Tuesday, September 30, 2008

Information Is King 

There is a sacred realm of privacy for every man and woman where he makes his choices and decisions-a realm of his own essential rights and liberties into which the law, generally speaking, must not intrude.
--Geoffrey Fisher

Here's the long and the short of the bailout crap: A bill will pass. We will be saddled with the $700 Billion cost. It sounds like the only reason it didn't pass yesterday is because the Republicans felt 'dissed' by the Dems. Political hand-jobs will take place over the next few days, and this will be shoved up our ass.

Time to move on.

One of the things that used to be great about our country was our belief in the privacy protections afforded by the Fourth amendment.
The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.
The government actually had to get a warrant before it was able to pry into your affairs. I think I've shared with folks how I've seen the Bank Secrecy Act (BSA) evolve over the past 30 years from a law that would not allow banks to provide personal banking information to the government unless Nanny jumped through some major-league hoops, to an act which essentially turns banks into agents of the state.

If a bank does not produce enough Suspicious Activity Reports (SARs), it receives increased scrutiny from regulators during their BSA exams. If you do virtually anything that has the outside chance of being suspicious, I guarantee you a SAR has been sent to Nanny.

Ever wire money out of the country? Ever take a large cash withdrawal ($3,000+)? Ever make a large cash deposit? Unless you are a business that regularly deals in these things, you have had SARs filed on you. If a cash transaction was in excess of $10,000 you got a Currency Transaction Report (CTR) filed on you as well.

Guilty Until Proven Innocent.

A few years ago, the FBI or NSA or some lettered-agency got smacked around because they were building a database of information on all Americans. The database was a aggregation of (usually) public information. This information was in a number of different databases, and they were simply bringing it all together in one place.

There was public outrage that Nanny was doing this, so the program was dismantled. In it's place, Nanny simply started buying the information they needed. For a small fee, any government agency (or business) can simply purchase your information. No need to store the information - just set up an account and download what you need.

Instead of needing a warrant to get your information, Nanny now simply needs a Logon Name.

Most people have never heard of ChoicePoint. They are one of the largest (if not the largest) information brokers in the country. It is astounding - and frightening - the amount and type of information they have on virtually every person in America.

Because of recent full-disclosure laws, you can see what information they have on you. For free.

Here is what is available in their Full File package:
(1) Two C.L.U.E.® (Comprehensive Loss Underwriting Exchange) reports (one for personal auto insurance and one for personal property/homeowner’s insurance), each of which summarizes insurance loss history information about you provided to ChoicePoint by participating insurance companies. This information is used when you apply for auto or homeowners insurance coverage. Also included will be a “How To Read” guide, which explains the information in the report.

(2) Two Current Carrier® reports (one for personal auto insurance and one for personal property/homeowners insurance), each of which provides summaries of your historical personal automobile or homeowner coverage that has been reported to us by contributing insurance companies. This information is used to confirm that you currently have personal auto and/or homeowner’s insurance coverage as well as indicate any gaps in insurance coverage. Also included will be a “How To Read” guide, which explains the information in the report.

(3) A pre-employment background check. You will receive this report only if you have applied for a position with a company that used ChoicePoint to create a background report as part of the hiring process. This report may also include your personal credit information and/or your state driving record if the employer requested this information as part of the background check. This information is used in the hiring process.

(4) A copy of an Esteem® report, which lists circumstances in which you have admitted to, or have been convicted of, theft while visiting or working at a retail company. This information is used by certain retail companies in their hiring process.

(5) A copy of a ScreenNow® report, which displays the results of a national criminal records search of your name and personal information. This information is used in the hiring and volunteer application process.

(6) A copy of a Resident Data® resident history report, which includes your personal credit information as well as a search of criminal records. As part of the report, your name is also checked against a national eviction file. This information is used by many apartment communities in resident screening. You will only receive a Resident Data report if you have applied for residence with a company that used ChoicePoint to create a background report about you as part of the resident screening process.

(7) A Public Records Search that shows government records and public information about you such as real estate ownership records, bankruptcies, professional licenses and historical addresses that ChoicePoint maintains or has access to. This information is used by companies as part of an effort to verify the assets, addresses, identity and credentials of a person as part of an account set-up process or anti-fraud tool. Government agencies also use this information as part of an investigation of a known or suspected crime.
To get this information (on you or your minor child), you simply fill out a form, provide some authentication information, and they send you your report in a couple of weeks.

YOU NEED TO DO THIS. Simply because of the sheer volume of data these guys store, problems can arise. While it might not be a problem if they had an incorrect prior address in your record, consider the impact on your life if it showed an arrest or conviction that was not valid. You can fix the error before it becomes a problem.

If you have had, uhm, a checkered past, at least you will be aware of what a potential employer will know, and can have a response ready to explain the circumstances. You'll also be less likely to fudge an employment application, which could then result in your termination after you've already given up your current job.

Information is King.

Nanny understands this. Business understands this. YOU need to understand this.

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Monday, September 29, 2008

Number Fourteen 

It is said that power corrupts, but actually it's more true that power attracts the corruptible. The sane are usually attracted by other things than power.
--David Brin

Another big-boy bank has bit the dust. The $780 billion in asset bank is being taken over by CitiGroup.
Citigroup Inc. agreed to acquire Wachovia Corp.'s banking operations on Monday for $2.1 billion in stock and will assume another $53 billion in Wachovia debt. Federal banking regulators pushed the deal by agreeing to share a portion of future losses that Wachovia's failing mortgage portfolio could generate.
When I initially read that Nanny would be on the hook for a part of the transaction, I was pissed off. But in this case, Nanny has at least received some security against loss.
The FDIC also has entered into a loss-sharing arrangement on a pre-identified pool of loans under which Citigroup will absorb up to $42 billion of losses on a $312 billion pool of loans, with the FDIC covering anything beyond that. Citigroup has granted the FDIC $12 billion in preferred stock and warrants to compensate the FDIC for bearing the risk.
So, if the typical loss scenario had been followed with an FDIC conservatorship, the deposit guarantee fund would be expected to take a hit of 25% of the asset size of the bank, or about $195 billion.

The FDIC fund has around $50 billion. Doh!

So, Nanny is taking a bit of a risk, but I like this better than the alternative. In this scenario, you take the $312 billion, less the $42 that Citi takes, leaving $270 billion. That risk is further reduced by the $12 billion in warrants and stock making the outside risk at $258 billion. To take a hit of that size, it would mean that the value of the real estate securing those loans was worth zero dollars. Obviously THAT will never happen.

What has really got my boxers in a bunch is that this was announced on the same day as the supposed bailout/rescue. Why the hell doesn't Nanny simply continue to follow this model? Get involved in brokering these kinds of deal. Work to reduce our exposure to loss. It seems to have worked with WAMU, and now with Wachovia.


But, we all know the reason they are doing this is because they've been corrupted. They've been bought and paid for, and this is just a dividend payment on the lobbyist's earlier "investments" to their re-election campaigns.

Write your Congress-critters and voice your disapproval. It probably won't do much, but at least it will make the bastards sweat. Maybe.

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Saturday, September 27, 2008

How Bad Will The Screwing Be? 

The welfare state is not really about the welfare of the masses. It is about the egos of the elites.
--Thomas Sowell

Some stuff I'm thinkin' about....

It looks like the bailout will happen this weekend, or early next week. Both sides are saying this while they negotiate various aspects of the deal.

The more I read and hear, the more I'm sure this is a bad idea.

Where did they come up with this number? How do they know it is the right number? Show me the math.

I have not heard how all of this bailout money will be spent. I'm guessing that in the short-run, I'd personally get a benefit out of this. It might temporarily stem the drop in home values, and it might stabilize some banks and investors. Supposedly, this would trickle down to "the little people". But the long-term impact would be very harmful to our economy.

And I mean that in more than a direct financial-benefit sense. I also am talking about the risk/reward calculation businesses and individuals are supposed to work through when making financial decisions. If Nanny takes away the downside of a risky investment, people and companies will always go balls-to-the-wall. They'd be stupid NOT to do this, because they'd know Nanny would be there to pick up the pieces if things went bad.

