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View From a Height

Commentary From the Mile-High City

Last Build Date: Wed, 08 Jul 2009 09:23:35 -0700

Copyright: Copyright 2009

As if...

Wed, 08 Jul 2009 09:23:35 -0700

there weren't enough to do already, Yes, I spent the day listening to the Fiscal Stability Commission, and what a swell surprise it was.  More on that later.

As I was saying, as if I didn't have enough to do already.  In advance of the Great Wagon Train West, we're having the wall repainted and the floors resurfaced.  And since having furniture against the walls (and yes, on the floor) makes it hard on the workmen, I've now got to pack the house up.  It's weird packing up without moving, and it's going to be weirder living in a packed-up house for a couple of weeks without unpacking.

In the meantime, I've now also got the Wagon Train to plan.  We'll stick to interstates, since I'm reasonably sure that the truck will make it through all the underpasses, and for speed.  Normally I like to dawdle on these sorts of trips, take the side roads, see the World's Largest Iguana intestine, keep and eye out for Muffler Me, that sort of thing.  But we've only got three, maybe three-and-a-half days, and we need to get over what pass for mountains back east.

Still, this will be the fourth time I've moved a household to/from the east coast from/to Denver, and I like to take different routes.  So we'll probably swing down through Memphis, then cut back up take US-50 across Kansas and eastern Colorado.  Who knows, maybe one night we'll sleep in a wigwam or something.

To boot, Shamash tells me that I don't have much to look forward to in the way of kosher restaurants, either.

In the meantime, I still have pictures from the last time to post, sound files from today to edit, and oh yes, boxes to pack before I sleep.  Plus the County party website to upgrade, and maybe a little blogging about our impending budgetary instability, and maybe about PERA's, ah, interesting financial report.

Where do I go to request another 8 hours a day?

The Youth In Iran

Fri, 19 Jun 2009 08:48:58 -0700

My friend, Ana Sami, wrote a piece for Al Arabiyah prior to the Iranian elections, discussing the role of the youth there.  Given that university students have been both the focus of government attacks, and the main, on-the-street, Twitter-assisted organizers of the stree protests, I thought it was worth highlighting this paragraph:

A noteworthy implication of Iran's youthful population includes timing. Currently, Iran's population while now old enough to understand and participate in politics, cannot be held accountable or claim loyalty to a government they never chose. While their parents' generation cannot be held fully responsible for what was to become of the revolution, they can at a minimum claim political participation and activism to change a way of life they knew and rebelled against.

The bold reactions and content of criticism surrounding the candidates from within Iran's youthful population is striking considering previous protests and the consequences that followed.

Read the whole thing here.

The Wrong Direction

Thu, 18 Jun 2009 16:57:49 -0700

That Heritage Foundation chart, with the CBO's preliminary scoring of the Senate's health care bill.  (Hat Tip: Keith Hennessey)


The Siren that Cried Wolf

Sun, 14 Jun 2009 15:32:28 -0700

My house is about 100 yards from the local tornado siren.  It's gone off three times in the last half-hour, and it's totally inaudible from most of the house (except perhaps to the dogs.  More than that, no funnel clouds.

Now, I say this with some mild disappointment, but mostly with frustration.  I'm happy the windows block out so much sound, but you'd think that a tornado siren on a busy street would come through better than a typical car horn.

More than that, if you really want people to head for their basements with their pets, government-mandated water bottles, hand-cranked radios, and all that ammunition they've been hoarding, then don't blow false alarms.

Calling Victor Davis Hanson

Thu, 11 Jun 2009 22:07:22 -0700

Of all the calumnies hurled against Israel, perhaps the most damaging is the claim that its self-defense measures showhow equate with its being an apartheid state.

In 1999, Victor Davis Hanson wrote The Soul of Battle, which described the marches of three great democratic armies to destroy apartheid states.  The Theban Epaminondas detroyed Spartan society and freed the Helots.  Sherman wrecked the Southern economy and exposed its internal contradictions, while freeing the black slaves.  And George Patton detroyed the Nazi state's ability to wage war, and could have prevented the Soviet takeover of central Europe had he been allowed to get there first.

