The plummet not worth mentioning.

If anything happens to the Dow-Jones Industrial Average, a.k.a The Dow, you'll see on nearly every news website. There was a big drop this week and it was front page on The Huffington Thing, as Princess Sparkle Pony likes to call it.

I looked all over that less than optimal website today, even in the so-called business section, but they don't seem to be noticing that three very important commodities, gold, silver and crude oil, are all plummeting this week. Here's the situation at market close, 2:00 p.m. on Friday.

Gold: $1657.20 an ounce, down from $1812.50 last week, 8.6% drop
Silver: $30.93 an ounce, down from $40.66 last week, 23.9% drop
Crude Oil: $79.98 a barrel, down from $87.92 last week, 9.0% drop

I'm of the opinion that lower crude oil prices are Generally A Good Thing for the world economy. My cause for concern is that all three of these commodities took a dive together just a few months before we found out the whole economy was in the toilet back in 2008.

Maybe this actually deserves the "Sweating the Small Stuff" label. I'm not an economist so I can't be sure. But a big sell-off of all three of these commodities in unison has me worried, and now that you've read it, you can join me in a feeling of unnamed dread.

You're welcome.

Have we seen this show before? The overture sure sounds familiar.

You may have heard that this week, especially yesterday, was a big shock for several commodities including the three that Matty Boy, Investment Advisor to the Stars* follows closely for no good reason other than habit, gold, silver and crude oil. Silver in particular took a massive blow, from about $48 an ounce to slightly less than $36 an ounce, losing roughly 25% of its value in the space of 24 hours. The percentage hits that gold and crude took were much smaller, about 4.5% for gold and 14% for crude. All three still are trading at prices higher than they sold for on New Year's Day.

I bring this up because there was something like this at the end of March 2008. All three commodities were riding high but then took a big single week bump, with silver taking the biggest hit. This was the beginning of the end of the party for the metals, while crude oil rallied back and went to nominal high price records of over $140 a barrel just before joining the other prettier but not as important commodities in free fall. Within six months, we found out that the world economy had been secretly married to degenerate gamblers for several decades, and like all degenerate gamblers everywhere, they eventually hit that very bad streak, bankrupting the world's economy as well as themselves.

Here's my theory. I cannot vouch that it is anything like the truth, but it does sound plausible, which I must advise as Matty Boy, Mathematician is a very long distance from the actual truth. In 2008, the margin calls in the derivatives market were being cashed in, and the losers needed to pay their bad bets in Credit Default Swaps (CDS) and Colateralized Debt Obligations (CDO), so they started cashing out other successful bets, the profits they had seen in the commodities markets. These successful bets weren't even close to covering their losses, so over the next six months a hell of a lot of investors were moving off their positions in silver and gold, some handing it over straight to their creditors, others speculating in the only winning game in town at that time, crude oil futures. When crude hit the high end of its roller coaster ride and began to fall precipitously, the last slot machine in the casino that was paying off went bust and it was a flat out panic, which the public was informed about when Bush and Hank Paulson told us they need $700 billion like RIGHT THE FUCK NOW or everything would simply stop working.

Again, I have no idea if that is the case right now, but I am certain of one thing. The problems in the derivatives markets have NOT been fixed. There is still no limit to how much credit the big banks can get in this insane casino, and some may be in the stinky position Bear Stearns was in when it died, $30 of bets on the table for ever $1 of actual assets they had on hand.

The people running the show these days, followers of that disgusting homonculus Alan Greenspan, himself a follower of an even more disgusting homonculus Ayn Rand, tell us there is no way to regulate the markets. Recall that 30 years ago, the Hunt brothers tried to corner the silver market and took a beating. They didn't take the entire world economy with them, but Paul Volcker, who was then head of the Fed, thought the situation was serious enough to institute a rule that banks weren't allowed to lend money to speculators.

Now it's the banks themselves that are lending money to speculators on their own payroll and the free market fetishists in charge of the world economy see nothing wrong with this.

If you are the sort of person who prays, now would be a good time to start.

Not even the angels in heaven.

If you read The Other Blog, you may already be aware that the End of the World is less than four weeks away now. This is the date set by Dr. Harold Camping, who can be heard on the innocuously titled Family Radio Stations, including the flagship station KEAR, based right here in Oakland. Dr. Camping has fleeced enough sheep to put up billboards around the United States, which have been noticed by the Huffington Thing, and even by reliable sources like sfmike's Civic Center.

