Snowflakes in Hell

While it might frustrate some Utah gun owners, I have to give their Governor some props for considering the legal costs to controversial legislation. It’s a point we’ve repeatedly hammered home to localities here in Pennsylvania who are considering constitutionally questionable ordinances.

Gov. Gary Herbert wants to sign a bill exempting Utah-made guns sold in the state from federal regulations, but he also wants to avoid a potentially costly constitutional challenge.

In an attempt to thread the needle, Herbert told The Salt Lake Tribune on Monday that he will ask the bill’s sponsors to “tweak” the bill, making it contingent on an already existing legal challenge to a nearly identical law in Montana.

“Let’s see what happens to them and react accordingly later rather than cause an instant financial obligation for the people with money we don’t have,” he said. “It would be much better to be a friend and support and see what happens with Montana.” …

Herbert has been perplexed how to handle the bill, just one in a slate of state-rights legislation working its way through the Legislature.

On one hand he says: “My heart is with them on the concept of challenging the federal government.”

But just moments later he worried about the potential costs of a bill which clearly conflicts with established federal law.

“We can ill afford a very expensive court fight with our budget being what it is,” Herbert said.

That said, it does sound as though the Attorney General has a solution to the issue that should save the taxpayers some money should they be dragged into a legal fight. He would ask any court to hold off on the lawsuit and agree to not implement the law until Montana’s situation is settled. That could work, and it seems a reasonable solution. However, it is still refreshing to at least see some attention paid to the cost issue given the kind of crap we’ve heard in response to taxpayer concerns here in Pennsylvania.

I can’t tell you how many times I’ve heard gun owners rant about just wanting someone to sue various agencies, yet they often forget that it costs money to do so. When this conversation happens in person and I politely point out exactly where they take a little from their wallet to help the fight, that’s about the time they walk away. Funny how that is.

If you want more of this, I strongly suggest reading some Russ Roberts novels. Yes, novels. He writes novels about economics.

A California fashion designer launched his fall/winter 2010 line today. I guess the economy really does influence design:

American designer Rick Owens continued to plumb the depths of the dark side Friday, with a fall-winter 2010-2011 menswear collection of gender-bending, space age-y designs ready for the apocalypse. …

Overall, the collection, with its asymmetrical hemlines and great floppy flaps of fabric, looked like the kind of wardrobe the father and son in Cormac McCarthy’s post-apocalyptic fable “The Road” would have fashioned out of found detritus.

If I were living in California, I suppose the apocalypse would be an apt design inspiration. Might as well be ahead of the pack, right?

It’s interesting to compare and contrast things in DC to here back home. I think you can argue that the Restaurant business is a good bellwether of how people are feeling about the economy. Back here in the Philadelphia area, since the economy went into the crapper, wait lists have shortened or disappeared altogether, often even on weekends. You can still find waits at some of the econo-chains, like Outback, but most everywhere else it’s just a matter of walking in. Especially in higher end restaurants.

So you can imagine my surprise when we hit the dinner scene in DC and we’re back to one hour waits. Even past 8:00, we had to wait 45 minutes at one place in Arlington. If people are feeling uncertain about the economy and their jobs in DC, it’s certainly not showing up in people eating more at home like it is here. But why should people in DC worry about their jobs? Their major industry is growing like gangbusters, and they can always suck more money away from parts of the country that really are struggling and uncertain. No wonder people are fed up.

Tyler Cowen has an interesting example of dolphins learning how to trade up for better treats. He enjoyed the story.

I’m concerned that this is a sign of the end times, at least if Lisa Simpson lets that damn dolphin go free.

Jim Geraghty noticed that New Jersey’s job numbers are looking surprisingly rosy now that Corzine re-election campaign is really heating up.

The CEO of Whole Foods is apparently operating under the delusion that his company’s business model involved making people healthy.  In that vein, he says his company sells “a bunch of junk.” and is vowing to help his customers eat healthier.

He went on to say that Whole Foods was going to launch a healthy eating education initiative to encourage customers and employees to reduce obesity.

