Author Archives: the editor

What is Georgia thinking?

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As most people know, Russia and Georgia are fighting. This from the New York Times…

Russia acknowledged that Georgian forces had shot down two Russian warplanes, while a senior Georgian official said the Georgians had destroyed 10 Russian jets. Russian armored vehicles continued to stream into South Ossetia, the pro-Russian region that won de facto autonomy from Georgia in the early 1990s.

The fighting that began when Georgian forces tried to retake the capital of the South Ossetia, Tskinvali, appeared to be developing into the worst clashes between Russia and a foreign military since the 1980s war with Afghanistan.

What I do not understand is why Georgian military forces decided to try to retake South Ossetia. Granted, Russia has been trying to provoke Georgia for a long time. But how have the Georgian’s made their position better either military or politically by trying to retake South Ossetia? You can argue that they had every right in the world to do so if you want to, but it still does not change the fact that they started the fight. When you start a fight, you had better be prepared to win or take the consequences.

It is hard to imagine Georgia winning against Russia at the present time. If they had waited 10 years maybe they could have pulled it off. But right now Russia has plenty of money to pay for weapons. And who is going to dare sell anything to the Georgians even if they have money?

This is English language news from Russian (read Russian Propaganda)….

This is from AlJazeera…..

Things that make you tear you hair out

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From Bloomberg…..

Fannie Mae’s initial attempts to restore delinquent homeowners to on-time payments with unsecured second loans failed 41 percent of the time.

The program to loan more money to bankrupt people has only been running for 5 months and it already has a 41% failure rate. Who could have guessed?

Einstein once said that the stupidity of humans was one of the only things that he was sure was infinite. I am not generally willing to ascribe the infinite to mortals, but sometimes I am tempted to agree with him. (h/t CR)

It is becoming profitable to grow potatoes in a home garden

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From Jackie Clay…..

Today I saw $7.99 eight-pound bags of potatoes at the store!

Holy mackerel, $1.00 a pound for plain old potatoes that weren’t that nice, to begin with. My heart just about stopped. My potatoes are doing wonderful, the plants being nearly up to my waist, but I thought I’d pick up a 10 pound bag so I could let mine get bigger. I’ve been digging around the plants a bit and am finding lots of fist sized ‘taters. I really wanted to let them get bigger, but NO WAY will I spend that much for potatoes!

I about cringe every time I go to the store, as the prices just keep going up and up and up. Cheese that used to be $3 a pound is now $4.99, flour that used to be .99 a 5 pound bag is now $2.99. Meat? Oh yeah, some was in the $10.99 range a POUND. Now where’s that deer?

It always use to be that boring and sensible people would tell you not to bother growing potatoes in a home garden because they did not give a good enough return. The advice was always to concentrate on greens and other leafy vegetables because they cost more at the store. But if potatoes start averaging a dollar a pound it would not be that hard to make a home potato plot pay for itself. The problem is coming up with a place to store the potatoes.

Sometimes it is hard to defend the free market

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From the Wall Street Journal…..

In recent years, companies from Intel Corp. to CenturyTel Inc. collectively have moved hundreds of millions of dollars of obligations for executive benefits into rank-and-file pension plans. This lets companies capture tax breaks intended for pensions of regular workers and use them to pay for executives’ supplemental benefits and compensation.

The practice has drawn scant notice. A close examination by The Wall Street Journal shows how it works and reveals that the maneuver, besides being a dubious use of tax law, risks harming regular workers. It can drain assets from pension plans and make them more likely to fail. Now, with the current bear market in stocks weakening many pension plans, this practice could put more in jeopardy.

Essay of the Week: 8/3/08-8/9/08

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You will find links to these videos all over the internet. Even people who are fairly knowledgeable will find things in here that they did not know. How many people know that what you say to police officer can be used against you but not for you?

But little details aside, the central message of the videos is simple; when faced with an interrogation, keep you mouth shut.

Don't read the fine print

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Did you here about the great quarter we just had? GDP grew by 1.9%. Not to bad considering banks are failing and everyone is running around like the wold is ending.

There is only one problem. The number is only believable if you think that inflation was less then the headline consumer price index.From Credit Writedowns…..

What you see above is the GDP deflator series. This is how the US government gets from nominal GDP to the GDP number we all hear on TV. What’s interesting about these numbers is the GDP deflator uses its own inflation gauge , which is entirely different than the CPI.

Look at the highlighted numbers for Q3 2007 and the last quarter. How is it that inflation was 1.5% in Q3 2007 and 1.1% in Q2 2008? Are they smoking something? Uh, fellas, inflation has been rising, not falling to 1.1%. Hmmm.

Nominal GDP only grew 3.0% in Q2, so Q2’s real GDP number of 1.9% is so obviously false that I expect it to be revised down significantly next year.

If you go to his site, you can see the numbers for yourself. (h/t Market Movers)