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While across the pond in London I saw these blokes pedaling some sort of “party bike” (there is an entry in wikipedia for it with a similar photo on Tower Bridge) through London traffic. Apparently there is one sober guy who steers and everyone else drinks and likely occasionally pedals. I saw a few of them and as they went by the pedestrians lots of people hooted at them or tried to give some sort of hi five or British equivalent. In River North we have the party buses (trolleys) these seem more eco-friendly, I guess.




By the way I am trying this blogging for the first time with an application through my iPad so if it looks a little funky I will get better over time.

This weekend the Brown Line of the CTA is shut down as they replace the next section of the Wells Street bridge. It is a big deal when they shut down the Brown Line since thousands of passengers ride that line each workday. This is the second shutdown of the Brown Line as part of this project. Since it was a beautiful Saturday I walked to the construction site to take photos with my Pentax K-01 recommended by Jonathan (who has far better photographic skills).

This view is looking East – you can see the new section that they will weld onto the bridge on a barge and it has a lighter coloration.

This view is looking North from the south side of the river. They have the portion of the old bridge that they plan to cut away “on blocks” on a barge.

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Recently I saw the art-metal band “Pelican” at the Bottom Lounge on Lake Street in the West Loop. It was a Thursday night and I just took a cab over there by myself. Pelican is one of my favorite bands – they play metal in a major key with no solos or lyrics (OK, they did have one song with lyrics). It sounds boring, but definitely isn’t (to me at least). Recently they had a switch out of some key players but since I hadn’t seen them before I couldn’t tell the difference and they sounded fine. Here is a brief movie of them playing “Lost in the Headlights” which is the first song from them that I heard that I really liked.

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This lotus made me laugh with the matching red Angry Bird on the dashboard.

Also liked the license plate on the BMW M5 calling out the Mercedes AMG competition.

Cross posted at LITGM

Not only is Tom’s Diner the background for Seinfeld, it inspired the Suzanne Vega song “Tom’s Diner”. More importantly, the remix version of “Tom’s Diner” was called “The Mother of the MP3” because the guy that made the compression format used this song and worked on it over and over to use MP3 to build a faithful version of the sound.

This guy looks like he needs a bigger truck…

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In the River North neighborhood of Chicago there are many affluent customers packed into a small physical area. The vast majority of these individuals shop online and receive physical packages as a result.

And yet the post office building that sits right smack dab in the midst of all these package-receiving citizens is not a hub of activity; many times it seems empty and forlorn.  Why is that?  It is due to the fact that the US mail system, which provides service across the United States, is not viewed as either a reliable or competitive delivery mechanism for e-commerce goods delivery, and the flood of packages that arrives is generally delivered by either UPS or Fed Ex.

The post office dutifully delivers all the stuff I don’t want – junk mail, catalogs, bill reminders, an occasional holiday card for those that are sent via snail mail, and notices from governmental entities that haven’t joined the internet era (to their credit some of them have moved much of their operations to the internet).

While the post office is crippled by liabilities, benefits, civil service protections for workers, and a mandate to serve every US address for first class mail, they would be in a much better situation if somehow they had been able to capture a significant share of the package delivery market that flourished right beneath their noses.  This article from Slate describes the situation as it exists today.

The loss of the package delivery opportunity is only the most obvious squandered one; think of what the post office COULD have done tied vai the internet (guaranteed, reliable domain names linked to addresses for bill paying or as a pre-cursor to social media) or with sales of goods since they have access throughout the entire USA.  However, given that they were set up as a monopoly to do one thing well (deliver first class mail), they didn’t have much pressure to innovate.

In the end the post office is mostly a machine to employ government workers, spread throughout the US and in every congressional district.  Per wikipedia (which has a solid write-up here) the US post office employs 574,000 workers, with government perks, pensions and benefits that most of you will never receive, in order to deliver that first class mail that you mostly throw into the recycling bin.  The proposals that they are floating show how tied their hands are; they want to cut Saturday mail delivery which will make them even less competitive vs. UPS and Fed Ex – they aren’t really talking about ways of outsourcing services and cutting expensive staff en mass which would be needed to move even close to breaking even.

The post office is probably just betting that their employees (through lobbying) and government protectors (the politicians) will be enough to stop significant cuts while their service (first class mail deliveries) becomes ever less essential.  Since we bailed out the banks and print enormous amounts of money to fund the US deficits, who will ever even notice tens of billions of dollars in losses on first class mail service to boot.

The sad part is, they are probably right.

Cross posted at LITGM.

In the US we have slowly debased our currency, the US dollar, and debt levels have risen at all levels of government. Since the US has extensive economic interests and huge reserves of oil, minerals, and agricultural capabilities, it will be a long time before the proverbial “wolf” shows up at our door.

In other countries, like Egypt, however, the wolf comes to the door right away. Egypt has an immense population concentrated along the Nile River and relatively few sources of income. Tourism has been badly damaged by the revolution against Mubarek and the rise of the Muslim Brotherhood hardly is something to put on a brochure at the pyramids, given that they have been known to slaughter their heathen guests in the past.

In order to feed their population, Egypt needs fuel, particularly diesel fuel. While Egypt does have some petroleum riches, they don’t have much refining capacity, so they must import diesel. In order to import diesel, you need “hard” currency, and the Egyptian dollar has been falling in value.

Finally, the Egyptian government distorts the local price of diesel so that it is subsidized, causing all sorts of negative impacts, including a huge black market, queueing, and all the other behaviors inevitably caused by hare-brained policies.
This situation was described in a recent NY Times article titled “Short of Money, Egypt Sees Crisis in Food and Fuel” which you can find here.

