State budget

New York state has reached a budget agreement . It is more or less on time which has not always been case in past years. Otherwise it doesn't seem to have much to recommend it with lots of tax increases to pay for added spending. I understand the arguments against drastic cuts in spending during economic downturns but I don't think big tax increases are such a great idea either.

Google maps

Google maps has added a feature that can mark (with small thumbnails) on the maps locations from which photos have been taken. Clicking on the thumbnail gives the full size photo. It appears anyone can submit photos for this feature which is a clever way to get people to generate content for free. I found the feature rather addictive as I checked what photos were available at various locations.

I guess this is old news but google also has a street level view feature for some locations which I found a bit creepy as I checked addresses of people I know.

Compact Fluorescent Light Bulbs

The push to replace incandescent light bulb with more energy efficient compact fluorescent light bulbs has led to some complaints. I have not had any trouble myself, none of the fluorescent bulbs which I have installed have failed. I have been careful to use them as directed. In particular I have not put them in closed ceiling fixtures where they might fail due to excessive heat. It is unfortunate that they have this limitation as replacing the bulbs in my ceiling fixtures is a bit of a job which it would be nice to minimize. Rumor has it there are plans to effectively ban incandescent bulbs, this problem best be fixed first.

The compact fluorescent bulbs do take a second or so to come on which is a little disconcerting at first. And they may take a couple of minutes to achieve full brightness which I didn't initially realize leading me doubt that they were actually as bright as claimed.

Old Croton Aqueduct trail

I took a walk today on the trail which runs on top of the Old Croton Aqueduct . This is a good time of year for this walk. It isn't too hot, the views are better with the leaves off the trees and it is less crowded than in the summer. The trail doesn't drain well and can be muddy with recent rain or snow melt but that wasn't a problem today.

The section I walked today runs in the Croton Gorge just west of Quaker Bridge road between two places where the trail crosses the road. It is about .75 miles long. There is a small parking area along the road about .25 miles south of the north crossing and it is also possible for a couple of cars to park on the shoulder at the north crossing.

Walking south from the parking area along the aqueduct you get views of the Croton River entering the Hudson. There are houses above to the east along Quaker Bridge road and below to the west along Old Albany Post road. Walking north from the parking area you can see and hear the Croton River at the bottom of the gorge. Walking both directions out and back takes me about 30 minutes.

Birkman

I took the Birkman first look assessment today. It is part of the outplacement assistance provided by my former employer. It is an online survey in 3 parts. First 125 true false questions about what people in general are like. Next the same (I think) 125 questions with reference to yourself. And finally 48 questions in which you are given 4 job choices and you are asked for a first and second choice (assuming you are qualified and they pay equally).

I found the first part difficult as I often felt completely unsure about things like the average person's work habits or preferences. So I tended to go by my own example a lot which probably defeats the purpose a bit. The second part was straightforward enough although a few questions were poorly worded. I also had a bit of trouble with the third part as assuming I was qualified for jobs I am totally unsuited for was a bit of a stretch and also I don't really have a good idea about what you actually do in some of the jobs (like toolmaker or even clerk).

After completing the questions you receive a fancy color coded assessment. I find it hard to take the results too seriously, apart from a few obvious points (like I am not cut for a position in sales) it seemed too much like the horoscopes you see in newspapers. Although I suppose it does have some value in making you think about career alternatives.

Grand jury summation

I finished my grand jury service today (see here and here ). Serving has educational and entertainment value and was no hardship for me so I don't regret being selected. However as I noted earlier I question whether grand juries are worth the expense. Based on my experience I doubt they provide any significant protection for the accused (compared to the preliminary hearing before a judge used in many states). Another argument for them is tradition but I don't find this compelling. I suppose there is some value in bringing a diverse group of citizens together to perform a civic ritual.

Some details of serving in Westchester. Although the summons said otherwise there was in fact plenty of juror parking. Theoretically our day was 10 am to 5 pm (with time for lunch) but in practice it averaged less than half that. You do need to allow some extra time (20 minutes on a bad day but usually less) to get through the metal detectors in the courthouse lobby. Serving exempts you for a while (8 years state, 4 years federal if I remember correctly) from future jury service.

