Monday, October 31, 2011

Funereal Sector Outlook

Cheaper and deeper?
It occurred to me the other day that the funeral business might be a great one to invest in over the next decade or so.  Once in awhile I check the obits in the city of my birth just to see if old What's-His-Name has gone to meet his maker, and it seems that "the parlours" are a lot busier these days.  With the Boomer generation all starting to retire (and expire), there are a lot of funerals to go to - if you're into that sort of thing.  Mind you I'd rather get my egg salad sandwich at home any day - but those little puff pastries ... but I digress.  Yours Truly worked part-time after school and on the weekends for a couple of years at Martino's Meat Market ("you stab 'em, we slab 'em"), so I have a unique perspective on this dark art/science/enterprise.  Let's look at the fundamentals.  Death is, of course, recession-proof, so the foreboding economic climate is irrelevant to The Men in Black and their bankers.  Not only that, but it's one industry that's also immune to deflation - you can't hold off burying a loved one in the hopes that the price will be lower next week, because it's against the law.  And another thing, hired help is cheap and plentiful these days - as are the Batmobiles at the head of every procession, given the recent struggles in the auto industry.  Just try Googling "discount funerals" to see the meagre offerings currently out there.  I'm just sayin'.  You heard it here first!

The Good News:  Cremation is cheaper and preserves farmland!

Saturday, October 29, 2011

Main Street Halloween Costume

Only a bailed-out Wall Street banker could afford that!

The Good News:  Congrats Cardinals!  Heard you all the way up here, Jeff!

Friday, October 28, 2011

Wall Street's Supreme Accomplishment?


"The machinery by which Wall Street separates the opportunity to speculate from the unwanted returns and burdens of ownership is ingenious, precise and almost beautiful.  Banks supply funds to brokers, brokers to customers, and the collateral goes back to banks in a smooth and all but automatic flow.  Margins - the cash which the speculator must supply in addition to the securities to protect the loan and which he must augment if the value of the collateral securities should fall and so lower the protection they provide - are effortlessly calculated and watched.  The interest rate moves quickly and easily to keep the supply of funds adjusted to the demand.  Wall Street, however, has never been able to express its pride in these arrangements.  They are admirable and even wonderful only in relation to the purpose they serve.  The purpose is to accommodate the speculator and facilitate speculation.  But the purposes cannot be admitted.  If Wall Street confessed this purpose, many thousands of moral men and women would have no choice but to condemn it for nurturing an evil thing and call for reform.  Margin trading must be defended not on the grounds that it efficiently and ingeniously assists the speculator, but that it encourages the extra trading which changes a thin and anemic market into a thick and healthy one.  Wall Street, in these matters, is like a lovely and accomplished woman who must wear black cotton stockings, heavy woolen underwear, and parade her knowledge as a cook because, unhappily, her supreme accomplishment is as a harlot." - The Great Crash: 1929, John Kenneth Galbraith (1955).

The Good News:  Search Out Here 2 "cauliflower" at right!

Thursday, October 27, 2011

Dear Uncle Sam


Bending over backwards to pick the pocket of a friend?
We're not feeling your love up here these days.  Is it really necessary to charge all Canadians traveling to the U.S. by air or boat an additional $5.50 tax?  Apparently your new free trade deal signed with Colombia "prohibits tariff exemptions for travellers from Canada".  What has Colombia got to do with our relationship, old friend?  The optics of this little slap in the face look pretty bad to our social circle - after all, you have no greater friend and ally than we Canucks. The National Post headline reads: "U.S. can't pay debts, wants Canadians to do it for them at $5.50 a pop."  First your "Buy American" plan, then all the ridiculous B.S. about our "dirty oil", followed by gutless delays on the Keystone pipeline project (you know you need both the oil and the pipeline to get it there), and now this little "provocative insult", as it has been called.  Even your own ambassador to Canada seems embarrassed by it, mon ami.  David Jacobson urged Canadians not to take the fee "to heart", as he defended the Obama administration's decision to impose it.  "The elimination of the exemption was necessitated by the budget situation in my country," he said.  So it really has nothing to do with Colombia, does it?  We all know that times are tough down there, ole buddy, but this naked little money grab is just plain disappointing.  With about 7 million Canadians flying to the U.S. a year, the new tax is expected to raise little more than $100 million a year.  You see, it's not the lousy $5.50.  (What's with the fifty cents anyway, are you trying to repatriate all the precious metal in your quarters?  Hello, there hasn't been any in there for awhile now.)  It's the principle of the thing.  You just don't pick the pocket of a friend.

The Good News:  Canadian soldiers are gradually returning from Afghanistan.

