A Little Nickelback for Memorial Day

The Gulf Oil Spill: Day 42

It is now day 42 of the Gulf Oil spill with no end in sight. Neither BP nor the federal government seem to have a solution to stop the leak. The quest for more energy for hungry consumers has pushed the producers into deep water drilling to tap into abundant supplies of oil, and have pushed the envelope on technology. Now with the first major accident in many years, the Gulf ecosystem will be severely damaged, birds and sea life destroyed in the region as well as beaches fouled, and marshes that are the breeding ground for shrimp and crab coated with goo. The economic cost of this accident cannot even be estimated yet, but will be very high and will devastate the watermen of the Gulf coast. One possibility that people should keep in mind as attempt to cap the well fail, is that extreme measures may need to be taken sooner rather than later. One such measure that I haven't heard discussed is to close the well via a large explosion. This has proven successful on a number of above ground leaks, and may be what is eventually required in the gulf. The old Soviet footage below demonstrates a well could be shut off with an underground explosion. Nukes may be a little extreme, but the longer this situation goes on the more extreme measures will be attempted.

The U-Socket

Coming to an electrical or home improvement store near you in October is the U-Socket, a redesign of the traditional electrical outlet that includes two ports designed to charge USB 3.0 and lower devices.  The U-Socket is expected to cost around $20 and should peak the interest of techno-geeks everywhere who are constantly searching for USB ports to charge their devices.  The electrical output of each port is expected to discharge 10 Watts, which means you can charge your iPad at the same speed as a traditional USB port connected to a computer.

What Motivates People

Money as a motivator only goes so far. Beyond that, people need a purpose, a sense of achievement and individual autonomy.

How Bored Engineers Have Fun: Mindless Diversions

Pretty stupid, I know, but what the heck.

Robin Williams as the American Flag, from 1982

Hard to imagine anyone doing a skit like this in 2010.

Sunday Verse: Richard Jones (1953-) Wan Chu's Wife In Bed

Wan Chu's Wife In Bed

Wan Chu, my adoring husband,
has returned from another trip
selling trinkets in the provinces.
He pulls off his lavender shirt
as I lie naked in our bed,
waiting for him. He tells me
I am the only woman he'll ever love.
He may wander from one side of China
to the other, but his heart
will always stay with me.
His face glows in the lamplight
with the sincerity of a boy
when I lower the satin sheet
to let him see my breasts.
Outside, it begins to rain
on the cherry trees
he planted with our son,
and when he enters me with a sigh,
the storm begins in earnest,
shaking our little house.
Afterwards, I stroke his back
until he falls asleep.
I'd love to stay awake all night
listening to the rain,
but I should sleep, too.
Tomorrow Wan Chu will be
a hundred miles away
and I will be awake all night
in the arms of Wang Chen,
the tailor from Ming Pao,
the tiny village down the river.

TV Icon Art Linkletter Passes Away

This guy was just naturally likable.

Penn & Teller on Bottled Water (Warning Strong Language)

One of my pet peeves has always been buying bottled water. To me it's a big gigantic waste of money and a scam. I'd rather drink out of my own tap for free (I have a well and the water tastes pretty darn good). Most bottled water is just filtered tap water anyway, and the plastic bottles add to the trade deficit for imported oil as well as filling up our landfills.

World Economics: The Lending Merry-Go-Round

Spoof: GM Payback Commercial

Ed Whittacre fesses up in this spoof.

