Check out the price tag – $408, 692 – that’s for one men’s room and one women’s room
Check out the price tag – $408, 692 – that’s for one men’s room and one women’s room22-Dec-2009 20:19SONY DSC-W55, 2.8, 6.3mm, 0.025 sec, ISO 200
The sign pictured here went up last month at 69th St Station. Check out the price tag: $408,692 to remodel the men’s room and the women’s room. My nice large house in a good neighborhood isn’t worth that kind of money. The station’s men’s room is a modest size – two toilets, two urinals, two sinks. Presumably the women’s room is similar, so we’re not talking about large facilities. And the sign says “refurbishing and renewal of existing public restrooms,” which doesn’t make it sound like major demolition or expansion is involved.
Usually when you see a sign like this for a public project, its for something like a bridge, and most of us don’t have the kind of experience needed to readily understand all the expenses involved. But most homeowners can relate to the cost of remodeling a bathroom. So I’ve been trying to imagine where all that money is going. Trying to be generous and fair, here’s my best guess at what the cost should be:
These are public restrooms that require heavy duty fixtures. In the old men’s room, the sinks, toilets, and urinals were stainless steel. The toilets were designed without seats (as the designers assumed – probably correctly – that some jerk would just tear them off) and the mirrors were reflective metal instead of glass. The sinks are probably designed to handle drunken idiots dancing on the counters. There’s also two of every fixture in each bathroom (two sinks, etc., but minus the showers and tubs in a typical residential bathroom). So given the need for heavy duty fixtures and two of each kind, let’s double the cost again: $80,000.
Now let’s add in the premium for union labor and the cost of compliance with regulations such as the ADA (Americans with Disabilities Act). That’s harder to guess at, but I think doubling the cost again is generous: $160,000.
So that doesn’t even get us halfway to the actual price being paid with public funds. What is the rest for?
UPDATE 2:septawatch.com got an answer: it turns out the cost is for renovating 4 bathrooms, not just the 2 implied by the sign. So if you take my generous $160K ballpark estimate and double it again (for going from 2 to 4 bathrooms), that’s $320K. That’s still almost $100K shy of the actual $408K cost, but if you read the septawatch.com post, it sounds like they’re actually doing more than just “refurbishing.”
A former student of Maria’s took this picture in Shinjuku. It’s Taro Aso, the Prime Minister of the recently defeated LDP05-Sep-2009 13:58EASTMAN KODAK COMPAN KODAK EASYSHARE M320, 3.2, 7.1mm, 0.0080 sec, ISO 80
One of Maria’s former students, now in Tokyo, took this picture in Shinjuku. It depicts Taro Aso, who in the wake of the LDP’s defeat, is now the outgoing Prime Minister of Japan.
The cover art for the Economist’s Sept 5th issue: Dokkaan means “explosion”
The Economist’s articles about the election are good – see this week’s Leader article and their more detailed Briefing article. Maria’s the expert on Japanese politics, not me, but she pointed out to me an aspect of the story that’s been missing from the Western press. Koizumi won a big victory for the LDP in 2005, partly because of his promise to privatize the postal saving system (a particular area of interest for Maria). The Western press depicted the 2005 election as a call for “reform” from the Japanese people, but it also represented a political maneuver by Koizumi to undermine the old guard of his own party, which opposed him on many issues and relied upon the patronage politics of the postal savings system. So while the DPJ’s landslide victory last week was certainly a resounding call for change, it’s also partly the result of the intra-party fight Koizumi started in the LDP several years earlier, which had the effect of weakening the party overall.
The Katakana word on the Economist’s cover is “Dokkaan” which is an onomatopoeia word for “explosion.”
Something I haven’t found any news on yet is how the Happiness Realization Party fared in the election. It’s the political arm of the “Happy Science” cult. The closest analogy to the US would be if there was a political party based on Scientology. They’re known for their wealthy members, they require large sums of money or expensive gifts from their followers to reach successive stages of enlightenment, and their leader claims “…he is the incarnation of El Cantare, a 9th degree spirit who was originally sent to the Earth from Venus 600 million years ago.” They claim to have 10 million followers, and they managed to field candidates in all of Japan’s 300 single-seat electoral districts.
