Stadiums: Not trusting the voters

Dayton: Get stadium done


Gov. Mark Dayton said Tuesday that he doesn't care whether Ramsey County voters get to decide on a sales-tax increase for the proposed $1.1 billion Minnesota Vikings stadium in Arden Hills, he just wants to make progress on building the team a new stadium.

And he dangled the possibility of calling a special legislative session to address the stadium issue in November.

"I don't have a problem with [a referendum], but I'm not advocating it," Dayton said. "I want to get this stadium project done."

The governor's comments clarified remarks from Monday at the State Fair where he said he would support a referendum. Dayton said those comments were twisted.

"I'm not supporting it, per se. I'm not opposed to it. If they pass legislation and the Legislature goes along with it, I'll support it," he said of the referendum.

The Ramsey County Charter Commission is meeting Wednesday night to discuss a possible ballot question on the sales tax. The deadline for 2011 has passed so the question, if approved, wouldn't be on the ballot until November 2012.

The Vikings want the issues resolved sooner. They say they have waited in line while others got new stadiums and now it's their turn.

The referendum question is critical because Ramsey County voters likely would reject a sales-tax increase. St. Paul voters, who make up more than half the county, soundly rejected a sales tax proposal to build a Twins stadium in 1999.

Comment: Let the people vote on this! (I live in Hennepin Co so this does not directly impact me)


I support the Plymouth Mosque

Plymouth weighs in on mosque


Muslim families in the northwest metro suburbs, who for years have moved from one place to another for prayer services, were waiting to see Tuesday night whether they would get permission to open a mosque at Plymouth's soon-to-be-closed post office.

The Plymouth City Council was to decide whether the Northwest Islamic Community Center could buy and move into the building. The center plans to remodel it for family activities and to serve the worship needs of about 40 Muslim families centered in the Plymouth area.

The center would be open for daily prayer and may begin a Sunday school program, said Najam Qureshi, a database manager who chairs the Islamic center's board. Activities will be offered to the broader public, including tutoring sessions for kids.

The post office has been scheduled to close, but the Islamic center proposes to keep open the customer service counter by leasing part of the building back to the U.S. Postal Service. Most other operations at the post office were moved last year to St. Louis Park.

"Overall, we're united as a community here, the broader community," Qureshi said. "This is not a divided neighborhood. ... It's a disappointment that people look at this as controversial. It isn't."

Last week, Plymouth's Planning Commission unanimously approved the plan after considering how the building, across the street from City Hall, would be used and whether it has adequate parking and access.

Scores of people attended last week's hearing, with two reportedly criticizing the Islamic center's plans. They were said to be concerned about Islamic infiltration of the United States.

Qureshi, who has lived in Plymouth since 1994, said families have met for worship at a variety of community centers from Maple Grove to Hamel. "It gets confusing for people and also expensive," he said.

Qureshi said they had looked at several locations in Plymouth and the surrounding area. A good possibility in Maple Grove was rejected because it was too close to a liquor store, he said.

The group needed to get a conditional use permit from the city because it will use the facility for religious purposes. Muslims conduct prayer services every day.

The 30-year-old post office building has 10,500 square feet. It's listed for sale for $800,000.

Comment: Freedom of Religion, Freedom of Speech, Freedom to Assemble. It's in the Bill of Rights


Imploding "The Harmon"

MGM Folds Vegas Tower


Designed by famed architect Norman Foster, the Harmon fronts the Las Vegas Strip at CityCenter, which MGM owns with Dubai World and includes multiple condo and hotel towers as well as a casino and a mall.

The development has been beset with problems, including the deaths of six construction workers and financial losses since it opened at the end of 2009. Those losses have narrowed more recently.

Now MGM and general contractor Perini Building Co. are locked in a legal dispute over around $200 million that MGM says it shouldn't have to pay Perini and other contractors due to severe construction failures at the Harmon.

According to a release Monday from MGM, a court order prohibits alteration or destruction of the Harmon while the legal dispute continues. As a result, MGM management is hoping that county approval of the demolition plan will help it in seeking relief from that order.

Perini contends that MGM's portrayal of the Harmon as a practically irreparable public safety concern is fear-mongering to get out of paying bills for a building it no longer needed after condo-buyer demand dried up and the tourism market slowed.

In a letter to Clark County Director of Development Services Ron Lynn, CityCenter's senior vice president of facility improvements, William Ham, wrote: "CityCenter has decided to abate the potential for structural collapse in case of a code-level earthquake.... CityCenter will demolish the Harmon Building."

Comment: Wiki: Harmon Hotel

August 15th, 1971 - the "Nixon Shock"

Nixon Shock


To stabilize the economy and combat the 1970 inflation rate of 5.84%, on August 15, 1971, President Nixon imposed a 90-day wage and price freeze, a 10 percent import surcharge, and, most importantly, "closed the gold window", ending convertibility between US dollars and gold. The President and fifteen advisers made that decision without consulting the members of the international monetary system, so the international community informally named it the Nixon shock. Given the importance of the announcement — and its impact upon foreign currencies — presidential advisers recalled that they spent more time deciding when to publicly announce the controversial plan than they spent creating the plan

Gold-standard debate back, 40 years after Nixon


Exactly 40 years ago Monday, the U.S. dollar formally became a fiat currency, as then-President Richard Nixon “closed the gold window” and ended the greenback’s precious-metal guarantee.

