Thunderbird

As well as the hardware problems mentioned in my last post I also recently had a software problem.  Starting on Tuesday June 7, 2022 the default Windows 10 email program (Version 16005.14326.20970.0) starting displaying some of my received emails as unreadable markup language gibberish. Strangely my oldest machine using the default Windows Vista email program was still able to display these emails in a human readable format. Some internet research provided no clue as to what was going wrong or how to fix it.  So I decided to try the free email program Thunderbird.

Downloading Thunderbird was easy but getting it to communicate correctly with my Aol email server was a bit aggravating. If you make a mistake you can get into an unfixable state which requires erasing the Thunderbird folder in an obscure Windows directory and starting over. However with the help of considerable internet research and trial and error I eventually got things working.  Once set up correctly Thunderbird seems to work fine. The problematic emails are now readable.

So this problem ultimately wasn't a big deal. However it left me a bit annoyed with Microsoft. It is not to their credit that the Windows Vista email program seems to be superior to the Windows 10 one.  As well displaying emails correctly I prefer the whole user interface.  I much prefer the Windows Vista photo gallery program as well.  It seems like Microsoft figures that it doesn't pay to spend too much money on these sorts of basic functions. 

South Brunswick Saker ShopRite Rant

Another rant this time about the South Brunswick Saker ShopRite supermarket.  Bottom line, their checkers should ring up sale prices correctly.  If they don't and this is later called to their attention they should cheerfully issue a refund for the difference.  Fortunately if they don't and you paid by credit card you may still have recourse.

After a long permitting and construction process a new Saker ShopRite supermarket opened a couple of years ago in Heritage Plaza (adjacent to Heritage Square) along Route 1.  ShopRite is a cooperative supermarket chain with stores in New Jersey and some nearby states.  Saker is their biggest operator with 39 stores many in central New Jersey.

The pandemic has made me reluctant to eat out and the new store is fairly convenient for me to get to so I have been shopping there sometimes.  Just before Christmas I bought a prime rib roast on sale for $4.79 per pound as advertised in their weekly mailed circular.  The shelf markings were not clear so I showed the ad to the checker to make sure I would get the sales price.  I was assured that I would.  I checked the receipt and saw I had received a discount but didn't notice until I got home that it wasn't sufficient to bring the price down to $4.79 per pound.  Apparently the checker should have scanned the ad in to get the full discount.  As it was I was overcharged by $14.83.    

When I returned to the store a week or two later I complained to the service desk about being overcharged.  I expected them to refund me the difference but they somewhat rudely refused to do so.  Although they accepted my version of events they claimed it was my responsibility to see that the sales price was rung up correctly.  Needless to say I disagree.

Fortunately since I had paid by credit card I had some recourse.  I challenged the charge with my credit card provider and yesterday they credited me with the $14.83.  It is unclear to me if my claim was actually adjudicated in any way (I was not asked for and didn't provide any details) or if the amount was too small for ShopRite to bother disputing.  Anyway I got my money.

It is somewhat baffling to me why ShopRite refused to refund the overcharge.  This was an advertised sales price which they should have expected to attract buyers.  Why incur ill will by trying to benefit from their checker's error?  Anyway I will be even more careful in the future.

California Tax Board Rant

Next up in the rant department is the California Franchise Tax Board which is in charge of collecting California's income tax.  Bottom line, if you have a problem with your California taxes call the taxpayer rights advocate number.  Apparently it exists because the regular process is often an ordeal.

While I live in New Jersey my employer has a location in California where I have worked several summers most recently in 2019.  This requires me to file a non-resident income tax form with California and pay the appropriate tax on my California wages.  I use TurboTax to do my income taxes.  However TurboTax only includes one state income tax return.  Additional states can be purchased but being cheap when doing my 2019 taxes I filled out the California non-residence forms myself.  Unfortunately I made a small error.

