Monthly Archives: May 2014

Fixing My Sole

By Noah Graff

Masters Shoe Repair in Chicago

This coming Sunday I’m competing in an amateur salsa dancing contest. Unfortunately the suede bottoms on my special dance shoes had become damaged a few weeks ago so I had to scramble to find some new dance shoes.

At the dance shoe store in the Andersonville neighborhood of Chicago, I couldn’t find any shoes that I loved, so one of the women working there suggested I go to a cobbler nearby called Masters Shoes Repair, where they refer many customers.

Before going, I read the reviews of the cobbler on Yelp. The place had received several reviews of five stars in which people referred to the elderly cobbler as a “master craftsman.” However, there were other reviews that gave him one star, in which people referred to him as an old curmudgeon and even called him a “Shoe Nazi,” a term inspired by the hilarious “Soup Nazi” character on Seinfeld.

I had to check the place out, both for my shoes’ sake and just for the experience. My anticipation to meet a hostile and colorful character had heightened when I called the store before going to ask if he thought he could repair my shoes. The man on the phone told me that he had to see the shoes in person, then abruptly hung up on me.

I went to see the cobbler with a friend. The cramped, cluttered, musty shop seemed to be about 20 x 10 feet. There was a sticker on the register of an upside-down American flag. The equipment was likely 50 years old, although I think that may be typical for shoe repair equipment. We were greeted by a short man, probably in his 70s, with a thick Eastern European accent. I explained to him that I wanted the soles of my shoes replaced. He exclaimed in a negative tone that in all his years in the business he had never seen shoes like mine, which didn’t surprise me, as they were an obscure designer brand and I had purchased them at a used clothing store (they were unworn when I bought them).

The cobbler told us that the only dance shoes he works on are women’s. Only once in his lifetime of repairing shoes had he worked on a man’s dance shoes with suede bottoms. From a drawer he pulled out a thick sheet of suede wrapped in paper that he had used one time 20 or 30 years ago. I was wary of using it, as was he, because it was three times as thick as the suede soles currently on my shoes. After scrutinizing the shoes with him, he reluctantly said that for $40 upfront he would glue the thick suede on the heels of the shoes while leaving the remainder of the bottoms as they were. I wasn’t sure if that was what I wanted to do, so I asked some more questions, which greatly annoyed him. After a minute more of my prodding, he proclaimed in his thick Prussian accent, “I wouldn’t work on your shoes for $100!” Then he asked us to leave. “No shoes for you!” we said to each other laughing after we exited the store, imitating the classic Soup Nazi line, “No soup for you!” I was both amused and frustrated by the experience, but I also felt relieved that I had not taken the option the Shoe Nazi had offered me. Neither he nor I were confident that it was the right solution.

The next day, I went to a different shoe repair man, Elijah Malik, owner of the shop Your Shoe Repair, who I had interviewed for Today’s Machining World several years before. I probably should have gone to Elijah first, but I had been intrigued by tales of the Shoe Nazi.

Elijah Malik and Sergio Eusebio with Noah’s resoled dance shoes

Elijah is a charismatic, intelligent guy, who runs an aesthetically pleasing store. He shines customers’ shoes and consults with them about their shoe repair needs. He employs a shoe repairman to work on the shoes in the back room, while he runs the business. Elijah beamed when I came into the store and told me right away that he could repair my shoes. He said he had done something similar for a past customer. He gave me a half price deal, $35 upfront. I’m a VIP after doing the article on him.

I walked through the back room of the store to use the bathroom and I noticed a short Mexican kid working on the shoes who looked like he was a teenager. I must admit I wasn’t 100 percent confident when I handed my shoes over to Elijah, because Elijah is the kind of guy who doesn’t want to say no to any customer. I also was a little skeptical of the kid working on the shoes after just being in the company of a shoe repairman with 50 years experience.

A week and half later my dance shoes were finished. A new layer of suede was glued over the old one — on the entire sole, not just the heel — and it was much thinner than the one the Shoe Nazi had offered. The soles now look like new and the shoes dance like new.

I needed to meet this Mexican kid who brought my shoes back to life. His name is Sergio Felipe Eusebio. He came to Chicago legally with his family one year ago from Mexico City. He said that he had learned to repair shoes from his father in Mexico 9 years ago when he was 12. His dad also repairs shoes at a different store in Chicago.

After I got my shoes back I confessed to Elijah that I had been a little skeptical upon giving him my shoes. I told him the story of the Shoe Nazi and asked him if he ever said no to certain jobs. He told me that he seldom says no to customers, but he also said that he has been thinking lately that he needs to start saying no sometimes. He said that many people come to him with unrealistic expectations for their shoes and that some customers are impossible to please. That’s the reason why shoe repair guys like Elijah and the Shoe Nazi insist on being paid before they do any work.

I respect both shoe men. Although the Shoe Nazi acted like a jerk, I respect his honesty. He appears to take pride in his craft and he didn’t want to do work that I likely would not have been satisfied with. Elijah however, was open to using creativity to take on a challenging job. He had youthful talent at his disposal and he had balls. He runs a modern business, while the Shoe Nazi appears to be satisfied with doing a quality job the way he’s done it for 50 years.

