Mish (and some of his readers) make some fantastic observations, especially timely as we are enjoying a moment to catch our breath in the bursting housing bubble, about an analogous bubble that he convincingly describes as having similar precedents.  Is it safe to say there will be similar antecedents?

“The cost of education has spiraled out of control with the cost of higher education far exceeding the payback unless one gets lucky in the jobs lotto process.

Many college graduates will be paying back student loans for 20 years or more. This is what happens when government tries to make things affordable. The same thing happened with affordable housing.”

When I applied to (and was declined by) some of the premier US universities  about ten years ago, the greatest shock during the process was the section where they expected me to list famous/powerful people that I knew and would presumably make me more eligible to attend the best schools in America.  The second most shocking part was the price.  As an international student, in the late-90s/early-aughts, I would have been paying somewhere between $40,000 USD and $60,000 USD for my schooling PER YEAR of my undergraduate program.  And my mildly-jacked tuition quotes as an international student are comparable to current tuition prices at Harvard, which was brought up to an average of $43,655 per student or the 2006-2007 years according to The Crimson.  And The Boston Globe reported that tuition, room and board, and student fees  rose to $47,215 in the (I believe) 2008-2009 year.  (Of course Harvard is just an example and I am in no way saying they were among the schools whose closed door I was able to observe in near-proximity.  But it was.)

That may not sound like much to any Canadian readers out there (our ‘elite’ institutions could easily be compared to the best state schools in the US and even could compete in many regards to many of the large US Ivy League institutions) and my undergraduate degree over the same period (as a domestic student, of course) was costing me between $4,500 CDN and $5,500 CDN per year.  Even including residence and the entirely sufficient albeit high in cardboard content meal plan it would be around $13,000 a year.  After the exchange rate conversion at the time, that would have been about $10,000 USD if memory serves.

As much as I’d feel like a BSD with an impressive degree from one of those institutions where mere mention of gets respectful silence.  And you have to mention in most polite company in hushed tones lest you be considered a braggart.  But for fuck’s sakes, a 4-yr degree in my case in Canada saved me about $120,000 USD.

Regardless of your level of talent, unless you pursue the career that will immediately net you the highest potential payout (any collapsing industries you can think of that meet that description?), is it realistic to be able to pay off that debt before age 25?  Or age 30?

Is it at all realistic to be able to save up and independently finance your education with summer and part-time work through a student’s entire high school life, even without considering the support many students are now providing to their families?

When heavy financing becomes a requirement for all but the superstars (full-ride athletes and scholars) and the ultra-well-heeled (those who fill up the “who I know and why I matter” section a bit better than I), Americans (and to a lesser extent, Canadians) are indoctrinated to a lifestyle of living on borrowed cash.  Of putting off financial planning for after the expense.  And for deferring difficult decisions into the uncertain future (that’s now, btw).

Not only does this add to the epidemic-level infection of debt-ignorance in American culture (go ask your Asian friend, if you have one, what they think of borrowing money to buy cars, stocks, or anything other than a primary residence, and then ask them the follow-up of how stupid and crazy and probably fat they honestly think Americans running up five-figure credit card debts during the good times, on top of no down payment — multiple — home and  — multiple — car purchases)… This arrangement eliminates the possibility for those talented students who wanted to go to personally fulfilling but perhaps lower-compensating professions to at least keep pace with previous generations’ concepts of success and failure.  For a real life example, see this USA Today article:

“”The first person who helped me was my pharmacist,” he says. Dillon, who no longer has epilepsy, would like to go into pharmaceutical research. But he knows he’d earn more money as a pharmacist for one of the big drugstore chains.

“When I get out, I’m going to have that $150,000 weighing over me,” he says. “What I decide is going to be dependent on that debt.”"

I try to think about it with a loose example (I apologize if my numbers and assumptions are a fair deal off:  I am a Canadian, as I’ve suggested above, and am not as familiar with what would be typical incomes and expenditures for a recent US university graduate.  Blame Harvard for denying me that personal experience.  Stupid Harvard):

Specifically, how does a graduate from (let’s say) Harvard, completing her studies in the 70th percentile of her graduating class (which probably puts her at or near the 99th percentile of her age cohort in academic achievement as is typically measured), pay off a $120,000 USD education debt by the time she’s 28 assuming no interest, no marriage, no babies, no sugar-daddies, etc.?  Besides, if she is lucky enough to be so talented, going to work for Goldman Sachs?

She would have to apply roughly $20,000 a year post-graduation towards the principal.  That’s after rent, after maybe her first not-too-fancy car, after taxes, other living expenses, likely some periods off work especially immediately after graduation.  Can it be done on an average $60,000 income per year for those six years post-graduation?  $80,000?  Would it be a stretch at anything under $100,000?

