Friday, November 28, 2008

Out till December 3, 2008

I will be out of town until December 3, 2008. If I have access to a computer in Cabo san Lucas, Mexico, I will write travel updates; otherwise, no posts till December 3 or 4, 2008. I am going with my grandparents, which should be fun. I just found out I am their oldest grandson. Yes, I am getting old. Sigh.

Brits and Americans Going Down Same Path

Looks like the Brits are in as much trouble as the Americans:

Mark Wallace, of the TaxPayers' Alliance, said: "It is unsustainable to have fewer and fewer private sector workers paying for more and more public sector workers. "The state wage bill, not to mention the future pension cost, is putting a crippling burden on the economy."

Didn't the Americans sail away and fight a war to be free from an overbearing government that was taxing them too much?

Oh, the irony.

Thursday, November 27, 2008

Happy Thanksgiving

What am I thankful for? Well, other than family and my health, two of my friends just got married on November 25, 2008--I wish them the best.

Wednesday, November 26, 2008

Foot Locker Affirms its Financial Strength

Things have gotten so bad, Foot Locker is sending emails to individual customers assuring them it is still a viable business:

As you are a valued member of the Foot Locker family, I would like to take a few moments to address the misleading information regarding our Company that has been circulating the Web and covered by the general media. Much of this information is being used to encourage consumers to avoid purchasing gift cards this holiday season.

We can assure you that our financial position remains strong and we continue to be a leader within the athletic retail industry. From time to time, we do close underperforming stores, in the course of normal business, in order to concentrate our efforts on those stronger-performing stores that ultimately allow us to better serve our customers.

During this holiday season and beyond, we will continue to offer an extensive selection of the most sought-after products at our more than 2,000 U.S. stores and on-line at, and And, of course, our gift cards will continue to be another great gift idea and are redeemable at all of our stores and on-line.

Thank you for your support.

Best regards,

Stacy Cunningham
Corporate Vice President
Foot Locker, Inc.

Oh, the paranoia.

Small Business Stats

These are some facts I received from the SBA's Office of Advocacy, which is sort of a BLS for small businesses, gathering lots of useful statistics: [PDF file]

1. "Since the mid-1990s, small businesses have created 60 to 80% of the net new jobs."

For more, go to

2. "Small businesses employ about half of U.S. workers."

3. "Two-thirds of new employer establishments survive at least two years, 44 percent survive at least four years, and 31 percent survive at least seven years, according to a recent study."

Well, so far, I'm in the top 44% so far.

4. "Very small firms with fewer than 20 employees annually spend 45 percent more per employee than larger firms to comply with federal regulations."

I have advocated that small businesses with fewer than five employees and a gross income of less than $550,000 annually should have no regulations other than those guaranteeing payment of wages to workers. (I still haven't figured out what the best number is for the gross annual income cutoff and chose 550K because if a company hired five employees and paid them 50K each and had gross receipts of 550K, it would probably net around $200K-$250K, which is not unreasonable.) Criminal laws are sufficient to keep small businesses in check. Beyond that, onerous civil regulations are a form of corporate welfare to larger corporations, who have the capital to hire in-house counsel to advise them, to keep up with ever-changing laws, and to have a litigation defense budget. Small businesses, on the other hand, sometimes don't even know a law until they get sued, because they've been too busy trying to survive in the real world instead of reading regulations and cases.

5. "Commercial banks and other depository institutions are the largest lenders of debt capital to small businesses. They accounted for almost 65 percent of total traditional credit to small businesses in 2003. (This includes credit lines and loans for nonresidential mortgages, vehicles, equipment, and leases.) Credit cards account for much of the growth in small business lending over the past few years."

This might be one factor in the credit crunch--the more small businesses fail, the more bad loans on the banks' books.

In Defense of Small Business

The WSJ's letter section has gotten so much better in the last five months, I am eagerly anticipating reading the letters section. Here is one letter in the November 25, 2008 edition that deserves to be read by every American:

"Let's All Work for the Government"

In regard to your editorial "The Public Payroll Always Rises" (Nov. 18): I am appalled that during these extremely poor economic times our government is the only substantial hiring body in the whole economy. I used to work for the government in Michigan when I was in my 20s and remember being bored to death, because I only had about two hours of real work to do per day. Having many friends that are business owners, I see a huge contrast. Business owners work 24/7, pay high taxes [we pay all of our own payroll taxes, an automatic 6.2% increase in taxes], receive no government pensions or benefits... [there is no state unemployment insurance fund for any solo business owners]

I wonder if our upcoming government administration has ever owned a business and/or has any clue about the differences between workers in the public sector vs. the private sector. It is not beneficial for the economy for government to keep excessive employees on board...I would suggest lowering then freezing property taxes nationwide as a way to offer more stability in the housing market [this is a great idea, but the real problem we have now is that current owners cannot afford their monthly payments, especially the ones who have ARMs].

How many public servants are needed, especially now that the economy has contracted so much and will continue to do so? Every day we read that tens of thousands of workers are being let go, but never in the government sector. The government needs to act like a business while using our taxpayer money. Consider how many government employees are really needed, especially since every sector in every economy in the world is laying off during these austere times.

Susan Marie
Tampa Bay, Fla.

To Ms. Marie and the WSJ: thank you for such a well-written letter.

Walmart Trip

I went to Walmart yesterday just to do some window-shopping and to check out its products. I told myself I wouldn't buy anything, and I was just doing some personal market research. I enjoyed walking around the store. Walmart stores are so huge, it's easy to get lost in them, and at one point, I "found" an entire area I had missed in my first walk-around.

My point in writing this article is to compliment Walmart on its store set-up. Even though I, an avowed cheapskate, had no intention of buying anything, I actually ended up leaving with a bunch of household products, drinks, and NBA cards for around $60. I never spend $60 when I shop, at least not on myself. Walmart's ability to get tightwads like me to spend a relatively large sum is a testament to how well they operate. The only product I didn't see at a substantial discount was aftershave--which had a surprisingly limited selection--but everything else I usually buy was cheaper than I've seen at other stores.

Here is a fairly popular post I did earlier on Walmart:

Tuesday, November 25, 2008

Self-Represented Litigants

More people are representing themselves in court:

This is wonderful news. This will force the court system to be more open to the general population and will cause state legislatures to avoid emphasizing procedure over substance. We already see that happening in family court, where the system has been made consumer-friendly. Tellingly, the California State Bar approved "unbundled services" for family law services first.

The law is the only place where the authorities used to demand that clients get full service or nothing at all. That's like forcing someone who just wants a haircut to get a manicure and pedicure at the same place or get no service whatsoever. That kind of system has never made any sense to me.

In addition, self-represented clients can get flat fees for unbundled work, such as responding to motions or making a specific court appearance, which places the consumer in control rather than the attorney. From the financial perspective of the consumer, unbundled services are excellent because they create more competition, which leads to lower prices, and they allow the consumer to control exactly what s/he pays for specific services.

"Full service" was fine when civil lawyers charged more reasonable fees, and when it was easier to get to trial. Now, it sometimes takes more than a year to get a civil court trial, by which time 6 to 50 very expensive motions have been filed. If the State Bar forces attorneys to offer only full service, the business-savvy lawyers--by that I mean the ones that want to stay in business--will demand deposits of $5,000 to $10,000 before taking on any case. High deposits reduce court access to the poor and middle-class.

Unfortunately, the days of the "country lawyer" are long gone. I try to be a country lawyer, but it is becoming more and more difficult because I end up becoming more of a counselor and therapist than an attorney. When clients know their lawyer won't charge them for emails and phone calls or will cut fees, it creates an incentive to contact the lawyer more than necessary, and to use the lawyer as a therapist. This, in turn, can make an attorney who cares about his/her clients more emotionally involved in the case, causing the attorney to absorb the clients' negative emotions (after all, few people contact a lawyer because something good has happened).

