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Dec. 22nd, 2011

The Sub-prime Mess: Assigning Blame

Back in 2008, Bank of America bought the country's biggest and shadiest sub-prime mortgage originator Countrywide for $4 billion. Today, they paid the US Justice department $335 million, in part because "Minorities also were steered [by Countrywide] to more expensive subprime loans even though they were qualified for traditional mortgage rates."

Our home mortgage was from Countrywide during the worst of this era, and indeed the salesperson said we shouldn't make a down payment, instead we should take a vacation, or buy a new car, or play the stock market with that money. We're non-Hispanic caucasians, so clearly not only minorities were steered toward subprime loans. Had we followed that advice, we would have gotten a sub-prime ARM mortage, but we insisted on paying a substantial down payment to cut the cumulative interest charges. Capitalism = caveat emptor.

Aug. 18th, 2011

"Means Testing" means forbidding savings

There's some talk about modifying social security retirement benefits to make them "means tested," where only people that really need them get the benefits. There's also a lot of opposition to this idea, due to the intrusive nature and perverse incentives caused by means testing.

Social Security Income (SSI), designed for the old, blind, or disabled poor, is already means-tested. You're ineligible if you do any paid work (unless under the table), or have "resources" exceeding $1K/household + $1K/person. In other words, a couple without children can't have more than $3,000 in the bank, and they check your bank accounts to ensure this.

But means testing that was purely cash based would be far too easy to evade, so "resources" includes *any* reasonably liquid asset not used directly for living. This official example is taken directly from the US government social security handbook SI 01130.430(E)(3):

"Mr. Hollenback received $10,000 from an insurance settlement. The CR [bureaucrat] later develops how he spent the $10,000. Mr. Hollenback paid back creditors with $7,000 and purchased $3,000 in jewelry that he ordinarily wears. Because Mr. Hollenback wears the jewelry, the CR must determine if the jewelry is excluded from resources as personal effects or is a countable resource in the form of other personal property. Mr. Hollenback’s statements establish that the jewelry has no family significance and that he purchased the jewelry for its value as a means to spend down the $10,000. The CR correctly determines that the jewelry is not an excludable personal effect because an item purchased for its value cannot be a personal effect. The CR also correctly determines that the jewelry is other personal property and evaluates it using normal resource counting rules."

In other words, means testing means a government bureaucrat will be carefully weighing every purchase you make to determine if you really need the item or not. You are legally forbidden to save more than about three months of your meager benefits. This program seems designed to keep people from ever being able to do useful work, by forbidding the accumulation of productive capital (e.g., for a hair salon) or even a cushion with enough living expenses to ever hope to leave the program.

Welcome to serfdom! We think you'll be staying for a long, long time!

Apr. 16th, 2011

Too big to not fail: AT&T, fraud, and institutionalized evil

This December a fraudulent charge started showing up on my prepaid AT&T GoPhone. Being both extremely rarely used and also prepaid, I didn't even look at my account balance until it was refill time.
04/05/2011     10:54:03 AM CDT     RingTones/AnswerTones/Games     -$ 9.99
03/05/2011     07:08:26 AM CST     RingTones/AnswerTones/Games     -$ 9.99
02/05/2011     05:44:57 AM CST     RingTones/AnswerTones/Games     -$ 9.99
01/05/2011     08:03:43 AM CST     RingTones/AnswerTones/Games     -$ 9.99
12/04/2010     01:24:46 PM CST     RingTones/AnswerTones/Games     -$ 9.99

Every month, AT&T is sending $10 of my money to... who?
Type     RingTones/AnswerTones/Games
Nature of Call     Local
Number Called     -
Calling Number     MY CELL NUMBER
Call Date     12/04/2010
Call Time     07:24:46 PM
Timezone     GMT
Call Duration     0min 0sec
Total Amount     -$9.99
Service Used     -
Unit(s) Charged     -
Call Location     None

OK, I still don't know what that is. I have never downloaded ringtones, answertones, or games. I don't think my ancient phone even has that capability anymore (the useless builtin web browser stopped working around 2008). I called customer service, and got "Maria", who was actually quite understanding and helpful.

Except she had no idea who was getting my money either. It's an "MQ charge", a recurring charge, like for ringtone of the day. But there's no source number, and she can't actually tell me anything about where my money was going. She managed to swing me an 80% refund, which she took pains to point out was coming from AT&T, not... whoever had been getting my money. She tossed in a cheaper dialing plan, and turned on "Purchase Block" for the account, so I can give my PIN if I want to make purchases over the phone in the future.

So I hung up happy, and didn't get pissed off until I did a little more digging. Only seconds prior to the first charge showing up, my bill shows three SMS messages from "0150100197956", which is AT&T billing-speak for SMS #97956. A quick google turned up page after page of people screwed by SMS #97956. This particular scam is supposed to send you uninspiring "inspirational messages" for $9.99/month, at least until you figure out who they are and ban them. They have a worthless "Text STOP to unsubscribe" message, which I never even saw, and evidently usually doesn't stop them anyway. They even have a website, if you are so brain-dead as to actually desire their service:


(I may have mistyped the URL due to my displeasure.)