And though a market price for the dollar was soon accepted as the new normal, the debate over a return to the gold standard has now resurfaced in a way we haven’t seen in the four decades since.

Many practical hurdles to a gold dollar exist — most significantly the tremendous difficulty in defending a metal-backed currency, even if the new gold standard opened with a major devaluation for the U.S. unit.

Abandoning the gold standard was a seminal moment, and one we're now all paying for


On 15 August 1971, with the US public finances straitened by the cost of the war in Vietnam, Richard Nixon finally cut the link between the US dollar and gold. Until then, the US Treasury was duty bound to exchange an ounce of gold with central banks willing to pay them $35.

Suddenly, for the first time in history, the level of the world's currencies depended not on the value of gold or some other tangible commodity but on the amount of trust investors had in that currency. Central banks were allowed to set monetary policy based on their instincts rather than on the need to keep their currency in line with gold.

It was one of those seminal moments whose significance has only gradually become apparent, obscured as it was at the time by Vietnam and then Watergate. But the more one examines economic history, the more obvious it is that this was one of the most important policy decisions in modern history.


Let's start with first principles: for as long as anyone can remember, politicians have sought to spend more than they can afford. Since the invention of money they have discovered ever more ingenious ways to do so.

The initial method involved debasing the currency. Henry VIII earned his nickname "Old Coppernose" because he added so much copper to what were supposed to be silver coins that eventually it would show through on the nose of his portrait.

These bouts of debasement typically end in disaster, as faith is lost in the currency, inflation shoots through the roof and the economy collapses, after which politicians introduce a new, more credible system.

After trust evaporated in gold and silver coinage, we had the gold standard and then the Bretton Woods system and now, today, fiat money – but the routine is painfully familiar. The main difference with fiat money is that whereas under the gold standard it was all too obvious when politicians were spending beyond their means (they would simply run out of gold reserves), these days it is slightly more difficult to tell quite how close the system is to breakage.

Nonetheless, as we look back at the chaos of the past few weeks, it is quite clear that our current version is on its last legs. This, in essence, was the point Sir Mervyn King tried to make again and again in the Inflation Report press conference last week: 2008 was only one stage in a far bigger crisis of confidence in the way we have structured the world economy.

Over the past 40 years, in the absence of a coherent international monetary system and under the veil of floating currencies, countries which would otherwise have been penalised for doing so were allowed to borrow enormous amounts (eg. The US and UK, or Greece). Other countries (eg. China or Germany) indulged them by lending enormous amounts. In the meantime, investors convinced themselves that the apparent economic growth fuelled by this debt was genuine rather than an artificial product of a binge.

The 2008 crisis represented the first recognition that those increases in asset prices and economic growth were chimerical. The recent relapse represents a recognition that the losses have merely been transferred on to sovereigns' balance sheets.

But what next? The Panglossian answer is that those imbalances are slowly but surely put right: indebted countries borrow less and repay their creditors. But countries rarely go gently: what seems more likely is that the next stage of the crisis represents a crisis of confidence in the very system which, founded as it is on trust rather than measurable yardsticks, has no reliable, inbuilt way of righting itself.

So are we nearing the end of this economic era? All the hallmarks are there. We've been through the periods of faith in the system, peaking with the certain belief in the 1990s and early 2000s that inflation targets really would help keep governments on an even keel.

We've had the financial crisis that usually marks the beginning of the end of established monetary systems. And now we are seeing the debasement.

Consider the price of gold, which has recently scaled new highs. Since the 1970s the price per ounce has risen from below $40 to an astonishing $1740. The price reflects many factors, including economic growth, but chief among them is a diminishing faith in the ability of fiat currencies to maintain their value.

Ignore the oil price shock and the mild fluctuations over time: it is no coincidence that the price really started to spike (in other words faith in currencies versus gold plunged) in 2001, which just so happens to be the year central banks first started experimenting with quantitative easing (QE) – in Japan.

Comment: Consider: Gold standard and Bretton Woods system. I long for the days of "Silver Certificates" and the gold standard

I won the Lottery!!!


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The Lucky Numbers.


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Comment: From my Spam inbox

On replacing smoke detector batteries

We had a dinner guest Saturday night and during dinner one of our detectors (not near the kitchen) started going off. Wow that was annoying! We have five Kidde i4618 and one carbon monoxide detector. Kathee dragged the ladder in from the garage and waved her hand around what we thought was the offending detector - no luck. I suggested that she vacuum inside of the detector. No help. I ran out to the local convenience store to buy one 9 v battery (wow - $ 5.69. The Battery Plus next door had just closed). Kathee replaced that battery. No change. I looked at the owner's manual on-line and suggested that we should replace the other's batteries too. At that juncture I thought we had 4 total not five. Our dinner guest and I drove back to the convenience store to buy 3 more 9 v batteries. We we returned, Kathee informed us that we had 5 detectors not 4. So back to the convenience store for the fifth one. After replacing all five batteries, we found out that it was the carbon monoxide detector, not the smoke detector. It was in close proximity to the first detector and with the noise we were not able to discern that was going off not the smoke detector. So 6 batteries and an hour and a half latter we finally got all resolved. Note to self ... replace these batteries annually and buy in bulk - I could have bought 8 Duracell Coppertop Batteries's for under $ 20 from Amazon. Instead I paid $ 5.69 each at the gas station convenience store.


