Not A Mystery

You’d think a barrel would just be a barrel.

But no, it turns out that a barrel of oil is 30% smaller than a barrel of wine. F2U Rio Linda a barrel of oil holds 42 gallons, while a barrel of wine holds 60 gallons.

I discovered this the other day while standing in front of a restaurant’s urinal in Healdsburg, California which is in the midst of Wine Country. If you are a guy you know that restaurants typically post ‘theme’ documents at strategic spots in their restrooms so that you can educate yourself while relieving yourself.

This was perhaps the very first form of multi-tasking.

Yes, I Stopped What I Was Doing To Snap This Pic With My iPhone

But I digress.

If you do the math, a ‘leak’ of 40,000 barrels of oil a day, is equivalent to a ‘leak’ of only 28,000 barrels of wine.

That sounds a lot better for several, mostly obvious, reasons.

Some might call this obfuscation, but I call it creative.

I’m surprised BP isn’t quoting the size of their spill using a wine barrel standard with a footnote to that effect on the second page of their press releases.

In preparation for our week in NYC I installed a number of travel apps on my iPhone.

Even though I grew up in the Bronx, I haven’t really spent much time in NYC since I moved to California after college. And I didn’t want to act like I was from Rio Linda when we hit the Big Apple. After all Leslie is from Rio Linda, and one in the family is enough.

F2U, Rio Linda the “Big Apple” is what non-natives call NYC.

But of all the apps I loaded, the best by far, was the one I didn’t load.

Google Maps.

If you have a smartphone with GPS and a broadband connection (like an ordinary iPhone), this will get you anywhere. No matter whether you are driving (insane in Manhattan); taking a cab (almost insane if it’s during the day and you want to go cross-town); taking a bus (sane but slow); taking the subway (sane and quick); or even walking (probably the best).

When you get a route from Google you can specify your mode of transportation.

Of course if you are taking a subway there’s no connectivity underground, so remember any directions before you submerge.

Here’s an example. Leslie took me to the Brooklyn Flea on Saturday. Great market by the way. When we were done we wanted to get over towards DUMBO which is a longer walk than we wanted, but how to get there on the bus? I had no clue.

Here’s how I figured it out in less than 30 seconds.

Google found my location from the GPS. Then it told me to walk a block to DeKalb Ave. and take the B38 bus towards downtown. Oh, and by the way, the next bus will come in 8 minutes.  Click to enlarge the image.

From Brooklyn Flea to DUMBO On The Bus

This Google service saved us hours of time and let us feel like native New Yorkers no matter where we were. If you travel, this is the only way to get around as long as you have a net connection.

I’ll discuss other apps over the next few days, that were equally useful for different tasks.

Traveling these days reminds me that I’m really not in Kansas anymore.

Or should I say, Rio Linda.

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.

Get a grip, because I’m about to tell you how to double your money with no risk.

While simultaneously bringing new meaning to the phrase, “go green”.

Let’s talk recycling.

Like me, I’m sure that many of your beer-drinking friends go on about the  hundreds of dollars they ‘make’ by taking their crushed aluminum cans to be recycled.

In these days of miserable interest rates on my savings account I figured it was time for me to see if this new income stream could improve my standard of living.

Unfortunately I don’t drink beer in cans, since I’m mostly a wine and craft-brew guy. But we do consume some Seltzer and Gatorade, both of which come in recyclable containers. Bravo.

Wait Until Goldman Sachs Finds Out

After investing in, and religiously employing, a can-crusher for several weeks, I accumulated what seemed to be a ton of aluminum. Well, not a ton, but at least a few pounds.

But when I delivered my load to be bought by the recycle guy I was crushed, crushed I say, by the meager payback. We are talking a couple of bucks for all that work and time. It seemed like I was paying a lot more for the aluminum when I purchased the cans in the grocery store than I was getting back in all my newly found green-ness.

