Saturday, October 3, 2009

Cande from the Washington Post

Fande = Fact & Evidence; Cande = Conjecture & Exaggeration

Here is an example of the Washington Post using conjecture & exaggeration. The financial payback (or ROI, Return on Investment) of solar depends upon (a) the price of existing electricity rates in the respective home, which is determined by the local utility company, and in the case of California, the Public Utilities Commission (b) whether you buy the solar system or (c) choose to lease the solar system.

(a) Electricity rates in California keep going up at steady clip. We have a tiered rate system in the Golden State, meaning the more electricity you use the more you get charged. So, displacing the expensive electricity at the top tiers pays back quicker. We have a baseline amount of electricity of roughly 350 kilowatt hours at a flat rate of 12-13 cents per kilowatt hour which is frozen and will not change, as mandated by the California State Legislature. Any electricity used over the baseline is called "over baseline" rates, where the prices of electricity can double and even triple, as in the case of PG&E's tier-5 rate of 44 cents per kilowatt hour. Anybody using electricity in all 5 tiers in PG&E territory would save money by switching to solar.

(b) Buying a solar-electric system is an investment. The solar system would pay for itself in 5-7 years, as electricity prices continue to rise. And the electricity prices in California are mandated to rise each year by the PUC. It's a no-brainer to go solar in a sun-drenched state like California, Arizona, New Mexico, Texas, and throughout the Sun Belt of the U.S. (depending on the price of electricity from your local utility provider).

* In Los Angeles, we have the cheapest electricity rates out of all the major utility regions in the state because LADWP uses roughly 50% coal to produce its juice.

** Coal is also the dirtiest fossil fuel we can burn to create our electricity. Remember, there is an environmental cost to burning coal. Coal is dirty and cheap, and bad for our environment.

*** Solar-electricity is a CO2-free, renewable source of energy. The Sun is a nuclear reactor in the sky; it is going to be around for millions more years. All we have to do is soak up its free-floating rays. Solar-electric, aka photovoltaic, systems last 40-plus years. Photovoltaic = light energy. Photovoltaic abbreviation = PV.

(c) If you choose to lease the solar-electric system, like many people I know have done on a zero-down lease, then the payback is immediate or almost immediate; and you are saving money from day one by using solar electricity.

So, when the Washington Post reports, "Solar systems, even with government incentives, are expensive," the reporter, Pat Mertz Esswein, is guilty of spreading misinformation. Ms. Esswein is guilty of using Cande.

Sharpen your critical thinking skills, 'cause here comes some Cande...

[My comments will appear in brackets]


Switching to solar is a great way to achieve energy savings [this is true, not a myth].


Solar systems, even with government incentives, are expensive [no, this is false; solar systems save $$$ money]. The owner of a typical single-family home in the United States [there is no "typical"; every home uses different amounts of electricity and every region of the U.S. has different electricity rates] wastes almost $350 annually on heated or cooled air that escapes to the outdoors. So for most houses in most places, the first line of defense is to reduce demand, says Bruce Harley, author of "Cut Your Energy Bills Now." That means tightening up the house and its ductwork, improving insulation, switching to CFLs, upgrading appliances and changing your behavior. [Change all the lightbulbs you want and you still need electricity to run the air conditioning, computers, TV, filtration pumps for the pool, electricity in the kitchen, bathroom, garage, etc. With solar-electricity you do the most good because you change the source of your energy]. After that, if you still want to go solar, you may be able to make do with a smaller system that costs less. For example, instead of a 4-kilowatt photovoltaic system (the size recommended for the average home) -- which would cost $16,800 installed after an average state-tax incentive of 25 percent and the federal discount of 30 percent -- you might get by with a 2-kilowatt system, which would cost $8,400 [a 2.4 kilowatt system costs roughly $6,000 in Los Angeles, with the federal 30% tax credit and state rebate].

**** When you go solar, you don't pay the utility company the same monthly payment. The monthly payment you would have been paying to the utility company goes toward your solar purchase or lease, and then you are saving money.

Friday, October 2, 2009

This Morning

Ahhh, we live on the best planet in the Universe. This morning...riding waves on a tilted axis, as the earth rotates and the sun seemingly rises out of the water. Orange-golden glittering warmth splashing across the cresting, churning volume of liquid variegating from black to purple to blue, like the canopy of sky above.

And waves upon waves barreling toward the shore, making tunneled slides for surfers. On the sand the crumbled waves hiss just before they recede back into the ocean to make more water mountains to ride.