Color me unimpressed. As this demotivational poster designed by Broken Eye 3 points out, This is Dr. Camping's third attempt at predicting the End of the World (technically, Jesus returns on the 21st, the actual end is later in the year), and both his previous predictions in the 1990s came up craps and even he admits it.

For those of you interested in reading more, here are links to more stuff I wrote and from my good friend Padre Mickey and my sister Karlacita!



You might think I doubt the good Doctor's math and prophetic abilities because I am a godless heathen Commie bastid, but when it comes to the End of the World, I rely strongly on my close personal bud for nigh onto thirty years, the Jebus lubbin' Commie bastid Padre Mickey. He knows all about the eschatology (end of the world stuff) and the Adventist cults (folks who predict an exact day for the End of the World), and he says yes, I am going to have to wake up on May 22 and prepare notes for the class I give the next day.

Because Padre Mickey really lubs the Jebus and Dr. Camping kinda fell in love with the sound of his own voice instead, the Padre believes the words of Jebus found both in Matthew and Luke that only God the father knows the day and time and he has shared this info with absolutely zero other souls, not His son and not even the angels in heaven.


So while I am blithely unconvinced of any upcoming end of the world, I do still worry about another big financial crash. I know the real problem if it happens in the future will probably resemble the last big crash, which was not the crash of the stock market, but the crash of the derivatives market, which brought down a whole bunch of other markets in its wake. I don't follow the derivatives market and don't even know how, but I'm seeing several of the markets I do follow - prices of gold, silver, crude oil and currency markets - following the strange patterns they followed in early 2008 before everything went to crap.

It isn't exactly the same. Crude oil is "only" at about $110 a barrel instead of $140, but that still is a horrible redistribution of wealth. Of course, the modern world is addicted to oil and that may not change any time soon, so basic macroeconomics says the oil producers would be idiots not to soak the pathetic crackheads who knock on their doors. Also, gold and silver are way higher than they were before the last crash, though people who shill for the precious metals like to remind us that they are only nominally at all time highs and they were actually higher when adjusted for inflation in the 1980s.

Before they crashed and burned.

The U.S. dollar is also taking a beating right now, though not quite the beating it took during the darkest days of the George W. Bush administration. The main reason the present beating seems tame in comparison to the last is the relative weakness of the pound (much weaker) and the euro (slightly weaker). There are actually several other currencies (the Aussie dollar, the Canadian dollar, the Swiss Franc, the yen) that are doing much better than they did during the Dark Days Of Which No One Will Speak.

Again, I am not following The Big Game, which is the derivatives market. People in Washington, both Republicans and Democrats, have no interest and not much idea on how to regulate the market. (Here's a modest proposal: set a leverage limit for all investment banks. For every dollar of real assets they have now, they may have $30 of credit of more in the Insane Casino where they killed the world economy not three years ago. Make a law that says they only get $10 credit maximum for every real dollar they own. That may still seem high, but it makes a complete collapse considerably less likely.)

As for another collapse, there may be someone beside the Father who knows when it's coming. The problem is there are a lot of people yapping, and you can't always tell in advance if a yapper is Cassandra or Dr. Harold Camping before it's too late.

Here endeth the lesson.

Another state worker taking your hard earned money has the nerve to complain.

According to a new Field poll, a plurality of Californians now feel that state worker pensions are too generous. With scandals like the Bell city employees' pay packages and a town like Vallejo filing for bankruptcy instead of paying the pensions of cops and firefighters, I understand how public resentment has grown. Closer to my situation, the pay packages for people at the district level of the Peralta Community Colleges, where a boatload of people are making between $100,000 to $300,000 a year each, are more than a little grating when workers who actually makes students' lives better are getting canned left and right, like teachers, librarians, facilities workers and janitors.

But here's a guy sucking at the public teat who would actually like to tell you that he is getting screwed at the pension level and there should be something done about it.

That guy is Matty Boy.

Hi, how are ya? Nice to see ya.

Now that I work for the state of California and I'm part of the state pension plan, this means I will get docked Social Security benefits. I understand the idea is "double dipping" and I will note that I don't get any Social Security deduction from my check at Laney.

