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    25 Stories About Work – Experience

    Posted by Carl from Chicago on 1st December 2016 (All posts by )

    I was recently on a plane doodling and thought of some funny / interesting stories from 25+ years of working and traveling. So I decided to write them up as short, random chapters of a non-book with the title of this post. Hope you enjoy them and / or find them interesting. Certainly the value will be at least equal to the marginal cost of the book (zero)…

    Chicago, 1990s through today

    I just finished reading the book “Disrupted” by Dan Lyons about a journalist from Newsweek who takes a job at a start up which eventually goes public called Hubspot.  Mr. Lyons is out of place from day one as he describes how the company acts without much oversight, firing workers on a whim (they ‘graduate’) and rapidly turning over employees as the company attempts to get to the public markets before the money runs out.  To make this even stranger, the author also writes for the HBO sitcom “Silicon Valley” and Hubspot allegedly goes after him to stop this book from being published, and the board finds out about it and fires / sanctions some (but not all) of the managers that he portrayed in the book.

    All that aside, the purpose of this post is to talk about experience, and how it changes you over the decades, and its value and detriments.  Reading that book caused (not “inspired”) me to think about my own views and how they’ve evolved over the years.

    It is strange when you go from being the “new kid” to being the grey-ish haired “experienced” one.  Recently I was at 1871, the incubator in Chicago for new start-ups at the Merchandise Mart in River North where I used to live.  As I walked around I noted all the fresh faces, the beer on tap, and the grown men riding around on razor scooters to get from meeting to meeting.  Then I realized – hey I am just an old guy here.  I’m not one of them, although I could probably be a boss of some sort in one of these companies (depending on what they are looking for).


    Read the rest of this entry »

    Posted in 25 Stories About Work, Book Notes | No Comments »

    25 Stories About Work – Getting a Review and Thinking Like Your Boss

    Posted by Carl from Chicago on 22nd November 2016 (All posts by )

    I was recently on a plane doodling and thought of some funny / interesting stories from 25+ years of working and traveling. So I decided to write them up as short, random chapters of a non-book with the title of this post. Hope you enjoy them and / or find them interesting. Certainly the value will be at least equal to the marginal cost of the book (zero)…

    Chicago, 1990s through today

    If you are ever looking for a great book to read, I would recommend High Output Management by Andy Grove, the late former founder of Intel. I picked up a hard copy on the internet for just a few dollars including shipping and although it was written in the mid 1980s (and updated in the early 1990s) much of the book is completely relevant for both new entrants to the work force and those that have been engaged for decades.

    Andy Grove had a passion for getting the most out of his employees, since he was focused on productivity and his staff represented a large cost (and opportunity) for his organization. He approached productivity in two main ways 1) by leveraging process and eliminating bureaucracy he could move faster at lower cost 2) by training and motivating his staff, he could achieve greater outputs. For the purpose of this post we will focus on #2, although it should be remembered that Andy Grove also essentially popularized key elements of the “open office” plan where executives sit amongst their staff which I will cover in a future post.

    For his employees, he defined motivation as getting the maximum that he could achieve. His motivation would broadly be considered “engagement” in the modern definition. “Engaged” employees go the extra mile and are passionate and drive for results, while “dis-engaged” employees are an active drag on the business and your company would frankly be better off if they just stayed home. Most employees are in the middle of the spectrum, neither actively engaged nor disengaged.

    Training and feedback are the key elements of this post. Andy pushed training in his business and held his executives to a standard that they needed to teach and be part of the process of investing in employees. I remember when I was starting out in my master’s program many case studies held up Motorola as ahead of their time with the “Motorola University” of classes to train and advance their employees. All of this was done before the internet with papers, books and physical classes and it represented a significant investment for the company. Today, these programs have mostly been minimized at large corporations, although many service firms (financial and technology) still invest heavily in training and grooming their own staff, and most large internet / technology firms have more extensive orientation and learning methodologies.

    For feedback, there is a template for an annual review in this book from the 1980s which contains all of the key elements of an employee review that you might receive today. The employee is supposed to do a self-review prior to the meeting, and the manager goes through the strengths, weaknesses, and areas of improvement and seeks out feedback from peers in order to develop a thorough analysis. Andy Grove mentioned how important employee development and feedback was to him and how he forced other top executives to be part of and even care about the process although many of them did it in a perfunctory manner (complying with the process but not the “spirit”).

    From my personal experience and from those of my work acquaintances across many industries, the formal personnel appraisal has been dying for many years and is usually done in a perfunctory manner if it happens at all. If you are in a services business (consulting, law, finance), your personnel review is essentially done for you in the course of your engagements, since “good” staff are selected for teams and “poor” staff are shuffled around and / or “ride the bench”. Leaders have an incentive to collect (and shield) the best staff because they make the most money for their groups by pleasing clients and billing lots of hours while the poorer performers are not selected and (mostly) find their way out of the organization (or into the back office bureaucracy where they don’t face clients). While the service firms’ HR departments would vehemently deny this statement, it is the “broad” truth.

    But if you are in a corporation or smaller business that is not service facing, you will be most impacted by a poor or minimalistic review process (as an employee), because you won’t get valuable and direct feedback that will help you grow and improve. In today’s corporate environment, re-organizations are frequent and managers rotate through departments (or are thrown into direct work), so supervision routinely moves to the back burner. There is little incentive to groom and work on staff (as a manager) if you aren’t going to be around for 2-3 years in the same job because it takes time to invest in staff and improving processes and behaviors and there is no purpose in putting in this sort of investment if you are just going to move on to the next job anyways.