In any case, the "full service only" system requires, practically speaking, a large deposit up front and places the control of that money solely and immediately in the hands of the lawyer. An unethical attorney can easily deplete the initial deposit and dump the client if the client chooses not to provide more funds. Thus, a "full service only" system--by creating an incentive for larger initial deposits--rewards lawyers who see their clients as short-term business propositions, because the less you care about your fellow human being, the easier it is to dump them if they fail to pay your bills or run out of money. In contrast, with unbundled services, the client has more leverage to demand a flat fee and the lawyer has an incentive to do good work so the client comes back.

The best definition of morality I've seen was from Immanuel Kant: "Always recognize that human individuals are ends, and do not use them as means to your end." A "full service only" legal system favors attorneys who treat their clients as "means to an end" by reducing the power and choice the consumer/client has in legal transactions. As such, an argument may be made that "full service only" is an intrinsically unethical system.

Kiva Stats

More good news from Kiva, a pioneer in micro-finance--their interest rates are substantially lower than the local competition:

Average Interest Rate Borrower Pays To Kiva Field Partner 22.91% (as of November 23, 2008)

Average Local Money Lender Interest Rate 85.22% (as of November 23, 2008)

Kiva's existence means that the poor can borrow money and create small businesses without being subject to usury. Even so, I don't like how high the interest rate is--23% still seems high to me, especially because the money given by Kiva lenders is given as an interest-free loan without expectation of re-payment. I'd like to see more transparency in terms of the overhead. I wouldn't be surprised to see nonprofits, especially international ones, without adequate bookkeeping. If some corruption comes to light, it would be devastating to the microfinance world, because it would scare away potential and existing lenders.

Monday, November 24, 2008

Malanga on Public Schools

The City, Autumn 2008 edition, has an article on poverty--"We Don't Need Another War on Poverty," by Steven Malanga. Mr. Malanga points out that all the money we've been throwing at schools hasn't resulted in better performance. This lack of improvement is what is spurring Congress to demand accountability from schools in some format:

[T]he U.S. has made vast investments in its public schools. According to a study by Manhattan Institute scholar Jay Greene, per-student spending on K-12 public education in the U.S. rocketed from $2,345 in the mid-1950's to $8,745 in 2002 (both figures in 2002 dollars)...Washington D.C. now spends more than $22,000 a year per student...

An Organization for Economic Co-operation and Development Study found that most European countries spend between 55 percent and 70 percent of what the U.S. does per student, yet produce better educational outcomes. If urban school systems are failing children, money has nothing to do with it. (from page 37,
The City, Autumn 2008)

In the same issue, there is another interesting article by Michael J. Totten on "The (Really) Moderate Muslims of Kosovo."

Also, on page 121, Theodore Dalrymple recalls the British stiff upper lip and laments its decline:

I found his self-effacement deeply moving. It was not the product of a lack of self-esteem, that psychological notion used to justify rampant egotism; nor was it the result of having been downtrodden by a tyrannical government that accorded no worth to its citizens. It was instead an existential, almost religious, modesty, an awareness that he was far from being all-important.

Looks like the West needs more of that old time British culture.

Commonwealth Club

Some great websites re: the Commonwealth Club I recently found: [Broken link] [Still works as of March 2018] [Outdated link]

Here's an interesting anti-regulation website:

And an economics-related one:

Sunday, November 23, 2008

Dept of Homeland Security's Incompetence

Yet another reason Homeland Security is America's most incompetent government agency:

The American government is spending our taxpayer dollars trying to deport wives of Americans, including dead soldiers, solely because their interview did not occur before the unexpected death of the husband. In the 60 Minutes segment, called "Immigrant Widows Left In Limbo," one mother-in-law tearfully says, "This is America." It's heartbreaking to learn just how incompetent the Department Homeland Security is. I am writing my Congresspersons in both the House and Senate.

And here I thought the federal government couldn't top its previous pinnacle of incompetence, which was improperly jailing an innocent man for seven years. Mr. Lakhdar Boumediene, a Bosnian of Algerian descent, was recently released by a judge--who was appointed by none other than George W. Bush himself. For the legal eagles, there's more about the Boumediene Supreme Court case here: The Most Significant Recent U.S. Supreme Court Case.

For even more on Mr. Boumediene, see WSJ, November 21, 2008, A6. The government jailed him for seven years on the basis of a "single, 'unnamed source.'" Basically, our United States government used secret evidence to jail a man on American-controlled soil for seven years, all the while insisting the man was not entitled to a trial. I'm with the mother-in-law featured on 60 Minutes, but I phrase her sentiment differently: "Is this the America we want, where the Department of Homeland Security appears to have no substantive checks on its powers and very little transparency?"

Ted Turner

I was going to post a review of Ted Turner's speech at the Commonwealth Club last week, but someone beat me to it:

Ted's book, Call Me Ted, is a quick read. It conveys his man-child personality, which masks a fiercely competitive spirit. Although the book is fun to read, the only real way to experience Ted is in person or on video--the book does as good a job of conveying his personality (several friends call him "crazy," and there's a story about him getting down on all fours at a business meeting asking whose shoes he had to kiss to get the deal done), but Ted is a man meant to be experienced in the flesh. Two interesting tidbits:

1. I am a fan of the San Jose Sharks and although our rivals are the Dallas Stars, I hate the Calgary Flames more because of playoff history. Apparently, the Calgary Flames used to be the Atlanta Flames. (page 105 of hardcover edition)

2. CNBC, the now-ubiquitous finance channel, used to be called the Financial News Network (FNN). The FNN was bought for around 100 million dollars by NBC in 1991. Turner was blocked from buying the channel, which he (correctly) believed would complement CNN's international and political coverage. (page 257 of hardcover edition)

Christopher Buckley

I like David Sedaris, Christopher Moore, and Chuck Thompson when it comes to laugh-out-loud funny books. A friend of mine pointed me to Christopher Buckley, who is featured in this month's Commonwealth Club magazine (p. 39):

You may know of the situation of the teenage boy who has to do a report for school on the difference between hypothetical and reality, so he goes to his father one night and asks him if he could give him a hand with it. The father thinks for a bit and he says, "Go ask your mother if she would sleep with a total stranger for a million dollars." So the son goes off and he comes back pretty quickly [and says] the answer is, You bet. So the dad says, "Go ask your sister," and the boy comes back quite lickety-split, and reports the answer as, "Totally." The dad says, "There you go. Hypothetically, we're sitting on two million bucks. In reality? We're living with a couple of hookers."

I think he's modifying something Churchill said, but it's still funny.

Saturday, November 22, 2008

Day Trading

Although I've made many, many short-term trades, for the first time in over thirteen years, my brokerage has officially classified me as a "day trader." The exact definition is below:

The FINRA currently defines day trading as purchasing and selling, or short selling and purchasing to cover, the same security on the same day. A pattern day trader is defined as someone who makes four or more round-trip day trades in a five-business-day period, unless this activity is less than 6% of total trading activity in that period.

What happens now? The only differences appear to be 1) I have to maintain 25K in equity ("Pattern day trading accounts are required to maintain minimum equity of $25,000 on any day in which day trading occurs."); and 2) my margin buying power increases.

Friday, November 21, 2008

New Treasury Secretary

We have a new Secretary of the U.S. Treasury, Timothy F. Geithner:

What I like most about him? "He has studied Japanese and Chinese, and has lived in East Africa, India, Thailand, China, and Japan." Wall Street apparently likes him, too. The stock market shot up after the announcement.

Stupidity or Genius?

In what can only be described as Las Vegas style gambling, I bought 1300 shares of Citigroup (C) today and yesterday. My average price is around $3.52. When I last checked, C was trading around $3.18, but had dropped as far as $3.07.

I will now proceed to hide under my bed until next week. I am assuming either the government will do something over in a special session over the weekend to deal with the Citigroup issue, or a merger will occur. If I am wrong, well, it wouldn't be the first time. If, however, I am right, I'll probably make between 1000 and 1800 dollars. I wish I had the cojones to hold onto the stock till next year, when it might be much higher. Sadly, my cojones remember the old saying, "The market can stay irrational longer than you can stay solvent."

The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.

Update on November 20, 2008:
in late-day trading, Citigroup went up to $3.83, and then started to dip. I sold at $3.74 and made around $300. Not bad for 60 minutes of risk.


From the film, The Italian Job--prescient words from a gold bug?