The thing is, I worked for more than twenty years out in the private sector before becoming a sponge off the taxpayers, having the gall to think that the time I spend 'splainin' order of operations or the quadratic formula or the Central Limit Theorem to community college students is actual gainful employment. More than that, I'm a part-timer, so I have to work several jobs to keep a roof above my head, and some of those gigs are still in the private sector. That means Social Security is taken out of those checks and I will get less of it than the average Joe, even though the system is still expected to be solvent when I get to retirement age, whatever age that scummy old coot Alan Simpson thinks that is.

And much more than this, I am NOT a unique case.

The current system has a sliding scale, but it depends on how may years you were paid "substantial earnings", a number which has increased over time because of inflation. If somebody has had a state gig his or her entire life, then it makes sense that since that person paid nothing into Social Security, he or she should just get by on a state pension and whatever savings were accumulated. But folks like me who have become state workers late in life and still have to work part time at companies that are taking Social Security out of each paycheck will never see any benefit from that removed money if we do not work enough hours outside the public employee system.

To me, it's just another example of a tax system designed to make the rich richer and the non-rich poorer. They use "small business owners" as human shields, but the very rich are robbing us blind when there has been enough growth in this country's economy in the past forty years that the tide should have lifted all the boats, not just the yachts.

The parable of the blind men and the elephant.

I didn't intend to make a study of the reports of the causes of the financial meltdown. It happened incrementally, with some very intentional steps and others less so.

First and most intentionally, I bought and read Michael Lewis' The Big Short, which I reviewed earlier this month. Next, I rented Charles Ferguson's Inside Job based on several people's recommendations and a sense of duty to watch a few of the Oscar winning and nominated documentaries.

There are major differences between The Big Short and Inside Job. First and most obvious, it's a book versus a movie. It's easier for Lewis in his book to spend more time explaining some tricky ideas. The two of the main weapons of mass destriction, the Credit Default Swap (CDS) and Collateralized Debt Obligation (CDO), definitely qualify as tricky ideas, intentionally designed by mathematicians and lawyers to be very hard to understand.

Alliances of mathematicians and lawyers. Even I shudder at the thought, and I'm supposed to understand half of that pretty well.

The second big difference between The Big Short and Inside Job is worm's eye vs. bird's eye. Lewis talked mainly to small players who figured out how to make a profit but had zero power to stop the avalanche. Ferguson got some interviews with the big fish, though there are a lot of times the caption "xxx refused to be interviewed for this film" appears. Glenn Hubbard (no relation), the genius who engineered the Bush tax cuts, is cheerful through most of the questions until he is asked to take some responsibility for the carnage, and there is some talking head from the Business Roundtable, a pleasant sounding name for an evil lobbying group created by the ass covering buffoons who got us into this mess. Almost all of the people who sit in front of the camera and tell the truth are not Americans, people from the governments of Iceland and Singapore and France who got taken for a nasty ride and admit their foolishness and a little of their culpability but make compelling cases that they were among the fleeced and not among the fleecers.

I recommend both the book and the film, so I don't want to give all the juicy bits away. There are parts of the colossal mess that are covered by both. A very fair question is "Where were the regulators?", and both The Big Short and Inside Job have plenty of scorn to heap upon Moody's, Fitch and S&P. One thing both the movie and book agree upon is that it was in the financial interests of the rating agencies to give high marks to repackaged crap. A company would pay a set price to Moody's to rate a CDO, but if it wasn't the highest rating available, maybe that company would ask S&P to rate the next one.

The book goes into more detail than the film on this topic, as was the case regularly when they overlapped. Since the end of the Cold War, a lot of young people good at applied math would go into financial engineering rather than weapons engineering because that was obviously where the money was. Lewis puts forward the thesis in The Big Short that if a young person was going into the field for a big payday (and why else?), then the really good financial engineers (known as quants) would be at the companies giving million dollar bonuses and the second string would be at the ratings agencies who would pay mere hundreds of thousands in salary.

To use a March Madness analogy, it was like a Number 1 seed vs. a Number 16. There was effectively no chance the big money would lose.

To give a point to the film, an excellent point was made in Inside Job as to why the massive financial bailout was voted through in the fall of 2008 by both Republicans and Democrats, an event that was the last nail in McCain's grotesquely mismanaged campaign, doomed to lose six weeks before a vote was cast.

