I Do Care Who Started It

And these peaceniks would NEVER EVER start something now would they?

Big Oil vs. Big Banks

I'll send somebody a shinny new nickel if they can explain to me that when BP screws up we make sure they pay every dime in damages, but if a bank screws up we bail them out with taxpayer money.

Rita Wilson

I love how they use children to extort money from the taxpayer.

Yes, won't somebody please think of the children.

Another question is would you really want this woman teaching your child in any subject, simply because what kind of warped ethics would she be teaching them?

Steve Wynn

My new hero.

Of the many things I like in it those that I like the most;

1. He's essentially shorting America by investing in its vices. Spend money you don't have, sex, live for the moment. He'll be the one with the cash after it's all said and done.

2. He finds it easier to deal with the Chinese government than the US government.

3. His quip on EBITDA. EBITDA, for those of you without the benefit of an accounting degree is your "Earnings Before Interest, Taxes, Depreciation and Amortization."

This measure is basically the most liberal and handicapped measure of a company's profits because (as far as lenders are concerned) this is the amount a company has to pay any loans that are made to it - the money you have before you pay out interest, taxes and account for depreciation and amortization.

I've never liked the concept of depreciation and amortization. I do understand the "matching" principle of accounting in that you spread out the cost of long term fixed assets to match the overall expense with the revenue it helps generate over the years, but for larger companies that are always buying fixed assets to replace the old ones, would simply expensing your purchases outright really make any difference between your cash flow and net income.

I also have a distaste for EBITDA because it was always used by bankers as the measure to see how much debt a company could afford. LITERALLY ignoring the fact the company would have to spend some money SOMETIME in order to keep its operations going. So if you based your loan on the amount EBITDA showed, you were pretty much guaranteed to be lending beyond the payback capacity of the borrower.

Alas, it was these sort of "rocking the boat" observations that attracted the criticism of my now insolvent previous employers, but as Steve Wynn has pointed out the "City Center" project which was financed by the likes of my previous employers, is belly up and bankrupt.

The Bachelor Budget

Many years ago, when the Captain was but a wee private, he put himself through college working at the campus police department doing campus security. It paid $6.90 and after three years and several promotions he was making $9.10 per hour.

I worked full time while going to school full time, but not once did I ever make more than $20,000 in any given year. However, I didn't need to, because by the end of my college days I had a surplus of $6,000 (which I bought a converitble with to celebrate finishing college). And while there has no doubt been inflation over the past 15 years, this spartan existence behooves the question;

"What is the absolute minimal amount a single person can live on today?"

I ask the question because whereas 15 years ago your young and naive Captain had dreams of working hard and establishing a long and successful career, observations of mortality and a limited life starts to make one think how does one spend their finite time on this planet. You throw in a recession, a-soon-to-be overall tax rate of 40%, the increasing likelihood Roth/401k's/IRA's will be rescinded and nationalized, and a general deteriorating future for the country it's like being the navigator on the Titanic. Inevitably you should give up trying to convince the captain to change course and just pony up to the bar and get the finest bottle of scotch.

Thus some back-of-napkin calculations to find out what, if necessary, is the absolute minimal a single person can live off of and pursue a life of leisure fully intending to maximize their free time on this planet and not to build up an estate or empire.

My estimate is in today's dollars $16,200 in annual income should cover every bachelor's basic desires and needs. This of course assumes several things;

1. Never a new car, always used.

2. Liability insurance only

3. No children

4. Catastrophic insurance only

5. No traditional "$25,000" wedding should he/she get married.

6. Living in an area that is NOT New York or San Francisco or some other expensive area to live

7. Roomate or a cheap one bedroom apartment

Now I am being serious here because I want to make sure I've caught everything. Do any of the Cappy Cap readers see something in my budget that is missing? The reason for my adamancy is because if we can calculate a precise number, then it will allow people to look at their personal finances, see if they can live on that amount, and if so, then weigh whether a life of slaving away for $60,000, $35,000 net, not to mention the standard corporate political BS that comes with it and complimentary high blood pressure and 2 hour commute, is a better existence than working some night time security job for $18,000 a year and fishing and reading books.

"Where are We Going?"

A colleague of mine asked and I thought this e-mail might be of some humor and entertainment;

Without going into detail, I predict a general decline ala Japan from 1989 to today. YOu will see the "Herbivore" movement in Japan come to the US and (gender politics set aside) men just frankly leave their traditional roles which will have large implications for future economic growth as well as stagnation in corporate profits and thus stock prices. This decrease in economic growth, combined with a decrease in asset prices is going to impair and underfund not just private pensions, but 401k's IRA's and 457's. Spending commitments made by Obama will essentially make the future so uncertain and taxes so likely that everybody, regardless of gender, will be less incented to work. Productive, hard working people who would have normally bred future generations of workers will opt for vasectomies instead and choose a life of leisure over work. This will bode ill for current and future pensioneers who were relying upon others to essentially work for them and pay for their retirement, not to mention health care. Nothing will change until the younger generations get a rude awakening that "unfortunately, yes little Jimmy, you do actually have to produce something of value in order for society to succeed, let alone, survive," but this lesson will be delayed as the rest of the world panics and throws money into the US dollar as a flight to safety simply because its "the US" permitting us to borrow more money and live the Barbie World lifestyle where we produce nothing, but buy everything as if the US was one big shopping mall. Financial crisis inevitably ensues, Keynesian fiscal stimulus never works, economy collapses and now people will finally have the free time to study economics and figure out how we got there in the first place because nobody will have jobs.