I’d like to point you to a couple of particularly good blogs for understanding the turmoil in Iran right now. Gary Sick, who served on the National Security Council for Presidents Ford, Carter, and Reagan, provides this context in his blog. His post, Iran’s Political Coup is particularly good. Middle East History Professor Juan Cole is often insufferable, but his blog is a great source of first hand accounts emailed to him from the streets of Tehran. His recent post Class v. Culture Wars in Iranian Elections explains why – when placed in the context of the past 10 years of Iranian politics – the official election results are completely implausible.
It’s also fascinating to see the online battle between the protesters and the Iranian government, with the government shutting down cell phone networks and blocking access to services like Twitter and Facebook. Their goal is to disrupt communication between the protesters, as well as stifle their communication with the outside world. In response, people inside and outside Iran are swarming to set up proxy servers to get around the blocks. CNET News has a good explanation of what’s happening in laymen’s terms.
The best and most comprehensive assessment I’ve seen yet of our current financial crisis is Simon Johnson’s article in the latest issue of The Atlantic, The Quiet Coup. Here’s the summary:
The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.
I’ve been very disappointed with the Obama administration’s handling of the crisis – they are letting the banks continue to run the show. As Johnson’s article makes clear, the financial sector wields preponderant influence in both political parties. Josh Marshall at Talking Points Memo explains the current politics of the situation well, as the extent of malfeasance in the financial sector becomes known, and public anger rises:
The problem is what appears to be the president’s mortifying impotence in the face of bankers and financiers who created the problem… I think the American people have demonstrated over the last six months that they’re willing to expend vast sums of money and endure great economic hardship without holding the damage against their political leaders. Effectiveness, in the sense of how long it takes to turn the economy around, is something they seem willing to be flexible on. But not on who’s in charge… From Geithner and Summers, and indirectly from Obama, we keep hearing financial-legal versions of ‘It’s bigger than the both of us’. Like we’re along for the ride, still taking dictates from the people who got us into the mess we’re in.
And Johnson, in the conclusion of his Quiet Coup article, is very clear about the economics of the situation:
At the root of the banks’ problems are the large losses they have undoubtedly taken on their securities and loan portfolios. But they don’t want to recognize the full extent of their losses, because that would likely expose them as insolvent. So they talk down the problem, and ask for handouts that aren’t enough to make them healthy (again, they can’t reveal the size of the handouts that would be necessary for that), but are enough to keep them upright a little longer. This behavior is corrosive: unhealthy banks either don’t lend (hoarding money to shore up reserves) or they make desperate gambles on high-risk loans and investments that could pay off big, but probably won’t pay off at all. In either case, the economy suffers further, and as it does, bank assets themselves continue to deteriorate—creating a highly destructive vicious cycle.
To break this cycle, the government must force the banks to acknowledge the scale of their problems. As the IMF understands (and as the U.S. government itself has insisted to multiple emerging-market countries in the past), the most direct way to do this is nationalization. Instead, Treasury is trying to negotiate bailouts bank by bank, and behaving as if the banks hold all the cards—contorting the terms of each deal to minimize government ownership while forswearing government influence over bank strategy or operations. Under these conditions, cleaning up bank balance sheets is impossible.
Nationalization would not imply permanent state ownership. The IMF’s advice would be, essentially: scale up the standard Federal Deposit Insurance Corporation process. An FDIC “intervention” is basically a government-managed bankruptcy procedure for banks. It would allow the government to wipe out bank shareholders, replace failed management, clean up the balance sheets, and then sell the banks back to the private sector. The main advantage is immediate recognition of the problem so that it can be solved before it grows worse.
Back in the banking crisis of 1907, J.P. Morgan got all the major bankers into one room and forced a kind of reorganization on all of them. We need the same today — a giant reorganization of the banks, in which their shareholders lose what little value they have left, their creditors get paid 20 cents or so on the dollar, and their assets are written down to about 20 percent of their face value. In effect, it’s an industry-wide reorganization under bankruptcy. This way, bank balance sheets are cleared up, there’s no run on any one bank, everyone starts anew, and taxpayers aren’t left holding the bag.
