Dana Blankenhorn

Celebrate Your Troubles

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Think of this as Volume 12, Number 21 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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When we got our  current cats, back in 2006, we decided they would be indoor meows. 

They have no problems. Their needs are all taken care of. They eat, they play, they sit by the windows or lie on our beds. 

Their placidity is in stark contrast to the neighbors' cats, both of whom are allowed outside. Those cats eye the world warily, and attack one another with ferocity. They know a truth our cats do not, that there is trouble in life, and you need to pay attention. 

What's true for cats is true for people.

Most kids today are raised with a minimum of trouble in their lives. Their playmates and playdates are chosen by their parents. They are hustled from karate to soccer to dance. They are protected and nurtured like flowers, usually in suburbs where the problems of real life are kept as distant as possible. 

People aren't cats. A lot of these suburban kids become teens and seek out trouble of one kind or another. They get cars and crash them. They feel hormones and act on them. They play at hurting one another. The best of them do as they're told, they cause no trouble for anyone, they graduate with honors, and they go on now to big-time colleges where they will experiment with sex, drugs, music, thought, and each other before settling down to lives of quiet desperation.

I didn't intend it to be like this, but there's another way to go.

Rachel is Wrong

Visit msnbc.com for Breaking News, World News, and News about the Economy

I admit to being a Rachel Maddow fanboy. I love the way she giggles when dealing with subjects that cause Keith Olbermann to spin the outrage dial to 11.

But she can also get outraged, and sometimes for the wrong reasons, as on the clip above, where she and guests protest the President's plan for "prolonged detention," outlined in his Constitution Hall speech.

I expected to be highly critical of the President's talk. There are areas here where I disagree with him. But on the critical issue of the detainees, and torture, a clear understanding of what he actually said tells me he's right.

Credit Where It Is Due

The passage of a credit card "bill of rights" has banks acting like what we liberals call WATB, Whiny Ass Tittie Babies. 

The final bill is not all it could be. But it's pretty good. Especially when you look at how the credit card economy works for the banks.

Every credit card purchase is a loan. But it's not a loan for which the bank pays out cash immediately, like  a car loan. Instead you get what you bought, and the money goes to the merchant after the transaction is settled, less a "discount" based on the merchant's past history.

The amount of the discount varies. With Discover it can be as low as 1.5%. With Visa it's usually 2.5%, although it jumps substantially in "card not present" transactions like Internet purchases. For AmEx transactions it usually starts at 5% and goes up from there. I'm barely counting the cost of processing the transaction because that comes to just a few pennies, although if your average sale price is very low (if you're a $1 store) those pennies add up fast.

For these reasons some merchants illegally limit credit card transactions to purchases of a certain size. At the same time some high-volume merchants, like fast food joints, allow small purchases and don't even make you sign for them. That is an innovative "product" of the industry, specifically for high volume merchants. All that really happens is that the card number is run against a "hot card list" in the store. Settlements are made overnight on a "batch" basis, the credit card computer calling up the store's terminals, uploading the day's transactions, downloading the new hot card list.

There's another way the bank gets back at merchants. Chargebacks. If you return the merchandise, or change your mind and cancel within a few days (a big risk for Internet merchants) the bank takes that money back. Oh, and the more chargebacks you have the higher the merchant's discount.

Because of this, a customer who pays their balance off each month makes a lot of money for the bank. Say you pay off a $1,000 balance on your card every month, within the grace period. That's $12,000 on which the bank has earned discount fees and transaction fees, from the merchants, for the year. If you're going to nothing but the best merchants, that's still $300 plus transaction fees, that was earned off your business. 

You're not a freeloader. Anything but. 

Take What You Can Get

The President seems to frustrate his supporters at every turn.

• Rather than confront the military over its misadventures, he tries a Petreaus plan in Afghanistan. 
• Rather than confront Wall Street over its failures he appoints bank regulators whose experience includes the season of crime. 
• Rather than confront the Bush Torture Regime he seems to dither, refusing to endorse either a special prosecutor or a "truth commission," giving the former Vice President and the Republicans every opportunity to defend what they did in public. 

This is just as true regarding The War Against Oil as anything else. "Mr. Obama’s “new” energy policy is more of the same old pandering," writes Bob Gordon of The Auto Channel. He doesn't call us to a war against oil. He just negotiates higher mileage standards. 

Of course as frustrated as liberals are conservatives are, squared. They're mad as hell, but to them it feels like they're raging against the wind. He borrows trillions, literally trillions, he remakes the economy and all the rules, yet he remains enormously popular. It drives them crazy, and we can only pray the Secret Service can do its job.

But there is something else going on. It's something the media is only barely conscious of, so intent are they on triangulating him, on trying to pin him down. 

The War Against Oil is a War for the Economy

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Think of this as Volume 12, Number 20 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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Want to get the economy out of the ditch? 

Make something. Make something new, something valuable, something real, something with a ready market. 

Despite what critics felt there was something real about the Internet, which defined the 1990s. The Internet accelerates the transfer of knowledge, and of any knowledge-based value store. It's the most powerful economic accelerant since the creation of the telegraph.

By contrast there was nothing ever real about the economic drivers of this decade, financial services and homes. Not that homes aren't real. But the value of a home has nothing to do with its cost or even its location. It is a measure of the economic value left out there to buy homes. A home sucks money, it only creates money for those who build, assuming someone buys. Thus homes became a natural sinkhole for the confederate money of this decade, soaking up as much as the banksters could create from thin air.

Now that the economy has stopped falling this question becomes vital. On what will we base the next boom? 

The answer is obvious. Energy.