Wednesday, October 26, 2011

Steve Jobs Was a Nut Case

The title says it all.
With the forthcoming release of Apple wunderkind Steve Jobs' authorized biography by Walter Isaacson imminent, several media outfits have seen pre-release copies, and the most disturbing quotes I've read are about his failure to act rationally regarding his cancer.  From The New York Times: “The big thing was that he really was not ready to open his body.  It’s hard to push someone to do that,” said his wife.  And from The Associated Press:  “I really didn’t want them to open up my body, so I tried to see if a few other things would work,” Jobs said.  And The Telegraph:  "Steve Jobs died regretting that he had spent so long attempting to treat his cancer with alternative medicine before agreeing to undergo surgery, his biographer has disclosed.  The Apple chief executive, who died this month after a pancreatic tumour spread elsewhere, delayed having operations and chemotherapy for nine months after the disease was discovered in October 2003.  In spite of pleas from family and friends, he tried to cure himself through acupuncture sessions, drinking special fruit juices, visiting "spiritualists" and using other treatments he found on the internet.  Some cancer experts have said that Mr Jobs may have extended his life or even survived if he had promptly tackled his cancer aggressively with scientifically proven medical treatments.  Walter Isaacson, whose much-anticipated authorised book on Mr Jobs's life is to be released later this month, said that before he died the 56-year-old had come to realise that he had made a mistake.  "We talked about this a lot," Isaacson told a television interview. "He wanted to talk about it, how he regretted it. I think he felt he should have been operated on sooner."  Asked why "such a smart man could do such a stupid thing", Isaacson said: "I think he felt: if you ignore something you don't want to exist, you can have magical thinking. It had worked for him in the past. He would regret it." Mr Jobs's wife, Laurene Powell, told the biographer: "The big thing was he really was not ready to open his body. It's hard to push someone to do that." She pleaded: "The body exists to serve the spirit".  Isaacson states in the book that several other Jobs confidantes, including Mona Simpson, his sister, and Art Levinson, an Apple board member, pushed him to embrace conventional medicine. "I told him he was crazy," said Andrew Grove, the former head of the computer chip company Intel.  When he eventually agreed to treatment, Mr Jobs went to great expense to ensure that he was given the most pioneering work available, Isaacson writes, having his DNA sequenced for $100,000.  Isaacson, who interviewed Mr Jobs more than 40 times over two years, states that this allowed Mr Jobs's doctors to tailor his drugs to target defective molecular pathways in his body. But eventual surgery revealed that the cancer had spread to tissue surrounding his pancreas."  So there you have it.  Creative genius often exists with mental illness, just ask the doctors.  But Steve Jobs didn't believe his doctors.  "Open up his body?" - that's done everyday for everything from tonsil removal to heart transplants, Steve.  Everyday!  In every hospital around the world!  This isn't the Middle Ages.  THERE IS ONLY ONE "SYSTEM" OF MEDICINE, not three or four or ten "alternative systems".  Do you think your wife and children will thank you for refusing the best medical care on earth - for a bunch of herbs, spices and incantations?  Steve Jobs, you were just another alternative medicine nut case - and sadly, you paid the ultimate price.

The Good News:  When will our federal government stop paying for - and start protecting us from - alternative medicine quacks, starting with chiropractors, naturopaths, and homeopaths?

Tuesday, October 25, 2011

Canadians 2nd Most ... Uh-Oh!

The gap is too big, Stephen.
Just when we thought everything was going so well, this, from The National Post: "Canada’s parliamentary budget officer ... Kevin Page calculates that the provincial and federal governments’ fiscal structures aren’t sustainable over the long term due to an aging population and current economic trends.  In its assessment, the PBO says increasing government debt over the medium and long term is expected to outpace economic growth. The result is a mushrooming “fiscal gap” where spending is outstripping revenues and corrective financial actions are needed to remedy it.  The consolidated fiscal gap among the federal, provincial and territorial governments currently sits at 2.7% of gross domestic product — or a whopping $46-billion for the 2011-12 budget year.  “We do not have a sustainable fiscal structure. It’s not sustainable at the federal level and it’s not sustainable when we look just at the provinces and territories,” Mr. Page told reporters Thursday, following the release of his report.  A greying of the Canadian population will put downward pressure on revenues as growth in the tax base slows, while spending demands will mount as more retirees tap seniors’ benefits.  Even if the economy fully recovers over the next few years, the additional spending on health care and elderly benefits is expected to erode public finances, taking governments from surpluses over the medium term to “sizable deficits” over the long term, the spending watchdog estimates.  “PBO estimates that permanent and immediate fiscal actions — either through increased taxes or reduced program spending, or some combination of both … would be required to ensure the net debt-to-GDP ratio does not ultimately rise above its current level,” the report says.  It also notes that any significant delays in closing the funding gap, either through program cuts or tax hikes, will “substantially increase the amount of corrective measures” needed down the road.  The federal government’s projected shortfall would be eliminated, the study says, if Ottawa trimmed the size of annual increases in provincial health and social transfers to the rate of nominal GDP, rather than the current escalators of six and three per cent, respectively.  But doing so would place a greater financial burden on provincial governments, the report adds, and force the provinces to take more drastic measures to get their fiscal houses in order."

The Good News:  The Gap north of here on the Oldman River is as beautiful as ever!

Monday, October 24, 2011

Canadians 2nd Most Satisfied?

Denmark who?
The latest OECD poll rates Canadians as the second most satisfied people on earth.
People satisfied with their life: 78%
Average weekly work hours: 32.7
OECD average weekly hours: 33.4
People in Canada devote 62% of their day, or 15 hours, to personal care and leisure.  Canada is the third safest country in the OECD, with a homicide rate of 1.7, lower than the OECD average.
Source: OECD  Read more: businessinsider

The Good News:  I think it's the beer!

Sunday, October 23, 2011

No, Those Are Not My Hay Bales

... although this sign looks like it could be Out Here somewhere!

The Good News:  New Zealand All Blacks reign supreme in rugby - but it was so close!  Ever notice how fast #2 is forgotten?  Remember who lost to NZ yesterday, there will be a quiz before year end.

Saturday, October 22, 2011

Oh, So True ...