Yevhen is 50 and like many in the gold trade, there isn't a conspiracy theory that he doesn't embrace. As they make their way to a back room, he keeps his mouth in overdrive --

All those poor bastards out there putting their life savings in banks and S&Ls and mutual funds. What do they think -- that when the collapse comes they can depend on the government? I don't think so.

Governments are nothing more than puppets on the strings of the Trilateral Commission with their twisted gods.

I mean, it's so obvious that in a world where NAFTA can overturn the Supreme Court, not to mention Microsoft's nefarious financial machinations, this, is our only refuge: gold.

I definitely get the part about feeling like a "poor bastard." Sigh.

Thursday, November 20, 2008

A Long Sigh

My poor, poor Roth IRA. I am losing around 2,000 dollars each in Yahoo (YHOO) and a Swiss fund (SWZ). Almost all my other holdings are also losing money. On the bright side, if the aforementioned two investments do well over the next year, along with my S&P U.S. Preferred Stock Index Fund (PFF), my Roth IRA will be somewhat healthy again. Right now, it's on life support. Five years of gains wiped out.

I wish I had more retirement savings to invest. As crazy as it sounds right now, I'd love to buy more stocks in my retirement accounts.

In my non-retirement brokerage account, which is around 90% in money market funds, I picked up some Starbucks (SBUX), Symantec (SYMC), Nvidia (NVDA), 3M (MMM), and ConocoPhillips (COP), and Citigroup (C). I wanted to buy more Cisco (CSCO) but chickened out.

Update on November 21, 2008:

The S&P 500 lost 46.8% from 12/7/07 to 11/21/08 [from December 7, 2007 (1504.66) to November 21, 2008 (800.03)]

In that same time period, my retirement accounts declined in value 27.9%.
Although I am beating the averages in my retirement account, I don't feel happy at all.

Public Sector Costs and Benefits

Rio Vista, California is yet another morality tale about how government spending, which includes public sector benefits, has spun out of control:

Link1 [replaced dead link]

Link 2 [replaced dead link]

In Vallejo, CA, another city that had to file bankruptcy, police and firefighter unions tried to force the city out of bankruptcy court so they could preserve their own government benefits--at the expense of the general taxpayers. How many more California cities have to go bankrupt before our government starts protecting taxpayers from unreasonable government spending, which includes comparatively much higher salaries and benefits in the public sector? (See Malanga article for comparison of private vs. public employees)

The costs of pensions and lifetime health care benefits depend on employees' lifespans and are difficult to estimate, because some employees may live longer or may need care that far exceeds the estimated costs. As a result, it's very difficult to ascertain employee pension liabilities because so many unpredictable factors are involved. Inevitably, because of the uncertainty involved in calculated how many years a public employee has to be paid after retirement, the government will have under-funded pensions. The result is that the taxpayers--and our children--will suffer as a result of the government continuing to provide itself with generous and hard-to-estimate benefits. Almost no private sector employees receive pensions anymore because companies figured out they shouldn't be in the insurance business. If a voluntary 401(k) or 403(b) plan is good enough for most engineers, nurses, and lawyers, why isn't it acceptable for government workers, firefighters, and police officers? Who exactly is the government protecting and serving?

Wednesday, November 19, 2008

Cisco's Annual Shareholder Meeting (2008)

Cisco's (CSCO) annual shareholder meeting was held on November 13, 2008 at the Santa Clara Convention Center. The meeting was open to all--Cisco did not check to see if anyone was actually a shareholder. The food spread was above average--OJ, cranberry juice, bagels, fruit, and Starbucks coffee (what I call "the Convention Center special").

Cisco ran its meeting professionally, almost too much so--at times, the meeting felt like a stiff, over-starched white-collared shirt. No one was allowed to ask spontaneous questions, because all questions had to be written down and submitted to employees, who would pick and choose which ones they wanted to display to the CEO. The meeting was designed to run smoothly, and with no unexpected problems or risks. Well, you know what they say--"Man plans, God laughs."

During one of the shareholder proposals relating to China, an older Chinese shareholder stood up and demanded to be heard. He held his hand in the air continuously and would not sit down, even after a Cisco employee came up to him. He had an issue with shareholder proposals being voted on without soliciting public comments. He had a point, but his heavily-accented English made him hard to understand. To his credit, CEO John Chambers later addressed the gentleman's concerns. Mr. Chambers said, towards the end of the informal presentation, that Cisco did not modify its equipment for any customer--the equipment is the same, i.e. "no unique capabilities [are given] to any government in the world." He also made a point of walking towards the gentleman to garner his support. I've never seen a CEO make an effort to approach an audience member who appeared somewhat aggressive, and Mr. Chamber's pro-active behavior made him instantly likable. After the meeting, I saw someone from Cisco talking politely with the gentleman, who appeared to be hawking his book. This high level of corporate professionalism is much talked about, but rarely practiced.

The formal part of the meeting had two presentations, one by Harrington Investments, and another by Boston Common Asset Management. Both focused on human rights issues and transparency. Ms. Carol Malnick (of Boston Common) made very interesting points. She said that censorship would decrease Internet traffic in the long run by discouraging new Internet users and limiting the use of existing users. Cisco's growth, of course, depends on more Internet users. It basically sells products that gets computers to talk to each other over the Internet, and the more computers sold with Internet capability, the more Cisco grows. She asked Cisco not to exit certain international markets, but to be transparent. She listed several countries she felt were Internet censors, including Saudi Arabia, China, Algeria, and Syria. I thought Carol Malnick's presentation was much more effective and polished. Others agreed--only 68% voted against her proposal, while 98% voted against the Harrington proposal. After her presentation, CEO Chambers made a point to use the word, "transparent" several times while looking directly at Ms. Malnick, as if to say, "We hear you, and even though we defeated your proposal, we are working on it." This was a very gracious and conscious move by Mr. Chambers.

CEO Chambers had a video and spoken presentation. The opening slide spelled "Globalization" as "Globalisation," with an "s," indicating that a British employee had worked extensively on the presentation. Mr. Chambers talked about a "six point gameplan," which focused on general ideas, like investing in emerging markets (note: I am sick of hearing about "emerging markets" at shareholder meetings--of course companies must invest in other countries) and Web 2.0. He said that Cisco had "3,000 telepresences a week," which meant that Cisco's sales force was connecting to thousands of potential buyers domestically and worldwide, without the need for any travel. If the telepresences, like the ones you see on Star Trek, become commonly used, it will be Cisco that takes us there. Mr. Chambers acknowledged that some companies wouldn't feel the need to upgrade their technology, which would limit the roll out of newer internet products; however, he was also hopeful, saying that the "next wave of productivity" would happen, and Cisco would be at its forefront. After some more generalities of "vision, strategy, and execution," Mr. Chambers showed a moving video presentation.

This video presentation showed the effects of the devastating 2008 earthquake in the Sichuan Province of China. In a brilliant move, John Chambers traveled there immediately after the earthquake and worked with the cities to rebuild their infrastructure. Cisco donated 45 million dollars to rebuilding efforts (See News Report). The cynic in me says that Mr. Chambers is a PR genius. He knows China represents his company's best chance for growth with its 1.2 billion people. By going to China and lending a hand and funds, he hopes Cisco will be remembered down the line by the Chinese government. But Mr. Chambers has a way of winning people over. He appeared completely sincere when he spoke about his experience in China. In fact, I almost teared up after watching the video. Various pictures were shown of Mr. Chambers interacting with earthquake survivors amidst the rubble, and he joked that a young Chinese boy who was bold enough to approach him would grow up to be a Cisco salesman. Mr. Chambers also mentioned a little girl who hadn't spoken since the earthquake but who spoke again after seeing new faces arrive. The girl, of course, represented the power of the human spirit, something we all implicitly understood. At this moment in the presentation, you could have heard a pin drop. It was hard not to be emotionally affected after seeing the pictures of the two children.

Most important, Mr. Chambers called upon us to act, saying that it was an "embarrassment to us" that 3 billion people in the world live on less than three dollars a day, because we had the power to change this situation. He said that Cisco's worldwide expansion would help "700 million people in China" because Cisco brought high paying jobs and the increased likelihood of a middle class, not only in China, but all over the Middle East. His implication was clear--Cisco would help usher in a new era of worldwide progress.

