Monday, November 30, 2009

Dubiety* about Dubai

*Word of the Day

The request for re-scheduling payment of principal on a maturing Islamic bond caused some screeching by the bears who are trying to start a bigger fire on fears of "what else" ?

First, what is Dubai ? Dubai is a sheikdom within the United Arab Emirates which itself is a federation of seven independent emirates. In classical terms, it's a city-state run by a monarch. How big is it ? Dubai has about 1,000,000 people, but only 20% are citizens. The rest are ex-patriates and guest workers. Where did I find out this information ? Not from any news reports or newspapers stories. They lazily don't tell us. I went to the US State Department website.

Dubai created a number of development companies to manage its hotels, tourism and port businesses. The company in trouble is a real estate company. Gosh, it's such a shock that a real estate company in a formerly "hot" location would get into trouble in a global recession.

What is an Islamic bond ? I don't know, but from poor descriptions in the press, I get the impression it's like a sale-leaseback, where the property/assets are sold to some legal entity, and the seller (borrower) pays rent, not interest explicitly, to the lenders. After some time, the seller buys the property/assets back. So an Islamic bond seems like a sale-leaseback coupled with a fixed price repurchase agreement. The analogous structure was rather common in the US until the mid 1970s until new accounting rules offset its legal and security benefits.

What does this highlight ? The economic risk in ANY debt that requires a large payment of principal at maturity ( a "balloon") is MUCH higher that any debt that requires small payments over time, like a home mortgage or a sinking fund bond. If the maturity happens to fall in a period of economic stress, the likelihood of trouble in re-paying that bond hugely increases. That's why the junk bond market gets hit so hard in recessions, yet recovers so fast when the ability to refinance resumes. Analytically, you can see that the correlation of risk & reward to the economy for balloon debt is much higher than for debt that amortizes slowly.

The bond markets started to prefer bonds with fixed balloon maturities in the 1970s. They were wrong. What made trading easier incurred more economic risk which was not compensated in interest rates. The old ways were better. Bring back sinking fund bonds and mortgage bonds.

OK, I am rambling. Yup. But the Dubai debt rescheduling is the screech of a mouse. No big deal at all. It's about like Las Vegas - another city in a desert - defaulting on a global scale. Smaller, even, as oil-rich Abu Dhabi is backing the Dubai banking system. Those banks probably own a majority of the debt at risk. Thus, it's even less that a default by Las Vegas, It's like the default of a few casinos. Hmmmm ... gosh, that's already happening in Las Vegas. Yawwwwwwn.


I'm cautiously making some speculative buys. I picked up some S&P calls on Friday and some HBC calls, too. I'm phasing this speculation in to see how this panic unfolds. I think it will be over in a few days. On Friday the US jobs numbers comes out. I expect a good number and then a rally to new recovery highs.

Word of the Day

"Dubiety" - noun [$10]
Dubiety means 1. a feeling of doubt; 2. a doubtful matter
Sentence: The debt rescheduling by a major Dubai company is causing a return of dubiety over any heavily leveraged nations.

NOTE: did you notice that poetic title, with its alliteration, assonance, consonance and internal rhyme ?

Friday, November 27, 2009

Thanksgiving Leftovers

The feast was fabulous: free-range, organically fed turkey roasted to perfection, baked Buttercup squash, cranberries, oyster "stuffing", apple-onion "stuffing", pumpkin cheesecake, and fine German Spätlese wine from the Mosel-Saar-Ruhr region.

I hadn't noticed before, but a relative pointed out to me that most of the principal parts of traditional Thanksgiving dinners are New World foods, that is, native to the New World (vs. the Old World of Europe, Asia and Africa). Here's a few - turkey, cranberries, pumpkin (for pies or my cheesecake), squash, regular and sweet potatoes. Very fitting that our holiday feast and giving thanks for whatever good has happened for the past year are New World foods.

The holiday was variously celebrated in the colonies and Washington proclaimed the first national thanksgiving in 1789 as the new government took shape under the Constitution. Various state holidays were celebrated, but then Lincoln proclaimed the first regular, national holiday in late November. Thanksgiving is a fine holiday and I hope all celebrated it in some appropriate manner, or at least had a moment of thought about what one could be thankful for, such as a few good friends or one's health.

Or perhaps surviving the financial Panic of 2008.


There will be a smashing today as a big, state-owned Dubai company announced that it will not repay its bonds at maturity next month. This a a problem in dealing with a state-owned company. Sovereigns just don't have to follow rules or customs if they wish. So now I suspect the fear is spreading to any Dubai related debt, which I just heard is around $80 billion. Sigh ... why would so many "smart" banks lend money to such entities ? This again reminds me of the great Harry James song, "I've Heard that Song Before" - check out this link:


I am thinking of buying some S&P Dec. call options today IF I can get a reasonable price. To me, this Dubai default is not particularly important and the panic rather senseless. But the old fears are there, so I might as well take advantage of them to try to bang out a trade. I'll put this speculation on in phases, as usual.

I thin the December jobs number next Friday will be good and this drop is a "Black Friday" discount sale.

PS: For squash, you want buttercup squash, not the more common butternut squash. The alliterative mnemonics are, "brown is bad" (butternut squash is brown) and "no on nut". Buy only buttercup squash for baking.

Word of the Day

"Ordure" - noun [$10]
Ordure means 1. excrement, dung; 2. obscenity, filth; foul language.
Sentence: The air in DC is redolent of the ordure filing the 2,000 page ObamaCare "plan".

Wednesday, November 25, 2009

A Holiday Wednesday ...

surprisingly has some interesting news.

But first, read the Wall Street Journal's annual editorial writings for the day before Thanksgiving. Although identical for almost 50 years, the writing seems to have special meaning every year. If you don't subscribe, I posted a copy last year - see link below.

Now to the News ...

The Russian gangocracy keeps getting bolder: FT - quote begins***

A London-based Russian lawyer allegedly received death threats before and after the sudden death in a Moscow jail of Sergei Magnitsky, a colleague who had accused the police of involvement in a corruption case. ... Hermitage said it believed the death-threat text messages sent from a Russian mobile phone over the last month were a warning. They could indicate Magnitsky was killed rather than dying of natural causes after complaining for months he had been denied medical treatment for a serious stomach condition, it said. "

A text message sent on November 8 said, “If history has taught us anything, it is that anyone can be killed”, according to Hermitage. An earlier message sent on October 23 said: “What could be more frightening . . . I don’t know, death . . . or prison.”

Mr Browder said on Tuesday: “It all started to crystallise after we got the fifth message literally gloating about Magnitsky’s death . . . These messages combined with bruises [that were seen] on his hand . . . and the cover-up over his autopsy lead us to believe there is a real possibility he didn’t die of natural causes.” ***quote ends.

It is rather obvious that Putin & Medvedev are involved in protecting this crowd. No one should be doing any business with this gangocracy until it's cleaned up.

Washington Post concentrates on the DC ruling classes to feed it.

From WSJ - quote begins***
Washington Post Co.'s flagship paper plans to close its remaining U.S. news bureaus outside of the Washington area, in a symbolic retreat for one of the country's major news organizations.
The six affected journalists in the New York, Los Angeles and Chicago bureaus will be offered new posts in Washington. Three news aides in those locations will lose their jobs, the Post said.
The closures are effective Dec. 31

The move is an acknowledgement the paper—which helped force the resignation of President Richard Nixon and recently won a Pulitzer Prize for its coverage of influence wielded by former Vice President Dick Cheney—is focusing more on its backyard.

