Monday, January 22, 2018

Porch Pirates Get Clever

Porch pirates steal stuff from your front porch.  But suppose you don't order anything?  They take care of that, too.

I've read two postings recently online about a new gag for porch pirates.  These are folks who cruise suburban neighborhoods during the day when every one is at work and take FedEx and UPS packages off people's porches.    Usually, there are some decent goods in there that they can sell for drug money.

And is a pretty easy gig, too.   When I started working from home, I would take a walk around our neighborhood during the day with the dog, and was startled to see how empty the place was.   With dual-income families, public school, and day care, no one was home on most houses on my street.

And this is why I say having a a pile of guns to prevent break-ins is kind of dumb.   If they want to steal from you, they just back up a truck to your house during the day and take all your stuff - including your guns.   The best you can do is have maybe one firearm and know how to use it, to prevent someone from breaking into your house while you are there - but the smarter burglars know not to break into occupied homes for that very reason.

Getting back to porch pirates.   You decide to outwit them.   You have things delivered to a P.O. Box, or to a friend's house who is always home.  Or to your parent's house or your work address.  The latter can be problematic, of course.  I once had a new computer delivered to the Patent Office, and the folks in the mail room thought, "Hey, free computer! Swell!" until I schooled them otherwise.

Or maybe, you just don't tend to order things online.   So what they do is steal your credit card and order for you.   They then have the items shipped to your home address, and wait for the delivery and pick it up.   Unless you get a fraud alert or have your bank and credit card accounts set up to e-mail and/or text you every time a charge is made (a feature many banks, such as Bank of America, offers) you may never know the charge was made.

There are variations on the game.  They might change the address slightly so it goes to a neighboring house.   That way if the resident is home, they can knock on the door and ask if a package "for them" was mistakenly sent to that address.   Or it may be a way of preventing you from finding the box.

One person reported finding a flyer for a non-existent computer repair company on their door on the day of delivery - a flyer than none of his neighbors received.   Some suggest it may be a ruse to allow folks a legitimate reason to be approaching the door (and walking away with a computer box).

Of course, you are not liable for these charges to your credit card.

There are other weird things these thieves are doing as well.   To prevent you from reading any e-mails alerting you to the credit card charges or purchases, they send you 100 or more SPAM e-mails, so your inbox is "bombed".  They are hoping you are checking e-mail on a smart phone and just delete them en masse apparently.

Another person reports that the thieves intercepted the packages (for expensive iPhone X's - a commonly bought item, apparently) and then returned them, unopened, to the Apple store for iTunes cards, which they then cashed in.   The hapless victim then has trouble getting a refund from his credit card, as Apple is showing the product was already returned and a refund given!  Ouch!

A hotel clerk reports yet another twist - people make reservations at the hotel and have the packages shipped there in care of the hotel.   They show up to claim the package and then cancel the reservation.   After this happened three or four times, the hotel wised up and called the Police.

Another person claims that fraudsters, if they can't intercept the package at your home, will send you an official-looking e-mail with a return authorization label, so the package gets sent to their address.  At first, this sounds less plausible to me, as the return address might appear suspicious and also leave a trail of breadcrumbs for the police to follow.  But once again, they just porch pirate.  They merely wait for the "returned" merchandise to be sent to an address near them and..... pirate it off the porch, or claim to be the resident (complete with fake ID).

For $2000 laptops and $1000 iPhones, it can be a pretty lucrative gig, even if only 1 out of every 4 packages is intercepted.  It begs the question as to why the phone people don't make it easier to track these things and shut them down if they are stolen, but as someone once explained to me, a stolen phone often means a sale of a new one to the victim, and a cell plan sale to the purchaser of the stolen one - a win-win for the telco.   I suspect these more sophisticated porch pirates are doing this en masse and shipping these overseas for resale.   Probably Russia.

But you live in a safe area!  Gated community!  Upscale neighborhood!   They wouldn't dare try to pirate from your porch!  You have ten security cameras and an exploding dummy "bait box" waiting from them!

Oh, but think again.  They either use a different address on the order, or, if the merchant doesn't allow this, they try to re-direct the package once it has already been shipped.   They call the shipper (UPS or FedEx) and tell some sob story about how they are visiting relatives and want the package redirected to a new address - and then porch pirate it from that porch!   Since they are not having it shipped to their own address, they can't be traced.

In a way, none of this surprises me.  It is like the non-existent dog scam that used my stolen debit card as a small piece of a larger enterprise.  It is not a simple "I take your credit card and buy things with it" kind of deal, but layers of an onion which make it hard for Police to investigate and nearly impossible for them to catch anyone.

It is like these squirrel videos I see on YouTube.  People put up obstacle courses to keep squirrels out of their bird feeders and the squirrels just learn to overcome the obstacles.  The homeowner adds more discs, spinners, rotating cylinders, and whatnot, and the squirrel merely figures out a way around these.

I am not sure what the answer is, of course.  But another aspect of modern American living goes by the wayside.  Having stuff delivered to your porch is, apparently, a thing of the past for more and more Americans.

Stop Believing in Memes, Tweets, and Hashtags (Trendy Nonsense)

Being up-to-the-moment with the news and the latest political bullshit doesn't make you well-informed, it makes you less so.  Click to enlarge (but you know how it ends).

One tactic that has been honed over the years and polished to near-perfection in this social media era, is the way people, organizations, and political parties can distract the American people with shiny trinkets, in the form of "breaking stories" that evaporate within a news cycle or two.  And a lot of people still watch television and television news and believe this nonsense, as if it was some spontaneous event that "just happened" instead of some carefully orchestrated scheme to distract you from what is really going on.

We saw this during the last election with the "dossier" on Donald Trump, which may contain some real information (which does not seem to be very incriminating) and a whole lot of admitted bullshit.   But if you are a Democratic True Believer, it is a "smoking gun" that will put the Donald in jail.

On the Right, is a whole host of these things, dating way back to Whitewater and President Clinton.   We started a perpetual investigation there and came up with.... lying about getting a blowjob in the White House.   Not much "there" there was there?

And Hillary - Oh boy do they love to do this shit with Hillary.   Secret e-mails that were erased and will reveal all!  Hashtag release the e-mails!   It will all come crumbling down.   But what is revealed is not scandal or high crimes and misdemeanors, but mendacity, and we all hate the smell of mendacity.

Now it continues.  The "Russia Probe" keeps ambling along without finding out much in the way of smoking guns, other than some small-time players doing stupid things.   And quite frankly, I doubt we will find out much or much will change.  That is the nature of the game - to keep the investigations going on forever, until you find a blowjob in the White House.

The Republicans are of course, worried about this - not that anyone will find anything.   Hell no.  Since Iran-Contra, all  you have to do is "come clean" and have some underlings fall on their swords and it all blows over in a news cycle or two.   Nixon resigned too quickly, in retrospect.

But what the GOP  hates is this perpetual investigation which is as sore as an ingrown hair.   So they are spinning it around 180 degrees.   Donald didn't collude with the Russians!   No, Hillary did by paying for part of this "dossier" which was originally financed by the GOP.   Hey, let's not get into details here, all you need do is Tweet "Hillary Colluded" and the masses fall into line.

The latest gag - left over from the election - is to allege that the FBI under Obama was "wiretapping" Trump or otherwise abusing power.   And then there is this whole tempest-in-a-teapot as to whether Republicans were "outed" as part of this Russian probe.   What is the whole point of this?   Distraction, of course.  Look over here!  Shiny, shiny!   Hashtag, release the memo!

Is there any merit to any of this?   Who gives a fuck, really?   No, really.  It is just political Kabuki theater designed to distract and entertain and give the hard-core fans something to root for and another conspiracy to blog about.   Keep them externalizing some more, so they don't notice their bank accounts being drained and their taxes not going down (and the deficit going up).  Eat your media kibble - snap it all up!  Yum! Yum!  Media kibble is de-licious!

Or maybe it is just poison for your brain.   I have a better idea.   Walk away from memes and hashtags and tweets and conspiracy theories, and whatever "narrative" or "talking points" the parties want you to barf up at the next cocktail party.    It just isn't doing you any good, personally.   You are not going to solve the Kennedy assassination, and you are not going to solve the Russian investigation with all of your amateur part-time "sleuthing", either.

