Dear American:
I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.
I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.
I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transactin is 100% safe.
This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.
Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.
Yours Faithfully Minister of Treasury Paulson
(Lifted from: http://www.theseminal.com/2008/09/23/awaiting-your-correspondance-important-business-matter/)
Wednesday, September 24, 2008
Saturday, September 20, 2008
Why Paulson is Wrong
Luigi Zingales of Chicago GSB has written a brilliant article on why the 'Paulson Doctrine' of dealing with the current crisis is a sure fire failure. Here are the reasons in brief:
By:
Luigi Zingales
Robert C. McCormack Professor of Entrepreneurship and Finance
University of Chicago - GSB
When a profitable company is hit by a very large liability, as was the case in 1985 when Texaco lost a $12 billion court case against Pennzoil, the solution is not to have the government buy its assets at inflated prices: the solution is Chapter 11. In Chapter 11, companies with a solid underlying business generally swap debt for equity: the old equity holders are wiped out and the old debt claims are transformed into equity claims in the new entity which continues operating with a new capital structure. Alternatively, the debtholders can agree to cut down the face value of debt, in exchange for some warrants. Even before Chapter 11, these procedures were the solutions adopted to deal with the large railroad bankruptcies at the turn of the twentieth century. So why is this wellestablished approach not used to solve the financial sectors current problems?
The obvious answer is that we do not have time; Chapter 11 procedures are generally long and complex, and the crisis has reached a point where time is of the essence. If left to the negotiations of the parties involved this process will take months and we do not have this luxury. However, we are in extraordinary times and the government has taken and is prepared to take unprecedented measures. As if rescuing AIG and prohibiting all short-selling of financial stocks was not enough, now Treasury Secretary Paulson proposes a sort of Resolution Trust Corporation (RTC) that will buy out (with taxpayers’ money) the distressed assets of the financial sector. But, at what price?
If banks and financial institutions find it difficult to recapitalize (i.e., issue new equity) it is because the private sector is uncertain about the value of the assets they have in their portfolio and does not want to overpay. Would the government be better in valuing those assets? No. In a negotiation between a government official and banker with a bonus at risk, who will have more clout in determining the price? The Paulson RTC will buy toxic assets at inflated prices thereby creating a charitable institution that provides welfare to the rich—at the taxpayers’ expense. If this subsidy is large enough, it will succeed in stopping the crisis. But, again, at what price? The answer: Billions of dollars in taxpayer money and, even worse, the violation of the fundamental capitalist principle that she who reaps the gains also bears the losses. Remember that in the Savings and Loan crisis, the government had to bail out those institutions because the deposits were federally insured. But in this case the government does not have do bail out the debtholders of Bear Sterns, AIG, or any of the other financial institutions that will benefit from the Paulson RTC.
Since we do not have time for a Chapter 11 and we do not want to bail out all the creditors, the lesser evil is to do what judges do in contentious and overextended bankruptcy processes: to cram down a restructuring plan on creditors, where part of the debt is forgiven in exchange for some equity or some warrants. And there is a precedent for such a bold move. During the Great Depression, many debt contracts were indexed to gold. So when the dollar convertibility into gold was suspended, the value of that debt soared, threatening the survival of many institutions. The Roosevelt Administration declared the clause invalid, de facto forcing debt forgiveness. Furthermore, the Supreme Court maintained this decision. My colleague and current Fed Governor Randall Koszner studied this episode and showed that not only stock prices, but bond prices as well, soared after the Supreme Court upheld the decision. How is that possible? As corporate finance experts have been saying for the last thirty years, there are real costs from having too much debt and too little equity in the capital structure, and a reduction in the face value of debt can benefit not only the equityholders, but also the debtholders.
If debt forgiveness benefits both equity and debtholders, why do debtholders not voluntarily agree to it? First of all, there is a coordination problem. Even if each individual debtholder benefits from a reduction in the face value of debt, she will benefit even more if everybody else cuts the face value of their debt and she does not. Hence, everybody waits for the other to move first, creating obvious delay. Secondly, from a debtholder point of view, a government bail-out is better. Thus, any talk of a government bail-out reduces the debtholders’ incentives to act, making the government bail-out more necessary.
As during the Great Depression and in many debt restructurings, it makes sense in the current contingency to mandate a partial debt forgiveness or a debt-for-equity swap in the financial sector. It has the benefit of being a well-tested strategy in the private sector and it leaves the taxpayers out of the picture. But if it is so simple, why no expert has mentioned it?
The major players in the financial sector do not like it. It is much more appealing for the financial industry to be bailed out at taxpayers’ expense than to bear their share of pain. Forcing a debt-for-equity swap or a debt forgiveness would be no greater a violation of private property rights than a massive bailout, but it faces much stronger political opposition. The appeal of the Paulson solution is that it taxes the many and benefits the few. Since the many (we, the taxpayers) are dispersed, we cannot put up a good fight in Capitol Hill; while the financial industry is well represented at all the levels. It is enough to say that for 6 of the last 13 years, the Secretary of Treasury was a Goldman Sachs alumnus. But, as financial experts, this silence is also our responsibility. Just as it is difficult to find a doctor willing to testify against another doctor in a malpractice suit, no matter how egregious the case, finance experts in both political parties are too friendly to the industry they study and work in.
The decisions that will be made this weekend matter not just to the prospects of the U.S. economy in the year to come; they will shape the type of capitalism we will live in for the next fifty years. Do we want to live in a system where profits are private, but losses are socialized? Where taxpayer money is used to prop up failed firms? Or do we want to live in a system where people are held responsible for their decisions, where imprudent behavior is penalized and prudent behavior rewarded? For somebody like me who believes strongly in the free market system, the most serious risk of the current situation is that the interest of few financiers will undermine the fundamental workings of the capitalist system. The time has come to save capitalism from the capitalists.
- Liquidity is not the problem, its just a symptom
- The assets are illiquid because the market is not sure of their correct value. What makes Paulson think his men/women are more accomplished at valuing them than the hot shot Wall Street Bankers?
- Private profits and socialized losses will only put this crisis in abeyance till an even bigger one strikes
- Debt holders of private corporations are accountable as much for the risks they took looking for enhanced yields
By:
Luigi Zingales
Robert C. McCormack Professor of Entrepreneurship and Finance
University of Chicago - GSB
When a profitable company is hit by a very large liability, as was the case in 1985 when Texaco lost a $12 billion court case against Pennzoil, the solution is not to have the government buy its assets at inflated prices: the solution is Chapter 11. In Chapter 11, companies with a solid underlying business generally swap debt for equity: the old equity holders are wiped out and the old debt claims are transformed into equity claims in the new entity which continues operating with a new capital structure. Alternatively, the debtholders can agree to cut down the face value of debt, in exchange for some warrants. Even before Chapter 11, these procedures were the solutions adopted to deal with the large railroad bankruptcies at the turn of the twentieth century. So why is this wellestablished approach not used to solve the financial sectors current problems?
The obvious answer is that we do not have time; Chapter 11 procedures are generally long and complex, and the crisis has reached a point where time is of the essence. If left to the negotiations of the parties involved this process will take months and we do not have this luxury. However, we are in extraordinary times and the government has taken and is prepared to take unprecedented measures. As if rescuing AIG and prohibiting all short-selling of financial stocks was not enough, now Treasury Secretary Paulson proposes a sort of Resolution Trust Corporation (RTC) that will buy out (with taxpayers’ money) the distressed assets of the financial sector. But, at what price?
If banks and financial institutions find it difficult to recapitalize (i.e., issue new equity) it is because the private sector is uncertain about the value of the assets they have in their portfolio and does not want to overpay. Would the government be better in valuing those assets? No. In a negotiation between a government official and banker with a bonus at risk, who will have more clout in determining the price? The Paulson RTC will buy toxic assets at inflated prices thereby creating a charitable institution that provides welfare to the rich—at the taxpayers’ expense. If this subsidy is large enough, it will succeed in stopping the crisis. But, again, at what price? The answer: Billions of dollars in taxpayer money and, even worse, the violation of the fundamental capitalist principle that she who reaps the gains also bears the losses. Remember that in the Savings and Loan crisis, the government had to bail out those institutions because the deposits were federally insured. But in this case the government does not have do bail out the debtholders of Bear Sterns, AIG, or any of the other financial institutions that will benefit from the Paulson RTC.
Since we do not have time for a Chapter 11 and we do not want to bail out all the creditors, the lesser evil is to do what judges do in contentious and overextended bankruptcy processes: to cram down a restructuring plan on creditors, where part of the debt is forgiven in exchange for some equity or some warrants. And there is a precedent for such a bold move. During the Great Depression, many debt contracts were indexed to gold. So when the dollar convertibility into gold was suspended, the value of that debt soared, threatening the survival of many institutions. The Roosevelt Administration declared the clause invalid, de facto forcing debt forgiveness. Furthermore, the Supreme Court maintained this decision. My colleague and current Fed Governor Randall Koszner studied this episode and showed that not only stock prices, but bond prices as well, soared after the Supreme Court upheld the decision. How is that possible? As corporate finance experts have been saying for the last thirty years, there are real costs from having too much debt and too little equity in the capital structure, and a reduction in the face value of debt can benefit not only the equityholders, but also the debtholders.
If debt forgiveness benefits both equity and debtholders, why do debtholders not voluntarily agree to it? First of all, there is a coordination problem. Even if each individual debtholder benefits from a reduction in the face value of debt, she will benefit even more if everybody else cuts the face value of their debt and she does not. Hence, everybody waits for the other to move first, creating obvious delay. Secondly, from a debtholder point of view, a government bail-out is better. Thus, any talk of a government bail-out reduces the debtholders’ incentives to act, making the government bail-out more necessary.
As during the Great Depression and in many debt restructurings, it makes sense in the current contingency to mandate a partial debt forgiveness or a debt-for-equity swap in the financial sector. It has the benefit of being a well-tested strategy in the private sector and it leaves the taxpayers out of the picture. But if it is so simple, why no expert has mentioned it?
The major players in the financial sector do not like it. It is much more appealing for the financial industry to be bailed out at taxpayers’ expense than to bear their share of pain. Forcing a debt-for-equity swap or a debt forgiveness would be no greater a violation of private property rights than a massive bailout, but it faces much stronger political opposition. The appeal of the Paulson solution is that it taxes the many and benefits the few. Since the many (we, the taxpayers) are dispersed, we cannot put up a good fight in Capitol Hill; while the financial industry is well represented at all the levels. It is enough to say that for 6 of the last 13 years, the Secretary of Treasury was a Goldman Sachs alumnus. But, as financial experts, this silence is also our responsibility. Just as it is difficult to find a doctor willing to testify against another doctor in a malpractice suit, no matter how egregious the case, finance experts in both political parties are too friendly to the industry they study and work in.
