Coyote Blog

I prefer "If I were a rich man" to "If I was a rich man", though apparently I am in the minority.  This despite the fact that someone who is as bad at proof-reading and litters his posts with grammatical and spelling mistakes cannot afford to be snooty about verb tense.

I vividly remember the year in Spanish when subjunctive verbs were introduced.  After slogging for years learning verb conjugation on all kinds of tenses, it came as a rude shock that there was an entire second set of parallel subjunctive verb conjugations.  Eeek. It was like completing your tool box after years of careful purchases, only to discover you needed a second set in metric.

I have forgotten most all the Spanish, but since then I remain fascinated by what, to my knowledge, is the only remaining subjunctive verb conjugation in routinely-used English.

This is hilarious, all the more so because the actors involved have absolutely no self-awareness of just how bad this looks

This week alone has seen a ratings downgrade for Spain as well as a threat by agencies to review France's AAA status -- and the markets have taken notice. Once again, it would seem, ratings agencies are making things difficult for European countries.

Now, the European Union is considering doing something about it.

European Internal Market Commissioner Michel Barnier is considering a move to ban the agencies from publishing outlook reports on EU countries entangled in a crisis, according to a report in Thursday's issue of the Financial Times Deutschlandnewspaper

This is not even a content neutral ban on speech - it obviously will only be applied to bad reports, not positive ones.  No wonder Obama has always been so admiring of the Europeans.

Ray Lane of VC Kleiner Perkins is seen in this video trumpeting how the Obama Administration is, for the first time in his memory, succesfully making investments in private companies.  His main example:  Solyndra!

The reason this is particularly timely and fascinating is that just a few weeks ago, Ray Lane took delivery of the first Fisker Karma electric car, financed with $529 million of our tax money and promoted with $7500 of our tax money on every sale,  Mr. Lane and Kleiner are investors in Fisker (and Lane is Fisker's Chairman) and therefore huge beneficiaries of Obama's largess, and Mr. Lane got the first Karma as a big thank you for his political connections that helped score the cash.

Of course Kleiner (who also hired green Crony-in-chief Al Gore) is going to be thrilled with the government money. Nothing is worse than being a VC in with a large early round position in a company and being unable to get the next stage of investment. Since it appears they could not get any private investors to fund this, the taxpayer money probably saved their investment .... at least for a while.

Update: Ray Lane is apparently ticked off by the negative publicity surrounding the Fisker Karma and the money they received from taxpayers. Tough. Surely he is used to his investors being ticked off about bad outcomes. Well, now he gets to see how REALLY ticked off his investors can be when their money was taken against their will, even without their knowledge. At least he can tell his institutional guys, when things go bad, that they came in with eyes open. What's his response to taxpayers?

For those who have not seen it, my article on how the Fisker Karma, even on all electric, uses more fossil fuels per mile than an SUV is here.

Folks in the OWS neighborhood in NYC are fed up and want the city to kick out the protesters.  While they grow old waiting for that, I would suggest taking some individual action right out of the army psi-ops manual (actually, its also from a Sopranos episode).

1. Find some big-ass speakers
2. Find the biggest amp you can
3. Place speakers in window, point out at park.
4. Find the single most annoying recording you can, and play it at volume 11 .. over and over and over and over, day in and day out.  I might try "I'm turning Japanese" or maybe "I want a hippopotamus for Christmas."  Possibly the song they used to play over and over in FAO Schwartz stores, or "It's a small world."   Or maybe something like a Joel Osteen sermon.  It almost doesn't matter once its been repeated 12 times an hour for 3 days.

For those of you in the Phoenix are, I would like to encourage you to check out the Arizona Ballet (disclosure:  my wife is on the board).

I was never a big ballet fan.  To be honest, the only times I really ever went in my younger days was when I was dating a girl who loved the ballet and when I was still in that relationship phase that I was bending over backwards to please her.

That being said, the Arizona Ballet is really doing a good job here.  In particular, we were dating far above our heads when we lured Ib Andersen as artistic director.  My wife wouldn't like me saying this, but we are not going to keep this guy in flyover country forever.