Question: Do you go to certain places where the product is so good that you don’t care if the service is nasty?

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Vietnam Memories

By Lloyd Graff

Vietnam Memorial in Washington DC

It’s Memorial Day 2014 as I write this piece, and for most people it’s a day of barbecues and softball games. For me, it’s still about Vietnam and memories.

And I didn’t even go.

Vietnam was my war. My horror.

And I didn’t even go.

But my friends and classmates went. Some died there or in the skies over Laos. I check for their names when I visit the stunning Vietnam War Memorial in Washington.

I do not apologize for not going to war. I signed up for the Illinois National Guard. I knew somebody who knew somebody who knew somebody and moved up on the Guard waiting list, though I would have gotten into the Army Reserves without the connections.

It was a crazy time 1967-68. Dan Rather was announcing the weekly casualty figures on the CBS Evening News, seemingly every night. The country was divided over the War. Young people were volunteering, demonstrating, moving to Canada. Some were paralyzed, ambivalent or numbed from drugs or booze.

I was pretty sure I was going to die in Nam if I got sent there, so I was committed to not getting sent there.

My war was spent at Fort Jackson in Columbia, South Carolina – 137 days of green uniforms, crappy food, getting in shape, and dealing with psychological warfare from a belligerent shrimp of a drill sergeant who was determined to make the life of the one Guardsman in a company of 300 men as miserable as he could.

After bootcamp, the rest of my six-year Guard commitment was spent writing lesson plans for training that was never given and two week stints in the summer at Camp McCoy, Wisconsin, pretending to fire Howitzers.

The Vietnam War came to an ignominious end with 58,000 Americans dead, including some of those good guys I trained with at Fort Jackson, along with many, many wounded veterans.

I think of those guys every Memorial Day. I don’t do the parades and I’m no pacifist, but I don’t want to glorify war.

I saw that the President, in his perfectly tailored bomber jacket, snuck into Bagram Air Force Base in Afghanistan yesterday to congratulate himself on winding down the war there.

My wife recently got a communication from a sweet young guy who joined the Marine Corps and was just shipped to Afghanistan. She had helped him pass the test to get into the Corps.

Jack, just be safe over there. Don’t be a hero. Get back healthy. I don’t want to have to think about you on Memorial Day.

Question:  Would you encourage military service for your child, sibling or friend?

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How Will the Keystone XL Pipeline Be Built?

Courtesy of Popular Mechanics. By Bobby Magill

If President Obama approves the hot-button Keystone XL pipeline, TransCanada has plenty of work to do to build the Montana-to-Nebraska connection. This is how its engineers plan to do it.

After more than four years of controversy, the Obama administration is expected to make a final decision this summer about whether the controversial Keystone XL Pipeline can be built in the United States. If the administration green-lights the project, which was proposed in 2008, it will go from hotly debated idea to a monumental engineering undertaking.

The pipeline would run 875 miles from the Canadian border to Steele City, Neb., where it would join already-built sections of pipeline that carry oil to the Texas Gulf Coast. Keystone XL would carry 830,000 barrels of crude oil each day through its 36-inch pipeline that would run along a 110-foot-wide ribbon of land. Building a project this size will take 400,000 tons of steel and provide work for 7000, laboring over a period of about two years. If the project is approved this summer, it is expected to be operational in 2015.

Before TransCanada (the company planning the pipeline) can move any dirt, the U.S. Department of State will hear public opinionabout the hotly contested pipeline through mid-April. On March 1, the State Department issued a draft supplementary environmental impact statement for the pipeline, a technical document detailing how the 1179-mile pipeline’s 875-mile leg on U.S. soil will be constructed and how it might affect the environment. So how will this monster infrastructure project come together?

Beginning on the Canadian border in northeast Montana, Keystone XL will snake across South Dakota and Nebraska to Steele City. TransCanada must obtain rights for the construction right of way. According to the company, it will build Keystone XL in 10 segments, mostly during warmer months, on a total of 15,493 acres of land. The pipeline will be buried about four feet beneath the ground and require a 50-foot permanent right of way along its entire course. “Large pipeline projects are typically built in segments, or ‘spreads,’ so that construction can begin in several locations along the route simultaneously,” TransCanada spokesman Grady Semmens says.

Timothy Considine, a University of Wyoming economics professor and petroleum market analyst who worked on pipelines while in college, says that the construction isn’t really the greatest challenge for Keystone. Compared to the engineering feat of the Trans-Alaska pipeline, a 48-inch pipe running 800 miles over several mountain ranges from Alaska’s North Slope to the Pacific Ocean, the Keystone XL has little in the way of complicated geology posing major challenges for engineers. “It’s an easy go,” and pipeline construction will become a major, if temporary, source of employment, he says.