The decisions that will be made this weekend matter not just to the prospects of the U.S. economy in the year to come; they will shape the type of capitalism we will live in for the next fifty years. Do we want to live in a system where profits are private, but losses are socialized? Where taxpayer money is used to prop up failed firms? Or do we want to live in a system where people are held responsible for their decisions, where imprudent behavior is penalized and prudent behavior rewarded? For somebody like me who believes strongly in the free market system, the most serious risk of the current situation is that the interest of few financiers will undermine the fundamental workings of the capitalist system. The time has come to save capitalism from the capitalists.
Wednesday, September 10, 2008
Drawbacks of a connected world
Its usually believed that the more connected a system is, the stabler it is. Studies of network complexity suggest that the stability of a network of connected nodes usually falls when interconnections begin and then it increases.
However, there is also a theory that more connected systems are stabler than sparsely connected ones only with regard to regular shocks. They are however much more prone to complete and utter failure in case of extraordinary shocks (aka Black Swans, courtesy NN Taleb).
Therefore, one might infer that the increasingly globalized world is bringing lower volatilities in most aspects of our lives (however, this can also be debated ad inf.) but is in the process exposing ourselves to a very high degree of uncertainty in case of extreme events.
If you've been following the recent news, you might've seen that the stock of United Airlines was battered 76% intraday based on a news article suggesting bankruptcy filing by the company. The news dated Sep. 7, 2008 was from Florida Sun-Sentinel and later on carried by Bloomberg. There was however one small problem, and it was that the news article was some 6 years old!
Once it came on Bloomberg, and before anyone could figure this out, the stock was hammered down. With all the programmed trading these days, sell orders cascade onto more shorting of the stock leading to a downward spiral of death. The management was really hard pressed understanding what the **** hit them and trying to let the investors know the truth. Given the general swiftness of bankruptcies in America lately, no one wanted to be on the boat till the crack in the hull was confirmed.
Now, the best part is how did this happen? Google's beta product Google News is taking some flak for this. They've come out with their version here. They sort of want us to know that it is not their fault alone. They say that the news bot picked up a new link on the newspaper's website which had somehow appeared in the most read articles list and associated the only date available on the page (which was Sep 7, 2008) with the news. Then, a reporter from the Income Securities Advisors Inc. who wanted to do a quick report on bankruptcies did a google news search for "bankruptcies 2008". This unfortunately lead to the UA news article and was published as an advisory report from the firm. Things went berserk after this report was carried by bloomberg on their trading terminals worldwide. Connected world! It took half a day for matters to cool down. UA stock regained most of what it had lost during the day.
Google and Bloomberg have since then taken down the story. Read it here and here
One mistake by a completely unrelated bot lead to the decimation of the stock. Its not that some trading system failed and caused this. The point is that the error happened in a completely unrelated corner of the world.
"That's how much confidence people have in our system, when you can take the stock of a major corporation to zero in about 10 minutes," said Thomas Buffenbarger, president of the International Association of Machinists and Aerospace Workers, which represents mechanics and other employees at U.S. airlines.
However, there is also a theory that more connected systems are stabler than sparsely connected ones only with regard to regular shocks. They are however much more prone to complete and utter failure in case of extraordinary shocks (aka Black Swans, courtesy NN Taleb).
Therefore, one might infer that the increasingly globalized world is bringing lower volatilities in most aspects of our lives (however, this can also be debated ad inf.) but is in the process exposing ourselves to a very high degree of uncertainty in case of extreme events.
If you've been following the recent news, you might've seen that the stock of United Airlines was battered 76% intraday based on a news article suggesting bankruptcy filing by the company. The news dated Sep. 7, 2008 was from Florida Sun-Sentinel and later on carried by Bloomberg. There was however one small problem, and it was that the news article was some 6 years old!
Once it came on Bloomberg, and before anyone could figure this out, the stock was hammered down. With all the programmed trading these days, sell orders cascade onto more shorting of the stock leading to a downward spiral of death. The management was really hard pressed understanding what the **** hit them and trying to let the investors know the truth. Given the general swiftness of bankruptcies in America lately, no one wanted to be on the boat till the crack in the hull was confirmed.
Now, the best part is how did this happen? Google's beta product Google News is taking some flak for this. They've come out with their version here. They sort of want us to know that it is not their fault alone. They say that the news bot picked up a new link on the newspaper's website which had somehow appeared in the most read articles list and associated the only date available on the page (which was Sep 7, 2008) with the news. Then, a reporter from the Income Securities Advisors Inc. who wanted to do a quick report on bankruptcies did a google news search for "bankruptcies 2008". This unfortunately lead to the UA news article and was published as an advisory report from the firm. Things went berserk after this report was carried by bloomberg on their trading terminals worldwide. Connected world! It took half a day for matters to cool down. UA stock regained most of what it had lost during the day.
Google and Bloomberg have since then taken down the story. Read it here and here
One mistake by a completely unrelated bot lead to the decimation of the stock. Its not that some trading system failed and caused this. The point is that the error happened in a completely unrelated corner of the world.
"That's how much confidence people have in our system, when you can take the stock of a major corporation to zero in about 10 minutes," said Thomas Buffenbarger, president of the International Association of Machinists and Aerospace Workers, which represents mechanics and other employees at U.S. airlines.
Thursday, September 4, 2008
Would you invest in a hedge fund which returned 41% annualized over a decade?
It may seem naive to question the capability of a hedge fund manager who has a record of returning close to 50% annually over a decade. You might be labeled a moron if you were to question his investment skills. Below is an insightful article written by James Hamilton in 2005. It talks about the research of MIT Professor Andrew Lo (published in Financial Analysts Journal in 2001) who established a fictional hedge fund called Capital Decimation Partners (CDP!) whose only strategy was to sell put options in the great bull run of S&P 500 during 1992-99. The fund returned an astounding 41% annualized with positive returns in every single year.
Read on ...
Hedge fund risk
Psst-- want to earn a 41% annual return over a decade? Then read on.
Originally, "hedge fund" was used to describe a fund that simultaneously buys and sells related securities, constructing a portfolio with desired risk-return characteristics or profiting from subtle differences in returns. Today, the term may refer more broadly to any unregulated private investment pool that adopts unconventional or aggressive investment strategies such as short selling, leveraged positions, program trading, swaps, arbitrage, and derivatives trading.
The Big Picture calls attention to this story from this weekend's New York Times:
Mr. Simons, who got into the hedge fund business after abandoning a stellar career in mathematics, has a track record that is jaw-dropping.... from 1990 to 2004, Renaissance's primary hedge fund, called Medallion, has delivered annualized returns of 33.21 percent. (The Standard & Poor's 500-stock index has returned, on average, 10.98 percent during those same years.)
I do not know anything about the investment strategy of Renaissance or Medallion. But let me tell you about one fund I do know about called CDP, which was described by MIT Professor Andrew Lo in an article published in Financial Analysts Journal in 2001.
1992-1999 was a good time to be in stocks-- a strategy of buying and holding the S&P 500 would have earned you a 16% annual return, with $100 million invested in 1992 growing to $367 million by 1999. As nice as this was, it pales in comparison to CDP's strategy, which would have turned $100 million into $2.7 billion, a 41% annual compounded return, with a positive return in every single year.
Want to learn more? CDP stands for "Capital Decimation Partners", a hypothetical fund created by Professor Lo in order to illustrate the potential difficulty in evaluating a fund's risk if all you had to go on was a decade of stellar returns. The strategy whereby CDP would have amassed a hypothetical fortune was amazingly simple-- it simply sold put options on the S&P 500 stock index (SPX).
Buying put options is a way that an investor can buy insurance against the possibility of a big loss. For example, the S&P 500 index is currently valued around 1250. You can buy an option (the 1150 March 2006 put) that will pay you $100 for every point that the S&P is below 1150 on a specified date in March. Such an insurance policy would today cost you about $750. If you've bought enough puts to balance the equity you have invested long, you have nothing to fear if the market goes below 1150, because every dollar you lose on your main holdings you can gain back from your put option.
But what about the person who sold you that put? They have now assumed all of your downside risk. Lo's Capital Decimation Partners would use its capital to meet the margin requirements (which guarantee to the exchange that CDP could in fact make the payments to the buyer of the put), and roll over the proceeds to make even bigger bets. Essentially it was thus using leverage to turn the relatively small proceeds from selling these puts into a huge return on the capital invested.
Of course, if you play that game long enough, eventually the market will make a big enough move against you that your capital used to meet margin requirements gets completely wiped out, giving you a long-run guaranteed return on your investment of -100%. But over the 1992-99 period, Lo's hypothetical fund dodged that bullet and ended up turning in a whopping performance.
Lo gives a variety of other examples of funds that could go for a long period with very high returns and yet entail enormous risks. They all have this feature of pursuing investments that have a high probability of a modest return and a very small probability of a huge loss. By leveraging such investments, one can achieve a very impressive record as long as that low probability disastrous event does not occur. It is certainly possible that some strategies along these lines would, unlike Capital Decimation Partners, earn a higher return than the market on average if you stuck with them forever. However, you should view that higher return as coming at the expense of much higher risk.
My discussion of Lo's hypothetical hedge fund should not be construed as a specific critique of any currently operating actual hedge fund. But suppose that all you know about a fund is that it has earned exceptional returns every year for the last decade, and you don't have access to information about the specific trading or asset holding strategy that netted those returns. Is it a good investment for your money? My advice would be no.
Read on ...
Hedge fund risk
Psst-- want to earn a 41% annual return over a decade? Then read on.
Originally, "hedge fund" was used to describe a fund that simultaneously buys and sells related securities, constructing a portfolio with desired risk-return characteristics or profiting from subtle differences in returns. Today, the term may refer more broadly to any unregulated private investment pool that adopts unconventional or aggressive investment strategies such as short selling, leveraged positions, program trading, swaps, arbitrage, and derivatives trading.
The Big Picture calls attention to this story from this weekend's New York Times:
Mr. Simons, who got into the hedge fund business after abandoning a stellar career in mathematics, has a track record that is jaw-dropping.... from 1990 to 2004, Renaissance's primary hedge fund, called Medallion, has delivered annualized returns of 33.21 percent. (The Standard & Poor's 500-stock index has returned, on average, 10.98 percent during those same years.)