FDIC insurance

The FDIC insures bank deposits up to a limit. The limit was $100000 for many years but was recently raised (supposedly temporarily until 12/31/2009) to $250000 due to the current financial crisis. The limit is per depositor per bank. However there is a loop hole involving revocable trust accounts which allows you to increase the limit several fold. In view of the current situation this seems like a good thing to do if you are over the limit. However I think it is questionable public policy to allow the limit to be increased in this way. It gives an undue benefit to paying attention. And setting up and maintaining the trust accounts imposes unproductive overhead costs on the economy.

Commuting

I have been driving to the Westchester County Courthouse in White Plains to serve on a grand jury. It is about 14 miles from my home and the drive takes about 25 minutes. I find the drive pleasant and relaxing just as I found my 5 mile 10 minute commute to work. I have always found driving in general enjoyable as long as the weather or traffic wasn't too bad and I wasn't driving all day. On the other hand I have never liked taking buses, planes or trains. I dislike the rigid inflexible schedules which for example require planning to arrive well in advance of the scheduled departure in order to assure you don't miss it. And I find the ride itself less pleasant with the lack of privacy and personal space found in cars. So I have doubts about the feasibility of shifting a lot of people from cars to mass transit.

Cobra

The Cobra law allows terminated workers to continue in their former employer's health plan for up to 18 months by paying the full cost of the premiums (plus a 2% administration fee). Today I elected to do this. This was an easy decision as my former employer as part of my separation package will pick up most of the cost for a year. The recent stimulus program also provides a subsidy for the first nine months (with an income limitation). So I won't have to worry about heath insurance for a while.

Clueless

The Obama administration is planning to announce a new bank bailout program Monday. It would be nice to believe that they know what they are doing but I am finding it difficult. The plan is a convoluted way of giving public money to private banks. The morality of this aside it is unclear what it is supposed to accomplishing.

The current problem is not just that the banks are short of money it is that there is a lack of attractive loans to make. It is all too apparent that in the last few years a lot of imprudent loans were made. Unfortunately a lot of people and businesses came to expect and depend on the availability of these loans. However banks, even banks with plenty of money, are now properly reluctant to make such loans. So bank lending is not going to return to normal if the debased lending standards of recent years are taken as normal. This means a lot of unavoidable economic pain as the economy adjusts to realistic loan underwriting standards.

Another part of the current problem is lack of trust. In recent years fraud and corruption became pervasive. Loan applications were falsified, appraisals and bond ratings were corrupted. The resulting lack of trust impedes the smooth functioning of the financial markets as parties are reluctant to deal with each other for fear of being cheated.

Additionally there is a general lack of confidence. People are reluctant to lend or borrow unless they are confident about future prospects. However it is hard to be confident when the government leaders appear baffled about what is wrong and how to fix it.

It is hard for me to see how throwing more money at the banks is going to fix any of this.

Ants

When I was employed I ate out almost all the time. After being laid off I started eating more meals at home. This meant more discarded food waste. Which revealed I had an ant problem. Ants would come out of a crack at the base of a wall in my kitchen and climb up the side of the kitchen waste basket to get at discarded food. This seemed an undesirable state of affairs. So last Thursday I checked out a local hardware store which seemed like the sort of place that might stock ant poison. Which it did, several varieties in fact. I went with Terro because the active ingredient was borax which seemed likely to be relatively non-toxic to people. It appears quite effective, I used some on Thursday and by today the ants were gone. Hopefully they will stay gone.

Collecting unemployment

As noted here I applied for unemployment insurance soon after being laid off. You don't get anything for the first week you are out of work but you are then entitled to a weekly benefit for each subsequent week of unemployment (up to a maximum number of weeks). You must certify weekly that you were not employed during the previous week. This can all be done online and is reasonably painless. Yesterday the first benefit payment showed up in my bank account three weeks after my final day at work.

Being laid off made me even more disinclined than usual to spend but this seems like found money so perhaps I will do my bit to stimulate the economy by spending some of it.

