Drunken Gas

Leave a reply

Has anyone else seen all those social media posts blaming the high price of gas on President Obama? Experts have pointed out that the causes for the rise and fall of gas prices are complex and have little to do with the President, but that doesn't seem to deter people from believing what they want to believe. Here's an interesting story that might help persuade some folks that the President, or anyone else for that matter, is really in control of the oil industry:

On June 30, 2009, oil mysteriously jumped by more than $1.50 a barrel during the night, to reach its highest price in eight months, the kind of swing that is caused by a major geopolitical event…

Although not authorized to invest company cash in trades, Steve Perkins, a long standing, senior broker at PVM Oil Futures, had managed to spend $520 million on oil futures contracts throughout the night, the FSA said.

On the morning of the 30th, an admin clerk called Perkins to ask why he had bought 7 million barrels of crude during the night. Perkins had no recollection of the transactions, and it turned out that he had made the trades during a “drunken blackout," according to the FSA.

By the time PVM realized the transactions had not been authorized by a client, they had incurred losses of $9,763,252.

Between the hours of 1:22 a.m. and 3:41 a.m., Perkins gradually bought 69 percent of the global market, while driving prices up from $71.40 to $73.05, by bidding higher each time.

Here's the crazy thing: the authorities only suspended this guy's trading license for five years and said they might give it back if he can prove he's conquered his drinking problem. If this is how the world works how can any one leader be held responsible for the outcome? The inmates are truly running the asylum.

Dilbert on the Debate

Leave a reply

Some gems from Scott Adams' review of the first 2012 Presidential debate:

I think Romney has a hypnotist for an advisor, or at least someone skilled in the dark arts of psychology and influence. I just watched him repeatedly lie to me and came away thinking he'd be a good choice for managing the economy. I'm not saying he actually would be a good choice, but he did something impressive: He made me think he wouldn't cut taxes at the same time he told his base he would. As a trained hypnotist myself, I rank his debate performance as breathtakingly brilliant. (Seriously.)

Meanwhile, President Obama was learning the hard way that the worst time to have anniversary sex is right before a debate. He looked a bit too relaxed. I think he should have lit a cigarette, taken a long puff, exhaled, and told the crowd that Romney would do for the country what the President just did for the First Lady. That would be totally bad ass. Then he could toss in a zinger about how awesome the sex was right after killing Bin Laden. I think we all know that evening was ear muff time for the Secret Service.

Jim Lehrer, who apparently died several months ago, moderated the debate. The pundits have been harsh on him today. But who else do you hire for the first debate? Do you hire someone who works for a Republican news network or someone from a Democrat news networks? Apparently the debate producers scoured the United States and decided that the only non-partisan left was a cadaver.

So glad I didn't watch.

An Ink-Stained Wretch Laments

Leave a reply

The Carrboro Citizen is shutting down its presses and its publisher, Robert Dickson, wonders aloud what the future holds for newspapers:

The problem is that professional journalism costs money, and that we have all gotten way too comfortable with getting our news for free. Journalists don’t make much money (just ask the Citizen staff), but they’ve still got to eat.

Newspapers have done this to themselves though, and pulling back from the brink is proving to be painful. The siren song of Internet advertising cash has not made up for the lost revenue from print editions. So, what do you know, newspapers across the land are deciding to charge for their online content. Gee, what a concept…

I’ve heard a neighbor tell me how easy it is to defeat the pay wall at The New York Times. The best $3.75 I spend every week is on that newspaper, and I can’t imagine a day without it. What’s our world going to be like when the Grey Lady goes down because readers won’t pay for content? Or The Wall Street Journal or The Washington Post or The News & Observer?

The republic will be on the rocks, that’s what will happen. We can have all the instant information we want, but we have to be able to trust it to make reasonable decisions…

So what does this have to do with the demise of The Carrboro Citizen? My pondering has led me to the belief that one future of hyperlocal news outlets, at least in the style of The Citizen, is as nonprofit entities.

It’s likely too much to ask of small local businesses to provide sufficient advertising revenue to sustain the necessary news coverage for a community like ours. A locally owned and operated nonprofit, however, could supplement ad sales with reader support and maybe a few grants, and come up with a sustainable model for local long-form journalism.

