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A rising tide lifts all boats

The whole theory of “trickle-down economics” was roughly based on the adage that a “rising tide raises all boats”. In other words, if you let the rich make lots of money, that money will trickle down to everyone else.

But according to an amazing new study done by none other than the International Monetary Fund, they got it completely backwards. According to the comprehensive study “there is convincing evidence that lower net inequality is good economics, boosting growth and leading to longer-lasting periods of expansion.”

The study concludes that “redistributing wealth, largely through taxation, does not significantly impact growth unless the intervention is extreme.”

To translate this into language that even Republicans can understand, they offer proof that raising taxes on the rich does not hurt the economy or raise unemployment. In fact, the opposite is true if those taxes are used to lower income inequality. A vibrant middle class increases demand and stimulates the economy.

The stunning bottom line: Raising taxes on the rich actually does a better job of making the rich richer than letting them keep more of their income.

The reason this is true is that income inequality has a significant negative effect on economic growth. And while redistribution (transferring money from the rich to everyone else through taxes) has a tiny — almost statistically insignificant — negative effect, that is swamped by the boost provided by lowering income inequality.

It is a win-win situation. By raising taxes on the rich, everyone gets richer, even the already rich. Or, to stretch the tide analogy, the way to raise all boats is by raising the tide from below. In contrast, trickle down economics is like lifting the yachts in the air, and expecting all the other boats to follow. Not only does it not work, eventually the yachts will crash back into the water.

This agrees with a study I reported on a few years ago, which found that in countries with high income inequality, the rich also suffered. They had a shorter life expectancy and were less happy, compared to countries with smaller income inequality.

And you don’t even have to be some bleeding heart liberal to agree that we need to raise taxes on the rich. You just have to be smart enough to realize that raising taxes on the rich will stimulate the economy and lead to more consumers buying more products, which will lead to more profits for the rich.

After all, being rich is not a zero-sum game. And a rising tide will surely raise everyone’s boat, including the yachts.

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Late Night Political Humor

“The Olympics are winding down in Sochi, and the Russian Olympic Committee says one of the giant Olympic rings that malfunctioned during the opening ceremony will be working for the closing ceremony. So it looks like Russia will be ready for the start of the Winter Olympics by the END of the Winter Olympics.” – Jimmy Fallon

“Are you watching the Olympics? Whenever I’m watching one of these weird events, I ask myself if this wasn’t in the Olympics, would I still be watching it? And the answer is always no.” – Jimmy Kimmel

“The one-man luge makes sense because it’s just a guy on a sled and whoever goes the fastest wins. But what doesn’t make sense is the two-man luge. There’s only room for one man on the luge. The other guy has to lay on top of him. It’s a bunk bed but without the second bed.” – Jimmy Kimmel

“What’s the point to two men for a luge event? Why not three or four? Why not stack them up? Imagine 15 guys piled up.” – Jimmy Kimmel

“Some critics are saying the U.S. and Canadian women’s hockey teams are so good that it’s unfair to the other teams. That sounds like something my Mom said after some of my Little League games.” – Jimmy Fallon

“Two former members of the Russian punk band Pussy Riot were detained by police in Sochi. If found guilty, they could be sentenced to two weeks in a Sochi hotel room.” – Conan O’Brien

“Making his first visit to our show tonight is Bill O’Reilly. Bill is here to promote his book ‘Killing Jesus’. I’m going to have to tell him someone else sold a book on that subject and it sold quite well.” – Jimmy Kimmel

“It’s been reported in the news that President Obama asked HBO for copies of the upcoming season of ‘Game of Thrones.’ You know things are bad in this country when even the White House can’t afford HBO.” – Conan O’Brien

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Posts may be spotty for the next two weeks

(meanwhile, stories I do post will show up below this one)

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Religious Rights and Wrongs

Concerning Arizona’s bill allowing businesses to use religious beliefs as an excuse to refuse service (in particular, to gays). You know, I’m all for allowing people to exercise their valid religious beliefs.

However, bigotry, hatred, and intolerance are simply not valid religious beliefs. And any religion that practices such beliefs should lose their tax exempt status. After all, what would Jesus do?

UPDATE: If you think your religious freedoms are under attack, but other people think they aren’t, here’s a simple test to find out the truth.

