Not A Mystery

Airlines and Cable Networks, two of our most popular industries today.

If you ignore the Banks.

Sign up for Cable and you get more channels than you need or want. You’ve been bundled.

Get on an Airline and nothing is included in the price of your ticket. You’ve been unbundled.

And yet, as a consumer, it all feels the same.

What's Not To Like?

I’m not saying we should regulate them.

That would be too good.

Shakespeare had it right, even in 1600 he could see these guys coming.

To be or not to be– that is the question:

Whether ’tis nobler in the mind to suffer

The slings and arrows of outrageous fortune,

Or to take arms against a sea of troubles

And, by opposing, end them.

- Hamlet

It is entirely possible that Airlines will soon revoke the law of diminishing returns.

And I’m not talking about their profits, but instead their ability to come up with new ways to tack on charges.

United Airlines has just begun to offer a new ‘service’, which they’ve dubbed Premier Line.

Board the airplane sooner and get earlier access to overhead bin space with Premier Line. You’ll also enjoy the benefits of priority check-in and priority security, where available. Premier Line is now offered in all United® and United Express® airports in the U.S.

So United will now charge you to board the aircraft earlier than your seat-mates. They should more honestly call it ‘Front Of The Line’, but that would invoke images of class warfare.

There Is Really No End In Sight

They’ve figured out that as more people bring along carry-on baggage, overhead bin space is becoming a scarce resource, and passengers  will pay for a leg-up so to speak.

And how much will they pay? The ad says it is ‘starting’ at $9, but we know that’s a teaser.

So I checked it out on my favorite San Francisco to London flight. In that real world case the actual charge $39 per passenger, one-way.

That doesn’t really guarantee you anything except the opportunity to stand closer to the door.

I’m not sure how many passengers will jump at this option, but I think there would be a larger market for the opportunity to get off the plane earlier.

Talk about being “in the zone”.

The final episode of Mad Men (Season 1) shows Don Draper coining the word Carousel for the gizmo that holds the slides on Kodak’s slide projector. And creating the Kodak Moment campaign to sell memories instead of hardware.

Which got me thinking about what could top this bit of genius marketing.

It would have to be getting people to pay for something they don’t use.

Two examples come to mind: Propane and Cellphone Plans.

I was at a friends home the other night and he was using his BBQ. I noticed that he had one of those recycleable propane tanks that you return when it gets low and exchange it for a new, filled up, tank. I hadn’t thought about that product before because I take my propane tank to a local station where they just top up my own tank when it gets low.

A little thought will reveal the brillance of the recycleable tank, which is that you are always paying for propane you don’t use. Since nobody can take the chance that they will run out of propane in the middle of their BBQ, that tank gets returned long before it’s empty. In my own case I only pay for the propane that actually ‘tops up’ my tank.

OK, that’s a bit of a rip-off, but we’re not talking big bucks and it’s hard to get mad at the guys who sell propane.

Cellphone Carriers are another story altogether. We hate these guys before the opening credits even come up.

They do the same thing as the propane guys, but it happens with bigger bucks and it’s every month. Plus, did I mention their service sucks.

When you sign up for a cellphone ‘plan’ you have to pick your ‘number of minutes’. Same idea, pay for something you don’t use. Because they charge confiscatory prices if you go over your limit, you are forced to buy more minutes than you think you might ever use.

And in the immortal words of Adam Carolla, ‘They don’t even give you a reach-around’.

Turns out a Verizon Moment is one of those minutes you pay for, but don’t use.

Don Draper would be in awe.

The careful observer will have noted that the Bentley we saw in Santa Barbara last week was not sporting a front license plate. Wassup with that?

Spotted In Front of US Bankruptcy Court

My (protected) sources tell me that this is a (well known) trick used to disguise cars in case they are photographed by a traffic camera. The risk of spending $25 on a ‘fix-it’ ticket for the missing plate is insurance against a $300 fine should you get caught running a red light.

Foolishly doubting my (protected) source I Googled ‘fix-it ticket’ and confirmed that the Bentley was not a one-off. Here’s a typical result … from my collection of pics you’d think we don’t require front license plates in California.