In a place like Egypt on the edge of starvation and social chaos, the safety net is thin, indeed, as they summarize in the last quote of the article:

At the empty Mobil gas station in town, attendants said profiteers, hoarders and desperate farmers were already threatening them with knives, clubs and shotguns. At harvest time, “People are going to kill each other,” said Hamdy Hassan, 37, a truck driver hanging out at the shuttered station.

Our understanding of economics in a theoretical basis and our casual acceptance of paper money has blinded most of us from understanding the practical, real-world economics that stands before us. People need goods or services, and they have to trade for it by providing alternatives that are acceptable to the seller.

If your currency is worthless, you need something else to trade, or your country will be bereft of necessary supplies. In this instance, Egypt needs refined petroleum products (diesel) or their entire economy will grind to a halt (and mass civil strife will immediately follow). As their currently depreciates relative to others in the region, their ability to purchase fuel is accordingly reduced.

This can be seen in medicines and fuel in Greece as well and likely soon to be Cyprus; it is assumed that these countries will be able to maintain first world status for their populace but it is difficult to see how that will happen while they have almost nothing to trade in return. One article about Cyprus ended with a quote from a local that if they don’t act as a banking haven “they will all just be selling ice cream and setting up deck chairs” to support any tourists that happen to visit.

With the implosion in Cyprus and likely deterioration of weakened countries like Egypt, Venezuela  Argentina with minor home currencies, we appear to be entering a new era where things we’ve taken for granted about smooth business transactions and friction-less international banking and trade are going to be put to a severe test.

Cross Posted at LITGM

Recently I saw this sign in River North, indicating the start of another large high rise project, with an optimistic start date of 2016. Apparently there is plenty of money sloshing around to fund the construction of large buildings, because cranes are up in the sky all over the downtown area. I don’t know if lessons have been learned from the last and most recent bust in 2008, where developers who put in only a bit of equity defaulted and handed the projects back to the creditors, who also took big losses. The most obvious lessons would be 1) require developers to put significant equity into the project 2) don’t fund too many projects competing for the same tenants. These projects don’t seem to be condominiums for the most part; I am only speculating but perhaps the failure of so many condominium projects rattled the banks (those that are still standing, at least).

I would consider it a victory if they finished a few of the half-built structures that have stood idle for five or more years without any progress. This hotel in River North is now restarting; I have been looking at this ugly mess for years so it is great to see some sort of actual effort to complete the hotel.

The real issue is whether or not the structures being built right now, at what is likely the apex of the boom, will be seen through to completion. I certainly hope so, because it is depressing to see half-built structures marring the skyline for years. The famous “Chicago Spire” didn’t get far (only a hole in the ground) which is a good thing because it would have been sad to see the “Stub” along the lake shore for years to come.

Cross posted at LITGM

As a rock music fan, it is difficult for me to stand back and appraise the impact of rock and roll in an objective and neutral manner. Growing up, I listened to music continuously, and over the years have bought it in almost every format from album to cassette to CD to digital. I owned early MP3 players (like the Rio) on to pretty much every variety of iPod. In addition, I have been going to concerts for many years, some of which I’ve discussed in the blog. I’d consider myself pretty knowledgeable about rock music from the ’60s through today.

At Lollapalooza I’ve seen the growth of “Perry’s Stage”, which is an electronic music tent. Here is a link to a post I wrote about it after the August 2011 show. I noticed how the young kids migrated over to the DJs and had a great time, while the “old” concert goers sat on blankets and watched the mainstream acts.

Today we look back on rock music as if it has always existed in its current form but it used to be an electric, alive, underground party. The rebellion has moved over to hip hop but the party migrated over to electronic music. Rock doesn’t stand a chance today in the popular consciousnesses compared to the DJs.

While rock bands struggle to find a few thousand fans at a show, the “Electric Daisy Carnival” can pack in over 100,000 fans a day. Here is the link to the trailer for the inaugural event that they will hold in Chicago.

It is amazing that the last Grammys telecast didn’t feature much in the way of electronic music, but then again they have not been a very good indicator of anything. They had many performers but none of the electronic winners were highlighted (last year they had a mash up with Deadmau5 and Dave Grohl, at least). The Grammys too are in the thrall of the past, but that’s to be expected since their demographics and voters skew so old.

It is easy to figure out where they kids are going. They are heading where ever there are bikinis and a good time. Bye bye rock music.

Cross posted at LITGM

The utility industry in the United States has made a giant return to traditional rate-making in many parts of the country. For someone who is unfamiliar with the concept, here is a brief summary:

1. Utilities receive a “monopoly” on services in a particular region (a city or county) which means that they are the only company allowed to provide service (thus you don’t have 2 sets of power lines going to your house)
2. The utility submits their expenses and capital requirements to a state regulator, who approves the spending plan
3. For the portion of the utility funding that is provided by equity (shareholders), the company is allowed to earn a “rate of return” that gets included on rate-payers bills

When I was fully engaged in the industry in the 1990′s, there was massive talk of “de-regulation” and traditional “cost of service” regulation as described above was seen as an archaic relic to be disposed of as quickly as possible with newer, more innovative models. If you would have told someone in the mid 1990′s that here, 20 years later, utilities would be HAPPY to still be part of a guaranteed return on their regulated investments, you’d have been greeted with a blank look of incredulousness.

The most famous critique of this model was a CEO who was said to have stated that “this is the only industry where I can make more money by remodeling my office” which of course was technically a true concept. This sort of talk was endemic in the 1990′s.

To be fair, the entire energy business used to be run this way (except for the municipal entities which were completely owned by some part of the government), and now much of the generation and parts of customer services are run using other methods involving some sort of at least partial competition. The generation of power, for the most part, has been financed using alternate methods (auctions, price caps, etc…), but it is notable that the only utilities going forward with nuclear plants are those with the old-school rate of return regulation (Southern Company in Georgia and SCANA in South Carolina).