My California return included form 540NR and schedule CA.  540NR is the main form, the purpose of schedule CA is to reduce your allowed deduction based on the ratio of your California income to your total income.  After completing schedule CA you were suppose to copy two numbers back to form 540NR, your California income and your California taxable income after your allowed deduction.  Unfortunately I only copied the second number back which is the only number used going forward (and the only number schedule CA tells you to transfer back).  As a result I left line 32 of form 540NR blank but everything else including the tax owed was correct.

A few months later California sent me a refund check for my entire tax paid in 2019 and a notice that they had changed my return.  Apparently some computer program had seen the blank line 32 and ignoring everything else in the return had deduced I had no California income and therefore owed no California tax.  This was remarkably foolish as any human reviewing the return would have seen easily that it was line 32 that was wrong not everything else on the return.  And I think it would be a good idea for to have a human review computer changes rather than automatically send out a check for the entire tax paid.  I expect it is pretty rare for people to work in California, have substantial taxes withheld from their wages, submit a return with an additional payment but nevertheless actually owe no California taxes.

I didn't cash the refund check because I knew it was sent in error and starting calling the California tax help number.  This involved long periods (a hour or more) on hold.  California supposedly had a call back system but unlike Amtrak's it didn't work properly, my phone would ring once and then go to voice mail.  Eventually I got through to someone but they were not very helpful.  For some reason although what had happened should have been obvious they required I submit a written explanation.  I did this but made another error in that I didn't include an entire corrected return.

After hearing nothing for months I called again and when I eventually reached a representative they disclaimed all knowledge of my letter of explanation, apparently because I hadn't precisely followed their amended return process it had just been thrown away.  So I sent another written explanation this time including a formal amended return.       

After another long delay California sent me a letter changing my tax owed back to the amount I had originally calculated adding interest and fees and demanding payment.  After trying and failing to reach someone at the regular help number I eventually tried the taxpayer rights advocate number.   This quickly reached a representative who put a hold on my account and told me that I could resolve the situation by returning the refund check (which fortunately I still had).  I did this.

After a long vacation I tried calling back the person I had talked to.  This took several attempts (apparently they don't check their voice mail) but eventually I got through.  California had received the returned check and this had in fact resolved the situation. I requested (and eventually received) a statement showing a zero balance. 

The whole experience was infuriating.  Liberals claim to be the good government party but they often show little interest in the (no doubt boring) job of making government work well.  Democrats claim that Republicans have kept the federal IRS underfunded and perhaps that is true.  But there is no such excuse for California, the Democrats have had complete control for a long time.  Nevertheless the California Franchise Tax Board appears to be totally incompetent.  Apparently good service just isn't a liberal priority.  This is shortsighted as it creates antigovernment feelings which reduces the popularity of the overall liberal agenda. 

Amtrak Refund Rant

 I haven't been posting much lately, maybe a few good rants will get me back in the mood.  First up is Amtrak.

As I have mentioned before, since I am afraid of flying I sometimes travel long distances by Amtrak.  So I had an Amtrak reservation from NYP to DEN (with a connection in CHI) leaving Friday, September 3, 2021 just before the Labor Day weekend.  I had purchased it online paying by credit card.  On Wednesday night the remnants of Hurricane Ida passed over New Jersey and New York bringing very heavy rain.  The resulting flooding caused my train to be cancelled.  Amtrak notified my of this by email Thursday night.  The email gave a phone number to reschedule and an email address to request a refund.  

Fortunately my plans were flexible and leaving a few days later was no big deal.  So I called to reschedule but got a message that it would be difficult to get through to a service representative until after the Labor Day weekend.  Still no problem, I could just book a new reservation online myself.  I did this leaving the following Thursday.  And I emailed a refund request and received an acknowledgement.

I duly took the later train and got to Denver okay.  But I don't hear anything more about my refund so eventually on Friday September 17, 2021 I called Amtrak customer service.  This involved a long wait for a call back (which to be sure is better than being kept on hold).  I eventually spoke to someone.  Despite the acknowledgement it appears that email refund requests are ignored (or at least not dealt with in any sort of timely fashion).  But the person I spoke to promised to process my refund request.  I was told it would take 7-10 days to appear.  And the refund for the NYP-CHI portion of my trip did appear on my credit card by the following Monday.  