Simply put, the world runs on credit. Sadly then and frighteningly still true today, it's way too much credit, with the big financial players massively over-leveraged, sometimes in the range of 30 to 1 or even 40 to 1 when measuring obligations in the markets compared to cash on hand. While this was a zero-sum game, which means if Company X loses $50 billion, somebody else makes $50 billion, several of these companies were on the hook for more money than they had, so Company X could lose everything, say $30 billion, and others would have $20 billion less than they expected. While all of these were flat out gambling losses, it meant that the people who lent to legitimate businesses had no money to lend. The scary and completely plausible scenario was that airlines would cease to function, because they are constantly borrowing to buy that day's fuel allotment.

No financial service industry, no planes in the air.

Anywhere.

Like... oh, nowish.

No James Bond villain ever made a better blackmail threat.


Add to this mix a talk I heard on the broadcast from The Commonwealth Club by Phil Angelides, the former California state treasurer and failed Democratic nominee for the governorship who was appointed to the blue ribbon government panel investigating the financial meltdown. This was the least intentional step in my search for knowledge, as I was driving down to Santa Cruz and the broadcast came on the radio in my dad's truck.

Yes, my father is a Republican who listens to NPR. I may have to report him to the proper authorities.

The panel was set up after the 2008 elections where the Republicans deservedly got their heads handed to them, so the Dems got six members and the Republicans four. Angelides plays the good boss in this talk, lauding his staff for long hours and excellent work, several of whom are in the audience and mentioned by name. But he doesn't deny the obvious, that this was an investigation done on the cheap by government standards, spending less than $10 million before issuing their report. This is a tiny fraction of the money Ken Starr spent looking for presidential blowjobs, and that total has to be adjusted for inflation. To compare it to another financial investigation from this era, the man charged with looking into the wrongdoing of Bernie Madoff has already spent $200 million.

Charles Ferguson was in the audience at the Commonwealth Club after giving a talk earlier in the week on the same subject, and he was one of many who sent in questions as to why the government hasn't seen fit to prosecute anyone involved in the fiasco. Angelides correctly points out that it wasn't his commission's task to put people in jail, and notes that after the most recent though much smaller similar meltdown, the S&L crisis of the late 1980s, over 1,000 people were sent to jail, including CEOs. As of this writing, there has not been a single person convicted for any wrongdoing. I don't even know of any big wig who has been indicted.

Instead of chiding the judicial system, let me pick up a few sturdy bricks and throw them at the Republican nominees to this committee. Before the final panel released their report, three of the Republican nominees got together to write a rebuttal and the fourth wrote his own separate rebuttal.

Their conclusions were as predictable as the dawn. It was not the fault of their paymasters, the American corporations. It was the crazy Asian investors who had so much cash. It was the semi-government agencies like Freddie Mac and Fannie Mae. No more regulation is needed. No one is criminally culpable.

I'm not sure if it's actually detectable in my writing, but I'm trying to cut down on the addictive drug of vitriol. I actually understand and agree with some of the underlying points of conservatism, but there is really no one in power making those points. The modern "conservative" movement is a loose coalition of fucking morons who think the world is 6,000 years old and fucking thieves who think a CEO making 6,000 times more than the average employee is perfectly acceptable if the market will bear it.

Ah, that first sip of vitriol! It still goes down smooth.

I don't agree with The Tea Party, but from what I see, it's largely a Revolt of the Morons. If these idiot dogs will go for the throats of their moneyed masters, there will be a blood bath and every fatality is a blessing on humanity. As Neils Bohr or Yogi Berra said, prediction is hard, especially about the future, but I could see an internecine fight like this changing the political power structure in this country. I wish I could be optimistic about the future, but watching the Obama administration, I think the people with money will just let the Republicans wither and buy more Democrats. Watching people in the streets in Wisconsin gives me some hope.

While I see change in the political world as a distinct possibility, sadly there is no political will to force change in the unregulated markets created by the eager-beaver quants on Wall Street, whom I will immodestly call my evil twins. Human greed focused by human intelligence is the most destructive power on earth, and even 9.1 earthquakes pale in comparison.

I should have done more research.

Last Monday, I wrote a blog post about a production vehicle that Volkswagen would be releasing in China in 2012.

This is what I get writing a blog post based on an e-mail without doing any research.

The pictures are from 2009. The rumor then was it would be released in 2010.

You know, one of those marvelous future things that is always one year away?

Other stories on the Internet say the price would be closer to $25,000, which seems ridiculously high to me, but I'm a cheap bastard without a car right now. Yet other stories said it was just a one-off experiment and there were no plans to even show it at any of the jillion auto shows around the globe.