Where would it stop? Now it's home mortgages. What's next? Credit card debt? Car loans? Don't forget unsecured personal loans. If anyone is left out, that wouldn't be fair, right?

Our government officials need to demonstrate through their actions that there is no public safety net for private decisions. If you fuck up, you're going to fall hard and fast.

Still, they'll pass something. I hope our representatives will at least add significant restrictions about what kind of assets can be purchased, and that the purchases must be pre-approved.

No, not on an individual loan basis, but in loan types. Some RTC-like oversight committee can give the thumbs-up, for instance, to buy $50 billion of first mortgages on single family residences from commercial banks. The next week, you can make it the same kind of loans from insurance companies.

An NO foreign bank bailouts. Good Lord, the thought of American tax dollars bailing out a private foreign bank turns my stomach.

We need to know where this money is going. This blank check, unilateral decision-making, my-way-or-the-highway crap just doesn't cut it. Yet it will probably come to pass.

CEO compensation. The Dems in particular, seem to be requiring that this be a part of the package. When you have CEO's making a BILLION dollars a year (holy shit!), the socialist Dems get their panties in a wad.

Compensation is between the shareholders and the CEO. If they want to pay some schmuck to run the company into the ground, it's THEIR money to piss away. If you as a shareholder don't like it, either vote in new directors or sell your shares. It is NOT the place of Congress to say what salaries should be. THAT'S communism.

Personally, I believe CEO compensation should be based upon performance tied to share price and have sales limits. Pay them a decent enough salary, but the bulk of their compensation should be in shares. Once the CEO leaves, he cannot sell the shares for 5 years or so. Maybe let him/her sell 20% a year for 5 years if they so desire.

In this way, you have enough time to truly judge the work the person did. You know it wasn't this churn-and-burn mentality of getting short-term gains at the expense of long-term stability. They also have an incentive to ensure there is a succession plan in place that will protect shareholder value. THAT is the primary job of a CEO.

The failure of WAMU is exactly how these things should be settled. The shareholders are wiped out, and the well run companies swoop in, pick over the pieces and buy them at bargain prices.

This will teach shareholders that they are business owners. They have a responsibility to participate in their own success. Failure to do so may be hazardous to their financial future.

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Friday, September 26, 2008

A Quandry 

I just spend a good deal of time writing a post about why I agree with the upcoming bailout. I just can't bring myself to post it. Everything in my head is screaming, "DON'T DO IT!"

Logic tells me the bailout is the least objectionable alternative, but my gut says it is wrong. And I trust my gut.

I need to chew on this for a while. I've been fasting since last night because I have to have some routine blood work done today. Maybe I'm loopy from the lack of food, or maybe it's given me some clarity. I don't know.

Confusing times...



Thursday, September 25, 2008

WAMU: Buh Bye Lucky Number 13 

Washington Mutual, the giant lender that came to symbolize the excesses of the mortgage boom, was seized by federal regulators on Thursday night, in what is by far the largest bank failure in American history.
They were purchased by JP Morgan Chase. What is nice is that Uncle Sugar won't be on the hook for anything.

Get this: They were a $300 billion in asset bank, and were sold for $1.9 billion. Talk about Fire Sale. JP Morgan will eat around $31 billion in WAMU loan losses.

This is sweet revenge for America. WAMU was at the heart of the over-heated real estate market. They were the biggest player that was pressuring appraisers to fudge their valuation. I hope some of those bastards end up in prison over this. A shareholder lawsuit is not out of the question.

I wonder when my new checks will arrive...



Weighty Preps 

Now there are five matters to which a general must pay strict heed. The first of these is administration; the second, preparedness; the third, determination; the fourth, prudence; and the fifth, economy.

Note: The table of information I mention in the post is WAY at the bottom. For some reason, Blogger doesn't like it when you embed tables in their program, and they punish you by fucking up your post.

I had fallen a bit behind in tracking my emergency supplies, so Wednesday was the day to get caught up. I noticed from my spreadsheet that I have over 500 lbs of emergency food in storage. That is starting to become an issue should we need to GOOD. I was curious as to which foods packed more punch per pound so those foods could be included in the boxes designated as "first to pack" should we need to leave, and are unable to take everything with us.

I decided to focus on protein content. When the chips are down, or you are constantly on the move, protein is what will keep you going. You need all of the other stuff - carbs, fats, sugars, etc. - for a well-rounded diet, but we're talking about an emergency situation, and for that, protein is king.

I decided to take my top-20 emergency foods and determine how much protein per pound of food was provided. The table below lists the items I reviewed. My spreadsheet already contained the net weight of the food in its container (represented in decimal format - 0.50 for half a pound, for instance), the number of servings per container, and the amount of protein per serving. To calculate the protein per pound, I did the following calculation:

(Protein/serving x Servings/container) / Container weight

For instance, my canned tuna comes in 6 ounce net weight (only the contents, not the can itself) cans. That represents 0.375 pounds (6/16).

It has 3 servings per can, and 13 grams of protein per serving.

(13 x 3) / 0.375 equals 87 grams of protein per pound.

I was shocked, to say the least. Powdered eggs, by a nearly 50% margin, are the Kings of Protein. They out-did the next closest competitors, canned bacon and powdered milk by 67 grams of protein per pound.

The nice thing is, they are so easy to prepare. Two parts water, one part powder, and you cook them up. In a pinch, you could pull a "Rocky" and just chug them. Maybe not too appealing, but it would get the job done (plus you'd get the hydration if water were scarce).

I also found it interesting when comparing the dried beans. Lentils rule the roost, having as much protein as canned beef. Another thing to consider with lentils is the ease with which they can be prepared. Because of their size and shape, they don't need to be pre-soaked like pinto or other types of beans. Also, they cook much more quickly, conserving precious fuel. A pot of lentils can go from bag to soup bowl in a half hour. Beans take hours to soak, then hours to cook.

I was a little surprised by the whole wheat being so low. Still, whole wheat is so versatile - from breads to sprouts to porridge - it is still a huge part of our stores.

I also included some ready-made foods: Survival "bricks" and snack packs. The Mayday Emergency bars came in at 37 grams of protein. The nice thing about them is that they give you a "well-rounded meal" and are very resistant to heat fluctuations. They also have a 5-year shelf life and require no preparation.

The snack packs are small packages with chicken salad and crackers. While actually higher in protein than the Mayday bars, they'll probably be moved out of the early boxes, as they take up quite a bit of space for their size (lots of packaging).

Here are the results:

Eggs, Powdered Whole
Bacon, Canned
Milk, Dry, non-fat
Beef, Canned
Peas, Split
Beans, Lima
Beans, Pinto
Tuna in Water
Sardines, Mustard sauce
Chicken, breast
Cheese, Canned, Processed
Wheat - Hard Red
Flour, All Purpose
Corn Meal
Chicken salad with crackers
Mayday Rations
Clams, chopped

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Tuesday, September 23, 2008

Other Rants 

I'm not upset that you lied to me, I'm upset that from now on I can't believe you.
--Friedrich Nietzsche

I'm burned out over all of this financial system crap. Here's some other stuff I'm angry about:

Where is the front page coverage, and lead-story TV coverage for this?
In the biggest event of the 2008 campaign in Florida so far, Sarah Palin drew tens of thousands of people Sunday to a Central Florida town square decked out like the Fourth of July for a speech aimed at pumping up the state's Republican heartland.
She had 60,000 people at this little gathering. How come when Obama does this, it gets coverage like it's a Beatles reunion?

Well, we all know the answer, but I still wanted to throw that out there.

A silver lining from the sub-prime bailout?
Democrat Barack Obama said today that the massive bailout package being negotiated to rescue Wall Street will likely force him, if elected, to delay some of the spending programs he has advocated on the campaign trail.
At least with the bailout, if we spend the money, we might get some of it back when the assets taken are later sold. If Barry gets Universal Health Care or any of his other programs, that money is just gone.

