terms these days, which may lead to some form of a buyout.
Monday, November 3, 2008
Traditional Gaming Companies in Trouble
You want to know why Take Two Entertainment (TTWO) and Electronic Arts (ERTS) are going to have a harder time making money? Because smaller, more nimble companies like Zynga are moving on their turf. Here's an old TechCrunch post of Zynga--note that Bing Gordon, EA's former CEO, is involved in Zynga: Zynga Profile
Zynga is the creator of the new hit, YoVille, which is attracting fans not only worldwide, but also from more diverse groups, like college-age women. With its YoVille game attracting over 2.5 million active users on Facebook, Zynga is perfectly positioned to capture the growth in gaming, which is shifting away from major franchise hits to social networking and games that are able to get to the market faster, like Ultizen-style games: Interview with Ultizen CEO Lan Haiwen
Unfortunately, EA's and TTWO's problem lies within their business model. More specifically, their revenue projections rely on having hit franchises, like Madden NFL--meaning that revenue is dependent on very few sources--or on franchises that require large licensing fees. When you factor in the licensing fees a company like EA has to pay Hollywood studios (e.g. for EA's Harry Potter and Batman games), the NFL, and the NBA, you begin to see that EA is almost working to make money for other companies, while bearing most of the risk and the costs of failure.
I realize my assessment may be overly pessimistic; after all, most companies would kill to have exclusive rights to the only official Batman game, which will be a guaranteed hit. At the same time, relying on one-time hits has its own problems. For instance, EA/TTWO's business model must assume a major dropoff in sales after an initial release, because almost no game creates a major source of consistent revenue three years after its release. History has shown that a new franchise, like Spore, will do very well in an initial release, but sales will dramatically decrease afterwards, absent unusual circumstances. Thus, the larger gaming companies, despite creating blockbuster gaming hits once every few years, know they cannot rely on those hits for very long. Of course, certain games, like Grand Theft Auto, may be exceptions to this rule, but there is no guarantee of consistent success, and like most retailers, Take Two probably isn't looking forward to the 2008 X-Mas season.
Now, compare gaming software with Microsoft's Office software, which most analysts assume will attract new users and have old users upgrading for another ten years or more (despite arguably better products on the market, like Corel's Wordperfect Suite). A skeptic might look at the difficulty in creating gaming software that will attract users five to ten years from an initial release and say that even if a gaming company establishes a major hit, "So what?" The competition and costs in continuing to establish blockbuster hits will continue to be fierce and never-ending, while also being based in part on luck and consumer fickleness. It's now more apparent why the X-Box, even with Microsoft's money behind it and an in-house gaming development team, has had such difficulty making a net profit. Indeed, Microsoft recently lowered the price of its console to take market share from rivals--showing that it recognizes consumers have become more cost-conscious, exposing the gaming market's reliance on discretionary consumer income: X-Box Price Cut
If social networking games and mobile gaming are the future, then smaller, more nimble companies will be more competitive because of their smaller size, which leads to lower overhead, and their focus on bringing less complex games to market, which allows games to be introduced to the public faster and with less potentially devastating financial consequences. In contrast, if EA spends two years perfecting its new Batman game, and sales are flat, it will lose millions of dollars.
When I began analyzing the gaming market in light of the aforementioned issues, I came to the conclusion that the best way for EA and TTWO to continue growing would be to use their substantial cash reserves to acquire smaller companies; in other words, to choose the route Larry Ellison took Oracle (ORCL): Oracle's Acquisitions. Despite Oracle's proven software business model of smaller acquisitions and generating (not paying) licensing fees, most large gaming companies are trying to merge or buy out other major companies, which reveals a much different business strategy--one that may be completely out of touch with the future of gaming.
Zynga is the creator of the new hit, YoVille, which is attracting fans not only worldwide, but also from more diverse groups, like college-age women. With its YoVille game attracting over 2.5 million active users on Facebook, Zynga is perfectly positioned to capture the growth in gaming, which is shifting away from major franchise hits to social networking and games that are able to get to the market faster, like Ultizen-style games: Interview with Ultizen CEO Lan Haiwen
Unfortunately, EA's and TTWO's problem lies within their business model. More specifically, their revenue projections rely on having hit franchises, like Madden NFL--meaning that revenue is dependent on very few sources--or on franchises that require large licensing fees. When you factor in the licensing fees a company like EA has to pay Hollywood studios (e.g. for EA's Harry Potter and Batman games), the NFL, and the NBA, you begin to see that EA is almost working to make money for other companies, while bearing most of the risk and the costs of failure.