So once again, let me apologize about spreading a false alarm. I promise to do better homework in the future.

Introducing the Bachelor-mobile!

Volkswagen has been working on a new prototype for truly basic transportation for about three years now and has unveiled the prototype, announcing it will be available for sale in China in 2012, just in time for the end of the world if we are to believe those pesky Mayans. The car is four feet wide, eleven feet long, a single seater with a rear mounted one cylinder diesel engine that in prototype got over 100 km per liter of fuel, which would mean getting between 230 to 260 miles per gallon. The tank holds 1.7 gallons (7 liters) and the price before tax, tip and dealer preparation will be about 4000 yuan, which right now translates to $600 American.

I call dibs on the nickname The Bachelor-mobile for three important reasons.

1. The owner is completely oblivious to the idea that his car is a phallic extension.
2. The owner is happy to let the world know he is as cheap as hell.
3. Sorry, honey, I can't give you a lift. There's no room.

I would also like to quote my nephew Eli who said, "1.3 billion Chinese are about to have an epic bumper car match."

I know the young people prefer LOL, but I'd rather type... Tee Hee!

Book review: The Big Short by Michael Lewis

Back in the 1980s, Michael Lewis went straight from Princeton to Wall Street, though his degree had nothing to do with finance. His lack of expertise did not hurt his career, but he quit the field just a few years later, much wealthier and terrified as hell. He turned his experiences into the book Liar's Poker, and in the bargain found a calling better suited to his talents, writing non-fiction best sellers.

Not without cause, Lewis thought he was watching an industry headed for an apocalypse and right soon. Conservative sectors of the financial industry were going nuts in the 1980s, due in no small part to de-regulation. He was in the game when the previously dull and solid savings and loan industry crashed, and he worked at Salomon Brothers, the first investment bank to go public. This meant the owners were no longer gambling with their own money, but instead with the money of the stockholders. Old timers were appalled, but it wasn't really the end of the world, even though some big names went to prison, including Michael Milken, Charles Keating and John Gutfreund, Lewis' former boss at Salomon Brothers.

No, the real crash of the financial industry was still about twenty years in the future, and when it came, Lewis decided to write an article about it for the now defunct Portfolio magazine, and then expand the shorter piece into the book The Big Short.

While Liar's Poker was kind of a bug's eye view of the financial world because Lewis was such a little fish, The Big Short is more like a worm's eye view. Because of non-disclosure agreements, it's hard to get the people at the top to talk. He did get some valuable information from insiders who saw the trouble in subprime loans early like Meredith Whitney, Steve Eisman and Greg Lippman, but a lot of the narrative of his book follows some very small fish indeed, investors local to the San Francisco Bay Area instead of New York. (Lewis lives in Berkeley.) These outsiders saw that if it was possible to bet against the loans being made by subprime lenders, the odds were massively in their favor.

Home ownership used to be straightforward. Get a down payment together, show proof of income and a solid credit rating and you could have your piece of the American Dream. That, of course, was in the quaint 20th Century. With sub-prime lending, down payments and proof of income would vanish as criteria and all that remained was your credit score. The thing was, it was pretty easy to go from no credit history to good enough to get a loan in a matter of months by getting a single credit card and paying off the entire balance every month. Lewis tells the tale of a migrant worker making $14,000 a year picking strawberries getting approval for a home loan of over $700,000.

You might argue the strawberry picker was an idiot, and I wouldn't disagree. But what about the idiocy of the company that made the loan? How can they possibly turn a profit on this? Lewis does a good job explaining this as well. A lot of subprime companies made the loan, got the points up front off the not really credit worthy buyer then sold the loan immediately.

Okay, you might say, but who's a big enough idiot to buy the loan? The loans were based on teaser rates and balloon payments. Maybe the strawberry picker could make the teaser rate payments, but he'd probably not be able to continue two years later when his monthly payment blew up. No matter, thought the alleged non-idiots taking the gamble on him. If he keeps paying, fine. If not, his house value probably went up, then he could re-finance. Worst case scenario, the company buying the loan now could foreclose and they owned a house, an alluring piece of the American Dream they could sell for a profit.

They could see no way this well-thought out plan could fail.