British dystopia - What does this have to do with America?

Après le Déluge, What?


At fault in the riots were the distorting effects of the welfare state and a degenerate British popular culture: "A population thinks (because it has often been told so by intellectuals and the political class) that it is entitled to a high standard of consumption, irrespective of its personal efforts; and therefore it regards the fact that it does not receive that high standard, by comparison with the rest of society, as a sign of injustice." Much of what they have is provided by others, but they are not grateful: dependency doesn't encourage gratitude but resentment.


What does this have to do with America? What we're seeing on the streets in Britain right now is something we may be starting to see here. It hasn't come together in a conflagration, but it is out there, and I think it's growing. And as in Britain, it doesn't have anything to do with political grievances per se.

Philadelphia right now is under curfew because of "flash mobs." Young people send out the word on social media, and suddenly dozens or hundreds of them hit a targeted store, steal everything on the shelves, and run, knowing no one will stop them or catch them. It's happened in other cities, too. Sometimes the mobs beat people up on the street and take their money. There are the beat-downs in McDonald's, where the young lose all control and the old fear to intervene. There were the fights and attacks last weekend at the Wisconsin State Fair. You've seen the YouTubes of fights on the subways. You often see links to these stories on Drudge: He headlines them "Les Miserables."


The normal, old response to an emerging problem such as this has been: The government has to do something. We must start a program, create an agency to address juvenile delinquency. But governments are tapped out, cutting back, trying to avoid bankruptcy. Which means we can't even take refuge in the illusion that government can solve the problem. The churches of America have always helped the young, stepping in where they can. That will continue. But they too are hard-pressed these days.


What's needed can't be provided by government. When the riot begins or the flash mob arrives, the best the government can do is control the streets, enforce the law, maintain the peace.

Comment: Après le Déluge = After the Flood. Image from Clockwork Orange. My view ... a post-Christian value vacuum!

"The Shining": recut as a romantic comedy!

Comment: Of course it's not! One of the scariest films I've ever seen. The Shining . More Viral Videos

Investing roller coaster week

Wild Week

Comment: Image capture from Wall Street Journal

Manic Market

The Trading Game Is Causing the Manic Market


Wall Street no longer views the stock market as a means to invest in companies that they believe are undervalued based analysis of a firm's earnings and growth potential. Instead, it has become a sort of game. The objective is to find ways to buy or sell stocks and make a quick trading profit. Instead of representing companies, these stocks might as well represent race horses.

Comment: Why an investor needs to be a value investor. Example: Don't Fight the Fed, Instead Buy These 20 Blue Chips (Image above is from this article)

1981: The IBM 5150 Is Born

The Modern PC Turns 30


IBM launched the 5150 PC on Aug. 12, 1981.

It wasn't much by today's standards, or even yesterday's. The 5150 featured a 4.77 MHz 8-to-16 bit Intel 8088 processor. It was less powerful than other processors available from Intel and Motorola, but those were thought to be “too powerful” for a PC. IBM also gave the 5150 a full 64 kilobytes of RAM — expandable to whopping 256 kB — one or two floppy drives (your choice) and a monochromatic display.

The 5150 was developed in less than a year by a team of 12 led by Don Estridge. The project was given the codename “Project Chess” -- which we mention only because it sounds so cool -- and built using off-the-shelf components.

Depending on how you configured your 5150, you'd shell out anywhere from $1,565 to $6,000 for one. That comes to $4,000 to $15,000 in today’s dollars. The success of the 5150 made the IBM PC the industry standard, and before long a whole bunch of "IBM compatibles” and clones jumped into the burgeoning PC market.

Comment: I couldn't afford it on a pastor's salary. In June of 1982, I bought a TRS-80 Model 3 and an Epson printer. With software it was $ 2,500.


Comment Moderation turned on

I am turning comment moderation back on. I am getting just silly comments that are obviously of the spam variety.

I only intend to check comments once a day so if you comment it may not display until end of day.

Thanks for understanding


Technical trading behind market swings

Chart-based trading behind big market swings


Support levels. Moving averages. Breakouts.

That strange language is being spoken more forcefully on Wall Street these days. It is the language of technical trading, which is helping to drive recent wild gyrations in stock prices.

Within hours, stock prices have been leaping and falling in 300 and 400 point bursts.

Technical traders all but ignore fundamentals, such as corporate profits or expected growth rates. Instead they rely on stock-chart analyses that signal when to buy or sell the entire U.S. stock market.