And even if this achievement is attained (and I think it’s fair to describe this hypothetical young woman’s wiping out of $120,000 of debt in six years as an achievement), as a 28 year-old woman with a low-six-figures annual income, a very impressive piece of paper signed by someone important at an Ivy League school, is she keeping up with expectations?  Can she afford to marry, start a family, and own her own home with white picket fences (my understanding of the prevailing middle-class expectation) by the time she’s 30?  Well, unless she and her husband pay for the wedding on their credit cards and buy a home with no money down…  The same USA Today article linked to above refers to this very real dilemma of cascading college debt effecting the issues that would have once been thought of problems for a different life stage:

“Those higher payments carry huge implications for this generation of college graduates. The weight of debt is forcing many to put off saving for retirement, getting married, buying homes and putting aside money for their own children’s educations.”"

Have we managed, aided by the the big, fat, clumsy hand of government assistance Mish describes, to price out the ideal of middle-class success to even middle-class kids in the 99th percentile of achievement?  And what will happen to the 98th percentile?  And those middling intellects in the 97th?  (And can you guess where I placed myself?)

[I know my math is rough (please see my many excuses above) but I'd love to hear what those who went through something analogous to the US student debt cycle experience, and correct where my math or assumptions stray too far from reason.  I just wanted to imagine and illustrate a very sympathetic and fairly realistic case where even doing everything right in America, absent an NBA-ready body and buttery j, can lead to something short of middling success by the end of young adulthood.]

[... And for those really interested in the idea of finding ways of maintaining a high level of learning and reducing student expenses, check out this old post of mine about what I was hoping to be a cheap online textbook revolution.  Also has my bitchy personal anecdotes that I'm ashamed to admit I actually enjoyed reading just now.  Can anything be more self-centered than typing up an opinionated post on a blog no one reads that links to another post in that very same blog that mostly consists of various personal anecdotes?  Look on my works, ye Mighty, and despair!]

… and the cow goes moo

I have very little to say about each of these links except that it’s been a glorious week or so of online reading.  I could not bring myself to close these articles from my Firefox tabs without recording them for posterity (as self-centered as I am, it appears I believe widely-circulated articles available on the Internet cease to exist when they leave my screen).

First, from The Atlantic Monthly (yes, I still call it that):

What Makes Us Happy? – By Joshua Wolf Shenk

An excellent, beautiful in that New Yorker-sorta way interrupted (by experiment subject narratives) interview with the man that has been behind the decades-old longitudinal Grant study at Harvard.  It makes me think my Bachelors in Psychology isn’t such a scarlet letter after all.

George Vaillant, head of the study for the past 42 years tries to plumb from the disparate measurements and surveys conducted since 1937 – questions changing to reflect the interests and eras that the study has now outlived – and from the ups, downs, ups and downs again from the cohort of Harvard men the cues to living well and growing up.

The author of the article beautifully ties Vaillant’s near-theology – which often sounds little different than self-help pablum – to Vaillant’s own surprising neuroses and private scandals.  Perhaps in doing so revealing a little known property of Psychologists (and Psychology students) outside of the discipline:  Our interest in mental illness is entirely self-serving.  Physician heal thyself.

And despite the shames of the researcher and the researched, the article lifted my spirits.  The technical feat of the collection, the triumph-against-adversity of the project itself to remain fecund and funded, moreso than even the subjects, is story of a hero.  Even if the hero is a collection of bits and bytes, papers in aged folders, and punch cards stuffed away in some filing cabinet monument in Boston.

Now from Chinese finance and economics magazine, Cai Jing (don’t worry, it’s in English):

Tight Spot for Fed, Blind Spot for Investors – Andy Xie

Mr. Xie provides what seems to me a very thorough and intuitively consistent synopsis of the state of American and international investment, with a US-centricity to his analysis despite the source of the article.

He provides a good anaylsis of the various push and pull forces active in the currency, Treasury, and commodities markets, tying his observations to current action within the equity markets and providing some broad predictions that may give pause to those on the sidelines (like myself) that have been failing to decipher all the noise of the market into something that resembles language.

On Mr. Xie’s implicit recommendation, I think I’ll invest in something loud with two wheels wrapped in Pirelli Diablo Super Corsa SPs.  I think that’s what he’s saying, anyways.

And now for something completely different!

The Ninth Life of a Berkeley Boomer – John Dolan (single page view)

Mr. Dolan always writes wonderfully (though the low-rent site which I enjoy and frequent doesn’t seem to stress spellchecks) and has some especially fascinating insights into the life of the near-literati; the failed writers who became failed academics who became just plain poor.

