How? Click on the graph to go to InTrade, and press the Trade button.

Graph displays recent action; all times in UTC:

The price is labeled on the right-hand axis, showing implied percent chance that the nomination will be withdrawn before the election.

As of the original time of this posting, the markets were offering 12.5% odds that the nomination would be withdrawn, and then crashed to 5% shortly thereafter.

“Not so much.”

Were the Kuznets Cycle to confirm to past patterns, real median CA house prices will not again return to the ‘04-’06 levels for another 15-20 yrs., if then, given the longer-term demographic profile, normalized lending standards, and likely slower real GDP growth trend (2% vs. 3-3.5%).

Seen another way, nominal SoCal median house prices will not bottom until prices return to the ‘99-’01 levels, implying another 20-30% avg. decline in prices hereafter; but even then nominal prices will likely not rise more than inflation for many years thereafter.

Click on the image for a larger, clearer version:

Read the Full Story at Mish’s Global Economic Trend Analysis:
“When Will Southern California Home Prices Bottom?”
September 1, 2008

What do we know about her? Well, she’s an book-banning, creationism-teaching, abstinence-only, anti-choice evangelical, for starters — I can hear the stampedes of supposed disaffected Democrats already!

And then there’s this:

Lawmakers will hire someone within a week to investigate whether Governor Sarah Palin abused her power in firing Public Safety Commissioner Walt Monegan. The legislative council approved 100,000 dollars for the investigation that will find out whether Palin was angry at Monegan for not firing an Alaska State Trooper who went through a messy divorce with Palin’s sister.

Read the Full Story at the KTVA web site.

We first noticed it was “a little smoky” around 1:00pm, and within 15 minutes, it looked like this, with the whole ridge on its way up to Smoky Town (this photo taken as we bravely retreated to our cars):

Industry Figure Larry Helmerich, our office building, and a passing fire. Click to enlarge.

You know her. She’s got wild eyes and rumpled hair. At some point she stopped caring about the stains on her blouse. She’s hurt, angry, rejected, and she’s willing to take the whole damn place down with her. She is Lady Macbeth. She is Jane Eyre’s deranged pyromaniac Bertha Mason. She is Cruella DeVil and the biblical Lilith. She is Snow White’s wicked stepmother, Miss Havisham, and Emily Bronte’s ghostly Catherine Earnshaw. She is the oldest literary type around—the bitter madwoman, hellbent on revenge and willing to act against her own interest to win some respect. And now, to hear the media tell it, she is a Hillary Holdout; she’s a PUMA (Party Unity My Ass)…

These women must be well aware that a vote for McCain is a vote to overturn Roe. I assume they don’t care. But my real problem with the Hillary Harridans—and the media’s relentless focus on them—is that they give new life to Paleozoic stereotypes about irrationally destructive older women…

The Madwoman in the Blogosphere
by Dahlia Lithwick
August 20, 2008

Consider that both the reporter and the editor would have had to let this mistake slip through.

That’s right, the freaking Washington Post!

Keri Rainsberger isn’t rich. She works in the nonprofit world for a relatively low-profit salary. Yet, as many Americans are scrimping for every penny, she hardly feels the pinch.

…”I live so far below my means that it doesn’t really register,” says Rainsberger, a 31-year-old Chicagoan with a wiry frame and unusually sunny outlook. “I don’t have to think about money.”

How is this possible?

For starters, she has no car and commutes by bicycle each workday. She also has no mortgage payment and chooses to live in an “intentional community,” a partly shared space where $775 a month covers everything from utilities to meals.

…”In one fell swoop, I pay for the roof over my head, the food in my stomach and the lights to read by. That’s a big advantage,” says Rainsberger, whose high-rise living space is part of the residential program at the Keystone Ecological Urban Center in Chicago’s Uptown neighborhood. Her private quarters — larger and a bit more expensive than some — are about 400 square feet, divided into a sitting room, a craft room and a small bedroom. She shares bathrooms, showers, a kitchen and a large dining room with 28 other residents whose ranks include young professionals, professors and retirees.

“It’s like a college dormitory, but with better conversation,” she often jokes.

…The Fellowship for Intentional Community, a Missouri-based nonprofit that began a steadily growing directory of such communities in 1990, estimates that at least 100,000 Americans now live in one. They define them as groups of people living together who share common values that are religious, economic, environmental, social or any combination of those. Sometimes they own property; others rent. About a third live in urban areas, while the remainder are rural.

Read the full story at USA Today:
“Living simply provides economic shelter”
August 5, 2008

Los Angeles economist Christopher Thornberg believes that home prices will stabilize when homes are affordable to about 25% of the adult population. For that to happen in Southern California, home prices would have to come down 20% to 35% from their current levels, Thornberg said.

“There’s no way in hell the house you buy now will be more expensive next year,” he said.

Home prices are also relatively high compared with rents. The ratio of home prices to annual rents in the Los Angeles area was 20 as of March 31, meaning the median home sale price was 20 times a year’s rent for a comparable property, according to Moody’s Economy.com.

The 15-year average ratio in Los Angeles is 16.4.

As a completely uncontrolled experiment to see if Mr. Thornberg is right: Zillow currently thinks that my home is worth $414K, which I think is…ambitious, to say the least.

Click here to see the recent price history; does that look like a bottom to you?

We’ll check back in a year.

Read the Full Story in the Los Angeles Times:
“Should you buy a home now?”
August 3, 2008

No.

This morning, there were 4 peacocks perched on the fence outside my front yard; the squirrels were going crazy, and the cats were Highly Interested in the squirrels:

Left to right: Bitey, Queenie, Tiger Lily (ears, lower right)

Note that the bottom of the lender page lists the distribution amongst gender and locale.

How it works: you make small loans to small entrepreneurs. They pay you back.

Olesya Mikitina is my cutest recipient — if you’re in the Ukraine, stop by and pick up a lovely new stove exhaust fan (in high demand, this season!), and while you’re there, try a delicious khrustyky!

Comments:

“This is precisely the sort of thing that’ll reduce readiness when a REAL zombie attack occurs!”
–pavel_lishin

“I know it’s supposed to be funny, but it’s only a matter of time, people!”
–TheColonel

“You know what’s scary? I’m not entirely sure what I would do if I would be driving home and saw that sign. I’ve been planning too long, waiting for the sign of their emergence. It is no laughing matter.”
–anime_wars

Commenter truffle_shuffle made the excellent point that zombies are fantastically good at viral marketing, and it’s true that they’re surprisingly effective — I mean, you might not think that you’d be lurching around, moaning for brains, but just wait until you’ve been exposed to it; it grows on you.

Read the full Zombie Survival Guide Interview in the Washington Post:

Falls Church, VA: What do zombies do during the day?

Max Brooks: Attack and kill, just like the night. One of the reasons they scare me so much. They don’t have any rules.

(”Freaking spineless Democrats!” — oh, uh… ok, all better now)

Obama says he will vote to remove immunity from the bill but knows full well that this effort will fail, and that the final bill will have telecom immunity in it. The bottom line is that he will nonetheless end up voting for this bill with immunity in it even though he previously vowed to support a filibuster of “any bill” that contains retroactive immunity. Put another way, Obama claims he opposes telecom immunity but will vote for a bill that grants it.

