Archive for September, 2009

Carrying an umbrella during a flood

September 26, 2009 4 comments

manilaThe Philippines suffered tragedy and death as heavy rains flooded the country.

Watching this BBC video, Rocky observed dozens of Philippinos carrying umbrellas amidst the flood.   He asks, “If you are waist-high in flood waters, why carry an umbrella?”

Click here to watch this bizarre BBC video clip:

In one scene, people grasp for a safety rope with their right hand — yet keep their umbrellas erect with their left hand.

Any theories or explanations to explain this seemingly odd behavior would be greatly appreciated.

[Disclosure: Rocky is neither callous nor insensitive to the obvious human suffering in the Philippines. He simply is puzzled by this widespread, seemingly irrational behavior.]


Supply, demand and buried treasure

September 24, 2009 7 comments

artifactsAn amateur “metal detectorist” recently stumbled upon  a trove of more than 1,500 gold and silver artifacts  in a Staffordshire, England field. 

The items date from the Seventh Century,  and archeologists say it is  the largest hoard ever found in Britain. 

Click here for the full story:

Rocky makes two observations:

1) While the bull market for gold is several years old, the bull market for Metal Detectors may just be starting. (Click here for a half-price sale on the “Bounty Hunter Time Ranger Metal Detector and Deluxe Gold Pan Kit.”)

2) The collection has been officially declared as a “treasure trove,” and under UK Law is the property of the State. Even in a field, the tax man is never “afield.”

Is gold expensive?

September 18, 2009 8 comments

Over at Jeff Watson’s excellent blog, he’s been debating whether gold is going up or going down. Rocky asks a slightly different question, “At $1,000 per ounce,  is gold expensive?”

The following graph shows the behavior of gold and the behavior of the US Consumer Price Index going back to 1947. While examining this chart, it’s  important to remember that:

1. It was illegal for US citizens (anywhere in the world) to own gold from 1933 until 1974. 

2. In 1944, the “Bretton Woods” agreement fixed the price of gold at $35 per ounce.

3. In 1971, President Nixon unilaterally took the USA off a gold standard, and from then to the present the value of gold (and the US Dollar) were allowed to float freely.

So, the question remains, is gold expensive at $1000 per ounce?  As those annoying math textbooks like to say, “the answer is left as an exercise for the reader.”

The black line is the CPI Index. The yellow line is the price of gold. Both values were normalized to make the visual relationship easier to see.

Gold Price versus US CPI Index

Gold Price versus US CPI Index

Chef freezes wife: no microwave or cutlery needed

September 16, 2009 2 comments

dumpsterIn light of the revelation that Chef Peter Wallner kept his wife’s body in a freezer in their suburban London home, guests at the Nutfield Priory Hotel & Spa Restaurant might also want to consider whether their dinner entrees were fresh or frozen. 

The former Head Chef at the aptly-named Nutfield, admitted that he kept his dead wife’s body on ice for several years, but he denied killing her.  For the UPI news story:   For the BBC news story:

Evidently, the Chef needed more room in his freezer, so he recently moved  the body to a trash dumpster outside the couple’s home in Cobham, Surrey.  Nosey neighbors noticed a foot, and became suspicious. (Mrs. Wallner had not been seen since 2006.)

In a court appearance at the Old Bailey in London, Chef Wallner pleaded guilty to “Preventing a Lawful and Decent Burial.” But he pleaded not guilty to murder.

[Disclosure: Rocky admits that elements of this story may be in “Bad Taste.”   Nonetheless, it helps explain Rocky’s preference for fresh ingredients, as well as  fastidious shredding of  confidential items   (which may include private parts) —  before — placing them in the dumpster.] 

Family dogs contribute to financial collapse

September 14, 2009 6 comments

attackdogEconomists, regulators and bankers all contributed to the financial crisis. Today, the family dog joined that list.

Rocky just learned that “man’s best friend”  is being blamed for contributing to insurance giant AIG’s collapse, as well as the skyrocketing cost of health care.

The Insurance Information Institute reports that dog bites represented a third of all homeowner insurance liability claims in 2008, and cost insurers $387.2 million, up 8.7% from 2007. 

“In the last year, the number of claims rose nearly 9% from 14,531 to 15,823. More than 4.5 million Americans are bitten by dogs each year, with nearly 900,000 requiring medical care, according to the Centers for Disease Control and Prevention. In 2006, more than 31,000 victims required reconstructive surgery.” 

Click here for the Insurance Information Institute report entitled “Avoid Being Bitten By A Lawsuit By Being a Responsible Dog Owner:”

[Disclosure: Rocky lives in a state where repeat Felons face a “three-strike-and-you’re out,” mandatory life sentence.  His state also has a “One-Bite Rule”where the owner is not liable for the first bite, but is fully liable for the second.  Rocky believes that the Criminal  and Dog Laws should be harmonized … so either wayward dogs  get three bites or repeat felons only get two. Accordingly, Rocky hopes Congress convenes a special Committee on Canine Culpability. ]

GM takes on Hertz & Avis with FREE cars

September 11, 2009 13 comments

gm logoFor really great Super Bowl parties, Rocky’s neighbor would  “buy”  large-screen TV’s at Circuit City on Saturday, and then return the TV’s the following Monday morning for a full refund. No questions asked. No cost. (Except that Circuit City eventually went bankrupt.)

This morning, GM announced a similar no-questions-asked, 60 day full refund on its cars. The promotion is called “May the Best Car Win,” and  GM Chairman Whiteacre coyly “declined to put a price tag on the overall promotion.”  That’s probably a good thing, since US Taxpayers are paying for this.

Click here for the full story from the NY Times:

Forget about free toasters for opening new bank accounts. Forget about value meals at fast food restaurants. For consumers with a chunk of cash in their checking accounts, this is the largest giveaway in recent history. (An even better deal than “cash for clunkers.”)

Although the exact details have not been disclosed, here’s Rocky’s arbitrage analysis:

1. Money market funds are yielding approximately 0%, so there is no cost of money.

2. Buyers empty their savings accounts and purchase a new GM car.  They pay cash.

3. Title and registration (non-refundable) will cost about $250. Sales tax will be refundable if the transaction constitutes a “return.”

4. After 60 days, the car gets returned to the dealer. (And GM has lost 10%-15% of the car’s value.)

A Hertz rental car for 60 days will cost about $3,000. A GM “rental car” for 60 days will cost about $250.

[Disclosure: Rocky has no position in Hertz Group (HTZ) or  Avis Group (CAR). He does have a position as a citizen and taxpayer in the USA.]

Record plunge in consumer credit: so what?

September 9, 2009 2 comments

Yesterday, the Federal Reserve reported that consumers reduced their debt by a remarkable $21.6 Billion during July.  Click here for the story:

Bearish economists will seize upon this data to show that the consumer is retrenching; final demand will not grow;  and the economy may lurch back into a sink hole.

Bullish economists will seize upon this data to show that consumers are finally behaving prudently, their balance sheets are being repaired, and the seeds are being sowed for a more-balanced, sustainable expansion.

Rocky will seize upon the data and say, “If you extrapolate the acceleration of  this decline,  consumers will be entirely debt free in a couple of years. That seems pretty unlikely.”

A picture is worth a thousand words:

Outstanding Consumer Credit versus Gross National Product

Outstanding Consumer Credit versus Gross National Product