Hanson notes that the unique quality of the armies is matched by the particular enmity that democracies have for apartheid societies, and their massive, collective injustices.

While Barack Obama and Condoleeza Rice may not have intended to compare the Israelis to Southern slaveholders or segregationists, by comparing the Palestinians to American Blacks, they have guaranteed that the Arabs will do just that, and with renewed gusto and confidence.

By virtue of his particular work and his strong moral sense, as well as his understanding of how the real world works, Prof. Hanson may well be uniquely qualified to rebut such charges.

How about it Professor?

Virginia's Governor's Race is Set

Tue, 09 Jun 2009 18:00:26 -0700

Mostly because they're off-year elections, I still slightly follow politics from my former home state of Virginia.  This year, the Democrats had a contested gubernatorial primary, and come-from-behind (literally) candidate Creigh Deeds seems to have run away with the nomination.  Deeds will try to beat Republican Bob McDonnell, who's the odds-on favorite in the general election.

If he succeeds, he'll be the first Democrat governor elected in Virginia while the Democrats also held the White House since Mills Godwin in 1966. 

Interestingly, Godwin is also the last Republican to have been elected Virginia governor during a Republican presidency, getting elected again in 1974. 

Virginia governors can't succeed themselves, and Godwin was the first governor to win non-consecutive terms since William Smith, twice a war governor.

Wildlife and Us

Tue, 09 Jun 2009 14:18:21 -0700

Worth keeping in mind as Denver tries to tell us to coexist with the Coyotes.  We've seen this movie before with other animals.

Scientists and outdoorsmen began to warn of danger, but they were ignored by both the Boulder public -- which was sentimentally attached to the idea of free-roaming wildlife -- and state wildlife-protection bureaucrats, who downplayed first the presence, and then the danger, posed by the cougars. Dogs and cats started being eaten, cougars started threatening people, and yet meetings on the subject were dominated by people who "came to speak for the cougars."

CFA Level II Post Mortem

Mon, 08 Jun 2009 22:06:24 -0700

Saturday was gorgeous.  So naturally, I assumed that Sunday would be the same, and that I'd be spending a perfectly beautiful Colorado day inside taking a test.  I needn't have worried.

In the meantime, a few observations:

1) It's a ton of material to cover.  It doesn't cover any more breadth than the Level I, but with fewer questions, there are fewer opportunities to make up an gaps with other questions.

2) There's much less calculation than in the Level I.  More of the questions are qualitative, and of the questions that do require calculation, the arithmetic is usually pretty straightforward.  While the Level I might ask you to calculate a NPV or the value of an annuity or depreciation based on double-declining balance, most of the work here is in recognizing the type of problem and setting it up.  You could probably do the math with a slide rule.

This means that:

3) More of the questions - although not all - of the the know-it-or-not variety.

4) There are three choices instead of four.  This makes is harder to sneak in the two-for-one questions: A and B, A not-B, B not-A, not-A not-B.  And yet...

5) They still manage to do so, along the lines of, "under the so-and-so theory of capital allocation, Mrs. Smith should put what percent of her money in Amalgamated Congoleum?"  You need to know what the theory is, what it says about this specific calculation, and then you need to do the computation.

In short, it's not just a knowledge test, it also requires you to put pieces together.

I do know I did better than last time, but whether I did well enough to pass, well, we'll find out in a about 2 months.  The monks grind slowly, but they grind exceedingly small.

Blog Talk Radio

Tue, 02 Jun 2009 19:10:30 -0700

This evening, we'll be interviewing Evergreen businessman Dan Maes, Republican candidate for governor here in Colorado in 2010, and businessman Cleve Tidwell, who's facing a three-way primary (so far) on the Republican side in the race to take on interim Senator Michael Bennett.