However the refund for the CHI-DEN portion didn't show up even after 10 days.  I called Amtrak customer service several times to try to find out what was holding it up.  Each call involving lengthy waits for a call back and/or on hold.  However the representatives refused to investigate until two months had passed from the original call.  Purportedly to allow for credit card billing cycles although I could see online that I had not gotten a credit. So it wasn't until Friday, November 19 that someone was finally willing to trace the refund request.  At which point it developed that the reason I never gotten the credit is that it had never been requested.  Apparently the second part of the refund (for the connecting CHI-DEN train) required some supervisor's approval and it had been sitting in their email inbox for two months.  I was told it had now been approved and in fact it did appear on my credit card by the following Monday.

Obviously this is totally unacceptable customer service.  There is no reason that getting a refund for a cancelled train should be a lengthy and painful process.

HP Notebook Breaks

Last summer I received as a gift a HP notebook computer (model 15-db0015dx). This is a low end machine but it was fine for web browsing and checking my email. However after about 6 months of normal use it developed a flaw in the upper left hand corner of the screen (which I am told is due to a crack in a internal glass sheet). Although the machine was theoretically still within the one year warranty period HP refused to fix it. Their position appears to be that any problem that could conceivably be due to customer abuse of the product isn't covered by the warranty. Which of course makes the warranty of little value as I not sure what if anything would be covered.

In my case the problem could easily have been due to a manufacturing defect, the machine could have been assembled slightly out of spec with the glass jammed into a position where it didn't quit fit and was under stress which eventually caused it to crack. Or the design could be inherently defective, unable to withstand normal use. According to internet sources some of the newer lightweight machines are so flimsy that just holding the display part by the top corner instead of the top center to open it can crack the screen. Which in my view is a defective design.

This has left me considerably annoyed with HP and I will be reluctant to buy their products in the future. I will also think twice about extremely lightweight designs. I bought a Dell Inspiron laptop about 10 years ago. While a little clunkier it has held up fine with similar use. 

Press 1 for English

Back in July, Paul Campos (of the Lawyers, Guns & Money blog) posted a rant in which he derided the  ""press 1 for English" myth" declaring (among other things):

The claim that people are forced to “press 1 for English” is pure racist bullshit, peddled by liars ...

I was pretty sure I had encountered this in the past  but of course it was hard to cite specific examples.  But now I can.  This morning I had reason to call New York E-ZPass service center (1-800-333-8655) and one of the first things I heard was "press 1 for English" (or some close variant).  So more confirmation of my opinion that the left is increasingly living in a fantasy world.

I was calling the service center because yesterday I received an E-ZPass statement which showed a bogus charge for using the lower level of the George Washington Bridge.  This was easy to spot since it was the only charge on the statement and I haven't been in New York State for some time.  Once I got a live person on the line this proved fairly simple to resolve.  She determined by some unspecified means that the charge was in error and agreed to have it reversed.  It was not clear what happened.  She said something about the license plate number not matching so maybe she was able to pull up a photo.

Defensive Indifference

I listened to the end of the Yankee's game this afternoon.  The Yankees were trailing the Seattle Mariners 3-2 with two outs in the bottom of the ninth but they had runners on first and third.  At this point the runner on first stole second.  However the Yankee's announcer, John Stirling, started claiming it wasn't a steal because of defensive indifference (since apparently the Mariners had not defended against the steal).  However a play should only be ruled defensive indifference  if  the run doesn't matter.  Here the potential winning run was moving into scoring position so defensive indifference does not apply.  And indeed when I checked later the play was properly scored a steal.  I knew the rule because Bill James in one of his books had discussed a similar play that had been scored incorrectly.  Stirling has been announcing Yankee's games since 1989, you would think he would know the rules by now.  Btw the next batter grounded out so the Yankees lost and the steal didn't make a difference.

