Political Calculations
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30 September 2006

Carnival Midway from The Jerk Welcome to this week's edition of On the Moneyed Midways, the only place on the Internet where you can catch up with the best posts from each of the week's blog carnivals related to business and money matters. Every week, we also award one post with the title The Best Post of the Week, Anywhere!(TM)

This week had a much larger than average number of high quality posts hidden among each of the week's blog carnivals - several were serious contenders for being The Best Post of the Week, Anywhere!, but in the end, we opted for our favorite kind of post - the kind that uses direct observation and/or data to contradict the "conventional wisdom" we hear all too often in the mainstream media! Scroll down for the best of the week that was....

On the Moneyed Midways for September 30, 2006
Carnival Post Blog Comments
Carnival of Business Improve Quality by Increasing Quantity WOW Alexander Becker finds it takes quantity to develop quality - his WOW blog is worth reading just to see where he developed his!
Carnival of Career Intensity Conquer Fear, Take Action! The Blogging Boss Eric Boehme focuses upon just what taking action means when it comes to overcoming one's fears.
Carnival of Fraud US Elementary and Middle School Curriculum "Overly Broad and Superficial" Freeman Hunt Are state and national learning standards short-changing U.S. students? Freeman Hunt asks the question that begs answers from the education establishment.
Investing Carnival How to Choose Dividend Growth Stocks The Skinny Investor The Skinny Investor shares a middle-ground strategy for choosing a portfolio of dividend growth stocks.
Personal Growth Carnival How to Get Ahead: Lie and Cheat? Passion, People and Principles David Maister wonders about the impact of a generation of MBA students where a majority admit cheating to get ahead in school.
Carnival of Debt Reduction Starting from Scratch - Laying the Groundwork Savvy Saver If you recently graduated from school with a lot of debts, the Savvy Saver takes you through the steps she's taking her brother to get financially independent!
Carnival of Personal Finance Would You Lose 10 Pounds If Someone Paid You $2000? Getting to Enough Could insurance premiums saved over 20 years be enough incentive to lose weight today? Gte has the scoop on one company's policies.
Cavalcade of Risk What Does It Mean to Live in a Riskier Society? RiskProf "Generally," says the RiskProf, "it means more wealth and well-being," in excerpting a book critique that compares today's world to 1970.
Festival of Stocks The Eighty Cent Dollar Inelegant Investor The Inelegant Investor provides their rationale for investing in a company that "has no employees," "leases nothing more than a storage space," and is sitting on a large hoard of cash.
Carnival of Real Estate Kicking the Tires on Housing Futures as a Predictive Tool True Gotham Are the new housing futures markets accurately predicting the direction of local housing markets? Douglas Heddings contrasts where the futures markets are pointing against his own direct observations in The Best Post of the Week, Anywhere!
Personal Development Carnival Wanna Be More Productive? Trash that Bloody PDA! RadicalHop Peter Kua makes a great argument for P&P technology (that's "Pen and Paper") over the PDA in a fun post!
Carnival of the Capitalists Passchendaele in the Office The Scratching Post K.T. Cat identifies what today's managers could learn from a battle in World War I.

Previous Editions

28 September 2006

You've seen countless talking heads on the news predict who the winners in various elections will be, but now, Political Calculations has created the tools you need to do the job yourself to put those over-excited political geeks out of work. Yes, you too can project the winners of the races that matter to you, just like those know-it-all professional prognosticators!

Election Forecasts
Subcategory Title Description
Simple Majority Simple Majority Win Born in the aftermath of the 2004 election, this tool is designed to figure out what percentage of the uncounted vote is needed for the candidates to win a simple majority.
Recounts Recounting the Odds Are there vote-counting shenanigans going on in a close election where a recount is underway? You can use this tool to find out how likely a reported outcome of a recount is compared to the original vote count!
Forecasts Projecting 2006 U.S. Senate Elections Would you like to project the winner of an election using polling data just like the "professionals?" This tool, originally designed for 2006's statewide races, is for you!

Return to the User's Guide to Political Calculations....

27 September 2006

Early in our history, Political Calculations became part of Bill Parke's Economics Roundtable where, thanks to the miracle of RSS feeds, we're able to keep up with commentary and analysis from many of academia's top economists.

But, more than that, these same folks have inspired a number of tools here at Political Calculations! Now, you too can analyze the economy like a pro:

Subcategory Title Description
Recession Reckoning the Odds of Recession Hands down, our most popular tool and post ever. Our tool is based on 2006 research published by the Federal Reserve that determines the probability of the U.S. economy going into recession sometime in the next 12 months using current bond market and interest rate data.
Recession Visualizing the Probability of Recession We went one step further from our recession odds reckoning tool and found a neat way to visualize whether or not the probability of a recession occurring in the next 12 months is better or less than 50%.
GDP Forecasting GDP Using the "Climbing Limo" Method What if, instead of relying on official government economic forecasts, you had a tool that produced a more accurate projection of U.S. economic growth some 60% of the time?
Monetary Policy Targeting the Federal Funds Rate Do you know that interest rate everyone gets worked up about whenever the Federal Reserve makes a decision about where to set it? Our tool takes a method developed by Harvard's Greg Mankiw that might help you gain insight into how the Fed does it!
Tax Policy Consumption vs. Income Taxes Did you know that income taxes discourage both work and savings while consumption taxes encourage them? Our tool does Professor Mankiw's back-of-the-envelope math to show why!
Bankruptcy Predicting Bankruptcy The Altman Z-score is one of the most popular tools you can use to predict if a publicly-traded company is heading down the tubes. Our tool will help you see if a company you're thinking about investing in is at risk.
Decisions The Cost of Risk vs. Benefit Economist Arnold Kling inspired this tool with his original post showing the math for determining whether or not a medical test might be beneficial enough to be worth its cost. Of course, being who we are, we recognized that the same math applies to whether or not the grand prize in the lottery is worth buying a ticket!
Data Modeling Average Wages in the U.S. We project the future average wage in the U.S. with our tool based on historical data from the Social Security National Average Wage Index.
Data Modeling Projecting U.S. Median Housing Prices What will the median price of a house in the U.S. be in 2010? In 2050? Our tool can help you find the answers!
Fiscal Policy Minimum Wage and Small Business What effect will an increase in the minimum wage have on your small business? Our tool gets to the bottom line!

Return to the User's Guide to Political Calculations....


26 September 2006

Did you know that the longest losing streak recorded for an investment in the S&P 500 index lasted for nearly 16 years?

It's true! A hypothetical S&P 500 index investor who plunked down good money in the index when the stock market peaked in value in September 1929, right before the Great Crash the following October, would not have begun breaking even and making money on their investment until 1945!

By contrast, the best annualized rate of return for a 16-year period in the S&P 500 index is 19.6%, which investors who put their money down in July 1982 might have realized. Meanwhile, the average annualized rate of return for an investment in the S&P 500 for time periods of any length is 9.4%.

To be fully accurate, actual returns realized from stock market investments are less than these values, given the effects of taxes, fees, commissions and inflation, but you can see why the stock market can be so attractive for the long term investor. That's why Political Calculations has mined stock market history data to create the following analysis and tools:

The Stock Market
Subcategory Title Description
S&P 500 Mapping S&P 500 Performance, Since 1871 Our tool for modeling the best and worst case historical performance for investing periods of any length. Based on historical data going all the back to 1871!
S&P 500 Mapping Stock Market Extremes and Mapping Average Stock Market Returns The previous generation of our tool and analysis of S&P 500 market performance.
What If? Lemony Snicket vs. King Midas What if you had the worst possible luck in investing? Or what if you truly had the golden touch? Our tool takes the results of our oldest stock market performance analysis (see below) and shows you the absolute best and worst case outcomes!
Total Stock Market Best and Worst Case Stock Market Investing Our oldest analysis of the best and worst case returns for an investment in an index representing the total stock market (as opposed to just the S&P 500) while also taking inflation into account!
What If? Lemony Snicket and the S&P 500 We update our Lemony Snicket tool to consider your investment in the S&P 500. Plus, we add more gloom to your worst case investing scenario by bringing inflation into the picture....

How To Use Our Stock Market Tools

Long-term investors will get the most use out of our tools, although shorter-term investors might find them useful in playing the what-if game.

We recommend that you not focus so much on the best-case performance, or even the average-case performance of the stock market when you're deciding what long-term investment decisions to make. Instead, we suggest that you focus upon our worst-case scenarios when shaping your investing strategies - that way, you can be pretty well ensured that you will reach your investment goals even if you have the Lemony Snicket touch!

Return to the User's Guide to Political Calculations....

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25 September 2006

People borrow money for all sorts of reasons, but when it comes to refinancing their loans, people predominantly choose to do so for what comes down to be two simple reasons:

1. To increase their personal cash flow by reducing the size of their loan payments.
2. To increase their wealth by reducing the total amount they'll pay over the term of the loan.

If just one of these reasons apply to you, it may well be worth the time and cost of refinancing your debt. If both reasons apply, the decision of whether or not to refinance becomes kind of a no-brainer!

That's why Political Calculations has created its suite of refinancing-related tools. Combined with our simple loan payment and payoff tool, these tools can help you determine if refinancing makes sense for you! Here they are, along with the questions they're designed to help answer:

Subcategory Title Description
Time Time to Break Even If you're able to successfully reduce the amount of your regular loan payments, how many months will it take to make back the money it cost to refinance your loan?
Saving How Much Will You Save in the Long Run? How much will keeping your loan as it is cost over its remaining life? And how much will your refinanced loan cost over its full term? If you save money in the long run, refinancing might make sense even if the amount of your regular payments goes up!
Consolidation Does Home Loan Consolidation Make Sense? If you have a mortgage *and* a line-of-credit that taps your home's equity, does consolidating your debt into a single loan a good idea? While this tool is set up to specifically address the multiple home loan situation, the basic math applies for any two loans with similar "endurance."

Return to the User's Guide to Political Calculations....