For those entities that are still primarily regulated (non-competitive) or whom have substantial portions of their business subject to this regulation, one item coming under fire is the “rate of return” that they receive on their equity capital. When I was in the industry this number was in the 12% – 14% range; per this WSJ article “Utilities’ Rates of Return Draw Flak”:

In 92 major rate decisions last year, regulators… granted gas and electric utilities returns of 10%, compared with 10.21% the prior year and 11% a decade ago.

These rates of returns, however, conflict with the type of risk profile and links to debt interest rates that traditionally anchor utility rates of return. Today interest rates are famously low, so why is it reasonable that utilities should earn 10% or more on returns when that sort of return is far out of reach in a 401(k) for investors, for example?

Further pressure on this model seems inevitable, although rate of return is rarely so simple because if a utility spends more than they plan, in most cases this essentially comes out of the return bucket, although their are exceptions like “pass through” increases for fuel which can be made depending on the jurisdiction. This sort of item should be watched by those who have utility investments, since a serious re-appraisal of this rate would likely push it down further.

As a long-time watcher of the industry, however, the continuing existence of this sort of rate of return regulation is astonishing, given how much it was ridiculed for so many years. It is sad that we haven’t come up with anything better in the interim. The issue with monopolies is not so much the rise in costs, but the lack of innovation, I once heard. This is the case with the rate of return model that continues to exist, today.

Cross posted at LITGM

While many states in the midwest are tackling their structural problems head on, Illinois is contentedly doing things the old-school Dem way. Michigan (of ALL states!) recently enacted a right to work law and is taking over Detroit, in an attempt to finally deal with their unending fiscal decline. Wisconsin is famously taking on their state unions (with the usual assortment of hacks picketing the state capitol to boot) as well as implementing a right-to-carry law. Indiana has made fiscal prudence, right-to-carry, and right to work laws a centerpiece for many years, with commensurate success. Yet while these midwestern states attempt to reform, Illinois (mostly) stands pat.

Illinois’ litany of woe is so long that I won’t bother summarizing problems that you can find for yourselves on the internet. We recently bucked trends in the region with a giant tax increase, designed to fix our immediate fiscal hole. The immediate problem is that we are not even paying vendors in a reasonable time frame, much less fixing our structural debt issues.

However, even with this giant tax increase, the state is far behind in paying vendors for services. A WSJ article titled “Startup See Profit in State’s Financial Woes” summarizes the situation:

A Chicago startup is aiming to mine a silver lining in the fiscal misery hanging over Illinois.

The nation’s fifth-largest state is running an estimated $7 billion behind on bills for everything from Medicaid reimbursements to doctors to plates purchased for prison mess halls, forcing some vendors to wait six months or more to get paid.

That is where Vendor Assistance Program LLC is stepping in. The closely held company says it can profit by advancing the money to pay the vendors, then keeping late fees the state owes them. Vendors forego the penalty payments but get their money faster than they would otherwise.

Thus the state of Illinois, which is paying 1% / month on balances over 90 days, is essentially funding this start up. In an era of record low interest rates, our fiscal ineptitude has us paying out these high penalty fees because we cannot get our act together and fund and pay bills on a 90 day cycle.

Given that the state of Illinois funds these programs and creates a budget and just raised taxes enormously, WHY can’t they figure out a plan that pays vendors in 90 days? This should be a scandal, but like everything else in Illinois, you just get inured to ineptitude, and this is just another story among a sea of stories of criminal behavior enmeshed with old-school Dem political hacks.

To be fair, one guy that deserves some credit in Illinois is Rahm Emanuel, who is attempting to close 61 schools in the City of Chicago, and is supporting the growth of charter schools which chip away at the education monopoly and cause competition so that some neighborhood schools and selected high schools are actually up to the type of standards that would cause parents’ to consider sending their kids locally.

Cross posted at LITGM

Here’s another post from our good friend Gerry over at LITGM who is at the “front lines” of the gun buying explosion at a major outdoor retailer…

The federal threat of banning of certain firearms and hi-cap mags has eased for now. The Hairy Reed said so.

Politicians are still willing to present some new background check legislation for what that’s worth. A second separate gun ban bill will be proposed but highly unlikely to pass.

The gun grabbers may seem to be in retreat mode but will be firing back when they believe any upcoming tragic event provides them with another opportunity to try it once again. One thing I know for sure about libtards is they never give up until they accomplish their ultimate Utopian goals. On this issue that would mean eliminating private ownership of all firearms no matter what the spewing heads in the media say. Some states will ban a this or a that and maybe that’s the way it will happen. For now I am still proud to be an Indiana resident and happy refugee from Illinois.

Coincidentally for the last three days the ammo truck came through. Since the 5 box limit is still on we are now able to make it through an entire day with some leftovers except .22LR. Each morning the ammo locusts enter and clean that category out within the first 30 minutes even with a 100 round limit. In my observation .22 LR is currently THE most popular round, taking over in requests for all rifle and handgun ammo combined.

Soon all things relating to firearms should get back to normal, becoming more available and prices easing up at retail. Our customers will be more at comfortable when coming in to buy ammunition and I can get busy dong my job instead of making excuses why the shelves are bare. Answering the phone and not being asked if we have any .22 or 9mm ammo in stock will be a relief in itself. I will feel much better when the first boxes of PMAG’s arrive and an assortment of AR’s occupy the shelf once again.

Credit goes to the NRA and all its members new and old for placing pressure on the Trotskyite politicians, it looks like the grabbers will head back to their hide-holes for a while. But they will be back. There are times when I watch Wayne LaPierre on television and cringe. We could use a more articulate and plain-spoken spokesman (paging Dr. Ben Carson) in my opinion but Wayne did get the job done. In addition, all the law abiding gun owners deserve praise for calling their representatives, calling in talk shows and doing what it takes to demand our Constitutional right to self protection. Citizens spoke with their wallets too, buying record numbers of firearms of all types and (I hate to say this) buying up every box of ammo, bullet, primer, press and powder container in sight. Reloading has become extremely popular. Special credit goes to all the first time gun buyers especially the women. Many more women now feel much safer when out walking or jogging alone. Practice, practice and practice, ladies.