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Late Night Political Humor

“Ted Cruz, of course, was furious that the big storm back east shut down the government. He said, ‘That my job!’ But you know, there is a big difference between Ted Cruz and snow. Both are white and everyone’s sick of them – but eventually snow goes away.” – Bill Maher

“In California, an openly gay candidate is running for office as something called ‘a new generation Republican’. Or as the’re known in the rest of the country, a Democrat.” – Conan O’Brien

“New Rule: This Valentine’s Day Americans must remember that politicians are like a box of chocolates. We bite into them to find out what’s on the inside only to discover that Democrats are too often soft and gooey and Republicans are mostly nuts.” – Bill Maher

“I know climate change is a hoax – of course – but places that have never seen this type of winter weather got hit by it. More than a half a million southerners have been left in the dark — and then the storm hit.” – Bill Maher

“We’re halfway through the Winter Olympics. The American speed skaters say there’s a reason their times are off. They’re blaming it on their suits, and I thought maybe I should do that. It was my suit.” – David Letterman

“The U.S. men’s hockey team beat Russia on Saturday in a very dramatic shoot-out. That was exciting. The American team said they’re thrilled with the win, while the Russian team is missing.” – Jimmy Fallon

“In Sochi, a man who criticized the Sochi games was sentenced to three years in a prison colony. After hearing the sentence, the man said it’s still better than a hotel in Sochi.” – Conan O’Brien

“There is good news from Sochi. Bob Costas has defeated pink eye. He’s back to anchoring the Winter Olympics. I’m surprised NBC let him come back. Usually when they replace a host, they stick with their decision.” – Craig Ferguson

“I wonder what ex-presidents do on Presidents Day. Probably have a big cookout at the ex-presidents clubhouse. Clinton, Carter, and the two Bushes all live together in a big house. Just like late-night talk-show guys live together in the late-night clubhouse. I haven’t seen Leno recently, although one of his cars is still in the driveway. Maybe he’s coming back.” – Craig Ferguson

“Welcome to ‘The Tonight Show.’ This is the first ‘Tonight Show’ broadcast from New York in over 40 years. I’m Jimmy Fallon and I’ll be your host … for now.” – Jimmy Fallon

“It happened again – today I get a call from my mom. She says, ‘David, did something happen to Jay?'” – David Letterman

“I want to start by wishing everyone a happy Presidents Day because it seems like the right thing to do, even though none of you are actually presidents.” – Jimmy Kimmel

“Happy Presidents Day. There’s a Presidents Day sale here where you get 50 percent off any mattress if you can prove you’re a former president.” – David Letterman

“It is a day to remember all our presidents. And also to get a terrific deal on mattresses.” – Craig Ferguson

“Presidents Day, of course, started out as celebration of Washington’s birthday. Then someone remembered it was Lincoln’s birthday on the 12th. So now we celebrate Washington, Lincoln and all the other Presidents. I have no idea how this led to mattress sales. It’s probably something do with Bill Clinton.” – Craig Ferguson

“I spent my Presidents Day the same way I always do. I spent it quietly hating everyone who has the day off today.” – Jimmy Kimmel

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Metadata Madness

Matt Bors
© Matt Bors

The fundamental problem with spying is that it assumes that you can trust the spies. Which seems like a system that is almost guaranteed to fail. Not only does absolute power corrupt absolutely (e.g., spies snooping on their love interests), but the “bad guys” we are trying to spy on have a huge incentive to compromise the spy organization itself. Consequently, there is a long history of double agents (and that’s just the ones we know about).

I find it interesting that despite the huge official furor over WikiLeaks, their revelations don’t seem to have made us particularly less safe in the world.

Don’t get me wrong. I think that there are things that are important to keep secret. But it seems like the pendulum has swung too far in one direction, and excessive secrecy has probably hurt our country more than any whistleblower ever will. Spying goes too far when it purposely subverts the rule of law, and there are plenty of examples of that.

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The Irony of Being Rich

Oh my, the rich are feeling under attack again. Back in 2010 a proposal to raise the tax rate on big investors was compared to “Hitler invading Poland in 1939”. So I guess it was time for venture capitalist Tom Perkins to go into full whiney mode and complain that the rich are under attack from “higher taxes, higher regulation and so forth. We are beginning to engage in class warfare.” And of course, he then went on to compare the assault on the wealthy to a wave of Nazi attacks on Jews ahead of the Holocaust.

