Rocky just read the most brilliant idea to create new jobs in this post-financial crisis world.
Jan. 30 (Bloomberg) … Earlier today, Senate Democrats took the first step toward limiting pay for workers at companies receiving federal bailouts. Senator Claire McCaskill of Missouri introduced legislation to restrict compensation at such companies to $400,000, the equivalent of the U.S. president’s salary. Another measure being proposed would create a court to restrain executive compensation.
Rocky observes that if the government “caps” compensation on the best and brightest employees at a company, those employees will quit. The capped employees will then either launch or join an unregulated company.
Once they settle into their new positions, these employees will count as “new jobs created” in the monthly statistics of the Labor Department (even though they are just moving around). The old positions will not count as “job losses.” (Although the regulated company performance will deteriorate faster, that’s a problem for the Treasury Department, not the Labor Department.)
Perversely, the lower the cap, the more jobs that will be “created.” So, if Obama wants to “create” millions of jobs, he can pick random industries, force them to accept a few government dollars, and just keep lowering the salary cap!
Note to Senator McCaskill: You wrote that the $400k cap is based on the salary of the President of the United States. Does your cap for executive compensation permit the following tax-free FREE perks: Company Residence (White House); private chef and dining room; private jet (Air Force One); private helicoptor; 34 member domestic staff; private security detail; and a personal “needs” expense account, which total tens of millions of dollars each year?
Since starting his blog, readers have inundated Rocky with questions, comments and spam.
He answers the most common questions below:
Is Rocky available for speaking engagements?
Yes, Rocky is a sought-after motivational speaker for corporate retreats, trade shows and Gambler’s Anonymous meetings. He also ghost writes offkey-note speeches on a pay-by-the-word basis. [Important Update: After an unfortunate fly-fishing accident, Rocky had to cancel all speaking engagements until further notice. He remains available for on-line chats and telephone interviews. Clients: If you previously booked Rocky, send an email to receive a refund. Police Officers: If you previously booked Rocky, he WILL appear in Court.]
Can you tell us about Rocky’s family?
Rocky’s mother came from a prosperous Cuban family that cultivated world-famous chile peppers. Shortly before Fidel Castro came to power, Rocky’s mom escaped on a small boat with just the clothes on her back, and a handful of Habanero seeds in her hand. She left her family behind, but brought her secret BBQ recipe to America, with dreams of freedom and the perfect sauce.
Rocky’s father grew up in The Bronx, and served his country with pride as an anti-aircraft gunner during WWII. Trapped by the enemy without food or water, he ingeniously turned his gun skyward, and shot down a flock of Golden-Maned Hornbills to nourish his battalion. For this brave deed, he received a Bronze Star. Returning to the USA, Rocky’s father worked his way through college by selling brisket door-to-door.
Through a common acquaintence, Rocky’s parents met and fell in love. With his mother’s BBQ sauce and his father’s brisket, they decided to start the first and only Kosher BBQ joint in The Bronx. Unfortunately, they were ahead of their time, and the restaurant closed inauspiciously after just three weeks. Rocky’s father then joined the burgeoning Military-Industrial complex and designed inertial guidance systems for nuclear missiles.
Rocky acquired the love of nuclear missiles from his father, and following in his dad’s footsteps, became a Rocket Scientist in his own right.
Why does Rocky always write and speak in the third person?
Rocky thinks this is perfectly normal, and wonders why most people do NOT speak in the third person? When pressed on this point, he offers three more possible explanations:
1) Elmo from Sesame Street as a role model. Elmo’s inspirational quote: “Just because you don’t know what is going to happen, doesn’t mean you are unimportant.”
2) The Wizard of Oz as a role model. The Wizard’s inspirational quote: “Pay no attention to the man behind the curtain.”
3) Mental illness.
How do I contact Rocky?
The best way to reach Rocky is to post on his blog at http://www.rockyhumbert.com However, if you have a sensitive issue that requires discretion, you may send him an email:rocky (at) rockyhumbert.com.
What is Rocky’s favorite music?
Rocky is partial to Gregorian Chant and Bluegrass. His favorite single is Ed Seykota’s Whipsaw Song.
For your “edge-ification”, click below:
Rocky supports the major automobile manufacturers’ initiatives to reduce American dependence on imported oil. This includes research into fuel cells, natural gas, and the combustion of leftover General Tso’s chicken from Rocky’s local Chinese Restaurant.
The following news story from Bloomberg surprised Rocky:
Jan. 29 (Bloomberg) — Ford Motor Co., insisting it can survive without federal loans, said it burned $5.5 billion in cash in the fourth quarter.