When I was a teen, the big thing on television was Watergate - the mess that started all this tit-for-tat investigations, bombshells disclosures, and newscycle-worthy stories.   The hearings were covered live, all day long, much to the dismay of daily soap opera viewers.   And the real story was sort of lost on the American people.   A bunch of college Republicans who liked to play "dirty tricks" during elections (including elections for the head of the college Republicans) got caught doing the same thing on a larger scale.

And these dirty tricks were stupid stunts the media fell for.  Putting out a racist letter on the opponent's letterhead.   The media eats it up, and for one "news cycle" they report the "controversy" because even back then, it sold ad space for the new 1974 Mercury Cougar.   Graaaawl!  At the sign of the cat!

But what it boiled down to, was Nixon was worried the Democrats had "the dirt" on him, and the dirt was that Nixon had a slush fund of cash from Howard Hughes in his office safe.   So they sent "G" Gordon Liddy and some disaffected Cuban expatriates to break into the Democratic National Committee offices in the Watergate hotel and rather clumsily try to tap the phones.

The whole thing was idiotic, as Nixon was winning and did win, in a landslide.   No one wanted McGovern, regardless of whether Nixon did dirty tricks or not.   But the Democrats smelled blood in the water, and years and years of investigating yielded.... well, maybe that Nixon tried to cover up the whole affair, but not that he was directly involved in it.   Today, this would be laughed at.   But Nixon resigned in disgrace and Republicans have wanted revenge ever since.

And they got it, it would seem, with the Bill Clinton Whitewater investigation which... after years of investigation revealed only that he got a blowjob in the White House and tried to cover it up, so Hillary wouldn't find out.   Big freaking deal.   But I guess revenge is sweet.   And maybe this wasn't enough "payback" for both Watergate and Iran-Contra.   So we move on to investigations of Obama and then Hillary.   And sadly, permanent investigations of the opposing party in power are now a permanent part of the political landscape.   Everything needs an investigative committee and a special prosecutor or a blue-ribbon panel, all announced with great fanfare and then sort of petering out without much happening later on.   What ever did happen to the voter fraud panel?   I mean, I too, want to find out how Trump stole all those votes!

Being a political junky or a news junky never pays off in your personal life.   It can cost you jobs, it can cost you relationships, it can cost you clients, customers, and friends.   I had a saying when we had our law practice, "If the client is a Republican, we are Republicans, if the client is a Democrat, we are Democrats!"   Because getting business and serving the clients was more important than trying to change someone's opinion or argue with them - because you aren't going to change their opinion one whit, and arguing with them is never any fun.   And besides, all these high-falutin' opinions really mean nothing - other than what lever or button you push in the polling booth, or better yet, who you make your political donation check out to, and for how much.

Besides, I see both sides of the equation.  Yes, Republicans are right about some things.  We need more personal accountability and self-reliance in this country.   We need less political correctness and feeling sorry for ourselves.   But that doesn't mean they are right about everything.  And Democrats are right that we should look out for our less-fortunate citizens, but that doesn't mean handing them all our dough.   The idea that people shouldn't exploit the poor through shitty deals has merit - but Republicans dismiss that as "unnecessary regulations" because the payday loan people - who are, for the record, shitbag people who deserve to burn in hell - donate a lot of money to their campaigns.  And hey, Democrats have just as many shitty donors as well.   Neither side has a moral high ground, if you ask me.

But political dogma gets in the way of getting things done.  It is a sad freaking day in America when Senator Lindsey Graham, of South Carolina, is the rational voice in the room.   But that is where politics have taken us today.  The "old school" politicians who made compromises and got shit done are being shouted down by a new generation of "my way or the highway" legislators on both sides of the aisle, who want to hold the government hostage until their radical agendas are enacted.  There are no winners here - we are all losers.  No good guys, either - well mostly bad guys, it seems.

The only conclusion I can reach is to worry more about my own life - my own spending, saving, budgeting balancing, health, welfare, and whatnot.  These political matters and investigations will carry on without my intervention (and indeed, I have no impact on them whatsoever).   Whether I have an opinion or not matters in the least - other than the second Tuesday in November.

So pardon me if I am not breathlessly waiting for a memo to be released - a memo that probably contains nothing really that "bombshell" significant.   And by the way, why does it matter now?   It is not like Obama is still in office, right?   Oh, right, deep state.   Gotcha!  (Wink! Nod! Makes creepy pyramid symbol with hands).

Sorry, but I have better things to do with my time!

Temper-Tantrum Politics - and Investing!

Another day, another gossipy book about Trump.

Trump has been a godsend for the media.  Late-night talk-show hosts have seen ratings soar.   Everyone waits to see what Alec Baldwin will do next on "SNL".   Newspaper sales are up - because "Democracy Dies in the Darkness - Sign Up Now For Amazon Prime!"

The latest book is more gossip, most of which is probably untrue or at least, irrelevant.  What the ITC or the FCC does with regulations is more important than what was tweeted last night.   But net neutrality?   BORING!  Change the channel!   Um, why is Netflix suddenly loading so slowly these days?

The book does discuss an interesting phenomenon - "Defiance Disorder" - which is actually a thing. Supposedly, aides claim that President Trump intentionally will do the opposite of what his advisers say to do, just to be defiant and prove them wrong (and himself a genius).  And oddly enough, this strategy sometimes works.  His entire campaign was based on doing the opposite of what traditional candidates did - the safe, message-neutral, inoffensive speeches and slogans that were scientifically designed to appeal to every demographic and tell disparate people what they wanted to hear, even if what they wanted to hear was the opposite of their neighbor, who also heard what they wanted to hear.  That's what you got out of Hillary - the carefully crafted and coiffed candidate, making sure she never said anything that wasn't on the teleprompter.  People felt it was fake.

And then Trump comes along and just talks trash - and people loved it.   Well, some people, anyway.  A certain core group of blue-collar workers, nativists, libertarians, populists, and right-wing Republicans ate up his messages not in spite of, but because they insulted minority groups, Democrats, and even other Republicans.   "He tells it like it is!" was the common refrain from the MAGA-hat crowd.

So, armed with this "success" (aided and abetted by the electoral college and Russia's Internet Research Agency as well as the Fancy Bear hacking of Democratic e-mails, not to mention unbathed rapist Julian Assange), Trump is emboldened.  Why the fuck do people think that crackpot is some sort of folk hero?  Assange, I mean, not Trump.   Well, I suppose it could apply to both.

But you can see where Trump is coming from.   Whenever he tries to be conventional, he doesn't get any attention and moreover whatever it is he is trying to do doesn't work.   When he goes into full-on batshit Twitter crazy mode, at least people notice him, and react.   Like a small child who cries for candy in the checkout line, we have trained him to do this.    Mother says "no" for fifteen minutes and then finally gives in to the crying brat - who learns than a candy bar costs fifteen minutes of crying.  Score, Brat: 1 Mom: 0.

But it got me thinking about this term, "Defiance Disorder" and whether it is something that all of us do or have done on occasion.   During the Obama administration, the cry of "don't tell us what to do!" was repeated again and again, for example, when Michelle Obama suggested that eating an entire platter of fried mayonnaise balls was, well, maybe bad for your heart.  It seems that since then, it has become a rallying cry against our "big, oppressive government" by people who have never been to China, Russia, or North Korea, and fail to understand what oppression really is like.

But it is not a recent trend.   I recounted before how my older siblings during the 1960's, denounced "materialism" and decided to live on a commune in an unheated barn for a decade - all in a fit of pique aimed at their parents' generation.   "We survived the depression and beat the Nazis, and built up this wonderful technological economy for you!" our parents' generation cried.  "Fuck you, Dad, you're the Nazi now!   I'm going off to join Charles Manson!" their kids replied - and many did just that, although maybe not that dramatically.   The entire 1960's "Peace and Love" movement was little more than a hissy-fit.   Again, folks like my siblings were in no danger of ever serving in the war they were protesting, thanks to deferments.  Nor were they in any danger of not being served at a lunch counter.   The poor, on the other hand, went and served, as they had no choice.  And they had to endure prejudice on a first-hand basis - something that largely all-white colleges at the time had little experience with.

Over the years, this pattern repeats itself again and again.  Today it is something as idiotic as the "Tide Pod Challenge" which stared as a satirical article in The Onion.   People are actually ingesting poison on a dare.  This makes the goldfish-swallowing craze of the 1920's seem pretty tame in comparison.  The more we say don't do it, the more they do it, just to defy us - as if we cared.

