TonyCinTX's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/154250/comments http://seekingalpha.com/article/165559-has-the-market-decoupled-from-economic-reality?source=feed#comment-710183 710183
The value of the DOW and S&P 500 companies has risen because risk has been abated, and in some cases eliminated. Smart, big-money investors discount prices for business risk, but when risk vanishes the discount is zero and the price rises.

This is why stock prices jump (in either direction) after a contract is signed or declined, or the FDA approves a drug or decides against it, or a lawsuit is settled in favor of or against a litigant: Until the final signature, bets exist on both sides, after it, all bets are settled up.

Well, my fellow citizens, we have collectively spent about a trillion dollars this year defining a whole brand new class of corporation in this country:

Too Big To Fail.]]> Fri, 09 Oct 2009 09:21:32 -0400
The value of the DOW and S&P 500 companies has risen because risk has been abated, and in some cases eliminated. Smart, big-money investors discount prices for business risk, but when risk vanishes the discount is zero and the price rises.

This is why stock prices jump (in either direction) after a contract is signed or declined, or the FDA approves a drug or decides against it, or a lawsuit is settled in favor of or against a litigant: Until the final signature, bets exist on both sides, after it, all bets are settled up.

Well, my fellow citizens, we have collectively spent about a trillion dollars this year defining a whole brand new class of corporation in this country:

Too Big To Fail.]]> http://seekingalpha.com/article/165550-buffett-and-gates-discuss-potential-succession-plan?source=feed#comment-710134 710134 Fri, 09 Oct 2009 09:00:45 -0400 http://seekingalpha.com/article/164963-krugman-puzzled-by-housing-asymmetry?source=feed#comment-705219 705219
It is clear when the referenced article is read that Krugman understands this point completely and is criticizing Arnold King (and others) for failing to understand it. This headline is as foolish and misleading as 1934 macro-economics. Either the author has a problem with reading comprehension, or just wants to bash Krugman and hopes we don't notice.]]> Tue, 06 Oct 2009 12:10:26 -0400
It is clear when the referenced article is read that Krugman understands this point completely and is criticizing Arnold King (and others) for failing to understand it. This headline is as foolish and misleading as 1934 macro-economics. Either the author has a problem with reading comprehension, or just wants to bash Krugman and hopes we don't notice.]]> http://seekingalpha.com/article/164803-insiders-confirm-rally-is-fake-economy-is-getting-worse?source=feed#comment-703616 703616
Yes it is wonderful if you can ride a rocket to the top, but the sad fact is that most companies are too greedy and try to grow too fast and are managed incompetently; and that means the odds are very good they will falter and fall long before they dominate a market. As DVK says before me; finalize your compensation and diversify. If your company really does grow, your options that mature next quarter or whatever will be worth more. Why bet everything on one unproven long shot that is likely to fail? ]]> Mon, 05 Oct 2009 10:21:01 -0400
Yes it is wonderful if you can ride a rocket to the top, but the sad fact is that most companies are too greedy and try to grow too fast and are managed incompetently; and that means the odds are very good they will falter and fall long before they dominate a market. As DVK says before me; finalize your compensation and diversify. If your company really does grow, your options that mature next quarter or whatever will be worth more. Why bet everything on one unproven long shot that is likely to fail? ]]> http://seekingalpha.com/article/163292-what-s-next-for-gold-and-silver-etfs?source=feed#comment-690633 690633
I guess if you think we are going to get out from under the current financial mess by some means OTHER than printing money, Gold is a bad bet for you. But I will remind you that taxes, fees, or reduced government payments of any kind are politically unpopular, and only about 15% of voters care anything about the deficit, and only about 5% understand the ramifications (or are even affected) by the government printing money. So my guess is, the politically easy way out is to start the presses.]]> Fri, 25 Sep 2009 09:38:37 -0400
I guess if you think we are going to get out from under the current financial mess by some means OTHER than printing money, Gold is a bad bet for you. But I will remind you that taxes, fees, or reduced government payments of any kind are politically unpopular, and only about 15% of voters care anything about the deficit, and only about 5% understand the ramifications (or are even affected) by the government printing money. So my guess is, the politically easy way out is to start the presses.]]> http://seekingalpha.com/article/163166-if-housing-were-priced-in-gold?source=feed#comment-688913 688913
Oh, I can imagine it, and I can imagine that if the UN printed money we would have the same problem as all countries have now; they can print money at will. And tying it to some "basket of goods" is no good either, because that would also be subject to political intrigue in determining how to weight the basket, what to include in the basket, and everything else.

And you are wrong; pet rocks and virtual pets have the ultimate real and fair value: They were entertainment. Will you next argue that anything that counts as entertainment has no real value? Not movies, books, water parks, plays, professional sports, music, good clothes or good restaurants? About 75% of people's spent income is "wasted" according to your lights, because they spend it on making their lives more fun and pleasant.

A universal currency is not just pointless, it would be harmful because it provides a single point for corruption and manipulation. At least now, we can measure inflation, corruption, and manipulation by one currency trading against others. ]]> Thu, 24 Sep 2009 09:50:03 -0400
Oh, I can imagine it, and I can imagine that if the UN printed money we would have the same problem as all countries have now; they can print money at will. And tying it to some "basket of goods" is no good either, because that would also be subject to political intrigue in determining how to weight the basket, what to include in the basket, and everything else.

And you are wrong; pet rocks and virtual pets have the ultimate real and fair value: They were entertainment. Will you next argue that anything that counts as entertainment has no real value? Not movies, books, water parks, plays, professional sports, music, good clothes or good restaurants? About 75% of people's spent income is "wasted" according to your lights, because they spend it on making their lives more fun and pleasant.

A universal currency is not just pointless, it would be harmful because it provides a single point for corruption and manipulation. At least now, we can measure inflation, corruption, and manipulation by one currency trading against others. ]]> http://seekingalpha.com/article/163166-if-housing-were-priced-in-gold?source=feed#comment-688864 688864
A rise in Gold signals inflation of the dollar, and inflation is either caused by or will produce salary increases. But your mortgage payment is FIXED, so while the number remains the same, as a percentage of income it is reduced by inflation. We also have the situation that home buyers tend to be younger and will earn more as they grow into their careers. This is why anytime you talk to somebody with a twenty year old mortgage their payment seems a ridiculously low fraction compared to typical apartment rents for the same square footage.

The author fails to consider that much of that free 300 ounces of gold would have been eaten by skyrocketing apartment rents rising with inflation; he assumes the apartment rent for the same square footage will just cost the same as the mortgage payment was in 2001. Good luck with that.

I am not arguing that money cannot be made on bubbles if you know when they are coming and when they are ending; far from it. But in times of inflation, a fixed-rate mortgage payment is your friend.]]> Thu, 24 Sep 2009 09:27:11 -0400
A rise in Gold signals inflation of the dollar, and inflation is either caused by or will produce salary increases. But your mortgage payment is FIXED, so while the number remains the same, as a percentage of income it is reduced by inflation. We also have the situation that home buyers tend to be younger and will earn more as they grow into their careers. This is why anytime you talk to somebody with a twenty year old mortgage their payment seems a ridiculously low fraction compared to typical apartment rents for the same square footage.

The author fails to consider that much of that free 300 ounces of gold would have been eaten by skyrocketing apartment rents rising with inflation; he assumes the apartment rent for the same square footage will just cost the same as the mortgage payment was in 2001. Good luck with that.

I am not arguing that money cannot be made on bubbles if you know when they are coming and when they are ending; far from it. But in times of inflation, a fixed-rate mortgage payment is your friend.]]> http://seekingalpha.com/article/162727-tilson-explains-the-increase-in-berkshire-hathaway-s-intrinsic-value-estimate?source=feed#comment-687399 687399 Wed, 23 Sep 2009 09:51:51 -0400 http://seekingalpha.com/article/159959-ceo-pay-and-the-reverse-robin-hood?source=feed#comment-663001 663001
Ah, well, I once believed Obama's rhetoric, enough to vote for him, but I am disillusioned now. You have no need to worry, Obama is just as much in the pocket of big business as any other politician. I have no doubt he will protect the existing system of ripping off the common man to benefit the wealthiest corporations; for the latter it will still be ice cream and cake, perhaps different flavors but just as delicious.