I do not know anything about the investment strategy of Renaissance or Medallion. But let me tell you about one fund I do know about called CDP, which was described by MIT Professor Andrew Lo in an article published in Financial Analysts Journal in 2001.
1992-1999 was a good time to be in stocks-- a strategy of buying and holding the S&P 500 would have earned you a 16% annual return, with $100 million invested in 1992 growing to $367 million by 1999. As nice as this was, it pales in comparison to CDP's strategy, which would have turned $100 million into $2.7 billion, a 41% annual compounded return, with a positive return in every single year.
Want to learn more? CDP stands for "Capital Decimation Partners", a hypothetical fund created by Professor Lo in order to illustrate the potential difficulty in evaluating a fund's risk if all you had to go on was a decade of stellar returns. The strategy whereby CDP would have amassed a hypothetical fortune was amazingly simple-- it simply sold put options on the S&P 500 stock index (SPX).
Buying put options is a way that an investor can buy insurance against the possibility of a big loss. For example, the S&P 500 index is currently valued around 1250. You can buy an option (the 1150 March 2006 put) that will pay you $100 for every point that the S&P is below 1150 on a specified date in March. Such an insurance policy would today cost you about $750. If you've bought enough puts to balance the equity you have invested long, you have nothing to fear if the market goes below 1150, because every dollar you lose on your main holdings you can gain back from your put option.
But what about the person who sold you that put? They have now assumed all of your downside risk. Lo's Capital Decimation Partners would use its capital to meet the margin requirements (which guarantee to the exchange that CDP could in fact make the payments to the buyer of the put), and roll over the proceeds to make even bigger bets. Essentially it was thus using leverage to turn the relatively small proceeds from selling these puts into a huge return on the capital invested.
Of course, if you play that game long enough, eventually the market will make a big enough move against you that your capital used to meet margin requirements gets completely wiped out, giving you a long-run guaranteed return on your investment of -100%. But over the 1992-99 period, Lo's hypothetical fund dodged that bullet and ended up turning in a whopping performance.
Lo gives a variety of other examples of funds that could go for a long period with very high returns and yet entail enormous risks. They all have this feature of pursuing investments that have a high probability of a modest return and a very small probability of a huge loss. By leveraging such investments, one can achieve a very impressive record as long as that low probability disastrous event does not occur. It is certainly possible that some strategies along these lines would, unlike Capital Decimation Partners, earn a higher return than the market on average if you stuck with them forever. However, you should view that higher return as coming at the expense of much higher risk.
My discussion of Lo's hypothetical hedge fund should not be construed as a specific critique of any currently operating actual hedge fund. But suppose that all you know about a fund is that it has earned exceptional returns every year for the last decade, and you don't have access to information about the specific trading or asset holding strategy that netted those returns. Is it a good investment for your money? My advice would be no.
Wednesday, August 6, 2008
Adult Entertainment benefits from stimulus cheques
What would you stimulate if your government sends you a stimulus cheque?
The economic stimulus cheque is a nifty way to put some petty cash back in the hands of people for them to spend it around and in the process stimulate the economy.
However, it appears that many Americans took stimulus rather too literally and went about stimulating whatever was easiest for them to do so.
There's some solid 'research' by AIMR Co (the Adult Internet Market Research Company … 'Adult Entertainment' is really a BIG business.) which suggests that right during the time the stimulus cheques were being sent to the American people, many 'Adult Entertainment' sites witnessed an abnormal growth of 20 to 30 percent in their paid memberships.
Don't giggle … there are some very strong economic reasons for this. If you don't believe me, look at what Dr. Marc Faber (he's a renowned investment guru) has to say on the stimulus cheques:
"The federal government is sending each of us a $600 rebate. If we spend that money at Wal-Mart, the money goes to China. If we spend it on gasoline it goes to the Arabs. If we buy a computer it will go to India. If we purchase fruit and vegetables it will go to Mexico, Honduras and Guatemala. If we purchase a good car it will go to Germany. If we purchase useless crap it will go to Taiwan and none of it will help the American economy. The only way to keep that money here at home is to spend it on prostitutes and beer, since these are the only products still produced in the US. I've been doing my part."
So, when the American economy is already being screwed, it's best to do it yourself.
I hope they will be able to screw themselves out of this mess.
Wednesday, July 30, 2008
Top down approach of controlling volatility in financial markets
Where else could you have seen this other than China? It seems that the Chinese government is reluctant to let the volatility in financial markets affect the Olympics in any way. That is why the Chinese market regulator has issued a not-so-open warning to financial analysts in China to avoid making any public statements which would increase the volatility of the markets. Which in essence means that analysts can't give a sell (or is it underweight :-) recommendation and they will have to agree with the government that everything is fine in Chinese equities.
Its good to be an analyst when you have been told the results before your analysis. You save a lot of efforts this way :)
The FT story on this is available here
How do you predict the stock market?
I recently had a discussion with a colleague regarding best predictors of the stock markets. Having followed this subject both academically and as an intellectual pursuit, it is very interesting to note how the human mind is conditioned to create relationships using short term data where none exists. Detailed beautifully in "Fooled by Randomness" by Nassim Taleb, there exists a multitude of such phony correlations. "A mathematician plays the stock market" also has similar stuff.
Taleb mentions in his book an example of this. According to the research of Cal Tech professor David Leinweber, the "single best predictor of the S&P 500's performance" over the period 1983 – 1993 that he found was … hold your breath … butter production in Bangladesh. The lagged correlation is almost unity, which means that a y% rise/fall in butter prices in any year is followed by exactly a 2y% rise/fall in S&P 500 in the subsequent year.
So, if you tracked butter production in Bangladesh during that time, you could have made a killing on the stock markets and everyone would've taken you to be a genius.
Tough luck you didn't know this before hand.
That's the problem with back testing. It's what they say, "hindsight is always 20-20".
Tuesday, July 29, 2008
The Jefferson Bottles - A fascinating tale of intrigue, deception and lies
A fascinating tale of intrigue, deception and lies … and a brilliant read.
=======================================================
The Jefferson Bottles
How could one collector find so much rare fine wine?
by Patrick Radden Keefe September 3, 2007
The Christie's catalogue suggested that the wine had belonged to Thomas Jefferson and that its value was "inestimable."
The full story is available on The Newyorker here
Monday, July 28, 2008
Iron man with a paunch ... and others
American Fattening seems to be one disaster waiting to happen. You see all these Americans are eating stuff from all around the world and accumulating them in their bodies. This makes that part of the planet so much heavier than it is designed to be. It would lead to a shift in the Center of Gravity of the planet and will someday or the other lead to a slowdown in Earth's rotation ... leading to a bigger disaster than Global Warming :-D
I came across a news article which states that Disney has recently announced its plans to close the "It's a Small World" attraction in one of its theme parks. The reason they cite is that they need to deepen the water channels because some of the heavy passengers' boats have started getting stuck.
If you think this is hilarious, just wait a bit. So, till the water channels are being deepened, the heavy passengers are being politely asked to disembark. And, they are being compensated with ... guess what an obese American would be most happy getting? ... Something for which he/she would not decide to sue Disney? … Free Food Coupons. Talk about irony.
Then there's this Iron Man Do-It-Yourself dress thing. It is nice to see people happy wearing whatever they are comfortable with. But Iron Man with a paunch! Have a look your self. The image is from Gizmodo.com
Gizmodo also has this image. Who's this guy? Can't hold my stomach laughing :)
Thursday, July 24, 2008
Mega-Super-Duper-Hyperinflation
Hyper inflation is theoretically defined as a situation where inflation exceeds 1,000 percent. We need to coin a new word for the Zimbabwean situation where inflation is close to 12.5 million percent.
Zimbabweans battle money shortages as collectors buy hundred billion dollar notes on eBay
Amid Zimbabwe's mind-boggling hyper inflation, a new 100 billion dollar bank note has more value as a novelty item on eBay than on the streets of the capital.
The note, launched this week, is worth enough to buy a loaf of bread _ if you can find one on Zimbabwe's depleted store shelves. Meanwhile on eBay, the bill was on offer for nearly US$80.
Notes in the millions of dollars are useful only as toilet paper and it's cheaper to light a fire with low denomination bills than with newspaper.
In the political and economic turmoil since disputed March 29 elections, prices have risen almost daily. Factories and businesses have shut down amid empty order books and chronic shortages of gasoline, power, water and spare parts for equipment repairs.
President Robert Mugabe and opposition leader Morgan Tsvangirai signed an agreement Monday to hold talks about power-sharing to end the crisis and restore economic stability. But the news failed to move the exchange rate, since little cash is available.
House prices and lottery prizes are quoted in quadrillions _ that's with 15 zeros. Zimbabweans says it's only a matter of time before big ticket items will be priced in the quintillions, which have 18 zeros.
Official inflation is quoted at 2.2 million percent but independent finance houses say it's closer to 12.5 million percent.
One major commercial bank said its automated teller machines are not configured to dispense multi-zero withdrawals and freeze in what it called a "data overflow error." Software writers are busy writing programs to try to overcome the problem.
Urgent electronic transfers in trillions also take several days as electronic accounting systems grapple with transactions in 12 zeros.
Bank transfers command a special rate. A hundred billion dollars is worth US$5 at the official rate, US$1 at the black market rate _ but just 30 U.S. cents in a transfer because by the time the funds are processed the Zimbabwe currency can be expected to be worth a lot less.
Shops have dropped six zeros from price tags, adding them again after totals are tallied at tills.
Zimbabwe has 27 denominations of bills and no coins. Lower value bills _ 10 million Zimbabwe dollars _ are all but obsolete, even in brick-sized bundles. Beggars and street urchins rarely bother to pick up such bills dropped on the street.
But one recent day in Marondera town outside Harare, traffic stopped and business came to a halt when someone _ apparently upset by the dizzying rate of inflation _ started throwing 50-billion-dollar notes from a moving car. Residents scrambled to collect the money.
The biggest bakery in Harare shut down this month and sent 1,200 workers home on forced leave because flour stocks recently ran out. For years, the bakery donated free loaves every week to a home for the handicapped and charity-run hostels.
One Internet provider has invited customers to pay their fees in gasoline coupons that hold their value.
A 58-year-old Harare financial director who asked not to be identified said his monthly salary is paid in local money which converts to US$50 at the bank rate. When available at his local sports club, a hamburger costs the equivalent of US$12. He hasn't eaten out in a year.