Did you hear the story about the guy who lands his hot air balloon in the middle of a field after being blown off course?  A bearded guy in a tweed jacket and chinos with horn-rimmed glasses strolls over and says, "can I help you?"  The guy in the balloon shouts, "where am I?"  The bearded guy yells back, "apparently you are in a balloon, in the middle of what appears to be a field."  The guy in the balloon yells back, "you must be a PhD economist."  The bearded guy yells, "that's incredible, how did you know?"  And the balloonist answers: "Because what you just told me is both accurate - and useless!"

The Good News:  No snow in Calgary yet!
Update on Derivatives:  Estimates of the notional value of the worldwide derivatives market go from $600 trillion all the way up to $1.5 quadrillion. (Michael Snyder)

Friday, October 21, 2011

U.S. Derivatives Risk

Poof! (another bank)
Robert Reich explains: "A Greek (or Irish or Spanish or Italian or Portuguese) default would have roughly the same effect on our financial system as the implosion of Lehman Brothers in 2008. Financial chaos.  Investors are already getting the scent.  Stocks slumped to 13-month low [recently] as investors dumped Wall Street bank shares.  The Street has lent only about $7 billion to Greece, as of the end of last year, according to the Bank for International Settlements.  That’s no big deal.  But a default by Greece or any other of Europe’s debt-burdened nations could easily pummel German and French banks, which have lent Greece (and the other wobbly European countries) far more.  That’s where Wall Street comes in.  Big Wall Street banks have lent German and French banks a bundle.  The Street’s total [loan] exposure to the euro zone totals about $2.7 trillion.  Its exposure to to France and Germany accounts for nearly half the total.  And it’s not just Wall Street’s loans to German and French banks that are worrisome.  Wall Street has also insured or bet on all sorts of derivatives emanating from Europe – on energy, currency, interest rates, and foreign exchange swaps.  If a German or French bank goes down, the ripple effects are incalculable.  Get it?  Follow the money: If Greece goes down, investors start fleeing Ireland, Spain, Italy, and Portugal as well.  All of this sends big French and German banks reeling.  If one of these banks collapses, or show signs of major strain, Wall Street is in big trouble.  Possibly even bigger trouble than it was in after Lehman Brothers went down.  That’s why shares of the biggest U.S. banks have been falling for the past month.  Morgan Stanley closed [recently] at its lowest since December 2008 – and the cost of insuring Morgan’s debt has jumped to levels not seen since November 2008.  It’s rumoured that Morgan could lose as much as $30 billion if some French and German banks fail.  (That’s from Federal Financial Institutions Examination Council, which tracks all cross-border exposure of major banks.)  $30 billion is roughly $2 billion more than the assets Morgan owns (in terms of current market capitalization.)  But Morgan says its exposure to French banks is zero.  Why the discrepancy?  Morgan has probably taken out insurance against its loans to European banks, as well as collateral from them.  So Morgan at least feels safe.  Should it?  Does anyone remember something spelled AIG?  That was the giant insurance firm that went bust when Wall Street began going under.  Wall Street thought it had insured its bets with AIG.  Turned out, AIG couldn’t pay up.  Haven’t we been here before?  Republicans and Wall Street executives who continue to yell about Dodd-Frank overkill are dead wrong.  The fact no one seems to know Morgan’s exposure to European banks or derivatives – or that of most other giant Wall Street banks – shows Dodd-Frank didn’t go nearly far enough.  Regulators still don’t know what’s happening on the Street.  They don’t know whether Morgan is telling the truth.  They have no clear picture of the derivatives exposure of giant U.S. financial institutions.  Which is why Washington officials are terrified – and why Treasury Secretary Tim Geithner keeps begging European officials to bail out Greece and the other deeply-indebted European nations.  Several months ago, when the European debt crisis became apparent, Wall Street banks said not to worry.  They had little or no exposure to Europe’s problems.  The Federal Reserve said the same.  In July, Ben Bernanke reassured Congress the exposure of U.S. banks to European nations in trouble was “quite small.”  Now we’re hearing a different tune.  Make no mistake.  Lurking here is another giant bailout of the Street.  The United States wants Europe to bail out its deeply indebted nations so European banks don’t implode.  And they don’t want European banks to implode because they don’t want the Street to crash again like it did three years ago.  One of the many ironies here is some European nations went deeply into debt bailing out their banks from the last crisis.  Full circle.  In other words, Greece isn’t the real problem.  Nor is Ireland, Italy, Portugal, or Spain.  The real problem is the financial system - centered on Wall Street."  Read more at robertreich.org  (Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written thirteen books, including The Work of Nations, Locked in the Cabinet, Supercapitalism, and his most recent book, Aftershock. His "Marketplace" commentaries can be found on publicradio.com and iTunes.)

The Good News:  Beautiful weather in Calgary!

Thursday, October 20, 2011

Canada's Derivatives Risk

This used to be a bank.
Tim Lane, Deputy Governor of the Bank of Canada, let slip the bank's estimate of Canada's over-the-counter (OTC) derivatives risk recently while discussing the concept of a clearing-house for these otherwise invisible instruments, to wit, he emphasized that “sufficiently robust” central counterparties (CCPs) for the Canadian OTC derivatives market would strengthen Canada’s financial system and reduce the counterparty credit exposures of major participants. The question now for Canada, Lane wondered, is whether to go domestic or international. Canada held up well following the financial crisis of 2008-09, but Lane noted that Canadians must be mindful of the country’s C$9 trillion OTC derivatives market. “OTC derivatives, especially interest rate swaps are closely connected via arbitrage and financing relationships with other markets in Canada, including other derivative, bond and money markets,” he said. “So that’s big enough and connected enough that any disruptions would likely result in significant reverberations through our markets ... It is essential to ensure that we do not unduly further concentrate risk in a relatively small number of institutions that are direct clearing members of global CCPs,” Lane said. “These were the very institutions that spread and amplified contagion through the global financial system in 2008.” 

