Occupy Toronto (and Wall Street)

The past several weeks have seen the phenomenon of people "occupying" Wall Street and then similar protests emerged in other places including Toronto. They call themselves the 99% who do not own a massively disproportionate share of society's wealth. Their complaints are many and proposed solutions varied. But they have a point even if they lack focus.

Comparisons to the Arab Spring are inappropriate. They do live in a democratic society and the power of the ballot box is what the Arab protesters were demanding. The 99% in the USA and Canada have the power of the ballot which most of humanity does not. However that doesn't mean that they don't have the right to express their frustrations nor do over the top comparisons make their sentiment irrelevant.

I'm going to focus on one concrete example of why they have a point. They generally say that the deck is stacked and the game is essentially unfair. One example sticks out like a sore thumb and that example is the firm known as Goldman Sachs.

Have a look at this impressive list of Goldman alumni.

http://www.trendsresearch.com/reports/goldman-inter.pdf

The number of Goldman alums who populated senior positions in the Clinton, Bush and Obama administrations is striking. Whether it be a Democrat or Republican in the White House, it seems that Goldman Sachs has a seat at the table.

It is more disturbing when one considers the bizarre decisions related to bailouts. Many in the financial community were scratching their heads when Bear Stearns (small) was bailed out while Lehman (medium) was not and AIG (large) was. It happened in that sequence and one wonders why little Bear and large AIG were too important to fail while Lehman (medium) was not. Could it be that Lehman was a competitor of Goldman while AIG was a huge customer of Goldman??

Most have forgotten now but years earlier, another financial crisis was looming as a massive hedge fund called Long Term Capital Management collapsed. Their massive trading book threatened the financial system as an unwind of large positions would cause big market distortions. The federal reserve worked behind the scenes to avoid such a scenario. It was detailed in a book called "When Genius Failed" by Roger Lowenstein.

http://findarticles.com/p/articles/mi_m1316/is_9_32/ai_65160621/

(I highly recommend this book as it was very good at explaining complex financial transactions in a way that most people could understand it.)

During negotiations to save LTCM, Lowenstein recounts the behaviour of Goldman employees. As a prospective bidder, they were allowed access to a data room of LTCM's secret trading positions. After viewing the data they went back to their desks and began trading against LTCM's positions. ie, if LTCM was short 30 year bonds and long 29.5 year bonds, Goldman would buy the 29.5 and sell the 30's. This has the effect of increasing LTCM's losses and putting Goldman in a position to benefit from the resulting fire sale.

Nowadays, actions like these are considered "Market abuse" by regulators and would subject the firm to sanctions.

Ronald Reagan once said "Concentrated power has always been the enemy of liberty." I wonder if a firm like Goldman is so well connected that the feeling that the deck is stacked (as espoused by the 99% protestors) does not have some validity?

The example of Goldman Sachs is an American one and we Canadians love to be smug about how we are so much better than the Americans: "Hey we have universal health care." "Hey we didn't have a sub prime crisis."

Will we be so smug in saying "Hey the Governor of the Bank of Canada used to work at Goldman Sachs"???

Steve Jobs

I run the risk of getting some hatemail for this post but I want to state at the start that I am not running down Steve Jobs. He was clearly at the forefront of creating some great consumer products and it is very sad that he has passed.

This post is not about Steve Jobs but rather the bizarre celebrity obsessed culture that magnifies the importance of famous people. Steve Jobs is really secondary to my point.

The newspaper headlines say that he was a "visionary" and that he "changed the world."

I'm not sure how to define a "visionary" but did he really change the world? I own several ipods and I have an Iphone 4. I'm happy to have these because I get to listen to music, watch videos and play Angry Birds.

So I imagined a world without Apple products. Hmm...i would still listen to music. I had a cell phone before Apple started producing them and probably would have one now. I'm not sure about Angry Birds...maybe, maybe not. But how would the world be different?

Racism would still plague too many societies. Economic downturns will hurt many vulnerable people. Israel and the Palestinians would probably still be at odds.

My Iphone is "cool" and I was very happy when i got it and started playing with it. I have yet to get an Ipad but it looks pretty "cool" too. I suppose Apple products have made many people feel special and "cool"....at least until everyone has one.