TransCanada plans to use 561 construction workers per spread, plus 100 additional workers for each of the 20 pump stations along the route, which ribbons through some very remote regions of the Great Plains. “As you can imagine, building a pipeline like Keystone XL is a major undertaking, which requires extensive project management, contractor scheduling, and access to skilled workers such as pipefitters, welders, inspectors, and environmental technicians. Dividing the project into spreads allows for work to proceed as quickly and efficiently as possible during construction seasons,” Semmens says. To house all those workers, the company plans to build temporary 600-bed work camps in remote areas using modular housing units. The camps will be complete with food-service facilities, a convenience store, laundries, entertainment rooms, and medical services.

Bulldozers and trackhoes will clear and grade the pipeline right of way. Then a convoy of ditching machines and trackhoes will dig a trench about seven feet deep and about five feet wide to house the pipe. Workers then weld the pipe’s pieces, lower it into the ground, and backfill on top of the pipe. Once the pipe is laid, another army of bulldozers, tractors, and mulchers will follow, restoring the construction site.

The trickier parts come when Keystone’s path crosses a river wider than 100 feet, such as the Missouri, Platte, Niobrara and 11 others. To get across, TransCanada will drill a borehole for the pipeline that arcs deep beneath the river using horizontal directional drilling, similar to the way many energy companies drill gas and oilwells. “This involves boring hundreds of yards across and below riverbeds to ensure the pipe is laid in stable bedrock where it is not vulnerable to flooding and other environmental impacts related to rivers and streams,” Semmens says.

TransCanada plans to purchase the pipe itself from steel mills in Arkansas and Saskatchewan, with about 40 percent of the steel originating from Canada, 50 percent from the United States, and 10 percent from China and South Korea. To prevent pipe corrosion and crude-oil leaks, the pipe will be coated with a corrosion-resistant epoxy. Also, TransCanada plans to use a measure called cathodic protection, in which impressed electrical current flows through the surface of the pipeline. Cathodic protection uses a device called a rectifier—a transformer which is connected to nearby power lines and converts alternating current to direct current. The electricity flows through the pipeline itself, with the rectifier on one end of a pipeline segment and a buried bed of anodes on the other. As the electric current flows through the pipeline, the exposed pipe metal is protected from corrosion.

After the pipeline is built and operating, TransCanada plans to inspect Keystone XL for cracks, corrosion, leaks, and other problems in many different ways, including routine patrols of the line from both the air and the ground and internal sensors that monitor for problems and help maintain the line. One of those is an internal sensor called a PIG, or pipeline inspection gauge, which travels the inside of the pipe. “The PIG is a high-tech electronic scanning device that examines the interior of the pipeline for any signs of cracks, corrosion, or other defects of concern,” Semmens says. “The PIG is inserted into the pipeline and travels through the line and is removed at one of our above-ground pump or compressor stations. The data is then downloaded onto a computer for analysis.”

The Keystone XL Pipeline is part of TransCanada’s larger Keystone system built to move synthetic crude oil and diluted bitumen from both the Alberta oil sands and North Dakota’s Bakken shale oil play. Part of the pipeline south of Steele City has already been built — a segment from Steele City to a crude-oil terminal in Cushing, Okla. The southernmost segment, stretching from Cushing to the Texas coast, began construction last summer and is expected to be complete later this year.

At the moment, there’s no guarantee that Obama will approve Keystone XL, a project environmentalists oppose because they fear spills could harm water resources along its route through the United States and because exploiting Canadian oil sands could speed up a changing climate, but that the oil and gas industry see as a way Canada and the United States can bring North American crude oil to market.

And while environmental-based opposition lingers, so do economic questions: According to Considine, any pipeline more than 1000 miles long (which Keystone XL will be when it joins the existing segments) is at the limit of its economic viability because of the construction and maintenance costs. But, as PopMech reported before, those Canadian oil sands will be extracted one way or another.

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California Chrome

By Lloyd Graff

I am hardly a horse racing buff, but the story of California Chrome, winner of this year’s Kentucky Derby and Preakness, is just so Mickey Rooney, it’s irresistible.

The California horse is trained by Art Sherman, who at 77 is the oldest trainer to ever win a Derby. A former jockey of little success, the 5’2” fellow’s only other appearance at Churchill Downs was in 1955 as an exercise boy for Derby winner, Swaps. He actually slept on the straw with Swaps on the horse’s four-day road trip from California to Louisville for the race.

California Chrome is owned by an unlikely partnership of two blue-collar guys, Perry Martin and Steve Coburn, along with their wives. Martin owns a tiny materials testing firm at the former McClellan Air Force base where he used to work for the Air Force until the base was closed. His claim to fame until now is writing the Electronic Failure Analysis Handbook in 1999. Coburn is a press operator at a firm that produces magnetic strips for credit cards.

These guys are not big time operators. Coburn’s wife Carol bought her Kentucky Derby outfit at a Cracker Barrel restaurant. The name of their racing outfit is DAP, which stands for Dumb Ass Partners. The colors of the silks are purple and green, her favorites.

Art Sherman, California Chrome’s trainer, is on the fringes of racing. He works out of minor league race tracks in California and trains about 15 horses with his son Alan. He just bought a house in a retirement community near San Diego. He loves California Chrome, who comes from quite undistinguished thoroughbred lineage. His mother cost $8,000 and his father cost $2,500. The horse has a refined appetite however — he hates carrots but loves cookies. Sherman says the horse really races to get his horse cookies, Mrs. Pasture’s Paddock Cookies, made of molasses, barley and corn.