OK, one thing on the bailout: Don't believe the bastards. I just heard Paulson testify on TV that he wants a big-assed oversight committee watching his every move. THEN WHY THE HELL DIDN'T YOU PUT THAT IN THE BILL? This is a typical Bush Administration tactic: Say one thing publicly, then do something very different in practice.

The Congress needs to hold these bastards feet to the fire. We need to have the kind of oversight we had with the 1980's Savings & Loan debacle and the RTC that was established to sell the bank assets.


I'm pressure canning up 20 pints of chili today, building some storage shelves out in the garage, and kegging another 10 gallons of beer. Our Oktoberfest party is less than 2 weeks away, and I have so much crap to still get ready.

I'm going to be making my World Famous BBQ Brisket. It takes around 10 hours to slow cook this bad boy, but it is worth every second. I put my secret rub on the slab, and smoke it with a combination of mesquite and oak wood chips for 4 hours, then wrap it up tightly in foil, and finish it in the oven at 200F for another 6 hours.

The party is on a Saturday, so I'll do the smoking on Friday, and finish it up in the oven the morning of the party.



Sunday, September 21, 2008

Bailout Details Emerge 

I think we need to do this. It is truly the lesser of two evils. Without it, trillions and trillions of dollars in personal wealth will get wiped out. This DOES affect you if you have any money in real estate, a retirement plan or in the stock market.

But we're about to spend a trillion dollars. This new bailout will cost us $700 billion. Add to that another $300 billion that was authorized in July and is available starting October 1 (you forgot about this, didn't you?).

Congress, let's think about this. Don't rush into this like you did when Bush presented you with the Joint resolution to invade Iraq. Saying you didn't read the fine print won't cut it this time around. You better understand whatever the hell you're getting us into.

There are a number of items in the proposed legislation that are very disturbing. For instance, all of that money would effectively be under the control of two people - the Treasury Secretary and the Federal Reserve Chairman. According to a 'fact sheet' that was released on Saturday:
Treasury will have authority to issue up to $700 billion of Treasury securities to finance the purchase of troubled assets. The purchases are intended to be residential and commercial mortgage-related assets, which may include mortgage-backed securities and whole loans. The Secretary will have the discretion, in consultation with the Chairman of the Federal Reserve, to purchase other assets, as deemed necessary to effectively stabilize financial markets.
Wording like this makes me very nervous. It's "intended" to buy mortgage-related assets, but the Treasury Secretary and Fed Chairman - at their discretion - can buy other assets.

Like what? Car loans? Credit cards? Unsecured lines of credit? This newest $700 billion is equivalent to around one-quarter of our national budget. That's too much unrestricted power to be put into the hands of two men.

And what's this crap about using US tax dollars to bail out foreign banks or governments?
Participating financial institutions must have significant operations in the U.S., unless the Secretary makes a determination, in consultation with the Chairman of the Federal Reserve, that broader eligibility is necessary to effectively stabilize financial markets.
So Saudi sheiks and Chinese Sovereign Funds will be getting buy-outs. That makes me want to vomit.

I have not been able to yet find a copy of the proposed legislation, but an AP article notes that:

The proposal is a mere three pages long, but it gives sweeping powers to the government to dispense gigantic sums of taxpayer dollars in a program that would be sheltered from court review.

Sheltered from court review? NO FUCKING WAY! This absolutely reeks of the way Bush does business. He twists and turns the situation so that it is never subjected to public scrutiny. If we're going to be asked to pony up this much money, we need to be able to see and question every comma in every paragraph of the legislation.

No one will fight this, though. No one wants to look like they're impeding progress. They will all roll over like the good little puppies they are. Go get the check book.

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Friday, September 19, 2008

Number Twelve 

Number 14 if you include Freddie and Fannie...

From the FDIC:

Ameribank, Inc., was closed today by the Office of the Thrift Supervision and the Federal Deposit Insurance Corporation (FDIC) was named receiver. The FDIC entered into purchase and assumption agreements with Pioneer Community Bank, Inc., Iaeger, West Virginia, and The Citizens Savings Bank, Martins Ferry, Ohio to take over all of the deposits and certain assets of Ameribank, Inc., Northfork, West Virginia.

Ameribank has five branches located in West Virginia and three branches located in Ohio. Pioneer Community Bank, Inc., Iaeger, West Virginia will assume all deposits for the five branches located in West Virginia. The Citizens Savings Bank, Martins Ferry, Ohio will assume all deposits for the three branches located in Ohio.

Ameribank sounds like a small, community bank. It is only $115 million in asset size. The expected hit to the FDIC fund is $42 million, or nearly 37% of asset size. That far exceeds the average with the prior 11 banks, that ran around 25%.

Chump change when compared with the size of the other bailouts of the week.....



Chance At Financial Revival 

What seems to us as bitter trials are often blessings in disguise.
--Oscar Wilde

As I noted yesterday in, The Mother of All Bail-Outs, Nanny is coming to the rescue with a big wad of cash. Our cash.

I am generally a free-market guy. Government should generally stay out of the way of commerce. But when Nanny is in the business of guaranteeing the return of deposits (via the FDIC), she needs to flex her regulatory muscle to reduce the likelihood she will have to make good on those guarantees. With our money.

With this bail-out comes the opportunity to fix the financial systems of our country to make us less likely to have to endure this kind of pain again in the future. These four items would go a long way towards meeting that goal.

They are not in any order of particular importance, as they have all contributed to our current situation.

Repeal the Community Reinvestment Act (CRA). The stated goal of the CRA is:
...intended to encourage depository institutions to help meet the credit needs of the communities in which they operate.
Encourage. What a nice, calm, sensible word. Extort is a more appropriate word, as banks have no choice in the matter.

The CRA is nothing more than using private companies to promote social change. It mandates that banks make loans within the geographic area of their branch locations. If you don't make enough loans to poor areas, you are at risk of being fined, having branch expansion plans rejected and being publicly humiliated1 simply because you have lending standards that differ from those of Nanny.

Sound loans are made based upon creditworthiness alone. Ethnicity should have no bearing on whether or not you get a home loan. There is no Constitutional or God-given right to home ownership. You should have to earn the ability to own a home.

But that's not how things work. If a bank chooses to NOT make loans to people that would not otherwise qualify for them, it can pay hush money - sorry, Community Development Grants/Investments. You are forced to give away money to local agencies so THEY can make loans to people who would otherwise not qualify.

If I want to run my bank and only lend to white, left-handed males with one testicle, that should be my right. Meeting the credit needs of my local community is irrelevant. It is smart business, but it is irrelevant. If my shareholders are willing to pony up the money to go after this one, slim market segment, the government should not be allowed to force us to do otherwise.

Any market segments left un-served will encourage other banks to enter that market. Banks are truly color blind. Well, they have been for the 31 years I've been in banking. As long as your creditworthiness is demonstrated, you'll get the money.

"But the [insert the economic or racial minority of your choice here] won't be able to get loans, and will be kept in perpetual servitude to 'The Man'."

Perhaps, but very unlikely. Loans may be declined in very isolated instances based upon race. I can say I have never heard of that happening. Every bank I've ever worked for is happy to take your monthly payment. Green is the color we care about.

But promoting social change is not the concern of a private business. It should not be the concern of the government as well. Government is supposed to be there to 'level the playing field' - giving all citizens the equal opportunity to succeed, NOT using the power of government to subsidize the desires of some citizens.

If you want to get out of your economic straits, great. Bust your ass, save your money, live within your means and you'll have a great shot at success. But it's incumbent upon YOU to make the effort, NOT private businesses or any arm of government.

1 The CRA exams, by law, must be published, and made publicly available in every branch of every bank. Also by law, banks are prohibited from disclosing the results of their Safety and Soundness exams - the exams that evaluate the overall stability of a bank. These two laws seem to be upside-down to me. The financial and management soundness of a bank is of paramount importance and should be made available to shareholders, potential investors and the public in general.

Disband the Federal Housing Authority (FHA). The .GOV should not be in the business of guaranteeing or subsidizing home loans. Encouraging home ownership by those not normally able to afford a home does nothing more than artificially inflate home values by increasing the pool of potential buyers.