We’re still out here in flyover country clinging to our guns and religion. We’re prepared to put up a fight again whenever our Constitutional right to personal protection and right to hunt is threatened. No east coast libtard with a Central Park West worldview is taking away our Second Amendment rights dammit.

The grabbers will be back and you can count on it. Until then stay vigilant. This could be my last entry for the “Tales From The Front” category for a while.

Cross posted at LITGM

It’s that time of year again. There are hordes of people just like this guy who were out at 6am here at River North in Chicago and the bars are packed to the gills. Last year at this time it was 80 degrees and beautiful (that will never happen again in my lifetime) but this year it is a more typical 32 degrees with a bruising wind. That won’t stop the fun though and everyone I run into is buying booze or taking cash from the ATM or trotting from bar to bar or waiting in line somewhere.

St. Patrick’s Day in Chicago has to be seen to be believed and I am not talking about dying the river green.

Cross posted at LITGM

Recently I was reading how a professor at the University of Illinois at Chicago was arrested for bringing an unloaded handgun to work, and that it made the news media. I reflected briefly on the fact that you can bring a loaded, concealed gun with you in most places in many states in the US and it wouldn’t be news, it would in fact be normal activity, for instance in the adjacent state of Indiana.

Meanwhile, in California, it is common for people to smoke marijuana openly as is discussed here. Needless to say, this behavior would get you immediately arrested in many states particularly in the south and midwest.

Taxation is also highly variable on a state and city basis. New York and California have some of the highest taxes, particularly on income beyond a particular level (progressive taxes). On the other hand, states like Florida and Texas have a much lower level of taxation and a much freer business climate in terms of regulation.

Without getting into the hottest of hot-button issues, clearly there are differences in the types of marriages and reproduction rights / right to life on a state by state basis. These differences are narrowing in some areas and getting wider in others.

Some states have “right to work” laws which massively limit union power, and have flourishing and expanding manufacturing economies as a result. Visit Alabama, South Carolina, and Texas to see where all the former manufacturing might in the midwest and Northeast and West Coast migrated to (if it didn’t go to China or overseas). The enacting of “right to work” laws obviously sends an important signal to business leaders whether or not a state is a friendly place to do business for incremental investment (along with taxation).

The “fracking” revolution has unleashed vast wealth in some states, and in other states it has been banned or severely curtailed. Meanwhile, California is going in on its own with carbon regulations and highly aggressive “green” energy targets, while other states are heavily reliant on traditional (and cost effective) technologies.

The differences on a state-by-state level on these different dimensions seem large and growing. They are much more subtle (though often correlated) with the Red / Blue analysis. An attempt to classify these vectors could be done as follows:
Energy Freedom – the ability to extract and use cost effective technologies (like natural gas, fracking, and coal) and a state’s willingness to invest more for reliability or the requirement to use expensive (green) technologies and curtail energy use even at the expense of industry competitiveness and reliability. California is likely on one end and Texas is on the other side, although many others have large freedom including Pennsylvania.
Safety Freedom – the right to defend yourself at home, in transit, at work and during study or whether that is assumed by the state. Sadly the most restrictive is Illinois and there are many candidates on the other side throughout the south and midwest (Indiana).
Personal Substance Freedom – the right to smoke, the right to drink, and the right to use various drugs or stimulants. Some odd states (like Colorado) are leading the way on this, it isn’t always the traditional Red / Blue divide.
Freedom to Work & Hire – the right to work and not be forced to join a union, and this is also tied with local laws and practices that limit the ability to hire and fire and direct hiring or limit firing in various dimensions.
Freedom to Build / Live / Rent – Houston is famous for having very limited zoning while other states and municipalities have highly restricted zoning practices. The New York co-op concept also severely limits new entrants along with rent control. These laws can also include whether you can work or have a business in your home. While subtle, these practices can have a large impact on prices and how the region functions.
Freedom From Excessive Taxation – Some level of taxation is necessary for government to function but high tax levels have severe intended and unintended consequences of under investment and evasion. Taxation includes state, local, city, sales, estate, property, and “sin” taxes. These vary significantly by area but are highest in California and the East Coast and likely the lowest in the South.
Freedom of Marriage Choice – A larger portion of states are recognizing marriages beyond the traditional marriage, and this varies by state
Freedom of Reproductive Rights – There are a wide variety of approaches and trends on a state level and then there are practical impacts, as well. This is highly variable by state in practice
Freedom on Medical Rights – an emerging model will be how each state approaches new medical practices and funding methodologies, along with the practical availability of doctors that subscribe to the state’s controls and funding methods. This area will grow exponentially in the near future

I believe that these sorts of analyses on a state by state level are much more useful than the traditional Red / Blue view (although they are often correlated) and when you start to dig in to the differences on a state and municipal level they are staggering, particularly when you view the extremes.

It would be interesting and useful to begin to put together the various data sets to analyze states and municipalities along these continuums, and others that I’ve likely missed.

Cross posted at LITGM

I have been working with blogs and blog-like technology for many years. The transformation of the tools in terms of cost, ease of use, and capabilities has been amazing to watch.

We have blogs on the “blogger” platform run by Google and the “wordpress” platform, which can either be self-hosted or run on the wordpress.com free sites (you get ads in some of your posts, and can pay a bit more to have those ads removed).

