Today was a terrible day for the market and for investors in the market. One my major holdings, KOL, declined around 9% today. So much for diversification being the key to stock market gains--gold, oil, tech, and international markets all declined today on a possible Lehman Brothers (LEH) liquidity problem.
Nothing new to report trade-wise, except I sold most of my CCT position, netting a positive gain. I am not including the gain below. Although I still own 75 shares, my holdings are below the required 2,000 dollar threshold for inclusion in this blog.
I picked up 1000 shares of TTWO today and will look to sell this week.
Since June 2007, my retirement accounts moved today from being in the black to slightly in the red. I am not happy, but I keep reminding myself that I am well-diversified and should have a long term investment horizon. I am not sure if we've experienced "capitulation" yet, but it sure feels like it. If I had more available cash in my retirement accounts, I'd be adding to my positions below. At the same time, the market may be extra-skittish with September 11 approaching.
Open Positions
EWM =-12.51%
EWS = -13.23
EZU = -10.72
GLD = -6.17
GXC = -9.16
IF = -17.79
KOL = -21.23
SWZ = -10.19
YHOO = -11.80
[Average of "Open Positions": losing/negative average 12.53%]
Closed Positions:
Held more than seven days but less than one year (from May 30, 2008):
CNB = +10.0
EQ = -8.83
GE = -6.4
INTC = 0.0 (excluded from average; insignificant movement)
PFE = -5.5
PNK = -16.7%
PPS = -2.8
VNQ = +2.37 [sold 8/7/08]
WFR = +0.9 (approx; based on partial sales week of 8/4/08 in two separate accounts)
WYE = +2.4%
[Overall Record: Lost an average of 2.82%]
Held less than 7 days:
DUK = (0%, excluded from avg) [8/07/08 - 8/14/08]; GE (1.0%); GOOG (0.8%) [7/28/08 - 7/29/08]; GRMN (-6.2%) [Sold 8/5/08]; ICE (2.0%), MMM (0.5%), MRK (0.1%), NVDA (8.0%) [8/12 to 8/13/08]; PFE (1.3%), SCUR (15%); SO (-0.3%) [Sold 8/5/08]; TTWO (4.3%) [partial sales on 8/5/08, 8/7/08, and 8/8/08]; TTWO (2.2%) [9/9/08 to 9/12/08]
[Overall Record: Gained an average of 1.68%; does not factor in TTWO's recent sale]
Daytrades:
PFE = +0.5%
GE = +0.5% (Updated on July 14, 2008; bought at 27.15, sold at 27.30)
XLF = +4.3% (Updated on July 15, 2008)
[Overall Record: Gained an average of 1.76%]
Compare to S&P 500: losing/negative 11.6%
[from May 30, 2008 (1385.67) to mid-day September 9, 2008 (1224.51)]
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.
"And if an epitaph be my story, I'd have a short one ready for my own: I had a lover's quarrel with the world." -- Robert Frost
Tuesday, September 9, 2008
VMWare (VMW) Special Shareholder Meeting
I have been so busy, I thought today was VMware's (WMW) annual shareholder meeting. I picked up my materials and ran off to the 8AM meeting in Palo Alto, only to realize my mistake. VMware was only holding a special meeting to vote on whether to approve a one-time stock option plan. Basically, the company's stock price has gone down significantly, causing most of its employees' options to be underwater. My understanding is the meeting today was held because VMware wanted to replace existing stock options with newer ones.
CEO Paul Maritz gave a short presentation, and the the stock option plan was approved after confirming a quorum. Mr. Maritz seems honest and smart. He has a British accent, and took questions from the few shareholders present (four of us), even though the format of the special meeting didn't require him to do so. The meeting lasted only 20 minutes, and only coffee was served.
I asked about the tax consequences of the stock option plan. The CFO answered that because the options had not been exercised, there was "no significant impact" tax-wise. Once the employees exercised their new stock options, the company would be able to record a tax deduction, which would actually benefit the company (but of course, dilute existing shareholders).
I asked a question about what the company does. I am not a born techie, so the concept of virtualization and virtual machines is strange to me. (Every time I hear the term, "virtual machines," I think of the Borg and T2's "Rise of the Machines.") Peter Lynch's advice, "Invest in what you know," worked well in the past, but these days, it's hard to follow that simple rule.