Here he captures the story of a friend much like himself: talented, but lacking the good sense to slow his pace to stay within the proximal zone of his ‘betters’ that would ultimately judge him and decide his fate.

In its telling, he reveals the life of some of the members of the true American elite: The filthy rich and the chieftains of academia who rule their roosts.  And even to them, a smart person cannot escape subjugation by them.  And a crazy person doesn’t escape their useful purposes.

He describes a secret bit of life that I probably always lacked the talent to access, or at least the high school extracurriculars.  And my entrance essays truly sucked.

… and the cow goes moo

I know this is an odd person to link to on this subject, and an odd thing for me to post about period… but I lost my doggie in March and am still not really over it.  And I’m masochistic enough to have to read about others’ lost dogs.  And I am deeply touched each time.

I would recommend anyone who has an under-appreciated dog to read the article in its entirety, but one passage seemed specifically relevant to me. From my (and every college kid’s) favorite sports columnist, Bill Simmons at ESPN:

“We couldn’t tell how much she was suffering. There was no way to know. Dogs can’t speak. Dogs have a huge threshold for pain. You just don’t know. You can’t know.”

My dog was a real trooper and never made a squeak despite eighteen years of poor care (I was nine when I got him and not very responsible).  He waited diligently for us to arrive home in my parents’ big empty house, even though all the kids and grown ups were too busy to pay attention to him when we were around.

And then something weird happened.  As my dog grew old, and so did I, my tempo began to match his.  And suddenly my quiet, loyal, and simple dog became my backyard companion on sunny days when I wanted to lie back in a lawn chair with a book.

Or when I read articles online on my laptop in the kitchen, and wanted to be able to reach under the chair every few minutes to tease my doggie behind his ear (like all dogs, he seemed to have permanent itchy spots).

And by the time I began to appreciate my dog as a person (and I did appreciate him as an impressively good-natured and strong person), my dog was already late into his teens and losing his mobility and sight.  But he never whimpered.  And he never wailed.  And he never whined.  And perhaps because of that, he lived a few days longer than he was ever supposed to.

In a bit of fortuitous timing, I capriciously quit my job at the start of March 2008.  With my sudden surplus free time, I began to spend more of my days with my dog.  Or so I intended.  The day after I quit my job, my dog had a turn for the worse.

Suddenly he could no longer support his weight on his rear legs and seemed, perhaps because of the lack of mobility, almost totally blind.  He had exhibited some problems with arthritis in the past, especially in the cold, but never to the degree that he could not hold himself up indoors, or lift himself up off of the ground.

Like Simmons, I had no idea how to tell if he would recover (as he provided glimpses of hope for the final week of his life).  My dog loved nothing more than to eat and run around chasing me from one end of the room, only to turn around and be chased by me to the other.  When he lost his ability to stand – let alone walk – half of his life was effectively over.  I knew that when he lost his desire to eat, his time had come.

He lost his appetite probably within a day or two of his initial turn for the worse.  He would lie on his stomach all day, unwilling to even approach the food left out for him.  Naively, I assumed it had everything to do with the strain moving to the food dish was putting on him so I began to hand feed him with some success.  He even had a fair appetite for the first few meals (for a dog who lied on his stomach all day and slept).

It was not long before he lost even his taste for food fed straight to him with a spoon.

Largely due to my own guilt of having never treated him properly, or appreciating him enough, I was unwilling to let it end that way.  I ended up preserving the faintest glimmer of life in my dog for several more days, bundling in towels and placing a block heater next to where he spot.  Buying special leashes that would hold his hind half up when I needed to bring him outside.  And mashing up fatty, greasy, oily food into water to pick up with an eyedropper so I could provide him water and some nutrients even if he was no longer strong enough to chew.  Or willing to eat.

For the last few days of my dog’s life, I cradled him for hours a day, with him wrapped in towels, as I tried in vain to feed him what amounted to little more than a thin gruel, soaking my shirt with worthless tears over the dog I had for eighteen years but failed to appreciate.

I still remember the look of puzzlement on his face those last few days: probably blind, doubtlessly enduring the pain of a failing body in silence, perhaps in abject confusion as to why someone who paid so little attention would suddenly force him to live on against his own wishes.  And against the wishes of my own family.

I did relent on March 11, 2008, about a week after he lost mobility, to have him euthanized.  I cradled my nearly-stiff and motionless dog from my car into his most hated place, and laid him on a cold metal table to have a needle full of poison injected into his tiny body.  He didn’t blink.  He merely looked at me as I looked at him.  Perhaps not seeing me but I am certain knowing that I was there.  He said nothing as he was dying, hardly anything as long as I knew him, and gave a single convulsion and gasp several minutes after the injection as I waited for his life to ebb away, alone in that hated veterinarian’s operating room.