Reich also emphasizes the urgency of the situation:
Six months ago it may have made sense for the government to buy up so-called “toxic assets,” based on home mortgages that should never have been issued. Three months ago it may have made sense to establish a “bad bank” to store them in, until they could be resold.
But as the Mini Depression worsens, “toxic assets” are no longer all that distinct from a vast and growing sea of non-performing or endangered loans on the banks’ balance sheets. Toxicity has spread to loans made to people and companies that were good credit risks as recently as early last year but are now bad risks. You don’t have to be an honest financier (no oxymoron intended) to figure this out: Ten percent of Americans are behind on paying their mortgages. Millions more are behind on paying their credit-card bills. Hundreds of thousands of small businesses are behind on paying their own bills. Auto suppliers can’t pay their bills. And so it goes.
A “bad bank” collecting all these non-performing or in-danger-of-becoming non performing loans might well become larger than the rest of the banking system — nationalization through the back door of lemon socialism, where the government (and taxpayers) own and control this vast sea of junky loans.
The current Treasury plan doesn’t force any transparency on the banks – it doesn’t require any honest accounting of the value of their assets. Instead it’s essentially an offer by the government to underwrite all the risk for anyone who will invest in banks, leaving the government (taxpayers) to absorb the losses if the investments fail. It’s a plan that again leaves the banks holding all the cards, serving no one’s interests but their own. If, for example, a bank owns a mortgage with a face value of $300K, and the home is foreclosed, the bank still has a $300K asset on its books. The home currently may be worth only $200K, but what incentive does the bank have to sell it at that price? Sales like this would bring in cash, but would dramatically reduce the value of what’s on the bank’s balance sheets. Enough such sales would likely push them into insolvency. The bank’s incentive is to instead find a way to persuade the government and investors to pay far more than what the assets are worth, or to just not sell them at all, and hold out for another bailout. (Credit for the observations in this paragraph goes to Maria, who understands the financial sector at a much deeper level than I do).
In the end, I’m forced to agree with this cynical observation from the comment section on a post about the possibility of banks gaming the plan (i.e. through proxies, bidding up the sale price of their own assets and leaving taxpayers on the hook for the difference):
As far as I can tell, the endless succession of plans offered up over the last six months has had one goal: come up with something complicated enough to provide political cover for foisting the huge losses of the banks off on taxpayers. Even assuming no cheating/gaming, best-case scenario – isn’t that the whole point of the plan?
Another voice worth hearing on the economic crisis is Paul Krugman at the New York Times (scroll down to the “columns” section). And to avoid ending on too depressing a note, give a listen to the song Hey Paul Krugman:
“I suggest, you know, obviously, maybe they ought to be removed,” Grassley said. “But I would suggest the first thing that would make me feel a little bit better toward them if they’d follow the Japanese example and come before the American people and take that deep bow and say, I’m sorry, and then either do one of two things: resign or go commit suicide.
“And in the case of the Japanese, they usually commit suicide before they make any apology.”
It’s a shame Senator Grassley hasn’t ever shown any interest in having us replicate other aspects of Japanese society, like their amazing and wonderful mass transit system. With their ubiquitous and reliable railways, jumping in front of a train is definitely a dependable way to go in Japan. If we had had a rail system like that, then the AIG executives would have their pick of modern, high speed trains to throw themselves in front of.
The 1933 “Norris Lame Duck” Amendment, as it was popularly known at the time of its ratification, eliminates the December to March Congressional “lame duck” short sessions… The amendment also moves the inauguration date for president and vice president from March to January… The amendment’s author, Senator George Norris, concerned with congressional efficiency and accountability, regarded it as one of his greatest achievements.
Having the inauguration in March hampered previous incoming Presidents during times of crisis, most notably Lincoln during the Civil War and Roosevelt during the Great Depression. Woodrow Wilson was so concerned about the effect of an extended lame duck period on the war effort if he lost his re-election bid in 1916, that he planned to resign immediately if he lost:
The final result was exceptionally close and the result was in doubt for several days. Because of Wilson’s fear of becoming a lame duck president during the uncertainties of the war in Europe, he created a hypothetical plan where if Hughes were elected he would name Hughes United States Secretary of State and then resign along with the vice-president to enable Hughes to become the president.
