ERICOPOLY

Rising price inflation coupled with stagnating incomes eventually forces the debtor to liquidate assets (at low prices)...if necessary all the way to bankruptcy... to delever. The 1970s inflation saw rising home prices, and rent alongside it. So the people who had bought homes as investments on fixed rates with maximum leverage did extremely well -- their interest costs were fixed (the largest expense in most rentals) while their income (rents) soared. The people who didn't buy homes saw their rents soar. Homes rose slower than inflation, but it was like 9% inflation vs 7% for home prices for some years (I'm just remembering what I read in Robert Schiller's book). Schiller argued that it was evidence that homes didn't even match pace with inflation, but I looked at that and said that because most "investors" buy the home with at least 2:1 leverage then the inflation actually earned them a real return. Anyhow, as I pointed out earlier the 1970s inflation was coupled with rising wages. That's what allowed for a lot of the measured inflation to happen in the first place (things like rents and home prices wouldn't be rising without wage pressure). What's not clear to me though is whether our next big inflation will happen independently of wages -- if wages don't go up, then you have the social unrest. We didn't get the social unrest in the 1970s because it didn't put everyone out on the street (saved by rising incomes).

As I like to point out, gold went down in late 2008 as the dollar went up. So I suppose it won't do well in a financial crisis of any kind. But that wasn't a crisis of confidence in the dollar itself. I'm having a hard time with this kind of hedging against collapse, because the kind of people who keep guns, canned food, and gold coins around the house are wackos. But I already have the guns -- (now for a funny story) I've even used them at home... we had a mink killing our chickens this year. It (there were two of them but I got one on the first day) killed all but 8 of our 30 chickens (this drove my wife crazy but personally I don't really like the chickens). The mink just chew off the head and only partially eat the chicken from the inside of the neck cavity before killing the next one... so you wind up with these otherwise perfect looking headlesss chickens lying around. So the last mink ironically I shot with a 12 guage from 7 feet away... and of all places I hit it cleanly in the head (it evaporated) and you just had the body left from the shoulders on down. I wasn't aiming for the had -- it was guided by karma I suppose.

I grew up during "The Great Inflation" -- I put "The Great Inflation" in quotes because as we all know "The Great War" was followed up by the epic sequel WWII -- history has shown that you don't want to use terminology like "The war to end all wars". I feel like (am I logical or am I getting sucked in?) the US dollar is going to devalue a lot more because the economy or political will is too fragile for austerity, but I have to hold my nose buying gold as an inflation hedge at this point. I guess I've beaten that to death, but my ongoing fear is that the price of gold is front-running the price inflation for the reasons you mentioned -- that gold is rising due to monetary inflation (monetary inflation then precipitates price inflation). My hunch is that the monetary inflation will peak before price inflation peaks -- so there is some point perhaps where one gets off the ride to buy TIPS. How do you get that right? People who got off the ride in 1980... what drove that? We still had significant price inflation after the monetary inflation was over (as measured by gold prices). I like your uranium exposure but I worry that if TerraPower succeeds it will lead to a decline in the value of uranium. Humor: this man (he is a genius) is one of the chief backers (alongside Bill Gates) of TerraPower http://en.wikipedia.org/wiki/File:Nathan_Myhrvold.jpg In that photo he is discussing his research on penguin defecation and rectal pressure! I know you like gold at the moment, but what do you think about doing with regards to exploiting the inevitable transition from monetary inflation to price inflation? Are you going to stay put throughout and let the chips fall where they may, or might you consider TIPS once you think the monetary inflation is over? I don't mean to be a pain, but do you have examples? I think that's generally said (or at least I generally say that debtors prosper) with regards to mortgages. I think that (although I'm not certain), the bank can't legally foreclose on you if you are current on payments. For a corporate example, nobody can call the long-term debt that Fairfax issued. Should interest rates go to the moon, Fairfax can buy back and retire that debt at a big discount. You say a lot of interesting things so genuinely I want to know what your sources are for that info -- I haven't come across the suggestion elsewhere. I'm increasingly with you on this one. In part because I read The Johnstown Flood, and in part because I read A Long Way Gone: Memoirs of a Boy Soldier. I don't want to be like those townspeople who say "yeah, right" and then get drowned when the dam breaks, and I don't want to lose sleep if a real crisis starts (having a bit of gold buys safe passage). A Long Way Gone really scared me... people are animals.