"It's necessary to concentrate our journalistic firepower on our central mission of covering Washington and the news, trends and ideas that shape both the region and the country's politics, policies and government," Executive Editor Marcus Brauchli and other top Post editors said in a memo to staff.
***quote ends

To paraphrase, the people no longer matter to the Washington Post - all power is flowing to the center and all importance occurs there in the court of the ruling classes.


Ms. Market seems to have endurance for dancing, and the band seems to be tuning its instruments for a new set of songs. What will be the theme song for this set ? Will it be Happy Days Are Here Again or Brother, Can You Spare a Dime ? Maybe a lively Louis Armstrong tune from the 1920s will spur Ms. Market to do a wild jitterbug with a big bull ?

At this time I am still doing nothing. I have plenty of cash, but see few screaming buys or sells. I'm still riding the bull elephant to the next water hole, surveying the landscape to a change in trend.

Word of the Day

"Deontological" - adjective [$10] and "Deontology" [$10]; from Kant.
Deontology means the study of duty.
(A) [from course notes of "Great Ideas of Philosophy", part 3, page 46 - a CD course from The Teaching Company] "Central to any deontological theory is the idea that it takes the imperative of certain moral precepts to be unconditional."

(B) From behavior observed, one can conclude that both the DC ruling classes and the Russian gangocracy both flunked deontology in their studies, or never even signed up, as both are concerned solely with their own power and wealth.

Tuesday, November 24, 2009

To Solve the Twin Deficits

That problem is how to simultaneously reduce the trade deficit and to reduce the US Federal budget deficit. Those problems are connected by the flow of funds to and from overseas: the dollars sent overseas to buy goods (or services) flow back to invest in US $ denominated debt. Some call them "imbalances". Maintaining stability when both flows are large is a problem, as small changes in big numbers are ... big, and cause serious disturbances.

What is Do ?

First, recognize some causes. IF the US economy had full employment, the Federal budget deficit would shrink hugely. Second, US tax policy both taxes employment heavily AND subsidises imports, so we get less employment and more imports than otherwise would be equilibrium.

How is this done ? Social security, Medicare and various unemployment taxes are a very, very high cost to labor, over 15% of gross wages. Add to that the cost of health care benefits. The gross cost probably is over 25%. Under ObamaCare, this cost for using people will grow. Obviously, less US source employment is used for production and US firms place production overseas where possible.

All that labor tax money flows to provide benefits to US workers/people, and is added to the cost of US source goods. So Americans buying US source goods pay a huge added cost, while buying foreign source goods lets them pay NONE. What do we get ? People can buy imports and not pay for those benefits to the people. So the nation's tax policy effectively subsidizes imports, at the expense of US-based production, AND even taxes exports, too, via US source labor taxes.

All these create a huge dis-equilibrium in favor of less jobs, more imports, and less exports. This poor US tax policy supports the twin deficits.

How to Solve the Problem ?

Replace ALL labor taxes - Social Security, Medicare, unemployment and any health care mandates with a single National Sales Tax ("NST"), or call it a value added tax ("VAT") if you wish, on all goods. Employers will see their labor bill reduced hugely, and can hire more. Firms using foreign source labor will have to pay the NST/VST on sales in the US, so will lose that prior advantage (of not paying for US social benefits). US firms will see better profit margins on exports, as they will not have to pay that tax on exports.

American consumers will pay the tax equally on US source goods and imports, but that total amount will go to US benefits to its people. The opposite is true now, as no benefit to the American people flows from use of imports.

This fair tax policy will hugely reduce unemployment and the trade deficit - helping hugely to solve the twin deficits.

By the way, one has to replace ALL labor taxes at once with the NST/VAT, or no one will believe that the change is real and permanent, and that the public will not end up with both taxes. Also, the tax is on goods only: services are labor. The income tax picks those up directly or in the NST/VAT on price of the goods they help produce.

Additional Benefits

The municipal bond freeloaders and cash income persons will have to pay that NST/VAT, too when they spend their money. This improves fairness.

Word of the Day

"Controvert" - verb, transitive [$10]
Controvert means 1. to dispute, deny; 2. argue about, discuss.
Sentence: To controvert that US labor taxes seriously hurt US employment levels is a pretty difficult position to argue.

Monday, November 23, 2009

Books and More

Stock market futures are up for now, about 1%. Gold continues to rally. The market needs a better jobs outlook for a sustained rally, in my "humble" opinion. That might come in early December.

BBC: "Russia has now turned into a "criminal state", according to the man who was once its leading foreign investor" - Bill Browder. I hope he gets coverage and continues to push. Russia gets way too much slack in the media. It's a gangocracy.

Book of the Week

"Plagues and Peoples" by William H. McNeill. This superb book - "A book of the first importance, a truly revolutionary work" in the words of The New Yorker on the cover - is a "must read" for those interested in the broad human history. Plagues had huge influence on the development of many regions and in many historical epochs. The book also covers how people understood them in the past and dealt with them, and how the growth in population densities changed the nature of the spreading of plagues.

As simple plain history, this book provides critically important knowledge on plagues throughout the world and throughout history. For those who might want to put the current controversies about Ebola, bird flu, and swine flu into historical context, the book is a one stop read to do just that. I read it about 25 years ago and still refer to it on occasion.

Bonus Book

"Life and Fate" by Vasily Grossman. This weekend's WSJ featured this book as #1 of the five best outstanding fiction works on World War II. I read it about 25 years ago when it was first published in the west. The book had been banned by Communist ideologists, but was eventually sneaked to the west for publication. To quote from the review: "Vasily Grossman's "Life and Fate" is the "War and Peace" of Stalinism and the Great Patriotic War, as the Soviets called World War II. This deliberate act of literary homage to Tolstoy uses the Battle of Stalingrad in the place of the Battle of Borodino, and there are several parallels in construction. But the characters in "Life and Fate" and the dilemmas they face when confronted by the moral distortions of the system ... The anti-Semitism that emerged in Stalin's later years convinced Grossman of the parallels between Nazism and Stalinism. This similarity became a covert but recognizable theme in his great novel."

Reading the book helps get beyond the WW II propaganda about the "Great Patriotic War".

Word of the Day

"Feculence" - noun [$10] and "Feculent" - adjective [$10]
Feculent means full of foul matter; fecal
Sentence: The feculence of ObamaCare as manifested in the 2,000 page Senate health care bill is going to get a lot worse as various senators are bribed for votes one at a time.

Friday, November 20, 2009


It's Friday and the holiday season is coming. Next week is a shortened week and Christmas ads fill the airwaves. Hmmm ... that's a bit archaic, as now the "airwaves" aren't analog waves at all, but packets of bits and bytes. But at the fundamental level, the digital bits are still electromagnetic waves, although somehow configured be read by receivers as bits. I wonder how that's done ? Oh well ... you can tell I'm mostly a theorist when it comes to physics, etc.

Marketwise, consolidation continues. A few weeks ago I wrote that to hit my S&P target of 1200 by year end, the markets need some good news on the jobs front. That means unemployment claims dropping solidly below 500,000 per week, and the December jobs number showing a loss well under 200,000. We'll see ...