WARNING: Email propaganda...Cande = Conjecture and Exaggeration

Fande = Fact & Evidence; Cande = Conjecture and Exaggeration

Just because someone says or writes something does not make it true. There are a lot of unsubsantiated accusations here (playing on emotional biases) with little to no proof. Let's research if the following information is true or false.

Here is an email sent to one of my colleagues today, October 2, 2009...

* CAVEAT: Read with caution. Sharpen your critical thinking skills, 'cause here comes some Cande.

**************************EMAIL BEGINS***********************************

Subject: "Important for MI and AMERICA! Who 'owns' Chrysler???????????"

Body of email:

[My comments will appear in brackets]

"I don't know if this is true or not. After reading this I have such a pit in my stomach. Could this be true? Maybe you already knew this...I did not. Very Scary.... Chrysler's 'Real' CEO

This could be a scandal of epic proportions and one that makes Nixon's Watergate or Clinton 's Monica Lewinsky affair pale by comparison [what about Bush starting a war in Iraq under false pretenses or the Bush/Paulson $700 billion bailout for the financial meltdown?] Why was there neither rhyme nor reason as to which dealerships of the Chrysler Corporation were to be closed? Roll the clock back to the weeks just before Chrysler declared bankruptcy. Chrysler, like GM, was in dire financial straights and federal government "graciously" offered to "buy the company" and keep them out of bankruptcy and "save jobs." Chrysler was, in the words of Obama and his administration, "Too big to fail," same story with GM.

The feds organized their "Automotive Task Force" to fix Chrysler and GM. Obama, in an act that is 100% unconstitutional [Got proof?], appointed a guy named Steve Rattner to be the White House's official Car Czar- literally - that's what his title is [that's not really his title]. Rattner is the liaison between Obama, Chrysler, and GM.

Initially, the national media reported that Chrysler had made this list of dealerships. That is not true. The Washington Examiner, Newsmax, Fox New and a host of other news agencies discovered that the list of dealerships was put together by the "Automotive Task Force" headed by no one other than Mr. Steve Rattner.

[Are these trustworthy sources of information? The Washington Examiner & Newsmax, let's find out more about them.]

Now the plot thickens. [What plot?] Remember earlier we said that there was neither rhyme nor reason [no rhyme or reason?] why certain dealerships were closed? Actually there's a very interesting [how interesting is it?] pattern as to who was closed down. Again, on May 27, 2009, The Washington Examiner and Newsmax [questionable sources of information] exposed the connection. Amazingly, of the 789 dealerships closed by the federal government, 788 had donated money, exclusively to Republican political causes, while contributing nothing to Democratic political causes [DOGMA = assertion without proof; who is making these unsubstantiated accusations? Got proof?]. The only 'Democratic' dealership on the list was found to have donated $7,700 to Hillary's campaign, and a bit over $2,000 to John Edwards. This same dealership, reportedly, also gave $200.00 to Obama's campaign. Does that seem a little odd to you? [Got proof? Where's the pudding?]

[Coincidence? Maybe. More to the point: is the accusation true?]

Steve Rattner is the guy who put the list together. Well he happens to be married to a Maureen White. Maureen happens to be the former national finance chairman of the Democratic National Committee. As such, she has access to campaign donation records from everyone in the nation, Republican or Democrat. But of course, this is just a wacky 'coincidence,' we're certain.

Then comes another really wacky 'coincidence.' On that list of dealerships being closed down, a weird thing happed in Arkansas , North Louisiana, and Southern Missouri . It seems that Bill Clinton's former White House Chief of Staff, Mack McClarty, owns a chain of dealership in that region, partnered with a fellow by the name of Robert Johnson. Johnson happens to be founder of Black Entertainment Television and was a huge Obama supporter and financier. These guys own a half dozen Chrysler stores under the company title of RLJ-McClarty-Landers. Interestingly, none of their dealerships were ordered closed - not one! while all of their competing Chrysler/Dodge and Jeep dealership were! Eight dealerships located near the dealerships owned by McClarty and Johnson were ordered shut down. Thus by pure luck, these two major Obama supporters now have virtual monopoly on Chrysler sales in their zone. Isn't that amazing? Go look in The Washington Examiner, the story's there, and it's in a dozen or so other web-based news organizations; this isn't being made up. [Got proof? Got named sources? Assertions without proof = DOGMA.]