I realize my assessment may be overly pessimistic; after all, most companies would kill to have exclusive rights to the only official Batman game, which will be a guaranteed hit. At the same time, relying on one-time hits has its own problems. For instance, EA/TTWO's business model must assume a major dropoff in sales after an initial release, because almost no game creates a major source of consistent revenue three years after its release. History has shown that a new franchise, like Spore, will do very well in an initial release, but sales will dramatically decrease afterwards, absent unusual circumstances. Thus, the larger gaming companies, despite creating blockbuster gaming hits once every few years, know they cannot rely on those hits for very long. Of course, certain games, like Grand Theft Auto, may be exceptions to this rule, but there is no guarantee of consistent success, and like most retailers, Take Two probably isn't looking forward to the 2008 X-Mas season.
Now, compare gaming software with Microsoft's Office software, which most analysts assume will attract new users and have old users upgrading for another ten years or more (despite arguably better products on the market, like Corel's Wordperfect Suite). A skeptic might look at the difficulty in creating gaming software that will attract users five to ten years from an initial release and say that even if a gaming company establishes a major hit, "So what?" The competition and costs in continuing to establish blockbuster hits will continue to be fierce and never-ending, while also being based in part on luck and consumer fickleness. It's now more apparent why the X-Box, even with Microsoft's money behind it and an in-house gaming development team, has had such difficulty making a net profit. Indeed, Microsoft recently lowered the price of its console to take market share from rivals--showing that it recognizes consumers have become more cost-conscious, exposing the gaming market's reliance on discretionary consumer income: X-Box Price Cut
If social networking games and mobile gaming are the future, then smaller, more nimble companies will be more competitive because of their smaller size, which leads to lower overhead, and their focus on bringing less complex games to market, which allows games to be introduced to the public faster and with less potentially devastating financial consequences. In contrast, if EA spends two years perfecting its new Batman game, and sales are flat, it will lose millions of dollars.
When I began analyzing the gaming market in light of the aforementioned issues, I came to the conclusion that the best way for EA and TTWO to continue growing would be to use their substantial cash reserves to acquire smaller companies; in other words, to choose the route Larry Ellison took Oracle (ORCL): Oracle's Acquisitions. Despite Oracle's proven software business model of smaller acquisitions and generating (not paying) licensing fees, most large gaming companies are trying to merge or buy out other major companies, which reveals a much different business strategy--one that may be completely out of touch with the future of gaming.
John Edgar Wideman
Most people who know me know I love basketball. In honor of the recent NBA regular season tip-off, I wanted to introduce readers to John Edgar Wideman. Mr. Wideman, a controversial writer, has some interesting pieces on basketball and was a former All-Ivy League forward for U of Penn. His daughter, Jamila Wideman, played in the WNBA (thanks to former Stanford star Heather Owen for giving me the heads-up on this familial connection). Here is one paragraph from an interview with Mr. Wideman, where he weaves basketball within the larger context of life:
[B]asketball and other contact sports are all about testing, pushing, within arbitrary frameworks. They are all about physicality. So it was very natural to me. I trust the body. I trust pleasure. I trust pain. You can muck around with those a little, but after a while they win. They tell you they're the boss.
http://findarticles.com/p/articles/mi_m2838/is_2_34/ai_64397591/pg_1
Here is my favorite paragraph from Wideman:
Well, if something terrible happens, you've got to do something about it. Your choice is either to be crushed by it or to carry on. That's a choice all the time. At this point today, and in my work so far, I have tried to suggest that it is worth carrying on. That's in fact what I am doing. I think the best thing and the worst thing about life is that you don't know what is going to happen. The best thing and the worst.
http://www.salon.com/nov96/interview2961111.html
Wideman's most popular basketball book is Hoop Roots: Basketball, Race, and Love. I have not read it but hope to start it one day--right now, I am still working through Pat Conroy's delightful book, My Losing Season.
[B]asketball and other contact sports are all about testing, pushing, within arbitrary frameworks. They are all about physicality. So it was very natural to me. I trust the body. I trust pleasure. I trust pain. You can muck around with those a little, but after a while they win. They tell you they're the boss.
http://findarticles.com/p/articles/mi_m2838/is_2_34/ai_64397591/pg_1
Here is my favorite paragraph from Wideman:
Well, if something terrible happens, you've got to do something about it. Your choice is either to be crushed by it or to carry on. That's a choice all the time. At this point today, and in my work so far, I have tried to suggest that it is worth carrying on. That's in fact what I am doing. I think the best thing and the worst thing about life is that you don't know what is going to happen. The best thing and the worst.
http://www.salon.com/nov96/interview2961111.html
Wideman's most popular basketball book is Hoop Roots: Basketball, Race, and Love. I have not read it but hope to start it one day--right now, I am still working through Pat Conroy's delightful book, My Losing Season.