Colorado's a red state gone bad blue, and it's a pivot state for the West and the rest of the country.  We'll be talking about the candidate's plans to counter the Colorado Model and start taking the state back for the Republicans.

That 10-Year Spot

Wed, 27 May 2009 21:27:53 -0700


A couple of things. First, we've been in a declining long-term interest rate environment for a long time. This is a huge plus for the economy is a number of ways, large and small. Second, that time is probably over. It doesn't necessarily mean we're headed for a period like the mid-50s to the mid-70s, but there just isn't much room for rate to decline, even if they wanted to.

Third, rates are still at historic lows, and we've seen quick increases even during the last 20 years when the trend was down, so there's not necessarily reason to panic just yet.

Fourth, the middle part of that graph should remind us all just how quickly things can get out of control.

CFA and Hedge Funds

Wed, 27 May 2009 21:16:05 -0700

The CFA unfortunately doesn't have much helpful to say about evaluating hedge fund performance.  You'd like to see if there's any alpha there, but the best they can offer is a series of variations on the CAPM theme, where alpha's what's left over after you've subtracted out the Betas for whatever you want to qualify as a risk factor.

If I believed in CAPM this would be alarming for its arbitrariness.

About Those Interest Rates

Wed, 27 May 2009 20:45:52 -0700

The Chinese, the major purchasers of our debt, have been getting increasingly antsy about the possibility that we might monetize our debt, or start playing Weimar Germany to their France & England.  Those nerves have been blamed for the recently rising spot yield for 30-year Treasuries, and the increasing doubt attending to recent Treasury auctions.

There may be another possibility.  The Chinese have been funding this debt in part because they hope that a stimulated and recovering American economy will help drag their export-driven economy out of its own slump.  However, their own Keynesian stimulus has been subject to the same sort of inefficiencies and failures that have been predicted for ours here:

The report "has some substantial findings," said Xianfang Ren, an analyst with IHS Global Insight. She said the issues it raised -- funding delays and not enough stimulus for small- and medium-size enterprises -- are big problems that have long been suspected. The report also raised the matter of speculative bill financing, which occurs when borrowers use loans not for working capital but to buy stocks or speculate in other assets.
China has begun issuing rules to try to prevent this, but Fitch has begun sounding warnings about Chinese banks' balance sheets:

In a report on China's banks published Thursday, Fitch said it is seeing warning signals from the Chinese banking system. Chinese lenders have been downgrading more "special mention" loans, those that are considered about to default, to nonperforming status, marking them as bad debt, said Charlene Chu, a senior director at Fitch Ratings China and an author of the report.

Chinese banks also have been increasing provisions for losses on unimpaired loans, indicating that "the banks themselves see greater losses down the line in loans that are currently performing," Ms. Chu said.

The report added to earlier warnings from the credit rater that lending quality in China is weakening.

This, even as HSBC and Citigroup scale back their lending in China.

Could it be that China is now worried that it might need to shore up its own banks' balance sheets, and is holding back money for that purpose?

Dispelling Myths

Tue, 26 May 2009 12:45:06 -0700

Douglas Ross over at Red Alert took a first pass through the political contributions of the Chrysler dealers who are losing their franchises, and noticed that virtually none of them contributed to Obama; that those who did contribute heavily favored Republicans, and that the ones who contributed to Dems at the Presidential level like Hillary.  So he asked if this might constitute some political juice in deciding whom to shut down.

A number of commenters pointed out that he hadn't looked at the contributions of those dealers who'd still be in business, so he posted both lists and asked readers to have at it.

Colorado is a swing state if ever there was one, which should make it especially vulnerable to this sort of political game-playing, if indeed it's going on.

It turns out that in Colorado, to the extent that there's any difference at all, those losing their dealerships are perhaps slightly more likely to have contributed to Democrats than to Republicans.

