Felix Salmon

The official declaration of Iceland’s president which caused the current crisis. Very well put. — Calculated Risk

The dreams of avarice are coming back — Cartoonbank

What would be the consequences of a US technical default? Anything to worry about? — Zero Hedge

“What Lady Gaga’s music would sound like if it were sung by somebody who is both tone-deaf and completely dead inside” — HuffPo

Are legal payday lenders a superior alternative to the loan sharks of old? Or are they they loan sharks of old? Just look at what happened in New Mexico, which tried to crack down on payday lenders by limiting the amount of money a company could charge in interest on a short-maturity loan. No problem, said the lenders, and just started selling a new product — an even worse product — which got around the law by having a maturity of over 120 days. They even provided their borrowers with Truth-in-Lending Act disclosures! Like this one:

In case you can’t see clearly, this shows a $100 loan which is due to be repaid with 26 bi-weekly installments of $40.16 each, plus a final installment of $55.34. In total, the borrower, Oscar Wellito, has to pay not only his $100 principal back, but also $999.71 in interest, for a total APR of 1,147%.

The New Mexico attorney general is trying to get this kind of thing made illegal, but it’s still going on — and not only in New Mexico, either.

Wellito ended up making four payments on this loan, for a total of $160.64, before he complained to the New Mexico attorney general’s office and they told him to stopped making payments. If those payments had constituted payment in full on the $100 loan, they would have amounted to an APR of something over 460%. In fact, however, after paying back $160.64 on his $100 loan, Wellito had managed to reduce the principal amount outstanding by a whopping 2 cents.

Which is more than this loan would be reduced by after four payments:

Here, the APR is a mere 521%, but somehow the first half-dozen payments don’t pay down the principal at all: after paying $1,169.52 — 25% more than the total amount borrowed — the principal is completely unchanged. Eventually, on payment #7, it finally gets reduced by the princely sum of $3.32.

The first loan, here, was issued by a lender called Cash Loans Now; the second comes from Fastbucks. If both borrowers paid back twice what they originally borrowed and then defaulted, they would still owe hundreds of dollars to each lender. It’s possible that if Cash Loans Now tried to take Mr Wellito to court, the judge would just throw out the case, since the loan was so unconscionable. But if Cash Loans Now just sold its defaulted loan to Fastbucks, while Fastbucks sold its defaulted loan to Cash Loans Now, then both would have bought legitimate debts of over a thousand dollars and wouldn’t have been paid a penny on them: indeed, they would both be out of pocket. It would be very hard for a judge to throw out that kind of case.

I hope that the New Mexico attorney general does manage to get these loans deemed illegal. But in any case one look at them is enough to prove that they’re not in any way being priced off of credit risk — the lenders are likely to make a massive profit even in most cases where the borrower defaults. This is loan sharking, pure and simple — and, for the time being, it’s legal. Isn’t it about time that we have a Consumer Financial Protection Agency which could put an end to this kind of thing?

Update: The New Mexico AG clarifies that although Wellito stopped making payments on his loan after complaining to their office, they did not advise him to do so. Karen Meyers, assistant AG, writes:

Many of the consumers who submit complaints to our office stop paying on their loans because they cannot extricate themselves from the debt trap that has been set for them by the lender. The New Mexico Attorney General’s Office does not provide individual legal advice to consumers regarding their individual loans. The New Mexico Attorney General’s role is to enforce the Unfair Practices Act as we seek to do in these cases.

Megan McArdle writes that access to credit is good for the poor:

Damon Runyon didn’t just make up the crowded living conditions, the loan sharks, the reliance on pawnbrokers. Those are relics of that golden bygone era when bankers didn’t extend credit to people without solid incomes, substantial assets, or affluent relations. Fewer people got themselves into trouble with a bank, it is true. But there are a lot of worse ways to get into trouble. And as with the War on Drugs, I’m pretty strongly averse to more paternalistic policies which improve the lives of the middle class while making poorer people worse off.