…Whether it’s better than the Protect America Act (PAA) is irrelevant. The PAA already expired last February. If the new FISA bill is rejected, we don’t revert back to the Protect America Act. We just continue to live under the same FISA law that we’ve lived under for 30 years (with numerous post-9/11 modernizing amendments). So whether this bill is a mild improvement over the atrocious, expired PAA is not even a coherent reason to support it, let alone a persuasive one.

Read Glen Greenwald’s full response.

A US House of Representatives Resolution effectively requiring a naval blockade on Iran seems fast tracked for passage, gaining co-sponsors at a remarkable speed, but experts say the measures called for in the resolutions amount to an act of war.

H.CON.RES 362 calls on the president to stop all shipments of refined petroleum products from reaching Iran. It also “demands” that the President impose “stringent inspection requirements on all persons, vehicles, ships, planes, trains and cargo entering or departing Iran.”

Analysts say that this would require a US naval blockade in the Strait of Hormuz.

Since its introduction three weeks ago, the resolution has attracted 146 cosponsors. Forty-three members added their names to the bill in the past two days.

In the Senate, a sister resolution S.RES 580 has gained co-sponsors with similar speed. The Senate measure was introduced by Indiana Democrat Evan Bayh on June 2. In little more than a week’s time, it has accrued 19 co-sponsors…

A guy I knew back in college chastises me for just posting these things without some sort of comment.

So…just for the record: I’m against it.

Oh yeah: and again, not a shred of coverage in the mainstream media, that I’m aware of.

Read the full story at Global Research
June 18, 2008

I don’t think so: the White House has issued an emergency order, extending hostilities, which hasn’t gotten even a peep of coverage in the mainstream media that I can find:

I, GEORGE W. BUSH, President of the United States of America, find that the current existence and risk of the proliferation of weapons-usable fissile material on the Korean Peninsula constitute an unusual and extraordinary threat to the national security and foreign policy of the United States, and I hereby declare a national emergency to deal with that threat. I further find that, as we deal with that threat through multilateral diplomacy, it is necessary to continue certain restrictions with respect to North Korea that would otherwise be lifted pursuant to a forthcoming proclamation that will terminate the exercise of authorities under the Trading With the Enemy Act (50 U.S.C. App. 1 et seq.) (TWEA) with respect to North Korea.

See the full proclamation from the White House.
June 26, 2008

Note the incredible L-shaped finale:

Snapshot above is through May, 2008. Click here for updated, even scarier Scary Graph.

Whoa, that’s pretty awesome. Observe the relatively small amount of Fed lending associated with, say, the aftermath of 9/11, or the Federal Savings and Loan Fiasco or the Stock Market Crash of the 1980’s.

And then look at what’s happened in the last month.

What’s going on? The Fed has agreed to a debt swap with banks. The Fed gives the banks highly-liquid T-bills, and in return, the banks give the Fed “collateral”:

…the Federal Open Market Committee authorized an expansion of the collateral that can be pledged in the Federal Reserve’s Schedule 2 Term Securities Lending Facility (TSLF) auctions. Primary dealers may now pledge AAA/Aaa-rated asset-backed securities, in addition to already eligible residential- and commercial-mortgage-backed securities and agency collateralized mortgage obligations, beginning with the Schedule 2 TSLF auction to be announced on May 7, 2008, and to settle on May 9, 2008. The wider pool of collateral should promote improved financing conditions in a broader range of financial markets.

Translation: The banks can use their crappy non-performing real-estate CDOs for collateral, and in return, the Fed gives them delicious, highly-liquid T-bills at a cost of 2%/year. So naturally banks are rushing to take advantage of this in droves, to the tune of several hundred billion dollars.

Now, whether you think that this a good action by the Fed or not, consider that the Fed believes it to be necessary. They’re not eediots; the fact that they have made a move this large indicates how large they think the problem is.

Seriously, hold on to your hats; it’s going to be a bumpy ride.

My retinal specialist said that things were so stable that I could cut back to seeing him annually, which would still be about 2.5x more often than I’ve been going.

Oh yeah, and the staff at his office made a huge fuss about how much weight I’d lost, more than 65 pounds since when they knew me well:

“You look…fantastic!”

And…we’re getting there! Banks, at least, are finally capitulating in a big way, and buyers are returning. Industry Figure Larry Helmerich points out an article in Thursday’s Los Angeles Times, which shows that statewide in California (note that we’ve just gone from discussing oranges to apples), the median price has fallen 30% from its peak of $484K in May 2007 to $339K in May 2008, with about 38% of sales statewide coming from foreclosures.

“All of a sudden, [homes] are in our price range,” said Elizabeth Trezza, a paralegal in Oakland.

Trezza has been on the hunt for a foreclosed property and placed offers on at least six in recent weeks.

The 24-year-old made an offer Tuesday on a two-bedroom, two-bath bank-owned home in Oakland listed at $234,000 — just below her maximum spending limit, $250,000.

“Right now our mortgage would be relatively close to what we pay for in rent,” she said.

If Southern California homes have fallen the same 30% from their peak (moving back from apples to oranges), then they’ll have fallen from $505K to about $354K — still too high, but getting there.

Whether we’ve fallen as much is anyone’s guess. The hardest-hit markets are those out in the boondocks (e.g. Temecula), where high oil prices are taking a huge toll on residents, who often accept terrible commutes in order to find an affordable home. Plus, we’ll still have to work through all the buyers from the last four years who would find themselves under water at today’s prices — if they want to sell, they either have to get their lender to accept a short sale, or else wait until they can find that one extra-special crazy buyer with the moneybags.

Read the full article in the Los Angeles Times.
“Median home price in California drops 30% in May”
June 19, 2008

So don’t give any more! — we’ve already made our goal.

And really, I can’t think of a better point to make than McCain’s repudiation of the recent Supreme Court decision reaffirming the centuries-old right of habeas corpus.

(And when I say “centuries-old”, it actually was part of British common law by the time of the Magna Carta in 1215 — that’s old)

McCain is against it; Obama is for it. There’s no starker contrast than that.

If you were thinking about donating, or donating more, to the Obama ‘08 campaign, you’ll help me reach my goal if you use this link. You’ll ultimately end up on Obama’s site to make your donation, but I’ll get credit (”Attaboy!”) for having gotten you there.

It doesn’t have to be a whole lot of money; one of the main tenets of Obama’s candidacy is raising money from a lot of little donors, rather than a few huge donors.

They’ve notified their customers that no new authorizations for playing a given song on a given PC or a given device will be issued after August 31, though any existing authorizations will continue to work, as long as you’ve started to play the song at least once on the existing PC or device, and haven’t had to reinstall Windows, or purchased a new PC or device that you were hoping to play music on. Enjoy!

(”So, everybody run out and buy a Zune! We’ll never screw you over a second time!”)

One customer posted the text of the letter, along with his “snarky translation of the meaning”:

“MSN Music is constantly striving to provide you, our user, with the most compelling music experience that we can. We want to tell you about an upcoming change to our support service to ensure you have a seamless experience with the music you’ve downloaded from MSN Music.”

