Tag Archives: economy

Predators and Prey

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White-topped Pitcher Plant

White-topped Pitcher Plant

Pitcher plants are carnivorous plants whose prey-trapping mechanism features a deep cavity filled with liquid. This is known as a pitfall trap. Insects such as flies are attracted to the cavity formed by the cupped leaf, often by visual lures and nectar bribes. When moistened by condensation or nectar, the rim of the pitcher is slippery, causing insects to fall into the trap. Liquid contained within the pitcher traps drown the insect, and their bodies are gradually dissolved. This particular Pitcher plant was found in the Mediterranean House at the Missouri Botanical Gardens.

Speaking of prey, Commerce our everyday bank, has settled a class action lawsuit and Dave, Anne and I are in their preyed upon class. According to the notification that we received, Commerce improperly posted debt card transactions from highest to lowest dollar amount to increase the number of overdraft fees charged to customers. We three have all been negligent of not studiously monitoring our bank account balances, but I can remember one weekend trip from Rochester to Toronto that Dave made. He had miscalculated his available funds, but because he was on holiday he was freer than normal with his debit card. There were several hundred dollars in overdraft fees and all for a sum total that was less than a single fee. Here is an example; Dave would purchase a candy bar for $1.39. Commerce charged a $25 overdraft fee for that transaction. We’re not done though; because this was an international transaction a few cents transaction fee was also charged, along with its own $25 overdraft fee. This pairing was repeated way too many times and all for less overdrawn money than a single overdraft fee.

The bank robber, John Dillinger was once famously asked why he robbed banks. “Because that’s where the money is”, was his reply. Dillinger used guns to steal with, but his theft only ran into the thousands. According to our notification, Commerce is on the hook for $18.3M in settlements. 30% of this settlement goes to the lawyers, but that still leaves over $12M in damages. Our actual damages were not so great, but if there are also punitive damages, cha-ching!

Let Toonces Drive

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Beaded Jaguar

Toonces, the Driving Cat is a fictional sketch character from Saturday Night Live. Created by SNL writer Jack Handey, Toonces was the family pet of Lyle (Dana Carvey) and Brenda Clark (Victoria Jackson), a couple who would allow their cat to drive the family car. At first, they were delighted that their cat had such an ability, but were always horrified to discover (too late) that Toonces was actually not a good driver. Inevitably, Toonces would drive the car over a cliff. This sequence was characterized by someone in the car yelling “Toonces, look out!”, followed by stock footage of the car sailing off a cliff. – per Wiki

Obama wins the election, the stock market pulls a temper tantrum and Republican congressional leadership returns to the mike after remaining silent for months. A lame duck session of Congress is in the offering, with the main agenda item on the table being the fiscal cliff.

The so-called fiscal cliff is really a series of escarpments. Broken down this precipice encompasses several parts. First, there is sequestration, the compromise from last year’s debt ceiling deal. Sequestration would cut the federal budget, but the main complaint about it is that it will cut as with a maul and not with the prefered scalpel. Second, are the payroll tax cut that were implemented to stimulate the economy and an extension to unemployment benefits. Finally, there are the Bush-era tax cuts.

It is generally agreed that allowing all of these tax and spending changes to occur would be a bad thing. It could possibly lead us back into another recession. There is the rub though. As a loyal American only wishing the best for my country I would whole heartedly endorse such a deal. Except that we will be dealing again with the very same tricksters, who for the past two years have done nothing, except to our obstruct government.

Once you have them by the balls, their hearts and minds will follow – Chuck Colson, Nixon consul

The Republicans have proved themselves way too adept at spinning these sometimes too arcane financial debates. The Democrats just can’t seem to hold their own water when it comes to debates like this. I have a simple prescription, let Toonces drive. Let’s dive off this fiscal cliff. Come late January, when the new Congress is sworn in, they can address these problems properly.

Except they won’t be the same problems. The Democrats won’t be arguing to raise taxes on the rich that will have already been done. Instead, the Dem’s might even exceed to an upper class tax cut, albeit a small one. Budget cuts will have been already made, we will just leven them with some intelligence. We’ll want to cut middle class taxes too. The markets will gyrate, but in the end rebalance. Is this not a Grover Norquist dystopian future?

To the more milk toast of my Demo brothers and sisters, I offer the following sop, Toonces in a happier younger time. I also want to offer a belated Happy Birthday to Dr. Alice. This blog has totally gone to the dogs. I mean cats.

Seattle Ferris Wheel and Cranes

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Seattle Ferris Wheel and Cranes

I went to Micro Center on Sunday. Women, don’t ever let you man go to Micro Center unescorted. Micro Center is a warehouse sized consumer electronics store with a twist. The twist is that the help all works on commission. Like I said, don’t let him go there alone. I went there with the intension of just buying two wireless mice. Our desktop’s mouse had lost its thumb wheel and the laptop’s was totally kaput. I have been buying ‘cheap cheap’ $8 mice, but they just don’t last. This time I selected two $30 Microsoft mice. So, I got out of there for $60, right? Wrong! Ladies, I was not kidding around.

Before I left home, I had been doing some file backups. My backup drive ended up being 98% full, while my main hard-drive only had a few percent more left. Back in December hard drives were exorbitantly expensive, something about typhoons in Thailand. Trust me on this, I leaned it at Micro Center. This time around, they were not so pricy. I bought a two terra-byte drive and escaped for under $200. What did I say about men and Micro Center?

Mister Ferris’s first wheel appeared at the 1893 World’s Columbian Exposition in Chicago. It was subsequently moved to the north side of Chicago, before it reappeared at the 1904 Worlds Fair in Saint Louis. At the end of that fair, it was dynamited on site. Its remains, in particular its ten-ton hub was buried somewhere in Forest Park.