But that brings me to my next point. How many people have Apple products? I don't know the actual numbers...but I am willing to guess that a fraction of 1% of humanity owns any Apple products. It is probably the wealthiest fraction of 1% of humanity as well. However that fraction feels "cool" when they listen to their Ipod or talk on their Iphone or watch a movie on their Ipad. Is watching the Matrix on an Ipad is much much better than on a Hi Def TV?

This news coverage reminded me of a time in 1997. Diana Spencer (the former Princess of Wales) had died in a car accident. Tributes flowed and a mountain of flowers appeared at various spots around the world. A famous person had died in a car accident and people who had never met her (but had seen her on TV) cried as if a family member had passed.

As we watched the coverage on a trading floor TV, a senior trader I was working with declared "this is a disgrace, if mother Theresa had died there wouldn't be so much coverage." Suddenly the cosmos decided it was time to give people a clue. Seconds after he said that, the news text below the live coverage of Diana's wedding said "Breaking news, Mother Theresa has died."

A few days later, the networks scrambled to ensure that Mother Theresa's death received as much coverage as Diana's.

It is sad that Steve Jobs died. It was sad that a runner at the Montreal Marathon died two weeks ago. One was more famous but neither changed the world.

Fame does not make one human tragedy more tragic....despite the way the news media reacts.

Montreal Marathon Memories

Last week I was thinking that I might write up a blog post about my experience at the Montreal Marathon. Unlike my prior two marathons, I went into this one feeling pretty confident. Although my training could have been better, there is no question that it was much much better than Niagara Falls (Oct 2010) or Mississauga (May 2011).

I lived in Montreal for 2 years in my early twenties but as a student, I rarely ventured out of the McGill Ghetto. I registered for the Montreal Marathon in part to see parts of the city that I had never seen.

Overall, I decided that I miss Montreal and did not do it justice when i lived there. We started at a park on Ile St Helene. It is a beautiful park. As we walked onto Pont Jacques Cartier, I looked over and saw an amusement park. "What you have an amusement park here?" I said....not quite realizing how silly I sounded.

The race itself had a fairly flat start and finished uphill.....mean and nasty trick by the organizers I'd have to say.

It was very warm and humid but I had a good race. I finished in 3:36 which beat my Mississauga time by 18 minutes. I was very happy with my time but subsequent news has made that seem very insignificant.

At the 41 km mark, I passed a scene where a man was flat on his back and EMS were performing chest compressions. His eyes were open and rolled back. Seeing this sent shivers up my spine. He was clearly in very bad shape.

After the race I found out that this young man (32 years old) had died of a suspected heart attack. The EMS staff who were trying to revive him as I ran by were unsuccessful at getting his heart to start again. He was pronounced dead at the hospital shortly after.

I'll be honest.....I was very shaken by this. Despite running a full marathon I did not sleep much that night. Usually running a marathon means I get a good night's sleep. I couldn't get the image of his face out of my head.

This young man has since been identified as Jean-Francis Presseau. My heart goes out to his family and friends.

His results on sports stats show that this was his third half marathon in the last 13 months. His times were impressive. He broke 1:30 in a race this past April.

Those times indicate that he was a very good runner. Most of the people in the marathon clinic i attend would not beat his time.

We still don't know for sure what killed him. The coroner has ordered an autopsy. It may well be that he had an undetected pre-exisitng condition.

I don't know if there are lessons to be drawn from this. For sure, life is too short. One minute you're here and the next......

This won't make me stop running. I don't think that the occasional death during a race should dissuade other people from running. I am more guilty than most of pushing myself to complete exhaustion. Whether that was the cause in this case or not is irrelevant. It's not smart.

Life is a journey TO a destination. For one fellow runner, the journey ended at Pie IX and Rosemount on Sept 25th, 2011. Everyone else....keep running but be careful out there!!

Montreal is a beautiful city and I hope to go back to run again.

Death, Taxes and Stupidity

It's been said that the only certainties in life are death and taxes. With respect to taxes, I'd suggest that stupidity also follows along.

I have watched with great despair as politicians debate tax rates. Nowhere is this discussion more perverse and misguided than in the United States.

Tax the rich because they can afford it....say Democrats.
There is a problem of overspending not undertaxation.....say Republicans.

Both sides are being equally stupid and simplistic but I shall focus on an argument often made by Republicans.