Obama's rhetoric is for the common folk like me, but as he has proven at least a dozen times already by signing statements, orders, and secret deals, his words are just words. Whatever "fundamental change" he claims to accomplish is going to be superficial and cosmetic, I feel certain.

And let me preempt any that disagree: I speak as a hard left liberal that donated $500 to the liar. Obama will protect the WORST of the capitalist system. I thought differently during his campaign, but the day he voted for telecom immunity after promising to *filibuster* over it, we knew for certain who was buttering his bread.

On Sep 05 09:00 AM jack789 wrote:]]> Sat, 05 Sep 2009 09:32:25 -0400
Ah, well, I once believed Obama's rhetoric, enough to vote for him, but I am disillusioned now. You have no need to worry, Obama is just as much in the pocket of big business as any other politician. I have no doubt he will protect the existing system of ripping off the common man to benefit the wealthiest corporations; for the latter it will still be ice cream and cake, perhaps different flavors but just as delicious.

Obama's rhetoric is for the common folk like me, but as he has proven at least a dozen times already by signing statements, orders, and secret deals, his words are just words. Whatever "fundamental change" he claims to accomplish is going to be superficial and cosmetic, I feel certain.

And let me preempt any that disagree: I speak as a hard left liberal that donated $500 to the liar. Obama will protect the WORST of the capitalist system. I thought differently during his campaign, but the day he voted for telecom immunity after promising to *filibuster* over it, we knew for certain who was buttering his bread.

On Sep 05 09:00 AM jack789 wrote:]]> http://seekingalpha.com/article/159959-ceo-pay-and-the-reverse-robin-hood?source=feed#comment-662986 662986
You miss a crucial difference between actors, actresses, news anchors, sports stars, music stars and other celebrities and CEOs.

Not one of these celebrities, including the ones you mention, has any responsibility to others when allocating their own pay. Katie Couric is not responsible to the shareholders of CBS for using their money wisely; she is an independent contractor. She demands a salary and perks, and the fiscal geniuses at CBS decide whether her services are worth it to them.

Julia Roberts doesn't own a movie studio. Somebody else owns the studio, approaches her (through an agent), pitches their picture and her share. She is an independent businesswoman with her own staff, lawyers, and negotiators. Somebody else decides whether she commands enough audience to be worth $20M, and that person has the fiduciary obligation to spend the money of their shareholders or investors wisely.

In all of your counter-examples, not one of those celebrities has any fiduciary obligation to the shareholders of the company paying them. In all of those cases, somebody else is trying to get the most bang for the buck out of their money, or the money of their investors or shareholders. Call that "maximizing value."

In the case of the public companies, The BOD and C-Level officers ARE specifically responsible for maximizing value, and setting their own salaries is a direct conflict of interest.

@Wisdom vs... saying "don't buy their stock" is like saying if you don't want to get mugged, stay in the house. I have a fundamental right not to be robbed, defrauded, misled or lied to by companies in which I invest, and I believe I have the right to not get mugged by CEOs or boards that are supposed to be representing my interests, even if that mugging is only 1% of my profits.



> On Sep 04 03:04 PM John Galt wrote:]]> Sat, 05 Sep 2009 09:15:56 -0400
You miss a crucial difference between actors, actresses, news anchors, sports stars, music stars and other celebrities and CEOs.

Not one of these celebrities, including the ones you mention, has any responsibility to others when allocating their own pay. Katie Couric is not responsible to the shareholders of CBS for using their money wisely; she is an independent contractor. She demands a salary and perks, and the fiscal geniuses at CBS decide whether her services are worth it to them.

Julia Roberts doesn't own a movie studio. Somebody else owns the studio, approaches her (through an agent), pitches their picture and her share. She is an independent businesswoman with her own staff, lawyers, and negotiators. Somebody else decides whether she commands enough audience to be worth $20M, and that person has the fiduciary obligation to spend the money of their shareholders or investors wisely.

In all of your counter-examples, not one of those celebrities has any fiduciary obligation to the shareholders of the company paying them. In all of those cases, somebody else is trying to get the most bang for the buck out of their money, or the money of their investors or shareholders. Call that "maximizing value."

In the case of the public companies, The BOD and C-Level officers ARE specifically responsible for maximizing value, and setting their own salaries is a direct conflict of interest.

@Wisdom vs... saying "don't buy their stock" is like saying if you don't want to get mugged, stay in the house. I have a fundamental right not to be robbed, defrauded, misled or lied to by companies in which I invest, and I believe I have the right to not get mugged by CEOs or boards that are supposed to be representing my interests, even if that mugging is only 1% of my profits.



> On Sep 04 03:04 PM John Galt wrote:]]> http://seekingalpha.com/article/159959-ceo-pay-and-the-reverse-robin-hood?source=feed#comment-661552 661552
We may know who they are, but nobody gives a crap, because the big traders only own the stock for a few months before selling; they are all short termers too. Corporate governance be damned, that is always the next buyer's problem. I admit I am always surprised to receive a proxy statement to vote on the corporate executives; I usually don't know them and don't care, I just happened to be holding the stock on the day of record.

The problem is one of scale, that is all, and the way to fix it is to limit the SCALE of public companies. I am not sure what the best measure of that is, but perhaps we limit them to 1000 employees, or $1B in revenue, or both. If they grow larger than that, we require them to split in two with equal assets and equal rights to any intellectual property and to be completely independent. The shareholders get a share of each stock in return for their original share, but no officer of one can vote any shares in the other for at least three years. Let them compete with each other.

Then the companies always have competition, they must compete for the workers who now have a choice, the shareholders have more than one company to choose to invest in, and consumers can choose between their products and be rewarded by price competition.

If a company doesn't want to split equally, let them spin off independent public firms before they get to that point, but require true independence of the spin offs with no possibility of manipulation by the parent: All they get is non-voting stock.

And for any private company, no such limits, except for anti-trust laws already in place.

Keep companies small, and this runaway compensation will come to a halt.]]> Fri, 04 Sep 2009 09:06:02 -0400
We may know who they are, but nobody gives a crap, because the big traders only own the stock for a few months before selling; they are all short termers too. Corporate governance be damned, that is always the next buyer's problem. I admit I am always surprised to receive a proxy statement to vote on the corporate executives; I usually don't know them and don't care, I just happened to be holding the stock on the day of record.

The problem is one of scale, that is all, and the way to fix it is to limit the SCALE of public companies. I am not sure what the best measure of that is, but perhaps we limit them to 1000 employees, or $1B in revenue, or both. If they grow larger than that, we require them to split in two with equal assets and equal rights to any intellectual property and to be completely independent. The shareholders get a share of each stock in return for their original share, but no officer of one can vote any shares in the other for at least three years. Let them compete with each other.

Then the companies always have competition, they must compete for the workers who now have a choice, the shareholders have more than one company to choose to invest in, and consumers can choose between their products and be rewarded by price competition.

If a company doesn't want to split equally, let them spin off independent public firms before they get to that point, but require true independence of the spin offs with no possibility of manipulation by the parent: All they get is non-voting stock.

And for any private company, no such limits, except for anti-trust laws already in place.

Keep companies small, and this runaway compensation will come to a halt.]]> http://seekingalpha.com/article/159382-the-economics-of-shopping-malls?source=feed#comment-658156 658156
In fact, since the Mall still has those sidewalks, parking lot and similar green islands, I'd argue their hallways are 100% overhead both in building and in ongoing maintenance. We have an open air strip malls down here with about a hundred stores and twenty+ buildings; you actually must drive from end to end.

The open air strip mall is simply a better mechanical model than the enclosed mall. The capital costs are less and that makes the mortgage expense less; the maintenance costs are less also, and together these produce about the minimum rent. The Mall worked, but the novelty is decades old and worn down, and neither the shop-keepers or the customers are willing to pay for the fancier digs anymore.