The Good News:  Only C$9 Trillion in OTC derivatives, plus "other derivatives".  I feel better already!

Wednesday, October 19, 2011

The Real Problem: Derivatives Risk

Poof!
A financial derivative is a security whose price is derived from an underlying asset.  The derivative itself is merely a contract between two parties regarding that asset. The contract's value is determined by fluctuations in the value of the underlying asset.  The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes, while futures contracts, forward contracts, options, and credit default swaps (CDS) are the most common types of derivatives of those assets.  Because derivatives are contracts which have value themselves, they can be used as the underlying asset of - you guessed it - another derivative.  Derivatives are generally used as an instrument to hedge against (lower) risk, but can also be used for speculative purposes.  For example, a European investor purchasing shares of a company on an American stock exchange must use U.S. dollars to do so, and would thus be exposed to exchange-rate risk (fluctuation) while holding that stock.  He might make 3% on the stock, but lose 3% on the currency conversion back to Euros.  To hedge this risk, the investor could purchase currency futures to lock in a specified exchange rate for the future stock sale and currency conversion.  (Read more about derivatives at: Investopedia)  The important things to remember here are: a) one underlying asset can have many derivatives, b) most derivatives are bought for very little "down", ie. they are highly leveraged to begin with, c) the derivative itself (because it has value) can be used as an underlying asset for even more derivatives which results in leveraging of the initial leverage, and d) these are private contracts with no central clearing-house (they are bought over-the-counter, OTC), and thus have virtually no visibility, let alone regulation.  And that is why, my friend, derivatives are the real risk to the global financial system, not debt.  Banks hedge their risks with derivatives from other banks called counterparties.  As long as the counterparty is fine if there is a problem with the underlying derivative or the underlying investment on which the derivative is based then there's no problem, the counterparty pays.  The problem is that derivatives don't show on balance sheets and so nobody really knows who the counterparty is, and what the solvency of the counterparty is.  They are "off balance sheet".  Now for the really bad news.  Canadian banks have assets in the hundreds of billions of dollars and this is what our government has been bragging about.  Our banks are required to maintain a capital ratio of 1 to 18, compared to 1 to 26 for US banks and a scary 1 to 61 for European banks.  That, and the fact we have a well established branch banking system that is diversified, is all on the good side.  Unfortunately they also have OTC derivative investments in the trillions of dollars and government is horrified because should we see some failures in Europe or the U.S., the banks here could suddenly be in trouble.  Hence US Treasury Secretary Timothy Geitner's pleadings with European leaders to get their act together, fast.  You aren't being told about this, or there would be a hue and cry throughout the country.  This is the real reason why so much effort was expended to save the banks in 2008: they act as counterparties to trillions of dollars of hedge funds, and the risk is cascading failures of banks and large financial institutions: the financial meltdown of financial meltdowns.

The Good News:  I forget the good part, frankly.

Tuesday, October 18, 2011

A New Occupy Wall Street Tactic

It was only a matter of time.  Yours Truly has been quietly wondering for months whether the high rate of unemployment and economic malaise in the U.S. could eventually affect the banking system in a very fundamental way - less money on deposit in individual and small business accounts.  It was a simple assumption.  But now Occupy Wall Streeters are actually targeting CitiBank and Bank of America in a campaign to get people who sympathize with The Movement to withdraw their funds, close their accounts and bank elsewhere - even at other Too Big Too Fail (TBTF) banks.  That's right, an old fashioned "run on the bank" to get the C-suite's attention.  ("Bank Transfer Day", November 5th, according to their Facebook page.)  A bank run is perennially one of the biggest worries of governments and financial authorities everywhere, but most such "runs" are the result of rumours of an impending individual bank failure, and are virtually unknown these days due to government deposit insurance programs.  This is different, a politically-motivated bank run.  Consumers letting their wallets do the talking (and walking) has always been a powerful message to business.  That said, it would take something like a hundred thousand people moving a hundred thousand dollars each to make a dent in B of A's affairs, so don't hold your breath.

The Good News:  Looking forward to Calgary this weekend!

Monday, October 17, 2011

The Best Occupy Wall Street Sign

Courtesy of The Daily Bail

Occupy Wall Street II


So how's that OWS thing going for ya'll?  Despite good evidence (courtesy of the Business Insider) that the protesters have at least some factual basis for their sloganeering - "we are the 90%" appears to be more statistically correct than 99% - I fail to see how occupying downtown Calgary is going to accomplish anything. (We'll really know it's over when Occupy Red Deer is proposed.)  Wall Street is, after all, the origin of the most egregious practices leading to the meltdown of 2008.  The rest of the world just bought the crap WS was selling on the basis of robo-recommendations from the Street's favourite whores; the ratings agencies.  (Not to mention the sleepy, incestuous relationship government regulators had with WS.)  The real test of OWS lies ahead, however.  How do you keep going in winter weather under the daily threat of being booted out by the NYPD?  The answer might be that a lot of the protesters aren't the motley "campers" getting by on pizza and love.  The vast majority seem to show up for scheduled events (like last Saturday's "global" event), and then return to the 'burbs or their apartments overnight before heading downtown for the next rally du jour.  (What else really is there to do when you've given up looking for work?)  My prediction?  The anarchists and hoodlums and hangers-on will be the first to go (because unlike Toronto and Vancouver, NYC doesn't coddle lawlessness).  However, the peaceniks, unemployed, unionists, and foreclosed will still be there next spring, perhaps in even greater numbers.