Virtually every Republican with broad name recognition has at some point made the argument that cutting taxes will increase government revenues by stimulating the economy and creating jobs which will lead to higher tax revenue as more people earn taxable income and at higher rates.

When Ronald Reagan made this a part of platform in 1980, a fellow Republican named George H.W. Bush gave it the rather caustic label of "voodoo economics." So which is it? Do lower taxes result in higher tax revenues or do lower taxes result in lower tax revenues?

Well the truth is that both were right which only makes the debates happening now even sillier.

Take an example of a marginal tax rate of 99% which is increased to 100%. This will certainly result in lower tax revenues as people will have zero incentive to work since they will get to keep none of the fruits of their labour. So it is fairly easy to see that a cut in tax rates from 100% to 99% will increase tax revenues. My guess is that a cut from 99% to 98% will have a similar effect.

Is there a point at which cutting taxes results in lower revenues then? Well of course. A cut from 1% to 0% might increase economic activity but it most certainly will result in a reduction in taxes to zero. My educated guess would be that if you halve the marginal tax rate from 2% to 1%...then this will also result in lower tax revenue.

The above example would lead to a conclusion that somewhere below 100% there is a level at which raising taxes results in lesser tax revenue and somewhere above 1%, there is a level at which cutting taxes would result in lesser tax revenue. So somewhere between 0 and 100% is a tax rate below which cutting taxes will result in lower revenues and above which raising the rate leads to lower revenue.

So basically anywhere other than the optimal point would result in lower tax revenues. Now I don't know where that optimal level is and it might not even be the same level from one year to the next. However, I do know that the highest rate in US history was 94%. (Does that seem awfully close to 100%?) When Reagan came into office, the rate was 70%. Currently it stands at 33%.

It is most irritating when I hear politicians talking about stimulating the economy by cutting taxes. Listening to some Republicans you would think that Moses came down from the Sinai with a commandment that says "Thou shalt cut taxes....always and forever more."

Paying taxes is not like famine and pestilence where the ideal number is always lower...but you wouldn't know that from listening to some Republicans.

As my simple example shows, there would be a point at which lower tax rates would result in lower tax revenue. This should serve as a caution to Democrats as well. Raising taxes on the wealthy should not be done for reasons of class warfare or resentment. The goal should be to raise money for government operation and in doing so, they should be mindful of not creating a disincentive to earn more income.

When someone says "raise taxes on the wealthy", i often ask to what level should it be raised? Usually there is no answer because it really wasn't thought through beyond "they're rich so they should pay more." When someone says "cut taxes because it will stimulate the economy and lead to more revenues", i will ask to what level it should be cut.

Both sides simply want "more" or 'less" without asking themselves what the "RIGHT" level of taxes should be. My guess is that the United States is pretty much at a point where cutting taxes will lead to lesser revenues not more. My guess is that an increase to the marginal tax rate would lead to greater government revenues. I think it's probably 10% higher before it becomes a cause of lower revenues.

I don't know what the right number is but I do know that I don't ever hear politicians speaking of the 'right' level of taxes.

Marathon Inspiration 1984

By the time of the 1984 Summer Olympics in Los Angeles, I had entered my teens. I had grown to love sports and had begun learning important life lessons through sporting competitions.

I had watched the "Miracle on Ice" of 1980 when a team of Collegiate American Hockey players defeated the heavily favoured Soviet Big Red Machine. As a hockey fan I was thrilled to see my New York Islanders emerge as 4 time Stanley Cup Champions after so many years on the periphery. Magic Johnson and Larry Bird were going mano a mano in what was a team sport.

The lessons learned were that David can slay Goliath, teamwork can pay off and sometimes a white guy can win the NBA Championship...LOL!

Into this mix the cold war era Summer Olympics came along. For the first time, women were competing for a Gold medal in the marathon. I watched on TV, captivated, as Joan Benoit (USA) broke away from the pack and widened her lead right into the finish. She ran the final lap in the LA Coliseum without any of her competitors in sight. She crossed the finish line to the cheers of the partisan American crowd and the networks were happy.

However the truly inspiring moment was yet to come. Way back from Joan Benoit was Gabrielle Anderson of Switzerland. She had been overcome by heat and when she entered the stadium she was not a picture of grace. She looked terrible to say the least.

But she was still moving (barely). She waved away medical personnel lest she be disqualified. She stumbled around and couldn't move in a straight line and her body was leaning awkwardly the whole way.