    Read the rest of this entry »

    Posted in 25 Stories About Work, Book Notes, Management | 12 Comments »

    Portland “Riots”

    Posted by Carl from Chicago on 12th November 2016 (All posts by )

    Recently I moved to Portland, Oregon. Portland is a very clean and safe city, albeit one with a lot of homeless people allowed to camp out on the street. Crime here is miniscule by the standards of Chicago – rather than seeing murders every day (with multiple murders and shootings compressed into one story since it isn’t “news”), you can actually see leading news stories about a guy who got his bike stolen, with a picture of the thief from a security camera.

    Now Portland is in the national news for a different reason. After the election, protestors have been taking to the streets. I was in a cab back from the airport Thursday night and my twenty minute ride became a 1 1/2 hour ride since the protestors were blocking bridges and highways. It was a bit unnerving because you were just sitting in traffic with no information and it could go on indefinitely.

    The protestors have been walking through neighborhoods and shopping areas and blocking bridges and the police have mostly left them alone. They did break business windows in an area less than a mile from where I live such as this Bank of America ATM bank branch. They set a couple of fires in dumpsters too. But generally they were pretty calm and the police followed them and didn’t bust their heads, Chicago-style.
    Read the rest of this entry »

    Posted in Civil Society, Current Events, Oregonia, Politics | 27 Comments »

    Efficiency and Restaurants

    Posted by Carl from Chicago on 30th October 2016 (All posts by )

    Since I eat out a lot and have frequented restaurants of every stripe over the last few decades I am always interested in restaurant efficiency. The restaurant industry is brutally competitive and it always disturbs me when I eat at a restaurant and enjoy it but then fear that the restaurant won’t survive because it lacks a critical mass to make enough money.

    There is an Italian restaurant called “Grassa” in Portland (you can see their logo, below). They are attached to another restaurant called “Lardo”.

    These restaurants serve high-end food (not luxury cuisine, but far from fast-food) and alcohol but have communal tables and always seem to be packed with a line out the door. They are different because their menu is a large signboard (dishes are frequently updated) when you enter the space and you order your food at a central register and they hand you a “flag” to bring with you to your table. Then when your food is ready, they bring it out to you and take away your flag and you eat your meal. Drinks are brought out first (and appetizers) and you can also flag down one of the servers to order more drinks (although most people tend to have one drink with their meal and then leave, based on a few times that I’ve sat at the restaurant). You can also order your food “to go” at Grassa, as well.

    This model drives peak efficiency at the restaurant. There are many fewer tables than you would need at a “standard” restaurant due to the communal standing tables and the food comes out as soon as it is available (the servers don’t have to take orders, they just serve the food as soon as it is up and return back to the kitchen area, unless they are bussing a table that just left). They don’t have to take reservations or mess with any of that complexity, either.

    Read the rest of this entry »

    Posted in Business, Economics & Finance | 11 Comments »

    The Hive Mind

    Posted by Carl from Chicago on 28th October 2016 (All posts by )

    As smartphones become more powerful and more connected there are subtle phenomenon that are very powerful that can go by unnoticed. For years I either walked to work or took public transit but now in the Pacific Northwest I commute by car. Since the surroundings are new I pay much more attention to what is going on than I used to in Chicago.

    In Chicago, there aren’t a lot of opportunities to optimize your travel if you are driving alongside major roads such as I290 or the Dan Ryan. Unless you really, really know what you are doing it is not recommended to get off the highway in many Chicago neighborhoods and just to follow your mobile navigation blindly. Thus in Chicago when I was in bad traffic it pretty much looked like this – a speed of zero and stuck crawling ahead.

    The first generation of car navigation tools told you how to get somewhere with the most efficient route, taking standard traffic into account. The new generation of navigation apps, however, have real-time information and continuously re-adjust the “recommended” route based on traffic, accidents and construction.
    Read the rest of this entry »

    Posted in Chicagoania, Tech | 17 Comments »

    On Investing

    Posted by Carl from Chicago on 18th September 2016 (All posts by )

    Investing has changed significantly during the 25 or so years that I have been following both the market and also the tools available for an investor to participate within the market.  The following trends are key:

    • The cost of trading and investing has declined significantly.  Trades used to cost more than $25 and now are essentially free in many cases.  Mutual funds used to have “loads” of 5% or more standard when you made an investment, meaning that $100 invested only went to work for you as $95.  These sorts of up-front costs have almost totally been eliminated
    • ETFs have (mostly) replaced mutual funds.  ETFs “trade like stocks”, meaning that you can buy and sell anytime (mutual funds traded once a day, after being priced with that day’s activity) and they don’t have income tax gains and losses unless you actually make a trade (mutual funds often had gains due to changes in the portfolio that you had to pay taxes on even if you were just holding the fund)
    • CDs and Government Debt are all electronic.  You used to have to go to a bank for various governmental bond products or to buy a CD.  Now you not only can buy all of this online, you can choose from myriad banks instantly rather than settle for whatever your main bank (Chase, Wells Fargo, etc…) offers up to you
    • Interest Rates are Near Zero.  One of the key concepts in investing is “compound interest”, where interest is re-invested and even small, continuous investments held for a long time can end up amounting to large sums (in nominal terms, because inflation often eats away at “real” returns).  However, with interest rates basically near zero, you need to earn dividend income or take on more risk (i.e. “junk bonds”) in order to receive any sort of interest income.  There is no “safe” way to earn income any more
    • Read the rest of this entry »

    Posted in Economics & Finance, Investment Journal, Personal Finance | 4 Comments »

    Updating Apple Products

    Posted by Carl from Chicago on 18th September 2016 (All posts by )

    I started out as a Windows user and was actually a Windows programmer (using MS Access) for quite a long time. I resisted the siren call of Apple products and stuck with Windows for years and years, for work and for personal use.