Europe is now going through the "Articles of Confederation" phase of nation-building. Eventually they'll copy the US Constitution, but it might take a generation for the need for that to be obvious to the leaders of member states. For now, Europe seems rather dominated by the big three, viz. Britain, France and Germany (listed alphabetically), but when will Italy, Poland and Spain (again listed alphabetically) start to get the respect they deserve ?

Hmmm in a year, this blogger will be semi-literate in all the major languages of the EU. I'll be able to add news from France, Germany, Italy, Poland and Spain to my daily posts. I wonder how many bloggers world wide are able to do that ? Perhaps I'll then consider expanding operations to a real web site with more capability.

By the way, I can read enough of those languages to note that the leading newspapers in Italy and Poland did NOT have the appointment of the EU president as a top headline, while those from Britain, France and Germany did. The headline in a leading newspaper in Spain focused on the weakness of the #1 and #2 EU leaders. Interesting ...


The refrain continues ...
Je ne fais rien.
Ich machte nichts.
Nic nie robię.
Estoy haciendo nada.
Non faccio nulla.
Nihil facio.
I am doing nothing.

I wonder if I can make a poem from those lines ? Perhaps next time. I am listing to a course on "How to Read and Understand Poetry" from the Teaching Company. I might be able to combine those lines into some sort of verses with alliteration, assonance, consonance and half-rhymes and other poetic "sound effects". A good project.

Word of the Day

"Proxeny" - noun [$1000] and "Proxenus" -noun [$1000]; both from Greek
Proxeny means the office of function of a proxenus"
Proxenus means (in Greek antiquity) A resident citizen of a state appointed by another state to represent and protect its interests there. Readers of the fine book by Thomas Mann, Buddenbrooks, will recognize that function was called "consul" in the free trading cities of pre-1871 Europe. Proxeny is sort of like an official agency of a governmental entity in another jurisdiction.
Sentence: The position of EU president seems a bit like a joint proxeny for all the members states of the EU on the world stage.

Thursday, November 19, 2009

Environmental Fundamentals

Enormous quantities of nonsense are bantered about the media in the environmental arena. The principal reason for this is phony mysticism that the Green movement uses to hide from facts about the world. The Green movement blathers about "nature" as if it's an ancient God; some make this express by referring to Gaia, the pagan deity of ancient Greece mythology for the Earth.

Let's begin the deconstruction of the Green movement by looking at some basic truths about the physical world - the "real" Earth composed of atoms and molecules, held together by gravity and receiving truly "free" energy from the Sun. Earth has existed in this form for about 4.5 billion years and has evolved without external intervention or forces (other than the Sun and Moon) for that entire period. Earth continues to evolve and move along its worldline as a roughly closed system, again, other than the energy from the Sun and tidal forces of the Moon.

Here are some truths about this real Earth specifically as related to the Green movement.

All sources of "renewable" energy are NOT infinite. By renewable, I mean wind, solar and biomass. All those require LAND to transform the energy to a form usable by humans. Land is finite - limited to the surface of Earth. Green economists love to blather about "external costs" and claim that traditional power sources must be forced to bear more of those. But they simultaneously always neglect the cost of the LAND in their calculations of renewable energy economics. They also ignore the costs of the initial investment in production of the "renewable" energy, but that's for another post.

Rain falls from the sky for free. This is a true statement. evaporation caused by the Sun creates water vapor that circulates in the atmosphere, eventually condensing out and falling as rain. All free. The Sun provides the external energy and the Earth's gravity and rotation provide the forces for weather circulation.

Water is almost never truly destroyed. It's simply used in physical processes (e., g. washing, cooling, etc.) or chemical processes (e. g. plant photosynthesis). However, even for the chemical processes, when looked at as an entire system, the net gain or loss of water is practically zero. Why ? Water is an exceptionally stable molecule. If broken apart by energy in one process, another process tends to re-form the water molecule, releasing energy.

Carbon Dioxide is not a Poison nor is it a Pollutant. Carbon dioxide is crucial for plant life. Human beings exhale carbon dioxide in every breathe. How can such a crucially, absolutely necessary chemical compound be a "pollutant" ? That's like saying water is a pollutant. because water can cause much harm in the wrong place or in excessive amounts, such as in floods. Or that oxygen is a pollutant, because in concentration is can lead to explosions or fires, or can even cause rust in very small concentrations.

That's enough for now. Let's bring some real science and critical discussion to environmental issues, and leave the sophistry and mysticism out.


Still looking for new screaming buys or sells. None yet, other than the occasional municipal bond. My parameters on those are over 5% yield (both in yield to call and yield to maturity), ten years non call (5 years for a 20 year maturity), acceptable credit (A rated, no CA, AZ, NV, FL, no liberal bastions like NY and NJ, no Michigan). I also reject selected other places; an example was a bond issued by a medical facility located very near the NC coast - a hurricane target zone.

I diversify very, very broadly in municipal bonds. My largest holding is Harvard University. My smallest is an issue by county school system in western Pennsylvania. I buy the bonds in Mrs. B. "Sky Fund" - it's a joint account - with a real broker, so we pay full service fees. But the broker finds the bonds for us and that's fine. Plus the broker provides advice to Mrs. B, who mostly runs the account.

As Obama's huge tax increases for "high income" persons become closer to reality, I think people will realize these bonds offer great value. They also have good value even for AMT taxpayers. A 5% tax free rate is equivalent to 6.94% taxable rate for AMT taxpayers. I do not buy municipal bonds subject to AMT, as for some years I find myself subject to that tax.

And yes, I am a free-loader now, as plans for ObamaCare do not, so far, envision taxing that income. Hence I will not be supporting that folly, at least for that portion of my income.

Word of the Day

"Verdure" - noun [$10]
Verdure means 1. green vegetation; 2. the greenness of this; 3. (poetic) freshness.
Sentence: Carbon dioxide and the sun are the crucial inputs to plant life and its extraordinary verdure.

Wednesday, November 18, 2009

What is Wrong with Wednesdays ?

Sheesh, another Wednesday and as usual nothing is happening. Maybe there is something to that idea I tossed out a few weeks ago regarding a ruling class conspiracy to put all news either at the beginning of the week or near its end. [That's a joke !]

FT says the big beefer and private equity firm, Apollo, plans a listing. Anyone buying that stock should expect to be shorn of one's money. Apollo is planning to capitalize on the aphorism that "There's a sucker born every minute."

The markets held onto all of Monday's gains yesterday, despite early weakness, thus consolidating over the old recovery highs.

DRYS to sell a convertible bond. That firm's management runs a stock share printing machine that Daniel Drew or Jay Gould would envy.

Fido Fund has a few stocks that are approaching the range of prior, pre-Panic highs. As they get to the lower end of that range, I'll take the sugar. Fido Fund capital goes to stocks I think can strongly outperform. Once a stock price gets to its upper range, further outperformance is both less likely and also less in potential magnitude. That double-barreled blow means sell to me.

I continue to seek "screaming" buys or sells. "Have Cash, Will Speculate" is going onto my new business cards.

Word of the Day

"Ascesis" - noun [$10]
Ascesis means the practice of self-discipline.
Sentence: Ascesis is a dirty word to the DC ruling classes; they practice hog feeding bouts seriatim.