Tweaking the natural economics of home ownership with government 'encouragement' is what got us in this problem.

That being said, I think VA loans should stay. To me, that is a fringe benefit for serving our country. They've earned that benefit.

Regulate bank size. We can never be put in the position of having to bail out a bank because it's 'too big to fail'. If the bank wants FDIC insurance, it can only be X billion dollars in asset size (I don't know what this number should be). This will probably require an AT&T-like divestiture/break up of large banks, spread out over a number of years.

Those of you with a couple of gray whiskers will remember that banks used to be confined to the borders of their state. First Interstate Bank (FIB) was one of the first to break down the barriers by forming a sort of confederation of banks. There was FIB California. FIB Arizona, etc. They were all stand-alone banks, that all fell under a single ownership umbrella. The other big boy banks liked the idea, and their lobbyists were able to get the interstate banking restrictions removed sometime in the 1980's.

Now we've got these behemoth banks. Too big to fail. Too influential in Washington DC. Too costly to American taxpayers.

Reinstate the Glass-Steagall Act. Shit-canned in 1999 with the Financial Services Modernization Act (aka Gramm-Leach-Bliley Act), it used to prohibit banks from owning brokerage houses, and vice versa.

Banks, by their very nature are supposed to be conservative. You make deposits, they lend them out. Brokerage houses are in the speculation business. Mergers, IPO's, high-risk investments. The very antithesis of traditional banking. The two should not be joined at the hip.

As an aside, banks obviously wanted this to become law. They saw it as a way to increase their size and profitability. Nanny saw this as an opportunity to further promote her vision of social change.
Crucial to the passing of this Act was an amendment made to the GLBA, stating that no merger may go ahead if any of the financial holding institutions, or affiliates thereof, received a "less than satisfactory [sic] rating at its most recent CRA exam", essentially meaning that any merger may only go ahead with the strict approval of the regulatory bodies responsible for the CRA. This was an issue of hot contention, and the Clinton Administration stressed that it "would veto any legislation that would scale back minority-lending requirements."
Share this little fact about Billy Jeff Clinton the next time one of his fans bitches about the sub prime mess.

We all know that none of this will happen. It will be Business As Usual.

Nanny, with even more clout in the financial markets due to the recent purchases of key market components, will continue subsidizing bad decisions. Whether these decisions are by homeowners that got into homes they could not afford or mega-banks that lent them the money, Nanny will continue with her policies to mandate her version of equality.

Personal effort and prudent financial decisions will continue to be ignored. Race and economic strata will be the important factors in determining who is worthy.

The lesson from all of this is this: Spend it while you've got it. If you ain't got it - or you lose it - we'll give it back to you.

Nice. Time to change my retirement strategy.

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Thursday, September 18, 2008

The Mother of All Bail-Outs 

I don't care what consequence it brings, I have been a fool for lesser things.
--Billy Joel

I'm at a loss for words.
The federal government is considering creating a mechanism to take bad assets off the balance sheets of financial companies, according to a person familiar with the matter.

The briefing is expected to discuss "potential solutions" to the financial crisis, including creating a mechanism that could buy up distressed assets from troubled financial institutions, according to people familiar with the matter.
Transfer private loss to the federal government. Well, isn't that generous of Nanny?
Any eventual plan isn't expected to mirror the Resolution Trust Corp., which was created during the savings and loan crisis to hold and sell off the assets of failed banks. Rather, a new entity might purchase assets at a steep discount from solvent financial institutions and then eventually sell them back into the market.
So bank management, shareholders and other investors will be let off the hook. A bank that makes a crappy decision will have no down-side for its actions. The big banks that were at least somewhat prudent during this crisis - Wells Fargo, Bank of America, CitiCorp - will, in essence, be penalized for not having gone balls-to-the-wall during the real estate bubble.

Great lesson to be learned there, Nanny.

The result will be either a massive taxpayer-financed bail-out, or Nanny will become one huge mortgage holder. Of supposedly private property.

That doesn't give me the 'warm and fuzzies'.

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Constitution Day 

This country, with its institutions, belongs to the people who inhabit it. Whenever they shall grow weary of the existing government, they can exercise their constitutional right of amending it, or exercise their revolutionary right to overthrow it.
--Abraham Lincoln

I'm sure all of you are waking up, all groggy from the hangover you got as a result of the Constitution Day party you attended. That's what you thought they meant when they said, "Celebrate the birth of our government", right? Wild times, wild times...

I am one of those twisted folks that actually reads the Constitution quite a bit. I pride myself on my knowledge of our great document. I took this little quiz, and got my ass handed to me. I only got 4 right (although one of the questions I missed, about gay marriage, is still up in the air).

I should know this stuff. Every American should know this stuff.

This surprised me:
The law establishing the holiday was created in 2004 with the passage of an amendment by Senator Robert Byrd to the Omnibus spending bill of 2004. Before this law was enacted, the holiday was known as "Citizenship Day". In addition to renaming the holiday "Constitution Day and Citizenship Day," the act mandates that all publicly funded educational institutions provide educational programming on the history of the American Constitution on that day. In May 2005, the United States Department of Education announced the enactment of this law and that it would apply to any school receiving federal funds of any kind.
I absolutely, positively guarantee you that the requirement to, "provide educational programming on the history of the American Constitution", did NOT happen at all schools as required by law.

Both of my boys attend community college - a publicly funded educational institution - and their school had nothing.

I saw no little kids walking out of their elementary school classrooms looking like Thomas Jefferson, James Madison or even Uncle Sam.

The local high schools didn't hold mock debates, re-enacting the discussions that ensued for nearly 3 years before the Constitution was ratified by the original 13 states.

You know where I'm going with this. The Constitution is the very antithesis of the core beliefs of most teachers. It doesn't jive with the socialist views they hold. It encourages self-reliance and discourages the hive mentality.

So it doesn't get taught.

Constitutional history should be a core requirement of our educational system. Just like reading, writing and arithmetic. It is most likely not taught because students might start asking questions about the power of the federal government. Questions like, "Which article or amendment authorizes the feds to require public education? In fact, is that not more akin to the Communist Manifesto, item number 10, which states, 'Free education for all children in public schools'?"

That question might spark interest in other students to compare our great document with the Communist Manifesto as well. They might see the Manifesto's requirements for Progressive Taxation, Abolish Individual Property Rights, Centralization/Nationalization of banking, Controlling the national communications and transportation infrastructure, and how we've now got all of those things.

They might begin wondering aloud how it is possible for our country to have largely abandoned its founding documents. How our first 10 Amendments - our Bill of Rights - are structured to limit the powers of the government and strengthen those of the individual, and how the 10 Planks of the Manifesto are designed to do just the opposite - strengthen the government and weaken the individual.

If they were taught this, they could create informed opinions. They could make their own decision as to which form of government they preferred and live their lives as they choose.

But this doesn't happen. Socialism is Queen. The motherly Government Assistance is portrayed as noble for both the giver and recipient. It's the right thing to do. The ugly side of income redistribution is never spoken of. The fact that you are forced at gun point to give a share of your earned income to provide housing, food and clothing for a stranger is not discussed.

Some Bright Bulb in the class might then start questioning the unachievable economics of socialism, and the class would degrade into pandemonium. We can't have that, now can we?


"So, Billy, what did you learn at school today about Constitution Day?"

"I learned that we're fucked, mom. Absolutely fucked."

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Wednesday, September 17, 2008

Post-Shooting Preps 

Arms in the hands of citizens may be used at individual discretion... in private self-defense.
--John Adams

I've been trying to do this post since this weekend, but I got side-tracked with all of the financial news that's been hitting the fan.

There is a ton of information on how to prepare yourself for self-defense using a gun. Tactics, weapons, training. But there is very little information on what you should do after you've been placed in the situation of having to shoot someone in defense of your life, or the life of someone else.