Translation: We’ve got bad news that’s really going to piss you off, and we need to soften you up first…

Read the full Dear-John Letter from MSN Music, and Translation

35 Counts of Impeachment, filed by Congressman Dennis Kucinich (D-Ohio), on this day.

When you’re only seeing greed, or only fear, you can pretty much count on which way the market is going to go, and if there isn’t much of either, well, it’s not going to go too far in either direction. But what if you’ve got both greed and fear? Because that’s what I’m seeing right now.

On Thursday, when commodities (such as oil) turned around and headed upward again, my energy and resources funds got a nice bump up, about 5%, which is pretty good in a single day.

But on Friday, when the cost of a barrel of oil jumped from $127 to $138 — a jump so enormous that just that single $10.75 change was larger than the cost of an entire barrel of oil less than a decade ago? My commodities funds actually lost money, dropping about 1%.

All right, that’s just plain spooky.

There are an incredible number of Bad Things swirling around, at this point:

1. The global credit crisis is, as previously stated, not at all over, and is not something that you can just dismiss as not-worth-worrying about, as countless Pollyannas have claimed. It’s really, really bad, and it hasn’t even started thinking about getting better yet.
2. Unemployment jumped from a nominal 5% to a nominal 5.5% last month, a larger nominal jump than has been seen in more than two decades. And the actual facts are much worse: the Bureau of Labor Statistics adds in a business birth/death fudge factor, which makes the bold claim that the nation added 42,000 construction jobs in the last month, in the middle of a 100-year collapse in housing. Without the cookery, the nation didn’t lose 49,000 jobs in a month; it lost 266,000. That’s almost 9,000 jobs a day.
3. In the wonderful Middle East, an Israeli cabinet minister suggested on Friday that if Iran did not cease pursuing nuclear weapons, then an attack on Iran was unavoidable, perhaps with Israel’s own nuclear weapons, which are apparently A-OK when our side has them. This statement alone caused oil to jump $6 a barrel.
4. America’s worthless currency is eroding faster than ever, and its leaders are crazier than bedbugs. Several players are buying oil, just as an inflation hedge, just to have one sure thing amid the insanity, which certainly goes a ways towards driving the price of oil up, rather than down. But that oil would be pretty handy, if the White House nutters decided to attack Iran (or gave Israel the go-ahead).
5. Those oil prices? Not just a speculative bubble. A well-respected energy analyst from Morgan Stanley reported Friday that due to increased demand from stronger emerging economies alone, oil could hit $150/barrel by July.
6. The recent jumps in the cost of a barrel of oil haven’t even begun to show up at the pump yet. Gas is going to break through $5/gallon and not even slow down.

When the stock market opens on Monday, I’m going to be sitting there at my keyboard, prepared to exit United States equity issues entirely. I only own 3 U.S. stocks (Apple, Disney, and Google), and since they’re in tax-sheltered accounts, standing down will cost me all of $33 total. And really, you have to ask yourself: what’s the potential upside, and what’s the potential downside?

The shock was all the greater because it came on the heels of a 200-point-plus rally the day before in celebration of such chimerical fancies as the skirting of recession, the end of the commodity boom (and especially of runaway oil prices), better-than-expected retail sales, the passing of the credit crunch and the conversion of Ben Bernanke into an advocate of a strong dollar.

Really astonishing was not that people bought into that claptrap, but that it took only 24 hours before they became so thoroughly and dramatically disabused…

As for the credit crisis, it just plumb refuses to call it quits, as the lugubrious daily revelations of additional bad-loan write-downs make clear. On this score, Standard & Poor’s released a mournful tally last week showing that globally, the number of companies suffering a downgrade in creditworthiness hit a record in May of 738, and the roster of potential downgrades is 118 greater than it was at this time last year, and two-thirds of those call the U.S. home.

Not to be outdone, Moody’s reckons that its downgrades and warnings on corporate debt may hit a peak $1.6 trillion (that’s right, trillion) in the second quarter.

–Spring Massacre, Alan Abelson, in Barrons (subscription only, until June 14, 2008)
June 7, 2008

–Job Losses and Oil Surge Spread Economic Gloom in The New York Times
June 7, 2008

…many analysts say that fundamentals, not speculation, are driving [oil] prices.

“I don’t know how else to say it, this is not a bubble,” Jan Stuart, global oil economist at UBS, said. “I think this is real. There is a whole bunch of commercial buyers out there who are spooked and are buying. You are an airline, right now, you’re scared. I don’t see who would buy at these prices unless they need to.”

Jeffrey Harris, the chief economist at the Commodity Futures Trading Commission, who was speaking before a Senate committee last month, said he saw no evidence of a speculative bubble in commodities. Instead, Mr. Harris pointed to a confluence of trends that has contributed to the oil price rally, including a weak dollar, strong energy demand from emerging economies, and political tensions in oil-producing countries.

“Simply put, the economic data shows that overall commodity price levels, including agricultural commodity and energy futures prices, are being driven by powerful fundamental economic forces and the laws of supply and demand,” Mr. Harris said. “Together these fundamental economic factors have formed a ‘perfect storm’ that is causing significant upward pressures on futures prices across the board.”

–Oil Prices Take a Nerve-Rattling Jump Past $138 in The New York Times
June 7, 2008

…you don’t buy a vehicle to leave it in your garage. You buy it to drive it. So it makes sense to consider the full costs of ownership, which include [purchase price], insurance, interest, repairs, taxes and, of course, gasoline. If gas remains near $4 a gallon, as many analysts expect, a big vehicle like the F-250 will cost $100,000 for an owner who keeps it for a typical amount of time (five years) and drives it a typical amount (15,000 miles a year). The gas alone would cost about $30,000, up from about $10,000 in the 1990s.

While the F-250 costs $100,000 and a fully loaded F-150 — the better-known, smaller Ford pickup — costs about $70,000, a Ford Focus still costs less than $40,000 over five years. A Honda Civic Hybrid does, too. A Toyota Prius costs only a little more. A Subaru Outback station wagon runs $50,000 or so.

To put this in perspective, the difference between a Focus and an F-250 over five years is $60,000. The annual pretax income of a typical family in this country is also about $60,000. So choosing a F-250 over a Focus is like volunteering for a 20 percent pay cut. The relative resale values might cushion the blow a little, but not much.

–Big Vehicles Stagger Under the Weight of $4 Gas in The New York Times
June 4, 2008

…a surprising number of economists in the Street keep uttering their mantra, “There is no inflation.”

By way of proof, they cite a concoction deliberately created by the Federal Reserve under Arthur Burns, seeking to mollify political pressures — and refined several times subsequently — that eliminated food and energy, supposedly because they were too volatile. Which is how some misbegotten monstrosity called “core inflation” was born.

It’s also why the core-ists sound so cheerful about current inflation, which might range as high as 11% if it were measured by the more stringent standards in effect before Burns puffed his pipe and ordained the end of food and energy as components of the inflation yardstick. By the core-ists benign reckoning, the present rate is somewhere around 2% and all must be well on the inflation front.