Tuesday, November 17, 2009


Nothing much is happening. I guess the world is returning to normalcy. The press still screeches about the dollar, climate change, "capitalism", and mostly fawns over La Grande Bouche, but I think they are just trying to retain viewers &/ readers. ['$/' means 'and/or']

The common man is hurting still, but it's not getting worse (so far).

The markets pushed to a new post-Panic high. The advance was steady and broad, so perhaps there is sufficient buying power (or covering power) to get to S&P 1200 by year end, which was my intermediate term target posted here last spring, I think.

Checking the allocations for Krypto Fund, Krypto saw no major moves to make (she pushes a butting on the computer). Good doggie, here's a tasty biscuit for your management fee. Krypto is a super fund manager - good performance for ... dog biscuits. Why pay a beefer big bucks ?

I am doing nothing, except monitoring my existing 1-2-3 Fund positions. BA and MT made good moves, but I'm holding those calls for now. I'm still looking for screaming buys/sells.


Below are my initial thoughts on the six languages that I'm trying to learn. My initial goals for year 1 are ability to understand slow speech, speak a bit and semi-literacy, which means knowing the grammar and thus having the ability to read almost anything with lots of help from the dictionary.

French - French is further along - I have already attained the year 1 goals there. Now I am focusing on speaking and listening skills. I neglected them last year in a sprint to learn attain semi-literacy. What is hard about French ? The pronunciation and aural comprehension. French has many difficult sounds for an American and has many letters in the words that are important to know for gender and endings, but silent. What is easy ? Learning a lot of the vocabulary - one can guess the meaning of a huge number of French words. English borrowed a lot of French words and Latin gave many words to both languages.

German - The hard part is the sentence word order. Germans move verbs around, split verbs into pieces and put a bit at the end of clauses, and shift the position of subject and objects. It's tough, but over time, I suppose one gets used to it. For a purportedly logical people, their language is a jumbled mess. The easy part is pronouncing the sounds. American is a Germanic lanugage in root sounds. You might be surprised, but pronouncing those long German words is rather easy. Our mouth and tongues can to it naturally. Germans has relatively few noun cases and few declensions and verbs are fairly simple. Plurals are hard, though, as they are rather irregualr.

Polish - Everything is hard in Polish. Knowing some Latin does help as Latin and Polish are both very old Indo-European languages with deep connections going back at least 4,000 years. However, the sounds are mostly different. Polish has many verb conjugations, many cases in several noun declensions, all the gender and number inflections of Latin, and has spelling and sounds changes depending on case, etc.. Plus you have to pronounce all those z, zh, sh, cz, dz, etc. sounds and palatalize lots of consonants. The saving grace is that it's rather logical in word order and grammar. Spending the time gives progress. The two years of Russian I had in college help my pronunciation. Compared to Russian, Polish is easier for an American as Polish uses the Latin alphabet plus a few Latin letters with diacritic marks for special sounds.

Italian - this is my recommendation for a fun and useful language that is relatively easy. Italian pronounces all the letters - there are a few diphthongs that have odd spelling, but those are easy to get used to as one has probably seem them in American borrowings already. Most letters have the same sound as in American. The cases and verb conjugation are easy to learn - not complex. And it's fun. One can use and see it in restaurants and movies and the culture is old and very high. Art, music, and literature all have heavy Italian influences and borrowings.

Spanish - Relatively easy, too. My Spanish is the least advanced as I must be careful about confusing what I learn with the Italian. They are rather close languages, as you might guess. Spanish does seem to have more letters that don't have the usual American sounds. I suppose one can speak to lots of people in Spanish, but do you want to ? And there is little classical literature in Spanish except Don Quixote. Perhaps my views will change as I learn more.

Latin - I had some Latin in high school 40 years ago, so this is fairly easy for me. I'm re-sparking lots of old, decrepit memory cells with a shot of vitality. Latin has lots of different verb conjugations and noun declensions, but the vocabulary is rather easy to guess, as so many words have American connections via direct borrowing or etymology. Also, listening is not important. Speaking is only party important, but helps the memory of the words. I think if one wants to be multilingual in Indo-European languages, learning Latin helps a lot. Plus no language can beat Latin in pithy aphorisms. One reads so many Latin phrases in books. A modest investment in attaining semi-literacy in Latin pays off big.

Word of the Day

"Sorites" - noun [$100] Logic.
Sorites means a form of arguments having several premises and once logical conclusion, capable of being resolved into a chain of syllogisms, the conclusion of each of which is a premise of the next.
Sentence: Arguments that use sorites must be analyzed carefully before being accepted, as a flaw in any link in the chain of syllogisms, perhaps from verbal vagueness or imprecise definitions, can cause the sorties to fail. A common fallacy in argumentation and rhetoric is the sorites "slippery slope" which relies on vague terms or faulty analogies to scare or intimidate an audience improperly into thinking - wrongly - that something bad would happen if the opposing argument prevails. These can be hard to detect when heard orally, so be wary of any sorites in speeches.

Monday, November 16, 2009

Monday Morning Ramblings

Not much is happening.

Climate change policies are grinding to a halt, as the delusions of the Greenies are running into hard costs and political reality. That Greenie "dream' will either disappear (good) or turn into a nightmare for the common man worldwide.

Obama is bloviating in China.

The Japanese economy grew better than expected, a solid 4.8%,

The Federal government is thinking about putting Guantanamo prisoners in a prison in Illinois. That's good - put them in Obama's backyard. He's foolish to bring them to the US, so let his state bear that burden.


I bought some more tax-free bonds Friday: state tax free, too, rated AA, 30 years, 10 year call, yield to call over 5%. Why do "savers" leave money in money markets when they can get these excellent rates on good credits ? These bonds are a screaming buy. By the way, this is Krypto Fund money - my long term investment fund.

Book of the Week

Uncle Tom's Cabin by Harriett Beecher Stowe. I read this book for the first time a couple of years ago, but of course, I had heard a lot about it for years. This book was published in 1852 and helped to bring to the people in the North the brutality and capriciousness of life under slavery. I have mentioned it in this place a couple months ago (September 3, 2009) as perfect example of the truth of the "philosophical thinking of David Hume and Richard Rorty on matters of empiricism and pragmatism ... that one must read "good fiction to understand the minds and feelings of others and also situations that one cannot experience with one's own senses."

The book in available in many editions, but I recommend "The Annotated Uncle Tom's Cabin", edited by Henry Louis Gates and Hollis Robbins. This edition has numerous illustrations from newspapers and books of scenes and provides excellent historical context and literary analysis. This edition is available on

By the way, the book also brings out the flaws of even "good" slaveholders: when they die, the slaves can be sold at auction like other property, splitting families and mothers from children. This happened to the slaves of Thomas Jefferson. George Washington freed all his slaves and those of his wife upon their death, and he provided for their retirements. This is a good example of deeds over talk.

Word of the Day

"Dissimulation" - noun [$10]; an old one from the card file
Dissimulation means to hide under a false appearance.
Sentence: Climate change policies are the dissimulation of global economic authoritarianism under an environmental cloak. The objective is to massively increase governmental power over the lives of the common man and limit his freedom. The ruling classes want to control him like a serf on a manor.