Who knows how we'll get our news in the future? Last night the country suffered through the first of three Presidential debates scheduled for this election season, and many of us tracked it by monitoring Twitter or Facebook. Who could have predicted even fifteen years ago that we'd be getting real-time "news" in 140 characters or less on a smart phone?

But that's news in the most shallow of senses, and does not answer the question of how/where we'll get the lcoal in-depth stories that have traditionally been the province of newspapers. Quite frankly the issue isn't the delivery system – paper vs. digital – but the ability for the people producing the stories to make a living doing it. 

The idea of creating a non-profit to house a local news operation is a good one, and for at least one more reason than Mr. Dickson mentioned: a non-profit is not owned by any one person and answers to a board of directors. Unlike a publicly owned company it isn't driven by the need to meet quarterly profit projections, and unlike a privately owned company it doesn't have to meet an owner's financial expectations or needs. Sure there will be people who exert more control on the organization than others, but there are mechanisms built into a non-profit corporation's structure that help prevent it going off the rails and losing focus on its mission. In fact, maybe its most important aspect is that its core mission moves from creating profit for its owners to serving its community's information needs. 

A non-profit structure wouldn't be a panacea, but if the objective is to create an institution that serves a community's information needs then it's probably a better fit than just about any other at this point in time. There's nothing wrong with for-profit newspapers, but as Mr. Dickson points out their days may be numbered.

Foreclosure Blossom

Leave a reply

Check out this interesting animated map showing how foreclosures exploded in the United States on a county-by-county basis. Interesting, but not surprising to folks in the Piedmont Triad, is the fact that the number of foreclosures in the area was already depressingly high in January '07, before the housing crisis hit most of the rest of the country. For instance in Forsyth County 1 in 837 homes was in foreclosure in January '07, and 1 in 549 in July '12. As you'll see when you look at the map, many other regions started out in better shape than the Triad, but quickly caught up as the economy tanked.

What’s a Good Education Worth?

Leave a reply

Fred Wilson has an interesting take on the student debt issue:

So we are big believers in the value of a higher education and we have invested in it for ourselves and our children.

I told the University President and the faculty members all that. But I also told them that I am deeply concerned that about the cost of a high quality education and the fact that it is getting out of reach for many. And I told them that I am not sure the return on the investment is as high as it once was for many degrees. And finally, I told them that too many students are walking out of college with a student loan burden that is crushing and that they can't and won't pay back. 

So how you reconcile these two opposing views and what can we do about it?…

But we also need to get more creative about the financing of higher education. We should measure the return on investment students are getting from the institutions they attend and the degrees they obtain and tie the amount of loans they can get to the returns they are likely to achieve. Students that attend institutions that can deliver higher returns should be able to take out larger loans.

Repayment terms need to change as well. Loan repayments should be capped at a percentage of current income. I know a woman who has been out of graduate school for more than a decade who dedicates one of her two paychecks a month to paying back her student loans. She is spending half of her take home income on her student loans. That is nuts.

Bubbles are driven by easy money that drives irrational behavior. Our student loan policies have been doing some of that. We can and should change our policies to force more rational decisions in the purchase of higher education in this country. 

There could be some pretty strong arguments made against tying the amount of a loan to the likely return of a degree. Someone who majors in English Lit with a concentration on 18th century poetry doesn't seem likely to have a high paying job, i.e. a high return, but you never know. There's also a compelling case for allowing kids to go on an intellectual exploration during their undergraduate years, and if you tie their loans to the return on any given degree you're likely to stifle that exploration.

But that's a nit-pick. Fred's core point, that we need to rethink how we structure and pay for higher education, is spot on. With two kids at NC State our family can tell you that the effects of reduced state funding are very real, and they are having a significant impact on students' abilities to fund their educations. Reduced state funding is leading inexorably to higher costs, which means more debt for students and an increasingly urgent need to figure out a way to turn the tide on student debt. 

Tangible Happiness

Leave a reply

Sasha Dichter's blog is fast becoming a favorite. His take on the "intangible dividend" of happiness:

Of course it’s hard to measure, of course it is squishy and self-reported, but if we’re ever going to get anywhere we have to have the comfort and confidence to say out loud that things like human dignity, pride, and yes happiness are the whole point, the only point really, and that everything we’re doing is aimed at loose proxies to those results – what could be more real or concrete than that?