AIG

There has been some ado about the bonuses AIG is paying executives in its financial products unit. Without getting into the merits of the bonuses it seems reckless to me to enrage employees in sensitive positions by doing them out of money promised while leaving them in their positions where they are capable of doing great harm to their employer. There is a reason private companies often escort fired employees in sensitive positions out of the building immediately.

Verizon rant

As I noted here I recently upgraded my home internet service to broadband. With Verizon as it happens. I was quite happen with the service until I tried to send an email with my resume attached. Verizon has an outgoing email spam detector which appears to classify any email with an attached resume as spam and block it. There is an appeal procedure but it has so far proved useless. I also tried complaining directly to Verizon via their live chat feature but (consistent with the experience of others as reported in this forum ) received no useful assistence as the support agent didn't seem to know anything about the filtering of outgoing email.

Needless to say this is rather annoying when one is looking for a job.

Electricity

In a previous post I complained that the push to solar panels on rooftops didn't make a lot of economic sense. This is part of a more general problem, you have to be careful when comparing different methods of generating electricity.

Because the demand for electrical power varies over time and because there is no really good way currently known to store electrical power the system has to able to vary generator output to match demand. This means generators that can be throttled to generate power as needed are superior to generators whose power output varies depending on external factors not under the control of the operator. Therefore it can be misleading to compare electrical generation methods just based on cost per kwh as not all kwh are equally valuable.

Unfortunately wind and solar panel power generators fall into the less valuable category whose output varies outside the control of the operator. This means they are not as competitive with fossil fuel generators as they might seem just based on per kwh cost. This effect will become worse as wind and solar panel power account for a greater fraction of total power generated since the remainder of the system will have to accommodate greater swings in demand.

Now these problems are not insurmountable. Power can be stored albeit at considerable cost. However switching away from fossil fuel generators is not going to be easy or cheap.

Grand jury midterm report

As I previously reported I have been serving on a grand jury . I am now halfway done having served for 5 days. Some thoughts follow.

Sol_Wachtler , a former chief judge of the New York Court of Appeals (the highest court in New York), once famously claimed that a grand jury could be persuaded to indict a ham sandwich. This is a bit of an exaggeration but based on my experience so far a grand jury will generally go along with what the prosecutor wants. Which leads me to question whether they are cost effective. As the wikipedia article notes many states have abolished grand juries replacing them with a preliminary hearing before a judge. This is clearly more efficient and I doubt much is being lost. It is no great hardship for me to serve but I expect many of my fellow jurors have better things to do.

Rooftop solar

Many people are attracted to the idea of placing solar panels on the roofs of houses to generate electricity. This post by Matt Yglesias is typical. However the idea makes no economic sense.

Yglesias claims there are no economies to scale when generating electricity with solar panels. This is obviously false. Imagine millions of solar panels lined up in rows in desert areas of Arizona (or Nevada or California). Compare this to a few solar panels on the roofs of millions of houses. Which arrangement will be easier and cheaper to build and maintain? The answer is obvious. Furthermore the desert panels will generate more electricity as few houses get as much sun as the southwest desert.

So given that utilities are not generating electricity from solar panel farms in the desert how do you create the illusion that generating electricity from less efficient roof top installations is sensible. The answer is massive subsidies. Some of these subsidies like tax credits and low interest loans are obvious. Another is less so.

It arises from the way the residential electricity consumption is currently billed. Typically there is a small fixed charge and a per kwh charge based on usage which accounts for the bulk of the bill. However in reality most of the cost of providing electrical service to a typical residence is fixed consisting of the costs of constructing and maintaining the power generation and distribution system. In most cases the marginal cost of actually generating the kwh is not the bulk of the cost of service. The effect of the difference between the actual costs and how electrical service is billed is that large users tend to subsidize small users.

So what does this mean for rooftop solar panels. It means the reduction in your bill from generating some of your own power overstates the savings to the utility. The difference will have to be made up by the other customers which represents a subsidy to you (since you are not disconnecting from the utility entirely and still expect utility power to be available whenever you want it). The subsidy is even greater if you are allowed to sell excess power to the utility at the retail rate (run your meter backwards). By pricing rooftop electricity at the retail rate it may appear to be a better deal than electricity from solar farms in the desert priced at the wholesale rate but this is an illusion. It would in fact be cheaper and thus better for society if it was generated in bulk in large installations.