The Q&A session began, with questions presented to Cisco employees on index cards, which were then typed on a large screen behind Mr. Chambers. One question asked about Cisco's 27 billion dollars in cash. This elicited a funny remark from Mr. Chambers, who said that in the current unstable market environment, "cash is king, queen and the entire royal family." He also said that before he left the company, Cisco would pay a dividend to shareholders. Paying a dividend would help stabilize Cisco's stock price, because the dividend would attract long-term investors and would prevent Cisco from using their cash in unproductive ways. (Also, paying a dividend might allow more mutual funds to buy Cisco stock.) The best question was tongue-in-cheek: "In the spirit of GM, what could make GM obsolete?" Mr. Chambers sat down to show the audience he took this question seriously and said that Cisco hadn't lost its sense of urgency. He mentioned Lucent and other companies that used to be technology high fliers and talked about Cisco's growth and its desire to continue growing.

On their way out, shareholders were treated to a Cisco-branded luggage tag holder, an interesting choice, given that Cisco's technology will probably decrease business air travel.

Overall, Cisco's meeting was run very professionally. In the future, Cisco ought to allow live, spontaneous questions and comments prior to voting on shareholder proposals. Beyond that, Cisco looks like a company well-positioned to benefit from the worldwide expansion of Internet users.

Disclosure: as of November 19, 2008, I own 6100 shares of Cisco (CSCO). I will, however, reduce my positions before the end of the year if not sooner.

OCM Revisited

I keep talking about OCM--Other Countries' Money. Very few people seem to understand the consequences of being dependent on the kindness of strangers. Now, the U.S. is considering selling Japanese-backed bonds rather than its own: 

Oh, the embarrassment.


You can now buy almost all the major foreign currencies through a U.S. brokerage account: 

FXE: Euro 
FXC: Canadian dollar 
FXF: Swiss franc 
FXM: Mexican peso 
FXY: Japanese yen 
XRU: Russian ruble 
BZF: Brazilian real 
CYB, CNY: Chinese yuan 
ICN, INR: Indian rupee 

Although you can trade currencies, it doesn't mean you should. Personally, I own some FXC and FXF, but my positions may change at any time, and I am *not* qualified to give investment advice.

I view the Canadian dollar as a diversification tool because it is indirectly linked to commodity prices. The U.S. imports most of its oil through Canada, Mexico, and Venezuela. 

The Swiss franc should do relatively well, despite Swiss banking problems, because war is the #1 destroyer of economies, and the Swiss have historically avoided war. In contrast, the U.S. has Iraq; China has Taiwan; Russian has Georgia; India has Pakistan (over Kashmir); and Mexico has internal corruption so terrible, it may lead to civil war. Brazil's egregious income inequality makes it difficult for me to invest too much of my money in the country, despite its independence from OPEC and recent economic growth. 

I have heard several Southeast Asians say that Malaysia is doing better than its neighbors Cambodia and Vietnam primarily because Malaysia avoided war and Cambodia and Vietnam did not. The general theory makes sense. Aggression and war destroy economies because they lead to a lack of stability, which drives away investment. Thus, peacenik Americans who crave stability are left with the Euro, which is going to be devalued because of future expected interest rate cuts; the Canadian dollar; the Japanese yen; and the Swiss franc. 

If Tyranny and Oppression come to this land, it will be in the guise of fighting a foreign enemy. -- James Madison

Tuesday, November 18, 2008

S.F. Judge Reprimanded

Interesting article on an S.F. judge:

I've never met the judge, but he sounds like a former District Attorney.

I just checked--Judge McBride was a former assistant D.A. and a police officer. According to the S.F. Sentinel, "[Judge] McBride has previously been named Judge of the Year by both the San Francisco Trial Lawyers Association and the San Francisco Bar Association’s Barrister Club." Judge McBride was also elected the S.F. Court's presiding judge this year.

Nothing against Judge McBride, but in states where voters can elect judges, I recommend voting against former district attorneys if they lack private sector experience handling non-criminal cases. Some great judges were former D.A.s, but generally speaking, D.A.s tend to see the world in black and white. Also, while former district attorneys seem to have a better work ethic than non-criminal lawyers, this extra energy is usually caused by a Superman complex. What do I mean by a Superman complex?

Most D.A.s become D.A.s to protect society from criminals and bad elements. To place yourself in a role where you can single-handedly protect your fellow man by locking up citizens (some of whom may be innocent), you have to be comfortable playing God or Superman. But people who view power cautiously or who are mindful of their lack of omnipotence will be fearful of wielding any kind of substantial power. This means that the most confident lawyers, the ones who are comfortable playing Superman, will gravitate towards the D.A. role.

In fact, good D.A.s must have supreme confidence to function, especially after seeing horrors like rape, homicides, and infanticides up close. The average person who sees an 18 year old mother microwave her baby probably won't want anything to do with that situation; a D.A., however, must not only get involved, s/he must convince a jury to throw the young mother in jail. If the D.A. thinks about the mother's personal background, her poverty, or some other random factor, it makes his job more difficult. In short, the ability to see gray areas complicates throwing a fellow human being in jail, because a person may realize that in some alternate universe, given the same set of circumstances, it could be him or her across the aisle in the courthouse. Of course, someone has to prosecute unfortunate souls along with the hardened criminals, so you want D.A.s to be tough, supremely confident, and comfortable playing God with people's lives. At the same time, it's important to recognize that kind of attitude works best in criminal law, not civil law.

Many meritorious civil cases involve gray areas without hard evidence (i.e., a smoking gun, fingerprints, DNA). For example, employment cases sometimes involve nothing more than he-said/she-said scenarios, such as where a female employee alleges sexual harassment. Thus, much of the time, a civil judge has to decide whether a case has merit based solely on sworn statements from different people. Although the law requires judges to send cases to a jury if a reasonable person could see genuinely disputed material facts, after seeing so much hard evidence in criminal cases and so many criminal cases involving severe harm, former D.A.s tend to be less sympathetic to cases that lack obvious physical harm.

You will notice that Judge McBride was named Judge of the Year by the San Francisco Trial Lawyers Association. Those associations are usually run by personal injury lawyers, who bring cases involving physical injuries. Thus, it is not unusual for former D.A.s to be well-liked by trial lawyer associations, because personal injury cases usually involve obvious physical harm and more black-and-white facts than other cases--such as securities litigation or labor law--which don't appeal to a D.A.'s experience of associating meritorious cases with blood on the ground.

Again, I don't know Judge McBride, so I cannot comment on him specifically. The only reason I write this post is to encourage voters to consider voting for a non-D.A., a public defender, a solo practitioner, or a lawyer with private practice experience when it comes time to choose a judge.

Bonus: an Illinois judge jails a man for making a yawning noise in his courtroom. See here.

Steve Malanga on State Governments

Steve Malanga, senior editor of the Manhattan Institute's City Journal, is my new favorite writer. The WSJ included an opinion piece by him in today's paper:

A the Employee Benefit Research Institute estimated that the average public sector worker earns 46% more in total compensation than his counterpart in the private sector, largely because government employers spend 60% more per worker on benefits than counterparts in the private sector. States have collectively ranked up some $731 billion in unfunded liabilities for pensions and other retirement benefits, according to a the Pew Charitable Trusts' Center on the States...

California state and local governments are paying some $12.8 billion a year to finance public employee pensions, up form $4.8 billion in 1999.

You know who's on the hook for all those benefits, don't you? We, the taxpayers, and our children. What is the reason government employees, on average, receive more benefits than private sector workers? It is becoming increasingly apparent that our elected representatives believe that we should work for them, instead of the other way around.