Now if you thought Chrysler was owned by Fiat, you are mistaken. Under the federal court ruling, 65% of Chrysler is now owned by the federal government and the United Auto Worker's union- Fiat owns 20%. The other 15% is still privately owned and presumably will be traded on the stock market. Obama smiles and says he doesn't want to run the auto industry.

As horrifying as this is to comprehend, and being as how this used to be the United States of America , it would appear that the president has the power to destroy private businesses and eliminate upwards of 100,000 jobs just because they don't agree with his political agenda. This is Nazi Germany [DEMAGOGUERY & AD-HOMINEM ATTACK: playing on emotional biases and name-calling, instead of debating the subject of discussion with fact & evidence] stuff, and it's happening right here, right now, in our back yard.. There are voices [Whose voices? Got a named source?] in Washington demanding an explanation, but the "Automotive Task Force" has released no information to the public or to any of the senators [Which senators? Got a named source?]. demanding answers for what has been done. Keep your ear to the ground for more on this story. If you've ever wanted to make a difference about anything in your life, get on the phone to your national senator or representative in the House and demand an investigation into this.

Benjamin Franklin had it right when he said, 'All that's necessary for evil to triumph is for good men to do nothing.' Car Czar No More. An amazing thing happened as this story was going to press. Obama's Car Czar, Steve Rattner, resigned on July 13 and was promptly replaced by former steel workers union boss Ron Bloom.

According to CBS News [got a named source?], Rattner left 'to return to private life and spend time with his family.' Treasury Secretary Tim Geithner said, 'I hope that he takes another opportunity to bring his unique skills to government service in the future.'
By the way, Rattner is under investigation for a multi-million dollar pay-to-play investment bank scandal in New York . Uh-oh! But, we're certain that had nothing to do with his resignation. And, according to several news sources [names of these news sources?] out there, there are rumors [rumors? Got FANDE?] he's being investigated for what could be pay-to-play scandal involving the closing of Chrysler and GM dealerships. Really? Again, that couldn't have anything to with his resignation- that's ridiculous! Like CBS [got a named source?] said, this guy just wants to 'spend more quality time with his family.' Obama has 32 personally appointed "czars" who answer to no one but him, all of whom are acting without any Constitutional authority [Not true!...see NY Times link below for counter argument]. But hey, we're sure they all have 'unique skills,' as Tim Geithner likes to say!"

*****************************END OF EMAIL********************************

Here are the articles from the Washington Examiner and Newsmax, as well as the same stories reported by the New York Times...

FANDE from the NY Times:

"Just to be clear, the job title 'czar' doesn’t exist in the Obama Administration. Many of the officials cited by conservative commentators have been confirmed by the Senate."

CANDE (written by Newsmax, as noted at bottom of article):

FANDE (written by the Associated Press, or AP, as noted at bottom of article):

CANDE (written by the Editorial Page editor of the Washington Examiner):

FANDE or CANDE?...Who is John R. Lott and his son Maxim, and why do their opinions matter?

FANDE from the NY Times...

Chrysler Plans to Shut 1 in 4 of Its U.S. Dealers

The carmaker sent letters to 789 of its 3,200 American dealers revoking their franchises.

BUSINESS May 28, 2009
DealBook: Rattner Had Investment in Cerberus
By DealBook
Steven Rattner, one of the president's leading advisers on the automotive industry, was an investor in the investment fund that controlled Chrysler and GMAC, according to financial disclosures released by the government.

BUSINESS July 22, 2009
Obama Auto Adviser Tells Lawmakers Not to Undo Dealer Closings
The head of President Obama's auto task force warned Congress that halting the closure of dealerships could threaten G.M.'s and Chrysler's turnarounds.

* Bring your Fande, leave your Cande.

Thursday, October 1, 2009

Solar is Local...stay put and the sunshine will come to you

Fande = Fact & Evidence; Cande = Conjecture & Exaggeration

Cande from the NY Times = nowhere in the article does the reporter mention that there are solar-electric systems that require no water. That's right! Localized solar-electric systems require no water to cool them down.

As I've written before, most solar-electric systems are localized.

Wall Street wants to make a Rube Goldberg experiment out of solar. Instead of implementing a CO2-free energy infrastructure one rooftop at a time in the Sun Belt of America, meaning with solar-electric panels installed on homes and office buildings, the big investment dollars are looking for large-scale solar projects.

As the New York Times reports, the large-scale solar projects require mass amounts of water to cool them down.

