The Rogue Scholar

Shit Happens to the Best of Us

I read this article by Edmund Andrews of the NY Times when it came out and realized that shit happens to the best of us.  And it does.  We are human, and we do stupid things for reasons that seem sound--kind of--at the time. At least part of this essential truth comes from the fact that humans possess huge brains that are far more likely to make decisions based on emotional responses than logical, analytical ones.  I could, of course, be especially obnoxious and suggest that getting roughly a million dollars in debt when you only make 120 grand a year is not the best idea, no matter when it occurs or why.  I confess that at the time, all I could think was "you poor fuck" while noticing that the article had not been written by, say, Floyd Norris or David Cay Johnston.

And now it turns out that there is more to the story than Mr. Andrews wrote. This recent bit from Andy's website offers much fodder for cynics everywhere, including myself:

Turns out, there’s more to the story.  Did Edmund Andrews mention anywhere in his article or his book, Busted, that his wife had twice before declared bankruptcy?  Chivalrous of him to leave that out; but, as Megan McCardle notes for The Atlantic, relevant to his tale.  Writing of this new twist, Andrew Leonard complains, “One of Busted’s selling points is the level of personal detail Andrews provides about his finances and his marriage. To leave out a detail so relevant to his tale of debtor’s woe smacks of outright dishonesty – and it’s exactly the kind of behavior that you would hope a New York Times reporter would avoid at all costs.”  Nor is Leonard buying Andrews’ response.

I strive each day to pass no judgements on anyone.  That said, sometimes the cynic in me has it right. Enjoy!

Happy Civilization Day!

All right, so very few Americans are happy today, since this is April 15, the day when our taxes are due to be filed. I don't like to pay them, you don't like to, nobody in this country from sea to shining sea likes to pay them.  Generally only the very rich or the very poor routinely get out of paying them, the former group through the employment of clever, crooked, or connected lawyers, accountants, and financial planners and the latter by being broke. I mean really broke, the kind of broke that we middle class folks shy away from when we pass a homeless guy on the street (the Wall Street Journal has been known to refer to those individuals who are too poor to pay taxes as "lucky duckies.")  Yes, trying to keep a family of four afloat on $35,000 in NYC a year feels broke, but it's not when compared to true poverty. At any rate, if you're in the vast middle, you don't have access to your personal lobbyist to Congress but you're still hanging on to a sliver of the American dream, so you get hosed (or feel like it anyway.)

And yet, getting hosed is a relative term.  For instance, my vast personal fortune is the result of inheriting money from my grandparents. It's not enough to constitute actual wealth and prosperity, but it does mean real savings, which didn't exist before they passed on, and which to me was essentially free money. I didn't work for it, I didn't earn it in any conventional way except by being related to them. That said, their estate was in fact large  enough to get intercepted by the federal and NY state governments when they died and the money passed to their heirs. The taxes paid constituted a sizable bite out of the whole, but there was enough left over to provide a cushion in case things really went south. So, yes, it could have been more--would have been more perhaps with some astute estate planning my grandparents never invested in--but it still is better to have it than not to have it.  In short, I didn't get hosed, I got lucky. In my view, everyone in this country who has had (or will have) a similar experience, doesn't get hosed, they just get lucky. 

Not everyone sees it that way, of course. Andy of the DNC, Fred the Slacktivist and the eXiles give different examples of the crowd that staunchly believe that "no taxes are good taxes" on their websites today. I've heard of and read plans to fund cities  states and nations without levying taxes, and some of them are quite ingenious. Some of them may work if tried out on real life. But that's not the world we live in at the moment. We like things like roads, schools, laws enforcement, a social safety net, etc. And if we want to keep them, we need to pay for them. It's that simple.

The ugly truth that the anti-tax folks crowd never acknowledges is that taxes and government are normal for human society. Not mandatory by any means--Somalia, for example, has avoided both for some time now--but normal. Deep down we're herd beasties, no matter how badly we like to think of ourselves as individuals brimming with free will and self-determination. Grouping together under collective organizations makes us feel safer and happier than we would living solitary existences surrounded by hundreds of miles of fallow countryside. That's not to say, of course, that all governments in all times and places are necessarily of the same value to those ruled by them--a 12th century feudal lord exercised a very different type of power over his serfs from that which a 20th century democratic representative exercises over his constituency, for example. Not all government functions are equally valued by those who live under them, either, as a bit of observation over any budgeting process will show in a bout ten minutes.  And it's not to say that our current government is well run or even sustainable, but that's the subject of another post.  My point is that governments--by which I mean ruling bodies in one form or another--are by and large, things we like. If we didn't, there would be fewer of them and they'd collapse more quickly when they did form.