For eighteen years, my dog was – at best – peripheral to my life.  And for one week, he was the center of my every waking hour.  And almost a year later, I still miss him more than I miss any of my deceased family.  I still hear his claws on the floor of the kitchen.  I still expect to see him lying by the door.  And I still reach down under my chair to play with his ear as I read at my kitchen table.  And I just miss him so much.

… and the cow goes moo

Palm, the world’s shittiest smartphone company, apparently isn’t bankrupt yet.  This may come to a shock to anyone who heard their idea for the Foleo.

Their newest device actually looks to be a fantastic amalgam between popular sliding keyboard phones like the HTC Tytn I and Tytn II, the newer preimum phones like the Sony Ericsson Xperia X1 and HTC Touch Pro, the already ubiquitious Blackberry Bold, and the touchscreen-only phones like the iPhone (or my own unubiquitious E-ten Glofiish X600, check out GSMArena for descriptions of any of those other phones as well).  Check out a brief tech summary of the device at Engadget, or a longer entirely non-technical report on the device and the importance of the Pre to Palm’s future success at the New York Times (sidenote: The NYT does technology and sports reporting so poorly I wish they would just give up and save the trees and webmaster’s time).

A better example of technological reporting for real smartphone nerds can be found at GSMArena (despite that the Pre will be available only as a CDMA device initially, with a GSM variant coming later).

The hotness comes from it’s fair size and weight (a bit clunky in shape, since there seems to be a fair bit of plastic real estate around the screen).  It’s a bit thick at 16.95mm but that is understandable for any sliding keyboard phone.  At 135 grams, it is a middleweight for a PDA phone, but once again, very respectable for one equipped with the sliding keyboard.

The excellent screen size (3.1″) and resolution (320×480) are good to see as well, and keeps the device competitive with more multimedia-oriented devices.

It has the full slate of demanded specifications as well, such as A2DP stereo bluetooth capability (as opposed to the neutered iPhones) for music and movie lovers that can live with the reduced quality for the increased range of movement and freedom (I’m a Plantronics Voyager 855 user myself), built-in GPS (we’ll see every phone with one soon enough), wifi-G, microUSB (hopefully to be used for optional USB charging, syncing/tethering with devices to use the wireless data stream, as well as for file transfers from USB devices), and amazingly, a 3.5mm headphone connector for the real audiophiles (let’s hope wired headsets can be used with an adapter as well).

The faux hotness comes from the gesture-ready lower touchpad so you can use gestures to perform some functions.  Anyone who uses a smartphone like I do (reading webpages one-handed while at the gym, on public transportation, or in any sort of lineup) will recognize that as a fairly useless function meant to impress people around you who haven’t seen an iPhone before or like the ‘toy’ factor.  I really don’t trust making gestures with a finger on the phone over tapping a tiny button when I’m on the bus or subway… It seems like a pretty precarious position for those of us who would prefer to not drop our phones unnecessarily.

And the superhotness:  Wireless charging!  Rather than ruin your precious phone by constantly plugging and unplugging the device on a nightly basis (I’ve busted the headet connector on a $720 Eten M600 back in the day from daily connects and disconnects, which forced me to make the unregretted move to A2DP audio), you can buy a (probably) superexpensive lux Touchstone charging station and magnetic backplate for the Pre so that it can be charged by resting the Pre on the Touchstone.  Like magic, it is.  Let’s hope it’s efficient as well and not a energy sieve.

The phone does have some major shortcomings, however.  First, it will be a CDMA-only (ugh) and Sprint-only device initially, meaning you will likely only be able to get it at a decent price if you indenture yourself with some outrageous $60/m data + voice contract.  As a non-data user (that’s what wifi is for!), I’m personally offended by the extra $360/yr charge the wireless providers demand for largely unneeded data plans for these devices.  Second, it will have builtin memory at a sufficent but non-expandable size of 8 gigs.  With microSD as cheap and widespread as it is right now, I’d much prefer to rely entirely on the external flash memory given the option.  Oh, and I bet this thing is going to be ass expensive.  Like, almost Xperia X1-ass expensive.

And the best news of all for the phone nerd who always felt that these smartphones always fell short of being able to perform ‘everything’ (from the GSMArena article):

“And finally, the Palm Pre flaunts a built-in 3-megapixel snapper”

FINALLY!  At long last, the perfect phone!