As I have grown to appreciate the ballet, I really like the more modern, story-less dances more than the classic ballets, but that is a matter of taste.  But this week the company is putting on Prokofiev's Cinderella, and the music, sets, and dancing are just fantastic.  This is not going to be the most daring or interesting dancing the company will do this year, but it is very likely the most accessible to the newcomer.  Everyone knows the story, so there are not any wtf? moments I get in some ballets, even ones as overdone as the Nutcracker.  And there is real humor in the ballet, in the form of the two stepsisters, that makes this perhaps the most accesible ballet for kids I have ever seen.

So go try it.

I had some fun yesterday, dashing off a quick note about the Fisker Karma electric car and just how bad the electric mileage is if you use the DOE methodology rather than the flawed EPA methodology to calculate an mpg-equivalent.

It was the quickest and shortest column I have ever written on Forbes, so of course it has turned out to be the most read.  It has been sitting on top of the Forbes popularity list since about an hour after I wrote it, and currently has 82,000 reads (I am not a Twitter guy but 26,000 tweets seems good).

I wanted to add this clarification to the article:

Most other publications have focused on the 20 mpg the EPA gives the Karma on its backup gasoline engine (example), but my focus is on just how bad the car is even in all electric mode.    The calculation in the above article only applies to the car running on electric, and the reduction in MPGe I discuss is from applying the more comprehensive DOE methodology for getting an MPG equivilent, not from some sort of averaging with gasoline mode.  Again, see this article if you don’t understand the issue with the EPA methodology.

Press responses from Fisker Automotive highlight the problem here:  electric vehicle makers want to pretend that the electricity to charge the car comes from magic sparkle ponies sprinkling pixie dust rather than burning fossil fuels.  Take this quote, for example:

a Karma driver with a 40-mile commute who starts each day with a full battery charge will only need to visit the gas station about every 1,000 miles and would use just 9 gallons of gasoline per month.

This is true as far as it goes, but glosses over the fact that someone is still pouring fossil fuels into a tank somewhere to make that electricity.  This seems more a car to hide the fact that fossil fuels are being burned than one designed to actually reduce fossil fuel use.  Given the marketing pitch here that relies on the unseen vs. the seen, maybe we should rename it the Fisker Bastiat.

Only XKCD could be this geeky.

The problem with going so deeply nerdy is so few people share the humor with you.  I wear this shirt to work out all the time and I can't remember anyone ever getting the joke.

The Fisker Karma electric car, developed mainly with your tax money, has rolled out with an EPA MPGe of 52.   But this number is bogus.  The true MPGe is worse than a Ford Explorer.  Learn why in my Forbes.com piece.

This via Q&O:

Earlier today, New York Times columnist Nick Kristoff opined on Twitter about cuts in government services. It’s not every day that you see such stupidity displayed so confidently…except from the Left:

Imagine John Boehner home in OH, seeing an escaped tiger–and getting a msg that help is unavailable due to govt cutbacks.

Well, I don’t know about John Boehner. But I do know that if I received such a message, it’d be because I was trying to call up a government flunky to haul a tiger carcass away. And if I did get such a message, my very next call would be to a good taxidermist.

It’s an interesting glimpse into the worldview though. The unspoken assumption is that, without government tiger hunters, we’re all doomed to be mauled by wild beasts. Presumably, this is because we are all tiny, little children, utterly incapable of solving our problems without the intervention of our benevolent government overlords. It’s a worldview that operates on the assumption that the government is the only adult in the room.

A great example of this sort of mentality was the Bruce Willis action filmLive Free or Die Hard.  The movie was a decent thriller, falling into the unlikely-buddy-movie genre (including also 48 Hours and most of the Lethal Weapon movies).

Like most modern techno-thrillers, it required a lot of technical suspension of belief, but what really struck me was the premise -- that somehow, if terrorists were able to really shut down the government, people would go into a panic and be totally lost and forlorn.  Even the strong male hero buys into the premise.  Can you even imagine a Clint Eastwood movie where Clint laments how scared Americans will be if they were to call the FDA to inquire if a certain product is truly organic and no one answered the phone?   It makes for a sort of irony in the movie because in fact the government is completely useless in the face of the terrorists, who are brought down essentially by a few private individuals.

I am willing to believe that the initial push into alternative energy subsidies was undertaken with good, honest (though misguided) intentions to change the US energy mix.  But once such a program is begun, it inevitably gets turned into cronyism.

