Happy New Year!

To all of our readers, have a happy and safe New Year celebration. Here's to you and hope your 2006 is great.

Top Business Stories for 2005

The Chicago Tribune ran a post listing the "Top Ten" business stories of 2005. While the Tribune does do some interesting reporting from time to time, this isn't a very inspired list, so I am not going to bother to take it apart, because it is just boring.

However, it is important to look back on the year and here are my top stories:

• Bull Market in commodities - Oil shoots up to $60 / barrel, natural gas skyrockets, gold passes $500 / ounce, and other metals prices go up. What is driving all of this growth? A giant surge in demand, not only from China but also from India and other developing countries. Since the suppliers are not really that inclined to add to capacity (there are massive environmental barriers to doing so in the Western world, and the producers benefit from high prices), these costs seem like they will go up for a long time to come, and stay at high levels. What is happening is that the free market, that would normally resolve such issues, has been poisoned by regulations here and around the world, combined with the fact that much of these resources are in repressive governments' hands such as Russia, Iran, Saudi Arabia, Venezuela, etc... Meanwhile, our government is weak as far as commodity planning and is not removing barriers to new supplies coming onto the market - the new "Energy Bill" is pathetic and won't solve any of these problems
• The strength of the US dollar - virtually every commentator was predicting that the US dollar would collapse against foreign currencies in 2005. Instead, the dollar strengthened, taking them all by surprise. The commentators on our economic policies and predictions are virtually always wrong, especially when they all agree on something. This is the time when you should really be suspicious
• Unions in the US are really on the ropes - Northwest Airlines' mechanics went on strike and the airline just replaced them and went merrily on their way, as if nothing had happened. They are still on strike, but a strike doesn't matter if no one is impacted. Note the real story, as I pointed out in a previous post, is that the unions don't even bother to make arguments that they are more productive than non-union workers, or that there is any benefit for paying their higher wages, benefits and pensions. The first shot against public sector unions was taken in New York, when the transit workers went on strike over pension benefits (once again, they didn't claim any productivity benefits to their union status) and even though New York buckled under, this is at least a starting point. Plus, bad case makes bad law, and New York is the weakest city / environment in which to take on a public sector union
• The US economy absorbs Katrina without a hitch - the US economy absorbed the loss of New Orleans without skipping a beat. The displaced workers (those with any sort of skills, at least) were snapped up around the neighboring states and even public sector workers like teachers and nurses were absorbed by fast-growth cities such as Las Vegas. There were obvious personal tragedies in the hurricane, well-documented by bloggers everywhere, but the real story from the business perspective is that New Orleans was absorbed into our dynamic economy. I think that massive rebuilding of New Orleans where it is below sea level is a mistake, but that is more a political and regulatory issue than a business issue
• Rise of World Markets - the equity culture continues to expand world wide. Stock markets are shaking off their doldrums in Japan, and Germany is awakening to foreign capital and raiders that are bringing new life to their valuable but moribund companies. If you look at the tables of annual stock growth you see gains of 25% in Canada, 25% in Japan, approximately 30% for emerging markets as a whole, and virtually every other bourse around the world went up. The big exception is the United States, where stock indices were basically flat. This is a rarity, since usually foreign markets are correlated with the US market, so something to watch in the future
• Continued Scandals in US Companies, particularly regulated ones - regulated markets like insurance saw major scandals where the President of AIG was forced out and AON's CEO resigned. Fannie Mae and Freddie Mac, the politically connected semi-government entities, continued to have big problems with their governance and portfolios. Drug companies, subject to the twin abuses of the US government regulatory system and rapacious lawyers, suffered some big blows, as well. General Electric, which operates many clear businesses (manufacturing) also relies heavily on opaque finance and insurance arms for its "magic" year on year steady profit increases, and these gains are being slowly wiped out by one-time charges for past aggressive assumptions. Many of these companies are going back and fixing the problems, with GE, Freddie Mac and the NYSE (post Grasso) among the ones deserving the most credit
• Rise of the Exchanges - the stock market commentators (mostly as useless as traditional media, something I will dig into more in the future) are focusing on "Big Oil" (see commodity boom, above) and "Technology" (mainly Google and Apple) but missing an entire class of stocks that are gaining steam, because they are new. The NYSE merged with Archipelago under ticker AX, going from $20 / share to a peak of $60 / share. The Board of Trade in Chicago went public (BOT) and boomed, along with the Intercontinental Exchange (ICE), joining CME and ISE (options) as other recent successes. The NASDAQ is also way up, along with the international exchanges (they are fighting over the London Stock Exchange and other European derivative exchanges, and their valuations are up). The equities and derivatives (futures / options) exchanges have gone way up in value as they moved from regulated (non-public) entities to public companies, a theme that you will see played out over and over as assets and companies are freed to make money and be public new and innovative solutions will arise, both to benefit shareholders and customers alike. Just watch, soon you will see sector ETF's and dedicated funds in this area, probably just in time to miss the peak and lose money as the values consolidate for a while
• The US Economy doesn't go into Recession, instead it Booms - many people were predicting a bad year for the US economy, but it didn't happen, even though the rise in commodity prices, the hurricanes, and scandals could have provided decent excuses for this to happen. The commentators are missing the boat, again

These are my top stories for the year as it relates to business. On a lighter note, the biggest story in Chicago for 2006 is - THE CHICAGO WHITE SOX. Hopefully in 2006 the best story will be THE BEARS.

Separated at Birth?

I found this facial recognition software program today while on my usual morning surf through the web. I decided to see which celebrity had the misfortune to be matched with my face the closest. Here is the shot I took of myself this morning:

And the celebrity closest matching my facial pattern is....drum roll please....

Paul Allen, co-founder of Microsoft. Crap! Does this guy really look like me? I decided to run it again, this time a photo of me with shades on at the Hoover Dam:

The program picks the face out of the digital photo and analyzes it - you will see this if you try it. And the new winner is...

Michael Dukakis! Michael Dukakis??? NOOO!!! Must be the bushy eyebrows. OK, one last try. Here is a photo of me with a bunch of demented souls at the Bear game on Halloween, 2004.

Look at what the computer came up with this time:

It actually matched three faces in this photo - the guy in the stocking hat to the left of Ditka was matched up with George Patton (I assume because of the hat/helmet recognition):

The guy dressed up like Ditka's closest match was Van Morrison (I assume because of the shades):

And me? Well I was matched up with Matt LeBlanc in this photo:Well, I can live with that - better than the other two at least. Hmmm, three different photos, three VERY different matches. I guess that company has a ways to go before this product is out of BETA testing. Hey, maybe if they have this installed at an airport I will get upgraded from economy class to get a free ride on Paul Allen's personal jet:

I guess not being pretty sometimes does have it's advantages...

Out Democrat the Democrats

I have been harsh on the Republicans the past year with good reason. They control the House, Senate and presidency, yet are letting themselves get pushed around by the Democrats instance after instance.

Still no Social Security reform. For the life of me I cannot understand why they could not get out the (good!) notion that I should be able to keep a part of my income in a private account - in the plan that was proposed the participation was even voluntary. So my money keeps going into the sinkhole and I predict that when I get of age that I will not receive one cent of all of the money that I keep paying in week after week, year after year. Look at your pay stub once in a while instead of just detatching it from your check and tossing it. It should give you pause. The fact that the Republicans couldn't get out this very simple message loud and clear tells me that something is amiss in DC.

Another bugaboo of mine is the estate/inheritance tax. Americans after death are allowed to give to or transfer up to 1.5 million dollars to their relatives tax free. After that, the rest of the estate (a business, house, cars, whatever) is taxed at an unbelievable rate. $1.5m sounds like a lot, but look at your current portfolio and what you own. That house you have in 10 years may double in value. Your profit sharing or IRA or 401k will grow by (usually) 5-7.5% per year. That property you own for vacationing purposes may be developed someday - and you may be able to cash in bigtime. Where you work, you probably have some sort of life insurance bundled into your health insurance program. You see where I am going - over your lifetime it is more and more probable that Americans can (and are) gathering more than $1.5m worth of assets.

Here is a calculator so you can see how over several years your estate will grow. Many businesses are forced to shut down to pay the estate taxes. This has created a cottage industry in estate planning as business owners and private citizens are forced to create trusts, purchase more life insurance and do other things to protect their hard work from falling into the hands of the government after their death. Supposedly the estate tax will be repealed in 2010, but I am not betting on it. The Republicans on the hill didn't do a lot about this in 2005.