I will also echo the convenience factor: We often want to go buy something from a specific shop, and at the strip mall we can park within 50 yards of it. We don't have to walk half a mile from the lot to the store, like we would in the Mall. Again, the open air mall is just a better mechanical model than the enclosed mall.

More flexible for vendors, more convenient for customers, and it costs less for both. We evolved a better species of shopping center, and I'd bet the enclosed mall is on its way to extinction, when the current structures fail. I certainly wouldn't invest in any new ones, I think that would be a bad bet.]]> Wed, 02 Sep 2009 10:05:30 -0400
In fact, since the Mall still has those sidewalks, parking lot and similar green islands, I'd argue their hallways are 100% overhead both in building and in ongoing maintenance. We have an open air strip malls down here with about a hundred stores and twenty+ buildings; you actually must drive from end to end.

The open air strip mall is simply a better mechanical model than the enclosed mall. The capital costs are less and that makes the mortgage expense less; the maintenance costs are less also, and together these produce about the minimum rent. The Mall worked, but the novelty is decades old and worn down, and neither the shop-keepers or the customers are willing to pay for the fancier digs anymore.

I will also echo the convenience factor: We often want to go buy something from a specific shop, and at the strip mall we can park within 50 yards of it. We don't have to walk half a mile from the lot to the store, like we would in the Mall. Again, the open air mall is just a better mechanical model than the enclosed mall.

More flexible for vendors, more convenient for customers, and it costs less for both. We evolved a better species of shopping center, and I'd bet the enclosed mall is on its way to extinction, when the current structures fail. I certainly wouldn't invest in any new ones, I think that would be a bad bet.]]> http://seekingalpha.com/article/158592-warren-buffett-and-brett-favre-s-big-mistake?source=feed#comment-648618 648618
Should Warren die I imagine Berkshire will decline temporarily but I will not divest one share. I am in BRK-B because Berkshire holds truly valuable stuff and has been able to go where no normal investor could tread. I am betting on Warren's past accomplishments: Who else could have gotten that GS deal? Who else could have gotten the Mars Candy deal? I would not be betting on MORE deals like that, I am betting that the deals already made are worth much more than the stock reflects right now.

Now if Warren dies or steps down, I am willing to wait and see if he was telling the truth about his successor; but he shall be judged (like Warren) on his actions and the deals made. If the new leadership makes a bunch of "me too" deals I will get out of Berkshire, but if they use the unique leverage of Berkshire to make those unique big-money deals no other investor on the planet can swing, then I am still in.

The current decline of BRK is no worse than the decline of the market as a whole, and in my opinion it is undeserved; Buffett's moves during the meltdown have been just fine by me. Stars of any field should retire when they no longer have comparative game.

I have quite a bit of money riding on my belief, backed up by evidence, that Buffett still has comparative game.]]> Thu, 27 Aug 2009 09:09:18 -0400
Should Warren die I imagine Berkshire will decline temporarily but I will not divest one share. I am in BRK-B because Berkshire holds truly valuable stuff and has been able to go where no normal investor could tread. I am betting on Warren's past accomplishments: Who else could have gotten that GS deal? Who else could have gotten the Mars Candy deal? I would not be betting on MORE deals like that, I am betting that the deals already made are worth much more than the stock reflects right now.

Now if Warren dies or steps down, I am willing to wait and see if he was telling the truth about his successor; but he shall be judged (like Warren) on his actions and the deals made. If the new leadership makes a bunch of "me too" deals I will get out of Berkshire, but if they use the unique leverage of Berkshire to make those unique big-money deals no other investor on the planet can swing, then I am still in.

The current decline of BRK is no worse than the decline of the market as a whole, and in my opinion it is undeserved; Buffett's moves during the meltdown have been just fine by me. Stars of any field should retire when they no longer have comparative game.

I have quite a bit of money riding on my belief, backed up by evidence, that Buffett still has comparative game.]]> http://seekingalpha.com/article/156995-has-the-rally-already-exhausted-itself?source=feed#comment-636399 636399 Wed, 19 Aug 2009 10:34:35 -0400 http://seekingalpha.com/article/156318-buffett-s-recent-portfolio-changes-what-s-the-message?source=feed#comment-631902 631902
Because insurance and the health industry are in the same economic whirlpool, there are quite a few floated options that would also reform the health industry specifically, those that prevent insurers from controlling treatments or countermanding doctor's orders by refusing to pay or capping lifetime payments or rejecting people based on existing conditions. I don't know about "reform" but these portend some massive changes to health care per se, putting the white coats back in charge over the gray suits.]]> Sun, 16 Aug 2009 11:48:59 -0400
Because insurance and the health industry are in the same economic whirlpool, there are quite a few floated options that would also reform the health industry specifically, those that prevent insurers from controlling treatments or countermanding doctor's orders by refusing to pay or capping lifetime payments or rejecting people based on existing conditions. I don't know about "reform" but these portend some massive changes to health care per se, putting the white coats back in charge over the gray suits.]]> http://seekingalpha.com/article/155796-green-shoots-are-a-mirage-economy-will-deteriorate-further?source=feed#comment-627895 627895
Personally I'd rather have let the bastards go bankrupt and let the chips fall where they may. On the other hand, if the economy really needed a stimulus, I'd rather we spent three trillion flat out on infrastructure and energy independence research. THAT would have been worth the money; I fear Mr. Kim's predictions will come true because we have failed to let the free market work and let the rich bastards blackmail us and hold us hostage for a trillion dollars in bail outs, when they should have gone bankrupt. Even if that DOUBLED my taxes I'd rather have dealt with the fallout of that problem. Instead we just perpetuate the rip-off for another decade.]]> Thu, 13 Aug 2009 08:46:18 -0400
Personally I'd rather have let the bastards go bankrupt and let the chips fall where they may. On the other hand, if the economy really needed a stimulus, I'd rather we spent three trillion flat out on infrastructure and energy independence research. THAT would have been worth the money; I fear Mr. Kim's predictions will come true because we have failed to let the free market work and let the rich bastards blackmail us and hold us hostage for a trillion dollars in bail outs, when they should have gone bankrupt. Even if that DOUBLED my taxes I'd rather have dealt with the fallout of that problem. Instead we just perpetuate the rip-off for another decade.]]> http://seekingalpha.com/article/155582-first-and-last-hour-correlation?source=feed#comment-626340 626340
This is a race by the machines to place their bets and lock in odds before the odds are changed; once the stock prices move out of the acceptable pricing range of the model, we can't trade anymore. ]]> Wed, 12 Aug 2009 09:00:11 -0400
This is a race by the machines to place their bets and lock in odds before the odds are changed; once the stock prices move out of the acceptable pricing range of the model, we can't trade anymore. ]]> http://seekingalpha.com/article/154420-in-defense-of-the-oracle-of-omaha?source=feed#comment-619424 619424
It is the nature of large companies that make it to the stock markets that, to some extent, they drift into unethical practices. With only about 2000 companies big enough for Buffett to invest in, it isn't like he has a lot of choices. He can avoid the boards and CEO's that would make a pirate blush or a vulture cringe, but beyond the several hundred bottom feeders, the reality is that Buffett must choose the least of evils that ALSO produce good profits.

Personally I find Buffett's skin in the game a comfort; not a detraction. Who cares if the bailout benefited Berkshire? It benefited all kinds of people, and if it really prevented a financial meltdown, all of us and all of the world. (I don't know that is true, I don't have enough information.)

BRK.B is the only individual stock I own. I will sell it, one share at a time, as I need the money for retirement. ]]> Fri, 07 Aug 2009 08:54:41 -0400
It is the nature of large companies that make it to the stock markets that, to some extent, they drift into unethical practices. With only about 2000 companies big enough for Buffett to invest in, it isn't like he has a lot of choices. He can avoid the boards and CEO's that would make a pirate blush or a vulture cringe, but beyond the several hundred bottom feeders, the reality is that Buffett must choose the least of evils that ALSO produce good profits.