Excuse me? Income for the top 1% grew by 31% from 2009 to 2012 (while the remaining 99% saw their income go up 0.4%). The Dow Jones stock index doubled since 2009 (which benefits the rich the most). And while a few small tax hikes have gone into effect, the tax rates on the rich are still pretty low compared to where they have been in the past.

Then he went on to say this:

The fear is wealth tax, higher taxes, higher death taxes — just more taxes until there is no more 1%. And that that will creep down to the 5% and then the 10%.

Yes, that’s right, he appears to be too stupid to understand how simple math works. There will always be a top 1%. That’s as dumb as saying you want all children to be above average.

But then Perkins gave us his solution to the problem:

But what I really think is, it should be like a corporation. You pay a million dollars in taxes, you get a million votes. How’s that?

You see, democracy is just like Nazi Germany! You are attacking the rich unless you give them more votes!

I have paid more than a million dollars in taxes in a single year, so I would greatly benefit from this, but it is a ridiculous idea. In fact, I don’t think he was really serious about it, but was just being an attention whore. However, what really annoys me is that it seems to be the rich people who least deserve all that money who make the most fuss about being attacked.

I don’t mind people who get rich by actually doing something worthwhile. Steve Jobs got filthy rich, but he worked hard for that money. Apple wasn’t enough work for him, so he took on Pixar too. Heck, he worked the day before he died of cancer.

Obama took heat because he referred to “fat cat” bankers on 60 Minutes back in 2009, but he wasn’t attacking the rich. He was attacking bankers who got bailed out by the federal government when they destroyed the world economy, and then paid themselves huge bonuses with our money. Since when did being rich become an entitlement?

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Late Night Political Humor

“Norway currently leads the medal count with 12, followed by the Netherland and Canada, followed then by white-sylvania and albino-stan. The Winter Games are really the only games that to do well, you have to look exactly like the surface you’re competing on.” – Jon Stewart

“I’m glad you were able to tear yourselves away from the Winter Olympics. The sporting event that answers the question, How many different ways can white people injure themselves on ice?” – Jimmy Kimmel

“Before the games, a lot of people were worried that hotels in Sochi wouldn’t be ready. For the most part, things seem to be working well. The only problems occur when people try to do something crazy like, you know, open a door.” – Craig Ferguson

“There’s a pillow shortage in Sochi too. They don’t have enough pillows for the beds. How do you not foresee a demand for pillows? Although in their defense it is Russia. When you sleep wherever you happen to pass out, pillows aren’t so important.” – Jimmy Kimmel

“There are rumors that the Russian government placed cameras in the hotel bathrooms in Sochi. Russia said, ‘Don’t worry, our cameras don’t work either.'” – Conan O’Brien

“One Sochi elevator has two up buttons. If you want to go down, you have to stand on your head.” – Jimmy Kimmel

“Organizers for the Sochi Olympics have had trouble filling seats for the biathlon. This is because Vladimir Putin is warning people away from any event containing ‘bi’.” – Conan O’Brien

“Yesterday Matt Lauer jokingly blamed Bob Costas’ eye infection on Russian President Vladimir Putin. Yeah, and today police are wondering: Where in the world is Matt Lauer?” – Conan O’Brien

“Poor Bob Costas. He hosts the prime-time portion of the Olympics for NBC. When the game started he had an infection in his eye. Then it spread to his other eye. Turned out to be a serious case of pink eye, which is a problem because Vladimir Putin now thinks his eyes are gay and wants them removed.” – Jimmy Kimmel

“Bob Costas had to take a break from hosting the Olympics coverage due to an eye infection. In fact, his eyes are so bloodshot, he’s been made an honorary member of the U.S. snowboarding team.” – Conan O’Brien

“Today at the Winter Olympics, temperatures reached almost up to 60 degrees. In other words, the only thing higher than the temperature were the U.S. snowboarders.” – Conan O’Brien

“It was 15 degrees cooler in Atlanta when they had the Summer Olympics than it is in Sochi where they had the Winter Olympics. It got up to 60 degrees today. It was so warm some of the people staying in the hotels thought the heat started working. But it turns out it was just the sun.” – Jimmy Kimmel