The CEO Maritz very politely attempted to answer my question about the company's products. He said the company is a software company involved in "virtualization." VMware software "fools" other software/hardware platforms, allowing greater functionality. Previously, users had to have different machines to run different operating systems, but now they can use just one machine. For example, VMWare's software allows users to run Windows and Apple's Leopard on the same computer. CEO Maritz went further, saying VMware is a "data management/IT company." It manages the computer environment, and the company had "700 third party customers."
Another shareholder mentioned Larry Ellison and how Mr. Ellison had grown Oracle by not selling his software outright, but requiring users to subscribe to it. CEO Maritz indicated VMware has different pricing plans, just like Oracle.
Overall, I left the meeting feeling like I was in the presence of professional, dedicated people. I still don't know what virtual machines are, or how they really work, or how a company can monetize such an asset, but I will ask more questions at the annual meeting next year [see below--I did more research into this issue and have provided an explanation of VMware's benefits].
One interesting item in the special meeting report: beneficial shareholders of VMware include Intel Corporation (18.30%); and Cisco Systems International (6.88%). As mentioned above, due to having greater voting rights, WMware is basically owned by EMC Corporation, which holds 97.17% of the Class B shares and "98% of the voting power of outstanding common stock" (page 48, Form 10-Q).
Another interesting item: VMware gives its partners access to its source code and hypervisor for development purposes, which may create IP issues later on.
The end result of today's meeting for me? I picked up more shares of EMC afterwards. I figure it's a safer bet to invest in the quasi-parent company than in the newer company, at least initially (e.g., buy Cypress Semiconductor rather than Sunpower) , because spin-offs usually saddle the newer company with debt. I am concerned about the market's volatility, but now seems like a good time to slowly add to positions.
Update on 9/10/08 and 9/15/2008: I understand EMC's business, i.e. information storage, but I haven't seen anyone adequately explain "virtualization" and how to monetize it over a long period of time. Here is how EMC explains virtualization: "virtual infrastructure solutions and services [enable] customers to run multiple operating systems simultaneously on the same physical machine." Again, that sounds nifty, but why would a company give x dollars to VMWare for this?
If anyone can explain VMWare's product offerings and whether VMWare can prevent its software or its products from becoming commoditized as more players enter the market, please submit a comment. Thank you.
Update on 9/15/08: I've done more research into what VMware does and spoken with a patent agent and a VMware employee. Basically, an obvious but key piece of information to understand is that the computer industry and the software industry are not homogeneous. As a result, certain software can only run on certain platforms and certain operating systems. Tech companies' failure to homogenize their products provides an opening for a company that can provide one piece of software ("middleware") that allows one machine to run all necessary software and to communicate across different platforms. Think of a fruit drink seller. In the tech world, the fruit drink seller would need one blender for blueberries, another one for strawberries, and another grinder for oranges, and none of them could work together. VMware allows the fruit drink seller to use one blender for all the different fruits. As for continuing to monetize the one blender after its sale, the blender will need upgrades as more and more fruits get introduced, allowing VMware to continue to get paid.
Here are the benefits of VMware in more detail:
1. Virtualization fools a piece or hardware into thinking it can run multiple applications on multiple platforms. So in the past, a company might have needed ten different pieces of software with ten different licenses and ten different IT employees just to maintain different department functions, like payroll, receivables, exports, etc. Now, the company just needs one IT employee, one piece of hardware, and can buy a multi-user license for all the software they need. A multi-user software license is far cheaper than buying each individual software license separately.
2. VMware increases safety while maintaining diversification. Many companies buy different software they need from different vendors, but the vendors don't collaborate, causing incompatibility. This incompatibility sometimes necessitates owning several different pieces of hardware, depending on what the company needs. In addition, companies don't like having all their company functions on one piece of software or relying on a single operating system--if there is a failure (think Windows Me, or the earlier versions of Windows Vista), the entire company might have to shut down or an upgrade might cause company-wide problems. VMware changes all that. It allows the company to have one piece of hardware that can run multiple platforms and software programs. In having one piece of hardware, the failure rate decreases, but without decreasing your options. It's like having a single video game console that can run Nintendo Wii, XBox, and Playstation games.