And everybody will blame Bush.

How William Shatner Could Reform Health Care More than Obama

So I apply for health insurance online because the Captain is one of those swashbuckling, self employed entrepreneur types that answers to no one, drives a motorcycle, calls his own shots, and ultimately as a result of his non-conformance has to get his own catastrophic health insurance.

I shopped online at esurance and noticed the application process was nearly identical to looking for hotels and flights. The only difference was that unlike Hotels.com, you can't "name your own price."

Thus I wish I had the Priceline Negotiator with The Big Deal backing me up when I got my quote.


It was a fair quote, but I noticed the one sidedness of it all. I either had to accept or not. There was no way for me to talk to the underwriter and say, "look, I use tobacco, but it's a cigar every 2 months. I'm not smoking a pack a day, cut me a deal or I'll go look elsewhere."

Alas, this option does not exist. However, if it did, I wonder what effect it would have on health insurance prices? Not that there are a lot of margins to be squeezed out of the insurance industry, but by simply having The Negotiator and The Big Deal on your side, perhaps some savings, or at least cost control would be realized.

Liberal Arts Majors Get Hit Upside the Head By Reality

This is absolutely priceless.

It's a 30 minute long podcast from NPR and basically it's the host taking calls from listeners, specifically, recent college graduates to tell him about their current job prospects.

It's a lengthy broadcast, but if you have the time I suggest downloading it because you will get a good guffaw out of it.

In any case, allow me three quick points;

1. The only people calling in are liberal arts majors who cannot find jobs. This unto itself makes it worth listening to, but what is really great is how the host and guests cannot get up the gumption to tell these children their degrees are worthless. The hiring expert users terms like "that's one of the weaker degrees for the current labor market." I especially like how they explain to the "environmental science" major how green jobs are not there for her.

2. They then turn their attention to the employment gap between minorities and whites. And instead of actually helping out minorities by pointing out a disproportionate number of them major in fields that are not in demand, they lie and say, "they don't know" why there is an employment gap. Their cowardice angers me because if you really cared about helping out minorities you would grow a spine and tell them they should major in engineering and computers. But no, that would be "hurting their feelings" and we can't have any of that tough fatherly love (no matter how much it would help out our fellow minority brothers and sisters) now can we?

3. At the tail end, what do you suppose the solution is they recommend? Federal government intervention.

Ah, liberal arts majors and the adults who lie to them.

If only they read my book first. It could have all been avoided.

Dow 8,000

A new twist I hadn't factored into my Dow 8,000 prediction was the risk of war on the Korean peninsula. Regardless, enjoy the decline!

I Shall Never Complain About My Dating Life Again

I actually know a couple guys like this.

Was led to confirm this fact by this.

You Mean We Have to Grow Up and Be Adults

Seriously, this article should be titled, "Europe realizes it has to grow up and become an adult."

I grow so tired of trying to explain the simple concept that in order to have such luxurious benefits a country must produce an insane amount of wealth and production in order to have the tax base to raise such a infantile-dream level of benefits. I then get enraged when I hear not only people my age (35) but people who should know better (50 year olds) dismiss it as "right wing talk" as well as dismiss all my research and experience and a triffle with youth and a cute childish experiment in economics. But then I have to tell myself;

"Cappy, Cappy, now come on now. You told yourself you were going to ignore this and just hunt fossils and go fishing and play Bio Shock 2 and purposely force yourself to enjoy life. You can't let the ignorant people of the country get you down. Besides, you don't have any kids and you are not encumbered by any real financial obligation. And even though becoming the world's next best and highly paid economist will be a never-realized dream, the next best option is to barely work and head out to North Dakota and Wyoming on multiple fossil hunting expeditions. Nobody is going to listen to you now. Nobody is going to listen to you tomorrow. But someday, when they've slaved away, socking hundreds of thousands of dollars into an IRA account, only to have it confiscated by the government they voted into office, you will bit sitting there pretty with over 4 decades of fishing, fossil hunting and video gaming under your belt asking them the ultimate question in economics;

"Did you spend your finite time on this planet wisely?"

I shall now go ride my motorcycle and NOT contribute to GDP today.

Dow 8,000

Another post in my series "Dow 8,000"

Apparently the "Puppies and Flowers and Unicorns" fiscal policy isn't working. Who would have thought!

