The Wine Commonsewer

Who Needs A Car? (or a 747)

Good Morning Gentle Readers,

Before I blew outta town last week on an old-fashioned road trip, it cost me a hundred bucks to fill the politically incorrect foreign pickup truck that's made in America. A hundred bucks. That's never happened, so I felt like I should open a bottle of Moet Chandon or something.

Funny thing about that too, once we crossed the Nevada border the gas prices dropped like a hot rock. Downtown Laughlin's Chevron Premo was selling for less than ARCO's Pingmaster regular down the hill from the Casa. The further southeast one travels in Arizona, the cheaper the gas gets. Twenty-five percent less in Tucson than in So Cal.

Course, like incest, gas prices are relative. $3.75 a gallon is still stiff. It's just relatively better than $4.85. Somebody emailed me that demand is finally falling and gas prices have eased a bit. Mrs TWC confirmed. Hadn't noticed, myself.

OTOH, high prices coupled with availability are preferable to cheap prices and long lines.

Been there. Done that. I'll pay.

Yes, that's 81.9 per gallon.

Why speculation doesn't necessarily affect oil prices.

Bonus: Well, no video bonus today, girls, because the video I planned to use has apparently been yanked. I've got A VERY COOL one myself but it isn't ready for YouTube quite yet. Well laid plans and all that.....But Wait! At the risk of burning through my entire bandwidth allocation for July, you can listen to it instead.   You'll need WinAmp, Itunes, or Quicktime to hear it. It's way cool.

Freddy Mercury on Moet Chandon here.

As Ever,

TWC

The Bear Stearns Catastrophe: Not Your Father's Free Market

Gentle Readers,

As a recent investor in Bear Stearns, whose foray into leveraged bond funds backed by subprime mortgages has turned into disaster, you'd think I'd be delighted with the US government's 30 billion dollar bail out that took the form of a credit line to entice JP Morgan to pick up the pieces. The pieces came at two bucks a share.

You, Gentle Reader, might wonder why TWC made such an idiotic decision. After all, investing in Bear Stearns seems sheer folly. Here's the strategy: Your government made my investment decision for me without asking. We taxpayers are on the hook and there will be absolutely no return on investment for any of us.

The Fed also essentially made the takeover risk-free by saying it would guarantee up to $30 billion of the troubled mortgage and other assets that got the nation's fifth-largest investment bank into trouble.

Smells like corporate welfare to me.

And here's your Econ 101 lesson for the day:

In a free market economy those who make bad economic decisions fail. They go broke, they go out of business, they lose their money, they lose their retirement, they don't get to go to Jamaica on vacay and the MBZ goes back to the bank. Failure and correction is what keeps a market economy on a relatively even keel.

A THIRTY BILLION DOLLAR bail out is NOT capitalism. It is NOT the free market. It is government intervention in the market place that benefits a proportionally few investors and stockholders who voluntarily took a huge financial risk because the promised return was tantalizing. To be charitable, they bet against the come and lost.

As the Old Man used to say, Tough Bounce.

As Ever,

TWC

History Stands Athwart William F Buckley and Yells: Stop!

Gentle Readers,

William F Buckley died of emphysema last night. Or so they say. I suspect it was actually a broken heart brought on by the death last April of his wife, Pat.

Somewhere in my vast archives is a photo of a young TWC (wearing a hideous plaid sport coat and a tie the color of Homer Simpson) shaking hands with Buckley. It was snapped by Larry Samuels at the Huntington Sheraton Hotel in Pasadena back in the late Cretaceous.

Godspeed.

UPDATE: Vintage Buckley:

As Ever,

TWC

No video? Click here.

tip of the glass to Rick B for the video link

Ron Paul On Leno: A Flat Tax of Zero

Good Morning Gentle Readers,

Been meaning to put this up since it aired and haven't had a chance. Guy I sort of know named Warty came up with a nearly perfect expression of veiled optimism that works well for a glass-is-mostly-empty kind of guy like me:

Ron Paul needs to stop infecting me with his horrible, horrible optimism.

Take a look at your favorite grandpa explaining that there is a risk he might get elected. Video is here if you cannot see it.

Ron Paul supports the flat tax with a rate of ZERO. I'm sold, right there.

And what about that phenomenal fund raising on the 5th of November?

Ron Paul's head-snapping fundraising puts a new face on a campaign that the media, politicians and much of the public had relegated to the sidelines.