A friend of mine had a precocious child who was this way - at age five.   The more you said don't do something, the more likely he was to do it.  Maybe they should have said, "Don't do your homework!  If you do, I'll be really mad at you!" - and maybe the kid would sneak off to do his homework in secret.   I dunno, it could work.   Could it work on Trump?   Don't balance the budget, dammit!

But this "Defiance Disorder" goes beyond presidential five-year-olds.  I think a lot of these "new" investments fall along similar lines.   "Don't tell me what to do!" people cry, as they throw money away at "crowdfunding" or gold, or bitcoin, or an IPO, or a new Elio three-wheeled car.   "I can afford to gamble a little!" they say, at the time, but years later, lament, "how do I get my money back?"  "I'm calling a lawyer!" they cry, "I'll sue!" - all in typical temper-tantrum fashion.   Their wild schemes didn't work out and of course, it has to be someone else's fault.  Externalizing raises its ugly head, once again.

And maybe this "defiance disorder" is at the heart of many forms of addiction.   The addict wants to be "naughty" and fall off the wagon - just to prove to themselves that others are not "telling them what to do!" (of course, the pleasure associated with drug use just reinforces that they were "right" all along).  My late mother was a classic example of Defiance Disorder in action.   She loved to play "naughty" by having that extra drink or saying outrageous things just a little bit too loudly in public places, such as restaurants.   She loved to smoke, in part because so many people told her not to.   She was once frog-walked off an American Airlines flight after smoking in first class.   They asked her to stop, and like a petulant child, she refused.

Say - this pretty much characterizes all these "incidents" of people being dragged off airplanes these days.   They tap you on the shoulder and say, "I'm sorry, you have to get off" and instead of complying with the employees of the owner of the airplane, we throw a childish tantrum, lay down in the aisle, and force them to drag us off.   And petulant Americans all flock to Facebook to defend this horrific behavior - of the passenger that is.   The airline owns the plane - get the fuck off, if they ask you, it ain't your airplane.  And when you hear a story like this, don't rush off to social media in outrage until to you hear the whole story - otherwise you are just as guilty of Defiance Disorder as well.

It is an interesting human phenomenon.   If you point out someone's folly, you are only encouraging them to do it more, often just to prove you wrong.   As I noted in a recent post, you can't really teach people things through confrontation.  And as I noted in a very early post, if you see someone driving their car off a cliff, the only thing you can do is make sure you are not in the back seat at the time.

So what do we get out of this?   Well, the first step is to realize we are in it - all of us.   This attitude of defiance sort of characterizes the last decade or two.   During the Bush administration, people were rabidly anti-Republican.  During the Obama administration, a different (but oddly enough, sometimes overlapping) group was rabidly anti-Democrat.  Today, Democrats are exhorted to "Resist 45!" which sounds to me like the temper tantrum du jour.   Just lie down and start kicking and screaming - maybe "Daddy" will buy you a lollipop!

The idea that, gee, maybe we should look at the demographics of this nation, the electoral map, the State and local races, and put up a roster of candidates with reasonable, rational positions that resonate with a majority of voters seems alien to most.   Naw!  Bradley Manning!   Now that's a person qualified to serve in the august body of the Senate!  Oprah for President!  What could go wrong with having a celebrity television star as President?   I mean, the Trump thing is working out so well for us, right?

So maybe our reader is right - Trump will be in office for eight years.  Because that is how long it will take for the Democratic Party to overcome its temper tantrum, have a good cry, and then look around and realize things aren't so bad and that you don't have to go hard Left to win elections.

That might actually happen!   Of course, I may not live to see it.

Quantifying the Real Estate Market, the Easy Way!

How do you tell if housing is overpriced?  Turns out, it ain't hard to do!  Just one simple test!

An article in Bloomberg this morning says a "rare bear" who spotted the housing crises in 2005 is saying that housing is again overpriced.  The fellow has mountains of data to show that housing is overheated, from the share prices of home builders to sales prices to whatnot.   And I am sure that his analysis is sound, particularly in selected markets (and you know which ones I am talking about). 

But the article falls down on two counts.   First of all, it wasn't a "rare" person who saw the housing market collapse coming.   I saw it, and I'm a blithering idiot.   What's more, many other people saw it, too.  There were a plethora of articles at the time questioning whether the housing market was overheated.   Our own head of the Federal Reserve talked about "froth".   People knew, deep down, that their hovels weren't worth millions, they just chose to look the other way, because they wanted to believe they were rich.

Hey, it was fun!   Back in the day, we had two condos in Pompano Beach.  We'd fly down on $30 post-9/11 airfares and pickup our BMW convertible that we left in long-term airport parking.  We'd spend a week going to bars and restaurants - often by boat - or just lounging out by the pool, enjoying the Florida sun.   At night, we'd go to cocktail parties with other real estate agents, mortgage brokers, appraisers, home inspectors, and other hangers-on in the real estate business.   And the topic of conversation was always, "how long will this last, and when it crashes, will it crash hard or crash soft?"  Because anyone in the real estate business for any length of time remembers the previous crashes.

That evening, the weather would cool down, and we'd put the top down on the BMW and cruise up A1A and admire all the mansions on the beach - and the mega-yachts parked on the Intracoastal.   I was quite a heady time and every one was pretty drunk and having fun.   But we saw the party ending, and when people offered us a ton of money for our condos - we sold out.

So how did we figure this out?   We don't have the smarts of this guy from Montana in the Bloomberg article.  We don't have the numbers to crunch, the charts, the figures, the vaults of newspaper clippings, the time to research and figure this out.   How did we know when to leave the party?

Simple.   When it was cheaper to rent a property than to own it, the properties were overpriced.   Very simple test, very easy to calculate.   When it costs nearly double to own as it does to rent, well, you've got a bubble on your hands.

Again, we made money in real estate not through wild speculation but through hard work.  We bought properties that needed work and did most of the work ourselves.  We rented them out at modest, market-based rents, and made modest profits each month.   We never thought we would get rich, but we would make some money and get a good tax deduction from depreciation.  When housing prices went berserk, we weren't euphoric, we were nervous.

We sold one duplex and bought two condos in Florida.  The market was heating up, but even at the prices we bought at, we were able to have a positive cash flow by fixing up the places and renting them, not by the month to local Florida trash ("Florida Man!") but to vacationers and Canadian snowbirds who wanted to rent by the week or the season.  At the prices we paid, we made a little money and it all made sense.

Then others started buying in  - and offering us nearly double the money for the same condo.   We sold.   At the prices they paid, there was no way they could ever make a positive cash-flow every month - even renting at seasonal rates year-round.   And as I related before, they didn't bother to even do that - instead installing Florida white trash meth-head tenants who never paid any rent whatsoever.   The whole thing fell part in short order - Statewide - as all these condo high rises topped out all at once and flooded the market with luxury condos that cost more to own than to rent.

You know the rest - or you should, unless you've forgotten it already.  Human economic memory is 18 months, tops, from what I can see.

Now note that I didn't make any calculations as to whether housing is affordable or not.   That is a much tougher test for the average person to calculate, and I am not sure it even is quantifiable.   No matter how much or how little anyone pays in rent or mortgage, everyone says it is too much.  No one complains their rent is too low or their mortgage too small.   So I take the "housing is unaffordable!" cries with a grain of salt.   All my life, I have struggled with housing costs - it is the nature of the beast.   Some folks want a free ride, is all, so they posit they are victims.

But a funny thing, everyone ends up finding a place to live - maybe not their first choice, but a place.   Folks living at the poverty line think they have a "right" to live in a trendy downtown neighborhood, instead of some cheaper location away from the city.   I am sorry, but I just don't get that - no one subsidized my choices in housing - I had to move to shitty places that I could afford (and still do - just that my level of shitty has improved.  They still won't let me live on real rich people's island as there is no "affordable housing units" there for middle-class schmucks.  We should have a protest march!).

So I would leave that other data alone.   If it costs more to buy than rent, you may be overpriced.  When it costs substantially more to buy than rent, you should really think long and hard about buying.   When the costs are double, or even triple, as they were in Pompano when we left, well, hello bubble-time!

The other thing to think about is future trends.  One thing that has driven real estate bubbles is interest rates and the availability of credit.   In 1980, with mortgage rates at 14%, home prices were depressed.  I remember my boss shaking his head because some friends of his bought a townhouse, and the mortgage payment as "over $1000 a month!  Can you believe that?"   Times have changed since then, of course.

