Lights Out November 30, 2007March 10, 2017 I remember when I bought my apartment 30 years ago ($11,000, down, $30,000 mortgage, thank you very much). The real estate agent and I met the seller in the lobby – she had been out shopping – and she wouldn’t let us go up with her in the elevator. She asked us to wait downstairs so she could go up first and turn on the lights. It would show better that way. I know you think we’re on a high floor with a sunny view, but writing a blog – as lucrative as it is – is not investment banking. Charles and I suffer on a low floor with sunshine emanating only from our dispositions. (So it’s dark.) To compensate, we have 47 light bulbs. Excluding closets. I just counted. In the old days, most of them might have been switched on (for example, 16 on a track to light the living room, five on a track to light the hall) – roughly 3,000 watts. It’s nice having the whole place bright. But now, as I type this, two of them are on: CFLs lighting my office – 50 watts. And – as I spend almost the entire day and night sitting here typing (and as Charles is generally out being a famous fashion designer) – that’s mostly all the lighting required. There’s still the matter of the refrigerator (non-negotiable) and all the instant-on electronics (negotiable, but so far the environment has lost the negotiation). But at least with the lighting, dramatic savings have been possible at almost no sacrifice. ENERGY TIP: Many of our 47 bulbs are dimmable, on tracks, which – when we do have then on – are kept low. Charles likes it that way; it’s more sophisticated. (To me, it’s just darker.) But it also saves energy – I checked – almost, though not completely, proportional to the degree of dimness. QUOTES FIXED I apparently knocked the Daily Quotes jar over with my elbow, so you’ve been getting, at left, a random offering each day from just the relative few that didn’t spill out. Oops! I just got a dust broom and swept the rest of them off the floor and back into the jar . . . and will continue to add a new one every so often. Monday: What May Be a Great (Free) Alternative to Symantec
Symantec November 29, 2007January 6, 2017 FMD Tom Brown’s reassuring perspective, here. There are no guarantees, but I’m hanging on to my shares. If I did not already have a ton, I’d likely have bought more. Brown is appears substantially more sophisticated than the analyst whose negative report sent the stock down 10%. SYMANTEC First all the responses I received defending Symantec. Okay. Now here are some of the other responses to yesterday’s comment: Richard Feinberg: ‘All I can say is that I HATE, HATE, HATE their software. The damn stuff is completely insidious and worms its way into the guts of your computer, forever acting maliciously, and often surreptitiously. I hope you will share your tale of woe. I have heard others . . .’ Karl Plenge: ‘Boy, was your comment about Symantec timely! Monday I spent over four hours on ‘chat’ with them – was disconnected twice, resulting once in a wait of over an hour to get reconnected to a ‘tech’ (I use the term loosely) – and was passed around from person to person for the whole four hours without once getting an answer to anything. Finally they stated they were ‘escalating’ me again, would I please wait…and after 15-20 minutes a tech sent me a message saying that since I hadn’t typed anything in 10 minutes, they were hanging up on me – and did as I furiously typed a response so that they would not disconnect me! I saved the transcript and I am going to try to find someone important there I can send it to (yeah, I know, good luck on that). I have felt up until now and still do feel that their software is a good product, but I will certainly be looking for a new solution when my subscription to Symantec is up!’ Sam Kahn: ‘I will never buy another Norton product and had been a customer for many years. They have an incredible amount of chutzpah. In 2006, I bought and installed Norton Internet Security which is a combination of several pieces of software, most of which does not have to be updated every year. In 2007, I bought Norton AntiVirus which does require an annual update. This uninstalled all of Internet Security. There was nothing on the box that said that it would uninstall all of Internet Security as opposed to just the AntiVirus component. I wrote emails asking to get my software reinstated. Finally, I wrote to Symantec’s CEO and the response was that I needed to buy a new Internet Security. I will do just that in 2008 but it won’t be from Norton.’ Chris Petersen: ‘You write: ‘Symantec, publisher of the Norton software line, is just the worst company that ever incorporated.’ Well, duh! I have been using Trend Micro for anti-virus for a number of years and have been reasonably happy with them. But being concerned about security, I offer the following – particularly where there is significant risk should security be breached: #1 Use one computer for general browsing and surfing the network. Use this computer to install applications, play games, etc. #2 Buy a second computer, a Macintosh. Only install required software from reputable suppliers (Apple, etc.). Only use this computer for the secure transactions where loss of information could have significant value. Don’t do general surfing. Enable encryption on your home directory should your computer be lost or stolen. Use Keychain to store hard-to-remember passwords as needed. Secure the computer login with a complex password (no dictionary words). Or here’s a second option for those who only want one computer: Buy a Macintosh. Install Windows in one partition using Boot Camp. Boot to Windows for #1 uses above. Boot to the OS X partition for #2 above. This process is admittedly for the paranoid – which one should be when managing assets on the net.’ ☞ Now you’re scaring me. COUNT YOUR BLESSINGS ‘I do count my blessings, but then I end up counting those of others who have more and better blessings, and that pisses me off.’ – Bob Mankoff New Yorker cartoon caption