Inequality

The Nov/Dec 2014 issue of the MIT alumni magazine, Technology Review, had a long cover story on inequality, "Technology and Inequality", by editor David Rotman. While it isn't particularly surprisingly that MIT thinks more spending on education is the solution to all problems I nonetheless found it irritating in this instance. Misdiagnosing a real problem is harmful not just because it encourages spending on solutions that will not work but also because it discourages investigating solutions that might work.

The problem with the MIT article (and many similar ones) is that it correctly notes that people who have completed more levels of education tend to earn more money in their subsequent careers and then jumps to the almost certainly false conclusion that the additional years of schooling are why they are more valuable employees. It seems far more likely that some people have more natural academic ability than others and that the traits that make them good students also make them good employees. So the educational system is just identifying students who will make especially good employees. For the most part students who do poorly in school do so because they lack natural academic ability not because their schools are especially bad. There is confusion on this point because average academic ability varies widely between schools so some schools have lots of high ability students who do well and other schools have lots of low ability students who do poorly. It is natural to think that schools where most of the students are doing well must be far superior to schools where most of the students are doing poorly. But in the United States this is not the case, schools (within the range commonly found) make little difference. Move a poor student to a "good" school and they are likely to continue to do poorly, move a good student to a "poor" school and they are likely to continue to do well. Furthermore what differences do exist are predominantly due to peer effects, it is better to be surrounded by good students than by poor students. And of course it is not possible for everybody to have mostly high ability classmates.

One of the traits which helps you do well in schools is of course intelligence or IQ which the article doesn't mention at all. I do not find it surprising people with IQs of 115 do better in school and in their work careers than people with IQs of 85. But schools (in the US) have little effect on IQ and more spending on education cannot be expected to significantly reduce IQ differences and hence income inequality stemming from them.

Nor do I find it surprising that IQ is becoming more important in the job market. In 1920 there were over 25 million horses and mules in the US, by 1960 this number had fallen to slightly more than 3 million (see here). Pure muscle power used to be worth a lot in the economy, now not so much. There is a real issue here but more education isn't the solution.

Annual Funding Notice

Last week I received the Annual Funding Notice for the IBM Personal Pension Plan (which is paying me a pension). Rather than require companies to adequately fund their pension plans Congress instead makes them send all participants annually a report on their plan's financial status. This is pretty pointless as most people won't get much from the disclosure. Pension accounting is inherently complicated and to make matters worse current rules are full of loopholes which can make a plan appear to be in better shape than it actually is. So the report is pretty opaque. And even if your plan is currently in good shape the weak regulations mean it may not stay in good shape. So I expect most people pay little attention to this notice and just hope for the best.

This year I actually tried to understand the report. Although the IBM plan is relatively easy to evaluate because it was frozen some years ago (which means participants are no longer accruing benefits) this proved rather difficult. Besides the notice for this year (2013) I looked at prior year notices, the 2013 IBM annual report and documents on the Department of Labor website for 2012 (the documents for 2013 aren't available yet). As best I can tell the only numbers in the notice worth paying attention to are in the "Fair Market Value of Assets" section. For IBM this says:

As of December 31, 2013, the fair market value of the Plan's assets was $53,953,692,333. On this same date, the Plan's liabilities were $47,920,350,174.

The key points here are that the valuation date is at year's end (as opposed  to 1/1/2013 or earlier elsewhere in the notice) so is relatively recent.  The assets are valued at fair market value which is fairly straightforward as opposed to elsewhere in the notice where a bogus accounting value can be used (although IBM does not do this)  based on what the assets would have been worth if the plan had achieved its expected rate of return.   Valuing the plan liabilities is a bit less straightforward as you have to figure the present value of future obligations which requires choosing a discount rate.  This should be determined by looking at the current yields of safe bonds which is not that complicated.  However elsewhere in the notice an artificially high discount rate is used which makes the plan liabilities look smaller than they really are.  This artificially high rate is a recent loophole created by Congress to allow companies to reduce their contributions to their pension plans while pretending they are adequately funded.  The notice for 2012 in the Fair Market Value section using a realistic (or at least more realistic) discount rate valued the plan liabilities at $52,939,309,074 (at 12/31/2012) while the artificially low discount rate used elsewhere in the 2013 notice gave a plan liability value of $40,044,112,196 (at 1/1/2013) which illustrates the magnitude of the loophole.  The actual discount rates used in the Fair Market Value section are not stated in the notice.  The IBM annual report lists discount rates of 4.5% and 3.6% for year end 2013 and 2012 respectively which may be the rates being used.  As best I can tell the present value of future plan administrative costs aren't included in plan liabilities which means they are understated a bit.  Still the IBM plan appears to be in reasonable shape.  And since it is frozen it less dependent on regular additional funding from IBM than active plans.