There are other things I would have loved to see go through but one thing did happen that made me feel like the Republicans may be gearing up for some action. That was when the House made the Democrats come to the floor and vote on an immediate withdrawal from Iraq. The vote count was 403-3 against, and Rep. Murtha, the guy who brought the issue up in the first place even voted against the resolution. It is good to take what the Democrats say and pin them down to it. When the rubber hits the road, they don't have any real ideas, just criticism. And when you call them on it, they just hide under their desks as this vote reveals.

Along these lines, this is a great article written by Bob Krumm. He says the very first order of business for the new year should be Dennis Hastert bringing forth crackpot John Conyers' articles of impeachment. The money quote from the article:

That the word impeachment—only twice tried against a president in over two centuries, and never yet resulting in a Senate conviction—springs so easily from so many people’s lips says not as much about President Bush as it says about those uttering the phrase. It’s like cussing. Several years ago I went to Kuwait for four months to live in the desert surrounded only by other cavalrymen. Like everyone else there, my language was atrocious at the end of the tour. Whether used as adjective, exclamation, or punctuation, the F-word made its way into my every sentence. I was trapped in my own feedback loop of swearing. However, it didn’t take me long after my return to remember that civilized people don’t talk that way. What those within the Impeach Bush-crowd don’t understand is that, similarly, civilized people don’t use the I-word all the time. Oh, but they’ll learn. When they push the issue in Congress, and it comes to the floor of the House for a vote, boy, will they learn. Then, having been chastised by the great middle ground that is the strength of the American body politic, far left Democrats, and a few on the radical right will finally come to the realization that George W. Bush is going to be President until January 20, 2009. Either that, or those radicals will be marginalized by their stance and ostracized by their peers.

This is exactly what should happen. You want an impeachment vote? We will give it to you. I would predict the results to be almost as bad as the immediate withdrawal everyone seems to want, but not want to vote for. Just like the war everyone criticizes, but everyone did vote for.

I sincerely hope the Republicans restore a bit of confidence in the red meat conservatives like myself in 2006, but I am not too optimistic. Painting the Democrats in the corner with their own paintbrush is a good start.

BusinessWeek Gets it Wrong... Forbes Gets it Right

I subscribe to a lot of magazines and newspapers including Forbes, Fortune, BusinessWeek, the Wall Street Journal, Barron's, the Chicago Tribune (weekend), the Economist, the Atlantic Monthly, and Strategy & Tactics (for fun). I also pick up the New Yorker from time to time off the newstand.

Of all these magazines, I chronically kick myself for subscribing to Fortune and BusinessWeek. Compared to Forbes and the WSJ, they are intellectually inferior and often come to anti-capitalist or anti-free market conclusions. You'd think that a business magazine would "get it", but that isn't always the case.

In addition, since I have been contributing to this blog, I also review the quality of their work with a more polished eye. Does the article contain original research, or is it just cribbed off the newswire? Is the topic original, and does the conclusion contain a (sensible) point of view, or is it just mush?

BusinessWeek puts their "opinion" or editor's views on the back page. This is usually the most excruciating page in the entire magazine. In their January 9, 2006 edition, the back page was titled "Social Security: O.K., Gang, Back to the Table" (a very dumb title, for starters). This editorial contained some real howlers - right from the first paragraph (it is better this way because you don't have to read as far before you give up and toss the magazine aside):

"The politicos in Official Washington logged some notable accomplishments in 2005... the $14 Billion energy bill that should spur more domestic production, and a $40 Billion government spending reduction bill."

I had to rub my eyes to make sure I was seeing the article correctly. The "energy bill" will NOT spur more domestic production, it is in fact avoiding the hard issues of the fact that much productive energy capacity is not tapped because of government regulations and did nothing to resolve the totterring energy grid, which is amazing because the 2003 electricity blackout was a strong impetus for passing this pork-barrel filled "bill". I really can't find any other commentators that view this bill as anything other than pork. Here is a summary of the energy bill from Daniel Yergin, an energy industry expert from Cambridge Energy Associates (I actually interviewed there once a long time ago).

Next up is the "40 Billion government spending reduction bill". Per this link, the reduction is about 2.5% of the total deficit that will likely be incurred during the next five years. Whoopee, let's throw ourselves a party for that big accomplishment.

By contrast to BusinessWeek, Forbes usually gets it right (even when they were wrong initially, they usually come around, like they did on blogs). In the January 9, 2006 issue of Forbes there is an excellent article from their publisher titled "World's Worst Disease". This article says that mainstream media is too negative and focuses on the world as if it were a zero-sum game, so that we are running out of everything and the sky is falling. He points out Krugman in particular, an economist famous for his doom-and-gloom predictions who is about as easy to poke holes in as the New York Times. No one is pointing out how well the US economy has done relative to these bad predictions, even with oil prices skyrocketing. In addition, they view tax cuts as a burden to the government, when in fact they have been a key element in our recent economic successes. Finally, he gives "props" to the bloggers, who are not zero-sum thinkers and in fact are contributors to society.

I highly recommend Forbes and I keep kicking myself for subscribing to BusinessWeek. The real reason I keep BusinessWeek around is just to remind myself how off target they can be, and how sloppy thinking can just ruin an otherwise decent publication (they do original research and have some good writers, but their editorial slant speaks for itself).

The US Tax System

I received a lot of Borders gift certificates over the holidays and I went out to buy myself some books. Maybe I am a masochist, but I picked out "Taxes 2006 for Dummies", one of those yellow "Dummies" books.

Actually this is quite a good book. I am a finance person and I hung around Borders for a while perusing various competitors before choosing this one.

I went through the entire book over the last couple of days. There are so many changes in the tax laws every year it is helpful to keep up with the most recent changes. In addition, I am planning on volunteering for the "Tax Counseling Project" here in Illinois that helps low-income taxpayers prepare their returns. Most low income taxpayers are eligible for the Earned Income Tax Credit, which gives money back to individuals who work, which of all the possible tax incentives seems to be a good one to me. What happens, unfortunately, is that the low income tax payers go to H&R Block and get a "refund anticipation loan" at an insane interest rate that chews up a significant part of the total return; since many of these people are not saavy financially, from their perspective they walk into H&R Block and walk out with cash and they are happy. Unfortunately, they only receive a portion of what is due to them and the rest goes into the tax preparer's pocket. It is not the tax preparation fee that I am talking about, but the "loan" portion to accelerate the refund (they give out the money on the spot).

In any case, the point of this blog post isn't about the Earned Income Tax Credit, the point is the amazingly byzantine set of laws and regulations that makes up our tax system. The complexity of this system is an enormous waste of time, and it does very little to encourage positive behavior.

An excellent example, well summarized in this book, relates to retirement plans. From the book:

"The different types of retirement plans - 401(k)s, 403(b)s, SEP-IRA's, Keoghs, regular IRA's, Roth IRA's and SIMPLE - and the unique tax laws governing each are enough to drive tax preparers wacky... and is another reason that some folks don't bother with these accounts... our neighbors to the north in Canada... have but one account - it's called the Registered Retirement Savings Plan (RRSP)... everyone with employement income can establish this account and contribute up to 18%... or $18,000. Simple, equitable and easy to understand."

This is the final insanity of our tax system. Not only is it complex, but it doesn't even accomplish what it sets out to do, which is to encourage some sorts of behavior (like saving for retirement) and discourage other types of behavior. And the code employs millions of tax preparers, accountants and lawyers in basically non-productive activity each year.

There really aren't obvious solutions to this. The government could simplify the code and improve collections if they'd get together and simplify the regulations, but with the extreme partisan bickering the big tax reform package is not on the horizon. It seems like every year we will just get more and more complex, until the whole thing kind of topples over.

It isn't obvious but I think that tax preparation software and the ubiquitous nature of tax preparers has made the burden of preparation too easy. People don't realize that we are all going round-and-round to get to a destination that we could have gotten to straight away.

Don't forget about withholding. If they banished withholding (money straight from the paycheck) and made everyone write their own checks to the IRS, like small business owners have to do today, there would be a riot, and this whole process would be fixed quickly.

Back When They Were Good

In college I listened to R.E.M. all the time. Why do I bring this up? Glad you asked.

With my new vehicle I now have XM Radio. It is actually built into the car, so there aren't any annoying things plopped on the dash.

I have been listening to mostly punk, ska, and alternative "hits" from the 90's. Today on the way to work I heard "Driver 8" by R.E.M. Boy did that one take me back. I used to have those old R.E.M. discs by my side practically everywhere I went. I even still have some of their older vinyl albums although my record player hasn't been hooked up since college. For some reason I just can't throw my old vinyl away.