Convinced I was getting shafted by the authorities I almost called my local Tea Party, but instead of going for comic relief, decided to do some calculations. Keep in mind that in the grocery store we pay the CRV (California Refund Value) deposit per container, but get paid back by the pound of material we present for re-cycling.

Here are our input figures after I did some careful weigh-ins:

• The CRV for all three containers is the same: 5 cents per container.
• The weight of 1 aluminum can is 1/2 ounce.
• The weight of 1 Gatorade 12 Fluid Ounce bottle is 1 ounce.
• The weight of 1 Gatorade 20 Fluid Ounce bottle is 1 1/4 ounces.
• The weight of 1 Gatorade 32 Fluid Ounce bottle is 1 3/4 ounces.

Our Menu, So To Speak

• The recycle value of 1 pound of aluminum is $1.57 per pound.
• The recycle value of 1 pound of plastic is 93 cents per pound.

Now we can calculate that it takes:

• 32 aluminum cans to make a pound.
• 16 small Gatorade bottles to make a pound.
• 12.8 large Gatorade bottles to make a pound.
• 9.14 extra large Gatorade bottles to make a pound.

So where do we find our best Return On Investment?

The envelopes please…drum-roll…for a 5 cent investment in each container our payback is:

• For each aluminum can, 4.9 cents returned, for a loss of 2%.
• For each small Gatorade bottle with cap, 5.8 cents returned, a gain of 16%.
• For each large Gatorade bottle with cap, 7.3 cents returned, a gain of 46%.
• For each extra large Gatorade bottle with cap, 10.2 cents returned, a gain of 104%.

Hmm pretty interesting.

Our beer-drinking friends are actually losing money even after collecting their re-cycle fees. They are generously donating 2% of their CRV to the State of California, and not even breaking even. Thanks guys.

On the other hand, those of us who work out every day, and drink Gatorade to replenish our electrolytes are not only happy and healthy, but if we supersize our investment to the Big Gatorade bottles, we will be making 104% on our money.

F2U Rio Linda, that’s otherwise known as doubling your money.

Oh, I discovered one more interesting fact. The State of California levies Sales Tax on the CRV, so when they increase the CRV evey so often it serves to increase their tax revenues.

Maybe it really is time to call in the Tea Party-errs.

Last week we noted ATT’s whining about a $1 billion [non-cash] charge they were being forced to take because of Obamacare. In fact the new law just eliminated a 7-year old scam allowing them to ‘double-dip’ by taking a tax deduction on healthcare premiums that were actually being paid (for them) by the government.

A simple back-of-the-envelope calculation showed us ATT had saved so much money over the past 7 years, that the new $1 billion charge still left them with a $1.6 billion profit. Not a bad return on a smallish lobbying investment.

But now we learn that by their own standards of what is material information ATT shouldn’t even have brought the matter to anyone’s attention in the first place.

So, This Is The New AT&T

Turns out that ATT has been mum (F2U Rio Linda, that means ‘silent’) about another significant liability making that $1 billion write-off look like chump change.

AT&T Inc. is seeking to dismiss a long-running pension case alleging age discrimination that seeks $2.3 billion in damages, according to documents filed this week in a federal court. The suit alleges a 1998 pension change effectively froze the pensions of 40,000 older management employees at AT&T, in some cases for years, but not those of younger employees …  Legal papers filed Monday… include the first publicly disclosed estimate for potential damages. The $2.3 billion potential claim dwarfs the well-publicized $1 billion noncash charge the company will take to reflect the recent loss of its deductions for health-care subsidies it receives from the government.

But because this case includes an age-discrimination claim, under federal law the judge could send it to a jury trial. If a jury found that the company willfully discriminated against older workers, it could award punitive damages that would double the size of the claim to $4.6 billion.

Source

So how is it, you might ask, that ATT neglected to tell their shareholders about this potential damage to their share price?

Last May, the Securities and Exchange Commission asked AT&T why it hadn’t disclosed its potential exposure in the pension case. AT&T responded that it didn’t think the case met the reporting threshold for disclosure, SEC filings show.