Regardless of the usefulness and / or future of the blogging format, here are some of the advantages that have come up over the last 10 or so years in terms of technology, cost, ease of use, and capabilities:

1. Cost – the software has always been free from either Blogger (Google) or Word Press (Open Source). However, many people chose to self-host for many reasons, and the cost of hosting has gone down dramatically over the years. The “free” alternatives are also extremely robust
2. Performance – the performance of the sites have exponentially increased in terms of speed, although it is difficult to quantify the differences in terms of the general increase in overall processing speed (bandwidth) on the part of the consumer as well as the provider, which is also tied to the reduced cost / MB of a high speed connection
3. Stability – Stability used to be wobbly on some of the sites, particularly from the administrative perspective. We used to have to save our posts all the time in case the site crashed, and fixing items like categories / tags used to be a lot of effort and painstaking. Many of these problems seemed to have gone away or are significantly reduced on the major platforms
4. Features – Many, many things you’d want a blog to do are built in. Not just the traditional items like links, categories, tags, photos, polls, but also more exotic items like linking to different media and different sorts of geographic data. Advertising is also built in, but since we don’t advertise, I’m not an expert in this, although I assume this is crucial to many people
5. Coding – you used to need to know some HTML or other languages in order to work effectively with blogs or to deploy the most advanced features, but since many of those capabilities are now built into the tool, this is less important or hardly needed at all
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This is another installment from our friend Gerry over at LITGM who is in the “front lines” of the gun rights issue working for a major retailer.

It is becoming all too weary for me to tell customers “no”. As a major outdoor equipment retailer it must be frustrating to know how a great sales period that is usually slow could have been even greater if they had the product to sell. That said, our store and the entire chain is doing very well. Turkey season is approaching and all the necessary items are being bought at a brisk rate. Now it’s fishing’s turn and yesterday the customers who are fishermen came in for a special sales event. They were all buying new tackle in anticipation of the season.

At work the phone doesn’t stop beeping so we started playing a new game. Between us we call out a caliber we each predict that will be requested by the caller whenever the phone beeps. I usually go with .22. Paul likes 9mm while Don prefers 5.56 or .223. “Hello, hunting department, how may I help you?” is soon followed by a “no sir, we are all out of 9mm.” Paul quickly lets out a “woo-hoo I won!” No bets, just fun. Breaks the monotony of constantly saying no.

Not much new to report from the firearm front. There is no retreat, more of a cease fire mode, awaiting replenishment from the supply line. AR’s come in small numbers and are quickly snapped up. Same holds true for ammo. Each morning the same dozen or individuals so show up looking for their favorite calibers. These are the battle hardened. They know they’re unlikely to find what they want but they still arrive to look. Maybe, and occasionally when they show up we actually have meager replenishment for them. Then it’s Katy bar the door – soon it’s gone. It goes into basements, garages and some to the great aftermarket to be resold. My bet is not much is being used at the range right now. When asked how soon ammunition will return to full supply I repeat the same answer trying my best to appear positive instead of weary. When the entire nation’s supply of consumer ammunition is sold within three weeks it takes a long time for manufacturers to recover. That is the simple truth.

What I witnessed last week was astonishing. 62 cases of PMC .233 55 gr. FMJ disappeared within 36 hours. That is 62,000 rounds (1000 per case) packaged in boxes of 20 and with a limit of 10 boxes per customer sold out in our one store alone. The first wave of regulars came in and while packing their baskets were simultaneously calling friends to alert them to their find. About an hour or two later that larger second wave arrived. Late in the day the after work crowd came in to clean up the leftovers.

They tell me of their own conspiracy theories or those they discover on the internets. The one most interesting is that the government is intentionally buying enough ammo with the intent of keeping the civilian supply low. So I went to a close acquaintance who is with the FBI. I asked him if what I hear about government bureaus such as NOAA and the DCFS buying excessive quantities of ammunition is true and why they would need so much, as many customers have claimed.
Read the rest of this entry »

This is another “tale from the front” from our friend Gerry over at LITGM. He works with guns and gun buyers all day in the thick of everything…

Women And Firearms

While most may not realize this, a fair amount of new firearms currently being purchased are by those who never held one before – especially women of all ages. This fact alarms those nanny-state leftists, Trotskyite politicians, useful celebrity idiots and milquetoast media sluts. While they gasp at the thought of so many first time gun owners this is a good sign that the Second Amendment may not be infringed after all.

A Gallup poll reported that in 2005, 13 percent of all women owned a gun. That number jumped to 23 percent in 2011. Here is an interesting read on the subject, from the New York Times of all places.
If we were a well-armed society last year then we are a very well armed society this year.

Thank you ladies!

Last weekend a lady who reminded me of my mother was standing at the end of an aisle holding some packages in one arm. She asked me for some assistance. She was somewhat overweight, well-dressed and used a cane for support. While not as old as my mother there was something very similar about the two.

As I drew near I could see one package was a clear plastic container holding Howard Leight hearing protection headphones. In the other was a nylon holster. Her question to me was – is the holster she chose able to fit her new handgun, a small .38 special S&W revolver?

Upon close inspection the holster was the type to be worn on the belt, outside the pants. Before explaining the function of different holsters I politely inquired what she intended to use her handgun for. Personal protection was the answer. Do you intend to wear the holster outside the pants or concealed, under the pants? Neither, she was simply looking for one that would keep her revolver from being banged up in her purse or, in her words, “have it accidentally go off”. What to do?

I explained that while the holster she chose was a good fit it was meant to be worn on  the belt and exposed. It had a safety thumb break strap secured by a button snap with a thin piece of plastic. The strap keeps the revolver secure and by using the thumb it will release the revolver for use. With the button snap and strap secured I explained, it could take her two hands and at least thirty seconds to draw it from her purse. A long time to fumble around in a self-defense situation. I steered her toward a thin, concealable foam/nylon product from Blackhawk. I use it as my personal carry choice. It’s lightweight, good for protecting her revolver from abuse in the purse and somewhat easier for her to interact with due to the lack of a safety thumb break. And it’s very affordable.