In the absence of clear signs about the economy's direction, more of Wall Street is turning to technical trading. When the charts say "sell," a herd of sellers emerges, magnifying declines. If prices fall far enough, another wave of technical selling is triggered and the decline is intensified. At some point, a threshold is reached where the charts say "buy," and stock prices get whipped higher.

"You have to have some idea of earnings and multiples for fundamental analysis," said James Masserio, the head of equity derivative trading at Credit Suisse. "But now there is essentially no clarity on future earnings for the next 6 to 12 months."

When traders can't forecast the future, they turn to what has happened in the past. "Technical analysis at its heart is just a graphical representation of human emotion and psychology," said Richard Ross, a global technical strategist at Auerbach Grayson, a New York-based broker. He says that price charts show that markets -- and investors -- follow reliable patterns.

A generation ago, volatility was measured in days. Now huge moves up, and then down, can happen in a matter of minutes. The moves are so fast these days because computers programmed to analyze charts are executing trades without any human intervention.

Comment: Small investors (like me) who have limited free trades (I get 100 free trades a year on my Wells Trade account) need to be buy and hold value investors - and be patient. Latest stock I am buying: Kimberly-Clark Corporation. Not exactly exciting ... but folk will still be buying Kotex, Kleenex, and Huggies. Note the 4.5% yield.

Gone: "That old black magic"

Democrats doubt Barack Obama's reelection chances


Gary Pearce, a Democratic strategist in North Carolina, a swing state Mr Obama is likely to struggle to retain in 2012, said: "Democrats are worried. He looks weak, he doesn't say anything that grabs you, and people are looking for some kind of magic."

Comment: Black Magic lyrics (Frank Sinatra).

But he has morphed into a Jimmy:

"The notion everyone is talking about is 'is he Jimmy Carter or will he be a one-term president'


Manhattan shoebox apartment: a 78-square-foot mini studio

Comment: $ 800 per month with no bathroom. HT: Salon

10 Years for grammatically challenged Bank Robber

'Give money, I gun' bank robber gets 10 years in prison


A grammatically challenged ex-con is looking at 10 years in prison for robbing a Fridley bank of less than $2,000.

Joe Nathan Michael, 48, of Fridley, was sentenced Tuesday in federal court after pleading guilty to holding up the TCF bank at Cub Foods on May 20, 2010.

According to the plea agreement:

Michael gave the teller a note that read "Give money, I gun," leaving her confused about what he wanted. He told her to give him all the money and not to push any buttons.

She handed over $1,991, recorded bait bills and a concealed electronic tracking device. Michael put the money in his jacket and fled on foot.

Police, provided with a description, saw Michael standing at a nearby bus stop and apprehended him.

Michael's criminal history includes convictions in Minneapolis for felony robbery and felony domestic assault and gross misdemeanors for domestic assault and assault

Comment: A Virgil Starkwell want-a-be!


"Get a part-time job — that's what I did"

30,000 college students kicked out of food aid program in Michigan


Michigan has removed about 30,000 college students from its food stamp program — close to double the initial estimate — saving about $75 million a year, says Human Services Director Maura Corrigan.

Federal rules don't allow most college students to collect food stamps, but Michigan had created its own rules that made nearly all students eligible, said Brian Rooney, Corrigan's deputy director. As a result, the number of Michigan college students on this form of welfare made the state a national leader. For example, Michigan had 10 times the number of students on food stamps as either Illinois or California, Rooney said.

Cutting off the students is part of what Corrigan says is an effort to change the culture of the state's welfare department and slash tens of millions of dollars of waste, fraud and abuse.

"Maybe (students) could go get a part-time job — that's what I did," said Corrigan, a former justice of the Michigan Supreme Court who attended Detroit's Marygrove College and University of Detroit Mercy School of Law.

"We want to encourage people to be self-sufficient, not to be dependent on the government," she said in an interview with The Detroit News.

Comment: Quit sucking off the government!


2012 Electoral Math

Obama Likely Will Lose in 2012


We'll begin with the 2008 results adjusted for the post-Census reapportionment. I think we can all agree that this is a baseline -- the chances that Obama will win more electoral votes than he did three years ago is zero. Then we'll begin with what I think are fairly obvious adjustments -- we'll give the Republicans back the electoral vote they lost in Nebraska along with Indiana, North Carolina, and Virginia -- traditionally Republican states that he carried last time through a special magic the like of which we are not likely to see again.

Let's work from this base of 219 electoral votes and assume that the following states are potential battlegrounds in 2012: Washington, Oregon, Nevada, Colorado, New Mexico, Minnesota, Iowa, Wisconsin, Michigan, Ohio, Pennsylvania, New Hampshire, and Florida. We'll throw in Maine and New Jersey as stretch states as well. This gives the Republican nominee an almost absurd number of paths to the White House:

Perhaps the most obvious one, in that it resembles the 2000 and 2004 battlefields most heavily, is that a Republican could win by taking just Florida, Ohio, and Nevada from that list of states.