    Finally, I gave in and bought a MacBook Pro in 2011 which turned out to be a great purchase (and got rid of my Windows Desktop PC). I always had an iPhone for my personal cell phone and when I turned in my work Blackberry (a sad day at the time) for an iPhone, that meant that I had two iPhones. For a while I also used a Mac at work, although I ended up switching back to a Windows laptop because password resets, system upgrades and a lack of compatibility for applications built for Windows made it too much of a pain in the rear. Mac laptops still struggle in the corporate world.

    Then over the years I of course bought an iPad and then upgraded that iPad, and an Apple Watch, which I really like (although the jury is mixed on that one). Here is an Apple Watch article and review that I wrote.

    Thus I now have five (5) Apple products – a MacBook Pro, an iPad, an Apple Watch, and two iPhones. And now it is time for all the updates… iOS 10 is out now which means I need to update my iPad and both iPhones. Apple Watch OS 3 is also out and I am downloading that right now (downloading the operating system into the watch, from the iPhone, seems to take a long time). My MacBook Pro will get updated to the new Sierra OS when it comes out on Tuesday, September 20th.

    Read the rest of this entry »

    Posted in Tech | 3 Comments »

    Monitoring Air Quality – Speck Sensor

    Posted by Carl from Chicago on 14th August 2016 (All posts by )

    Due to the fact that computing power continues to increase exponentially, devices that once were out of reach for the general population are now becoming mainstream. I wrote about Netatmo, a device that measures temperature, humidity and sound (indoor and outdoor) here. Due to the internet, these devices can also be connected together in order to see a real-time version of the country, without having to look at a weather forecast.

    Recently I saw an article in an MIT journal about indoor air quality which described how cooking eggs aggravated the authors’ asthma and they were able to take specific actions because they were able to pinpoint the source of the spike in unclear air. The name of the company that created the monitor is called Speck and it was sold for approximately $200 so I thought that was a decent price point for me to join the air quality monitoring revolution. I am specifically most interested in INDOOR air quality but I will explain the broader context and then come back to the specific items I am reviewing (basically you can get official measurements of air quality in the US from public sources).

    Read the rest of this entry »

    Posted in Environment, Medicine, Tech | 3 Comments »

    Amtrak and Train Travel

    Posted by Carl from Chicago on 30th June 2016 (All posts by )

    Over many years I’ve commuted on trains for work – the light rail Metra in Chicago in the suburbs and the “L” tracks in the CTA in Chicago. However, I’ve never taken the Amtrak trains so I was excited to take the opportunity to travel between Portland and Seattle and avoid the horrendous traffic that I’ve heard plagues Seattle. Plus, you can have a drink along the way, which is frowned upon nowadays while driving (good for a Friday evening).

    You can buy your train ticket online, but you don’t get seats for coach class. When you get to the train station, there is a line that forms before the train departs and you physically stand in the line to get your ticket. At that point they assign you a seat on the train, and if you buy two tickets in the same online purchase, they will plan to seat you together. This is the ticket that they manually wrote out for us coming back from Seattle to Portland on Sunday.

    Not very high tech, I’d say. But the experience on the train was fine. You get all kinds of folks on the train, from families with kids to people who look like they can’t afford a plane. The Amtrak personnel were all very friendly and seemed to know what they were doing.
    Read the rest of this entry »

    Posted in Transportation | 13 Comments »

    Keeping Portland Weird

    Posted by Carl from Chicago on 28th May 2016 (All posts by )

    I recently relocated to Portland and there’s a lot of interesting stuff to see and do here, along with annoyances.

    Pug AT AT

    Pug AT AT at Star Wars Pug Parade in Portland

    I went to a Star Wars themed Pug Parade at a local brewery and this pug dressed as an Imperial AT AT was my favorite. I love the dog’s shy look as it was lavished with attention.

    Didgeridoo Band

    Didgeridoo Band

    This guy plays an amplified Didgeridoo along with a drummer and while it is amusing for the first few minutes it gets old quite quickly as the low drone buzz reverberates through the neighborhood.

    Barlow Gin and Tonic

    Barlow Gin and Tonic Portland

    I ordered a gin and tonic at a local artisanal bar over happy hour and this is what I received, quite different from my expectations of clear liquid with a lime. But it was quite tasty!

    Posted in Photos | 5 Comments »

    Carl in Portland

    Posted by Carl from Chicago on 14th May 2016 (All posts by )

    Recently I became “Carl from Portland” with a move from living in downtown Chicago to the West Coast. It has taken me a while to get settled but I wanted to say hello to my friends at Chicago Boyz.

    Originally I started taking pictures of all the weird people I saw in Portland – guys wearing kilts or fishnets, girls dressed up like bumblebees with ukuleles, and all manner of tattoos, nose rings and piercings. But then I realized – hey – that’s like taking a picture of a drunk, fat guy at a Bears game. Unless you can go beyond the obvious, don’t do it at all. Or maybe that is grist for a future post.