Obit November 28, 2007March 10, 2017 DO YOU KNOW WHY I WRITE THIS COLUMN? It’s so that once in a while I can say things like, ‘Symantec, publisher of the Norton software line, is just the worst company that ever incorporated. I hate these people so much I could cry.’ I may or may not elaborate – there are limits to even my self-indulgence – but just being able to shout it out the window this way makes me feel better. Thank you. FORECLOSING ON YOUR HOME Joel Grimes: ‘I thought I should point out that Glenn misses a crucial point with his Washington Mutual analysis. People who walk away from their homes are not necessarily on the hook for the balance of their mortgage. Anti-deficiency laws protect borrowers from lenders in the event of default. In short, you do not have to pay the ‘deficient’ part of your mortgage and there’s nothing the lender can do about it. Not all states have this protection, but California does, and I’d be surprised if California isn’t the biggest offender in their portfolio.’ ☞ Also, in the states that don’t have the law, there is simply the practical reality that (unless the new bankruptcy law has changed this), it’s impractical for banks to go after you anyway, because most borrowers in foreclosure are not likely to have lots of other assets to go after, let alone sufficient to make the bank whole and cover the legal fees it would rack up trying to collect. WELL-BEING RESEARCH Would you rather be happy or rich? ‘Both,’ is the obvious answer; but if you could chose only one? This story explores ways policy wonks are trying to measure happiness and well-being. OBIT OPTIMISTIC, PERHAPS, BUT ENCOURAGING ALL THE SAME THE DEATH OF THE RELIGIOUS RIGHT By Bill Press No matter who becomes the next president of the United States, the American people have already won a great victory – with the total disintegration of the once all-powerful religious right. Starting in 1979, when Jerry Falwell founded the Moral Majority, Christian conservatives have been the most powerful voting bloc in the Republican party. Ironically, they began by casting out of the White House a born-again Christian who continued, as president, his life-long practice of teaching Sunday school, and replacing him with a divorced and remarried man who seldom stepped inside a church. But of course, Jimmy Carter was a Democrat and Ronald Reagan was a Republican. And by staying united, the religious right has been able ever since to exercise its veto power over Republican candidates and dictate the issues – abortion, same-sex marriage, stem cell research and school prayer – they would campaign on. Until, that is, the presidential campaign of 2008. Today, the religious right has splintered into as many different factions as O. J. Simpson has alibis. Unable to find one candidate who fits the bill of being both true-blue on the issues and electable, America’s ayatollahs have divided their loyalties. Indeed, in some cases, they’ve even declared war against each other. The National Right to Life League has endorsed Fred Thompson, even though he opposes a constitutional amendment to ban Roe vs. Wade and admits he only goes to church when visiting his mother – while James Dobson says he’s not even sure Thompson qualifies as a Christian. Sam Brownback has endorsed John McCain, who once called Jerry Falwell an “agent of intolerance.” And Bob Jones III and Moral Majority Co-Founder Paul Weyrich have even endorsed a Mormon, because they think Mitt Romney is the only one who can beat Hillary Clinton. Meanwhile, Mike Huckabee, the only ordained Baptist minister in the race, is almost totally ignored by his fellow Christians because, even though Huckabee scores 100 percent on the issues, they don’t think he has a snowball’s chance in Hell of winning. Huckabee’s only evangelical endorsement comes from Tim LaHaye, co-author of the “Left Behind” novels – which may be the appropriate title for Huckabee’s campaign. And, in one of the most bizarre pairings in politics, Pat Robertson, who blamed gays for Sept. 11 and prayed for a meteor to strike Disney World’s gay pride parade, has endorsed Rudy Giuliani – perhaps because he’s counting on Giuliani to assassinate Hugo Chavez. James Dobson has said he will never vote for Giuliani, even if it means staying home. But the fact remains that, with Robertson’s help, the Republican party could very well nominate for president a candidate who is twice-divorced, thrice-married, pro-choice, pro-gay rights and an occasional cross-dresser. Merely entertaining Giuliani as a candidate demonstrates that, for many conservatives, political power counts more than Christian values. The religious right is dead. It will never again exercise the political clout it once had – which is bad news for Republicans, but good news for the republic. . . . – – – Bill Press is host of a nationally syndicated radio show and author of a new book, How the Republicans Stole Religion. You can hear “The Bill Press Show” at billpressshow.com. His Web site is: www.billpress.com. © 2007 Tribune Media Services, Inc.