Warren Buffett on Geeks
Today's WSJ had another gem from Warren Buffett (front page). Regarding the computer programs that financial firms relied upon to evaluate so-called safe investments and derivatives, Warren delivered another classic line:
All I can say is, beware of geeks...bearing formulas.
Oh, the obviousness, especially post-LTCM.
All I can say is, beware of geeks...bearing formulas.
Oh, the obviousness, especially post-LTCM.
Genetic Ancestry
National Geographic is building an ancestry database. It's called the Genographic Project, and it's cheaper but much less specific than the 23andme/ genetic test:
https://www3.nationalgeographic.com/genographic/
For $99.95, you will get a kit in the mail where you provide some DNA for analysis. This is accomplished by scraping the inside of your cheek and then placing the samples in a watery solution to ship to National Geographic. My first sample didn't work, probably because I ate food too close to the scraping, but my second sample had enough DNA for analysis. It turns out I am a member of the Haplogroup J and J2. Wikipedia has a good entry on this haplogroup:
http://en.wikipedia.org/wiki/Haplogroup_J2_(Y-DNA)
Apparently, my particular haplogroup is shared by everyone from Greeks to Italians to Iranians to Sephardic Jews. Here is the particular breakdown of shared ancestry, from Wikipedia and National Geographic:
Iraqis 29.7%, Lebanese 29.5%, Syrians 29%, Sephardic Jews 29%, Kurds 28.4% , Turks 27.9%, Georgians 26.7%, Iranians 23.3%, Ashkenazi Jews 23.2%, Greeks 22.8%, Italians 19.3%, Tajiks 18.4%, and southern Spaniards 10%.
Wikipedia had a more expansive list than the National Geographic results, so after you receive your haplogroup results, you should view the relevant Wikipedia entry for more information.
I'm not sure what these results really show. Much of it is probably based on the program's original ancestry database. For example, if not enough Persians are in the original database, then fewer samples will be classified as Iranian. I'd be very interested in seeing how National Geographic set up its original ancestry database before it cross-compared new DNA samples.
My sister also did the test and her haplogroup is found disproportionately among the Finnish in Finland. So it appears she and I are a combination of Mediterranean and Scandinavian ancestry. What does it all mean? Who knows? My Mediterranean side prefers warmer weather, so maybe I will stay put in California. On the other hand, perhaps this will convince me to go to Finland one day and visit. I've always liked Matt Damon's character in Good Will Hunting, and Damon is Finnish-American. On the other hand, apparently Aileen Carol Wuornos (a serial killer) is Finnish-American, too. It just goes to show you there's not much you can glean from genetic data.
Even so, if some government official from Finland sees this post and wants to offer me a free trip to the Motherland, I'd happily accept--I mean, there's nothing wrong with a country taking care of one of their long-lost emigrants, right? I'll go brush up on my Finnish--especially these two phrases: Minä en ymmärrä suomea, and Puhutteko englantia?
https://www3.nationalgeographic.com/genographic/
For $99.95, you will get a kit in the mail where you provide some DNA for analysis. This is accomplished by scraping the inside of your cheek and then placing the samples in a watery solution to ship to National Geographic. My first sample didn't work, probably because I ate food too close to the scraping, but my second sample had enough DNA for analysis. It turns out I am a member of the Haplogroup J and J2. Wikipedia has a good entry on this haplogroup:
http://en.wikipedia.org/wiki/Haplogroup_J2_(Y-DNA)
Apparently, my particular haplogroup is shared by everyone from Greeks to Italians to Iranians to Sephardic Jews. Here is the particular breakdown of shared ancestry, from Wikipedia and National Geographic:
Iraqis 29.7%, Lebanese 29.5%, Syrians 29%, Sephardic Jews 29%, Kurds 28.4% , Turks 27.9%, Georgians 26.7%, Iranians 23.3%, Ashkenazi Jews 23.2%, Greeks 22.8%, Italians 19.3%, Tajiks 18.4%, and southern Spaniards 10%.
Wikipedia had a more expansive list than the National Geographic results, so after you receive your haplogroup results, you should view the relevant Wikipedia entry for more information.
I'm not sure what these results really show. Much of it is probably based on the program's original ancestry database. For example, if not enough Persians are in the original database, then fewer samples will be classified as Iranian. I'd be very interested in seeing how National Geographic set up its original ancestry database before it cross-compared new DNA samples.