* Keep your eyes peeled and your ears open, and sharpen your critical thinking skills. Bring your Fande, leave your Cande.

"Here is an inconvenient truth about renewable energy: It can sometimes demand a huge amount of water. Many of the proposed solutions to the nation’s energy problems, from certain types of solar farms to biofuel refineries to cleaner coal plants, could consume billions of gallons of water every year."

Wednesday, September 30, 2009

The debut of The Dude, Gustavo Dudamel

With all due respect to Lebowski, there is a new "Dude" in town. This Saturday at the Hollywood Bowl, the 28-year-old Gustavo Dudamel takes up his conductor's wand for the first time as the new leader of the LA Philharmonic.

“Music has to be recognized as an element of socialization,” [Jose Abreu, who organized "The System" in which Dudamel learned music] says in Arvelo’s documentary, “as an agent of social development in the highest sense, because it transmits the highest social values, such as solidarity, harmony, mutual compassion, and it has the ability to unite an entire community and express sublime feelings"....

Or, as an 11-year-old violinist in Arvelo’s documentary puts it: “I imagine that God must be like music because something so beautiful can only be the work of God.”

Keep your eye on the bouncing write-down: The "toxic assets" are still on the banks' books

The banks tried to play kick-the-can with the so-called "toxic assets," or subprime mortgages.

* The Federal Accounting Standards Board changed the accounting rules in April 2009, so the banks could wait until the assets appreciated in value (read: until the real estate market improved) and therefore take less of a write-down against the losses.

BOTTOM LINE: The "toxic assets" are still on the banks' books.,kbh,len,itb,bzh,xhb&sec=topStories&pos=9&asset=&ccode=


"Liquidations" of delinquent loans are taking much longer than usual.The banks are taking longer to foreclose and holding foreclosed properties to avoid putting pressure on prices (and thus triggering writedowns). Mortgage mods are delaying foreclosures. Many houses are early in the foreclosure process.

We have wrapped many of Amherst's charts into
the presentation below. Here is the firm's bottom line:

We are concerned that, in light of this housing overhang, the stabilization we have seen in home prices the last few months is temporary....

During the boom, sales of existing homes soared to 7 million a year. Now they're back to a more normal 5 million.

At the current rate of sales, it would take 8.5 months to clear all the inventory on the market. This is still high. Normally "inventory-months" averages about 6.

If Amherst Securities is right, meanwhile, there are another 7 million houses of "shadow inventory" that will hit the market in the next couple of years. It would take 16 months to sell this inventory.

Friday, September 25, 2009

The U.S. imports 50% of the oil it consumes

Americans consume roughly 7.1 billion barrels of oil in 2009

U.S. Petroleum Consumption (2009)

19.5 million barrels per day


7.1 billion barrels per year,0,2829417.graphic,0,3884900.story

"The Westwood company revealed in July that it had found the equivalent of 150 million to 250 million barrels of oil and natural gas in an undisclosed part of Kern County using techniques that the oil company's executives would rather not talk about. It was California's biggest find in 35 years."

* Even if the company can bring above ground the total of 150-250 million barrels of oil (assuming the find is mostly oil) it is still an insignificant amount--15 to 25 days worth of oil, or 2 to 3.5% of our country's yearly consumption of oil.

* We still need to import 9.7 million barrels per day or 3.5 billion barrels per year.

Yes, we import half of our oil. And here are the top 15 countries exporting oil to the U.S.

#1 Canada

#2 Venezuela

#3 Mexico

#4 Saudi Arabia

#5 Nigeria

#6 Angola

#7 Iraq

#8 Russia

#9 Colombia

#10 Brazil

#11 Algeria

#12 Kuwait

#13 United Kingdom

#14 Ecuador

#15 Norway

Marine who built Gitmo: US lost moral high ground


Lehnert, 58, was commander of Joint Task Force 160 when it was assigned to build prison cells in 2001 at the U.S. Navy base in Cuba to hold designated "enemy combatants" from Afghanistan and elsewhere.

He said he was given little guidance from the Pentagon, but he did have his staff read the Geneva Convention, the international agreement governing treatment of prisoners.

"I wanted to run it close to Geneva Convention rules," Lehnert said. "Our job was to take them out of the fight, and once we had done that, I felt we had a moral responsibility to take care of them."

However, another task force was put in charge of interrogating detainees, and there were disagreements over their treatment, Lehnert said.
"I think it is extraordinarily important how we treat prisoners," he said. "Obviously, there were other views."