Or, even, they could tie it -- and win in a Republican-controlled House -- by taking Ohio, Michigan, and Wisconsin from the rust belt and Nevada in the West.

Alternatively, they could win without taking a single rust-belt state by winning in Nevada, New Mexico, Colorado, Florida, and New Hampshire.

Another odd-looking way of doing it would be to take Pennsylvania, Ohio, Nevada, and Oregon.

More simply, working from this base, Obama has to take 2/3 of the electoral votes in battleground states -- a tall order even for ordinary times.

Comment: Cool interactive electoral map (screen shot above): 270towin.com


Obama: "I will be held accountable"

FLASHBACK: Obama: My Presidency Will Be ‘A One-Term Proposition’ If Economy Doesn't Turn In 3 Years


“Look, I'm at the start of my administration. One nice thing about the situation I find myself in is that I will be held accountable. You know, I've got four years,” Obama told The Today Show’s Matt Lauer on February 1, 2009.

Comment: Hopefully the folk who voted for him are listening



United States of America Long-Term Rating Lowered To 'AA+' Due To Political Risks, Rising Debt Burden; Outlook Negative


The outlook on the long-term rating is negative. We could lower the long-term rating to 'AA' within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.

Comment: Further on the Washington Post

Standard & Poor’s announced Friday night that it has downgraded the sterling U.S. credit rating for the first time.

The move came even though the Treasury Department said that it had found a math error in the firm’s calculations of deficit projections, according to a person familiar with the matter.

S&P decided to lower the AAA rating, held by the United States for 70 years, to AA+ after a bipartisan debt deal signed into law this week failed to assuage concerns about the nation’s growing spending.

Analysts have said a downgrade could increase the cost of borrowing for the U.S. government and lead to tens of billions of dollars in more interest costs per year. That could translate into higher borrowing for consumers and businesses, too.

A downgrade would also have a cascading series of effects on states and localities that rely on federal funding, including in the Washington metro area, potentially raising the cost of borrowing for schools and parks.

Comment: AAA for 70 years ... downgraded ... thank you President Obama!

Job market not hopeless

Dept. Of Labor Reports It Could Be Nothing, But They May Have Spotted Job In Iowa Strip Mall


Urging the 14 million Americans without jobs not to get their hopes up, officials from the Department of Labor cautiously announced Tuesday that they had heard about a possible employment opportunity at the Lindale Mall in Cedar Rapids, IA. "Now, this could be something, or it could be absolutely nothing, but we think they're looking for someone to restock the jewelry kiosk Monday, Wednesday, and Friday evenings, with the chance to add Sunday mornings further down the line," said Labor Secretary Hilda Solis ...

Comment: From "The Onion" (a satire site)

But it is a real mall!

Out of Bullets

The Government Can’t Save the Market This Time


But there are also several very important differences between this market crash and the ones a few years ago:

  • The Fed has fired most of its bullets (interest rates are already at zero)
  • Our budget deficit is already out of control, and Congress has had it with "stimulus"
  • The public has had it with bailouts
That means the government's ability to do anything about this market crash is severely limited. Yes, we'll almost certainly have a "QE3." And maybe that will prop things up a bit. But it won't fix the fundamental problems clogging the economy, just as QE1 and QE2 didn't permanently fix anything. (The only thing that will fix our economy is debt-reduction, discipline, and time.)
To get a good sense of how hamstrung the government is, you need only look as far back as last week, when Congress was so paralyzed that it almost put the country into default rather than raise the debt ceiling. And you also need only note that, when the 2000 crash began, the US federal budget was running a surplus, and when the 2007 crash began, the deficit was only $200 billion. Now, the deficit's about $1.4 trillion.
Comment: Image source. The problem:

  • Debt-reduction? Does anyone see that happening?
  • Discipline? Time? Congress and the President are more interested in their own political fortunes!


Bear Market or Bull?

How Does This Bear Compare to Others?


While there are various opinions about what qualifies as a bear market, one widely used definition is a price decline of 20% or more over at least a two-month period. By that measure, we're not yet there, but getting uncomfortably close.

What's been influencing the move in stocks as of late? The market has been flooded with a wave of bad economic news (weak GDP, weak manufacturing, weak consumer spending, weak job market, etc.) and instability from Europe's ongoing sovereign debt crisis. The U.S. government's own struggle with too much debt is also worrisome.

Comment: Full article has a chart: History of Bear Markets Over the Past 50 Years. My own take: I think there are good values: Like 3M. Still selectively buying and diversifying. Image source

Time to Panic? Look a Dividend Yields!

Time to Panic? Just the Opposite


Another strategy is to focus on dividends—getting paid to wait for the market to recover. The downdraft has caused a lot of robust yields, especially when compared with the 2.44% yield on 10-year Treasurys.

Pfizer, which trades at 8 times forward earnings, is paying a 4.5% dividend yield. Merck, also trading at 8 times forward earnings, boasts a 4.7% dividend yield. Verizon, trading at 15 times forward earnings, is yielding 5.5% and AT&T, trading at 12 times forward earnings, is yielding 5.9%.