Or so it seems to that misguided bunch. But a hot-off-the-presses paper by the research department of the Federal Reserve Bank of Philadelphia finds that, pure and simple, “core inflation is not necessarily the best predictor of total inflation” and, contrary to the conviction of Burns and his spiritual heirs, “food and energy prices are not the most volatile components of inflation.”…

THE STOCK MARKET UNDENIABLY still has a pulse. But to judge by the way it bounces, this cat is fast using up just about all of its nine lives.

The only question, it seems to us, is how long it takes those happy souls eagerly taking the plunge to wake up to the fact that this is a market kept aloft pretty much on hope, always a sorry substitute for something tangible like an economy with legs. And this economy, despite the sputtering stimulus of a tax rebate and the gobs of dough the Fed is tossing around, is headed for an extended stay in rehab.

Once you eliminate the impact of higher prices on the numbers, the poor thing is barely keeping its head above water…

Merrill Lynch’s David Rosenberg points out that real consumer spending on durables and semidurables contracted at a 2.4% annual rate in the first quarter, the biggest decline since the one at the tail end of the 1990-91 recession — and, he adds dryly, this one is just beginning.

–Fair Game, Alan Abelson, in Barrons
June 2, 2008

Seen here:

It Ain’t Over
May 18th, 2008

‘This American Life’ on the Global Credit Crisis
May 13th, 2008

Housing Price Bust Still Has a Long Way To Go
May 11th, 2008

Holy Crap
March 17th, 2008

Economic Forecasting Geniuses
March 15th, 2008

Mr. Housing Bubble — Sell! Sell! Sell!
August 7th, 2005

I’ve never seen the cats flatter — stretched out for maximum surface area. Our fluffy cat, “Bitey” (possibly the smartest of the lot, and certainly the fluffiest) quickly learned to hang out in the bathroom exclusively…all that cooling tile. It was kind of funny, every time we wanted to use the bathroom, to find her there, stretched out on the tile.

Still, she was perhaps the only thing in the house that was more miserable than her owners. We tried opening a few windows at night, but couldn’t leave the doors open because our front screen door is down, awaiting delivery of its replacement, and the house has so much thermal mass that it doesn’t end up cooling off until about 5:00am. Bitey, at least, had the advantage of literally being able to sleep in the window.

I had left a message with the folks who had serviced our A/C a year ago, but when I called them back at opening time, 08:00am this morning, they told me that they still had jobs left over from Friday, and they couldn’t promise me anyone before tomorrow morning at 08:00am. So I had them pencil me in, and set about looking for another outfit to call.

Several of the places that I called just answered the phone with “Hello?” You’d think that beggars wouldn’t be choosers, but I want just a little more professionalism than that.

I ended up calling Mountain Electric, who wanted a $75 diagnostic fee for coming out, which they would refund if the work was ordered. This actually sounded reasonable to me, and the flip side of that policy was that they could be here today! All righty, then. Cancel the first guys. The mountain men showed up at 4:30pm, went up on the roof, and came back down directly, having diagnosed a failed motor of some description — $575 to replace.

We gave them the go-ahead, and after about 2 hours total, they were done. Call it four man-hours, plus the cost of the part. I’m satisfied with the price.

One interesting thing was that they brought a large patio umbrella up on the roof with them, so that they wouldn’t have to be working in the blazing sun all day — brilliant.

And the house is cooling down! Sweet, merciful Jesus.

He’s ironic — sarcastic, even — and is properly wary when Bear Markets are stalking around. Back when the dot.bomb bubble was rising, and then falling, he couldn’t have been more (rightly) sardonic about the Glory of the New Economy.

And he’s often been heard to say that bottoms don’t come when everybody is sniffing around, waiting to buy, looking for which stock is undervalued — they come when everyone has given up, and all have sworn off stocks forever.

Which brings us to last week’s column:

AS STEPHANIE POMBOY reminds us in her most recent MacroMavens commentary, this isn’t by any means the first time that the prayer parading as forecast — “the worst is over” — has been heard in Wall Street. In March 2001, the Nasdaq was off by more than 70% from its peak set only a scant year earlier. Investors became increasingly convinced that lightning had already struck, the landscape was littered with shattered stocks and a turn had to be in the offing. Were they ever wrong! Instead, recession reared its ugly head, profits posted their biggest declines since the 1920s and Nasdaq fell another 50% before hitting bottom deep into 2002. […and that’s not even counting the companies that had failed and been delisted –Tom]

Stephanie, who has a thing for scary comparisons (the scarier the better, of course) notes some unsettling resemblances between then and now. The most conspicuous of which is that, just as in March 2001 when the Nasdaq was off 72% from its top, so the home builders today are down eerily the same percentage from their all-time high. And there has been, at least until the shock of AIG perhaps nicked it a trifle, a revived appetite among investors for risk.

The biggest flaw in the notion that the worst is over, in her view, is that the source of the problem — home-price deflation — is not only continuing but intensifying. “According to the latest Case-Shiller Index,” she notes, “home prices are now deflating at a 32% annual rate, versus 8% six months ago. And the deflation is sure to intensify as the 4.6 million new and existing homes still sitting on the market find a clearing price.”

She exhorts us to “Think of it…that 4.6 million inventory is nearly double the 2.6 million average inventory in the 20 years leading up to the bubble. More disturbing still, a record 2.27 million of those homes are sitting empty!” Well, leery of getting her mad, we followed instructions and thought of it, and, we’re sure she’ll be pleased to learn, we felt an appropriate shiver go up our spine.

For good measure, Stephanie adds that those melancholy figures fail to include all the homes “stuck in purgatory at banks, which are now collecting keys faster than they can list the properties.” The Federal Deposit Insurance Corp., she relates, reckons that “other real estate owned” by banks is up more than double the year-ago total.

And, she concludes, “As long as the largest asset on household — and bank — balance sheets continues to deflate, the credit and consumption hits will keep coming.” In short, the worst sure ain’t over.

IF, WE’RE DEAD WRONG (which, hard as it may be to believe, would not be a first for us) and the worst really is over, we wish that some illustrious personage — say [Treasury Secretary] Mr. Paulson or [JP Morgan Chase Chairman and CEO] Mr. Dimon — would take a few minutes out of his busy, busy schedule to pass the good news along to [Federal Reserve Chairman] Ben Bernanke. For if the credit crisis truly is winding down, why in the world is Mr. Bernanke’s Fed running around like a proverbial chicken without its head and still working feverishly to prop up the banks?…

Read the Full Column at Barron’s
“It Ain’t Over”
May 12, 2008

It’s a gripping story, filled with debauchery, jargon, and really, really bad math:

A mortgage-backed security… is a pool of thousands of different mortgages. These are all put together, and divided into different slices — Jimmy’s word, tranche: “tranche” is just French for slice.

Some of these slices are risky, and some are not.

OK. A CDO is a pool…of these tranches…a pool of pools.

And Jim, and most companies like his, weren’t buying the top-rated tranches, the safest ones, the AAA’s, they were buying the lower-rated stuff, the high-risk stuff. Jim’s company bought tranches that came from [Glen’s] company, the guy who hung out at nightclubs, with B-list celebrities, the guy who said he was selling mortgages to people who didn’t have a pot to piss in.