Megan won’t be surprised to learn that I too am averse to policies which make poorer people worse off. But I’m not at all convinced that tightening rules on credit has that effect. Indeed, it seems to me that payday lenders and the like positively thrived during the credit boom — much as India’s moneylenders have thrived and grown even as microfinance institutions in the country have done likewise.

So is there less predatory lending now, from loan sharks and payday lenders and the like, than there was in Damon Runyon’s day? I’d love to see some numbers on that — as opposed to anecdotes from an author who specialized in chronicling the criminal underclass.

There’s a reason why people are often reluctant to stand up to bullies, especially when those bullies have an enormous size and strength advantage and are credibly threatening to hurt you very badly. And so it’s going to be very interesting to see what happens now that Iceland’s figurehead president, Olafur Grimsson, has suddenly decided to cause a major international incident by vetoing a bill which would have put his country’s citizens into billions of dollars in debt to bail out the UK and Dutch governments.

In principle, I’m with Mish on this one: if you’re the president of a country where 70% of the population opposes the bill and 20% have signed a petition urging you to veto it, the noble course of action is clear.

But the UK, especially, is playing hardball, threatening Iceland with financial isolation. And as Dan Drezner says, “total isolation from the global financial system is not a fun experience, Great Recession or not”.

The threat of Iceland dropping off the face of the financial world is a real one, and the country’s bonds have been downgraded to junk status as a result. It’s really that bad: the ratings agencies have downgraded Iceland for not taking on an extra 40% of GDP in new debts.

I’m quite ashamed of the bullying tactics being used here by the UK government. What happened was that an Icelandic bank, Landsbanki, started attracting UK depositors through its Icesave brand. When Landsbanki failed, the UK government bailed out those depositors in full. And now it wants that money back from the Icelandic government, which never guaranteed the Icesave deposits. If you thought the cod wars were bad, this is much worse.

If the UK were picking on a country its own size, here, I wouldn’t feel so bad. But Iceland is tiny, and has no real means to fight back, other than essentially saying “OK, then, hit me.” Which is what it’s just done. I hope that the UK doesn’t follow through on its threats — even if that means damaging its own credibility going forwards.

The Fed is profoundly flawed, and there’s a good chance it will fail at doing the job we’re tasking it with. But it’s the best chance we’ve got. That’s the consensus I’m beginning to feel on the subject of Ben Bernanke’s status as Fed chairman specifically, and the wisdom of confirming and expanding the powers of the Fed more generally.

David Leonhardt today has a great column along those lines, explaining that even a Fed with much more teeth than it has today would have done nothing to prevent the housing bubble — not under Greenspan, certainly, and probably not under pre-crisis Bernanke either. It’s worth reading John Carney on the subject too: far from being worried about the housing market in the bubble years, regulators were actually being asked to help inflate it.

So it’s clear that the Fed needs to renounce its former worldview and move to a state of permanent worry about the risks that markets pose to the economy as a whole. And as Leonhardt says, even if it’s doing the latter, it’s doing a bad job on the former:

The fact that Mr. Bernanke and other regulators still have not explained why they failed to recognize the last bubble is the weakest link in the Fed’s push for more power…

Just this week, Mr. Bernanke went to the annual meeting of academic economists in Atlanta to offer his own history of Fed policy during the bubble… He never acknowledged that the Fed simply missed the bubble…

He and his colleagues fell victim to the same weakness that bedeviled the engineers of the Challenger space shuttle, the planners of the Vietnam and Iraq Wars, and the airline pilots who have made tragic cockpit errors. They didn’t adequately question their own assumptions. It’s an entirely human mistake.

Which is why it is likely to happen again…

What’s missing from the debate over financial re-regulation is a serious discussion of how to reduce the odds that the Fed — however much authority it has — will listen to the echo chamber when the next bubble comes along. A simple first step would be for Mr. Bernanke to discuss the Fed’s recent failures, in detail.

Leonhardt talks about setting up a permanent board to go back over past mistakes and try to ensure they don’t happen again. I’m not sure how useful that would be — my guess it would issue carefully-parsed and extremely long reports and would change very little. At the same time, however, Leonhardt is surely right that we need much more transparent self-criticism at the Fed, especially when it comes to its underdeveloped regulatory role. If you don’t know exactly where you went wrong in the past, the chances are you’ll continue to go wrong in the future.

