A Letter from the US Economy

Dear US Populace,

Though in the past I have never directly addressed you, preferring to act either via unseen methods (the so-called "invisible hands") or through sweater-clad proxies, I am taking the exceptional step of speaking directly to you, the US taxpayer, during this time of our joint crisis.

I have taken this drastic measure because more and more of you are being misled by charlatans, fools, and gun-toting religious nuts who want you to believe that I will receive little or no benefit from the stimulus package that is currently passing through congress.

I can assure you that nothing could be further from the truth, and I shall be stimulated more thoroughly than Ron Jeremy after swilling down a Cialis cocktail and dropping into the Playboy grotto.

Perhaps you live in a fairy-tale world where cat feces miraculously shape themselves into effigies of the Virgin Mary strangling Christ by his umbilical cord, or where bicycle paths spontaneously carve themselves in areas where they are patently infeasible and unnecessary, but here in the real world it takes tax money forcibly removed from your pocket to provide these valuable social services to the chronically unskilled and underemployed.

During your morning commute on the Interstate, where you see a large empty expanse of terrain beside the road, I see a place where an ultra-modern, high-cost light rail system could endlessly shuttle half-empty trains back and forth in an eternal procession of protected union jobs and hopelessly outdated railworker benefits packages, all taking people from a place they don't live near to another place they don't want to go.

Assuming, of course, that no tit mice or red-crested dungbombers would be disturbed by the installation of such a rail system, in which case it will have to be rerouted through a residential area.

I have read several economic "columnists" claim that there are legitimate concerns, but I can assure you that they are invalid. Even now sociology and performing-arts majors are flooding the rolls of the unemployed; don't they deserve a chance to be hired by a shoddy construction outfit owned by political cronies of the ruling party so that they, too, can have the life experience of constructing shoddy high-density housing that will crumble into disuse within the next 3 to 5 years?

To those of you who still feel that my stimulus is less important than your paltry tax dollars, which you will doubtless squander selfishly thinking only of yourselves, remember that when I am angry my wrath is terrible to behold. If you think that my boundless rage will be slaked by closing thousands of Starbucks and brutalizing the journalism industry, you are fooling yourself.

Inefficient car manufacturers are only the beginning. Unless I get my stimulation, I may turn my attention to other trillion-dollar operations that are poorly run.

Like your government.

Book Review: Nassim Taleb’s Fooled by Randomness

I’m currently reading Nassim Nicolas Taleb’s book Fooled by Randomness: How Chance Influences Life and the Markets. I picked it up because both chance and the markets are subjects that interest me. It also seemed to reflect some of my thinking, that a lot of what we see going on in the stock market is noise and random variation with very little meaning.

My first comment is this: if you’ve ever wanted to suffocate in the ego of an emotionally-stunted misanthrope, then this is the book for you! It’s difficult for me to overstate what an objectionable presence this man Nassim Taleb must be in person, and how loathed he must be by those around him. The ironic part is he seems completely unaware of this, decrying the behavior in others that he manifests so clearly in his writing.

In short, the author is an ass. Having said that, he does have some interesting things to say. In order to save you exposure to him, though, I’ll sum them up for you:

-Journalists suck.

-Success by traders is solely because random chance demands there be some successful traders. None of them have any skill. Well, except Taleb and his friends; they have skill. But the rest are foolish charlatans who deserve the bankruptcy they inevitably get. We know that there’s no such thing as skill in trading because Taleb tells us it’s so.

-The end of every trading career is a spectacular blowup that costs hundreds of millions of dollars to their employers, who will have the trader escorted out the door by security guards never to be seen again. How these employers stay in business is a mystery to me. Perhaps Taleb will explain it in a future book.

-The plural of anecdote is definitely data. And unverifiable, unreferenced, uncontrolled anecdotes are the best kind. Telling these anecdotes certainly proves whatever point it is that you’re trying to make.

-Taleb hearts Karl Popper. And George Soros. And dozens of other people who he name-drops at every opportunity in a desperate attempt to make himself seem well-connected and on the “inner circle” of both high finance and deep philosophy. For all I know, he is. But he mentions everybody except his girlfriend in Canada. I still see only two people coming to his funeral, though: him and the grave-digger.

-Taleb makes conservative investments and protects himself, thus taking smaller gains to protect himself from larger losses. Why he feels this is some superhuman feat is beyond me. It sounds fairly pedestrian.

-It’s fun to beat up strawmen.

-Employ the “Cassandra Strategy.” What this means is that you should forecast failure and doom, because you can be sure that someday there’ll be failure and doom. When that day comes, you can profit from it. If it takes five or ten years; well, that’s not a big deal. You just get the added bonus of being smug for a longer period of time.