The next time you vote to give more money to government programs, just remember what we were told as kids: "Money doesn't grow on trees." Perhaps these days, it should read, "Money may not grow on trees, but what's wrong with getting money through bond sales?" Well, remember OCM--Other Countries' Money? Other countries are and have been the major buyers of our bonds, meaning they have become American Express, while we have become debt-holders, working each month to pay them off. I guess our own government is selling us out to other countries. Who can blame them? Other countries are the ones effectively paying for their benefits and for their inefficient programs (Bridge to Nowhere, etc.) through the purchase of municipal and Treasury bond sales. Although I am opposed to unnecessary regulation of private citizens, that doesn't mean an irresponsible government doesn't deserve to be regulated. Maybe we should require all public sector bond sales to have at least 51% American citizen ownership before being offered to other countries--once Americans realize we don't have the money to buy back our own debt, much less our future debt, we might become more frugal.

Update on Transmeta (TMTA)

On September 18, 2008, I wrote that Transmeta was a potential takeover target:

If you're looking for a growth story, this isn't it; however, as long as its patent portfolio remains viable, TMTA may be a potential takeover target or value play at the right price.

On November 18, 2008, Novafora acquired Transmeta:

This appears to be a good outcome for Transmeta. Kudos to the Board of Directors and to the officers for selling the company in a professional, transparent manner.

Now a Good Time to Invest?

A lot of you have been on the sidelines, waiting for a good time to buy stocks. I'm not making any recommendations, but I just bought between 55 to 250 shares of some tech stocks, including NVDA, ERTS, INTC, STM, SYMC, and CSCO. I realize my financial outlay isn't much, but perhaps these shares will be worth much more five years or more from now.

The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.

Homes v. Stocks as Investments

According to an article in Charles Schwab on Investing, Fall 2007 (p. 7), which looks like it was written by Matt Wood, stocks are a better investment than housing:

[R]esidential real estate provided an annualized return of 8.6% during the period from 1978 to 2004, compared with 13.4% for the S&P 500 Index (citing Jack Clark Francis et al, Contrasting Real Estate with Comparable Investments, 1978-2004, April 2007)

In some cases, [owning a home costs] as much as three times the purchase price [due to insurance premiums, maintenance costs, and property taxes]...Robert Shiller says real estate's historic real returns are closer to zero after adjusting for inflation. [David Crook, "Your Home Isn't the Nest Egg That You Think It Is," WSJ Online, March 12, 2007]

I refused to buy any property during the last five years, believing that everything in California was overpriced. Now, however, I am not so sure. Housing and other hard assets might not be a great investment, but they no longer appear to be flagrantly overpriced.

Monday, November 17, 2008

Poem: Lola Haskins

I finally dumped my 8 years old wallet and replaced it with a new one I had in my drawer (it's been there for the last 5 years). In the process of emptying out the old wallet, I found a short poem, by Lola Haskins. It's titled, "Love":


She tries it on, like a dress.
She decides it doesn't fit,
and starts to take it off.
Her skin comes, too.

This was one of two poems I had in my wallet. Not sure why I had that particular one in there, other than the fact that it's one of the most poignant poems I've ever read. Can't you just feel the unnamed woman's anguish? I am still in awe of how the last line creeps up on unsuspecting readers, only to bludgeon them so matter-of-factly in the end.

Book Rec: Factory Girls

I am in the middle of Factory Girls, a fascinating book about migrants in China:

Factory Girls

The book is a fantastic read. The writer, Leslie Chang, traveled to China and got to know various factory workers, all of whom migrated from small towns into large cities. She wrote about their experiences, and even seamlessly includes her own family's migration to America. The women profiled are incredible human beings, and reading about their lives should be required for every American high school and college student. What struck me most about the migrants is their desire to do anything to move up in society, including enrolling in "white collar" manners classes. Even though the migrants' wages are absolutely meager--about 50 dollars a month--they forge forward, determined to leave their mark in the city. Think Grapes of Wrath, but Chinese-style. Thanks to Jeff E. for the recommendation.

Yahoo (YHOO) Update

Here is the latest on Yahoo (YHOO):

Mr. Yang is going to step down. Bostock has the easiest decision ever--Susan Decker is right there. She takes over Mr. Yang's spot, and using her position on Berkshire's board, talks to Warren Buffett about a partial sale to Microsoft. Mr. Buffett, of course, knows Bill Gates very well. Mr. Bostock can't possibly screw this up...or can he?

Louis Brandeis

A friend picked up the Brandeis train (courtesy of The Green Bag) last month. Isn't it a beaut?

Brandeis has a special place in my heart for these words:

The makers of our Constitution undertook to secure conditions favorable to the pursuit of happiness. They recognized the significance of man's spiritual nature, of his feelings and of his intellect. They knew that only a part of the pain, pleasure and satisfactions of life are to be found in material things. They sought to protect Americans in their beliefs, their thoughts, their emotions and their sensations. They conferred, as against the government, the right to be let alone--the most comprehensive of rights and the right most valued by civilized men. To protect, that right, every unjustifiable intrusion by the government upon the privacy of the individual, whatever the means employed, must be deemed a violation of the Fourth Amendment. (OLMSTEAD v. U.S., 277 U.S. 438 (1928))

"The right to be let alone." Such beautiful words. Too bad it's just a dissent, and therefore not legally binding.

On Prostitution

Re: sex workers, the keys to legalization seem to be as follows: 
1) criminalize excessive and unwanted solicitation, which allows the workers to avoid coercion; 
2) legalize prostitution, which requires police protection and presence for both customers and workers, furthering increasing the safety of the transaction; 
3) tax the transaction, thereby funding other services, like education as well as the police squads assigned to the "Hamsterdam" districts; 
4) require STD testing and databases of all participants before any activity; 
5) place all districts far, far away from "core" business activity, including K-12 schools; 
6) provide housing dormitories and free health care (in exchange for waiving some privacy rights in order to study physical changes or some other constructive health care purpose, and only when the workers themselves choose to see a doctor for more than the required STD-testing) to ensure that they can save their money (think military-style housing); 
6) require that at least 10% of all earnings be set aside into an irrevocable retirement fund until age 50 and put into a balanced fund; 
7) require 5% of all earnings be put into a liquid account accessible upon exiting the business; 
8) require maximum employment of 15 years (I'm not sure about this step, but the idea is that at some point, just like prison rehabilitation programs, the participants would re-enter "core" societies with marketable skills); 
9) apportion some tax revenue to the workers to decide what to do for communal purposes, allowing an indirect education into economics and politics.

BonusPolice protection is necessary to prevent trafficking and mafia involvement--the whole point of legalization is to eliminate the underground economy; again, the idea is to shift police resources away from undercover work and targeting the informal economy into protecting consensual behavior; 

You'll notice I included social services, too, but in non-traditional forms--free housing, vocational job training, healthcare, and financial independence.  

You'll notice I want a time limit to get the women and men out of this business eventually. 

Prostitution is not something most people want to do, but it happens, it will always happen, and we must choose where we want our resources to go and whether we want a society that favors above ground or underground systems.  Re: imbalances in power, they exist in almost every single business transaction. Does anyone suggest all results of imbalanced power relationships are automatically immoral? Shouldn't the touchstone of the analysis be voluntary consent, safety for all parties, and fair pay rather than subjective criteria? In other words, shouldn't the analysis center on how to avoid using the worker as a means rather than imposing a legal structure based on subjective criteria, which will only drive the business underground? 

Sunday, November 16, 2008

Blue Dog Democrats

The WSJ's November 14 letters section (A16) introduced readers to a Blue Dog Democrat, Jim Cooper. I am a registered Democrat, but am fiscally conservative, which makes me a Blue Dog Democrat.

Rep. Cooper makes the point that the federal government "is still using unaudited cash accounting despite the availability audited, accrual numbers. The federal government is the only large enterprise in the U.S. that is exempted from normal accounting rules. If you want the truth, check out the 'Financial Report of the U.S. Government' (available at"

That link leads to this one:

A politician who isn't lying, and who's showing us where the truth is? Just doing the former would make him special in Washington, but the latter, too? Bless those Blue Dogs.

Saturday, November 15, 2008

Michael Lewis on Wall St Corruption

Michael Lewis always has great stuff:

My favorite parts? Here you go:

In Bakersfield, California, a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $720,000...

He called Standard & Poor’s and asked what would happen to default rates if real estate prices fell. The man at S&P couldn’t say; its model for home prices had no ability to accept a negative number. “They were just assuming home prices would keep going up,” Eisman says.