Maximizing taxes by pitting one income group against the other should not be the name of the game. Tax revenue is not maximized by setting different rates for different income revenues... its only class warfare. The legal, illegal and accounting overhead incurred by all segments trying to seek personal advantage negates the benefits of a graduated tax regime and ends up with less revenues to the Treasury. Revenues are maximized when private and public investments (spending) are efficient and wealth producing.... the economy is growing. Tax revenues should balance spending and the pain of taxation would in turn rationalize government spending. For example if the Bush tax cuts were accompanied tit for tat with reduced federal spending...the fiscal situation would look very much the same as the almost balanced budget of the final Clinton years.. but with reduced government presence. Unfortunately tax revenues were deliberately reduced as a sop to the ruling oligarchy at the same time that spending was ramped up for the "wars" which are in reality supply side stimulus for the war machine and associated travelers. No matter how you feel about the wars.. if taxes were raised to fund them.. there would have been a lot less enthusiasm for them in the first case and they certainly would have come to a conclusion long before now and the associated debts incurred would not be hanging over the whole economy. But that ship has sailed, it can't be undone but going forward tax revenues and spending must be balanced, by a combination of higher tax rates and eliminating ALL non productive government spending. The money supply must be further dilluted to pick up the slack because the other math doesn't work, until future public and private investments become productive. This process will take years (decades).. but it starts with raising tax revenues... not extending tax cuts. I favour wiping out the current tax code and introducing a flat income tax at say 25% (after allowances for those at the very bottom). which will generate more revenues than the current regime without the expensive overhead. Obviously this is not going to happen as it would result in the unemployment of all the sycophants.. tax lawyers, accountants, political aparatchiks, lobbyists etc. Nor will the wars or other pork barrel spending be seriously pared.. for the same reason. Therefore the hyperinflationary collapse of the US dollar is assured because the most politically doable piece of the remedy..QE.. is well under way and in absence of the 2 other necessary steps can only result in inflation and currency collapse. Eventually however the golden rule will apply... those that have the gold will make the rules. I'm actually agreeing with you more than disagreeing these days. I'm not totally sold on gold as the vehicle, but everything else you said above I agree with. I mean, pretty much everything. What percentage is your gold allocation? Do you have anything outside of that? I feel like this country is headed for soup kitchens. It doesn't have to be that way, they could cut the waste per the deficit commission findings, but will they?

MMM, hot blonds. Hopefully I meet some on vacation in December. I dont think I can get a visa there, but am thinking of trying Australia on a work and holiday visa. Why Norway in particular. yes, why norway? additionally, can someone post a link to the thread about the roth IRA and a loan that ERICOPOLY wrote?? http://en.wikipedia.org/wiki/Dividend_tax Norway does not "double tax": "To avoid (economic) double taxation, shareholders receiving dividends from Norwegian limited companies, [are] entitled to full credit.... Consequently dividends from Norwegian companies were in practice tax free on the hands of the shareholder". I think he's referring to a thread at the end of April, or was it early May. I don't remember exactly what I said at the time but it's in these archives somewhere. I was extremely raw at the time after paying my 2009 taxes. So I laid out a plan where I could effectively never pay much tax again, or worst case only pay capital gains taxes -- I have about 42% of my net worth in Roth IRA, and basically if I just let dividends accumulate there and borrow an offsetting amount on margin in my taxable account, then no taxes triggered. I'm still 37, and when I get to about 59 I can then pull the gains out of the IRA to help pay down the margin loan a bit (or entirely) -- or I could just sell some of the non-dividend paying stock, but then likely having to pay some capital gains taxes. I reasoned that if you have stocks like Berkshire in the taxable account that grow in value but don't distribute dividends (only capital gains), then you've got a situation where you never have to worry about dividend taxes. So in that thread I said that if you're counting on me to pay my fair share, then you'd better adopt some kind of VAT because it's nearly the only way to get me. I can even get out of inheritance taxes if I wish (provided I act before I die) because I'm a dual citizen and can just go to Australia and renounce my US citizenship. I think after about 5 years the IRS can no longer reach me. Australia has no inheritance tax and no gift tax -- they have other taxes of course but their dividend franking is rather interesting (you pay less in dividend tax there than you do here... even with our low 15% rate. I think with fully-franked dividends you wind up paying about 9% dividend tax in Australia). They also have a "land tax" but it's only for investment property or second homes -- not for your primary residence (I think there's an exemption for the first $1m of assessed land value if it's your primary residence). And the tax is only levied on the value of the land... not the building!

I was talking to a guy who was responsible for installing the nat gas Bloom boxes http://www.bloomenergy.com/ An in that case distributed power is actually more efficient. Power from a station many miles away loses a certain amount of energy before it reaches it's destination. Supposedly getting the nat gas directly to the site and converting it there is more efficient than doing it in a power plant. All second hand knowledge so can't corroborate one way or the other... You are correct about transmission loss -- I read somewhere that it's in the 20% range, or maybe it's a quarter of electricity generated is lost to the transmission lines. Something like that. So I could be completely wrong about the efficiency -- however if that commercial operation can acquire some efficiencies of scale then I could still be correct... for each dollar spent on equipment (including cost of installation and maintenance) maybe they can afford 40% more solar cells per dollar, for example. I think I read that a large amount of cost in a residential system is the installation -- makes sense to me so I believe it. Anyhow, even if there is not net efficiency gained I can at least feel good that a higher percentage of the dollars spent by me go into the actual solar panels themselves, and less to the installer. That helps channel more money to the companies engaged in R&D. It's also a cheap way for me to finance it -- I just pay a bill instead of sinking my dollars into owning the equipment. Then if the typical person were to finance it with a loan they would then find it harder to finance other things they wish to purchase (debt/income limits). Then there's also the trees around my house that would shade solar panels -- a commercial plant one would think is located without shade issues for part of the day. Or if they break I've got the hassle and cost of getting them repaired. If I'm a renter what do I do if my landlord won't buy them? Do I buy my own solar panels and then move them from house to house? Or if I own the house and then choose to move -- do I take them with me? If my new house already has solar panels, how much can I sell them for on the used market and how much do I lose in that transaction? etc... etc... One inefficiency of it though is that I tend to leave the lights on more and turn the heat up higher than I would otherwise do -- I have no conscience nagging me about ruining the planet. I also reason that by purchasing a greater amount of green power I am helping to accelerate the buildout of green power. Either way it's waste of capital... maybe I could have fed somebody with that money.