A cup of coffee at a government-owned five-star hotel was 130 billion Zimbabwe dollars, or US$5.30 this week. A waitress at the hotel said she earns 100 billion Zimbabwe dollars, US$4 a month.
A German company stopped shipments of bank note paper to the central bank's printers this month as the European Union looked to strengthen sanctions. The release of new money slowed as the central bank said it was looking to Indonesia and Malaysia to supply the specialized paper.
The daily grind for Zimbabweans to survive in the economic meltdown has won them a rating as the world's unhappiest people in the World Values Survey of the Michigan Institute for Social Research.
Zimbabweans were slightly unhappier than Armenians and Moldovans, also victims poverty and "the legacies of authoritarian rule," the researchers said.
Dereck Nhamo, who manages a warehouse, says he wants to join the teeming ranks of unemployed because he can't afford to work any longer.
Nhamo earns less than his bus fare to the warehouse in Harare but adds to his monthly income by selling firewood collected on weekends in outlying woodlands.
"It doesn't make sense to go to work any more," Nhamo said.
Friday, July 18, 2008
Behavioural Economists and Airlines
There's a recent article on why Airlines Should Hire Behavioral Economists
We all know about the problems that the airlines are having with rising costs and their efforts to raise prices on everything – bags, snacks, good seats, and so on. Their problems are real and I wouldn't be the one responsible for figuring out a way to cover costs at airlines today.
But I can't help but wonder if the airlines should hire a couple of behavioral economists as consultants. Here's why.
One of the major tenets of behavioral economics is that people don't view gains and losses the same way because they are averse to losses. The classic example is that people are not equally happy about finding a $20 bill on the ground as they are sad about losing a $20 bill, even though both are $20.
This brings me to the airlines. The airlines have framed all of their efforts to raise revenues as losses to the customers. You have to pay an extra fee to check a bag, get a snack or drink on the plane, get a headset, get an exit row seat, and so on.
Behavioral economics would tell you that a better approach would be to charge higher ticket prices and then provide ways for customers to gain money by engaging in the behavior that the airlines want. For example, you pay $350 to fly from Cleveland to New York, but you get $20 if you carry on your bag, $7 if you refuse the peanuts and pop; $2 if you refuse the headset, and $15 for taking the middle seat.
By giving people money for taking the actions that they want (even though the customer is only getting back his or her own money paid in the form of higher ticket prices), the airlines would frame their efforts to raise revenues as gains to customers. Almost all of the research studies show that framing the same efforts as gains instead of as losses make people respond more positively. So the airlines should get the same outcome with less negative customer reaction by taking this approach.
it seems very plausible, but my common sense suggests that it would not work. It is likely that it would do worse than the current system. In India many people use travel portals to book their tickets. When you do a search, you get multiple offers at various prices. At the time of booking, if someone sees a ticket priced at 6000 bucks v/s another at 7000 (controlling for the airline brand value), it will seem plausible for him to book his gains instantly rather than wait for flying to get cash backs.
We all know about the problems that the airlines are having with rising costs and their efforts to raise prices on everything – bags, snacks, good seats, and so on. Their problems are real and I wouldn't be the one responsible for figuring out a way to cover costs at airlines today.
But I can't help but wonder if the airlines should hire a couple of behavioral economists as consultants. Here's why.
One of the major tenets of behavioral economics is that people don't view gains and losses the same way because they are averse to losses. The classic example is that people are not equally happy about finding a $20 bill on the ground as they are sad about losing a $20 bill, even though both are $20.
This brings me to the airlines. The airlines have framed all of their efforts to raise revenues as losses to the customers. You have to pay an extra fee to check a bag, get a snack or drink on the plane, get a headset, get an exit row seat, and so on.
Behavioral economics would tell you that a better approach would be to charge higher ticket prices and then provide ways for customers to gain money by engaging in the behavior that the airlines want. For example, you pay $350 to fly from Cleveland to New York, but you get $20 if you carry on your bag, $7 if you refuse the peanuts and pop; $2 if you refuse the headset, and $15 for taking the middle seat.
By giving people money for taking the actions that they want (even though the customer is only getting back his or her own money paid in the form of higher ticket prices), the airlines would frame their efforts to raise revenues as gains to customers. Almost all of the research studies show that framing the same efforts as gains instead of as losses make people respond more positively. So the airlines should get the same outcome with less negative customer reaction by taking this approach.
it seems very plausible, but my common sense suggests that it would not work. It is likely that it would do worse than the current system. In India many people use travel portals to book their tickets. When you do a search, you get multiple offers at various prices. At the time of booking, if someone sees a ticket priced at 6000 bucks v/s another at 7000 (controlling for the airline brand value), it will seem plausible for him to book his gains instantly rather than wait for flying to get cash backs.
Saturday, July 5, 2008
Designing Better Choices
by Richard H. Thaler and Cass R. Sunstein,
Commentary, LA Times:
The director of food services for a big-city school system hatches an interesting idea: If she changes the arrangement and display of school food, will it alter kids' decisions about what to eat? Without modifying menus, she decides to place the desserts first on the cafeteria line in one school, last in another... The results are dramatic. Simply by rearranging the cafeteria, the consumption of ... items increases or decreases.
This example is a product of our imaginations, but we know from similar real-world experiments -- in supermarket design, for example -- that the arrangement of settings is important to the choices consumers make. ...
Those who design supermarkets and school cafeterias are engaged in what we call "choice architecture"... Choice architects are everywhere. If you design the ballot that voters use..., you are a choice architect. If you are a doctor and must describe the alternative treatments available to a patient, you are a choice architect. If you design the form that new employees fill out to enroll in the company healthcare plan, you are a choice architect. ...
Cognitive psychology and behavioral economics have shown that small and apparently insignificant contextual details can have a major effect on people's behavior. Researchers tell us that if a candidate is listed first on the ballot, he may well get a 4% increase in votes. If a doctor says 90% of patients are alive five years after a certain operation, far more people will have the operation than if the doctor says 10% of patients are dead five years after having it. ...
Let's return to the cafeteria line. If, all things considered, you think the arrangement of food ought to nudge kids toward what's best for them, then we welcome you to our new movement: libertarian paternalism..., a whole new approach to the role of government.
The libertarian aspect ... lies in the straightforward insistence that, in general, people should be free to do what they like. They should be permitted to opt out of arrangements they dislike... The paternalistic aspect acknowledges that it is legitimate for choice architects to try to influence people's behavior in order to make their lives longer, healthier and better.
Private and public institutions have many opportunities to provide free choice while also taking real steps to improve people's lives.
Commentary, LA Times:
The director of food services for a big-city school system hatches an interesting idea: If she changes the arrangement and display of school food, will it alter kids' decisions about what to eat? Without modifying menus, she decides to place the desserts first on the cafeteria line in one school, last in another... The results are dramatic. Simply by rearranging the cafeteria, the consumption of ... items increases or decreases.
This example is a product of our imaginations, but we know from similar real-world experiments -- in supermarket design, for example -- that the arrangement of settings is important to the choices consumers make. ...
Those who design supermarkets and school cafeterias are engaged in what we call "choice architecture"... Choice architects are everywhere. If you design the ballot that voters use..., you are a choice architect. If you are a doctor and must describe the alternative treatments available to a patient, you are a choice architect. If you design the form that new employees fill out to enroll in the company healthcare plan, you are a choice architect. ...
Cognitive psychology and behavioral economics have shown that small and apparently insignificant contextual details can have a major effect on people's behavior. Researchers tell us that if a candidate is listed first on the ballot, he may well get a 4% increase in votes. If a doctor says 90% of patients are alive five years after a certain operation, far more people will have the operation than if the doctor says 10% of patients are dead five years after having it. ...
Let's return to the cafeteria line. If, all things considered, you think the arrangement of food ought to nudge kids toward what's best for them, then we welcome you to our new movement: libertarian paternalism..., a whole new approach to the role of government.
The libertarian aspect ... lies in the straightforward insistence that, in general, people should be free to do what they like. They should be permitted to opt out of arrangements they dislike... The paternalistic aspect acknowledges that it is legitimate for choice architects to try to influence people's behavior in order to make their lives longer, healthier and better.
Private and public institutions have many opportunities to provide free choice while also taking real steps to improve people's lives.
- If we want to increase savings by workers, we could ask employers to ... enroll them automatically [in a 401k plan] unless they specifically choose otherwise.
- If we want to increase the supply of transplant organs in the United States, we could presume that people want to donate, rather than treating nondonation as the default. ...
- If we want to increase charitable giving, we might give people the opportunity to join a ... plan, in which some percentage of their future wage increases are automatically given to charities...
- If we want to respond to the recent problems in [credit markets], we might design disclosure policies that ensure consumers can see exactly what they are paying and make easy comparisons among the possible options.
Friday, July 4, 2008
Comment on the drying up of Auction Rate Securites
A brilliant comment on the drying up of the A-Rate Securities market:
"It’s the fire in the discotheque," said Peter Demirali, a vice president at Vineland, New Jersey-based Cumberland Advisors Inc., which has $1 billion of assets under management. “Everyone can’t get out all at the same time."
Paul Krugman terms the failure of this market as a 'modern version of bank run'.
Rritu
"It’s the fire in the discotheque," said Peter Demirali, a vice president at Vineland, New Jersey-based Cumberland Advisors Inc., which has $1 billion of assets under management. “Everyone can’t get out all at the same time."
Paul Krugman terms the failure of this market as a 'modern version of bank run'.
Rritu
Liquidity Dis-Premium!
It is conventionally assumed that many "normal" assets (equities, many commodities) enjoy a built-in liquidity premium: they are worth dearer than otherwise because of the possibilities they offer for quick and easy trading (ie, you can get rid of your position very conveniently and with transparent pricing). But in a world where many players (savvy and un-savvy alike) hold very complex stuff, and where things like staid boring equities become today´s treasury bonds, cushions in case the complex stuff turns funny, or necessary as collateral with which to deal in complex stuff, or required to convince investors that you don´t just deal in mega-esoteric things, the liquidity premium could actually transform into a dis-premium (that is, a reason for a lower, not higher, valuation). Why? Simple. When complex-stuff markets go awry (like, well, now) the mark-to-market of the complex positions goes south or actually dissapears into nothingness, requiring punters to raise cash with which to meet margin calls, satisfy redemptions, and endow their positions with something actually valuable. What do they sell? What they can, which is of course their most liquid holdings. In the midst of a liquidity gold-rush, it is hard to dispose of iliquid things. So what happens to the prices of the liquid stuff that all those iliquid stuff-holding large players are dumping? They go down and become very volatile. The liquid stuff (along with those who invested in it) is paying the price for being so liquid at a time when non-liquid investments have become extremely voguish and prevalent. A purveyor of stocks may explain to their prospective clients that one of the things that justifies the asset´s dearness is its high liquidity. If you don´t like it anymore or need some money to send your kids to college, getting rid of the asset is as easy and transparent as 1-2-3. Isn´t that a wonderful property? Something worth paying for?. After these weeks' troubles many clients may start demanding a substantial discount simply on account of equities' too-deep-for-their-own-good liquidity.