3. Statistically speaking, VMware reduces risk. VMware requires only one piece of hardware. If a company has 100 different pieces of hardware, it increases the potential failure rate. For example, if you have 100 people walking across a busy street, the potential of having 1 person get hit out of 100 is much higher than if you just have one person walking across a highway. Basically, having 99 other people there means there's 99 extra chances for someone to get hit. (My intuition tells me I haven't given the best (or even the right) example for this concept, but it's the best I can do at this late hour.)
I hope this post helps laypersons and non-geeks understand VMware and its products.
CEO Paul Maritz gave a short presentation, and the the stock option plan was approved after confirming a quorum. Mr. Maritz seems honest and smart. He has a British accent, and took questions from the few shareholders present (four of us), even though the format of the special meeting didn't require him to do so. The meeting lasted only 20 minutes, and only coffee was served.
I asked about the tax consequences of the stock option plan. The CFO answered that because the options had not been exercised, there was "no significant impact" tax-wise. Once the employees exercised their new stock options, the company would be able to record a tax deduction, which would actually benefit the company (but of course, dilute existing shareholders).
I asked a question about what the company does. I am not a born techie, so the concept of virtualization and virtual machines is strange to me. (Every time I hear the term, "virtual machines," I think of the Borg and T2's "Rise of the Machines.") Peter Lynch's advice, "Invest in what you know," worked well in the past, but these days, it's hard to follow that simple rule.
The CEO Maritz very politely attempted to answer my question about the company's products. He said the company is a software company involved in "virtualization." VMware software "fools" other software/hardware platforms, allowing greater functionality. Previously, users had to have different machines to run different operating systems, but now they can use just one machine. For example, VMWare's software allows users to run Windows and Apple's Leopard on the same computer. CEO Maritz went further, saying VMware is a "data management/IT company." It manages the computer environment, and the company had "700 third party customers."
Another shareholder mentioned Larry Ellison and how Mr. Ellison had grown Oracle by not selling his software outright, but requiring users to subscribe to it. CEO Maritz indicated VMware has different pricing plans, just like Oracle.
Overall, I left the meeting feeling like I was in the presence of professional, dedicated people. I still don't know what virtual machines are, or how they really work, or how a company can monetize such an asset, but I will ask more questions at the annual meeting next year [see below--I did more research into this issue and have provided an explanation of VMware's benefits].
One interesting item in the special meeting report: beneficial shareholders of VMware include Intel Corporation (18.30%); and Cisco Systems International (6.88%). As mentioned above, due to having greater voting rights, WMware is basically owned by EMC Corporation, which holds 97.17% of the Class B shares and "98% of the voting power of outstanding common stock" (page 48, Form 10-Q).
Another interesting item: VMware gives its partners access to its source code and hypervisor for development purposes, which may create IP issues later on.
The end result of today's meeting for me? I picked up more shares of EMC afterwards. I figure it's a safer bet to invest in the quasi-parent company than in the newer company, at least initially (e.g., buy Cypress Semiconductor rather than Sunpower) , because spin-offs usually saddle the newer company with debt. I am concerned about the market's volatility, but now seems like a good time to slowly add to positions.
Update on 9/10/08 and 9/15/2008: I understand EMC's business, i.e. information storage, but I haven't seen anyone adequately explain "virtualization" and how to monetize it over a long period of time. Here is how EMC explains virtualization: "virtual infrastructure solutions and services [enable] customers to run multiple operating systems simultaneously on the same physical machine." Again, that sounds nifty, but why would a company give x dollars to VMWare for this?
If anyone can explain VMWare's product offerings and whether VMWare can prevent its software or its products from becoming commoditized as more players enter the market, please submit a comment. Thank you.