Dumb Ass Partners turned down a $6 million offer for a 51% stake in the colt shortly before the Derby, so I don’t think the Coburns and Martins are all that dumb.

Personally, I have little interest in horse racing, but I’ve always loved the hokey movies about the Sport of Kings. My dad Leonard was not a huge fan of horse racing, but he was fascinated that a used machinery dealer he knew, Isaac Blumberg, founder of Adams Machinery in Chicago, had owned a Kentucky Derby winner in 1960 named Venetian Way. I remember going to Gulfstream Park Racing with him in Hallandale Beach, Florida when his health was failing. We picked horses to bet $2 on, for no good reason except that we liked their names. They were memorable outings, if only because they were so unlike his normal everyday routine in Florida. So when I hear about California Chrome, Dumb Ass Partners, and a 77-year-old trainer who slept alongside his horse in 1955 on a cross country schlep, I love it. Win that Triple Crown, you big brown cookie-loving nag! I’ll have a few bucks on your nose.

Question: Can a small shop running mechanical equipment compete with a large shop running the latest and greatest?

“National Velvet” staring Mickey Rooney and Elizabeth Taylor

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The Government Takes a Weak Stab at Making Oil Trains Safer

Courtesy of BusinessWeek. By Matthew Philips

On Wednesday, a week after a train loaded with crude oil from North Dakotaexploded in downtown Lynchburg, Va., dumping 30,000 gallons of oil into the James River, the Department of Transportation announced two moves to try to keep this from happening so frequently. It’s doubtful that either will make much of a difference in preventing what’s become a major safety hazard in the U.S.

Under a new “emergency order,” the DOT said it’s now going to require any railroad that ships a large amount of crude to tell state emergency responders what it’s up to. That includes telling them how much crude it’s hauling and the exact route it intends to take. Railroads also now have to provide local emergency responders with contact information of at least one person who’s familiar with the load, in case, you know the local fire chief needs to find out what the heck’s inside that overturned tank car that just unleashed a 400-foot fireball.

This emergency order applies to any train carrying more than 1 million gallons of crude specifically from the Bakken region of North Dakota. That’s essentially all the trains hauling crude across the U.S. right now. Since there aren’t enough pipelines connecting the oil fields in North Dakota, most of the nearly 1 million barrels the state produces leaves every day by train. It takes about 35 tank cars to haul 1 million gallons. Most of these oil trains are 100 cars long and stretch over a mile.

The reason this applies only to Bakken crude is twofold. First, that’s most of what’s being hauled. Second, the oil coming out of the Bakken is unlike any other kind that’s out there. It’s light, sweet, and superflammable, with high levels of propane and methane. That makes it almost impossible for local first responders to put out the fires that erupt when these trains derail. Sometimes, their only recourse is to evacuate the area and watch the tank cars burn.

Knowing these trains are coming might help the local fire and police departments prepare, but unless these local emergency teams get better equipment to deal with these fires, it’s unclear how much good any advance notice will do. And considering how frequently these trains are crisscrossing the country, you can’t evacuate town every time an oil train rumbles through. Prior notification will, however, give a heads up to all the local officials, who have been largely clueless about all the oil that’s getting transported by rail through their cities and towns. Last week, Lynchburg’s city manager, Kimball Payne, admitted to the Wall Street Journal that he had no idea that CSX was moving oil through town.

On top of the emergency order, the DOT on Wednesday issued a “safety advisory,” in which it “strongly urg[ed]” the oil companies shipping Bakken crude on trains to use the best tank cars they can. This advisory came from the Federal Railroad Administration, a division of DOT. How that differs from the organization’s normal position on safety isn’t clear. But it seems not unlike the FAA, after a rash of plane crashes, “strongly urging” airlines to buy the safest kind of planes they can and stop using old, outclassed ones.

The old, outclassed ones in this case is the DOT-111 model of tank car that’s been involved in most of the crude train explosions, including the one last summer in Quebec that killed 47 people. Although it’s widely deemed unfit for transporting crude, the DOT-111 is used to move the vast majority of oil sent by train in the U.S. It’s also the same classification of tank car that’s used to haul agricultural commodities, such as corn or soybeans.

According to the investment bank Cowen Group, about 100,000 DOT-111 tank cars in the U.S. are used to haul flammables such as crude and ethanol. About three-quarters of them may require retrofitting or a gradual phaseout. While some energy companies, such as Tesoro, are already choosing to phase out DOT-111s in their North Dakota operations, most companies are sticking with them until they’re forced to change. A complicating factor is that it’s not even clear, given how volatile Bakken crude is, whether using safer, better-reinforced cars would even help keep a derailed train from exploding.