The Texas congressman is now the presidential candidate tugging at the establishment's coat.

Funneled through the Internet, Paul's one-day loot totaled $4.3 million from about 37,000 donors, considered the largest sum ever collected online in a single day by a GOP candidate.

Guess all those Internet autobots got cash stashed somewhere. 

Ron Paul has taken some flak of late from both sides of the spendthrift aisle in Foggy Bottom for his insistence that gold might be an appropriate currency standard. And on that issue, TWC is not a nutcase gold standard kind of guy but I have to point something out.

• In 1913 it cost $.57 cents to buy what cost $1.00 in 1800.

• In 2006 it costs $20.15 to buy what cost $1.00 in 1913.

I'm sure I don't have to point out what happened in 1913. But I will. It's called the Federal Reserve System, the Federal Income Tax, and the end of gold backed money. More or less. Whole story here.

There's a reason why the fifty is the new twenty.

Your tax dollars at work.

As Ever,

The Wine Commonsewer

It Ain't Even Halloween Yet

Good Morning Gentle Readers,

Dashing through Sam's the other day and, of course, they already have the Christmas, er, ah, non-sectarian winter holiday stuff out on the shelves. I groused about it to the kids.....not even Halloween yet, ought to be a law, can't believe this crap, no respect, dam mercenary heathens, yada.....

Then it occurred to me that this is a market economy and Sam Walton's ghost doesn't have a pistola pressed to anyone's temple forcing them to buy Christmas lights and blow-up lawn Santas in Rocktober. If people didn't buy the stuff, the stores would stop selling it.

That'd be the hot cigar.

As Ever,

TWC

A Different Take On The Subprime Loan Fiasco

Good Morning Gentle Readers:

Lots of fall out and hand wringing lately over the creative financing techniques of the subprime mortgage markets and the wave of defaults that has swept from coast to coast in the wake of interest rate adjustments that ratcheted once-affordable house payments to levels well beyond some borrower's ability to pay.  In his Chicago Tribune piece on Charles Shumer's Big Fix for the subprime problem Steve Chapman notes that......

the fact that some borrowers are behind on their payments is no condemnation of the system that furnished them credit. They are in the subprime market, after all, because their credit history or income suggests they are bad risks, and it's no shock to find that some of them turn out to be exactly that.

What was once the savior of renters looking for a chunk of the American Dream has now become the whipping boy as defaults surge and the housing market stagnates.

In the old days, financial institutions that refused to lend to people with low incomes or imperfect credit were accused of victimizing the needy. Today, financial institutions that make many loans to those same people are found guilty of the same crime.

It turns out that 86% of all subprime loans are being paid on time and in full, every month and the primary beneficiaries of subprime loans have been minorities that would otherwise have nothing but a stack of canceled rent checks.

Schumer, however, would overrule their judgment and dash their dreams. They can take deep consolation in knowing it's for their own good.

Schumer vents here and here.

More on those predatory lenders at Liberty Papers.

As Ever,

TWC

tip of the glass to Reason

Coming To Your Neighborhood Soon: Nutritional Labeling On Wine Bottles and..... Colonoscopies For All!

Good Morning Gentle Readers,

Like that 1958 Sci-Fi thriller, The Blob, the Nanny State oozes ever onward leaving behind an opaque, shimmering, jellyfish-like substance reducing all it has touched to atonal shades of gray. From Tom at Fermentation.....

It appears there is a serious move to force nutritional labels on alcohol bottlings, including wine. It's a Bush Administration proposal that is supported fully by The Center For Science in the Public Interest...the folks who spent time particularly in the 1990s explaining to us all why we will all die very quickly if we eat Movie Theater Popcorn, Alfredo Sauce, and any other food that is not made of pure fiber.

The Bushkies and CSPI, together and happy. Well that's ample enough illustration of the marginal differences among those who scrap like feral dogs to see who gets to make the rules you get to live by.  Well, it IS a free country, don't you know?

According to Diageo, one of the largest alcohol beverage companies in the world that supports this initiative, it is a giant and very positive step in the right direction...Overwhelmingly people want this kind of information on the package.

Really? If that's the case why doesn't Diageo provide that information voluntarily. As a large distributer, Diageo could require bottlers and distillers to provide that information as part of the distribution contract. If this isn't empty posturing and the market truly demands the information, providing it would be a smart move. A leg-up on the competition.