Installing roof top solar panels is a symbolic way of demonstrating concern for the environment. Too bad they don't actually make any sense.

Stocks

As noted in my brother's recent post , Jim Cramer has come under a lot of criticism lately. I don't watch his show but to the extent that Cramer advocates short term trading of individual stocks this criticism is justified. However the main problem is the high turnover not the ownership of individual stocks. Index funds are fine if you want to invest in stocks with minimal effort but if you enjoy following the market there is nothing much wrong with buying individual stocks as long as you intend to hold them for a reasonable length of time. You won't be quite as well diversified but you get the entertainment value of rooting for your stocks.

And while short term stock trading isn't particularly smart it has little to do with the current crisis.

Treasury direct rant

I opened a treasury direct account in 1999. It allowed you to buy, roll over and redeem treasury bills with funds coming from (or going into) a linked bank account. The web interface was a bit clunky but worked OK. A few years ago the government created a new treasury direct product and renamed the old product "legacy treasury direct". I continued to use the old product without problems. This year I decided to upgrade to the new version (encouraged by a recently increased fee for using the old version). This proved to be a lot of trouble, requiring two separate signature guarantees from my bank (one to set up the new account, one to transfer the securities in the old account to the new) although all the account information was exactly the same. I then found that new security measures make logging into your account difficult and tedious. Of course security is good but somehow the old system managed with a lot less trouble. Once in I found requesting that a maturing treasury bill be rolled over into a new treasury bill is a complicated multi step operation (which I have already botched once resulting in an undesired redemption). With the old system this was simple and in fact repeated rollovers (up to two years in advance) could be scheduled. Naturally all pending rollovers were cancelled when my account was transferred. All in all the new system is far inferior to the old. One more thing to blame on Bush I guess.

Yale vrs Cramer

Another post from my brother, Peter (a Yale alumnus):

Given CNBC Jim Cramer's recent evisceration by Jon Stewart on the Daily Show, I was interested to read what Yale investment guru David Swenson says about Cramer in the latest Yale alumni magazine:

"Jim Cramer exemplifies everything that's wrong with the "advice"—and I put advice in quotation marks—that is given to individual investors. Investment is a serious business. We're talking about retirement security of American citizens, and he turns it into a game. It's a game where his listeners lose. It's ridiculous. These high-turnover, rapid trading strategies enrich the brokers. It you look at Jim Cramer's approach on an after-fee, after-tax basis, the individual doesn't have a chance."

All I'd like to add is that Cramer is a graduate of Harvard College and Harvard Law School.

Funny money

This American Life did a couple of shows The Giant Pool of Money and Bad Bank on the financial crisis which I recommend. The second makes what I think is an important point. The banks got into trouble by making a lot of bad loans. Inducing them to make a lot more bad loans isn't going to fix things in the long run. We need to find a way to transition to a less leveraged world in which bad credit risks find it harder to get loans. This will be hard on some industries like housing or automobiles where much of the demand has come from buyers using funny money (by which I mean loans which they were unlikely to repay).

20% down

There has been a lot of discussion about how to fix the current economic mess but less about measures to prevent similar troubles in the future. Here is a suggestion. Prohibit more than 80% financing for real estate purchases. In other words require 20% down. This would probably reduce the home ownership rate but it is not sound public policy to maximize the home ownership rate at all costs. Many people are better off renting.

Nothing

It seems this blogging business is harder than it looks. I have nothing to say today, hopefully I will be more inspired tomorrow.

Antilock brakes

In July 1998 I attended a lecture entitled Mathematics in Finance given by Robert C. Merton at a math conference in Toronto. Someone asked if these new mathematical tools were making investing safer. The gist of the reply was no, it was like antilock brakes, you just drove faster. With the addition that you was referring to Wall Street types (as opposed to the no doubt more cautious mathematicians in the audience).

At the time Merton was involved with LTCM which was already in a bit of trouble and blew up shortly thereafter. I have sometimes wondered since if Merton had a sense of foreboding when he gave this answer.