The DOT’s safety advisory urging the use of better tank cars is a weaker step than what Canadian regulators did two weeks ago, when they aggressively moved to phase out all DOT-111s from hauling crude within three years. In an e-mail, a DOT spokesperson wrote that the agency is moving as quickly as it can to update its tank car regulations and that the safety advisory is a step it can take immediately. Last week, DOT Secretary Anthony Foxx sent to the White House a list of options on how to make crude-by-rail safer.

The DOT is obviously getting pushback from energy companies, which would have to foot the bill for leasing more robust tank cars. It’s unclear how many of the energy companies will decide to switch because the federal government is strongly urging them to.

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After I reach 100

By Lloyd Graff

2000-year-old Gandalf

What a day I had yesterday. My wife Risa and I went down to the Sears (Willis) Tower in Chicago to meet a new lawyer who is going to rewrite our wills. Another chance to contemplate death and decrepitude and the loneliness of life without your beloved partner.

Our lawyer, a thoughtful gentle woman, guided us through the choices that people with financial assets need to consider as they ponder the future.

My wife’s primary concerns were about money for old age. How would she fare without me if she lives to be 90? I must admit that I deeply care about her wellbeing through her 80s, but with my health history I doubt I’ll experience it with her. My focus is the present and immediate future. I think in five year slots of time, and the possibility of a 20-year slide through retirement seems so distant and remote I really don’t contemplate what I’ll look like at 89.

My eyes began to glaze over as our lawyer explained trusts and legal technicalities and minefields. I told her I was reaching my ceiling of complexity, but it was also the difficulty of trying to grasp the impact of my dying for my wife, or the ultimate horror for me if I had to live my life without her. That was a place I just did not want to go. I started looking out the window a lot in the conference room on the 78th floor of the tallest skyscraper in Chicago.

We adjourned at noon because Risa and I had to scurry back to home base for important afternoon appointments. I had a meeting with our business accountant who had my tax return for 2013 and a quarterly statement my banker had requested.

My accountant, a genial guy with a national firm, looked tired and stooped over when he arrived at our door. We had been sparring for weeks over the details of our financials and I had implied that we were looking elsewhere for accounting because his fees were exorbitant.

We had a pleasant meeting as he went through the intricacies of corporate accounting. Again my eyes started to glaze over as his reality of placing round pegs into round holes and fitting numbers into the correct slots banged against my world of turning labor and spindle bearings and creativity into profitable transactions.

A long day of lawyers and accountants, the technicians of the business world trying to make people like me play by their version of Uncle Sam’s rulebook. It was exhausting. Wills and trusts, working around the prospect of death and dementia, and the interests of heirs. Then the accounting issues of IRAs and SEP accounts, when is a sale a sale, and when is a profit really a loss – or is it the other way around.

After the meetings with the professionals were over I was delighted to walk through the factory, imbibe the oil, and feel the comforting surface of a nicely milled screw machine part. That felt real to me. Solid. I was so happy to leave the glum world of death and loopholes.

Question: Would you like to live to be 100?

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Scan of Obamacare

By Lloyd Graff

Yesterday, a physician friend of mine explained to me the economics of doctoring while his medical technician was removing wax from my ears. He says that with Obamacare, Medicare and increasingly tough insurance firms, the office visit is now the loss leader of medicine. From a money-making point of view, the office visit only pays for a doctor if they can get a scan or a procedure out of it. That is where you can still make money if you are an office based doctor.

Recently, hospitals have been buying up practices to get access to referrals, which will bring them big money in procedures and scans. The major arguments between Obamacare and the doctors will be on how procedures and scans are reimbursed. If the prices for reimbursement fall, doctors and hospitals will scream. How the disagreement is resolved will be crucial for Obamacare to survive.

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IMTS is coming! IMTS is coming! IMTS is coming! And I wonder, who really gets the payback? It is certainly good for the insiders and the cheerleaders like Gardner Publishing (Modern Machine Shop), but maybe the emperor has no clothes. My sense with each new show is that it is basically an insider’s game. The extravaganza is primarily aimed at attracting dealers who will do the grunt work of selling to the actual end users. This is a valid use of the machinery circus called IMTS, but I wonder if the huge money that exhibitors spend is worth the investment. The company open houses that DMG MORI, Mazak and Okuma put on around the country may well bring a bigger bang for the buck. And they are a lot less exhausting to attend.

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I am always surprised how often the consensus is wrong about the economy. For the last few years virtually every “expert” was sure that interest rates were headed up – to where they ought to be, where they’ve always been. Yet they have barely moved. The 10-year Treasury is around 2.6%, historically low, and trending lower.

On the other hand, most people thought there would be a significant rebound in home buying. Did not happen. The economy has improved but houses are still not really moving. Two big reasons. First, financial institutions are looking for big down payments, 10-20%, which is an enormous hurdle for first time homebuyers. Second, initial buyers are often burdened with college debt, which impairs their credit and kills their ability to get the down stroke for the first house.

Almost half of the residences being sold today are going for all cash. Most are being bought to rehab and rent out to those 20- and 30-somethings who can’t or won’t buy their first home. A country of owners is turning into a country of renters. I know this is happening now where I live. A five-bedroom home directly across the street from me was recently rehabbed and is now being rented.