Update on 9/15/08: I've done more research into what VMware does and spoken with a patent agent and a VMware employee. Basically, an obvious but key piece of information to understand is that the computer industry and the software industry are not homogeneous. As a result, certain software can only run on certain platforms and certain operating systems. Tech companies' failure to homogenize their products provides an opening for a company that can provide one piece of software ("middleware") that allows one machine to run all necessary software and to communicate across different platforms. Think of a fruit drink seller. In the tech world, the fruit drink seller would need one blender for blueberries, another one for strawberries, and another grinder for oranges, and none of them could work together. VMware allows the fruit drink seller to use one blender for all the different fruits. As for continuing to monetize the one blender after its sale, the blender will need upgrades as more and more fruits get introduced, allowing VMware to continue to get paid.
Here are the benefits of VMware in more detail:
1. Virtualization fools a piece or hardware into thinking it can run multiple applications on multiple platforms. So in the past, a company might have needed ten different pieces of software with ten different licenses and ten different IT employees just to maintain different department functions, like payroll, receivables, exports, etc. Now, the company just needs one IT employee, one piece of hardware, and can buy a multi-user license for all the software they need. A multi-user software license is far cheaper than buying each individual software license separately.
2. VMware increases safety while maintaining diversification. Many companies buy different software they need from different vendors, but the vendors don't collaborate, causing incompatibility. This incompatibility sometimes necessitates owning several different pieces of hardware, depending on what the company needs. In addition, companies don't like having all their company functions on one piece of software or relying on a single operating system--if there is a failure (think Windows Me, or the earlier versions of Windows Vista), the entire company might have to shut down or an upgrade might cause company-wide problems. VMware changes all that. It allows the company to have one piece of hardware that can run multiple platforms and software programs. In having one piece of hardware, the failure rate decreases, but without decreasing your options. It's like having a single video game console that can run Nintendo Wii, XBox, and Playstation games.
3. Statistically speaking, VMware reduces risk. VMware requires only one piece of hardware. If a company has 100 different pieces of hardware, it increases the potential failure rate. For example, if you have 100 people walking across a busy street, the potential of having 1 person get hit out of 100 is much higher than if you just have one person walking across a highway. Basically, having 99 other people there means there's 99 extra chances for someone to get hit. (My intuition tells me I haven't given the best (or even the right) example for this concept, but it's the best I can do at this late hour.)
I hope this post helps laypersons and non-geeks understand VMware and its products.
Monday, September 8, 2008
Fannie and Freddie Bailout
The big news yesterday was the U.S. government's takeover of Fannie Mae and Freddie Mac. My response? Ho-hum. The international community holds about 5 trillion (yes, that's a "t") dollars of Fannie Mae debt, according to today's WSJ. Of course we had to bail them out, if we ever wanted to see a single yen or yuan buying American paper.
(For more on this, read http://www.blacklistednews.com/news-1459-0-13-13--.html)
In short, we didn't have a choice. What's really scary is politicians are talking about bailing out GM and Ford. I predicted a Ford and GM bankruptcy months ago, but there is no reason for the government to bail out Ford or GM--they are private companies who decided to focus on manufacturing SUVs right before oil spiked. While taxpayers may have an interest in ensuring their neighbors don't lose their homes--vacant lots of homes are terrible for cities and states--ensuring your neighbor gets service for his Hummer is a different matter entirely.
If the U.S. seriously talks about bailing out GM and Ford, the American dollar will have officially become the world's doormat. (I earlier compared the dollar to the world's prostitute, who kept servicing STD-ridden johns instead of closing the doors to them, but apparently, that analogy was too blunt.) Perhaps we've got a case of financial immaculate conception, where U.S. taxpayers who paid their mortgage bills and taxes on time, still end up with a baby on their hands to support; however, instead of a savior, U.S. taxpayers will apparently be forced to pay for Rosemary's Baby's expenses. Where are three wise men when you need them?
(One of them, Patrick Killelea, is here: http://patrick.net/housing/crash.html)
Sunday, September 7, 2008
Fun: German Chocolate, Kinder Happy Hippo
I've just tasted a bit of heaven. I loved the famous Kinder eggs, the chocolate eggs with the toy parts inside of them. But now Kinder has come up with something so good, I was just stunned: Kinder Happy Hippo cacao. It's hazelnut chocolate inside a hippo-shaped wafer.
I can't read German, so I can't tell you what the ingredients are, but I felt like I had tasted ambrosia--the food of the gods. If you like hazelnut, you must check it out.