I guess the SEC will need to re-write their regulations so that we take into account politics when deciding what is and is not material.

But wait, it gets even better.

To butress their case ATT revealed that even if they lost a $2.3 billion cash judgement it would have no real impact because the retirement account is so well-funded it could simply absorb that hit. At the same time we are being told that the Obamacare $1 billion non-cash write-off could trigger a loss of such magnitude that ATT might have to cancel or cut back retiree health benefits.

This simply boggles the mind. Or maybe not.

Republicans might want to start thinking about who leads their parade.

Our enemy is now clearly defined. We know who they are: Anybody with a D beside their name. There’s no moderate Democrat or pro-life Democrat. There’s no Blue Dog, lap dog, hot dog, back dog Democrat. If it’s a D, they are the enemy, and they need to be reacted to as such.” -Rush Lambaugh

Turns Out That Politics And Entertainment Don't Always Mix

F2U Rio Linda, the good news is that Act II promises even more entertainment.

I wasn’t always a fan of Paul Krugman, but that was when I still thought El Rushbo spoke only the truth. F2U Rio Linda: he doesn’t.

In any event, the New Yorker magazine just published a great profile of Krugman the person, which also sheds light on Krugman the (Nobel Prize winning) economist.

And buried in that article is quote from one of Krugman’s teachers, Evsey Domar, that really got my attention.

Why did some societies have serfs or slaves and others not? …  Evsey Domar [argued] that if peasants are barely surviving there’s no point in enslaving them, because they have nothing to give you, but if good new land becomes available it makes sense to enslave them, because you can skim off the difference between their output and what it takes to keep them alive. Suddenly, a simple story made sense of a huge and baffling swath of reality …

Too Bad About Those Pre-Existing Conditions

This says to me that he who can accurately calculate the economic value of people’s activities can make lots of money, if you are in the right place at the right time.

One of the first great financial applications of these insights was insurance, which began as a way of reducing the risk of traders, as early as 5000 BC in China and 4500 BC in Babylon.

Right place, right time.

Let’s cut away to the present and look at Health Insurance.

Without arguing how we got here; we have an opaque, monopolistic market. Consumers have virtually no quality information, and in practice no choice of insurance providers.

The insurance companies have all the data, information and tools to calculate and guarantee their profitability.

Right place, right time.

Oh, and one other small plus … no accountability.

Time flies.

It’s the Economist Big Mac Index for 2010.

That’s pronounced “Twenty-Ten” F2u Rio Linda.

Just to review, The Economist has been publishing their (not so tongue-in-cheek) Big Mac Index since 1986. It’s a reality check on world-wide currency exchange rates, based on the concept of Purchasing-Power Parity.

Purchasing-Power Parity (PPP) says that exchange rates are correct when the price of similar goods are the same in each country. The Big Mac survey compares the price of a Big Mac all over the world. The Big Mac is, after all, a basket of standard ingredients put together in a consistent process.

Ronald The Economist

Anyway, this week’s 2010 survey says that should the Big Mac price in a country translated into dollars be above $3.58, its cost in America, the currency is overvalued; if it is below that benchmark, it is undervalued.

But our Burger-In-Chief seems to be causing a few upsets.

Last year the best deal in town was Hong Kong. This year they don’t even make the chart; wassup? Did the mainland hackers get into the Economist gMail account?

And perhaps more disturbing, Wikipedia has compiled a comparison chart of Big Mac stats worldwide, which seems to indicate it’s not quite the Gold Standard of Standard.

Are Not All Big Macs Equal? We're Shocked ... Shocked!

And I’d say that Wikipedia has certainly Earned Their Chops on this one.

So we’ve reached a milestone of sorts. America’s Pinata and Yours Truly are splitting the sheets. It’s sad but appropriate that I post this on Open Line Friday.