IBM assumes an 8% annual return on its US pension fund investments.  This is too high in the current environment but doesn't affect the above liability numbers as IBM (as a private company) is not allowed to discount plan liabilities using this rate.  In contrast public entity pension plans can and do discount their liabilities using their assumed rate of return (which is typically in the 7% to 8% range) thus grossly understating their actual liabilities.  IBM's assumed rate does affect IBM's reported earnings.

Net Neutrality

Vox has an article blaming Congress rather than the FCC for the apparent demise of net neutrality regulations.  In my view this is wrongheaded, according to Vox's own coverage, Congress has given the FCC adequate authority to impose net neutrality regulations.  The FCC simply has to classify broadband internet provision as a "telecommunications service" rather than as an "information service".  This seems more logical and would allow the FCC to enact common carrier regulations.  Instead the FCC has tried to impose common carrier regulations while classifying internet provision as an "information service".  Since this is not allowed by the relevant law the Courts have rejected these attempts. 

Apparently the FCC is reluctant to classify broadband internet as a "telecommunications service" because they fear this would prompt a political backlash from industry groups.  But expecting Congress to be more willing to take political heat than a federal agency seems crazy to me.  The real reason net neutrality is dying is that its advocates haven't mustered enough political support to overcome industry opposition. 

As for my opinions on net neutrality itself, I don't think internet providers should be allowed to discriminate based on content but I am sympathetic to the view that they should be able to charge extra for high bandwidth usage and other behavior which stresses the network.

Retarded

The Supreme Court heard arguments Monday in Hall v. Florida.  I was not impressed.  This is a follow up case to Atkins v. Maryland, a 2002 case in which the Supreme Court ruled it was unconstitutional to execute the mentally retarded.  In Hall v. Florida Hall's lowest tested IQ was 71 which is above the IQ 70 cutoff for mental retardation.  So Hall was denied the exemption provided by Atkins v. Maryland.  But Hall argues IQ tests have a margin of error so even though his tested IQ was 71 his true IQ could be at or below the 70 cutoff.  This argument would have some force if the state was required to prove Hall is not retarded.  But since it was undisputed at oral argument that the burden of proof is on Hall to prove that he is mentally retarded his objection seems basically frivolous.  A tested IQ of 71 indicates it is more likely than not his true IQ is 71 or higher which is above the cutoff so it is more likely than not that he is not retarded.  Whereas he had the burden of showing at a minimum that it is more likely than not that he is retarded.  Which he has not done even if he has shown there is a substantial chance that he is retarded.  But while this seems perfectly clear to me the Supreme Court justices and advocates seemed rather muddled and confused about this point.  So it is possible, perhaps likely, that they will rule for Hall out of distaste for the death penalty and justify their decision with a confused and illogical opinion.

Value Line Fair Fund

This is kind of puzzling. Back in 2009 Value Line settled charges that from 1986 through 2004 it had been cheating investors in its mutual funds by having the funds pay inflated commissions which were then partially kicked back to Value Line. As part of settlement the Value Line Fair Fund was set up to reimburse damaged shareholders. Since I was a shareholder in two of the funds during the period in question (see here and here)  I was eventually sent a claim form which I duly filled out and returned in June of 2011.  My claim was initially denied (for bogus reasons) but I submitted an appeal and additional documentation in February of 2012 which was accepted.