[Edit:  Ignore the last comment as 'snapper' apparently does not mean what I thought it meant]

… and the cow goes moo

Words cannot describe the elation I felt when a friend (who, I assume, received advanced notice through his employment at a sports broadcaster) texted me THIS FANTASTIC NEWS!

For YEARS (since almost the moment he was hired… I tried as best as I could to give him some lenience to learn the occupation early on) I have been shitting on Smitchell’s coaching decisions (substitutions, play calls, time outs, end of game situations, defensive match ups, player growth, and general style of play) and was aghast and disgusted by the league when he managed to, despite having a mediocre underperforming team in a weak conference and having shown no actual evidence coaching ability, win the NBA’s Coach of the Year award at the end of the 2006-2007 season (more deserving recipients such as Jeff Van Gundy and the always considered but never rewarded Jerry Sloan should be slightly more outraged than I).  Key quote from that CBC article:

“The award is especially sweet for Mitchell, as he was voted the worst coach in the NBA last year in an unofficial poll of players by Sports Illustrated.”

Well, then.  What’s most frustrating about the award, perhaps, is that Mitchell’s contract was ending and there was a decent chance, in my mind, that Brian Colangelo would have the good sense to not renew his contract or replace him after another year.  Sadly, even an apparently bright GM such as Colangelo cannot discard a COTY.

As a Toronto native and longtime basketball aficianado/Raptors viewer (though not exactly a Raptors fan), I have endured Sam Mitchell like an untrainable mutt.  Every other day, he poops the rug and out of love for dogs, I convince myself that it’s the last time.  Within 48 hours, I’m donning my rubber gloves and carpet sanitizer.

But enough about me.  Let’s properly eulogize the Toronto Raptor’s dearly departed head coach.

I remember one game in particular that I’m sure others may remember for different reasons (the number ‘81′ conjure up any memories?).  A certain Electric Mamba was running roughshod over the overmatched Toronto Raptors as he is one to do.  Mamba had accumulated something like 37 pts in the 3rd quarter and had bricked two or three straight shots, looking suddenly very un-Mamba and rather cold.  In what I assume must be Smitchell’s doing, Jose Calderon is suddenly tasked with guarding dwindling Mamba.  I assume it is Smitch’s doing as this occurs over 3 straight possessions or so, and Jose meets Mamba somewhere near halfcourt (unlikely to be the result of a switch).

Being one of the league’s most notoriously poor defenders, and not that strong of a ball handler, Spanish, and not even the right position or size for the job, Jose promptly allows Mamba to score three buckets (two dunks off steals and a trey, as I recall) and suddenly Mamba is electric again.

A timeout quickly follows, which much commotion and histrionics, and Mamba goes the rest of the 20 game minutes to score another 35 pts or so.

That is the Smitchell that I will always remember.  And though we may now have a chance (it’d be better if we replaced Jay Triano with a stronger coach, but there’s no downgrading from Smitch) to make it to the second round of the playoffs (we only have the 4th or 5th most talented roster in the East…), I believe the city of Toronto is better off for having known our dear friend, and beloved coach, Sam “Smitch” Mitchell.  He may not be missed, but he will never be forgotten.

We have now had our big baby superstar (Vince Carter) who started faking injury and quit playing defence (can you quit if you never started?) and then whined his way out of the city.  And we now have had the coach who did nothing, failed in every facet of game day coaching (I cannot judge his between-game impact), and who rid the crest of a #1 overall pick, a GM overhaul and spending spree, and the development of a legitimate star (Chris Bosh) to a COTY and suffocated the team with his incompetence for another year and some.  Let us never forget and let us hope the City of Toronto is never fooled again into supporting those who deserve nothing but our ire (VC) or disdain (SM).

For a more appropriate commemoration of this event, please see the official site for this event.

And please share your own Smitchocities in the comments.  I think I might actually be able to laugh at them now that it’s all over.

… and the cow goes moo

This isn’t just to make myself money (I do though, if you buy books from BCO). I don’t expect to make much/any, but it’s my favorite book store in the whole wide world so it deserves some props.

STORE REVIEW:
My most recent BCO crazy deal example: I have a hardcover David Halbsterstam – War in a Time of Peace from BCO, autographed by the recently departed author, that was purchased as a gift for me for all of $7.99.  That Amazon.com link, I think, makes my point for me: The book is on sale at Amazon for $12.24.  And that’s a paperback.  And unautographed.  Though Amazon does have superlative shipping for books, I find (I have received some orders in under 30 hrs).