Just think how much we’ve punted on this issue, if we’re really honest with ourselves.  We’ve come to a point where we’re saying with a straight face that if we put a lot of money into the impact investing sector and that money realizes a healthy level of financial return then we’ve had success.  That puts us about seven degrees removed from actually understanding if anyone is better off, happier, freer, more proud or connected or more able to realize their potential, if someone is more likely to realize justice if they’re wronged or less likely to fall back into poverty if they get sick.

Name That President

Leave a reply

If you had to guess the president to whom the following quote belongs, who would it be? Reagan? Kennedy? Roosevelt?

The country needs and, unless I mistake its temper, the country demands bold, persistent experimentation. It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something. The millions who are in want will not stand by silently forever while the things to satisfy their needs are within easy reach. We need enthusiasm, imagination and the ability to face facts, even unpleasant ones, bravely. We need to correct, by drastic means if necessary, the faults in our economic system from which we now suffer. We need the courage of the young. Yours is not the task of making your way in the world, but the task of remaking the world which you will find before you. May every one of us be granted the courage, the faith and the vision to give the best that is in us to that remaking!

If you guessed Roosevelt you'd be right, but which one?

This Ain’t Your Dad’s Wall Street

Leave a reply

Mark Cuban does a great job explaining why Wall Street is no longer the economic engine it once was:

Over just the past 5 years, the market has changed. It is getting increasingly difficult to just invest in companies you believe in. Discussion in the market place is not about the performance of specific companies and their returns. Discussion is about macro issues that impact all stocks. And those macro issues impact automated trading decisions, which impact any and every stock that is part of any and every index or ETF.  Combine that with the leverage of derivatives tracking companies,  indexes and other packages or the leveraged ETFs, and individual stocks become pawns in a much bigger game than I feel increasingly less  comfortable playing. It is a game fraught with ever increasing risk.

So back to the original question. What business is Wall Street in ?

Its primary business is no longer creating capital for business. Creating capital for business has to be less than 1pct of the volume on Wall Street in any given period. (I would be curious if anyone out there knows what percentage of transactions actually return money to a company for any reason). It wouldn’t shock me that even in this environment that more money flows from companies to the market in the form of buybacks (which i think are always a mistake), than flows into companies in the form of equity.

He then offers up some ideas about how to return Wall Street to its original role:

My 2 cents is that it is important for this country to push Wall Street back to the business of creating capital for business.  Whether its through a use of taxes on trades(hit every trade on a stock held less than 1 hour with a 10c tax and all these problems go away), or changing the capital gains tax structure so that there is no capital gains tax on any shares of stock (private or public company) held for 1 year or more, and no tax on dividends paid to shareholders who have held stock in the company for more than 5 years.  However we need to do it, we need to get the smart money on Wall Street back to thinking about ways to use their capital to help start and grow companies. That is what will create jobs. That is where we will find the next big thing that will accelerate the world economy.  It won’t come from traders trying to hack the financial system for a few pennies per trade.

Just Do Your Job

Leave a reply

Greensboro blogger Roch Smith, Jr. has been taking local CBS affiliate WFMY to task for passing off press releases or stories from other outlets as having been written by WFMY staffers. Roch calls it plagiarism, which I don't agree with IF the other parties are in agreement that it's okay for WFMY to do it. On the other hand it's incredibly lazy on the part of WFMY and it likely diminishes their reputation as a news outlet.

There's also a hidden danger to the practice of simply regurgitating press releases with the station's imprimatur: mistakenly giving credence to an organization, or even missing a story, because the station didn't bother to do any background on what it was sent. Today Roch found a perfect example of this at WFMY's website:

Here's why. When WFMY vomits up a glowing press release that touts a local sheriff heading off to some "border training" sponsored by Federation for American Immigration Reform (FAIR) without any of their own investigation, they miss the rather important fact that FAIR is tied to white supremacy and bigotry.


WFMY not only gives their poor audience the impression that everything is just peachy with the sheriff's trip — just as the press release promises and just as they've affirmed by putting a staff person's name to it — but they also fail to see the news right under their nose and ask the obvious question which is why the hell are local sheriffs attending a "training" event sponsored by this group?

So here's a lesson for you kids: laziness in your work almost always comes back to bite you. It will be interesting to see what happens with this.