Comment: Consider Kimberly Clark.

Gulp. The world's largest stop-motion animation set

Comment: HT: Make

Gulp: The making of

Dot: World's Smallest Stop-Motion Animation

Comment: Very cool. Artists.

The Long, Strange History of Kraft Foods

The Long, Strange History of Kraft Foods


Few companies in corporate America have as complicated a history as Kraft Foods, the owner of Oreo cookies, Ritz crackers and Oscar Mayer lunch meats. Today, Kraft announced plans to split up, marking yet another shimmy in its background as a mélange of corporations, including Philip Morris, General Foods and RJR Nabisco.

Comment: Soon to split into two. Good for investors!

What we've got here is... failure to communicate

The Power of Bad Ideas - What we've got here is far worse than a failure to communicate


It was late Wednesday afternoon, July 13, in the Cabinet Room in the White House. Budget negotiations between Democrats and Republicans had been going on for months. The president, the vice president and congressional leaders on both sides were meeting again. Late in the meeting, House Majority Leader Eric Cantor asked the president a question. As Mr. Cantor told it this week, he was thinking about how the White House and the Republicans were still far apart on the size of budget cuts. He felt the president and his party were hung up on an insistence on raising taxes. Mr. Cantor asked Mr. Obama if he would drop his stand that the debt ceiling should be raised without dollar-for-dollar cuts. At that point, said Mr. Cantor, the president "turned to me and said, 'Eric, don't call my bluff.' He said, 'I'm going to take this to the American people.'" Then he got up and left.

The president was confident he could go over the heads of the opposition and win the day with his powers of persuasion. On July 25 he made his move, with a prime-time national address.

Boy, did it not work.

It was a speech with a calm surface but a rough undertow. "The wealthiest Americans" and "biggest corporations" should "give up some of their breaks." The "burden" must be "fairly shared." The problem is Republicans, who are "insisting" on an approach that "doesn't ask the wealthiest Americans or the biggest corporations to contribute anything at all." These Republicans ask nothing of "those at the top of the income scale." Their stand would "threaten working families" and enrich the "corporate jet owner," the "oil companies" and "hedge fund managers." But don't worry, "the 98% of Americans who make under $250,000 would see no tax increases at all." "Millionaires and billionaires" must "share in the sacrifice." Otherwise the government may not be able to send out Social Security checks.

It was, obviously, an attempt at class warfare. But class warfare is inherently manipulative, and people often sense manipulation and lean away from it. Americans at this point—they've been through the 20th century—don't like attempts to divide them. It turns things sour.

Comment: Cool Hand Luke


Dow Tumbles 500 Points, Putting It in Red for Year


U.S. stocks plunged in the biggest selloff since the financial crisis, driving the Dow Jones Industrial Average down more than 500 points, as investors appeared to lose faith in the ability of the world's policy makers to revive the global economy and stave off a rolling debt crisis in Europe.

Comment: S & P Heatmap


George Will: On 2012, The Tea Party, Obama's "apostasy"

The debt deal and Obama's 2012 problem


By affirming liberalism’s lodestar — the principle that government’s grasp on national resources must constantly increase — Obama made himself a spectator in a Washington more conservative than it was during the Reagan presidency. By accepting, as he had no choice but to do, Congress’s resolution of the crisis, Obama annoyed liberals. They indict him for apostasy from their one-word catechism, “More!” But egged on by them, he talked himself into a corner. Having said that failure to raise the ceiling would mean apocalypse, he could hardly say failure to raise revenue would be worse.


Regarding the political process: There are limits to what can be accomplished by those controlling only half of Congress, but the Tea Party has demonstrated that the limits are elastic under the pressure of disciplined and durable passion. As Tom Brokaw said in Washington on “Meet the Press” last Sunday, the debt-ceiling drama ended as it did because the Tea Party got angry, got organized and got here.


Obama’s presidency may last 17 or 65 more months, but it has been irreversibly neutered by two historic blunders made at its outset. It defined itself by health-care reform most Americans did not desire, rather than by economic recovery. And it allowed, even encouraged, self-indulgent liberal majorities in Congress to create a stimulus that confirmed conservatism’s portrayal of liberalism as an undisciplined agglomeration of parochial appetites. This sterile stimulus discredited stimulus as a policy.


America may be one-third of the way through a lost decade — or worse, toward a lost national identity. So, Republicans have their 2012 theme: “Is this the best we can do?”

Comment: Interesting read. Obama is looking weak right now but I think he will be a formidable candidate. Clinton looked beatable in '94

Econony at ‘Stall Speed’

U.S. Economy Running at ‘Stall Speed’


Pacific Investment Management Co. and BlackRock Inc., which together oversee almost $5 trillion, say the U.S. economy is stalling.

Bill Gross, who runs the world’s biggest bond fund at Pimco, and Peter Fisher, head of fixed income at BlackRock, say the Federal Reserve is preparing measures to counter the slowdown.

“We’re not looking at a recession yet, but we’re at a tipping point,” Gross said yesterday in an interview on Bloomberg Television. “We’re at what we call a stall speed in which corporate profits don’t grow, jobs aren’t created,” said Gross, who is based in Newport Beach, California.