They are not perfect though: BCO mistakenly sent me two copies of The Calvin and Hobbes Lazy Sunday Book ($10.39 at Amazon.com, $5.49 at BCO when I purchased) rather than one copy of Lazy Sunday and one copy of The Calvin and Hobbes Tenth Anniversary Book ($11.55 at Amazon now, $6.99 at BCO when I purchased).  When I made BCO aware of this, they immediately shipped out a copy of the Tenth Anniversary Book and told me to keep the extra copy of Lazy Sunday to apologize for their error without any bitching on my part.  Considering the amount of money I’ve lost in the past to e-tailers like Deep Discount DVD and RideGear from their errors, this was a breath of fresh air (only one other e-tailer, the computer/electronics store NCIX, has consistently provided excellent service and performed their due diligence to correct their errors in my past experience with them).

BCO has fantastic promotions (free shipping on right now, click on the promotions tab; often they will have a $5 off of $35 or so promotion as well).  There best regular deals can be found if you do not mind surplus/imperfect copies of books.  As I read books on the subway/bus and tend to throw them around (I have books for reading and lending away, not for modeling), I couldn’t care less if the books have imperfect corners or a market streak across the bottom edge of the pages (stores do this to overstock books before returning them to the distributors, I believe).  You can often find books at a 50% to 90% discount if you’re willing to purchase these types of books and the descriptions for the titles, in my experience, very accurately reflect these flaws.

Though the inventory is constantly changing and does not even remotely rival the current inventory of Amazon.com or other sites, you cannot find a better price.  And very reasonable shipping even to Canada, though it will take a couple of weeks normally.

I highly recommend checking BCO for books before you buy anywhere else (even eBay!) since you won’t beat the price anywhere else, if they have what you’re looking for in stock.  You can easily pick up ten great books for under $50 final.  I highly recommend using BCO for comic collections especially (such as for the great Calvin and Hobbes titles).  Great for gifts as well, if you know sensible people who don’t care if someone took a sharpie to the bottom edge of the book (along the edge of the pages so no one page shows more than the slightest mark) and would appreciate your being able to gift them a gift of six books rather than two.

Even if you hate me/this blog, do yourself a favour and check out the site (just don’t allow the cookies or copy and paste the url from the link but remove everything beyond the basic domain before navigating to the site to keep me from stacking my paper to the ceiling).  Unbelievable site for cheaper-than-used books.

… and the cow goes moo

Despite the substantial (about 20%, as of market close on Thursday, since I made my stock purchase last week Tuesday) drop in GM’s stock price, and all the associated recent bad news for GM, I remain convinced a bailout in some form is coming.  And here’s part of the reason for my certainty:

From CNN Money (from The Business Sheet, which I am not familiar with… from Some Assembly Required):

“If the Big Three carmakers were to cut U.S. operations by 50%, 2.5 million jobs could be lost in 2009, according to a study released Wednesday.

The Center for Automotive Research reported that the total employment impact includes nearly 250,000 jobs lost at the automakers and nearly 800,000 at suppliers.

…

In economic terms, cutting operations in half would reduce personal income by more than $125.1 billion in the first year, and $275.7 billion over three years, the center said. Such a decline in personal income would cost the government tax dollars — $49.9 billion in 2009 and more than $108.1 billion over three years.”

It just makes too much sense if you ignore the moral hazard component (and by ‘ignore’, I mean opt not to inject it into the debate as it hasn’t been part of the conversation among decision makers so far).  The $10 billion or so that is estimated to be necessary to make the GM/Chrysler merger occur wouldn’t even make the front page with the dollar amounts that have been sent to the much more odious financial sector.

Had John McCain somehow won, I imagine George W. Bush would be less likely to leave the automotive industry reeling through the end of the year, however, should the situation become desperate enough, I would expect he would make the perhaps politically difficult decision to save the long-faltering American automakers.

I believe all that is keeping a bailout from being completed are the political considerations and the appearance the Federal government saving a company (or companies) that have been hemorrhaging billions (and making fairly shitty cars) well before the housing bubble burst.  I believe that is why direct merger assistance was discarded so promptly and why there seems to exist so much talk of somehow re-routing the $25 billion of approved loans to the automakers to develop fuel-efficient technologies to facilitate the merger, as well as somehow folding an automaker bailout into the TARP .

The most likely outcome to me (and I believe the announcement that the “next one hundred days could represent the most crucial time in the history of the troubled company and entire U.S. auto industry,” according a top GM executive) would for GM to announce a string of horrible news with no hope for any independent turn around over the next month until the utter failure of GM’s management (and the dire situation) becomes broadly clear to union members, automotive sector employees, lawmakers, and the general public and the lawmakers can act without fearing the voter reprisal that accompanied the first TARP passage attempt.