“Because of the warm weather, some of the ski jumpers were actually landing in puddles of water. They turned into water skiers mid-flight.” – Jimmy Kimmel

“The Slovenian woman who won the gold medal in alpine skiing is also a pop star in her country. So Justin Bieber is not the only pop star going downhill fast.” – Conan O’Brien

“A shipment containing 5,000 containers of Greek yogurt was supposed to be delivered to the U.S. Olympic team, but the Russian government blocked it because they said they didn’t fill out the required paperwork. Once again, the Russian government is doing everything they can to repress live and active cultures.” – Jimmy Kimmel

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Follow the Obamacare Money

I am constantly amazed at the creativity of investment funds. I didn’t realize until today that there are mutual funds that allow investors to bet for or against the Affordable Care Act.

So what does Wall Street think about Obamacare? According to Bloomberg Businessweek “investors have bet 45 times more money on Obamacare’s success than on its failure.” ”

Plus, the fund that bets on Obamacare is up 46.9% in the last year, while the fund that bets against is up only 13.8% (underperforming the S&P 500, which is up 22.8% in the same time frame).

Unsurprisingly, it was the Republican effort to kill Obamacare after it was enacted that hurt health care investment the most. Once the Supreme Court ruled that the law was constitutional, investment in health-oriented companies soared. Funds focused on health care saw their assets more than double from $7 billion to $16 billion. According to venture capital firm Venrock:

Investors can’t imagine a scenario where the changes the Affordable Care Act started will be repealed and taken away. There’s a ton of money flowing into things that help health-care [companies] take advantage of the insurance market changes, the coverage expansion, the payment model changes, and the data liberation that are derivative of the law.

And yet, the Republicans are still trying to sabotage Obamacare, opposing Medicaid expansion, trying to discourage young people from signing up, and even a recent proposal from Marco Rubio that would abolish “risk corridors” that limit the risk to health insurers. Rubio claims that it is a bailout. What’s hypocritical about this is that risk corridors are a Republican idea that were part of Dubya’s Medicare prescription drug law, and which actually saved taxpayers $7 billion. And the risk corridors in Obamacare are projected to save the taxpayers even more than that.

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Follow the Drug Money

Marijuana has only been legally for sale in Colorado for less than two months, but already it is exceeding expectations. Previously, they projected sales would be around $395 million in the state’s next fiscal year.

But now, those numbers are suddenly “higher”. Based on current sales, they are now projecting recreational and medical marijuana sales to approach $1 billion.

The state has a 25% tax on recreational marijuana, which is projected to add around $134 million to the state tax revenues. But most of that money will be spent on marijuana education and prevention programs.

What they don’t count is how much money the state will save by not putting marijuana users in jail, and also from freed up police time.

I predict that if this turns out as planned, and there aren’t any major problems, we will be seeing other states fall in line.

Ironically, the biggest problem legalization might engender is too much drug tourism — people traveling to Colorado explicitly to partake legally and then party a little too hardy. This very issue has forced some places in the Netherlands to back off a bit on legal weed. But it would only be a problem in Colorado if other states do not follow suit.

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Late Night Political Humor

“Yep, tonight is the 969th and final episode of ‘Late Night.’ Or as my dad put it, ‘Couldn’t make it to a thousand, huh? Quitter.'” – Jimmy Fallon

“I don’t like goodbyes. NBC does. Well, tonight is our last show for real. See, I don’t need to get fired three times. I get the hint.” – Jay Leno

“We’ve done over 10,000 monologue jokes over the last five years. And in case you missed any of them, the best way I could summarize those jokes is that Joe Biden needed Obamacare after Anthony Weiner texted Justin Bieber a picture of Chris Christie dating a Kardashian on the Jersey Shore – with Rob Ford.” – Jimmy Fallon

“I got to tell you, the outpouring from people. It’s really been touching. Today Anthony Weiner sent me a photo of his penis looking sad.” – Jay Leno

“You know, being together all these years, the staff is very close. It’s kind of like graduating high school – a high school for really stupid people that have been in the same class for 22 years.” – Jay Leno

“When I started hosting, Justin Bieber wasn’t even born yet. That’s why we call those ‘the good old days’.” – Jay Leno

“This is the last night Jay Leno is hosting ‘The Tonight Show’. Good luck, Jay. The lesson here is if you work hard and succeed, someday you will be fired.” – Craig Ferguson