If the poor can’t get credit from banks, they’ll end up in more trouble elsewhere? Empirics please! — McArdle

Nobody has a million followers on Twitter — Dash

If you asked a blue-suit solution provider to quote you on building Twitter — Tbray

The Polycentric Parking System — Reason

Denton moves from pageviews to uniques. Guess he’s maxed out the juice he can wrong from those commenters — Awl

Gorgeous photos of a visit to Sprial Jetty — Art Fag City

Michael Corkery’s list of buck-passers who refuse to take any blame for the financial crisis. Could be much longer — WSJ

The $177,000 tuna. That’s $345/pound — Yahoo

Brett Arends holds me up as an exemplar of deplorable financial blogging, and implies that I don’t do “real thinking” — Marketwatch

Edmund Andrews, who took a Times buyout, is now a blogger for Capital Gains and Games; is also joining the Fiscal Times — CG&G, Politico

I agree with pretty much everything Mike Kinsley says in his broadside against unnecessarily-long newspaper articles. But what are newspapers to do about it? The question is a tough one, as Kinsley clearly knows: the conventions he’s complaining about, he says, “are traditional, even mandatory”.

Spencer Ackerman uncovers a bit of the hidden point here: newspaper conventions have been built for physical newspapers, and can look silly in the age of the web — especially when the stories themselves appear, pretty much unchanged, on newspapers’ websites. It might make sense for the physical LA Times to run one big story about Afghanistan, but once that decision is made, no one is going to chop that one big story into three smaller ones for the website.

This is a subject which Ben Hammersley is in the middle of writing, very perceptively, about, in a four-part series on what he calls E-books, which are basically any means of packaging content. Here’s a bit of part one:

At the moment, the average magazine is made from a combination of Microsoft Word, Photoshop, In-Design, shared-drives, and PDFs sent to the repro house. As each step of the analogue production process has been replaced by a digital version (film photography to digital, for example) that bit has been swapped out and replaced. The upshot is that we have accidentally efficient production processes that are optimised to getting a print magazine out of the door every four weeks or so. When you then try to put that magazine onto the web, as we do with WIRED every month, the process is mostly cut-and-paste. This is one of the reasons why magazine websites aren’t very good: you lose so much simply because of the way you have to get the content from one medium to the other. The rest of the content you never had in the first place (for example because the original copy wasn’t written in HTML, and so doesn’t have links in it.)

There’s a lot of snarking on Twitter today about the amount of words it took Kinsley to make his point, but the fingers here should really be pointing not at Kinsley but at exactly what Hammersley is talking about here.

Kinsley wrote an excellent column for a monthly magazine. People reading the physical version of the Atlantic on the train or in their armchair at home will love the content, and will be very happy with the length; James Bennet, the Atlantic’s editor, puts out a really good physical book. And Atlantic.com is very good too, largely because it has lots of excellent purpose-built web content. But the magazine content needs to go online too, and when that happens you do get this kind of disconnect.

Exactly the same issues come into play with newspapers, as Ackerman understands. In the UK, newspapers indicate the importance of a story mainly by dint of the size of its headline, but American newspapers, especially the ones that Kinsley is writing about, don’t. The front page of the New York Times gives very little visual indication of which stories are important: instead, convention has it that the more important a story is, the longer it becomes. And thus a simple vote in the House of Representatives becomes a 1,500-word portentious essay complete with a laboriously-constructed 35-word opening sentence. It’s not because the story needs to be that way, it’s because of something much deeper in the physical structure of the newspaper itself — something which, of course, is lost when Kinsley fires up his laptop and calls up the story at nytimes.com.

Similarly with things like the “Windfall Seen as Bonuses Are Paid in Stock” headline: from the point of view of readers who are comfortable in the blogosphere, that kind of thing is a joke. If stock-based bonuses are creating a windfall, that’s the news, not the weird fact that the windfalls have been “seen”. But the NYT is, understandably, paranoid about fiddling too much with what Kinsley calls its “legacy code”, since it’s by far the most criticized and second-guessed newspaper in the world.