Rritu
Rritu
The improbable roots of efficient markets theory!
Below is an extract from Pablo's blog which I follow:
From hedge fund manager John Seo, the following illuminating ruminations:
These academics couldn't understand the fact that they couldn't beat the markets. So they just said it was efficient. And, Oh, by the way, here's a ton of math you don't understand? Wait a minute. Could it really be that simple? Is efficient market theory a direct result of theorists inability to make money in the markets (or, worse, jealousy at those players that do make money in the markets and who perhaps, sin of sins, never dared to offer a real-life job to the academics)? Is the true thinking behind the (improbable) theory the following: since I can´t make money, either because I don´t have the ability or because no one ever gave me a chance at it, then I just state that no one can. Perfect alibi, and by the way it allows me to say that anyone who beats the market is simply a lucky aberration. It is tempting to think, following Seo´s words, that had certain notable finance theorists gotten a job as hedge fund managers rather than a university post, efficient market theory would have never taken flight.
This is in some sense related to the 'Drawer phenomenon' (or something similar which I fail to recollect). It says that among all research done on the efficient markets theory, only those findings come out / are published which confirm the efficient markets hypothesis. Any research which detects an inefficient markets is not published because the author has a financial incentive to withhold this information from the public and use it to make money in the markets. Hence, all such findings are safely tucked inside the drawers of the researchers :)
However, there is a catch to it. There are other incentives (sometimes much more rewarding than just money) awaiting someone with any such findings.
Rritu
From hedge fund manager John Seo, the following illuminating ruminations:
These academics couldn't understand the fact that they couldn't beat the markets. So they just said it was efficient. And, Oh, by the way, here's a ton of math you don't understand? Wait a minute. Could it really be that simple? Is efficient market theory a direct result of theorists inability to make money in the markets (or, worse, jealousy at those players that do make money in the markets and who perhaps, sin of sins, never dared to offer a real-life job to the academics)? Is the true thinking behind the (improbable) theory the following: since I can´t make money, either because I don´t have the ability or because no one ever gave me a chance at it, then I just state that no one can. Perfect alibi, and by the way it allows me to say that anyone who beats the market is simply a lucky aberration. It is tempting to think, following Seo´s words, that had certain notable finance theorists gotten a job as hedge fund managers rather than a university post, efficient market theory would have never taken flight.
This is in some sense related to the 'Drawer phenomenon' (or something similar which I fail to recollect). It says that among all research done on the efficient markets theory, only those findings come out / are published which confirm the efficient markets hypothesis. Any research which detects an inefficient markets is not published because the author has a financial incentive to withhold this information from the public and use it to make money in the markets. Hence, all such findings are safely tucked inside the drawers of the researchers :)
However, there is a catch to it. There are other incentives (sometimes much more rewarding than just money) awaiting someone with any such findings.
Rritu
Thursday, July 3, 2008
Speculators are often scapegoats, economists say
Speculators are often scapegoats, economists say
LONDON (MarketWatch) -- Once again, it's open season on speculators.
The full article is available here
Paul Krugman has commented on this article too:
I also believe that the tell tale signs of speculation are missing from the current boom in oil prices. It is only time which will tell how much of the oil demand actually gets reduced.
Rritu
Tuesday, July 1, 2008
Wittiest comments in the past week
Witty comments by some of the well known talk show hosts.
If the Democratic candidate is elected president, we'll have an Obama nation. If the Republican candidate is elected, he'll bomb a nation.
(Richard Lederer)
Former President Bill Clinton now says he is willing to do whatever he can to help Barack Obama become president, so the Obama team is asking him to campaign for John McCain. (Jake Novak)
Do you like good news? President Bush has ordered now -- it's official -- has ordered his troops now to find Osama Bin Laden. Yep boy, he really jumped on that one, didn't he? (David Letterman)
Los Angeles City Hall reported Tuesday it has issued seven thousand oil drilling permits this year. The city sits on a huge oil pool. Between the price of gold and the price of oil we're lucky that people aren't digging up the roads with their bare hands. (Argus Hamilton)
According to the Pentagon, at least 1,000 nuclear missiles or components in the U. S. arsenal are lost or cannot be located. We can't even find our own weapons of mass destruction. (Jay Leno)
President Bush went to Iowa today. ... Of course, people from Iowa were a little confused. They weren't sure which disaster President Bush was talking about - the floods or his presidency. (Jay Leno)
By casting the key vote in the Supreme Court's gun decision, Justice Anthony Kennedy proved again that he's the court's swinger who can go either way. Interns of both sexes are getting nervous. (Scott Witt)
Al Gore has endorsed Barack Obama for president. How about that? Political experts say this is great, because it gives the Obama campaign a much-needed shot of boredom. (David Letterman)
Saudi Arabia hosted a summit to find ways to reduce prices from the oil well to the pump. Gas station owners are looking for ways to make gasoline more affordable. Across the nation they're converting all their mini-marts into pawn shops. (Argus Hamilton)
Australian police have charged a man for drunk driving in a motorized wheelchair after he was found to be six times over the legal alcohol limit. Police said they might have overlooked the incident if he hadn't been doing 45 in a school zone. With gas prices rising, folks are souping up their chairs. (Joe Hickman)
Business at Nevada's Brothels is down 45% because of gas high prices. Not so much because truckers find it hard to find money to drive to the bordellos, but rather because the price of gas is so high, the trucker's wives are the ones working in the brothels. (Pedro Bartes)
George Carlin was remembered this week for his classic comedy routine listing the seven dirty words you can't say on television. Not much has changed in the ensuing thirty years. You still can't say those seven words on the air, but you can show them. (Argus Hamilton)
The Midwest floods are being called the biggest economic disaster in decades. Aside from the Bush Administration. (Jim Barach)
Belgium released a study Tuesday proving men make bad judgments about alcohol and money whenever they see a woman in a bikini. It could be worse. Seeing women covered from head to toe causes men to fly planes into buildings, so take your choice. (Argus Hamilton)
THE CANDIDATES
Here's good news -- Bill Clinton will be out on the campaign trail getting people to vote for Obama. Isn't that what he was doing for Hillary? But Bill Clinton is campaigning for Obama. President Bush is campaigning for McCain. And I'm thinking, wow, this could really be the year for Ralph Nader. (David Letterman)
Barack Obama is asking his top contributors to help Hillary Clinton pay her campaign debts. Since Obama didn't want the 80 million in government funds, why can't Hillary have part of that? I mean, should it all go to Ralph Nader? (Joe Hickman)
John McCain proposed Monday a $300 million dollar prize for a better auto battery. Gee, if the battery costs $300-million, I don't think I could afford the car. No thanks, John, I'll just keep my old Corolla and only drive downhill. (Joe Hickman)
Ralph Nader told reporters Tuesday Barack Obama is not addressing black issues of urban poverty and job cuts due to free trade because he wants to talk white. He might have a point. Barack Obama has won a Grammy and it was for a tribute to Perry Como. (Argus Hamilton)
John McCain says that if elected president, he will give a $300 million prize to anyone who can design a new car battery. McCain can get a new type of battery invented because he's the guy that came up with the idea of not cranking the car up at the start. (Craig Ferguson)
The big story out there continues to be the high cost of gasoline.
Four bucks a gallon. I have stopped traveling anywhere that is not downhill. Luckily, John McCain has the solution… offering millions of dollars to people who actually have ideas. It's just the latest example of John McCain's brave fight to keep Americans awake while he talks (Stephen Colbert)
John McCain drew protesters in Las Vegas Wednesday who picketed over his support for nuclear power. He's toured many nuclear power plants and he knows they're harmless. All radiation does is bleach your skin white, thin your hair and dump your first wife. (Argus Hamilton)
The latest Bloomberg poll shows Obama has a 15-point lead over John McCain. That's a big lead. He leads in men and in women and with young people, minorities. I think the only place that McCain is beating Obama is in calcium deposits right now. (Jimmy Kimmel)
John McCain and Barack Obama have both laid out their energy plans. Obama wants enough "green" energy to power the entire U.S. economy, and McCain just wants enough energy to stay up past nine o'clock.
(Craig Ferguson)
John McCain and Barack Obama are bickering, and you know what they're bickering about? What to do when they catch Osama bin Laden. That's right. Obama wants to bring him to trial, but John McCain wants to shoot him. Both really good ideas. And I said to myself, guys, guys, how about somebody finding him first? Let's do that. (David Letterman)
Both McCain and Senator Barack Obama are trying to woo voters who are outside their natural demographic. In this election, for Senator Obama, that means trying to reach working class, non-Muslim white women who love America. (Jon Stewart)
PRESIDENT BUSH
Someone asked President George W. Bush what he thought about Roe vs Wade. His response: "Them Iowans should decide for themselves the best way to evacuate the flooded areas."
Former White House spokesman Scott McClellan says President Bush did not know about the CIA leak. He said the President couldn't understand all the commotion about a leak, that the White House plumbing was just fine. (Jim Barach)
THE ADMINISTRATION
James Dobson says Barack Obama distorts the Bible in his speeches. It's good experience. If the White House job falls through, he can be a TV preacher. (Joe Hickman)
THE COURTS
The Supreme Court made it easier Thursday for older workers to claim they have been discriminated against due to their age. Reaction was swift. The Republican National Committee just announced it will sue anybody who doesn't vote for John McCain. (Argus Hamilton)
The Supreme Court ruled Monday to permit the construction of hundreds of miles of border wall with Mexico. It's vitally necessary. The whole idea of the wall is to keep out terrorists who are trying to get into the United States for a fair trial. (Argus Hamilton)
THE DEMOCRATS
Hillary Clinton had promised the daughter of a supporter, when the girl was in eighth grade, that she would attend her high school graduation. On Sunday, Clinton fulfilled the pledge and spoke at the girl's graduation. This is a switch - usually it's Bill Clinton who makes promises to young girls. (Doug Austen)
LOCAL NEWS
Miami Beach police arrested 6 people and impounded a limousine bus that cruised Miami Beach offering sex aboard. How bad is it the foreclosure affecting the country that now bordellos run on wheels?