There’s another term the industry uses — this is not a joke — they call these lower-rated tranches “toxic waste.” They’re so high-risk, they’re toxic.

And so basically a CDO is sort of a financial alchemy: Jim takes this toxic stuff, these low-rated, high-risk tranches, puts them all together, re-tranches them, and…Presto! He has a CDO whose top tranche is rated AAA: rock-solid, Good as Money.

If this seems too good to be true to you, you’re in good company. Guys like billionaire investor Warren Buffet said the very logic was ridiculous.

But back in 2005, 2006, the Global Pool of Money? They couldn’t get enough of these things. And the CDO industry was facing the same pressures everyone else was, at every other step of this chain: to loosen their standards, to make CDO’s out of lower and lower-rated tranches.

This is Jim’s partner…

“Actually, in 2005, already, we had an internal debate, here, because there were two banks coming to us, saying, ‘Why don’t you do a deal with us? — BBB securities — and, uh, you get paid a million bucks in management fees per year.’ Very clear, just like that, in 2005. And…we declined those deals, we said, ‘We just don’t believe that those BBB assets are Money Good. We don’t think they’re well-underwritten, and we think that if we do a CDO of those, that’s going to blow up completely. We were a little early in ‘05, by not wanting to do those deals, and people were laughing at us, to be honest, to say, ‘Well, you’re crazy. You’re hurting your business. Why don’t you want to make…per-deal, you could make a million dollars a year.’”

“And did somebody do that deal?”

“Absolutely! Everybody!”

---

…by late 2006, the average home cost nearly four times what the average family made. Historically, it was between two and three times. And mortgage lenders started to notice something they’d almost never seen before: people would close on a house, sign all the papers, and then default on their very first payment. No loss of a job, no medical emergency: they were under water before they even started.

And although no one could really hear it, that was probably the moment when one of the biggest speculative bubbles in American history…popped.

Listen to the entire show at This American Life:
“The Giant Pool of Money”
May 9, 2008

By most measures, prices are still above the levels implied by the fundamentals. Using a model that ties house prices to disposable incomes and long-term interest rates, analysts at Goldman Sachs reckon that the correction in national house prices is only halfway through. They expect an 18-20% correction overall, or another 11-13% decline from now. But their models suggest that six states—Arizona, Florida, Virginia, Maryland, California and New Jersey, could see further price declines of 25% or more.

Ooh…further price declines of 25% (or more!)

Read the Full Story in The Economist
“Map of misery”
May 8th, 2008

An interesting point is that such a fall in Southern California (on top of the 20% fall we’ve already had) would be equivalent to a 40% drop from peak prices:

(1 - .20) x (1 - .25) = (1 - .40)

…which is the same most-pessimistic drop predicted by the most pessimistic of the industry analysts quoted in the Los Angeles Times article that I wrote about here a few months ago. It would mean that median prices here would fall from a peak of $505K to about $303K, which again, I have to say, sounds like the likely bottom to me.

“Oh, man, watch out, the sky is falling.” –me, August, 2005.

The gas tax holiday is small potatoes relative to everything else. But it’s so economically stupid (it would increase demand for gas and cause prices to rise, eliminating any benefit to consumers while costing the Treasury more than $9 billion, and generate more pollution) and silly (even if she won, HRC [Hillary Clinton] won’t be president this summer) as to be worrisome. That HRC now says she doesn’t care that what economists think is even more troubling.

In case you’ve missed it, we now have a president who doesn’t care what most economists think. George W. Bush doesn’t even care what scientists think. He rejects all experts who disagree with his politics. This has led to some extraordinarily stupid policies.

…Even though the summer gas tax holiday is pure hokum, it polls well, which is why HRC and John McCain are pushing it. That Barack Obama is not in favor of it despite its positive polling numbers speaks volumes about the kind of president he’ll be – and the kind of president we’d otherwise get from McCain and HRC.

Haven’t we had enough of politicians who reject facts in favor of short-term poll-driven politics?

Read the full post on Robert Reich’s blog:
“Hillary Clinton Doesn’t Listen to Economists”
May 4, 2008

Ponette, a young girl, has recently lost her mother in an auto accident, but still sees her, sometimes.

Ponette (to the Dead Mom): Will you stay with me?

Dead Mom: I’m still a little dead.

The young actress, Victoire Thivisol, who plays Ponette, was discovered by director Jacques Doillon and cast as the title character at the age of 3 1/2. She does an astonishing job; I’m sure she has the most lines of anyone in the movie.

I am also a long-time Douglas Adams fan (The Hitch-Hiker’s Guide to the Galaxy; Dirk Gently’s Holistic Detective Agency), and again, an Industry Figure (Andy Bennett) is to blame, as it was his subscription to a literary newsletter that first alerted me to Mr. Adams’s work, in 1979.

And I was familiar with Wodehouse’s technique, used in the Jeeves novels, and described in Adams’s The Salmon of Doubt, of pinning up each page around the room, higher if he thought it was good, lower if he thought it needed work, with the goal of getting every page up to the picture rail.

But I had never thought to use it when refactoring a computer program. That’s brilliant!

“The P.G. Wodehouse Method of Refactoring“

And the answer is…yes, and no. I could edit text, and take photos, but I couldn’t upload photos — I had to e-mail the photos from the iPhone to an actual computer, and then post the photos from the computer. Of course, I haven’t updated WordPress to the latest version, so perhaps those later versions can do it, but it might just be a browser limitation in the iPhone, too.

(I had tried this last night, and seen a couple of weird problems, but then I saw those same problems on my desktop this morning, all of them related to using WordPress’s “Save and Continue Editing” button, which I never use, and had just accidentally pressed on the iPhone.)

At any rate, here’s a picture of Maya Cat, a.k.a. “Bitey” (who has to have two different medicines every day to avoid liver failure), which I was able to take, but not upload, with my iPhone:

She’s just sleepy, here, not unwell. She’s actually quite a playful, active cat. She has a trick of staring at you like a daemon until you relent and tease her with a feather on a stick.

JP Morgan Pays $2 a Share for Bear Stearns

In a shocking deal reached on Sunday to save Bear Stearns, JPMorgan Chase agreed to pay a mere $2 a share to buy all of Bear — less than one-tenth the firm’s market price on Friday.

As part of the watershed deal, JPMorgan and the Federal Reserve will guarantee the huge trading obligations of the troubled firm, which was driven to the brink of bankruptcy by what amounted to a run on the bank.

Reflecting Bear’s dire straits, JPMorgan agreed to pay only about $270 million in stock for the firm, which had run up big losses on investments linked to mortgages.

JPMorgan is buying Bear, which has 14,000 employees, for a third the price at which the smaller firm went public in 1985. Only a year ago, Bear’s shares sold for $170. The sale price includes Bear Stearns’s soaring Madison Avenue headquarters.

The agreement ended a day in which bankers and policy makers were racing to complete the takeover agreement before financial markets in Asia opened on Monday, fearing that the financial panic could spread if the 85-year-old investment bank failed to find a buyer…

And, in a separate, related story in the same paper:

Fed Acts to Rescue Financial Markets

Hoping to avoid a systemic meltdown in financial markets, the Federal Reserve on Sunday approved a $30 billion credit line to engineer the takeover of Bear Stearns and announced an open-ended lending program for the biggest investment firms on Wall Street.

