This thing in history

According to my calendar, in 1921 the Kansas City Fed had its 100,000 lb vault door delivered to the bank from the train station. The door was pulled by four trucks, a tractor, and four draft horses.

Neo-speak

Consider the wide neo-range of neo-uses for the prefix "neo." Neo is so overused that you can bet will soon be replaced by neosomething.

neoconservatism
neoliberalism
neo-hippie
neoclassical economics
neo-idiot

Despite its overuse, neo has lots of room to spread through what will soon be referred to as the neocolloquial. You'll hear people saying things like, "I love my neojob," or "Global warming threaten to mess up the neoclimate."

How to refinance your mortage at just 2%

I recently received a fascinating inquiry:

What are the odds that the Fed could share the love with us? Home mortgage loans are still up at 5.6%-6.5%; isn't the Fed offering loans down at around 2%? I could afford a whole lot more house at that rate! Somehow I'd like to benefit from this recession.

Indeed, the Fed has devised several ways of loaning money since the onset of the current financial slaughter. In December the Fed created the "Term Auction Facility" to give out cheap loans -- the going rate in the last auction, March 24, was 2.615%. Unfortunately, you need to be a "depository institution" to participate, you only get to keep the money for 28 days, and you've got to fully collateralize, which means you can't just take the money and run.

Similarly, all the other recently-introduced methods of getting cheap money are irrelevant for common folk. That's why the Fed is sometimes referred to as the "banker's bank." Your best bet at getting access to cheap credit is to start your own bank.

Economics

Economics is the study of our stuff,
where it comes from, where it goes, and other fluff.
If you get a masters in this field,
that's quite the thing to wield,
but this is sure: you'll never have enough.

Wiretapping Factoid

New York Times reporter Eric Lichtblau claims that the NYT new about the NSA's warrant-free (or warrant-less, or unwarranted) wiretapping program all of 13 months before they decided to publish the story.

Dear Freakwenter

My boyfriend, who I'll call Ralphie, gave me a valentines card made of big pieces of printer paper taped together in the shape of a heart, half-covered with pieces of newspaper, but left uncompleted because he ran out of tape. Should I be worried? Is this a sign of insincerity? Last year he gave me flowers. Ah, that was the good old day. All this right after Christmas when I gave him a new car and his return gift was a trip in the new car to a mountaintop, where he had me get out and look around and he said, "This beautiful scenery is my gift to you." I'm sure he got the idea from his brother who did the same thing for his girlfriend last May. What should I do?

-Perplexed in PA


Dear Perplexed,

First I want to thank you for writing to me, since I don't often get mail. Your story is deeply touching. Just kidding. You're really not making any sense. Why are you dating this guy?

Sincerely,
The Freakwenter

West Virginia Loves Hillary

http://www.rasmussenreports.com/public_content/politics/election_20082/2008_presidential_election/west_virginia/west_virginia_democratic_presidential_primary

Bona fide tax language

From page 30 of the income tax instructions for part year residents of Virginia:

Column 2, in combination with Column 3, is for use
with respect to a person who moved to a place out
of Virginia during the taxable year with the bona fide
intention of continuing actually to abide permanently
without Virginia. (Read up.)

Why the US needs a recession

That the US may "need" a recession is not a new idea. Some commentators say that the recession is "needed" in the sense that the laws of nature demand it. In particular, trade imbalances and overheated housing markets require "corrections." And Paul Farrell in MarketWatch lists "17 reasons America needs a recession," nearly all of which seem to be variations on "If all our problems get worse, maybe we'll finally do something about them."

But the real reasons that America needs a recession are far more subtle. Here they are:

• Americans are working too hard. A recession makes jobs scarce, so there is less work to do. This reduction in work will be especially beneficial for the investor peons of Wall Street, who reputedly sell their souls by working legendary 70-hour weeks and engaging in a culture of "boozing it up."
  
• Americans work too fast. If the recession continues to deepen, you can expect to see further declines in productivity growth.
  