Recently I became curious as to why I hadn't heard anything more about this.  I poked around a little on the internet and found that on April 26, 2013 the SEC had issued (34-69469) an "Order Directing Disbursement of Fair Fund",  This order says in part:

The Plan provides that a portion of the Fair Fund consisting of disgorgement,  prejudgment interest, and civil penalties, plus any accrued interest less a reserve for expenses and taxes, be transferred by the Commission to The Huntington National Bank for distribution by the Fund Administrator when a validated list of payees with the identification information required to make the distribution has been received and accepted by the staff. The validated list of payees, which is for a total disbursement amount of $21,053,635.14, has been received and accepted.

Accordingly, it is ORDERED that the Commission staff shall transfer $21,053,635.14 of the Fair Fund to The Huntington National Bank, and the Fund Administrator shall distribute such monies to investors, as provided for in the Plan.

This started me worrying that my check had been sent to my old address or lost in the mail or something.  But when I called the Fair Fund help number they told me that despite the above the SEC was still reviewing the claims list and they had no idea when the money would be distributed.

Hopefully it won't be too much longer.  The whole process has been more than a bit annoying.  It will be really aggravating if it turns out my claim is valued at less than $10 in which case I won't receive anything (the claims forms provided no useful advice as how to estimate your claim value and thus determine if it was worth expending the considerable effort and some expense involved in filing a claim).

Liquidity

Last week I criticized a Kevin Drum post complaining (in effect) that the government wasn't subsidizing home mortgages enough.  Drum quoted from a Felix Salmon post which is also wrongheaded in my view.  Salmon complains:

Meanwhile, here in Manhattan, no one in my condo building has been able to sell or refinance for the past couple of years, thanks to an ever-shifting series of rules at various different banks, all of which are clearly designed to just give them a reason to say no.

In the first place all cash buyers exist so even if no mortgages were available at all you could still sell.  So it appears this is really a complaint about the price obtainable.  Perhaps the value of units in Salmon's building has dropped significantly and the owners are in denial about this.  This would also explain the lack of refinancing, banks are justifiably reluctant to refinance a $600,000 mortgage on a property currently only worth $400,000 (for example).   Banks should not be lending money based on inflated valuations and public policy should discourage them from doing so even if current owners would prefer otherwise.

Salmon also appears to believe that there are both credit worthy potential buyers who are unable to obtain mortgages and banks with money with which they are unwilling to make mortgage loans because mortgage rates are too low.  But it is a bit hard to see why this wouldn't lead to rising mortgage rates (as potential buyers bid up the rates) attracting more lenders.

Salmon concludes:

Still, one thing is clear: for all that the Fed has been pumping billions of dollars into mortgage securities as part of its quantitative easing campaign, all that liquidity has failed to find its way to new homebuyers. I’m in general a believer in renting rather than buying, but the US is a nation of homeowners, and in such a country, a liquid housing market is a necessary precondition for economic vitality. Right now, we don’t have one — and we don’t have much hope of getting one in the foreseeable future, either.

It is hard for me to figure out what this even means.  Obviously the housing market is much less liquid than the stock market.  I recently bought a townhouse in New Jersey and sold a townhouse in New York and would estimate the transaction costs (shared between the buyer and seller) were at least 10% of the sales price.  In contrast buying and selling stock has much lower transaction costs, perhaps .1% of the sales price for a liquid stock like IBM, a hundred times less.  It is also much quicker and easier to buy or sell stock (to an extent that actually made me a bit uneasy considering the amount of money potentially at risk).   But this has little to do with availability of mortgages.  The very liquid stock market is largely cash based.  In fact mortgages make the housing market less liquid by adding layers of fees and required approvals to a typical transaction.   So it appears once again that Salmon's real issue isn't that the housing market isn't liquid (which has always been the case) but that prices are lower than he thinks they should be and that the government should be propping them up by offering subsidized mortgages.   I don't agree.

