Thoughts In Grey

Brief Notes

Was a nice 4th of July. While my "date" for the fireworks party flaked, I had fun anyway.

• Ben Bernake is responsible for more than half of the currency currently in circulation. Yup, after 234 years of U.S. history, more than half the dollars in circulation were created in the past decade.
• And worth noting that serial criminal Casey Serin has spent yet another independence day still at large.
• Is this a sign of the end of prohibition? When governments start considering that taxing something is preferable to spending money on banning it, we're likely at an endgame. Considering that about 20% of the accumulated Federal deficit is related to the 40-year "war on drugs" and that the "war" has absolutely nothing to show for itself, maybe that's a good thing?
• Not that I'm in favor of drug use. Never used the stuff and don't plan on changing my stance anytime soon, but historically such bans -- whether on alcohol or anything else -- have never been anything other than a gift to organized criminals who are happy to step in and supply the market. We've shown that we know how to reduce smoking and drinking in much cheaper ways, so why insist on continuing down failed path of dealing with drug abuse through criminalization rather than trying something that has a history of working?
• Not that the morons at the L.A. County Commission don't have anything better to do. Like maybe deal with the broken county hospitals, the overcrowded jails (mostly overcrowded with low-level drug offenders), and the perpetually broken budget?
• On the other hand, the never-ending war on drugs is certainly good for a few laughs now and then, courtesy of the dumbest criminals.
• I tweeted this outrage from the Federal Reserve a few days ago but didn't comment on it here, as it sort of speaks for itself. As usual, Barry gets the last word.
• "Remember that all models are wrong; the practical question is how wrong do they have to be to not be useful" - George Box
• Andy Grove hits things right on the head, as he always did during the few opportunities I had to meet him during my short years at Intel (NasdaqGS: INTC). Industries are like ecosystems. You can't outsource the dirty pieces that we think somebody else should do cheaper and still expect to hang on to the "good" pieces. In the end the "high value" work tends to be a lot easier to do when you're right down the street from the factory or the call center or any of the other places where the rubber meets the road.
• Andy also is willing to break some taboo and remind us of times when things got bad enough that troops had to be called in to keep the peace. He doesn't remind us (but somebody should!) that one of the more common depression-era crimes was kidnapping and that violence against the well-off tends to increase when people decide they have no better options. I think a lot of people at the upper end of society are fooling themselves about how the current state of affairs will affect them.
• From my Facebook wall: "Facebook thinks I should become a fan of Barack Obama and Fox News, apparently because my real-world friends include a guy who had a show on Fox Business, and a former campaigner for Obama, among others. And isn't it grand that on this 4th of July weekend, I can still be friends with both of them and many others, and put the political BS aside."
• And for the record, I am not a "fan" of any politician or large corporation. When they pay me and/or bail me out to the tune of billions of dollars, I'll consider it.
• But please do hit the button above and become a fan of this blog! I can't pay, but I'll be really, really, really grateful.

Brief Notes

Slow going here:

• I like this image, courtesy of my friend Hazel-Grace. Wondering what I should change, and whether it's one thing or a whole bunch of them?
    
• Was awakened from rather poor sleep at about 2am by an earthquake. Another hit just a couple of hours ago. Apparently quite a few have been taking place on the same fault just offshore.
   
• Being woken up at 2am didn't help my attitude throughout the day.
   
• This report about the impact of technology on our brains is pretty interesting, I'll have more about it later.
   
• Got another voter registration card today and dropped the Democratic Party registration. As noted before, I don't recall ever registering with that party (or any other) to begin with and suspect the reason lies with incompetence or possibly maliciousness at the county clerk's offices. I just really don't want more junk mail or annoying phone calls from washed-up celebrities.
    
• Clio is not liking the new low-carb food quite as much as the old and is eating less. This is probably a good thing.
   
• I'm beginning to wonder if we're ever going to see the sun again on this side of town.

mg

Weekend notes

• The report on The Age of Denial in New Scientist is fascinating. Thanks to Barry for passing it along.
   
• One of the most common misconceptions echoed in some of the comments is that if something is false, it will be dis-proven and by extension, everything that can't be dis-proven is fact. This is the veneer that many deniers of various sorts cling to. In fact many, probably most, statements can't be proven true or false. Say I told you there is intelligent life on Venus. Prove me right OR wrong. You can't. What if I made the same statement about the U.S. Congress? You'd still be hard pressed either way.
   