On the other hand, the Dow Jones and S&P 500 stock averages have been setting new records after rising more than 25% last year. Retirement assets and savings are flooding into the stock market because fixed income return is dismal, real estate is tough without leverage, and bank accounts pay nothing.

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I thought I would never say this, but my allegiance to the Chicago Cubs is waning. The team they are putting together on the field today is the dullest and probably the worst I have ever endured, and I go back to the days of Hank Sauer and Andy Pafko. The Cubs outfielders have hit three homers all season – AS A GROUP. The bullpen is atrocious. The starting pitching has been good, but you can’t win if you score less than two runs a game. Jeff Samardzija, the Cubs ace, is 0-3 with a 1.45 ERA. He is supposed to be traded for “prospects” by July, and he can’t wait I hear. Can you blame him? The idea that you can’t develop prospects while putting a competitive team on the field is absurd. I am officially on strike against this team. Go Blackhawks. Bring on the Chicago Bears. But please don’t ask me to root for the White Sox.

Question: Now that Obamacare has been implemented, have your views on it changed?

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Russia Ratchets Up Ukraine’s Gas Bills in Shift to an Economic Battlefield

Courtesy of The New York Times. By STEVEN ERLANGER

LONDON — Gazprom, the natural gasgiant 50.01 percent owned by the Russian government, keeps ratcheting up the bill for Ukraine, increasing the economic pressure on Kiev in tandem with military pressure along Ukraine’s eastern border.

What Gazprom executives now say Ukraine owes them comes to more than $22 billion. In early March, Gazprom put the bill at less than $2 billion. How Gazprom now calculates its charges explains a lot about the way the company is used by the Kremlin for political purposes.

Behind the payment demands was a warning that Gazprom would cut off gas supplies to Ukraine, which it has done at least twice before, in 2006 and 2009, over political and financial disputes. And behind that warning is one to European countries that largely depend on Russian gas supplies moving through Ukraine.

In its annual report, Gazprom said that it might cut gas supplies to Ukraine unless its bills were paid, and that Europe could suffer reduced deliveries as a result. Ukraine has threatened to take Gazprom to court over what it said were inflated prices for gas.

Gazprom’s chief executive, Alexei B. Miller, escaped the American sanctions list for Russians involved in the Ukraine crisis as a political concession to European countries that depend on the company’s gas supplies. In 1989, Gazprom was created out of the Soviet Ministry of Gas Industry. And unless there was a clear invasion of eastern Ukraine by the Russian military, senior European officials said, the European Union was unlikely to push for harsher sanctions or punish Gazprom.

Late last month, Gazprom sent executives to countries like Germany to argue its case for collecting what they said Ukraine owes. Alexander Medvedev, the second in command at Gazprom, said that his company had done everything possible to keep gas flowing to both Ukraine and Europe, but that the time of reckoning was near, and that Ukraine owed them $18.5 billion.

But in early March, Mr. Miller said that Ukraine owed just $1.89 billion for unpaid gas. Mr. Medvedev said recently that the figure was $2.2 billion, and that Ukraine had stopped payment altogether after Gazprom raised the price of gas on April 1 to $385 for 1,000 cubic meters, the standard measure for gas in Europe. That figure was up from $268, an increase of about 44 percent. The debt will reach $3.5 billion by mid-May, Mr. Medvedev said.

The sharp increase was political.

The reduced price was part of a pact President Vladimir V. Putin ofRussia struck last December with the former president of Ukraine, Viktor F. Yanukovych, for turning down a European Union free-trade deal. Gazprom also paid Ukraine in advance for transit fees.

But after Mr. Yanukovych fled Ukraine in February, Mr. Miller announced that the price would revert to $385 per unit on April 1. Mr. Miller said Ukraine’s unpaid debt to Gazprom — and not any political motivation, like punishing and further destabilizing the European-minded interim government in Kiev — prompted the move.

Then the price went up again.

Under a 2010 accord between Mr. Yanukovych and Moscow, Ukraine received a 30 percent discount on gas in return for extending Russia’s lease on its base in Crimea for the Black Sea fleet. But after Russia’s annexation of Crimea, Moscow abrogated the accord, canceling the reduction and bringing the price Ukraine now pays Gazprom to $485 per unit.

Gazprom added that it intended to apply this price retroactively to 2010 when the deal was struck.

That’s not all.

Mr. Medvedev, Gazprom’s No. 2 official, insisted that Ukraine owed an additional $18.5 billion (mostly for gas never used). This figure stems from a January 2009 contract that the prime minister at the time, Yulia V. Tymoshenko, signed after Russia cut off gas to Ukraine, again over unpaid debts (then some $2.4 billion). In early 2009, after more than two weeks without gas, Ukraine and East European countries like Slovakia, which then got all its gas through Ukraine, were freezing.

The agreement eliminated a shadowy intermediary company, but committed Ukraine to a 10-year deal at a high level of consumption — some 50 billion cubic meters a year — and at a price higher than what the rest of Europe was paying. But Ukraine’s gas consumption declined from 44 billion cubic meters in 2011 to 32 billion in 2012 and some 28 billion last year, given the recession, said Dmitri Petrov, an analyst of emerging markets at Nomura. Gazprom insists it should be paid for the difference.