I have no connection with the following website, nor have I ordered from them, but they appear to be based out of Illinois and they do have Kinder chocolate:
http://www.minosimports.com/
Happy eating, folks. Unleash your inner hippo.
I can't read German, so I can't tell you what the ingredients are, but I felt like I had tasted ambrosia--the food of the gods. If you like hazelnut, you must check it out.
I have no connection with the following website, nor have I ordered from them, but they appear to be based out of Illinois and they do have Kinder chocolate:
http://www.minosimports.com/
Happy eating, folks. Unleash your inner hippo.
Wednesday, September 3, 2008
The Green Bag, Summer 2008
I just got my first edition of The Green Bag, Summer 2008, Vol 11, Number 4. The Green Bag calls itself an entertaining journal of law, and it is indeed a fun read. This volume talked about the change from the plural to the singular in "The United States are" to "The United States is" post-Civil War; and Henry R. Selden's must-read June 17, 1873 speech in defense of Susan B. Anthony's right to vote.
Some of my favorite items are here:
page 474: Louis Brandeis: "Equity does not demand that its suitors shall have led blameless lives." Loughran v. Loughran, 292 U.S. 216, 229 (1934)
page 519: Nelson Lund, quoting Gene Healy's book, The Cult of the Presidency:
True political heroism rarely pounds its chest or pounds the pulpit, preaching rainbows and uplift, and promising to redeem the world through military force. A truly heroic president is one who appreciates the virtues of restraint--who is bold enough to act when action is necessary, yet wise enough, humble enough to refuse powers he ought not have. That is the sort of presidency we need, now more than ever. And we won't get that kind of presidency until we demand it.
Restraint? Check. Humility? Check. Act not rashly, but when necessary and prudent? Check. It's this kind of talk that makes my libertarian heart go aflutter.
Some of my favorite items are here:
page 474: Louis Brandeis: "Equity does not demand that its suitors shall have led blameless lives." Loughran v. Loughran, 292 U.S. 216, 229 (1934)
page 519: Nelson Lund, quoting Gene Healy's book, The Cult of the Presidency:
True political heroism rarely pounds its chest or pounds the pulpit, preaching rainbows and uplift, and promising to redeem the world through military force. A truly heroic president is one who appreciates the virtues of restraint--who is bold enough to act when action is necessary, yet wise enough, humble enough to refuse powers he ought not have. That is the sort of presidency we need, now more than ever. And we won't get that kind of presidency until we demand it.
Restraint? Check. Humility? Check. Act not rashly, but when necessary and prudent? Check. It's this kind of talk that makes my libertarian heart go aflutter.
Hospitals and the Real Costs of Protection
The August 28, 2008 WSJ (front page, "Nonprofit Hospitals Flex Pricing Power") had a well-researched article on hospitals. Most people don't realize hospitals and even insurance companies are usually nonprofit corporations. What's worse is that many hospitals and insurance companies are nonprofit subsidiaries of larger partnerships or for-profit corporations, making it hard to ascertain the true owners. When lawyers sue hospitals, it usually takes forever to figure out the proper entity to sue. Many times, you have to trace the corporation or non-profit back to a Limited Partnership (L.P.), even though the direct employer is a nonprofit hospital corporation. Corporations, nonprofits, and hospitals have created byzantine empires to shield themselves from liability, which makes it very difficult to point fingers when things go wrong.
For example, you think Stanford University is called "Stanford University"? Nope. That would be too easy. Stanford is broken up into three separate entities: one, the LUCILE SALTER PACKARD CHILDREN’S HOSPITAL AT STANFORD; two, STANFORD HOSPITAL AND CLINICS; and three, The Board of Trustees of The Leland Stanford Junior University. Yes, it's a scary world when you realize how hard it is to point blame in an ever-expanding universe where lawyers spend all day trying to shield their clients from liability.
I'm not saying Stanford is doing anything unwise--they should be trying to ensure that a medical malpractice judgment against a hospital doesn't cost their University students anything, but at some point, Enron and its fake, fraud-masking subsidiaries come to mind (remember, Enron claimed major profits partly because it kept offloading its debt through a complicated set of fake subsidiaries that took on Enron debt for stock). We forget there's a moral cost to this kind of paper legal protection. The more fragmented a place or entity, the harder it is for people to take responsibility or to find out where the buck stops. Corporate fragmentation disincentivizes entities and their agents to act responsibly, because the money and assets can be shifted or protected through more and more complex special purpose paper vehicles.