• Yesterday I commented about junk mail. Today the junk phone has started in earnest, with a robocall from mostly-forgotten bloated actor and activist Ed Asner. I wonder who is really that desperate? (I didn't stay on the line long enough to find out.) Ed Asner? He's supposed to be the voice that will influence somebody in 2010?
   
• I realize that due to a quirk in law, my participation in the "no call" list run by the FTC doesn't restrict political parties, campaigns and some other "special" groups. But it doesn't prohibit them from honoring it if they choose to and it would probably behoove them to choose to. Calling people who have clearly expressed an interest in not being called is only going to piss us off. There is no more certain way of ensuring that I won't support you than hitting me with a "junk call."
  
  As Coach Wooden once said: "Consider the rights of others before your own feelings and the feelings of others before your own rights." These robocallers may have the right, but would do well to consider my feelings on the matter first.
  
  
• My brother's garbage disposal jammed on broken glass and could not be revived. We replaced it with a simple drain that also opened up lots of extra storage space under the sink. What's so difficult about just tossing stuff in the trash can anyway?
   
• My experiment with Foursquare is over. I have been still playing around a bit since my last comment on the matter and it was interesting to try, but until I see some utility to it -- either because my friends are on there or they build in new capabilities that provide capabilities that are interesting -- I'd rather spend my time and bandwidth on other things. For now I've killed the app on my iPhone and moved on.
   
• My brother's going to both Europe and Asia this summer. From a currency perspective, it's the best time in years. But somehow I'm not particularly drawn to either. Too many trails I haven't ridden and rivers I haven't run, and they're all just a few hours from home.
   
• Lazy Sunday. Cleaning up a bit.

mg

Environmentalist Democrats? Not around here.

This is my mail.

Not all of my mail, mind you. This is just today's mail. It is roughly the same as yesterday's and the day before's. In fact, this is pretty much what the contents of my mailbox have looked like for several weeks.

I find it ironic how many of these useless mailings tout the candidates' commitment to the environment, because virtually all of this stuff is going to end up in the landfills of southern California. It's a gift to the archaeologists of the future who may be able to sort through the stuff and conclude that our society died of hypocrisy. They'll be able to examine this mail because landfills really don't promote decomposition in any meaningful way. Really they are just large tombs for our garbage that will most likely be there for several millenia. This is especially true in dry places like Southern California, but isn't all that different in wetter climates either. The "caps" on top of all modern landfills are designed to keep us people away from whatever nasty stuff may be in there, but also tend to keep out moisture, earthworms and helpful bacteria which would promote better decomposition. Like the bits of food waste that can still be found in the Native American ruins of the southwest and the Egyptian deserts, our political junk mail is likely to be around for a long time.

I'll be doing my best to see that this stuff gets recylcled rather than landfilled, but it's almost impossible do so. The coated glossy cardboard they use is hard to recycle into anything else and mostly it ends up in landfills because it's less expensive and often less environmentally damaging to just chop down new trees and make more of it from scratch.

Yet it should have been easy to prevent. The Democrats should have been able to get together and say "we want to be the party of environmental causes" and act in a manner so as to prevent any candidate in their primary from using this highly destructive method of non-communication. (Does anybody really read these things? My own observation suggests they never make it past the closest trash can.) They may not be able to hold off other parties, but certainly they could try to take the lead on something. And I haven't seen any of these "green" Democrats talking about the $4.5m that their buddies in the legislature spend in sending us this kind of crap year-in and year-out. Personally, I can't think of any better place to start balancing the state budget.

Instead, they prefer to have me, and apparently the vast bulk of the public, continue to see them as nothing but opportunistic and hypocritical scum. All of them.

Which is part of the reason I won't be voting for anybody in this primary. (The other being that I don't recall ever registering as a Democrat, so don't see why I would be eligible to vote in their primary to begin with.)