The U.S. recovery that began two years ago has been losing momentum and there are even odds the nation will slip into a recession, according to Harvard University economics professor Martin Feldstein

Comment: Despite QE1, QE2, TARP, Auto bailouts, Cash for Clunkers, Rebates for home buyers, et cetera. Job creation is near zero. My take is that Obamacare has introduced a lot of doubt into the business world and is counter-productive to economic growth


Legislative Star Chamber?

'Super Congress': Debt Ceiling Negotiators Aim To Create New Legislative Body


Debt ceiling negotiators think they've hit on a solution to address the debt ceiling impasse and the public's unwillingness to let go of benefits such as Medicare and Social Security that have been earned over a lifetime of work: Create a new Congress.

This "Super Congress," composed of members of both chambers and both parties, isn't mentioned anywhere in the Constitution, but would be granted extraordinary new powers. Under a plan put forth by Senate Minority Leader Mitch McConnell (R-Ky.) and his counterpart Majority Leader Harry Reid (D-Nev.), legislation to lift the debt ceiling would be accompanied by the creation of a 12-member panel made up of 12 lawmakers -- six from each chamber and six from each party.

Legislation approved by the Super Congress -- which some on Capitol Hill are calling the "super committee" -- would then be fast-tracked through both chambers, where it couldn't be amended by simple, regular lawmakers, who'd have the ability only to cast an up or down vote. With the weight of both leaderships behind it, a product originated by the Super Congress would have a strong chance of moving through the little Congress and quickly becoming law. A Super Congress would be less accountable than the system that exists today, and would find it easier to strip the public of popular benefits. Negotiators are currently considering cutting the mortgage deduction and tax credits for retirement savings, for instance, extremely popular policies that would be difficult to slice up using the traditional legislative process.

Comment: See also

Ron Paul Sounds Alarm on “Disturbing” Super Congress

Image: The Star Chamber

Entitlement state time bombs ... the road to fiscal perdition

A short history of the entitlement state


FDR began the entitlement era with the New Deal and Social Security, but for decades it remained relatively limited.


... in the mid-1960s with LBJ's Great Society and the dawn of the health-care state. Medicare and Medicaid were launched in 1965 with fairy tale estimates of future costs.

Medicare, the program for the elderly, was supposed to cost $12 billion by 1990 but instead spent $110 billion.


Social Security's fiscal trouble began in earnest in 1972 with bills that increased benefits immediately by 20%, added an annual cost of living adjustment, and created a benefit escalator requiring payments to rise with wages, not inflation. This and other tweaks by Democrat Wilbur Mills added trillions of dollars to the program's unfunded liabilities. Believe it or not, these 1972 amendments were added to a debt-ceiling bill.

None of these benefit expansions were subject to annual budget review and thus they grew by automatic pilot. They are sometimes called "mandatory spending" because Congress is required by law to make payments to those who meet eligibility standards, regardless of other spending needs or tax revenues.

According to the most recent government data, today some 50.5 million Americans are on Medicaid, 46.5 million are on Medicare, 52 million on Social Security, five million on SSI, 7.5 million on unemployment insurance, and 44.6 million on food stamps and other nutrition programs. Some 24 million get the earned-income tax credit, a cash income supplement.

By 2010 such payments to individuals were 66% of the federal budget, up from 28% in 1965. (See the second chart.) We now spend $2.1 trillion a year on these redistribution programs, and the 75 million baby boomers are only starting to retire.

We suspect that in the 1960s as now—with ObamaCare—liberals knew they had created fiscal time-bombs. They simply assumed that taxes would keep rising to pay for it all, as they have in Europe.

On Monday night Mr. Obama blamed President George W. Bush's "two wars" for the debt buildup. But national defense spending was 7.4% of GDP and 42.8% of outlays in 1965, and only 4.8% of GDP and 20.1% of federal outlays in 2010. Defense has not caused the debt crisis.


Then came Mr. Obama, arguably the most spendthrift president in history. He inherited a recession and responded by blowing up the U.S. balance sheet. Spending as a share of GDP in the last three years is higher than at any time since 1946. In three years the debt has increased by more than $4 trillion thanks to stimulus, cash for clunkers, mortgage modification programs, 99 weeks of jobless benefits, record expansions in Medicaid, and more.


This is the road to fiscal perdition. The looming debt downgrade only confirms what everyone knows: Congress has made so many promises to so many Americans that there is no conceivable way those promises can be kept. Tax rates might have to rise to 60%, 70%, even 80% to raise the revenues to finance these promises, but that would be economically ruinous.

Yet Mr. Obama and most Democrats still oppose any serious reform of Medicare, Medicaid and Social Security. This insistence on no reform reinforces the notion that our entitlement state is too big to afford but also too big to change politically. This is how a AAA country becomes AA, the first step on the march to Greece.

Comment:  Every young thinking adult should read this. At 62 I may well be dead (and in heaven) before this time bomb goes off.

