Trivia Time-BCS Championship, Pasta and Cotton Candy

When I lived in Atlanta in the late 1970's there was a great radio show on Monday nights that was called the Quiz Kids.  The radio show host had 4 or 5 regulars.  They all had day jobs.  A couple of them were attorneys as I recall.  What they had in common was an encyclopedic knowledge of trivia. 

The premise of the show was that callers would call in and try to stump the panel with some type of trivia.  However, one of the ground rules was that it had to be interesting trivia.  There had to be some "ah ha" element or "twist" to it for it to be considered good trivia.  Just calling in and asking how many pounds of pasta an Italian eats in a year would not qualify and get rejected out of hand.  Providing that number and then asking the question which country consumed the most pasta after Italy would be welcomed.  (Answer below). Or what was the occupation of one of the people who invented cotton candy? ( Answer below).

I am a big fan of trivia but that show made a big impact on me.  I am always looking for that little twist you do not expect.  When I share trivia with you I will try to live up to that standard.

With that in mind, and the BCS National Championship Football game tonight between Auburn and Oregon, I came across this little tiriva gem in USA Today.

Who has more former players in the Pro Football Hall of Fame, Auburn or Oregon?

My initial reacton was clearly Auburn.  SEC.  Something like 11 undefeated seasons. A lot of great players have passed through over the years including Bo Jackson, Tucker Fredricksen, Pat Sullivan, Wayne Gandy, Cadillac Williams, Ronnie Brown, James Brooks, Rudi Johnson etc.  Oregon is better known for track and field, right?.

Wrong.  Oregon has actually had 6 Hall of Famers.  Auburn just 1!  I had never even heard of the lone Auburn honoree...Frank Gatski who played Center for Auburn in the 1940's and played most of his pro career with the Cleveland Browns.  It turns out he did not even play his entire career at Auburn.  He started out at Marshall University.

Oregon's Hall of Famers are Tuffy Leemans, Mel Renfro, Norm Van Brocklin, Dave Wilcox, Gary Zimmerman and Dan Fouts.

Answers to the two trivia questions above:

Country with the 2nd highest per capita pasta consumption after Italy......Venezuela (12kg per capita per year.  Italy is at 26kg.  U.S. is 9kg.)

What was the occupation of the person credited with inventing Cotton Candy.....Dentist  (Sounds more like strategic marketing.  He actually gave it out in his dental office)

Making Amends With The Constitution

The newly installed House of Representatives clearly gets it.  Beginning the new 94th Congress with a complete reading of the Constitution and requiring that each bill that is introduced cite the Constitutional authority were smart moves by the new leadership.  All of this really shows how brilliant the Framers of the Constitution were.  The House was meant to be the People's House.  Requiring that the entire House has to run for election every 2 years in a direct election was an important safeguard to insure that the direction of the federal government would never stray too far from the people's will.

Over the years when I have heard people complain about Washington, my response has always been simple.  "The people have a lot more power than they think.  If they want something different they have it in their authority to totally replace the House of Representatives in less than 2 years".  This past November we saw how true it is.  This is exactly what the Founders envisioned (special thanks to James Madison in particular!)

The size and scope of the attempted expansion of power by the federal government by the President and the last Congress is reminiscent of the Roosevelt administration in the 1930's.  Tough times do require tough decisions but where does one draw the line?

Bailing out Fannie and Freddie.  Bailing out half of Wall Street.  Bailing out GM and Chrysler.  Giving secured creditors of these two companies cents on the dollar while bailing out their unions.  Bringing action against a state for trying to enforce federal law.  Requiring people to buy individual health insurance.  Subjecting 80 year grandmothers to full body searches by the TSA.

Is any of this within the power of the federal government based on our Constitution?  It seems a very reasonable question in my mind if you merely consider a little history.

For example,

• Article I, Section 8 of the Constitution provides that Congress has the power to lay and collect taxes.  Nevertheless, the income tax law of 1892 was ruled unconstitutional because it was considered outside the power of Congress.  The 16th Amendment was ratified in 1913 to allow it.