By the late 1980's, rates started to drop and prices started to rise - and then over-correct.   It all fell apart in 1989.   By the mid-1990's, prices were down and interest rates started to fall, and lending practices got, well, sloppy.  Zip-code appraisals, liar's loans - I know because I used both myself!  Prices skyrocketed and, well, 2007 happened.

Since then, mortgage rates are at record lows, and housing prices once again are skyrocketing - perhaps not as bad as in 2007, but still pretty bad, particularly in places where there are high-paying jobs or people with a lot of money to spend.   But interest rates are on the rise, and as I have noted before and the Bloomberg article notes, "A rate rise from 4 to 5 percent for a 30-year loan would drive up monthly mortgage costs by 12 percent."

Think about that for a moment.  If mortgage rates go up even a percentage point, the cost of housing, as a monthly expense, can go up by over 10%.   If rates go up a couple of points - as they appear to be poised to do - housing could increase by 20%.   And people buy houses based on monthly costs, not overall costs.   Do the math on this and see what answer you get.

And although people buy houses based on monthly carrying costs, they sell them based on overall gain or loss.   If you buy a house based on a $3000 a month mortgage cost, that's fine and all.   But if mortgage rates rise a couple of points, $3000 buys a lot less house.   Your resale value may remain flat, or even go negative.  Again, do the math and see where it goes.

The Difference Between Gambling On Crypto And Investing In, Say, Exxon.

Investing in stocks does incur some risks. However you can quantify these risks in a number of ways. Gambling on cryptocurrency, on the other hand is just gambling.  And actually gambling on cryptocurrency is even dumber than gambling in a casino or at the horse track.  When all you have to go on is pricing trends, you really are shooting in the dark.

I get flak from the crypto true believers who claim that "investing", as they call it, in cryptocurrency is a good deal because you can put in a little bit of money and it's possible you might make millions of or even billions of dollars.  Of course, this is the siren song of the pyramid scheme in the Ponzi scheme - that a little bit of investment can yield a fantastic amount of money.  However you don't be a rocket scientist to see that in order for you to make a lot of money a lot of people are going to have to lose a little bit of money, and eventually those other people refused to cooperate with the scheme.  The great Fool shortage of 2007 proved that.  So long as a greater fool kept buying these investments, it all worked out OK.  But then we ran out of fools, motley and otherwise.

The crypto faithful also say silly things like "Well, you can never count on the Dow is it can go down in value as well!"  And yes investing in stocks involves a lot of risk.  For example in February of 2009, the stock market dropped by nearly 50%.  Of course, it recovered by the same amount within a year.  So when you invest in stocks there could be risk.  Particularly with individual stocks, companies can go bankrupt and leave you with nothing - which is why stock-picking is so risky.  Buying a number of stocks in small amounts is less risky - which you can do, or buy a mutual fund.

But with stocks, you can at least investigate and research the particular stock you were buying, and what's more monitor its performance and make a decision over time whether to good buy or sell. Take for example stock in Exxon, which I've just chosen at random.  Before you buy the stock, you could do something stupid like looking at the stock price and its trend overtime - which is what crypto-currency buyers too.  But stock price really doesn't tell you much about the company and whether or not to invest, as I have noted before.  You might also look at the P/E ratio which tells you the ratio of price-to-earnings gives you an idea of the profitability of the company.

You might also look at the annual dividend and the dividend yield to get an idea of how much money you'll make in dividends from a company.  And you can look at the profit-and-loss statements in the annual reports and figure out how the company is doing financially from its balance sheet.  Moreover, you can research the industry in general and understand how it is doing overall come, where the price of oil is going, what the demand for petroleum products are, geopolitical factors that affect the oil business, and so forth.

And you can use this data to come up with an opinion about whether the stock is of any value and whether it's going to go up or down in value.  And you can use this data to decide when to sell the stock if you think it's going to decrease in value - although the timing the market is awfully difficult and I don't recommend it.  But at least you have a treasure trove of data to draw from and to draw conclusions from, other than merely the share price of the stock and its history.

Now take gambling on cryptocurrency.  All you have to look at is... The price of the cryptocurrency and maybe it's pricing trends.  Oh, and the opinion of "experts" (who are quickly minted in this new field) which often are very vague on details.   And this is where the difference between gambling and investing is. With cryptocurrency, our buyer looks at a chart showing the price of the cryptocurrency going ever upward, much as Disco Stu's disco record sales chart shows.  They then assume that since the price is going up, it will always upward, and buy the cryptocurrency.

There really is nothing else to look at.  Or at least, people seem willfully blinding themselves to any ancillary data. There's very little data out there on who is using cryptocurrency and for what purpose and what the volume of actual trading the cryptocurrency for use in actual purchases.  Since the entire thing is decentralized, we have no idea if people are actually using this as a currency or in fact using it is just some sort of virtual investment.  There are no annual reports, no balance sheets and no other dated to look at.  There are no P/E ratios or dividend ratios as the currency, of course, does not pay any dividends or make any profits.

Like I said, what little concrete data there is, most crypto buyers ignore.  Bitcoin for example is supposed to be a currency that people can use to buy and sell things.  But since the cost of each transaction and the amount of time it takes to process each transaction has expanded greatly, nobody can use Bitcoin for anything other than transactions involving thousands or tens of thousands or millions of dollars - such as in money laundering.   Crypto is hot in China right now, because the Chinese want to take money out of the country without the government knowing.   Also, Chinese are famous gamblers - ask Sheldon Adelson.   But China is cracking down on crypto for obvious reasons.  The party will end there soon, and soon after in South Korea - with America and Europe next falling in line.  Only rogue states will let the currency be used unfettered, and it may not be useful for them, if they can't use it to move money from other countries.

The idea that Bitcoin would become a new currency that you could use to buy a latte at Starbucks is not only overstated, but laughable.  Nobody accepts this currency for anything other than investment purposes and thus it's no longer a currency.

I said that buying cryptocurrency is gambling, but it is even worse than that - it is the most stupid form of gambling.  If I go down to the racetrack, I can at least look at the horses and read their histories and look at their past racing history, figure out track conditions, and make an educated guess as to which horse is the fastest.

If I bet on professional football, I can research the teams and understand the players and coaches in their histories and home team advantage and come to a conclusion as to who is likely to win the football game.  In poker I can understand the odds of obtaining the various hands that win and also play my opponent as well as the cards in my hand.  Even an idiotic Wheel games I can understand the odds of winning.  But with cryptocurrency we don't even have this limited data.

People are buying these things because other people are saying they're going to go up in value. Nobody is saying why or giving any rational arguments why they go up in value, they just are.  In over the last two or three decades I've heard the same siren song again and again and again - and each time people get burned.  Houses were going to go up in value in 1989 because they were.  And once again, in 2007, houses were going to go up in value just because they were.   Gold was going to go up in value just because it was.   An IPO stock in a money-losing company was going to go up in value, just because they said so.   You see a pattern here.

And the pattern is called irrational exuberance.  And we've seen this time and time again.   It usually follows a period of irrational pessimism.    In the 1920's not only did the stock market take off, but society did as well.   It was an era of optimism, jazz music, flappers, bootleg gin, and 23-skidoo. They called it the "roaring 20's" because of that, and eventually, that era of irrational exuberance gave way to the depression and irrational pessimism ' "we have nothing to fear, but fear itself."  You get the idea.

The optimism of the post-war 1950's America lead to the recession of 1958.   Suddenly, over-priced and under-built gaudy cars slathered with chrome and giant tail-fins seemed, well, excessive, and sales of smaller and more practical Ramblers, Studebaker Larks, Chevy II's, and Ford Falcons took off.   The era of peace and love of the 1960's was a fun time, and the economy was doing great, until the Arab oil embargo and stagflation recession of the 1970's.   Then it was Reagan's "Morning in America" in the 1980's, and "It's the Economy, Stupid"  by the end of the decade.   The boom years of Bill Clinton, followed by 9/11.  Then the irrational market of the Bush era, capped by the collapse of the economy in 2007.  Up and down, up and down, up and down.   If you can't see this pattern, you are fucking blind.

So, what's next?  A steady and slow progression throughout the Obama years that resulted in the longest bull market since the war.   Throw some tax-cut gasoline on the fire and watch it burn - brilliantly, of course, but not for very long.  We see irrational exuberance all over the market, from the IPOs, to gold, to housing, to crypto-currency - all going up in value, we are told, just because they will.   Never mind that the IPO company never makes money, the expensive houses cost more to own than rent, or that gold has already peaked and fallen.   Crypto is different!   This time, for sure!