"I came to the conclusion very soon that this probably wasn't the right way to go," said Lehnert, who served just 100 days at the base.

"Probably before I left Guantanamo, I was of the opinion it needed to go away as soon as possible," he said.

The general said he didn't feel the U.S. would get much useful information by using the techniques.

"I think we lost the moral high ground," he said.

President Barack Obama has ordered the prison to close by January 2010, but it's unclear where about 200 remaining prisoners would go.

US banks made $5.2B trading [financial weapons of mass destruction] derivatives in 2Q

Derivatives are "financial weapons of mass destruction."
--Warren Buffett


Derivatives, traded in an unregulated $600 trillion market, were partly blamed for the financial crisis that ignited a year ago. The value of derivatives hinges on an underlying investment or commodity -- such as currency rates, oil futures or interest rates. The derivative is designed to reduce the risk of loss from the underlying asset. Derivatives trading is dominated by about 20 big banks worldwide....

Credit default swaps, a form of insurance against loan defaults, account for an estimated $60 trillion of the over-the-counter derivatives market. The collapse of the swaps brought the downfall of Wall Street banking house Lehman Brothers Holdings Inc. about a year ago and nearly toppled American International Group Inc., prompting the government to support the insurance conglomerate with more than $180 billion in aid....

Congress is weighing legislation to impose broad new oversight on derivatives. The Obama administration's proposal, part of its plan for overhauling U.S. financial rules, would subject the banks that trade derivatives to requirements for holding capital reserves against risk and other rules. A new network of clearinghouses would be established to provide transparency for derivatives trades.

US banks made $5.2B trading [financial weapons of
mass destruction] derivatives in 2Q

By Marcy Gordon, AP Business Writer
On Friday September 25, 2009, 12:48 pm EDT

Wednesday, September 23, 2009

Cande from Qaddafi at the U.N. General Assembly

Fande = Fact & Evidence; Cande = Conjecture & Exaggeration

* If Qaddafi didn't speak with so much hyperbole on almost every other topic of discussion he might have more credibility decrying wars.

I would rather see diplomacy than war. But I want to see an honest, rational debate based on fact & evidence (Fande). Qaddafi offers the same, old, tired dogma (assertion without proof) and demagoguery (appeals to emotional biases) that have dominated geo-politics for far too long. With his form of language we get more confusion than clarity.

"An hour into his address, Colonel Qaddafi began calling for investigations into each of the major wars since the United Nations was founded: the Korean War, the war over the Suez Canal, the Vietnam War and the United States’ two wars in Iraq, which he called 'the mother of all evils.' "

Cande from Qaddafi...

EXCERPTS via the NY Times:

“We are not committed to obeying or adhering to resolutions by the Security Council in its composition right now,” he said, adding that the Security Council should be renamed the “Terror Council.”

Ali Abdussalam Treki, the Libyan diplomat who now holds the rotating presidency of the Security Council, introduced him as the “leader of the revolution, president of the
African Union, King of Kings of Africa.”

At times, Colonel Qaddafi veered into conspiracy, saying, for example, that the H1N1 influenza virus, also called
swine flu, might be a military or corporate weapon that got out of a lab, and he intimated that an Israeli hand was behind the assassination of President John F. Kennedy.

The Israeli-Palestinian conflict, he said, should be solved by the creation of a single state, which Mr. Qaddafi called Israteen, but Mr. Qaddafi stressed it was wrong to infer that Arabs hate the Jews. “You are the ones who burned them, not us. You expelled them,” he said, referring apparently to European nations.

Tuesday, September 22, 2009

Electricity rates in San Francisco keep going up, and up, and up...

* Yes, the more electricity you use the more you get charged.

Prices as of September, 22 2009...

Total Energy Rates ($ per kWh, or kilowatt hour)

Tier 1 = 12 cents per kWh

(Baseline Usage)

Tier 2 =
13 cents per kWh

(101% - 130% of Baseline)

Tier 3 =
26 cents per kWh

(131% - 200% of Baseline)

Tier 4 = 38 cents per kWh

(201% - 300% of Baseline)

Tier 5 =
44 cents per kWh

(Over 300% of Baseline)

Solar energy is the way to go (published 2006)

The Statue of Liberty

Statue of Liberty National Monument

"The New Colossus"

Not like the brazen giant of Greek fame,

With conquering limbs astride from land to land;

Here at our sea-washed, sunset gates shall stand

A mighty woman with a torch, whose flame

Is the imprisoned lightning, and her name

Mother of Exiles. From her beacon-hand

Glows world-wide welcome; her mild eyes command

The air-bridged harbor that twin cities frame.