“And the worst thing about losing this job, I’m no longer covered by NBC. I have to sign up for Obamacare.” – Jay Leno

“That’s why I’m happy right here. They can’t fire you if they don’t know you’re on the air.” – Craig Ferguson

“The Olympics start airing tonight on NBC. It’s a big deal. NBC will finally get to show somebody who is OK with passing the torch.” – Conan O’Brien

“Did you see the Opening Ceremonies today…what an elaborate pageant of flamboyant costumes and choreographed dance numbers all aimed at one theme – no gays allowed.” – Bill Maher

“The hotels are lousy. The Olympic village is a mess. The food is horrible. And, well, that’s what happens when you tick off gay people.” – David Letterman

“Have you seen what’s going on in the hotels in Sochi? They report that the water, if it does come out, is yellow; the toilets don’t flush; they say construction workers just wander into you room, which the male figure skating team described as ‘heaven’.” – Bill Maher

“The Olympic torch arrived in Sochi yesterday, after going on a four-month relay around the world. That’s when you know things are bad – when even the TORCH is putting off going to Russia.” – Jimmy Fallon

“While attempting to light the Olympic flame, Vladimir Putin’s body oil caught on fire.” – David Letterman

“They rushed to get the Olympics together there. The hotels are open but they keep finding forgotten little things like handles on the doors, showers with no curtains, floors that are missing. They say if you do fall through a missing floor, here’s what you do: relax your body, remain calm and above all – try to stick the landing.” – Bill Maher

“Tomorrow night the Olympics begin from Sochi. A lot of people over there say the hotels stink. The problem is there are only three hotels in Sochi. Of course, you have the Ritz Chernobyl. You have the Sheraton Gulag. And really the best one over there, The Two Seasons.” – David Letterman

“Of course, the Russians have their pride, so they are not admitting that any of this is all a big fuck up. They say this is all part of their brilliant plan to make the terrorists think that they’ve already bombed the place.” – Bill Maher

“There are 12 new events in this year’s Winter Olympics, 12. The new events include women’s ski jumping, luge-team relay, and finding a working toilet.” – Conan O’Brien

“You gotta feel for the athletes because the events themselves are dangerous enough – flying down hills are breakneck speeds. After a grueling day of doing that, you just want to get back to your room and take a long, hot yellow shower.” – Bill Maher

“I guess it isn’t going well over there. In fact, I heard there’s even a shortage of pillows. The shortage is so bad that visitors are being asked to give their pillows to the Olympic athletes, because there’s nothing more comforting than waking up in Russia to see a stranger coming at you with a pillow. ‘How was your sleep, Mr. Bond?'” – Jimmy Fallon

“They are very upfront about the fact that you should have no expectations of privacy if you go there to Sochi. The phones immediately are hacked, your computers are hacked, the rooms are bugged; one hotel – their slogan is ‘we’ll leave the mic on for you’.” – Bill Maher

“Guess which state is going to be the next; it looks like, to legalize pot? It’s on the ballot and it’s looking good… Alaska! And you thought Sarah Palin didn’t make any sense now.” – Bill Maher

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Bad Headlines

The headline for the article on NBC News “Pot Fuels Surge in Drugged Driving Deaths” is accompanied by a disturbing photo of a crumpled car destroyed in an accident. The article itself says that new research supports the claim that legal marijuana is making the problem of drugged driving worse, and tells stories of people who lost children and relatives in accidents where there was evidence of drug use. Scary! The article strongly implies that legalizing marijuana leads to more traffic deaths.

But as Forbes points out, this article is grossly misleading at best.

In fact, a separate study showed that in states where medical marijuana was legalized, traffic fatalities actually went down significantly. This other study theorized that this happened because people substituted marijuana for alcohol. California saw traffic fatalities drop by 31% after they legalized medical marijuana, in Hawaii they dropped by 14% and in Rhode Island by 21%. Alcohol, which of course is legal, has a much more dramatic effect on driving ability than marijuana.

Another problem with the NBC article is that they used a statistic from the study that found remnants of marijuana use in 12.2% of drivers killed in traffic accidents during 2010, up from 4.2% in 1999. The problem is that marijuana can be detected up to a week after use. So this statistic is more about how many people are smoking marijuana somewhat regularly than if they were actually impaired while driving.