• There was nothing in the Constitution signed by the framers that precluded women from voting.  All references in the document were to people, not men.  However, the culture and custom was generally for only males to vote.  Nevertheless, it took the 19th Amendment in 1920 before it became the law of the land.  Interestingly, 15 states (beginning with Wyoming in 1870) granted women the right to vote before adoption of the 19th Amendment.  Since voter eligibility was an issue left to the states (in that it was not specifically enumerated in the Constitution by the Framers) women in these states voted in both state and federal elections before 1920.

The point here is pretty clear to me.  There was a time when the Constitution meant something.  It was respected for what it was.  So were the limitations that were carefully crafted into the document by the Framers.  Even when there was pretty compelling language in the Constitution to bend it to the "current times" it was ruled out of bounds.  Has something been lost?

Was it designed to change with time? Of course.  That is what the amendment process is for (Article V).  The Framers in their wisdom also considered this carefully.  They did not want it amended for some passing fancy.  Nor did they want a small majority to change the key foundations of the governing document to the detriment of a significant minority.  Therefore, 2/3 of both the House and Senate can come together and propose any amendment.  They do not even need the President to concur.  Alternatively, 2/3 of the states can come together and call a convention to propose their own amendments and bypass Congress completely.  If the amendment is ratified by 3/4 of the state it is adopted as part of the Constitution.

If the American people want a federal government with expansive power they can have it.  They can allow gay marriage.  Or ban it in all 50 states.  They can require everyone to buy health insurance or anything else.  

It just does not seem that these types of powers exist with the President or Congress with any reasonable reading of the Constitution.  At least, this has been the interpretation for most of our history.  Nor does it seem to be within the power of a handful of judges to suddenly discover fundamental rights that have somehow been hidden in the Constitution for over 200 years and start applying them to 308 million citizens by fiat.

That is why there is an amendment process to the Constitution.  It is hard and it was meant to be hard.

It is good to see the House of Representatives (with a keen ear to the people) trying to make amends with the Constitution.  We can only hope we will start to see more judges defend it than try to define it in their own terms as well.

   

Parenting Principles Perspective

Asians make up 19% of the class of 2013 at Harvard and 18% at Princeton.  By comparison Asian Americans only represent about 4% of the U.S. population.  I walked around the campus of UC Berkeley a couple of years ago and it seemed that every other student was Asian.  According to Berkeleyside, the Fall, 2010 number is 45.7%.  12% of Californians are Asian. I was not far off.

You see the same pattern of accomplishment in music.  If you see a young prodigy on the violin or piano there is a good chance you will see it is someone of Asian descent.

Why is this?

Malcolm Gladwell in his book, Outliers (which I recommend as one my best reads of 2010) attributes it to a "rice paddy" attitude.  Simply stated, tending to a rice paddy is a 360 day, 3,000 hour per year activity.  It is exacting, hard work where effort and dedication make a huge difference in results.  The peasants that tended these rice paddies may be long gone but the culture carries on in their progeny.  Gladwell makes the point that there is nothing that indicates that Asians are naturally any better at math, science or music but each requires hard work, persistence and doggedness.  It is more attitude than aptitude.

Today's Wall Street Journal supports this view with a great essay by Amy Chua entitled "Why Chinese Mothers are Superior".  Chua's book, Battle Hymn of the Tiger Mom, is coming out on Tuesday.  This is the first paragraph of Chua's essay.

A lot of people wonder how Chinese parents raise such stereotypically successful kids. They wonder what these parents do to produce so many math whizzes and music prodigies, what it's like inside the family, and whether they could do it too. Well, I can tell them, because I've done it. Here are some things my daughters, Sophia and Louisa, were never allowed to do:

View Full Image

Erin Patrice O'Brien for The Wall Street Journal

Amy Chua with her daughters, Louisa and Sophia, at their home in New Haven, Conn.

• attend a sleepover

• have a playdate

• be in a school play

• complain about not being in a school play

• watch TV or play computer games

• choose their own extracurricular activities

• get any grade less than an A

• not be the No. 1 student in every subject except gym and drama

• play any instrument other than the piano or violin

• not play the piano or violin.

Chua cites three main differences between Asian and Western parenting styles.

• Western parents are too concerned about their children's self esteem.  Chinese are not. Asians  assume strength in their children, not fragility.  Therefore, they push hard on them and hold them accountable for results.