23 September 2006

Carnival Midway from The Jerk Welcome to this week's edition of On the Moneyed Midways, where we link to the best posts from each of the week's blog carnivals related to business and money matters. But wait, that's not all! We also award one post with the title The Best Post of the Week, Anywhere!(TM)

This week, we're proud to proclaim Noah Kagan of Okdork.com as our new hero! Hosting this week's Carnival of the Capitalists (link below), Noah had this to say about his Carnival posting philosophy:

I run the carnival of marketing and the biggest problem I found was that so many articles are shit. So in honor of my readers I will present the 5 most interesting and just give links to the other people.

As we review many blog carnivals each week, we find this to be very true. We also find that the Carnival of the Capitalists is lucky to be able to regularly produce 5 quality posts each week - there are a number of other carnivals out there that don't provide any. But, that may be why you're here (we read 'em so you don't have to!) Just scroll down for the best of the week that was....

On the Moneyed Midways for September 23, 2006
Carnival Post Blog Comments
Carnival of Business Innovation is a 2 Level Game Innovation Zen Daniel Scocco finds that "most companies fail over the long run because they do not recognize the 2-levels of the innovation game."
Carnival of Debt Reduction Using a Windfall to Pay Off Debt MightyBargainHunter John shares his very, very best money saving tip in asking why a couple would take on debt after receiving an unexpected lump sum of money.
Carnival of Fraud Physical Security and Social Engineering with a Bonus PurpleSlog Story PurpleSlog Does your business depend upon security to maintain your competitive advantages? How good is it really?
Carnival of Personal Finance Debt Can Actually Make You Rich Debt Free The conventional wisdom is that debt is bad. Debt Free shows how good debt management can build wealth. The Best Post of the Week, Anywhere!
Carnival of Real Estate Census Data Trends Zillow Blog Drew Meyers has gone digging through recent U.S. Census data to map the demographics of growth.
Carnival of the Capitalists Why Your Employees Are Better Than You Trizoko The folks at Trizle have an outstanding article on how to overcome your overestimating your own abilities.
Festival of Stocks Toyota Wise to Slow Development, Improve Quality One Investor's View Bill Allen outlines what Toyota is doing right, what it needs to do, and why it deserves a place in your investing portfolio.
Festival of Under 30 Finances Who Was Richer? Scrooge McDuck or Croesus? I'm Just Wondering… Ms. MiniDucky Ms. MiniDucky asks "Can you make the money make your stress go away?"
Personal Development Carnival Building a Business, While Working for An Employer Cultivate Greathness | Personal Development Travis Wright offers his views on how to get your own business going while working a full time job, having a real life and, well, sleeping!
Personal Growth Carnival 10 Easy Ways to Not Get Dumped American Inventor Spot Our blog discovery of the week! American Inventor Spot highlights some of the funny inventions that have been conceived to solve the "problems" of relationships!

Previous Editions

22 September 2006

Our regular Friday feature, On the Moneyed Midways, will have a special Saturday edition this week! Be sure to check back for the best of the week that was in the world of blog carnivals!

In the meantime, you could see what the sharply declining yield of the 10-year Treasury over the past two days since the last Fed meeting has done to the odds of recession in the U.S. in the next 12 months.

Or, you could find out just what a Trunk Monkey is!...

'Til tomorrow!

21 September 2006

Have you just won the lottery? Or maybe you've come into some other kind of windfall where you now face the same dilemma that the lottery winner does: should you take the money all at once or spread out over a number of years?

The key to answering this question lies in comparing the effective rates of return that you could receive from investing the amount of the lump sum against what you would be getting if you opted for the annual payout plan. The best choice is to select the option that provides a higher rate of return.

The problem though is that while it's pretty easy to find out what a typical range of annualized rates of return are for a typical investment in the stock market, it's not so easy to figure out what interest rate you're getting from the annual payment option, even though you know how much it will pay out each year and how many years the money will be paid out. The reason why is because the math it takes to get the answer is horrendous! (And we're not even factoring in taxes!)

That's why we here at Political Calculations' have stepped up to provide our newest tool, which you may use to find that effective rate of interest! Just enter the amount of the lump sum payout, the amount of the annual payments you would receive and the number of years the payments would be made - we'll take care of the rest! (Warning: It's best to use actual numbers rather than guessing - it doesn't take much to throw the results out of range!)

Lottery Win or Windfall Data
Input Data Values
Lump Sum Amount Offered If Paid Now
Amount of Annual Payment
Number of Years for Payout

Effective Rate of Return
Calculated Results Values
Annualized Interest Rate (%)

Now, all you have to do is to compare this rate of return against the historical best, worst and average rates of return from an investment in the stock market. For the 20 year payout period default entry in the tool above, these rates of return for an investment in the S&P 500 index are:

  • Worst case: +1.6%
  • Average: +9.4%
  • Best case: +19.2%

The figure to use for comparison is the average rate of return - the best and worst rates of return are provided simply to illustrate the extreme ends of the possible range.

HT: Oak Road Systems for the math!