Of Borrowers, Lenders, and 6,000 Applicants for 300 Unskilled Jobs November 27, 2007March 10, 2017 PEAS, PIES & PEARS – II Richard Bliss: ‘You are probably too young to remember the Peter Cook/Dudley Moore routine about their restaurant ‘The Frog and the Peach.’ Its only two dishes were Frog a la Peche and Peche a la Frog. Asked if he has learned from his mistakes, Peter Cook replies, ‘Oh yes I have learned from my mistakes and I am sure I could repeat them exactly.’ Most investors have at one time or another felt just that way.’ ☞ Now that you remind me, of course I remember it. Who could forget? So let’s call Peas, Pies, & Pears a subconscious homage to the absurdist cuisine of Cook and Moore. MORTGAGE REALITY Even now, argues Chris Johnson, a mortgage loan originator in Ohio, the industry is treating as excellent risks borrowers who are, in fact, marginal. He walks us through the example of a young man four years out of college earning $37,000 a year with a fine credit score (731) buying a $138,000 condo. His analysis concludes: . . . he’ll be left with $468 per month-best case-to spend $108.00 a week (if he drives 250 or fewer miles per month) to spend on food, clothing, surprises. This assumes that his car never needs maintenance. He won’t be able to miss a single day at work, it will be years before he can really and truly afford this home. The way our market works, this guy is the BEST BORROWER ON THE PLANET! . . . Until FNMA and FCMLC radically change how they underwrite, the problems are still growing-not shrinking. Nothing is contained because of the antiquated underwriting models that both of these agencies employ. This is why we’re not even at the beginning of the end. Our borrower is considered ‘not risky,’ solid and safe. If a major event happens, he is in a severe tailspin, but the current Fannie Mae underwriting model gives him preferred rates and reduced mortgage insurance. A lot of people with even thinner credentials were given these loans. The underwriting models are still wrong. There is no disposable income test, there are people like this that are advised that this is a ‘smart’ decision, and the current underwriting model thinks that this is a ‘safe’ borrower. So, the worst is yet to come, until we include ‘disposable income,’ in the advice that we dispense along with debt ratios. ☞ This particular borrower could do just fine. A bright guy, he might get a $3,000 holiday bonus and steady raises over the next few years. We all hope does (whoever he is). But for every story like that, there may be another young man who gets laid off; or who encounters other more modest difficulties – but lacks any real margin to absorb them. WAL-MART Here‘s a story from the Plain Dealer (thanks, James Musters) about 6,000 people applying for 300 jobs at a new Cleveland Wal-Mart Supercenter. When you read stories like this, it’s hard to believe that the economy is quite as robust as the Administration says – or that Wal-Mart is quite as bad a place to work as its critics say. Yes, the economy could be worse (just wait, I fear); and, yes, Wal-Mart could pay better (if we don’t mind paying a little more when we shop there). But I think a story like this tells a sobering tale. FMD . . . . . . dropped 10% yesterday on an analyst’s downgrade. It is now barely above the price we first paid. My FMD guru responds: Clearly not a pleasant day all around. As far as Mr. Snowling [the analyst] at FBR is concerned…..he is the most notorious “stirrer of the pot” on FMD and has been to date as wrong as anyone could possibly be on the operating performance of FMD. Why an analyst with such a systematically flawed record for predicting operating outcomes still has such sway over the stock price confounds me – and, in my opinion, raises other questions. As far as TERI is concerned, their IFS rating (Insurer Financial Strength) was lowered to A from A+ a month ago in an expected development that was widely considered unnoteoworthy. Most of the increased risk was attributed to the rapid growth of the private student loan industry and the relative concentration of industry risk generated by FMD and resident with TERI. (See here.). Also, keep in mind that FMD effectively “bought” supplemental insurance from AMBAC on their last securitization to cover any increased risk to interest or principal. Now….with all of that as preamble, there remains very real short term risk in FMD’s business model associated with their ability to consistently and profitably access the Asset-Backed Securities markets. This is the risk I have always pointed to as the one we really had to watch out for. Right now, with the mortgage meltdown and fear of associated recession, the ABS markets appear to be somewhat paralyzed – and not just for mortgage paper. Funding for auto loans, credit cards and potentially student loans could also be affected. Importantly, FMD should be in the process of bringing their second fiscal quarter securitization to market as we speak – with a usual announcement of volume and pricing expected sometime in the early part of December. Results of that announcement (or lack there of) may exhibit extraordinary influence over the price of the stock in the near term….in either direction. In the medium and longer term, the ABS markets should inevitably settle down and stabilize… and any increased risk associated with funding student loans should be reasonably priced into the cost of the loan. More importantly, in the medium to long term, there should continue to be impressive growth in the private student loan industry – and FMD possesses some very real, sustainable and exploitable competitive advantages in that space. In my view, the medium and long term FMD story remains compelling – however the near term price action could be highly volatile. ☞ Or put another way: kids are still going to go to college; cheap government loans will pick up only a fraction of the cost; FMD is smarter about underwriting student-loan risk than its competitors; so this might be a better time to buy than sell – but only with money you can truly afford to lose. WRONG PRINCE In early editions of yesterday’s column, before several of you gently corrected me, I had the wrong prince acquiring Citicorp shares at $10. I said Bandar. I should have said Alwaleed.