They couldn't, but others could. The thing was, to bet that the housing market was really a massive bubble, you needed to enter the bond market. Some people might think the stock market is a place where the big fish eat the little fish, but the stock market is to the bond market as a well maintained aquarium is to the deep blue sea. With exotic bonds like the Credit Default Swap (CDS) and the even more arcane Collateralized Debt Obligation (CDO), it was nearly impossible to know exactly what you were buying and even the alleged "experts" couldn't agree on what the things were worth. There's a very funny scene where Lippmann from Deutsche Bank, the biggest fish Lewis could talk to who bet against the CDOs, calls up his counterpart at Morgan Stanley, who thought the incredibly bad loans in the obscure package really deserved a triple A rating. The deal was set at 100. Lippmann's model said they are worth 72. The person from Morgan Stanley counters that their model put the value at 95.

"Fuck your model," Lippmann patiently explains. "If you really think they are worth 95, I will sell them to you at 77. Otherwise, dude, you owe me $1.2 billion, and I want it fucking now!"

Of course, this was not the end of the conversation. Lawyers stepped in and eventually Morgan Stanley paid Deutsche Bank half that amount, $600 million, for being on the wrong side of a tiny part of the biggest bet in the history of the world.

The Big Short is supposed to be the story of gamblers in a zero sum game, which means for every dollar one gambler might make, someone else at the table has to lose a dollar. But here's where the story gets scary. A single loan could be repackaged again and again into derivatives like CDSs and CDOs, and the amount of money actually tied up in home loans that wouldn't get paid off was a tiny fraction of the money floating around in the casino that every major player in the financial world was gambling in. Some were on the right side but many on the wrong side so deep, bankruptcy was their only option and the winners wouldn't get paid off.

Like I said, it's supposed to be the story of gamblers. The main characters in the book are smart guys on the right side of the bet like Dr. Michael Burry, an obsessive researcher who stopped being a surgeon to become an investment advisor, and Charlie Ledley and Jamie Mai, a couple of neighbors in Berkeley, California who started Cornwall Capital and dove bravely into the bond market, only to be mocked by the big fish with whom they swam as Cornhole Capital. But all the good guys get their bets paid off, and so do all the idiots, only two of whom are featured prominently by name, Howie Hubler at Morgan Stanley and a CDO manager named Wing Chau. All of them get paid off because of the massive bailouts of the financial sector under presidents Bush and Obama, engineered by the scum in charge Ben Bernanke and Tim Geithner.

While I have mentioned many of the plot points, there's plenty I haven't talked about, and The Big Short is still a ripping good read, largely because Lewis is a better writer than I am. While there is a good chance you will finish the book either somewhat depressed or pissed off as hell, I still recommend you read The Big Short. The sad moral is that the idiots and thieves are still in charge up and down the line, and you can see in slow motion the post mortem of the last train wreck they caused while waiting for the next one.

Something's going on but I don't know what it is. Do I, Mr. Jones?

Since late in 2006, I've been following the price of silver and gold. I haven't had enough money to invest, I just was surprised at how high gold was and decided to pick something to compare it to.

If I had been serious about investing, I might have looked at other stuff, like the guys in Michael Lewis' book about the last gigantic crash, The Big Short. But I wasn't nearly as diligent as those guys. The problem that would bring the whole economy down was the bursting of the housing bubble. In effect, I was just watching a few corks bob up and down on the tumultuous sea that was the financial markets.

I'm still watching the corks bob, and I'm here to report they are bobbing in new weird ways I haven't seen before.

The big idea of gold is that is the hedge against bad times, but when everything went to hell in 2008, gold took a hit as well, just not quite as bad as everything else. In 2007, gold seriously outperformed silver, 35% to 17%. In the beginning of 2008, gold was still rising even though anyone watching the financial markets knew there were troubles like never seen before. When the dust settled, gold was up a very modest 1.4% at the end of 2008 while silver had taken a 30% hit.

Since then, both have been rising, but not in lockstep. When silver was at its worst, it would take nearly 80 ounces of silver to equal an ounce of gold, a far cry from the standard exchange rate of 50 to 1. In the past 26 months, the market has decided that silver was underpriced in comparison to gold. In 2009, gold rose 27% and silver rose 50%. In 2010, gold improved by 30% and silver by 83%. Now, silver is at its best position in many years compared to gold, where it only takes 40 ounces of silver to buy a ounce of gold.

This may just be the market finally realizing that silver is actually much more useful than gold, but when I see numbers I've never seen before, I start worrying about a correction.