Previously on Political Calculations

Revisiting the Lottery

Our improved tool for determining what the prize needs to be to make the lottery worth playing!

The Cost of Risk vs. Benefit
Our original tool for finding whether the benefit (the grand prize in the lottery) is worth the price of a ticket when the odds are taken into account.

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20 September 2006

Today, the Federal Reserve's Open Market Committee left the Federal Funds Rate, the interest rate banks are charged for overnight loans, unchanged at 5.25%. Using Political Calculations' tool for reckoning the odds of a recession beginning sometime in the next 12 months, this puts the current probability of a recession at 38.7%, given the current 3-Month Treasury yield of 4.79% and the 10-Year Treasury yield of 4.73%.

Visualizing the probability of recession doesn't produce much difference from the previous chart, but here it is anyway:

Since the Fed's previous meeting, we saw a short-lived run-up in recession odds to mid-40 percent levels, which subsequently receded as inflationary factors have weakened substantially.

And that's our best thinking of where the economy is today. For a positive view of the economy, see Institutional Economics' Stephen Kirchner's excerpt of a recent report from Action Economics. For substantially more negative view of the economy, please check in to the analysis available at Nouriel Roubini's RGE Monitor (which Stephen Kirchner affectionately calls "Doomsday Cult Central"!)

19 September 2006

Now that economist Greg Mankiw, the kind of guy who has pet fish named after him, has posted his vanity license plate on his blog, how often will his vehicle be spotted "leaving the scene of the _________"? Then again, Mankiw's vanity license is pretty tame, especially when you consider that EclectEcon's John Palmer's license plate has been duly noted at border crossings between the U.S. and Canada, which gives better odds that his car will be involved in an international incident....

Why are mega-millionaires George Soros (NY), Peter Lewis (OH), Stephen Bing (CA), Gerard & Lilo Leeds (NY), Lynde Uihlhein (WI), and Jon Stryker (CA) donating so much money to unseat Washington state senator and Democrat party member Tim Sheldon? (Their contributions are confirmed by this public disclosure statement of the political action committee they're funneling their money through to support Sheldon's far-left opponent - HT: Sound Politics.) One thought is that big left-wing money *really* doesn't like "moderate" Democrats, but could they just be making an example of Sheldon to keep all the other Democrats in the state in line?...

Now that we're wrapping up the regular baseball season, here's a question for number crunchers who like sports. In the past, I've observed that the number of teams in each league with records above .500 is usually equal to the number of teams under .500, give or take a team. This season though, the current standings show that 10 of 16 teams in the National League are under the even mark, while 9 of 14 teams in the American League are above it. Is this outcome a "bug" of this particular season or could it be, as Bill Gates might put it, a "feature" that results from interleague play during the regular season?

And does that mean that we'll start regularly having teams that win their division without so much as a having a winning record?

18 September 2006

In recent years, states where citizens have the right to bring initiatives to the voting ballot have had this right abused by politicians and the special interest groups that support them.

Perhaps the most powerful of these politician-interest group alliances is represented by the public transportation lobby. This alliance of big project developers and state and local government public transportation agencies perpetually promise the following benefits to the voting public in return for votes (and tax money) supporting their dream of universal public transportation:

  1. Better service.
  2. Cleaner air.
  3. Energy conservation.
  4. Greater safety.
  5. Less traffic congestion.

Yet somehow, despite all the investment made by taxpayers over the years in supporting public transporation initiatives, the providers of public transportation continue to keep going back to the polls promising the same things, over and over again. How come they're not doing a better job at providing these things after all these years?

The answer is simple. Public transportation is something that the public wants, but only for other members of the public, not themselves. They want the benefits, the cleaner air, the less congested roads, etc. but they don't want to inconvenience themselves into a system that, no matter how grandly planned, cannot serve every need of every individual.

Instead, one suspects that the only reason the public transportation lobby continues to put initiatives on the ballot is to keep an ever-increasing flow of tax money going to the big public transportation project developers and the bureaucrats of the government agencies that run them. This would explain why the problems "solved" by public transportation never really are solved.

So, we here at Political Calculations had an interesting thought. We couldn't help but notice recently that there sure is a lot less traffic on government holidays when government employees don't work. We also notice that government employees often are among the largest employers in every region of the U.S. We also can't help notice that reduced traffic congestion is one of the stated benefits of public transportation.

Obviously, commuting government employees are a clear contributor to traffic congestion. So, why not have a ballot initiative that combines problem and solution together? Let's get government employees out of their cars and onto public transportation!

How can this be done? We suggest that this goal may be achieved by eliminating the biggest subsidy that government agencies provide their employees for their private transportation: the parking place.

But, we shouldn't eliminate all parking for government employee. After all, we've already acknowledged that no public transportation system, no matter how well executed, is capable of serving every need of every individual. So, the initiative should direct government agencies to only provide parking for just 20% of its employees. Surely that would be enough to accommodate the unique needs of each government employee. Plus, we can count upon the wisdom of the government agencies in allocating the use of their parking places by their employees. If they can successfully allocate our tax money to achieve optimal results, they can certainly do the same with a mere handful of spaces in their own parking lots!