If the Bank Fails, We Could Always Open a Restaurant November 26, 2007March 10, 2017 PEAS PIES AND PEARS Let me preface this by saying real guys don’t eat peas. And they don’t eat pies except for frozen apple pies that they eat semi-defrosted, like the ultimate Ben & Jerry’s apple pie ice cream minus any actual ice cream. Real guys will, at Thanksgiving, eat their mother’s hot apple pie ala mode, but they’d never go to the trouble of cooking it themselves. That would be Baking Like a Guy™, and what guy bakes? Guys grill. But I digress. My point is that at Thanksgiving this year I saw a huge serving bowl of peas on the kitchen counter next to two pies – and a light bulb went off. Why not open a restaurant – ultimately, with proper management, a nationwide chain – called Peas and Pies? “Hey, Madge – look! Peas and Pies! What the . . . ?” “Well, Honey, isn’t that odd. It must be good. Let’s try it!” (The thinking here: why would anyone open such a presumptive loser, if it weren’t really, really good.) My nephew Timmy, 14, eyeing the peas and pies, was listening to my pitch and completely not buying it. “Too narrowly focused?” I asked him. “Definitely.” “All right then. Pears. Peas, Pies & Pears.” (I thought briefly of “Peas, Pies ’n Pears” but it is absurdist, not folksy, we are going for here.) Timmy rolled his eyes as he often does when I am pitching an idea. Were he a bit older and a reader of this column, he might have added, “Well, it can’t be any worse than your WA-MOOPS idea.” Touché. WA-MOOPS There is, to begin with, worse to come with the housing and mortgage mess, and it’s hard to see how that won’t spill over into other miseries. So be careful. (“Rising Rates to Worsen Subprime Mess” ran this Wall Street Journal headline Saturday. “Now the real crest of the reset wave is coming.”) Just how bad it will get, and which players will ultimately emerge stronger as their weaker competitors fall by the wayside, I am not remotely qualified to guess. Will Washington Mutual muddle through? Glenn Hudson: “I found two charts (both as of 9/30/07) showing valuable information about the breakdown of the $20 Billion of subprime loans on Washington Mutual’s balance sheet. One of the most interesting facts that can be derived is that the loans are backed by $27.8 Billion in estimated current value of real estate. Obviously there are a lot of situations where the loan is greater than the current value of the residence but looking at the chart, it is also obvious that this probably only represents a small fraction of the $20 Billion in loans. Also, it should be pointed out that where there is a shortfall in value of the residence, the owner of the mortgaged residence is also personally liable for any uncovered loan balance. So unless a person decides to go bankrupt, there wouldn’t be a loss incurred by Washington Mutual on loans not fully covered by the residential valuation. People need to remember – we have low unemployment, fairly low inflation, fairly low interest rates, and Washington Mutual has a whole department working on making sure these sub-prime loans don’t go into default and even if they do go into default, they have people working on keeping the loss to a minimum. Also, if everyone can look beyond the current supposed crisis, there is always going to be a need for mortgage lenders and this market has knocked out a lot of their smaller competition. I believe they will continue to pay at least their 56 cent per quarter dividend (based on Friday’s close of $18.21 equals a 12.3% dividend) plus there is a huge potential for capital appreciation over the next two years. If you do the research, you need to load up on this stock.” ☞ Much as I’d like to think Glenn is right (and I have added some to my position, with the stock price barely half where it was when I first bought some), I think he is being much too cheery in his assessment. I don’t think we can assume massive numbers of people won’t go bankrupt, or that a vicious cycle of foreclosures leading to falling home prices leading to more foreclosures, decreased consumer confidence, and all the rest, won’t take hold. Yes, with the dollar falling, our exports should pick up, and unemployment might stay low. But you can also imagine a recession where unemployment rose. And you can imagine a situation where the falling dollar led investors to demand higher interest rates before they would be willing to finance the U.S. debt. In short: fasten your seatbelts. And, while WM may ultimately work out well (as Citibank would have, had you joined Prince Alwaleed in buying it at $10 a share at the depths of its last great crisis) – it may not. Advice so useless, let me be the first to note, it is worth exactly what you pay for it.
A New Spaculation November 23, 2007March 10, 2017 Such a feast! And the nieces and nephews are growing up to be such great people! Charles cooked a spectacular dinner for 34 – and is now at JFK headed to London. His brother the priest is at the airport headed for Nigeria. My brother the scholar is at the airport headed for Oakland. And I am at the airport – we are all at JFK in different terminals – headed South. Eat your heart out Marco Polo. I even have TV in the seatback in front of me. AL FRANKEN ON THE STUMP One of the things I failed to mention in my things-to-be-thankful-for list Wednesday was that most of us are Americans. What did we do to be born here? We just got lucky. (See John Rawls’ veil of ignorance.) But reading a recent profile of Senate candidate Al Franken, I thought this excerpt somehow fit with the holiday: Another transformation seems to be happening to Franken on the campaign trail. In the past, he’s often been portrayed as an angry grouch, and indeed his books are as