I tend to wonder where hardware innovation would be today if Apple had won this fight back in the 1980s. That would really have been a monopoly.

Isn't this why we got into the crisis in the first place? The loan reviewers in North America are "robots." Everything is systematized to make loan approvals quick and easy. The drawback is that the systems are not designed to deal with rare and unusual cases like yours. When I first moved here, I faced the similar problem of not being able to get a credit card - because I did not have a credit history. (Same story with mortgage). Doesn't matter what your net worth is or how much money you have in the bank - they only understand "credit score." If I had kept on using cash to pay for stuff, I probably would still not have a credit history today and still be unable to get credit. Credit scores are not a measure of ones ability to repay the loan, but of the chance that the loan will be profitable to the lender. That's why people who are likely to pay the loan off in advance have lower scores instead of higher ones. There are real up front costs to the lender (like sales commissions) which must be charged against the total profit of the loan. I have a very low credit score because I rarely take loans and when I do I have a history of stiffing lenders by paying off the loan before its full term. The credit score is an attempt to screen out both potential deadbeats and potential early payers. In the upside down world of contemporary credit risk assessment, people with solid balance sheets like Ericopoly are deemed a poor risk to pay the full pound of flesh. Thanks for that explanation -- I hadn't taken account the repayment risk to the lender. Had I thought of that at the time I might have offered to pay them cash for their commission upfront. I wonder if I were 64 years old and 1 yr from retirement -- would I qualify for the Fannie/Freddie program? Likely I'd be dead long before the 30 yr maturity -- and almost certainly not able to work for much longer. I wonder if common sense is applied, or whether for political reasons they don't want to age discriminate.

Much faster, thanks. But I'm willing to help pay for the site with cash donation if people choose to block your ads. Microsoft's new enhancement to their browser: http://seattletimes.nwsource.com/html/microsoftpri0/2013616394_microsoftaddsdonottrackliststointernetexplorer9.html The new tracking protection will allow anyone to create lists of websites users can permanently ignore. Those sites will not be able to send cookies or other tracking software to the user's computer.The sites have implications for online advertisers and website designers. Many websites that people visit include content from other websites that serve Web ads, for instance. By blocking those other websites, users could eliminate those ads on site they're visiting. So, buh-bye doubleclick!! I take it all I have to do is feed it this URL: http://googleads.g.doubleclick.net

Perhaps hurt by the composition of my assets. I have it all in equities. But put a 50% haircut on it and I'm still at 50 years of payments. The real estate market here is actually relatively stable on Bainbridge Island. This particular house was a short sale and at 50% of what it's new-build price was. Nice house. They classified it as "asset based lending" because I have no earned income, and would only assign me some arbitrary yield of about 1.5% (it was 1.x%, I don't remember exactly what the fractional amount was) on my loan as "income". I told them I could put a zero percent yield on the assets and they would still get their money back -- because even if I spent 1.5x my prior salary on living expenses for the 30 year loan term, and additionally paid the mortgage all along the way, I'd still have a lot of money left over at the end of the 30 years. Plus, this was for an amortizing mortgage... every year they've have it partially paid off, so that initial 30% margin of safety would get larger and larger. So for arguments' sake if I defaulted after year 10 or 15 or 20... what have you... I'd have sunk so much principle into the loan by then that the margin of safety would be well beyond 30%. They still said no. Then Stumpf gets on the news saying they have a problem with demand for loans! I was going to pay them about 6% interest, and it was only about 3 yr fixed rate, then adjusting... so they carried little interest rate risk -- still not profitable? At that point, I said "okay, let's say I put down 35%". Nope. How about 40%. Nope. All those pencil-heads cared about is the paltry 1.5% or so yield they'd give me for my assets in order to count it as income. I said how about I just put the entire thing into Treasuries (for arguments' sake) and get 4% yield? That would have given them automatically a risk free yield that was more than double what they would grant me in their projections. Or how about I invest in blue chip stocks like JNJ so that you can in effect be lending against a AAA rising income? And that income would likely rise faster than your typical earned income paycheck in this environment? Nope. Bottom line is no matter how silly, they wouldn't lend. Now, if the secondary market had been more accomodating there would not have been a problem. The person with no assets and an income (a pink slip away from foreclosure) is a better risk than a person with 100 years of payments ALREADY in the bank. That person with the income... are they going to work for the next 100 years? It's bizarre.

I've seen realtors compared to Klansmen, but that's the first time I've seen the animal huggers painted! I think that at least one scientist who used animals in his research has been murdered by these harmless people. All arson is terrorism then, because there is a risk of killing someone. An arsonist of any stripe is a domestic terrorist, and a group of them is a "terror cell". I can tell you that when I hear on the news today that there are "terror cells" in the United States, I feel like (after the Joe Dibee incident) they are talking about a broad stripe of criminals including people who have absolutely no motivation to kill people. Accidents happen... a kid driving a car drunk at 100 MPH can kill two little girls just like some drunk driving Klansmen once did. So does that make him a drunk driver that should go to prison for involuntary manslaughter, or does it make him a "domestic terrorist". I'm drawing a distinction between "accidental" and "deliberate". It's semantics, I think arson is a crime and he should go to prison for it. My gripe is that I think this is political.