Anyway, I should break out the record player and play those old R.E.M. albums. From front to back every single song wasn't just good, they were great. That was back in the day when Michael Stipe looked like this and maybe actually liked girls:
(Photo credit REM website)

Sadly, most R.E.M. music that comes out now is fairly uninspired pop garbage. They lost me when Losing my Religion came out. And now Stipe is very open with his homosexuality (or is he bi?) and now looks like this: (Photo credit here)

Well, whatever, it is his life, who am I to criticize his dress or lifestyle. Just something I would never seen in public in.

So my question is, what happened to this once great group? Remember back when they were good? Remember albums like Murmur, Reckoning, Life's Rich Pageant and Document? I bet you have a group like this. One that you hear an old song of theirs and say to yourself "remember when they were good?"

Interesting Links For You

As a public service, I give to you the reader some links to places I visit daily (or try to anyway) for my education and edification. Some of the links are over on my sidebar, some are not.

BLDGBLOG is a blog about architecture, the earth and urban living. It always has stunning photos and is written very well by a guy that clearly knows what he is talking about.

Chicago Boyz concentrates mostly on politics and economics. Very brainy people write on this group blog and you can find me in the comments at times when I think I can add to the discussion.

Lileks.com is the site written and maintained by James Lileks. He is a writer that you may have seen in the paper as he is syndicated nationally. He lives in Minneapolis and has a five year old girl. If you click on the "bleats" you will get an extensive entry every day about living in Minneapolis. He is a truly great writer that turns normal, everyday situations into funny stories that you can relate to. He also delivers a podcast every Friday that is pretty good. He is off until next year, though.

Hog on Ice is a blog written by a fat guy who lives in Florida. I found the blog while I was doing research about Pajamas Media, that soon to be dead amalgamation of bloggers that doesn't seem to have a business plan. Anyway, Steve H. is the man who writes this blog and his essays are very good reads. If you have a person close to you that is dealing with any sort of addiction, in the last month he has written several on this topic that are truly outstanding. But I like his essays about beer, beans and cigars.

Hell in a Handbasket is a blog maintained by a cop who lives in Columbus, Ohio. He writes a lot about weapons and their uses and how new laws impact everyone in interesting ways. The things he writes sound a lot like the way I speak so I have a weird connection with this guy.

For matters military, visit The Officers Club. This site has a lot of very cool historical information as well as photos and good commentary about our present day forces.

Here is a guilty pleasure of mine. It is called Go Fug Yourself. It is a blog written by a couple of women who rag on celebrities for wearing crap clothes in public. They are brutal on some of the celebrities but give cudos out on occasion, too.

For a laugh, go over to The Sneeze. This is a blog authored by a parent of a little kid that seems like he has become a kid again. Just look around here a bit and you will see what I mean. For a couple real laughs, don't forget to check out the Steve, Don't Eat It! series where Steve eats and reviews products he sees in the store that most of us would never think about putting in our dog's mouths, much less our own.

Rick Lee is a photographer that has a blog - his photos are some of the best around, in my opinion. I like the style and content of his shots and hope that someday I would be half as good as him - that would make me happy.

One more thing. If you have time and decide to check out a few of the links I have just given you, remember that you are reading original essays and viewing original writings and photos from some not very famous people. I feel that the quality of these products surpasses the shit you see in the papers and on TV by a mile. Most of these blogs are not very popular in the big picture of the blogosphere. Most are not getting paid or if they are, it is only enough to cover bandwidth costs. Carl and I blog here for free because we like it - and it costs us zero. Therefore we have no sponsor to kiss up to - you will find this independent streak in all of the blogs I have linked to above.

Lets look at one of the most very popular blogs, MichelleMalkin.com. I know I pick on her a lot, but when you are on top, you are visible.

So today, Dec. 29 on this blog the first two entries are ragging on the New York Times. Talk about shooting fish in a barrel! Shit like this makes me cringe. It is basically telling the reader that she thinks the folks reading her blog are dumb and can't handle too much substance. Next is something about a German moonbat and the list goes on and on. Basically red meat for the rabid right. Can you believe this is one of the most popular blogs on the web?

Don't waste your time on blogs like this - they don't matter, they suck and never make you THINK or LEARN. Try a few of the blogs I listed above and if you haven't had enough, start looking through the blogrolls on those blogs. Usually high quality blogs link to other high quality blogs.


"I am so glad Dan gave me those links so we can learn different things on the internet." "Yea, being smarter always helps me get dates with the guys in the lab." Photo credit here.

The worst intersection in the City of Chicago

The City of Chicago is an old city. After the great fire the city was re-laid out in a grid, with streets running north / south and east / west centered on the corner of Madison and State.

There are very few streets on an angle in Chicago, but boy do they cause a mess in traffic. Major diagonal streets on the North side are Clark, Lincoln, and Elston.

This simple graphic shows the intersection of Damen (North / South), Fullerton (East / West) and Elston (diagonal).

This diagram really doesn't do the intersection justice. See that little "triangle" just north of the Popeye's restaurant? There are cars stuck in there on all 3 sides. And when it is your time to go and turn left, you "blast" out because their green light is delayed which allows you to go first, although this isn't posted anywhere (how about a sign like "Oncoming traffic has shorter green").
To make things even crazier, there is a Popeye's restaurant on the corner. You can't get to the Popeye's off Fullerton, you need to go in off Damen. Someone definitely has it written on their tombstone "I died trying to make a left turn across traffic into Popeye's at the corner of Damen, Fullerton and Elston" because I have seen insane mayhem many times as people try to cut across traffic all for chicken. The Popeye's is off Fullerton on the south side of the intersection (south of Damen).





This view is looking North while heading west on Fullerton (yes, I almost did get killed trying to take photos at this nutty intersection). You can see how Elston is whizzing by at a diagonal with a little island out there for desperate pedestrians. This photo was taken far away from rush hour, because at that time for a bonus round it becomes gridlock in all directions.








This photo shows the traffic looking south on Damen. As soon as I took this I was struck by how damn ugly the intersection is, too! At least during Christmas there is a Christmas tree stand on that vacant lot so it looks better and not so barren.

Not shown is the fact that when you are going North on Damen heading towards the intersection (getting off the Kennedy) that is also total gridlock, because the lanes narrow down and there is a store that rents moving trucks that are double parked out in the street to make things even crazier. Also note the hapless pedestrians in the rear view mirror.

I read that there is an effort to fund a study to build an overpass at this site, which is desperately needed. There is a similar intersection at Western but they built an overpass so it works far better. However, knowing how long it takes to get something done here, I wouldn't hold my breath and wait for the situation to improve. Fortuntately, it really can't get worse - gridlock all the time, death defying stunts as people try to turn into Popeye's, and nearly suicidal left turns. What more could you want?

Beautiful Christmas Pictures

One of the best parts about living in the city in a high-rise is the view. During the holiday season all of the buildings light up in bright colors. I am not much of a photographer but these pictures turned out great!

In the front you can see the Merchandise Mart, with the Sears Tower rising up high and then 311 South Wacker peeking out just to the left. The clouds look really cool, too, and they were moving fast that night.

The Wright Stuff

This time of year I usually look at the past year and see what I have accomplished, what I have not and what I need to in the following year. My biggest accomplishment last year, for the first time in my life, is one that has to do with athletics.

I rode my bicycle 101 miles in one day - voluntarily.

Yep, my first century is in the books. We started here, which I assume is now doing a booming business with the snowboarders this time of year. The place was crawling with bicyclists - I would put the count at somewhere around 1,ooo that did this ride.

I went by myself. I had never ridden a century before so everything was new and my adrenaline was pumping. After I got my registration materials, it was off to my bike and time to hit the road. It was around 7:30 in the morning.

For those not in the know, this was a "ride", not a race. There was no gun start, no order of finish. Just start when you want, go at your pace, and get done when you want. So off I went. The first 25 miles or so were a piece of cake. Only one major hill to speak of and the scenery was absolutely outstanding. I got passed by a lot of people who were riding like you see on the Tour de France - in line, wheel to wheel and very fast. I could have kept up with them if I wanted, but knew that later I may have needed my energy - how right I was.

The first rest stop was at the famous Unity Chapel, one of Frank Lloyd Wright's first buildings.

I have been a fan of Wright for a long time and it was neat to actually see this building up close for a while. What a strange sight Wright would have thought it to be - all of these spandex clad helmet wearing goofballs looking around his building.
Photo credits and a wonderful essay about Unity Chapel here.