Oh, the hubris.

Poem: How do you like them apples?

It's the weekend, so not much on the economic front to report. The government might take our tax dollars to give to GM and Ford, but that potential giveaway comes next week. For now, some poetry: [Broken link]

Same poem, different link:

Federico Lorca, who wrote the poem above ("Gacela of the Dark Death"), had a fascinating, but sad life:

Friday, November 14, 2008

Bay Area Homeowners in Trouble

According to The SF Chronicle and, around 20% of California Bay Area homeowners have no equity in their homes:

Zillow's estimated prices are not 100% accurate (that's the nature of an estimate), but it's very hard to price houses in this market; therefore, Zillow might be the closest thing we have to getting what I call the "misery numbers."

Hat tip to Barry Ritholtz for linking to the SF Chronicle article first.

Poem by Judith McCune

I keep this poem in my wallet. It's from The Atlantic magazine (March 2000, page 96), and I've kept it there for eight years. Like my eight-years-old wallet, it is fraying and may soon become unreadable. I wanted to post it here so that others may read this little-known poem. Click on the link below to read the entire poem:

I can't post the entire poem because of The Atlantic's copyright (a question for the IP and copyright lawyers out there: once the author is dead, does the copyright to her work diminish in any way, even though the owner of the copyright is the magazine, not the author?). In any case, I will quote the last stanza only to entice you to read the poem:

Now when Chiqui asks me how I've slept, I lie: Just fine, I say, though by this time I've learned the Spanish word for shame.

Copyright © 2000 by The Atlantic Monthly Company.

The poem neatly summarizes my old-fashioned world view. It has hard-working immigrants, caring family members, and a continuity of time (expressed through different generations of the same family). It also juxtaposes old-fashioned values against modern values in a way that makes the new values subservient to the old ones. Whenever I read McCune's poem, I fall in love with its style and content all over again.

Thursday, November 13, 2008

Ariel Investments

Ariel Investments CEO John Rogers, Jr. beat Michael Jordan in a 1-on-1 game back in 2003. The video is here:

Ball Don't Lie

WSJ Link

Just for this, I am going to buy some Ariel funds someday ( I love the way Mr. Rogers Jr. calmly walks away after the game instead of getting excited or trash talking. That's the temperament--calm but determined--a good mutual fund manager should have.

CEO Lanni Leaves MGM Mirage

MGM's CEO Lanni is leaving MGM Mirage:

Jim Murren will likely replace him. Here is an old transcript of a 1998 interview with Murren:

Mr. Murren seems much more candid than Mr. Lanni. Earlier this year, I posted a review of the 2008 MGM shareholder meeting--see 2008 MGM Shareholder Meeting--in which Mr. Lanni seemed far too sunny and upbeat about his casino's prospects. You can't blame the man for trying, though.

I hope next time I'm in Vegas, I won't get a horse's head in my hotel room after this blog entry. An experienced dealer in Reno once told me, "Back when the mob was running Nevada, things ran much more smoothly." I bet.

General Electric at 12 Year Low

General Electric (GE) stock hasn't been this low since July 1, 1996. GE stock went as low as 14.58 per share today.

Yesterday, the stock tanked because the federal government suddenly reversed course and said it would not be buying bad debts. GE issues debt and also owns various financial subsidiaries, including insurance companies. Absent a government guarantee, various pieces of GE's financial portfolio would be less attractive to buyers. However, GE immediately issued a press release noting that the Federal Deposit Insurance Corporation approved GE Capital Corp. to participate in the Temporary Liquidity Guarantee Program--meaning up to $139 billion in short and long-term debt is going to be guaranteed by the federal government. (See AP article.) I guess when one door closes, another opens.

Today, GE's stock tanked because of rumors that GE was cutting its dividend, which stands at a hefty 7%. GE denied the rumors, but its stock fell anyway.

I am a major buyer at these levels. I picked up three thousand shares yesterday and just bought another thousand shares this morning at around 15.24 per share. My average buy price is around 16.25 per share.

Update on November 13, 2008: I sold my 4000 shares of GE at 16.74 today. Had I waited just five more minutes, I could have sold my shares at 16.90, meaning I would have made another $600+. That's fine--I'm not greedy. GE stock closed today at 16.86. It will probably go up more tomorrow, but I had too much invested to sleep comfortably if I held my shares overnight.

If you go back and look at my "Stocks Update" posts, you can view my short-term trading record. I also sold the GOOG and AMAT shares I bought yesterday.

The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.

Wednesday, November 12, 2008

Techcrunch on Yahoo

Yahoo's share price is almost in the single digits:


It's like watching a train wreck. Susan Decker needs to call Warren Buffett and get some advice.

Buying Opportunity?

If you are a high risk trader, today's volatility might create a good entry point for short and long term trades.

Today, I bought GE, AMAT, and GOOG. My largest purchases were in GE--I now own over 3000 shares of GE at around 16.55 a share.

Traders still have twenty five minutes to buy (or sell) before the market close.

The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.

California's Ailing Government

The AP's Judy Lin reports that California faces a $28 billion deficit:

SJ Mercury

And the hits just keep on coming...

Tuesday, November 11, 2008

Famous Speeches

Here is a website with transcripts and some audio/video of famous speeches:

Here is a speech by Barbara Jordan--before Obama, Barbara Jordan spoke of change:

And here is the text of one of my favorite speeches, by Barry Goldwater:

We see in private property and in economy based upon and fostering private property, the one way to make government a durable ally of the whole man, rather than his determined enemy. We see in the sanctity of private property the only durable foundation for constitutional government in a free society. And -- And beyond that, we see, in cherished diversity of ways, diversity of thoughts, of motives and accomplishments. We don't seek to lead anyone's life for him. We only seek -- only seek to secure his rights, guarantee him opportunity -- guarantee him opportunity to strive, with government performing only those needed and constitutionally sanctioned tasks which cannot otherwise be performed...

Balance, diversity, creative difference: These are the elements of the Republican equation. Republicans agree -- Republicans agree heartily to disagree on many, many of their applications, but we have never disagreed on the basic fundamental issues of why you and I are Republicans.

This is a Party. This Republican Party is a Party for free men, not for blind followers, and not for conformists.

That's from 1964, back when Republicans knew what they stood for. How will the GOP recover from its 2008 defeat? All they have to do is look at the not-too-distant past for answers.


Here's a link for the lawyers--speeches by U.S. Supreme Court Justices:

How Did You Vote?

This is the Ron Clark Academy presidential debate. Gotta love the token white guy.

Lyrics to “You Can Vote However You Like”

Obama on the left
McCain on the right
We can talk politics all night
And you can vote however you like
I said, you can vote however you like, yeah

Democratic left
Republican right
November 4th we decide
And you can vote however you like
I said, you can vote however you like, yeah

(McCain supporters)
McCain is the man
Fought for us in Vietnam
You know if anyone can
Help our country he can
Taxes droppin' low
Don't you know oil's gonna flow
Drill it low
I’ll show our economy will grow
McCain’s the best candidate
With Palin as his running mate
They’ll fight for gun rights, pro life,
The conservative right
Our future is bright
Better economy in sight
And all the world will feel our military might

(Obama supporters)
But McCain and Bush are real close right
They vote alike and keep it tight
Obama’s new, he’s younger too
The Middle Class he will help you
He’ll bring a change, he’s got the brains
McCain and Bush are just the same
You are to blame, Iraq’s a shame
Four more years would be insane

Lower your Taxes - you know Obama won’t
PROTECT THE LOWER CLASS - You know McCain won’t!
Have enough experience - you know that they don’t
STOP GLOBAL WARMING - you know that you won’t

I want Obama
Stick with McCain and you’re going to have some drama
We need it
He’ll be it
We’ll do it
Let’s move it

Obama on the left
McCain on the right
We can talk politics all night
And you can vote however you like
You can vote however you like, yeah

Democratic left
Republican right
November 4th we decide
And you can vote however you like, I said
You can vote however you like, yeah

I’m talking big pipelines, and low gas prices
Below $2.00 that would be nice

But to do it right we gotta start today
Finding renewable ways that are here to stay

I want Obama
Stick with McCain you gonna have some drama
Iran he will attack
We gotta vote Barack!