• Americans spend too much money. Right before the recession came into view, the annual rate of personal consumption in America was 9.7 trillion dollars. That's way too much.
  
• Americans have stopped believing in God and started believing in products whose production harms the environment. Watch the Reverend Billy exorcise the cash register at Victoria's Secret.
  
• Americans earn too much money. Average per capita income is $46,000. That's enough money to support a child in Africa for about 136 years. Instead, they buy suburban homes at least 5 miles from work, buy gas to get to work, and pay for extensive medical treatments for health problems which started when they stopped walking to work.

Money and the Founding Fathers

The Intelligencer Journal of Lancaster PA wins the Freakwenter Prize for Investigative Reporting with its March 3 story on the arrest of Fritz Schrom, a man who claims to have spent "$80,000 worth of gold, silver and copper as payment for goods and services in the last year."

Prosecutors charged Schrom with "theft by deception" after he convinced a clerk to accept five ounces of silver and an ounce of copper as payment for his $111 electric bill. If found guilty, Schrom could face fines up to $5,000 plus jail time.

Presidential candidate Ron Paul, who wants to abolish the Federal Reserve, would side with Schrom. Paul has often argued that the writers of the American constitution were strongly opposed to using currency not backed by precious metals. Indeed, the US constitution constitution addresses the issue somewhat directly in article 1, section 10, where it is written, "No state shall ... make any thing but gold and silver coin a tender in payment of debts."

The Freakwenter finds it comforting that the intentions of the founding fathers are no longer taken seriously by the general public. The intentions of America's founders on issues of suffrage and civil rights, for example, were rather stunted, so they hardly qualify as a respectable source of wisdom for the modern student of governance. (The mothers of the founding fathers allegedly had very little say in 1787.)

The Political Classes

Unemployment was starting to rise,
Inflation reached up to the skies.
So the political classes
Pulled out of their asses,
A plan to feed everyone pies.

Second Weekly Financial Disclosure

Revenue surged in the second quarter of the month as blogger confidence rose to its highest level in about a week. Weekly earnings tallied a piggish $6.16, up 44% from one week earlier, for an annual growth rate of over 2000%. At current growth rates, future contributers to The Freakwenter can hope for small dump truck loads of cash to be deposited on their doorsteps.

Photo stolen from http://sugarmtnfarm.com/blog/, a blog for earthy types.

Antagonizing

by The Loved One

I see everyone in three parts

First the head--the great big, crushing jaws (which can lift up to 50 times your weight!)

Then that little part in the middle--the heart, so brittle--

And then the big REAR END.

Eviction by Fire

This morning on my run to work, I stumbled upon about 30 cop cars and 20 firetrucks in Mt. Pleasant, DC. The fire was almost out; All three hook-and-ladder trucks appeared to be focusing their three-inch beams of water on destroying all that the fire had not, behind the brick walls of the gutted, roofless apartment complex. At least a hundred firefighters milled about, waiting to go home after nearly 8 hours on the scene.

The Washington Post this morning hints that the fire's cause could have been electrical problems resulting from longstanding maintenance neglect.

Why the neglect? The apartment owner was tired of renting to his low-income clientèle. He wanted to get rid of all the tenants, renovate the building, and market the new apartments at much higher prices. Evicting the renters would have incurred great legal expense. The owner's most profitable option was to perform an "eviction by neglect," hoping that the renters would leave when conditions became intolerable.

Instead of taking the hint and moving out, residents organized successfully enough to eek some maintenance concessions out of the owner. According to the Post,

In 2004, tenants from that building and three others in Mount Pleasant and Columbia Heights joined with two advocacy groups and forged a deal with the city to increase building inspections and force repairs.

Surely the owner must have felt resentful of this coercion. At the time he bought the apartment complex and started renting out apartments, could he have predicted that in doing so he was effectively losing control of his property?

The tenants clearly had legitimate gripes about maintenance problems. If they had been more successful at organizing, repairs might have been done more thoroughly and the fire averted.

But if tenants in general are given such power over their landlords, landowners will become reluctant to rent out their property. The supply of rental units will fall. The price of new rental units will rise. Renters, on average, will be worse off.

