Saturday, December 5, 2015

Cab Thoughts 12/5/15

"Years ago my mother used to say to me, she'd say, 'In this world, Elwood, you must be' - she always called me Elwood - 'In this world, Elwood, you must be oh so smart or oh so pleasant.' Well, for years I was smart. I recommend pleasant. You may quote me."--Elwood P. Dowd


I am ignorant of the debate over the Import-Export Bank. The strict economists generally oppose it. Here is a quote from Paul Ryan that makes me suspicious: "Are we going to reward good work or good connections? I think there are plenty other ways to expand opportunity in this country, and corporate welfare is not one of them. The biggest beneficiaries of this bank, two-thirds of their money go to 10 companies. Forty percent goes to one company."

Everyone is excited about Trudeau's election. Aside from legalizing marijuana, Trudeau’s other concrete proposal is to intentionally run a deficit by raising taxes (on the rich) and spending even more money on infrastructure. Classic Keynesian stuff, countercyclical fiscal policy. Should be interesting to watch.

U.S. government debt now stands at 103% of GDP. If private debt is included, the ratio climbs to about 370% of GDP. Scholarly studies indicate that real per capita GDP growth should slow by about one-quarter to one-third from the long-run trend when the total debt-to-GDP ratio rises into the range between 250% and 275%. Since surpassing this level in the late 1990s, real per capita GDP has grown just 1% per annum, much less than the 1.9% pace from 1790 to 1999.
These results indicate that the relationship between debt and economic growth is non-linear, or progressively negative, as debt advances to higher levels, a pattern confirmed by academic research.

Who is....Charles M. Schulz?

John Glenn had flown nearly 150 combat missions during World War II and the Korean War. In 1957, he made the first nonstop supersonic flight across the United States, flying from Los Angeles to New York in three hours and 23 minutes. On February 20, 1962,  Glenn made the first American multiorbital flight in Friendship 7, a spacecraft that made three orbits of the Earth in five hours. In 1998, Glenn returned into space again as a payload specialist aboard the space shuttle Discovery. At 77 years of age, Glenn was the oldest human ever to travel in space. During the nine-day mission, he served as part of a NASA study on health problems associated with aging.

Data never speak for themselves. Interpretation is essential. Without thoughtful, unprejudiced analysis reading numbers is no different than reading bones or Tarot cards.

Charles Schultz' son and grandson  are creating an new "Peanuts" movie. The comic strip has received intense analysis. “A cartoonist,” Schulz once said, “is someone who has to draw the same thing every day without repeating himself.” It was this “infinitely shifting repetition of the patterns,” Umberto Eco wrote in The New York Review of Books in 1985, that gave the strip its epic quality. Watching the permutations of every character working out how to get along with every other character demanded “from the reader a continuous act of empathy.” Eco! The New York Review of Books! Here is one summary analysis: http://www.theatlantic.com/magazine/archive/2015/11/the-exemplary-narcissism-of-snoopy/407827/ The Atlantic!

Anyone looking for an example of Rube-publican ineptness need look no further than the esteemed Benghazi Committee who, in spite of the astonishing circumstances they are investigating, are on the defensive.
Illinois State officials announced that winners who are due to receive more than $600 won’t get their money until the state’s ongoing budget impasse is resolved. Players who win up to $600 can still collect their winnings at local retailers. More than $288 million is waiting to be paid out. For now the winners just have an IOU and no interest on their money. The state delayed a $560 million payment to its pension funds for November and may have to delay or reduce another contribution due in December.

Wolves have about 200 million scent cells. Humans have only about 5 million. Wolves can smell other animals more than one mile (1.6 kilometers) away.

Perhaps the fundamental political fact – one characterized by inexpedient and untimely consequences – is the separation of cost and benefit considerations.  The fact that few persons are forced to weight them against one another before making policy choices enables and encourages people to seek additional gains at collective expense.--William Mitchell

Golden oldie:

When the state of Maryland raised its tax rate on people with incomes of a million dollars a year or more, the number of such people living in Maryland fell from nearly 8,000 to fewer than 6,000. Although it had been projected that the tax revenue collected from such people in Maryland would rise by $106 million, instead these revenues fell by $257 million.