The best example is probably corn ethanol.  A combination of subsidies and mandates have pushed an enormous proportion of our food supply into gas tanks, for little or even negative environmental effect.   Environmentalists and the Left turned against it, but for a few large corporations like ADM, the subsidies have become life and death, and they do anything they have to to get Congress to maintain them.

The best evidence that corn ethanol shifted from a green program to pure cronyism was the imposition of large import tariffs.  The only possible purpose of these tariffs was to enrich farmers and a few manufacturers.  After all, if one really cared any more about getting more ethanol in the fuel supply, one would welcome low cost imports.

Well, the Solyndra debacle has started to make clear that cronyism has taken over solar subsidies as well.  Every day we find yet another high-ranking Obama supporter with his thumb on the scales tilting the DOE funding decision toward Solyndra.

Now we will see the ultimate test:

A group of U.S. solar-panel makers Wednesday called on the federal government to punish Chinese rivals with extra duties for allegedly dumping their products on the U.S. market…

The U.S. makers are asking the Department of Commerce and the International Trade Commission to impose a duty on panels imported from China, a market that totaled $1.6 billion in the first eight months of 2011. SolarWorld accused Chinese manufacturers of selling solar panels at less than half of what the production costs would be in a comparable free-market economy, and is asking for tariffs to make up the difference.

One could argue that this is in direct response to the Solyndra failure.  Solyndra's failure has been blamed on low cost panel manufacturing in China.   Again, if we care just about energy, we should be thrilled about low-cost Chinese solar panels.  If the Chinese government wants to somehow subsidize our consumption of solar panels, great!

Watch this proposal.  Any politician that jumps on this solar tariff bandwagon will be saying "My statements about wanting to see more solar usage is just a bluff, I only really care about subsidizing a few selected businesses."

Paul Krugman had this sideswipe comment the other day:

This isn't the only case where news organizations consistently report as truth something that didn't happen, while failing to report what did. Another one that comes to mind is the California electricity crisis of 2001-2002. As some readers may recall, that crisis was caused by market manipulation -- and that's not a hypothesis, Enron traders were caught on tape telling plants to shut down to create artificial shortages. Yet "news analyses" published after the whole thing was revealed would often tell readers that excessive environmental regulation and Nimbyism caused the crisis, with nary a mention of the deliberate creation of shortages.

And as you'll notice, in both cases the imaginary history just happened to be one more comfortable to status quo interests.

I find it hilarious that Krugman is talking about imaginary history, since he plays the same game so often.  In fact, the disconnect between many of Krugman's current political writings and his historical economic work are often jaw-dropping.  Even the differences in Krugman's opinion on the same topic when a Republican vs. a Democrat is in the White House can be amazing.

But I wanted to address the California utility issue.  Certainly Krugman is right, as far as he goes, in that Enron made a lot of money in the California electricity crisis creating some short-term artificial shortages.  But what he leaves out of his brief comment were the structural rules the government had put in place that made Enron's actions possible.  Enron's profits in the California electricity crisis could never have been made in a free market.

I am not an expert on the whole regulatory environment in which these events occurred, but there were three key regulatory facts that need to be understood:

1.  California, due to the NIMBY and environmental concerns Krugman mentions in passing, want lots of electricity but do not want the electricity production near them.  So they have exported the production to other states, and, more importantly, California utilities did not control the production of the electricity they needed.  Thus a lot of California power, and all of its marginal demand, is satisfied by local utilities buying out of state power.  As we will see next, Krugman is really putting up a straw man here, as this is simply background, the least important of the three government factors that drove the problem.

2.  California deregulated wholesale utility prices, but not retail prices.  The point of price deregulation is that suppliers and consumers can make better decisions because the information they get via prices is not distorted by government mandates.   But price deregulation only makes sense if the ultimate consumers have prices that float with the market.  But California consumers still had fixed prices.  There were no changes to pricing signals to consumers that might cause them to conserve more when electricity was particularly short.

So, only wholesale customers saw their prices paid increase when electricity supplies ran short.  This mainly applied to large California utilities that bought power they needed from out of state.   Theoretically, when prices spiked, they could cut back their demand.  This is more awkward for them than consumers, but could be done either with pre-determined shut down priorities or rolling brown-outs.  At some point, one would assume the cost of power would be higher than the cost of service disruptions, but...

3.  California utilities were effectively required by regulation to try to serve all demand.  Right or wrong, they felt they were in a position that if power were available, they had to buy it no matter what the cost.