And then there's the third thing I've been watching, crude oil. It had been trading between $85 and $90 a barrel this year after being in the seventies most of 2010, but now it's sneaking back up to the $100 a barrel range. Smart people are in consensus now it was the financial markets that caused the big crash, but the cost of the life blood of the world's economy can't be ignored. As bad as high unemployment is, high fuel prices are often the cause of stagflation, that dreadful economic effect that means the economy isn't growing but prices rise anyway, a pair of symptoms many useless by still popular economic models says cannot happen at the same time.

I don't know what's the cause of all of this. I don't even know if the numbers I'm looking at are worth a rat's rectum. But I do get the feeling that a new tsunami is coming, and the class warfare we are seeing now is just the start.

A quick reminder of which side I'm on. Class warfare is better than class genocide.

Fight back, y'all.

Matty Boy lends a hand to the American economy.[Finally.]

I don't like shopping. I tend to buy stuff and use it until it wears out, then try to figure out how to use it in its decrepit and flawed state.

When I finally decide to shop, I have a three step process.

1. Do I need something?
2. If the answer to question #1 is yes, can I afford it?
3. If yes to both questions #1 and #2, do I know where to get it?

If yes to #3, mission accomplished!

Because of a favorable work situation at long last, I am in the unusual position of having a few nickels to rub together, which means I can ask the Three Essential Questions of Shopping™ about what is euphemistically known as a Big Ticket Item.

The recliner I bought early this century is no longer truly usable and I need a new one.

So we have a yes to question #1 and I can make a budget to say yes to question #2. The thing is, I am not clear on question #3.

Wednesday was my birthday, and my dad, bless him, bought me a birthday lunch as usual. I asked him if he had time to drive me over to Sears a few blocks away to look at recliners and he said yes.

We went. They had one recliner on the floor.

One. And it sucked.

As my friend Mina put it so well, Iron Curtain levels of service at Western democracy prices.

Okay, that didn't work. My dad, wise in ways younger than his years, advised me I should look online first, and he suggested Big Lots, which sells a lot of stuff at low prices.

Thursday, I took BART down to BayFair and walked over to the Big Lots. Much better selection than Sears and much lower prices, but the stuff wasn't that good.

I sleep in my recliner. I need a good one.

So comes the third step in what is usually a one step process for me.

On Friday, I went to the La-Z-Boy showroom in Emeryville.

Oh. My. Lack. Of. God.

La-Z-Boy is the leader in the industry, so you might think you are getting the Toyota of recliners, but the selection is absolutely astounding and if you sit in just the right one, you will know you are in the Cadillac of recliners.

I could have written "Mercedes" instead of "Cadillac", but La-Z-Boy is an American company that still makes their product in the good old U.S.A., and they definitely know what they are doing. The quality is good, the service is impressive and the sales staff was knowledgeable and low key. I was walking around looking for chairs and I saw other customers in their perfect and near perfect chairs doing everything they could to keep from drooling.

It's reeeeallllly nice.

I have no idea what percentage of people walk into a La-Z-Boy showroom and leave with a product. I have no idea what percentage of bugs wander into a Venus Flytrap and end up lunch. I suspect the numbers are just about the same.


I sat in a lot of chairs that were in my price range, but the one I liked best was the Maverick. I went in with the idea that I didn't want a rocker, but the mechanism of a La-Z-Boy rocker is significantly better than other rocker recliners I've tried, so I was debating between the rocker and the non-rocker, which they call a Wall Saver. There were two versions of the Maverick right next to each other. The salesman who greeted me, a nice fella named Aaron, walked me away from these Mavericks across the showroom floor to a non-rocker Maverick with leather upholstery.

I sat down. I did everything I could to keep from drooling. I may not have been entirely successful.

This was the only attempt to up-sell me. It was about $300 more and I decided, with an itty bitty tear in my eye, the leather Maverick was not for me, even at the end of the year sales prices.

I am now the proud owner of a La-Z-Boy recliner. It will be delivered on Tuesday. If the ownership experience is even half as nice as the shopping experience, I am going to be happy for many years to come, especially given how little I usually like the shopping experience.

If you need a recliner, you should take a look at their selection. I perfectly understand if it is out of your price range, but if you decide to go with someone else, at least you will know what you are missing.

Working on that whole "viral" thing again.