My sister also did the test and her haplogroup is found disproportionately among the Finnish in Finland. So it appears she and I are a combination of Mediterranean and Scandinavian ancestry. What does it all mean? Who knows? My Mediterranean side prefers warmer weather, so maybe I will stay put in California. On the other hand, perhaps this will convince me to go to Finland one day and visit. I've always liked Matt Damon's character in Good Will Hunting, and Damon is Finnish-American. On the other hand, apparently Aileen Carol Wuornos (a serial killer) is Finnish-American, too. It just goes to show you there's not much you can glean from genetic data.
Even so, if some government official from Finland sees this post and wants to offer me a free trip to the Motherland, I'd happily accept--I mean, there's nothing wrong with a country taking care of one of their long-lost emigrants, right? I'll go brush up on my Finnish--especially these two phrases: Minä en ymmärrä suomea, and Puhutteko englantia?
Sunday, November 2, 2008
Election Won't Have Long Term Impact
From AP writer Madlen Read:
[I]nvestors shouldn't get too caught up in the market's short-term reaction after the election results. The Dow surged, for example, after President Hoover was elected in 1928 — and the next year the it crashed, ushering in the Great Depression.
If the next two unemployment reports show increased layoffs, they will overshadow any election results. If you are a pessimist who believes the market has already priced in an Obama election and is due for another technical bounce, one short-term strategy might be to buy now and then sell in mid-January 2009. Personally, I am overweight tech stocks.
The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.
[I]nvestors shouldn't get too caught up in the market's short-term reaction after the election results. The Dow surged, for example, after President Hoover was elected in 1928 — and the next year the it crashed, ushering in the Great Depression.
If the next two unemployment reports show increased layoffs, they will overshadow any election results. If you are a pessimist who believes the market has already priced in an Obama election and is due for another technical bounce, one short-term strategy might be to buy now and then sell in mid-January 2009. Personally, I am overweight tech stocks.
The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.
Saturday, November 1, 2008
Harvard Law Grad Burns Diploma
A Harvard Law grad has burned his diploma and has quit the daily grind:
ABA Journal Article
http://adventuresinvoluntarysimplicity.blogspot.com/2008/10/follow-your-dreams.html
His blog is here:
http://adventuresinvoluntarysimplicity.blogspot.com/
ABA Journal Article
http://adventuresinvoluntarysimplicity.blogspot.com/2008/10/follow-your-dreams.html
His blog is here:
http://adventuresinvoluntarysimplicity.blogspot.com/
I've also learned that there is something seriously wrong with law firm life. I've been blogging for five months now, and I am still surprised by the sheer number of e-mails I receive from other lawyers who are dealing with some of the very same issues I struggle with. I think there is a yearning out there for a way to reconcile the demands of a legal career with other life goals. Many lawyers feel that they have rejected important aspects of themselves in exchange for a life they no longer feel they want to live. They feel trapped because they have to pay a mortgage, student loans, private school tuition, etc. ... but have no idea how to get out.
I think it is important to emphasize that not every lawyer working at a law firm is unhappy. Some of my very best friends have thrived in that environment and are genuinely happy. If you derive genuine, meaningful pleasure from the profession and can overcome all the obstacles that this lifestyle places on your personal life, then you have it made.
Like most things in life, law practice is what you make of it, but there are definitely more workaholics in the legal profession. For me, it's not the practice of law that is problematic, but the 24-7 nature of the job. I feel discombobulated when I am not working because I am afraid I might miss important messages and phone calls; also, being a solo practitioner, it's almost impossible to take two week vacations. I've gone five years now without a two week vacation (and I'm not sure if I've taken any one week vacations, either, except one time when I was best man). I hope to take a two week vacation next year. A friend suggested San Luis Obispo, so I might go there for a simple, relaxing vacation.Recession Hits Law Firms
Two major SF law firms have shut down:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/10/31/MNA113S07P.DTL
You know the economy's bad when lawyers can't find work. On the other hand, like most professions, certain subgroups do well even when an overall industry doesn't. For example, bankruptcy lawyers, especially those who can handle Chapter 11s, will have plenty of work. Family lawyers probably aren't worrying too much, either. As for me, a labor and employment attorney, I'm not sure how everything will shake out, but I'm not overly concerned.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/10/31/MNA113S07P.DTL
You know the economy's bad when lawyers can't find work. On the other hand, like most professions, certain subgroups do well even when an overall industry doesn't. For example, bankruptcy lawyers, especially those who can handle Chapter 11s, will have plenty of work. Family lawyers probably aren't worrying too much, either. As for me, a labor and employment attorney, I'm not sure how everything will shake out, but I'm not overly concerned.