The more attitude and opinion you build into an editorial product, the better it becomes, in many ways — but, at the same time, it will also, inevitably, make more mistakes. And the cost of a mistake to the NYT is much higher than it is to just about any other publication. So cautiousness reigns. This is mainly a function of the NYT’s status as an authoritative source: it’s not another voice in the conversation, much of the time, so much as it is the foundation upon which much of the conversation is based. (Remember Ambassador de Sadesky, in Doctor Strangelove, explaining that the Soviet Union had built its Doomsday device because the New York Times had reported that the USA was building one. In that film, an error at the NYT ended up literally destroying humanity.)

A little bit of that authoritativeness comes from the fact that the NYT exists in physical form, but most of it comes from the brand, and from precisely the kind of overly wordy long-form reporting that Kinsley criticizes. I suspect that most NYT editors know full well that shorter stories would be much more readable. And on the web, it’s important for any given story to be as readable as possible. If you’re building a brand for the ages, however, other considerations come into play, and I suspect that the NYT is worried about losing in importance and venerability whatever gains it might make in readability and accessibility.

The New York Times is hardly a major media franchise in monetary terms: a public company, it has a market capitalization of less than $2 billion, and that includes its other properties such as the Boston Globe. If it were to be forced to compete on a level playing field with every other journalist outlet jostling for pageviews, it would be worth even less. The one thing it has going for it more than anything else — the thing that its reporters and editors and controlling shareholders live for — is its enviable global reputation for being impartial and reliable and — yes — a little bit boring.

Kinsley is in the process of building a website for the Atlantic which will be none of those things, and I wish him all success in that endeavor. We both believe that there’s an enormous market out there for short, feisty, funny, opinionated prose — the kind of stuff which would always be the first thing you chose to read if you put it up against a 1,500-word front-page story from the NYT on the latest political developments surrounding healthcare reform. But that doesn’t mean that the NYT should drop everything and move in the same direction. Franchises like the NYT — and Reuters, for that matter — get built up carefully over decades and centuries. That might encrust them with more than their fair share of old-fashioned attitudes, but it also gives them the hope of being able to rise above the crowd and be the calm center of the noisy blogospheric storm. If they decide to join the unwashed masses, in many ways they will have lost everything they stand for.

Brian Moynihan’s first speech as CEO of Bank of America was a big one — and, judging by the sometimes-clumsy writing, he wrote it himself. He certainly seems pretty contrite about what happened:

The surge of growth in the financial services industry over the past decade obviously went way too far. The broad industry over-lent, and consumers and companies over-borrowed, and we all overleveraged as we believed the risks of the new products could be managed effectively. This led to our recent economic crisis.

Moynihan does not, however, draw the obvious conclusion. If the surge of growth in financial services went way too far, and given that Bank of America was one of the largest and fastest-growing financial-services groups in the country, doesn’t it follow that BofA should get a lot smaller? Moynihan hints a couple of times that it might, but ultimately can’t bring himself to go there:

We will see changes in three primary areas: Consumer issues, including pricing and access to credit… capital markets… and the structure of the industry, including the idea of companies that are “too big to fail.”…

The third area of reform is the structure of the industry. The issues here are the idea of “too big to fail,” leverage and capital requirements, proprietary trading and related activities and taxpayer support…

The key lesson here is “never again.” We can never again get our company or our industry in this position. This will require more capital and more liquidity for all participants, which we support.

We are more concerned with the view that somehow the integration of capital markets and commercial banking is a flawed structure for companies in our industry. It is not. It represents what our customers need from us as an industry.

It’s far from obvious what Moynihan thinks about the issue of too-big-to-fail banks. If the lesson is “never again” then doesn’t that require smaller banks? After all, giants will always fall eventually, no matter what their customers need. But no: Moynihan is perfectly happy with Bank of America’s enormous size.

At Bank of America, we are out in the marketplace every day, making every good loan we can. It is how we build relationships…it is how we make money… it’s the most important thing we can do to help boost the economy. And, it is simply how we serve our customers. Overall, over the past four reported quarters, we have extended three quarters of a trillion dollars in credit.