The Good News: Occupy Out Here ain't happening!

Sunday, October 16, 2011

Another Day Older and Deeper in Debt

This little ditty from the late '50s early '60s just keeps jumping out at me.  Is this the Wall Street bankers theme song?  Watch Tennessee Ernie Ford serenading a bunch of 'em.  See Lloyd Blankfein gettin' down at this black tie affair!  Watch Jamie Dimon (snappin' as usual)!  Their favorite part is "I owe my soul to the Gluttony Corps"!

The Good News?  If the Right ones don't get ya, the Left ones will!

Saturday, October 15, 2011

99 To Canadians


Sign of the Times?

(with thanks to Banzai7)

The Moped and The Ferrari

Where's me braces, Beulah, I'm goin' fer a ride!
An elderly man on a Moped, looking about 80 years old, pulls up next to a doctor at the last street light on the way out of town.  The old man looks over at the sleek, shiny car and asks, "What kind of car ya got there, Sonny?"  The doctor replies, "A Ferrari.  It can do 220 miles an hour!"  The old man asks, "Mind if I take a look inside?"  "Not at all," replies the doctor.  So the old man pokes his head in the window and looks around.  Then, sitting back on his Moped the old man says, "That's a pretty nice car, all right .... but I'll stick with my Moped.  It's fast enough for me!"  Just then the light changes, so the doctor decides to show the old man just what his Ferrari can do.  He floors it and within 30 seconds the speedometer reads 150 mph.  Suddenly, he notices a dot in his rear view mirror.  It seems to be getting closer!  He slows down to see what it could be and WHOOSH, something whips by him.  He floors it again and takes the Ferrari up to 180 mph.  Soon he sees that it's the old man on the Moped!  Amazed that the Moped could pass his Ferrari back there, he gives it more gas and passes the Moped at 200 mph, and he's feeling pretty good - until he looks in his mirror and sees the old man gaining on him again!  Astounded by the speed of this old guy, he stomps the gas pedal and takes the Ferrari all the way up to 220 mph.  Not ten seconds later, he sees the Moped bearing down on him again!  The Ferrari is flat out, and there's nothing he can do!  Suddenly, the Moped plows into the back of his Ferrari, so the doc slows down and pulls over.  The doctor stops, jumps out and unbelievably the old man is still alive.  He runs up to the banged-up old guy and says, "Is there anything I can do for you ?"  Out of breath and pale as a ghost, the old man whispers, "Just unhook my suspenders from your side view mirror!"  (With thanks to Schauerte, "The Shack")

The Good News:  I don't own a Moped or wear suspenders - yet!  Have a good weekend.

Friday, October 14, 2011

U.S. Health Care Costs

An unconscienable system.
According to the Bureau of Economic Analysis, health care costs accounted for just 9.5% of all personal consumption back in 1980.  Today they account for approximately 16.3%.  The cost of a health insurance policy for the average American family rose by a whopping 9% last year, and according to a report put out by the Kaiser Family Foundation, and the Health Research and Educational Trust, the average family health insurance policy now costs over $15,000 a year.  One study found that approximately 41% of working age Americans either have medical bill problems or are currently paying off medical debt.  An all-time record 49.9 million Americans do not have any health insurance at all at this point, and the percentage of Americans covered by employer-based health plans has fallen for 11 years in a row.  According to a report published in The American Journal of Medicine, medical bills are a major factor in more than 60% of the personal bankruptcies in the United States.   Of those bankruptcies that were caused by medical bills, approximately 75 percent of them involved individuals that actually did have health insurance.  I've said it once, and I'll say it again, what is needed in Canada and the U.S. is a hybrid of our two medical systems.  The U.S. system is unconscienable, and the Canadian system is unsustainable.  A good place to start would be to collect healthcare premiums based on net income as part of (and via) federal income tax, and to immediately institute a small user fee for every appointment.

The Good News:  Congratulations to CIB on closing the biggest deal of his career as lead counsel!

Thursday, October 13, 2011

David Rosenberg Speaketh

"It is our contention that in this post-bubble, mean-reverting process, the ability for policymakers to re-create the credit cycle, reinflate asset values and ignite a consumer-led recovery is going to be thwarted by secular changes in attitudes towards credit, savings, discretionary spending and homeownership. In other words, even after enough debt is paid off, the baby boomers’ spending years will be focused on putting their money in the coffee can."  (David Rosenberg is Chief Economist & Strategist at Gluskin Sheff.  Prior to joining Gluskin Sheff in 2009, Mr. Rosenberg was Chief North American Economist at Bank of America-Merrill Lynch in New York and prior thereto, he was a Senior Economist at BMO Nesbitt Burns and Bank of Nova Scotia.)

The Good News:  We can still afford the coffee to get the can to save the money in!