The Greecing of America, Simplified

Sunday Verse: Ron Rash (1953-) The Exchange

The Exchange

Between Wytheville, Virginia
and the North Carolina line,
he meets a wagon headed
where he’s been, seated beside
her parents a dark-eyed girl
who grips the reins in her fist,
no more than sixteen, he’s guess
as they come closer and she
doesn’t look away or blush
but allows his eyes to hold
hers that moment their lives pass.
He rides into Boone at dusk,
stops at an inn where he buys
his supper, a sleepless night
thinking of fallow fields still
miles away, the girl he might
not find the like of again.
When dawn breaks he mounts his roan,
then backtracks, searches three days
hamlets and farms, any smoke
rising above the tree line
before he heads south, toward home,
the French Broad’s valley where spring
unclinches the dogwood buds
as he plants the bottomland,
come night by candlelight builds
a butter churn and cradle,
cherry headboard for the bed,
forges a double-eagle
into a wedding ring and then
back to Virginia and spends
five weeks riding and asking
from Elk Creek to Damascas
before he finds the wagon
tethered to the hitching post
of a crossroads store, inside
the girl who smiles as if she’d
known all along his gray eyes
would search until they found her.
She asks one question, his name,
as her eyes study the gold
smoldering there between them,
the offered palm she lightens,
slips the ring on herself so
he knows right then the woman
she will be, bold enough match
for a man rash as his name.

~ Ron Rash

Quote of the Day: James Grant

The substitution of collective responsibility for individual responsibility is the fatal story line of modern American finance. Bank shareholders used to bear the cost of failure, even as they enjoyed the fruits of success. If the bank in which shareholders invested went broke, a court-appointed receiver dunned them for money with which to compensate the depositors, among other creditors. This system was in place for 75 years, until the Federal Deposit Insurance Corp. pushed it aside in the early 1930s. One can imagine just how welcome was a receiver's demand for a check from a shareholder who by then ardently wished that he or she had never heard of the bank in which it was his or her misfortune to invest.

~ James Grant

Quote of the Day: Dan Solin

Hedge funds: A way for fund managers to make unbelievable profits by convincing wealthy investors, pensions, and trusts, they have discovered a way to achieve high returns without commensurate risk. Qualifies as one of the greatest wealth transfer vehicles in modern times.

~ Dan Solin, author of The Smartest Retirement Book You’ll Ever Read

So the next time anyone gets hedge fund envy, remember the people running the hedge funds are enriching themselves at the expense of their clients to a degree far and above the high fees of the typical mutual fund.

We Are All Greeks Now

To paraphrase Maggie Thatcher, "the problem with socialism is that sooner or later you run out of other people's money."  Over the weekend the EU and IMF decided to bail out Greece to the tune of $146 billion dollars in exchange for the pledge of strict austerity measures by the Greek government.   Greek labor unions and citizens took to the streets to protest their impending loss of benefits.  Waiting in the wings are the other PIIGS, Spain, Portugal, Ireland and Italy.  It remains to be seen whether the EU and IMF will put together a loan package to bail all of these countries out of the economic messes their governments have created by promising the citizens generous social benefits and putting off the costs of paying for them.  Does the story sound familiar to anyone who lives in the US?

The modern day Dr. Dooms-- Marc Faber, Peter Schiff, and Nouriel Roubini-- have been sounding the warning on a looming Sovereign debt crisis throughout the world that the heavy borrows will either default on their debt or debase their currencies by printing money.  Greece is the first domino to fall, with others likely to follow.  The EU countries have a unique disadvantage in that they do not control their own currency.  The US is, of course, the largest debtor nation in the world with few backstops other than to inflate its way out of debt through printing money or to cutting benefits (highly unlikely) or substantially raising taxes (more likely). 

If the US government, whose debt is rated AAA by all the rating agencies, were to get a credit score like the average citizen where would they rank?  Onlineschools.org has already taken on this task.  I can't vouch 100% for its accuracy, but given the state of the country's finances, the chart looks reasonable to me.

Even in the Berkshire Hathaway annual shareholder meeting this weekend, Buffett and Munger warned of higher inflation ahead due to the unprecedented government deficits. What's an investor to do in this kind of environment?   In an inflationary environment, with the expectation for higher interest rates, the worst places for cash are in the mattress, in low-yield savings accounts, and in long bonds, all will lose value.  Since I'm a believer in balanced investing, the best places to be are in short-term bonds, inflation-protected bonds (especially in retirement accounts), domestic stocks that can pass inflation through with higher prices for their products, international stocks of countries with sound currencies, and commodities.  The investor has more investment vehicles available to them today than ever before to prepare for a world with higher inflation.  For example, in the area of commodities they can choose from broad commodity futures baskets such as PowerShares DB Commodity Index Tracking (DBC), iShares S&P GSCI Commodity-Indexed Trust (RJI), and ELEMENTS Rogers Intl Commodity ETN (RJI).  Or for those who prefer owning a physical asset, there's SPDR Gold Shares (GLD), iShares Silver Trust (SLV), ETFS Physical Platinum Shares (PPLT), and ETFS Physical Palladium Shares (PALL).