As I’ve said before, that number is nothing to be proud of: it’s a single number which encapsulates the moral hazard of too-big-to-fail. But Moynihan goes on to make matters worse by underlining how little of that money actually went to small and medium-sized enterprises, the real engine of job creation in the US:

Just last month, we announced that we will increase our lending nationwide to small and medium-size businesses by $5 billion – an increase over 2009 production levels of about 40%.

By my calculations, that means BofA lent just $12.5 billion to small and medium-size businesses in 2009: that’s just 1.6% of its total lending. This is the benefit we get from having a monster too-big-to-fail bank with a balance sheet of $2.25 trillion? A promise to increase lending to small business by a whopping $0.005 trillion? Sorry, but that’s no way to justify the existence of a bank the size of BofA. It should be cut down to size soon, and if Moynihan won’t do that, the government should force his hand.

Please don’t anyone tell Jonathan Nossiter about Vines of Mendoza, I fear he might never recover. Vines of Mendoza is the epitome of everything Nossiter hates about the new world of wine: it’s all about globalization, homogenization, and money, rather than love and memory and terroir.

Vines of Mendoza was set up by a chap called Mike Evans, who bought a 920-acre plot of wine land in Argentina in 2006, and immediately started selling it off in chunks as small as three acres, at upwards of $50,000 per acre. The whole thing is done by remote control: you sign on for say three acres, and then get sent 28 8 different numbered-but-unlabeled bottles of wine from the region. You drink them all blind (after all, you don’t have a clue what they are), and after telling the company which wines you liked the most, they will pick a plot for you which is best able to produce that kind of wine.

As anybody who knows anything about blind tasting will tell you, this is a recipe for ending up with highly alcoholic, oaky, sweet, fruity reds. Any halfways-serious would-be winemaker would go to the region in question, find out about its history and the varietals growing there, drink various wines — not blind — from various vintages, talking to the different winemakers who made them, and slowly try to work out how to take local grapes and transform them into something with character and maybe a little bit of one’s own personality.

What Evans is offering is the exact opposite: a “turnkey opportunity” (yes, they really say that) where the ostensible winemaker never needs to see or smell or touch the grapes or the land they grow on. It’s a new expensive hobby for billionaires: grow wine right next door to a vineyard overseen by Nossiter nemesis Michel Rolland! And kid yourself, while doing so, that it’s an investment:

An acre of land in the Uco Valley presently costs one-fifth of the amount of land in the Napa Valley. This provides a good opportunity for those seeking investment in a quality wine production.

It’s pretty silly to think that anybody with a three-acre plot of land in Mendoza will ever be able to sell it at a profit — certainly not before Evans has sold out his inventory, at any rate. Insofar as there will be any secondary market at all for these things, it will be controlled by Evans. And any real would-be winemaker is going to want a lot more than three acres. This is vanity winemaking, as seen all over Napa, but at lower prices and without even the superficial veneer of being a commercial enterprise. What’s more, Evans is happy to explain to anybody who’ll listen that there’s a strong inverse correlation between wine production and wine quality: the fewer bottles you produce, the higher the quality of the wine in them. Which is probably true, if you judge wines on the degree to which they resemble a jar of high-alcohol blackberry jam.

There is one good thing going on here, though. If you’re the kind of person who believes that small, low-production winemakers nearly always make better wines, then Vines of Mendoza might finally be the entity to disabuse you of that fallacy. And if you’ve got $150,000 to spend on a wine adventure, I can think of many better uses for that money than buying three acres of land in Argentina to produce a few thousand bottles of wine functionally indistinguishable from all the other Malbecs out there.

Update: Evans responds, both in a comment on this blog, and on his own blog. Also, Vines of Mendoza tells me that the information they gave me originally is incorrect: they supply 8 bottles to drink blind, not 28. What’s more, you don’t have to drink them blind if you don’t want to, although Vines of Mendoza recommends that you do: they do supply you with separate information on the wine in each bottle.