This is not some made-up construct.  It is not fitting a pattern to data.   The Bulls and the Bears of the market are well-known and have been, for over a century.   And the Bulls usually win, over time, which is why investing in rational things, over time, pays off.  Where people lose money is in the wild swings - where a small number of people make money at the expense of others.

So it comes down to this - do you want to be the person that someone else makes a lot of money off of, at your expense?   Because you aren't going to be the brilliant Bitcoin Billionaire who cleans up on this mess, unless your name is Winklevoss or something.

Sunday, January 21, 2018

Economics, The Dark Art

We can send Rockets to the moon but we really still cannot understand our own basic economic system.

It is fascinating to me that mankind has yet to figure out exactly how our economic system works. Economists have lots of theories, and indeed come up with new theories every year.  People win Nobel prizes for their theories and yet later on are often proven to be wrong or at least, inaccurate.

At first blush, it would seem that economics is a very simple science.  It is not as complex compared to say Calculus or Physics.  A person buys things another person sells things - it's about as simple as two plus two equals four.  But it is deceptively simple, as it is not just a mere system of exchanges. When you throw in the actions of dozens, hundreds, thousands, or millions of people - or indeed even billions of people - it gets far more complex.

And then when you add in the idea of investing and compound interest and even something called derivatives - term we also use in Calculus, it becomes infinitely more complex.  And it may just be possible that mankind is not capable of understanding its own economic system much as the human brain doesn't have enough memory capacity to comprehend its own structure to the minutest detail.

I have a theory about the latter - and maybe somebody else has expressed this more clearly than I have - that a machine or system is incapable of thoroughly comprehending its own structure.  You can't ask a toaster to describe how it works.  You can't expect a computer to completely and thoroughly understand its own workings.  There always has to be some higher authority who designed and built the equipment that has the understanding of how it functions.

And maybe this is why I am very skeptical of Psychology and Psychiatry or any other attempts to understand how the human brain works.  These are no doubt worthy endeavors, and people are finding out more and more fascinating information as each year passes.  However the idea that we can completely and minutely understand how every aspect of the human brain works, I think, will always elude us.

It is like the laws of quantum mechanics.  You can know the position or the speed of a particle, but you can't know both.  If we, human beings, could understand every aspect of our own human brains, we would in effect become Gods ourselves.   It seems to me to be sort of like an infinite loop or divide-by-zero situation.   I'm sorry I can't describe it more succinctly than that but it's how I feel. Eventually we will hit a wall and will be able to discover no more.

And I think the same is true with economic activity.  Our economic activity is, in effect, an extension of how our brains operate.  And thus, we will never fully and truly comprehend how our economic system works, as we are trying to measure it from the inside out and not from the outside in.  Perhaps if we were aliens in a flying saucer circling the earth, we could quickly comprehend how the Earth's economic system works.  But as people living on the planet Earth, participating in the economic system, our views are necessarily prejudiced by our experiences.  We can't measure economic conditions of humans, without affecting the measurement itself.   Again, quantum theory.

Economics has been called a dark art, or more famously "the dismal science" - a reference to Thomas Carlyle's characterization of the economic theories of Thomas Malthus, who claimed humanity was trapped in a world where population growth would always strain natural resources and bring widespread misery.   Of course, that theory has been proven wrong time and time again, as mankind finds ever new ways to expand food production and increase the population yet further.  The misery thing, he seems right about, though.

Maybe Malthus is right - maybe eventually, just as Moore's Law of semiconductor science hits the wall of the molecular level, there will reach a point where you just can't jam any more people onto planet earth, without something having to give.  And maybe we are seeing that already, with the extinction of species after species, destruction of more and more habitats to make room for humanity and of course, pollution and global warming. Eventually, the planet may become a mono-species environment  - but I think the system would break down long before that.   Dismal science, indeed!

But getting back to more mundane things, like why stock prices do what they do, and how futures and derivatives work, as well as why speculative bubbles not only continue to exist, but have been increasing in number and frequency lately, it seems that we are not getting closer to understanding economic theory, but further away.   Physicists yearn for the "unified field theory" that Einstein postulated - a theory that explains everything - and appear to be closer to this every passing year.  Economists, on the other hand, seem further and further from such an explanation of our behavior, with each passing year.

Of course the granddaddy of them all was Adam Smith - the Newton of Economics.   Just as Newtonian Physics describes the everyday interaction of objects on our planet, Adam Smith's "invisible hand" of the marketplace describes the basic functioning of our economic system.   Newtonian Physics breaks down, however, on the macro and micro levels.   When you start talking about black holes and supernovas, what you learned from apples falling from trees no longer is sufficient.   Similarly, when you study matter at a subatomic level, simple equations like F=ma no longer apply.

And perhaps the same is true with economics, which is why it has spawned the fields of macroeconomics and microeconomics.   And increasingly, we are applying the fields of psychology and things like chaos theory to this dark and dismal art - the only question being, of course is, what took so long?   In terms of human history, the advances in the science of economics seem rather late.  And perhaps our economic system is changing faster than economists can come up with new theories.

And some of the theories of the recent past - which many still think are valid today - seem almost laughable.   Communism, for example, has been shown time and time again to simply not work.   And if you've ever worked in a factory, you'd understand why.  The workers, given a chance to control the means of production, immediately vote themselves a raise and time off.   It is a system that simply doesn't work, yet many today pine for it, still.

Worse yet, others pine for economic systems that are not even systems at all, such as libertarianism or anarchy.   They are just vague ideas from people who don't want to work for a living and are convinced "the other guy" has it on easy-street.  And  maybe that is the problem with our economy and government (worldwide) today - it is up to the average schmuck to determine what our economic system is like, and the average schmuck is going to vote for what he thinks is to his own advantage in the short-term, even though it works against him in the long-term.

And many of these folks decry "capitalism" as a flawed system, not realizing that it is not an external construct imposed on people by political means (as Communism is) but rather the default mode of human operation.  And therein lies the folly of Communism or Socialism or any other political or economic theory that promises to instill order from the top-down.   Even in a Communist country, people operate in a Capitalist way - buying and selling products, legally or illegally, based on the laws of supply and demand.   The Venezuelan government might set an "official" exchange rate for the bolívar, but the real market - the so-called "black market" (which is just a market) sets the real exchange rate.

And it is interesting how the pressures of the marketplace work and really cannot be held back for long.   In postwar Europe, the occupying allied forces imposed price controls in Germany and other countries to keep prices reasonable and prevent shortages and hoarding.  One of the greatest movies of all time, The Third Man, is based on this scenario, in post-war Vienna.   The allied occupying forces tried, to no avail, to shut down these black markets and institute order.   Things only changed when a new commander was appointed who immediately eliminated all price controls.   There was chaos for a few weeks, as people bid prices through the roof, and people were hoarding goods, but eventually, the market reached equilibrium, and shortages and hoarding disappeared, and prices came down due to competition.   This is not a "system" of economics or politics, no more than Newtonian Physics or Quantum Mechanics are imposed "systems" that force how masses or particles behave.  It just is how things work.

The fact that our economic theories - just like our theories about Physics - are incomplete or inaccurate, does not make them wrong, just not finished.   And inventing new ideas out of whole cloth is not the answer.   Communism or flat-earth theory are the same thing - saying things should be so because you'd like to believe it to be so, in spite of evidence and data to the contrary.   It is belief, not science.


And I think people get away with this today because our economic theories are so primitive and incomplete - despite the best efforts of Nobel-winning economists.   Take basic things like interest rates and inflation.    The basic economic theory about inflation has been that if you increase inflation, people will spend more today and prime the pump of the economy.   They will perceive that they can pay off debts in the future with money that is worth less, so they will borrow more now.   They also perceive that goods will be more expensive tomorrow, so they will buy now.  It gets more complicated than that, of course, but from what I understand, it is the general idea.

To decrease inflation, so the theory goes, you raise interest rates - which should decrease inflation:

There are three main ways to carry out a contractionary policy. The first is to increase interest rates through the Federal Reserve. The Federal Reserve rate is the rate at which banks borrow money from the government, but, in order to make money, they must lend it at higher rates. So, when the Federal Reserve increases its interest rate, banks have no choice but to increase their rates as well. When banks increase their rates, less people want to borrow money because it costs more to do so while that money accrues at a higher interest. So, spending drops, prices drop and inflation slows.