Friday, November 13, 2009

Flaws in Indexing Tactics

Indexing done correctly does work very well for long term investors. The are guaranteed to perform close to the averages and pay very, very low fees for administration and management. Considered collectively, the underperformance of managed portfolios is a virtual mathematical certainty due to the fees, which add up fast. Over 20 years, paying a 1% per annum management fee amounts to 20%, which is one entire bear market. And choosing a good manager is as hard as choosing a good stock. In fact, one is much better off spending time picking some good stocks for a portion of one's long term investments (an "alpha fund") and letting the rest be indexed. This is due to the fact that the reward from picking an outperforming stock is far higher than for picking a good manager.

BUT ...

Indexing can be done poorly. A poorly chosen index can give one a systematic loss or erratic performance over multi-year time periods. Both occur from the same error, which is choosing an index that is a mere component to the "market" versus the entire market.

The way to buy the ENTIRE market is to buy the Vanguard Total Market index fund or its sister ETF - ticker VTI. This is the optimal index tactic for US stocks.

Babblevision and lots of pundits talk about buying the S&P 500 index funds. BUT those invest in only large stocks selected by S&P, not all stocks. They leave out small stocks and mid-cap stocks and the sector weights (industrial, financial, utility) are erratic. There have been and will be multi-decadal periods when large cap stocks underperform.

Also, buying the S&P 500 fund alone introduces systematic errors and costs, too, from the changing components of the index. Periodic rebalancing costs money, as a stock is added or removed. And the tendency is to remove poor (past) performing low market value stocks and add the best performing mid-cap stocks. That's a form of Sell Low, Buy High. The total market index avoids all that. It suffers much, much less re-balancing (really only for cash mergers and buyout). And it buys small companies holds them, capturing all the gains that can occur until such a company gets added to the S&P 500.

So if you choose to index US stocks, use the correct index - the Total Market Index. And the way to do that is through the Vanguard Total Market Index Fund or its VTI exchange traded fund.

My Krypto Fund does just that for its US stocks.


Looking around for screaming buys or sells, finding none yet.

Word of the Day

"Ephebe" - noun [$10/$100] (Greek historical)
Ephebe means [$10] a young man of 18-20 undergoing military training (also "ephebus"); ($100) a young man, especially an ephebus.
Sentence: The Marines are look for a few good ephebes.

Thursday, November 12, 2009

Very Bad - and Sad - Changes

Some recent events occurring in Iran show alarming changes. This morning's WSJ online had this story that caught my eye and tweaked my memory of other similar stories.

WSJ: Revolutionary Guard Tightens Security Grip
BRUSSELS -- Iran's elite Revolutionary Guard has sidelined the country's intelligence ministry, forming a new organization that reports directly to the Supreme leader, Ayatollah Ali Khamenei.
Interviews with Iranian analysts and opposition figures, along with recent government announcements, depict a shift under way since Iran's clerical regime was shaken by the massive street protests that followed disputed presidential elections in June. ...

"Khamenei wants to have absolute control," said Ms. Rajavi, saying that the NCRI's network of supporters in Iran has established that Mr. Taeb [head of new Revolutionary Guard unit] reports directly to Mr. Khamenei's chief of staff, Ali Asghar Hejazi. That would consolidate power in the hands of Mr. Khamenei and his loyalists at a time when deep fissures have emerged within the regime over his handling of the elections. ...

"The Revolutionary Guard is already a military, economic and political powerhouse in Iran. It controls the country's long-range missile program, as well as multiple business enterprises, including lucrative oil and gas projects. ...

""The Guards are in complete control of the country, they are running the show," said Iranian dissident journalist Roozbeh MirEbrahimi. "

Here is the point: This is exactly how the Nazi and Stalinist totalitarian regimes operated. They created a totally loyal party organization with offices parallel to the government, completely unaccountable to anyone BUT the supreme leader - der Führer - the General Secretary. This structure makes reforms will-nigh impossible. The Revolutionary Guards are Iran's SS and its KGB. The Iranian government itself is now secondary and is almost a Potemkin village - a fiction for show to delude the West and Iran's own people with a phony elections.

Unless bigger cracks appear in Iran's now totalitarian government somehow, prospects for long term peace in the Middle east are becoming very, very bad. The Soviet Union was worn down in a cold war of attrition and pressure for 45 years.

The recent demonstrations in Iran show that many of its people want freedom and a modern life. It's a great evil that the Iranian theocracy wants to subjugate them for its own power.


I am doing nothing, but thinking, looking and waiting for some good speculations. To borrow from that great old TV series, Paladin,

"Have Capital, Will Speculate"

Word of the Day

"Seriatim" - adverb [$10]; a very old one from the card file
Seriatim ans in a series.
Sentence: Many recent events in Iran, taken seriatim and not individually, are very alarming and show very great risks to regional peace.

Wednesday, November 11, 2009

Cluster FUBAR

That's my favorite term nowadays for a colossal mess, or as the British might say, a big bloody cock-up. I coined it by conjoining that fine WW II slang term, "FUBAR", with part of a very colorful expletive said by Clint Eastwood as "Gunny Highway" in the fine movie, "Heartbreak Ridge".

Today, I am using it to describe the health care bill passed by the House of Representatives this past weekend under the orders of Speaker Pelosi, that paragon of the liberal pearls, wine and brie set. The bill in normal printed form is nearly 2,000 pagers. Like a malignant tumor, it's growing rapidly as it was a mere 1,000 pages just a few months ago. Of course, no one in that august body of "leaders", the House of Representatives, knows truly what is in it. Pelosi twisted arms and / or paid off 220 of those sheep (or is "hogs" more appropriate as they no doubt got plenty of payoffs for those votes) to get it passed.

The action moves to the Senate now. They will debate it - at least nominally. I suspect most of the bloviation will be sloganeering and pontification and ad hominem attacks on the opposition.

On October 21, I published my thinking on this major issue in a post titled, "A Solution to the Health Care Dilemma". Having put my views out for all to see, hence proving I am no mere naysayer, I now feel perfectly justified in slamming the Pelosi bill as the cluster FUBAR that it is.

Can anyone imagine the administrative costs that will occur with that bill ? I suppose one way to see it is as a transfer of the entire insurance company administrative mess to the Federal government. Anyone thinking will lead to cost savings or simplicity must be smoking what Barney Frank's "friend" was growing when arrested in August 2007 (Barney was present, claiming ignorance ... sure). [btw, the press covered this sleaze up for over two years.]

ObamaCare is a cluster FUBAR. Obama and Pelosi want to drop it on the American people without anyone finding out what it will truly do or not do. They will say anything to get it through. All the slogans are propaganda to hide its provisions until to late. There is no integrity there, no reason, no concern for people or freedom. Just sheer power and the push for more of it by the DC ruling classes.


I sold the HBC calls as the stock popped on its quarterly update. The call options strategy worked well. I still have calls on MT and BA (January expiration dates).

Otherwise, I am looking around for the next "Screaming Buy" or "Screaming Sell" to deploy speculative capital. I am also monitoring Krypto Fund for possible asset allocations. I'll post whatever I do, just after I do it.

Word of the Day

"Vomiturient" - adjective [$1000]
Vomiturient means characterized by a desire to vomit.
Sentence: Anyone seriously considering what the state of America's health care system will become under the Pelosi bill should be having strong vomiturient sensations.

Tuesday, November 10, 2009

It is Wednesday ?

Nothing is happening - it sure seems like a typical Wednesday.

The Dow hit a recovery high yesterday. Yawn. The S&P 500 got to within one sneeze of its recovery highs. Why ?

