Monthly Archives: January 2010

Profile: Who's In and Who's Out

We are spending a lot of time talking about profiling.  Who should be profiled and who shouldn’t.  There’s even talk about NOT profiling at all.

I have to wonder why.  Why would we NOT use all the information we have?

For example, without even talking about nationality, race, religion or sex we could profile on:

  1. One way ticket purchases bought day of.
  2. One way ticket purchases bought with cash.
  3. Passengers boarding without either checked or carry on luggage.
  4. People who are on ANY watch list.
  5. Passengers who board International flights WITHOUT passports.
  6. If the age of the passenger is between 17 and 40, bump up suspicion quotient.
  7. If the passenger is boarding without family, bump up suspicion quotient.

Then, after building a list of who we SHOULD profile, we could build a list of people we could rule OUT:

  1. Anyone aged 65 or more.
  2. Anyone aged 18 or less.
  3. Women traveling with children.

There is a LOT more that we can do.  There is more we SHOULD do.

War on Terror

Brad and Britt opened the New Year with an interesting question this morning:

Is President Obama serious about the War on Terror?

Good question.

My take and short answer?

I don’t think that he thinks this is a War.  I think that he views this as a criminal matter.  As such, he feels that the method or path to resolution is diplomacy first and foremost with any type of military action secondary; if even secondary.

My reasoning for this?  The fact that he prohibits the term “War on Terror”.  He won’t even call it war.

Further, I think that Obama is more of a Social ills kinda guy.  I think the things that keep him awake at night, and hold his interest, are things like reducing homeless, fighting poverty and extending rights to all people regardless of color, race, religion……

I don’t think that international diplomacy, national defense and terrorism are in his natural DNA.

Is this bad?  I dunno.  Is it good?  Again, I dunno.

All I DO know is that Obama doesn’t think that we are at war and he doesn’t think this is as important as I wish he would.

What NOT to Teach Your Children

When raising children, I find that explain “mine” and “yours” is critical.  It becomes a point of strength when trying to instill charity, compassion and respect later on.  After all, you are unable to GIVE something that isn’t YOURS to begin with.

However, like many things in life, what we teach our kids are things that we don’t expect our government to live by:

NEW YORK (Reuters) – The attorney general for Washington D.C. has filed a lawsuit against an AT&T Inc unit, seeking to recover consumers’ unused balances on prepaid calling cards.

The suit claims that AT&T should turn over unused balances on the calling cards of consumers whose last known address was in Washington, D.C. and have not used the calling card for three years.

“AT&T’s prepaid calling cards must be treated as unclaimed property under district law,” the attorney general’s office said in a statement.

So, I buy something from someone, choose not to use it.  Or lose it.  And the selling party has to give the money back to me the government?

How do you even begin to explain that to your kids?

Hard to See This Coming

In an effort to curb banks from “predatory lending” and “profit taking”, Washington lawmakers enacted legislation that our Dear Beloved Leader signed into law.  Basically the new law makes it harder for banks to raise rates it charges folks who fail to make payments.

First, I often find it hilarious when groups of people chastise banks or lenders for trying to make money for “selling money” or lending money to people.  Especially when these people fail to pay that money back.  Fail to pay it back either “on time” or “at all”.  As if these lending institutions exist for the sole purpose of handing out discretionary money.  At times likes these, I always ALWAYS trot out my favorite “put your money where your mouth is” argument.  { by the way, didja catch that pun?!?  money where your mouth is? }.  If someone you know, or even if it’s you in this situation, think that people, banks or institutions should lend money without regard to being paid back, go to prosper.com and lend your own money to people who can’t afford to pay it back.  This is the perfect opportunity.  You don’t have to be a fancy shmancy bank with billions of dollars.  Even a couple hundred bucks would be appreciated.

Okay, back to the point.  When banks are restricted in their ability to sell their product to a group of people, they will react by:

  1. Stop selling that product
  2. Charging the non-regulated customers more for the same product
  3. Like the force of water, work around the obstacle

In this case, the banks choose option #3:

(AP) It’s no mistake. This credit card’s interest rate is 79.9 percent.

Typically, the First Premier card comes with a minimum of $256 in fees in the first year for a credit line of $250. Starting in February, however, a new law will cap such fees at 25 percent of a card’s credit line.

In a recent mailing for a preapproved card, First Premier lowers fees to just that limit – $75 in the first year for a credit line of $300. But the new law doesn’t set a cap on interest rates. Hence the 79.9 APR, up from the previous 9.9 percent.

The new law restricts the fees for selling money.  So, in response, the banks just raise the rate of interest.  Awesome.

But even with these new rates, does a credit card appeal to certain people?

As harsh as First Premier’s terms seem, that could be a blow to those who rely on the card, said Odysseas Papadimitriou, CEO of CardHub.com.

“Even when the cost of credit is astronomical, for people in true emergencies, it’s much better than not having access to credit,” said Papadimitriou.

Sure.  In fact, for some people, even at these rates, the borrowed money passes the marginal value threshold.  Then again, so did the flat rates the government restricted.

Where Are All the Jobs Going?

When we look backwards, it’s easy.  We see that as we lost steel working jobs and coal mining jobs to various other countries around the world, we found other more value added jobs here.  We became technology leaders in fields such as IT and medical care.

However, looking forward is much harder.  Both in vision and on the soul.  We literally can’t see the type of industry that we will identify and advance in.  That industry that will provide the new jobs of tomorrow.  Further, we view tomorrow with trepidation wondering what role this new world order has in store for us.