I saw this on the website Talking Points Memo, a very popular progressive website, who pulled it off of The You Tubes, the Internet version of the Library of Congress, only bigger and more global. And now I put it on my much, much tinier blog. That's what makes it "viral".

The guy's name is Hans Rosling and he teaches stats. He's really good.

He explains a data plot of 200 countries over 200 years, correlating average income and life expectancy. Give it a click. It's fascinating.



If you like this, wander over to The You Tubes and watch some more of his stuff. Like I said before, he's really good.

Crazy, but calmer.

Matty Boy, Investment Advisor to the Stars*, is still keeping track of the financial situation despite the fact he does not have two nickels to rub together, and I'm not talking about the gold plated nickels seen at the lower part of this picture. I'm talking nickel plated nickels or pure nickel nickels or whatever alloy they are passing off as nickel nowadays.

For anyone who isn't sure who was in office when things went nuts and then crashed and burned, here's a quick rundown of what happened to gold, silver and oil in the past few years.



2007
Gold +34.9%
Silver +17.4%
Crude Oil +74.8%

2008
Gold +1.4%
Silver -30.0%
Crude Oil -61.8%

2009
Gold +27.1%
Silver +49.8%
Crude Oil +57.1%

2010 (nine months)
Gold +20.3%
Silver +31.1%
Crude Oil +2.7%

There's a lot of talk about the people who sell gold to an unsuspecting public, but it's actually a pretty good investment, though not when you buy coins as the company Glenn Beck shills for recommends. If we have another 2008, and those who are given to praying should pray that we don't, gold tends not to crash and burn like other investments. Still, since the crash ended, silver has steadily outperformed gold. Before things went to hell, about 50 ounces of silver bought an ounces of gold. At the bottom of the investment crash, it took 80 ounces of silver to buy an ounce of gold. Now the ratio is 60 to 1 and improving in silver's favor as both commodities climb.

The "nice" part of the investment world right now is that crude oil is off the roller coaster. It's bounced around in a range from about $70 to $85 a barrel this year, which might seem high by the standards of the beginning of the century when people thought $50 a barrel was the end of the world, but it's nothing like the $140 a barrel nonsense from 2008 before the crash and it no longer shows much correlation to the gold and silver prices, thank Odin.

Metals are supposed to be the investment for speculators. The life blood of the world economy, not so much.

And then there's the other weird worldwide speculation market, currencies. The dollar was very, very strong at the end of last century, trading as the USD index at around 120 points. During the early part of the last decade, it began to plummet, and at its lowest the USD index was around 70. It rebounded to around 85 after the 2008 crash, but it's slipping again and is below 80.

The USD index measures the dollar again a mix of currencies. The strongest elements in that mix are the pound, the euro and the yen. A few years ago, the euro and the pound were beating up the dollar. Now, the greenback has rebounded against those big currencies. The big currency that is now beating up the dollar is the yen. Usually, a yen and a penny are about at an equal footing. Today, 84 yen buys a dollar. That's as strong as the yen has been in a very long time.

The yen is the big winner right now as a currency investment, but an odd mix of other currencies are doing well against the buck. The Aussies, Brazilians, Canadians and Swiss are all near ten year records against the greenback. The Chinese, who don't really believe in completely unrestricted capitalism, bless their little Commie hearts, often don't let the yuan float in value in the day to day currency market. For years, they set the price and a dollar bought 8.25 yuan. In late 2005, they let the yuan float and it became more expensive. In 2008, they decided that was enough fun and the price became stable at about 6.8 yuan for a dollar. It's starting to show downward movement again, currently at 6.68 yuan.

I hear you ask, Matty Boy, Investment Advisor to the Stars*! What can I do to profit in these uncertain times? When I hear this, I immediately know... you are new around here. Matty Boy's broke-assedness is not just because he has decided to work as a teacher when budgets are being slashed. The last good investment he pulled off was selling his Activision stock as soon as he could back in the 1980s, and that was done just because he wanted some extra walking around money.

Pretty much, you are on your own.

*Matty Boy, Investment Advisor to the Stars, knows no stars. Any star he might know in passing would not be stupid enough to ask him for investment advice. If Matty Boy says silver looks good, you should probably look at pork belly futures. His track record is only slightly better than the Chicago Cubs, who last won the World Series in 1908 and are already mathematically eliminated from contention in 2011, even though the season has not started yet.