Photo stolen from http://dcist.com/

Shania Twain Waxing Economical

Shania's album "Up," released Nov. 2002, gives a prescient analysis of the present consumer credit crisis. Who convinced this pop/country artist to take up social commentary? It makes me wonder if she could have been a member of that old band Peter, Paul, and Shania.

Shania starts by naming the cultural roots of the sub-prime fiasco:

We live in a greedy little world
That teaches every little boy and girl
To earn as much as they can possibly
Then turn around and spend it foolishly
We've created us a credit card mess
We spend the money we don't possess
Our religion is to go and blow it all
So it's shoppin' every Sunday at the mall

All we ever want is more
A lot more than we had before
So take me to the nearest store

And then Shania gets surprisingly specific:

When you're broke go and get a loan
Take out another mortgage on your home
Consolidate so you can afford
To go and spend some more when you get bored

But by then end of the song, you know it's Shania again because she starts sounding like she's too interested in dancing to be bothered with profound lyrics:

Let's swing
Dig deeper in your pocket
Oh, yeah, ha
Come on I know you've got it
Dig deeper in your wallet
Oh

Beastly Beets

4 hard boiled eggs, chopped.
2 chopped apples.
2 cups freshly boiled chopped beets
Half a cup of mayonaise.
Some walnuts.

Sinecure

Definition: A position that requires little or no work but provides a salary.

Pronunciation: Like cynical, but more like cynicure.

Used in a sentence: After landing himself a sinecure, the previously over-worked cynical man happily declared that he had found his cure.

Shopping Shlopping

The Listless Shopper
by The Loved One

I'm so languid and confused.
What should I buy? What could I use?
I'll just rest here and think awhile,
dreading every cluttered aisle.
Shopping takes such energy.
Whopping bills, they're not for me.
I hate to move, I hate to pay.
I'll try again another day.

A Humanitarian Return to Eugenics?

In his "Theory of Devolution," one anonymous blogger predicts that the success of modern medicine has interrupted the process of natural selection in the human race so much so that we can expect to see a "continually weakening human DNA."

I would go even further. Modern evolution arises not only from humanity's temporary escape from the sharp edges of natural selection, but also from the way in which the resulting population boom is developing. All around the world, except perhaps China, the poor reproduce far more rapidly than the upper classes (see page 20). To whatever extent financial success depends on genetic traits, the huge difference in child-bearing rates between the rich and poor must be devolving the human race to be genetically predispositioned for poverty.

How rapidly should we expect the human race to evolve? The study of evolution rates using DNA is new: Watson and Crick discovered DNA only 53 years ago. More importantly, there is no generally accepted concept for how one measures the "rate" of evolution. How does one separate out the substantial changes in intergenerational genetic traits from the normal quazi-random variation that you see between children of the same parents?

Despite the obstacles to quantifying evolution, one recent study concluded that "in the past 10,000 years a host of changes to everything from digestion to bones has been taking place" [in humans]. And it was only in the last 10,000 years that the first blue-eyed humans appeared!

The same study estimates that "the pace of change has accelerated to 10 to 100 times the average long-term rate." One broad cause for this acceleration is the changing human environment through modernization. A second factor is that the modern population increase provides more humans in which mutations can occur.

The above observations/surmises on human evolution have enormous public policy implications. According to Wikipedia, eugenics is "a social philosophy which advocates the improvement of human hereditary traits through various forms of intervention." For anyone familiar with the holocaust, eugenics has a deeply bitter connotation. The Nazi's effort to exterminate the Jews was eugenics in its crudest form. But if we care about the success of future generations, shouldn't we search for public policies that protect not only the environment but also our genetic material?

First Weekly Financial Disclosure

The Freakwenter is proud to announce rapid revenue growth after delivering its soul to the free markets about a week ago, despite a sagging US economy. Gross earnings per week increased infinitely on the first day of the Get Rich Quick campaign, and by the end of the week, gross earnings per week had increased another 480%, reaching the previously unintended sum of $2.41.