People were saying that twelve months ago too. I went out looking for a home loan. I couldn't get one. I wanted a 30% down loan. The amount I wanted to borrow amounted to an annual mortgage payment of about 1% of my net worth. So I told them... okay... I'm already giving you a 30% price cushion, I ALREADY have 100 years frigging years worth of payments saved up, and you're telling me it's too risky? Actually, the real story is that because I have no job I'm not qualifying for a Fannie/Freddie program, so they have to carry my loan on the books. This at a time when they are trying to de-risk to meet stricter capital levels. They said it was because the secondary markets were not welcoming this kind of loan. One of those banks that turned me down is Wells Fargo. I gave up looking for a while -- for a brief time we thought of getting a house in Montana (and found a bank that would do it), but then we decided to wait on that too. Actually, I haven't been out looking in 9 months so I'm not sure if the banks here in Washington state have healed yet. Anecdotally I heard from a lender that Washington Federal was making such loans (I guess that's a solid hint that their balance sheet is healthy).

I found this in one of Hoisington's letters -- and couple that with Bernanke's frustration over the exploding deficits. What exactly happens when the government borrows that is so painful to the private sector? Why does that impair the private sector as Hoisington claims? I realize that Bernanke has said this is only about controlling interest rates, but I don't believe they always tell the whole story when they speak publicly. It might be a half truth. Perhaps Hoisington is referring to the cost of servicing the debt, but I wondered what good it does for the economy when there is an increased supply of "safe havens" (Treasuries) for the private sector to purchase. So I speculated that if you were to hoard the safe havens to yourself (keep them locked up by the Fed) then people would need to use their dollars for risk taking in order to generate return. http://www.hoisingtonmgt.com/pdf/HIM2009Q1NP.pdf Are Massive Budget Deficits Inflationary? Based on the calculations of the Congressional Budget Office, U.S. Government Debt will jump to almost 72% of GDP in just four fiscal years. As such, this debt ratio would advance to the highest level since 1950 (Chart 5). The conventional wisdom is that this will restore prosperity and higher inflation will return. Contrarily, the historical record indicates that massive increases in government debt will weaken the private economy, thereby hindering rather than speeding an economic recovery. This does not mean that a recovery will not occur, but time rather than government action will be the curative factor. By weakening the private economy, government borrowing is not an inflationary threat.

Interesting idea except for the cost of security or insurance. (Thus making it still a liability for Broxburnboy.) I remember a contractor telling me about a job he was working on the last time copper prices were going through the roof in 2008. Apparently, thieves had broken into the house (which the homeowner had left vacant, in between tenancies) and stripped it of all the copper pipes and wiring. Cost the homeowner a lot more than the value of the copper to repair the damage! But, I guess it might work if you bought guns and tinned food to go with the gold and build the house out in the boondocks. :) That's true. Perhaps best to pour the foundation with the molten metal.

I thought when they boosted their hedge program that they went primarily with Russel2000 total return swaps. That index is up 30% from the summer lows.

I wonder if it's possible to have a tiny super cheap house built, and then make the floors out of gold brick or something else of lasting quality (like copper). You know, so that you barely have any cost in the house itself, but then you have tremendous cost associated with the expensive commodity. You then put something minimal down, like get an FHA loan and 5% down. Or 20% down if you can't get FHA. You get a long term 30 yr conforming fixed interest rate. That would pretty much hedge you out right? I mean, you wouldn't have too much tied up in the house, and your interest costs wouldn't go up with a takeoff of inflation. Maybe even Broxburnboy would concede that such a house is an asset. It's a shame I didn't do this back when you could finance 100+% of a house. It would be a call option on gold or copper, where you just turn in the keys if the commodity goes the wrong way. Perhaps I'm surprised we haven't yet heard of homebuilders pushing homes like this on late night TV -- they could revive the "home is an investment" pitch.

I've seen realtors compared to Klansmen, but that's the first time I've seen the animal huggers painted!

I agree, that's an inefficient and wasteful subsidy. My house is run on 100% renewable energy. I've never bought a solar panel or any other kind of equipment. I merely mailed in a postcard telling my utility that I'd like them to purchase "green power" to exactly offset my usage. It costs me a 10% premium. http://www.pse.com/energyEnvironment/renewableenergy4/Pages/GreenPowerProgram.aspx The company that is creating that green power likely is getting a subsidy themselves, but I argue that they have likely created a more cost efficient and scalable solution -- imagine all the wasted dollars in having all these disparate systems scattered across rooftops.

That's a possibility. When memory goes bad you get these single bit corruptions where registers have values that cannot possibly be so according to the preceding instructions (leading to totally random crashes). It's rare though -- but possible.