Here is Wright's original grave. When his wife died at Taliesin West in Arizona, she demanded his ashes (or body?) be moved to Arizona to be interred with her, where both of them are today. Taliesin in Spring Green and Taliesin West in Arizona are both great day trips if you are interested in architecture and Wright's fascinating life. But enough sightseeing, it was time for a quick snack, fill the water bottles and time to hit the road for me.







The next thing the course took us on was a loop from this rest stop for about 30 miles through the countryside around Spring Green, Wisconsin and back to the rest area. I think that this portion of the course was by far the most demanding. Some of the hills were absolutely killers and I had to stop on several of them to get my breath. All of the riders were very friendly and encouraging. I wasn't the only one stopping, though. Yes, I stopped, but I didn't cheat - I rode my bike every inch of the way that day. I could have walked at times faster than I was riding, but nah, I had trained too hard waiting for this day to do that. You see, as busy as I am, I had to train at night in my basement after the kids were in bed and on Sunday mornings I would be able to go for a long training ride. I had also wrecked my knee earlier in the year due to not being set up correctly on my bike so that had to be rehabbed into shape as well.

So after that loop, we were back at the Unity Chapel rest area for another break. Just over halfway done and I was getting pooped. No time to feel sorry, back to work.

The next 25 miles were very tough. The field was getting more spread out and there were fewer people to talk to - at times I was wondering if I was going the right way, but I was assured by the appearance of the maintenance car that would pass by every 30 minutes or so, that was looking for injuries or breakdowns.

So now I was in the city of Barneveld, WI at the last rest area. I was very tired, depressed and I knew exactly what was happening. My body was beginning to dehydrate. Those murderous hills had taken a greater toll than I assumed. I thought I had drank enough over the route and at the rest stops but I remembered reading in a biking magazine several months ago that depression is a sign of dehydration - your brain starts to go into self preservation mode. I knew just what to do. At this last rest area I drank two quarts of lemonade and that fixed everything. In a matter of minutes my mood was back in order and I was ready to do that last 20 miles.

I kept myself under control, keeping my speed at around 15 miles per hour - I didn't want to go too fast and kill myself. Then I saw it - Tyrol Basin 3 miles! It was the easiest 3 miles I have ever ridden. It felt like I was going downhill all the way and I was finally back at the base camp. I made it 8.5 hours after I had started - a full 7.5 hours in the saddle. And in fine Wisconsin tradition, everyone got some free beer at the end. Those went down pretty damn well, I might add.

The question I get asked most when I relate the story of my century is "did your ass hurt?" Well, the answer is, yes, but not a lot. During your training rides (mine are always between 40 and 75 miles on Sunday mornings) THAT is the time to find out what is right about your bike, clothing and gear. And if you are set up correctly on your bike your ass should not "hurt". A recurring problem I have when riding distances is a slight numbing of my feet, but it didn't really affect me on my century - don't ask me why. If you ever get into distance riding, spend a couple hundred bucks and have a professional bike shop set you up on your bike - it will be the best money you ever spent.

So there you have it, the story of my first century. When I got done I said to myself - never again. But now that I am recovered, I say to myself - Oh, yes - again. And this time I need to shave at least 45 minutes off of my time from last year!

Here is my bike, the Specialized Sequoia Elite, 2004 version:

Dreary Christmas Thoughts

Today on Fox News - not a source I generally trust - I saw that the Russians were giving or selling nuclear technology to the Iranians. No matter the source, the story is believable. Lets look into this a bit.

Actually, lets not. Lets just assume that the Russians are selling the technology to the Iranians. Do you understand what this means? It means that my children (and myself) will see the first nuclear detonation on a human population (probably Tel Aviv) since the nuclear attacks on Japan during World War 2. And then my children and myself will witness the second, third, fourth, fifth and sixth attacks on a civilian population with a nuclear weapon since WW2. That would about be the end of Iran.

Think about that. Sorry to cast a long shadow on the Christmas holiday.

Photo credit here.

An Early Christmas Present - Jack Welch exposed

Jack Welch is the former head of General Electric (GE). In my opinion, Jack Welch is one of the most over-rated characters in US business. Jack Welch built GE up by investing in insurance and financing, which allow a company to create gains and losses in a “black box” fashion by changing business assumptions, while touting their manufacturing prowess, which is much more straightforward to understand (i.e. you can count aircraft engines and appliances). For years and years I have been cynical about all “conglomerates”, which are companies that invest in a variety of unrelated industries and magically create income and can manage these disparate companies together. Most of these conglomerates eventually unravel or are forced to unravel due to poor performance, such as ITT in the past, then Tyco, and now GE.

After Jack Welch retired he wrote a Harvard Business Article with the editor of the review while having an affair with her. This is an obvious conflict of interest on her part, and something that is pretty seedy. His wife (2nd) divorced him and made him look even worse by bringing up all of the amazing perks that Jack Welch, shareholder advocate, had negotiated for himself from GE such as lifetime apartments and air service, and then he was forced to disown these perks in order to change his reputation. His second wife used to be a lawyer and I don’t think she is someone you want to push around.

Even though he was seen as a seedy cad, this really wasn’t the heart of the issue. The heart of the issue, from my perspective, was the feeling (can’t prove anything because there isn’t enough detail or disclosure to know what is going on) that somehow these financial businesses (insurance, financing) were propping up the non-financial businesses (aircraft, appliances) because under the pre-Enron laws and assumptions you could basically come up with any level of income that you wanted in the financial businesses. And without these great returns, then the “legend” of Jack Welch starts to fade and he is seen as another greedy, low performing businessman such as Michael Eisner of Disney, or, possibly, a peer to Skilling at Enron or Kozlowski at Tyco.

Here is where we get to my early Christmas present – a cover article by Barron’s magazine, in their December 26, 2005 issue, titled “Jack Magic” with the cover line:

“GE’s results looked great in Jack Welch’s last years as CEO, helping to make him rich. But profits would have been flat if not for the $9.4 billion that the company under-reserved at its reinsurance unit. Did he leave investors holding the bag?”

We have the opportunity to see the specifics of what led to GE’s earnings because they are selling their reinsurance unit to Swiss Re and getting out of this business under their new CEO, Jeff Immelt (who seems to be a standup guy trying to cleanup everything, rather than hogging the limelight like his predecessor). In order for Swiss Re to buy the unit, they want to make sure the reserves (for future policy losses) are brought up to snuff, and this is a public transaction. GE has already put $6 billion into extra reserves, and needs to come up with $3.4 billion more to close the deal. This $9.4 billion total basically accounts for almost all of the earnings “gains” (not the base earnings) over the Welch era of 1996-2001 (as calculated in the article, 90.2% of the total).

Usually when there are write offs it is blamed on the current boss, not someone from 1996-2001. However, in this unique instance, the specific losses can be apportioned to the years when the policies are issued, so (per GE and Swiss Re) we KNOW that they happened in those years.

Thus basically all the “magic” of Welch, as far as beating the market (they still would have had substantial profits, they just wouldn’t have been growing much) was due to under-reserving in this reinsurance business, a business that Immelt is exiting.

No one has facts to see if anything illegal was done, and this type of article may or may not generate further analysis and potential lawsuits. I don’t know. It isn’t in GE’s interest to essentially create lawsuits against itself, but it sheds a great deal of light on a murky situation.

To go back to my original thesis, conglomerates usually end badly, and if you see one performing well, look extra hard. In addition, if you see a business that magically shows consistent earnings growth and has a lot of financial assumptions that they can play with (like insurance or financing), be extra suspicious. The point isn’t that you can’t make money in those areas, you can, the point is that you typically make a lot of money or lose a lot of money in a given time period, it is odd when you see the smooth, trending behavior that Wall Street loves so much. Wall Street gives a low valuation to firms that have boom / bust type earnings, and a high multiple for companies with consistent growth.

Another thing to look at is that Immelt is adding a lot of transparency to GE and is apparently “cleaning up” the messy legacy that he inherited. If GE is a manufacturing conglomerate that is a stock that I can understand much better than a manufacturing / financing / reinsurance conglomerate, since there are more obvious synergies between manufacturing businesses.

Finally, in addition to being skeptical of conglomerates and complex financial companies from Enron to Tyco and now GE, I always was skeptical of showboating Jack Welch. I wish that he was in charge during the Sarbanes era, would have been interesting to see how it all would have turned out in the era of corporate transparency and regulation. A lot differently, I’d bet.

Naughty or Nice?