    First the highlights – Portland has an incredible location. Not only does the city offer everything you’d expect in a big city (restaurants, concerts, cool stores, ability to walk around, nightlife) – they have little to no crime (when compared to ChiRaq) – but you can go about an hour and a half and be on the Pacific Ocean, or about an hour and a half the other way and be hiking in real mountains. Here is a photo I took at Cannon Beach when I went there early in April for an unseasonably warm and beautiful day (I’m told). Below is a photo of Mount Hood from a recent hike we took last weekend.

    Read the rest of this entry »

    Posted in Announcements, Photos | 12 Comments »

    The Federal Takeover of State Debt is About to Begin…

    Posted by Carl from Chicago on 17th April 2016 (All posts by )

    Often people focus on the “loud” items and miss the subtle, important events that really change the world. On the positive side, the 401(k) plan has that obscure name because a financial expert basically “invented” it out of a line in the tax code which enabled tax-deferred savings. And Jack Bogle of Vanguard did the same thing with “passive” investing, which reduced fees and for practical purposes has taken over the investing world (along with ETFs).

    One very subtle item that is about to occur is the nationalization of state debt (and likely debts of individual cities) by the federal government. At the highest level, states and cities have made promises (mainly pensions) to their employees that are un-payable without raising taxes to extortionate rates. Detroit cracked first but since it was a city and there was some state framework they were able to use bankruptcy, but many more are to follow, including Puerto Rico (right now) and soon thereafter likely the City of Chicago or its teachers’ pensions as well as the state of Illinois.

    A very similar event occurred in Europe when the ECB basically put the debts of Greece and Portugal onto the backs of taxpayers in Germany and Holland. The ECB had a moment (several moments, actually) when they could have fundamentally changed how Greece ran their economy, shutting down statist laws and heavy governmental interference in the economy to open up competition and growth, but they blinked and instead just “wired them money in exchange for promises”. The Greeks, of course, haven’t kept their promises, and why should they, given that the ECB continually blinks when the showdown occurs.

    The reason that these states and territories like Puerto Rico are in dire straits is because they

    1. Spend more money than they make every year,
    2. Rely on borrowing to pay for operating expenses,
    3. Have giant, unfunded liabilities on top of this that can never be repaid (pensions, medical bills, etc…).

    This situation is enabled by a governing class that views funds as an opportunity to redistribute wealth to favored constituents and relies on “fairness” as a bedrock of their planning. The apex of this sort of planning can be seen in crony capitalist states like Brazil, where large enterprises like the National Oil Company (partially on the stock market, partially owned by the state) are used to fund politicians and social programs and are systematically diverted away from their core mission (to make money) until the enterprises are bled almost totally dry. Then, ironically, the state has to bail out the very companies that were supposed to provide for the socialistic wealth in the first place.

    The CORE issue is – if you give these sorts of entities money (bailout) without a “root and branch” cleaning of the issues – you will just get more of the same, indefinitely, as their individually painful debts become part of the larger national (or pan-European) debt, which continues the little game of overspending and wasting money on favored political groups for a little longer (maybe a couple years, maybe longer).

    The slippery slope – the trigger – is occurring right now in Puerto Rico. That entire economy is corrupt and ridden with subsidies from electricity to taxes to everything else. For Puerto Rico to thrive, it would need to break down barriers to private enterprise, reduce taxes, levies and bureaucracy, and find some way to bring logical industry into their jurisdiction. However, the more likely course is as follows:

    1. Point out the current individuals suffering from a lack of funding (the poor, kids in school, the elderly),
    2. Note that the debt which was once owned by individuals was bought up by hedge funds for a fraction of its original value – these funds are in a position to fight (legally and politically) for repayment and although they may be termed “vultures” or something else, they really are the last man standing for individuals who lack the means to fight legally for their rights,
    3. Use the political system to “promise” reforms that will never be carried out (because why would you if you can use funds to enable the current system to thrive),
    4. Talk about the retirees, and “promises” made to them over the years that cannot be paid, and how they can’t go back to the work force and earn more money so that they have to be made whole,
    5. Use political or class warfare to point out the groups that run Washington don’t look like the groups that are broke and make it a fairness issue or tied to some century plus grievance.

    It is very likely that these tactics will “work” and that the debts of Puerto Rico will be backstopped by the US government. While this technically isn’t a “bailout”, it absolutely is, because Puerto Rico can’t borrow one dollar on their own anymore (who would lend money to someone who says they won’t pay you back?), and we know that without major reform (which won’t happen) Puerto Rico will just continue to bleed money indefinitely (and fall back on fairness arguments and the above listed tactics to ensure that this keeps happening).

    Then soon after this subtle bailout (and likely before Puerto Rico fails AGAIN, which will happen again as it will with Detroit), entities of Illinois or the state itself will drive straight through this loophole and federalize their debt, too. The state and entities will make lavish promises about change that will never occur, because this is the lifeblood of the Democratic Party (patronage workers and the public sector) and all of the clout / featherbedding / etc… will continue on indefinitely, without any of the sorts of laws that enable competition.

    Watch the headlines… see this occur… it will be seismic in its long-term nature, because it will fundamentally change the nature of the US government, since the debts of the states and cities will become everyone’s debt and we don’t have any “real” tools to govern their behavior or fix the long-term promises that destroy competitiveness and economic growth.

    This is the real story, it is happening under our noses, and instead of paying attention we are following these idiotic presidential campaigns of pure vapor.

    Cross posted at LITGM

    Posted in Big Government, Chicagoania, Economics & Finance, Illinois Politics | 13 Comments »

    Chicago River and Construction

    Posted by Carl from Chicago on 20th March 2016 (All posts by )

    There’s a lot of activity along the Chicago River. If you haven’t been to Chicago in a while I highly recommend that you take the river walk along the south side of the Chicago River which extends through Streeterville / River North. They have bars and restaurants and you can rent canoes and do some people-watching at river level. Here’s the official web site.