But that’s just my guess.  And my view could be (is almost definitely) very skewed by the 20% paper loss I just ate, as of 4:00pm EST October 6, 2008.  I gambled on a bailout and knew it was a gamble.  I guess I’ll have to wait to get my government cheese.

… and the cow goes moo

Ya, I’m sorry about that to those who make a point to visit daily (and have recently seen few updates in the week).  A few legitimate reasons for that:

1. My new job is kicking my ass in terms of hours
2. The world’s economy isn’t quite as close to exploding as a few days ago, so I had fewer panicked rants to make
3. The US political scene has died down a bit too, it seems.  The US elections are upon us and prematurely ended, really.  And now that the fight is over, some of the comments from either side that would normally make for my favorite targets are either less frequent, less prominent, or just unable to gain sufficient traction to warrant comment (accusations of Barack Obama being a socialist would fall under the last category).

I’ll try to do better.

Also the lack of time to spend on quality posts have resulted in some of them being slightly more rambly than usual.  Once again, I’ll try to do better.

Hopefully my new job will provide me with some new insight into the Canadian financial and housing sectors though, which will hopefully make their way into some future posts.

To those who have been visiting despite the lack of updates:  Thanks! And I’ll try to do better.

… and the cow goes moo

Has been postponed until God knows when (I have read a bit indicating enthusiasm on the part of Obama to facilitate the merger, but even if he is willing to support funding the merger, I doubt he would make it one of his first major acts of business in office.  And that is a few months away regardless.  The condition of GM and Chrysler and the economy at large could force Bush’s hand).

As a recent (Tuesday morning, $5.99/share) purchaser of GM shares, I am very keenly following any updates on the situation.  I was hoping I could piggyback on the largess and get me a cut of that government cheese that has become so fashionable lately, but my failure to sell at $7.00 means I’ll likely have to hold this horrible carmaker’s shares for months before getting a payout.

The facilitated-merger rumours have drawn the ire of many journalists and the public at-large (though not to the extent of the TARP of course, as the direct Federal costs are being estimated between $5 and $12 billions:  Not even 2% of the TARP outlay).  Many have phrased the merger as Some Assembly Required has:

“The taxpayers give $15 billion to GM/Chrysler to help them merge, and in return they lay off 74,000 taxpayers.”

That seems very accurate to me but what he does not mention in his sarcastic summary is that watching GM and Chrysler fail would appear to be a much scarier prospect.  As the article he links to describes (Bloomberg):

“A “free fall” by Chrysler in which the company runs out of money, enters bankruptcy and stops producing cars would almost destroy the U.S. industry and cause massive supplier failures, she [Kim Rodriguez, who leads Grant Thornton's automotive restructuring group] said. While that scenario is unlikely, it would mean “significant” job losses.”

Despite the likely vested interests of Ms. Rodriguez (and myself, as a small investor), I do believe this is an accurate depiction.  And the same would apply to GM.  GM is estimated to be losing over a billion per month and could run below the $11 billion or so necessary to maintain operations sometime in 2009.  The Chevy Volt (which I believe was originally scheduled for a mid-2009 release) is, according to CNN Money, expected for late 2010.

Unlike the financials that have been bailed out so far, I actually do believe GM has a relatively bright future ahead of it if it can make it to the Volt’s release.  This merger would likely cost thousands of jobs in the short term, but no merger would cost thousands of jobs in the short term as well (as the Bloomberg article indicates, Chrysler is eliminating 25% of their salaried workforce already) and should GM not find some way to survive the continuing automotive downturn, there seems to be a fair chance that 74,000 jobs could be lost in next year between GM and Chrysler if nothing is done.

The larger question that doesn’t seem to be posed much in print (but is alluded to or stated rather matter-of-factly in the commentary about the news) is whether or not GM or Chrysler desreve to survive as companies.

GM and Chrysler have ignored the writing on the wall for years and have continued to shortsightedly build their business around the (in my opinion, embarrassing) once-growing trends in SUV ownership and refused to acknowledge the shift towards more economical vehicles, even in the face of coming (or already arrived at) Peak Oil (to clarify: I’m not saying we’re almost out of oil, but we’re out of easy-to-get-at oil).  The Detroit Big Three (and Toyota) were so committed to their SUV market that they actively and aggressively lobbied against improved fuel economy standards just last year (Autoweek story).  I wonder if they wish that money spent lobbying against the imminent tightening of fuel economy standards wouldn’t have been better spent… improving their fuel economy?