• Chinese parents believe their children owe them something.  Many Americans seem to believe that since they were responsible for bringing the child into the world that they owe the child in some way.

• Asians believe they know what is best for their children and override their children's own preferences and desires.   Chinese parents understand that nothing is fun until you're good at it. To get good at anything you have to work, and children on their own never want to work, which is why it is crucial to override their preferences.

For those who are familiar with Dr. Spock and other "child-centered"parenting philosophies it might be valuable to consider a counter-point.  There is likely no best way to parent.  Anyone who has had children knows that each is unique.  However, this chart from The Wall Street Journal indicates that the rice paddy culture countries are getting much better results than we are.  Props to Finland as well.  Any lessons anyone can give me on what has lead to this success?

The China Numbers Game

My 8th grade science teacher talked incessantly about the Chinese. It was all a numbers game.  "They have about 4 times our population.  That means that the odds are that they are going to have 4 times our number of geniuses, top scientists, skilled athletes and talented artists.  It is tough to fight the numbers over the long term if you want to stay on top", he explained.

That was almost 50 years ago.  Mr. Russell might have been on to something long before anyone else was thinking about it.  However, numbers never tell the whole story.  Trust me, and that's coming from someone that used to practice as a CPA.   Good old Mr. Russell also failed if his intent was to motivate me to be a scientist.

Taiwan has 23 million people.  China has 1.3 billion.  Taiwan's GDP per capita is about 10 times the size of China.

North Korea has GDP per capita of less than $2,000 per capita.  South Korea's is $30,000.  Same people.  Same cultural background.  Very different results.

One of my favorite pictures of all time is this satellite photo of the Korean peninsula at night.  If ever a picture spoke a thousand words this is it.

Korean Peninsula at Night

Before the Korean War most of the wealth was concentrated in the North.  The South was more agrarian.  Things have changed quite a bit in 60 years.

What made the difference between Taiwan and China, South Korea and North Korea?  Could it be the difference between freedom and oppression? Capitalism and communism?  Could it be that a profit motive does lead to prosperity for all?

Mr. Russell had the numbers right.  However, the numbers don't work unless they are accompanied by the right system.  One that has incentives aligned so that talented people are willing to be inspired and perspire for their own success.

China had a planned socialist economy from its founding in 1949 to 1978.  In that year they first introduced the ability for farmers to grow what they wanted and sell much of it at markets prices.  They opened up most of the rest of the economy to what they refer to as a "socialist market economic system" in 1984.  Since that time China's GDP per capita has increased some 13 fold in dollar terms.

The Chinese are now focusing intently on new innovation and patents.  This from "China Business".

In an extensive campaign significant for the global economy, China is targeting an astounding 2 million domestic patent applications annually by 2015, and wants to be one of the top two patent owning countries by 2020.  

How are they intending to get where they want to go?

To boost domestic patents, China will offer incentives of cash rewards, houses and tax breaks to scientists and innovators. The patent master plan promises infrastructure for quicker filing, examining and granting of patents, funding patent holders, and integrating new patents into the economy.  

When Mr. Russell was talking about China they had about 500 million more people than the United States. Today they outnumber us by over 1 billion.  We better be prepared to hustle.

The Speech That Helped Make History

Miami University Interim Head Football Coach Lance Guidry pre-game speech before the GoDaddy.com bowl.  Miami defeated Middle Tennessee 35-21 last night.  The RedHawks made college football history by becoming the first team to go from double digit losses (1-11 in 2009) to double digit wins (10-4 with this win) in one season.

Mr. Speaker

I first met new House Speaker John Boehner 27 years ago.  He was a young township trustee in the early stages of putting a campaign together to run for the Ohio House.  I was also young and had come to understand a great deal about the budget of the State of Ohio in being part of an unsuccessful grassroots effort to rollback a 90% tax increase.  The tax increase had been enacted by a newly elected Democratic governor that had passed both Ohio legislative chambers on straight party line votes.  All Democrats for.  All Republicans against.  Does that sound kind of familiar?

I was an independent who have never done anything political in my life.  Much like today's Tea Partiers I was shocked at this money grab and the arrogance in which it was done.  By the end of that year I had the equivalent of a Phd. in politics and the Ohio state budget.  John was looking to gain some insights on both perspectives.