Martha White has a very odd column about Arianna Huffington’s attempted boycott of the big four banks. Her math is simple: the four banks have $209 billion between them in transaction deposits, and the average American bank account has $4,000 in it, which means that in order to reduce the deposit base by 5%, or $10.5 billion, a whopping 2.6 million Americans would need to go through the hassle of changing banks.

But White here is missing the point: bank profits don’t go up with the size of your bank account. Indeed, it’s the other way around: it’s the poorest customers, racking up habitual overdraft charges and the like, which account for the lion’s share of banks’ fees and profits. As White herself writes:

Banks make their money in a lot of ways, such as by collecting fees. For instance, banks are projected to collect $38.5 billion in overdraft fees this year, some 90 percent of which is paid by only 10 percent of the customer base. While the new opt-in requirement for overdraft protection will probably lower this number in the coming years, it’s safe to assume that banks will come up with other ways to extract their pound of flesh. A recent Bankrate study showed that fees for everything from out-of-network ATM usage to account maintenance rose in 2009.

If the people with modest-sized checking accounts started leaving the big four banks for community banks and credit unions, that fee income would fall much faster than the banks’ deposit bases. That’s where the pressure from this campaign would really be felt.

And besides, the total balances leaving the banks would be more than $4,000 per account. People keep relatively small amounts of money in their checking accounts because those accounts don’t pay interest — checking-account funds are better off just about anywhere else, whether you use them to pay down credit-card debt or just invest them in a CD. If customers closed all their credit cards, savings accounts, in-house brokerage accounts, and the like when they left the bank, the net effect would be multiplied enormously.

So I’m still a fan of the Huffington campaign. No, I don’t think it’s going to have much visible effect on the banks themselves. But with luck at least it will help consumers realize how much of their earnings are being pocketed by these enormous bailed-out institutions — and help nudge them in a direction which will improve their own personal finances, even if it doesn’t make an enormous dent in the big banks’ P&L.

Back in October, I criticized a WSJ story on interchange fees for not making it clear that they were rising rather than falling. The WSJ’s chart showed interchange fees falling as a percentage of each transaction, and settled on a he-said, she-said approach where first fees seem to be rising and then they seem to be falling:

Debit cards carry lower interchange fees than credit cards, but fees on those cards are rising as debit cards become more popular.

Merchants in the U.S. paid an average interchange rate of 1.82% per transaction last year, down from 1.93% in 2005, according to the Nilson Report, bolstering the industry’s argument that fees are falling.

Many thanks, then, to Andrew Martin at the NYT for publishing the missing chart today. As I suspected, both credit-card and debit card interchange fees are rising, with the fastest-growing segment of the market — debit PIN transactions — positively soaring.

There is no good reason whatsoever for the debit-card interchange fees to be rising like this, especially when they were often negative a few years ago. It’s almost funny, watching Visa executives tying themselves up in knots trying to justify the indefensible:

Visa officials said the costs of debit for merchants had not gone down because the cards now provided greater value than they did five or 10 years ago. The costs must not be too onerous, they say, because merchant acceptance has doubled in the last decade.

The fees are “not a cost-based calculation, but a value-based calculation,” said Elizabeth Buse, Visa’s global head of product.

How, exactly, does a debit card now provide “greater value” for merchants than it did in years past? Visa doesn’t say. And of course we know exactly what the “value-based calculation” is that Buse is talking about: debit cards are cheaper for merchants than credit cards, and so long as there’s a spread there, Visa and Mastercard will see it as an opportunity to hike prices.

This chart also helps to explain why the chip-and-PIN system which is so ubiquitous (and, indeed, compulsory) in most of Europe will never catch on in the US unless and until regulators force the issue. It’s much more secure, but it’s also much less lucrative for banks, who love to be able to charge enormous fees for forcing people to sign credit and debit card bills with a pen.

Martin doesn’t seem to have talked to any regulators for his story, but I hope they’re watching this fiasco closely, and are minded to crack down on it. There’s no reason at all that Visa and Mastercard should be soaring in value in a world where payments should be completely commoditized: it’s a monopoly rent, and I look forward to this particular trust being busted sooner rather than later.