Thanks Myth for that tax explanation. One of these days I'm going to hit upon an elegant solution to getting around these double taxes on dividends, and I think the answer is comprised of these letters: Nyorwa. Can you figure out what country that spells? I'm married with a family, but to a young man out there I'd also suggest that the natives are friendly :-)

Did he include corporations in that proposal? In other words, was he really offering to give up HIS dividends? I could always start my own investment holding company, put my money in there, and collect my dividends under corporate tax rules too. Dividend tax? Just buy back some of my own shares and "launder" the dividend as a capital gain (there won't be capital gains if I buy the shares back at the cost basis). Is that even legal by the way? Is it allowed to start your own investment holding company and have a share structure where you are the only shareholder? If not, what percentage do you need to make public? I suppose sometimes you don't mind if your shares never rise in price and fall after IPO ;D

Did I ever own MSFT stock? I got stock options starting when I was hired in 1997... at age 26 I think I was suddenly worth about $500k on paper (largely unvested) and then all of it but about $80k blew up. I know I won't get any sympathy complaining about an $80k options paycheck in 2001... but I had psychologically locked in that $500k so the anchoring made it very tough. Better to have loved and lost? Hmm... Serves me right though, because I argued with my recruiter (Lyzette was her name) that the stock was overvalued (she told me that the stock would likely appreciate 20% a year). She retired in 1998 -- didn't buy her own story perhaps? I think there are two ways in that my work experience translated to my investment success, and neither of them had anything to do with stress testing. One of them was the stock bubble (and the experience of that devastating paper loss), and the other was the DOJ trial. IE was an interesting place to work because it was ground zero. I learned that the story in the media can be completely false, yet people believe it because it's in the media. These people who say that the market is efficient because all the facts are known... well they are naive rubes apparently. They assume the media is reporting unbiased facts! That's a freaking obvious weakness of that argument -- for the market to be efficient you have to take a tremendous leap of faith that the market participants are getting unbiased facts from the news outlets. I can't really get into the details, but there were numerous instances where the facts were clearly distorted and despite a tremendous effort by the PR folks the media just wouldn't budge. It was just a fiasco and my view of what I read in the newspapers has been forever changed by that experience. The media is not accurate, so therefore there is opportunity for profit as prices therefore won't be accurate. Why do I still use IE and Vista? People who have ugly kids still love them all the same I suppose. I really don't mind Vista because I use it to browse and to run my jscript files. It works just fine as far as I'm concerned -- all the bugs that really pissed me off I complained about and had fixed while I worked there. It sits by my bed and I pick it up first thing in the morning, check a few stocks and read some news. It never gets rebooted so the shutdown/reboot time is inconsequential. I also know why many features exist in their present form -- somebody else might find a particular feature really stupid and annoying but in some cases I remember the product manager telling me the justification for not changing it... sometimes it makes sense after hearing his reasoning. There was actually a guy on the IE team who was still running Win95 on one of his computers because he liked it's speed on new hardware (and as you might guess, he was on the Win95 product team). I also worked 3 doors down the hall from this guy: http://www.mostwantedhoes.com/sex/dibee-j.php He worked on the team with me for years (he was there I think from day one, or maybe hired just after me), I even shot him in a paint ball game that we had as a team morale event (that's more than the FBI has been able to do by the way). So it's funny, you go to lunch with the same group of guys every day for years on end, and then one day the guy doesn't come in to work. After a couple of weeks his office is locked off and it's a big secret what happened to him -- then I hear about him on the news. Turns out he got mixed up with some people in Oregon who were burning down animal research laboratories -- just, you know, radical animal rights activists. They always made sure that nobody was in the building -- nobody was ever hurt. Now, granted, that's vandalism and arson. But terrorism? Come on. Somebody in the FBI is desperate for some political headlines. Ten years ago I doubt it would have been "terrorism". That word evokes images of people flying planes into buildings full of thousands of people -- not people who deliberately make sure that those buildings are vacant. Whatever.

How did I miss this Gem. and Ericopoly I think you are a bit biased with regard to MSFT. Macs dont get sick or break ;D. I love the improvements -- the scrolling on the touch-pad and the zooming by moving my fingers on the screen. I have an IPhone4 and a MacBook Pro (both acquired in past 3 months). Generally, I like them -- but the bugs are starting to really irritate me. The MacBook system crashes -- I'm accustomed to better reliability. If I pay more, I expect more. Usually on a Vista system if you're getting crashes you can track it down to a faulty driver -- it's just too difficult to police all the hardware drivers out there. Apple has no excuse as their not an open hardware platform -- they are the OEM. They don't have to test Dell/HP/Acer/Toshiba configurations... only their own. With a test matrix that simple, they just have no excuse for this kind of quality control. I've had Safari crash on me several times -- this is a lower level of reliability that Internet Explorer. I know Internet Explorer's reliability rather well -- for several years it was my job to stress test it. Normally (the vast majority of crashes) it would come down to some third party software running in-process. Think of a search toolbar control that somebody installs -- if it's got a bug it takes down the process. So on my machines I don't allow any of that stuff to run in-process and I get no crashes. Apple has no such excuse -- they have no such open model. This is just Apple code that is going down. Then Safari has this supremely annoying bug where I get no response sometimes clicking on links -- typically I hit this a lot on the midwayusa.com web page when you try to navigate their search results or at the InteractiveBrokers website when I'm trying to do a funds withdrawal transaction. The work around I've found is to open the site in a new tab -- that seems to snap it out of this state. Then my wife has an IPod that she syncs to ITunes running on her Vista laptop -- it hangs the ITunes process and this appears to only happen to the Apple ITunes software written for Windows. Searching online it turns out that a LOT of people have that problem -- seems to be some sort of file system corruption that Apple doesn't admit to but people on the forums have the advice to fix it. You have to reformat the IPod, then reinstall the software, then sync all your old stuff back to it. Then it works for a month or two and you have to do it all over again -- I've been through it twice already. Frustrating. "It just works". Nice. They have a lot of work to do before I'll feel like they are living up to their hype. We're they to be as reliable as Windows I'd give them the nod for sure -- it's frustrating trying to use my Windows laptop these days because I find myself trying to scroll the page by moving my fingers across the touchpad and trying to zoom by dragging them on the screen. I was a reliability (stress) tester because that's the only kind of testing I was interesting in doing -- it's what annoys me the most. I started with the team on IE4 Beta2 and left during the IE8 product cycle -- largely I was getting extremely bored because it was getting damn hard to make it crash.