I can tell you first hand, that the stories profiling John are accurate.  This is a guy who worked for everything he got.  He worked his way through college.  He built a successful business.  He had been inspired by Ronald Reagan. He told me that day that he wanted to run for office to make a difference.  He told me he wanted to make sure the system that allowed him to succeed would endure for his children and future generations.

He does smoke.  He does like to play golf.  That much he has in common with President Obama.   That is not a bad start to at least get some dialogue going.  However, there are some pretty fundamental differences in how they view the world. 

I have not always been on the same page in approaching issues as John.  I am a policy guy first and a poor politician.  I always found John to be a politician first and a policy guy second.  I am not saying that in a pejorative way.  He has a good sense of what is achievable and has been a master at getting it done. I tend to look for the best policy rather than the best politics. I never would have gotten off the back bench if I had gone to Washington. 

I can't tell you how impressed I am with what John has achieved from that day 27 years ago. I also can see no evidence that John sees anything any differently than he did sitting with me those many years ago.  He understands hard work. He understands what the American Dream is all about. He wants to make a difference.  Let's all hope that he can find a way to work with the President to get the country moving...even if it requires a few rounds of golf.

Best wishes, Mr Speaker!  

The BeeBest of 2010

Time to take account of the best of 2010 from my perch on the BeeLine.

Best Book I Read 
Made to Stick by Chip and Dan Heath.  Runner-ups to Outliers by Malcom Gladwell and The Big Short by Michael Lewis. As I said in an earlier post, I do not read fiction very often.

Best Movie I Saw
The Social Network.  I did not see many movies in the theatre in 2010.  I liked the story, the casting and the script even if it may not have been 100% accurate.  It still is incredible that Facebook did not even exist on this date 7 years ago.   If Facebook was a country, it would now be the third largest in the world!  More interesting trivia...The actress who play Mark Zuckerberg's girfriend in the opening scenes in the movie is Rooney Mara, granddaughter of Wellington Mara, former owner of the NY Giants.  Shis is also the great-granddaughter of Art Rooney, the founding owner of the Pittsburgh Steelers.

Best TV Show
Friday Night Lights.  If you have not seen it you should give it a try.  Nothing better than Coach Eric Taylor helping shape the lives of high school football players in small town Dillon, Texas.  Last season is due up on NBC this spring.  Mrs. BeeLine also never misses an episode.

Best New Place I Visited  
Sun Valley, Idaho.  It is not easy to get to.  I don't ski.  No wonder it took me awhile to get there.  It is a beautiful spot.

Best Old Place I Visited
Florence, Italy.  I had not been there since college but it had not changed much.  If DaVinci was visiting today he could probably say the same thing.  Great atmosphere and great art surround you everywhere.

Best Golf Experience
Outdriving former PGA champion Dave Stockton while playing with him for a couple holes at a golf outing.  One highlight from a poor year on the links. Considered by many to be the best putter of all time, he parred with a one putt.  I three putted for a bogey. Drive for show, putt for dough.

Best Prediction
Predicted right after passage of the health care reform law that if Republicans gained more than 60 seats in the House that a repeal would be introduced and would pass in early 2011.   Not done yet but this prediction looks pretty good.  I was smart enough to not make any predictions about the Senate.  However, if the repeal vote passes the House I do believe there is a reasonable chance that there will be at least 50 senators for repeal evan though there are only 47 Republicans in the Senate.  I say that because 23 of the 33 Senate seats that up for election in 2012 are held by Democrats.  These include more conservative and swing states like Florida, Missouri, Montana, Nebraska, North Dakota, Ohio, Virginia and West Virginia that all have Democrat incumbents.

Worst Prediction
My beloved Miami RedHawks football team would not be better than 6-6 for the year.  They ended up 9-4, won the MAC Championship and play in the GoDaddy.com Bowl tonight.  If they win it will represent the first time in the history of major college football that a team has gone from double digit losses (1-11) to double digit wins (10-4 if they win) in one year.  Go RedHawks!