-Monte Carlo simulations rock! GIGO? Never heard of it.

-Only scientists who agree with Taleb are real scientists. All the rest are fake scientists. Ditto for philosophers, economists, theorists, and anybody else.

-If you’re not a philosopher-trader then you are worse than the navel lint of an earthworm’s parasites, living a shallow and meaningless life, and you deserve to die a painful death in the bankruptcy that will inevitably claim you.

-Did I mention that journalists suck?

I think that’s about it. In short, some interesting ideas, but wading through the author’s suffocating ego is, quite frankly, not at all worth it. A basic class in statistics and probability will do you just as well, and save you from hundreds of pages of “I am so great! I am so great! Everybody loves me, I am so great!”

I hate to quibble...

Zimbabwe's inflation was 7,634.8% in July, according to official statistics.

If inflation is over 7,500, can you really measure the 0.8%? I'm just saying. Couldn't you just say "much higher than catastrophically disastrous"?

Geez, we think 4% is out of control...

Right Idea, Wrong Execution

I won’t criticize Bradd Pitt for trying to help with the Katrina recovery. It’s noble work and kudos to him for continuing it. But it seems to me that he’s making a critical error in the way he’s choosing to help rebuild the communities. From the article:

The house that Pitt toured, loosely modeled on the distinctive New Orleans shotgun" style of long, narrow homes, will generate almost all its electricity from 28 roof-mounted solar panels, said Global Green USA president Matt Petersen.
Global Green hopes to use the house, which should be completed this fall, as a prototype for the neighborhood. Built not far from the banks of the Mississippi River and raised by three feet on concrete pilings, it is above sea level.

Why do I think he’s making a mistake? Because the article also says this:

Some in the area, which was not as badly flooded as others in the city, are rebuilding. But a lack of funds have kept most from starting fresh.

What Pitt’s doing is encouraging the construction of more-expensive, higher-maintenance-cost structures targeted at low-income families. This doesn’t seem like a good idea to me.

Solar panels are not cheap, neither to install nor to maintain. There are 28 of them on top of each of these houses (according to the article). So the people who buy these houses must pay the not-negligible added cost of the panels and of their upkeep. Or, the people who sell the homes must lose money.

And finding people willing to invest in real estate that’s guaranteed to lose money is difficult. Well, now that the subprime market has collapsed it is.

If that's what the US gets...

You think the toys the Chinese are exporting to the US are bad, with Thomas the Tank Engine's Brain-Damage Bertie and Dora the Exploder? Well, just imagine what gets shipped to consumers in countries where consumer protection is nonexistent, like Thailand or Great Britain:

Shave Me Elmo: What little kid has ever been able to resist the urge to play with a razor? Well, now Elmo says it's okay!

Grater: Arch-enemy of the Teenage Mutant Broken Bottles, Grater is ready to chew up his enemies with mad ninja skills!

Super Space Exploration Set: Remember to take your spare air pack, because in space no one can hear you scream.

Sparky the Swimming Shark: A ter-lectrifying good time for kids in the tub; just plug it in and watch them wiggle!

Economists Warn on Lack of Recession

The group Freelance Economists for an American Recession today warned that the lack of a recession could be a sign of insanity among institutional and private investors in the United States and urged the government to take drastic action designed to plunge the nation into recession.

“The markets are not adequately correcting themselves,” said spokesman Robert Kiyosaki, author of the upcoming book Rich Dad’s Recession. “The true purchasing power of the average family is plummeting, the government is miscalculating inflation, and the Fed is just sitting on its hands hoping nobody notices until they retire so they can blame it on the next guy.”

Pointing to the recent collapse of high-risk lender New Century as a sign of market weakness, they urged congress to take whatever action was necessary to wreck the economy. “I’ve been warning of this a long time,” Kiyosaki noted. “Since at least 2004 I’ve been predicting a market crash, either slow or fast or medium-paced. But it won’t come, because nobody will listen to me. So the government needs to get involved to destroy the economy. Everyone else is calculating incorrectly, not me.”

“Wealth in the hands of the people is one of the big problems,” noted another member, Charles Wheelan. “If we say the country should be in recession, it really needs to go into recession in order to maintain our credibility. If we say taxes should go up, they really need to go up. We can’t have people running around spending money and investing and lowering taxes when we say they should be buying gold and burying it in the basement and panicking.”

Asked what financial advice he would give people to weather the upcoming storm, Kiyosaki was succinct: “Buy real estate and other fixed assets. Take on massive amounts of debt to buy gold as a hedge against the plummeting value of the dollar. Get used to over 12% inflation like we’ve had the past few years, because it’s here to stay.”

Wheelan added his advice: “Panic like it’s 1929.”