CDS: My question for the presidential candidates tonight

Senator Obama, Senator McCain,

As you know, under the Bush administration unregulated credit default swaps--which billionaire Warren Buffet describes as "financial weapons of mass destruction"--now exceed $40 trillion. Can you explain to the American taxpayer

a. What a credit default swap is;

b. Why credit default swaps are currently unregulated;

c. How a company with $1 billion of outstanding debt can have $10 billion of outstanding CDS contracts and;

d. How a default on $1 billion in corporate debt, assuming debt recovery at 40 cents on the dollar, becomes a $6 billion loss to credit default swap sellers.

Oh, and a follow-up if I may: What are your plans, if any, to regulate the CDS market in the future? Please be as specific as possible in your responses.

Thank you.
p.s. This is a closed book test, but candidates may refer to the Wikipedia article and this diagram.

Under Pressure? Wikipedia can help

A few posts ago I wrote about the need to have the right amount of air in our tires. I was going to make a witty reference to the song "Under Pressure," you know, the one with the wicked bassline that's been used in ad campaigns for everything from Propel Fitness Water to Zales Jewelry, and movies such as Grosse Pointe Blank, The Players Club, Stepmom, 40 Days and 40 Nights, The Girl Next Door, I Now Pronounce You Chuck and Larry, and The Heartbreak Kid. It's the one that rapper Vanilla Ice sampled without permission for his big hit, "Ice Ice Baby."

My problem was not that I couldn't remember the name of the song but I wanted to say who wrote it and that's where things get tricky. Was it Queen or David Bowie? This was not immediately clear from my initial Googling. A few days after the post I realized that all I needed to do was to go to Wikipedia, where an entire page is devoted to the song at this URL:  http://en.wikipedia.org/wiki/Under_Pressure.

It seems that rock music is one area where Wikipedia is growing at a phenomenal rate, adding details down to a level that some people might think obsessive, but others, like me, find fascinating, and actually rather helpful. Thanks Wikipedia!

Oil Prices Down as Supply Drops? There goes the froth

A Wall Street Journal headline today said "Crude Hits Seven-Month Low" which is good news, but infuriating. First of all, it strikes me as proof positive that most of the dollars per gallon in excess of $100 were pure speculative froth, that is, rich people gambling as they try to get richer by distorting the value of a vital ingredient of the world economy, one that is not far behind food and water in term of human survival (given the extent to which current economies are petroleum-based).

In the midst of hurricane season with oil rigs knocked off line and Nigerian rebels blowing up pipelines left and right, in other words, with supply in doubt, oil drops. Where are all those Wall Street talking heads who popped up to parrot the line that $140 a barrel oil "is simply a reflection of supply and demand"? My gut feeling is that they should be publicly stoned with Economics 101 textbooks (obviously it is not stoning when a wood-based material is used, and it probably wouldn't be deadly, just painful and humiliating).

Second reason this situation made me angry was that gas is still close to $4.00 a gallon in New York and it really should be a lot less. Let's say the price of a US gallon of gasoline topped out around here at $4.30 when crude was $142 a barrel (mid-July). That's a little more than 3 cents per dollar of crude. With oil at $100, gasoline should surely be about $3, not $3.85, which is what I paid yesterday. I realize that the finer points of this calculation vary by state, and some states have taxes that are per gallon and per dollar of retail value. But it seems to be that if oil is close to $100 a barrel then gas should be a lot close to $3.00 a gallon than it is. One thing's for sure, you can bet on another quarter of record profits for Exxon-Mobil-BP-Shell-Chevron-Etc.

Labor Day for Virtual Workers?

A few days ago I wrote a post over on the Monetate Blog to make the point that every worker should be proud on Labor Day, even those of us who work with bits and pixels and other nebulous, virtual things. Code slingers and geeks and digital tinkerers are responsible for a significant percentage of the GDP, not to mention the joys of MP3s and Hi-Def TVs and cell phones and IM and texting and such.

Happy Labor Day!

Desperately Seeking Sven?

I'm not going to say a word about this. I'm just going to give you the headline: Mad Cow Rules Hit Sperm Banks' Patrons. And no, that's not from The Inquirer. It's from the Washington Post.

Huffington Post Pick-Me-Up

I thought the Huffington Post was all about politics, but then I saw a post by Verena von Pfetten that said glasses are the new gorgeous.

While this may only be true for Verena and a handful of commenters on the piece, it perked me up quite a bit.

Could this mean that wearing glasses for over 40 years will finally start paying off?

The first glimmer of hope for me was John Lennon, who started wearing National Health Service glasses in the late sixties. That was more than a fashion statement, it was subversive politics of a kind you seldom see these days. NHS glasses were free from the British government's health service, of which Lennon, like me, was a big fan. But before he wore them, many people, myself included, considered them uncool. Suddenly they were cool because a Beatle was wearing them and a lot more people opted to wear them instead of a. designer frames they couldn't really afford, b. going without glasses. He helped make the NHS cool.

So maybe Verena von Pfetten is more politically savvy than she lets on.