It's a perfect win-win scenario! The voting public gets what they really want (a large number of other people off the roads) and the public transporation lobby gets what they want (more tax money and increased investment in public transportation resources.) In fact, there should be no greater advocate for this change than the government agencies responsible for public transporation themselves. We look forward to their enthusiastic support for this proposed initiative....

Update (22 September 2006): You know, we didn't even know about the public transportation lobby's ballot proposal in King County, Washington when we wrote this! We'll look forward to our initiative proposal appearing on the ballot there sometime in the near future!

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15 September 2006

Carnival Midway from The Jerk Welcome to this week's edition of On the Moneyed Midways, where each week, we link to the best posts from the week's blog carnivals related to business and money matters. Each week, we award one post with the title of being: The Best Post of the Week, Anywhere!(TM)

This week's edition features more posts than ever before. What can we say? It was a really good week for very high quality posts! Scroll down for the best of the week that was....

On the Moneyed Midways for September 15, 2006
Carnival Post Blog Comments
Carnival of Business The Secret to Successfully Delegating Work in 6 Steps Instigator Management is the art of getting other people to do things they wouldn't necessarily do on their own. The Instigator shows how to successfully delegate work.
Carnival of Career Intensity The Myth of Thinking Big Brian Kim Everyone says you have to think big to be successful in life, but Brian Kim says you have to be able to think small too!
Carnival of Debt Reduction How Is a Budget Like a Diet? Debt Free debt blog asks the question that might answer why so many people can have a hard time with managing their fiscal lives.
Carnival of Fraud Health Food Store? The Ironic Fist Doctabones discusses the scare tactics and misinformation health stores use to sell their products to uninformed customers.
Carnival of Investing Condo-Hotels: Questions and Answers Michael Emilio Real estate specialist Michael Emilio Rodriguez introduces a very interesting investing concept - something we had never encountered before (and that's saying a lot!)
Carnival of Marketing The Crunch of the Turnaround, Part 1 Business and Technology Reinvention David Daniels presents John Scheel's “The Crunch of the Turnaround” - anyone who's ever considered being involved in righting a business going wrong will find this post useful.
Carnival of Personal Finance 5 Hollywood Lessons About Money The Frugal Duchess Sharon Harvey lists the lessons that Hollywood has to offer for personal finance.
Carnival of Project Management Dharma and Team Performance Zen, Project Management, and Life What does the Law of Dharma have to do with successful project management? Bob Tarne has the answer!
Carnival of Real Estate The Real Losers When the Housing Bubble Bursts My 1st Million at 33 Frugal points out who the real losers are when housing bubbles pop - essential reading for those cheering the climate for today's homesellers and real estate investors.
Carnival of the Capitalists Is Avoiding Failure a Valid Business and Life Strategy Ripples David St. Lawrence questions why the fear of failure drives so much human activity.
Cavalcade of Risk Health Policy Straw Man Cato at Liberty Michael Cannon makes the case for free-market health care by knocking down straw man arguments made by proponents of government controlled health care.
Cavalcade of Risk The Law of Unintended Consequences: Part 3 - Something for Nothing Frugal Wisdom from Wenchypoo's Warehouse Wenchypoo looks at how different people's pursuit of "something for nothing" shapes their outcomes.
Festival of Stocks Katrina Stocks One Year Later Fat Pitch Financials Fat Pitch Financials tests a theory for future investing in taking lessons from a natural disaster.
Investing Carnival Why Verizon Looks Cheap Stock Market Beat William Trent has been digging into Verizon's numbers and believes he's found a "nugget that is pure gold!"
Personal Development Carnival Are You a Quitter? Christine Kane Christine Kane provides the Best Post of the Week, Anywhere! in showing how letting go of something does not mean that you are being a quitter.
Personal Growth Carnival 10 Questions to Ask Before You Join a New Job life: personal, business, social shuchetana presents the questions you should ask before getting yourself hired on in a new job.
Wealth Building Ideas Don’t Wait Until It Hurts Smart Living 4 Smart People sl4sp says that "pain causes average people to change their ways, but only enough to get rid of the pain but not enough to get anywhere."

Previous Editions

14 September 2006

Brian Mulroney, the Radio Equalizer reported yesterday that the clock counting down to bankruptcy will finally run out on Air America Radio (AAR) this Friday, 15 September 2006.

As Political Calculations' readers know, we began following the AAR story as a business case study. In that original analysis, we asked three questions that would determine whether Air America would become viable as an ongoing business without going into bankruptcy. We can now answer those questions, assuming that the story is true, of which there is some question at this time (Update 15 September 2006: Brian Mulroney confirms that the liberal blog Think Progress has retracted it's story as false. Oddly enough, our analysis below still holds!):

1. What "critical mass" of stations or ratings is needed to generate the operating revenue required for the network to become self-sustaining without additional investor capital infusions?