Finally, I do want to thank the coalition of local nurses, health care workers, public safety officers, classroom teachers and other public service workers' organizations, who decided to send me a "free gift" (is there any other kind, really?) on behalf of candidate Nick Karno. Yes, that's a little bag of Jelly Bellies. I'm not sure why. But it was nice of those nurses and health care workers to send a bunch of flavored sugar to a guy whose dad and two of four grandparents died of diabetic complications. These are the same people who claim they have the solution to our health crisis, sending me candy. Yeah, right...

mg

Brief Notes

Stuff that's on my mind, which is tending to wander this morning:

• The Europeans continue to founder. I've been critical of much of what this country did when the financial crisis hit us, but I'd have to argue that sometimes doing anything -- even just having a coordinated "no comment" -- is better than doing nothing. At this time the Europeans are doing nothing, or at least nothing that is coordinated in any way. As noted in yesterday's Brief Notes, this European unraveling may undo decades of capital mis-allocation and be a good thing in the long-term, but the short term pain resulting from an apparent lack of any stabilizing force is going to be painful for the entire world.
   
• Why do I have a feeling that what they're going through is something we will go through as well?
   
• Why do I also have a feeling that we will see the same results here, where the strong sections of the country will have to bail out much of the rest, but that severe cuts will be needed?
   
• And if that's the case are you better off being in one of the places that gets bailed out? (Somewhat speaking my book here, as I'm in California, which probably tops the "needs to be bailed out" list.)
   
• Incidentally, this may very well make the whole immigration question somewhat moot. Historically, immigration has been an issue at the end of booms. When the economy is growing, nobody cares and once it's stopped growing for a while, the problem tends to go away because the immigrants (largely motivated by jobs) stop coming. Combine that with a Mexican birthrate that has been dropping like a stone in recent decades (7.3 children/woman in 1962, 3.1 in 1990, 2.1 today) and one has to wonder if the whole thing is worth the debate.
   
• As noted a few days ago, Germany's actions just reinforce the fact that government wasn't doing their job in the first place. Wasn't naked shorting already illegal? If it was (as it is most places), why do we need new laws? This is much the situation as existed here two years ago and to a large degree still exists: laws on the books are unenforced until a crisis hits, and the sudden re-enforcement of those laws during a crisis just makes things worse.
   
• Historically, situations like the current one have represented good opportunities to invest in Korea. It's a binary bet: either tensions get diffused as they have been every time since the Korean War and Korean stocks rebound, or we get a war that wrecks much of the world's economy in which case you have to be holding gold, oil and dollars. The case against investing in Korea can best be summed up as "North Korea has gotten crazier than they were before and are willing to commit collective suicide this time."
  
• I don't believe that Kim Jong-Il wants co commit suicide, even post-stroke. I do believe that those around him are jockeying for position and are willing to provoke the outside world to prove their worth. For that matter I don't think the Iranians are suicidal either. They just know they have the upper hand at the moment and are willing to press their bets as far as they can, realizing that their situation is likely to be temporary.
   
• Of course, the folks in Pyongyang and Tehran are all quite happy to have suicidal loons elsewhere who are willing to do their bidding. We should not make the mistake of presuming that their support of suicidal loons means that they are willing to put themselves in the same position. They all live far too well.
   
• Bet for the rest of the day? With nothing on the table either way and little conviction, I think they'll close the market above the February intraday low at 1044 on the S&P. I have less conviction that they'll hold above it for long.
   
• The only certainty into the close is that there will be at least one cat sleeping through it on my desk when it happens.
   
• Actions for today: continue making a list of stuff I'd like to buy as the sale continues and gets better. Top on the list are the kinds of companies Jeremy Grantham would call "High Quality" value: Microsoft (NasdaqGS: MSFT), Pfizer (NYSE: PFE), HP (NYSE: HPQ), A-B Inbev (NYSE: BUD). Will also be looking into NCR in the wake of David Einhorn's investment. Some guys are worth watching.

mg

Confidence Lost

So our friends in Europe have jumped in today to halt trading activities that are harming the Euro and their big financial institutions. They seem to think this will restore confidence. They should have learned from us, or from the many, many times in history that this has failed, as it did today.

In truth, there's not much wrong with what they did. It's how they did it and the selective nature of enforcement that is causing the problem. Last I checked, naked shorting was illegal in Europe as well as here. Enforcing that law is a good thing. But letting it go on unabated then selectively enforcing the law with regards to ten "blessed" financial institutions does not help "restore confidence." It sends the message that something is really, really wrong with those institutions, that in fact something is so wrong that it justifies sudden and selective enforcement of laws that were ignored until now.