Personally I find Buffett's skin in the game a comfort; not a detraction. Who cares if the bailout benefited Berkshire? It benefited all kinds of people, and if it really prevented a financial meltdown, all of us and all of the world. (I don't know that is true, I don't have enough information.)

BRK.B is the only individual stock I own. I will sell it, one share at a time, as I need the money for retirement. ]]> http://seekingalpha.com/article/148280-income-tax-not-wealth-tax-that-s-another-story?source=feed#comment-584459 584459
That glaring oversight aside, let me point out the actual wealth tax: Inflation. Inflation is a flat tax, so some would like that, but it certainly costs the wealthy much more than the poor, and takes a fixed percentage of their wealth.

If some person holds one billion dollars in something that can be tied to the US Dollar, after 5% inflation they have lost fifty million in buying power. That might as well have been a flat 5% wealth tax.

When the US Government needs to tax wealth, they can do it anytime they want: Print the money.

Inflation taxes the poor as well, but almost by definition the poor have no cash reserves. It does reduce the buying power of whatever income they DO get, so in that sense 5% inflation acts as a 5% income tax on the poor; at least until minimum wage is jacked up to account for the inflation.

So, texpat, best get yer boots on and hit the trail, pardner.]]> Sun, 12 Jul 2009 12:20:17 -0400
That glaring oversight aside, let me point out the actual wealth tax: Inflation. Inflation is a flat tax, so some would like that, but it certainly costs the wealthy much more than the poor, and takes a fixed percentage of their wealth.

If some person holds one billion dollars in something that can be tied to the US Dollar, after 5% inflation they have lost fifty million in buying power. That might as well have been a flat 5% wealth tax.

When the US Government needs to tax wealth, they can do it anytime they want: Print the money.

Inflation taxes the poor as well, but almost by definition the poor have no cash reserves. It does reduce the buying power of whatever income they DO get, so in that sense 5% inflation acts as a 5% income tax on the poor; at least until minimum wage is jacked up to account for the inflation.

So, texpat, best get yer boots on and hit the trail, pardner.]]> http://seekingalpha.com/article/147657-more-on-the-benefits-of-smart-rail-transport-policy?source=feed#comment-580427 580427
In other cities (and Europe) I have taken subway rail all over a city; there is typically a stop every four blocks or so, easily within walking distance of your destination. If they can do it in Rome with all their restrictions on excavation, they can do it anywhere. Or do it like San Francisco with surface rail and open buses (streetcars). Or like New York, with lots of cabs.

Please, we are not idiots here in Texas. The market still rules, and if rail costs us half as much as driving, you will see a ton of students traveling and taking buses to their concerts or parties or whatever. Lower human transportation costs (in money, time or both) increase market sizes, period, and the cheaper it is the bigger the increase.

If you link San Antonio and Austin, you increase the market for San Antonio by adding a lot of Austinites to it, and the market for Austin business by adding a even more San Antonians to it. A combined market created by cheap mass transportation (and thus lower transaction costs) increases the opportunities for everybody.]]> Thu, 09 Jul 2009 09:53:19 -0400
In other cities (and Europe) I have taken subway rail all over a city; there is typically a stop every four blocks or so, easily within walking distance of your destination. If they can do it in Rome with all their restrictions on excavation, they can do it anywhere. Or do it like San Francisco with surface rail and open buses (streetcars). Or like New York, with lots of cabs.

Please, we are not idiots here in Texas. The market still rules, and if rail costs us half as much as driving, you will see a ton of students traveling and taking buses to their concerts or parties or whatever. Lower human transportation costs (in money, time or both) increase market sizes, period, and the cheaper it is the bigger the increase.

If you link San Antonio and Austin, you increase the market for San Antonio by adding a lot of Austinites to it, and the market for Austin business by adding a even more San Antonians to it. A combined market created by cheap mass transportation (and thus lower transaction costs) increases the opportunities for everybody.]]> http://seekingalpha.com/article/147294-reviewing-munger-s-the-psychology-of-human-misjudgment-part-ii?source=feed#comment-576836 576836
Similarly; in the USA we have 42 murders per 100,000 people every year. So our average murders per capita is non-zero, but about 99.9% of us are "better than average," having committed exactly zero murders.

As far as Swedish drivers are concerned; it is entirely possible that 90% have never been in an accident that was legally their fault. No matter how you define "good driver," I imagine "not causing accidents" is a necessary characteristic.

Yet, we know of accidents and hear of them frequently; so we all know the average number of accidents caused per capita is non-zero; and if I have exactly zero to my credit (and I do), I am justifiably better than the average driver.

To be even more critical of this idiotic study, when one asks whether somebody is a "better than average driver" they implicitly claim two things; that driving ability can quantified and thus averaged, and that it can be sorted in a spectrum from bad to good.

If the metric is not defined by the question, it is left up to the subject to define their own metric. Given this freedom, every subject is free to choose any measurement they want, guess at the average based on experience, and conclude CORRECTLY their own measure is better than the average! It is surprising that 100% of the respondents did not claim they were better than the average. This doesn't measure objectivity, this measures creativity or depression or humility. It tells us that 10% of Swedish drivers could not imagine a metric in which they were above average, or were prevented by personal ideology from claiming it. ]]> Tue, 07 Jul 2009 08:54:14 -0400
Similarly; in the USA we have 42 murders per 100,000 people every year. So our average murders per capita is non-zero, but about 99.9% of us are "better than average," having committed exactly zero murders.

As far as Swedish drivers are concerned; it is entirely possible that 90% have never been in an accident that was legally their fault. No matter how you define "good driver," I imagine "not causing accidents" is a necessary characteristic.

Yet, we know of accidents and hear of them frequently; so we all know the average number of accidents caused per capita is non-zero; and if I have exactly zero to my credit (and I do), I am justifiably better than the average driver.

To be even more critical of this idiotic study, when one asks whether somebody is a "better than average driver" they implicitly claim two things; that driving ability can quantified and thus averaged, and that it can be sorted in a spectrum from bad to good.

If the metric is not defined by the question, it is left up to the subject to define their own metric. Given this freedom, every subject is free to choose any measurement they want, guess at the average based on experience, and conclude CORRECTLY their own measure is better than the average! It is surprising that 100% of the respondents did not claim they were better than the average. This doesn't measure objectivity, this measures creativity or depression or humility. It tells us that 10% of Swedish drivers could not imagine a metric in which they were above average, or were prevented by personal ideology from claiming it. ]]> http://seekingalpha.com/article/145729-creating-debt-to-reduce-debt-doesn-t-work?source=feed#comment-566734 566734 Mon, 29 Jun 2009 09:06:19 -0400 http://seekingalpha.com/article/145729-creating-debt-to-reduce-debt-doesn-t-work?source=feed#comment-566725 566725
There is a difference you fail to appreciate between borrowing money to spend it on personal gratification and borrowing money to invest it in your future.

I borrowed nearly $100K to get my Bachelors and then two graduate degrees; every year I borrowed three times my take home pay at the time. It worked, I became a consultant and paid it all back and was left with a well paid career. When I was 20 I borrowed $4000 to buy a used car, but without it I wouldn't have been able to work during college, and probably wouldn't have been able to stay in college. That piece of junk was critical to my prosperity.

A neighbor on my street started a business twenty years ago by borrowing: He borrowed $30K and bought a used mini-bulldozer / trencher with a trailer to carry it, and maintained and ran it himself as a sub-contractor. Now he owns about 20 different machines and employs a half dozen people and is pretty well off. He borrowed his way to prosperity.

It all depends on how you spend it. Governments are not like people, they are not in business to make a profit for themselves. Government investment is to make it easier for citizens to make a profit. That means investment in things the vast majority of us need, like roads, infrastructure, and cheap energy. And health care: The cost of health care and insurance is crippling businesses and individuals.

Now, government has been spending like a sailor under two administrations, and is now in a position where it cannot operate without a deficit budget. It is committed by law to spend more than it brings in, on the military, social security and Medicare and other entitlements. The fiscal conservative stance is to directly cut spending, but that is a FANTASY. Bitch all they want, only Congress can change those laws and there will NEVER be the political will to do that, EVER. They might as well be demanding geese that lay golden eggs.