Obama on the left
McCain on the right
We can talk politics all night
And you can vote however you like, I said
You can vote however you like, yeah

Democratic left
Republican right
November 4th we decide
And you can vote however you like, I said
You can vote however you like, yeah

Where Will the GOP Go Next?

Here are some articles on the battle for the GOP's future--will the Republican Party be able to contain the competing viewpoints of its reformists, traditionalists, and secular conservatives?

David Brooks:

National Review: National Review Corner

Rod Dreher: Crunchy Con

Yours Truly: Hey, Hey, Ho, Ho, Palin's Got to Go

And, just for kicks, a biblical perspective on immigration: Dr. Lindy Scott

Retirement Options for the Self-Employed

If you're self-employed, you have access to multiple retirement accounts, including a SEP IRA, a SIMPLE IRA. and, if you run your business just by yourself, an individual 401k. But how much asset protection do you really have with these retirement options? I can't vouch for the accuracy of the information below, because it's from 2005, but the basic information appears to be useful:

Because I save a lot of money in my retirement accounts, I've always been concerned about what would happen if I somehow received a judgment against me. Perhaps I need not have worried.

On October 17, 2005, the bankruptcy reform law, formally named The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (11 USC 101), went into effect and apparently protects most retirement accounts.

(a) In General.--Section 522 of title 11, United States Code, is
(1) in subsection (b)--
(A) in paragraph (2)--

[[Page 119 STAT. 63]]

(i) in subparagraph (A), by striking ``and''
at the end;
(ii) in subparagraph (B), by striking the
period at the end and inserting ``; and'';
(iii) by adding at the end the following:
``(C) retirement funds to the extent that those funds are in
a fund or account that is exempt from taxation under section
401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue
Code of 1986.''
Basically, it appears the bankruptcy law allows you to protect most retirement accounts against creditors when you declare bankruptcy. For more information, you should contact a CPA or tax attorney.

Monday, November 10, 2008

GM's Woes

The AP has finally reported that GM might be going bankrupt: AP Story on GM

The press, as usual, is slow to catch on. I predicted GM's bankruptcy last year, in a letter to The Metro: [Metro Letter]

[A]lmost no one in the private sector receives pensions or lifetime medical benefits, and all the private companies who used to offer such benefits, such as General Motors and Ford, are changing their policies and are slowly going bankrupt.

I hope Lee Iacocca was wrong when he (reportedly) said, "As goes General Motors, so goes the nation." But Mr. Iacocca seems to be blessed with accurate foresight--see Where Have All the Leaders Gone?, published May 2007:

Am I the only guy in this country who's fed up with what's happening? Where the hell is our outrage? We should be screaming bloody murder. We've got a gang of clueless bozos steering our ship of state right over a cliff, we've got corporate gangsters stealing us blind, and we can't even clean up after a hurricane much less build a hybrid car. But instead of getting mad, everyone sits around and nods their heads when the politicians say, "Stay the course." Stay the course? You've got to be kidding. This is America, not the damned Titanic. I'll give you a sound bite: Throw the bums out!

It's just a little bit of history repeating...

Sunday, November 9, 2008

Reason #3947 to Be Libertarian

The price of freedom is eternal vigilance--not just against foreign influence, but also against our own government agents. Our government has spent our money going after a man, Sayed Mousavi, who wanted to promote cell phones in Iran. He also did not report a portion of his taxable income (for which he should be punished financially). The government used a law called the International Emergency Economic Powers Act (IEEPA) to convict him. Yet, no one believes this man is a terrorist except perhaps the American government and their lawyers. The most distressing detail is that our government removed Seyed Mahmood Mousavi's American citizenship by claiming he lied on his citizenship application. They apparently used mis-translated documents as evidence. 

To those would say America is a place where all citizens can breathe free post-Obama, the government's prosecution of Mr. Mousavi is a harsh lesson that vigilance must remain high. Even if Obama issues executive orders nullifying enforcement of the Patriot Act, such as canceling Executive Order 13224, more laws exist to harass citizens and non-citizens in America. 

Laura Donohue, a Stanford fellow, once said that counterterrorism activity increases "executive power both in absolute and real terms. This changes the balance of power at a federal level between the branches of government. It changes the relationship between the citizens and the state." Executive Order 13224, mentioned earlier, gave the White House and the Treasury the power to freeze assets of those they suspect of being terrorists and those they suspect have associations with terrorists. In other words, citizens "can have their assets frozen without being found guilty in any court of law for actually having any association with terrorism itself." "Between October 2001 and April 2005, 743 people and 947 organizations had their assets frozen underneath this order. 98% of the people, and 96% of the organizations, appeared to be Arab or Muslim." (Laura Donohue, Commonwealth Club speech, 9/11/08, page 20-21 of the November 2008 The Commonwealth magazine). 

Unfortunately, Obama is not proof that this country has progressed past its religious intolerance. Obama is Christian. Bobby Jindal, another political up-and-comer, converted to Catholicism. If you are not some form of Christian in America, and you have innocuous ties to Middle Eastern countries, the government is apparently willing to charge you with a crime. I realize Mr. Mousavi may have violated a trade embargo, and if he knowingly violated the law, jail-time is warranted. What terrifies me is our government, rather than prosecute him specifically for his violation of the trade embargo, actively expanded its prosecution to remove his citizenship--despite no evidence that he was a terrorist or danger to his community. 

Also, I've never heard of International Emergency Economic Powers Act (IEEPA). It seems that so many laws have been passed, the government can classify any transaction with a Middle Eastern country or charity as illegal. Overly broad laws effectively intrude on personal associations and the right of peaceful assembly guaranteed under the First Amendment. For example, if I believe that my association with others can be used against me in the future, I may alter my behavior and self-banish myself from others who share minority religious or political views. Thus, the Patriot Act and other laws similar to it--which apparently do not require any malicious intent or actual damages--have the effect of violating the First Amendment by their mere existence. 

If you are interested in more information on domestic surveillance laws and activity, get the November 2008 edition of The Commonwealth magazine. One section of Donahue's speech is titled, "Better than the Stasi," referring to domestic law enforcement activities.

Norwegian Poetry

Props to the Norway for having such an eloquent king. From King Olav V of Norway:

When I look back
I see the landscape
That I have walked through
But it is different
All the great trees are gone
It seems there are
Remnants of them
But it is the afterglow
Inside of you
Of all those you met
Who meant something in your life

King Olav V
August 1977

Cars and People

Reason #1044 I hate cars and the driving culture:

Cars and Cities

She makes great points about cities being more hospitable when they are not built around an automobile culture.

Tech Geeks

Since Warren Buffett mentioned geeks earlier, I've been meaning to post something for my tech geeks--here are some links you might find useful:

Just leave your financial formulas at home, and no one gets hurt.

Friday, November 7, 2008

More Reasons You Should Vote Libertarian

This article should make every American mad as hell:

Basically, the FBI spent taxpayer monies to spy on one of our best American writers. Many people associate David Halberstam with military or political history, but I found him through his sports-writing. I highly recommend Everything They Had: Sports Writing from David Halberstam.

Don't you just love the FBI's response when they were asked why they were spying on Mr. Halberstam? "[The file] speaks for itself." &!%$##^

Dick Armey's Conservatism

In today's WSJ (11/7/08, A17), Richard "Dick" Armey correctly pinpoints the problem with McCain's campaign--a failure to communicate convincing pride in individualism and small government:

The modern Republican Party has risen above its insecurities to achieve political success [in the past]. [We] understood that big government was cruel and uncaring of individual aspirations. Small government conservatism was, by definition, compassionate--offering every American a way up to self-determination and economic prosperity. Republicans lost control of Congress in 2006 because voters no longer saw Republicans as the party of limited government. They have since rejected virtually every opportunity to recapture this identity...The evidence suggests we are still a nation of pocketbook conservatives most happy when government has enough respect to leave us alone and to mind its own business.