Merry Christmas and Happy Holidays to all of our readers. Time for me to imbibe in some X-mas cheer (that would be a couple vodka martinis) and dine on our X-mas smorgasbord, a first at my house. Usually we do the prime rib, but this year we wanted to do something different. Be safe, think of the troops, and thank whatever god you may pray to (or just thank your lucky stars if you are an atheist) that you live in the good 'ol USA.

To The German Commander: "Nuts!" The American Commander

Brigadier General Anthony McAuliffe


Today, December 22, 61 years ago, Brigadier General Anthony McAuliffe gave that famous one word reply to a German demand for surrender. How did he say it? Why?

During the Battle of the Bulge the American forces at Bastogne were surrounded and given a surrender paper by the Germans, on which McAuliffe wrote or dictated that famous reply you see in the title of this post. Not many people know that his assistant added:

"If you don't know what 'Nuts' means, in plain English it is the same as 'Go to Hell'. And I'll tell you something else, if you continue to attack we will kill every goddam German that tries to break into this city."

It is one of my very favorite WW2 stories.

For more information on the Battle of the Bulge, click on the link above, as the wiki entry is fairly short and will give you a fairly good idea of what happened in the snow in Belgium all those years ago.

Photo credit here, along with the wonderful detailed story of "Nuts!"

An original blogger... John Reed on Real Estate

A few years ago I read a book called "Rich Dad, Poor dad", and I was intrigued. I thought the book was kind of interesting, although it seemed pretty antecdotal.

I came across a web site by a guy named John Reed with a link to his site - that basically obliterated the arguments behind that author's work whose name was Robert T. Kiyosaki’s and John Reed was so "disturbed" by this book, one of the worst financial investment books that he ever read, that he built a special web page to destroy all of the key elements of that book.

In this analysis he systematically researches points of reference in the book and then explains why it is completely wrong. From the page:

The Author (Kiyosaki) recommends using a property manager to run the properties that you acquire - from the site:

Property manager is the key to real estate?Kiyosaki says, “A great property manager is key to success in real estate.” He’s nuts. Experienced property owners do not hire independent 5%-of-the-gross property-management companies. When syndication was big, those companies owned income properties all over the U.S. They tried to use local companies for everything they needed, but they found they could not get good service out of local property-management companies so they all started their own in-house property-management companies.
I heard the head of a major pension fund say at a speech that his company tried to hire local property managers for office buildings and finally concluded they had to create their own in-house property-management company. All my millionaire friends manage their properties themselves and would never use an outside property-management company. The property-management industry has almost no happy private clients. They mainly work for owners who are not spending their own money like government agencies, nonprofit entities, corporations, and bank trust departments.
The problem with property-management companies is that they neglect properties and use expensive suppliers and subcontractors. I estimate that approximately 90% to 95% of property managers take kickbacks from those expensive suppliers. When I was a property manager I reported a number of bribe attempts to my boss. Both my predecessor and my successor at the job took kickbacks. (A subcontractor showed me a canceled check cashed by my predecessor and my successor was fired for taking kickbacks.) My secretary had worked for a major property-management company before working for me. She said every property manager in her old company took kickbacks.
If you ask the typical successful investor if he ever used a property manager, he will shudder at the memory, admit that he did once, and somberly swear, “Never again.”

He goes through the book in detail and does a point / counterpoint basically saying that the author is a shyster and his claims of success cannot be verified. I have to say that I felt pretty damn stupid when it was all over. Most of all, I felt dumb for accepting un-verified claims at face value.

He also goes through all of the other "real estate gurus" that you see on late night TV claiming that you can buy properties with "no money down". Of course many people are putting up little or nothing to buy their main residence nowadays, but that is a different issue, not quite the same.

What I find fascinating is how this site, in a way, predicted the entire boom in blogs. The site is sparse, text orientated, and simple to navigate. The site contains dense content, written by a knowledgable and very opinionated author. The site also has some feedback in that others write in stories confirming or denying his claims, and often the "denial" claims from deluded followers are downright hilarious.

Also note that unlike the mainstream media, which is happy to run commercials and infomercials for these shysters, doesn't bother to do any research. Check out all of the research that he does on these guys, including specifically pointing out (scary) errors in their recommendations on items such as specific taxes and lending laws. There is a funny quote from someone saying that John Reed seemed to do more research taking apart authors like Kiyosaki than the author spent putting together the book in the first place...

I highly recommend reviewing this site and also if anyone you know is even thinking about reading real estate books or gurus that they ought to go here and review them first. He DOES approve of many people, and puts them in green (with non-recommended ones in red), a very prescient and simple organizational method.

He doesn't have any ads on the site but he sells his own books. I may buy one just to patronize this guy, and I probably will learn something, to boot.

Now New York is Even More like France...

If one thinks of liberal New Yorkers (there are a lot of regular, working people in New York, so I am certainly not talking about everyone) the country that they most seem to admire is France. After all, that country has excellent fashion, gourmet food and wine, and a burning hatred of our President.

Now they can see what living in France is really like. The transit strike has paralyzed the entire city, right at Christmas season. Most of Europe is typically roiled by strikes at when it pains the most, such as this one in France. Even though it is illegal for the New York transit union to strike, they are going ahead anyways, confident that there will be little sanction. New York has a Republican mayor, but he is about as much a “Republican” as the Illinois Republicans, which is to say that he is not much of a Republican at all.

The transit union is a pretty heartless bunch. People are trying to buy Christmas gifts for their families and trying to get together over the holidays and this is the worst time that they could strike, as far as disrupting the city goes.

The real issue, however, isn’t what it seems. Way back when I started reading about unions, back in the 80’s, there was a big theme that “unions cost more, but you received better, more loyal workers”. Many unions said this, and used it as a defense against the common charges levied against unions (they stifle productivity, ensure that jobs can’t move to where they are most needed, and cause burdensome work rules that make entire industries non-competitive).

No where have I seen any mention that these union members are more productive than non-union sector workers, or even the feeblest claim in that direction. Now unions are pretty much fighting a last ditch effort to hold on to whatever crumbs that they can find, and about the only place they can really throw their weight around is the public sector, because politicians don’t have the guts to face them down (after all, it isn’t their tax dollars that have to fund their non-productive ways).

Unions have dragged down the steel industry, the airline industry, and is in the process of dragging down the car-parts and car manufacturing industries. They are also fighting a rearguard action in the supermarket industry, fearing WalMart will crush them (which they likely will).

One of the most profound advantages of the US economy from a productivity and growth perspective is the lack of union power. In Europe pretty much only the UK and Eastern Europe, where union power is comparatively low, are seeing growth anywhere except in government jobs.

Hopefully this transit strike starts to wake up the public to the true costs and dangers of public sector unions. From a private sector perspective, the dangers are already evident in the stock prices of once solid union companies like United Airline and Delphi which hover near zero on the pink sheets.

UPDATE

The Wall Street Journal, a newspaper that I regularly read and have a lot of respect for, wrote an article today titled "A Taste of Paris". Sounds kinda familiar with my title... although probably a bit better. Still, I beat them to the punch with it! They also offer some solutions in privatizing parts of public transit or opening it up to competition, both good ideas, except you can't really privatize the subway.

Gay Cowboys

There is a movie out in some theaters now called Brokeback Mountain. Apparently it is a movie about gay cowboys, from what I can tell. I haven't seen it, as I don't see many movies at all, but I guarantee you that I will never see this movie, ever.

The interesting aspect of the movie is how everyone is wondering how this movie will do in flyover country. Now, I am no political scientist, nor am I a movie industry executive, but I think I can safely say that in places like Canton, Ohio or Waterloo, Iowa or Branson, Missouri that this movie will be a severe flop. Of course, the lame "writers" at the New York Times predict a new wave of acceptance. But if it doesn't happen, they will claim the Midwest is still a hotbed of gay haters. But enough of them, it isn't worth anyones time to take apart a NYT editorialist who has never probably lived in the Midwest, much less participated in a manly activity like going to a football game or grilling a sausage.

Normal, cornfed Midwestern guys like me and the friends I have don't want to see movies with gay men in them. Simple as that. Nothing to analyze, no hidden agendas, no secrets. We are men that don't like to see other men holding hands, kissing or anything else. That's it.

Hey, look at that, millions in potential research dollars saved, by me! I await the check from Hollywood.

Not to say that this movie wouldn't play well in certain places in the Midwest. For instance, a small showing here in Madison, with our large gay community, would probably go over pretty well. Also, Chicago and other large cities have gay areas and, I assume, would support this movie.

But I think a mass release of the gay cowboy movie all over the Midwest is a stupid move.

Why does everything need to be so complex?

Pro Sports Fans - too rowdy?