The problem I have with this sort of model is that it has been proven wrong time and time again, and also it relies on the idea that the average consumer does this sort of math when making purchases.  When I came of age, we were in an era of "stagflation" which arguably was triggered by the Arab oil embargo of 1973.   Oil prices rose quickly, and in an economy where everything is based on oil, prices rose spectacularly as well.   One of my professors at GMI claimed that in order to make a glass of milk - from the farming for crops, keeping the cows, processing the milk, refrigerating it, and shipping it to stores by truck - you would use the equivalent of a half-a-glass of crude oil.   I don't know if that statement is entirely accurate, but it is probably not too far off.

So by the late 1970's, we had been through several "oil shocks" including incidents where there was no gasoline to be had on some occasions, to the point where we were rationed to buying gasoline on even and odd days, to prevent long lines and hoarding of gas (many people back then had 5-gallon cans of gas in their trunks - sometimes several of them - out of fear of running out.  This was a safety problem, to be sure, and the hoarding aspect added to the shortages).

Inflation was running rampant - by American standards, anyway - at 10% or more.  Unemployment was well over 10% and interest rates were as well.  Mortgage interest was 14% or more - stifling the demand for new houses and tamping down housing prices (which exploded in the late 1980's when rates went down to "only" 10% or so).  Increased interest rates slowed the economy - to be sure!  But they did not tamp down inflation one whit, largely because inflation was due to an external force (the increase in the price of oil) than it was due to increased economic activity.

Despite this experience, however, economists still use these same levers to control the economy based on the same theories - even as past experience has proven them wrong.   More disturbingly to me, it seems these economists drive like old people do here on retirement island - alternately slamming on the brakes and then pounding the gas pedal.   I kid you not about this - we sit on our front porch and see and hear people drive by, the engines on cars going "whooo... whooo...." as they pump the gas pedal as though it were a bicycle or an old pump organ or player piano.   The idea of using the cruise control and going at a nice, steady speed seems to elude them.

Cruise control for the economy - what a neat idea.   Rather than jerk the levers of the money supply and interest rates, gradually control these for a smoother ride.   Republicans complain that the eight years of the Obama administration didn't have enough growth.   Coming off the worst recession since 1929, we had eight years of steady, if not spectacular growth.    Maybe the economy wasn't skyrocketing, but it wasn't crashing, either.

Today, the GOP gets its wish - the economy is taking off based on little more than exuberance.   And if you read the financial papers closely - the articles citing experienced traders and Nobel laureates, you see a pattern.   Most are predicting that the bull market will have to end - and it will end - sometime this year or next.   And the longer the exuberance carries on, the worse this ending will be.

But as others have pointed out, a nice boring steady market doesn't provide the wild profits for a few individuals.   It spoils the whole speculative bubble party!   As I noted in A few win a lot, a lot win few, these ups and downs of the market are excellent vehicles for a few wealthy and knowledgeable people to take a little bit of money (by their standards, of course - like ten grand) from a lot of little people, and make themselves fabulously rich.   Best of all, they don't really "take" the money - we schmucks give it to them with our blubbering thanks.

As I noted before, wealth inequality in our country didn't occur because the rich "stole" it from us, but because we, as a people, decided that having cable teevee or a jet ski was more important than having money in our 401(k).   Read any sob story about Mr. and Mrs. Middle-Class, who are lurching toward retirement with no savings.   Odds are, you will hear comments here and there in the story about how hard they have it, as they can barely make the Harley payments or can no longer go on vacation to Las Vegas to gamble.

You give these folks a chance to vote, they lurch from far-right policies that don't favor their own interests at all - tax cuts for the rich, and gutting the Consumer Protection Agency to the point where it now protects payday lenders instead of prosecuting them.   Once they are fed up with this, Johnny and Josephine Lunchbucket will decide that "guaranteed annual income" and a $15 minimum wage are the answer and vote for extremist solutions of the opposite sort.

And these sort of lurches, from one economic extreme to another and one political extreme to another, seem to be increasing in frequency.   Something has changed in our economy over the years that has affected how we behave.   And maybe social media - the latest iteration of electronic communication - is partly to blame.   In Adam Smith's era, you went down to the "market" with your basket, and exchanged a few ha' pennies for some rutabagas or whatever.  The data available to you as to what was a fair price or not, was somewhat limited to what you saw in the market, or perhaps the gossip you heard down at the well.   Even in the larger markets and stock markets in London, data was pretty limited in terms of availability.

Enter the electronic communications age.  Telegraph, radio, then television.   Now economic data is beamed into every home - and sold in the form of advertising.  Demand for products can be created out of whole cloth merely by repetitive advertising.  But it was a top-down system - a single message broad-casted (thank you very much, Mr. Sarnoff!) from a single source.   Today, we have social media, where anyone can generate a message, which may take off in a viral fashion.   In fact, the description of social media posts as "viral" is fascinating in and of itself.   It describes, in a way, the sort of thing that accompanies speculative bubbles - things just take off, on their own, and get out of control.

So, rather than our economy becoming more and more mature and stable over time, it is doing just the opposite - with more and more bubbles and market ups and downs, with increased frequency.   A mere decade after one of the worst market collapses in the last 100 years, we are sitting on a number of bubbles - which have been clearly identified as such by economists - that are set to burst.  Cryptocurrency, real estate, dot-com stocks, gold - all the usual suspects.   And when one bubble bursts, it likely will burst the others - and take down the overall market, at least temporarily.

And once again, we will ask ourselves, why?   Why did we let this happen?  Why did people blindly believe that some guy on YouTube had the secret answer to fabulous riches?  Why did we loosen regulations just at a time when we needed them most?  Why did we cut taxes to "stimulate the economy" when it was in fact, already over-stimulated?   Why do certain people think that high rates of growth are always a good idea?

Of course, we will never get these answers - or ponder them very long.   We will once again enact new regulations to limit speculation and rein-in predatory practices.   And before long, the people who profit from those enterprises will cry once again that the economy is being stifled by the inability of organized crime to charge the very poor 300% interest on a title pawn loan.

And once more, we go back into the breech!

Saturday, January 20, 2018

Imagine There's No Countries

(click to enlarge)

Imagine there's no countries
It isn't hard to do
Nothing to kill or die for
And no religion too
Imagine all the people living life in peace
Imagine - John Lennon

There has been a lot of heat, but not much light, in the immigration debate.   On the far-left, this is painted as a humanitarian issue, with camera-ready illegal immigrants trotted out before the press with their heart-rending life stories.  Less talked about are the folks who are not so squeaky clean, of course.

On the right, racism raises its ugly head - often obscuring whatever good points the right had to make.  And then specious arguments are made about "illegals stealing jobs" but at the same time, those Republican politicians making those arguments are using illegal labor to maintain the lawns and scrub the bathrooms of the mini-mansions in their manicured gated communities.   

Illegal aliens are called "undocumented persons" by the left, as if they forgot their wallet at home.  On the right they are "illegals" or "illegal aliens" which sounds more menacing, but of course, is legally the descriptive term.   Of course, some on the right use other terms, which are racist and derogatory.   When people try to control the language of the debate, they are trying to win the debate without debate.   It is no different that the Pro-Life/Anti-Abortion or Pro-Choice/Pro-Abortion labels.   Each side chooses the label that makes the argument in and of itself.

And yes, it is tragic that some young kid is dragged across the border and brought to America not by choice, and then decades later, deported to a country he has never known, where he might not even know the language.  But on the other hand, if you tell people their kids will be allowed to stay if they drag them across the border, does this not send the message that you should take young children on this arduous and often dangerous journey?

One unusual aspect of our Constitution is that if you are born in America, you automatically qualify as a citizen.  Seems like a normal thing, but other countries often don't have this provision - in order to be a citizen, your parents have to be citizens, sometimes even your grandparents.   Good luck sneaking across the border and establishing an "anchor baby" in Switzerland!

And it is not just impoverished folks from Latin America sneaking into Texas to have "anchor babies" - wealthy Chinese women are doing it as well.   Having a child with dual citizenship could come in very handy, if later on down the road, the Communist government of China decides that their new Billionaires have too many billions, and what's more decide a new "cultural revolution" is in order.  The Chinese clearly don't trust their own government, which is also why so many of them are establishing residency in Canada and running up the price of homes in Vancouver and Toronto.