In a third move aimed at helping banks and thrifts, the Fed also lowered the rate for borrowing from its so-called discount window by a quarter of a percentage point, to 3.25 percent.

The moves amounted to a sweeping and apparently unprecedented attempt by the Federal Reserve to rescue the nation’s financial markets from what officials feared could be a chain reaction of defaults.

After a weekend of intense negotiations, the Federal Reserve approved a $30 billion credit line to help JPMorgan Chase acquire Bear Stearns, one of the biggest firms on Wall Street, which had been teetering near collapse because of its deepening losses in the mortgage market.

In a highly unusual maneuver, Fed officials said they would secure the loan by effectively taking over the huge Bear Stearns portfolio and exercising control over all major decisions in order to minimize the central bank’s own risk…

Note the word ‘unprecedented’ — as of Friday, we could say that the Fed was doing some things in the current credit crisis that it hadn’t done since the Great Depression. As of today, it’s doing things that it’s never done. And since the Fed’s job is to keep our money from becoming worthless pieces of scrap paper and to keep the economy from detonating, it’s bad (in the Ghostbusters sense of the word) when they resort to extraordinary measures.

Read the full stories in The New York Times:

“JP Morgan Pays $2 a Share for Bear Stearns”
March 17, 2008

“Fed Acts to Rescue Financial Markets”
March 17, 2008

In Princeton economist Paul Krugman’s (always excellent) column this morning, he writes:

According to late reports on Sunday, JPMorgan Chase will buy Bear for a pittance. That’s an O.K. resolution for this case — but not a model for the much bigger bailout to come. Looking ahead, we probably need something similar to the Resolution Trust Corporation, which took over bankrupt savings and loan institutions and sold off their assets to reimburse taxpayers. And we need it quickly: things are falling apart as you read this.

Read the full column in The New York Times:
“The B Word”
March 17, 2008

On the other hand, they do still have a killer graphics department. Let’s go to the graph!

During 53 months between 1991-1996, Southern California home prices fell 19%, a huge drop, and one that many homeowners here still remember with…dismay, let’s say.

But see, in the current mess, home prices have already fallen 19%, and in a mere 7 months.

And that median price line is still going down pretty darn fast — not, perhaps, as quickly as the first few terrible months, but not slowly, either. But what do the Los Angeles Times’s experts have to say? What are their experts’ insightful, expert opinions, just brimming over with knowledge? Incredibly, the first one quoted, who had originally predicted a 15% slide, now says that “20% to 25% looks more likely, and that’s not to say we won’t see 30%.”

But wait, that’s not the only expert quoted in the article, no way! No, there’s another one, who had originally predicted a total drop of at least 15%. What does he say now? “Now, it’s going to be more than 20%.”

And a third, not quoted directly, is reported to be predicting that “home prices will fall 20% to 25% from peak levels.”

That’s right: faced with a 19% drop over the last seven months, their low-end estimate, the smallest additional drop that they’re predicting, is…just 1% further, for a total of 20%. I mean, look at the graph! Yeah, that’s going to happen — the prices are just going to fall one more percent, and then people are going to wake up, and say, “Wow, what a bargain!”, and start wanting to buy houses again. And the interest rates are going to be low enough so that they can. And the credit crisis is going to disappear, so that the banks will be willing to lend to those qualified, motivated buyers. And the economy’s not going to implode, so they’ll have a job and will be able to make their home payments.

I mean, are you kidding me? A third of the houses sold here in February were foreclosures. This week, for the first time ever, Americans collectively owe more on their houses than they have equity. The Fed Chairman predicted recently that if banks don’t face reality and lower the mortgage due amounts, that 1 in 10 American homeowners are going to be under water on their mortgages (owing more than their homes can be sold for). And that’s if things don’t get much worse than they already are.

Now, to be fair, the paper also notes, but does not directly quote, an expert who predicts that “home values will sink 40% from their peaks reached last year, double his previous estimate.”

That would mean that the median price on the above graph will have fallen from $505K to $303K by the time this thing bottoms out. Yeah, that sounds like a bottom I can believe in.

Read the Full Story at the Los Angeles Times
“Southland home prices tumble fast”
April 14, 2008

“Oh, man, watch out, the sky is falling.” –me, August, 2005.

First, the main result: after a meta-analysis of data from several past studies, the authors found that Selective Serotonin Reuptake Inhibitors (SSRI’s), such as Paxil, Prozac, and Zoloft, are really not much better than placebos, except for the most severely-depressed patients.

The delicious part is why severely-depressed patients fared better than the less-depressed: it wasn’t because the drug worked better (on the severely-depressed, than on the not-as-severely-depressed), but that the placebo worked less well (on the severely-depressed, than on the not-as-severely-depressed).

I don’t know why, but there’s something about that that just makes me smile — grin, even.

This may have something to do with why Industry Figure Ray Norberte once told me,
    “Tom, you’re almost a nice guy!”

Read the Full Study at the Public Library of Science - Medicine.
“Initial Severity and Antidepressant Benefits: A Meta-Analysis of Data Submitted to the Food and Drug Administration”
February, 2008

Yes, the pictures are large, but these men are larger-than-life.

Note also that I do not have copyright to these photos, even though I have purchased them. I’m free to use them for my personal use, though, whatever that means.

In any event, I’d certainly advise you not to attempt to use these photos for profit. No wagering, for example.

(Click on the photos to make them even larger)

(Me, #44: It’s still incredibly cold and foggy, even though I have already, at this point, spent 10 minutes with my fingers in my armpits. Also, note the wilyness: I’ve got the bike number wrapped tightly around the headset, for decreased wind resistance)

(Ron, #161: Colder and foggier, since he was way ahead of me at this point. He didn’t try the wrapped-tight trick with his number, which was probably the crucial competitive error)

(#861, my nemesis. Finally left me in the dust on Foxen Canyon Road. Look, he left his number off his bike entirely! There’s a lesson for next time!)

The next morning, Ron and I both got up early without trouble, and were ready to go almost on time. This time, it was Ron who made us slightly late! Oh, I was happy. Not that being slightly late was bad — it was foggy, and cold, and I hadn’t successfully purchased riding gloves with fingertips. Neither had Ron, for that matter, but it didn’t seem to bother him:

(Click on the photos to make them larger)

(Note how poor the visibility is: Ron is in focus, but I’m a shadowy, mysterious figure)

And actually, I lied just now about Ron making us late. He would have made us late, but then I had forgotten my little paper wristband, which might have been (but which was not, in fact) important, perhaps for being fed, for example, and so we went back to get it, and then there was a brief, terrible search, until it was found in the motel room’s second trash can. Ron had his, but wouldn’t wear it until he found out whether or not it was required.

Hoo, boy, it was cold! The first 25 miles of the Solvang Century is just a big downhill, interspersed with a few uphills to wake you up, and I couldn’t warm up to save my life, or my fingers. Eventually I had to stop and just stand there with my hands in my armpits, trying to keep my fingertips from falling off. They still felt a bit frostbitey this morning, actually. Later, hearing this, John Blackburn commented, “What is it with you and gloves?”