But Mackey told the Wall Street Journal: “Basically, we used to think it was enough just to sell healthy food, but we know it is not enough. We sell all kinds of candy. We sell a bunch of junk.”

Mackey, dude.  I don’t know if anyone’s told you this, but at the end of the day, you sell food.  That’s your business.  If you’re encouraging people to eat less of it, unless you can turn up the margins, something that’s going to be tough in this economy, you’re screwing your shareholders.  Whole Foods has a simple business model: selling overpriced food to people who care about Mother Gaia, and who think an overworked Filipino adolescent driving a pair of oxen around a rice patty are all the farming technology the world needs.

Whole Foods provides somewhere to go to buy food so they can feel good about themselves.   That’s what you’re selling, Mack.  You’re selling a dream to hippies, and at a much higher profit margin than your typical supermarket.  If those folks come to Whole Foods, and feel good about themselves when they buy a box of organic, fair trade ho-hos, that’s a win win situation.  You win, because you just sold an overpriced box of ho-hos, and the consumer wins, because they can feel good knowing they are buying the best product subsistence farming has to offer.  It’s what capitalism is all about!

Whole Foods needs to ditch the true believer, and hire someone who’s more interested in making money for their shareholders.  I have no CEO experience, but I understand what Whole Foods sells, so I offer my services.  I would never shop at a Whole Foods store myself, but I know plenty of folks who do, and they have money to burn.  I’ll keep selling them the dream, and promise to cry for Mother Gaia all the way to the bank, and print your dividend checks on 100% recycled, organic bleach free paper.  Wouldn’t want any of our shareholders feeling bad about themselves, now would I?

According to Marginal Revolution, they report that lower-end patio sets, grills, and toilet seats are hot items at Wal-Mart in a down economy.  The manager who offered up the observation believes it’s a matter of people cocooning and putting more wear into their homes.

I can’t speak to the bathroom fixtures, but I can speak to the outdoor furniture since we’re in the market for both a new grill and a patio seating set – and I’ve looked at Wal-Mart for both.  As I have said previously, I was floored by how much patio furniture sets cost these days.  Granted, I was looking for something a little nicer than what I bought for my balcony, but nothing too fancy.  And the idea of spending more than $500 just on furniture when we also need to buy lights and a grill, plus do a little bit of landscaping just really turned me off (not to mention, Sebastian, who makes the final decisions on the matter).  It’s not just because of tighter budgets, if this was a booming economy, I would have a hard time swallowing those kinds of prices for outdoor furniture.

Ironically, a notoriously overpriced store will be the likely source of our new patio furniture.  It’s not online, but there are nicer chairs at Bed, Bath & Beyond that are better than anything I’ve found at Wal-Mart, Target, Home Depot, & Lowe’s.  Even better, they are the same price.  Plus, since B,B&B is always sending out coupons, we can get $10 off each chair, making them the lowest priced option.

Although, since I’ve been looking, I have noticed that Lowe’s and Home Depot have already marked down many of their nicer sets.  I guess they are seeing the same trend as Wal-Mart, and lower pieces move while their more expensive sets gather dust.  Grills have also been marked down this early in the season.

Actually, on the grill front, I’m still trying to find the right size to fit our budget.  So far, everything I have found is too big.  The whole point of downsizing is to get something smaller so we have more useable space on the patio.  But, I think I found one at Sam’s that is a little more than what we were looking at for price, but appears to be the right fit.  I just need to get Sebastian over there to look at it since he’s the one who will have to cook on it.

BTW – our patio is done for now.  I know I need to do another update post on that.  We had some government approval adventures, and the finished product is beautiful.  Now we just need to touch up a few places with paint, get a power washer to give the house a good bath, and patch some stucco, and the back will be in good shape.

Megan McArdle shows us why correlation is not necessarily causation.  I’ve dealt with this even in my professional life, because there’s a lot of lessons to be drawn from this even in the drug discovery field.

This is a pretty good pictoral reprentation of the economic downturn as far as auto manufacturers are concerned.  Lots of cars piling up that no one wants to buy, and the automakers have been churning them out because of the expense involved in shutting down and restarting production lines.