This ramble has gone on longer than I intended so I'll end here. Except to challenge my fellow libertarians and capitalists out there: if you want to get attention and promote your ideas, demonstrate their worth.  And I don't mean pushing lame ideas like piling into New Hampshire to stage a coup from within. I mean coming together to buy up a couple hundred acres of land, and building upon it a town where people would want to live, funded by rents and a few service fees and nothing else. It's been done before, so one imagines that it could be done again. Make it happen, make it work, make it work better for its inhabitants than the competition could, and you'll have everything you need to change the face of civilization itself.

If you can't make it work, however, just pay your taxes and stop complaining.

The Ponzi Master

I've not been reading the financial pages with my usual attention since other projects keep taking time away from such interesting but (I admit) unproductive tasks.  On the good side, I'm not nearly as depressed as I've been for oh, say, the past year.  On the bad side--now that I think of it, there is no bad side to that. (Yea!)

Anyway, the Trials and Tribulations of Bernie Madoff is an especially fascinating subject to me personally. (I was one of those money nerds who clipped reams of articles when BCCI--a.k.a. Bank of Credit and Commerce International--went belly-up in a shitstorm of illegal money transfers and scandals years ago, not unlike Madoff's spectacular self-destruction.) The names change and the schemes become more sophisticated but the sequence of events is the same: rich people lose money, laws are discovered to have been broken, scandal, instigations and allegations follow. 

If you're doing rsearch on the subject, I might suggest taking a look at CNN's so-called Complete Madoff Coverage website, which I won't call complete since it relies exclusively on CNN reports, but I will call a good place to begin your research. Another good place to look (assuming he keeps updating it, of course) is Matt Savinar's coverage of Maddoff's problems on his LATOC website.

Something not directly related but interesting to read is a Wall Street Joirnal article titled Why we Keep Falling for Financial Scams.  And finally, you'll want to look at this profile of Mr. Charles Ponzi, courtesy of the Times of London.

Enjoy!

RS Edit: I just found this article by Michael "Liar's Poker" Lewis and David Einhorn in the NY Times. Definitely worth the read, if only becauyse the authors do a good jobof bringing the wackinesss of Mr. Madoff's activities to a more comprehensible place.

"The World Ends Today"

All right, so it didn't end today (at least not yet). And it didn't end yesterday, and it probably won't end tomorrow.  But if you read the financial pages or listen to those nominally in charge of our situation, you could be forgiven for thinking it might.

I don't go much into economics here because it's a hobby for me rather than a calling. I get the concepts easily enough but I can't always follow the math. Besides, there are plenty of writers and thinkers out in the world who are much smarter, better educated, and otherwise better prepared to write well on the subject. I link to my favorite sources in the sidebar of this blog and when something truly stands out, I link to it directly.

So when Lou the Library Director here and I talk about such things as economics or the imminent collapse of the U.S. economy, we do it indirectly. In this case, by referencing books like Charlie and the Chocolate Factory.

“I think the U.S. is very much starting to resemble Veruca Salt,” Lou says.

 I think about that for a moment and decide there’s a better comparison. “No,” I say, “We’re Violet Beauregarde.”

Remember those two characters from the book? Veruca was the irrevocably spoiled rich girl and Violet was the world famous gum-chewing queen. They both meet bad ends--as all the naughty children in the book do--but their ends are qualitatively different. Veruca’s end was simple and quick: she tried to take one of the squirrels in the nut sorting room and fell into the garbage chute. That’s bad, but it’s a soft if gross landing (the Oompa Loompas had, luckily for her, failed to ignite the incinerator that day). Plus, garbage washes off. I think that Violet’s fate was worse: she turned into a giant blueberry.

 As a kid, Violet’s end scared the bejeezuz out of me. Remember the details? She takes the gum that is supposed to present the chewer with a three-course dinner and chomps down, grinding away at this amazing, hypnotic taste sensation. She described each course as it came to her taste buds, chewing and chewing, so caught up in the moment that when she’s told to spit the stuff out because it’s going wrong even as she chews, she can’t (or won’t.) Then she starts physically changing: her skin turns blue, her middle swells out, and the Oompa Loompas have to literally roll her off the factory floor into “The Juicing Room.” And when she turns up at the end of the book she’s much thinner but she is stuck with purple skin.

 Well, the United  States economy has been rolled off the floor and is getting juiced. Granted, this has been happening to the real economy—the one that makes stuff—for two decades. Now the financial economy—the one that creates tradeable securities—is catching up. When it’s done, we’ll be a lot thinner—hopefully that means we’ll be better regulated and perhaps a bit wiser--but the purple skin will never go away, just like the memories of the Great Depression didn’t go away for our grandparents. I’m not suggesting a Great Depression 2.0 necessarily in on its way, but unexpected things happen and at this point it’s anybody’s guess what happens next.

I am convinced of one thing: the system will not vanish. It will get smaller, be run a bit less efficiently, and be available to fewer people and institutions. The institutionalized system of matching investors with capital to entrepreneurs is simply too damned useful to too many people for it to be abandoned outright. To be sure, the immense concentration of technology that went into making that matching-up process a 24/7/365 global affair is a recent development. But the system in its more primitive form has been around for centuries. I do think the financial institutions that support is will likely migrate to the regions with real resources like Russia, India, and China. That is something we should start thinking about now.