Quite frankly, my personal financial interests aside, I would love to see all three American automakers fail to some extent (I am commenting on just the companies: Though I would not consider working at an automaker so behind-the-times and more eager to compete through lobbying than automotive innovation a point of pride, I certainly don’t wish unemployment and poverty on their workers).  Despite my fondness for the Chevrolet Volt and GM’s entire public and uncompromising approach to its development, I would be perfectly happy to see GM liquidated and a stronger and less idiotic automaker purchase the Volt and its compatriots and let the rest of the brand die.

But I do not see that happening.  Despite Detroit’s consistent inability to build a reliable automobile for the past decade or more, US consumers nonetheless continue to purchase American (albeit in diminishing numbers).  Ford’s quality has improved and could even be said to be impressive with three of their brands in the top 10 for JD Power’s 2008 Initial Quality Survey if you include Jaguar, which Ford sold this March.  GM tends to rank somewhere in the middle, with no marques cracking the top 10.  Chrysler manages to dominate the bottom 10 of the 36 brands with the last place finisher (Jeep), and a total of three brands in that bottom 10 (Pop Quiz – Question:  How many brands does Chrysler have?  Answer:  Three).

Industry average:  118

Ford’s five brand unweighted average (for the brands it currently controls):  117.400

Ford’s seven brand unweighted average (including Mazda, Volvo, and the recently sold Jaguar and Land Rover):  122.857

GM’s eight brand unweighted average:  127.875

Chrysler’s three brand unweighted average:  150.000

The quality of American cars (or lack thereof) is no secret.  Quite frankly, I would estimate based on my brief employment in the automotive industry that consumer impression of US carmaker quality is even below what JD Power’s ranking would suggest.  What American consumers’ decision to continue to buy horrible American cars despite competitively priced and superior performing import availability says to me is that there is a major impulse among American carbuyers to purchase American, and should a company like GM release a product worth buying (perhaps the Volt?) Americans will flock towards them.  Of course, $7,500 tax breaks (as per the CNN Money article) would help.  But GM has to survive for the Volt’s release for that to happen.

So the companies, for the most part, suck.  And the market, without a doubt, totally sucks.  But so do the options.  Given the choice between a slow (if you consider fewer than five years slow) drift into liquidation for Detroit’s Big Three and a still-possible drift to liquidation in an indeterminant amount of time, but potential post-2010 resurgence if $12 billion or so is provided to make a merger possible, I have no doubt that Washington will choose the latter.  Despite my financial stake in its event, I do not support it.  I have no doubt, however, that the fear of the difficult-to-predict consequences of the automakers’ failure in the weakened American economy will drive Washington to action.  And I doubt the Big Three have cut back on their lobbyist expenditures either.  That will probably help.

… and the cow goes moo

Normally I’m not too fond of these videos (I get pretty annoyed when friends send me a bunch of so-so videos and viral-whatevers without making sure I should care first) but this one is fantastic.

(Found via Angry Bear, which I found through Naked Capitalism)

Rather than spew attacks that would only appeal to those that are already commited to one side of another, the video stays focused on the one idea encompassed in the title: That McCain (McCain’s handlers, I guess, since it is very likely that John McCain was never too fond of Sarah Palin candidacy in itself), by bringing Sarah Palin to prominence and giving her the opportunity to become Vice-President in 2008 (and President in 2012, or 2016, or sooner) has put the entire naiton at risk of an easily manipulated idiot (full disclosure:  I thought the Palin pick was a smart strategic choice initially, before learning anything about her, because I thought that there was a very large number of politically neutral supporters of Hillary who wanted to make history for female candidates, and because the lack of any excitement in the McCain campaign needed an energetic element and something worth talking about… I did NOT think they needed another idiot that was selected on the fairly accurate but deeply disturbing low-expectations politicians have of the American voter).

The video does go a bit overboard (but only a bit, considering that Palin could easily be worse than George W. Bush) with it’s warnings of further military and economic crises should Palin become VP/President.

The video itself is fantastic.  The production is simple, but surefooted.  The narration is Saturday-morning-educational-cartoon perfect.  The content is accurate and appropriately concise.  The writing is flawless.

And futhermore, it touches a part of me that current campaigning from any side hasn’t so far:  Sure, Democrats have to be a bit vigilant to the chance of a sudden resurrection of the cold and dead McCain campaign, but EVERY AMERICAN should be concerned with the resurrection of Sarah Palin / George W. Bush politics of finding the dimmest, most docile ’spokesperson’ you can and installing them into office by appealing to the most base and vile intuitions and indulgences of the (slight) majority of Americans.  And then rape and pillage the country through experimentation and corruption while letting the blame fall on the blow-up doll installed in office while you inflate his or her successor.

I could watch this video all day.

… and the cow goes moo