I love riding the Poto, it is by far the best trail in the entire southern LP.  It just always seems like something goes wrong there.  I’ve locked my keys in my car.  No matter how perfectly my derailer is tuned at the start of the ride, it always stop shifting right about halfway through.  Today was no different.

Aside from the rainy conditions which I pretty much accepted since I started in the rain, things seemed to be going ok.  Then I looked down and my computer was gone!  WTF!?  I did finally find it after backtracking a mile or so.  Finally my drivetrain starts making some very unhealthy sounds after becoming caked in sand.  Not sure what the exact problem is, but it is not good.  So after a loop and a half I decide to call it a day.  I had hoped to do more but I didn’t want to take the chance of seriously damaging something.

One of the most critical concepts in Austrian Economics is that of capital malinvestment.  This occurs whenever a firm makes an investment in future business that fails to pay off as originally expected.  Obviously this happens all the time, people and firms are not perfect and naturally make mistakes.  Also obvious is that these same firms are putting as much effort as they can into NOT making such mistakes since the penalty could ultimately be bankruptcy.  Therefore in an economy free of outside manipulation such failures would tend to be infrequent and sporadic enough as not to cause serious disruptions.  A business may take a heavy loss but regroup and recover with a new investment.  Or it may continue to fail, liquidate its assets, and have them put back to use by more productive firms.

This is NOT what is happening in America today.  Since the inception of the vile Federal Reserve in 1913 the Federal Government and the Fed Reserve have pursued an openly stated policy of nonstop monetary inflation and artificially low interest rates.  This is a very bad thing and one of the key factors in the major economic bust we are currently experiencing.  I’m sure you may be asking yourself “What’s so bad about low interest rates?  I hate paying interest!”

The problem with manipulated interest rates is that they increase the level of malinvestment in the economy.  Instead of sporadic and generally inconsequential malinvestments, you get huge clusters of malinvestment, entire industries blowing up at once.  Interest rates are THE key factor that a business uses when evaluating where to invest its money.  If virtually unlimited credit is available to every firm in the country for virtually zero interest, suddenly every investment starts to look like a winner.  Applied to consumer credit, this causes people to borrow too much feeding right into the malinvestments of the firms that serve consumers.  Eventually the bubble bursts.  Someone stops spending when they realize what a mistake they’ve made, this cascades through the entire system popping all the bubbles in sight.

The concept of malinvestment is completely foreign to the economists who write economics textbooks, work in industry, and run the federal government.  To them, all demand is good demand.  All investment, all spending on anything and everything is good.  They pursued the low interest rates on purpose, because they believe that if you drive the rates low enough that you can create a bubble that expands forever without consequence.  This belief is utterly false.  Malinvestment is everywhere you look today: housing, automobiles, restaurants, the list goes on and on.

Still need proof?  Here’s an example near and dear to my heart and the well being of quite a few people here in Michigan and the midwest: automobiles.  Do you have any idea how many economists and financial analysts and marketing experts are employed by the auto industry?  Thousands!  Every single one of them in some capacity is given the job of forecasting the future, and evaluating investments to satisfy consumer demand.  Smart people, with all kinds of experience and training and fancy degrees and complex computer models.  And yet look at what is going on right now, they were all wrong, VERY wrong, and at the same time!  What a coincidence!

Automobile demand has essentially collapsed in virtually every market around the globe, at the same time.  Virtually every automobile company on the planet overinvested in capacity, and in the wrong kinds of products.  Currently worldwide automobile capacity is probably being utilized at about 40%, that means 60% sits idle and unused.  That means the entire industry guessed wrong on demand by more than 100%  Amazing!  Not exactly a near miss.  People expect such stupidity from the Detroit 3, but even the untouchable Toyota has made some huge blunders, maybe fewer than the domestics but huge nonetheless.  Their new $1.2 billion Austin, TX truck plant sits completely idle less than a year after opening.  They’re the smartest guys in the business, how did they screw up so bad?