So step in Enron.  Seeing this mess, they found they could corner the market at a few peak demand times and sell Calfornia power for a gazillion dollars a Kw.   I would not personally have been proud to make money that way, but Enron jumped right in.

I have no problem giving Enron grief for the way they make money, but one has to ask themselves, why the hell were California utilities buying power no matter what the price, and why was it that when electricity was so dear, it was illegal to communicate this to end users via prices (as we do with any other product or commodity).  The story here is a lot more complicated than Enron.

Update: Finem Respice took a more sophisticated look at this same issue a while back in a broader post about trying to close an open system.

On the retail side, just as California was patting itself on the back for "deregulating" in 1996 (via a bill that Pete Wilson created with complexities and exceptions for e.g., San Diego that make the special interest game in Washington look tame by comparison), it froze, just after reducing, retail electricity rates for five years. Add to this the fact that California had long depended on supplies from, e.g., the Northwest, which, for years, enjoyed a hydroelectric power generation surplus. As the surplus vanished with droughts and increased demand in the Pacific Northwest, so did the supply buffer California was so used to, and that it leaned on most heavily over the years to avoid building new generating capacity (new capacity being the bane of the progressively green environmental utopian-paradise that was (is) California energy politics). All this conspired to spike rates. Who is surprised?

It is somewhat unfortunate that Enron's shrewd manipulation of California's badly flawed and outright schizophrenic market scheme was so flagrant, and that unrelated accounting scandals at the company permitted the story to become one of deregulation evils and free market greed rather than the core issue: the political spinelessness exhibited by California officials and their ongoing attempt to insulate voters from anything resembling market prices for electricity

David Roberts (via Kevin Drum) gives us a simply outstanding view of the mind of a statist:

In these grim economic times, one U.S. industry has defied gravity. Not only is it growing, it's thefastest growing industry in the country. It now employs 100,000 Americans at 5,000 mostly small businesses spread across all 50 states. Unlike in so many others, in this industry the U.S. has a positive trade balance with China; it is a net exporter of high-tech manufactured products....

The startling counter-cyclical growth of this industry had been unleashed by a modest bit of economic stimulus: a cash grant program that helps project developers compensate for the crippling credit crunch. In contrast to the familiar tax credits -- which tend to go to large, mature companies that have enough profit to benefit from them -- cash grants help small, innovative, growing businesses that are plowing revenue into growth. In fact, a recent study found that they work twice as well as tax credits. In 2009, this cash grant program pulled in $4.50 of private capital for every public dollar it invested.

The cash grant program expires at the end of the year. Extending it for a single year could support 37,000 additional jobs over and above the industry's baseline. And here's the capper: Since the cash grant program is simply repurposing money that's already devoted to a tax credit program, it requires no new federal revenue.

So you'd think this would be a home run, right? At a time when jobs are at the top of every politician's mind, surely a bit of low-cost economic stimulus that doesn't increase the deficit and leverages tons of private capital and creates tens of thousands of jobs can serve as the rare locus of bipartisan cooperation. Right?

Except the industry in question is the solar industry. And because this industry involves clean energy rather than, I dunno, tractor parts, it has been sucked into conservatives' endless culture war. Rather than lining up to support the recession's rare economic success story, Republicans are trying to use the failure of a single company -- Solyndra -- as a wedge to crush support for the whole industry. Odds are they're going to succeed and the cash grant program (Sec. 1603) won't be renewed next year.

Do you see the basic assumption -- if we don't take money from taxpayers and give it to businesses in a certain industry, that means we don't like that business.  Really?  That means that there is not a single industry in this country that I like, since I don't support subsidies for any of them.   Unless you believe the state is mother and father to us all, the fact that I don't support state subsidies does not mean that I don't like the industry somehow.  Kevin Drum even goes so far as to say that opposition to solar power subsidies is an aspect of the culture wars.  Huh?   Oh and by the way, the politicization of this loan process is just amazing to me.  More and more people at Solyndra seem to be fund raisers for Obama, and here is a story of how a cleaning products company turned donations to Democratic candidates into taxpayers subsidies for themselves.