The Wages of Sin

"Blog reader #10 of 10" calls attention to an exhaustive investigative report on the rise of the drug trade among Old Colony Mennonites in Ontario. Some highlights (or lowpoints):

They are dressed in their finest for the Holy Day — the day when several hundred Old Colony Mennonites gather for a solemn two-hour sermon, delivered in Low German. Inside the church, pine pews on the right are filled with men wearing western-style shirts and cowboy boots and holding well-worn bibles. On the other side of the pulpit, young women sway, hushing babies. Their black bonnets and leated dresses, fashioned from patterns handed down for generations, reflect little of the profound change sweeping their community.
...
By the late 1990s, Old Colony Mennonites living in Ontario, Manitoba and throughout northern Mexico had cornered the market on the sale and distribution of marijuana in Canada, and were responsible for a staggering 20 per cent of all pot smuggled into the country. ... Today, by Loop’s count, 5,000 Mennonites have been conscripted into the drug trade in southwestern Ontario alone and their ranks swell steadily every year.
...
Old Colony Mennonites have mastered the complex machinery of drug trafficking, acting not only as mules, but also as lookouts to detect police surveillance; running “decoy” shipments during rush hour to hoodwink or preoccupy border agents ... Mennonites even use rudimentary code words, such as “cows,” “fleas,” “steel” and “shingles” to negotiate the quantity, quality and price of drugs with prospective dealers.
...
And as the old system disintegrates, more Mennonites living in Canada and Mexico are likely to join the ranks of the poor and illiterate. “The lower the level of education,” Funk warns, “the lower the morality and the more crime and corruption.”

A Profit Proposal

The groundwork is laid. This blog has a readership of at least ten people. Google Adsense is installed. The time for all of us to get rich has come.

The Freakwenter is now soliciting content. Think short blurb. Incredible recipes. Links to astounding news sources. My Freakwentness will keep track of who contributes and pay all contributers a fair share of the revenue. Email your contributions to freakwenter@gmail.com

So start thinking about what you're going to submit!

Notice! Any email, or some distorted version thereof, that is submitted, could show up on the blog, excluding names and mailing addresses and phone numbers and social security numbers, etc. Upon your first published contribution, you will automatically start receiving monthly revenue statements, unless you explicitly request otherwise. To ensure that you get your money, include a mailing address to which cash can be mailed.

The Meaning of Subprime

Apologies to Mankiw for stealing all his posts -- actually I'm only reprinting about 30% of his finds. Here is the best explainer I've seen so far for the subprime mortgage mess.

Steven Landsburg: Source of Wisdom

He holds a mathematics Ph.D. and works as a distinguished professor of economics, but these accomplishments pale next to Landsburg's greatest feat: Agreeing with and articulating the profound intuitions of My Freakwentness by writing irrefutably logical and compelling arguments on various commonly misconstrued topics.

Here Landsburg argues in favor of the pre-Christmas Ebeneezer Scrooge.

In this whole world, there is nobody more generous than the miser—the man who could deplete the world's resources but chooses not to. The only difference between miserliness and philanthropy is that the philanthropist serves a favored few while the miser spreads his largess far and wide.

If you build a house and refuse to buy a house, the rest of the world is one house richer. If you earn a dollar and refuse to spend a dollar, the rest of the world is one dollar richer—because you produced a dollar's worth of goods and didn't consume them.

The alert reader should recall at least two of My Freakwentness' greatest under-commented hits: Hit 1, and Hit 2.

Landsburg recently put the current housing fiasco in perspective. My Freakwentness already had this perspective, too, but gives credit to Landsburg for writing it down.

None of these foreclosed houses is going to disappear. After a foreclosure, one family moves out, and another moves in. We see the sad faces of the people moving out, but we don't as often see the happy faces of the new homeowners moving in. Nevertheless, those happy faces are out there, and we should not discount them.
...
If you get to live in a nice home for a few years and then lose it to foreclosure, you are not worse off than someone who never got to live in a nice home in the first place. If the Treasury Department is looking for ways to help people, it would be nice to focus on the people who are most in need of help [such as "... the struggling homeless? Or, for that matter, a child starving in Africa?].