Whoops, didn’t see that coming…

Everything was looking pretty good for a while there.  Demand just keeps going up and up.  Then thwack!  In less than a year demand falls back to where it was 20 years prior.

Still think artifiically low interest rates are so great?  Suddenly you have twice as many auto companies as you really need, half of them could just disappear tomorrow and we would still have plenty of production capacity to serve consumer demand.  That’s one heck of a coincidence!

But back to the point I originally started in on: the malinvestments are not being purged.  The failed companies are not allowed to fail.  The capital is not being diverted to productive activities.  The federal government steps back in with bags of free money to keep the failed companies going.  Billions upon billions of free money to GM and Chrysler, to keep building cars that no one wants.  Oh wait, the government has a plan for that too.  Plenty of free cash to the financing companies so dealers can buy inventory and keep the 0% loans flowing to consumers.  Still not enough though probably.  The Cash For Clunkers bill is virtually guaranteed at this point - the government will literally pay consumers to scrap perfectly good cars and buy new ones.  The government is already planning to buy the hybrid and electric cars to be built by the “new” GM and Chrysler, gee I wonder why…maybe because they will be ungodly expensive and no one will willingly buy one with their own money except a few celebrities.  And if that’s still not enough they’ll find any number of ways to move that metal (or plastic).

I have raced the innaugural Yankee TT three years in a row now, and the first two years had nearly perfect weather for April in Michigan.  I guess we were due for a less than perfect day.  Conditions were on the cool side at about 50 degrees, low wind, and very light rain all day.  This wasn’t really a bad thing, the trail is very sandy and the rain helps solidify it quite a bit making for easier trips through the many sand pits.  The main downsides being all the sand sticking to you and your bike, and the slippery tree roots and rocks along the way.

This is my first year racing sport, and I was ready for a rude awakening.  I ended up with a time of 1:05:54 which was good for 20th out of 30 starters.  Course length was 11.4 miles by my computer, my ave speed was 10.3 with a max of 21.9  I felt pretty lousy about this result, but then I looked at my 2007 and 2008 times on the same course: 1:16:22 and 1:11:22 dropping roughly 5 minutes a year, I guess it looks better from that perspective.

Still, I had hoped for better after training a lot more for this year than in the past, dropped a fair amount of weight too.  This is a good wake-up call to start training with more intensity if I want to really improve.

Needs improvement/negatives: didn’t warm up properly due to time, that was just dumb.  My bike was not shifting properly in the low gears which was a bit of a problem on the uphill sections and had me preoccupied constantly looking down to make sure I wasn’t in the problem gear.  I also had a bit of a sore throat/congested feeling possibly from spring allergies.

Positives: carefully preplanned all foods and drinks for raceday by the hour, energy level felt good.  Bike otherwise performed perfectly, the handling was razor sharp and never let me down.

I might bite the bullet and take the bike to the shop, I can’t race again with it shifting so poorly.  Training wise I need to do some hard intervals on the mountain bike, going to stay as far from the road bike as possible.

Right now, a lot of people are rightfully freaked out about the economy.  Mainly, they are confused because they don’t really understand why things are happening or what to do about it.  If you are the type given to believing in conspiracy theories, you think this ignorance is intentional.  Intentional or not, it is the case that almost no one you know, and no one you see on the news has any idea what they are talking about.  In particular this includes anyone holding a Phd in economics from any American university.

(effectively) Every single college and university in this country teaches an incorrect theory of economics that asserts that the only solution to recession/depression is increased government regulation and market interference, inflation in the money supply, and manipulation of interest rates.  There is no diversity of thought (excepting Ron Paul) within the government, no matter how much “diversity” is celebrated.  Obama himself has stated he doesn’t know much about economics, and he will not get the correct answers from the people who advise him.  These are the people running the economy now, you are right to be worried.

There is one, and only one, school of economic thought which correctly predicted and explains the current economic recession.  None of the people in the government follow this theory, and no one is teaching it in an economics class anywhere in this country.  I will let you wonder to yourself why this is.  This alternative economic theory is known as Austrian Economics, or The Austrian School.  You can learn all about it for free at the Ludwig von Mises Institute website.