    The construction is fun to watch as you walk down Wacker Drive. They have barges where they bring in equipment and install a metal barrier and then fill it in with gravel to extend out into the river. The river is still green from St. Patrick’s day in this photo above. If you have kids or grandchildren who like to watch construction and cranes and such this is highly recommended, as well.





    We keep building new high rises in Chicago. This photo is looking west along the river and you can see the two large buildings that are nearly completed. It is a whole new Chicago!




    Cross posted at LITGM

    Posted in Chicagoania, Photos | 3 Comments »

    Disruption – Part Four – The US Airline Industry

    Posted by Carl from Chicago on 6th March 2016 (All posts by )

    I have been considering “disruption”, including what is hype and what is real. Here is one on the cab industry where it occurred, in the electric and gas utility industry which has proven resilient in its current business model, and retail which is in the process of being disrupted.

    My theory under these posts is that increasing supply (broadly defined) has been the key to whether or not “disruption” is truly real or not occurring. I don’t know if it will play out that way or not in the end but this is a starting point.

    I have been interested in the airline industry for decades… in high school for my statistics class I built a model which correlated the profits of United Airlines with the price of oil. As an auditor and consultant I spent hours every week on a plane crossing the country serving utilities. And ever since I have traveled at least ten times a year for business or pleasure. So perhaps I would not consider myself an expert on the airline industry but certainly an interested observer.

    The airline industry famously de-regulated in 1978. From 1978 to 2010 the airline industry added myriad new entrants and saw them fail along with much of the old guard. Wikipedia summarized this era here. In recent years, through bankruptcy and mergers, the US airline industry consolidated into four major carriers – American, United, Delta and Southwest. These four carriers control the vast majority of gates at major cities and effectively operate as an oligopoly. Now these four carriers are in rude health, as you can see in the stock chart below. Their stock prices have increased between 135% to 355% over the last 5 years. As an investor I bought Southwest after 9/11 and held on to it for years as the price languished; unfortunately I exited the stock before they became today’s oligopoly.

    Another contributor to these gains is the collapse in oil prices. During the “peak oil” era, the airlines profits were strangled by the high cost of fuel – today they benefit immensely from today’s commodity price crash. This article describes how lower fuel costs saved them $4.3B in the third quarter 2015 alone and these lower costs have generally not come through to end users as price decreases – the airlines have banked the money or used them for dividends and capital improvements.

    Read the rest of this entry »

    Posted in Business, Economics & Finance, Tech, Transportation | 13 Comments »

    My Pathetic Vote in Illinois Is Now the Hottest Ticket in Town

    Posted by Carl from Chicago on 27th February 2016 (All posts by )

    Due to the fact that I live in Illinois which has been carved into districts to ensure Democratic majorities, my vote is mostly useless or a protest vote at best. I wrote about gerrymandering here and the fact that perhaps I live in the most ruthlessly gerrymandered district in the nation (and that is no small feat), the fifth Illinois house district, with our current representative, Ken Dunkin.

    Recently I have been receiving a series of mailings for Ken Dunkin’s re-election, which is hotly contested. Currently in Illinois, the Democrats technically have a super-majority, meaning that they can unilaterally issue a budget (more or less) and raise taxes. However, not every Democrat “falls into line” with Mike Madigan, the speaker of the Illinois house, who is the true leader of the Democratic party in Illinois. Rauner is looking for Democrats who might listen to his message of reform or for some reason or another be amenable to working constructively with him (don’t want to speculate too long on why this might be, but you can probably jump to your own conclusion). Dunkin refused to show up for a vote that Madigan thought was crucial in September and conspiracy theories have him aligned with Rauner.

    Per this article from the Chicago Tribune:

    More than $2 million, an unprecedented sum for a legislative primary contest, could be spent between Dunkin, who has allied himself with Rauner against Madigan, and Stratton, who is backed by organized labor.

    This is a ridiculous amount of money to spend on a primary race for a house seat for the Illinois legislature. Given the Democratic machines’ hold on this part of the city, it is accepted as a “given” that the Democratic candidate will win so all of the efforts go into the primary.

    Thus my vote is now a precious commodity. Seemingly every day I get a giant, colorful, nearly insane flyer in the mail with the two candidates attacking each other. Here is a flyer stating that Ken Dunkin was convicted of abusing women and is unfit for office.

    Read the rest of this entry »

    Posted in Chicagoania, Illinois Politics, Politics | 12 Comments »

    Disruption – Part Three – Retail

    Posted by Carl from Chicago on 20th February 2016 (All posts by )

    I have been considering “disruption”, including what is hype and what is real.  Here is one on the cab industry where it occurred and in the electric and gas utility industry which has proven resilient in its current business model.

    While “retail” is a nebulous category, it is one that touches virtually everyone in the USA. Let’s start with the definition of retail:

    the sale of goods to the public in relatively small quantities for use or consumption rather than for resale.

    My experience with retail has been that of a consumer, although I live in an area near Michigan Avenue which features a huge variety of stores of all types, from mass market to high end “showcase” stores. I also have a long history with e-commerce, having been involved in a variety of businesses helping them to go “online” and “digital” from the earliest days of the web. Since the primary threat to modern retail today is from e-commerce, this experience is relevant.