It is interesting that he would mention tractor parts.  Guess what, folks who don't like the solar subsidies probably don't support subsidies for tractor parts either.  I was going to say something like, "guess what, we don't subsidize tractor parts" but in our screwed up corporate state, we probably do at some level, like with some special export program snagged by a John Deere lobbyist.  But I can pretty much guarantee that we don't subsidize anywhere near the total value of the tractor parts industry like we do the solar industry.

In one silly passage, he says

"In addition to being successful, this industry is wildly popular with the American public, across regions, demographics, and political parties. It has been embraced by mainstream institutions from Walmart to the U.S. military"

I could say the same thing for iPods too, but no one is rushing to provide grant programs for their manufacture.  If it is so wildly popular, why does its use require so many government incentives and subsidies.  Because the author pulls the trick of looking at one narrow solar program, and attributing the entire solar industry growth to that one program.  And then he says, see, look how much benefit we get from this tiny sensible expenditure.

But solar's growth (I don't have the data, but I am willing to be real money that his "fastest growing industry" claim is BS) is due not to just this tiny programs but to a plethora of federal, state, and local subsidies and mandates.  The government gives money to capitalize companies, and then then provides tax credits for up to 30-50% of their customer's purchase, and then through public utility commissions enforce above-market feed-in tariff rates for solar power.  One reason we export so much (the export market for US solar is nearly entirely to Europe) is that European governments have feed-in tariffs for solar power more than 5 times higher than the market rate for electricity.   They are paying something like 70 cents a kilowatt for solar electricity.

So of course solar is growing.  If the government were to buy small cars for $150,000 each, there would be big growth in car manufacturing. This does not mean the product makes sense -- in fact, the necessity for so many government supports at every step of the process means almost by definition that it does not make sense economically.  Look at corn ethanol.  Corn ethanol is the stupidest product ever, but it has grown like crazy due to the same combination of government subsidies, price floors, and mandates.

By the way, I am a huge fan of solar, in theory.  I honestly think that solar will some day be the power system of choice in this country, as companies figure out how to roll solar sheets out of the factory as cheaply and quickly as carpet comes out of Dalton, Georgia.  We are not there yet, and I am not at all convinced that the current approaches are anything but dead end technologies.  Beyond wasting a lot of money, there is a real risk the government actually slow ultimate implementation of sensible and economic solar, just as I would argue they did by forcing manned space flight and the transcontinental railroad ahead of their time.

Or maybe it is more correct to say that the taxpayer is being set up to keep BofA counter-parties whole. From Bloomberg, via Zero Hedge:

Bank of America Corp. (BAC), hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, according to people with direct knowledge of the situation.

The Federal Reserve and Federal Deposit Insurance Corp. disagree over the transfers, which are being requested by counterparties, said the people, who asked to remain anonymous because they weren’t authorized to speak publicly. The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC, which would have to pay off depositors in the event of a bank failure, is objecting, said the people. The bank doesn’t believe regulatory approval is needed, said people with knowledge of its position.

Three years after taxpayers rescued some of the biggest U.S. lenders, regulators are grappling with how to protect FDIC- insured bank accounts from risks generated by investment-banking operations. Bank of America, which got a $45 billion bailout during the financial crisis, had $1.04 trillion in deposits as of midyear, ranking it second among U.S. firms.

“The concern is that there is always an enormous temptation to dump the losers on the insured institution,” said William Black, professor of economics and law at the University of Missouri-Kansas City and a former bank regulator. “We should have fairly tight restrictions on that.”

Obviously I am not a huge fan of bank regulation, but if the taxpayer is going to insure deposits, then the government has got to set and enforce capital restrictions on how those deposits are invested.  How many times do we have to learn this lesson?  The S&L crisis and the Texas bank collapse of the 1980's was caused by the exact same BS, investing taxpayer insured deposits in increasingly risky investments.

Normally, in a free economy, we expect lenders to enforce rules and discipline on those to whom they lend, just as fire insurers in the 19th century developed the first building codes and inspections to protect their themselves.  But if depositors are insured, they are not going to get worked up too much about BofA -- I am a depositor but I know the Feds will make me whole if the bank crashes.  Deposit insurance provides comfort to depositors and pays some dividends in heading off bank panics, but at the same time it relieves the bank of any accountability for how the deposits are invested unless the US government takes on that role.  Of all the BS regulations financial firms have to put up with, this is the one that should actually exist, and the implication in this article is that despite thousands of pages of new regulation, these basic protections still don't exist.  Sure, they exist in law, but there seems to be nothing to stop an agency from issuing exemptions, and this Administration has shown itself to love giving exemptions.