Heisenberg principle

One of the perils of having a blog is that you find yourself doing things just so you can blog about them. Hence my visit today to Circuit City. Which proved a complete waste of time since, although the paper said Sunday was the last day of their liquidation sale, this particular store had apparently sold out earlier and was closed. Can't say I will miss them much as I don't remember ever buying anything there. Still, like the closure of Linens'n Things and the troubles of the big three auto companies, a sign of the times. A lot of businesses appear to be no longer viable and the adjustment process will be painful.

Some more about Circuit City.

Late adopter

Getting laid off prompted me to upgrade my home internet access from dialup to dsl broadband (as I would no longer be able to surf the net at work). I have had dsl for a few weeks now and it of course is much nicer than dialup. I should have upgraded long ago. I tend to be behind the curve on this sort of thing, I didn't get a digital camera or replace my Windows 95 computer until just over a year ago. Staying away from the bleeding edge is fine but you don't want to overdo it.

Triage

There have been some complaints that the Obama foreclosure plan does not help those that need it most. Without judging the plan as a whole this particular complaint is silly. It is standard triage methodology to first help those for which a small amount of help will make the difference between living and dying or in this case between keeping and losing your house. It is better to use a million dollars to save 20 homes from foreclosure by giving $50000 worth of relief to 20 people than to save 1 home by giving $1000000 worth of relief to one person.

A more legitimate criticism is that the plan should not just attempt to prevent foreclosures but should also try to reduce the harm caused by the large number of foreclosures which will remain inevitable. Perhaps by providing incentives to get the houses rented or resold quickly.

Kepler telescope

I don't have a wife or kids but I do have a brother, Peter M. Shearer . He contributes the following:

Let’s hope that tomorrow’s planned launch of NASA’s Kepler Telescope to search for Earth-sized planets is more successful than the crash of their CO2 sensing satellite last month. The Kepler mission will continuously monitor the brightness of over 100,000 stars to detect subtle dimming events caused by transiting planets. Given the small size of many planets and their likely orbits, such events will be rare (don’t miss the 2012 transit of Venus---this won’t happen again until 2117), but if all stars have Earth-like planets, Kepler should detect about 500 of them.

One thing I’ve noticed is that most people seem to want there to be other Earths out there. For example, from the March 2 NYT article on the Kepler mission:

When a reporter departed from journalistic objectivity to venture a hope that other Earths are out there, Dr. Fanson happily joined in. “I hope the answer is yes,” he said. “I hope the universe is teeming with planets like Earth.”

It’s exciting to think about other Earths. But is it rational to hope they exist? To be truly Earth-like and potentially habitable they would need to have oxygen-rich atmospheres, which implies that they already have life. The record of what happens when isolated biospheres come into contact with each other is not a happy one for at least one of the two life systems. But the public and many scientists seem to yearn to find life on other planets, and are disappointed when experiments fail to detect it, as in the classic Onion headline “Mean Scientists Dash Hope of Life On Mars.”

Traffic court

Last October 19th I got a speeding ticket charging I was going 63 in a 40 zone. This was particularly annoying as I was in a 55 zone as the photos of the signs I took the next day clearly showed. Tonight I showed up in New Castle Town Court to dispute the ticket. I did not get much satisfaction. In New York the charging officer offers plea deals to people who show up to fight a ticket. So after I sat around for a while watching other cases the police officer calls me aside and immediately offers to allow me to plea to 45 in a 40 zone. I point out I was in a 55 zone. After looking at my photos the officer acknowledges this. This means I am innocent. Unfortunately the officer can issue another ticket correcting the mistake after which I will be assigned a new trial date. When my case is eventually called before the judge he confirms this and suggests I plea to 60 in a 55 zone. I am tempted to demand a trial as I would not be risking much and I could give the police officer a hard time about his mistake and suggest this it raises reasonable doubt about whether he can reliably operate a radar gun when he can't even read speed limit signs. However the likely result would be I would be convicted anyway and get a somewhat bigger fine. And I don't really need to have this hanging over me for another few months. So I do the sensible thing, plead guilty and pay the $135.