GM Payback

This math reminds me of the good ole days when a client would have one LLC hemorrhaging money, but another LLC that was just squeaking by on profitability. Of course overall his entire business was losing money, but we were supposed to make the loan to the one profitable LLC and ignore his collapsing "business empire."

Ahhhhh, fuzzy accounting.

Dow 8,000

I will say it again for the cheap seats;

Based on corporate earnings the Dow should be trading around 8,000.



But (to quote Michael Savage) "You don't want to hear about this. You want to hear about some guy who hits a ball over a fence."

The Ivy League Bubble

Your Captain is largely self-employed. It is because of this he greatly appreciates your contributions. However, because of his self-employed nature (and his rebellious psychological handicaps which prevent him from becoming a cubicle slave), he needs to put food on the table and therefore has to come up with new ideas and ventures. Most of these (like his attempts to court women) fail. But because of the sheer volume of attempts made, I do inevitably succeed (in both work and the ladies).

However, your Captain is working on something very big. And by very big, I mean Gru attempting to steal the moon big. If funding is received for it, I will have to employ people and executives and probably a lot of them, however;

NONE of them will be Ivy League graduates.

And NONE of them will be MBA's.

The reason why is so blatantly obviously, that perhaps it needs explaining.

First, look at our beloved president. Barry is a Harvard graduate. Not a great marketing campaign. "Hey, look, I graduated from Harvard! I'm so smart, I spend $1.4 trillion more than we take in EVERY YEAR!"

Second, if you are on the other side of the political fence, Bush Jr also a Harvard graduate. Not a great marketing campaign. "Hey, daddy, give me money so I can run an oil company and a baseball team into the ground!"

Third, if you look at the

housing bubble
dotcom bubble
Savings and Loan scandal
Asian currency crisis
Enron and the accounting scandals

and pretty much every major economic disaster in recent history it is caused by two general groups of people;

Ivy league graduates

and

MBA's

(sometimes both)

Now who am I to claim this? I went to some crap state college and paid my way through. I don't make more than $30,000. What the hell do I know?

Well, I'm an entrepreneur. And like all entrepreneurs we fail miserably for the most part. But inevitably we break through with something. We come up with something that is so big, "it will blow this pyramid thing out of the water." And when we succeed, it is not GW taking his daddy's money and buying a baseball team. Nor is it Barry Hussein taking his grandmother's money and writing books about himself. It revolutionizes economies and entire industries and it is the Ivy leaguers that work for us. Not the other way around. And the reason why is that Ivy leaguers and MBA's are not trained to think or be creative, they're not even trained to obey. They are trained to work the system. They are trained to simply be one thing and one thing only;

Rent seekers.

Don't believe me?

Look at GE.

That entire corporation is pathetic to my smallish LLC. Why?

I don't need to force through legislation that the entirety of America buy my light bulbs. I produce something of value people want.

Goldman Sachs anyone? Matter of fact the entire bulge bracket. They can't get it up unless the government bails them out. Hmmm...so they hire from any place outside the Ivy League?

Look at all of K street. You think lobbyists exist because their company makes the best product the people want? No, they exist because corporations figured out it's more profitable for them to bribe elected officials to enact laws that give them an unfair advantage over their competitors. So instead of developing the latest and the greatest, it becomes fighting over the remains of a stagnant economy.

Of course what happens is the "old" economy while wrapped up on politicking and bribery and law suits, loses its creativity and vitality to the "new" economy where younger whipper snappers come up with ideas that obsolete the old economies, turning them into worthless bankrupt entities over night. Regardless, understand the MBA's and Ivy Leaguers can only exist and survive in a cronyistic and corrupt environment. And not only will those environments inevitable fall to new ones, the new industries that do come about are going to look at the Ivy League's "product" and MBA's and say, "Good lord, why in the Patron Saint's Name of Frick are we going to hire these charlatans?"

Thus the collapse of the education bubble, particularly the Ivy League.

Understand this and understand this well. It may not happen tonight. It may not happen tomorrow. But until MBA's and our precious "best of best" Ivy Leaguers start actually proving their worth (or perhaps just stop destroying the economy every 5 years or so), the real capitalists and entrepreneurs are going to get wise as to what a scam it is hiring these overpriced dolts. And when this epiphany hits (and also assuming our great Harvard-educated leader can get the economy growing significantly again - ha!) the demand for MBA's and Ivy legaue degrees will have so dried up, that the likes of Yale and Harvard are going to be synonymous with "The University of Phoenix" and "Rasmussen Business College."

Enjoy the decline!

You WILL Enjoy the Recession

Hey, Let's Invest In Greece!

Heh.

Commercial Bank Profits

Thought this chart would make those of you in the Capposphere a little smiley today.

Now imagine if banks were to have just paid the ole Captain a mere $10 billion to tell them not to make bad loans as a consulting fee.