A good starting point is the Bailout Reader page.  The essential component of the Austrian School is the alternative explanation of the business cycle, nicely summarized here by Lew Rockwell.

Some other good sites, most of which are on my daily must read list:

• Safe Haven - an aggregation of investing articles
• The 5 Minute Forecast - a daily summary of the investing world
• Lew Rockwell - essays on economics, investing, and random conspiracy theories
• The Mogambo Guru - the most hilarious economic commentator out there

There you go, ignorance is no longer an excuse.

I just recently finished building my winter project bike: a Sette Reken aluminum hardtail.  While my full suspension bike was certainly plush by comparison, I never got used to the tail bobbing of the rear suspension.  Plus the bike had some issues I could just never quite solve, so I decided to go back to a hardtail.  Aside from being a good learning experience, it would also be cheaper to salvage as many parts from the old bike as possible.

The frame was surprisingly cheap, it is a “house brand” frame from Pricepoint and only ran $90 on sale.  Its basic, but solid, and quite light at around 4.5 lbs.  I had hoped to salvage the wheels, fork, drivetrain, and headset.  I intended from the start to replace the brakes on the advice of a local bike mechanic.  Also planned to replace the usual wear parts such as stem, handlebar, and seatpost - they were getting old and it is recommended such parts be replace every few years at least - especially if used heavily.

After tearing the old bike down I found a few problems with that plan.  The headset was actually the wrong size, not to mention the bearings were trashed - gotta replace it.  The bottom bracket - looked questionable and considering its age, definitely due for replacement.  Finally the front and rear derailers had to go - the rear turned out to be bent and the front was the wrong size.  Technically I could have shimmed it to work but I didn’t want to half-ass it.

Aside from those mishaps which only required a few extra trips to the bike shop, the process went pretty well.  Its really not as dificult as you might think.  Only a few specialized tools were required for installing the bottom bracket and cranks.  Otherwise its mainly allen wrenches, screwdrivers, and wire cutters.  I still have trouble perfecting the rear derailer adjustment, which is quite frustrating.

Well here’s my component list:

• Sette Reken frame - 6061 aluminum
• Fox F100X Fork - 100mm travel with inertial lockout
• Easton EA50 aluminum bar and stem
• Avid Juicy 5 hydraulic brakes
• Shimano XTR rapidfire shifters with XT front and rear derailers
• Specilaized ergonomic grips
• Race Face Evolve XC Crank
• Mavic X223 wheels with Shimano XT hubs

Rand was right.  A refreshing glimmer of hope.

I read today that Ayn Rand’s magnum opus Atlas Shrugged is once again climbing the sales charts as people rediscover the novel’s prophetic description of a world brought to the brink of destruction by government control.  The affordable paperback currently sits at #44 on the Amazon sales ranking, and the Ayn Rand institute reports that sales have tripled thus far in 2009 over their 2008 pace, noting that 2008 was the best sales year ever at 200,000 copies.  Not too freakin’ bad for a novel first published in 1957!!!

“Americans are flocking to buy and read ‘Atlas Shrugged’ because there are uncanny similarities between the plot-line of the book and the events of our day” said Yaron Brook, Executive Director at the Ayn Rand Center for Individual Rights. “Americans are rightfully concerned about the economic crisis and government’s increasing intervention and attempts to control the economy. Ayn Rand understood and identified the deeper causes of the crisis we’re facing, and she offered, in ‘Atlas Shrugged,’ a principled and practical solution consistent with American values.”

May only be temporarily, but for now I’m running it with uploads every 5 mins.  Will disable at night so you don’t get blank pictures.

Today was the annual MMBA Expo, for the first time held at the posh Lansing Center.  Posh is relative of course, in prior years the Expo was held in an unheated barn, so it wasn’t tough to make an upgrade.  The Expo is basically a series of speakers, a silent auction of donated items, a swap meet for used parts, a bunch of organizations with information booths, and awards for both the top trail work volunteers of the year and the CPS race award winners. Ten Mile Media posts some pix if you want to know what it all looks like. Bonus points if you can spot Eric and I.