Obama’s been President for about 10 hours now, and I’m still waiting for world peace, electric cars, a revived economy, universal health care, and, of course, my jet pack. No President in my lifetime has come into office with such high expectations (due to both the multiple challenges we face, and the type of campaign Obama ran). But one thing is for sure, the Bush administration has been in “not my problem” mode since before the election, and I’m very glad to see Obama in office now instead of March. So, thank you, Senator Norris, and good luck, President Obama – you’re going to need it.
To followup on my election day post, I’ve been looking for numbers on turnout, but right now they’re all still estimates. At this point it looks like overall turnout, compared to 2004, moved from 55% of the eligible population to 62-66%, roughly matching the post WWII record set in 1960. What about the new voters in key demographic groups that Obama was counting on? They showed up: “About two-thirds of the new voters were under 30, twenty percent were black and another twenty percent were Hispanic. They went overwhelming for Obama.”
Nebraska and Maine are the only states that can split their electoral votes, although it’s never happened. Two of Nebraska’s five votes are awarded to the winner of the statewide election and each of the other votes are awarded to the winner in each of the state’s three congressional districts.
Obama targeted the 2nd District’s electoral vote, opening three campaign offices in Omaha and registered thousands of voters.
McCain has already won Nebraska’s four other electoral votes by winning 57 percent of the state’s vote, but in the 2nd District McCain’s led Obama by only 569 votes Wednesday. And a recount is possible in the District once 10,000 provisional and absentee provisional ballots are counted.
The Obama campaign was looking at multiple possible scenarios where they might end up with a 269-269 tie in the electoral college – like winning Kerry’s states plus only Iowa, Nevada and New Mexico. So they were looking to Omaha (Obamaha) to put him over the top. Obviously that’s not a concern at this point, but if Obama wins Omaha, it’ll be interesting to see how all the TV networks try to figure out how to adjust the display of their electoral maps to show a mixed result from a single state
A while back I mentioned the town of Obama, Japan. Here they are celebrating Obama’s victory, in a way that only the Japanese can. Presumably the Hawaiian theme is because he was born in Hawaii.
I often get questions from friends about the polls for the Presidential election. Back in January I discussed the routine abuse of the margin of error. Another big issue in polling is how you determine who a likely voter is.
To determine if you’re a likely voter, pollsters will typically ask if you’re registered to vote, if you intend to vote, and if you voted in the last election (in this case, the last Presidential election). They typically give the most weight to your answer about voting in the last election, so they consider past behavior a better indicator than stated intentions. Some will also ask if you know where your polling place is located, as an additional screen. In this election, with enthusiasm sky-high among the African-American community and young voters – both in favor of Obama – pollsters aren’t as sure about how to screen for likely voters. Gallup dealt with this dilemma by simply publishing an additional set of results – one using their traditional likely voter model, and one that counts you as a likely voter strictly by whether you say you plan to vote. What’s interesting in the final Gallup poll yesterday was that the results of the two models converged – both give a roughly 11 point advantage to Obama. (If you’re curious, back in August Nate Silver wrote an astute critique of how Gallup screens likely voters, arguing that it could be substantially underestimating the ultimate impact of unlikely voters).
Silver also wrote back in May that “youth turnout in the primaries increased by 52 percent as a share of the Democratic electorate.” This was part of an analysis of what the electoral map would look like if Obama could substantially increase turnout among young voters and the African American community. Silver went on to say:
The ability to bring new voters to the polls remains Barack Obama’s most significant electoral advantage, both relative to Hillary Clinton and John McCain. Indeed, current polling may already be underestimating Obama’s strength against McCain if it does not account for improved turnout among Democratic-leaning groups like young voters and African-Americans, who have participated in record numbers in this year’s primaries. If Obama can parlay that advantage with a strong ground game, he very much could redraw the electoral map.