Governments matter.  Borders matter.  How a country is run and its cultural values can determine whether it is successful and prosperous or not -  and China is a prime example of this.   Since opening itself to the outside world and implementing limited capitalist reforms, the country has rocketed from third-world status to world superpower - even surpassing Russia.   Folks from China, however, don't appear to be confident that this change is permanent - or at least they are wisely hedging their bets.

So what is the answer to this immigration thing?   Are we a big, bad country for trying to stop illegal immigration, and is this a Republican or Democratic issue?   Bear in mind that deportations under Obama reached record highs before he left office - as we shall see, in response to record illegal immigration.   There must be some concrete things we can all agree on, or at least most of us agree on, if we are to move forward with this issue.

For starters, a country is defined, among other things, by its borders.   Yes, our Constitution and our system of government, our history, our culture, and our values also define who we are, but our borders define where we are.   And nowhere else in the world is the idea that you can't control your borders even up for debate.   Countries may argue as to exactly where their borders are (and arguments like that can go on for generations - such as in the Kashmir region) but no one seriously suggests that borders don't exist.   I am not sure than even John Lennon was suggesting this - other than to "imagine" it.

So let's do just that.  Let's do what Einstein called a "thought experiment" and think about what would happen if tomorrow, Congress decided to abolish ICE and the Customs agencies and open the borders to all immigration.  What would happen?

Well, it doesn't take a rocket scientist to see that a lot of people from very poor countries, or countries that are in civil war, facing famine, strife, ethnic cleansing, and the like (safety issues) would flock across the border to America.  There would be a flood of people of biblical proportions.   We would be inundated with a new population and nowhere to house them and no way to feed them, and no jobs to provide for them.

The situation would get so bad, so quickly that many might decide to go back to their home countries.  Eventually, some sort of equilibrium would be reached, where the "shithole" country they came from (and no one, well very few at least, immigrates from anywhere else!) would become less of a shithole by nature of its rapid depopulation.

Suppose we limited our experiment to just Mexico?  Folks from Mexico might flock across the border for jobs, but since they could freely travel back and forth, many might just take seasonal jobs while continuing to live in Mexico, where the cost of living is far less.

But one thing is clear, by the very nature of the disparity in wealth, as well as the disparity in safety, people would flock from lower-income and lower-safety countries to higher-income and higher-safety countries.   The only way this could work is if all countries were equal in wealth and safety, in which case, few people would migrate, other than perhaps to work at a particular job specialty.

Since that perfect world doesn't exist, the result of free migration would be that the high-income, high-safety countries would reduce their level of income and safety, while bringing up the levels in the countries people departed from.   A form of equilibrium would be reached, but the folks living in the high-income country might not be happy about that - their standard of living is dropped accordingly.

And we have a real-world example of this "thought experiment" going on right now, with the EU and Brexit.  The EU was founded on the idea of free migration.   If you are a citizen of an EU country, you can settle and work in any EU country.   And many people have migrated from one part of the EU to others.   In the UK, they have seen an influx of Poles from Poland, which has angered many on the Right there.   For some reason, a country which has absorbed populations from all the countries of the Commonwealth is reluctant to accept one more.   And Poles, by all account, are hard-working and decent people.  Maybe it was just one immigrant group too many, and the Poles are on the unfortunate receiving end of the wrath of the nativists.

Whatever the cause, the end result was Brexit - aided and abetted by Russian troll farms, of course.  The problem for the EU is that it is a conglomeration of separate countries, not separate "States" as we have here in the US (although the term "State" as originally envisioned under the Articles of Confederation, which pre-dated our Constitution, were effectively countries.  That arrangement didn't pan out well, so we chucked it for our current Federal system).

From our thought experiment - and its real-world counterpart - I get the feeling that unlimited and unrestricted immigration across borders simply would not work.  Different countries have different types of government, different cultural values, and different ideas. Countries that have been successful with their ideas, culture, and government, would be overrun by folks from countries that are less well managed.   The country that could produce the largest population would end up winning, which is why ever major religion in the world exhorts its followers to have as many babies as possible.

Of course, the United States is a country largely founded on migration.   Most Americans can trace their ancestry to "elsewhere" and indeed even the Indians came across a land bridge at one point - themselves descendants of migrants. Immigration has worked in America as the migrants have adapted to our culture and our culture has adapted to migrants.  We have absorbed wave after wave of immigration from various countries around the world, and at each stage, the "native-born" Americans (often right off the boat themselves) protest the importation of the next wave of immigrants.  "Hey, we Irish are OK - but Italians?  You're just letting anybody in!"

Today's immigrant is tomorrow's nativist.   But we are talking legal migration at this point, and the ability of a country to assimilate immigrant populations.  In the US, this has largely worked, as each new group of migrants adapts their culture to the US, and the US absorbs a part of their culture, making it uniquely American. It also helped that we had a lot of space for populations to expand.  From some accounts, disease, relocation, war, and genocide reduced the Indian populations in America by 90% or more - leaving a lot of empty space for these new immigrants to fill.

But each successive wave of migrants has adapted to our culture and changed our culture as well. During the anti-Chinese immigration era in the late 1800's, for example, Chinese immigrants could only come to America if they had a business of their own (so as not to "take away our jobs" - sound familiar?).  As a result, many immigrants founded small businesses - Chinese laundries and Chinese restaurants.  The number of such establishments blossomed across the United States and are now a part of the landscape.  And created in that process was "American" Chinese food which bears no resemblance to anything ever served in China.  (And perhaps the same could be said for Mexican restaurants, Tex-Mex, and so forth, which have provided employment opportunities for many migrants, both legal and illegal and created new forms of "Mexican" cuisine unrecognizable in Mexico).

In some countries, however, assimilation has been harder.  Paris, France, is ringed with suburbs of low-income high-rise apartments populated by underemployed Algerian immigrants. They have formed a permanent underclass in France, not really assimilating into French culture.  As a result, France has had to deal with rioting and crime in these impoverished areas, and they have turned into a hotbed for radical Islam and the resulting terrorist attacks.  Immigration and assimilation hasn't really worked out well, there.

Of course, for any immigrant group, the first, and maybe second, generation of immigrants may remain in a cultural ghetto, with only their children or children's children adapting to the decadent ways of their new home country.  I recounted before how an Indian associate of mine ran back to India with his family, when I intimated that his daughter would grow up to be an American, complete with valley-girl accent.  "No, no, no, No!" he said, wagging a long finger at me, "My daughter will be brought up as a proper Indian girl!  She will go to Indian boarding school and marry the man we have chosen for her!"   Assimilation to US cultural values wasn't in the cards.   And maybe it was a good thing they moved back to India.   If you don't like the cultural values of an adopted home country, why live there?   And no, the "natives" won't like it if you move there and announce that everyone has to change to suit your tastes.

Europe is facing a new migration problem today, as people flee African countries in droves, risking life and limb to cross the Mediterranean in flimsy, overloaded boats, for a "better life" in Europe.  Some go further, trying to sneak through the Channel Tunnel to get to the UK, where relatives await.  The Channel Tunnel was constructed with elaborate gates to keep foxes (and rabies) out of the UK, but apparently these same gates allow illegal migrants in.   And it has gotten ugly.   Migrants, many of them young men or even children, throw rocks at trucks (lorries) trying to cross via "Chunnel", hoping the truck will stop or slow long enough for one or two people to sneak aboard.   As you can imagine, people are getting fed up with this, along with migrant camps.  You want to be humanitarian, but then again, when people throw rocks at you....

And again, we have the "bug light" or "honeypot" problem.  If, in a humanitarian gesture, you set up camps or housing for migrants, give them food, clothing, a job, and so forth, they write home to the folks in Shitholestan and tell them what a great place Germania is, what with the not starving and all, and another wave of migrants sets off to join them.  It is a conundrum and I wish there were easy answers to these problems.  But there aren't, and slogans are not answers.

And one problem with migration is that in many of these countries in Africa undergoing civil war, the good people are fleeing to the North and Europe, leaving the bad people to take over and win.  Sad as it sounds, folks need to take a stand sometime and stand up for their country and values, rather than fleeing and letting religious extremists win.   But that is a lot easier to say than to do, of course.  Like I said, no easy answers. 

