Tater’s Takes – A Competing Religion

July 30th, 2011 by Potato

Was just at Canadian Tire and saw all the back-to-school stuff out for sale, and realized that this is the first time I won’t be going back to school in September! :(

A member of the Church of The Flying Spaghetti Monster — a competing “fake” religion to the true quasi-religion of Potatoism — has won the right to wear a holy collander in his ID photos.

Some Prius owners sell their used cars for a profit, hopefully putting to rest for good the belief that hybrids are somehow doomed to face higher depreciation.

Michael James comments on cap-weighting vs. fundamental weighting. I wonder not only if fundamental indexing can provide enough return to cover the costs, but also if they’re not trading one problem for another. One example of the problems with cap weighting is that when you get big bubbly stocks like Nortel back in the day, those stocks end up taking up huge proportions of a cap-weighted index, and the more over-valued those companies get, the bigger their share in the index! But that problem of lack of diversification doesn’t seem to be fixed by fundamental weighting from a 1-minute look at the two indexes: instead of having giant stocks, now we have giant sectors, with the fundamental index putting a 45% weight on financials, when the cap-weighted index was already a pretty hefty 30%.

Scott Adams puts out some quasi-serious ways for the US to get out of its budget crisis. For the carpool lane one, that’s actually a pretty good idea. Thanks to an experiment with hybrid cars, we know that being able to travel solo in carpool lanes is actually a valuable feature some people are willing to pay money for. You see, at one point LA (among other cities) gave a special sticker to hybrids to allow them to use the carpool lanes, as an incentive to get people to drive cleaner cars. Then, the quota for that program was hit and they stopped giving out the stickers. But the stickers were good for a few years and most importantly transferable, so what you saw happen is that cars with HOV stickers went for a premium over comparable cars — a few thousand dollars, perhaps as much as $4k. And that’s just for a few years of HOV access. So maybe there’s a group of people out there willing to pay on the neighbourhood of $1k/year to get solo HOV access, let’s ballpark it at 1% of a metro area’s population. Across a few major cities, that could hit a billion in tax revenue. Yes, a drop in the bucket for the problems facing the US budget, but a start. [And also, perhaps at the wrong level of government]

One of the Ford annoyances in Toronto commented on closing libraries, saying “And my constituents, it wouldn’t bother them because they have another library two miles one way and two miles the other way.” I’m all for eliminating waste in the city budget, but I’ve got a soft spot for libraries (and not only because Wayfare’s a librarian). Being no more than “two miles” (3.2 km) is about right — his ward is only about 6 km across, so assuming there are at least two libraries in it, that’s not far off. But 3 km is a long way to be from a library. Remember that the biggest users of libraries are not driving: the poor, the young, and I guess the cheap. Toronto has 99 libraries. Is that too many? It’s tough to say, but Toronto has 625 elementary schools (public, catholic, french catholic — not counting other private ones) and 135 high schools. Approximately one library branch per high school sounds about right to me. I’ll also just quickly say that the branches are more than just a place to check out books, so they are important to maintain, and maintain throughout the city.

I heard again recently the bit of reassuring spin from CMHC that they’re totally cool because the average equity of their mortgage portfolio is 45%. And note that that includes equity gained by price appreciation. To me, that average is nearly meaningless because it doesn’t break it down regionally, or bin it by equity. The defaults occur at the margin, and if the distribution of equity/LTV is large, then there will be plenty of people put underwater by even a modest correction that trouble will follow. Just for a point of comparison I tried to look up what a similar figure from the US would have been and found that in 2007, Fannie Mae’s average equity of the mortgage portfolio was 41%. That does not make me feel reassured that things are that much better here in the great white north, land of the conservative banks. I’d do a post on the “Canadian Moral Hazard Corporation” except it’s been done (with that exact title in several places). Maybe I’ll dig into Genworth later in the summer if I find some time (that one I can at least short if it comes up particularly spotty).

“Environment Canada now even has media officers in Ottawa tape-recording the interviews scientists are allowed to give.” Oh! I think I found where we can cut back on the budget!

Corning reported results and it was pretty much what I expected: display glass is facing troubles, but the company is expanding its other business lines to (partially) compensate. Given the price it looks like the display issues may be priced in, and allow for some upside if/when the other business lines grow enough to be meaningful. Still no position, but with it under $16 I’m becoming more interested, and have put in a bid at $15; let’s see what happens.

Cool random thing I learned: Saturn has two moons that share an orbit: Janus and Epimetheus.