In January, Gazprom demanded the additional $7.1 billion under the contract as payment for unused gas for 2012, but Ukraine refused to pay it, and it is considered unlikely to be enforced in any court outside Russia itself. Now Gazprom has billed Ukraine for an additional $11.4 billion for unused gas in 2013 under the same contract, including the retroactive pricing after 2010 that represents the return of prepayment on the base lease.

That would bring the total Gazprom says it is owed to at least $22 billion by the end of May.

Whether Gazprom actually expects to get that extra money is debatable. A Czech unit of Germany’s RWE A.G. won a legal ruling in 2012 on a similar complaint, supporting its refusal to pay for gas it did not use.

But the issue is even more intriguing because Ukraine’s increasing debt would give Moscow the right to demand early repayment of a $3 billion loan made in late December, as part of Mr. Putin’s offer to Mr. Yanukovych to turn his back on Europe. Moscow bought Ukrainian Eurobonds, but a clause states that if Ukraine’s state debt and state-guaranteed debt increases beyond 60 percent of gross domestic product, Moscow can demand early redemption on the bonds. Ukraine’s debt is currently over 52 percent of G.D.P., and much of it is in foreign currency, while the hryvnia is losing value. If Ukraine borrows to pay Gazprom, it may come close to the ceiling.

But Gazprom isn’t done. It now insists on prepayment by Ukraine of another $4 billion to $5 billion to buy gas to put into underground storage facilities for itself and especially for European customers of Gazprom next winter. The deadline for Ukraine to pay up was Wednesday. If it was missed, Gazprom would require the prepayments, Mr. Medvedev said.

By May 16, he said, Gazprom would bill Ukraine for gas to be supplied in June, which must be paid for by the end of May to ensure delivery.

It is difficult to know how seriously to take such threats, but a gas cutoff would be easier to deal with in the late spring and summer than in the middle of winter, especially since Ukraine already has sizable amounts of gas in storage.

And it is also true that the dependency goes both ways — Gazprom is highly dependent on its European customers, too.

Energy exports represent up to half of Russia’s revenue, and natural gas represents about a third of that revenue. Ukraine, which gets about 60 percent of its gas from Russia, itself consumes 13 percent of the exports of Gazprom, while 53 percent of Russian gas exports to Europe still pass through Ukrainian pipelines. The European Union still gets a quarter of all its gas from Russia.

Just last week, the International Monetary Fund approved a $17 billion emergency loan for Ukraine. If Russia gets its way, however unlikely, it could all go to Gazprom.

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Car Rental Magic

By Noah Graff

Noah Graff in his Chevy Camero rental

On Sunday I drove up highway 101 at 95 miles per hour in a bumblebee yellow Chevy Camaro convertible. “Born to Be Wild” blasted on the stereo. My face rapidly bronzed under the California sun. A good way to start my week.

Last week I had a pleasure/business trip to California (90 percent pleasure), spending the first five days at our family’s timeshare in Carlsbad near San Diego. I had to visit a customer in L.A. on Monday so I jetted up the coast Sunday morning in a nice rental.

I think most people would concur that renting cars is not one of life’s great pleasures. First the shuttle from the airport, followed by waiting in line, followed by spending a half hour with the “professional” at the counter setting everything up, even though supposedly you had already reserved a car online or by phone prior to the trip. Then you feel another poke in the gut as you realize the car with the features you need costs way more than you thought it would, both because you have to upgrade models and then because the taxes and fees triple the $20 a day bargain you had chosen online. That doesn’t include the price of the insurance that the agent always makes you feel guilty about declining, even though you’ve repeatedly been told that your credit card and personal car insurance is supposed to be sufficient.

Yes, if you are a Hertz Gold member you can reserve a car beforehand and have a car waiting for you when you arrive with the keys in the ignition, bypassing the nonsensical time suck. But you still don’t know what actual car model you are going to end up with, so if you’re picky like me and don’t like the Dodge Charger they’ve stuck you with, you might have to go back inside and wait with the other sheep anyway.

But enough negativity. Yes, the rental car experience can be annoying, but on the other hand, if you go to a reputable company like with Hertz with a good selection of cars, and you get a cool agent, I’ve found the experience can be both amusing and even satisfying.

My one request every time I rent a car is to have Bluetooth capability. Number one — I need a handsfree phone both for safety and to avoid traffic violations, number two — so I can use my iPhone as an audio source. Pandora and audio books can make me even look forward to being caught in traffic.