And much the same is true of the restrictions on naked CDS trades. There's little if any justification for the existence of these conduits for expanding risk with no benefit to any actual holder of the underlying asset. But to suddenly and selectively prohibit a few CDS products from trading sends the message that there's something seriously wrong.

I hate to harp on Taleb the second time this week, but his Ten Principles for a Black-Swan-Robust Society, (reproduced as Postscript VIII in the second edition of The Black Swan) makes the point quite bluntly:

Only Ponzi schemes should depend on confidence. Governments should never need to "restore confidence."

...Governments cannot stop the rumors. Simply, we need to be in a position to shrug off the rumors, be robust to them.

Easier said than done.

Quick Friday Notes

The weekend couldn't have come soon enough.

• It's good to hear of at least one friend whose job has been "created or saved" this year. In her case, "saved," though her employer is a non-American company it will undoubtedly be counted as a victory for the "stimulus." Congrats Kara!
• Apropos my earlier post, Barry Ritholtz is demanding a well-deserved apology for those who smeared him, David Einhorn and others over their well-researched questioning of Lehman and its execs prior to the meltdown.
• Barry also notes the endgame of the chicanery and fraud that has been tolerated for far too long:

  All in all, the entire system failed. The situation is utterly disgusting, and if the investing public pulls its money out of the completely corrupt public markets for a generation or more, it would not surprise me . . .

  That's not a happy prognosis if you believe the markets serve an important function in providing funding to businesses that need it. But perhaps it's indicative of how far we've come from that basic thesis, that in fact the markets no longer are serving the "main street" interest of financing businesses all that well. Instead they've discovered it's more profitable to run a casino where the little guy is always betting against the house and they make money either way while providing no social utility to anybody. And maybe the public would be right to just go elsewhere until they actually do something anybody outside "the club" finds useful.
• And all this should serve to remind us that nothing's new. It appears now that Lehman may very well have been technically insolvent years before their problems became known, just like Enron. And their unwillingness to control risk is long-standing, extending back to this incident in 1998 and probably earlier. As Jim Grant noted at the time, on Wall Street there's no constituency for the truth.
• Lenny Dykstra's ego and penchant for coming back long after he overstayed his welcome is perhaps second only to Casey Serin's. His latest? He's hoping to sell you a subscription to a scammy newsletter far more expensive than the one he used to sell through TheStreet.com, but he's doing it without their help as even Jim Cramer's often-maligned web empire won't touch the guy. This, all while trying to get out of bankruptcy. Of course, this time you get an autographed baseball if you sign up, which may be the only tangible benefit to the whole thing.

And now it's time to head over to "The Palm Tree" where we will celebrate a job saved!

mg

The Short Sellers Didn't Do It!

So, the results are finally in, and it seems that short sellers, speculators, Wall Street insiders and all the rest had pretty much nothing to do with the collapse of Lehman.

It seems that Lehman's executives and it's auditors were pretty much responsible, just as I thought when it happened.

Maybe now we'll question Vikram Pandit over at crippled and government-supported Citi (NYSE:C), who still claims that the institution is and was always fine and that the reason it nearly collapsed and needed more government money was a bunch of short sellers.

Or perhaps we'll consider that the reasons for the Euro's decline is not a bunch of short sellers thinking they could move the $2t a day currency markets, but rather because Greece, Portugal and maybe Spain are complete basket cases who have been falsifying their books in a manner that would make the Lehman and Enron guys look like angels, and the various European bureaucracies have been no better at calling them out on it than the Auditors of those private firms were. I mean really, if you had a bunch of Euros and you saw this coming, wouldn't you sell them? Just as I saw what was coming and got rid of the Toyota? If you have a brain you would have.

Maybe we'll even apologize to Soros for blaming him for "breaking" the pound, when the reality is that it was political pig-headedness and a desire to have the impossible that led to the pounds unsustainable rise and inevitable collapse. We might even recognize that the "breaking" of the pound presaged the British boom of the late 90s and early 2000s.

But for now, it's easier to blame "speculators" for causing all these problems. The reality is that most of them aren't that smart. They're just smarter in most cases than those who caused the problems and imagined that they could maintain the unmaintainable and sustain the unsustainable. They hate the speculators not so much for making money off their scams, but because the speculators are necessarily the ones who are yelling that the emperor has no clothes and that's bad for business.