(Pedro Bartes)
Holly Springs, Georgia is considering a $12 gasoline surcharge for anyone caught speeding, to pay for gas used by police. That's three gallons worth. How long does it take for them to pull someone over?
What's next? A lead surcharge for anyone who gets shot by the police?
(Jim Barach)
THE ECONOMY & TAXES
Government figures released by President Bush show we are not in a recession. Unless, of course, you have to buy gas or food or some other luxury item. (Jay Leno)
Some conservative economists say they are hopeful about a rebound in the economy and say there's light at the end of the tunnel. Unfortunately, for most people the light at the end of the tunnel is off because they didn't have the money to pay their electricity bill.
(Pedro Bartes)
Have you noticed how expensive fireworks are? And with gasoline so expensive, we can't afford to go anywhere. So I think this July 4th we'll just stay home and blow up the SUV. (Joe Hickman)
Merrill Lynch's survey said Tuesday there were ten million millionaires in the world. The list includes everyone from Arab sheiks to San Fernando Valley tract home owners. By next year it will include everyone with enough money for a full tank of gas. (Argus Hamilton)
High oil prices are absolutely killing the restaurant business. Everyone is staying home at night playing the world's hottest new Playstation game, Grand Theft Gasoline. (Argus Hamilton)
Californians now driving across the border to get cheap gas in Mexico. Here's another tip. Instead of gas, try using Rite Aid vodka. Much cheaper, and about the same mileage. (David Letterman)
NASA & SPACE
The Mars Lander has found traces of ice and salt on Mars. Now, it's looking for tequila. (David Letterman)
NASA reported on Friday the Phoenix Lander exploring Mars found what analysts believe is ice. Scientists were guarded. We don't know if there's actually life on Mars because the presence of ice doesn't by itself guarantee the presence of cocktails. (Argus Hamilton)
MEXICO & LATIN AMERICA T
housands of Californians are heading to Mexico to buy cheaper gas. Who knew we'd have to build the border fence to keep our people in?
(Jake Novak)
Californians are flocking to Mexico to buy gas because it's 50% cheaper. But I'm not sure about the quality of gas, when you fill up they ask if you want it on the rocks or blended, salt or no salt?
(Alex Kaseberg)
ENGLAND & GREAT BRITIAN
Queen Elizabeth stripped Zimbabwe president Robert Mugabe of his knighthood on Wednesday. He's bankrupted her former colony. The Mississippi River just tied Robert Mugabe's record for the most number of white farmers run off their land in one sweep. (Argus Hamilton)
The owner of a tiny island off Scotland declared its independence from the United Kingdom on Saturday, saying he wanted the territory, population one, to be a crown dependency like the Channel Islands. President Bush sent his congratulations and offered to send the new country our Constitution because we're not using it anymore. (Pedro Bartes)
Martha Stewart was denied a visa to enter Great Britain Friday due to her past conviction and imprisonment for lying to the FBI. There's really no need for her to be there. They already have a Queen who knows how to decorate a house like a Protestant. (Argus Hamilton)
IRAQ & IRAN
Iran says it will launch a nuclear attack against the West if its nuclear sites are attacked. But it's not clear if that statement was meant to deter or encourage an attack against Iran. (Jake Novak)
Fortunately, the only way Iran could get a nuclear weapon to America today would be aboard American Airlines. And the new fee for that is prohibitive. And there's a chance it would get lost anyway. (Joe Hickman)
AFRICA
South Africa's former president Nelson Mandela will be honored in Europe this week with a huge celebration on his ninetieth birthday. He spent twenty-five years in prison before he served in public office. In America we do it the other way around. (Argus Hamilton)
SCIENCE & HEALTH
The Federal Aviation Administration has removed the anti-smoking drug Chantix from the list of medications considered safe for airline pilots, mostly because Chantix does not work well when washed down with 11 martinis. (Jake Novak)
The Los Angeles Times published the results Monday of EPA-administered drug tests on the raw sewage of the world's major cities. It shows Los Angeles leads every city in the country in cocaine use. Now you know why we don't miss pro football. (Argus Hamilton)
Safeway begin restocking its produce shelves with tomatoes Thursday despite the threat of salmonella poisoning. It's a humanitarian gesture. They know customers are suffering from high gasoline prices and they wanted to offer them an easy way out. (Argus Hamilton)
According to the American Society of Plastic Surgeons, nearly one in five Americans will be getting cosmetic surgery by 2015, mostly ex-employees of the Bush administration that will need to change their faces to get a new job. (Pedro Bartes)
THE WEATHER & THE ENVIRONMENT
A nasty heat wave is still gripping parts of the nation. It was so hot today; John McCain offered $300 million to the guy who can develop a prune Sllurpee. (Patrick Gorse)
Man it was hot yesterday. I was sweating like President Bush realizing he just promised to write a book. (Alex Kaseberg)
Mississippi River flood levees broke in Iowa on Thursday. The flooding reduced pressure on the river and saved New Orleans. After one hundred and forty years of Reconstruction it's about time Union states picked up their share of the clean-up tab. (Argus Hamilton)
SPORTS
In New York, Shaquille O'Neal, used racial remarks and obscenities in a derogatory rap song about Kobe Bryant and, as a result, lost his honorary Arizona deputy police badge. Too bad, Shaq was one of the best world famous seven-foot millionaire undercover agents they ever had. (Alex Kaseberg)
Shaquille O'Neal ripped into Kobe Bryant for two minutes non-stop as he performed a freestyle rap Sunday night. The crowd became unruly and upset. Not because Shaq was dissing Kobe. But because Shaq actually rapped for two minutes non-stop. (Willam Hale)
Tiger Woods decided Tuesday to sit out the PGA tour this year following his U.S. Open win. He had a broken left leg and a torn up left knee and he won the U.S. Open. It's the most incredible feat on one leg since Heather Mills attracted Paul McCartney. (Argus Hamilton)
Tiger Woods had surgery Tuesday to repair torn knee ligaments by a famous knee surgeon, Dr. Tom Rosenberg. He works out of Park City. The only thing more lucrative than drilling where there's oil is performing knee replacements where Baby Boomers ski. (Argus Hamilton)
Kobe Bryant headlines the group of NBA stars named to the U.S. Olympic basketball team on Monday. The NBA players will begin training this week in Las Vegas. That's a great place to train if our goal is to take home the gold medal in stripper tipping. (Argus Hamilton)
An American hiker stranded in the Bavarian Alps for nearly three days was rescued after using her sports bra as a signal. Not only did she save her life, but she will now also be featured in the next Girls Gone Wild Climbing. (Pedro Bartes)
Tennis scandal! There's a report some big money tennis matches are fixed. Plus -- when the players grunt -- they're actually lip-
synching. (Toms Lake Humor Company)
ENTERTAINMENT
One critic said the new Indiana Jones movie, quote, "Made my heart pound and left me gasping for breath." That's also what 66-year-old Harrison Ford said after making the movie. (Toms Lake Humor Company)
The movie "Wanted" opens this weekend. Angelina Jolie is a trained assassin. She studied for the role by spending time with a tobacco executive. (Alan Ray)
Dozens of up-and-coming indie rock bands will have to cancel their summer tours because of gas prices... and you thought $4 gas was a bad thing. (Jake Novak)
CELEBRITIES
On the death of comedian George Carlin: He is currently doing a set in Heaven convincing God that He doesn't really exist. (Jake Novak)
Don Imus said his racial crack on the radio Monday was a sarcastic point about the unfair treatment of blacks by police. It never ends.
Don Imus wishes he could mention how often Jackie Robinson stole home without people thinking he's stereotyping. (Argus Hamilton)
Don Imus implied on his radio show Monday that Dallas Cowboy Adam "Pacman" Jones' six arrests aren't surprising considering he's black.
It was an honest mistake. The next day Don Imus issued a clarification saying what he meant to say was, We Shall Overcome. (Argus Hamilton)
Ed McMahon was sued by CitiBank for a hundred and eighty thousand dollars Friday as foreclosure loomed. No one can believe he blew through his entire two hundred million dollar fortune. Normally to waste that much money you'd have to invade Iraq. (Argus Hamilton)
Jamie Lynn Spears' baby girl was born weighing 7 pounds, 11 ounces. When Britney Spears was told her niece came in at 7-11, she said that was also the name of the place she buys beer and cigarettes for her own kids. (Jim Barach)
EDUCATION
Gloucester High School in Massachusetts was rocked when dozens of girls decided to get pregnant and seventeen of them succeeded this month. It's devastating. In addition to losing its tourism revenue, New Orleans has lost its title as the Big Easy. (Argus Hamilton)
Several girls at a Massachusetts high school have joined a "pregnancy pact," deciding to deliberately get pregnant at the same time. Man, what some kids won't do to get out of gym class. (Jake Novak)
RELIGION
An interesting study was released today. People in California are less convinced there is a God than people of any state in the country. On an unrelated note, more than 800 wildfires are burning out of control here. (Jimmy Kimmel)
Ted Haggard, the evangelist forced out of his job after being caught up in a sex scandal involving a male prostitute, has left a "spiritual restoration program" and said he is ready in touch with Jesus, and by Jesus he means his gardener. (Pedro Bartes)
HISTORY
United Airlines announced Tuesday it will lay off nine hundred and fifty pilots because of tight profit margins. It's the way things have been going. The airline figured out they can make more money off the passengers by charging extra for a pilot. (Argus Hamilton)
A couple in Maine has opened an Antique Gas Station Museum dedicated to all things related to Shell gasoline, with displays showing old gas pumps, oil filters, cans of brake fluid and other things carrying the Shell logo. There's even a Shell squeegee so visitors can wipe away the tears from seeing pumps selling gas for a quarter. (Paul Seaburn)
The Hula Hoop turns 50. It's not as popular as it once was. Nowadays, if a person wants the sensation of plastic spinning out of control they get a credit card. (Alan Ray)
CULTURE & SEXUAL MORES
The Los Angeles Dodgers were honored by the Hollywood Chamber of Commerce last week with their own star on Hollywood Boulevard. It's a first. Until now no one ever thought there could be twenty-five guys on Hollywood Boulevard who couldn't score. (Argus Hamilton)
The Houston Chronicle said Friday the Texas polygamy sect will be investigated by a West Texas grand jury this week. It's not easy being the husband at a polygamist ranch. You leave the toilet seat up just once and suddenly you're facing an angry mob. (Argus Hamilton)
BUSINESS & LABOR
In a study: Coffee does not appear to be a health risk. That's good news. Because - I'm not sure I'm going to be fully at peace with the world until they open a Starbucks in my living room. (Toms Lake Humor Company)
Yesterday a top Starbucks executive resigned. He will receive a $120 million severance package or three lattes. (Conan O'Brien)
United Airlines and US Airways have joined American Airlines in charging $15 to check in a piece of luggage. However, you'll still get the crying baby, the fat guy in the next seat, the snoring salesman and that guy with the personal hygiene issue absolutely free! (Tim Hunter)
United Airlines is going to start requiring one to three night minimum stays on all their flights. And that's just to prepare for takeoff.