This is an excellent article from a few weeks ago that describes one of the proximate causes of the current financial crisis.

For five years, Li’s formula, known as a Gaussian copula function, looked like an unambiguously positive breakthrough, a piece of financial technology that allowed hugely complex risks to be modeled with more ease and accuracy than ever before. With his brilliant spark of mathematical legerdemain, Li made it possible for traders to sell vast quantities of new securities, expanding financial markets to unimaginable levels.

Read the whole thing.  I am by no means a mathematician, but I work for a company that does mathematical modeling of a complex system (ligands binding to proteins), so I have some experience with the benefits and deficiencies of such systems, as well as some experience with what happens when the uninitiated try to understand these models.  Let’s just say there’s a strong tendency to celebrate the benefits and fail to appreciate the limitations.

I think there’s a lot of this when it comes to global warming, too, which is another complex system that people have attempted to model.  It’s always a good idea that when anyone claims to have a mathematical model of a complex system that is simply revolutionary, without any significant limitation of caveat, drag him into the nearest bathroom and beat him senseless, before he destroys civilization as we know it.  Entire industries have been ruined by such people, who are seldom the people who actually developed the models, and understand the limitations.  Finance is not the only industry, just the latest.

Not what I expected to get in my Inbox:

Because you are one of our loyal customers, we wanted to give your Citi® Card even more value. So reward yourself with the spending power and flexibility that comes with a higher line of credit.

You’ve earned it. Now enjoy it.

Isn’t this how you guys got us all into trouble in the first place?

Todd Zywicki explains:

Why has this incredible boost in the money supply had no impact? Presumably because the “velocity” of money has remained low–people and banks are hoarding money, rather than spending, borrowing, and lending it. Assuming velocity rises again, however, we may be looking at an inflationary spiral like we’ve never seen before in this country.

Peter says it well, “We’ve Never Been Here Before.”

I keep joking to Bitter that I need to buy some gold sovereigns.  Maybe it’s time to stop joking.

Megan McArdle is skeptical the stimulus proposed by Congress is going to do much, and pretty much represents an excuse to push multiple Democratic spending priorities:

Though you wouldn’t think it from the really quite shocking incivility emanating from the pro-stimulus side, the empirical evidence that this works in a large industrial economy like ours is basically nonexistant.  The problem is, we have very, very few examples to test on:  America during the Great Depression, and Japan in the 1990s.  And neither America nor Japan managed to stimulate their way out of their troubles.

Meanwhile, it looks like Boehner is getting the GOP to start acting like Republicans again.

I’m not as panicked as Kevin, SayUncle, and PDB about the vast expansion of the money supply.  While I would not sell myself as any economic expert, the risk in inflation the money supply is, well, inflation.  But my understanding is that the reason to do this is to prevent giving rise to a much worse beast, which is deflation.  We’re already experiencing deflation in a lot of sectors, like Housing, which was the match that lit this fire.

If this recession is fundamentally a problem of people over-borrowing, and business being over leveraged, and falling asset prices, one easy way out of the problem is to inflate your way out of it.  The problem with deflation is that it gives people an incentive to hoard money.  Not to spend, or invest it, but just to sit on it, because it’ll be worth more tomorrow than it is right now.  That’s very damaging to the economy.

Inflation is painful to people who have saved, which isn’t many of us these days.  Too much inflation is indeed a bad thing, but if the problem is too much debt, and declining asset prices, an inflationary cycle would actually help alleviate the problem.  Unfortunately, runaway inflation is also a big problem, and stopping it can be highly painful.  I suspect this massive expansion in the money supply is going to have detrimental effects at some point, as the fed will have to tighten the spigot to deal with inflationary pressures.  That’s going to suck, but I suspect it will suck a lot less than the consequences of deflation.  Given that, I’ll worry about what effect a rapid expansion in the money supply is going to have when it comes time to cross that bridge.  The really scary part to me is, everyone, even expert economists, seem to be playing this by ear.  No one seems to really understand what’s going to get us out of this.