I'm not much of a fan of a lot of what goes on these days on Wall Street. As far as I'm concerned all the "prop traders" of various types should be kicked out of any insitutions that get any government support or favorable treatment (by which I mean, any access I don't personally have) and forced to either make it or break it on their own. But I'm happy there are guys like Soros, Ackman, Tilson & Tongue, Einhorn and many others who are willing to stand up and note that the emperor has no clothes and get me away from the parade before the riot starts. I haven't always agreed and I've sometimes even made money betting the other way, but they make the debate and they shine light in lots of places where others prefer no light be shone. That's a good thing, the Greeks, Citiwhores and Lehmanfrauds notwithstanding.

mg

A Taxing Change of Paradigm

Amazon and Colorado are in a bit of a tiff over sales taxes. Colorado wants Amazon to either collect sales taxes or report them for purchases by everybody in Colorado. They'd also like reporting about payments to amazon affiliates and everybody else who might earn a bit of money from Amazon.

This is likely to be coming soon to New York, California and many other states as well.

The problem is a simple one: While states have the right to assess sales taxes on anything delivered to a buyer in the state, they have no jurisdiction to demand that an out-of-state seller actually collect the tax on their behalf. And with the proliferation of small online sellers -- including many who sell through Amazon, Google, eBay and others -- it's tougher and tougher to police this. State officials believe they're losing a lot of sales tax income because while they're entitled to collect the tax, it's not practical to track bill each individual purchaser for each out-of-state purchase.

Amazon has responded to Colorado's new law by cutting off all Amazon affiliates in the state. As noted earlier in the Huffington Post, this is more likely a matter of bringing political pressure than anything else.

But whatever the political maneuvering, the dispute is just the tip of the iceberg, indicating a much, much greater problem lurking below and increasingly undermining our entire tax system.

Again, the Solution is Obvious

They're at it again.

Once again, they're trying to pretend that the battle between network affiliates, other local TV stations and the cable companies that deliver their content to most households has to do with anything more than strong-arming the American public into padding their profits and buying content we don't want.

As I've noted before, there's a really simple way to resolve these conflicts, whether they're between Fox and Time Warner, ABC and Cablevision, or anybody else.

Stop demanding that we buy "packages" of stations in a way that subsidizes content we don't want and elimiates any ability to really vote with our wallets about what content we do want and what we're willing to pay for it. Want to save me money Cablevision? (Or Time Warner?) Easy. Let me opt out of all the expensive stations that I never watch. That'll save approximately $4 a month (or so I'm told) on ESPN because I never watch sports. Probably a few bucks for the local independents and their incessant Seinfeld reruns. Probably would drop the network affiliates too, as network programming is completly worthless. In fact, I'd probably drop all the "Broadcast Basic" stations that I never watch and which represent much of the "baseline" product I am forced to buy before I buy anything else.

It'll save me money, it'll deliver the content I want and it will allow the marketplace to work, because nobody will need to debate, discuss or argue about what consumers are willing to pay for any network. We'll vote with our wallets and you'll know how much or how little we value your product.

Stimulating Thoughts

I didn't say much about the stimulus 1-year anniversary, because there was not that much to say. I've thought from the start that this "stimulus" was neither particularly stimulative nor particularly helpful to anything in the long run. It's not that the idea was a bad one, it's that the idea as executed had little to do with the idea as promised. As executed, it did little more than perpetuate an unsustainable situation, and thus any "stimulus" was ephemeral and unlikely to last.

A year later we're seeing the reality. The stimulus sent huge amounts of money to the states and cities that have been facing shortfalls far greater than the Federal Government. In effect, it was the Federal Government borrowing to sustain jobs and benefits in the cities and states because the cities and states no longer can do so. It fails, because as the stimulus dollars run out, the cities and states find themselves right back where they were. All the Federal debt bought us was a temporary reprieve from the inevitable.

California, of course is a great example. Spending has far exceeded population growth and inflation combined. Much of this has been shoveled into ever-increasing pensions and benefits for government employees at all levels. Services haven't increased that much (unless you consider throwing non-violent offenders into prison for life a "service"), but the costs of delivery have increased disproportionately. Absent a Federal bailout masquerading as "stimulus" this deadweight spending would have had to have been addressed. The Federal government gave California a 12-18 month reprieve. Now that reprieve is up.

The Citi Catch

I just got a new Home Depot (NYSE:HD) credit card.