depressing as they are funny in their meticulous detailing of America’s woes. But all this exposure to the youth of today-and media consultants-has had an uplifting effect on Franken. ‘A lot of the kids I was talking to, the freshmen were like 11 years old when Bush became president, and they don’t remember having a president who was articulate; they don’t remember that the federal government actually could work; they don’t remember when America was a really well-respected country,’ Franken tells me later. ‘And I felt my job was to tell them, No, no, no! We used to be the leader of the world and we can be again! We’re the country that went to the moon and we’re the country that beat Fascism and Communism and rebuilt Europe and we’re the country that’s mapped the human genome and we’re the country that had enough juice left over to invent the Internet and rock and roll, you know? I mean, we’re a great country! So I found myself sort of cheerleading. I was giving not just them but myself a pep talk. Sometimes I say the reason I’m running is my dad’s generation was the Greatest Generation, and I just don’t want ours to be the Worst Generation.’ He laughs his bullfrog laugh. ‘I wanna actually be able to look at my kids and say I tried my damnedest to get us up to the Mediocre Generation. I really did everything I could.’ ANOTHER SPACULATION If cash will be king next year, you may want to consider the units – or perhaps the stock or the warrants – of another SPAC (Special Purpose Acquisition Company, or ‘blank check’ company) whose offering was significantly oversubscribed last month. It is the NRDC Acquisition Company, one of whose principals I know to be a smart guy (and with whom, full disclosure, I have some business dealings). Which is a guarantee of nothing. But to be sitting on $400 million in cash these days could be a good place to sit – especially when each NAQ share currently sells for about $9.20, yet represents $9.82 in cash. Unlike the HAPN cliffhanger, whose acquisition could have been quashed if 20% of the shareholders had demanded their cash back, this one requires 30% of all the shares to be redeemed to quash the deal. So Wednesday I bought some units for $10.03 and some warrants for 92 cents. If no deal is done, those 92-cent warrants expire worthless. If a deal is done, they entitle you to buy the underlying stock for $7.50 until October 17, 2011 (unless the stock trades at or above $14.25 for 20 days and the company chooses to force conversion). So, on the warrants, heads you lose 92 cents, tails you turn 92 cents into $6.75 (the right to buy a $14.25 stock for $7.50 being worth $6.75) . . . except that this coin analogy suggests a 50-50 chance, when in fact no one knows the odds of the two outcomes – and there could be intermediate outcomes. The stock could be $9, say, four years from now, or $10. You do okay, if the stock is $9 or $10 when the warrants expire but not nearly as okay as you would have done if it were $14.25. Buying the warrants is highly (but I think not stupidly) speculative. Buying the units is low risk (if you don’t like the deal, you can eventually exercise your right to get most of, or quite possibly a bit more than, your money back). Buying the stock, likewise. What I like about this is that, if the economy goes to hell as it may, that could work in favor of smart guys sitting on $400 million. Here is the full prospectus.
TG November 21, 2007December 9, 2014 I feel so blessed (in a secular way) I could cry. But won’t. Any sniffles you detect are from the chill. (Get me back to Florida!) Any tears are from the onions that go into the stuffing . . . though you will be relieved to know I’m not cooking. If I were cooking, I’d be Cooking Like a Guy™. (Step One: buy a package of sliced turkey and a can of cranberry sauce . . . ) As I’ve said so often in this space, almost all of us live better than the kings of England, czars of Russia, pharaohs of Egypt ever did. We have magic carpets with seats that recline; we have jesters, bards, gladiators and orchestras on instant call (with volume control and a pause button). We have cell phones, antibiotics, zippers — Velcro, even — Novocain and aspirin. We . . . have . . . air-conditioning. Happy Thanksgiving, dear readers. See you Friday.
Healthy, Wealthy, and With It Or At Least a Way to Get Senators to Focus on Health Care; a Way to Organize Your Bank Accounts; and a Way to Sharpen Your Wits November 20, 2007March 10, 2017 THIS HOLIDAY, GIVE THEM BRAIN FITNESS I own a sliver of Posit Science, whose Brain Fitness Program I offer for your consideration from time to time. So now come the results of a two-year, 524-participant, ‘randomized, controlled, double-blind’ study that reportedly showed that ‘the Posit Science program genuinely improves memory overall’ and that ‘study participants in the experimental group reported significant improvements in their everyday lives [ranging] from remembering a shopping list without having to write it down; to hearing conversations in noisy restaurants more clearly; to being more independent, feeling more self-confident, finding words more easily and having improved self-esteem in general.’ Participants who used the Brain Fitness Program increased their auditory processing speed by 131%. On average, people who used the Posit Science program experienced an improvement in memory equivalent to approximately 10 years. Three out of four people who used the Posit Science program self-reported positive changes in their everyday lives. ☞ Skeptical? Well, who wouldn’t be. But the evidence grows that if an older person actually uses the program (buying it alone seems not to be enough; they have to actually use it), they might be one of the three out of four who notice positive changes in their everyday lives. JIM HIGHGTOWER From his column Friday: It’s always impressive to see a politician take an unbending stand on principle, so I salute George W. for going against popular opinion by vetoing the State Children’s Health Insurance Program bill, which would have extended health coverage to some 6 million uninsured children in our country. Bush said that what irked him about this children’s health proposal is the principle of providing government-financed coverage, which he derided as “federalized” medicine. George, you see, is a die-hard privatization ideologue, and he insists that people should get their health care from the free market, not the government. The vast majority of his Republican colleagues in Congress agreed, voting to uphold his veto of the children’s bill. . . . Since Bush and his GOP allies don’t believe in federalized medicine . . . it is our duty to free them of the burden of having their own health coverage paid for by us taxpayers! As a matter of principle, we must take away their government health plans and let them buy their own in the free market. This idea offers two pluses: 1) Taxpayers will no longer have to pay benefits to politicians who are ideologically opposed to them, and 2) the money saved can be redirected to the millions of American children without health coverage. If [this] idea appeals to you, call the GOP congressional conference and urge that its members give up their “federalized” health plans: 202/225-5107. And while you’re at it, tell them to forego their socialized government retirement money, too. After all, it’s the principle of the thing. MINT.COM Dan Jackson: ‘I’ve tried out Mint.com for the last few months and it’s pretty clean. The reporting is definitely inferior to Quicken/MSMoney but setup is much easier so it doesn’t take much time to give it a shot. I did run into some synchronization issues with certain banks but they were incredibly fast to resolve.’ Nancy Wolcott: ‘Mint.com looks wonderful. But how are they offering it for free? I’m happy not to pay, but it makes me nervous.’ ☞ Their game plan is ad revenue and ‘sponsored links.’ My friend who’s one of the founders says: ‘Some of the offers we present are sponsored, meaning we earn a referral fee if you sign up for them. However, Mint will always show you an unsponsored offer ahead of a sponsored one if it will save you more money. We sort offers in order of their value to users, regardless of sponsorship.’ Mark Centuori: ‘The ‘money management’ moniker is premature. Given the plethora of non-bank-related financial assets that dominate personal finance today, Mint currently has very limited functionality by only handling credit card and true bank accounts. The ability for users to include other financial assets can’t be excluded for long and in my opinion should already be part of the package. . . . Adding credit card accounts is a hit-and-miss proposition. I tried typing in both ‘AT&T’ and ‘AT&T Universal Card,’ neither of which was found. So I went to the link I use to pay the account and pasted the URL into the search field. Still not found. Then I searched on only the dot-com portion of the URL, ‘accountonline,’ and received as an option none other than, ‘AT&T Universal Card.’ Ugh. Similarly, entering ‘Chase Bank’ didn’t work (not withstanding that it’s the name on the back of the card) but ‘Chase Credit Card’ did. I was also able to add the account via the ‘Chase Credit Cards (aka Bank One Visa)’ option but the ‘Chase Cards (Formerly FirstUSA)’ option didn’t work despite being part of my account’s pedigree. , , , Where is Mint sourcing merchant names from? They don’t accurately reflect what appears on the actual statements. If Mint has room to display ‘Rickshaw Restaurant Lounge,’ why am I left with only ‘Fred,’ ‘Burger’ and ‘Taco’ for Meyer, King and Bell? I had to log on to Chase to jog my memory for the $25.00 ‘Sea King Bldg’ charge – a flu vaccination at ‘Sea King Cty Dept Health.’ Geographic references don’t appear at all, that I can see. . . . The flimsy password programming discussed in their forum remains laughable. My attempt to change my original password to ‘bob’ failed as it wasn’t the required minimum six characters long, but ‘robert’ worked just fine. Ditto for ‘123456.’ This is entirely unacceptable even in beta mode (although account numbers aren’t disclosed on the Mint site). . . . ‘Get Help’ returns a minimal FAQ page that is not specific to the area a user is in when help is requested – a critical missing element that should have evolved with the site.’ ☞ This is how Quicken started, making fun of Managing Your Money for having so many capabilities. And then they started adding them. If only MYM’s publisher had been a little more farsighted, we would have been Quicken. But then I’d probably have died long ago when pirates boarded my yacht, throwing us all overboard – my crew of 20 and me – to be eaten by sharks. So who’s to say it didn’t work out for the best? Russell Turpin: ‘Before someone puts the usernames and passwords for all their financial accounts into a service like Mint, they should consider the potential exposure if a hacker somehow manages to obtain that information. The convenience of such a service is attractive. The single point of failure it creates for one’s financial life is scary.’ ☞ My friend responds: ‘Mint does not store your credentials, we use them once to create a linkage with your account(s). Consider the benefits of being able to see all your account activity in one place – makes it easy to spot any suspicious activity (remember 90% of fraud occurs offline). Mint offers alerts (via email, or text message) to bring unusual spending to your attention.’