All of this considered I proposed another solution. We sell a line of handbags designed for women who wish to carry self-protection firearms. I led her over to the “Gun Totin’ Mama” line of handbags on display. Demonstrating to her the built-in feature of a zippered side compartment containing a lightweight nylon holster with soft velcro on one side and opposing hook velcro on the other, this slight holster (similar to the Blackhawk) could be positioned according to her style for ease of use.

She smiled. “You just gave me a great idea” was her reply. She did not wish to spent $99.99 on another handbag. Instead this inspired her to use another handbag she already owned. Her intent was to buy the Blackhawk $14.99 conceal holster and sew velcro to it. The other velcro side would be stitched to the inside of her old handbag. Clever.

The lady explained to me that when her husband asked what she wanted for Christmas her response was a gun. This floored the old boy, who had just arrived on the scene and explained to me his surprise at her request. They would soon be going to the range where he would help her become more familiar with her new gift. This explained the headphones.

The Leight brand sells, it’s a good commercial retail product. They both asked me why there was a large price difference in the selection of headphones on display. I explained the features on more expensive models.

The lady was so thankful and delighted that I spent so much time with her she went home and wrote a nice note about me on the corporate feedback website. This got back to me through management, who were very grateful and complementary.
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A few things have happened recently that have the hairs on the back of my neck standing up in economic terms. It feels like it did right before the crash in 2007-8, when we were still in the end stages of the bubble.

One – Japanese and Venezuelan devaluation

Japan (a thoroughly modern economy) and Venezuela (a semi-dictatorship oil economy) both recently devalued their currency. Japan was warned by the G7 (fat lot of good that will do) here about it:

The official said: “The G7 statement signaled concern about excess moves in the yen. The G7 is concerned about unilateral guidance on the yen. Japan will be in the spotlight at the G20 in Moscow this weekend.”

Venezuela did more of an “old school” devaluation, where the “official” rate is moved closer to what it really is trading for in the black market, and Bloomberg writes about it here.

Venezuela devalued its currency for the fifth time in nine years, a move that may undermine support for ailing President Hugo Chavez and his allies ahead of possible elections later this year… He ordered his government to weaken the exchange rate by 32 percent to 6.3 bolivars per dollar… A spending spree that almost tripled the fiscal deficit last year helped Chavez, 58, win a third six-year term. The devaluation can help narrow the budget deficit by increasing the amount of bolivars the government receives from oil exports. Yet the move also threatens to accelerate annual inflation that reached 22 percent in January.

I kept that whole paragraph in the block quote because it encapsulates all the elements of fiscal ruin so succinctly – profligate government spending, impact on commodities imported or exported (that move opposite of currencies), and the impact on inflation.

Two – The Chinese and Russians Aren’t Buying Our Debt – We Are

I had thought that the Chinese and other countries were big buyers of our debt which funds our budget deficit. But I was wrong. Per this WSJ article:

China’s holdings of $1.17 trillion in U.S. Treasurys in November 2012—the most recent date for which we have a figure—are virtually unchanged from two years earlier, when they stood at $1.16 trillion. Beijing has purchased a lot of Treasurys over this period but many have been redeemed. Net new investment is essentially zero.

But if the Chinese aren’t buying our debt, who is? The answer – the US government.

The largest buyer of new U.S. Treasurys during the past three years has been not China but the U.S. Federal Reserve. In fiscal year 2011, for example, the Fed bought more than three-fourths of all new Treasury debt.

Here’s a challenge for you – try explaining to a child or someone unfamiliar with economics how it is that we can spend money that we don’t have, issue debt, and buy it back ourselves.
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It was another sunny winters’ day here in Chicago while the East got socked with snow. Here is the Trump building, IBM, and new construction. I like the water tank, too (don’t know what the “Big Picture” stands for but its been there for years).

Just North of the Brazilian steak house is a building that’s been semi-constructed and abandoned since the 2008 property crash. Hopefully they can get it completed before the next crash.

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France and Nuclear Power – Losing Its Edge

France has long pioneered a tradition of being reliant on nuclear power. France has 59 nuclear reactors and delivers a very high percentage of their total power needs through nuclear power, as well as being a major exporter of electricity to adjacent nations. France chose nuclear power after WW2 because they lacked local energy resources and had a strong engineering capability.

The company that runs the nuclear industry is called EDF. EDF is 84% owned by the French government, so you could basically say that the French government owns by far the most significant portion of their own electricity industry (and 15 nuclear reactors in the UK, to boot). Currently EDF pays a very high dividend, yielding 7.7%, due to the fact that their market capitalization has declined precipitously while the company has tried to keep the dividend constant.

For many years EDF provided France low cost electricity, which provided a competitive advantage against their industrial neighbors such as Germany. Today, however, Germany has a cost advantage over France in terms of power, since the price of coal has dropped and Germany uses a significant amount of coal to burn their own electricity. One of the main reasons that the price of coal has dropped is the rise of natural gas in the USA, which in turn allows the US to export their surplus coal overseas to Europe. This article from Bloomberg provides a good overview of the competitive situation.

“French energy used to be competitive,” said Emmanuel Rodriguez, head of energy for the French unit of ArcelorMittal, the world’s biggest steelmaker, which also has operations in Germany. “This model is crumbling. Germany is now better than us whereas a decade ago they were much more expensive.” French power prices for big industrial users are projected to average as much as 25 percent higher next year than in Germany, according to Uniden, a lobby whose members consume 70 percent of electricity used by industry in France.

In another sign of the upside-down world we live in, EDF’s dividend at 7.7% is far higher than what they are paying in yield on debt of 4.375%, even debt that looks suspiciously like equity here in the US (a perpetual dated bond is debt without a maturity date).