When Blogs Work and Politics Don't: The Tire Pressure Debacle

Right wing reaction to Barack Obama's comment about tire pressure is yet another example of how political discourse has devolved in this country. It says so much about the world today that a politician can be mocked for saying that properly inflating the tires on our cars could save more oil than would be produced by an oil drilling program proposed by his opponent. Even if you favor said drilling program, you have to be brain dead to downplay the value of proper tire pressure when gas is $4 a gallon (by defiintion the only people who aren't interested in reducing their gas consumption are those who are too rich to notice the price at the pump). Fortunately, this storm in a glove box has led to some good blog posts, like this from Dan Neil in the LA Times. Here are my own random thoughts:

1. My father taught me to check the pressure in the tyres of the family car on a regular basis, probably because I learned to drive in a country that typically pays 3 times as much as America for gasoline.

2. I have routinely fumed about under-inflation in America since I moved here in 1976. Few things irk me more than driving down the Interstate behind a car or minivan or SUV that has obviously not got enough air in its tires. Even when gas was cheap, wasting it was wrong. Not to mention the negative effects on tire wear, braking, safety, etc.

3. America badly needs educating about tires. A lot of people have no idea what the pressure should be or how to check it accurately. Factors like temperature and load are largely ignored. Read Dan's blog. Read the articles on this site. Have a family meeting to make sure all drivers are with the program.

4. Driving on properly inflated tires is something real you can do to reduce our reliance on foreign oil, so if you can't be bothered to do it, what standing do you have in the national debate?

So be a patriot and invest $10 in a decent tire gauge, then use it, regularly. Please.

Hackers Are People Too Debuts to Cheers Not Boos

We're delighted to report that Ashley Schwartau's debut production, Hackers Are People Too, debuted to applause and standing ovation at the DefCon premiere.

Read Ashley's account of the evening here. She really had the whole indie experience with audio issues and first-time nerves, but it all came good by the closing credits. Like Ashley says, DefCon is a tough crowd. But she wowed them. And sold 600 copies of the DVD!

You can buy your copy here.

Way to go Ash!

What's With The Rugelach-Bashing?

I recently had one of those Emily Litella moments (see entries for Emily Litella and Gilda Radner in Wikipedia if you've forgotten who Emily was). It got me thinking about the sad state of political discourse these days.

While driving from Outer Philadelphia to Upstate New York a few days ago, I took the back roads to avoid some badly-managed late summer road work on the Interstate (ah, the joys of GPS-based motoring--freelance detours without the fear factor). Fading in out out over the hills, the radio in my Jeep picked up something that sounded angry and white and pretty far to the right. I caught a phrase that sounded like "get rid of all these rugelach-eating liberal commie gun-banning elitist...something, something." And I'm thinking rugelach? Rugelach? Really?

Cell Ranger to the Rescue: A product that actually works

It is perhaps a measure of contemporary consumer cynicism that many of us regard strong product claims with suspicion. Consider the Cell Ranger that I recently purchased in hopes of regaining cell phone service up at the cottage (our provider is AT&T and my wife's Blackberry normally has 2 bars indoors--my Treo often has 2 bars as well, but lately has been failing to reconnect to the network after I return from trips down to the post office, which lies in a dead zone).

The Cell Ranger web page proclaims: "Boost your bars!" Then it asks: What Frustrates YOU About Your Cellular Service?

• Dropped Calls?
• Poor Call Clarity?
• Late VoiceMail and Text Message Notifications?
• Slow Data and Music Downloads?

Amazingly, Cell Ranger claims to "Solve ALL These Problems!" And the unbelievable part comes when you check the price: $149.99. Now that might sound like a lot of money for two bits of plastic and a wire to connect them, but there is more to the product than that. Consider the price of other products that claim to boost signal at your house and you will be hard pressed to find anything under $250, and those products tend to have a fairly industrial look to them, suggesting that implementation might require hand tools.

So I took a chance and ordered one, the USB-powered Port version. When it arrived I stuck the small magnetic antenna on the charcoal grill that sits on the porch and plugged the other end into the nearest wall socket (I happened to have a USB-to-mains connector handy). Then I conducted my first test. The Blackberry went from 2 bars to 5 when I held it near the plug. The Treo connected to the network, which it had refused to do for weeks, and then it hit 5 bars. It retained connection in all rooms of the house. In other words, Cell Ranger works!

In the next few days I will test it on a trip to the post office. If I get signal there, I will be very impressed. The setup works best if you can use your phone near the plug end while keeping the plug far away from the antenna, which ideally sits on a metal surface or object outside the house/vehicle.

The boost effect is clearly quite localized. It is stronger when you are 30 inches from the device than when you are 30 feet away. I expected this but I think the Cell Ranger web site could make it a little clearer that the device will not light up your entire house (that said, it's boosting signal nicely throughout the cottage's modestly-sized living area ).

Is it worth the price? For me the answer is yes, especially if it boosts signal in the car. I really don't want to go through the hassle of changing carriers and handsets (that is a whole other world of consumer dissatisfaction). And although I've heard that Verizon works on our hill, there is no way of telling unless they loan me a Treo for several days to test it. (Note: This thing does not currently support Sprint/Nextel networks.)