After many years of a warm and cozy relationship, we’ve come to the point of irreconcilable differences. This may change down the road, but my long-standing subscription to Rush 24/7 is now over and not renewed.

I will miss our time together via his Podcasts, where I have spent literally thousands of hours listening to Rush while I’ve worked out at the gym. And I’d like to also send a final shout-out to Bo Snerdly for his work over the years, particularly during the 2008 Presidential Campaign.

So now I’ve got to find a new work-out buddy. At the moment I’m thinking I will replace Rush with Adam Carolla, who does have a killer podcast.

(F2U Rio Linda, a Podcast is something you listen to on an iPod or other digital player, so you can listen when you want, where you want. By the way, a 1 hr. Rush segment is only 35-40 minutes when you strip out the adverts and hourly news.)

I’ve copied my logged-in web page at rushlimbaugh.com below, so you can see for yourself my certified ditto-headness. Look for yourself right in the middle of that image and you will see that El Rushbo is proclaiming:

Dittos Robert Gelber!

Showing Off My Credentials

Because we’ve declared this blog a Politics-Free Zone, I won’t go into the details. But I hope with this gesture I now have established the chops to speak for both the Left and the Right, even as I refrain.

I have to admit to being a little misty eyed right now, so I will go back to one of the most popular posts on our blog, the infamous Rio Linda Collection to calm my nerves.

And now for me, every day is Open Line Friday.

Note: Matthew had been trying to get me to listen to Adam Carolla for several years when I discovered his podcasts for myself, and then called Matt to suggest he listen. At which point he almost lost his cookies in frustration. So to make him feel a little better you should go to his website, TreasuredFinds.com, your home for Sterling Jewelry and Gifts.

We are predicting that The Big Mac will soon be taking on a expanded role in Global Finance as an alternative candidate to the US Dollar as the world’s reserve currency.

Not a week goes by now without another Global financial indicator being tied to the Big Mac.

You will recall that this all began with the Economist’s Big Mac Index, which is a proxy for PPP (F2U Rio Linda, PPP is the acronym for Purchasing Power Parity).

The lastest tabulation is now is from UBS which converts the number of hours worked around the world into Big Mac Units, as reported by The Economist.

That a major global financial institution like UBS would spend their time and resources collecting this kind of data confirms they are either completely out of touch, or know something we mere mortals are missing.

Who In Their Right Mind Collects This Data?

On the other hand, I’m happy to verify that USB maintains their integrity these days thru their recent settlement with the IRS regarding hidden Swiss bank accounts.

UBS AG and the Swiss and U.S. governments have finalized a settlement in a tax-evasion investigation that will allow UBS clients to appeal to a Swiss tribunal before their account information is handed to U.S. tax collectors, according to a person familiar with the situation.

In any case the Chinese are on the case, witness their recent call for an alternative to the US Dollar in Central Bank currency reserves.

BEIJING — China’s central bank reiterated its call for the creation of a new international currency that could replace currencies such as the dollar in countries’ official reserves.

In its annual report on financial stability … the People’s Bank of China said the country will push reform of the international currency system to make it more diversified and reasonable. While it didn’t specifically target the U.S. currency, it said it aims to reduce over-reliance on the current reserve currencies, of which the dollar is the biggest.

Although Beijing didn’t spell out what candidates they would support as an alternative reserve currenty, our guess is that the UK staple of Fish and Chips will not suffice given Sterling’s recent (greasy) slide against the Dollar and Euro.

Should we proceed down the Big Mac road there is food for thought:

• Go Long McDonald’s Stock – MCD
• Like gold there are a finite amount of Big Macs.
• Unlike “Blood Diamonds”, there is  no such thing as “Blood Big Macs”.
• They can be ‘mined’ in underdeveloped countries, like ‘micro-loans’.
• And while you can’t take your money with you when you die, you can eat any surplus.

Flash to all you day traders: instead of betting on hedges in Commodities, the world is changing, it’s time to consider Condiment futures.

Just One Word

I have just one word: Ketchup.