It’s valid.  Life is somewhat hard.  It requires grown up planning and grown up work.  It requires sacrifice, often times significant.  But fear can not stop advancement.  And advancement initiates creative destruction.  My advice; learn smelting.  Because stone is a thing of the past:

Hat tip:  Mark Perry at Carpe Diem

"This One Time…..In Band Camp…"

I’m relatively new to really REALLY watching politics.  I guess, in the past, I didn’t care.  Mostly I was single, renting and didn’t make enough money to care about taxes.  The last decade has seen that ALL change.  I am no longer single, I have children, own a home, make more money and am seriously considering starting my own business.  I also spend more time at home than I used to spend before all the changes aforementioned.   Combine this with the very compelling story of last year’s election; first time in many years that a  President or Vice President wasn’t running, and you have good drama.  AND we would have the opportunity to see America’s first woman or black Presidential candidate.  All good political drama.

Back to my point.  I am really pretty new to political theater.  So, maybe as I say this, it’s really not so unusual.  Could even be par for the course.  But to me, this is absolutely stunning.  Not only in the hypocrisy of it all, but in the sheer ignorance of any semblance of economic thinking.

WASHINGTON (Reuters) – The Obama administration pledged on Thursday to back beleaguered mortgage finance giants Fannie Mae and Freddie Mac no matter how big their losses may be in the next three years.

Serious?  Banks are paying BACK their TARP funds and these guys are asking for, and getting, more money?  At least they’ll have to be smart in their use of it, right?

It also jettisoned a demand that the two companies cut the size of their mortgage-related investment portfolios next year, allowing them to provide even more support in the near term for a housing market recovering from its worst slump in decades.

Nope.  Business as usual; continue to sell money to people who can’t afford it.

So, how is it that some businesses are capped and controlled and can’t WAIT to get out from under government control while others seem unable to even WANT to get out?  Is it political or is it simply a way of life?  Is it really possible that the Obama administration is giving political favors to supporters or, perhaps, does he simply think that a fascist* banking system is the most effective method by which to establish financial systems?

The Treasury’s announcement came just hours after the companies said their chief executives would be paid up to $6 million on an annualized basis for 2009.

Fannie Mae and Freddie Mac are congressionally chartered companies that buy up mortgages from banks and other originators to keep mortgage markets liquid. Some of the debt is repackaged as securities and sold off to investors, and the government has been buying an increasing share.

Sadly, for Liberty loving people, it would seem that the answer is “Both”.  Obama is both paying political favors, $6 million to the CEOs, AND feels that economic fascism is the preferred method of financial systems.

Like I said, I am new to this.  Maybe this is business as usual.  But from the cheap seats, this is ugly.

*   From wiki:  Fascists promoted their ideology as a “Third Position” between capitalism and communism.  Italian Fascism involved corporatism, a political system in which the economy is collectively managed by employers, workers and state officials by formal mechanisms at national level.  Fascists advocated a new national class-based economic system, variously termed “national corporatism”, “national socialism” or “national syndicalism”.  The common aim of all fascist movements was elimination of the autonomy or, in some cases, the existence of large-scale capitalism.

Fascist governments exercised control over private property but did not nationalise it. They pursued economic policies to strengthen state power and spread ideology, such as consolidating trade unions to be state or party-controlled.

HealthCare: Price vs. Cost

I wish that I could say that I said it.  But I didn’t; Mr. Munger did:

Right now, our attempts at reform are doomed by a law of accounting physics: Insurance can’t cost less than the health care it insures.

Consider: I have car insurance. But my insurance doesn’t pay for oil changes.

Instead, I go down to the Happy Lube, without an appointment, get a diagnosis of the needs of my car, and choose services based on a price list published online. Some of these services are complex, and require large expensive machines and equipment. But I don’t have to pay a separate bill, or go wait in another line, at another office or lab.

… compare it to car insurance, for two people. Imagine neither of us has to pay for our car repairs, from accidents or engine wear. We can go to the garage as often as we like, and get whatever service we want, for free. The car repair shop can charge our insurance whatever they want, because insurance pays everything. An oil change would bill out at $600; an alignment would bill our insurance $2,200, with another $800 tacked on to pay for micro-digital wheel axis imaging.

Of course, the services aren’t really free. At the end of every year, we sum the total repair costs for both people, and each of us pays half of that total.

The cost of that free car care would be enormous, because of all the unnecessary and overly expensive charges. Of course, the government could subsidize the final bill; would that help? The answer is no, for two clear reasons.

First, having the government (meaning taxpayers) subsidize the total would do nothing to reduce the runaway cost increases. Buyers won’t shop around if they don’t know or care about real costs. Subsidies mean I don’t pay if I spend, and I don’t save if I’m frugal.

Second, let’s expand the example from two people (each paying half) to 300 million people getting free care (but paying an equal share of total costs). We have met the public option, and it is us! Once we are all paying ourselves, there is no one else to hit up to help with the costs. We are simply taking each person’s money in taxes, then giving some of it back in subsidies. There is no saving, even to individuals.

Just good stuff.

Tarheel Red Favorite

I really enjoy reading and listening to Mike Munger.  Mr. Munger is a professor of economics and chair of the Political Science department at Duke University.  He was also the Libertarian candidate for Governor of North Carolina in 2008.  Further, I LOVE reading reason.com.

Mixing the two is always good pleasure:

…will they burn the castle of the Al Franken monster in Congress, or will they join Sarah Palin and her populist following and simply go RINO (Republican In Name Only) hunting? The point is that we could be heading toward 1994 all over again. Or toward 1964. The tea leaves are there for the reading. Either way, it should be interesting.

Interesting indeed.  And a worthy read.