Pretty soon, it won't be enough to sue, get to trial, win the trial, and then deal with the appeal after multiple years have passed--when you do win and finally get a judgment, maybe the entity you sued doesn't have assets to claim, or you can't pierce the corporate veil. Corporate America, One. Consumer/Employee, Zero.
For example, you think Stanford University is called "Stanford University"? Nope. That would be too easy. Stanford is broken up into three separate entities: one, the LUCILE SALTER PACKARD CHILDREN’S HOSPITAL AT STANFORD; two, STANFORD HOSPITAL AND CLINICS; and three, The Board of Trustees of The Leland Stanford Junior University. Yes, it's a scary world when you realize how hard it is to point blame in an ever-expanding universe where lawyers spend all day trying to shield their clients from liability.
I'm not saying Stanford is doing anything unwise--they should be trying to ensure that a medical malpractice judgment against a hospital doesn't cost their University students anything, but at some point, Enron and its fake, fraud-masking subsidiaries come to mind (remember, Enron claimed major profits partly because it kept offloading its debt through a complicated set of fake subsidiaries that took on Enron debt for stock). We forget there's a moral cost to this kind of paper legal protection. The more fragmented a place or entity, the harder it is for people to take responsibility or to find out where the buck stops. Corporate fragmentation disincentivizes entities and their agents to act responsibly, because the money and assets can be shifted or protected through more and more complex special purpose paper vehicles.
Pretty soon, it won't be enough to sue, get to trial, win the trial, and then deal with the appeal after multiple years have passed--when you do win and finally get a judgment, maybe the entity you sued doesn't have assets to claim, or you can't pierce the corporate veil. Corporate America, One. Consumer/Employee, Zero.
Is College Still Worth It?
Meg, a blogger, has a great post on market inefficiencies and colleges:
http://wealthisgood.blogspot.com/2008/08/government-subsidies-enable-colleges-to.html
Her post is related to this CNNMoney article:
http://money.cnn.com/2008/08/20/pf/college/college_price.moneymag/index.htm
I like her dad already.
http://wealthisgood.blogspot.com/2008/08/government-subsidies-enable-colleges-to.html
Her post is related to this CNNMoney article:
http://money.cnn.com/2008/08/20/pf/college/college_price.moneymag/index.htm
I like her dad already.
Tuesday, September 2, 2008
WSJ's Neal Templin Supports Young Adults
All college-educated young adults who live at home with their parents should read Neal Templin's "Learning Life's Lessons On a Shoestring Budget," WSJ, August 28, 2008; Page D2. For now, the article is posted at the link below, but no permalink exists. If the link below does not go to the article, try googling "Learning Life's Lessons On a Shoestring Budget."
http://online.wsj.com/article/cheapskate.html
It wasn't always a given that kids would move out when they reached adulthood. Children used to live at home until they married, and it's still that way in many other countries.
This arrangement also allows parents to have more sway over who their daughter or son marries, thereby providing more leverage for their expectation of grandchildren. For more on this subject, 60 Minutes did an entertaining report on Italy's men this year, called "Mammoni."
http://60minutes.yahoo.com/segment/170/mammoni
http://online.wsj.com/article/cheapskate.html
It wasn't always a given that kids would move out when they reached adulthood. Children used to live at home until they married, and it's still that way in many other countries.