Mortgages

There is a powerful lobby in the US in favor of higher house prices.  Millions of Americans are homeowners and being generally richer and more politically active than renters they have disproportionate political influence.  In addition home builders and realtors also have an obvious interest in higher house prices which is expressed through lobbying by industry groups and trade associations.  The result is various government programs and policies which make houses more expensive.   These include various forms of government subsidized mortgages.  While such programs are sold as helping buyers in fact much of the benefit goes to existing home owners in the form of higher house prices (just as colleges capture much of the government aid to students by raising tuition).  In my view this bias in favor of high house values is not in the interest of the nation as a whole.  Trying to eliminate (or perhaps even substantially reduce) this high house price bias produced by government policy is probably unrealistic but I certainly think a substantial burden of proof should be imposed on people advocating biasing government policy even further towards high house prices.


Which brings us to this Kevin Drum post advocating fixing (which seems to mean even more government subsidies) the housing finance market without providing much in the way of evidence that it is broken.  He claims that even people with good credit (low 700s credit score) can't get mortgages which I highly doubt.  See for example according to this recent WSJ article reporting that the average credit score for approved mortgages declined in 2013 from 2012 and that plenty of mortgages are being approved for people with scores below 750 (or even 700).


Borrowers can still qualify for a mortgage with just a 3.5% down payment through the Federal Housing Administration, which has among the easiest qualification rules. The Ellie Mae report showed that the average credit score on an FHA-backed purchase mortgage stood at 690 in December, down slightly from 699 a year earlier. Average total debt-to-income ratios stood at 42% (lenders generally consider anything above 43% to be high).


Perhaps people with good but less than perfect credit scores can't get the very best rate on a mortgage but this is hardly surprising and isn't at all the same thing as being unable to get any mortgage.  Drum further claims (quoting Felix Salmon) that bank mortgage rules are designed to give the banks a reason to say no.  But this is a natural consequence of the fact that the loss on a bad mortgage is likely to be many times the profit on a good mortgage.  So it is much more costly for a bank to give out a bad mortgage than fail to give out a good one and bank rules and procedures will (or at least should be) designed accordingly. 


Considering recent history I think Drum should be embarrassed to be advocating lowering mortgage standards on such a flimsy basis.

Yarnell Hill Fire

On June 30, 2013 a crew of 19 firefighters was killed by the Yarnell Hill Fire near Yarnell Arizona.  Recently a report was released on an investigation of this event.  In my view the report is seriously flawed, showing an undue reluctance to criticize the decisions that led to 19 deaths.  The report claims it is trying to avoid hindsight bias, the tendency to label decisions as wrong when they work out badly even if they were actually reasonable under the circumstances.  This is a commendable goal but it has to be balanced against the need to identify avoidable mistakes.  Simply refusing to judge decisions is not the proper balance.

The report refers to decisions made by the crew and speculates about the thinking behind them.  But I expect the crew as a whole was not making decisions, instead the decisions were made by the crew's leaders (who appear to have been two men which the report does not name).  If 19 people are killed in plane crash the investigation will naturally focus on the pilots.  What was their training, experience, reputation?  Similarly one would expect this report to discuss the background of the fire crew leadership but in fact it provides no information at all.  Also in recent years there has been much attention paid to cockpit dynamics.  For example if the pilot makes a mistake does the co-pilot feel free to object.  Again this report does not discuss the analogous fire crew dynamics at all.      

The fire crew was killed while apparently attempting to move from one safe area to another (perhaps as the report speculates because they felt the second area would leave them better positioned for further firefighting efforts, although it should be noted the overall leadership did not expect or particularly want them to do this).  In doing so they chose a route that placed them in mortal danger.  Initially they moved on a two track road along a ridge.  This seems to have been reasonably safe at least at first as they had a view of the fire and various retreat options if it moved towards them.  However they then left the road (which would have eventually taken them to their apparent goal) to descend off the ridge through a box canyon directly towards their destination (a ranch with a cleared area).  Although this was a shorter route than continuing along the road it probably wasn't quicker as it was much heavier going.  The report speculates that the ranch appeared closer than it was and that they didn't realize how slow the going would be.  The real problem however was once they left the ridge they lost sight of the fire and (according to the report) the ability to perceive the wind shift that drove the fire towards them.  By the time they realized they were in danger it appears it was too late to do anything.  The report lists some of their options at the point they left the ridge but does not discuss one possibility.  Why didn't they leave a scout on the ridge to keep watch on the fire and warn them if it started to move towards them?  They had utilized a scout earlier in the day in what seems like a less dangerous situation so why not here?  The report doesn't discuss this.