Whether the inflation scenario due to high deficits plays out or not only time will tell.  But in my opinion, investors should hedge for the possibility.

I Don't Like Wall Street the Most

The GM Shell Game

So just how did GM pay back that government loan "in full and ahead of schedule?" Nick Gillespie of Reason TV explains the sleight of hand and chutzpa that went into this claim. You'd think a man with the stones to select himself as CEO because he could find no one better qualified would know better than run ads on national TV bragging about repaying a government loan repayment that didn't exactly happen as advertised.

Woodstock for Capitalists: Some Highlights

Buffett has the payout on his Goldman investment calculated down to the second. $15 per second, $900 per minute, tick, tick, tick. Also, in these videos he discussed his Goldman investment, the case against Goldman, the PR battle, the state of the economy and how the Berkshire companies are performing. Sokol, long rumored as Buffett's successor, explains the Berkshire position on derivatives and covers a number of other issues.

Sunday Verse: Kate Daniels - Portrait with Money

Portrait with Money

At the end of the day, my father is tired.

He sighs over his newspaper and pushes

the cold dinner around on his plate.

Because he works late, he eats alone.

Even my mother will not sit with him.

She is tired, too, from her day at the office

and is folding clothes or making lunches

for tomorrow or is already asleep

in front of the chuckling television set.

As young as I am, I know about money:

How there is never enough, how it causes

crying and fights. On payday, I know

happiness again-- a new pair

of saddle shoes, a movie after school,

the red plaid skirt on the beautiful girl

in the Sears catalogue, page three-sixty-two.

When my father goes to bed at night

he leaves his wallet on the hall table.

Most often, there is nothing in it

but a couple of ones or fives.

In the plastic window for photographs

there is a picture of him and me when I was one.

We look so happy together. I hold him

so tightly on the arm and neck

there's no space between us,

but he hasn't started to mind. Somehow,

small and fair and held so close, I can see

how I could look like a growth on him, something

permanent and needy, something he didn't ask for

but is learning to live with.

~ Kate Daniels

Ubuntu 10.04 Released

I'm a big advocate of open source software, and spent most of this morning doing a clean build on my PC of the new release of Ubuntu.  Other flavors of Linux that I like are Debian, Mint, and Mandriva.

But Ubuntu is my favorite due to it's ease of installation and vast (and often confusing) array of software packages.  Some of the improvement in this release include faster boot up times (leaves my Windows work PC in the dust), addition of the Ubuntu One music store and cloud storage, Gwibber a social media aggregator, PiTiVi video editor, and a simplified scanner interface cleverly called Simple Scan.

With Linux you get software for free that you have to pay dearly for with other operating systems, such as word processing, spreadsheets, presos, cd/dvd burning and ripping, TV watching and recording, money management, project management, mp3 player management, IM clients.... list just keeps going (see my earlier Linux posts).

Linux has not made the same inroads on the desktop that it has made in the server market over the years (the dominate OS on the Internet is Linux, just ask Google and Amazon) because it does take some computer knowledge to setup and configure some of the advanced features, and Windows and Mac are the safe, but expensive, choices.  But each release keeps getting more user friendly.

I don't think Linux will ever have the impact on the desktop that it has had in the datacenter.  From 2000 to 2009 it has kicked the butt of the proprietary Unix systems.

One could argue that Linux helped drive Sun Microsystems into the arms of Oracle.  I know where I work, the mantra for new systems development is web apps on Linux running on commodity Intel-based servers.

I would encourage those skeptics and doubters to install Linux in a virtual machine (such as VirtualBox) on their current PC and give it a whirl.  I think you'll be favorably impressed.

Money Trivia

Click to Enlarge.  Interesting that raw material costs for pennies and nickels are higher than face value, and the government actually loses money producing them.