Lots Of Examples With Missing License Plates

Further research reveals that a normal fix-it ticket requires payment of $25 admin fee.

However, the officer can mark [the violation] as non-correctable under specific conditions pursuant to CVC 40610.

In which case the fine jumps to $175. More interesting are the numerous posts in forums and blogs about the actual chances of being cited. Here’s just one example:

As a note, some jurisdictions cite for those with some frequency. If you live in a place where they heavily utilize red light cameras, expect some increased enforcement. If you live in a quiet, small community where the officers have some discretionary time on their hands (like mine), you might expect to get stopped for it. It really depends on where you live and how much time and effort the local cops are going to put into it.

So I have to admit this whole thing irritates me. While not an issue on the scale of testicular cancer or blood doping, it still irks me as a patriotic tax-payer that creeps are taking advantage of the system. While I am not.

But as Jack Nicholson said in Something’s Gotta Give:

We’ve got nothing but good news here.

The good news? No official corruption.

In not a single (anonymous) post could I find mention of bribes being used to avoid a ticket.

Compared to countries where every traffic violation has a standard fee paid immediately to the attending police officer, we are a nation of law-abiding scofflaws.

That’s gotta be something, anyway.

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Note: Actually my favorite line(s) from Something’s Gotta Give are:

Harry: I have never lied to you. I have always told you some version of the truth.
Erica: The truth doesn’t have versions, okay?

What do theatre owners and airline executives have in common?

Nothing.

Well, actually they do both provide their services to seated customers, which should imply some sort of similarity. But in practice nothing of the sort.

While the airlines constantly shrink their seats and services, theatre owners at least have a different take on customer satisfaction.

… theaters across the country [are] expanding the width of … seats and increasing … leg room, or row spacing …

“We want to err a little bit on the roomier side, because over the last 50 years Americans have gotten a little plumper,” [New York] City Center’s senior vice-president and managing director, Mark Litvin, said, “and we find these larger seats are much more comfortable for people.”

… Theatre Projects Consultants, a theater-development firm, found that the average standard width of seats in performing-arts theaters has expanded from 21 to 22 inches over the last two decades, “primarily due” to the concurrent rise in obesity. Over the course of the entire last century, the average width increased from 19 to 21 inches.

Source

If, like me, you spend your airtime crammed in coach you will be impressed with the ‘pitch’ on these seats.

The airlines might try to claim that frequent flyers are not succumbing to obesity like their theatre-going cousins.

But given that they now force some customers to purchase two tickets if they require a seatbelt ‘extender’, that excuse just won’t fly.

We all know that Big Government, Big Oil, Big Tobacco and Big Bank cannot be trusted.

But I’ve always thought I could trust Big Box.

Not any more.

Up until now I had written off ever-shrinking product packaging evilness to manufacturer’s greed. You know, charge the same price but put less ‘stuff’ in the box. It’s a price hike without a change in price.

Just like a tax increase that’s created by allowing a tax cut to expire. But I digress.

In our household we have many divisions of labor. One division is in the area of shopping. When it comes to shopping Leslie is in charge of food and shoes. I do most of the rest.

Most of the rest happens in COSTCO and SAM’s, where I resign myself to buying hideously large (for 2 people) packages of stuff in return for great prices. But it’s these great prices that have lead me down the road of complacency. I’ve let my guard down.

I have assumed, wrongly it turns out, that one huge package of stuff bought in any Big Box is equivalent in value to any other. I haven’t been comparison shopping. My bad.

But two things have changed for me lately,

1. A nagging suspicion that I’m being taken advantage of, and
2. I am packing an iPhone, with its built-in camera.

Today when I went to use my COSTCO coupon, I was shocked, shocked I say, to be let down by Big Box. The coupon made it look like I could purchase my normal huge f*cking container of Tide He detergent and save $2.50.

Fewer Loads by 26% In COSTCO On The Left, vs. SAM's On The Right

But when I compared that offering to SAM’s regular priced alternative it turns out that in this case because of the package size COSTCO was 20% more expensive, and not $2.50 cheaper.