BUT SHE DIDN'T QUIT!!!!!!!!!!!!!

Watching Gabrielle Anderson collapsing over the finish line in 37th place made quite an impression on this 14 year old boy.

Now through the magic of youtube I was able to view her finish again 27 years later and it still gave me the chills.

Joan Benoit won the Gold Medal that day. It's a common saying in sports that "nobody ever remembers who came second." True enough! For me the most memorable person at the first women's Olympic Marathon in 1984 finished 37th.

The language of the commentary is not important. If you watch the video....well judge for yourself.

http://www.youtube.com/watch?v=YZFNiuuApFU&feature=related

An Orange Tide for Ontario??T

hThe Ontario election campaign has barely begun but we have already seen the two frontrunners get bogged down in a bizarre issue.

Liberal Premier McGuinty has promised a tax credit to companies that hire foreign trained professionals.  Conservative leader Hudak has labelled it affirmative action for "foreigners".  Not true replies McGuinty, it is meant for Canadian citizens who were foreign trained but have been in Canada for less than 5 years.  Hudak has been accused of being divisive.

I find this whole issue and the reactions rather bizarre.  I don't like affirmative action as a matter of principle but I'm not sure this qualifies as affirmative action.  That being said, labeling Canadian citizens "foreigners" is completely offensive.  Am I Canadian because I've been a citizen for longer than 5 years or am I still somewhat of a foreigner?  I've always thought that when one becomes a Canadian citizen, you are Canadian from that day forward.  That being said, if this is such a great idea, why did Dalton McGuinty wait until an election campaign 8 years after he took office to present this great idea???  He could have presented it and implemented it at any time during the past 8 years.

This whole debate makes both of them look silly.  It's possible that the voters of Ontario will decide that both of them are right....about the other and vote for neither.

This silliness has created an opportunity for Andrea Horwath to woo disaffected voters.  It has been decades since Ontario's disastrous experience with an NDP government.  Former NDP Premier Bob Rae is now the leader of the Federal Liberal Party and the face of the NDP is now Jack Layton.  In other words, the NDP brand in Ontario has been completely washed clean of the Rae years by Jack Layton's success and Rae's defection to the Liberals.

It is very early and the leaders debates have yet to happen.  If Andrea Horwath can introduce herself to the voters and show that she is ready for prime time, she could pull off an upset.  The ground is fertile, can she step up and seize the opportunity?

President Obama's Jobs Plan

With the United States mired in an economic slump and fears growing of a double dip recession, President Obama did what he does best.....he gave a speech.

Obama's skills as an orator are well known.  I don't think the Oval Office has had a better orator post Reagan.  However, his plan is doomed to fail.

I have heard that one definition of insanity is repeating the same behaviour and expecting a different result.  So what is the Obama jobs plan?  Well it's a $447 billion dollar package of tax cuts and public works spending....to be paid for later.  Excuse me but haven't we seen this before?  What does anyone think that a half trillion dollar program of spending will do for the economy what three years of trillion dollar deficits did not?

Bill Gross (of PIMCO) speaking on CNN stated flat out that it will not work because the unemployment problem in the United States is a result of structural changes resulting from technological change and the migration of jobs to cheap labour countries like China.  A modest lowering of payroll taxes will not suddenly cause businesses to start hiring.  Bill Gross is right.

However let me take a step back and address a more fundamental assumption that everyone seems to be labouring under.  How exactly did it become a fundamental underlying assumption that the economy will continuously grow at rates that will lead to ever greater prosperity?  Everything I've read in my studies of economics says that boom and bust are part of something called the business cycle.  Recessions are as much a part of growth as death is to life.

Recessions aren't all bad.  During boom times, people drive more, eat more, waste more and save less.  Why wouldn't they?  Greater future prosperity makes thrifty ways seem pointless.  The environment suffers and the garbage dumps fill up while waistlines expand.  During recessions, businesses become more efficient, energy costs are costs that need to be cut, lights are turned off more and carbon emissions go down.

Stimulus spending will not work now because it simply attempts to fast forward future consumer demand to the present.  This works temporarily but there is a limit.  The downgrading of US Treasury debt to less than triple A tells us that this point is near.  That point was reached after a decade of deficit financed prosperity under George W Bush.  That is certainly not Obama's fault but it does mean that the stimulus gun has no more bullets that are effective.  Besides, bringing forward future growth to today inevitably means a hangover of low growth.

It is now time for society to readjust their expectations, live with lower growth and wait until the gloom passes.  It may take years or even a decade or two....that is simply a reflection of how long and prosperous the boom was.  It's time to recover from the hangover and there is no quick way to do it.

Jack Layton's Legacy

The passing of Jack Layton united Canada in grief today.  People who would never have considered voting for him (such as myself) were equally moved by his story and his words.

I first heard of Jack Layton 20 years ago when he was running for Mayor of Toronto.  He lost to June Rowlands.  He also had unsuccessful runs for a seat in Parliament twice before finally meeting.  It took a long time and a lot of losing campaigns before he became an overnight success.

During the mayoral campaign, Layton came across like an angry young man berating a kind old lady.  In the recent federal election, he was a very different man.  Gone was the simmering anger.  He spoke plainly in a way that voters could understand him.

One of the ironic things about the last election is that Harper campaigned against the three other parties as being in bed with separatists.  How ironic that Harper did not slay the separatist dragon but one of the men supposedly in bed with Gilles Duceppe decimated the Bloc's Ottawa headcount to a number that could be counted on one hand not including the thumb.

Jack Layton greatest legacy lies in Quebec.  Many Canadians outside of Quebec had Jack Layton's sunny demeanour and working class french to thank for sparing us the sight of separatists in Ottawa rising to ask questions during question period.  The last election was a great result for Canadian Federalism and Jack Layton was the key driving force behind Quebec's change in direction.

Since that is his greatest legacy, it is also the area in which his legacy can be most easily squandered.  Layton's successor must find a way to hold on to Official Opposition status at the very least in the next election.  If he/she does not, then the last election result will be seen as a fluke result that will not be repeated.  If that happens, then Layton's legacy will be squandered.

It will be very difficult for the NDP to do anywhere near as well as they did in 2011.  Jack Layton's presence will so dominate that his successor will pale in comparison.  A new leader from Quebec runs a high level of risk of alienating NDP voters in english Canada.  Some candidates such as, Thomas Mulcair are simply too unstable to appeal to many people in or out of Quebec.

The NDP is not my party and I have never voted for the NDP.  However as a Canadian, I fervently hope that the NDP can carry on Layton's legacy.  It was Jack Layton's presence as leader that eliminated the travesty known as the Bloc Quebecois.  All Canadians should be greatful and hope that the NDP will continue to block the Bloc from a resurgence.

A strong and durable NDP will be the ultimate tribute to Jack Layton.  RIP Jack!

The Real Downgrading of America

Today Standard and Poors downgraded long term debt of the United States from the highest rating of AAA to AA+.  The other two major agencies have not downgraded but have warned of the possibility.

This is the first time in history that US Federal government debt has had anything other than the top rating so many people haven't really ever considered this and are unsure of the consequences.  Even financial experts aren't so sure.

Many products and pricing methods in Finance are built around the concept of what is known as the "risk free rate."  This is useful for calculating things like the "Present Value" of future cash flows.  (ie.  the opportunity cost of not having money today that you could then invest at the 'risk free rate.')  Nothing is ever truly risk free but having the highest possible credit rating is as good as you can get.

There is a knock on effect of a downgrade of US Sovereign debt.  It is a principle that the Sovereign must always have the highest credit rating in the country.  The idea behind this is very simple:  A nobleman can't be AAA while the King is AA since the King can simply choose to tax the nobleman to pay his obligations.  As a result, Apple Computer may have had more cash in their bank account than the US Treasury did for a time last week, but their credit rating still cannot be higher than the Treasury.  This knock on effect may increase borrowing costs for many US companies down the line.

The Standard and Poors downgrade statement made a particular point of saying that a deficit reduction plan had to be 'credible' and that the dysfunctional way in which the Executive and Legislative branches are interacting was a factor.  I don't think that anyone who followed the recent debate and brinksmanship around raising the debt ceiling could argue with these criticisms.

As a practical matter, this downgrade may not have any big immediate effects.  There are three major ratings agencies and the others have not yet followed suit.  (if the other dominoes fall, then the USA is on the same slippery slope as Greece)

The S&P doesn't have a mandate for social commentary but their statement still pointed us to the real historical downgrading of America:  before Congress got dysfunctional, society became dysfunctional and voted that way.