If, of course, the world does not end today.

A Medically Disliterate Culture

This bit from today's Independence Journal caught my attention:

I'm starting to refocus on developments in what seems like a battle over money between the pharmaceutical business and food supplements crowd.  What got me started was the recent headline on Reuters "Suspected steroid ring to stars busted".  The story centers on allegedly illegal sales of growth hormones, but I read it as only a skirmish in a much broader battle between big pharmaceutical companies on one side with compounding pharmacists, life extension advocates, and natural food advocates on the other.

 

As I've advised you many times, to get the big picture, it's easiest sometimes to follow the money - and in this case, there's been lots of money to be made in natural compounds approximating the FDA-blessed lab rat-tested chemicals, many of which try to mimic the natural effects of naturally occurring chemicals in the first place.  For example, some women I know swear that certain yam compounds are much better/less dangerous that manufactured chemical treatments (synthetic estrogen) for menopause.  But I have no idea and make no claims not being a medical professional and such.  I just follow money around.

 

What does comes into focus are a couple of main points:

• Big pharmaceutical companies have lots of money to throw at statistical studies, which can be  used to amplify even small condition changes.

• The pressure has been turned up on pharmacists to only dispense what comes from a drug company with FDA blessing.  Local compounding is almost a lost art. Liability issues abound.  Is a compound a "medicine" or a "food supplement?" 

• And as one source told me: "big Pharma have been agitating for years to halt the private medical care practiced by doctors of conscience and their methods which have been driving patients away from the overpriced new drug-of-the-week television advertisements (in 2004, drug companies were spending $4 billion on direct-to-consumer advertising, making them the largest consumer advertiser on TV), directing patients instead to safer and more effective therapies such as nutritional therapeutics and bioidentical hormone replacement therapies, employing the best of the most innovative medical approaches from around the world."

I am personally amazed every time I turn on television and I see commercials telling me to "Tell your doctor about xxx" or "Ask your doctor is xxx is good for you." Ad agencies have escaped the wrath of the FDA - they're on the side with the big bucks.  But why isn't direct-to-consumer advertising illegal for all drugs?  Not just nicotine, and highest octane alcohols?  Answer:  $$$  Big $$$ at that.

 

I'm not trying to knock modern medicine. I like modern medicine. (As an asthmatic, I really need modern medicine to keep plugging along.) Just the same, IP has a great point that can be proved by going through any decent serial. Take a look at a recent issue of JAMA or New England Journal of Medicine and marvel at the sheer number of ads you find as you breeze through the pages. There are considerably more of them now than there were in, say, the 1990s.  Advertising of what MeSH calls "Pharmaceutical Compounds" is up, and since we know who the primary audience for these journals is, we can imagine that pharmaceutical firms are using the same selling techniques that consumer marketers do. The purpose might even be the same, namely, to sell you stuff you don't particularly need to be paid with money you don't have. The analogy works even if (perhaps especially if) you consider just how much of the drug industry is underwritten by the federal and state governments via Medicare and Medicaid (which is being funded by how many trillions of dollars of U.S. debt?).

Dr. Jeremiah Barondess, former president of the Academy, said it very well at his retirement party last year:  "We don't live in a medically illiterate culture.  We live in a medically disliterate culture.  There is no other reason for those ridiculous commercials the drug companies put on television at dinner time."

 

Emergency Record Management 101

I found this article, titled "How to prepare for One really Quick Getaway"  in today's NY Times. It's not the most comprehensive word on managing records, as it deals only with people's personal situation: household finances for the most part, which is, of course, a far cry from the comparatively serious record management needs of even a small business. And, of course, nothing compares to the massive record keeping needs of even a small institution with 50+ employees.  Having said that, this article hits the important points, makes mention of a variety of cheap yet high-tech solutions to record storage, and suggests what you and your family should be keeping track of on a yearly (semi-yearly?) basis. The main thrust is toward what happens if you need to bug out NOW! in the face of a Katrina-like emergency rather then just what happens if you happen to not come home today.

Worth a look; the text is below the link.

Free Business Management Library

Here's something you might want to take some time to look through if you're so inclined: The Free Management Library, hosted by MAP for Nonprofits and developed by Carter McNamara from Authenticity Consulting, LLC. THey've got links to 75 different categories and subcategories, along with embeded links and extra links to outside online references. Not a bad deal at all.

If you're more into printed matter on these subjects, take a stroll through the Small Business Administration's website--they print hundreds of booklets every year and they're free (or almost free in some cases.) They even have an online library.

Remember folks, your tax dollars pay for this stuff, so if you're inclined towards starting a small business, these are the places to do some homework. Enjoy!