Of course the smart shopper will notice that COSTCO is selling “Advanced Power” as compared to the “Original Scent” at SAM’s. This is because of the clever arrangement between Big Box and Big Detergent to confuse the shopper with (supposedly) non-equivalent product.

If you ask me, nothing about this obfuscation smells good.

Being an expert must be harder these days.

Nobody seems to have any good answers to tough questions about the economy.

Morningstar pundits are usually pretty good when it comes to personal financial advice. But in is a recent answer on how to maintain yourself in retirement, they managed to coin the phrase ‘pre-tire’ when recommending that you just keep working.

… most retirees are going to have to make some hard choices … [it's] hard to generate a livable income unless you have a lot of money, [so] working longer is going to be part of the solution for a lot of pre-retirees.

Source

Which is probably not the solution most people are looking for.

But whether you like that or not, at least they were working in the present, or near future.

On the other hand we have Mohamed A. El-Erian, CEO and co-CIO of PIMCO, who at the end of a good piece on The Real Tragedy of Persistent Unemployment suggests that,

… policy makers should also come up with a comprehensive strategy that focuses on improving human capital, particularly through a greater emphasis on education and training; expanding infrastructure and technology investments, in part by creating a more friendly tax system; encouraging a bigger translation of scientific advances into economy-wide productivity gains; and better protecting the most vulnerable segments of society …

Source

And while I can’t disagree with Mr. El-Erian, the time-frame for his solutions are measured in generations.

It’s a good time to remind ourselves that the fun is in the journey and not the destination.

And Somebody Already Mortgaged The Parachutes

J. Wellington Wimpy was many years ahead of his time, and at least honest, when he offered that, “I will gladly pay you Tuesday for a hamburger today.”

No trip to NYC would be complete without a Bagel Schmear.

When I was a kid growing up in the Bronx, my Dad would take me to what he called “The Bagel Factory” early on Saturday mornings. I was too young to remember where exactly it was, but I do recall the noise of the ‘elevated’ train up above. And yeah, the taste of those bagels. Killer. Fresh, soft and hot. Mmmm.

So of course we had to find a bagel shop for Leslie.

Here is Murray’s on Sixth Avenue.

And it’s nice to report that there was one guy on Wall Street with some soul.

More than ten years ago, when he was putting in long hours as a Vice President at Merrill Lynch, Adam Pomerantz had a dream.  A dream of someday running his own business – not a business on Wall Street, but something much closer to his heart, and his stomach.

He followed his heart and his stomach, and when it was right he just knew it.  He found a small storefront in Greenwich Village, which he renovated on a shoestring budget, opening Murray’s Bagels in November 1996.  Adam named Murray’s Bagels for his father, from whom he learned his love of bagels and appetizing.

Murray's On Sixth

And here’s a Schmear you can believe in.

Screaming For Lipitor, Before It's Too Late

Just to prove that Murray’s retains some of it’s Wall Street Heritage, here’s the tab. Two bagels, with Lox, and Schmear. Total price, just shy of $20.00.

If The Cream Cheese Didn't Get You, This Will

It’s a good thing my Dad isn’t still alive, because this bill would put him in his grave.

“It’s good though.”  – Utah Philips

The US Congress is getting close to passing new financial regulation, attempting to rein in our friends on Wall Street. Pending legislation would limit Investment Banks’ ability to trade for their own accounts, and effectively bar them from trading derivatives.

The bankers are pushing back.

Surprised?

The big banks argue that the Volcker proposal is misguided, for several reasons … the banks assert that the financial crisis of 2008 was a lending-based crisis caused by reckless loans made to unqualified home buyers. It was not, they say, a trading crisis.

Source

Wall Street Bankers "Getting Wood" Over The Volcker Rule

This is not quite the truth, or even a close approximation to the truth. It’s an outright lie.