"Keep ancient lands, your storied pomp!" cries she

With silent lips. "Give me your tired, your poor,

Your huddled masses yearning to breathe free,

The wretched refuse of your teeming shore.

Send these, the homeless, tempest-tost to me,

I lift my lamp beside the golden door!"

A poem by Emma Lazarus is graven on a tablet
within the pedestal on which the statue stands.

This is not fiction...

America. My God, the word means so much. We were a beacon of hope…a shining example to the downtrodden masses around the globe who dreamed and yearned for this land where hard work got you a house in a safe neighborhood and two working cars (and freedom of speech, freedom of religion, and freedom to shop at the mall). Then Bush came along and disgraced our country by recreating the Vietnam War in Iraq.

At the time of writing, the Iraq War costs us approximately $700 billion…which also happens to be the same price-tag Paulson put on the first bailout for his banker buddies.

‘Cause none of those greenbacks made it to the people on Main Street when the subprime jack-in-the-box sprung up on Wall Street. Those MFs had pension plans, 401ks and home values all rolled into one ball of wax, and then they bet it all on “subprime” lendees’ abilities to pay back the loans on houses they couldn’t afford.

There was also the surprise of the mortgage with the escalating interest rate that could double and even triple in value. Meaning, a 4% interest rate could become 8%, and then 12%...and that’s when the “subprime” lendees threw the keys in their mailboxes, and abandoned the homes they couldn’t afford. Banks and lending offices were taking anybody who walked through the door, literally. No proof of job, no nothing. Just sign here and off you go to your patio in the back of your new 4-bedroom house, which may in the future lose 30% of its value when the Real Estate Boom goes…Bust!

The Dow lost over half its value, from a high of roughly 14,000 in October 2007 to roughly 6,600 in March 2009. Venerable financial firms crumbled like shale being drilled for oil.

“Down goes Lehman Brothers!” (You gotta do it in Howard Cossel’s voice for the full effect. It’s more fun that way.)

“Down goes Bear Stearns…oh, oh no!...Mer-awl L’nch is-on-the…ropes. But seemingly like a Deus-ex-Machina from the heavens, Bank of Am…eric-ah…steps in to claim the wayward bank.”

I mean, we saw the biggest bank failure in United States history (WaMu) and the biggest corporate collapse (AIG). General Motors also waved the white flag when they saw all the kingdom’s drivers not being able to afford the $3-4 a gallon gas the oil companies were ransoming. We people sure as hell weren’t going to buy an SUV that got 13 miles to the gallon. So Detroit (Ford and Chrysler, too) took a handout, from us taxpayers who couldn’t afford to drive their inefficient cars anymore.

The credit markets seized up, nobody was lending. Nobody. Nobody but the Federal Reserve…lending our tax dollars to the banks who put us in this mess. It ain’t right what happened, but I sure don’t want to see the whole thing come tumbling down. Prop up the banks until they can walk on their own, but once they can they should be lending the money back to the people who bailed the banks out in the first place.

Bush did more damage than hurricane Katrina. Worse yet, he didn’t clean up his own mess. He left it all for Barack Obama to sort out.

And that’s where we begin our story…

Monday, September 21, 2009

The Financial Crisis…What happened?

IMPORTANT: Financial Accounting Standards Board changes mark-to-market rules

Hey All,

Please take a peek when you get a break in your day. For those of you lacking a natural affinity for accounting rules (I’m right there with you), I’d suggest you get some chocolate or coffee, or a stimulant of your choice, before reading this.

Get jacked up on something and tear through this because it is very important to understand…they flipped the board and changed the rules of the game.


Here are viewpoints from the New York Times and the Wharton School of Business from the University of Pennsylvania…


The change seems likely to allow banks to report higher profits by assuming that the securities are worth more than anyone is now willing to pay for them. But critics objected that the change could further damage the credibility of financial institutions by enabling them to avoid recognizing losses from bad loans they have made.

Critics also said that since the rules were changed under heavy political pressure, the move compromised the independence of the organization that did it, the Financial Accounting Standards Board.

During the financial crisis, the market prices of many securities, particularly those backed by subprime home mortgages, have plunged to fractions of their original prices. That has forced banks to report hundreds of billions of dollars in losses over the last year, because some of those securities must be reported at market value each three months, with the bank showing a profit or loss based on the change.