Best New Term
Crowdsourcing.  I knew about outsourcing.  Insourcing was also not foreign to me.  I was not familiar with this term that Wikipedia defines as "the act of outsourcing tasks, traditionally performed by an employee or contractor, to an undefined, large group of people or community (a crowd), through an open call."  The growth of the internet and social media has given us access to experts and contributors in every part of the world.  There may be a better idea.  Crowdsourcing is the way to get access to it.

Best Way to Get Away From It All
8 day transatlantic cruise from Ft. Lauderdale to Gibraltar.  That is 4,500 miles of ocean without seeing a speck of land.  Plenty of time to read, relax, recharge and eat.  Greece was falling apart and the stock market was tanking but there is not much you can do about it in the middle of the Atlantic.  A great perspective on what is really important in life.

Time As Money-A Million, Billion, Trillion

It is not easy to comprehend the difference between a million, a billion and a trillion.  These numbers are thrown around everyday in discussions about the federal budget but it is hard to wrap your mind around anything without context.

This example from John A. Schweizer in today's Wall Street Journal provides a good way to see what a trillion is in terms of time.

One million seconds is approximately 11.5 days.

One billion seconds runs nearly 32 years.

One trillion seconds represents more than 30,000 years.

I Will See Your $14.294 Trillion and Raise You...

Sometime between early March and mid-April the federal government will hit the current public debt limit of $14.294 trillion.  The current ceiling (why didn't they just make it an even $14.3 trillion???) was signed into law last February 12 (what would good old Abe think???) from the prior limit of $12.394 trillion.

That means that the federal government rolled up almost $2 trillion dollars of debt in a little over a year!  It is almost incomprehensible.  Let me put that in perspective for you.  That is about $19,000 of additional debt for every household in the United States.  It makes you wonder why we didn't just send $19,000 to all 100+ million households as a stimulus package.  More sobering is the fact that the U.S. will collect less than $2 trillion from individual income and FICA taxes in 2010.  We spent all that and added $2 trillion on top of it in new debt.  This means that we essentially spent $2 for every $1 that individuals paid in taxes in the last year.  It's like you making $50k and spending $100k.

How do you fix it?  The math is pretty simple.  Double all individual and FICA taxes.  Cut spending in half.  Some combination of the two.  The math may be easy but there is nothing simple about the solution.

There are no good solutions from this point forward...only various forms of pain.

It looks to me as if the real tough decisions are going to begin with the upcoming debate over raising the debt limit.   Many Republicans have signaled that this will be a real debate.  There also will be a direct vote.  In the past, members were not required to put their name on votes on federal debt limit increases.  They were done by voice vote or put in a package deal. Only in Congress can you get a $2 trillion line of credit and not have to sign for it. Speaker Boehner has ended this practice.

What will be interesting to see is how the Republicans play this.  What do they have to get to gain the support of the majority to raise the limit?  They very effectively boxed in President Obama in December on the tax cut with the help of the "shellacking" (the President's word for it) the Democrats took.  In politics, it always helps to have the voters on your side.

Having the voters covering your back is a lot easier when it comes to holding the line on taxes than cutting government spending.  The Republicans have a real opportunity to get the country back on the road to sanity this Spring.  However, they will only be able to go as far as public opinion takes them.  People need to know the facts.   Forward the first 3 paragraphs to someone you know.  If you are under the age of 40, forward the first 3 paragraphs to everyone you know!  The bet is about to get raised again.  How high do you want the pot to go knowing your (our) cards look like this?

2010 Investment Hindsight

The final numbers are in for 2010.  The best investment advisor on the planet is Mr. Hindsight. If I could hire him to manage my portfolio I would.  He is much more reliable than Ben Graham's Mr. Market.

Dow Jones Industrials                      +11.0%
S&P 500                                          +12.8%                           
Russell 2000(small caps)                 +25.3%
MSCI EAFE (international)             +  4.9%

LT Barclays Treasury Index             +9.4%

Gold                                                 +29.8%
Silver                                                +83.7%
Corn                                                 +51.7%
Wheat                                               +46.7%
Cotton                                               +91.1%
Coffee                                               +76.9%
Crude Oil                                          +15.1%
Natural Gas                                       -20.9%

Dollar vs. Euro                                  +7.1%
Dollar vs. Yen                                   -12.8%
Dollar vs. Canada                              -5.1%
Dollar vs. Yuan                                  -3.6%

I think most investors would be more than with satisified with the 2010 stock and bond performance if they could have those returns every year.  Unfortunately, it doesn't work that way.