• Investment banks packaged, securitized and re-sold the fraudulent loans made by originators, ‘enabling’ them to keep the hustle going.
• Investment banks deliberately ‘gamed’ the rating agencies so that sub-prime loans were magically converted to investment grade bonds.
• Investment banks invented new vehicles to peddle (trade) their products called Special Purpose Vehicles.
• Investment banks obfuscated what they were doing by re-branding (renaming) the slime that was inside these investments; for example No-Doc (Liar) loans became known as Alt-A loans.

And to say that the crisis was lending based? Get this. When Investment banks ran out of loans to repackage and sell, because their suppliers couldn’t make them fast enough, they invented a totally new class bonds called Synthetic CDOs that didn’t even require real mortgages at all!

It was truly breathtaking.

If you read only one book exposing the underbelly of Wall Street, get a copy of The Big Short by Michael Lewis. If you have an audible.com account, I can highly recommend the audio version read by Jesse Boggs. Listen while you are in the gym, and the adrenalin rush when you hear about these Wall Street thieves will definitely improve your workout.

If you are not familiar with the term “wood”, then here is your link to the Urban Dictionary. Caution, this link is not rated GP.

Hard as it is (for me) to believe, we began our blog one year ago today.

And this is our 178th. post. But who’s counting.

In honor of that Anniversary, I’d like to suggest that you check out some of our FAV posts.

F2U Rio Linda, FAVS are items that I had the most fun composing, or that I thought actually had some redeeming social value.

You can either click the FAV link in the right-hand column, or just click here.

In the meantime, what with the oil spill, let’s all think Big Green this week.

This Is As Green As It Gets

The good news is that if a catastrophic event destroys mankind our investments will be extremely well managed after we are gone. The bad news is that the computers doing it may be trading for their own accounts instead of ours.

This theater of the absurd scenario might be more plausible than you think, and occurred to me last week when our stock exchanges mysteriously melted down in the space of a few minutes.

I’m currently reading David Hoffman’s Pulitzer prize-winning book “The Dead Hand: The Untold Story of the Cold War Arms Race“. Its cheerful title is taken from a Soviet weapon system designed to have computers automatically fire a massive retaliatory nuclear strike at the US if Soviet leaders were ‘decapitated’ by an assumed US first strike.

The Soviets referred to a semi-automatic defense plan as the “Dead Hand.” The Dead Hand was a system that would fire a portfolio of SS-18′s on to the United States and Western Europe if its sensors made the conclusion that the Kremlin had been destroyed by a nuclear blast. The system was in place as early as the mid-80s. It is a bit of a miracle, given the demonstrated shortcomings of Soviet engineering, that it never made a mistake.

The Soviets claimed that they never actually set up a completely automated system, but instead would have had (surviving) lower level officials make the final decision on whether a strike was to be launched.

In any case I was struck by a parallel in last week’s breakdown of the US stock market. As I write this the SEC has still not tracked  down the specific cause of a 1000 point drop in the Dow that reduced a number of Dow Component stocks to pennies a share in the space of a few minutes. Everyone breathed a sigh of relief when, a few moments later, the market recovered as mysteriously as it had plummeted.

F2U Rio Linda, normally a quick recovery after a market drop is called Dead Cat Bounce by investors. So let’s refer to this event as a Dead Hand Bounce in homage to the anonymous computers that caused, and then corrected, the disruption.

Last One Out, Shut Off The Lights

Although the real cause of the market dislocation is still unknown, what is clear is that a number of computers were at the scene of the crime. And those computers place their trades so fast there is no way humans can be involved in real time to supervise.

By late Sunday, a cause of the slide hadn’t been determined … Still, some new details about what happened during the brief span Thursday afternoon that sent the Dow Jones Industrial Average into a nearly 1,000-point tailspin continued to emerge over the weekend …

But it is becoming clear that much of the decline was because of glitches in how the market functions. High-speed electronic trading, long held as a boon that has made the market more efficient, can also trigger sharp selloffs that overwhelm the market.

Source

Although everyone is relieved that this storm has passed, it reminds me of a that old saying, “Problems that go away on their own, come back on their own.“

And now that hackers know what’s possible, they will have begun working on their own version of the Dead Hand.

I wonder what they’ll call it.