But not everyone agrees that mark-to-market rules have been as damaging as the banks claim.

“I’ve never bought the idea that market-value accounting caused this crisis,” says Wharton accounting professor Brian J. Bushee. Changing accounting rules to accommodate the banks would be like changing the scoring system for tennis, he suggests. “It wouldn’t make you a better tennis player. Changing how we keep score — what these assets are worth — won’t change the problem…. In a sense, that’s what [the banks] are asking investors to do — to say, ‘Let’s use these four-year-old values, not what things are currently worth’”….

Bankers bitterly complained that the current market prices were the result of distressed sales and that they should be allowed to ignore those prices and value the securities instead at their value in a normal market. At first FASB, pronounced FAS-bee, resisted making changes, but that changed within a few days of a Congressional hearing at which legislators from both parties demanded the board act.

If the FASB, which sets accounting rules in collaboration with the Securities and Exchange Commission, approves the rule change tomorrow [which they did], banks would be free to carry troubled assets on their books at higher prices, avoiding requirements to shore up balance sheets with new capital they cannot get now.

But potential buyers of toxic assets will make their own valuation assessments regardless of what the accounting rules allow the banks to claim, says Wharton finance professor Itay Goldstein. “After all, if assets are not marked down, investors would still fear that they are worth less” than they once were.

Mark-to-market defenders say that using market prices is the best way to derive honest values. Allowing banks too much latitude would paper over the problem, making banks look healthier than they are, they say. “It’s an issue because … the year before the crisis was the first in which firms were required to follow a new set of fair-value measurement tools,” according to Wharton accounting professor Catherine M. Schrand….

On the other hand, if the government’s toxic-asset purchase program does generate significant trading, the whole issue of how to value the assets remaining on banks’ books will become moot, since there will then be enough fresh data to justify mark-to-market accounting, says Wharton finance professor Franklin Allen.

Skimpy Trading

Many experts acknowledge that the skimpy trading in toxic assets creates difficulties. “If there is no trading then you can’t really mark to market,” argues Wharton finance professor Jeremy J. Siegel. “I think there’s been trading that is at too low a price…. I wouldn’t mind suspending mark-to-market for those assets right now.”

But Susan M. Wachter, professor of real estate at Wharton, thinks that for the financial and economic crises to begin to ease, the “murky” condition of banks must be clarified. That cannot be done with accounting changes that simply make the assets look more valuable, she says, arguing that the banks must instead be encouraged to get rid of those holdings. “In order for capital to come to banks, they must disgorge their non-performing assets. That mark-to-market component is necessary.”

Banks’ in-house systems cannot give accurate valuations because too many factors are unknown, such as whether the economy will deteriorate further and whether there will be additional government stimulus spending, according to Wachter.For the banks, a chief benefit of flexible accounting is that it will make them less likely to run afoul of capital-reserve requirements, since their balance sheets will look stronger.Siegel notes that if capital requirements are the issue, regulators could help the banks by easing those instead of changing accounting rules. Wharton finance professor Marshall E. Blume, agrees. “The regulators are in a difficult position, because these companies clearly are not as viable as they were. Having said that, you don’t change the accounting to make it look like they are viable.”

Wachter insists that capital requirements should be based on market-to-market rules, because investors who could pump capital into the banks will be reluctant to do so if they think accounting tricks make banks look healthier than they are. Easing the mark-to-market requirement, she says, “is a road to a long and sustained recession.”

The Stock Market had the same value on 9/11/01 & 9/11/09


“This has been circulating Wall Street trading desks via UBS’ Art Cashin: On both 9/11/01 and 9/11/09, the Dow industrials were at 9605 (it was the close of the 9/10 in 2001, since markets never opened on 9/11 2001).”

Average American’s wages stagnant for first decade of the new millennium


“Median household fell to $50,303 last year, from $52,163 in 2007. In 1998, median income was $51,295. All these numbers are adjusted for inflation.”

Not all solar-electric systems require transmission lines

Dear Christopher Martin and Mario Parker,

Your misrepresentation occurs because you do not clarify “from remote areas,” meaning that the wind or solar requires transmission lines. Caveat: not all solar systems require transmission lines.

Most solar-electric systems are localized, meaning each home or business powers itself with rooftop panels that feed into the individual building’s meter. Therefore there is no transmission line needed.