In many states, although the law says you have the right to use a gun to defend yourself, it seems as though the presumption is made that YOU are the criminal. My state of California is a prime example. It seems as though unless a TV crew was taping as an assailant bursts into your home with a sawed-off shotgun in one hand and a 30-round, full-auto AK-47 in the other, you are at risk of being prosecuted.

Clearly, unless you politely asked the misunderstood youth to exit your home through the newly broken window, return the TV set, and to get his paws off of your wife and teen-aged daughter, you're nothing more than a blood-lusting, right-wing gun nut that needs to be locked away for the safety of society.

Thinking through what you will do after a shooting may keep you from being arrested or help your cause in the event you ARE prosecuted.

The US Concealed Carry Association has a free newsletter, of which I strongly recommend anyone with a handgun or CCW permit subscribe. Their latest newsletter has an article on what to do and NOT to do after a shooting.

Call 911. Two reasons for this. You DON'T want the bad-guy to die. It just complicates things. Plus, if he does croak, you've shown you're not some blood-lust nut. You tried to help.

Secure your weapon. After the bad guy is incapacitated, holster or otherwise secure your weapon. You don't want the cops to roll up and think you're the bad guy. I'd add that you might also be at risk from a neighbor who heard the shooting, sees you with gun in your hand standing over a body, and comes out and shoots your ass.

DON'T render aid to assailant. This one is a great point. Remember, this guy was just trying to harm you. You have no idea if he's 'playing possum', has a knife, etc. Don't give up the advantage you gained by getting within striking range.

DON'T mess with the evidence. Don't rearrange or touch anything if possible. Other than placing any weapons out of the reach of the bad guy, don't change anything.

Shut your pie-hole. When the police arrive, give them your name, tell them you were in fear for your life, and stick to the basic facts. Then tell the cops you want an attorney before you say anything else. This makes me sick - that you have to worry about going to prison for defending yourself - but it's how it is.
When you shoot somebody, unless you have ice water in your veins, you will be going through various stress reactions. Some of you may be in shock, others will be distraught that they just took a life, others may be enraged that some bad guy just threatened their children, but whatever your reaction, you will not be in a calm state of mind. It is a medical fact that adrenalin affects our higher brain functions. You will tend to forget details, some of which may be very important, or even worse, your brain will fill in the forgotten blanks with facts that will later be shown to be incorrect.

Wait until you have an attorney present before you make your complete statement. This gives you the time to compose yourself and calm down. Also, the Bill of Rights gives us the right to legal counsel. Take advantage of it. A good attorney will keep you from saying anything stupid that will be used against you in court later.
If you have any doubts about this, look at these two videos (here and here) by a lawyer and cop discussing why you need to shut the hell up.

I must say, I think that this last piece of advice will most likely increase your chances of being arrested. The police seem to have the attitude of, "If he's lawyering-up, he must be guilty". If I were in their shoes, I'd probably think the same.

Still, I'd rather be arrested and win in court, than to step on my dick during an interview and end up as San Quentin bunk-mates with Bubba.

When I took the class for my Utah non-resident CCW permit (should be here in two weeks - woo hoo!), they talked about this quite a bit. Some states, like TX and GA might give you the benefit of the doubt in a shooting, but most states tend to look down on citizens exercising their right to self-defense.

Very sad.

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Tuesday, September 16, 2008

Why AIG Should Worry You 

I know at last what distinguishes man from animals; financial worries.
--Romain Rolland

American International Group, or AIG is a huge insurance company. It is the largest in the world, and is in the top-10 of all businesses world-wide.

There was wide-spread reporting that they were looking for a $75 billion cash infusion. Most people probably figured that it had to do with the sub prime melt down, and they'd be right. How they're involved with sub prime might not be so clear.

They have a sizable portfolio of sub prime securities on their books. That's bad enough. What is worse, is they are the insurer for many banks. What did they insure? They wrote policies that are intended to protect banks and investors against losses on securities they hold. In sub prime loans.

That's a problem. Since they are out of cash, they have lost their ability to pay claims in the event these securities decline in value. That means if the securities lose value, the holders will have to absorb the losses themselves.

Let's say you bought $1 billion in sub prime securities. You go out and get insurance - technically called a Credit Default Swap - to protect you against a portion of that amount going bad, say 25% or so. Now that the market has gone bad, you do a 'mark-to-market' calculation to reflect the actual value of the securities on your books. Let's say they have dropped by 50%.

On your books, you would show a value of $750 million: $1 billion original value, minus $500 million market decline, PLUS $250 million of insurance protection. You would write off $250 million in losses and be done with it.

Or not. Now, your insurance company has gone tits-up. That insurance you bought is worthless. YOU need to eat another $250 million. Add a lot more commas and zeros to these numbers, and you can get a feel for how bad this is.

AIG has over $525 billion in Credit Default Swaps on their books. Half a trillion dollars.

And this is bigger than just the US market. AIG is the biggest insurer in the world, and insure many, many international banks. Asian banks and investors seem to have their panties in a particularly tight wad right now. I'm not sure why that is.

Tied to this, the NY state insurance commissioner has allowed AIG to release certain assets so that they can be used as collateral to raise money. To the tune of $20 billion.

This is simply robbing Peter to pay Paul. Those assets are required to be pledged to pay for losses for things like home owner insurance claims, car claims, etc. They are being 're-purposed' to raise cash to pay off investors.

That just rubs me wrong. I guess the thinking is, if the company dies, no one will get paid. I don't know much about the insurance industry, but I believe that in the event of a bankrupcy by AIG, those assets would be sold and held in a trust account as a safeguard to pay for current and future losses.

It seems as though those safeguards are being ignored. Isn't disregarding sound business practices what got us into this mess.....?

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Monday, September 15, 2008

Warning, Will Robinson! 

There is a great difference between worry and concern. A worried person sees a problem, and a concerned person solves a problem.
--Harold Stephens

Wow, what a day. Let's see, what happened?

B of A is buying Merrill Lynch. Bad idea.

Lehman Brothers filed for Chapter 11 bankruptcy protection.

The Dow Jones dropped over 500 points. Glad I'm out of the market.

The New York Stock Exchange - made up of 3,243 companies, had over 3,000 lose market value. See above Dow Jones comment.

AIG, the huge insurance company (something like 8th or 10th biggest company IN THE WORLD) is broke, and is looking for a massive capital infusion. Something in the $70 billion range. Their stock dropped 61% TODAY.

Hewlett-Packard - PC and printer giant - announced nearly 25,000 layoffs.

It wasn't all doom and gloom:

Gold was up $26 an ounce. Silver was up as well.

Crude oil was down $7 a barrel, to finish below $95.

The dollar was flat against most currencies. It has had a trend lately of getting stronger.

The Fed is indicating they won't raise rates at their next meeting.

What does this all mean?

I have no damned idea. But my gut says this is just the beginning of a very bad spell. Unemployment keeps going up, both the CPI and inflation are up, yet the economy (GDP) is growing at a very healthy pace.

The specks of good news are over-shadowed by the clouds. The long-term engine of our economy is consumer purchasing. Right about 70% is driven by consumers. If you're out of work, or stuff costs more, you're less likely to spend money. I don't know if the boost in the GDP is broken out by cash versus credit, but I'd guess it's mostly credit. What I'm getting at is, I don't think the growth is sustainable. Cash is already gone, credit will dry up and things will get very ugly.

As I noted yesterday, the real estate market is in the shitter, and is going to get worse before it gets better. The vast majority of American personal net worth is tied up in real estate, and it is evaporating right before our eyes.

So much happened today. I have something I call my '24-hour rule'. Before I make a big decision or set a plan of action, I try to take 24 hours to let stuff sink in and help clarify my perspective.

I'm having great difficulty sorting out all of these occurrences to identify some sort of trend. Shit is just all over the board. Maybe I'll take 48 hours...

On a personal note, I'm going to be making a fairly large purchase this week, a portion of which will be financed. I approached a number of banks -all big boys, all in good financial health - and their rates were obscene (I have a great credit score and usually get the preferred rates). These rates were a joke.

I contacted a couple of credit unions, and they are damned near giving the money away. The interest rates were less than half that of the banks.