Imagine, if you will, that adjacent to Old Navy in your local mall was "Inspirastore", which employs pickpockets to lift cash from your wallet. Pure theft, right? But instead, say they use RFID technology to lift your credit card number directly from your wallet, and charge $10 per month to it. Sorry, that's still theft. But! What if they provided some "service", like keeping your credit card account active with their charges, and the terms and conditions are printed in extremely fine print behind their fire exit sign? Now it's all perfectly legal! At least until they catch us!

Of course, the mall would toss them out, or they'd be facing legal action. "Inspirastore"'s employees would get cuffed by the local cops, or at least beat up in the parking lot repeatedly.

But in the cellphone world, SMS scams just seem to keep on running. I fear that AT&T (and the other cell providers) let these scams keep running because they're *profitable*: I don't know how much total billing SMS scammers generate for the major cell companies, but it's certainly in the millions. AT&T has to pay some fraction of that back when people catch them, but I swallowed only an 80% refund, right?

Apr. 3rd, 2011

Radiation Levels Still Nominal

So Alaska is *not* experiencing an enormous, Revelations-class cloud of radiation due to the difficulties at the Fukushima nuclear plant. I know this, not because I implicitly trust the news reports, but because years ago I built up this little Geiger counter kit (which was way cheaper then):

The first rule of survival equipment: it's dirt cheap until you need it, but if you need it, it's either not there or it's too expensive to buy. See also: generators during a blackout, good shoes or clean water during any emergency, semiautomatic high-capacity rifles during a zombie outbreak, etc.

Anyway, radiation levels are currently measuring exactly at our typical background level, which is actually pretty high around here (40 counts per minute beta+gamma) due to our granite bedrock under just 30 feet of gravel. That's right: GRANITE IS RADIOACTIVE! OH NOES!

Notice how, despite all the news coverage about Fukushima, the total number of people killed or even seriously injured by that "disaster" is still zero? Granted, some workers who were literally splashing through radioactive water in the bowels of the plant got a minor rash, about like a sunburn (which is a RADIATION BURN!! RUN!!). Contrast the news hysteria with the non-coverage of this Pakistan coal mine disaster, which killed at least 43 people. I agree with Lewis Page that nuclear paranoia scares people away from this valuable technology.

Mar. 14th, 2011

Japan: there are no words...

Rikuzentakata, a week ago, was full of houses:


Block after block. Entire neighborhoods. Just gone.

My God.

Mar. 5th, 2011

Science Fiction: "AƧU"

"Director, we're getting telemetry again!"

"Finally. Is he still alive?"

"Alive and conscious, sir, and he's just left farside and is transiting k-space now. He'll be in the gate room in three minutes."

"I'm headed there now. What took Jim seven hours over there?"

"We're downlinking only a few bits per second of telemetry now, but the bandwidth will be much better once he's back on Earth, sir."

"I'll just ask him then."

I walked briskly out of the control room. The operators looked relieved to finally see me go.

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Feb. 26th, 2011

Capitalism vs Automation

There's a curious inverted graph at this interesting summary of US manufacturing output since 1975:

In 1975, it took 17 million people to manufacture $1.5 trillion worth of stuff. In 2010, less than 12 million people manufacture more than $3.0 trillion of stuff (measured in constant 2005 dollars). So fewer Americans have manufacturing jobs, but America as a whole is doing more manufacturing.

A curious paradox, which is almost entirely due to better technology, such as CNC machining. Today, one highly skilled guy with a warehouse of expensive HAAS CNC machines can crank out almost limitless numbers of perfectly machined parts. Only a vanishingly small amount of unskilled labor is needed to load and unload the machines, crate and ship boxes, and so on. Somebody amazingly good will get a ton of money to write the CNC code (a primitive form of computer programming), but crucially the code only has to be written once per part, and aside from the occasional tune and debug, no additional skilled labor is needed.

The macroeconomic problem with this is that it has put 5 million plus Americans out of work so far, and this will only get worse as technology progresses. Eventually, it will only take one guy to keep the servers humming, and a federated system of fully automated factories will build everything anybody could ever want. The question is, who owns the stuff the factories produce?

Under our current legal system, machine-produced stuff is owned by whoever paid to build the machine, minus whatever labor they have to pay to keep the thing running. But as labor goes to zero, the returns on capital go to infinity. In other words, a generation-18 factory in 2142 AD will be producing goods that are legally owned by bazillionaire Ed Fatcat IV, simply because his great grandpa Elliot Fatcat Sr. put together the loan to build the automated generation-1 factory in 2036.

There's something deeply wrong with this, which is the screaming mob of unemployed ex-workers, who have no money because they have nothing useful to contribute to modern society. They might have made excellent farmers or blacksmiths, until those occupations were automated and industrialized; or mechanics, until buying new became cheaper than repairing old; or pre-Word typists; pre-Roomba janitors; pre-deJureX lawyers; pre-AutoDEBUG computer programmers; or pre-SUPERteach educators. The victory of IBM's Watson should be proof that the soft service-based knowledge economy so many predict is also amenable to automation.