The bears and doomsters fail to realize that returning to a prior know condition or state is much easier than growth into a new domain. They use growth rates appropriate for "new growth" applied to recession earnings levels and moan, "too far, too fast". But they are simply using the wrong method for assessing the changes.

I suppose an extended metaphor might help illuminate this concept. Suppose you are digging a hole in "virgin" earth (undug previously). That ground is going to be firm and hard. You'll have to really put your foot on the shovel and push it into the ground, and break the adhesion of the earth to itself. Now fill it in, and dig again. It's easy now - you probably don't even have to use your foot to remove the dirt with the shovel.

Another metaphor. Suppose you had many years of Latin in high school. And 40 years later, you decide to re-learn Latin. Guess what ? It's a LOT easier to recover that knowledge than it was to learn it first. This is something I now have personal experience with, as I am doing just that.

This is why "return to normalcy" can occur with great rapidity. Everyone already knows how to do what they were doing three years ago. So everyone (worldwide) can simply to revert to "normal" behavior once the panic is over. A bit of government stimulus helps regain the psychological confidence. Once that hits, the race begins to reclaim old business everywhere.


I sold the S&P call options yesterday, booking a 50% gain on quite respectable size. Although I still expect S&P 1200 soon (year end), who knows what the future will bring ? And with the beefers out there, maybe they'll attack and let me re-buy at lower levels.

As I posted in the comments upon the sale of the final chunk, "Je ne suis pas un goinfre" - I am not a greedy pig.

I still have some calls on HBC, MT and BA. HBC reported in Europe today and is trading up. HBC says loss provisions are decreasing - that's good. I'll read the report and decide later whether to sell or hold a few more days.

Word of the Day

"Quondam" - attributive adjective [$10]
Quondam means that once was; sometime; former.
Sentence: Returning to one's quondam state or condition is usually much easier than changing to, or learning, something new.

Monday, November 9, 2009

Why Did the Berlin Wall Fall ?

This quote from today's Book of the Week is the answer: "We do not interfere in the internal affairs of Poland. The Poles must solve their problems themselves." [Book of the Week, page 504] That was part of a press release on August 16, 1989 from the Soviet Foreign Office. To understand the fall of the Berlin Wall, you must look east to Poland and further east to the Soviet Union. In early 1989, Poland was creating the first democratic government under communism and the question was, 'Would the Soviet Union permit it ?" Or would they use the huge military forces stationed in Poland and Germany to crush it, as they had done in 1968 in Czechoslovakia.

Gorbachev was trying to reform the Soviet Union from a closed, one party state ruled by the communist party to a more pluralistic government that could have more economic growth. He refused to unleashed the KGB hardline killers and army to crush glimmers of nascent freedom in Poland. If such was ever even considered, I suspect he realized the Poles would fight. History has to give him credit for being a mostly decent man, if wrong about communism.

Without Soviet Army support, the communist party in Poland could not hold sole power - or any power in the end as it had no public support. Democracy and freedom in Poland started a true domino effect. The Communist party ruling east Germany could not hold on as both that statement quoted above showed that the Soviet Union would not fight to keep it in power and the existence of a democratic Poland further was a physical roadblock for Soviet military pressure on Germany.

A future book of the week (once I finish it) references a statement by Toqueville that for a totalitarian order, the moment of maximum danger is when they initiate the reform process. That proved true for the Leninist regime in the Soviet Union and its satellites in eastern Europe. The entire edifice was rotten and without constant effort, it would collapse. Gorbachev stopped trying to hold it together at all costs. Poland led the wave of freedom culminating the fall of the Berlin wall.

That's quite an interesting twist, no ? East German freedom owed to Polish (peaceful) freedom fighters.

Book of the Week

God's Playground - A History of Poland, volume II 1795 to present, by Norman Davies. Look at a map of all of Europe. The western nations with which most Americans are familiar represent about 1/2 of Europe. How can anyone understand Europe and its future prospects without understanding a LOT more about the eastern half ? This book helps tremendously. Very well researched and written, Davies thoroughly covers the Polish people, culture and nation-building as Poland arose like a phoenix after being swallowed by the 18th century empires of Russia, Prussia and Austria, and then later was reborn again after the immense cruelties of Hitler and Stalin jointly threatened to exterminate the Polish people.

This book helps one understand the cold war better, too. Western press reports - I remember the gist of them - completely misunderstood the nature of the postwar regime in Poland. It was a classic case of "Some A and Some B". Some A - decent men and women in the communist party and outside it trying to do whatever could work in Poland to help it recover from World War II and improve the lives of the people, and Some B - picked officials really working together with the Soviet security forces and the Soviet communist party to rule Poland as a fief for themselves. The "left" in the US saw all "A". The right saw all "B". Both were wrong.
Overall, this book is immensely valuable for its content and evenhanded treatment the history of Poland. By the way, Volume I is also excellent, covering Polish history up to 1795.
I am doing nothing. I have a large position of S&P 500 December call options and am riding this bull elephant to the next water hole. News of reasonable economic growth continues to occur and that slowly asphyxiates the remaining bears while adding to new bulls. The market can rise as that process goes on -until the bears are gone and the pool of new bulls is used up. Until then, sitting and riding one's longs is best.
Word of the Day
"Pullulate" - verb, intransitive [$10]; used by U. S. Grant in his memoirs, page 420.
Pullulate means 1. (of a seed, shoot, etc.) bud, sprout, germinate; 2. (esp. of an animal) swarm, throng, breed prolifically; 3. develop, spring up, come to life; 4. (followed by 'with') abound.
Sentence: Freedom pullulates everywhere once the chains are weakened. Recent in Iran prove this. The Iranian people want freedom, but so far, the theocrats want to retain power and are willing to kill with abandon to retain it.

Friday, November 6, 2009

The Spectrum of Politics and Government

In common writings this spectrum is the line from the far left to the far right - the "Standard Model" of politics. In that paradigm, those two styles are purported opposites. How this mode of analysis and concomitant metaphor and metonymy* arose, I don't know. But it's so obviously completely wrong that everyone needs to stop using it. [*Word of the Day]

Why ?

The systems characterized as far left are truly EQUAL to those of the far right in substance and ideology. Here is a list of qualities for which communism has in common with naziism taken from God's Playground: A History of Poland, Volume II 1795 to present, page 476. [Poland and the Polish people suffered from occupation by both totalitarian systems.]

A national-socialist ideology
utopian goals
a dualist party-state
a Füherprinzip (leader principle)
bureaucratic elephantitis
the Aesthetics of Power
the Dialectical Enemy
moral nihilism
the psychology of hatred
pre-emptive censorship
contempt for liberal democracy

"The petit bourgeois Social Democrat and trade union boss will never make a good National Socialist, but the Communist will" [Adolf Hitler as cited in "The True Believer" by Eric Hoffer, page 17]. Hannah Arendt provided very detailed ideological analysis of those identity. Alan Bullock's several history books about Hitler and Stalin provide plenty of details to support the identity of naziism and communism practice.

The "Standard Model" of the modern press and pundits is wrong.

What works for the classification of governments and political systems and thinking ?

One can use the same simple line, but place pure libertarianism on one side and pure totalitarianism on the other. Pure human freedom versus pure non-freedom. Pure individual choice versus pure control by one man/party. A free person versus a slave. That works. A system them is evaluated by where it is on that line on many attributes such as economics, elections, movement of peoples, etc.