The way out is to increase government income, and the best way to do that is to increase prosperity, and the best way to do that is to invest in the things that make more people profitable so the existing tax rates will generate more income.

Cutting taxes doesn't do it; we will just have to borrow to spend on the entitlements. We are living beyond our means, AND we are legally obligated to do so!

But we are allowed to borrow, at pretty low interest rates, and thus the way out is to borrow money for INVESTMENT in areas that will make the USA profitable. How do we do that? By funding research in clean and plentiful energy, for one. By cutting the cost of healthcare by destroying the profit system in healthcare that lets for-profit hospitals and insurance company hold people's lives hostage until they cough up everything they own; that will reduce costs for all of us. By investing in infrastructure (power lines, roads, bridges, passenger rails) and power so we stop shipping $700B a year out of the country, mostly to petro-dictatorships.

But of course we must borrow this investment money in order to save the country, because there is no way in THIS lifetime we will ever cut the military in half, or cut SS in half, or cut Medicare or the prescription benefit in half. EVER.

As proof, let me present the Bush administration. The Republican party is home to fiscal conservatives and libertarians. For years after 9/11 they could do anything they wanted, and they ran roughshod over the Dems. What did they do? Even with the trillion dollar expense of the WoT completely off the books, even not counting that at all, they spent like sailors.

Well if they can't do it, nobody can. Face it. Congressmen get elected by spending money and that will never change. There are babies in my extended family, and I don't expect this to change in THEIR lifetimes. So if government is going to spend either way, what do you want them to spend it on? Moon shots or new and modern railroads that can save a trillion dollars a year in fuel costs? New clean power stations, nuclear and geothermal and solar, or wars of choice in the Middle East? Research on electric cars or bailouts for vampire banks?

If your answer is you just want them to stop borrowing and stop spending, you are just pouting in the corner, like the author of this column, because that is not an option and I doubt it will ever be. It is like demanding the sun not rise and the tide stay out. There will be borrowing, there will be spending, that cannot be prevented, and the only choice is what shall we spend the borrowed money on? THAT is something we can influence.]]> Mon, 29 Jun 2009 09:01:17 -0400
There is a difference you fail to appreciate between borrowing money to spend it on personal gratification and borrowing money to invest it in your future.

I borrowed nearly $100K to get my Bachelors and then two graduate degrees; every year I borrowed three times my take home pay at the time. It worked, I became a consultant and paid it all back and was left with a well paid career. When I was 20 I borrowed $4000 to buy a used car, but without it I wouldn't have been able to work during college, and probably wouldn't have been able to stay in college. That piece of junk was critical to my prosperity.

A neighbor on my street started a business twenty years ago by borrowing: He borrowed $30K and bought a used mini-bulldozer / trencher with a trailer to carry it, and maintained and ran it himself as a sub-contractor. Now he owns about 20 different machines and employs a half dozen people and is pretty well off. He borrowed his way to prosperity.

It all depends on how you spend it. Governments are not like people, they are not in business to make a profit for themselves. Government investment is to make it easier for citizens to make a profit. That means investment in things the vast majority of us need, like roads, infrastructure, and cheap energy. And health care: The cost of health care and insurance is crippling businesses and individuals.

Now, government has been spending like a sailor under two administrations, and is now in a position where it cannot operate without a deficit budget. It is committed by law to spend more than it brings in, on the military, social security and Medicare and other entitlements. The fiscal conservative stance is to directly cut spending, but that is a FANTASY. Bitch all they want, only Congress can change those laws and there will NEVER be the political will to do that, EVER. They might as well be demanding geese that lay golden eggs.

The way out is to increase government income, and the best way to do that is to increase prosperity, and the best way to do that is to invest in the things that make more people profitable so the existing tax rates will generate more income.

Cutting taxes doesn't do it; we will just have to borrow to spend on the entitlements. We are living beyond our means, AND we are legally obligated to do so!

But we are allowed to borrow, at pretty low interest rates, and thus the way out is to borrow money for INVESTMENT in areas that will make the USA profitable. How do we do that? By funding research in clean and plentiful energy, for one. By cutting the cost of healthcare by destroying the profit system in healthcare that lets for-profit hospitals and insurance company hold people's lives hostage until they cough up everything they own; that will reduce costs for all of us. By investing in infrastructure (power lines, roads, bridges, passenger rails) and power so we stop shipping $700B a year out of the country, mostly to petro-dictatorships.

But of course we must borrow this investment money in order to save the country, because there is no way in THIS lifetime we will ever cut the military in half, or cut SS in half, or cut Medicare or the prescription benefit in half. EVER.

As proof, let me present the Bush administration. The Republican party is home to fiscal conservatives and libertarians. For years after 9/11 they could do anything they wanted, and they ran roughshod over the Dems. What did they do? Even with the trillion dollar expense of the WoT completely off the books, even not counting that at all, they spent like sailors.

Well if they can't do it, nobody can. Face it. Congressmen get elected by spending money and that will never change. There are babies in my extended family, and I don't expect this to change in THEIR lifetimes. So if government is going to spend either way, what do you want them to spend it on? Moon shots or new and modern railroads that can save a trillion dollars a year in fuel costs? New clean power stations, nuclear and geothermal and solar, or wars of choice in the Middle East? Research on electric cars or bailouts for vampire banks?

If your answer is you just want them to stop borrowing and stop spending, you are just pouting in the corner, like the author of this column, because that is not an option and I doubt it will ever be. It is like demanding the sun not rise and the tide stay out. There will be borrowing, there will be spending, that cannot be prevented, and the only choice is what shall we spend the borrowed money on? THAT is something we can influence.]]> http://seekingalpha.com/article/145729-creating-debt-to-reduce-debt-doesn-t-work?source=feed#comment-565681 565681
Before the real estate bubble we had fifty years of people borrowing their way to prosperity in the form of mortgages on houses, loans for cars, and loans for businesses. Without that borrowing they would have been paying rent that increased with inflation, bicycling to work and wage slaves to some taskmaster instead of wealthy business owners. The SBA has been helping people successfully borrow their way to prosperity for decades.

The idea that you cannot "borrow and spend" your way to prosperity is a total LIE, it has been proven to work MILLIONS of times. Any non-idiot can see that the paid off, 30 year fixed rate mortgages made in 1979 and before have been a net economic win in real dollars for the borrowers, especially compared to apartment dwellers, whose rents keep pace with inflation (while mortgage payments decline in real dollars with inflation).

Whatever the debt is now, borrowing money to invest in less costly energy and health care creates prosperity that will help pay off that debt. We pay TWICE what the average first-world citizen pays for health care, ALL factors considered. That is because we are being blackmailed by medical, insurance and pharmas run amok in their pricing, and we cannot stop them because they literally hold the power of life and death over us, and that makes for zero leverage on our part.

Likewise, the middle east (or OPEC) can cripple our economy in a heartbeat with an agreement made over their afternoon tea. At this point we need to spend money to cut our costs and create a positive cash flow so we can pay down the idiotic expenses of the two previous administrations (Bush and Clinton). Anybody that doesn't think so is delusional.]]> Sun, 28 Jun 2009 11:07:07 -0400
Before the real estate bubble we had fifty years of people borrowing their way to prosperity in the form of mortgages on houses, loans for cars, and loans for businesses. Without that borrowing they would have been paying rent that increased with inflation, bicycling to work and wage slaves to some taskmaster instead of wealthy business owners. The SBA has been helping people successfully borrow their way to prosperity for decades.

The idea that you cannot "borrow and spend" your way to prosperity is a total LIE, it has been proven to work MILLIONS of times. Any non-idiot can see that the paid off, 30 year fixed rate mortgages made in 1979 and before have been a net economic win in real dollars for the borrowers, especially compared to apartment dwellers, whose rents keep pace with inflation (while mortgage payments decline in real dollars with inflation).