6 Responses to “Tater’s Takes – A Competing Religion”

  1. Michael James Says:

    On the subject of libraries, I think it makes sense to really think about the services libraries need to offer. Things have changed dramatically in the last few decades and I don’t trust most people over 40 to understand the irrelevance of their romantic ideas about libraries. Many library users, like my family, don’t even need to go inside. I’d be happy with a drive-through kiosk to pick up the books I place on order online. Now this won’t suit all users, but we need to understand how people now use libraries and make reasonable plans instead of continuing to build palaces to display rows of books as though it’s still 1970.

  2. Potato Says:

    I was going to say the opposite: libraries aren’t needed nearly as much for book borrowing/browsing (as you say, you can reserve your books in the online catalogue and even “borrow” ebooks for the kobo) or reference work for school projects (the internet has a lot of that information), but just as the world getting more digital reduces the time you or I might spend in a library browsing the stacks, it increases the importance of the library for those who need a librarian’s help to get online. I would suspect that we need just as many if not more libraries these days, though each one could probably be smaller.

    Anyway, I’m sure Wayfare will come along at some point and give a more thorough comment on that matter :)

  3. Potato Says:

    Actually, reading your comment again, I think the more, smaller libraries idea I was talking about is anything but the opposite of what you were saying.

    Anyway, libraries = still important, but with changing roles and formats.

  4. wayfare Says:

    I think the biggest challenge to public library funding is a general lack of knowledge of what services are offered. For the majority of users, the library is a perk: a great place to get some free reading material, or to take the kids for the occasional story time or group activity. For people who are well off, the local library is like the neighbourhood park: a nice benefit to the community. If there were no free public libraries, these people could still afford to pay for leisure reading or children’s activities.

    Public libraries are vital for so many more important reasons, particularly for those who are not as well off. They’re a place to get help with citizenship tests and take language classes, a safe place for the latchkey kids to go after school, and a place to learn how to use a computer or set up your first e-mail account. They help new Canadians get oriented and find services, teach new parents how to be playful with their children, and provide free passes for families to places like the ROM and the AGO. The computers in most branches are booked up days in advance for access to the internet, word processing programs and printers, even in well-off neighbourhoods. They provide free classes on personal finance, tenant rights, small business matters, health and wellness, senior’s issues, finding employment, and just about anything else you can imagine. Even classes and programs that don’t appear at first glance to benefit the community (do-it-yourself zombie makeup anyone?) are designed to engage kids and teens, and help keep them off the street.

    When I worked as a librarian in the public library, about half my time was spent helping kids with their homework, helping people get access to the latest best-sellers, or doing story time with toddlers and pre-schoolers. The other half was spent doing things like teaching seniors how to use a mouse, helping people to find their nearest homeless shelter or children’s aid, and simple but important things like showing someone how the ‘shift’ key works on the computer so they could apply for their first job to get off the street. I’d argue that libraries are a lovely perk for some, but provide a vital service for others who’d otherwise have nowhere else to turn.

  5. wayfare Says:

    “I’d be happy with a drive-through kiosk to pick up the books I place on order online”

    Toronto Public Library actually has a few branches that have very limited physical space, and are essentially just places to pick up books that have been placed on hold.

    They have also been considering automated book kiosks where people could borrow books on the run: http://www.thestar.com/news/gta/article/845357–city-library-considering-book-dispensing-kiosk-at-union-station, but I believe budgetary constraints have so far put this idea on hold.

  6. Michael James Says:

    @Wayfare: Your first comment illustrates nicely how the value of libraries has changed since 20 or 30 years ago. At the very beginning of my career, libraries were critically important for researchers. I used to do literature searches through a company librarian. There was no other way for me to find out what people on other continents were doing in my field. Now, the internet has completely replaced libraries for research work.

    For me, libraries became unimportant professionally by the mid 1990s. They still mattered for my children and they were a convenient place for my wife and me to get books for leisure reading, but they weren’t critical for our livelihoods. Some young people now may not realize that libraries used to be the main way that great ideas spread around the world. (As a librarian yourself, I’m sure that you know about this.) Now the internet has taken on this role.

    You stress the importance of libraries for the less well off and for immigrants; this makes sense to me. My fear in public discussions is that old people will make decisions about the future of libraries based on their past role in society. We need to recognize the big change in the usefulness of libraries when planning for the future.

    I’m sure that people like you understand these issues well. But I have less confidence in the political process to figure out which parts of the library system should be expanded and which parts should be cut.