The real problem is a downgrading of the values of shared sacrifice that once existed in America.  Where people once dutifully stood in ration lines to support the effort to defeat the Axis powers, people now see shopping on credit as their patriotic duty.  In a way, one can hardly blame them.  President George W. Bush and Mayor Giuliani told them to do just that.

Every debate around the budget comes down to various interest groups basically saying one of two things:

1. Cut my taxes and raise taxes on these other people.
2. Don't cut my benefits, cut someone else's.

Both Democrats and Republicans are equally guilty of this.

The 2011 Federal Budget contained spending of $3.8 trillion dollars and revenue (taxes) of $2.2 trillion leading to a deficit of $1.6 trillion.  This means that for every one dollar collected in taxes, the government was spending one $1.72.  That is an absolutely irresponsible level of spending.

Here is my suggestion for how America can fix this problem of values and get their AAA credit rating back:

1. Raise taxes on the wealthy.
2. Raise taxes on the not wealthy.
3. Cut Democratic sacred cow social programs like Social Security, Welfare, Medicare and Unemployment Insurance.
4. Cut Republican sacred cows like National Defence, Corporate welfare subsidies, Ethanol subsidies.

In short, taxes go up for EVERYONE and benefits are cut for EVERYONE.  How can this be fair?  It's fair because when $1.72 of spending exists for every $1.00 in taxes, the entire society is living beyond its means.

Those on the right will talk of how certain social programs cost too much.  By and large, these programs benefit urban dwellers and minorities.  They will ignore any talk of ethanol subsidies which benefit rural white farmers.

The left is equally guilty of playing class warfare politics of division.  They will always say that taxes should go up for the "rich".  This is a red herring because the rich already pay higher taxes and there simply aren't enough of them earning $250,000 + to fix this fiscal imbalance.  This plays right into the attitude of "let someone else pay."  Why shouldn't the middle class pay more?  The only reason nobody says that is because the middle class is where most voters are.  

My suggested plan will fix the deficit (unlike the current plans) and probably trigger a severe recession (just as the current plan will).  Recessions are painful but they are inevitable.  They are inevitable because sustained growth creates the conditions that lead to recession.  (I don't want to write a textbook here so I won't go into that much more now.)

My suggested plan would not get a single vote in Congress.  It offends every constituency and enforces shared sacrifice.  Therefore, my plan is not aligned to the values of America right now.  What a pity.

Pension Folly

An amazing argument is playing out across the public and private sectors across several nations.

This argument deals with defined benefit pension plans.

The problem is very simple to define and (in theory) just as easy to solve.  Whether we are talking about Social Security, the Canada Pension Plan or various public or private sector pension plans the problem is the same.  Current workers pay premiums that fund the benefits for retirees.  The benefits are paid out without any real connection to what those workers paid into the plan in the first place.

As an example, one pension plan I am aware of pays out (for life) based on the following formula:  2% x the number of years of service x average of your salary in the final 3 years.  If one lives a very long time, the retiree will receive much much more than was paid in.

This problem afflicts all such pension plans.  Social Security (USA) sets payments to begin at the age of 65.  At the time that the program came into inception (1935) the average lifespan of workers was 67.  Today it is around 80 and increasing.

The aging of the population and reduced birth rates has lead to projections that the worker-retiree ratio (which was 10-1) will soon reach 2-1.

In short, the program is fundamentally flawed.  It is simply not built to deal with negative demographic trends. In fact, it was always doomed to fail since the human population simply cannot keep growing forever...certainly not at the rates that it had been.

So why all the hue and cry when corporations or governments try to fix this obvious problem?  It points to a cultural shift in values.  Where such programs were once a sign that society takes care of each other, now it has become a game of hanging onto your spoils and damn the consequences for everyone else.

Personally, I don't want to saddle my children and grandchildren with debt to pay for my retirement.  If we want to avoid the fate of nations like Greece, then we need to eliminate or at least radically reform the way cherished programs like CPP work.  Otherwise we are just sweeping today's problems under the rug for our children to deal with.

If anyone wants my advice, I suggest saving enough for your retirement assuming that you will get bupkus from the Canada Pension Plan.  It's the right thing to do and the safe thing to do....cuz that might be the case anyway.