(Jim Barach)
Continental Airlines cut routes and cities Thursday in a desperate bid to make money. There's always a way. United Airlines has begun making money hand over fist by charging Los Angeles passengers fifteen dollars for each item of emotional baggage. (Argus Hamilton)
U.S. Airways infuriated customers Monday whey they began charging for soft drinks in flight. The war on terror is over. Thanks to long lines, new baggage fees, body searches, no food and three-dollar Coca-
Cola's, Americans now side with the hijackers. (Argus Hamilton)
HOLIDAYS
The Fourth of July approaches. Americans will be on the road celebrating their independence. That's if the shipment of oil arrives from Kuwait. (Alan Ray)
If the Democratic candidate is elected president, we'll have an Obama nation. If the Republican candidate is elected, he'll bomb a nation.
(Richard Lederer)
Former President Bill Clinton now says he is willing to do whatever he can to help Barack Obama become president, so the Obama team is asking him to campaign for John McCain. (Jake Novak)
Do you like good news? President Bush has ordered now -- it's official -- has ordered his troops now to find Osama Bin Laden. Yep boy, he really jumped on that one, didn't he? (David Letterman)
Los Angeles City Hall reported Tuesday it has issued seven thousand oil drilling permits this year. The city sits on a huge oil pool. Between the price of gold and the price of oil we're lucky that people aren't digging up the roads with their bare hands. (Argus Hamilton)
According to the Pentagon, at least 1,000 nuclear missiles or components in the U. S. arsenal are lost or cannot be located. We can't even find our own weapons of mass destruction. (Jay Leno)
President Bush went to Iowa today. ... Of course, people from Iowa were a little confused. They weren't sure which disaster President Bush was talking about - the floods or his presidency. (Jay Leno)
By casting the key vote in the Supreme Court's gun decision, Justice Anthony Kennedy proved again that he's the court's swinger who can go either way. Interns of both sexes are getting nervous. (Scott Witt)
Al Gore has endorsed Barack Obama for president. How about that? Political experts say this is great, because it gives the Obama campaign a much-needed shot of boredom. (David Letterman)
Saudi Arabia hosted a summit to find ways to reduce prices from the oil well to the pump. Gas station owners are looking for ways to make gasoline more affordable. Across the nation they're converting all their mini-marts into pawn shops. (Argus Hamilton)
Australian police have charged a man for drunk driving in a motorized wheelchair after he was found to be six times over the legal alcohol limit. Police said they might have overlooked the incident if he hadn't been doing 45 in a school zone. With gas prices rising, folks are souping up their chairs. (Joe Hickman)
Business at Nevada's Brothels is down 45% because of gas high prices. Not so much because truckers find it hard to find money to drive to the bordellos, but rather because the price of gas is so high, the trucker's wives are the ones working in the brothels. (Pedro Bartes)
George Carlin was remembered this week for his classic comedy routine listing the seven dirty words you can't say on television. Not much has changed in the ensuing thirty years. You still can't say those seven words on the air, but you can show them. (Argus Hamilton)
The Midwest floods are being called the biggest economic disaster in decades. Aside from the Bush Administration. (Jim Barach)
Belgium released a study Tuesday proving men make bad judgments about alcohol and money whenever they see a woman in a bikini. It could be worse. Seeing women covered from head to toe causes men to fly planes into buildings, so take your choice. (Argus Hamilton)
THE CANDIDATES
Here's good news -- Bill Clinton will be out on the campaign trail getting people to vote for Obama. Isn't that what he was doing for Hillary? But Bill Clinton is campaigning for Obama. President Bush is campaigning for McCain. And I'm thinking, wow, this could really be the year for Ralph Nader. (David Letterman)
Barack Obama is asking his top contributors to help Hillary Clinton pay her campaign debts. Since Obama didn't want the 80 million in government funds, why can't Hillary have part of that? I mean, should it all go to Ralph Nader? (Joe Hickman)
John McCain proposed Monday a $300 million dollar prize for a better auto battery. Gee, if the battery costs $300-million, I don't think I could afford the car. No thanks, John, I'll just keep my old Corolla and only drive downhill. (Joe Hickman)
Ralph Nader told reporters Tuesday Barack Obama is not addressing black issues of urban poverty and job cuts due to free trade because he wants to talk white. He might have a point. Barack Obama has won a Grammy and it was for a tribute to Perry Como. (Argus Hamilton)
John McCain says that if elected president, he will give a $300 million prize to anyone who can design a new car battery. McCain can get a new type of battery invented because he's the guy that came up with the idea of not cranking the car up at the start. (Craig Ferguson)
The big story out there continues to be the high cost of gasoline.
Four bucks a gallon. I have stopped traveling anywhere that is not downhill. Luckily, John McCain has the solution… offering millions of dollars to people who actually have ideas. It's just the latest example of John McCain's brave fight to keep Americans awake while he talks (Stephen Colbert)
John McCain drew protesters in Las Vegas Wednesday who picketed over his support for nuclear power. He's toured many nuclear power plants and he knows they're harmless. All radiation does is bleach your skin white, thin your hair and dump your first wife. (Argus Hamilton)
The latest Bloomberg poll shows Obama has a 15-point lead over John McCain. That's a big lead. He leads in men and in women and with young people, minorities. I think the only place that McCain is beating Obama is in calcium deposits right now. (Jimmy Kimmel)
John McCain and Barack Obama have both laid out their energy plans. Obama wants enough "green" energy to power the entire U.S. economy, and McCain just wants enough energy to stay up past nine o'clock.
(Craig Ferguson)
John McCain and Barack Obama are bickering, and you know what they're bickering about? What to do when they catch Osama bin Laden. That's right. Obama wants to bring him to trial, but John McCain wants to shoot him. Both really good ideas. And I said to myself, guys, guys, how about somebody finding him first? Let's do that. (David Letterman)
Both McCain and Senator Barack Obama are trying to woo voters who are outside their natural demographic. In this election, for Senator Obama, that means trying to reach working class, non-Muslim white women who love America. (Jon Stewart)
PRESIDENT BUSH
Someone asked President George W. Bush what he thought about Roe vs Wade. His response: "Them Iowans should decide for themselves the best way to evacuate the flooded areas."
Former White House spokesman Scott McClellan says President Bush did not know about the CIA leak. He said the President couldn't understand all the commotion about a leak, that the White House plumbing was just fine. (Jim Barach)
THE ADMINISTRATION
James Dobson says Barack Obama distorts the Bible in his speeches. It's good experience. If the White House job falls through, he can be a TV preacher. (Joe Hickman)
THE COURTS
The Supreme Court made it easier Thursday for older workers to claim they have been discriminated against due to their age. Reaction was swift. The Republican National Committee just announced it will sue anybody who doesn't vote for John McCain. (Argus Hamilton)
The Supreme Court ruled Monday to permit the construction of hundreds of miles of border wall with Mexico. It's vitally necessary. The whole idea of the wall is to keep out terrorists who are trying to get into the United States for a fair trial. (Argus Hamilton)
THE DEMOCRATS
Hillary Clinton had promised the daughter of a supporter, when the girl was in eighth grade, that she would attend her high school graduation. On Sunday, Clinton fulfilled the pledge and spoke at the girl's graduation. This is a switch - usually it's Bill Clinton who makes promises to young girls. (Doug Austen)
LOCAL NEWS
Miami Beach police arrested 6 people and impounded a limousine bus that cruised Miami Beach offering sex aboard. How bad is it the foreclosure affecting the country that now bordellos run on wheels?
(Pedro Bartes)
Holly Springs, Georgia is considering a $12 gasoline surcharge for anyone caught speeding, to pay for gas used by police. That's three gallons worth. How long does it take for them to pull someone over?
What's next? A lead surcharge for anyone who gets shot by the police?
(Jim Barach)
THE ECONOMY & TAXES
Government figures released by President Bush show we are not in a recession. Unless, of course, you have to buy gas or food or some other luxury item. (Jay Leno)
Some conservative economists say they are hopeful about a rebound in the economy and say there's light at the end of the tunnel. Unfortunately, for most people the light at the end of the tunnel is off because they didn't have the money to pay their electricity bill.
(Pedro Bartes)
Have you noticed how expensive fireworks are? And with gasoline so expensive, we can't afford to go anywhere. So I think this July 4th we'll just stay home and blow up the SUV. (Joe Hickman)
Merrill Lynch's survey said Tuesday there were ten million millionaires in the world. The list includes everyone from Arab sheiks to San Fernando Valley tract home owners. By next year it will include everyone with enough money for a full tank of gas. (Argus Hamilton)
High oil prices are absolutely killing the restaurant business. Everyone is staying home at night playing the world's hottest new Playstation game, Grand Theft Gasoline. (Argus Hamilton)
Californians now driving across the border to get cheap gas in Mexico. Here's another tip. Instead of gas, try using Rite Aid vodka. Much cheaper, and about the same mileage. (David Letterman)
NASA & SPACE
The Mars Lander has found traces of ice and salt on Mars. Now, it's looking for tequila. (David Letterman)
NASA reported on Friday the Phoenix Lander exploring Mars found what analysts believe is ice. Scientists were guarded. We don't know if there's actually life on Mars because the presence of ice doesn't by itself guarantee the presence of cocktails. (Argus Hamilton)
MEXICO & LATIN AMERICA T
housands of Californians are heading to Mexico to buy cheaper gas. Who knew we'd have to build the border fence to keep our people in?
(Jake Novak)
Californians are flocking to Mexico to buy gas because it's 50% cheaper. But I'm not sure about the quality of gas, when you fill up they ask if you want it on the rocks or blended, salt or no salt?