Despite all the press about gold prices, silver was the place to be in 2010.  However, if you really wanted to be in high cotton, you should have owned cotton.   For the record, I did not corner the market in silver in 2010 and the only cotton I bought was in my shirts and shorts.

Forget the hindsight, what does Mr. Market say for 2011?  Where should you put your money? John Bogle, founder of the Vanguard Group, told Money magazine (Jan/Feb 2011 issue) that he thinks "this is the most difficult time to invest in my career".  Since that career goes back 60 years that is saying something. In a lot of ways we are in uncharted waters that even Admiral Bogle sees as treacherous.

Far be it from me to give anyone investment advice because I don't have a clue where things are going.  My only suggestion is that you make sure you are well diversified.  Most people I know do not have enough international stocks. They do not have enough small cap stock exposure (especially small cap value).  They often do not have a good balanced fund (that has exposure to both stocks and bonds).  Most do not have any gold or silver as longer term "portfolio insurance".  If you are looking at your portfolio for 2011, you might look at these areas first to see if you are well diversified.

What Exactly Is The Purpose of Public Sector Unions?

In college I took several courses on the history of the labor union movement as well as labor union economics.  I also took a labor law course in law school.  I also was a member of the United Papermakers and Paperworkers while in college.  I understand the reasons for the establishment of the labor union movement and its position in our private sector capitalist system.

I just don't get the rationale when it comes to the public sector.  Nobody else in this country seemed to get it either for years and years since I don't think there were any public sector unions at all before the late 1950's. In fact, it was illegal for most government employees to unionize until well into the 1970's.  In a number of states it is still illegal.

The historical basis for unions in the private sector is based on insuring a balance of power to insure that workers receive a reasonable share of profits and work in safe and sanitary conditions.  Governments don't make profits to share.  They only levy taxes.  In addition, has anyone ever heard of a government worker working in a sweat shop?  They also work in a monopoly situation meaning that if they provide poor service, no service or strike there is no corresponding power by the consumer to go elsewhere as there is with a private sector business that is unionized..

My guess is that public sector unions will come under increasing scrutiny over the next decade.  We are in for a tumultuous period as the issues of government spending and our debt loads are so inextricably tied to these public sector unions.  These interests are firmly entrenched and will not go easily into the night.  We are likely to see many of the things occurring in Europe begin to also occur in the U.S as budget pressures intensify.

One preview might have been the recent snow removal fiasco in New York City where it is reported that the union leadership ordered a slowdown by workers because they are unhappy with proposed budget cuts. Another interesting insight is this editorial in my hometown Cincinnati Enquirer that takes the majority of City Council to task for its recently approved "Fantasy Land" budget.

"The process Cincinnatians have witnessed during the past few weeks has been a disgrace – and evidence that business as usual can no longer be acceptable at City Hall. Council members, some reluctant to compromise after public employee unions and other interests turned the screws on them, deadlocked over a proposed trash fee and a related plan to cut costs through managed competition. They chickened out and opted for neither, hoping that rosy scenarios on items such as police overtime and a tax “amnesty” will keep the budget balanced."

The real issue is the clout the public unions have with their political contributions meaning that ordinary citizens (and the taxpayers) are less important than the public union campaign contributions to many of our elected officials.  

"As we have said, city leaders must be devoted to serving all the citizens of Cincinnati, not just the most vocal interests closest to the political process. And they must fundamentally change the way the city does business. So far, they are doing neither. A majority has yielded to the demands of public employee unions that opposed layoffs, yet didn’t want to make wage or benefit concessions, and went ballistic at the mere thought of competitive bidding – something the real world of private enterprise regards as a fundamental principle.

A compromise seemed possible a week or so ago, where the sides would give some and take some on layoffs, trash fees and competition. But public sector unions turned up the heat on wavering council members with threats, invective and accusations of “union-busting.”

The editorial also cites what has to be one of the most bizarre quotes of 2010 (or any other year) by Diana Frey, the President of the local union that represents some of the municipal workers, that "she would rather be a laid off municipal employee than a private sector employee."  She was responding to the suggestion by some on Cincinnati Council that they consider some form of managed competition for some municipal services.

Whether public unions will survive in the future might very well depend on how responsibly they participate in the needed restructuring of government spending, jobs and pensions over the coming years.

The recent examples in New York City and Cincinnati are not reasons for optimism.

John Hinderaker of PowerLine also weighs in with "Time to Rethink Public Employee Unions".  PowerLine is always one of my favorite blogs.

Swapping Spouses- 2011 and 1973

I saw this story about Shania Twain getting married yesterday.  An interesting pairing in that she just married the former husband of her best friend and confidante, Marie Ann Thiebaud.   The relationship formed as Twain and Frederic Thiebaud, her new spouse,  sought solace with each other after Shania's former husband of 14 years, Robert "Mutt" Lange, moved in with Marie Ann in 2008. Turnabout is indeed fair play here!  Best wishes to Shania!

This story reminded me of what I still think is the greatest wife swap story I can remember.  In 1973, two young New York Yankee pitchers (and their wives) decided to swap wives, houses and children.  Fritz Peterson (Marilyn) and Mike Kekich (Susanne) were close friends and did a lot together socially.  The two couples and came to what was described as a group decision by all four.  Fritz moved in with Susanne and Mike moved in with Marilyn.  After spending a lot of time together they decided that the new couples were better suited to each other than their original partners.

I lost track of the story and had not checked to see how things had worked out for the couples until now. The Wanna Be Sports Guy provides this update from 2009.  Fritz and Susanne were still together at that time and had 4 children together.  Mike and Marilyn were not so lucky.  They flamed out after several months.

This is one of the reasons that I hardly ever read fiction.  Non-fiction stories are almost always much more interesting.

Unstoppable-The Federal Debt Train

I saw the movie "Unstoppable" the other night. The movie is about a runaway train flying through Pennsylvania with a cargo of hazardous materials. Denzel Washington and Chris Pine are the everyday RR guys that take it upon themselves to attempt to stop the train before it wreaks havoc.

Watching the movie I could not help but think about another seemingly unstoppable, runaway train-our federal debt.

A fact that is not well known is that despite the enormous amount of spending and the additional debt we have incurred over the last several years, the interest on the federal debt is actually down. How can that be?  Simple.  Interest rates are much lower largely due to Federal Reserve policy.  In addition, a lot of the debt is being purchased by the Fed essentially out of thin air.   The Fed now holds over $1 trillion of U.S debt.  To put this in perspective, the Chinese hold about $900 billion.  These actions have resulted in significantly lower interest costs despite much higher total debt levels.  This is great now but it portends potential disaster ahead if we don't get our fiscal house in order.

This is how the Congressional Budget Office describes it in its December 2010 report on Federal Debt and Interest Costs

Although the federal government has increased its net borrowing by more than $3 trillion in the past two years, net interest costs dropped from $253 billion in 2008 to $197 billion in 2010 because of remarkably low interest rates. The amounts of net interest shown in the budget include interest paid on all Treasury securities ($413 billion in 2010), minus the portion of that interest that is received by trust funds ($186 billion in 2010) and the net amount of other interest received by the government ($30 billion in 2010). The last category consists primarily of net receipts to the Treasury from the financing accounts for federal loan programs (those accounts are not included in the federal budget).

That's the good news.  The bad news...CBO is forecasting a $600 billion increase in interest costs (a four fold increase) due to more debt and higher interest rates by 2020.  Bear in mind that this projection assumed that the recent tax cut and unemployment benefit extensions would not be enacted.  How much is $600 billion? We will spend about $450 billion on Medicare in 2010.   We are not talking about spare change here!

In CBO's most recent projections, which assume that current laws remain the same, annual deficits decline from the $1.3 trillion recorded in 2010, but the cumulative deficit from 2011 through 2020 exceeds $6.2 trillion. Borrowing to finance that deficit--in combination with an expected rise in interest rates--would lead to a fourfold increase in net interest payments over the next 10 years, from $197 billion in 2010 to $778 billion in 2020. As a percentage of GDP, net interest outlays would more than double during that period, rising from 1.4 percent to 3.4 percent.

This is a train wreck waiting to happen. We need some real life heroes to stop this runaway train. Who is it going to be? I have high hopes for Rep. Paul Ryan (R-Wis) the new Chairman of the House Budget Committee. He has been one guy who has not been afraid to talk straight and to put tangible plans on the table. However, it is easier to talk than to govern. We need some heroes who are willing to try to stop the train before it is too late for all of us. Will Paul Ryan have the right stuff?

Changing Things When Change Is Hard

Made to Stick was the book that had the greatest influence on me in 2010. Written by brothers Chip and Dan Heath, it describes why some ideas survive and others die.  Why some things are memorable and "stick" with people and how to make your ideas, speeches, presentations "stickier".   It is a good read and one I definitely recommend.

I am now reading the second book authored by the Health's, Switch.  It carries the subtitle "How To Change Things When Change is Hard" and is focused on teaching you how to effect transformative change whether it is changing the world, your organization or yourself.  This book should be particularly useful at the beginning of the year as you consider your new year's resolutions.

A couple of lessons from the book...

Self-control is an exhaustible resource.  Changing personal behaviors is hard not because people are lazy or lack motivation.  Change is hard because people wear themselves out from attempting self-control.  When we try to change things we usually are trying to overcome things in our brain that have become automatic or reflexive.  These things in the brain are on auto-pilot and don't require the brain to work very hard.  Forcing yourself to self-supervise requires the brain to work hard and is exhausting.  That leads to the second lesson...

It is easier to change the situation than yourself.  If you eat too much candy, keep it out the house to begin with.  If you smoke when you go to a bar with the girls, don't go to the bar.  In this way you are better able to conserve the necessary mental muscles that you need to keep you focused and on track and to persist in your bigger, well-reasoned long-term goals.

What looks like resistance to change is often lack of clarity.  If you want change yourself or others, you must have crystal-clear goals or direction.  You can't just say "be healthier".  That is subject to too much interpretation.  It also usually mean that nothing gets done.  You need to be very specific such as "I am going to walk 30 minutes every day".  It also is better to "shrink the change" by looking for smaller, achievable goals. For example, walking 30 minutes a day is a better goal than setting out to lose 30 pounds.  Work on the walking, then work on cutting out the snack before bed and you will soon be on your way to the loss of weight.

I am only half-way through the book but the Health brothers weave a lot of great stories into their books that are truly "made to stick".  You can't go wrong with either one.

Good luck for all you change managers in 2011!

Welcome to BeeLine

A new year.  A new beginning.  A new blog.  It certainly is debatable whether the world needs another blog.  By one count (Pingdom), there were 126 million blogs on the internet in 2009.  That compares to 234 million websites serving 1.73 billion internet users worldwide.

90 trillion emails were also sent in 2009 (the final 2010 totals should be available in the next 30 days). However, 81% of all emails are spam according to Pingdom!!

Keeping all this in mind, I want BeeLine to be useful and relevant.  A"beeline" is defined in most dictionaries as a straight or direct route. The shortest line from one place to the other is probably the way I like to think of it.  That is what I want this blog to be.  There is so much information out there, but how do you get yourself above the clutter, chaos and calumny that we live with everyday?  My hope is to provide some small modicum of coherence and context about the world and share it with you in a concise manner.  That is my goal for BeeLine.

I intend to write primarily about what interests me and what I also think you will find interesting. That will probably mean there will be a heavy dose of politics, public policy, economics, taxation, investing, employee benefits, neuroeconomics, sports and interesting trivia.  However, anything and everything is fair game if it meets the BeeLine test of giving you a direct path to what I find interesting and what I think is worth sharing.

How will I do this?  Will there be enough worth sharing?  I have no idea as I begin the New Year.  However, experience tells me I will come across something that will meet the test.  The only serious question is whether anyone will care.  I start off knowing that of those 1.73 billion internet users, 738 million are in Asia.  By contrast, only 250 million are in North America-only 15% of total worldwide internet users.

When you add in the internet users in Latin America (179 million), Africa (67 million), the Middle East (57 million) and Europe (418 million of which a large majority do not speak English) I have to come to terms that none of us is as relevant as we think we are (or used to be).  It is a new world. I will do my best to embrace it even if I am competing in a small market much like my local Cincinnati Reds baseball team.

Happy New Year!