Can someone please explain to me this week’s New Yorker cover? Are they meant to be standing at the end of a ski jump or something? — TNY

Was the rename from Burj Dubai to Burj Khalifa part of the UAE bailout of Dubai? — BusinessWeek

May the screwcap extend its gains in the 2010s: please let it be a majority of wine bottles in a few years — Wine Anorak

Do you really look at that sales clerk? An interesting experiment: Change Blindness — YouTube

Best Midtown Lunches of 2009 — Midtown Lunch

The $260 toaster arrives. Recession? What recession? — Telegraph

A gyroscopic front wheel to help kids learn to ride a bike. Watch the video — Gyrobike

Who will buy Johnny Apple’s bottles of ’45 Lafite? And how much of a premium will they fetch? — WaPo

It’s well known that alcohol levels in wine have been rising fast. But this was news to me:

Rising alcohol levels have appeared despite winemaker efforts to keep them low. The dirty little secret of California wine is that a great deal of it goes through some form of de-alcoholization, where at least part of each vintage has alcohol removed to bring down the overall level.

Another approach is to “just add water” to the fermenting must to literally water down the potential alcohol. A friend calls this technique “adding Jesus units” because water is turned into wine instantly; he says that it is a common practice, if not one that anybody admits using.

How is it that even in the face of these extreme measures, red wine nowadays tends to cluster around the 14.5% mark, with some wines, such as the 2008 Marquis Phillips Shiraz, coming in at more than 18% alcohol by volume? Most wine-lovers I know prefer it when wine’s in the 12% range: those wines might not do very well in blind tastings, but they go much better with food, they are much more likely to express terroir, and — not to put too fine a point on it — you can drink much more of them without waking up in the morning feeling as though a cat is trying to claw its way out of your head through your eyeballs.

I don’t believe that this is a global-warming thing. And if it’s a function of winemakers feeling pressured to make high-alcohol fruit bombs because those are the wines which get high ratings on 100-point scales, then why would those winemakers overshoot like this and find themselves forced to de-alcoholize or even simply dilute?

In any case, I recently had a very good experience at one of my favorite NYC wine bars, Tarallucci e Vino, by simply asking them for the lowest-alcohol red on their list. If you’re stuck for what to drink, give it a try some time. If the place in question has a good wine buyer, you’re likely to find something pretty interesting and off the beaten track.

Mike Mandel is doing a great job at uncovering telling charts these days. Here’s his latest:

The personal savings rate might be going up, but that’s just thanks to the hundreds of billions of dollars which the government is borrowing and transferring to the private sector to save. (Not the most efficient use of borrowed funds, it must be said.) Overall, the net national savings rate is at its lowest level since the Depression, and it’s falling: it’s now an astonishing -2.5% of national income. Any guesses for when it might be positive again, and who’s going to repay all of this borrowing?

What are the chances that James Altucher won’t send his daughters to college? Roughly zero, is my guess. Yes, it’s expensive, and yes, it’s possible to make more money as an entrepreneur than as an employee. But only a small minority of people will ever have the necessary skillset to thrive in a business they founded. And many of those will actually go to college in an attempt to acquire that skillset. In any case, the point is that the option value of a college degree is enormous: it gives you potential entry into thousands of careers (including blogging for Reuters) which would otherwise be off-limits.

Altucher is right that college is largely wasted on those who don’t graduate — but that is unlikely to apply to his middle-class daughters, as failure to graduate is highly correlated with being poor. He’s also right that there are other things that can be usefully done with the money which would otherwise be spent on going to college, although I’m not sure that putting it all in a savings account would be top of my list. But he completely ignores the compelling non-financial reasons why people go to college, including the fact that for any given income, a college graduate is likely to be happier in their work (and life) than a non-graduate.

It’s just as well that lots of people go to college for non-financial reasons: collectively, a well-educated population is much more productive, and such countries become much more prosperous as a result. A few entrepreneurial free-riders here and there are fine, but they have to be in the minority.

The US has big problems with its colleges, and they need to be fixed. Let’s not kid ourselves that avoiding going to college entirely is a remotely sensible or scalable solution.