Whatever the debt is now, borrowing money to invest in less costly energy and health care creates prosperity that will help pay off that debt. We pay TWICE what the average first-world citizen pays for health care, ALL factors considered. That is because we are being blackmailed by medical, insurance and pharmas run amok in their pricing, and we cannot stop them because they literally hold the power of life and death over us, and that makes for zero leverage on our part.

Likewise, the middle east (or OPEC) can cripple our economy in a heartbeat with an agreement made over their afternoon tea. At this point we need to spend money to cut our costs and create a positive cash flow so we can pay down the idiotic expenses of the two previous administrations (Bush and Clinton). Anybody that doesn't think so is delusional.]]> http://seekingalpha.com/article/145635-why-you-don-t-need-an-informational-advantage-just-an-emotional-one?source=feed#comment-564704 564704
The latest (July 2009) Scientific American has a great, lengthy article on this topic. It has always been *economists* making the efficiency claim, based on their idiotic insistence on rational players and simpleton math. The same mentally retarded crowd that believes in the magical powers of free markets to set prices. For thirty years I have read study after study after study (all peer reviewed) disproving the foundational premises of economics, one after another, and still they persist in using them because presumably, that is all they have.

Hopefully, the alternative (behavioral economics) outlined in Scientific American will take root and take over, once these bozos are discredited by their failures. Or maybe not -- Economics is a non-science good at insulating itself from ugly facts.

Good article, Mr. Kenyon. One of the few I have read on this site.

On a different topic, I am long BRK-B and unconcerned by the decline. The question is whether it outperforms the **market** in the long term, I never had ANY expectation it would hold price like an island unto itself. All stocks are affected by the climate; even if their fundamentals are fine, they can be subject to selling pressure because some of the big fish incurred debts elsewhere in the market. When you are leveraged to 200% invested and there is a 25% market decline, you have to cover your margins somehow. This is just ONE of the reasons the market is not efficient. Read the Scientific American article. ]]> Sat, 27 Jun 2009 09:23:08 -0400
The latest (July 2009) Scientific American has a great, lengthy article on this topic. It has always been *economists* making the efficiency claim, based on their idiotic insistence on rational players and simpleton math. The same mentally retarded crowd that believes in the magical powers of free markets to set prices. For thirty years I have read study after study after study (all peer reviewed) disproving the foundational premises of economics, one after another, and still they persist in using them because presumably, that is all they have.

Hopefully, the alternative (behavioral economics) outlined in Scientific American will take root and take over, once these bozos are discredited by their failures. Or maybe not -- Economics is a non-science good at insulating itself from ugly facts.

Good article, Mr. Kenyon. One of the few I have read on this site.

On a different topic, I am long BRK-B and unconcerned by the decline. The question is whether it outperforms the **market** in the long term, I never had ANY expectation it would hold price like an island unto itself. All stocks are affected by the climate; even if their fundamentals are fine, they can be subject to selling pressure because some of the big fish incurred debts elsewhere in the market. When you are leveraged to 200% invested and there is a 25% market decline, you have to cover your margins somehow. This is just ONE of the reasons the market is not efficient. Read the Scientific American article. ]]> http://seekingalpha.com/article/144884-warren-buffett-getting-no-respect?source=feed#comment-560313 560313
Freight (including people) gets 10 times the gas mileage of eighteen-wheelers, and is far more amenable to alternative fuel conversion as well. Just as old trains used to carry wood or coal, a train can carry any number of cars of batteries or alternative fuel. Trucks and cars cannot do that. Change one locomotive to alternative fuel and you can have the impact of changing a thousand private cars.

Fuel efficiency will drive increased use of both diesel trains and electric trains (metros and/or street cars). The country needs to move freight and people to sustain the economy. Trains are no-brainer, ten times as fuel efficient and requiring zero new technology and frankly not much besides a track. Plus they can run 50% to 100% faster than private vehicles, both in town and between towns. ]]> Wed, 24 Jun 2009 09:37:05 -0400
Freight (including people) gets 10 times the gas mileage of eighteen-wheelers, and is far more amenable to alternative fuel conversion as well. Just as old trains used to carry wood or coal, a train can carry any number of cars of batteries or alternative fuel. Trucks and cars cannot do that. Change one locomotive to alternative fuel and you can have the impact of changing a thousand private cars.

Fuel efficiency will drive increased use of both diesel trains and electric trains (metros and/or street cars). The country needs to move freight and people to sustain the economy. Trains are no-brainer, ten times as fuel efficient and requiring zero new technology and frankly not much besides a track. Plus they can run 50% to 100% faster than private vehicles, both in town and between towns. ]]> http://seekingalpha.com/article/144226-book-review-the-four-filters-invention-of-warren-buffett-and-charlie-munger-two-friends-transformed-behavioral-finance?source=feed#comment-555117 555117
I'd be far more interested in an analysis of Buffett's failed investments (and he admits to many) than in an after-the-fact list of his what-makes-me-great quotes. We read those ad infinitum; "make sure there's a moat", blah blah blah.

You need to add something new; and if you don't have access to WB to do it, it will have to be analysis and your own voice. I've been following Buffett for years. I'm a fan. He's got a big chunk of my investment money. I'm not selling. Nevertheless, I am pretty sure his investing advice can be condensed to a series of six articles, maybe ten, complete with examples. If you don't add something new to that, you don't have a book.]]> Sat, 20 Jun 2009 09:10:04 -0400
I'd be far more interested in an analysis of Buffett's failed investments (and he admits to many) than in an after-the-fact list of his what-makes-me-great quotes. We read those ad infinitum; "make sure there's a moat", blah blah blah.

You need to add something new; and if you don't have access to WB to do it, it will have to be analysis and your own voice. I've been following Buffett for years. I'm a fan. He's got a big chunk of my investment money. I'm not selling. Nevertheless, I am pretty sure his investing advice can be condensed to a series of six articles, maybe ten, complete with examples. If you don't add something new to that, you don't have a book.]]> http://seekingalpha.com/article/143033-the-debt-conundrum-part-2?source=feed#comment-546958 546958
My point was that it is simply not true that you cannot borrow your way to prosperity; in fact almost every business success in the country has borrowed and repaid loans, for equipment, buildings, vehicles, supplies and legal services to get started. Translating this to a national level, what those businesses were borrowing to build was infrastructure. If our government went another $3T in debt to build a new infrastructure (roads, rail, energy), that would be an investment that would pay itself back a hundred fold in our lifetimes.

My second critique was against the knee-jerk panic about government health care costs, which strikes me as simple adolescent petulance about paying taxes. In fact, Canada and several European examples demonstrate that governments can get health care costs under control, with very little inconvenience to the populace. Their approach drastically cuts the PROFITS of health care, but guess what? Doctors and hospitals don't mind; Doctors in Sweden and Britain earn less than half of what their average American counterparts earn, and they still produce doctors as fast as their schools can graduate them. The supply remains the same.

They have proven for us that the answer to the health care cost crisis is dumb bunny simple: Get rid of the get-rich-quick profit motive, eliminate the quarter-over-quarter 10% profit growth corporate mentality, and start treating hospitals, insurance, and pharmaceuticals as mature businesses aiming for a 5-10% annual profit with zero growth. Thousands of American non-profit hospitals operated this way for decades without any fiscal problems, and more thousands operate in first-world countries like the USA with no fiscal problems.

Health care is not like selling any other discretionary product. Over 95% of health care, by cost, is for non-discretionary purchases. Bypasses, bone settings, medicines, emergency and accident care, surgeries, cancer treatments and other procedures that nobody would do if their lives weren't at risk.

The supply of patients is largely fixed, very inflexible, and with very little discretion. With near zero ability to increase the demand for their product, corporations that run hospitals can only increase profits by cutting costs. I worked for a large for-profit hospital chain, and this was their strategy. Cut personnel costs, cut supply costs, cut maintenance costs. After several years of this, these cuts produced a statistically significant diminishing in the quality-of-care of their hospitals, measured in increased patient deaths, increased infections, increased medical error, and increased incidents of negligent care and lawsuits. It did, however, produce more profit for shareholders, year over year.