France is also struggling as they try to build new nuclear reactors. The next generation plant being built for EDF by Areva has had cost overruns and schedule delays:

EDF has previously said France’s first EPR would cost €3.3 billion and start commercial operations in 2012, after construction lasting 54 months. The estimated cost has now increased to €8.5 billion ($11 billion) and the completion of construction is delayed to 2016.

Energy Futures Holdings

Energy Future Holdings took a major Texas utility (TXU) private in a 2007 deal that leveraged up the company with $45 billion in debt in 2007. 2007 was a horrible year for most deals across almost all sectors including real estate as it was the “height” of the bubble before it all came crashing down. TXU, one of their entities, has bonds trading as low as 15 cents on the dollar (for bonds that have an interest rate of 10.25%, to boot) per this Bloomberg article.

The company has struggled to be profitable ever since the LBO, as the shale revolution created a glut of natural gas, pushing U.S. prices to the lowest since 1999 last year

While EFH is not a public company, they do have publicly traded debt and thus they have an active investor relations department. If you read through one of their documents you can see their expectations for natural gas prices and how they have been able to keep the company going for as long as it has due to a strategy of hedging against low priced natural gas, as well as through what seems to be very effective management of costs. However, the large debt load likely has to be restructured since a company that was built to profit from a marginal cost of power based on $14 / unit priced natural gas cannot service that debt load with the cost of natural gas between $2 – $4 / unit.

Cross posted at LITGM

For Christmas a friend of mine rented a house to host their family staying from out of town and to have a holiday party. The house was in a “hip” part of town (near Wicker Park, where I used to live) and was a large 3 story very nice home typical of the area.

She rented the house from Airbnb. Private individuals rent whole apartments, houses or rooms in their house to essentially strangers using the service. For example, this is an example of an entire house for rent in Wrigleyville.

While I was first thinking that this seemed like a risky move, the party turned out very well. The house was beautiful, with a nice TV, stereo, fully stocked kitchen, and even a decorated Christmas tree. Since the house was so nice, everyone seemed to go the extra mile to keep it clean – if a drink was spilled, someone cleaned it up right away (probably the fact that there was a damage deposit helped, too).

A recent BBC News article on Airbnb described the phenomenal growth of the service and how an idea that seemed radical (renting out your home to complete strangers) is now becoming mainstream.

Airbnb is a website matching up homeowners with tourists and backpackers wanting a place to stay. Set up in 2008, it’s one of a wave of sites – like Wimdu, and Homestay – making money out of those seeking a bargain. The firm says it has listings in more than 35,000 cities in 192 countries.

I know of other people who travel around the world using Couchsurfing, where you basically just crash for free on a strangers’ couch. This seems even stranger, but apparently works out well and people generally make friends and have a good time, although of course there are horror stories (probably the ones your mother would send you if you told her this is how you planned to travel the world).

Likely one element that makes this successful is the fact that most of the people doing the hosting and the people using the service are outgoing and friendly types. The sort of person that would use or trust someone else in the first place are generally the ones that would make these services successful. Another type of service like this is HomeExchange, where you can exchange your home in a tourist friendly area for one in another tempting locale (generally there are additional checks on these sorts of arrangements that you wouldn’t see in Couchsurfing).

An analogous situation is when we go on a tour with a company called “Backroads” where you travel to great locations like Italy but you do active vacations including bikes, hiking and even kayaking (although I am certain it wouldn’t stress out Dan). If you take an “active” tour, you seem to have positive experiences with your peers, since the fact that they volunteered for a tour involving physical fitness (and not just sitting on a bus) makes them the type of people less likely to complain and generally to have an upbeat attitude. We have been on four of these trips and have not had significant issues with any of our fellow tourists, even though we are confined with them (at various times) for 5-7 days.

The idea is that the type of people likely to assume that the other person won’t steal or take advantage of you, and in fact might be someone interesting that you might enjoy spending time with, is a positive social trait that would be associated with many parts of the world. I don’t know if I’d expect this type of reciprocity everywhere, however.

Cross posted at LITGM

I recently walked about town with my new Pentax K-01 camera recommended by Jonathan over at Chicago Boyz and even read a bit of the manual (a shock!), and found a custom setting for “blue sky”. The camera took far better pictures than I was used to although I am still having trouble fitting what I want to see into the frame since I am used to a tiny (crappy) digital camera.

Here is 900 North Michigan with the distinctive 4 spires on top and the Chicago city flag blowing in the breeze.

The Allerton hotel with the iconic “Tip Top Tap” bar on the roof, and the Hancock in the background.

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Our good friend Gerry from over at LITGM works for a major reseller of outdoor equipment including firearms and is on the “front lines” in this important debate. Here is his story…

In the wake of a senseless tragedy and the residual madness regarding the Second Amendment of the Constitution of the United States I try to find the positive things. It’s not easy if you pay attention to the media but there are plenty of positives to witness first hand while on the front lines.

Good news #1

Ammo is coming in again, that is some good news. The bad news is customers snap it up as soon as it hits the shelves. Even with a ten box limit it disappears fast as if it were being given away. The magazine aisle is still barren. No backorders or rain checks are being issued. The reason is because manufacturers cannot guarantee when they will get it into our supply chain and that goes for firearms as well. Much of it has been wiped off the website. If there is no guarantee from a manufacturer then the company will not disappoint customers with a potentially false promise. Seems like a sound business decision.

Yesterday a man approached me with the usual questions. Any .223 come in? No. Any 5.56 arrive? No. How about PMAG’s? No. What’s going on, when do you expect to get more? Don’t know. Do the delivery trucks come in overnight or during the day? Nobody knows. What is holding up the supply? Manufacturers cannot keep up with the demand. I heard some is coming in today, is that true? I’ll check.