There were a large number of other people there for a variety of cases including DWIs and invalid licenses. There was also an eviction case which cast a noticeable pall over the courtroom. This was a woman (who I believe said she had two children) who due to some personal reverse (perhaps her husband deserted her) had stopped paying rent. She seemed in shock or denial and did not have a lawyer or any good argument as to why she should not be evicted. The judge granted a judgement for the accumulated back rent (and penalties) and ordered eviction but stayed the order for 5 days for reasons that were unclear to me. Perhaps this was to give the woman a last chance to get her act together but this didn't seem too likely to happen.

Grand jury service

Yesterday (and today) I reported to the Westchester county courthouse (in White Plains NY) for service as a grand juror. Some years ago I spent 2 days in the same courthouse not being selected as a regular juror. That was my only previous experience with the jury service. Grand jury service is quite a bit different than regular jury service. I am one of a panel of 23 grand jurors who on 10 days spread over the next 4 weeks will hear many cases. For each case we will decide if the DA has presented enough evidence to bring an indictment (after which a trial before a regular jury will determine guilt). Only 12 votes are needed to indict and the standard of proof is a lesser reasonable cause (as opposed to guilt beyond a reasonable doubt) so I expect indictment will be the usual outcome.

Yesterday I was placed on one of three panels (of 23 people each) who will hear cases for the remainder of the month. We were given some general instructions yesterday and some more detailed instructions this morning after which we began to hear cases. The proceedings are secret which means we are legally prohibited from disclosing any of the testimony or deliberations so I will not describe any of the specific cases.

We were told that grand jury service is more interesting (and pleasant) than regular jury service which I expect is true (although this is not necessarily saying much). Among other things grand jurors can ask questions of the witnesses.

We get paid $40 a day (the same as regular jurors). Not very much but I do like the idea of some money coming in.

Here (pdf file) is the NY Grand Juror's handbook. Procedures in other states will vary.

Security clearance

I returned the forms needed to obtain a security clearance today. Fortunately I have had a rather boring life without numerous jobs, spouses, abodes or foreign travel so filling out the forms was not as painful as it could have been. Still it is a rather intrusive process and there is a polygraph to come. And I am somewhat allergic to security regulations. But being out of work makes me a bit nervous and having a clearance will increase my employment options.

Unemployment insurance

Today I applied for unemployment insurance. New York has an online application process. It wasn't too bad. It appears I will also have to claim for each week (Monday-Sunday) of unemployment within a one week window (Sunday-Friday) in order to collect that week's benefit. No benefit is paid for the first week of unemployment. After that the benefit is normally about half your previous wage (up to a maximum of $405/week) for a maximum of 26 weeks during the following year. Apparently the federal stimulus legislation has increased the benefit by $25/week and 33 weeks has been added to the 26 weeks for which you can collect.

I didn't sign up for direct deposit but will do so as it appears more convenient than the direct payment card (like a debit card) that you get otherwise.

Here is the New York unemployment insurance website.

PBGC maximum amounts guaranteed

The Pension Benefit Guarantee Corporation (PBGC) is a government entity which guarantees traditional pensions up to certain limits. The monthly maximum payments for plans which fail in 2009 can be found here . As you can see these maximums strongly depend on your age in 2009. For example at 55 the maximum is $2025/month, at 60 the maximum is $2925/month and at 65 the maximum is $4500/month.

The above site explains these reductions as follows:

The maximum amount is lower for benefits commencing at ages below 65, reflecting the fact that younger retirees receive more monthly pension checks over a longer expected remaining lifespan. The maximum amount is higher for benefits commencing at ages above 65, reflecting the fact that older retirees receive fewer monthly pension checks over their expected remaining lifespan.

But in fact the reductions are much greater than needed to equalize the present value. According to this annuity calculator (for a New York state male, quotes obtained on 3/2/09), a single life annuity paying $2025/month to a 55 year old has present value $331948, a single life annuity paying $2925/month to a 60 year old has present value $445704 and a single life annuity paying $4500/month to a 65 year old has present value $622755. So in fact the limits strongly favor older retirees.

In my case this means I best hope the large American technology company stays solvent for a few years.