The Chicago Tribune ran a story on December 9th 2005 asking whether Chicago Bears fans were too rude. The story was pretty lame as far as getting actual rude incidents... I don't know if the writer even went to the Stadium, or he thought he was doing the Bears a favor by not showing what everyone is like. Either way, here is a link to the story.

Here is the lead from the article which you can find here:

"It was 35 minutes before kickoff of last Sunday's Bears-Packers game and three goofs, in full Bear regalia, clutching cups of beer and obviously intoxicated, stood at the top of steps leading into the south entrance of Soldier Field. As thousands of ticket-holders streamed below them, they singled out Green Bay fans -- some with small children -- to taunt."Hey! hey! You in the green jacket over there: Yeah, you!" shouted one of the three young males. "[Brett] Favre's gonna get hurt today. Lots of pain. It's gonna be bad. Go home!"The three laughed uproariously, took swigs from Miller Lite cups and looked for more Green Bay loyalists to harass. Their language was crude and boorish. They continued for 20 minutes."

I had to laugh. This happens everywhere. If you go to a sporting event in another city dressed in your teams' colors, expect to be severly heckled. I went with Dan to an Illini-Badgers football game in Madison when the whole damn stadium was dressed in Red and White, team colors. We didn't wear Orange, the Illini colors, but the fact that we weren't in Badger colors pretty much tipped people off that we were visitors. The Badgers crushed the Illini so we weren't taunted that much, but if the game was close or, God forbid, the Badgers would have lost, we would have suffered mass abuse. It is not so much the taunting but everyone will challenge you to a fight, and they are hammered and they mean it.

Dan and I went to an Illini-UCLA game in Pasedena a few years back and we weren't taunted at all. In fact, we got more high fives from Illini fans than taunts. I think that the reason for this is that Pasadena has to be one of the richest areas I have ever seen; they are too busy counting their money to taunt us. The Illini actually played pretty well at the game, but lost and started a horrible downward spiral at that game that continues to this day.

I guess I don't quite know what people expect to happen at these games. For a big sporting event, something at US Cellular for the Sox, Soldier Field for the Bears, Wrigley Field for the Cubs or the stadium for the Hawks (not the Bulls, their crowd is too rich since they sold everything out after the Jordan era championships), people are treating it as a chance to get drunk and celebrate a bit. This definitely happens in Chicago, and from my limited experience it is wayyyy crazier up in Madison tailgating for Badgers games.

DAN ADDS:
Actually, "they" are trying to do something about the behavior of Badger fans at their home games with the power of words. Several fans, usually from Ohio State and Michigan, with kids, were severely heckled and verbally abused and did some pretty loud complaining. Of course the net result of all of this will be *zero*. But the press latched onto the story and it got out there so we all know it is happening.

As far as Soldier Field goes, there is some fan abuse, but most of it isn't nasty, just the usual "(insert visiting team here) suck" or whatever. If you take your kid to a pro football game and don’t prepare him/her for swearing and the occasional fan taunt (if you are a visiting fan) then you are just naïve.

Usually it is the VISITING fans that start to get on the Chicago fans nerves that causes all the trouble. And 100% of the time, those visiting fans starting trouble are 100% intoxicated to the gills.

The funny part is that the organizations in charge of both the UW and the Bears use the same tactic to combat fan abuse and intoxication as the UN when combating a terrorist regime. They write letters and make announcements.

While all the “hand wringing” is going on, bars surrounding Camp Randall and tailgates are selling huge quantities of alcohol to anyone with a fistful of dollars and at Soldier Field, as long as you aren’t falling down, you can buy as many 20 ounce Miller Lite’s as you can pay for. Also, in the tailgating lot at Soldier Field, you can get drunk on the cheap as you can enter the grounds four hours before the game and simply bring your own.

So what the hell do these organizations expect? It is one of those “we care but won’t do anything about it” deals. As long as the stadium is full, what difference does it make if some kid gets verbally abused by an intoxicated fan? Right?


Well, maybe I ought to recuse myself from commentary on this issue.... US Cell opening day 2004.

New Google customized Home Page is very cool

I don't know how long it has been around but I just noticed that Google has an option to customize the "Google" front page. I started playing around with it and it had some really cool features, and like everything else from Google, it's free...

You can move stuff around on the page in different groups, picking up weather, stock info, news headlines, and even an "ATOM" feed (a kind of syndication, like RSS) where you can get info from a blog site like this one. In this case you just click on "add content" and there is a blank URL area and for this blog (as an example) you'd put in

http://lifeinthegreatmidwest.blogspot.com/atom.xml

and then the # of headlines you'd like to see (like the last 5). I am not saying that our blog is necessarily that exciting that it would need to go on your home page, but there could be some blogs or sports scores or something like that - that could be...

The good thing about starting w/the Google home page is that it is (famously) blank to begin with, so it is easy to customize and just include the content that you want. There are other ways to customize your home page such as through yahoo but there aren't as many options to do this and less real estate.













Also need a "shout out" to Google for Picasa, the program that allows you to cut up photos and fix common problems like red eye, also free from Google. There is a button called "I'm feeling lucky" that often dramatically improves photos, especially night shots, and you can also "sharpen" up photos, turn them into black and white, etc...

Finally, I am amazed at how fast Google works at getting new products out the door. That will be the subject for another post, especially when compared with another technology company (that featured dinosaurs in their advertisements recently)...

We Need More Power!

That is always what Kirk said to Scotty when whey were in their "jam du jour" on the show. But that is exactly what the US needs - now.

Carl knows much more about this subject than most having worked within that industry for a while and has written extensively here in this blog about our impending issues we will be facing.

Today, at Chicago Boyz there is an interesting essay about the proposal to construct a wind farm on Nantucket Sound and Cape Cod, home of the super rich and super liberal in Massachusetts. There is a large cast of interesting characters and it is getting very ugly.

The Not In My Back Yard or NIMBY crew is hosing everyone by not letting power companies build new plants to meet current and future demand. I find it deliciously ironic that greens and so called "liberals" won't step up to the plate and allow clean power in to solve their OWN energy issues. The best quote I have read in some time was in the post:

Wind power is fine in theory, I guess, as long as you don't actually build the windmills.

Flailing Scotty photo credit here.

The Astounding Lack of Productivity in Housing

The Wall Street Journal is a newspaper that I view so highly that I not only pay for a print subscription, I also pay for an online subscription so that I can keep up with changes during the day, and look up items that are interesting from the past several days. The Wall Street Journal is useful because they actually research their stories and have a point of view that is understandable, and have a reputation for taking businesses to task when necessary.

The Wall Street Journal just implemented a Saturday edition of the paper. It is pretty boring but a lot of the journalistic wonks were up in arms because basically their writers and editors had to work an extra day, but for me it makes a better Saturday of reading, when I also pick up Barron’s and the Chicago Tribune for the sports pages. I like the Saturday edition, there is usually something of interest in there.

In this Saturday’s edition on the third section there is a brief article called “Home Improvement Takes Off” by Gene Colter. In this article is a quote that caught my eye:

After talking about getting a contractor and which remodeling jobs return the best on your investment (kitchens and bathrooms), he said…

“If you live in an economically less buoyant part of the country, your renovation should cost less. Should you need professional help, your contractor likely will show up, which often doesn’t happen in towns where overextended “professionals” remodel homes whose values resemble the GDP’s of small nations.”

The key element of this quote is that your contractor might actually show up to do the work. I know many friends and family members that have done remodeling work or needed assistance with repairs and what a jungle it is out there.

Ideally, you should get 3 bids for every job. In order to do this, you would need to spend an incredible amount of time and be completely dogged and single-minded in the pursuit. First of all, the contractors don’t show up ½ the time, so you will need to be able to get away from work many times to set up three showings. After you get the showings, now you need a bid from them. This takes a lot longer than you think, and the bids will generally be nonsensical and cover different things, which means that they are difficult to compare. Ideally, you would go back to each contractor and get an “apples to apples” bid, and nudge your preferred contractor (who probably charges more) a bit down to match the more dicey contractor’s price.

Even after this happens, and you sign the bid (don’t even ask what happens when you are part of a condo and the bid has to be approved by the board… this adds an entirely new layer of nuttiness and difficult interpersonal issues prior to approval), then the work begins…. if you are lucky. The contractor is probably going to show up late and miss half the times he claims he is going to be there, and then lots of unplanned for expenses will start to crop up as he starts to dig around. A lot of times (maybe this is just my bad luck) even after the work is completed it doesn’t fix the problem completely, and then you need to hound the contractor for warranty work, which is always lowest in their priority list.