Of the 27 dealers keeping their businesses, 14 had made contributions at all, with only a little money going to Joan Fitz-Gerald, and the rest going to the NADA PAC, Republican candidates, and Republican PACs and committees.    Of the 11 losing their dealerships, 9 had made contributions, and while these are also heavily Republican donors, about $3500 went to Democratic candidates, the balance going to NADA and Republicans.

Ross found something interesting, asked a question, and made the raw data available, which is what good bloggers should do.  I'm just afraid that the fact that there doesn't seem to be any there there, at least not in Colorado, won't keep some folks from repeating this claim as fact.

Sotomayor Roundup

Tue, 26 May 2009 12:00:00 -0700

A roundup of some early reaction to the nomination of Sonia Sotomayor to the US Supreme Court:

  • Powerline has the pro-Sotomayor talking points, and the Lawyers' eval from the Almanac of the Federal Judiciary
  • Scotusblog has responses to some of the predicted criticisms.
  • The Volokh Conspiracy wonders how this will play out among Hispanics.
  • Ann Althouse has a bunch of stuff
  • There's some back-and-forth between Althouse and Jeffrey Rosen, although to be fair, Althouse isn't really engaging in an all-out debate here
  • Stuart Taylor on Sotomayor's embrace of Democratic-Left identity politics
  • At Volokh, Jonathan Adler's take on Sotomayor's problematic comments
  • And via Orin Kerr at Volokh, the relevant portions of her speech, and a link to the whole thing
  • The Anchoress has her own comments, and a series of links, as well
  • Ed Whelan's earlier research, Part 1 and Part 2

Channels of Information

Mon, 25 May 2009 19:29:28 -0700

Markets are only efficient when there's a free flow of information.  One of the channels of that information are the sell-side analysts.  I was one for a little over a year, and I can tell you that small-to-medium sized companies, even ones with significant coverage, were almost always happy to hear from us.  We were their means of getting their stories out to the market at large.  While we were always honest, and always discussed the company's warts, we also wouldn't have been covering them if we didn't think they were a good investment.Now, with the financial industry in flux, adn Wall Street hurting, there are fewer analysts around to cover stocks, and information flow may be suffering:Lost coverage can be meaningful not just to smaller companies but to their investors. Analysts link corporate management with both institutional and, to a lesser degree, retail investors. Though they are faulted at times for being too cozy with companies and too bullish on their stocks, analysts build a mosaic of information and analysis that can help drive interest in a particular company. The good ones do an even better job of understanding when corporate operations are struggling and thus warn investors away.... Scholastic Inc., a publisher of children's books including the U.S. editions of the Harry Potter series, has lost coverage from Goldman Sachs, J.P. Morgan and Citigroup, among others, leaving only three analysts still tracking the company. One result: company executives now spend more time on the road, meeting with potential institutional investors, since Scholastic has fewer Wall Street analysts to pitch their story."It has changed how we communicate with investors," says Jeffrey Mathews, Scholastic's vice president of corporate strategy and investor relations. "We spend much more time with institutional investors than we did five years ago." Goldman said the Scholastic analyst left the firm and coverage was dropped. Citigroup declined to say why it stopped following the company and J.P. Morgan declined to comment.Directly targeting institutional investors would tend to reduce the information available to smaller investors, and narrow the decision-making base.  Information flow is slower, and fewer people are making informed decisions; both these effects tend to degrade market efficiency.This effect may be reversible, but another will be harder to undo.  In the past, analysts could content themselves with analyzing market forces, the actions of thousands or millions of actors.  The government is taking a much more direct role not only in regulation, but in credit decisions and the actual running of banks, credit companies, auto companies, and soon, the insurance industry.  More and more, the fate of companies will ride not only on management's ability to respond to its consumers' needs, but also on decisions made in Washington.  Not only will the analyst have to read tea leaves to guess the direction those decisions will take, but he will also have to judge management's ability to do so.  This is going to make political analysis as important as economic and financial analysis, and it's going to make guessing the moods of a couple of dozen lawmakers as important as understanding a company's supply chain.And you thought it was only the technical analysts who practiced black magic. [...]