21 things to do in Las Vegas for under $21Wow. Nice. Thank you, L.A. Times.
"Instead of spending big bucks to see Midler's 'The Showgirl Must Go On,' you can hear six members of her band performing as Santa Fe and the Fat City Horns, a weekly act at the Lounge at the Palms. The band performs at 10:30 p.m. Mondays. Free."
Tower of Power has been here this weekend at Suncoast. Email I got from Jerry:
Tom Politzer, the lead tenor player with T.O.P. is coming in tomorrow night and wants to sit in. Should be cool, the guy plays his ass off.Tomorrow night will likely be insane.
They sounded great, and they gave us a big plug during the show. A lot of T.O.P. fans from all over the country and Canada that I met after the show, are staying over to see us. They have all heard of us and checked us out on the sites etc.
Below, NASA satellite image just taken of the U.S. economy.
Scary time right now in our economy, 'eh? (If you're paying any attention.)
The OPIUM Economy [TM BobbyG]
Other Peoples' Irresistibly Undervalued Money.
My main 401k account netted about a 16% return in 2006 (16.2% to be exact). Not bad, 'eh, A 16% ROI? ("Return On Investment") Can't complain about that, really, given that my fund allocation was relatively conservative in the aggregate.
Well, consider that, also at the time, assuming you had a decent FICO score, you could borrow OPM (Other Peoples' Money) at around 8%.
So, hmmm, lessee, I take $100,000 of my direct liquid asset money and invest it in a fund or stock that returns $16,000 in a year (16%), I'm pretty pleased, if naively so.
But -- what if I borrowed $90,000 at a cost of 8% APR interest and threw in only $10,000 of my own cash? The OPM cost me $7,200 (90 grand at 8%), which I have to deduct from my $16,000 gross return. So, my net return after paying off the loan is $8,800.
Well, effectively, my ROI is my $8,800 net profit divided by the ten thousand of my own dough that I put at risk, or 88% -- 5 and a half times the ROI I'd have gotten using my own cash (and, during the period, I still had unrestricted use of my remaining 90 grand for other things).
Hell, why not borrow it all (hey, while that might be illegal, nobody's apparently paying attention), and make a clean $8,000 for having put zero of my own dollars at risk? My lender gets a mundane ROI of 8%, while my "net" return is truly off-the-scale, given that I've incurred no risk whatsoever. Free money.
It's called "leverage." By astutely "working the spread" between what you pay for OPM and what you can earn from OPM, you can accrue up to infinite multiples of profit relative to the prospects of the prudent chump risking solely his or her own cash in search of maximal return.
Now, at the macroeconomic level, when the absolute OPM sums tossed about get really large -- e.g., in the multiple nine figures range or larger -- the spread can be much, much thinner and still provide acceptable nominal net profits, replete with those dizzying brokerage and bank CEO compensation packages.
It all works wonderfully well.
Until it no longer does (i.e., once the ROI goes negative, as it eventually must, just as is the inevitable case of one slavishly habituated to real opium).
The latter is essentially where we are in the fall of 2008. The OPIUM supply is gone, and is unlikely to return for quite some time.
"My lender gets a mundane ROI of 8%"?
Why, you ask, would a lender even do that? Well,  the lenders are pretty much recursively using OPM as well, so they got no substantive skin in the game, and  as soon as the ink is on the downside of damp on your loan contract, they're gonna sell the loan to someone else! Break off some nice little setup and transaction fees for your trouble, cha-ching, and wash your hands of the long-term risk. The phrase is "securitization pooling," i.e., take a bunch of loan contracts, bundle 'em all up as a "security," and push 'em out on to Wall Street.
Someone else then becomes (for a little while) the proud owner of an "asset." Against which -- guess -- they too can borrow. Lather, Rinse, Repeat.
And so it goes.
Until it no longer can. Music stops, someone is left without a chair. Well, actually, many, many people are left without chairs.
A circumstance explicitly extant as of September 22nd, 2008. The logical, inexorable upshot of the "de-regulation uber alles" mentality of the past decade.
Just an off-topic BobbyG rant.