Clip of the Month

http://glumbert.com/wii/view.php?name=baddayoffice

Georgetown, DC: A Place where "people cannot live"

A colleague described his recent visit to what was once one of the most vibrant neighborhoods in Washington, DC. The people there, he said, walk their "foo-foo item" dogs while yelling into their cellphones. You can't see their faces for all their makeup, and none of their clothing is thrift, old, or home made. Those not on foot clog the street in land-yachts. This, he said, is an environment in which people cannot live.

Community House Church: The Way of the Future

My church today asked the question, what is the importance of faith? According to the speaker, faith was what allowed his parents to boldly join a group of like-minded hippies and dedicate the next twenty years of their lives to a commune bent on embodying the Kingdom of Heaven on Elkhart, Indiana. Faith, he said, is a leap of trust, a decision to take a risk in search of the good life.

The discussion that followed veered sharply from "faith" to focus on the story of the commune: how the strains of resource allocation led to a strict male-dominated hierarchal governance, how shared parenting and close community provided an exceptionally nurturing environment for the children, and how the groups founders gradually abandoned their intentions to spend their whole lives together and migrated to new lands in search of new opportunities.

In its final strange twist, the discussion combined the topics of faith and community by asking, "Who are we? What does it mean for us to be a church?"

"Does anyone know if we have a statement of faith?" said someone. The answer was yes, but no one seemed to know what it said.

"Should we have a statement of faith?" said another. Consensus view was that statements of faith are good for little besides bickering.

"Then what defines us? To what standard do we strive?"

Well, next Sunday is planning Sunday. People who show up will get to talk about ways that they can contribute to the church activities in the next year. If no one volunteers, there will be no church. The church will be what we make it.

Progressivity of the FairTax

The FairTax is a proposed federal sales tax on goods and services. Advocates for the FairTax estimate that a tax rate of 23% would be high enough to replace all current federal taxes, including social security, etc., while dissidents say it would have to be much higher. To make the tax progressive, the federal government would issue monthly payments for each person equal to the sales tax rate multiplied by the federal poverty level income. This essentially removes all tax burden for people who spend at or below the poverty level.

Why switch to FairTax? The most obvious benefit of the FairTax is the simplification of the tax code. There is only one tax rate, and only businesses have to file taxes. This reduction in tax-time stress and record-keeping costs would represent a modestly substantial improvement in our lives.

The main other known effect of switching to FairTax would be a change in the progressiveness structure of the tax code. If the estimate of 23% FairTax tax rate is correct, the moderately wealthy would pay slightly less tax and the extremely wealthy would pay slightly more. In his NY Times article, Why Democrats should love the FairTax, Laurence Kotlikoff waxes profound:

Our [current] tax system is regressive because none of the corpus - the principal - of the wealth of the rich, including our more than 400 billionaires, is subjected to taxation. Instead they pay taxes only on the income earned on their wealth.But this income comes primarily as capital gains, which are taxed at only 15 percent. Furthermore, capital gains taxes are levied only when wealth holders realize their gains - when they sell their appreciated assets.

Who knew! Kotlikoff continues:

But the superrich don't need to sell their gains. If they need cash they can borrow using their appreciated assets as collateral.

Can IIIIIIII do this too? Suppose I have $50 million in stocks. How can I turn those stock into spending money without paying that stupid 15% capital gains tax? Kotlikoff has the answer: just take out a loan from the bank for a million dollars. I don't have to pay taxes on a loan! And the bank will be happy to give the loan since I already have $50 million in stocks as collateral. What have I been waiting for? So I take out the loan. At the end of the year I have to pay it back. But that's OK because I can take out another loan to pay it back. Actually, my new loan has to be 6% bigger to cover interest, but 6% is still much less than a 15% tax. Moreover, the million dollars of stocks that I chose not to sell has risen in value by at least 8%, thanks to the excellent advice from my well-paid financial advisers.