Obama's curious exercise of presidential "leadership"

Boehner Repeals Murphy's Law


... by rejecting everyone else's plan while offering no plan of his own, the president effectively took himself out of the game. This curious exercise of presidential "leadership" transformed Mr. Obama into the Newt Gingrich of this debate, while Mr. Boehner looked serious and reasonable.

That seems to be the liberal reading as well. The New York Times appears to be reeling. Maureen Dowd quotes a Democrat as saying we're watching President Obama "turn into Jimmy Carter right before our eyes."

Comment: He seems content to enjoy the trappings of the presidency: the world tours, the entourage, the fawning, et cetera. First lady Michelle the same.


Deciding not to buy a Lamborghini

When a cut is not a cut


No plan under serious consideration cuts spending in the way you and I think about it. Instead, the "cuts" being discussed are illusory, and are not cuts from current amounts being spent, but cuts in projected spending increases. This is akin to a family "saving" $100,000 in expenses by deciding not to buy a Lamborghini, and instead getting a fully loaded Mercedes, when really their budget dictates that they need to stick with their perfectly serviceable Honda. But this is the type of math Washington uses to mask the incriminating truth about their unrepentant plundering of the American people.

Comment: Ron Paul

Fiat 500 - Very Cute

Fiat commences 500 national media onslaught


The FIAT brand's new tagline, "Simply More," defines the Fiat 500 as everything you need and nothing you don't. It represents the notion that the simple things in life are treasures, alongside the thought that the richness and fullness of a life well-lived is defined by one's view of self-expression.

Comment: We drove by the Luther dealership in Brooklyn Park and looked at 4 models in the showroom. Very cute. (We are not in the market ... happy with the two vehicles that we currently have)

Debt deal: Big issues kicked

Leaders Agree on Debt Deal - Plan to Cut $2.4 Trillion in Spending, Avoid Default Fails to Resolve Fraught Issues


For all the down-to-the wire drama, the deal leaves the hardest questions unanswered and sets in motion years of fiscal pain. It imposes spending caps for the next 10 years, but leaves the details of what programs would be cut to congressional committees.

And it launches a ferocious, months-long argument over how to rewrite the tax code and what changes to make in popular programs like Social Security and Medicare—issues that were ultimately shelved in this debate.

So while one uncertainty would be lifted from the economy with the increase in the debt ceiling, others would be prolonged.

Comment: Findings of the Bowles-Simpson commission should be considered

Loose lips

Loose Lips Trip Up a Good Hands Executive


Some agents were angry about the changes and the company's recent performance, said people who heard the remarks at the bar. Mr. Wilson, who wasn't at the bar, was a popular target.

Then came the two words that helped end Mr. Lacher's 20-month career at Allstate: "f—ing a—."

Some people who heard the double-barreled expletive or are familiar with an internal investigation about the incident launched by Allstate said Mr. Lacher was talking about Mr. Wilson, the chief executive at Allstate since 2007.

Another account has Mr. Lacher saying Mr. Wilson "would have to be a "f—ing a—" if he didn't feel responsible for the company's performance.

Either way, some of the people who heard Mr. Lacher's remarks interpreted them as highly critical of Allstate's chief executive. Accounts of the incident rippled through the Leaders Forum the next day, according to several people. Eight weeks later, Mr. Lacher lost his job.

Comment: It's one thing to feel this way ... but keep lips sealed

Summer projects

Summer project season at the Peet household. Time for home maintenance.


  • Replaced broken brick on the front of the house. (I chipped off the edge with the snow plow last Winter). I had a tough time finding a contractor for such a small project. Finally found a mason who replaced the brick on Friday
  • New tile in the master bedroom bath. Existing tile is cracking. We purchased new slip resistant tile at Kate-Lo Tile & Stone. Today is tear out of the old. Tomorrow and Wednesday setting and grouting of new tile
  • Driveway repave by DMJ asphalt. Our driveway really took a beating last winter and is cracked up by the street. I had hoped to not have to do this but had to. Asphalt turned out to be 1/3 the cost of concrete. Good article on Concrete vs Asphalt Driveways? This project looks to happen in September

Delayed gratification and Retirement

What a Marshmallow Experiment Can Teach You About Retirement


Decades ago, in what's now come to be known as the "Marshmallow Experiment," Stanford researcher Walter Mischel gave a group of three to five year-olds a choice: Eat one marshmallow now, or wait fifteen minutes and get two marshmallows. The experiment was intended to measure children's ability to delay gratification.

What did Mischel discover? About 30 percent of the children were able to wait fifteen minutes to get the second marshmallow; the rest gobbled it down before the time was up.


So what does all this have to do with retirement planning? Quite a bit, actually. The fact is, almost half of all Americans start their Social Security benefits at age 62, which provides the lowest possible income. But if they could instead wait until age 70 to start receiving benefits, they could almost double their monthly income and increase their expected lifetime payout.

Comment: The Stanford marshmallow experiment . I turn 62 in 18 days but won't be starting retirement or social security yet. But I doubt I wait until 70. I'm also not much of a marshmallow fan!