So, if you're looking for money, go local. Your small local bank, or a local credit union. Most CUs have very flexible membership requirements. You no longer have to work in a specific trade, or for a specific employer. For instance, the one I'll be using only requires that I live in the county where they're located.

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Drawing A Line In The Sand 

I need to do more research on this, but the announcement that the Bank of America - the second largest bank in the country - is going to buy Merrill Lynch, the largest brokerage house in the country, is very disturbing.

Nanny needs to belly up to the bar, and say "NO!".

Part of the reason tax payers are on the hook for so much money - Bear Stearns, Freddie Mac, Fannie Mae - with this credit crisis, is because these financial services companies are, "too big to allow to fail". You don't fix that problem by giving the nod to a new behemoth.

Financial services companies are not like other businesses. They have a very close relationship with the government. Along with health care - the other big business that's in bad shape - banking is very heavily regulated. Whether you think THAT is a good idea is irrelevant. It is fact. Banks and Nanny are joined at the hip.

Because of that, Nanny needs to use risk management practices to reduce the likelihood of a loss. You are more likely to have a loss when you have a large concentration of assets in any one company, business line or geographic region. You want to spread the risk, not paint a bull's eye on it.

I've noted before, I don't know what the right size is for a bank. Nanny needs to do some math and determine what the right number is, and not allow banks to cross it.

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Sunday, September 14, 2008

Nanny Broke? 

Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.
--Ayn Rand

It has been fascinating to me to watch the happenings this weekend with regards to Lehman Brothers. They are on the brink of collapse, and Nanny appears to be ready to let them fail.
In meetings that began on Friday and were scheduled to continue today, officials led by Federal Reserve Bank of New York President Timothy Geithner and Treasury Secretary Henry Paulson are said to be pushing top banking executives to hammer out a Lehman solution that doesn't depend on access to the public purse.
Has Nanny bit off more than she can chew? It started with a Nanny financed bailout of Bear Stearns. Then 11 banks failed (so far), leading the FDIC to begin drawing on a line of credit with the Treasury. Last week, Nanny took over Freddie Mac and Fannie Mae, in what has effectively nationalized the home mortgage industry. We're on the hook for somewhere in the neighborhood of $6 trillion in home loans.

So now Lehman Brothers gets in trouble, and Nanny suddenly becomes a believer in market forces?

I don't think so. Lehman's is bigger than Bear Stearns. If the reasons behind a Bear Stearns bailout were valid, they're more valid for Lehman's.

I think Nanny has finally added up her obligations and compared it with how much money can be printed up to pay for this crap, and realized that further bailouts would do more harm than good.

From a Wall Street Journal article on the same subject:
Under one plan, either Barclays PLC or Bank of America Corp. would buy Lehman's "good assets", such as its equities business, people familiar with the matter say. Lehman's more toxic, real-estate assets would be ring-fenced into a "bad" bank that would contain about $85 billion in souring assets. Other Wall Street firms would try to inject some capital into the bad bank to keep it afloat for a period of time so that a flood of bad assets don't deluge the market, damaging the value of similar assets held by other banks and insurers. The banks are also looking for the government to somehow financially backstop the bad bank.
In regards to other firms injecting capital into the real estate portfolio of the 'bad bank' - very unlikely. These guys have enough problems on their hands with their own portfolios. I could see someone coming in a buying these crappy loans for pennies on the dollar, but the other banks won't take an action intended to soften the blow of the declining real estate market.

I do think this is where Nanny may once again step in. If these crappy loans total $85 billion, the loss potential is most likely in the $20-$25 billion range. It's a bad idea, but I think Nanny may crack under pressure of stemming further declines in the real estate market.

We'll see. This problem keeps getting deeper and deeper. It also has the possibility of lasting far longer than I had originally believed.

I've discussed that I believe that the bottom of the real estate market will be in mid- to late- 2009. The last sub-prime loans re-price in early 2009. Figure it will take 3-6 months for the problem loans to go to foreclosure and sale.

But what about people like me? People with home that weren't purchased or refinanced with sub prime loans?

I bought my home in 2002. Not even close to the peak of the market. In 2005, I refinanced my home. I brought my loan up to my original sales price - I essentially got back my down payment (I've done this with each home I've owned). At the time, the loan-to-value percentage of my property was in the 60% range, which was great. It meant my home's value had almost doubled.

Then, the market began tumbling. As of right now, my home is worth about 20% less than I paid for it in 2002. This is with the understanding that the real estate market is not yet at its bottom - that's at least another year away.

What if I want or need to move? I guarantee you that I won't be making up the difference on my current home. Who would? Why would I dig into my savings to make the bank whole?

There are a lot of people like me right now. Employment numbers keep getting worse, further affecting people's ability to pay their bills. I think this is a ticking time-bomb, and it's going to be around for a long time.

It is a huge unrecognized liability. As long as people like me keep making our payments, the banks have no obligation to reflect this loss potential on their books. Hell, why would they? But if employment numbers don't improve and real estate values don't stabilize, this could get much, much more ugly.

If I had to move, I would most certainly have already qualified for, and maybe even completed the purchase of the new home before I told my current lender to kiss my ass.

When I refinanced the home, the bank and I had an agreement. I agreed to send them a certain amount of money each month - mostly pure interest income for them. They gave me the cash to refi the loan, and took the home as security in case I didn't pay as agreed. They got the interest payments and property lien and I got a place to live.

The value placed on the property was done by one of their employees. They set the ratios and the value, not me or any other homeowner. If shit goes south, the amount of security - of risk protection - is based upon their calculations, not mine.

It is a business proposition for both of us, and one of us may lose. It wasn't the plan when we made our agreement, but shit happens. If things go south, I'll protect my interests, just as the bank will protect their interests. I'd expect no less from them, and they should expect no less from me.

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Friday, September 12, 2008

Racial Profiling With The Ballot Box 

The modern definition of "racist" is "someone who is winning an argument with a liberal”.
--Peter Brimelow

I read an article in the Wall Street Journal this morning, and my blood is boiling.

An ugly racial component has entered the presidential campaign.
An anxious murmur is rising among white voters as the presidential race tightens: What if John McCain loses?

White talk-show hosts and white-themed Web sites are being flooded with callers and bloggers reflecting a nervousness -- and anger -- over the campaign. Bev Smith, a nationally syndicated radio talk-show host, devoted her entire three-hour show Monday night to the question: "If McCain doesn't win, what will you think?"

"My audience is upset," she said in an interview. "Some people said they would be so angry it would be reminiscent of the [1960s] riots -- that is how despondent they would be."
Of course, I substituted 'white' for 'black' and 'McCain' for 'Obama' from the original quote.

No radio station in America would be allowed on public airways if it were openly espousing support of a white candidate simply because he's white. It seems to be OK if you're supporting a black candidate for racial reasons.

White-themed web sites are chastised for what they are - racial cesspools. Black-themed sites are viewed as 'progressive'. WTF?

How can these people go unchallenged with saying this crap? Go to any of these sites or publications and do as I did - change the words 'black' or 'African American' with 'white'. Do that in public, and you would have a racial shit-storm rain down on you of Biblical proportions.

But blacks are able to get away with it. Why is that? Why are they not held to the same Politically Correct standard as whites? Why in the hell does our media continue to allow - to promote - this racial divisiveness, when their stated goal is racial equality?

Because they want him elected simply because he's black.
But the racial undertone of the campaign has some blacks -- and some whites -- unable to envision the Illinois senator losing the election without racism playing a role.

"If he loses, it will shake the very ground that we stand on mentally as far as what we need to be to succeed," said Robert Gordon, a 48-year-old engineering surveyor from Dallas. "From day one, we've been told to be a certain way, to be neat, intellectual, speak clearly. He is the symbol of what we were told to be by our parents and by society as a whole. If this doesn't work, what does that do to our psyche? What do I tell my sons?"

What do you tell your sons? You tell them the same thing I tell my boys when the candidate I voted for loses: My guy lost - my vision of the 'best man' was not shared by most of America. Let's get someone better for the next round.