Friday, October 31, 2008
It's Dues Paying Time
Carl Haefling has one of the best articles I've seen on the current economic crisis and its potential consequences:
Carl Haefling on Paying Your Dues
The hard lesson learned, and this seems to keep repeating itself, is that in a Capitalistic economy if there is a good idea that creates wealth quickly, it will be identified, copied and mass created until it creates failure. We have seen that happen over and over in the financial markets and with corporations who are successful for a period of time and almost inevitably fail. Demand destruction has effectively ruined Bear Stearns, Lehman Brothers, hundreds if not thousands of mortgage companies, and forced banks and related businesses into merger or bankruptcy. More and more companies will go out of business, the unemployment levels will expand, and there is little that Obama or McCain can do about it. The decisions made by the Bush Administration and the Fed have drastically reduced our choices in funding our financial obligations and the various programs that our citizens have become accustomed to.
Carl Haefling on Paying Your Dues
The hard lesson learned, and this seems to keep repeating itself, is that in a Capitalistic economy if there is a good idea that creates wealth quickly, it will be identified, copied and mass created until it creates failure. We have seen that happen over and over in the financial markets and with corporations who are successful for a period of time and almost inevitably fail. Demand destruction has effectively ruined Bear Stearns, Lehman Brothers, hundreds if not thousands of mortgage companies, and forced banks and related businesses into merger or bankruptcy. More and more companies will go out of business, the unemployment levels will expand, and there is little that Obama or McCain can do about it. The decisions made by the Bush Administration and the Fed have drastically reduced our choices in funding our financial obligations and the various programs that our citizens have become accustomed to.
It is now dues paying time.
Mr. Haefling also has some choice words for libertarians:
Libertarians for the most part believe that the higher nature of humanity will surface and ultimately allow for a free market to prevail. I believe that is naive at best.
Ouch. I don't think libertarians believe the "higher nature of humanity" will surface in a crisis. It's the other way around, actually. The lower nature of humanity will lead to mistakes, and we have two choices: one, increase government and its interference into our private lives; or two, accept the consequences of our mistakes without burdening those who did not participate in our follies.
NY Predicts 47 Billion Dollar Deficit
NY forecasts a budget deficit of 47 billion dollars over the next four years:
LA Times Article
Over the next four years, New York must confront a budget gap of $47 billion...Projected state budget deficits nationwide are expected to total at least $100 billion by fiscal 2010.
Almost sounds small when compared to 700 billion...almost.
LA Times Article
Over the next four years, New York must confront a budget gap of $47 billion...Projected state budget deficits nationwide are expected to total at least $100 billion by fiscal 2010.
Almost sounds small when compared to 700 billion...almost.
Bill Fleckenstein on the U.S. Dollar
Bill Fleckenstein, a hedge fund manager, hates what we've done to the American dollar and says a weaker dollar won't fix our trade deficit:
http://moneycentral.msn.com/content/P93626.asp
We don't export enough to solve our trade deficit. What we need to do is stop consuming beyond our means and start saving, which is what will be forced upon us eventually.
Bill's Archives:
http://articles.moneycentral.msn.com/Commentary/ByAuthor/BillFleckenstein.aspx
http://moneycentral.msn.com/content/P93626.asp
We don't export enough to solve our trade deficit. What we need to do is stop consuming beyond our means and start saving, which is what will be forced upon us eventually.
Bill's Archives:
http://articles.moneycentral.msn.com/Commentary/ByAuthor/BillFleckenstein.aspx
Thursday, October 30, 2008
Foreign Debtholders and National Debt
It's one day early, but Happy Halloween. If the above chart doesn't scare you, click on the link below and view the national debt:http://perotcharts.com/home/
The Big Picture (apologies to Barry Ritholtz)
The stock markets went up substantially today and yesterday because the Fed cut interest rates to 1%. Interest rate cuts usually cheapen a country's currency, lower the available interest rates for CDs and regular savings accounts, and make commodities, like oil, more expensive. Thus, the joy of seeing your stock market gains should be tempered by the fact that in real terms, if you are a saver, your chances of losing to inflation have increased dramatically. One valuable lesson I've learned from the recent turmoil is to increase exposure to commodities if I know the Fed is going to cut interest rates. I had done so indirectly by investing in a Brazilian fund and it is now paying off handsomely--at least today. Who knows what tomorrow will bring? I had also recently invested a small amount in TIP, which may help as a hedge against core inflation.
As for directly saving, I had hoped to buy an ING 4.25% CD, but apparently Washington Mutual (now JP Morgan) places a five day hold on any transfers. The 4.25% offer still exists, and I am hoping ING maintains it, at least until tomorrow, when my transfer money is available.