I told him to stick around while I made a personal visit to the warehouse and see. Some ammo came in and was being unloaded off the truck. What was on the pallets was unknown because it is all mixed up and shrink wrapped so there is no way to tell what exactly was in the shipment but I did manage to make out some branded shotshell cases. After my trip to the back I saw the department manager. He told me he heard some 5.56 was in but didn’t know how much and would get back to me when it was unwrapped. I explained that a customer had the shakes for some AR ammo. He said to tell him to come back in an hour or so and even then he did not know how much would be available since it sells instantly.

By this time the man was accompanied by his wife who was pushing a cart with various handgun ammo boxes as I returned to the floor. I told him that yes, some had come in. When I told him it would be in an hour or so I detected that he was getting the shakes. On the floor I refer to these customers as being similar to drug addicts. I see it daily. Folks are so frightened of bans or restrictions or high prices they are taking the lack of availability way too seriously.

He introduced himself as Sam and his wife Jill (not their real names). His shakes were brought on by the fact that he was due in for work in an hour. They discussed their situation in private. My take was they were after a twenty box limit between the two of them. Ten wasn’t enough with him having to leave. He pleaded with me to make it quicker but I explained that it was out of my control.

Going about my business I spotted them an hour later in the archery department looking at crossbows. In another half hour I spotted them walking toward the checkout grasping their twenty boxes of American Eagle 55 grain 5.56 NATO. That’s 200 400 rounds total. They were all smiles as if they just scored an eight ball. We spoke.
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This week I walked by the always-mobbed Apple store on Michigan avenue where they had a big window display for the new iPad mini. I liked the expression on this woman’s face as she looked at her new iPhone.

Down the street you can see the lonely Garmin store. Garmin, the GPS related company, has its only retail store in the world (per wikipedia, at least) on Michigan Avenue and I have been by it many times and it is sparsely populated, at best.

GPS used to be a great hype story, with the possibilities seemingly endless, and companies poised to clean up with huge stock prices. Soon, however, GPS became a widely used tool, background almost, and the hype was forgotten. Garmin (GRMN on NASDAQ) initially was a darling of the stock market, a momentum stock, but which has since transformed itself into what appears to be a well-run and diversified company spread across the marine, flight, exercise, and auto areas. They have changed from a stock touting the limitless growth of GPS to a practical stock that explains their gross and operating margins for each segment clearly and also how they are using the free cash flow that they receive to pay investors a large and growing dividend – go here for a brief presentation for investors from their web site.

It is interesting to see how our perception of a company or stock is based on our personal experience with the consumer devices. We see Apple at home or at work, and interact with it every day of our lives (if you are an “Apple” person). On the other hand, few of us think much about Garmin, but it is integrated into cars, exercise devices (one of the few stand alone devices that really seems to be growing), planes, boats, and many other areas. At one time it seemed that everyone would have a stand alone GPS devices, but then the “coolest” consumer application components were integrated into iPhones and Android phones and became commonplace in autos so it just became less exciting over time.

Cross posted at LITGM

Taxes are very complex in that there are many different types of taxes designed to raise revenue and modify behavior that the government wants to incentivize or dis-incentivize. At the highest and most simplified level you have:

Sales Taxes – generally taxes paid by the buyer to the seller at the point of purchase (tax on food at the grocery store)
Income Taxes – taxes on money people earn paid to the Federal, State or Local governments. Often this money is “withheld” from your paycheck. Typically there are myriad deductions applied to determine the amount owed
Property Taxes – taxes levied on property owned based on valuation and paid to the local government annually
Excise or “Sin” Taxes – taxes on specific items that the government wants to dis-incentivize such as cigarettes and alcohol, collected at the point of purchase
Payroll Tax – tax on wages used to “fund” social security and medicare and are levied on the employer and employee alike, to a certain amount, with few or no deductions
Capital Gains Tax – tax on the profits of securities, properties or businesses sold when the amount received is greater than the cost
Estate Tax – tax on the accumulated assets of someone who died, paid to the government.

There has been talk in the media about wealthy individuals who advocate “higher taxes” for various reasons, and they receive disproportionate press coverage for their “selfless” actions. Warren Buffett in particular has called for higher taxes on the rich, specifically INCOME taxes, as you can note below:

As fiscal cliff talk buzzes around Washington and Wall Street, Buffett on Monday published a New York Times editorial calling on Congress to impose a 30% tax on people making $1 million to $10 million a year and 35% percent above that.

However, Warren Buffett is taking significant steps to actually avoid paying the ONE tax specifically designed for him – the estate tax. Here he joins with other billionaires on their “pledge” to give away their fortunes (to trusts that they would designate how the money gets spent).

Warren Buffett got 11 more billionaires to agree to give away half of their wealth to charity.

It is hypocritical for those billionaires like Buffett to set aside their money in charities to be directed for purposes that they “believe in” while everyone else’s money is funneled to Federal, State or Local governments to fund whatever that governmental body decides to do with it. You and I can’t control where our payroll, income, sales or property taxes go – and we have to accept that. Then Buffett, too, should accept that when he calls on higher taxes for everyone (but income taxes hardly dent him since his wealth would be taxed through capital gains if he chooses to sell or most likely the estate tax on all of his unrealized gains through his lifetime) he should dismantle his “estate tax” protections and just show up and give his billions directly into the US Treasury when he dies, to be used for whatever purpose the government chooses, likely to pay interest on debt that we issue to the Chinese or to pay for some sort of poorly run entitlement or wealth transfer scheme.

Warren – if you believe in the call for higher taxes, then just die without an estate plan, and let the Federal government get their 40% of your billions. It is the right thing for you to do, since you believe (apparently) that they will spend this money wisely.

Cross posted at LITGM