The bottom line is that scare and sensationalist tactics like those used in the NBC article don’t help (other than perhaps help NBC attract readers and sell advertising). Driving while impaired by anything, whether it is legal drugs like alcohol and cold medicines, or illegal (in some places) drugs like marijuana, is the problem.

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If at first you don’t succeed…

First a federal court overturns the FCC net neutrality rules, then Comcast announces that it is buying their biggest competitor (which would give them seriously dangerous control over the Internet), but finally there is some good news. The FCC announced yesterday that they are going to reformulate their net neutrality rules. Hopefully, this time they will get it right.

Underlying all this is whether or not the internet companies should be treated as common carriers (like phone companies and other utilities), which require a higher level of regulation.

While I strongly support rules enforcing net neutrality, I’m hopeful that these new rules can be applied without reclassifying the Internet as a common carrier (at least for now). The Internet is still new and is growing and changing, it would be a shame to put any unnecessary dampers on innovation.

The FCC will not immediately reclassify Internet service as a utility, but it will retain the right to do so in the future if their new rules do not work adequately to protect the Internet. The White House announced that they support this approach.

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Late Night Political Humor

“The games haven’t even started yet and already there are people complaining about the horrible accommodations at the Sochi Olympic village. Toilets don’t flush. The faucets spew discolored water. They say it’s like being on a Royal Caribbean cruise.” – Jay Leno

“You know, ticket sales have been slow for the Olympics in Sochi, mostly because the Olympics are in Sochi.” – Jimmy Kimmel

“Today, the Olympic torch arrived in Sochi. But Vladimir Putin immediately put it out because he thought it was too flaming.” – Conan O’Brien

“The Olympics are set to begin on Friday but construction crews in Sochi are still racing to complete work on everything from roads to hotels. When asked to explain the delays Vladimir Putin admitted that in retrospect it was a mistake to fire his construction foreman for being gay.” – David Letterman

“In their hotel at the Sochi Olympics, the Canadian hockey team has to squeeze three players to a room. Even the bobsledders are like, ‘Isn’t it a little cramped?’ When you scare off all the gay people, interior design goes to hell.” – Jimmy Kimmel

“The Olympics start Friday and Russia’s implementing the most intensive security in Olympics history. The government will monitor every email. They will monitor every social media message and they will listen in on every phone call. In fact, people are now comparing Russia to the United States. That’s how bad it is.” – Jay Leno

“The Russians have spent $51 billion on the Olympics – $51 billion. With that kind of money the Yankees could buy themselves a mediocre player.” – David Letterman

“The Russians are not ready. You heard it here first. They are not ready for the Olympics. You know, I’m blaming it on Obamacare.” – David Letterman

“New Jersey Governor Chris Christie is indignant at the New York Times for its sloppy reporting about the Bridge-Gate scandal. The governor also took the opportunity to highlight a few other things he believes are sloppy: Meatloaf with gravy, nachos, barbecue ribs, meat-lovers pizza, buffalo wings, hot-fudge sundaes and chili dogs.” – David Letterman

“The Winter Olympics start Friday. But if you want to see people flipping end-over-end in a frozen wonderland, just watch people on the East Coast try and drive to work.” – Craig Ferguson

“Yesterday, Red Hot Chili Peppers bassist Flea admitted the band faked playing during the Super Bowl. In his defense, so did the Broncos.” – Conan O’Brien

“CVS is no longer selling cigarettes. They say, ‘It’s the right thing to do for our customers and our company in their path for better health.’ I go to CVS all the time. If they want to promote better health, maybe they should stop selling Cheese Whiz, Circus Peanuts, Little Debbie jelly rolls and all the ingredients for meth.” – Jimmy Kimmel

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What the Media is not Covering

Last week, close to 100,000 people from 32 states held a massive protest in Raleigh, NC against the “immoral and unconstitutional policies” of the state’s Republican party, which controls both legislative chambers and the governorship. Since taking over, the Republicans have eliminated social programs, raised taxes on the bottom 80%, repealed tax credits for working families, blocked Medicaid expansion, cut preschool funding, cut unemployment benefits, engaged in voter suppression, and gave the state the authority to intervene in abortion lawsuits.

Of course, you probably didn’t hear about it on your corporate controlled TV news. But here’s a funny sign from it:

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