Regardless of whether you like immigration or migration or not, the fact is, it occurs, whether you make it illegal or not.  As we learned in economics class, outlawing a particular activity or product doesn't make that thing go away, but rather just drives it underground and raises the price.   Drugs are illegal in the United States, or at least here in Georgia.   But I could probably find several illegal drugs without having to leave the island.   I am sure I could find pot without too much trouble - just a few phone calls.   You want opiates?   All the old people have expired bottles of Oxycontin in their medicine cabinets.   I know this because they keep offering it to us.   "You hurting?  Try some of these pills, left over from my hip replacement!"   Worse yet are the offers for "the little blue pill".   "My husband passed away, and he left behind all these bottles of Viagra - you boys want some?"   Uh, no thanks.

But I digress.

Make something illegal, you just drive it underground.  And today we have illegal immigration.   And the debate is, how strict should we be about enforcing this?   The interesting thing to me, is, if I went to Europe and tried to get in illegally, I would likely be caught and sent back, if not jailed first.   Even if I overstayed my Visa, I likely would be nailed.   They don't play for fun over in Germany, France, or particularly Switzerland.   Back in the day, it used to be when you checked into a hotel, you had to surrender your passport, which they checked at the front desk, and if your Visa was invalid or expired, the Guarda or Gendarmerie or Polizia were called and you were hauled off to the pokey.

For some reason, when we do this in the United States, we are deemed heartless bastards.  And it is interesting, we have more illegal immigrants than most, if not all, Western countries - often three to 30 times as much, as a percentage of overall population - see the chart at the top of the page, click to enlarge or click on the previous link.  Greece is the only country on par with the US in terms of percentage of illegal migrants.  Russia, well, that doesn't count as a Western country.

Now the reasons for this disparity are many.   The US shares a huge border with Mexico which is hard to police, wall or no wall.  Our country is very prosperous, but borders a country far less so, which in turn is bordered by countries wracked by violence, poverty, and civil war.   It is a lot easier to hitchhike from El Salvador to Texas than it is to walk from Sudan and swim the Mediterranean. But I think also, as I noted above, European countries have far stricter immigration laws and enforcement.

Not only that, they have largely homogeneous cultures, so it is harder to "blend in" when you don't look like the native population.  When we were in Japan in the 1990's, there was an issue of "illegal immigration" from Peru, a country with strong Japanese ties.  But in Japan, it is very hard to not be noticed, if you are not Japanese.   Illegal Peruvian immigrants stood out like a sore thumb on the Japanese subway.  I hear today they are actually encouraging limited immigration or at least temporary workers, as the Japanese population ages and may in fact shrink.

But I think a large part of it is that we've always looked the other way with regard to migration and illegal immigration.   Huge sectors of our economy rely on migrant labor to get the job done at low cost.  Farmers need illegal workers who will work at low wages, to pick crops and do various other farm chores.  Yard maintenance crews and home cleaning services are affordable for middle-class Americans only because the workers are not demanding a "fair wage" of $15 with health insurance and benefits.   Restaurants only work as kitchens for Americans when the food is cheap and the labor is cheaper.   Take all of that away, and these enterprises may crumble, or at least become far more expensive to operate.

Ronald Reagan understood this.  Maybe coming from California where there is a large immigrant population (both legal and illegal), he realized that these were hard-working folks and not "rapists and murders" as our current President postulates (but hey, I'm sure a few of them are good people, too, right?).  And although the people in the alt-right (all three of them, meeting in Mom's basement) will deny that it ever, ever happened, in 1986, Ronald Reagan signed an "Amnesty" bill that allowed illegal immigrants a path to residency and even citizenship.

It was a humanitarian thing to do, it was a practical thing to do.  It was good for business.   But many argue that amnesty for illegal immigrants of that era (with an arbitrary cutoff date) only served to encourage more illegal immigration.   Hey, if tío Sam allows amnesty once, maybe he'll do it again, right?

And here we are today.   A new President has made it a priority to deport illegal aliens.   And ICE, emboldened by things the President has been saying, has been deporting people in record numbers.  In the past, the government looked the other way if you were here illegally, but committed no crimes.  Their priorities for deportation were people with criminal histories who had done or were doing bad things.  But illegal immigration itself is a crime, so they use that to bootstrap accelerated deportations.

There are heartbreaking stories, of course.  A young man adopted from Korea, is deported, as his adoptive parents never formalized his adoption papers and obtained his US citizenship.  He got involved in some criminal acts and, well, he's going back to a country where he doesn't even speak the language, or have a job or means of supporting himself.   Men and women who have made lives for themselves here for decades, are shown the door - sent back to countries where they know no one, have no money, job, or even place to stay.  And often these are countries wracked by violence or gang violence, where deportation is tantamount to a death sentence.

Of course, you can't manageably work a system where deportation is based on ambiguous circumstances.  You can't have a judge apply arbitrary criteria to each case.  "Well, this person is a really nice guy, and he's been here a long time and his son has a project due for Science fair next week, so we'll let him stay!  This other fellow, well, he has no family and has only been here five years, so he goes!"

It is possible to seek asylum status if you can show that you might be harmed if you returned to your home country, but it is very, very hard to do, for the simple reason that everyone would claim asylum if they could allege harm.   Hey, if you live in Chicago, that alone should qualify you for asylum in any other country, right?

Of course, the issue today is the "DACA" or Deferred Action for Childhood Arrivals, which was not a law, but a policy enacted under the Obama administration.   Once again, we have this language thing, with Democrats calling them, wistfully, "Dreamers" - as if to invoke The American Dream.  Again, it is a humanitarian gesture and a fine one - kids who were dragged here by parents shouldn't be sent back to a country that is alien to them, right?   On the other hand, it seems like an arbitrary form of immigration policy - one that would encourage people to drag children on an arduous trek across the Arizona desert.

The Democrats - or at least some of them - have made this a cornerstone issue.   Whether it resonates with voters remains to be seen.   Bear in mind that "Dreamers" don't vote in elections.   And even if DACA can be enshrined into law - which is doubtful - it really is a shitty way of "fixing" our immigration system, by providing this arbitrary age-cutoff for immigration.   Welcome to America!  Children only, please!

Of course, petty politics are getting in the way.  Trump supposedly was open to legislating DACA into law and even made noises to that extent.  But those talks were derailed with Senator Dick Durbin claimed that Trump called Haiti and African countries "shitholes."   I am not sure why Senator Durbin did this - one would think that private discussions regarding pending legislation should remain, well, private, and that people could say things without fear of repercussions or being "outed" in the press.   As idiotic a thing it was to say (for different reasons than the press seized upon), I am not sure leaking it to the press was a good idea, unless the point was to derail the negotiations so as to deprive Trump of a legislative "win".

Maybe a better approach is a more comprehensive approach to immigration reform.  If our nation's farmers really need migrant labor to pick crops, then let's find them migrant laborers, document them, and allow them to cross the border in safety during harvest season, for temporary labor jobs.   In an era of record low unemployment, this seems like a real no-brainer, and something that Republicans, being pro-business, would comprehend.  And it is something we've done in the past, when there were labor shortage, notably during World War II.

Oh, but that's applying common-sense to politics.  And politics is all about sloganeering and grandstanding.   Republicans have to be anti-immigrant, as this is the corner they painted themselves into.  And again, it was an issue they created from whole cloth well over a decade ago.  Illegal immigration wasn't on anyone's radar back in the 1990's.  But I recall an interview on the radio back then with a Republican operative, who when asked what the "big issues" for the next election would be, replied, without missing a beat, "immigration!"

The reporter was flummoxed.  "But immigration really isn't that big an issue right now!" he replied.

"Oh, we'll make it an issue," the GOP strategist said.   And he was right about that.   Since then, they have been beating the drum of illegal immigration, seizing up every and any incident where an "undocumented worker" (note the use of the term worker, comrade!) commits a crime, even though the native-born part of the population seems to create just as much, if not more, mayhem in our society.

So I guess that is the point, when we get right down to it.  You may feel you have a strong, original opinion, about immigration - an opinion you formed on your own, uninfluenced by the television or the powers-that-be.  You may think of yourself as "humanitarian" and wanting to "help those poor Mexicans" or you may be standing up for "Law and Order" and the Constitution as well as "Preserving our Jobs and Way of Life!" by supporting deportation.

You may very well think any of that.   But it is likely that no matter what you believe about this, they were not original thoughts of your own, but rather carefully crafted "talking points" which have been honed over the last two decades to create political divide.

And Left or Right, Democrat or Republican, we fall for this nonsense.   Every single damn time.