In March I wrote a post explaining how and why the US Postal Service had
begun to slowly circle the drain. It had the impact on policy makers that my more clever posts usually do, which is to say none at all. So here I am trying again.
The USPS is a business (term used loosely) with high fixed costs and a variable income. That means that what it costs to run the operation is not particularly tied to the amount of business being done. It is a setup that is typical of transportation companies, not just postal services but also, for example, airlines. (And telecoms and media companies, BTW.)
When revenues are growing, all is well. Incremental income is mostly profit, since the overhead has been paid for. But when the trend is in the other direction, an irreversible death spiral often results.
Read more »
I will admit that what got me to click on the article at the Wall Street Journal was the mug-shot-like picture of the sad middle-aged guy who could really use a shave.
Turns out, the picture is mug-shot-like because it is, in fact, a mug shot. The ennui filled subject is one Steven Brasner, a Florida life insurance salesman. He has the unmistakable look of a man who’s entire life has suddenly come crashing down around him.
I feel for the guy. It is not like the insurance thing was just a cover for some glamorously dangerous life of high-stakes crime. In that case you might expect an expression of I-knew-they’d-get-me-eventually resignation or perhaps an I’ll-beat-the-rap defiance. No, Brasner really sold insurance for a living.
Read more »
There was a (for me) thought provoking article in The New York Times the other day on Weighing the Value of Home Security System.
Our house had an alarm when we moved into it 11 years ago. It was not particularly useful. With children too young for school, there was somebody
in the house almost 24/7 so the alarm almost never got turned on. After a while it broke, I never bothered to get it fixed, and eventually I just cancelled the contract. All that is left now are some unobtrusive but ugly motion detectors in the corners of some rooms.
Home alarms are more about psychology than economics. That much is clear from the overwrought TV commercials the alarm companies run. They do not mention the discount you will get on your insurance or the average reduction in property loss. Instead we get unlikely dramas with burglars in ski masks and foiled home invasions.
Read more »
I cannot remember if I have disclosed this before, but I own some Goldman Sachs stock. It is not a particularly large position, less than 1% of my net 
worth. But it worries me. I came close to selling yesterday and might just let it go today.
It is not that I don’t think Goldman is a great company. And it is certainly not that I think the stock is overpriced. With a trailing PE of less than 7 and no obvious threat to near term profits, it is, or ought to be, compellingly cheap.
The problem is that there is a chance, maybe not a big one, but a significant one, that the stock will go to zero. Not because of a problem in Goldman’s business, nor because the firm did anything it should not have, but because the federal government will decide to destroy it. Basically, I am worried that Goldman will get lynched.
Read more »
Once, in a now faintly remembered time, we were obsessed with house prices. Even as recently as a year ago, such obscure arcana as the Case-Shiller Home Price Index was closely followed. Looking back it is hard to
understand why. It was almost as if we thought that houses were a significant slice of our national wealth, that a change in their value might actually effect consumer sentiment and spending, and that a sharp drop in house prices, of all things, had set off the Great Recession. As if.
Of course, now we know that the Great Recession was started by a mid-level employee in the London office of Goldman Sachs.
Yesterday S&P released the monthly Case-Shiller numbers for February. It did not get a lot of coverage. True, that may be partially attributed to sharing a business news cycle with surprisingly strong consumer sentiment numbers, a turn for the worse in the Greek Crisis, and the ritual sacrifice of Goldman execs to appease the mid-term election gods. But it is hard to escape the conclusion that we have simply lost interest in house prices.
Read more »
begun to slowly circle the drain. It had the impact on policy makers that my more clever posts usually do, which is to say none at all. So here I am trying again. 
Government, Media | Frank Curmudgeon | 
July 7, 2010 11:59 am | 
Comments (10) 
Subscribe