Really, I don't need a Home Depot credit card, because I shop there infrequently and almost always for small stuff that will never justify a dedicated store credit card. But I was buying some paint last week and was told that the $20 can of paint (the most expensive item) would be free if I opened an instant credit account.

I tend to be fairly strategic about applying for credit. As a non-homeowner, non-student loan holder, and generally non-debtor in most ways, I have found that keeping my credit score up in the mid-700s takes some effort. Why care if I don't use credit much? Well, because someday I will want to buy a place, or have an employer check up on me, or do something that will require a good score. So I make some effort to keep things in good standing, usually by taking loans I don't quite need or opening credit facilities I'm rarely going to use. For example, the past couple of times I've bought vehicles, I've taken on small auto loans at super-low rates just to have some longer-term credit activity in addition to my credit card accounts that are paid off monthly.

This is one of the more moronic aspects of our system. If you have no credit accounts out there, you're considered a bad risk even if you do have the income and/or assets to support whatever loan you want to take out. If you have lots of credit cards but a history of not using them much, you're considered a good risk because you have supposedly shown that you know how to manage (ie, not use) it well. No matter that in case of a life-changing event all those credit cards will be drawn on to the max, maybe to the point of your being unable to pay for anything. If I were a banker I'd be looking for people with lots of assets and income, but with as little outstanding credit as possible that might impair their ability to pay me back. But finding such people would require real work, like detailed examination of income and asset records for several years. Compare that to just looking at a credit score which is mostly automated and work-avoiding. Whatever else has happenned in the past 20 years, bankers doing everything possible to avoid real work is an immutable constant.

Why Sirius-XM Fails

I purchased a new vehicle recently. Like most vehicle manufacturers, Honda (NYSE: HMC) has a deal with one of the two satellite radio services, in this case XM. For those of you who haven't been living under a rock, former competitors Sirius (NasdaqGS:SIRI) and XM were allowed to merge a year or so ago, and while they still support the two incompatible services, they are, or at least should be, operated as one company.

When it comes to content, lots of merging has already taken place. Some content (especially sports) is available only on one or the other and some (like Howard Stern) is only part of the basic package on one of the services, but not both. Some of the channel lineups aree different as well. These oddball differences are mostly the result of pre-existing contracts and in all likelyhood will be resoved when the contracts are renewed or renegotiated in the coming years.

But operationally the merger is a disaster. I know, because I've just recently had to deal with the customer service operations at both services, because my previous provider was Sirius and I needed to switch to accommodate the new vehicle.

You would think that with both companies under the same roof, you'd be able to easily switch from one the the other. But you'd be thinking wrong. There is no way to switch to the "other" service offered by the same company and no way to have an account that covers receivers on both, which means that to have two receivers with the "multi radio discount" I had to replace a perfectly adequate home receiver that has been connected to my stereo system for a couple of years. To me, the changeover has involved nothing but waste and annoyance.

Crying Wolf

If you've purchased a car in California you've experienced one of these stickers blocking the view on your driver-side window. At least for the few minutes it takes you to get it home when you scrape it off.

You've also seen a similar warning every time you enter a parking garage, or a hotel, or a business of just about any size.

If you live near any sort of manufacturer, food-processor or anybody else who might occasionally use a cleaning solvent in the course of doing normal business, you will also get a letter from them every year telling you pretty much the same information, even if the use of the chemicals is entirely within an enclosed facility with no impact on the outside environment.

I have no argument with the notion that businesses should have to disclose non-obvious and non-normal risks to the public that they serve or that might be impacted. But we've gotten to the point of crying wolf. Identifying obvious risks so frequently and pervasively that the warnings of real, unusual or unanticipate risks gets lost in the clutter.

Seriously, is there anybody with enough brainpower to read this label who does not yet know that things like gasoline, oil, antifreeze and automobile exhaust are dangerous? Is there anybody checking into a hotel who doesn't know that the cleaning supplies they use to sanitize the bathrooms may, in sufficiently large quantities, be harmful? Anybody who is not aware that a parking garage may contain all of the above and more and that maybe it's a bad place for kids and pregnant women to play?

Yet we seem trapped between those who feel that everything should be disclosed, to the point that the disclosure becomes so routine as to be meaningless, and those who feel that business should not be hampered with any disclosure requirements.