Rocky knows of no internal combustion engines that efficiently burn “cash.” This opinion is based on independent research he conducted many years ago:
As a political science experiment, Rocky replaced a Chevy’s gas cap with a rolled-up copy of the editorial page from the New York Times. He then set the newspaper on fire (Chevy “Blazer.“) He believes that the test results can be extrapolated to Ford vehicles and a wad of US currency.
Rocky applauds the news that Ford will not seek Federal loans. He also ponders whether Ford’s R&D Department may actually be wiser than they appear: “Is cash trash?”
[Disclosure: Rocky is currently bullish on gold. But his opinion may change at any time.]
McDonalds is bringing back the boneless McRib Barbeque Sandwich in selected markets. Rocky believes that lobbying by the Boneless Pig Farmers of America for their piece of the “pork” in Obama’s $800 Billion stimulus package may explain this controversial culinary development.
From today’s Wall Street Journal:
“When you’ve got 800-plus billion dollars to spend, you’ll have an equal number of opinions on how it should be spent,” said Chris Galen, spokesman for the National Milk Producers Federation, the dairy industry’s main lobbying group.
Rocky respectfully disagrees with Mr. Galen’s comment. The world population is only 6.7 Billion, and there are far too few economists amongst that total to create 800 billion opinions.
Nonetheless, Rocky believes that much of the lobbying may be for naught. No matter what Obama tells him to drink, Rocky still prefers a Diet Coke with his McRib, rather than a pint of milk.
The Official website of the BPFAA (Boneless Pig Farmers of America): http://www.bonelesspigs.org/bonelesspigs_MMH.swf is well worth a visit.
On a recent frigid Sunday morning, Rocky noticed a long queue of cars at the full service cash wash ($12), but the self-service car wash ($3) next door was completely deserted. Rocky hypothesized that this might be a leading indicator of improved consumer sentiment — and perhaps a bullish omen for the stock market.
Rocky needed a car wash, and he didn’t like to wait. He pulled into the deserted self-service car wash, and fed a five dollar bill into the change machine. Only a single quarter came out. The car wash owner explained that the change machine dislikes the new $5 notes, and the owner handed Rocky five $1 bills. (Rocky now had a 5% profit.)
Instead of taking his $0.25 windfall and driving away, Rocky turned the machine to “soapy wash” and began to douse his car with a high pressure stream of soapy bubbles.
The soapy stream lathered the vehicle, and instantly turned into a frozen coating of thick white custard — denser than the shaving cream an old-time barber uses. The liquid froze solid as it reached Rocky’s car!
The wash cycle ended after five minutes, and Rocky’s car had a white frozen shell. Rocky scraped the ice from his windshield and drove off, having mummified the encrusted road salt and sand under this new protective ice finish.
Rocky glanced in his rear-view mirror as he drove away, and saw shiny, clean cars pulling out of the expensive full-service car wash down the street. Perhaps a little early to aggressively buy stocks, he concluded.
Rocky rubbed his eyes upon receiving an advertisement from a Fortune 500 company that promised an investor would “never lose value.” Rocky knows that such statements are either fraudulent or “qualified in their entirety by the Private Placement Memorandum” (i.e. legal but money-losing.)
Rocky’s initial reaction was to call the Securities Exchange Commission, but based on recent whistleblower experiences, he decided that his time would be better spent buying a new pair of non-prescription reading glasses … so he could independently read the “fine print.”
Rocky took no pleasure learning that Apple CEO Steve Jobs may require a liver transplant. He notes, however, that following an initial swoon on January 14th, Apple stock regained all of its lost ground and more.
As a suffering Microsoft shareholder and believer in the miracles of modern medicine, Rocky suggests that Microsoft CEO Steve Ballmer should perhaps consider a hair transplant. Might this transplant have a similar salutary effect on Microsoft stock? Or do company fundamentals matter more than CEO health?
[Disclosure: Rocky's coiffure is closer to Ballmer than Jobs. It's just one more thing that Rocky and Donald Trump do NOT have in common.]
Treasury Secretary Designate Tim Geithner testified that he used Turbo Tax Software to self-prepare his income tax returns (and under-pay taxes). In light of this shameless commercial plug, Rocky suggests that Corporate Sponsors pay Cabinet Secretaries for product endorsements — similar to the Queen of England’s Royal Seal programme. It can be a new source of tax revenue!
Rocky suggests that the Cabinet Member Due Diligence Questionnaire be amended to include:
1) Favourite antacid. (Secretary of Health & Human Services)
2) Favourite vacuum cleaner. (Secretary of Housing & Urban Development)
3) Favourite car wax. (Secretary of Transportation)
4) And, of course, favourite tax software (Secretary of Treasury)
“By Appointment to His Majesty, The Secretary of the Treasury — Turbotax — purveyor of finest tax preparation software –
Rocky reports that his Citibank teller just refused to deposit a check drawn on Wachovia Bank. The check was in the amount of “Twenty-Nine Hundred Dollars,” and the teller politely informed Rocky that she would only accept the check if it read “Two Thousand Nine Hundred Dollars.”