The last line is pure poetry. Unfortunately, Dick Armey has the fatal flaw of many Republicans--cultural myopia, which has led him to make insensitive statements against minorities. Cultural insularity was a major problem in McCain's campaign and especially in its VP choice, because unless Republicans convince Americans they stand for more than just quota-type diversity, their ranks will not grow. If you don't believe me, take a look at the Arizona audience for McCain's concession speech, and compare its diversity with the people in Grant Park and worldwide who supported Obama. The United States has changed demographically, but the Republicans seem oblivious.

Cultural insularity is the main reason Sarah Palin was such a controversial choice. Picking her meant the Republican Party consciously closed itself to independents who didn't favor a robust Christianity or who valued intellectualism. Palin famously refused to specify what she read (see Couric interview) and admitted she hadn't traveled much outside of North America before her VP nomination (see Gibson Interview, 9/13/08). But Palin aside, the Republicans desperately need a plan that will make them more attractive to people in larger cities, who tend to be less religious and more diverse. The solution is simple: if Republicans want to beat the Democrats, they must agree to advocate smaller government, lower taxes, and more legal immigration.

The failure to have a coherent immigration policy doomed the Republicans and will continue to doom them as long as they are viewed as a white, Christian party. This is because the electoral college system favors states that attract the most immigrants (or whose residents have the most children). For instance, despite winning only 53% of the popular vote, Obama won around 70% of the vote that matters, the electoral college vote. He won by focusing on diverse, larger cities, and he prevailed even though he received only 30% of working-class white votes. In short, Obama won because he understood that a vote in California is worth more than a vote in Alabama.

Assuming the electoral college system continues, sensitivity to legalized immigration and ethnic and religious diversity will be necessary to win the White House. Every single state with more than 19 electoral votes has either a large immigrant population or is not majority white. Meanwhile, many Republican strongholds, like Alabama and Kentucky, are experiencing depopulation or are sustaining population levels mainly because of foreign immigration. In fact, without immigrants and their children, America would have a negative population growth rate. Assuming naturalized citizens favor legal immigration and do not agree that Christianity is the only path to morality, any continued attempt to support Sarah Palin or persons like her as representative of the Republican Party will exclude immigrants and residents in mega-cities.

Still Pro-Palin? Look at a sample of mega-cities, like Los Angeles, Houston, Chicago, San Jose, San Francisco, Miami, New York City, Philadelphia--in all those cities, the white, presumably Christian population is a plurality, not a majority. Outside of Texas, guess how many cities with over a million residents are majority white? Only one--Phoenix, Arizona--and the Republicans already tried winning with that hometown hero.

If you continue to disagree that a pro-immigration, non-religious platform is necessary for the Republicans to recapture the White House, you should study Santa Clara County and North Carolina. Both are microcosms of America in terms of changing demographics.

In Santa Clara County, more than 40% of the residents were born outside the country. An astounding 69% voted for Obama, and only 28% voted for McCain. Those numbers demonstrate how out of touch the Republican Party has become with non-Caucasians and non-Christians. Republicans should be more popular in California--after all, Californians recently elected a Republican governor, and the Republican Party's platform of less spending and lower taxation should appeal to high-earners and people concerned with the state's budget crisis. Yet, Republicans cannot gain a reliable foothold in any county where immigration has exploded. This failure to do better in diverse counties, even in states that badly need fiscal discipline, shows that the Republicans' strategy of focusing on whites, Christians, and senior citizens at the expense of other groups is not viable. This is not to say that Republicans should exclude their core groups of support and suddenly focus on minorities. That strategy shift won't work, either. For example, despite having consistent support from Florida's Cuban population, Republicans lost Florida. In addition, foreign-born Americans are only 12% of the national population, according to the U.S. Census Bureau's 2004 survey.

What's the solution? Again, it's surprisingly simple: Republicans need to focus more on fiscal responsibility, advocate more legal immigration to appear progressive, and excise the fundamentalist religious right from their ranks. To do this, Republicans must cast out Sarah Palin and expressly affirm the separation of church and state. Indeed, despite being accused of practicing fundamentalist Christianity, Sarah Palin never delivered her version of JFK's "Catholic speech" or an Obama/Jeremiah Wright rebuttal. By failing to publicly and openly address concerns that her religious beliefs would interfere with her ability to govern the nation impartially, she hurt the Republican Party in all major urban areas. She also lost an opportunity to show that she understood American values, an opportunity a previous Democratic candidate did not forsake. Historians now agree that JFK won in no small part because of his stand against the commingling of church and state:

I believe in an America where religious intolerance will someday end...

And it represents the kind of Presidency in which I believe--a great office that must neither be humbled by making it the instrument of any one religious group nor tarnished by arbitrarily withholding its occupancy from the members of any one religious group. I believe in a President whose religious views are his own private affair, neither imposed by him upon the nation or imposed by the nation upon him as a condition to holding that office...

I am wholly opposed to the state being used by any religious group, Catholic or Protestant, to compel, prohibit, or persecute the free exercise of any other religion.

If the Grand Old Party wants true reformation, it will condemn in the strongest possible language any Republican who believes that a particular religion is required to gain God's favor. Ironically, this shift will probably cause the Christian right to create the first viable third party in America, which will gain Senate seats from the Midwest and allow them a firmer, more consistent voice in politics. Thus, my proposed solution would create a win-win-win situation.

Still unconvinced? Take a hard look at the evolution of North Carolina. Less than ten years ago, North Carolina voted for a senator, Jesse Helms, who was opposed to the Civil Rights Act of 1964 and who filibustered the idea of having a national holiday for Martin Luther King, Jr. (as you can see, minorities and immigrants have legitimate reasons for not voting Republican). North Carolina voted for Jesse Helms from 1973 to 2003--twenty long years. Recently, however, North Carolina voted out Helms' successor, Elizabeth Dole, in favor of a Democrat, and previously, it elected one of the most liberal Democrats, John Edwards.

The story gets worse for the Republicans. North Carolina voted Republican in every presidential election from 1968 to 2004--until Obama. That's quite a shift from Senator Jesse "Anti-Civil-Rights-Act" Helms in the last ten to twenty years--and the children of recent immigrants, both legal and illegal, haven't even hit voting age yet. North Carolina shows that if Republicans do not disavow themselves of their Palin/Helms strain of right-wing religion and cultural insularity, they will lose America. Not just "real America," but America, period. After all, the Declaration of Independence and the Constitution of the United States say nothing about Christianity, Jesus Christ, or the Bible. Also, in 1797, George Washington signed the Treaty of Tripoli, which declared that “the government of the United States is not, in any sense, founded on the Christian religion.”

Demographics are destiny, as the saying goes. For now and the immediate future, the demographics are decidedly in favor of a party that respects and favors legal immigration, diversity, and separation of church and state. That's good news for Arnold Schwarzenegger, Bobby Jindal, and others prescient enough to see the future of American politics.


Blog Post on Immigration Policies of Obama and McCain:

Update on April 2, 2009: not that it's conclusive evidence of anything, but Newt Gingrich agrees with me.

Update on April 2012: for better or worse, urbanization is happening world-wide, not just in the United States: "In the hundred years between 1950 and 2050, the global population is undergoing an irreversible structural transition in the way we live.  Drawn by the economic, lifestyle and social opportunities of urban dwelling, the world's population is migrating from rural areas--accounting for 70% of global population in 1950--to cities--accounting for 70% of of global population by 2050 based on United Nations projections.  In 2009, the percentage of the planet's population living in urban areas crossed the 50% threshold and by 2037 cities in developing nations will contain half the world's total population." (from Credit Suisse, April 2012)

Update on March 2017: "Hillary Clinton, more than others, has a worldview problem because the vast majority of the electorate has already told itself a story about her... I believe there isn't enough money in circulation to persuade those voters that have already made up their minds to change them." -- from Seth Godin's All Marketers are Liars (2005), pp. 81, hardcover.

Update on December 2017: the Republicans won the 2016 election through a twice-divorced candidate who married a legal immigrant, presumably employs numerous immigrants in his businesses, and who has no religious piety or knowledge. Unfortunately--or fortunately--I was wrong about Bobby Jindal's potential.