Regular competition does not work. It doesn't do any good to make your hospital nicer or better than another; people will never become sophisticated and discerning consumers of something they really need badly just a few times in a lifetime. Cost cutting and price raising to the point of patient extortion is the only way to relentlessly increase profits, as Wall Street demands.

When it comes to health care, the profit motive kills and cripples people. The solution is to take Wall Street out of the equation. That will cost us money, but unlike simple spending, this is also an investment that will pay off for consumers of health care (all of us) in reduced costs going forward.

That was my point. As a society we have come to realize that for-profit health care is destructive and too costly and is making health care progressively worse every year, because people cannot afford it.

One solution is to eliminate the profit motive. Pay a tax so the government administers a non-profit approach; and the tax will be made up several times by the reduced costs that result. As I said, this has already been proven to work and work well with high patient satisfaction in several other countries.

Perhaps a good analogy might be toll roads. Imagine if the government did not collect taxes and build roads, and instead every single road in your town, in your state, were a toll road, operated for profit, without price regulation. Chances are, you would pay far more to get to work than you currently pay in road taxes and it would take much longer. The domino effect of that is much less travel, much less commerce, fewer cars and less social contact. There are far too many roads that are basically the only sane way to get from point A to point B, and these would become essentially monopolies.

This is why no free market economist has every developed a viable plan for unregulated, free market road infrastructure. A non-profit tax based system of publicly owned roads is the only viable option. You can have several toll roads, but it is in the public's interest to have the vast majority of roads built and maintained by government through taxes, so no profit motive is present.

The same thing has become true for health care. It has become a profit monster that is collectively making decisions to let people die in order to maximize profit. Now I agree we cannot have infinite health care costs, but decisions about the life and death of citizens are not decisions that should be made by people whose salaries or bonuses or even livelihood depends upon the decision being made.

Our objective should be to maximize the number of lives saved with the resources we have, and any profit motive will diminish that objective. For profit health care has proven itself incapable of controlling the cost of health care for patients, and therefore health care should be primarily a non-profit enterprise, and all citizens should have access to a non-profit alternative. If for-profit hospitals can survive and profit in that environment then they should be welcome, but they cannot continue to exist in an environment where they have a life-and-death monopoly over patient care, because they have proven themselves too greedy to do anything except bankrupt their patients.

My point to Mr. Quinn was that you can't look at the cost of government run health care without considering the benefits of it, including net savings by the taxpayers that funded it; because under that metric nobody should spend any money on anything ever.]]> Mon, 15 Jun 2009 09:15:56 -0400
My point was that it is simply not true that you cannot borrow your way to prosperity; in fact almost every business success in the country has borrowed and repaid loans, for equipment, buildings, vehicles, supplies and legal services to get started. Translating this to a national level, what those businesses were borrowing to build was infrastructure. If our government went another $3T in debt to build a new infrastructure (roads, rail, energy), that would be an investment that would pay itself back a hundred fold in our lifetimes.

My second critique was against the knee-jerk panic about government health care costs, which strikes me as simple adolescent petulance about paying taxes. In fact, Canada and several European examples demonstrate that governments can get health care costs under control, with very little inconvenience to the populace. Their approach drastically cuts the PROFITS of health care, but guess what? Doctors and hospitals don't mind; Doctors in Sweden and Britain earn less than half of what their average American counterparts earn, and they still produce doctors as fast as their schools can graduate them. The supply remains the same.

They have proven for us that the answer to the health care cost crisis is dumb bunny simple: Get rid of the get-rich-quick profit motive, eliminate the quarter-over-quarter 10% profit growth corporate mentality, and start treating hospitals, insurance, and pharmaceuticals as mature businesses aiming for a 5-10% annual profit with zero growth. Thousands of American non-profit hospitals operated this way for decades without any fiscal problems, and more thousands operate in first-world countries like the USA with no fiscal problems.

Health care is not like selling any other discretionary product. Over 95% of health care, by cost, is for non-discretionary purchases. Bypasses, bone settings, medicines, emergency and accident care, surgeries, cancer treatments and other procedures that nobody would do if their lives weren't at risk.

The supply of patients is largely fixed, very inflexible, and with very little discretion. With near zero ability to increase the demand for their product, corporations that run hospitals can only increase profits by cutting costs. I worked for a large for-profit hospital chain, and this was their strategy. Cut personnel costs, cut supply costs, cut maintenance costs. After several years of this, these cuts produced a statistically significant diminishing in the quality-of-care of their hospitals, measured in increased patient deaths, increased infections, increased medical error, and increased incidents of negligent care and lawsuits. It did, however, produce more profit for shareholders, year over year.

Regular competition does not work. It doesn't do any good to make your hospital nicer or better than another; people will never become sophisticated and discerning consumers of something they really need badly just a few times in a lifetime. Cost cutting and price raising to the point of patient extortion is the only way to relentlessly increase profits, as Wall Street demands.

When it comes to health care, the profit motive kills and cripples people. The solution is to take Wall Street out of the equation. That will cost us money, but unlike simple spending, this is also an investment that will pay off for consumers of health care (all of us) in reduced costs going forward.

That was my point. As a society we have come to realize that for-profit health care is destructive and too costly and is making health care progressively worse every year, because people cannot afford it.

One solution is to eliminate the profit motive. Pay a tax so the government administers a non-profit approach; and the tax will be made up several times by the reduced costs that result. As I said, this has already been proven to work and work well with high patient satisfaction in several other countries.

Perhaps a good analogy might be toll roads. Imagine if the government did not collect taxes and build roads, and instead every single road in your town, in your state, were a toll road, operated for profit, without price regulation. Chances are, you would pay far more to get to work than you currently pay in road taxes and it would take much longer. The domino effect of that is much less travel, much less commerce, fewer cars and less social contact. There are far too many roads that are basically the only sane way to get from point A to point B, and these would become essentially monopolies.

This is why no free market economist has every developed a viable plan for unregulated, free market road infrastructure. A non-profit tax based system of publicly owned roads is the only viable option. You can have several toll roads, but it is in the public's interest to have the vast majority of roads built and maintained by government through taxes, so no profit motive is present.

The same thing has become true for health care. It has become a profit monster that is collectively making decisions to let people die in order to maximize profit. Now I agree we cannot have infinite health care costs, but decisions about the life and death of citizens are not decisions that should be made by people whose salaries or bonuses or even livelihood depends upon the decision being made.

Our objective should be to maximize the number of lives saved with the resources we have, and any profit motive will diminish that objective. For profit health care has proven itself incapable of controlling the cost of health care for patients, and therefore health care should be primarily a non-profit enterprise, and all citizens should have access to a non-profit alternative. If for-profit hospitals can survive and profit in that environment then they should be welcome, but they cannot continue to exist in an environment where they have a life-and-death monopoly over patient care, because they have proven themselves too greedy to do anything except bankrupt their patients.

My point to Mr. Quinn was that you can't look at the cost of government run health care without considering the benefits of it, including net savings by the taxpayers that funded it; because under that metric nobody should spend any money on anything ever.]]> http://seekingalpha.com/article/143033-the-debt-conundrum-part-2?source=feed#comment-546374 546374
Am I embarrassing you? If you think I am embarrassing myself, you are mistaken. My rebuttals are grounded in human psychology and logic, and anybody that resorts to an emotional argument (like I should be embarrassed) is not engaging in debate but simple vitriol. I don't give a crap about what you think I should feel, feelings aren't the way out of the dilemma. Thinking is. So if you have a reasoned argument against my position, let's hear it; otherwise I will assume you are just an emotional reactionary with a simplistic mind that cannot think for himself.

You and Glen L should start a chorus of parroting the party line about the infinite wonders of free markets and deregulation. It would be a comedy, of course.]]> Sun, 14 Jun 2009 18:49:25 -0400
Am I embarrassing you? If you think I am embarrassing myself, you are mistaken. My rebuttals are grounded in human psychology and logic, and anybody that resorts to an emotional argument (like I should be embarrassed) is not engaging in debate but simple vitriol. I don't give a crap about what you think I should feel, feelings aren't the way out of the dilemma. Thinking is. So if you have a reasoned argument against my position, let's hear it; otherwise I will assume you are just an emotional reactionary with a simplistic mind that cannot think for himself.