On the other hand, solar-thermal electric systems, usually installed in the desert, do need transmission lines. Large-scale solar-electric systems in “remote areas” would also need transmission lines.

All of these statements from your reported story misrepresent the reality of solar electricity:

–”A new solar-power facility costs three times as much as a coal-fired plant of the same size, the Energy Department estimates.”

* A solar-electric system on an individual home or office saves money, especially if leasing the solar system. Grid electricity prices continue to rise, but using a solar-electric system effectively puts a cap on the cost of running one’s home or business. You should have also mentioned that there is an environmental cost to burning coal–rising sea levels, flooding coastal areas, etc.

–”Regulators don’t know when additional wind and solar power would disrupt service.”

* A solar-electric system on an individual home or office does not disrupt electric service to the respective home or office. In California, the meter swings both ways: excess solar electricity spins the meter backward to build up credits on the customer’s account; the credits can be used later as debits. A solar-electric system on an individual home or office does not disrupt electric service to the grid either.

–”The North American Electric Reliability Corp., a nonprofit group based in Princeton, New Jersey that oversees power systems serving 334 million people, said in an April report that grid monitoring must be improved to add wind and solar power without harming reliability.”

* A solar-electric system on an individual home or office does not harm reliability of electric service.

Once again, for accuracy’s sake, all of these statements need clarification that the solar or wind power is coming “from remote areas,” and therefore would require transmission lines.

Your story is about “Transmission lines,” however you do not make that explicit. Your headline especially confuses the issue of solar electricity’s very reliable and economical potential to produce CO2-free power (without any hazardous byproduct, like the kind left behind by nuclear energy).

Nowhere in your reporting do you two denote that there is an economical solar-electric solution that does not require transmission lines. That is a very important distinction for those of us who already use solar electricity and are saving money by doing so.

Thank you very much for your attention to detail and your efforts to get accurate information to the public. The Press performs an essential function in our democratic society; it’s not mentioned in the First Amendment to our Constitution for nothing. Now please take more care from here on out, and exercise your awesome power to report facts and evidence to the public with more diligence and clarity.

Your Fellow American,

Justin Bass

A solar-electric system on every roof and a plug-in electric car in every garage

House bill to increase Pell Grants (college $$$)

* Grants do not have to be paid back, and therefore do not increase the debt of the student like a loan would do.


Putting the government in charge of all federal loans would save taxpayers an estimated $87 billion, according to the Congressional Budget Office. The CBO says the figure could be much lower, $47 billion, when administrative costs and market conditions are considered.

The money would boost Pell Grants for needy students, increasing the maximum grant by $1,400 to $6,900 over the next decade. It also would pay for a new college completion fund, community college reforms and more college aid for veterans.

“No student in this great country of ours should have to mortgage their future to pursue their dreams,” said the bill’s sponsor, California Democratic Rep. George Miller, chairman of the House Education and Labor Committee.

Yet the money also would be spent on things that don’t help pay for college, such as construction at K-12 schools and new preschool programs.

And while the measure would increase Pell Grants, it would do nothing to curb college costs, which rise much faster than Pell Grants do.

As consumers, college students probably wouldn’t notice much difference in their loans, which they would get through their schools. Broadly speaking, the bill doesn’t do much to make loans cheaper or help pay them off.

It does keep interest rates for need-based federal loans from jumping from 3.4 percent currently to 6.8 percent as scheduled in 2012. Rates for most other loans would remain at 6.8 percent.

Still, the bill’s changes to federal college aid programs would be the most sweeping since their creation in the 1960s and would fulfill a campaign promise by President Barack Obama.

The measure would end the subsidized loan program under which private lenders made $56 billion in government-backed loans to more than 6 million students last year, compared with $14 billion in direct loans from the government.

The bill would also shorten the labyrinthine college aid form, which Obama proposed to eliminate altogether when he ran for president.

The Joker-sign-maker didn’t even vote

“To accuse him of being a socialist is really immature. First of all, who said being a socialist is evil?,” said the man who made the image of Obama-as-Joker.

Protest in D.C., September 2009

Seeing what happened in D.C. reminds me of the “fallacies of logic” I learned along the way. #1 The ad hominem attack, like a school yard name-calling incident: “He wears purple shorts, he doesn’t know anything.” In much the same way, a caricature of President Obama as Joker-portrayed-by-Heath-Ledger does not depict the actual man in the White House. There is no logical argument in it; it is Demagoguery.