If you think it's bad with this Prop 65 stuff, try to buy a car or a condo. Dozens to hundreds of pages of disclosure, all of which is so dense as to be meaningless and not understandable. Want to understand how the mortgage crisis could happen? It's because a mortgage -- which should be easy enough to describe in less than a single page of high-school enlish -- now requires so much disclosure and documentation that even a guy like me with an MBA in finance can't understand it.

Yet the answer we get from government is always more disclosure.

The problem is we need less. We need less disclosure, but meaningful disclosure. We need warning labels and letters about non-normal risks, not warnings on every parking garage. We need mortgages and car loans to use a 1-pager disclosure form indicating interest rates, initial payment, maximim payment over time if it's a variable rate, date the reset can happen, and just a few other simple things.

Yet we're not getting this, instead we're getting more and more confusing disclosure. More confusing paperwork and labels that just give the banks, the polluters and everybody else who needs to disclose stuff ample opportunity to bury the important disclosures in among the hundreds of other meaningless warnings that know we have come to ignore.

Our regulatory infrastructure is designed to force people to cry wolf. Along the way, we never notice that occasionally a wolf is really there.

mg

Roll Over, Get Tough, or Sell Me What I Want?

Like many Time Warner Cable subscribers, I spent the weeks ahead of the New Year hearing that I had two choices in my cable rates. I could either back Time Warner in "getting tough" with the local Fox affiliates, or I could "roll over" and submit to the higher fees for programming that Fox was demanding.

This is another place where the truth is in the "grey area" between the two warring parties. The truth is that the real value for the Fox programming would become evident if I were actually allowed to vote on what programming I want to receive and pay for. I can state with 100% confidence that my expense for Fox local affiliates in that scenario would be absolutely zero, because I would not pay a penny for the schlock that is offered on most local broadcast TV, or most cable TV networks for that matter. [Nothing personal to my friends at Fox, except that this time they were the ones involved. I'm equally indifferent to the other three broadcast networks and their useless programming.]

The resolution, predictably, was a "fair" deal, the details of which they won't disclose, which will inevitably mean my rates go up. In the end, despite the hoopla, the only real issue on the table was which of these corporate behemoths gets which share. We won't get better programming, we won't get better service and we won't get the choice of telling them "take those awful networks and shove them."

But that's the one thing that both of these business organizations are unwilling to even consider, despite the fact that it's what most of the customers would like.

Today's Financial TV Stupid Moment

I usually watch financial TV with the sound off. The ticker is mildly informative and I can always unmute if some headline pops up. But the volume comes on often enough that I sometimes hear some really dumb stuff. CNBC tends to be the biggest culprit, because Bloomberg tends to avoid the "personality based" style that leads to idiots being on the air, and Fox Business is becoming less and less focused on the markets and business with every passing day. [Killing off the bulk of their pre-market coverage in favor of Imus was the end of their pretending to be serious about the markets, as far as I'm concerned. That's the most important part of the day people!]

Anyway, earlier today on CNBC:

Resident geniuses Larry (Republican idealogue) Kudlow and Trish (Pot reporter) Regan had a couple of lawyers on to discuss a case currently on the Supreme Court docket that addresses mutual fund fees, or more specifically the proper disclosure of such fees and the mutual fund companies' responsiblity to negotiate the best possible fees with outside advisers who manage their funds.

In this particular case, the allegation is that the management company failed to do its proper fiduciary duty by allowing the adviser to charge the fund's shareholders roughly double the fees that they charged anybody else for similar work.

It's a complex issue, and it would have been nice to see it explored.

But nobody even bothered to explain what the issue was, let alone provide any useful analysis! I had to look it up and found the details here. Trish and Larry focused on the rather specious "well, if shareholders don't like it wouldn't they just sell?" argument, which is at best tangential to the case. One of the lawyers used his platform to scream about fees being too high and the government needing to regulate them, which may or may not be true but is also pretty tangenial to this case. The other guy spoke about the fact that the case was before the Supremes because of a disagreement between other judges leaving the issue unresolved, blah, blah, blah...

Watching the segment, and especially listening to Regan's faulty discussion and Larry's biovating, one could have mistakenly presumed that the case was about government regulating fees, which it's not. I'm reminded that in years gone by I had a rule about changing channels whenever Larry came on, and I should probably reinstate it, except that I think he's probably good material for the blog.

mg