At its peak, AAR's local broadcast affiliate network consisted of somewhere between 80 to 90 stations, along with its Internet and satellite broadcast outlets. At present, the network has just 39 affiliates in the Top 100 radio markets in the U.S. and five of these markets (New York, Los Angeles, Portland, Seattle and San Francisco) account for more than half of the network's total audience.

With a national average Arbitron rating between 0.9 and 1.0 over the past year, AAR's share of the listening audience has simply not grown at all. Since a radio station's revenues from advertising is directly proportional to the size of its listening audience, and given that advertising accounts for the vast majority of a radio station's revenue, the lack of audience growth indicates that AAR has had no significant revenue growth over this period.

It would then go that the "critical mass" of stations and ratings needed to sustain Air America Radio an a viable business was much greater than these levels. The bottom line: While AAR's management deserves credit for assembling a network of stations in many of the U.S. top radio markets and keeping the operation running for as long as it has, AAR's programming wasn't good enough to attract enough listeners to support the exceptionally high cost of its on-air talent to keep the operation out of bankruptcy.

2. Can the network grow fast enough to reach that level of self-sustainability before having to fold?

Combined with highly disproportionate costs for the radio industry, particularly for on-air talent and their staffs, AAR's management has had the challenge of trying to grow revenues to meet the network's exceptionally high expenses in order to become self-sustaining. Despite significant cost reduction efforts, including layoffs and firings of on-air personalities, as well as cutbacks in operational expenses, AAR's management could neither increase their revenues or reduce their costs enough to achieve operational profitability.

3. If the network cannot achieve operational profitability, can it convince its current or new investors to provide more capital to keep it afloat?

Air America Radio is entering bankruptcy proceedings specifically because its "white knights," RealNetwork's Rob Glaser and financier George Soros, who had previously kept the money flowing freely, are likely not interested in continuing to write blank checks to a failing enterprise with a bloated cost structure. Then again, that's been true of Air America Radio for some time - so, why should they stop now?

The Future of "Progressive" Talk Radio

The lack of willingness to continue funding AAR's operations doesn't mean that the network's "white knights" are going to stop funneling their money toward local broadcast radio outlets altogether, so much as that is suggests that they've tired of underwriting the liabilities that accompany Air America Radio and its current parent entity, Piquant LLC.

The early indications are that AAR's senior management is aligning its assets to benefit another business entity assembled by fellow left-wing political activists. GreenStone Media, which includes Jane Fonda and Gloria Steinem among its principals, is expected to take over many of the company's physical assets and may also go on to acquire its local broadcast affiliate venues, and perhaps the services of some of AAR's current on-air talent as well. Interestingly, both Steinem and Fonda appear to be connected through political affliations and financial relationships with George Soros' myriad political influence organizations.

Meet the new boss, same as the old boss....

It would appear that the new group may be intended to cleanly take over AAR's functions while washing its hands of its liabilities - a variation of what AAR's management attempted when it transferred Air America Radio from Progress Media to the Piquant LLC, but failed when it was ultimately unable to dispose of the network's Gloria Wise Boys and Girls Club obligation, which is still outstanding.

It stands to reason that "progressive" talk radio will continue as the forces behind it are unwilling to give it up. We suspect it will just go forward with a superficial makeover and a cleaner balance sheet.

Update: 15 September 2006: As we noted above, our analysis still holds. We do note that the sale of AAR's assets, which Brian Mulroney suggests may be in advanced stages (with the leaked bankruptcy story a tactic to lower the sale price), may also be used to achieve much the same goals, but with the disadvantage of not shaking the network's liabilities.

Previously on Political Calculations

The Future of Air America

We kicked off our series of posts analyzing Air America Radio viability as a business with this post. We really didn't think it would go much further than this!

Air America, Again

We found that AAR doesn't just have competition from the right - it has it on the left as well....

The Financing of Air America Radio

A throw-away post that let us fill space with some information on where AAR got its financing that we had come across in our previous analysis.

Time to Harvest or Divest

As AAR appeared to be running into significant turbulence, we updated our original strategic business analysis, finding that what AAR's management needed to do was to find "white knight" financing or to start making moves to significantly cut its costs.

A Top Ten Countdown

We couldn't resist applying a list a bankruptcy lawyer came up with for a failing company to AAR's known problems - lucky thing AAR has benefitted from the generosity of multi-millionaires with deep pockets.

Profiles in Semi-Obscurity

Another space-filler post where we just unloaded background information about various members of AAR's Board of Directors that we had come across in previous analysis.

Air America's Ratings in the Top 100 Radio Markets

Our look at AAR's ratings through Arbitron's Winter 2006 period.

A Bigger Footprint

An intrepid e-mailer let us know that AAR's flagship affiliate WLIB had a bigger footprint than just the New York City market - plus, we find that roughly half of AAR's audience is in just five cities.

Profiling a Handful of AAR's Local Affiliates

Once again, we unload information we collected in other analysis. This time, we estimate just how many local AAR affiliates there are by determining where they're not.

Air America's Spring 2006 Ratings

Here, we found that ratings weren't growing, at all, for the troubled radio network.