A Clip You Should Watch to Save the World – With Hats Plus, Reassuring Words on FMD November 19, 2007March 10, 2017 But first . . . WHAT THE WRITER’S STRIKE IS ABOUT (Thanks, Alan.) 19-cent cheques leave writers wanting change by Ken Levine Special to the Toronto Star I got a check recently from American Airlines. A royalty check. For the past several years as part of their “inflight entertainment” American Airlines has been showing episodes of Cheers, M*A*S*H and Becker that I wrote along with episodes of Everybody Loves Raymond, Frasier and Dharma & Greg that I directed. Considering the number of flights and years I’d estimate they’ve shown my shows 10,000 times. My compensation for that: $0.19. That’s right – 19 cents (American, so it’s even less in Canada.) I figure at that rate, in 147 years I’ll be able to buy one of their snack boxes. An episode of Frasier I wrote is out on DVD. I make nothing. The script is included in a book. I make zilch. Soon you’ll be able to download and watch it on your iPod or iPhone at IHOP. The only one who won’t make money is “i”. Are you sensing a pattern? The Writers Guild of America is asking the mega-corporations that own the entertainment industry in America and the galaxy to compensate its members fairly for this highly desired product they create. Just a piece, that’s all. More than nothing. And without sounding greedy, more than nineteen cents. Via-Uni-Time-Corps-Ney would rather have a strike. I’ve been through three of them already. Many of the companies I struck are no longer in business. Two-thirds of the people I struck with are no longer in the guild. And unlike actors and directors, when we go out it doesn’t just shut down the industry. It slows it. Hair restoration crèmes have faster results. But as someone who has prospered and enjoyed the gains writers before me have won, I feel it’s my obligation to fight the good fight for the next generation. And hopefully in 20 years, when the issue is holograms transmitted directly to the back of viewers’ eyelids, WGA members will hang tough for a piece of that pie. This acrimony between writers and management has been a proud tradition since the 1930s when scribes first rose up and had the audacity to … well, ask for things. Warner Brothers czar Jack Warner warned that any writer who joined the union would “find themselves out of work forever.” And he claimed this wasn’t blacklisting because “it would all be done over the telephone.” Darryl Zanuck of 20th Century Fox once shouted, “Throw that writer off the lot until I need him again!” Critic David Thomson says Hollywood writers are like divorce lawyers or private eyes. When you want them you have to have them, but later you despise them. Is it any wonder we “schmucks with Underwoods” have an inferiority complex and assume a defensive posture? We spend our entire careers trying to protect our work from meddling studios, directors, actors, fellow writers, research gurus, networks, and girlfriends of all of the above. Yes, we’re an angry bunch, a self-righteous bunch, but we make 19 cents from American Airlines when management flies in private jets. I teach a seminar called The Sitcom Room (sitcomroom.com). It’s a fun weekend where I simulate the experience of actually being on the writing staff of a network show. Students rewrite scripts, have real actors perform their work, and learn first hand the realities of the business – little sleep, bad Chinese food, notes. But they eagerly participate, because they love the process, they have a need to express themselves, they want to be heard. Not one has said they want to be a TV writer to make money. And when they finally do enter the industry, who knows what that industry will be? New delivery systems are emerging so rapidly that even the “unthinkable” was obsolete five minutes ago. These young writers will embrace that future, and through their vision and zeal will make it soar. All they’re asking for is their fair share. MyPiece, not MySpace. iShare, not iTunes. NetWorth, not NetFlix. And now . . . STILL NOT PERSUADED ON GLOBAL CLIMATE DESTABILIZATION? It seems obvious. Who cares whether we’re 100% certain that smoking causes lung cancer? Even if we only suspect it, shouldn’t we stop promoting it to children? But no, said the tobacco industry successfully for decades, the facts were not in. Similarly – who cares whether we’re 100% certain that we’re poisoning our planet and headed for catastrophic climate destabilization? Even if we’re only 20% sure, shouldn’t we do all we can to clean things up and burn less fuel? Especially when so much of what we’d need to do – like replacing our lightbulbs and driving more fuel-efficient vehicles – would cost us less, not more, and increase our national security? It astounds me that there are still people on the other side of this issue. So for them, here’s an engaging nine-minute video that takes a very simple point (above) and dresses it up as a matrix and complicates it to make it look profound. (The guy is presumably a management consultant.) And I say: great. Whatever rocks your boat. One way or another, it seems to me, everyone needs to find his way to this conclusion. (And, yes, Bjorn Lomborg, we should do the smart, high-impact things first. Of course. But we’ve barely begun doing even those.) Oh – and here’s the same guy doing it with hats. (Turns out he’s a science teacher, not a management consultant.) FMD GURU Last Thursday I posted this sobering link and promised to ask my guru for reassurance. He responded: “Seems like more of the same to me – uninformed, unbalanced, highly biased, ‘stirring of the pot.’ Most of the Attorney General attention (Mr. Cuomo is a very busy guy; not sure what he is accomplishing other than building his own profile) as well as the Kennedy ‘Sunshine Act’ has been focused on the ‘school’ channel, where schools act as financial aid intermediaries with different lenders. Most of the issues identified have to do with schools taking a real or perceived kickback from lending institutions in return for advantaged loan flow. The vast majority of this activity is in the federally-guaranteed loan arena, which is not where FMD plays. “Where FMD competes (80%+ direct to consumer, 95% private, non-federally guaranteed), they are in an advantaged position. Also, the recent federal legislation substantially degrades the profitability of the guaranteed business, making private loans relatively more attractive. If banks want to stay in the student loan business, they will need to go increasingly private; and if they do, they will need FMD’s expertise. This is all VERY positive for FMD, unless there is some shoe out there about to drop which is not yet visible. “As far as Senator Dodd is concerned, he is getting generous and frequent contributions from all financial services companies, given his committee chairmanship. And chairman Dodd is not shy about asking for support. The blog you linked to neglected to mention that, which demonstrates incredible naiveté, or else a deliberate attempt to distort the facts. As far as the stepped up frequency of FMD political contributions – four years ago they were hardly large enough or established enough to try to influence federal legislation and regulatory policy. Now they are a recognized leader in an important market. I would be concerned if FMD were not trying to influence the development of responsible policy. “All of the above does not mean that FMD has no risk associated with it, however. In my view, the single biggest risk remains consistent and profitable access to the securitization markets. Right now risk premiums are very wide, potentially weakening FMD upfront securitization margins. The other perceived risk is the valuation of the residual values on the balance sheet. In my opinion, this should be resolved favorably for FMD by mid 2008 when the residuals start to contribute to quarterly earnings (and importantly, cash flow). “Meanwhile, FMD remains an early stage, high growth company that that has significant share and distinctive capabilities in a large and fast growing market; has around $300 million in cash; pays a current (and rapidly increasing) dividend of 3%; sports a P/E of around 6 and a PEG ratio of less than 0.2 (according to Yahoo).” Tomorrow: Jim Hightower and Your Comments on Mint.com
Drive Smart and Social Security Will Be There When You Retire November 16, 2007January 6, 2017 ONE THING *NOT* TO WORRY ABOUT: SOCIAL SECURITY This excellent piece by Mark Weisbrot makes a clear case that the concerns over Social Security are overblown. A cynic might suggest that all the scary talk was just the Bush Administration trying to dismantle the social contract and cut Wall Street in for a slice of the pie. But whatever the motivation, I believe the truth lies someplace between ‘we really need do nothing now’ and, ‘well, that’s true, but some modest tweaks would best be put in place sooner rather than later.’ [My tweaks: (1) I’d keep 62 as the age for early retirement. But, where currently the full-benefits retirement age rises one month per year to 67 in 2027, I would let it keep rising to 68 in 2039. (Hey: ‘Seventy is the new fifty-five.’) (2) Where the 6.2% tax rate you and your employer each pay drops to zero on wages above a certain cap, I’d have it drop to 1% instead. Annoying, but not a killer. (And worth paying so that grandma – much as we love her – doesn’t have to move in.) (3) I’d keep raising benefits with inflation. But for higher-income recipients, I’d calculate those benefits based on price inflation, not wage inflation, in years when prices rose slower than wages. Bang: you’re done. A bit of pain around the edges, with plenty of time to prepare for it, and the Social Security problem is solved.] TWO THINGS WE *DO* NEED TO WORRY ABOUT: MEDICARE AND MEDICAID Our health care system is wildly inefficient. Perhaps adding a million more insurance administrators and marketers would do the trick, but I am of the school of thought that it’s more nurses, doctors, and preventive care that we need, not a million administrators. Have you seen Sicko? DRIVE SMART Fred Reynolds: ‘Regarding Tuesday’s mention of the mileage of the Smart car, it would, if the published numbers are correct, reduce the mileage we get. Our 2002 Toyota Echo gets between 42 and 46 MPG, depending on how much highway driving we do. Part of that is the way we drive (coast down the hill, anyone?), but the EPA lists the highway mileage as 38 mpg. We spent a little bit more than you list for the smart car (there are advantages to buying in December), but getting a back seat and a trunk for the extra few thousand dollars seems a good tradeoff. This is not to say that this is the only other car that will get over 40 MPG on a regular basis. My old Ford Festiva did. I suspect most well designed small cars driven reasonably well will.’ Stewart Dean: ‘Another result of high European fuel prices is that they’ve learned the simple answer to better mileage: drive a diesel. Half the new cars sold in Europe are diesels, and they’re as clean as gas models. Our diesels have been dirty because, until recently, our diesel fuel was high-sulfur which turns into sulfuric acid and eats up catalytic convertors. I drive an old 2003 (dirty) mid-size VW Jetta Diesel and get just under 50mpg, but the 2008 VW TDI Diesels will be of the clean European type. Buy one, you won’t be disappointed. Diesel fuel is easy enough to find; and with 750 miles on a tank, it wouldn’t matter even if it weren’t. Plus you can run biodiesel (the payback on soy is MUCH better than corn; it doesn’t have to be fermented; it’s easier on the land) or run it as a greasecar. Gasoline is for chumps. Now if VW would only import their Polo BlueMotion Diesel: 70+ mpg. ‘BTW, the increased mileage of a diesel is based on two factors: First, the fuel has more energy (it’s heavier, duh, than gasoline); and, second, the engine operates more efficiently than a gas engine. Other diesel realities: 1) the engine has to be stronger, since it runs at higher compression…hence the distinctive giveway clatter of a diesel. The extra strength and complexity makes it a bit more expensive . . . 2) the fuel is identical to home heating oil, so it competes in the market with it and thus is more expensive than gas in the winter (when HHO is in demand) and cheaper in the summer. In a fuel shortage, you could tank up out of your heating oil tank (but the powers that be Do Not Like That since there’s no road taxes on HHO). HHO is dyed red and there’s a length of clear tubing in your diesel’s fuel lines that would enable a cop to see if you had cheated . . . 3) is easier to make at the refinery than gasoline . . . 4) stores a long, long time. I have a diesel generator that has started up, bang, and running after sitting for two years. A gasoline engine wouldn’t have. The only real place for gasoline engines is in super-cheap and high-performance vehicles. Here‘s a piece of fun: VW’s road-capable 250 MPG demonstrator concept car.’ Jim Roberts: ‘Britain’s G-Wiz electric car costs £7,999 (about $16,000). London waives the £8 city congestion charge and offers free charging!’