Call me a young curmudgeon, but all of this strikes me as folly. The reason we got into this mess is because Greenspan lowered interest rates to 1% and held it there for too long, and now, to correct the problem caused by the lower interest rates, we are going to lower interest rates to 1%--the exact same action that got us in trouble in the first place. I can't help but think of the old saying that insanity is doing the same thing over and over again and expecting different results. We better pray Bernanke is good at timing the economy and will raise interest rates as soon as possible. Otherwise, we might be in for another pop in a new bubble five years from now.
As for directly saving, I had hoped to buy an ING 4.25% CD, but apparently Washington Mutual (now JP Morgan) places a five day hold on any transfers. The 4.25% offer still exists, and I am hoping ING maintains it, at least until tomorrow, when my transfer money is available.
Call me a young curmudgeon, but all of this strikes me as folly. The reason we got into this mess is because Greenspan lowered interest rates to 1% and held it there for too long, and now, to correct the problem caused by the lower interest rates, we are going to lower interest rates to 1%--the exact same action that got us in trouble in the first place. I can't help but think of the old saying that insanity is doing the same thing over and over again and expecting different results. We better pray Bernanke is good at timing the economy and will raise interest rates as soon as possible. Otherwise, we might be in for another pop in a new bubble five years from now.
Wednesday, October 29, 2008
Margaret and Helen on Goldwater
Apparently, Margaret and Helen have taken the blogging world by storm:
I’m old enough to remember the Republican party of Barry Goldwater - when the party stood for fiscal responsibility, small government and personal freedoms. I remember when I could talk with friends about politics and just agree to disagree. And then religious nut cases decided that if you didn’t agree with them you were immoral. So they went and elected George Bush President so he could take the Republican Party from being a party full of respectable people to a party filled with asses, jackasses and yes - [people] like Sarah Palin.
Margaret and Helen
It's nice to have people who remember what real Republicans used to stand for.
I’m old enough to remember the Republican party of Barry Goldwater - when the party stood for fiscal responsibility, small government and personal freedoms. I remember when I could talk with friends about politics and just agree to disagree. And then religious nut cases decided that if you didn’t agree with them you were immoral. So they went and elected George Bush President so he could take the Republican Party from being a party full of respectable people to a party filled with asses, jackasses and yes - [people] like Sarah Palin.
Margaret and Helen
It's nice to have people who remember what real Republicans used to stand for.
Arbitrage Opportunity?
Rohm & Haas Co. (ROH) shareholders approved a deal with Dow Chemical (DOW). The offer is apparently going to be an all-cash deal, although there is some risk that the deal's terms may change. I just bought 40 shares of ROH today. ROH is selling at around $68/per share, and DOW's offer was to buy them at $78/per share.
BUD is another possible arbitrage play, but I have not bought any shares of BUD.
The efficient market hypothesis would say that the lower price is due to the risk that the deal will not get financing and will collapse; however, in a world of 1% interest rates, that kind of risk should not be providing an arbitrage opportunity of 10% or more. Warren Buffett, of course, hates and disagrees with the efficient market hypothesis. These are interesting times.
The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.
BUD is another possible arbitrage play, but I have not bought any shares of BUD.
The efficient market hypothesis would say that the lower price is due to the risk that the deal will not get financing and will collapse; however, in a world of 1% interest rates, that kind of risk should not be providing an arbitrage opportunity of 10% or more. Warren Buffett, of course, hates and disagrees with the efficient market hypothesis. These are interesting times.
The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.
Steve Forbes on Gold and the Fed
Steve Forbes, in November's Commonwealth Club magazine, says ignore the Fed and look at gold prices:How do you know whether this thing [market situation] is getting better or not? Don't listen to the Federal Reserve--they speak what sounds like the English language but is designed to leave a fog of confusion. [Instead] Just look at the commodity markets, particularly the gold price. This has worked for 4,000 years; it'll give you a good indication whether they're doing it right or wrong. Right now, gold has come down a little bit, but it's still high, $870 or $880 an ounce. If it stays in that range, expect that more strange things will happen. If it comes down to the $600, $500 range, and they keep it there--don't let it fall below that--we'll be okay; we'll get out of this pretty quickly. Just watch the commodity markets, not what these folks [at the Fed] say.
Snarky. And probably true. As of October 29, 2008, gold was between $740 and $750 an ounce.