Rocky offers the following explanations for this bizarre experience:
1) Congress revised the Uniform Commercial Code last week. Rocky missed the announcement because he was the only customer shopping at Sears. At Sears, Rocky bought large garbage bags which he heard were “too big to fail.”
2) The Federal Reserve replaced the US Dollar with Itunes Cards. (If true, Rocky happily offers his daughter’s Britney Spears CD in trade for foreclosed real estate.)
2) Rocky is a dinosaur. Noone writes checks anymore.
3) George W. Bush signed the “No Child Left Behind” Law. He missed one child. (She’s a teller with Citibank.)
4) Citi discourages investments with “strings attached” … such as a depositor who, one day, might actually want his money back . Government TARP funds have no such strings.
The news that Treasury will provide BofA with $139 Billion for the Merrill Lynch deal, reminds Rocky of the saying: “If you’re in a poker game, and you don’t know who’s the sucker, then look in the mirror.”
Rocky speculates that Ken Lewis’ December threat to walk away from the Merrill deal was a massive bluff. The US Government folded.
Although Ken Lewis may be getting heat now, after the economy heals, Ken Lewis will be remembered as The Greatest Gambler of All Time.
Rocky also shares, “When I’m at a racetrack, I’ll never eat at a restaurant called Mom’s, nor bet on a horse owned by The Government.”
Rocky sadly reports that the US Treasury just called his 13-1/4% of 2014 bonds. Rocky fondly remembers buying these bonds during his salad days in 1984 (although it was scary at the time.) It was fun while it lasted.
Rocky also observes that the current 30-year bond is yielding 2.87%, and he states with 100% mathematical certainty that the buyers of today’s bonds will not achieve the same returns as he did in 1984. (He rather prefers the S&P-500 right now with its 3.4% yield.)
Lastly, he poses the question:
Why did the Treasury leave such expensive debt outstanding for so long?
Answer: Perhaps because the Government doesn’t care about minimizing its costs. How many homeowners still have a 14% mortgage?
A reader asked Rocky — What does this post have to do with the mission of the OneHonestMan Blog? Rocky answers: “There is deception all around us. The deceptions can come from others and from ourselves. Facts that we take for granted in life (and markets) may actually be illusions or rationalizations. This post is an example of that.”
It’s 12 degrees outside, and Rocky’s brother (PhD physicist) reports that he’s pouring HOT water down his gutters to unclog them. Alas, either Rocky’s brother didn’t get the memo from Aristotle, or he slept through an early morning lecture at MIT. According to Mpemba Effect, HOT water often freezes faster than COLD water!
Rocky muses, “Is this an urban myth?”
According to Monwhea Jeng at the University of California, the answer is no! Warm water DOES freeze faster than cold water.
Hot water can in fact freeze faster than cold water for a wide range of experimental conditions. This phenomenon is extremely counter- intuitive, and surprising even to most scientists, but it is in fact real. It has been seen and studied in numerous experiments. While this phenomenon has been known for centuries, and was described by Aristotle, Bacon, and Descartes [1-3], it was not introduced to the modern scientific community until 1969, by a Tanzanian high school student named Mpemba. Both the early scientific history of this effect, and the story of Mpemba’s rediscovery of it, are interesting in their own right — Mpemba’s story in particular provides a dramatic parable against making snap judgements about what is impossible. For the full article, click on: http://math.ucr.edu/home/baez/physics/General/hot_water.html
He wanted to share that (until very recently), there was a “free lunch” in the gasoline crack spread. The gasoline crack spread is the price difference between gasoline and crude oil. The price difference is the refiners’ profit. He apologizes for being late to share this with his readers, but he didn’t have his own blog until last night. He says that refiners break-even with the crack spread around $4 per barrel, and although he paid $1.70 for the June crack spread (last price=$4.40), he still likes the idea. See: Rocky’s Definitions: Rocky II
Rocky reasons that if the June crack spread goes negative, it’s as if the refiners are PAYING HIM to back up his pickup truck and fill his rusty gas cans. It happens sometimes. But then he sometimes gets food poisoning at Costco too….
Rocky wants to share a new academic paper written by Professor John Taylor at Stanford University. It’s the first paper that Rocky has seen which postulates a unified theory of WHY the financial crisis developed, and why it accelerated during the last several months. It’s consistent with Rocky’s view that Art Teachers and Treasury Secretaries make lousy guests at family barbeques.
Welcome to the One Honest Man Blog. Http://www.onehonestman.wordpress.com
Rocky Humbert, the legendary speculator and cumudgeon, decided to join the ranks of bloggers and share his thoughts on commodity markets, finance, politics, music, religion and barbeque.