13 September 2006

In our previous looks at the U.S. trade deficit, which we noted really opened up beginning in July 1997, six months after former President Bill Clinton was sworn into office a second time, we asked the question: "What did Clinton do?"

The reason why we asked is that because prior to July 1997, the ratio of U.S. exports to U.S. imports was largely stable throughout Clinton's entire first term, with the ratio of exports to imports ranging between 87% and 93%. After July 1997, this ratio plunged to 72% by the end of Clinton's term in office. In the five and a half years of the current Bush administration, the ratio has lowered much more slowly to roughly 65% today.

With Monday's headline that China's trade surplus has reached a record level of $202 billion USD, it occurred to us here at Political Calculations that China's surging exports to the U.S. might account for a really large chunk of the U.S. trade deficit.

So, we checked it out. First, we went to the U.S. Census database that tracks the volume of imports and exports with nations around the world to get the numbers of dollars of trade between the U.S. and China. The chart below illustrates the growth of this trade from January 1992 to July 2006:

We can see that China's exports to the U.S. has grown exponentially during the period covered in the chart above, averaging an annualized rate of growth of 16.4% (12 times the exponent shown for the import trend shown in the chart above.) Remarkably, the volume of U.S. exports to China has also grown exponentially during this time, approaching an average annualized rate of growth of 12.6%.

In terms of the United States' total volume of international trade, China's share of that trade went from accounting for just 2.6% of the total volume in January 1992 to 9.6% of the total U.S. trade volume in July 2006.

But what impact do these trade figures have on the overall U.S. trade deficit? We can find out by subtracting the value of China's trade with the U.S. from the overall totals (which we originally presented here). The chart below presents the ratio of U.S. exports to imports, excluding the contribution of trade with China, to see how the U.S. trade deficit has fared with the rest of the world from January 1992 through July 2006:

In this chart, we can see that trade with China played a very small role in the opening of the U.S. trade deficit during the second term of the Clinton administration. Combined with our previous analysis, it would seem that the Clinton administration, with very little fanfare, simply threw open the import doors to the U.S. during this time.

Correction: The second chart says it only goes through June 2006 - the data presented in it actually goes through July 2006! Our apologies for any confusion.


12 September 2006

Occasionally, we get around to living up to our name here at Political Calculations, which we hope explains our latest project!

In a nutshell, we've decided to convert Election Projection's formulas for projecting 2006's U.S. Senate races into our newest tool!. (HT: The Blogging Caesar for developing and posting the math!)

Now, instead of having to rely on "professional" prognosticators, you too can project who will be the winners of 2006's statewide elections, just like the "pros!" You can even play "what if" games to your heart's content - you just need to enter the indicated data into the tool below:

2006 U.S. Senate Election State

State: There's something to be said for how the last presidential election went for the state in question. For this tool, that means you would need to find out the margin by which either Bush beat Kerry or Kerry beat Bush in the state to provide a general sense of the inherent political leanings of the state's voters. Rather than have you look it up and do the math yourself, we built the winning candidate margin for each state into the tool!

You'll note that we've listed all 50 states and not just the ones with U.S. Senate elections - that's because the same formulas work for any statewide race (our built-in bonus for you!)

Incumbent Party Data

In the U.S., incumbency matters. Incumbents not only have an edge going into every election they enter, they can even transfer some of their vote-getting power to members of their party in the case of an open election in which they are not running. This section is where we capture the power of incumbency in an election.

Incumbent Net Job Approval Rating: If a statewide incumbent candidate has a positive net approval rating, the odds are good that they, or the candidate of their party, will win the election.

Incumbent Political Party: There's something else about elections in the U.S. that we didn't mention already - there are only two political parties that matter. It's rare to find a three-way (or four-way, or five-way, etc.) race where there are more than two serious candidates, which is why there's only two choices to select from here. Select the party of the incumbent that best fits the affiliations of the two major candidates in the race (we'd be less vague, but there's that whole Lieberman vs. Lamont thing in Connecticut.)

State Polling Bias: This is an arbitrary adjustment for which you'll need to use your best judgment. First, you need to indicate whether or not statewide polls in the state in question skews in the direction of the incumbent's political party. Next, you'll need to estimate by how much those polls skew the results (in other words, how far off are the polls from the results of actual elections?)

A good example is New Jersey, where polls typically indicate 0.5% more support for Republican candidates than actually shows up in election results. For the state's 2006 senate election, you would indicate that the polls do not favor the incumbent party (Democrat) and you would enter 0.5 to show the amount of state polling bias.

Incumbent Party Candidate Data

Here's where we get into who's actually running! Again, to keep the amount of data entry that you have to do managable, we focus upon the data for the party of the current incumbent in the office.

Name of the Incumbent Party Candidate: Enter the name that will appear on voter's ballots or your own cute concoction! This will be used in text that you can copy and paste elsewhere....

The Most Current Average of Polling Results: For our money, there's no better source for this data than Real Clear Politics, whose polling results and averages for U.S. Senate races is just what the doctor ordered for this tool!

Are They the Incumbent?: As we've said before, incumbency matters. Here's where you identify if the Incumbent Party candidate is, in fact, the Incumbent!