It is a completely hit or miss affair. My rule of thumb is that everything takes AT LEAST twice as long as you plan for, and is going to cost more money.

The odd part about this is that it turns out, in my opinion, that the quality and honesty of the contractor is the most important part of the equation. Everything you read about contractors says to get these bids and get it written down but what good is it to have an un-enforcable contract with a dicey contractor? Are you really going to sue him? It will take years to get through the courts, and if you win he probably has his assets shielded in some method, and you would be piling up legal fees every step of the way.

Thus in the end, after all of this technology and all of the rules and regulations and processes, that the best answer is to talk to your friends and family and co-workers for the name of a contractor that worked for them and that they trusted. In some cases you can talk to an inspector, they also can give you places to look. This is how I found some of my best contractors, and even if I ended up paying more, the end product is much better (although I probably ended up paying less… costs don’t seem to correlate very well with quality).

The part about this entire thread that drives me nuts is that home building and remodeling makes up a GIANT part of our economy and it is run in a completely stone-age fashion. If you look at computers, iPods, or even cars, generally the quality goes up over time and the price per function goes down (cars cost more, but they are packed with features that weren’t there 10 years ago like air bags, etc…). We don’t have any of these benefits in the construction sphere. They are completely archaic in their business processes, with each building being unique, training haphazard, supervision negligible, and outcomes not improving consistently over time. In fact, the quality is probably going down overall – there are many buildings built a hundred years ago that will far outlast lots of the newer buildings popping up in the exburbs.

Another trend in here is the toxic mix of unions and illegals. Go to a construction site downtown for a big building and it is all union. Go to anywhere in the neighborhoods where smaller contractors work and it seems to be all illegals, everyone either speaking Spanish or Polish (Chicago has the second most Polish people of any city in the world after Warsaw, I have been told). The unions are famously expensive and slow, while the illegals move fast but quality can be erratic, it depends on the contractor. Is this really how we make policy? If not for construction, with its extremely poor oversight by officials, immigration would probably be way down because it seems that construction is a magnet for them in the states. Of course, it would probably also take a lot longer to get anything built, as well.

Name That Toy

One of the fun parts about having kids is that you get to play with toys that you haven't seen in a while - like since you were a kid. Being the goofball I am, a few days ago I ordered a grabbag of toys from a company. Inside the box were weird things like tiny playing cards, rubber chicken, etc. But also inside the box was this:

Honest to god, I have no idea what this is. You can see my ring for scale. Inside this box are 40 small containers, each with a clear lid on top. There was no wrapper or directions. Also inside was that metal rail you see on the right. Does anyone have any idea what this is, besides a choking hazard? My thought is a dead bug collection container, but I dont know what the rail would be for.

UPDATE: In the comments a reader says it is this - I think they are right! Thanks to the commenter.

Pajamas Media - The Final Word (or not)

I didn't get invited to join PM or to the big alcohol party in New York City a month ago. And neither did 99.99% of the rest of the blogs on the internet. But maybe I don't want to be involved.

But there are the "chosen" 70 or so. These blogs combined to form Pajamas Media. I will lay out some facts as I know them and make a comment or two.

The business model, to me, is simple. Create a link farm, sell ads, make money. That is, of course, oversimplified, but in my eyes, the eyes of an outsider, that is what it looks like. PM has gotten some start up money - some folks put that number at $3.5m, some say $7m. It really doesn't matter.

Those that signed the documents to join PM are contractually obligated to run the PM ads and must drop Blogads. I have heard that some sites may be able to still run Blogads, but lower on the page. I don't have the contract in front of me and I can only assume that some blogs may have negotiated different deals. But again, it doesn't really matter. Some of the blogs that have signed on have complained openly already about how the show is being run. Some blogs probably have made more money with PM than they did before they had to drop or alter their Blogads. Some blogs are probably making less money now.

To all of them, I say either "congratulations" or "tough shit". They signed the documents, they are the ones that wanted to be associated with PM, and they are the ones solely responsible for what they have gotten themselves into, for better or worse. We all make decisions every day in our private lives and our jobs that are our choices and ours alone. These choices range from what type of bread to buy in the store to how to handle certain customers to what type of car we want to buy. Caveat emptor.

Will PM make it? I really don't think so, at least in it's present form. Their home site is boring. If I want to read one of their member blogs (and I read several every day) I will just go there, same as I always did. Today on Instapundit, one of the largest hit getters day in and day out in the blogosphere, the lead ad wasn't even for a product, just the silly quote from CBS that gave Pajamas it's name. It is an ad powered by Doubleclick that takes you to the home site of PM. So Doubleclick makes money and PM makes....hits? Not the start of a successful business model, if you know what I mean. And at the home site of PM is one lonely ad, for Circuit City - as if that will ever be an impulse buy for a guy like me. I am, I assume, the target audience for this outfit (mid 30's with education and some disposable income) and they present me with a Circuit City ad? What am I supposed to say - OOOHHH I forgot I need stuff at this electronics store - let me click on through. Memo to PM - if I need something at Circuit City, I will just go there or to their site directly.

But enough ankle biting for now. If PM succeeds, wonderful. If they fail, I can't wait to read all about it on the blogs I read now, because the dirty laundry will be very dirty "indeed". And to all the bloggers that signed the papers to join and may not be enjoying the experience - just STFU and deal with the choice YOU made.

UPDATE: In the comments to Carl's last post I referred to this essay by Dennis the Peasant. It echoes some of what Carl said and some of what I said above and it is one of the best essays I have ever read about blogging. Well worth your time if you have an extra five minutes or so today. Glad I am not in it for the money.

Forbes starts to get it Right

A while back Forbes ran a cover story on the “evils” of blogs. From their (shrill) perspective, blogs were a way to slander businesses and reputations and hide behind the anonymous machinations of the Internet.

Here is a summary of the article, which you can see in the November 14, 2005 issue or pay to see online (which I wouldn’t recommend):

Attack of the Blogs
By Daniel Lyons Nov 14 '05
Web logs are the prized platform of an online lynch mob spouting liberty but spewing lies, libel and invective. Their potent allies in this pursuit include Google and Yahoo.

This really pains me because I have seen a lot of ignorant articles about blogging but not usually from a magazine like Forbes, which I read every week and find to be interesting and generally a good, solid read.

They kind of washed that bad taste out of my mouth with a recent counter-point article titled “My life as a Blogger” by Rich Karlgaard on in the December 26, 2005 issue. In this article he talks about his positive experience as a blogger and hits home with a few key points, including 1) the best blog writers “write about what they know” 2) blogs “threaten the mainstream media”

Dan and I go back and forth via email about blogging from time to time and these 2 points are critical ones. Dan and I have similar backgrounds as far as history, geography and politics, and we try to write about something we know and we try to be unique in our commentary. If someone has said something better, we try to link to them and give them the credit, or bring our own unique perspective to the situation.

The other, ominous item for “traditional” media is that marginal revenues approach marginal costs over time. Let’s total up what it costs Dan and I to put up this blog…. Nothing. Google gave us Blogger, and even the pod cast posting is free. Sure you might spend some money on a microphone or a better Internet connection or some software but these are small costs, and also costs that provide a better Internet experience anyways, so they really can’t be attributed solely to blogging.

Thus we put up our blog, and we can gain some loyal readership (if that is what happens, it isn’t a goal, but it could be an outcome), and it costs us nothing, and we charge nothing for it (i.e. no advertising).

I see this happening in Chicago, where recently the Chicago Tribune gave up charging for their “Red Eye” paper and now it is given away in paper boxes throughout the city, with the cheeky tag line “You know you want it”. And yes, at a price of zero, I will take one, and keep up with concerts and clubs and upcoming celebrity sightings, and a bit of news, and some sports to boot.

Remember, in the end, marginal revenue equals marginal cost, and if the cost is zero, you can do the math at what the media is going to be able to sell their product for, unless the output is compelling, narrowly tailored, and of immediate value to the recipient. Bland, poorly written stories cribbed off the news wire won’t do it…

All Hail the Power of Outside the Beltway

Well, I have had my moment in the sun, it seems. Lots of great email, lots of lunatics. As I have mentioned before, when researching something for an essay or podcast I quite frequently happen upon something much more interesting that takes me in a different direction. It has happened again.

Yesterday I was linked by Dennis the Peasant, who has been writing extensively about the Pajamas Media trainwreck. I had emailed Michelle Malkin to see why she was not putting up the PM logo or ads.