I'm convinced America's increasing income inequality is at heart mostly due to the immense returns on capital created by technology. I'm no Luddite: except for unemployment, this technology really does make our lives unconditionally better. It pains my right-wing heart to even think it, but given unlimited automation, will the capitalist ownership model still work? Or do we need to institute some means to bleed off ownership of automated machinery, such as a few percent per year tax on capital, used mostly to fund unemployment benefits?

Feb. 13th, 2011

"Gunwalker" scandal: ATF, Mexico, and a murdered federal agent

Mexican casualties in the US Government's misguided drug war have been in the news for years. In early 2009, Secretary of State Clinton was talking up the notion that "Our inability to prevent weapons from being illegally smuggled across the border to arm these criminals causes the deaths of police officers, soldiers and civilians," and hence presumably law-abiding Americans should meekly submit to Clinton-era disarmament to save Mexicans. Rather than something simple, like treating US drug abuse as a medical problem instead of a criminal problem.

And then back in late 2009 through early 2010, a hispanic guy named Jamie Avila was going around Arizona gun shops buying piles of guns: stacks of FN Five-seveN pistols, semiauto AK-47 rifles, a Barrett 50 BMG every week, etc. Very early, October 2009, one of the dealers became suspicious of this and called the ATF. Allegedly, the ATF's response was essentially:

"Yes, we think this Avila character is indeed a 'straw buyer' running guns down to Mexico... so you *should* sell him those guns!"

This happens, periodically: the cops know about some illegal activity, but they don't stop it because they're still investigating, trying to understand the entire organization so they can catch big fish, not just arrest one low-level creep.

But late on December 14, 2010, in Arizona US Border Patrol Agent Brian Terry was shot dead by a gang of illegal Mexican cross-border bandits. Found on the scene were two WASR-10 AK-47 rifles registered as purchased by Jamie Avila, who the ATF arrested the next day.

Is this simply a case of classic law enforcement difficulties, stringing along a marginal investigation until it's tragically too late? Or was ATF intentionally allowing guns into Mexico, perhaps to pump up the "90% myth" for domestic political purposes? As Heinlein stated, "Never attribute to malice that which is adequately explained by stupidity," but Republican Iowa Senator Charles Grassley is calling for ATF to release more details in the case. The sensational aspects of the story are beginning to take off on right-wing blogs; see a timeline at the national gun rights examiner. You can read a pile of Grassley's released documents in the "Rosetta Stone" post.

Domino Dictators

There's something very hopeful about these BBC pictures of Egyptian ex-protesters cleaning up Tahrir Square. Young men in dust masks wielding brooms to clean the streets, protesters carefully replacing cobblestones, etc.

Mubarak had run Egypt since 1981. 1981! Good riddance.

Other long-ruling dictators few would miss:

  • Kim Jong-il has been groomed to run Korea since his dad helped take the place over in 1948. The translations on the official state-run Korean News agency (hosted from Japan) give the flavor of a Stalin-era hellhole. Everybody has to wear a pin of Jong-il, or his dad. Their cornfields have armed guards.
  • Gaddafi, who has run Libya since 1969, and has a long and varied history of ethnic cleansing (of Italians), terrorism (Pan Am 103), and murder. Other than that, he sounds like an interesting fellow.
  • Robert Mugabe since 1980 has run Zimbabwe... into the ground. With the best of intentions, he's managed to destroy the country's economy, currency, and life expectancy.
  • Omar al-Bashir has run Sudan since 1989. Darfur? That was him.
  • Islam Karimov has run Uzbekistan since 1991. Despite the killings, he still wins "elections" with 90% of the vote!

Sadly, this is not a complete list.

Jan. 18th, 2011

Enjoy my unwanted tax advice!

Last year, I told you to file Schedule M with your taxes to get your sweet $800/household kickback. You still need to do that this year. This will end up on line 63 of your Form 1040, reducing your bottom line tax bill.

What? You haven't even thought about taxes yet this year? What if I told you uncle Sam might have up to several thousand bucks of your money, and you just have to fill out a few forms to get him to send it back to you?

One new form for me this year is 1040 Schedule D, Capital Gains and Losses. I've got to file that because this summer, I sold a gold Kruggerand that I've been holding for thirty years or so. Gold counts as a "collectible" for capital gains purposes. Trying to simply follow the instructions, in particular the "worksheet" on page 10, is like living through the vigorously hybridized nightmares of Stephen King and Franz Kafka. But when the smoke clears, the sell minus buy price difference on the gold seems to just count as ordinary income which goes on line 13 of form 1040, and after thirty-some lines of "if line 8 is smaller than line 13, then enter the number of chromosomes in a female albino hawkmoth, otherwise enter -0-", I end up just calculating the tax normally, like none of that crap ever happened. Your mileage may vary.

I wonder how many people cheat on their taxes simply because they can't, for the life of them, figure out what in the hell they're supposed to pay?

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