The week before the California trip I was in Seattle for work. I must have spent at least a half hour discussing car options with my agent at Thrifty (Graff-Pinkert was trying to be lean). To get Bluetooth in my car I was going to have to pay $20 more per day than for the midsize we had reserved. The agent and I stared at the computer together combing the different car options. I took a shot in the dark and asked if any convertibles were available, figuring it would be way more expensive. I always had wanted to drive a convertible and a few sweet rides sitting idle outside were staring me in the face. He typed a bunch of stuff into his computer and then told me that he can do an amazing deal for me. He offered me a Mustang convertible for just $15 more per day than the car I would have to upgrade to for Bluetooth. He said it was because we were in Seattle in April, so convertibles weren’t so in demand. I couldn’t resist and took it. I decided that I would pay Graff-Pinkert the extra money back if they wanted it, I didn’t care because I now had a car that I had fantasized about driving. Seattle turned out to be sunny the next day and only drizzled for a few minutes during my two day stay. Sure, the price which supposedly was going to be $55 a day turned out to be something like $80 after all calculations, but I had a Mustang convertible. And I had gotten a deal!

San Diego followed suit. At Hertz (my dad is a Hertz guy) we requested a convertible. This time they had nothing affordable, but the woman behind the counter started typing furiously into her computer and presented us with an incredible deal for shiny Mercedes SUV for something like $20 per day. Yes, we had to spend a half hour waiting for her to work this miracle, but we held back our antsiness because she was working so hard give us the most amazing impossible deal of the century. And we felt pretty good about ourselves, especially after she gave us a AAA discount on gas if we bought it ahead, and I didn’t even have my card with me. I never buy gas ahead, but the deal just seemed too good to pass up!

Finally, our great vacation ended and our family went its separate ways. The jaunt to L.A. after San Diego had been unplanned prior to the trip, but we figured I’d just take the Benz for another two days. After all, it had Bluetooth. But no, we then found out that our wonderful deal was actually too good to be true. I called Hertz to extend my use on the car but the nice Filipino woman on the phone, who truly was trying her best, told me that it was going to cost a ridiculous amount of money to extend the car because the catch of our “amazing deal” was that you couldn’t return the car at alternate airports. After wasting a half hour of my life on the phone with an unhelpful Hertz worker 7,000 miles away, we decided it would be best just to return the car to Hertz at the San Diego airport and rent a new car, even though it meant traveling a half hour in the opposite direction of L.A.

It was a familiar drill by then. Me: “I need a midsize with a Bluetooth.” Agent: “Sorry, you have to upgrade to the luxury model to get that.” Me: “What about a convertible?” Agent: “Well actually, let me see what I can do.” Then, what do you know, he found me a garish badass yellow Camaro convertible for only $10 more per day than the cost of a boring car with a Bluetooth, a feature which I had to have, as it is explicitly illegal to pick up a phone in the car in California.

The scene was perfect! I had a convertible to drive up the Pacific Coast Highway — the right way to drive up the Pacific Coast Highway. And although I had to drive a half hour out of the way and then hold a plastic smile through the mandatory rental car BS, I felt like I had GOTTEN A DEAL! Lets hear it for those rental car magicians.

Moral of this story. Nice salesperson + fun product + magical mumbo jumbo + patient customer = happiness, sometimes.

Question: If you could rent any car, what would it be?

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Plenty of Workers, But No Workers

By Lloyd Graff

We fired a Manpower temp working in our machine cleaning area yesterday. Nothing unusual. They normally last from one day to a month. It’s hard, dirty work. Hector, who runs our cleaning and painting department, is demanding and intolerant of slackers or dummies. We pay $16.75 an hour for temps, but the workers get around $10 an hour. It’s no harm-no foul employment.

Last Friday’s unemployment stats cheered some people, angered others. Non-farm payrolls added 288,000 jobs, a big number. But there was no increase in wages, and a meager 16,000 jobs added in manufacturing. Another stat – 43% of jobs added in the last year paid less than $16 an hour.

Connecting the dots from my viewpoint as a small business person – there is work out there, and good jobs, but it is very hard to match up the capable workers with the good jobs.

At Graff-Pinkert, our used machine tool firm, we hire folks for the long haul if they are capable, hard working and reliable. We train them, upgrade their skills and treat them honorably. We used to regard temps as rookies who could make the team if they show promise. Today this approach seems obsolete.

So I look at the employment stats and think to myself, nobody has time for workers with a bad attitude, iffy transportation or drinking problems. Do I have a prejudice against the long-term unemployed, the lazy, or argumentative folks who are waiting for the cellphone to ring on the shop floor? Yes, I do.

I have looked at temp agencies as a timesaver, because they supposedly vet the workers, but it appears that they do not or cannot provide a temp for us with staying power.

The active workforce is shrinking these days, which is taking the unemployment rate down. The number of people actually working in America is growing slowly. A new group joining the workforce is the ex-military leaving Afghanistan. Even with all of their desirable qualities, this is a challenging group to integrate. The war scars are very deep and enduring. Those who have spent a tour on the front lines are often long-term casualties, even if they escaped harm physically. I grieve for these men and women, but honestly, I might be anxious about them if they applied for a job at my shop.

The job situation in America looks a lot better on paper than it really is, both for the job seeker and the potential employer.

The small number of manufacturing jobs being filled today is not so much about a flat area of the larger economy, but employers being fussy about people who look like they have limited upside and plenty of downside risk. Overtime beats issues. 

Questions: Any suggestions how to find decent moderately skilled workers? How have veterans from Iraq and Afghanistan worked out at your company?

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