The report doesn't want to admit that any mistakes were made.  This makes it hard to identify problems and make improvements going forward.  The report's view is that firefighting is inherently dangerous and that these 19 deaths were just one of those things.  I am not convinced.

Added 12/25/2013:  I fixed the link to the report.  Some other material including a video was also released.

New York refund arrives

My New York State income tax refund finally arrived on Wednesday.  It wasn't as much as I was expecting because it turned out I had made an error (using the wrong tax computation worksheet) in figuring my tax.  This was a bit annoying although I can get some (but not all) of the difference back from New Jersey by filing an amended return which I did.  Hopefully New Jersey will process this a bit faster than my original return.  I was also annoyed to learn that although New York theoretically pays interest on refunds delayed more than 45 days this only applies if the interest is at least $1 so I was out of luck there too.

While looking over the New York tax computation worksheets I noticed something bizarre.  Suppose a married couple is taking the standard deduction of $15,000 so that their taxable income (line 38) is $15,000 less than their AGI (line 33).  Then if I have figured correctly, if their AGI is exactly $2,000,000 their tax will be $135,972.5 while if their AGI is just $50,000 more (that is $2,050,000) then their tax will be $179,487 or $43,574.50 more.  This is a marginal rate of over 87%.  Taking federal taxes into account some people in this situation seem to be facing a marginal rate of well over 100% for this income range.  This makes no economic sense, it is just evidence that the New York legislature can't be bothered to write sensible tax laws.  

Bridge not out

Speaking of government not working well, this isn't the biggest deal in the world but it is starting to annoy me. The Quaker Bridge Road Bridge repairs took longer than they were supposed but they were finished months ago and the bridge was reopened. It is time someone took down the sign.

Housing markets

One of the Congressmen I find most irritating, Barney Frank, was in the news yesterday continuing to spout nonsense about the housing market:

“We’ve already abolished Fannie and Freddie,” he said, referring to the government takeover. “Yes, we waited too long to fix it. But the money is not being lost by anything they are doing now.”

This is simply wrong. As the article acknowledges the government is propping up the housing market by providing subsidized mortgages. But subsidized is just another way of saying money losing. Perhaps under the circumstances there is something to be said for this policy (although I oppose it). But pretending it is not costing the government money is dishonest. And they haven't "fixed" anything.

Also it is easy to underestimate the perverse effects of government subsidies. I might currently be in the market for a house but I am reluctant to enter a market in which I would be competing with people playing with government money, no money down government backed loans that they can easily walk away from if prices move against them.

NYT AIDS story

I think the New York Times is a pretty good newspaper in general but this story on an AIDS prevention gel for women is just dreadful. It starts:

The best AIDS-prevention news in years was released here last week at a world conference on the disease: a vaginal gel, called a microbicide, that can be used without a man knowing it, gave women a 39 percent chance of avoiding infection with the deadly virus.

Thirty-nine percent is, obviously, not perfect, though the women in the South African trial who used the gel most faithfully did better, achieving 54 percent protection.

It is completely unclear what the 39% and 54% are referring to and this is not explained in the remainder of the story. I suspect this is because the reporter had no clue. But if he can't explain what these numbers mean they shouldn't be in the story.

Free money

A lot of people, some of whom should know better, seem to think that a low interest loan is the same as free money. Here Ezra Klein argues that the US government should take advantage of the current low interest rates to borrow a lot of money. This is not a good reason for individuals to borrow money and it isn't a good reason for the government to borrow money. If the money is going to wasted, as I expect most of it would be, a low interest rate doesn't help a lot.