You and Glen L should start a chorus of parroting the party line about the infinite wonders of free markets and deregulation. It would be a comedy, of course.]]> http://seekingalpha.com/article/143033-the-debt-conundrum-part-2?source=feed#comment-546315 546315 > For every entrepreneur that "borrowed his way to prosperity" there are 9, at least, that tried that and failed.

Because you say so, I presume? Besides, my point was that it is possible, and you don't seem to argue that point.

> NO! You obviously don't understand how completely the debt load is crippling America's ability to compete.

What a crock of crap; YOU obviously don't understand how completely our dependence on middle east oil is crippling our security and our economy, how completely held hostage we are to the price of oil. We cannot work, cannot produce our food, cannot ship our food, cannot frikkin' LIVE without oil, and WE DON'T HAVE IT. Investing in green energy is NOT investing at the point of a gun, we are AT the point of a gun held by monarchs and dictators that don't much like us and can throw us into chaos at a whim, if we don't pay. Investing in alternatives, even if they are more expensive, is the way out. Even if it costs more, at least we'd have something, and if they want they can reduce us to nothing.

> Pathetic. ... you are punishing the prudent to benefit the imprudent ...

I said no such thing. What I said is the government can borrow money at a low rate, and basically loan it to citizens at a low rate so they could pay off high rate debt. That isn't punishing anybody or anything, it is reducing the cost of consumer credit so consumers can get out from under crippling usurious interest rates. There is no moral hazard involved, I never said a word about socializing debt or bailing anybody out. You can't read.

> Likewise, you learned nothing about economics from you experience working at the hospital. I work in the medical billing field, and I know what I'm talking about:

Yeah so did I, in fact I wrote the programs, and I don't think you DO know what you are talking about. Here is what I learned at the hospital: When a person is diagnosed with a life-threatening condition, they don't have the time or will to haggle over the price of the fix, and they don't have the leverage even if they did, because doctors are booked twelve hours a day and can afford to just take the next person in line.

Now you apparently had NO economics, because if you did you would recognize a monopoly situation when you see it, and realize this forces the price of the life-saving service to the point of 100% of the average person's money. Pay it or die, and the price is the same everywhere, because enough people will pay it to keep the doctors working just as much as they want to work.

Hospitals do not compete, and your third party complaint is a red herring. The insurance companies, hospitals, and pharmaceuticals are emptying the pockets of patients that have no real choice in the matter, and the government tries to stop the extortion with regulation, and the other side always finds a way to continue the extortion just because they can. Health care costs rise 6-10% a year because Wall Street demands it and the guy having a heart attack will pay whatever it takes to live, even if it bankrupts him. The only way to end that exploitation is to remove the profit motive, and that is the moral thing to do because patients cannot bargain with a figurative gun to their head, which is the situation for the vast majority of people being served by any hospital.

> FedEx is forbidden to compete in the first class letter carrying business! Don't you know that?!

I know that FedEx's cheapest package, which is the equivalent of a letter, costs twenty times as much as the US Postal Service's cheapest package. The label of "first class" mail makes no difference, and the rule that FedEx is not allowed to carry routine letters was challenged by FedEx in court and the US Postal service dropped the issue years ago. Apparently YOU didn't know that.

In any case, arguing that the US Postal service is subsidized is like arguing that the US Military is subsidized; it is a US organization!

> ... your own complete lack of understanding of basic entrepreneurial economics must be embarassing to everyone who knows you.

Your complete inability to comprehend what you read or to follow a logical argument must be a burden to anyone that knows you.

> As for basic political philosophy, yours is straight from your government high school education.

I don't recall hearing the points I made here in high school, and the majority of the free-market idiots of your ilk seem to think that the government should be a for-profit industry.

That position is ridiculous on the face of it. You want your police and court system to operate on a for profit basis? Such a system would be completely corrupted by money and provide not even a semblance of justice, it would just be the rich ruling the poor. But maybe that is what you want, I don't know.

It is not what I want, so I repeat, there are services we need as people that we do not WANT to be run at a profit, and that is the point of government.]]> Sun, 14 Jun 2009 17:08:16 -0400 > For every entrepreneur that "borrowed his way to prosperity" there are 9, at least, that tried that and failed.

Because you say so, I presume? Besides, my point was that it is possible, and you don't seem to argue that point.

> NO! You obviously don't understand how completely the debt load is crippling America's ability to compete.

What a crock of crap; YOU obviously don't understand how completely our dependence on middle east oil is crippling our security and our economy, how completely held hostage we are to the price of oil. We cannot work, cannot produce our food, cannot ship our food, cannot frikkin' LIVE without oil, and WE DON'T HAVE IT. Investing in green energy is NOT investing at the point of a gun, we are AT the point of a gun held by monarchs and dictators that don't much like us and can throw us into chaos at a whim, if we don't pay. Investing in alternatives, even if they are more expensive, is the way out. Even if it costs more, at least we'd have something, and if they want they can reduce us to nothing.

> Pathetic. ... you are punishing the prudent to benefit the imprudent ...

I said no such thing. What I said is the government can borrow money at a low rate, and basically loan it to citizens at a low rate so they could pay off high rate debt. That isn't punishing anybody or anything, it is reducing the cost of consumer credit so consumers can get out from under crippling usurious interest rates. There is no moral hazard involved, I never said a word about socializing debt or bailing anybody out. You can't read.

> Likewise, you learned nothing about economics from you experience working at the hospital. I work in the medical billing field, and I know what I'm talking about:

Yeah so did I, in fact I wrote the programs, and I don't think you DO know what you are talking about. Here is what I learned at the hospital: When a person is diagnosed with a life-threatening condition, they don't have the time or will to haggle over the price of the fix, and they don't have the leverage even if they did, because doctors are booked twelve hours a day and can afford to just take the next person in line.

Now you apparently had NO economics, because if you did you would recognize a monopoly situation when you see it, and realize this forces the price of the life-saving service to the point of 100% of the average person's money. Pay it or die, and the price is the same everywhere, because enough people will pay it to keep the doctors working just as much as they want to work.

Hospitals do not compete, and your third party complaint is a red herring. The insurance companies, hospitals, and pharmaceuticals are emptying the pockets of patients that have no real choice in the matter, and the government tries to stop the extortion with regulation, and the other side always finds a way to continue the extortion just because they can. Health care costs rise 6-10% a year because Wall Street demands it and the guy having a heart attack will pay whatever it takes to live, even if it bankrupts him. The only way to end that exploitation is to remove the profit motive, and that is the moral thing to do because patients cannot bargain with a figurative gun to their head, which is the situation for the vast majority of people being served by any hospital.

> FedEx is forbidden to compete in the first class letter carrying business! Don't you know that?!

I know that FedEx's cheapest package, which is the equivalent of a letter, costs twenty times as much as the US Postal Service's cheapest package. The label of "first class" mail makes no difference, and the rule that FedEx is not allowed to carry routine letters was challenged by FedEx in court and the US Postal service dropped the issue years ago. Apparently YOU didn't know that.

In any case, arguing that the US Postal service is subsidized is like arguing that the US Military is subsidized; it is a US organization!

> ... your own complete lack of understanding of basic entrepreneurial economics must be embarassing to everyone who knows you.

Your complete inability to comprehend what you read or to follow a logical argument must be a burden to anyone that knows you.

> As for basic political philosophy, yours is straight from your government high school education.

I don't recall hearing the points I made here in high school, and the majority of the free-market idiots of your ilk seem to think that the government should be a for-profit industry.

That position is ridiculous on the face of it. You want your police and court system to operate on a for profit basis? Such a system would be completely corrupted by money and provide not even a semblance of justice, it would just be the rich ruling the poor. But maybe that is what you want, I don't know.

It is not what I want, so I repeat, there are services we need as people that we do not WANT to be run at a profit, and that is the point of government.]]>