This reminds me a ton of the AIG bailout.  For some reason, there are a group of Wall Street companies (cough Goldman cough) that seem to have immense political power to protect investments in which they are a counter-party.  To this point, people have been expecting that the BofA holding company might soon fail, but the underlying banks would be fine and just sold off in pretty good shape.  Most of the trash is apparently at the holding company level.

The losers in all this are the counter-parties to these various derivatives, who would rather have a better set of assets to grab if the ship starts sinking.  Of course, they don't have any right to this -- they didn't make these original deals with the depository banks, they made them with Merrill Lynch and other trash BofA has bought.  But never-the-less, the Fed seems fired up to give these guys a special deal.  It reminds me of the Solyndra deal where the Administration allowed certain private parties to move ahead of the US Government on the creditor list, though at least in Solyndra's case these parties actually put some money into the pot for the privilege.  This seems to be a straight giveaway, and it is no surprise that the FDIC is apoplectic.

And he keeps getting re-elected by wide margins.  Unbelievable.  

In a performance worthy of a Mafia don, Sheriff Joe Arpaio dissembled under oath today in a disciplinary hearing for disgraced former Maricopa County Attorney Andrew Thomas, and Thomas' ex-underlings, former deputy county attorneys Rachel Alexander and Lisa Aubuchon.

During more than two hours of questioning, mostly by counsel for the State Bar of Arizona, Arpaio's favorite response was, "I don't recall," which he repeated numerous times.

He asserted that he had delegated all authority concerning the investigations of the Maricopa County Board of Supervisors, county judges, and various other county officials to former Chief Deputy David Hendershott, Arpaio's hand-picked fall guy.

For those who don't live here, I can assure you that at the time, Arpaio took personal credit for everything the department did, using his simply astronomical PR budget.

Here, for example, is one of the key cases Arpaio is being asked to discuss.  He and former county attorney Andrew Thomas waged a war for years against their bosses, the County Supervisors, who frequently had the temerity to try to circumscribe Thomas's and Arpaio's power.  Among other craziness, Thomas, backed by Arpaio, filed a RICO suit against the supervisors.  When a Judge hearing the case, Judge Donahoe, issued some unfavorable rulings in that case, Thomas and Arpaio filed a bribery case against Donahoe, their wacky theory being that since the Supervisors had authorized a new County Court building, this was a bribe to Judge Donahoe, whose court would now be in the new building.  Arpaio claims he had nothing to do with any of this.  Here is his uninvolvement, via the AZ Republic.

Maricopa County Attorney Andrew Thomas on Wednesday filed criminal charges against Gary Donahoe, presiding criminal judge of Superior Court, accusing him of hindering prosecution, obstructing a criminal investigation and bribery.

The three felony charges relate to Donahoe's handling of criminal investigations into county officials, particularly a controversial court tower under construction in downtown Phoenix.

Thomas and Sheriff Joe Arpaio, who stood side by side during a news conference Wednesday, have repeatedly questioned the $340 million joint project of the Superior Court and Maricopa County government.

By the way, it is a nice touch, right out of some place like North Korea, for a prosecutor to bring a judge up on charges for "hindering prosecution" merely for issuing a ruling form the bench which wasn't exactly what the prosecutor wanted.  Its more scary when you consider just how many judges truly are in the tank for local prosecutors.

In the 2012 budget, the DOT will spend about $59.4 billion on highways and $30.2 billion on transit and rail (source).   Highways are getting a smaller and smaller portion of what we think of as the Federal highway budget, with transit and rail spending almost 50% the size of highway spending.  For what results?

Despite huge efforts to get people out of single-occupancy vehicles, nearly 8 million more people drove alone to work in 2010 than in 2000, according to data released by the Census Bureau. Wendell Cox’s review of the data show that the other big gainer was “worked at home,” which grew by nearly 2 million over the decade.

Transit gained less than a million, but transit numbers were so small in 2000 that its share grew from 4.6 percent to 4.9 percent of total workers. While drive alone grew from 75.6 percent to 76.5 percent, the big loser was carpooling, which declined by more than 2 million workers. As a result, driving’s share as a whole declined from 87.9 percent to 86.2 percent.