My MacBook Pro is actually crashing more often than my Windows Vista ever did (I've actually never had a system crash with my Vista laptop). That's twice in 106 hours! Yeah Steve Jobs! Interval Since Last Panic Report: 383259 sec Panics Since Last Report: 1 Anonymous UUID: B7D14614-39D1-41DB-A928-B08E798113F6 Mon Dec 6 17:22:08 2010 panic(cpu 0 caller 0x2aab55): Kernel trap at 0x002347d7, type 14=page fault, registers: CR0: 0x8001003b, CR2: 0x00000028, CR3: 0x00100000, CR4: 0x00000668 EAX: 0x00000000, EBX: 0x00000030, ECX: 0x00000028, EDX: 0x03643d74 CR2: 0x00000028, EBP: 0x00fc32c8, ESI: 0x00000000, EDI: 0x0a20f400 EFL: 0x00010202, EIP: 0x002347d7, CS: 0x00000008, DS: 0x00000010 Error code: 0x00000000 Backtrace (CPU 0), Frame : Return Address (4 potential args on stack) 0xfc3058 : 0x21b50c (0x5d42fc 0xfc308c 0x223974 0x0) 0xfc30a8 : 0x2aab55 (0x59616c 0x2347d7 0xe 0x596336) 0xfc3188 : 0x2a09a8 (0xfc31a0 0x0 0xfc32c8 0x2347d7) 0xfc3198 : 0x2347d7 (0xe 0x48 0x10 0x10) 0xfc32c8 : 0x220633 (0x3643d74 0x1 0x1 0x5551ff) 0xfc3308 : 0x220673 (0x30 0x1 0x0 0x0) 0xfc3328 : 0x52e7e4 (0x30 0xa20f400 0x1000 0x0) 0xfc3348 : 0x96c965 (0x30 0xbd80a000 0x1000 0x0) 0xfc3368 : 0x96dc66 (0x8208dac 0xd9ab200 0xa20f400 0x52b5c000) 0xfc33c8 : 0x9d69f0 (0xbd80a000 0x0 0x1000 0x0) 0xfc3408 : 0x16a975e (0xbd80a000 0x0 0x1000 0x0) 0xfc3478 : 0x16a99ce (0xfc34e8 0xfc34e4 0x1000 0x0) 0xfc3508 : 0x16a9fa7 (0x2 0x94a2004 0x0 0x0) 0xfc3568 : 0x178acf9 (0x94a2004 0x9548804 0xdda4404 0xfc35b8) 0xfc3618 : 0x176050c (0x94a2004 0x9549804 0x4c231014 0xfc3748) 0xfc3768 : 0x1799e87 (0x94a2004 0x950c004 0x0 0x3) 0xfc37e8 : 0x9cf780 (0x94a2004 0x3f 0x0 0x0) 0xfc3888 : 0x9d3826 (0xc1d00021 0x4000000 0x41 0x2) 0xfc3a38 : 0x9d48f7 (0x0 0x600d600d 0x703a 0xfc3a68) 0xfc3b08 : 0xbd6ba1 (0xc1d00021 0x4000000 0x41 0x2) 0xfc3b88 : 0xbcae7c (0x4423d000 0xfc3dbc 0x0 0x13dc221) 0xfc3ca8 : 0x96aae6 (0x4423d000 0x1 0xfc3d3a 0x84) 0xfc3d08 : 0x95d90f (0x8dc8000 0x1 0xfc3d3a 0x84) 0xfc3d78 : 0x95e0ec (0x8dc8000 0x19 0xfc3dbc 0x4ff931) 0xfc3de8 : 0x95eb01 (0x8dc8000 0x2 0xfc3e18 0x4ff5ae) 0xfc3e58 : 0x945159 (0x8dc8000 0x70777273 0x2 0x1) 0xfc3e98 : 0x945348 (0x8dc8000 0xb1 0xfc3ec8 0x949791) 0xfc3ec8 : 0x94e884 (0x8d8ac00 0xb1 0x0 0x2a35a1) 0xfc3f08 : 0x54c4db (0x8a91180 0x8a96100 0x1 0x0) 0xfc3f58 : 0x54b50c (0x8a96100 0x0 0x202 0x0) 0xfc3f88 : 0x54b966 (0x8a91180 0x8a91180 0x0 0xab9a000) 0xfc3fc8 : 0x2a06cc (0x8a91180 0x0 0x0 0x0) Backtrace continues... Kernel Extensions in backtrace (with dependencies): com.apple.nvidia.nv50hal(6.2.4)@0x1694000->0x1aa8fff dependency: com.apple.NVDAResman(6.2.4)@0x967000 com.apple.NVDAResman(6.2.4)@0x967000->0xc54fff dependency: com.apple.iokit.IOPCIFamily(2.6)@0x927000 dependency: com.apple.iokit.IONDRVSupport(2.2)@0x95a000 dependency: com.apple.iokit.IOGraphicsFamily(2.2)@0x938000 com.apple.iokit.IONDRVSupport(2.2)@0x95a000->0x966fff dependency: com.apple.iokit.IOGraphicsFamily(2.2)@0x938000 dependency: com.apple.iokit.IOPCIFamily(2.6)@0x927000 com.apple.iokit.IOGraphicsFamily(2.2)@0x938000->0x959fff dependency: com.apple.iokit.IOPCIFamily(2.6)@0x927000 BSD process name corresponding to current thread: kernel_task Mac OS version: 10H574 Kernel version: Darwin Kernel Version 10.5.0: Fri Nov 5 23:20:39 PDT 2010; root:xnu-1504.9.17~1/RELEASE_I386 System model name: MacBookPro7,1 (Mac-F222BEC8) System uptime in nanoseconds: 74059766557762 unloaded kexts: com.apple.driver.AppleMCP89RootPortPM 1.11 (addr 0x1440000, size 0x20480) - last unloaded 156130369438 loaded kexts: com.apple.driver.AppleHWSensor 1.9.3d0 - last loaded 21108703735 com.apple.filesystems.autofs 2.1.0 com.apple.driver.AGPM 100.12.19 com.apple.driver.AppleMikeyHIDDriver 1.2.0 com.apple.driver.AppleHDA 1.9.9f12 com.apple.driver.AppleMikeyDriver 1.9.9f12 com.apple.driver.AppleUpstreamUserClient 3.4.5 com.apple.driver.AppleMCCSControl 1.0.17 com.apple.driver.AudioAUUC 1.13 com.apple.driver.SMCMotionSensor 3.0.0d4 com.apple.kext.AppleSMCLMU 1.5.0d3 com.apple.Dont_Steal_Mac_OS_X 7.0.0 com.apple.driver.AudioIPCDriver 1.1.6 com.apple.driver.AppleIntelPenrynProfile 17 com.apple.driver.ACPI_SMC_PlatformPlugin 4.5.0d5 com.apple.driver.AppleLPC 1.4.12 com.apple.driver.AppleBacklight 170.0.34 com.apple.GeForce 6.2.4 com.apple.driver.AppleUSBTCButtons 200.3.2 com.apple.driver.AppleIRController 303.8 com.apple.driver.AppleUSBTCKeyboard 200.3.2 com.apple.iokit.SCSITaskUserClient 2.6.5 com.apple.driver.AppleUSBCardReader 2.5.8 com.apple.BootCache 31 com.apple.AppleFSCompression.AppleFSCompressionTypeZlib 1.0.0d1 com.apple.driver.AppleHPET 1.5 com.apple.iokit.IOAHCIBlockStorage 1.6.3 com.apple.iokit.AppleBCM5701Ethernet 2.3.9b6 com.apple.driver.AirPortBrcm43224 426.36.1 com.apple.driver.AppleFWOHCI 4.7.1 com.apple.driver.AppleAHCIPort 2.1.5 com.apple.driver.AppleEFINVRAM 1.4.0 com.apple.driver.AppleUSBHub 4.1.7 com.apple.driver.AppleRTC 1.3.1 com.apple.driver.AppleUSBOHCI 4.1.5 com.apple.driver.AppleSmartBatteryManager 160.0.0 com.apple.driver.AppleUSBEHCI 4.1.7 com.apple.driver.AppleACPIButtons 1.3.5 com.apple.driver.AppleSMBIOS 1.6 com.apple.driver.AppleACPIEC 1.3.5 com.apple.driver.AppleAPIC 1.4 com.apple.driver.AppleIntelCPUPowerManagementClient 105.13.0 com.apple.security.sandbox 1 com.apple.security.quarantine 0 com.apple.nke.applicationfirewall 2.1.11 com.apple.driver.AppleIntelCPUPowerManagement 105.13.0 com.apple.iokit.IOBluetoothSerialManager 2.3.8f7 com.apple.iokit.IOSerialFamily 10.0.3 com.apple.driver.DspFuncLib 1.9.9f12 com.apple.driver.AppleProfileReadCounterAction 17 com.apple.driver.AppleSMBusController 1.0.8d0 com.apple.driver.AppleSMBusPCI 1.0.8d0 com.apple.driver.AppleProfileTimestampAction 10 com.apple.driver.AppleProfileThreadInfoAction 14 com.apple.driver.AppleProfileRegisterStateAction 10 com.apple.driver.AppleProfileKEventAction 10 com.apple.driver.AppleProfileCallstackAction 20 com.apple.iokit.IOFireWireIP 2.0.3 com.apple.iokit.IOSurface 74.2 com.apple.iokit.IOAudioFamily 1.7.9fc4 com.apple.kext.OSvKernDSPLib 1.3 com.apple.driver.AppleHDAController 1.9.9f12 com.apple.iokit.IOHDAFamily 1.9.9f12 com.apple.iokit.AppleProfileFamily 41 com.apple.driver.AppleSMC 3.1.0d3 com.apple.driver.IOPlatformPluginFamily 4.5.0d5 com.apple.nvidia.nv50hal 6.2.4 com.apple.NVDAResman 6.2.4 com.apple.iokit.IONDRVSupport 2.2 com.apple.iokit.IOGraphicsFamily 2.2 com.apple.driver.BroadcomUSBBluetoothHCIController 2.3.8f7 com.apple.driver.AppleUSBBluetoothHCIController 2.3.8f7 com.apple.iokit.IOBluetoothFamily 2.3.8f7 com.apple.driver.AppleUSBMultitouch 206.6 com.apple.iokit.IOUSBHIDDriver 4.1.5 com.apple.iokit.IOSCSIMultimediaCommandsDevice 2.6.5 com.apple.iokit.IOBDStorageFamily 1.6 com.apple.iokit.IODVDStorageFamily 1.6 com.apple.iokit.IOCDStorageFamily 1.6 com.apple.iokit.IOSCSIBlockCommandsDevice 2.6.5 com.apple.iokit.IOUSBMassStorageClass 2.6.5 com.apple.driver.AppleUSBMergeNub 4.1.5 com.apple.driver.AppleUSBComposite 3.9.0 com.apple.driver.XsanFilter 402.1 com.apple.iokit.IOAHCISerialATAPI 1.2.5 com.apple.iokit.IOSCSIArchitectureModelFamily 2.6.5 com.apple.iokit.IO80211Family 312 com.apple.iokit.IONetworkingFamily 1.9 com.apple.iokit.IOFireWireFamily 4.2.6 com.apple.iokit.IOAHCIFamily 2.0.4 com.apple.driver.NVSMU 2.2.7 com.apple.driver.AppleEFIRuntime 1.4.0 com.apple.iokit.IOUSBUserClient 4.1.5 com.apple.iokit.IOUSBFamily 4.1.7 com.apple.iokit.IOHIDFamily 1.6.5 com.apple.iokit.IOSMBusFamily 1.1 com.apple.kext.AppleMatch 1.0.0d1 com.apple.security.TMSafetyNet 6 com.apple.driver.DiskImages 289 com.apple.iokit.IOStorageFamily 1.6.2 com.apple.driver.AppleACPIPlatform 1.3.5 com.apple.iokit.IOPCIFamily 2.6 com.apple.iokit.IOACPIFamily 1.3.0 Model: MacBookPro7,1, BootROM MBP71.0039.B0B, 2 processors, Intel Core 2 Duo, 2.4 GHz, 4 GB, SMC 1.62f6 Graphics: NVIDIA GeForce 320M, NVIDIA GeForce 320M, PCI, 256 MB Memory Module: global_name AirPort: spairport_wireless_card_type_airport_extreme (0x14E4, 0x8D), Broadcom BCM43xx 1.0 (5.10.131.36.1) Bluetooth: Version 2.3.8f7, 2 service, 19 devices, 1 incoming serial ports Network Service: AirPort, AirPort, en1 Serial ATA Device: Hitachi HTS545025B9SA02, 232.89 GB Serial ATA Device: MATSHITADVD-R UJ-898 USB Device: Internal Memory Card Reader, 0x05ac (Apple Inc.), 0x8403, 0x26100000 USB Device: Built-in iSight, 0x05ac (Apple Inc.), 0x8507, 0x24600000 USB Device: BRCM2046 Hub, 0x0a5c (Broadcom Corp.), 0x4500, 0x06600000 USB Device: Bluetooth USB Host Controller, 0x05ac (Apple Inc.), 0x8213, 0x06610000 USB Device: IR Receiver, 0x05ac (Apple Inc.), 0x8242, 0x06500000 USB Device: Apple Internal Keyboard / Trackpad, 0x05ac (Apple Inc.), 0x0236, 0x06300000

It is actually the opposite -- the author wrote that article bringing up 1970s without mention of wage pressures. I'm not letting him off that easy. If he's going to compare two periods, he needs to address important variables that differ remarkably. He may have guessed correctly, but he is not showing his work. Hoisington has a chart that Fairfax watchers popularized on this board -- the chart shows the spike/collapse in long term interest rates (inflation expectations) coinciding with the Rise/Collapse of Iron/Bamboo curtains. I've argued in the past that Hoisington failed to mention the depegging of the dollar -- I wondered out loud on this board whether the historically low Treasury yields of the past ought to come back again or not... after all, the gold bugs argue quite loudly that a currency backed by gold will hold down inflation. Why should bond yields today reach the levels of the past when back then the dollar was backed by gold? Is there no such thing as a risk premium for fiat money? In other words, let's say the Treasury were to auction off two issues side by side. One of them would be exactly the same as Treasuries today, where principle and interest are paid in dollars. The other issue is one where the principle and interest is paid in gold. Which one do you figure will attract the most demand? Shouldn't that be at least worthy of mention in Hoisington's chart?