Drifting South at $40B/Month

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Lopez Island Driftwood

The Dow Jones industrial average spiked more than 200 points on Thursday and cleared 13,500. This brings this index to within 625 points of its all-time high. What prompted yesterday’s rally was Ben Bernanke’s announcement that the Federal Reserve would commence QE3. QE or Quantitative Easing is a Fed program that buys equities in order to boost liquidity in the markets. In practice this means that the Fed buys assets that no one else will and prints the money that it uses to make these purchases. The number three pertains to the fact that this is the third such program that the Fed has embarked upon.

The Fed has run these three QE programs because; TARP and the stimulus program were insufficient to pull the country out of the Great Recession. That and since 2010 the Republicans have been unwilling to support any further economic recovery measures, shutting down any legislative remedies. The Fed’s QE programs represent a backdoor stimulus, a door that was left open by Congress a hundred years ago.

The only problem with the Fed’s efforts is that it is primarily benefiting the banks, the same banks that precipitated the recession. The big banks have taken the money from the Fed, pocketed it and used these taxpayer dollars to fatten their balance sheets. They were supposed to lend out this money and generate business. Greedy bankers pocketing the money, go figure. Since banks figure prominently in the Dow, it shouldn’t come as too much of a surprise that more Fed money leads to higher stock prices. The Fed doesn’t have too much choice in this though; because its charter limits it from doing more. That is the providence of Congress.

This is an election year and any Fed involvement becomes highly political. These QE programs have been characterized as a sugar rush for the markets. This one is different then its predecessors. It is open-ended. The Fed will pump $40B a month into the market, for as long as it takes. IMHO, I view this move by the Fed as a throw down for Obama. Bernanke has already cast his November vote. QE3 won’t affect the jobs numbers before the election, but it will provide a floor for the markets, a cushion in the event of an October surprise.

Surfing the Winds of Change

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Bay Area Wind Surfers

A year and a day or two ago the Perma-Bear wrote a note to me on a Post-It note. It said, “Ask [me] about Starbucks Indicator”. It also set the date to ask this question, September 2, 2012. That date fell in the middle of this year’s Labor Day weekend, so I’ve delayed until now to do as I was requested. Consider it asked.

For the casual reader, let me add a bit of background. In the depths of the winter of ’09, I could walk into my neighborhood Starbucks coffee shop, saddle up to the register and immediately place my order for a Grande Latté. There was no line, there were no other customers in the store, there was just me, Aaron, the store manager and his two associates. This ritual was repeated often enough for its innate strangeness to finally permeate the consciousness of my un-caffeinated brain. Kudos to Starbucks for keeping this staff through the depths of the Great Recession.

Though 2009 and 2010 I noticed a gradual change. Customers began to reappear. A veritable line began to form. I actually had to queue to place my order. It was about this time that I coined my version of the ‘Starbucks Index’. Others had preceded me, but I believe that mine is still unique. Simply put, I count the number of patrons ahead of me in line when I enter the door. Customers will race each other to the front door, but past that portal it is all courtesy and grace. It is both a simple and easy measurement. I noticed and would report that the line continued to grow.

Then came the summer of 2011 with its political bickering and market down turn, I marched into work on the first Friday in September, full of bravado and tossing off claims of how great my Starbucks Index was that morning. This must have ticked the Perma-Bear off, because he wrote the note. You see folks; the Perma-Bear is a student of history. He has read the histories of the Great Depression. Both Hoover and Roosevelt struggled mightily to right the economy then. Save the advent of World War II, who know how long those struggles could have gone on.

A year has passed since the note was written. The economy has not tanked, the past has not been revisited. Between now and then the DOW has increased 2,000 points. The S&P has matched pace. With 20/20 hindsight one can see that the note was written at the nadir of a minor correction. With all this exposition I don’t really expect a response. I’m just glad that he was wrong.

Shorting America

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Helicopter Ben Bernanke, Chairman of the Federal Reserve Bank, in concert with the world’s other major central banks, stepped up to the bar and took action this morning. Worldwide, markets reacted positively to this sign of spine, actually, as Alan Greenspan might say, reacted with irrational exuberance. Whatever, the DOW climbed almost 500 points and all major indices were up a similar 4%. We here at RegenAxe are proud to announce that we have scooped the rest of the blogosphere. We have here a recording of Big Ben’s helicopter as it descended low over Zuccotti Park and hovered as Wall Street traders poured out from the surrounding buildings and let their cheerful voices be heard, almost drowning out the sound of the rotor blades. OWS (no octopi today) protesters were overwhelmed by the crushing onslaught of three-piece suits.

Irrational exuberance aside, not everyone was happy with the Fed’s surprise action today. Short sellers got caught with their pants down. They awoke to find the Fed holding on to their short hairs and in short that is not a pleasant position to find oneself. To them I say too bad, cry me a river. The stock market was intended to be a mechanism for corporation to raise capital, by publicly trading shares in themselves. It was never intended to be a Las Vegas style gambling house, where parasite investors can bet against American companies, nay the United States itself. It is alright to be a bear on Wall Street, if you believe that the market is in a downturn. Markets go up and they go down that’s what markets are supposed to do. Go ahead and sell. It is not alright to act bearish, if you do so to the detriment of the marketplace and for your own perverse gain. Various brokerages have or will pay fines for selling dubious securities and then turning around and betting against their own customers. This is an example of illegal activity, but on the sliding scale of human morality there is also immoral activity and that is where I place the practice of short selling. Just because you can place the bet, does not mean you should, “22, 22, 22, …”.