Running counter to this argument is Gallup’s results published yesterday, showing no indication of an overall surge in youth interest in the election over 2004 levels. But in terms of the final outcome, they give themselves some wiggle room by saying “[voter mobilization efforts by the campaigns] can convince people with little motivation or interest in the campaign to actually vote on Election Day.” Gallup’s assessment of youth interest contradicts other evidence, but if Gallup is right, this is where Obama’s massive get out of the vote effort may prove decisive. In 2004 the Democrats registered new voters in much greater numbers than the Republicans, just as they have for this election, but in 2004 they didn’t turn out their voters nearly as well as the Republicans.
The actual turnout numbers for young voters and African American voters are what will make the difference between a narrow Obama win and big one.
The other thing to keep an eye on is the significance of the huge number of early voters. The national numbers for early voters are about 10% higher than 2004, with Democrats submitting 1 million more early ballots than Republicans. And the LA Times reports: “In three swing states — North Carolina, New Mexico and Colorado — the number of voters who have already cast their ballots has reached more than 70% of the number who voted there in 2004.” The question is whether the campaigns are simply banking votes early, or if the early votes are presaging even bigger – and equally lopsided – turnout numbers today, Election Day.
Most of the major polls have Obama up between 6-8%, which I think is about right. In 2004 I made predictions for the 13 swing states, and got 10 of them right (and since two of my wrong predictions were Ohio and Florida, I got the outcome wrong too). I’m not going to do a state by state breakdown again, as there are now lots of people already doing it, with skills and resources beyond mine. Instead, I’ll point you to political scientist Larry Sabato’s Crystal Ball map, which I think looks just about right. He has the electoral college going to Obama 364-174 (I credit Sabato for coloring every state blue or red, and not wimping out like many of the others making predictions, by leaving the close states as uncounted tossups).
Even if there is a big Obama win, be wary of pundits using the word “landslide.” While there is no hard and fast definition, if you look at the 3 elections since WWII that are generally considered landslides (Johnson v Goldwater, Nixon v McGovern, Reagan v Mondale), the popular vote gap between the winner and the loser was around 20%.
If Obama overperforms his poll numbers in states where he is very closely behind McCain, he could turn some red parts of Sabato’s map blue: North Dakota, Nebraska’s 2nd district (Nebraska divides it’s electoral votes by Congressional districts), Georgia, Indiana, and Montana. If he significantly underperforms, then this is what possible winning electoral maps look like for McCain.
Most of the things I wanted to say about the debate have already been said by James Fallows. Some points I’ll add:
Except for the stock market, on every issue that came up relating to economics – taxes, health care, education, international trade – McCain again and again sang the praises of unobstructed free markets. In good times, the underlying message people would hear in this is “opportunity.” But with the markets in chaos and a severe recession looming, this kind of laissez faire message instead communicates “risk.” Leaving aside for the moment the pros and cons of his particular proposals, it’s the wrong message in a time of economic anxiety.
In politics it is generally not considered a good sign when voters are laughing at you, not with you. And by the end of the third and last presidential debate, the undecided voters who had gathered in Denver for Democratic pollster Stan Greenberg’s focus group were “audibly snickering” at John McCain’s grimaces, eye-bulging, and repeated references to “Joe the Plumber.”
I watched the debate on PBS, which did not have a split screen, so I missed most of McCain’s scowls and tongue juts. This morning I saw clips online with the split screen, and it leaves a very different impression of several key exchanges.
I’m generally not a fan of David Brooks, but he had the best observation I’ve heard so far summing up the overall tone of the debate: McCain had some good attacks, but it was like watching someone lob cannonballs into a redwood forest. Obama is amazingly unflappable. Aside from McCain’s “get government off our backs” message, there was no coherent theme tying together any of the points he tried to make. His overall approach was scattershot (Fallows has another good piece from a few weeks ago that relates to this, as it typifies McCain’s campaign in general: On strategy and tactics).
A couple of weeks ago, Maria got a copy of the book The Trillion Dollar Meltdown. It’s been on her reading list since it came out about 6 months ago, but she had a backlog of books to read, so she’s just getting to it now. The author, Charles Morris, actually wrote the book about a year ago. I’ve only read the Foreward so far – it’s amazingly prescient, and concisely describes the sources of the current market turmoil in a way that is much more lucid than most of what I’m currently seeing in the media:
The sad truth, however, is that subprime is just the first big boulder in an avalanche of asset writedowns that will rattle on through much of 2008. An overhang of subprime-like assets, at least as large, is sitting in corporate debt, commercial mortgages, credit cards, and other portfolios. Even municipal bonds may be at risk. Loss estimates of $400 billion to $500 billion barely get you halfway where.