Tuesday, October 28, 2008
Alec Baldwin on Family Court
Behind Alex Baldwin's funnyman persona is a libertarian--at least when it comes to the family court system. In the Commonwealth Club's November 2008 article (pp. 45), The Ex-Files, he talks about "parental alienation" and government corruption. Most citizens think the court system is there to protect them and be fair. Mr. Baldwin's experience should hammer home the reality that court systems are not blessed with any special fairness--they are government agencies, and like all government agencies, have the same incentives and disincentives to work hard and to achieve just results.
The difference in family court, Baldwin argues, is that the incentives are aligned to work against the family and against fairness:
The whole custody evaluation system in Los Angeles is corrupt. It is bankrupt. That is the problem. The judges can do whatever they want to do, which is what you learn about all courtrooms in this country.
In other words, your case is only as good as the judge you (randomly) get. Baldwin points out that state court judges are subject to political pressure, causing an "implied corruption":
These judges are there by appointment, or they run for political office. Either way, there's a mechanism by which they can be punished if they don't get it. If they don't serve the pit boss, you make a call to Sacramento and say, "Get rid of this woman." ... So there is implied corruption in the terms that they work for these law firms.
[J]udges and lawyers are never going to help us. Schmucks like me walk in...and they suck it [your money] out of you. They think it's great. Why change that?
In other words, the incentives for lawyers to work things out are misaligned in civil litigation, and even more so in family court.
I used to work in a family law firm's offices, and the first action they usually took upon being hired was to file for a restraining order and include the worst possible allegations against the opposing side. Allegations of physical or verbal abuse (no matter how slight) would be submitted to the Court, which expected these kinds of allegations and seemed inclined towards granting a restraining order. So of course the other side would get one or try to get one, and now you've got these emotionally-charged allegations going back and forth, which required the use of mediators, facilitators, and numerous government employees. If you ever get divorced, look up collaborative divorce--it may be cheaper and, more importantly, easier on your soul.
Update on November 23, 2008: I found a link to Alec Baldwin's speech:
http://weimarworld.blogspot.com/2008/09/alec-baldwin-discusses-la-family-court.html/pres02.htm
The difference in family court, Baldwin argues, is that the incentives are aligned to work against the family and against fairness:
The whole custody evaluation system in Los Angeles is corrupt. It is bankrupt. That is the problem. The judges can do whatever they want to do, which is what you learn about all courtrooms in this country.
In other words, your case is only as good as the judge you (randomly) get. Baldwin points out that state court judges are subject to political pressure, causing an "implied corruption":
These judges are there by appointment, or they run for political office. Either way, there's a mechanism by which they can be punished if they don't get it. If they don't serve the pit boss, you make a call to Sacramento and say, "Get rid of this woman." ... So there is implied corruption in the terms that they work for these law firms.
[J]udges and lawyers are never going to help us. Schmucks like me walk in...and they suck it [your money] out of you. They think it's great. Why change that?
In other words, the incentives for lawyers to work things out are misaligned in civil litigation, and even more so in family court.
I used to work in a family law firm's offices, and the first action they usually took upon being hired was to file for a restraining order and include the worst possible allegations against the opposing side. Allegations of physical or verbal abuse (no matter how slight) would be submitted to the Court, which expected these kinds of allegations and seemed inclined towards granting a restraining order. So of course the other side would get one or try to get one, and now you've got these emotionally-charged allegations going back and forth, which required the use of mediators, facilitators, and numerous government employees. If you ever get divorced, look up collaborative divorce--it may be cheaper and, more importantly, easier on your soul.
Update on November 23, 2008: I found a link to Alec Baldwin's speech:
http://weimarworld.blogspot.com/2008/09/alec-baldwin-discusses-la-family-court.html/pres02.htm
Monday, October 27, 2008
Cops and Robbers
In today's SJ Merc (October 27, 2007, page 2B), John Woolfolk talks about police officer pay in San Jose:
Basic pay for a San Jose officer is now $108,167, excluding overtime; with benefits, the total cost comes to $147,614.
Note that the basic salary excludes overtime pay, which can be substantial. The SJ Police Department is now asking for a 4% raise. Each 1% in raises costs San Jose taxpayers 1.9 million dollars each year. If the city is inclined to grant any raise, it should be in the form of a higher salary, which can be more easily tracked than benefits. The costs of increased benefits, such as pensions, are almost impossible to determine until they become due.
Basic pay for a San Jose officer is now $108,167, excluding overtime; with benefits, the total cost comes to $147,614.
Note that the basic salary excludes overtime pay, which can be substantial. The SJ Police Department is now asking for a 4% raise. Each 1% in raises costs San Jose taxpayers 1.9 million dollars each year. If the city is inclined to grant any raise, it should be in the form of a higher salary, which can be more easily tracked than benefits. The costs of increased benefits, such as pensions, are almost impossible to determine until they become due.
Vanguard's John Bogle on Investing
John Bogle on Investing:
http://www.nytimes.com/2008/10/26/business/26bogle.html
“If you were to put your money away and not look at it for many years, until you were ready for retirement,” he said, “when you finally looked at it, you’d probably faint with amazement at how much money is in there.”
http://www.nytimes.com/2008/10/26/business/26bogle.html
“If you were to put your money away and not look at it for many years, until you were ready for retirement,” he said, “when you finally looked at it, you’d probably faint with amazement at how much money is in there.”
Corporate Bond Yields: the Best Indicator?
I was watching CNBC today, and one manager made perfect sense. He said stocks were low based on valuation, but he was in cash. He indicated he was going to wait until the market stabilized before investing in stocks, because right now, the market was behaving irrationally, and he did not want to risk timing a recovery too early. He also said that when yields on safer (GE, etc.) corporate bonds narrowed, that might be the time to buy stocks. He was long cash and corporate bonds. If you want to follow his advice, you may want to consider buying iShares S&P U.S. Preferred Stock Index (PFF), a preferred shares ETF, and/or T. Rowe Price's Corporate Income Fund. I own PFF, and may buy some of the T. Rowe Corporate Income fund.
The Government's Pension Plan
The AP's Erica Werner on why government employees aren't like average Americans:
http://finance.yahoo.com/focus-retirement/article/106022/Meltdown-Retirement-Blow-Is-Softer-for-Lawmakers
She has some interesting points about why government's interests may not be aligned with the people's interests.
http://finance.yahoo.com/focus-retirement/article/106022/Meltdown-Retirement-Blow-Is-Softer-for-Lawmakers
She has some interesting points about why government's interests may not be aligned with the people's interests.
Sunday, October 26, 2008
Frigor Chocolate and the Economy
So many people have made sensible comments about the bottom being far off, I feel anxious. Their arguments, unfortunately, make sense:
1. The recession is just beginning to hit Europe.
2. The unemployment rate will rise, as companies lay off employees (e.g. Yahoo).
3. The ARMs (adjustable rate mortgages) are going to be re-set at higher interest rates, causing more foreclosures, and placing more downward pressure on housing prices.
4. The dollar will weaken, as the Chinese and Japanese begin to put more of their money in Euros to diversify their holdings.
When anxious, I suggest eating chocolate. Here is a link to the best chocolate I know of, called Frigor:
http://www.cailler.ch/en/sor/fri/default.asp
At least Warren Buffett is buying U.S. shares, so the optimists have good company.
1. The recession is just beginning to hit Europe.
2. The unemployment rate will rise, as companies lay off employees (e.g. Yahoo).
3. The ARMs (adjustable rate mortgages) are going to be re-set at higher interest rates, causing more foreclosures, and placing more downward pressure on housing prices.
4. The dollar will weaken, as the Chinese and Japanese begin to put more of their money in Euros to diversify their holdings.
When anxious, I suggest eating chocolate. Here is a link to the best chocolate I know of, called Frigor:
http://www.cailler.ch/en/sor/fri/default.asp
At least Warren Buffett is buying U.S. shares, so the optimists have good company.
Saturday, October 25, 2008
Death Penalty Economically Unviable?
Gerry Uelman writes that the benefits of the death penalty don't outweigh its costs (Fall 2008, Santa Clara Law, pps. 10-11):
Because the death penalty is being sought, the prosecution and defense must actually prepare for two trials, one to determine guilt, the other to determine the sentence...those elements added approximately $500,000 to the cost of a homicide trial.
The bottom line: a conservative estimate of the current cost of our death penalty law in California is $137.7 million per year...to total $232.7 million [after implementing commission's recommendations].
I used to be pro-death penalty until I saw how the system works. I am still pro-death penalty in principle, but from an economic perspective, most studies show it's better to have life without parole. The other benefit of life without parole over the death penalty? Humility. The ones that were wrongfully convicted may get a chance to prove their innocence through DNA or some other new method.
Because the death penalty is being sought, the prosecution and defense must actually prepare for two trials, one to determine guilt, the other to determine the sentence...those elements added approximately $500,000 to the cost of a homicide trial.
The bottom line: a conservative estimate of the current cost of our death penalty law in California is $137.7 million per year...to total $232.7 million [after implementing commission's recommendations].
I used to be pro-death penalty until I saw how the system works. I am still pro-death penalty in principle, but from an economic perspective, most studies show it's better to have life without parole. The other benefit of life without parole over the death penalty? Humility. The ones that were wrongfully convicted may get a chance to prove their innocence through DNA or some other new method.
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