Wednesday, October 12, 2011

Men in Tights Vs. Wall Street

How to pop the Bailout Bubble?
With some Occupy Wall Streeters dressing up as Robin Hood lately and promoting "steal from the rich and give to the poor" as a course of action, I began to wonder about the true character of The Hooded One. Of course to do this one must rely on academics, and I did: "The oldest references to Robin Hood are not historical records, or even ballads recounting his exploits, but hints and allusions found in various works. From 1228 onwards, the names 'Robinhood', etc. occur in the rolls of several English Justices. Between 1261 and 1300, there are at least 8 references to 'Rabunhod' in various regions across England. The first mention of a quasi-historical Robin Hood is given in Andrew of Wyntoun's Orygynale Chronicle, written in about 1420 and placing him under the year 1283, when he is 'commendyd gude'. Robin is later represented as a fighter for de Montfort's cause. This was in fact true of the historical outlaw of Sherwood Forest, Roger Godberd, whose points of similarity to the Robin Hood of the ballads have often been noted. In the medieval period itself, Robin Hood already belongs more to literature than to history. In an anonymous song called Woman of c.1412, he is treated in precisely this manner - as a joke, a figure that the audience will instantly recognise as imaginary. The earliest surviving text of a Robin Hood ballad is "Robin Hood and the Monk", preserved in a Cambridge University manuscript which was written shortly after 1450. The first printed version is A Gest of Robyn Hode (c.1475), a collection of separate stories which attempts to unite the episodes into a single continuous narrative. After this comes "Robin Hood and the Potter", contained in a manuscript of c.1503. "The Potter" is markedly different in tone from "The Monk": whereas the earlier tale is "a thriller" the latter is more comic, its plot involving trickery and cunning rather than straightforward force. Other early texts are dramatic pieces such as the fragmentary Robyn Hod and the Shryff off Notyngham (c.1472). The character of Robin in these first texts is rougher-edged than in his later incarnations. In "Robin Hood and the Monk", for example, he is shown as quick tempered and violent, assaulting Little John for defeating him in an archery contest. No extant ballad actually shows Robin Hood "giving to the poor". In fact, his social status is often represented as that of yeoman, as shown by his weapon; he uses swords rather than quarterstaffs. The political and social assumptions underlying the early Robin Hood ballads have long been controversial. It has been influentially argued by J. C. Holt that the Robin Hood legend was cultivated in the households of the gentry, and that it would be mistaken to see in him a figure of peasant revolt. He is not a peasant but a yeoman, and his tales make no mention of the complaints of the peasants, such as oppressive taxes. He appears not so much as a revolt against societal standards as an embodiment of them, being generous, pious, and courteous, opposed to stingy, worldly, and churlish foes. Other scholars have by contrast stressed the subversive aspects of the legend, and see in the medieval Robin Hood ballads a plebeian literature hostile to the feudal order. In the early ballads he was a member of the yeoman classes, which included common freeholders possessing a small landed estate. From the 16th century on, the legend of Robin Hood became fixed as stealing from the rich to give to the poor." (Wikipedia)  I leave it to you to decide if the protesters are modern-day Robin Hoods.

The Good News:  Slovakia takes a stand on bailout buffoonery!  The mouse that roared.

Tuesday, October 11, 2011

30,000 And Counting

Out Here 2 saw its 30,000th visitor sometime yesterday, so it's probably a good time to take stock of where we've been with this little "web log"- and where we hope to go.  OH2 started out pretty much on a dare about a year and a half ago.  Certain family and friends thought some sort of outlet for the ravings of a this madman might be a good idea, and encouraged me gently to vent somewhere other than at the kitchen table/local pub.  (One of said instigators actually said, "Balf, I'd hate to be inside your head, it's a scary place!"  Thanks, DH.)  The original Out Here blog lasted about two weeks, and became Out Here Too upon its migration to Blogger.com.  (Out Here Two is hence just as accurate a moniker as Out Here Too.)  As I said, the idea was to provide an outlet several times a week for the more outlandish ideas I had so that friends and family wouldn't have to listen to them in "polite society".  Little did any of us know that OH2 would become a daily rant - or that it would contain as much "political economy" as it does.  (A recent improvement - we hope - has been to restrict serious commentary to weekdays, and the off-the-wall stuff for the weekends.  Take your choice.)  At any rate, have a look around while you're here, try the Search OH2 function for example ("sex" is a search I haven't tried, but I can guarantee you'll be disappointed in the results), or you can bring up all posts with a certain label (try "libations") by clicking on the Index term.  And if you think you read a good one in, say, June of 2010, you can always go to the OH2 Archives to find it.  I know 30,000 visits isn't much in today's blogosphere, but considering that OH2 is so eclectic in nature it's not bad.  (Single-issue blogs attract larger audiences sooner, but there's just too much interesting going on out here today to restrict myself to atheism or politics or economics or cyber warfare or ... well you get the idea.)  Another hint: I am increasingly "tweeting" during the day, so if you're inclined to receive those 140-character bursts sign up at left - and don't forget to download "The Best of OH2" as well (shameless plug).  And now, recalling that OH2 claims to be "always brief", I'm outta here!  Thanks for stopping by.
Postscript:  Can someone from Russia tell me why I'm so popular over there?  (Russia is my third-largest audience since inception by a wide margin, after Canada and the U.S., according to Google.)

The Good News:  I have three team members occasionally riding herd on me!

Monday, October 10, 2011

Occupy Wall Street?