But voluntary implementation doesn't come without costs and the real risk of resistance from some bottlers & distillers who could bail to other distributors offering distribution contracts sans labeling clause. Solution: Saddle everyone, industry-wide, with a legal requirement.

Think about the airline industry, groveling to CONgress, begging for an in-flight smoking ban. We all want it, they claimed, because smoking is icky and it dirties up the air circulation systems. Yet, not one single airline was willing to alienate the smoking public by changing policy and not allowing smoking on board its flights.

Assume for the moment that nutritional labeling on wine bottles is a great idea and assume, if you will, that people actually care. Which, based on our reputation as a rather rotund society, is a dubious proposition (apparently, nutritional labels on food are routinely ignored).

We must then ask ourselves why every good idea must become ham-handed law. It's not like the information you want or need isn't available. In fact, Robin Garr's Wine Lover's Page has it right here.   

Or maybe we should just drop the pretense that we're all grown-up intelligent adults living in a free country and mandate annual colonoscopies and bran cereal breakfasts for everyone over fifty. Wouldn't that do light years more good for the populace than nutrition labeling on wine bottles?

As Always,

TWC

tip of the glass to Fermentation and Robin Garr
photo credit: Tom Wark

DEA Nails Am Ex Customers* For 65 Million

Gentle Readers,

I got a couple of emails scolding me for my snarky remarks about the ongoing War on the Bill of Rights, er, I mean the War on Drugs.  So it seemed serendipitous that I ran across Radley Balko's piece about the DEA beating up American Express for Bank Mopery and Failure to Snoop. IOW, the bank didn't snoop into its customers affairs well enough to suit your betters.

Think hard about what Radley had to say......

.....it's always good to remember that in order to make it marginally more difficult for Americans to get high, not only are you footing the $1.9 billion bill it costs the DEA to raid homes, pay snitches, arrest doctors, spray poison across Latin America, and storm medical marijuana clinics each year, you also pay your bank to spy on your financial transactions on behalf of the U.S. government.

To which I might add: and your bank isn't allowed to let you in on the dirty little secret or to tell you what info was passed on to Uncle Sugar. Come on girls, don't we have a 4th Amendment that says something about probable cause?

But if you've got nothing to hide........

*What? You think businesses don't pass costs along to the customers?

DEA article here.

As Ever,

TWC

Marx, Markets, & Pinot A Primer

Good Morning Gentle Readers,

A significant number of TWC's Gentle Readers get home delivery via a feed or by email which means they typically don't see comments. That said, occasional contributor, The Kosmik Kid, left an incisive comment about markets and Pinot Noir worth sharing.

I'm a market guy too, and I agree that Pinot Noir prices are way too high on average, and it is mostly the fault of that movie. But that just means that the movie-going public, the large majority of which knows little about wine, has transfered the value it attached to the movie to all wines with the words Pinot Noir on the label. Out of curiosity they've been scarfing up Pinots at record rates, ratcheting the price up through good old supply and demand. This is further proof that Marx's labor theory of value was completely wrong; the value of any product is completely subjective, determined by all the individuals who use the product, making central price planning impossible. Those clamoring for government-supplied healthcare would do well to learn this lesson.

I remain hopeful that quaffing large quantities of bad Pinot will eventually prove distasteful even to those with bad taste, and the prices for all Pinot will recede again. My hunch is, however, that a lot of bonafide life-long Pinot fans are also being created in the process, as those with good taste taste the good stuff, and thus increased demand will keep the prices at historical highs.

So, good for the brave entrepreneurs who took the chance on growing this fickle grape, and in so doing have opened up a new world of affordable good-to-great red wines for all of us. This has the side benefit of putting more competitive pressure on the cabernet producers, and oh btw have you noticed that cab prices have moderated a lot lately?

Capitalism forever,

Kos

Nice summation of the pitfalls and practices involved in growing Pinot from Kos' Lost Canyon Winery is here (best Pinot Kos' has ever had).

2006 Top 30 Countries Stock Market Performance

Gentle Readers,

This really surprised me. Not that TWC is a market guru or anything remotely close, but still, I expected better US stock market performance than 31st.

As Ever,

TWC

tip of the glass to DWS-Scudder

Disclaimer: The information appearing here is taken from sources deemed reliable but accuracy is not guaranteed. Nothing appearing here should be construed as investment advice.