Though they get less money in absolute dollars, transit and rail have for years gotten wildly disproportionate amounts of money compared to their ridership.  This is not an accident of timing -- rail and mass transit costs per passenger mile are simply way higher than for cars in all but a few very specific high-density urban areas.

Much of this Federal spending is a huge waste of money, made worse by the fact that local authorities who get this money have little incentive to use it wisely.  Its time for the Feds to get out of the transit funding business.  If LA wants more subways, let them pay for it.

Via Zero Hedge:

A key reason why a preponderance of the population is fascinated with the student loan market is that as USA Today reported in a landmark piece last year, it is now bigger than ever the credit card market. And as the monthly consumer debt update from the Fed reminds us, the primary source of funding is none other than the US government. To many, this market has become the biggest credit bubble in America. Why do we make a big deal out of this? Because as Bloomberg reported last night, we now have prima facie evidence that the student loan market is not only an epic bubble, but it is also the next subprime! To wit: "Vince Sampson, president, Education Finance Council, said during a panel at the IMN ABS East Conference in Miami Monday that lenders are no longer pushing loans to people who can’t afford them." Re-read the last sentence as many times as necessary for it to sink in. Yes: just like before lenders were "pushing loans to people who can't afford them" which became the reason for the subprime bubble which has since spread to prime, but was missing the actual confirmation from authorities of just this action, this time around we have actual confirmation that student loans are being actually peddled to people who can not afford them. And with the government a primary source of lending, we will be lucky if tears is all this ends in.

When you mess with pricing signals and resource allocation, you get bubbles.  And one could easily argue that OWS is as much about the student loan bubble bursting as about Wall Street.

I must say that I never had a ton of sympathy for home buyers who were supposedly "lured" into taking on loans they could not afford.  The ultimate cost for most of them was the loss of a home that, if the credit had not been extended, they would never have had anyway.  US law protects our other assets from home purchase failures, and while we have to sit in the credit penalty box for a while after mortgage default or bankruptcy, most people are able to recover in a few years.

Student loans are entirely different.  In large part because the government is the largest lender via Sallie Mae, student loans cannot be discharged via bankruptcy.  You can be 80 years old and still have your social security checks garnished to pay back your student loans.   You can more easily discharge credit card debt run up buying lap dances in topless bars than you can student loans. There is absolutely no way to escape a mistake, which is all the more draconian given that most folks who are borrowing are in their early twenties or even their teens.

I can see it now, the pious folks in power trying to foist this bubble off on some nameless loan originators.  Well, this is a problem we all caused.  The government, as a long-standing policy, has pushed college and student lending.  Private lenders have marketed these loans aggressively.  Colleges have jacked costs up into the stratosphere, in large part because student loans disconnected consumers from the immediate true costs.  And nearly everyone in any leadership position have pushed kids to go to college, irregardless of whether their course of study made even a lick of sense vis a vis their ability to earn back the costs later in the job market.

Public service note:  Their are, to my knowledge, five colleges that will provide up to 100% financial aid in the form of grants, such that a student can graduate debt free:  Princeton, Harvard, Yale, Stanford, Amherst.  These are obviously really hard schools to get into.   I don't think a single one has a double digit percentage admissions rate.  But these are the top schools that hopefully establish trends.

I am thrilled my alma mater is on the list.  For years I have argued that they were approach severe diminishing returns from spending tens of millions of dollars to improve educational quality another 0.25%.   If an institution is really going to live by the liberal arts college philosophy -- that a liberal arts education makes one a better human being irregardless of whether the course of study is easily monetized after graduation -- then it better have a way for students who want to join the Peace Corp or run for the state legislature to graduate without a debt load than only a Wall Street job can pay off.

By the way, my other proposal for Princeton has been this:  rather than increasing the educational quality 1% more to the existing students, why not bring Ivy League education to 3x as many students.  I have always wondered why a school like Princeton doesn't buy a bunch of cheap land in Arizona and build a western campus for another 10,000 kids.

My son and I spent the last year touring colleges.  One common denominator of all the good and great private colleges:  they are all over 100 years old.  Rice was probably the newest, when a rich guy toured the great colleges of the world and thought he could do as well, and started Rice  (Stanford is older but has a sort of similar origin story).  Where are the new schools?  The number of kids with the qualifications and desire to go to a top private college have skyrocketed, and tuition have risen far more than inflation, but there is no new supply coming on the market.  Why is that?