Cyclists glided by while I stood there, helpless to avoid their concern and/or scorn:
There they go, thinking, “Wow, that guy’s already having trouble? I mean, what does he want?”

After a solid ten minutes of armpit-warming, my fingers felt brave enough to carry on, and shortly thereafter, Mr. Sun made some brief forays into our sphere. At one point, I came upon an entire fog-shrouded valley, seen from above:

Sunny riders, about to descend into a Foggy Doom.

Panning right, showing the extent of the foggy wasteland.

Those peaks peeking out of the fog are far, far away. Everyone down below is in foggy despair.

But as we continue to pan right, we see that Change is Coming. The fog practically lifted as I panned.

Valley’s end. Someone should stitch these photos together for a panorama! Not me, of course.

Right after I took the last of these pictures, my camera sadly complained about a low battery, and refused to take any more. I had just charged it the day before! I looked at it in disgust, but also in commiseration: “I know what your real problem is, darn you — it’s just so cold! Well, just see if I try to take any more pictures until it warms up.”

I made it to the first SAG (Support And Gear) stop in Lompoc. The nice thing about going on a “supported” ride like this is that they have regular stops such as these, stocked with food, water, toilets, and repair staff.

Ron was really wondering what the heck had happened to me, and even just in pure seat time (not counting armpit-warming stops), he was ahead by five minutes. But apart from that, the ride was going great. We had both noticed that, although this leg of the ride had not changed since the first time I had ridden it in 1995, its few uphills, once notable, were now inconsequential.

This particular SAG stop was at a huge barn with a pretty mural on the side.

All the SAG Stops were as jammed as this, a tribute to the way Ron and I infested the middle of the bell curve.

The views were idyllic, and I really mean it. Solvang is in the middle of central California wine country
(perfect for Pinot Noir, but about 125 miles too far south for delicious red Zinfandel):

A totally-typical view. There were many better than this, but I mostly felt like cycling.

Our co-workers Carlos and Vincent had found us at the first SAG stop, and Vincent and I ended up sailing in to SAG stop #2 together. I should make clear that Carlos and Vincent are much faster than we are, but they had driven up from Los Angeles on the day, starting later than we had. And plus, they were bedeviled by some equipment problems:

A helpful fix-it guy gets ready to examine Vicent’s crank, while Vincent looks on.

Ron had picked up another few minutes on me by SAG stop #2. He might have been 6.5 minutes ahead at this point, in seat time.

But I was feeling pretty great, actually, and this next section was supposed to have quite a bad headwind, which Ron doesn’t care for (yeah, I know — who does?). I got in line behind Ron, and another fellow, in red and yellow, but no number, got behind me, and our little train headed out into the wind. Whoa, it was kind of awful. Ron later said that it had been much worse in 2007, but it was bad enough, believe me. Nothing like mixing a headwind and a climb. But I had my little altimeter watch, and it was reassuring me that we weren’t that many hundred feet below our starting point. We hadn’t gotten too much of a free ride.

Oh, the wind. Ron was pulling away from me, and the guy behind me pulled ahead so as not to lose Ron, because you really have to follow the guy in front of you rather closely to get the benefit of drafting. There they went, choo-choo, the train had left the station, and I wasn’t on board.

And I might have trouble catching them: somewhere around mile 35 or so, I had already started noticing a bit of saddle-soreness, and right-knee pain. Great, no problem there, only 66 miles to go.

But here’s the funny thing. In my other rides in the last six months or so, I had either tried ignoring the pain, and it hadn’t worked (”Oh yeah? OK, how about this then?”) or else I had been careful, not wanting to put my training schedule in jeopardy, kind of like someone preparing for the Olympics: if you screw yourself up, you’ll miss it, and then it’ll be another 4 years. An exaggeration in my case, but a good analogy nevertheless. But here I was, at the Olympics, figuratively speaking, and I didn’t care if my knees were going to be sore for the next month or not, and it just didn’t feel like I was putting them at risk for anything longer term.

So I went for it, ignoring my knee pain, and catching up with the drafting train. And my knees never said anything more for the whole rest of the ride. They just continued their low-level soreness, muttering to themselves, bitterly. But here I was, keeping up.

After a while, I felt that Ron had had his share of being in front. The headwind was only supposed to last for 10 miles or so, and he’d been in front for a mile or two at least. So I pulled in front to take my turn. Wow, it was staggering, no fun at all, but I soldiered on.

And here’s one of the great things about riding in an event like Solvang, in about the middle of the pack. There are always people who are passing you, and people who you’re passing. If you look carefully, you should be able to find a pack of riders who fit you perfectly, and you shouldn’t have to wait too long, either. The train behind me was growing, but another pack of riders was pulling ahead of me, and it seemed to me that keeping up with them wouldn’t be any harder than leading my own train. And hey, they had a guy, about my age, about my weight (and consequently an excellent wind break!), and who seemed to be pretty aggressive and just slightly better than I. Let’s try to keep up with that guy!

So I latched on to the passing train, behind rider #861, and off we went. I could feel my own train fracture behind me, as some riders moved to join the faster pack with me, and some hung back.

I liked this train of riders. There were about 10 of them, and they were all very followable. I had led my own train for a few miles, and didn’t mind hanging in the back of the pack for a while. Man, this was great, we were really hauling!

This whole riding-with-a-pack thing is kind of tricky. When it works, it’s the greatest thing there is. If it’s a little too fast, you can totally burn out trying to keep up with the too-fast pack. Whoops, #861 had lost the thread, we had been jettisoned. I pulled alongside him, announced that according to the technology, we were +10 feet above Solvang, and shortly afterwards said, “Let’s go catch those guys again.”

I pulled ahead, and felt #861 pull in behind me, just us two. We charged along, and…eventually…here’s our old friends, the previous pack, we’re slotted in, it’s great. And so we went. Occasionally I would see #861 pull ahead, and I’d tag along, and at one point the red and yellow guy who was my original follower caught up as part of another train, laughed, and said, “You’re still hanging in there, eh?”

He went ahead, and I latched on after him, vowing to enter SAG stop #3, the Santa Maria airport, mile 58 or so, alongside him.

Which I did.

Ok, that was an outstanding segment, and I knew I had caught up with Ron quite a bit on that one.

But I haven’t mentioned the onlookers, and that’s one lovely thing about Solvang: there are well-wishers scattered all along the course, ringing cowbells, shouting encouragement:

A gaggle of bell-wishers at the Santa Maria airport. Note the small dog being held by the lady in yellow. I tried to get a picture of them cheering and ringing their bells, but was thwarted by my smaller camera’s horrible shutter lag and the near constant intrusion of some cyclist passing by.

Wow, we had covered over half the distance, and I had a 15.1 mph average, seat time — not bad! I was waiting around for Ron to be ready to go, but he had disappeared into the mob, and…my knees, oh, my knees were seizing up, I could feel them. I had really started to notice, on our training rides, that the breaks didn’t seem to help me at all; towards the second half of the ride, I was always better if I could just continue pedaling than if I was stuck standing somewhere.

