Wednesday, May 06, 2020

Beware Experts Who Aren't

Campbell Harvey, finance professor at the Duke business school, is an expert.  He must be, it says so right on his CV.  He also supposedly has a perfect track record for calling recessions.  He just put that record at serious risk.  He thinks the current economic crater will be over by the end of the year.  And he thinks that largely because he believes the world will know by then that we'll have a vaccine for SARS-COV-2 in Q1 2021.

Folks, there isn't an epidemiologist on Earth who believes we'll have a vaccine that quickly.  The good professor may know a lot about business finance, but he knows so little about epidemiology he doesn't even know how little he knows (See Dunning-Kruger Effect.).  I've helped a few biotech companies get started, but that in no way makes me an expert in research pathology.  So the next time some supposed expert starts giving an opinion, do what we do in court (or at least what we're supposed to do in court): Determine whether the opinion fits within the expert's field of expertise.  If it doesn't, you might as well be getting an opinion from the next person you meet on the street.  Or one of my cats.  Probably the brain-damaged one.

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Brighton High School Redux

As I mentioned previously, Brighton High School (Deep Space Brighton) is being torn down and replaced by a generic box.  The process is now well under way, and it really is shaping up to be just the sort of thing you eyes will slide right off of.  This sort of thing has become so pervasive, I have adopted a new standard for architectural aesthetics: the Ruin Test.  When the building falls to ruin, what will the people living then think of it?  Will it still be interesting like the ones we now have in Greece, Egypt, Thailand, or Mexico?  Or will it be something they'll want to scrape off into a dump as quickly as possible?  I have a good idea where all our ugly boxes are heading.  The only question is whether there will be enough landfill space.

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Law Enfarcement

OK, I'm going to pitch in on the general train wreck surrounding us, but first I have to make this comment based on a recent case.  A word of advice to law enforcement people: Before you write up another creative report trying to make the subject of a traffic stop look like the worst thing since Ted Bundy and claiming he threatened you by spinning his wheels and spraying gravel at you, you might want to remember that the days of rear-wheel-drive vehicles are gone and look into the spray patterns of front-wheel-drive.  Otherwise some defense counsel is going to get you on the stand and make you look like an idiot.  A lying idiot.

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Friday, January 17, 2020

A Store Closing That Hurts

Mountain Gear in Spokane is closing.  If you needed technical gear, that was THE place to go.  Now it's gone.  Roskelley and I have had disagreements over a few things, notably the Oregon Episcopal School disaster on Mt. Hood, but we are of one mind here:  The world is about to be a lesser place.

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Thursday, November 07, 2019

New Bankruptcies

So Murray Energy has filed a Chapter 11.  A few points here.  First, anyone connected to the Crandall Canyon Mine Disaster knows that Robert Murray shouldn't be in bankruptcy court, he should be in prison.  That place was one, big, deliberate safety violation, and nine people died.  Second, for anyone who has a lick of sense, this ought to put the lie once and for all to Trump's promise to bring the coal industry back, which is no surprise at all to those of us who have spent the last four decades or so following how well Trump has kept his "promises".  Third, watch out for another big load dumped on taxpayers.  Perhaps the biggest reason corporations file Chapter 11 is to shed pension plans and foist them on the Pension Benefit Guarantee Corporation.  Ordinarily, PBGC can refuse to take over an underfunded pension, but that authority is overcome by a confirmed Chapter 11 plan.  So the PBGC ends up with yet another underfunded pension, and one of two things happens: 1) PBGC cuts benefits down to the funds available, leaving the pensioners impoverished and compelled to seek public assistance, or 2) PBGC gets a special bail-out from Congress.  Either way, the bankrupt company shifts its private debt onto the general public.

Also filing Chapter 11 is EP Energy, one of the biggest players in the Eagle Ford Shale (Full disclosure: I represented EP Energy in the III Exploration II, LP bankruptcy.).  I think it is apparent that everyone in the oil shale play is hurting and the hot money that has been propping it up is cooling.  So is this why gas prices just bumped up?  Doubt it.  EP filed a month ago, and it was already common knowledge then there was trouble in Oil Shale City, so all that should have been factored into prices some time ago.  No, I think it's far more likely, as I've commented before, that gas prices just jumped for no other reason than that they can.  Don't expect gas prices to be affected by anything that happens in that place called Reality.

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Monday, August 05, 2019

More Market Craziness

As I recently blogged, markets are not making sense.  One of the things I noted was gas prices, which are jumping back up a full month before Labor Day and without any change in the threat posturing in the Middle East.  Prices are going up because they just can.  I also commented about the crazy money going into multi-family housing.  This week I learned it's worse than I thought.  The cap rates on these projects are running as low as 4%.  There is much debate about what all goes into a cap rate, but for our purposes it is the annual rate of return an investor expects from an investment.  A high cap rate indicates a risky, volatile, short-term investment.  The investor needs a high rate of return to get its return and quickly flip the investment.  In contrast, a low cap rate indicates a safe, stable, long-term investment.  4% is low.  In fact to get lower, you have to go into the world of government and high-grade corporate bonds.  Serious buy-and-hold strategies with almost guaranteed returns.  Is multi-family construction that stable?  Not hardly.  Which means Mr. Market has a fire hose of money aimed at a sector that can't give adequate returns.  Just like the Dotcom Boom.  Just like mortgage-backed securities.  Just like oil shale and tar sands.  Which means we're just pumping up another bubble.  When people talk about markets, what they are really talking about is marks.  Don't be their next mark.

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Saturday, July 27, 2019

Enough Death...

...time for some simple destruction.  Last Saturday was a farewell open house at Brighton High School.  They're going to tear down Deep Space Brighton and replace it with, of course, another generic box.  In other words, they're tearing down yet another architecturally significant structure and replacing it with yet another pile of brick and glass that will slide right off your eyes and mind.  I got ripped on the local message board for this opinion, but I will hold to it: This is the sort of planning and design "thinking" that gave us the abomination that is the Abandoned Borg Cube we now have for a federal courthouse.  Keep it up, folks, and we'll end up with a structural environment that will make Soviet-era housing blocks look dynamic and exciting.

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Wednesday, July 24, 2019

And Now Rutger Hauer...

...is gone.  And all these memories will be washed away like tears in the rain.

Tuesday, July 23, 2019

Unfortunately,...

...Chris Kraft has died.