We are accustomed to thinking of bubbles and crashes in terms of specific markets — like junk bonds, commercial real estate, and tech stocks. Overpriced assets are like poison mushrooms. You eat them, you get sick, you learn to avoid them.
A credit bubble is different. Credit is the air that financial markets breathe, and when the air is poisoned, there’s no place to hide.
Here is a crude gauge of the credit bubble. Not long ago, the sum of all financial assets–stocks, bonds, loans, mortgages, and the like, which are claims on real things–were about equal to global GDP. Now they are approaching four times global GDP. Financial derivatives, a form of claim upon financial assets, now have notional values of more than ten times global GDP.
The soaring ratio of credit to real output is a measure of leverage, or financial risk. Think of an inverted pyramid. The more claims are piled on top of real output, the more wobbly the pyramid becomes.
…By March [2007] I was convinced that the bubble was vastly greater than I had imagined… I expected the mother of all crashes by mid-2008 or so.
My only complaint to Maria was that I wish she had gotten the book about 2 weeks earlier! It would have motivated me to finally take my retirement savings out of the stock market – something I’d been considering for a while now. I was waiting only because I hadn’t made the time to research where else to put it. Now I’m seriously regretting not having acted sooner. At this point I think I’ll cross my fingers for at least a modest recovery before pulling out.
The reason I was thinking about pulling out – well before the recent turmoil – was because of an article I read four years ago, which I was able to dig up just now, thanks to the wonders of The Google:
Mr. Logue [who retired in 1994], a Massachusetts Institute of Technology graduate, decided to go back and check his own records. Would he have done better investing his money than the bureaucrats at the Social Security Administration?
He recorded all the payroll taxes he paid into the system (including the matching amount from his employer), tracked down the return the Social Security Trust Fund earned for each of the 45 years, and then compared the result with what he would have gotten had he been able to invest the same amount of payroll tax money over the same period in the Dow Jones Industrial Average (including dividends).
To his surprise, the Social Security investment won out: $261,372 versus $255,499, a difference of $5,873.
It’s an astonishing finding. The DJIA represents blue-chip stocks. Social Security invests in US Treasury bonds. Over long periods of time, stocks have consistently outperformed bonds. So, you would think that Logue’s theoretical stock investments from 1950 to 1994 would have surely outpaced the return on government bonds.
The fact that they didn’t illustrates one of the hard truths about stock investing: Timing matters.
Although Logue started pouring money into Social Security in the 1950s and early 1960s, some of the best years for stocks, he hadn’t accumulated a lot of money.
So the gains of his theoretical stock portfolio would have been limited.
By the time he had substantial sums, the market swooned for long periods. From 1965 to 1982, for instance, the DJIA made no progress. Logue retired before the real run-up in stocks in the latter half of the late 1990s.
My sense is that my market timing will likely match Mr. Logue’s. The 1920s saw a market boom, followed by the Great Depression, and the stock market didn’t regain its values from the 20s until the mid 1950s. Then the markets stagnated from the mid 1960s to the mid 1980s, before taking off again in the mid 1990s. My hunch is that we’re following this pattern again now, so we’re in for another 20 to 30 years of poorly performing markets (as noted in the Morris quote above, there are likely still other shoes to drop, from derivatives based on credit card debt, commercial real estate, etc). There probably won’t be another boom until around the time I retire. I’ll likely be better off (both psychologically and financially) with my retirement money somewhere other than the stock market.
Check out the price tag – $408, 692 – that’s for one men’s room and one women’s room
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. It’s been on her reading list since it came out about 6 months ago, but she had a backlog of books to read, so she’s just getting to it now. The author, Charles Morris, actually wrote the book about a year ago. I’ve only read the Foreward so far – it’s amazingly prescient, and concisely describes the sources of the current market turmoil in a way that is much more lucid than most of what I’m currently seeing in the media:
