The Capitalist Maven

So it looks like 2 million Americans get a raise today, not a merit based raise of course, but a government mandated one. Not surprisingly businesses affected by the increase look to pass the cost onto consumers.

“Last week, the Labor Department reported the fastest inflation since 1991 — 5 percent for June compared with a year earlier. Energy costs soared nearly 25 percent. The price of food rose more than 5 percent.”

Do you think it’s any coincidence that this latest bout of inflation seems to correspond exactly with last year’s minimum wage increase? It’s funny they mention that inflation was the worst since 1991 because guess what happened in 1991? Why the minimum wage increased of course! Coincidence, I don’t think so.

Here’s so interesting data to see this trend for yourself. Here’s the history of the minimum wage and here’s the history of inflation. So let’s look back further than the early 1990’s mentioned in the article. How about the huge inflation of the 1970’s? So inflation was nice and low in 1972 and 1973, then it starts to heat up in 1974. What happened in 1974? Why a minimum wage increase. Surprised? Not me. Inflation continues throughout the 1970’s along with minimum wage increases. Then in 1982 the minimum wage increases come to an end. Guess what happens in 1983, by this point you probably have a good idea. In 1983 inflation comes in at less than 4% for the first time since 1973.

Check out the picture of the huge line of people waiting to take their money out of IndyMac Federal Bank.  I think this picture may qualify them for the 2008 dumbass awards.  What they don’t seem to realize is that the FDIC has already taken over the bank, as indicated by addition of Federal to the bank’s name.  The damage is done.  Taking your money out now is no different than taking it out in a month, a year, or a decade.  If you have less than $100,000 at the bank you will get 100% of your money back.  If you have more than $100,000 at the bank you will likely get something less than 100% back.  Taking it out now or later makes no difference.

It would be nice if the media could generate a newspiece making fun of these people, to get the word out that this kind of behavior is stupid.  Instead I’m sure they are using this as another sob story to attempt to paint the recession picture.  Nothing like a picture of nervous people standing in line to take their money out of a failed bank.

I just checked my Fatwallet cashback account balance.  My lifetime cashback has crossed the $100 mark!  This means I have earned $100 for doing nothing more than clicking on a Fatwallet link before buying something online.

Some background for those who don’t know about Fatwallet.  Fatwallet is an online deals site.  They have several forums where people post various deals that they have gotten or are currently available to purchase.   They also have a section called cashback, where many online merchants are listed.  When you click on the link to go to the merchant site and make your purchase, a percentage is rebated back to your Fatwallet cashback account.  When you accumulate a minimum of $10, you can request payment via check (or for any amount via Paypal).

Recently the cashback goldmine I’ve discovered is travel.  Since I do tend to do alot of travelling, it provides a nice way to get some money back.  Most of the hotel group websites are represented along with many of the big travel sites:  Orbitz, Priceline, Hotwire, Hotels.com, Expedia, etc.   Particularly interesting is Priceline, which allows you to book most flights with no booking fee.  Since none of the airlines offer cashback and US Airways even charges you an extra booking fee right now on their own website, Priceline makes a killer deal for air travel.  As an example if you were to book a $200 flight on US Airways, you would save the $5 booking fee by using Priceline as well as receive $6 in cashback.  Not bad for simply clicking a link.

Well I watched the Boone Pickens interview on GMA.  It was actually pretty good, although if you watch all the way to the end, the comment by Diane Sawyer is priceless “T. Boone, I just like saying T. Boone, hehe.”  I guess it is GMA after all, it wouldn’t be complete without something idiotic.

Here’s the video of the interview.

Basically a dumbed down version of what he said on CNBC.  But hopefully he can get his point across, particularly the danger of $6 gas next year.

I happened to see an advertisement for “Good Morning America” featuring Boone Pickens last night.  Frankly I was shocked.  Here we have a highly intelligent and successful business man who correctly predicted that oil would hit $4 a gallon in 2008.  This is not your typical feature story on GMA.  Check out their website right now. The top 3 headlines as I write this:

“Obama’s Plane Trouble”

“What Happened to Obama’s Plane?”

“Obama Access Hollywood”

Clearly this is a show that brings you the best of business and capitalism (sarcasm intended).   I’ll be curious to catch the video of his appearance at some point.  I’d be particularly curious how they manage to spin his “peak oil” view into something political, which they are bound to do.  Nothing like some finger pointing on the morning news.

Curiously Pickens also appeared on CNBC “Squawk Box” this morning, I guess he is in New York City and is making the rounds.  Pickens believes that the world has reached a condition known as “peak oil” where the demand for oil exceeds the greatest possible supply.  He believes that the only thing that will curb demand for oil is painfully high prices, which we are seeing now.  I happened to catch part of his appearance on CNBC this morning.  He was pitching a plan to replace the 20% of energy for electricity that is natural gas with wind power and reallocate that natural gas to powering vehicles.  His theory was that the vehicles to make this happen already exist, produced by GM but sold only abroad.  The only pieces of the puzzle that were missing were the refueling infrastructure for the CNG cars and the wind farms to comprise the 20% replacement for natural gas both of which could be rolled out relatively easy with some work on the part of the federal government.

There was a recent Slashdot post about how it would cost $24,000 to send an MP3 at text messaging rates.  Maybe I’m crazy but I’ve always thought that text messaging was overpriced.  Even at the ridiculous overage rates ($0.35 a minute) voice is still far more costly for a carrier to transmit.  A GSM voice call has a data rate of 22 kpbs, so 1 minute of voice data is 1,320,000 bits.  Compare this to a text message at 1120 bits.  To send 1 minute of voice using text message rates would cost $235!

Being the cost conscious person that I am, I think I have sent something like 4 text messages in my life.  All were at times when it was physically impossible to carry on a voice conversion due to the noisy environment.  Would I use it more often if the price was reasonable?  Absolutely.  But would I use it like I see others doing, carrying on slow conversations using a cryptic compressed English coding (LOLspeak)?  Absolutely not.

When I got my HAM radio license, you still had to learn morse code to operate on HF bands.  So I spent a few months learning morse code and eventually passed the test.  I could transmit 5 words per minute using a simple binary encoding of the english alphabet.  Aside from a few diehards, most HAM’s preferred to use voice.  For many of us its just not fun to peck away at the key.  For HAMs though, sending morse code was a way to get a message through when other mechanisms were impossible.  A simple lower power radio could transmit a message around the world using morse code.

Texting is different.  Here you are using an extremely complex and powerful device to transmit what amounts to smoke signals at astromical prices.  It’s like you are using paper money to burn to generate your smoke signals.  I’ve comtemplated disabling texting on my account.  But I always remember those maybe 4 times when texting got the message through, so I leave it turned on.  I never send any messages when voice is possible and I respond via voice to messages sent to me.

Sure I could buy a text message plan or just suck it up and pay a few dollars a month.  But why?  I’ve got a mechanism that communicates information much faster and more reliably:  my voice.  I can immediately confirm receipt on mesages when I hear the other person respond.  I don’t have to learn a cryptic english shorthand to communicate.  Eventually data enabled phones with IM capabilities will replace texting until then I’ll be sticking to voice.

Well more accurately, I replaced nearly all the parts. She had been using my Athlon XP 1700 machine that I put together back in 2001. Recently it started turning itself off at random inconvenient moments. A quick visual inspection of the motherboard confirmed my what I suspected: bulging capacitors. It’s a well known problem with PCs from the first half of this decade. Apparently somebody in China got some bad electrolyte and produced nearly all the capacitors used on computer motherboards during that time with it. I’ve actually been lucky to get 5 years out of this motherboard. At some point I will try to get some capacitors and fix this board but the amount of time it will take to do it without special ordering capacitors (expensive) was prohibitive.

So I bought some new parts. I wanted to maximize the value and power efficiency I got out of the new parts. After searching around the web, the hot new chipset for non-gaming systems is the AMD 780G. It’s fast, low power, and actually has decent integrated graphics. While it wasn’t the cheapest motherboard at $89.99, it’s got USB 2, Firewire, eSATA, DVI, and HDMI. She’ll actually be able to watch Blu-Ray on this system when it comes down in price in a few years. And it’s got connections to match whatever Ipod/Camera/Toy she is using at the momement. I matched this with a AMD Athlon X2 4800 for 59.99. I picked up 2GB of DDR2 RAM that should come to $27.99 after rebate. And she really wanted a DVD drive so I picked up a DVD burner for $26.99. Total after rebate shipping $211 for a system that’s easily 6x as fast as the old 1700. I ordered all my parts from NewEgg. They have great prices, fast shipping, and the best selection of computer parts anywhere.

I actually expect this system to pay for itself in a year or 2. It idles at 45 watts compared to over 115 watts idle for the old system. That’s a savings of 70 watts. Since she likes to leave it powered up and available 24/7, thats 70 watts x 24 hours x 365 days = 613.2 KWH a year. At 17 cents/KWH that’s $104 a year. Sure enough, in 2 years her computer upgrade will be free.

The AP published an article today about how premium fuel sales are down significantly. First let me get this out of the way. If your car calls for 87 octane gas, you are a fool for using anything more expensive than 87 octane. If you engine is specified to run with 87 octane, you get no benefit from using anything higher. It is literally money down the drain or up in smoke in this case…

On the other hand if you car engine is designed for premium fuel, using the cheap stuff will cause your engine to run in low performance mode. What this means is that you will lose horsepower, torque, and acceleration. Most importantly, you will lower your fuel economy. An engine that is designed for premium may get 30 MPG using the specified grade, but put in the cheap stuff and you’ll drop to 26-28 MPG or so. So even though you saved $3.00 on your fill up, that tank of gas will go 50 miles shorter.

It’s interesting to note that most of the premium fuel vehicles are European. Gas has been ridiculously expensive for years in Europe it stands to reason that they would want to find a way to make high performance engines run more efficiently. The answer of course is premium fuel. While gas prices have double in the past couple of years, the spread between regular and premium is a relatively constant $0.30. Why not pay a few cents more to get better fuel economy overall?

A hot topic of conversation that came up at dinner this weekend were the long lines at the Dunkin-Donuts drive-through backing all the way up into the road. How lazy can people be? Is it really that much easier to wait 15 minutes with engine idling than to take 5 minutes or less to park and walk inside? While cars probably use vastly difference amounts of fuel to sit in line for 15 minutes (Prius = near zero vs. 5.0L V8 = over a half a gallon), even without the fuel charge is the 15 minute wait worth saving the short walk?

First, I have to make that observation that the vast majority of people are probably just waiting for a coffee. I’m not a coffee drinker but I do drink alot of beer. Even if they did have drive through bars, I don’t think I’d use them. The only beer I’d ever wait in line for is a free beer. Is the coffee that good that’s its worth sitting in your car for 15 minutes waiting for? I understand that caffeine is addictive (by some accounts more so than nicotine) but I’ve never worried about the difference between Coke and Pepsi enough to wait in line for one over the other.

Second, the parking lot at Dunkin-Donuts is not very big, it’s not like it’s a long walk. It would most certainly be faster to park and walk-in than wait in the drive through. Does coffee make you lazy? Perhaps people are concerned that if they get up in walk-in, they will actually wake up enough to not need the stimulative effects of coffee, thus making the trip to DD worthless…

Third, with all this talk of recession (which I still don’t believe), how can people afford a $5 iced coffee every day? I thought everybody was broke and out of work? The recession clearly isn’t bad enough to warrant a switch $5 coffee to $0.10 or less homemade coffee.