    This chart above is from a recent Business Insider article on retail. The graph clearly shows how shopping is moving from the physical retailer to the online retailer, and it is being accelerated by the adoption of mobile technologies (which enable you to shop and research while on the move, not just when you are in front of your computer at a desk).

    Read the rest of this entry »

    Posted in Business, Economics & Finance, Tech | 17 Comments »

    Disruption – Part Two – Electric and Gas Utilities

    Posted by Carl from Chicago on 16th February 2016 (All posts by )

    I started a trend of posting on disruption with the taxicab industry being walloped by Uber. While disruption is everywhere in the press, the question is – when is disruption truly real and where is it a distraction? Let’s move on to the electric and gas utility industry.

    The electric and gas utility industry is the “exact opposite” of the classic “disruption” thesis… although disruption and revolution have been promised many times over the years, they have failed to materialize. Let’s look at the characteristics of this industry and find the salient facts that either “enable” or “defeat” disruption.

    I worked in the electric and gas utility industry throughout all of the 90’s. I traveled to over 100 public, private and municipally owned utilities (there aren’t that many left today because there have been many mergers in the industry space). Since then I have followed them through business publications and public sources of information.

    The electric utility industry has 4 main components:
    1. Generation – the generation of power through nuclear fuel, coal, natural gas, hydro or solar / renewable
    2. Transmission – moving power via high voltage lines from where it is generated (remote) to the cities where people live
    3. Distribution – the local city with overhead and underground wires and substations and physical trucks
    4. Customer Service – who you call and how they dispatch crews and respond to incidents

    The electric utility industry also is characterized by “real time” surges and the fact that power can’t be stored (yet) on a large scale; thus peaks occur on the hottest days or the coldest days and power is needed exactly at that moment at your particular location. These peaks can results in demand far higher than during a “typical” day.

    The natural gas utility industry is conceptually similar to the electric energy industry with two main differences. Generation isn’t handled by them (exploration companies find natural gas and get it to their system through their own processes and methods) and natural gas is much less “peak sensitive” and can be stored near the point of demand and injected into the system.

    Broadly speaking, there have been many attempts to “de-regulate” the electric and gas utility markets over the last THREE decades. Let’s start with natural gas.

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    Posted in Business, Economics & Finance, Tech | 11 Comments »

    Disruption – Part One – the Taxicab Industry

    Posted by Carl from Chicago on 14th February 2016 (All posts by )

    The term “disruption” is everywhere in the popular press. You should “disrupt yourself” and new internet unicorns are going to “disrupt” all kinds of industries. Let’s think a bit about what really is disruptive and what isn’t. This post is going to start with the taxi industry. Later I will turn to other industries, where disruption was predicted but didn’t occur, and we can try to determine why.

    I am very familiar with taxis, having traveled all around the country for business over decades and using taxis all the time in Chicago. Downtown Chicago is one of the few places where you could hail a street taxi at almost any hour of the day or night and assume that one could be found in a relatively short period of time (within 10-15 minutes at worst).

    What were the elements of the traditional taxicab industry? They were as follows:
    – Limited numbers of licenses were offered, and they were generally bought up and consolidated into a few taxicab companies
    – The taxis operated mostly where they offered the highest returns; downtown, in wealthy areas, or near clubs and nightlife. While they theoretically served the entire city, in practical terms they ignored the poorer areas not only for the inherent danger but also due to the fact that it was hard to get a “return” trip once you dropped someone off, necessitating a drive back to a wealthier area and lost time with no earnings
    – If you talked with a taxi driver, they typically worked very long hours and did not earn much money. Since driving a car an “entry level” skill, there were in practical terms an infinite number of possible drivers (a large supply) so the earnings of the drivers were as low as the market would bear (very low). The medallion owner then kept all the remaining profits
    – The taxicab experience as a rider generally was lousy and perceived to be unsafe to single women. You didn’t have any information about the driver and they could be anyone; the low wages of being a taxicab driver also tended to attract drivers on the margins economically
    – The taxicab used a consistent rate based on time or mileage plus a charge to start the meter and often specific additional charges such as tolls or airport fees. The costs could be high; for instance in Chicago if you left the city limits after the first city you were charged “meter and a half” – thus to travel out to a far suburb the fare could easily exceed $100. This was explained as the fact that the cab can’t get a local fare (they are licensed to pick up in Chicago, not the remote city such as Naperville) so they had to drive all the way back to the city to start working again. And on a big night like New Years’ Eve, it was a crapshoot to find a taxi since supplies were limited and not everyone was out driving
    – The main role of the taxi associations was to limit new medallions (which increased competition) and manage the local regulators, who generally defined rates and other business conditions. After a while most cities had “regulatory capture” and didn’t issue new medallions and mainly kept the status quo
    – If you were out of a major city, generally no one used cabs except maybe to go or be picked up at the airport. When I lived in Texas in the late 90’s I tried to get a cab and I was laughed at; cabs were terrible and no one took them. The alternative was drinking and driving or finding a designated driver

    By now everyone knows what has happened to the taxicab industry. They have been disrupted practically out of existence by Uber (and to a lesser extent ride sharing apps like Lyft).

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    Posted in Business, Economics & Finance, Tech | 4 Comments »

    New Era Drugs and Death

    Posted by Carl from Chicago on 17th January 2016 (All posts by )

    One of the most fascinating shows that I watch is called “Drugs, Inc.” on National Geographic, which describes the “business” of drugs from its creation (chemicals) or growth (agriculture), through transportation (to America or Europe) and then to distribution (street level), along with interviews with drug abusers and their families.  I did a blog post about this show here if you are interested.