Today I await the jobs number and the market's reaction to it. My S&P call options speculation anticipates an improved number. The market seems to have built some of that in already, but if a truly good number comes, my S&P year-end target of 1200 comes into play. Tactically, I'll sell a big rip looking to re-buy on the correction. If I'm wrong, I'll probably just bail out.

Word of the Day

"Metonymy" - noun [$10]
Metonymy means the substitution of a name of an attribute or adjunct for that of the thing meant. [e. g., Crown for King, White House for US executive authority]. Alternate definition: a figure of speech in which an attribute or commonly associated feature is used to name or designate somethings, as in 'the pen is mightier than the sword'.
Sentence: Writing has to use metonymy to be succinct and colorful and playful; why use "the radical environmental movement" when "greenies" conveys the message better.

Thursday, November 5, 2009

Betrayers of Revolutions

For around 400 years the world has seen many revolutions by and in the name of "the people". Some worked, some did not. Some were disasters. Some were colossal successes.

What determines success and failure ? Sometimes ingerence* - interference from foreign neighbors - causes a collapse. [*Word of the Day] Such was the cause of the failure of the 1791 revolution in Poland led by Tadeusz Kościuszko , which was crushed by armies of Russia and Prussia.

The quality of the leaders - usually a singular leader in both senses of the word "singular" - determines if the revolution will evolve into a positive state of government, or devolve into a tyranny. And for revolutions in current times, how do we decide what is happening ? Our information is usually very, very fragmented and imperfect.

One crucial factor seems to be a necessary condition for success, and a sufficient condition for failure. Will the leader permit a peaceful transfer of power, or will he resort to any means to hold on to power ? The answer to that single question seems to link historical failures to each other and obversely to link successful revolutions also.

Here are some examples of success and failure.

Cromwell - he never again held free elections in England after taking power, becoming an unpopular tyrant. His puritanical revolution died when he died and the issues of power in England had to be re-fought (peacefully) in 1689 in the "Glorious Revolution".

Washington - he resigned his command after winning the Revolutionary war and caustically rejected calls for his kingship. Recalled to power eight years later, after two terms as President he then refused to run for a third term, relinquishing power peacefully again. The American revolution went on to succeed for hundreds of years.

Lenin - His Bolshevik party resorted to a killing spree in 1919-1922 rather than share power with other social revolutionary parties. That is documented in historical records and numerous first hand accounts by truly dedicated revolutionaries such as the books by Emma Goldman and Angelica Balabanova. The Communist revolution in Russia became the killing ground for Stalin and the eventual oppressor of eastern Europe for 45 years.

Hitler - that sordid tale is well known. After taking power in 1933, no free election was held in Germany until the Nazi regime was crushed in World War II.

Castro - After seizing power in the 1959 revolution, no free election was ever held. Castro's own sister has documented in a recent book how he began to imprison and kill any opposition leader, no matter how moderate, so that he could retain power.

De Gaulle - after being President, commander in chief and then Prime Minister of France during and after World War II, he left power peacefully in 1946 when political conflict rose. Later in 1958, he led a restructuring the the French government to create the Fifth Republic and became its President. He led strongly, but did not create a party to hold power regardless of opposition. He left office peacefully in 1969. France is a strong nation today, one of the leaders in Europe.

Wałęsa - After leading the "Solidarity" revolution to victory in 1990 and being elected to the Presidency of Poland, he did not try to consolidate power into a dictatorship. He was defeated in the 1995 election and left power peacefully. He is still active in Polish politics. Poland is a political and economic success story in Europe.

The answer: A revolution succeeds when the leader is not blinded by fanatical desire for power. A revolution fails when it is betrayed by its own leader whose lust for power consumes all reason. That is the acid test of a revolution. Revolutions are betrayed by their leader.

What about now ? How do some current leaders shape up on this standard ?

Post-communist Russia - Yeltsin and Gorbachev both left power peacefully. Putin is questionable, as he installed a crony, Medvedev, into the Presidency. However, he did not change the constitution to permit another term for himself - that does show a "bit" of self-restraint. Unclear for now -very risky position.

Venezuela - this is easy - Chavez has changed innumerable rules to retain power. He's evolving into, or is, a tyrant.

Honduras - easy, Zelaya wanted to change the constitution to retain power. He was a potential tyrant, stopped for now by the Supreme Court of Honduras, its Congress and loyal military. Obama and Hillary are ignorantly on the wrong side of this controversy.

Red China - easy, the Communist Party permits no political opposition. It's an oppressive military dictatorship. Whether it returns to its past Maoist butchery is unknown. Red China could easily revert to the darkest side again.

Iran - another betrayal as the current clique of mullahs cling to power using any means. The recent oppression of electoral protests proves Iran is a oppressive dictatorship.



I bought more S&P Dec. call options yesterday on a couple of dips in the post Fed volatility. I have 3/4 of my planned position. This is a risky play on an improved jobs number being reported Friday that could lead to an new leg up in the market. I could lose 50% of the speculation if wrong or make 300% if right.

Word of the Day

"Ingerence" - noun [$1000]; and "Ingere" - verb, obsolete, rare.
Ingerence means bearing in upon, intrusive; interference. Often used in diplomatic of affairs of nations.
Ingere means to carry in, put or push in, obtrude; (reflexive) to thrust oneself in, to obtrude oneself, to intrude, to presume.
Sentence: (I) see * above in the second paragraph of this post. (II) Why does the US government seem compelled to ingere itself into the business of almost every nation on Earth ? The US is neither the world's policeman nor its nanny. Let's leave them alone.

Wednesday, November 4, 2009

Hare-brained Schemes

For the title today. I'm borrowing an old pejorative label on some development ideas of Nikita Khrushchev that were colossal flops in the old Soviet Union. This label fits perfectly the endless stream of "ideas" the Greenies put forth as "solutions" for alternative energy. Here's the recent list:

Solar - uh, what do you do at night for energy ? Or in the long, cloudy winters ? The fundamental physics imposes huge limits, too.

Wind - what do you do when the wind doesn't blow ? The landscape is spoiled, birds massacred and the economics don't work, either.

Hydrogen - that was W's big "idea". But where do you get the hydrogen ? Of course, there are no hydrogen mines, as this element is not found in any significant quantities in its molecular state on earth.

Switch Grass - that is, cellulosic ethanol. No viable plant or process exists to produce ethanol from switch grass (which is a fast growing grass). And you have the problem of land: whose land gets taken for production of huge quantities.

Now we have "carbon sequestration". The green crackpots now want to pump carbon dioxide deep into the earth to "store" it. So energy comes from coal, and somehow the carbon dioxide is captured and pumped into storage places deep underground.

Of course, the carbon dioxide is emitted widely and not in the places that it would be stored. How do you get it there ? And how do you capture it, anyway ? Separate that gas from all the other smoke from the smokestacks of industry.

And how is that gas kept deep underground ? I remember reading of an accident where it escaped and flooded a community, killing many people by asphyxiation. And even if is doesn't escape catastrophically, what if in a hundred years, the gas begins to seep out ? Then instead of stopping its increase abundance in the atmosphere, the world will have a double problem.

The greenies refuse to consider burying a SOLID GLASS BLOCK containing nuclear waste underground in dry caverns. Now they propose pumping huge quantities of a GAS underground and say it's safe ? What thumping tosh !