Opposing Party Candidate Data

Name of the Opposing Party Candidate: Just like the name you entered for the Incumbent Party Candidate, enter the name that will appear on voter's ballots or your own editorial creation! This bit of information will be used in text that is provided in the results below, which you may copy and paste elsewhere.

The Most Current Average of Polling Results: Enter the opposing party candidate's RCP polling average!

And that's it - here's where you can enter all the data and find the margin by which one candidate is projected to defeat the other!:

Election Data
Input Data Values
Current Incumbent Data
Incumbent's Net Job Approval (%)
Incumbent's Political Party
Do statewide polls tend to favor the Incumbent's Political Party?
By how much are the polls typically off from actual statewide election results? (%)
Incumbent Political Party Candidate Data
Candidate Name
Most Current Polling Average
Is this Candidate the Current Incumbent?
Opposing Political Party Candidate Data
Candidate Name
Most Current Polling Average

Projected 2006 Election Results

A Quick Example

For no other reason than we can, let's pick on New Jersey again. Here, the incumbent senator, Robert Menendez (D) is running for re-election against opposing party candidate Thomas Kean (R). Incumbent Robert Menendez currently (September 12, 2006) has the following numbers:

Net Approval Ranking: -1% (SurveyUSA)
Incumbent Party: Democrat
Do statewide polls favor the incumbent's political party?: No
How much are the polls off? 0.5%

Incumbent Party Candidate Name: Robert Menendez
RCP Polling Average: 40.0%
Is this the incumbent?: Yes.

Opposing Party Candidate Name: Thomas Kean
RCP Polling Average: 42.3%

We get the following projection:

Thomas Kean is projected to edge Robert Menendez by a margin of 1.16%.

The other races are up to you - go to it, poll junkies!

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11 September 2006

We here at Political Calculations thought we'd mark the fifth anniversary of the September 11, 2001 terrorist attacks by noting the major terror plots that have been foiled since then. We've put together the following short list to honor the professionals who take their jobs in fighting terrorism very seriously.

First, here's an excerpt of major terror plots foiled around the world from an October 2005 CNN report:

1. West Coast Airliner Plot:
In mid-2002 the United States disrupted a plot to use hijacked airplanes to attack targets on the West Coast of the United States. The plotters included at least one major operational planner behind the September 11, 2001 attacks.
2. East Coast Airliner Plot:
In mid-2003 the United States and a partner disrupted a plot to use hijacked commercial airplanes to attack targets on the East Coast of the United States.
3. The Jose Padilla Plot:
In May 2002 the United States disrupted a plot that involved blowing up apartment buildings in the United States. One of the alleged plotters, Jose Padilla, allegedly discussed the possibility of using a "dirty bomb" inside the United States. Bush has designated him an "enemy combatant."
4. 2004 British Urban Targets Plot:
In mid-2004 the United States and partners disrupted a plot to bomb urban targets in Britain.
5. 2003 Karachi Plot:
In spring 2003 the United States and a partner disrupted a plot to attack westerners at several targets in Karachi, Pakistan.
6. Heathrow Airport Plot:
In 2003 the United States and several partners disrupted a plot to attack London's Heathrow Airport using hijacked commercial airliners. The planning for this alleged attack was undertaken by a major operational figure in the September 11, 2001 attacks.
7. 2004 Britain Plot:
In the spring of 2004 the United States and partners, using a combination of law enforcement and intelligence resources, disrupted a plot to conduct large-scale bombings in Britain.
8. 2002 Arabian Gulf Shipping Plot:
In late 2002 and 2003 the United States and a partner nation disrupted a plot by al Qaeda operatives to attack ships in the Arabian Gulf.
9. 2002 Strait of Hormuz Plot:
In 2002 the United States and partners disrupted a plot to attack ships in the Strait of Hormuz, the entrance to the Persian Gulf from the Indian Ocean.
10. 2003 Tourist Site Plot:
In 2003 the United States and a partner nation disrupted a plot to attack a tourist site outside the United States. The White House did not list what site that was.

And here's a sampling of the major terror prevention headlines since October 2005:

11. Terror in Canada
In June 2005, news of a foiled terror plot in Toronto where a group "inspired by al-Qaeda" had taken steps to acquire 3 tons of ammonium nitrate (1 ton of this chemical was used in Timothy McVeigh's destruction of the Murrah federal office building in Oklahoma City) for the purpose of attacking a wide range of targets in southern Canada.
12. Australian Terror Plot Foiled
In November 2005, over 500 police officers backed by helicopters raided sites across the cities of Sydney and Melbourne, arresting some 17 individuals who were described as being in the final phases of implementing "a catastrophic terrorist act ... involving the attempted stockpiling of chemicals and related materials that could be used in a major explosion."
13. London Terror Ring Broken Up
An undercover British agent infiltrated a terror cell in London planning to bomb 10 U.S. bound airlines over the Atlantic Ocean, leading to arrests in August 2006.

About Political Calculations

Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

ironman at politicalcalculations

Thanks in advance!

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