I hope you’ll keep the important things in mind today and tomorrow. I know I’m looking forward to the small things about Christmas.

For those of you who received a little extra something from either work or gifts, I leave you with this excerpt from an article on the state of charitable giving.  Read it all the way to the end, as the last number may surprise you.

Charitable organizations are feeling the effects of the economic downturn, too. A recent news story entitled “Giving season struggles to earn its name” lamented that this year’s charitable giving total is unlikely to top last year’s total of $306 billion. It will be only the second time in 40 years that charitable giving failed to grow from one year to the next.Certainly, that’s bad news for organizations that depend on private contributions, particularly given that the poor economy will increase demand for many charitable services. Yet there is a very “glass half-full” way of looking at the statistics: Americans’ ongoing willingness to give, even as their household wealth shrinks by trillions of dollars, is testimony to the true generosity of our citizens.

Americans stand out in the world for their commitment to private charity. Americans don’t lead the pack just in terms of total dollars donated but also when giving is measured as a percentage of gross domestic product. In 2005, private giving in the United States was 1.67 percent of GDP, more than twice the next most charitable country, the United Kingdom, which gave away just 0.73 percent of its GDP.

A recent report released by the Philanthropic Collaborative shows that Americans’ commitment to charitable giving is more than a sign of compassion. It’s also an important investment in the country’s well-being. The report measures the impact of private and community foundation giving, and it suggests that the grants made by these organizations produce very large economic returns. The authors estimate that each dollar of grants provided by the foundations generates $8.58 of economic benefit.

This is a big part of why GM can’t succeed.  I don’t even get half that many holidays, and I’m management.

When formerly red countries have a better tax structure than Western European ones.

This article by Tyler Cowen talks about how we came to the current financial crisis.  This has me wondering something:

It now seems that a wide range of asset prices were artificially inflated. The market for contemporary art, which depends almost exclusively on very wealthy buyers, will probably be the last market to plummet but that development is almost certainly on its way.

Know what other asset market depends on wealthy buyers?  Title II firearms, which have also skyrocketed in price in the last 8 years.  Could it be that we’ll see lower prices for registered transferrable machine guns?  We’ll see.

Bill Clinton isn’t blaming the Republicans for deregulating banks.  I think Clinton is right on this one.  Also, if you’re looking for a great outline of the current credit crisis, head over to Marginal Revolution.

The Mackerel standard is just too inflationary.

Megan McArdle writes:

All of New York’s rebound has been paid for by the taxes on the financial industry–a few hundred thousand people in the industry pay the lion’s share of the taxes for the entire city.  Take them away, and the city will rapidly lurch back towards bankruptcy.

Of course, that’s not the sort of thing that happens overnight.  But the City and State of New York are remarkably business-unfriendly places; they usually end up ranked at the very bottom of the league tables in terms of the ease of doing business there.  That isn’t just taxes, though that’s part of it, but the massive, overgrown regulatory apparatus that can be perilous and expensive to negotiate.

Read the whole thing.  And after that, her post on rethinking regulation is quite worthwhile.

Tyler Cowen has explain to his mother why the price of gas is high because of Ike, and why that’s not a bad thing.  Sadly, it’s not just Tyler’s mother, but a lot of the politicians who run this country that need this basic lesson in economics.

Well, it look as if someone has proposed a scheme for a government car buyback.  Alex Tabarrok points out that this scheme will have the same economic problems that gun buyback schemes suffer from.

I’ve been reading Megan McArdle’s various posts about Ron Paul’s rather kooky idea about returning to the gold standard.  It seems to have brought the Ronulans out in force.  I love comments like this:

You are a clueless woman. I am just an engineer not an economist, and yet I know these things. A piece of sincere advice – you should stop posting on all matters economic. Focus on some birth control pills and stuff.

I am an engineer as well, and I also know a bit about economics, but I an also aware I know a tiny fraction of what Megan McArdle knows on the subject.   This sounds like a case of people hearing something they don’t want to believe, and attacking the messenger.  Truth hurts, I suppose.