(Alex Kaseberg)
ENGLAND & GREAT BRITIAN
Queen Elizabeth stripped Zimbabwe president Robert Mugabe of his knighthood on Wednesday. He's bankrupted her former colony. The Mississippi River just tied Robert Mugabe's record for the most number of white farmers run off their land in one sweep. (Argus Hamilton)
The owner of a tiny island off Scotland declared its independence from the United Kingdom on Saturday, saying he wanted the territory, population one, to be a crown dependency like the Channel Islands. President Bush sent his congratulations and offered to send the new country our Constitution because we're not using it anymore. (Pedro Bartes)
Martha Stewart was denied a visa to enter Great Britain Friday due to her past conviction and imprisonment for lying to the FBI. There's really no need for her to be there. They already have a Queen who knows how to decorate a house like a Protestant. (Argus Hamilton)
IRAQ & IRAN
Iran says it will launch a nuclear attack against the West if its nuclear sites are attacked. But it's not clear if that statement was meant to deter or encourage an attack against Iran. (Jake Novak)
Fortunately, the only way Iran could get a nuclear weapon to America today would be aboard American Airlines. And the new fee for that is prohibitive. And there's a chance it would get lost anyway. (Joe Hickman)
AFRICA
South Africa's former president Nelson Mandela will be honored in Europe this week with a huge celebration on his ninetieth birthday. He spent twenty-five years in prison before he served in public office. In America we do it the other way around. (Argus Hamilton)
SCIENCE & HEALTH
The Federal Aviation Administration has removed the anti-smoking drug Chantix from the list of medications considered safe for airline pilots, mostly because Chantix does not work well when washed down with 11 martinis. (Jake Novak)
The Los Angeles Times published the results Monday of EPA-administered drug tests on the raw sewage of the world's major cities. It shows Los Angeles leads every city in the country in cocaine use. Now you know why we don't miss pro football. (Argus Hamilton)
Safeway begin restocking its produce shelves with tomatoes Thursday despite the threat of salmonella poisoning. It's a humanitarian gesture. They know customers are suffering from high gasoline prices and they wanted to offer them an easy way out. (Argus Hamilton)
According to the American Society of Plastic Surgeons, nearly one in five Americans will be getting cosmetic surgery by 2015, mostly ex-employees of the Bush administration that will need to change their faces to get a new job. (Pedro Bartes)
THE WEATHER & THE ENVIRONMENT
A nasty heat wave is still gripping parts of the nation. It was so hot today; John McCain offered $300 million to the guy who can develop a prune Sllurpee. (Patrick Gorse)
Man it was hot yesterday. I was sweating like President Bush realizing he just promised to write a book. (Alex Kaseberg)
Mississippi River flood levees broke in Iowa on Thursday. The flooding reduced pressure on the river and saved New Orleans. After one hundred and forty years of Reconstruction it's about time Union states picked up their share of the clean-up tab. (Argus Hamilton)
SPORTS
In New York, Shaquille O'Neal, used racial remarks and obscenities in a derogatory rap song about Kobe Bryant and, as a result, lost his honorary Arizona deputy police badge. Too bad, Shaq was one of the best world famous seven-foot millionaire undercover agents they ever had. (Alex Kaseberg)
Shaquille O'Neal ripped into Kobe Bryant for two minutes non-stop as he performed a freestyle rap Sunday night. The crowd became unruly and upset. Not because Shaq was dissing Kobe. But because Shaq actually rapped for two minutes non-stop. (Willam Hale)
Tiger Woods decided Tuesday to sit out the PGA tour this year following his U.S. Open win. He had a broken left leg and a torn up left knee and he won the U.S. Open. It's the most incredible feat on one leg since Heather Mills attracted Paul McCartney. (Argus Hamilton)
Tiger Woods had surgery Tuesday to repair torn knee ligaments by a famous knee surgeon, Dr. Tom Rosenberg. He works out of Park City. The only thing more lucrative than drilling where there's oil is performing knee replacements where Baby Boomers ski. (Argus Hamilton)
Kobe Bryant headlines the group of NBA stars named to the U.S. Olympic basketball team on Monday. The NBA players will begin training this week in Las Vegas. That's a great place to train if our goal is to take home the gold medal in stripper tipping. (Argus Hamilton)
An American hiker stranded in the Bavarian Alps for nearly three days was rescued after using her sports bra as a signal. Not only did she save her life, but she will now also be featured in the next Girls Gone Wild Climbing. (Pedro Bartes)
Tennis scandal! There's a report some big money tennis matches are fixed. Plus -- when the players grunt -- they're actually lip-
synching. (Toms Lake Humor Company)
ENTERTAINMENT
One critic said the new Indiana Jones movie, quote, "Made my heart pound and left me gasping for breath." That's also what 66-year-old Harrison Ford said after making the movie. (Toms Lake Humor Company)
The movie "Wanted" opens this weekend. Angelina Jolie is a trained assassin. She studied for the role by spending time with a tobacco executive. (Alan Ray)
Dozens of up-and-coming indie rock bands will have to cancel their summer tours because of gas prices... and you thought $4 gas was a bad thing. (Jake Novak)
CELEBRITIES
On the death of comedian George Carlin: He is currently doing a set in Heaven convincing God that He doesn't really exist. (Jake Novak)
Don Imus said his racial crack on the radio Monday was a sarcastic point about the unfair treatment of blacks by police. It never ends.
Don Imus wishes he could mention how often Jackie Robinson stole home without people thinking he's stereotyping. (Argus Hamilton)
Don Imus implied on his radio show Monday that Dallas Cowboy Adam "Pacman" Jones' six arrests aren't surprising considering he's black.
It was an honest mistake. The next day Don Imus issued a clarification saying what he meant to say was, We Shall Overcome. (Argus Hamilton)
Ed McMahon was sued by CitiBank for a hundred and eighty thousand dollars Friday as foreclosure loomed. No one can believe he blew through his entire two hundred million dollar fortune. Normally to waste that much money you'd have to invade Iraq. (Argus Hamilton)
Jamie Lynn Spears' baby girl was born weighing 7 pounds, 11 ounces. When Britney Spears was told her niece came in at 7-11, she said that was also the name of the place she buys beer and cigarettes for her own kids. (Jim Barach)
EDUCATION
Gloucester High School in Massachusetts was rocked when dozens of girls decided to get pregnant and seventeen of them succeeded this month. It's devastating. In addition to losing its tourism revenue, New Orleans has lost its title as the Big Easy. (Argus Hamilton)
Several girls at a Massachusetts high school have joined a "pregnancy pact," deciding to deliberately get pregnant at the same time. Man, what some kids won't do to get out of gym class. (Jake Novak)
RELIGION
An interesting study was released today. People in California are less convinced there is a God than people of any state in the country. On an unrelated note, more than 800 wildfires are burning out of control here. (Jimmy Kimmel)
Ted Haggard, the evangelist forced out of his job after being caught up in a sex scandal involving a male prostitute, has left a "spiritual restoration program" and said he is ready in touch with Jesus, and by Jesus he means his gardener. (Pedro Bartes)
HISTORY
United Airlines announced Tuesday it will lay off nine hundred and fifty pilots because of tight profit margins. It's the way things have been going. The airline figured out they can make more money off the passengers by charging extra for a pilot. (Argus Hamilton)
A couple in Maine has opened an Antique Gas Station Museum dedicated to all things related to Shell gasoline, with displays showing old gas pumps, oil filters, cans of brake fluid and other things carrying the Shell logo. There's even a Shell squeegee so visitors can wipe away the tears from seeing pumps selling gas for a quarter. (Paul Seaburn)
The Hula Hoop turns 50. It's not as popular as it once was. Nowadays, if a person wants the sensation of plastic spinning out of control they get a credit card. (Alan Ray)
CULTURE & SEXUAL MORES
The Los Angeles Dodgers were honored by the Hollywood Chamber of Commerce last week with their own star on Hollywood Boulevard. It's a first. Until now no one ever thought there could be twenty-five guys on Hollywood Boulevard who couldn't score. (Argus Hamilton)
The Houston Chronicle said Friday the Texas polygamy sect will be investigated by a West Texas grand jury this week. It's not easy being the husband at a polygamist ranch. You leave the toilet seat up just once and suddenly you're facing an angry mob. (Argus Hamilton)
BUSINESS & LABOR
In a study: Coffee does not appear to be a health risk. That's good news. Because - I'm not sure I'm going to be fully at peace with the world until they open a Starbucks in my living room. (Toms Lake Humor Company)
Yesterday a top Starbucks executive resigned. He will receive a $120 million severance package or three lattes. (Conan O'Brien)
United Airlines and US Airways have joined American Airlines in charging $15 to check in a piece of luggage. However, you'll still get the crying baby, the fat guy in the next seat, the snoring salesman and that guy with the personal hygiene issue absolutely free! (Tim Hunter)
United Airlines is going to start requiring one to three night minimum stays on all their flights. And that's just to prepare for takeoff.
(Jim Barach)
Continental Airlines cut routes and cities Thursday in a desperate bid to make money. There's always a way. United Airlines has begun making money hand over fist by charging Los Angeles passengers fifteen dollars for each item of emotional baggage. (Argus Hamilton)
U.S. Airways infuriated customers Monday whey they began charging for soft drinks in flight. The war on terror is over. Thanks to long lines, new baggage fees, body searches, no food and three-dollar Coca-
Cola's, Americans now side with the hijackers. (Argus Hamilton)
HOLIDAYS
The Fourth of July approaches. Americans will be on the road celebrating their independence. That's if the shipment of oil arrives from Kuwait. (Alan Ray)
Friday, June 27, 2008
Mozilla Firefox
Get Firefox 3.0 here
There are also tons of addons which will make your online life easy. For a list, visit
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There are also tons of addons which will make your online life easy. For a list, visit
http://lesliefranke.com/files/firefoxyourway/
http://lesliefranke.com/files/firefoxyourway/
Thursday, June 26, 2008
Is it really speculation driving oil prices?
Brilliant analysis of the rise in oil prices by Paul Krugman of
http://www.princeton.edu/~pkrugman/Speculation%20and%20Signatures.pdf
But, this does not preclude the possibility that because of increased speculation and an expectation that oil will rise in the near and medium term, the oil producers might not be pumping as much oil as they would have if there was no such expectation. This is in essence hoarding by the oil producers themselves i.e. they purchase oil at the current price and store it in the oilfields itself.
Interesting point, and it is what an oil cartel is all about.
Why?
just a log book of what I read. Preparing to feel nostalgic some years down the line. Maybe also impress Shilpi and Agastya some day :)
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