    Unlike television shows with a “narrative arc” of redemption, the business of Drugs, Inc. shows users as ever-insatiable and ever-addicted to the various drugs that are investigated by the show.  Drug dealers are meeting demand that exists and is never questioned; the only risks to the dealer are competition from other cartels / distributors or the police.  The fact that demand will always be there assuming the quality of the product is solid is taken as a given.

    When they interview addicts their lives are not glamorous and often are morose and filled with regrets.  The addicts may take an hour to find a place on their body to inject the drug, they steal from their own families, and they live brutal and dangerous lives in order to acquire the cash to make the next fix.  The traditional high school movies that tried to scare you off drugs have nothing on this systematic and pragmatic approach to just watching the destroyed lives of drug users as they live to support their next fix.

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    Posted in Business, Current Events, Health Care | 17 Comments »

    Blackberry’s Fall… and Apple Watch Part II

    Posted by Carl from Chicago on 9th January 2016 (All posts by )

    As I watched the movie “the Big Short” (which I highly recommend) one item I noted was the ubiquitous nature of the Blackberry. Everyone on Wall Street lived on their Blackberry, and much of the action took place via a Blackberry (phone conversations, updates via email, watching stock prices remotely, etc…). A book was written called “Losing the Signal” that covers the rise and fall of Blackberry.

    While I haven’t read the book I am intimately familiar with Blackberry, having owned one for many years and waking every morning to see the blinking red light which indicated that I had new emails outstanding. I had an early version with the combined numeric / letter keyboard, which meant you had to hit the button multiple times (with delays) to type a “C” for instance. Like everyone else I was soon able to type at a rapid clip in this insane method and it seemed like an enormous relief when this was replaced by a “full” keyboard.

    Blackberry also was a pioneer in instant messaging, another technology whose power I underestimated when I initially encountered it. A co-worker tried to connect to me by messenger and I just didn’t see the use – why not just send an email? Of course nowadays it is completely obvious why messages are useful and email is mainly “just for work” and overtaken by reams of spam. And initially when texts were expensive (remember when your phone plan limited the number of texts?) this enabled text messaging that was essentially “free” (if you owned a phone already). But when you watch the complete and utter fall of Blackberry it must be remembered that not only did they invent and perfect the phone / email hybrid but they also had a head start on messaging, another multi-billion dollar technology.

    My Blackberry was more reliable than my iPhone – I received email quickly and with more certainty, especially when compared with the wonky iPhone connections to outlook. However, with the lack of an “App Store” and no touch screen, the Blackberry was doomed by both iOS and Android. Reliability and a keyboard lost to an open system, a touch screen, and a seemingly infinite number of apps from third party programmers. You could look to a Blackberry as a lesson for Apple and their iPhone dominance, but Apple does a lot of things well that Blackberry never did, such as let vast numbers of third parties program for their platform, and continually evolve their platform with new tactile features (touch, GPS, etc…).
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    Posted in Tech | 9 Comments »

    Crazy Chicago Weather

    Posted by Carl from Chicago on 3rd January 2016 (All posts by )

    Earlier this year when I was laid up I bought an indoor / outdoor weather station called Netatmo and wrote about it here. It is a lot of fun and I recommend it highly. It is likely that some of these temperatures are impacted by the sun (although I went to a lot of trouble to keep it out of direct sunlight) although this shouldn’t impact the lows which generally occur at night.

    I was struck when I looked at the temperature for October – December. I have lived in the midwest my whole life (traveled a lot) and have never seen this many typically cold months so unseasonably warm. We haven’t had any days below 20 degrees (or at least not on my balcony). This aligns with my experience at the Bears games, which have almost all been nice and warm (and home losses).

    We had one day recently with high winds and blowing sleet that was terrible – it felt like I was being sandblasted. We still have snow and big chunks of rock-hard ice on the ground that haven’t melted yet. But that was the exception, and it is likely to all melt away this week.

    Not to say that the weather hasn’t been rough in other ways – Illinois and the whole midwest faces flooding from continuous rainfall and my parents’ basement has been inundated numerous times after being mostly dry for decades.

    Cross posted at LITGM

    Posted in Chicagoania | 10 Comments »

    Electricity and Ethics and Europe

    Posted by Carl from Chicago on 29th December 2015 (All posts by )

    When I was a young auditor I was on an airplane heading out to a utility client in Iowa. I sat next to a woman and her grade school aged child. I was making small talk with them and the kid asked me what I did. I said I worked with the electric utility. And he said

    Are you the guy who comes over and turns off the power?

    The child’s mom was embarrassed and the conversation was muted after that but I never forgot that exchange – the reality that, for the poor, electricity was a bill that had to be paid, and frequently it came ahead of other key necessities which then was brutally enforced by pulling the plug. Electricity is a big bill for the poor.