Man, where was Ron? Hey, he’s got an iPhone! I tried calling him a few times, and finally left a message, saying that I just had to take off, the knees had spoken. And off I went, pedaling not so very fast, waiting for everything to smooth out again. Ah, and here’s Ron, excellent!

We chugged along, and almost immediately found ourselves at Clark St., a long, terrible uphill where I had seriously bonked in 1996, and where I first discovered the healing power of Skittles. (It was like magic: I had been completely drained, and after downing a bag of Skittles, just went charging up 500′ of Clark St. like nothing had ever been wrong). I didn’t need them yet, though. This year, I had been sipping on Hammer’s Sustained Energy throughout, with a 1/2 peanut butter and jelly sandwich and 2 or 3 cookies at each SAG stop as a supplement.

Ron left me in the dust, though now that I think about it, I had stopped to wash the salt off my face. Man, I have to remember to do that at the SAG stops, where it won’t slow me down. But Clark St., and the 250′ or so hill following, held no terrors for me — couldn’t have been easier.

And so I arrived at the Sisquoc SAG stop, the SAG stop immediately before Foxen Canyon Rd., which features a relentless 10-15 mile uphill of 1,100 feet or so. Oh yes, I’ve bonked there, as well. I refilled my CamelBak with two bottles worth of water and Sustained Energy, thanked the small local boys who were helping out with the water, gave them each a small Halloween bag of Skittles, and took a dose of Skittles to fortify myself for the climb to come.

Off we went. And I’ve got to say, I just love having an altimeter watch. Because what you really need in this world, what you need more than anything, is a progress meter: “You are 74% done climbing this horrible hill.” I just pedaled along, and every so often I’d check and see that, ah, yes, a little more progress, excellent.

This was so great! I wasn’t running out of energy at all! I jammed along, hitting the big gears on the occasional slight downhill, riding the higher gears on the following uphill, climbing, climbing, just excellent. Half-way up I stopped to wash the salt off my face. Man, when am I going to remember to do that at the SAG stops? Ron pulled in a few minutes afterward, and we chatted briefly, agreeing to meet again right before the much-steeper 200-300 foot climb approaching the Foxen Canyon summit.

I took off again, still feeling great. About half-way to the meeting point, #861 passed me. I cried out, “#861! You’re an animal!” He laughed, and allowed as how he’d noticed that we’d been trading off for the last 40-odd miles. Nice guy. Never saw him again.

At the meeting point, I stopped and awaited Ron, who arrived within a minute. Hey, I was surely getting closer to Ron’s time! Ach, no, he’s still 1.5 minutes faster, and there’s less than 1,000 feet of climbing left to go — bah. And there goes Vincent; his crank’s either all better, or better enough that he can pass the likes of us. Carlos stopped to chat for a minute, but quickly pulled ahead of me on the steep part of the Foxen Canyon summit climb.

And it slowed us down, of course, but we were still passing people, just as we were being passed. I was standing up a lot more often on the steep hills, which allowed me to use an entirely different set of muscles, and by the time they were wasted, which wasn’t very long, maybe a minute, the regular muscles used by the regular position felt as if they had gotten a wonderful vacation. Long enough, but not too long. Up I went. The gears were super quick and sure, after being fixed just a week earlier at the terrific Win’s Wheels (360941 W. Agoura Rd., Suite #302, Westlake Village, CA 91361).

Oh, the top. That wacky, wacky Foxen Canyon Road. Abruptly down, and down. I lost 180 feet in two minutes. That’s fast.

I pulled in to the final SAG stop, just short of mile 90. Hey, there are Vincent and Carlos! And…about 1.5 minutes later, here was Ron! Could it be???

“Ron, my seat time is 6:02:02 — what’s yours?”

“Let’s see, mine is…6:02:05.”

“Yes! I’m beating you! Three seconds!” I literally pumped both fists in the air.

A girl sitting at the side of the road was quite amused at my joy: “That’s brutal!” Yeah, but it’s 3 seconds.

Still, despite the fact that I carried my bike around the SAG stop with its front wheel in the air for most of the time, I’d picked up another 23 seconds on the meter by the time we left again.

Down we dropped, and I really didn’t like this road. I dropped 280 feet in two minutes, that’s more than two vertical feet every second for two minutes straight! Bumpy, with some blind turns, nice. Well, here’s the 154 coming up, and there goes Ron, passing me, gleefully: “Ha! Three seconds!”

There was one steep, but short, hill left, about 200′, and then a last hill shortly before Solvang. I took off, passing Ron. The police, who had been at many major intersections along the route, waved us through the stop sign, while holding back the highway traffic. Never mind, that stop sign doesn’t apply to you today.

I zipped up the steep hill, never ran out of steam, and just tore through the rest of the course. What was my average speed? Oooh, 14.9 miles per hour, not bad at all considering that it had been at 15.1 at the 58-mile mark, and considering how back-loaded the climbing is on this ride. Oh, surely I can get it up to 15.0 before the end!

And I did, and sailed through the stop light (thank you officer) on Mission Road, and was now just a few fairly level surface streets from the end. And it was at this point that I hit the dark side of traveling in the middle of the bell curve, which was…the incredible bicycle congestion. There are 5,000 cyclists at Solvang, and they were all coming back now, it seemed like. I fought my ride through the finish line, picked up my finisher’s bag of goodies, and locked my wheel down. Rats, 14.9 mph! Darn congestion. But wait…I’ve noticed before that, incredibly, my dopey cycling computer doesn’t report average speed accurately. It tends to read very-slightly-low. Do the math yourself, in your head. Oh, it really seems like it’s going to be at least 15mph! Ooh, here comes Ron, get a picture:

Ron sails in. 3:21pm.

So, how did we do? We totally crushed our six-years-ago selves! New personal bests all around!

Ron beat his six-years-ago self by 18 minutes. That’s good crushing!

And me? I was almost 35 minutes faster than 2002 Tom, which was only fitting, since 2002 Tom was 30 minutes faster than his six-years-ago self, 1996 Tom. That’ll show him. As John Blackburn said, when I told him, “Good for the goose, chump! Maybe you’ll beat me next time…oh wait, YOU CAN’T because you’re in the past! Second-best forever. Eat it, boy.” Wow, that John Blackburn really has no trouble at all pretending to be as competitive as I am.

And I finally beat Ron, in a long ride:
Finally.

Oh, and the knees seem fine — not actually happy, mind you, but definitely fully functional.

Tom’s Cycle Computer and Altimeter Watch:
      distance:  101.25 miles
        ascent:   4,440 ft.
   saddle time: 6:44:57       (not counting stops. 35 minutes faster than 2002!)
 average speed:    15.0 mph   (not counting stops)

Ron’s Cycle Computer:
  saddle time:  6:47:50       (not counting stops. 18 minutes faster than 2002!)
average speed:     14.9 mph   (not counting stops)

From Start to Finish:
 elapsed time:  8:50:00       (counting everything: 06:27:00 - 15:17:00)
average speed:     11.5 mph   (counting everything)

“Hey, Ron, there’s a Solvang Double Century! Ron?”