Personally I don’t get all that excited about the Expo.  I like riding my bike, but I’m not into “the scene” and socializing with bike shop workers and such.  If I hadn’t won an award in my class I surely would not have gone.  I am a little cheesed off as well at the awards this year.  In every past year the award was actually a pretty sweet looking little trophy with a statue of a mountain biker on it.  This year it was a cheap little plastic chainring.  Seriously!  I know its just a silly little award for an amateur race series but I drove over 2 hours to pick this thing up.  Not to mention I paid a fee for the series, and by their own admission this was the highest participation year yet.  So why cheap out on it now?  Just my luck I gues. Judge for yourself, I think you will agree.

Current trophy:

Old, awesome trophy:

I’ve spent a lot of time thinking about what to say about this whole mess.  I just didn’t know where to begin.  Should I tell people what idiots they are for repeatedly voting all these treacherous Democrats and Republicans into office again and again?  Or maybe try to explain the massive inflation that has been and will continue to happen as a result of the insane policy of eternal deficits, ever growing federal debt, and ever expanding money supply?  But that would be a lot of work, and today I found the perfect little snippet that just sums it all up perfectly.  A reader writes in to the 5 Minute Forecast:

“I worked hard,” says a reader, adding to the housing bailout debate, “and had to start over from scratch 23 years ago when I lost all but my shirt, pants and children in a divorce. I always searched for bargains and wore clothing found at garage sales. I paid my credit card bill on time every month to avoid interest charges. I finally bought a home and was able to pay it off in approximately 12 years by loading up my payments by denying myself the new cars, vacations and other luxuries that I saw others around me enjoying. I changed my own oil under my leaky, drippy old car and put off making my home more comfortable with improvements. I finally obtained the prize last year when I paid off the mortgage and felt so good being responsible and doing the right thing.

“The joke was on me, because now my government has signed my name onto a contract to help pay for the mortgages of all of those people that I saw driving around in the new cars and enjoying their hot tub every night in their great big beautiful homes. I am glad that I bought gold along the way so at least I can eat in my broken-down paid-off shack.”

Being a very lazy person by nature, I naturally gravitate toward the “low hanging fruit” as they say when it comes to getting just about anything done.  Getting in shape and losing weight are no different.  So here are a few tips I have run across that really involve little to no effort on your part but can be very beneficial:

1. Drink lots of water. Most people are chronically mildly dehydrated so this gives you a couple benefits.  I guess if you think drinking water is too much effort for you then maybe you should stop reading right now.  64 oz daily is the generic recommendation, but basically you should keep drinking until your urine is almost clear.  Filling your stomach up with water will make you feel fuller helping you eat a bit less, and any exercise you do happen to do will be more effective.
2. Eat 5-6 small meals per day. Don’t eat more or less, or anything different, just break up what you do eat into smaller more frequent meals.  This will increase your metabolism and cut off hunger pangs before they happen.   Always eat breakfast.  And a trick I like since I pack my lunch is to just eat half my sandwich around halfway to lunch time instead of eating it all at once.
3. Sleep 8 hours. If you are doing any kind of exercise it is crucial to recover properly, and this means sleep.  If not much of your effort is wasted.
4. Eat out less. And if you do order water not soda and definitely not alcohol.  This also appeals to my cheap side.
5. Eat slowly. The bodies hunger signal is extremely slow, so eating fast causes people to keep eating well past when they have had enough.  Some people use little rules like chewing every bite 20 times.  Whatever works for you.  If you’re always the first one heading for seconds, it may be time to slow down fatty.
6. Fidget. If you’re just sitting around doing nothing tap that toe or shake that foot or whatever you do.  Nervous twitching like this consumes a surprising amount of energy - and yes people have actually studied this.
7. Turn down the heat. By keeping it as cold as you can stand in your house you will force the body to burn energy just to keep you warm, even if you’re just sitting on your butt watching TV!  And you save money on energy.  We call that a win-win.