This expectation - this perception - that by living a good, decent life somehow guarantees you your way is amazingly naive. Life ain't fair, sport. Sometimes the wrong guy wins.

It is an attitude grounded in our creeping socialist psyche: You owe me. Simply because I exist, I deserve Nanny hand-outs. Simply because Obama is a well-spoken, clean-cut, play-by-the-rules guy, he deserves to be president.

Get real.

I would no sooner vote for Barack Obama than I would vote for Karl Marx.

I would not care if he were my physical spitting-image. It would not matter if he were cleaved from my own DNA. It would mean nothing if he were as white and Wonder Bread-ish as Michael Phelps.

The only thing I care about is what he has accomplished in the past, and what his plan is for a stronger America. Period.

The amount of pigmentation in his skin does not even come into the equation. If Ron Paul ideology were coming from Obama's lips, I'd have my house plastered with Obama posters. I'd be manning the phone banks. I'd be sending him money. I'd be working it.

But that ideology is NOT coming from his lips.

What I hear is how he's going to saddle America with the cost of universal health care.

I hear how wants to bring illegal aliens 'out of the shadows' instead of deporting them or throwing them in prison.

I've heard him chastise people because they 'cling to their guns and religion'.

I've read his plans to defeat poverty that are nothing but socialist dogma clipped from The Communist Manifesto.

Throw in his ideas about global warming and carbon credits/taxes, Social Security, Urban Development and Education, and the deal is sealed. His color isn't the reason he won't get my vote. It's his ideology.

I know, I know. I'm just a white guy who was born with a silver spoon in his mouth, and never had to work a day in his life. I'm just living off of daddy's money or influence. You just don't understand.

Kiss my ass.

I was born to an Oakland beat cop and a wonderful housewife. I attended the same state college as tens of thousands of blacks, Asians and Hispanic students attended. I paid my own way.

No one gave me a damned thing other than a loving household and supportive family.

I have noted in the past that a little piece of me hopes Obama wins (steady now, put down the pitch forks and flaming torches). If he wins, logically, the race issue in America should be dead. A black man will have risen to the highest office in the land, making him the most powerful person in the world.

But the pragmatist in me knows that racial favoritism will not die. It will continue to flourish because entire careers have been made on race baiting. That gravy train won't soon end.

Still, it might be entertaining to watch the likes of Reverend Sharpton, Reverend Jackson and Reverend Wright put the spin on it. When your guy is at the top of the heap, how do you claim racism then?

I'm sure they'll find a way...

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Thursday, September 11, 2008

Geek Preps, Part I - Stealth 

Relying on the government to protect your privacy is like asking a peeping tom to install your window blinds.
--John Perry Barlow

I've been struggling with whether I should do this post or not. Many times when I talk about technology stuff, people's eyes gloss over. Still, I think it's important to at least understand a little bit about what happens when you use your computer on the Internet, and what you can do to reduce your chances of becoming infected.... or tracked.

I'll try to keep this concise! I'll also break down what's rattling around in my head into a couple of posts to keep the bites easily digestible.

Have you ever asked yourself how a web site - say Google - knows how to return a query you've keyed in, back to your PC, and not your neighbor's? After all, Google gets millions of queries a day. How do they keep it all straight?

They do it via your IP Address. IP stands for Internet Protocol. It is a unique address assigned to your machine alone. When you key in your query, you are also giving instructions on where it should be returned. All of that happens in the background (as part of the 'packet').

This is good, in that you will get back the information you requested. It is bad, in that you are now identifiable. Your IP address can be tracked back to you.

(Note to other geeks - I know, I know, virtually all PC's now use non-routable IP addresses and NAT on their router/firewall so the IP address can only be tracked back to the ISP. Hold your water. I'll address that.)

What if you don't want anyone to know where you searched or the web sites you've visited? If you used some words Nanny might be nervous about in your query, you might end up on a list of IP addresses to be monitored. With a USA PATRIOT Act request or a search warrant to your ISP, your every move online can be monitored.

Let's say President Obama is thinking about clamping down on gun rights. Do you think he might have his minions set up IP address loggers on the NRA site or GOA.org? How about CheaperThanDirt.com or MidwayUSA.com? Hell, do you ever visit blogs that champion the Second Amendment?

You get the idea. If you trust Barry, or even certain agencies under the current administration (does the BATFE make anyone feel good?), then don't bother proceeding any further. You've already consumed the Koolaid.

How do you stay off the radar in the first place? Stealth.

No single program or technique will protect your privacy. You must think in terms of 'layers of defense'. One might be penetrated. Perhaps two layers. But unless you just get plain old lazy, you should have a good chance of protecting yourself if you so desire.

The first layer is your own PC. As I mentioned earlier, most PC's now use non-routable IP addresses. If you have a Window's based machine, there is an easy way to check this:

Hit your start button. Click 'run'. Key in 'cmd' (without the quotes). A black box will pop up. Key in 'ipconfig'. A bunch of information will scroll on the screen. Under the Ethernet Adapter section, it should list your IP address. It will show a string of numbers, separated by 3 periods. If the number starts with either 192, 172 or 10, you should be OK. Jot down this number.

Now go to www.DSLReports.com. Click the Tools tab. Now click the WhoIs tab. See that number? It is your public IP address. It is actually an address owned by your ISP that they've assigned to you. It can, and usually does change on a periodic basis.

By checking that IP address, the world will know your ISP, and your ISP will know you.

The second layer is also on your PC. You should have a virus scan program, that also has Trojan or Bot protection. Big names are McAfee and Norton's. Personally, I prefer McAfee. They have a program that costs around $40 a year. It updates automatically and scans all files loaded on your PC on a regular basis.

Not allowing programs to be secretly loaded on your PC which track where you go and what you do is important, to say the least.

The third layer is on your PC as well. This is the one most people have problems with. It has to do with browser History and Cookies. People keep a certain amount of History so that they can easily return to certain sites quickly. Cookies make your life easier when visiting certain sites - like your bank.

And they both identify you.

I strongly recommend disabling the History feature in your browser of choice. It is not that difficult to go to your Bookmarks page and clicking the site.

Cookies are actually required by some sites - like banks or online retailers. I strongly suggest using the 'Ask me first' option in the Tools section of your browser. If it's not a site where you're going to do business, don't let them or their advertisers put cookies on your computer. It takes more work to keep saying 'No' to advertising cookie requests, but you and your machine will be much more safe.

[BTW the new Chrome browser from Google has an Incognito mode that allows you to visit sites anonymously. Once you've closed the browser, it removes all history and cookies. I'm testing it to see how buggy it is. I'll report back later on my results.)

The fourth layer is outside of your machine. If the bad guys or federal boogie-men don't know your IP address - or can't obtain it from your ISP - you can pretty much go where you please with impunity.

The way you do this is with a proxy. In short, you use another IP address to do your viewing or searches.

There are companies out there that offer this service, some free, some that charge. Personally, I use TOR. What this does is it takes your inquiry and routes the request through a number of anonymous sites. There are pluses and minuses to doing this, so if you're going to use this technique, read the site and fully understand what's going on.

A big drawback is a slower connection. You may be routed through Montana on one inquiry, and Germany on the next. Personally, I think this is worth the inconvenience when doing any searches or inquiries that may raise an eyebrow with Nanny.

The last layer is being very stingy giving out personally identifiable information. Unless you are on a site where you're doing business - and it's a trusted, big name site - don't ever give out your real name.

When blogging or signing up to an information site, use a Nom de Internet - a false identity - to protect your privacy. Promises of free stuff convince many people to give personally identifiable information to perfect strangers. I hope all of you have at least one email account with a false name that you use for stuff like this.

As I said earlier, there is never a guarantee you will be perfectly anonymous. If Nanny wants your ass, she'll have it. IMO, the key is to stay off the radar. Keep off the ridge line. I used to preach to my network guys, "Security Through Obscurity". Use privacy techniques as a regular habit and you'll significantly increase your level of personal security.