Well, Outside the Beltway also wrote about this. In the comments of this post I had challenged the author of this piece, and you can see that in my post here. All I wanted to know was if he got the same email I did, word for word, or if he cribbed my post. But if you look now, you will not see my comment in that post over at Outside the Beltway because it is gone. Good thing I saw this coming. As a public service I saved a screen shot of the entire post with my comments in it last night before they were deleted. I will post this later today as it is on my laptop at my house and I am at work right now scribbling this off.

So this is how a big blog works? According to their Site Meter, that blog averages over 10,000 hits per day. Does that mean they cannot answer a challenge? Clear the air? My blog averages somewhere between 50 and 100 hits a day (before yesterday). The only comments I ever delete are spam and vile or totally off topic comments. I find this incredibly lame and think it is the worst of blogging. Being open with those who are on board, but the second someone calls you on your mistake, just deleting the comment. Truly sad.

As I said, I will publish the entire comment section later today with my comment as it existed last night. And I will post yet another comment today - lets see if this one gets deleted too.

UPDATE: Here is my comment from today I left over there:
Good Morning! – you deleted my comment from yesterday. All I asked was if you received the same exact email I did from Malkin or did you crib my post? Was that worth deleting? I saved the origninal last night with my comment in there and will be publishing that later today in this post. Best, Dan.Posted by: Dan from Madison at December 16, 2005 06:48 Permalink

Of course I have saved a screen shot of the comment in there - let's see what happens.

UPDATE 2: James from Outside the Beltway has responded in the previous post in the comments. So have I.

UPDATE 3: Outside the Beltway updates their post thusly:

Update: A commenter apparently received the same response from Malkin and wonders whether I stole the above from his blog or whether Malkin is answering the same question the same way to different people. Given that I had never visited, nor indeed heard of, his blog before getting his comment and that I link other blogs all the time, even for pointing me to articles in major papers, the latter seems more likely. And, frankly, I'm not sure why, having typed an answer to a question in an email, a person with a modicum of experience with computers wouldn't cut-and-paste it if called upon to answer it again.

This still doesn't address why my comment was deleted yesterday. By the way, I hadn't heard of Outside the Beltway until I was pointed there by one of my (relatively few) readers. So there. The excuse that he links other blogs all the time doesn't explain anything. And the last sentence simply doesn't make any sense to me at all. All I want to know is, if he didn't crib my post with the same exact WORD FOR WORD email received from Malkin, doesn't it look a little, well, goofy that a person of her standing would hire a drone to send a form email to folks? That's all I'm asking.

UPDATE 4: I promised earlier a screen shot of my comment at the Outside the Beltway post. I do have it, but I saved it in MS Word and don't have the time or energy to convert into a suitable format to post here. If you really want to see it, simply drop me an email and I will get it to you right away. Damn I feel bad about that, too, because Outside the Beltway still hasn't told me why they deleted my comment last night.

Now This Is Interesting

In my last post I put up an update from Michelle Malkin. Observe this post over at Outside the Beltway. The money:

It's a very simple technical issue. I've been waiting for Pajamas Media to send me the coding to put the ads up on my site. There are a lot of PM bloggers waiting. I'm in line like everyone else--but I think all the tinfoil-hat-rattling is going to get me bumped up.

Does this look at all familiar to the quote in my last post? Either duplicate emails or this guy copied and pasted my post. Either way, it is not good.

So Malkin is sending out blanket emails to all who are asking about the PJ non ads or Outside the Beltway, a blog averaging over 10,000 hits a day sees the need to copy and paste my post. I have a copy of my email if Mr. Joyner over at Outside the Beltway would like to share his copy with me.

Pajamas Media and Movable Type

Dennis the Peasant linked a couple of interesting posts today about Pajamas Media and the absence of their ads on one of their largest sites, Michelle Malkin's blog. There is a lot of conjecturing going on about how this could possibly have happened (or not). So I emailed Ms. Malkin myself. My original:

Hi Michelle, Just wondering why you don't display the Pajamas Media logo or their ads on your site. Thanks in advance for the reply and your time, Dan

The reply:

It's a technical issue. They haven't set up the coding for my blog yet.

Granted, some grunt may have answered the email and not Malkin herself, but Holy Crap! Charles Johnson (doesn't he write code for a living?) and the others that founded the thing didn't consider blogs that were powered by Movable Type (like Malkin's) when they came up with their ads? I find that doubtful since Instapundit has the ads up and running just fine and his blog is also powered by Movable Type. So this leaves me to wondering still:

Why are the ads and Pajama logo not on Malkin's site?

UPDATE: I have received another email from Michelle Malkin:

I repeat: It's a very simple technical issue. I've been waiting for Pajamas
Media to send me the coding to put the ads up on my site. There are a lot of PM
bloggers waiting. I'm in line like everyone else--but I think all this
tinfoil-hat-rattling is going to get me bumped up.

Well, thanks to Michelle for the update and I am glad to help, but again, I reiterate, why would Instapundit be able to use the ads but not Malkin, who both use Movable Type? And, most importantly, why in the name of God would the boys at PJM not have the system tried and true with at least the major platforms before launch?

The Perils of Becoming Popular

Last night there was a severe spam attack on the comments section of this blog. I have had to turn on comment verification. It is no big deal - you just have to enter a series of numbers or letters before your comment can be published. Ah the internet, what a wonderful place.

Photo credit here.

Recommended Christmas gifts (books)

It is the holiday season and I thought I’d post up some of my favorite books that you might be interested to put on your Christmas list.  There are a million lists out there so I am staying away from obvious titles towards ones that you might not have thought to ask for.

1. “Silent Victory – The US Submarine War against Japan” by Clay Blair, JR.  I first bought this book way back in the early 1980’s.  I read it and re-read it because it was a thick book, covering the US submarine offensive against Japan in WW2 from the very beginning in December 1941 up through the surrender of Japan in 1945.  The most interesting part of the book is the early war, in 1942 up until the battle of Midway, when a few brave submarines attacked the Japanese fleet with completely inadequate torpedoes, and paid for this poor technology with their lives.  The submariners had the highest casualty percentage of any US military arm, and those that were forced to surface and surrender faced horrors in Japanese prison camps, if they survived at all.  But in the end the submarine arm contributed mightily to the war effort, picking up new tactics, new weapons, and could have starved Japan into complete submission if they had been given enough time (my opinion, but a supported one)


2. “The Effective Executive” by Peter Drucker.  Mr. Drucker died this year, and he was one of the most important thinkers of the 20th century, not only about business, but about society, history and Technology.  In this slender volume he asks fundamental questions about what an executive should focus their time on, and after observing many good and bad executives comes to the conclusion that effectiveness can be learned.  This is a great book and also a rebuke to business books that seem to value themselves by weight of tome; you can go directly to the point and keep it brief and punchy at the same time


3. “The Attack on Taranto – Blueprint for Pearl Harbor” by Thomas Lowry and John Wellham.  It is little known but immediately prior to the Japanese attack on Pearl Harbor the British attacked the Italian battle fleet at Taranto in an eerily similar style.  This attack required extraordinary bravery since the swordfish biplanes that they piloted actually made little or no headway when the wind was blowing strongly, they were that slow!  While this attack was a triumph for the Allies the fact that these tactics were lost on our Pearl Harbor defenders makes it an even more bitter pill to swallow.  Another slender book that is highly readable


4. “The Logic of Failure – Recognizing and Avoiding Error in Complex Situations” by Dietrich Dorner – this book is hard to find but it has an instantly recognizable (and perfectly appropriate) cover of a locomotive train engine off the tracks and buried deep in the mud, with some academic types peering over the wreckage.  There are many interesting experiments and real-life situations and this is also a funny and slender book.  I am most interested in the common problem that when people change a process to improve outcomes, they usually focus on what they don’t like about the existing process, but fail to remember and plan for the items that they did like because the trade-offs are often inherent in the process itself (i.e. fix 2 things and 2 more things break, so you are back to where you started)


5. “The World’s Most Dangerous Places” by Robert Young Pelton.  This book is just crazy – the author goes to literally the most dangerous countries (Columbia, Afganistan under the Taliban, etc…) and interacts with the locals, government authorities, rebels, mercenaries, and people just caught in the crossfire.  The book can also be humorous, such as the “top ten” list of things not to do at a rebel checkpoint (i.e. don’t talk politics with soldiers).  It also makes me sad to remember that so many people, especially children, have to suffer in these ungoverned, bandit torn lands, where civilization as we know it has effectively broken down and the lives are as Hobbes describes it – nasty, brutish and short

Best of luck, and have a merry Christmas!