    This discussion is completely relevant to what is occurring in Europe today, as these countries move to wind and solar renewable energy instead of economically efficient coal, natural gas and nuclear power. This great article from Forbes summarizes the current debacle:

    To illustrate, Denmark and Germany are the proud wind capitals of Europe, but they also have the highest home electricity prices on Earth, 42 and 40 cents per kWh, respectively, against just 12.5 cents in the U.S…. Undeniably non-sensically, Germany has been paying over $26 billion per year for electricity that has a wholesale market value of just $5 billion

    This sort of mass economic distortion (possibly suicide) has a real, human toll:

    higher cost electricity (and energy) is horrible for our health. That’s because, since electricity is so indispensable, meaning that it “cannot not be used,” higher cost power drastically erodes our disposable income, which is the very basis of our health – while also disproportionately hurting the poor most. As a percentage of income, poor families pay 5-9 times more for electricity than rich families do. Predictably silently, higher cost electricity in Europe is killing tens of thousands of people a year, ”Excess Winter Deaths,” where older residents on fixed budgets in particular are forced to turn their heat down to avoid overly expensive utility bills. For example, there were 44,000 Excess Winter Deaths in England and Wales in 2014-2015

    It is amazing that while Europe is able to penalize the poor and elderly on fixed income in the name of clean energy, their same economic champions, the car companies, ran elaborate schemes to defeat emissions limits on diesel cars in a massive scandal that we’ve all heard about. The cost of remediation and penalties will be in the billions.

    Finally, in perhaps the bitterest pill, moving to expensive and unreliable energy sources means that the reliable blood-money energy available from Putin and Russia becomes even more important to maintaining their grid. While Western Europe has been making a (relatively feeble) effort to punish Putin for his atrocities in the skies and in Ukraine, they ignore the obvious morality issues linked to filling his coffers so that he can buy weapons and pay his soldiers that are used for repression and dictatorship in the east. It is amazing that there will be sit-ins for climate change and animal rights but the rights of Ukrainians and fellow European citizens apparently count for nothing if it enables their energy fantasies to be supported.

    The Europeans are breathtaking in their ability to unilaterally punish the poor and the elderly and increase their payments to Putin while cheating on emissions testing and pursuing their odd goals of “clean” power. These issues apparently do not keep them up at night despite their real-world effects.

    Cross posted at LITGM

    Posted in Economics & Finance, Energy & Power Generation, Europe, Germany, Russia | 51 Comments »

    Hedging ETFs and Foreign Currency Impact

    Posted by Carl from Chicago on 14th December 2015 (All posts by )

    I wrote an article at Trust Funds for Kids about using hedged vs. unhedged ETFs for investing. If you are interested it is below the fold. The impact of currencies on investing is very large and linked closely with interest rate and Central bank activities.

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    Posted in Economics & Finance, Investment Journal, Markets and Trading | 6 Comments »

    Apple Watch Review

    Posted by Carl from Chicago on 2nd December 2015 (All posts by )

    I do enjoy gadgets and for some time I have been eyeing an Apple Watch. Recently a friend of mine pointed out a special at Target where a $499 watch was reduced to $399 with a $100 target gift card (meaning it effectively is $299, since it is easy to spend $100 on target for items you need around your house and groceries). At $299, I decided to “take the plunge” and it effectively is my XMAS gift to myself.

    This is what the watch looks like in the box. The box is very long and it contains an extra watch band in case your band gets mangled from over-use. The watch bands also are replaceable – I picked the white one because it was the last watch available at the target that was walking distance from my condo.

    Here’s what the watch looks like on your wrist. This is one of the more basic faces, with the time, the weather, calendar notifications, and the “universal” time which apparently is Cupertino. The multiple circle image is their sort of fitness tracker, and the red dot on the top means that I have notifications waiting.

    It took me a little while to figure out how to use the watch, and I am still learning. At this point Apple basically includes no useful documentation – they just have a few pictorial pull-outs and then you figure out the rest by going to the web or watching videos on Youtube. When I turned on the watch it needed to be charged, which occurs when a magnetic disk is attached to the bottom of the watch face. It seems to take an hour or two to fully charge the watch. I also upgraded the watch to the version 2+ operating system which took a while (a few hours).

    It is important to understand that the watch is of marginal use without your iPhone being nearby. Your watch is basically receiving all of its information and connectivity from your iPhone – it can still tell time and function as a fitness tracker, but it can’t do much else on its own.
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    Posted in Tech | 15 Comments »

    When It Took Guts To Live Your Music

    Posted by Carl from Chicago on 21st November 2015 (All posts by )

    Some nights when I have time to kill I just put on a recorded music video show from MTV2 or Palladia and fast forward until I see something that looks interesting. I stopped briefly on a new band out of the UK that looked like half glam / half punk just long enough to get a screen shot… I don’t even care enough to spend ten seconds looking on the internet to figure out their name.

    What I really thought about was that once it took guts and rage to look different from everyone else and music / lifestyle / looks were one and the same, not just an act that you put on like makeup. If you want to read about that in action, try “Get in the Van” by Henry Rollins, the iconic lead singer of the seminal Southern California punk band “Black Flag”.

    Growing up we listened to Black Flag all the time, especially the iconic “Damaged” album. I was too young (and too chicken) to go see them in concert, but reading the “Get in the Van” book really brought home all the violence and flat-out deprivation that it took to live that lifestyle, with Rollins completing a set after being punched and kicked and often drenched in spit. We also forget that Rollins was one of the first individuals to get interesting tattoos in addition to his hairstyle and overall look, which constantly got him in fights everywhere he went. If you want to read about a real and dedicated artist, not some band that was prefabricated for TV and the internet, just read anything Rollins writes but start with “Get in the Van”.

    Reading the book prompted me to get back in the spirit and listen to my favorite Black Flag albums. However, they’ve been lost from vinyl to cassettes to CDs and I’m pretty much done with physical media anymore. So I just signed up for Apple Music and there they all are – the whole catalog. Kind of ironic to listen to music that was made and played with fire in such a bloodless manner as through my iPad and bluetooth speaker…

    Cross posted at LITGM

    Posted in Book Notes, Music | 10 Comments »