From my column today at Forbes.  An excerpt:

A number of smart folks on the Left, who have never and would likely never do something so crass as actually participate in a productive enterprise, have argued that complaints about regime uncertainty by business people is all so much whining.  The problem, they argue (not without some truth) is with demand -- if business people were being presented with profitable market growth, they would invest to capture it, irregardless of the President's personal disdain for business people.

And yes, given that scenario, they would likely invest.  But would they hire?

Already, the true cost of an employee dwarfs what is on his or her paycheck.  Bad employees are increasingly difficult to hire, as employees immediately run to the eager, waiting arms of an attorney when they are fired for cause.  But if one doesn't fire a bad employee quickly, he or she is a walking liability time bomb, with my company liable for any boneheaded action an employee might engage in.    With rising minimum wages, family and medical leave laws, an increasing number of protected groups who will sue over any bad outcome -- is it any wonder we have jobless recoveries?

This is from 1906.   Most records show that glaciers have retreated since around 1820 right up to date.  Those who want to blame retreating glaciers today on man-made CO2 have to first explain why the natural retreat from 1820 to about 1955 ended natural somehow at the exact moment that manmade Co2 took over.

This is part of a retrospective of such articles over the last 100 years here.

Nice work with the colorizing, though its maybe a tad saturated for my taste.  Source

As a reminder, I do not moderate comments.  This means that the comments section is entirely an open forum and its contents do not necessarily reflect my opinion on anything.  Just because I leave a comment up does not mean I accept it in any way, since, just to repeat myself, I don't moderate comments.

Cafe Hayek has a nice post that reflects feelings on the subject I mostly agree with,

Megan McArdle gives 8 reasons why people might not have personal servants any more, even if they are rich enough to afford them.

The interesting part is that seven of the eight (all but #6) apply just as well to any business who might be hiring, and go part of the way to explaining why we have jobless recoveries nowadays.

Megan McArdle looks into where all that green seed capital is going.  It turns out it is going the same place most other government "investments" go -- to large, well-connected companies who don't actually need the money but will sure appreciate it come election time.

But I have highlighted what jumped out at me: most of the money has gone to enormous companies that should have no trouble accessing capital.  Established utilities, large multinational auto manufacturers, a global warehouse owner.  The bulk of these funds are not going to rectify some gap in the capital markets.  They're straight subsidies to huge corporations.  Even some of the smaller firms/deals are owned by large corporations like Total SA.

Giving large, established companies extra-cheap loans to build power plants, run transmission lines, and fix up the roofs of their warehouses is, in the immortal words of P.J. O'Rourke, like paying a Dairy Queen owner to keep his ice cream freezers on.

I am curious why one would create a windfarm where the majority of the generators are right in the turbulence / wake of another windmill?  Wouldn't you want to stagger these?

An interesting story about the background of the real "Sybil," and how much of her personality problems were the result of aggressive third parties trying to make their career -- totally unsusprising to anyone who has studies the great child abuse / day care hysteria and JaneyReno's Miami method.  A very brief excerpt:

Mason, like so many patients diagnosed with multiple personality disorder (now rechristened “dissociative identity disorder,” in part to shake the bad rep of MPD), improved markedly under certain conditions — namely, the absence of her therapist. For several years after her therapy concluded, she lived happily as an art teacher at a community college, even owning her own house. But the publication of “Sybil” destroyed that life; Schreiber, who had invented so much of her biography, had so thinly disguised other details that many acquaintances recognized her. Too self-conscious to endure this exposure, Mason fled back to Wilbur and lived out the rest of her life as a sort of beloved retainer, cooking her doctor breakfast and dinner every day and nursing her on her deathbed.

Wilbur, on the other hand, thrived, presiding over the explosion of MPD diagnoses as one of the foremost experts on the condition. She played a key role in promoting the belief that conspiracies of fiendish, sadistic adults were secretly perpetrating murder, child rape and mutilation, human sacrifice, and cannibalism across the country and that repressed memories of such atrocities lay at the root of most MPDs. Innocent people were convicted of these crimes on the basis of testimony elicited from highly suggestible small children and hypnotized adults. Families were sundered by therapists who convinced their patients that they’d suffered similar ordeals despite having no conscious memory of it. This opened the door to years of expensive and ineffective therapy.