I'm protesting ugly trophies tied to headlights!
The Occupy Wall Street protest reminds me of the scene in the 1953 film "The Wild Ones" where a young woman asks a motorcycle gang leader played by Marlon Brando, "Hey Johnny, what are you rebelling against?"  Tough guy Brando answers, "Whaddya got?"  The Zucotti Park protesters risk becoming irrelevant if they can't come up with a cohesive message (and fast - both the park owners' patience and the NYPD's overtime budget are running low).  They apparently have lots of support across a broad spectrum of America because so many have been hurt by the financial meltdown of 2008 and its sequelae.  Even your humble scribe supports OWS (so far) because I want the sub-prime mortgage slicing-and-dicing, bundling-and-flogging WS hotshots and their incompetent regulators to do time if laws were broken.  However, I'm not a trade unionist or anarchist, or a supporter of numerous other groups camped out under the OWS banner.  Paul Krugman notes that some of the protesters are parodies of themselves - the drumming, the dancing, the throwback-hippie garb a la Haight-Ashbury.  He also agrees that the protesters need to be focused (on debt relief for average Americans and infrastructure spending in his view.)  As I said, I'd like the focus to be about corporate crime and public malfeasance, but then I have a roof over my head.  It will be interesting to see where this all goes.

The Good News:  The NYPD is showing Toronto and Vancouver police forces how it's done.

Sunday, October 9, 2011

Thanksgiving Pita

It was inevitable, but in Missoula, MT?
The Good News:  A weekend of surprises!  The second surprise was awesome!

Saturday, October 8, 2011

So Much For That Idea



The Good News:  A successful surprise party last night, after a great dinner out with friends!

Friday, October 7, 2011

Earth to Erin Burnett

"You're out of touch with the real world (again)."  From a hero yesterday - Steve Jobs - to a bum today, Erin Burnett.  Long-time readers of this space will remember when I called Erin Burnett on her glib remark and laughter about "that school district in Norway" that was forced into bankruptcy during the financial meltdown as a result of investing in sub-prime-backed Wall Street crappola.  Since then she has left CNBC for a bigger pay cheque at CNN, and three shows into her first season has managed to piss off the vast majority of her viewers by mocking the protesters at Occupy Wall Street, and baiting Michael Moore - who many believe is at least as credible (if not more so) than your average investment banker/tycoon.  Wall Street's "Sweetie" as she is known from her many years in front of the CNBC cameras as Mark Haine's foil, is one of those too perky, spoiled brats that I can't stand.  If you're lucky and privileged enough to have an audience such as she (had), why not show some serious sober second thought once in a while, maybe even empathize just a smidge with the millions of middle class Americans who are out there hurting right now.  But whatever you do, don't mock them.  Michael Moore is big enough to take care of himself, but it is just downright nasty to mock your average working stiff or grandmother trying to make ends meet.  Shame on you, Perky.

The Good News:  There is hope however; Erin can retire from the media altogether, marry her Citigroup executive fiance, and raise the next generation of uppity, perky little snots!

Thursday, October 6, 2011

Steve Jobs, 1955-2011

Truly one of the good guys.
"Remembering that I'll be dead soon is the most important tool I've ever encountered to help me make the big choices in life. Because almost everything - all external expectations, all pride, all fear of embarrassment or failure - these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart. ... Stay hungry. Stay foolish." - Stanford University commencement address, June 2005.

The Good News:  He did follow his heart.

Wednesday, October 5, 2011

Aufedersein, Part 2

Don't like the sound of this music?
Dr. Pippa Malmgren's advice in case of a euro collapse after Germany exits that currency: "Gold, diamonds, agricultural assets, energy prices and mined asset prices will rise.  Default reduces the debt burden and allows growth and inflation to return.  If central banks (other than the ECB) throw huge liquidity out into the market because of this event then the liquidity is going to lean away from paper financial assets other than the most trusted and liquid (US Treasuries), and lean toward hard assets.  Europe is about to become a very cheap place to go on holiday or to buy a beach house or a ski chalet or a vineyard... Countries that already have inflation can expect much more once these events unfold.  This is going to make the policy problem for Australia and Canada substantially more difficult.  The cost of living will rise but no central bank can raise rates against the backdrop of a crisis environment... The world is about to experience deeper stagflation.  The cost of living will now rise even more but growth remains stunted.  Policymakers will start to veer back and forth between dealing with unemployment and dealing with inflation.  The years ahead will be referred to as “stop go” years because policy will at times try to stop price hikes and at other times policy will try to push growth.  Luckily, the world has seen this movie before in the 1970’s.  Hopefully, we have learned something from the past and it ends rather more quickly this time around."

The Good News:  Home again!

Tuesday, October 4, 2011

Germany to Eurozone: Aufedersein!

Bye-bye!
And now this, from Dr. Pippa Malmgren:  News to expect in the coming days and weeks:  Greece defaults.  Germany protects German banks but other countries cannot do the same - thus quickly provoking multiple sovereign defaults and/or bank failures, all of which may easily lead to a payments crisis in the global banking system.  Derivatives are particularly at risk in terms of operation and execution.  The Euro falls in value, especially against the US dollar.  The Germans announce they are re-introducing the Deutschmark.  (They have already ordered the new currency and asked that the printers hurry up.)  The Euro falls even more on any news that Germany is withdrawing from the Euro. Legal wrangling begins as to the legality of Germany’s decision.  (Resolution takes years.)  Germany insists that the Euro continues to exist even they do not use it any longer.  They emphasize that European unification will continue and suggest new legal instruments to strengthen European unification including new EU Treaties.  (Read Dr. Malmgren's full article (well worth it!) and her biography.)

The Good News:  Don't just sit there, take some action while you still can!  The specifics tomorrow.