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Wednesday, September 10, 2008

Range Report 

In England, if you commit a crime, the police don't have a gun and you don't have a gun. If you commit a crime, the police will say "Stop, or I'll say stop again."
--Robin Williams

I have a Mossberg 500 shotgun. It came with the standard 28" All-purpose barrel, as well as with an 18 1/2" Defender barrel. It was the first firearm I ever purchased.

A few months ago, I added a 24" rifled barrel for the gun. I picked up some of sabot rounds for use with the rifled barrel, and got pretty good accuracy in my initial test.

I decided to do another test between the rifled barrel used with the sabot rounds, and the smooth bore using rifled slugs.

In case anyone's not familiar with these two types of shells, here's a quickie description:

The sabot (say-bo) rounds are a bullet that is encased inside of the 12 gauge shell. In my particular case, they are 1 oz, conical nosed boat-tailed bullets (the pictures below show a more typical conical nosed, flat-bottomed bullet). Just like any other bullet, they take advantage of the rifling in the barrel to give you greater accuracy at greater range. I've never done it, but you can supposedly do something like a 6 inch pattern at 200 yards.

This first picture shows the sabot round being fired, and the bullet emerging from the jacket.

This one shows the bullet separating from the wadding/jacket, and heading down range.

The rifled slugs use the smooth bore barrel normally found on a shotgun. The slugs themselves have the rifling "built in".

Supposedly, they are not quite as accurate as the sabot rounds over longer distances. The reason I did the test was to see how they compared at 50 yards. The other consideration is price. The sabot rounds start at around $3 each. The rifled slugs start around $1 each.

I began the test with the sabot rounds. Remember, this is 5 shots at 50 yards using iron sights.

The first shot was the high and outside shot. I think I flinched in anticipation of the kick! Anyways, I focused and did some breathing for the 4 other shots. Two of them found the same hole and the others are about an 8" spread. Not great, but not horrible (remember, show pity - iron sights!).

Next up were the rifled slugs. Again, 5 shots, 50 yards. (Did I mention they were with iron sites?!). First shot was a dead ringer!

I should have stopped while I was ahead. The rest were in an 8" spread like the sabot rounds.

My conclusion: At least at 50 yards, the cheaper rifled slugs performed at least as well as the sabot rounds. I'm trying to get a scope for my Mossberg so I can push this out farther. I believe the sabots will out perform the rifled slugs at that distance.

Both rounds would lay some serious hurt on a two-legged critter with a center-of-mass target. I don't think I'd use them on deer or anything else without a scope or if I were in an emergency situation.

I don't know if you can tell from the pictures, but the rifled rounds punched a much bigger hole. They were hollow-point slugs. The sabots were copper jacketed, so it's not really surprising. Still, up close and personal at 50 yards, I have to give the nod to the rifled slugs because of the comprable accuracy and significantly lower price.

Some guy was shooting a .50 caliber rifle while I was there. The rounds looked like little surface-to-air missiles! He was popping them off like they were .22LR rounds. Must be nice to be rich...

Good Lord, that thing would lay some serious hurt on the recipient.

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Tuesday, September 09, 2008

Is Conscious Disobedience The Result? 

But rightful liberty is unobstructed action according to our will within limits drawn around us by the equal rights of others. I do not add 'within the limits of the law,' because law is often but the tyrant's will, and always so when it violates the right of an individual.
--Thomas Jefferson

This is the epitome of what is so wrong with Nanny State laws. You know, those laws put in place out of political consideration (trans fats laws, smoking laws) or because a single horrific event is used as an excuse to take further control of individual freedoms (the shoot-up in San Francisco that lead to the Assault Weapons laws via the VCCLEA - aka The Biden Crime Law).
Kimber VanRy was sitting on his stoop in the Prospect Heights section of Brooklyn, drinking a beer and sending e-mail messages on his BlackBerry, when a police car slowed to a stop on the street in front of him.

The police officer in the driver’s seat said something to Mr. VanRy. He left the stoop, walked to the car and, several minutes later, was handed a small pink slip — a $25 summons for drinking in public.
A guy on his own front stoop, drinking a beer, is breaking the law. It makes my head hurt.

It seems that NYC considers your private property to be 'public space'.
The city’s open-container law prohibits anyone from drinking an alcoholic beverage, or possessing and intending to drink from an open container containing an alcoholic beverage, “in any public place.” The law defines a public place as one “to which the public or a substantial group of persons has access, including, but not limited to,” a sidewalk, street or park.
Hey! Wait a minute! He wasn't on the sidewalk or in the street. He was on his own stoop on his own property. Whew... he'll win this one hands-down, right?

Not so much.
Indeed, last year, a State Supreme Court justice in the Bronx ruled that an apartment building lobby qualified as a “public place” in relation to the open-container law. A police officer had confronted a man who was drinking a beer in the lobby of a building on the Grand Concourse, and Justice Joseph J. Dawson ruled that the officer had probable cause to arrest him.
I guess I shouldn't be surprised. The SCOTUS essentially nationalized all private property with the Kelo decision. If Nanny sees a need for control or revenue, your personal property rights go straight out the door.

Of course, exceptions can be made.

If you're part of the political elite, you may do as you please.
Mr. VanRy will contest the summons at a court appearance in November by pleading not guilty. He questioned the notion that his stoop is considered a “public place” as defined by the law. Besides, he pointed out, Mayor Michael R. Bloomberg was photographed by The New York Post in May sipping a glass of wine at Brooklyn Bridge Park.
I'm sure Bloomberg had a very good reason for breaking the law. It was probably a meeting of Gun Grabbing Bastard Mayors of Amerika, and was thus an exempted event.

Of course, VanRy will lose in court. Nanny has no intention whatsoever of giving up control of the masses. He'll pay his $25 fine, and go about his business. Nanny will have won another round in the game to determine who is in control of our lives.

Sadly, if I were a betting man, I'd put my money on Nanny.

I'll leave you with this:
Where you find the laws most numerous, there you will find also the greatest injustice.

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An Unpleasant Event 

The achievements of an organization are the results of the combined effort of each individual.
--Vince Lombardi

The evening started off quite nicely. There was the unfurling of a massive American flag while the crowd sang The Star Spangled Banner.

In final preparation, a formation of jets screamed over the stadium. It was impossibly loud - where you feel the vibration of the jets as they pass overhead

In this picture, they look so far away, but it felt like they were right on top of us. (I cannot imagine what it must be like to have jets with fighter pilots that know what they're doing, coming after your ass with bad intentions. It can't be a good feeling...)

Anyways, we were pumped. The whole stadium was pumped. There was fire in the belly, pride and hope. Mostly, there was hope.

That lasted for about 10 minutes into the first quarter.

My Oakland Raiders. Pride and Poise. Just win, baby.

Empty bull shit slogans.

The Raiders spent a ton of money in the off season. They got a return on investment of exactly ZERO last night.

The big new dude, cornerback DeAngelo Hall - who got $24 million in guaranteed money for this season - was regularly beaten like a rented mule. This punk had his panties in such a wad, that he lost his composure - twice on the same drive - and got personal fouls that each cost them 15 yards.

Why his ass wasn't yanked off the field is beyond me. It was pathetic.

Speaking of beaten rented mules, the Raiders were thoroughly thrashed 41-14. It wasn't even that close. Denver could score at will. The Raiders were limp-dicked wannabee's on both sides of the ball.

The offensive line actually looked pretty good on run blocking, but were like paper mache when it came to pass blocking. Same for the D-line. They were great on the run, but sucked badly on pass rushing. I don't think they got a single sack. The linebacker corps were solid as usual.

Is this a coaching problem? Perhaps. They have a ton of talent. Because they've sucked so badly in recent years, they've gotten great picks in the draft. They've also spent a good deal of money to get some decent big-name players to come to Oakland.

It's actually an ownership problem. No one wants to work for Al Davis. Remember, the Raider's coach, Lane Kiffen, was an assistant coach in college. The Raider's couldn't even attract a college head coach for the team. That says a lot.

I don't think they'll return to their glory days until Davis has croaked.

I will be blind drunk on that day.



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