These are really all part of a "bait & switch" by the greenie ideologists, who will always find flaws just before any scheme begins to go into practice. They really want to forceably revert mankind to the medieval village standard of life and be the lords of the manor over all of us serfs, approving anything we do.

Solution: Chuck the greenies over. Build nuclear power and use more natural gas to replace imported oil. Use coal.

Humans don't cause global warming anyway. That computer-based theory doesn't fit the facts at all in any detail. It's just garbage-in, garbage-out. They can make those models dance to almost any tune they wish, but can't even get an intermediate term temperature downturn right with all the data current.


As the market firmed yesterday on news of Warren Buffet's purchase of Burlington Northern railroad, I started looking for buys. A commentor reminded me of the old Obama Fund stock, CX, which I purchased as it has good profit potential for a speculation. I also started a position in December call options on the S&P 500. I bought 1/4 of my planned size that will put me back at 300% long effectively. Often the market is volatile around a Fed day, so I'm waiting to buy more. This is a play on a rally after the jobs number Friday, which I expect to show some improvement.

Word of the Day

"Trope" - noun [$10]
Trope means a figurative (e. g. metaphorical or ironical) use of a word.
Sentence: This blog commonly uses the trope of "hogs" to refer to highly paid CEOs and other in the executive suite. It fits rather well, and is quite visual, and aural, too.

Tuesday, November 3, 2009

More on the Hogs at the trough

Long ago the tipping point between any sense of fairness or market forces versus sheer greed in the CEO club was passed and executives stuck their snouts deeply into the hog trough. Today's WSJ online has another example.

"Pensions for top executives rose an average of 19% in 2008, with more than 200 executives seeing pensions increase more than 50%, according to a Wall Street Journal analysis. The executive-pension growth stemmed partly from generous pension formulas, which are based on executive pay, according to the filings. Also adding to the pension jumps are arcane techniques that have received little scrutiny ... "

"The growth of such supplemental executive retirement plans, or SERPs -- which can be worth tens of millions of dollars to executives -- largely has been overlooked amid a backlash against executive pay, particularly at banks and other companies receiving taxpayer bailouts. "

The article is full of examples of CEOs getting double digit million pensions. But anyone with a memory remembers that for the last decade, corporations have cut employee pensions and reduced sharing formulae and pushed them into 401K plans. Why isn't all the deferred compensation in stock considered as the CEOs pension ? Why do those favored princes and dukes get a double dip ? The answer is, of course, the CEO club protects its own and they aid and abet each other's feast in the trough. The paid "consultants" give the CEOs cover to deceive the stockholders, who often get no vote at all, thanks to the SEC.

Corporations grossly overpay the executive suite. And likely underpay the common man. Those who make the rules - the ruling classes of the rich and powerful - have gone too far and the tide needs to go out on executive pay.

This endless greed and unrepentant looting of the corporate treasury by the hogs at the top has to somehow end.


Despite rather good economic news worldwide, markets seem to be correcting. Perhaps those who anticipated this good news took or are taking profits [as I did do, in fact . Or the bears are getting bolder and increasing their positions. And insufficient real, long term buyers exist to cushion the decline now. Most likely, it's all three as recent post titled "How the World Works"emphasized: 'some A and some B' is the general philosophical reality of the workings of the world.

My tactics are unchanged. I an doing nothing, but am thinking about stocks to buy when the selling dries up.

World Series

Back to the Bronx as the Phillies hang on. Yankees lead, 3 to 2. Go Yankees !!!!!!!!!! Smash those Phillies !!!

Word of the Day

"Eremite" - noun [$10] a Mencken word
Eremite means a hermit or recluse (especially Christian).
Sentence: [from "The American Language" by H. L. Mencken, page 557] "Everyone, including even the metaphysician in his study and the eremite in his cell, has a large vocabulary of slang ..."

Monday, November 2, 2009

A Nice Price

Price does matter in buying stocks for speculations. I want to make 50 to 100% profits on speculative capital. If I overpay for a stock, I would need a peculiarly unlikely correlation of good news and the support of momentum buyers to make a big profit. But if I buy at "a nice price", I can get my payoff with just one of those two principle boosters for a big price move.

Lately I've chosen sectors that I thing might benefit from good news that I anticipate. Then I survey the charts of stocks in those sectors to see which might be able to double on good news. How do I do that ? Easy, I just look at where the prior "normal" price level was in 2006 or 2007 before the Panic of 2008. If the economy does return to normal conditions and growth, a rapid return to those profits levels, and hence stock price, can occur or at least come close enough.

If I can't find good sectors or stocks that might double, I sometimes will shift tactics and find higher quality stocks that might go up 20%. Then I'll buy call options - usually one strike in the money and a few months of durations. Sometimes I ladder them with a few, cheaper, out of the money calls. Those can go up 50 - 100% IF my news comes through. Sometimes they go up in anticipation of the news, as occurred in September and early October. Whatever, take the sugar when it reaches your plate. Don't be a greedy pig.

If I have been a pig, I would have made next to nothing on my call options play of mid September, instead of the roughly 75% average profits that I did book.

Books of the Week

The title of today's blog is from a story in "The Bloodhounds of Broadway and other Stories by Damon Runyon". There's a companion volume, too, titled "Romance in the Roaring Forties and Other Stories by Damon Runyon". These particular collections were published in 1981 and 1986, respectively. If you've ever watched and enjoyed that great movie, "Guys and Dolls", you might appreciate that its characters and some of the plot comes from Damon Runyon stories that millions enjoyed in his newspaper columns for decades.

Runyon wrote about gamblers in New York City and their culture, using their colorful nicknames, attitudes and vocabulary and style of speech. "Guys and Dolls" borrows from "The Idyll of Miss Sarah Brown" which is contained in the second volume mentioned. "She is tall and thin, and has a first class shape, and her hair is light brown, going on blonde, and her eyes are like I do not know what except they are on-hundred-per-cent eyes in every respect." The "rolling for souls" ending of the story occurs in a slightly different manner than the movie, by the way.

The title of today's post is the title of story in the first volume. It's about gamblers and how they love to get "the right price", viz., odds. Specifically, they are excited about a rich Yale alumnus offering 3 to 1 odds on a rowing race with "the Harvards" as they say. Professional gambler, "Sam the Gonoph" says, "I do not know anything about boat races, and the Yalies may figure as you say, but nothing between human beings is 1 to 3. In fact, I long ago come to the conclusion that all life is 6 to 5 against." So they plunk down many G notes [$1,000 bills - yes, those existed in circulation then !] not because they like Harvard, but because "it's a nice price". The story ends spectacularly with quite a fine twist.

I recommend these books for very, very enjoyable reading. You might have to look in used book sites such as www. or the used book offerings on to find them. I just looked and saw some offerings of these and other collections of Damon Runyon stories. By the way, I bought my copies in Penn Station in New York City in the 1980s when I worked on the "Street". There was a great little book store there that offered many eclectic books for riders of the Long Island Rail Road. Sigh .. it's gone now, of course.

Word of the Day

"Prosody" - noun [$10]
Prosody means 1. the theory and practice of versification; the laws of meter; 2. the study of speech rhythm.
Sentence: To understand and analyze a poem, one must consider prosody as well as simple rhymes and the meaning of the words and metaphors used. Bluntly, there's a reason why poems are written in verse.