Bromide: 1. a platitude or trite saying. 2. Chemistry. a. a salt of hydrobromic acid consisting of two elements, one of which is bromine, as sodium bromide, NaBr. b. a compound containing bromine, as methyl bromide. ety: Bromide is a combination of bromo- (a combining form used in the names of chemical compounds that contain bromine) and -ide, a suffix used in chemical compounds. Some bromides were used as sediatives, giving rise to the metaphorical extension of the term in the early 1900s.

Financial planning is tough on people. Governments too.  Pension managers used to think they could average 8% after inflation over two decades or more. At that rate, a million dollars invested today turns into $4.7 million in 20 years. If $4.7 million is exactly the amount you need to fund that year’s obligations, you’re in good shape. What happens if you average only 7% over that 20-year period? You’ll have $3.9 million. That is only 83% of the amount you counted on. At 6% returns you will be only 68% funded. At 5%, you have only 57% of what you need. At 4%, you will be only 47% of the way there.

There has been criticism of the post 2008 recovery with many saying that the monetary easing and the resulting buybacks have artificially raised stock prices. The decrease in available stock might increase prices but should not raise earnings, which also has happened.
The latest Producer Price Index (PPI) numbers from the Labor Department said that prices at the wholesale level actually declined by 0.5% in September. Over the last 12 months through September, the PPI has dropped by 1.1%... that’s the eighth consecutive 12-month decrease in the index. But the Wisconsin Farm Bureau Federation Index, which tracks the prices of key agricultural commodities that most American households use every day is up. The newest semi-annual survey of the 16 items rose to $53.37, up $1.41 or 2.7% compared with one year ago.

It is perfectly legal for some advisers to steer customers into complex financial products that will earn the highest rewards, perks and prizes for the advisers – even if they are bad options for their customers. Research suggests that this loophole costs Americans an estimated $17 billion every year.  That’s $17 billion taken out of the pockets of retirees by unscrupulous advisers who are more interested in collecting fees and prizes for themselves than helping families build real security. (From a recent Senate report)Thirteen of the 15 major annuity providers investigated acknowledged providing these incentives.

During US Military actions in southeastern Vietnam in February 1968 AP correspondent Peter Arnett quoted an unidentified Army major regarding the town of Ben Tre, "It became necessary to destroy the town to save it."

In May of 1957, an American bomber accidentally dropped an American 42,000 pound, 10-megaton hydrogen bomb on Albuquerque, New Mexico. The Mark 17 had a yield of approximately 10-megatons. For comparison's sake, the bomb dropped on Hiroshima was a relatively small 16 kiloton weapon.
10 megatons = 10,000 kilotons, meaning that it would take about 625 "little boys" (the code word for the bomb dropped on Hiroshima) to make only one Mark 17.
According to the investigation, Field Command, a division of the Armed Forces Special Weapons Project, conducted recovery and clean-up operations at the site shortly after the nonevent. What they found was a crater 12 feet deep and 25 feet in diameter, blown, fortunately, in uninhabited land owned by the University of New Mexico.
Only the bomb's conventional explosives - those necessary, but not sufficient to start the nuclear chain reaction - were triggered by the fall, and, according to the experts, no radioactivity was detected beyond the lip of the crater. Traces of a luckless cow, reportedly, were scattered over a much wider area

Texas is the largest petroleum-producing state in the U.S. and if it were an independent nation, it would rank as the world’s 5th largest petroleum-producing nation. Only 34 of Texas’ 254 counties have no known natural gas within their boundaries. However, no major wells have been discovered for a half-century or more.

AAAAAaaaaannnnnnddddd......a graph. The direction is startling but so is the history of recovery:
 Chart of the Day

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