Monday, October 3, 2011

The Only Solution For Greece

Yes, that's a piano in the woods.
A deus ex machina (Latin for "god out of the machine") is a plot device whereby a seemingly inextricable problem is suddenly and abruptly solved with the contrived and unexpected intervention of some new event, character, ability, or object. It comes to English usage from Horace's Ars Poetica, where he instructs poets that they must never resort to a god from the machine to solve their plots. He refers to the conventions of Greek tragedy, where a crane was used to lower actors playing gods onto the stage. The machine referred to in the phrase could be either the crane employed in the task, or the riser that brought a god up from a trap door. The idea is that the device of said god is entirely artificial or conceived by man.  Sometimes, the unlikeliness of the deus ex machina plot device is employed deliberately. For example, an offbeat scene in The Life of Brian involves Brian, who lives in Judea in 33AD, being rescued from a high fall by a passing spaceship.  A deus ex machina is generally undesirable in writing and often implies a lack of creativity on the part of the author.  There is also a Russian expression, "a piano in the bushes," which has a similar meaning: an artificial plot twist, clumsy, obviously pre-prepared "accident".  (Wikipedia)

The Good News:  I'm on the road for a couple of days, more on the economy on Wednesday!  Until then, here's hoping Greece is rescued by a deus ex machina - it's their only hope!

Sunday, October 2, 2011

Occupy Wall Street!

This is what the protest should be about.
An interesting phenomenon that hasn't gotten much air play out here (yet) is the fledgling "Occupy Wall Street" sit-in.  It started out with a handful of protesters on September 17th, and I pretty much thought they'd be gone by now.  But being "maced" a couple of times by New York's finest seems to have gotten them the PR boost they needed, and the result is that the protest is growing day by day.  In fact, the "occupation" tactic has now spread to other major financial centres around the world.  And notice that I said "protesters" - not "rioters", they run the gamut from retirees to off-duty first responders, and from academics to young mothers.  Regular readers of this space will know that - although there's certainly lots of blame to go around for the 2008 Financial Meltdown and the mess we're in today - I place the bulk of the responsibility at the feet of Wall Street hotshots who sliced and diced and packaged tranches of worthless mortgages and derivatives, and then flogged them around the world as "investments".  (Several times I've wondered in print where the paddy wagons were, but the first casualties of any financial turn-down are the Ponzi schemers - it takes time to catch the rest of 'em.)  The fact is, these over-leveraged investment "banks" should have been allowed to fail, but instead they were propped up by you and me, the taxpayers, such that now we are now on the hook for sovereign debt and the hotshots are living life large with huge bonuses while they spout "it's Obama's fault" every chance they get.  Now don't get me wrong, I'm slightly right of Attila The Hun, but the greed and avarice shown by Wall Street over the past three years picks my ass.  I'd say the Occupy Main Street movement is not "right versus left", but more "the 99.9% versus the 0.1%".  I'm not ready to join the sit-in myself (last time I did that was 1969, I believe), but I can understand the frustration of the masses at the opulence of a few.  (There's that Gini Coefficient thing again.)  With luck the serious peaceful protestors won't be co-opted by the anarchists and other misfits that usually get the headlines.  We'll see.

The Good News:  Enjoying a visit from B&B!

Saturday, October 1, 2011

Chemistry of Hell Explained

A painting of Hell by the Limbourg brothers in "Les Tres Riches Heures" (1416)
The following is an actual bonus question on a University of Arizona chemistry midterm, and an actual answer turned in by a student.  The answer by this student was so "profound" that the professor shared it with colleagues via the Internet which is, of course, why we now have the pleasure of enjoying it as well.  Most of the students wrote proofs of their beliefs using Boyle's Law (gas cools when it expands and heats when it is compressed) or some variant.  
Bonus Question:  Is Hell exothermic (gives off heat) or endothermic (absorbs heat)?
     "First, we need to know how the mass of Hell is changing in time.  So we need to know the rate at which souls are moving into Hell and the rate at which they are leaving, which is unlikely.  I think that we can safely assume that once a soul gets to Hell, it will not leave.  As for how many souls are entering Hell, let's look at the different religions that exist in the world today.  Most of these religions state that if you are not a member of their religion, you will go to Hell.  Since there is more than one of these religions and since people do not belong to more than one religion, we can project that all souls will go to Hell.  With birth and death rates as they are, we can expect the number of souls in Hell to increase exponentially.  Now, we look at the rate of change of the volume in Hell because Boyle's Law states that in order for the temperature and pressure in Hell to stay the same, the volume of Hell has to expand proportionately as souls are added.  This gives two possibilities: 1) If Hell is expanding at a slower rate than the rate at which souls enter Hell, then the temperature and pressure in Hell will increase until “all Hell breaks loose”.  2) If Hell is expanding at a rate faster than the increase of souls in Hell, then the temperature and pressure will drop until “Hell freezes over”.  So which is it?  If we accept the postulate given to me by Teresa during my Freshman year, that, "It will be a cold day in Hell before I sleep with you," and taking into account the fact that I slept with her last night, then number two must be true, and thus I am sure that Hell is exothermic and has already frozen over. The corollary of this theory is that since Hell has frozen over, it follows that it is not accepting any more souls and is therefore, extinct ... leaving only Heaven, thereby proving the existence of a divine being which explains why, last night, Teresa kept shouting "Oh my God, Oh my God."  (The student received an A+.)

The Good News:  The stock market is closed!  What a week!