This arrangement also allows parents to have more sway over who their daughter or son marries, thereby providing more leverage for their expectation of grandchildren. For more on this subject, 60 Minutes did an entertaining report on Italy's men this year, called "Mammoni."
http://60minutes.yahoo.com/segment/170/mammoni
Movie Reviews from Erik Lundegaard
I'm a big fan of The Wire and Tyler Perry. I just found two interesting articles on both subjects from Erik Lundegaard and had to share:
The Wire:
http://www.huffingtonpost.com/erik-lundegaard/the-wire-vs-the-sopranos_b_92120.html
Tyler Perry:
http://www.msnbc.msn.com/id/23635092/
Erik Lundegaard's blog, with movie reviews, can be found here:
http://www.eriklundegaard.com/moviereviews.php
A friend of mine, Jim Quillinan, also has a movie review website worth checking out: http://qsreviews.wordpress.com/
The Wire:
http://www.huffingtonpost.com/erik-lundegaard/the-wire-vs-the-sopranos_b_92120.html
Tyler Perry:
http://www.msnbc.msn.com/id/23635092/
Erik Lundegaard's blog, with movie reviews, can be found here:
http://www.eriklundegaard.com/moviereviews.php
A friend of mine, Jim Quillinan, also has a movie review website worth checking out: http://qsreviews.wordpress.com/
David Boaz, Libertarian
David Boaz, Executive VP of the Cato Institute, spoke at the Commonwealth Club recently. His speech was reproduced in The Commonwealth Magazine, September 2008 edition. I haven't been able to find a free online link, but it's a wonderful speech, and you should make the effort to find the speech. Here is an audio file of the speech:
http://search.everyzing.com/viewMedia.jsp?res=0&dedupe=1&index=117&col=en-all-public-ep&sort=rel&e=20501629&channelTitle=Ron+Paul&num=16&start=112&ci=43&expand=true&match=none&channel=236&bc=90&filter=1
Boaz's best line is about Everything I Need to Know I Learned in Kindergarten and how libertarianism has the same simple rules:
Don't hit other people, don't take their stuff, and keep your promises...if you apply those rules, you get civilization and freedom.
Here's another great line:
Always love your country, but never trust your government.
Boaz makes the great point that while we may feel less free today because of excessive government intervention and power, we are certainly more free when compared to a distant past involving slavery, 70 percent income tax rates (1977), fascism, feudalism, and communism. Boaz reminds us, "We had a monopoly phone company, strict regulations on interest and investing, sodomy laws in most states, and, at least briefly, generalized wage and price controls."
Boaz also takes on the question of how to define liberty and arrives at three factors: one, widespread wealth; two, an open society (less racism, no signs stating "No Blacks Need Apply"); and three, actual political and economic liberty (no more military conscription, no Jim Crow laws). He boldly states, "On balance, Americans today are more free than any people in history." He also says we should still be wary of those who seek to curtail our freedoms, suggesting,
Just speak up when somebody says there ought to be a law. There's no magic bullet. There's never been a golden age of liberty and there never will be.
Wise words from a man who strikes the perfect balance between optimism and fear. For more from David Boaz, check out the following link:
http://www.libertarianism.org/reader.html
http://search.everyzing.com/viewMedia.jsp?res=0&dedupe=1&index=117&col=en-all-public-ep&sort=rel&e=20501629&channelTitle=Ron+Paul&num=16&start=112&ci=43&expand=true&match=none&channel=236&bc=90&filter=1
Boaz's best line is about Everything I Need to Know I Learned in Kindergarten and how libertarianism has the same simple rules:
Don't hit other people, don't take their stuff, and keep your promises...if you apply those rules, you get civilization and freedom.
Here's another great line:
Always love your country, but never trust your government.
Boaz makes the great point that while we may feel less free today because of excessive government intervention and power, we are certainly more free when compared to a distant past involving slavery, 70 percent income tax rates (1977), fascism, feudalism, and communism. Boaz reminds us, "We had a monopoly phone company, strict regulations on interest and investing, sodomy laws in most states, and, at least briefly, generalized wage and price controls."
Boaz also takes on the question of how to define liberty and arrives at three factors: one, widespread wealth; two, an open society (less racism, no signs stating "No Blacks Need Apply"); and three, actual political and economic liberty (no more military conscription, no Jim Crow laws). He boldly states, "On balance, Americans today are more free than any people in history." He also says we should still be wary of those who seek to curtail our freedoms, suggesting,
Just speak up when somebody says there ought to be a law. There's no magic bullet. There's never been a golden age of liberty and there never will be.
Wise words from a man who strikes the perfect balance between optimism and fear. For more from David Boaz, check out the following link:
http://www.libertarianism.org/reader.html
Sunday, August 31, 2008
X-Men
The X-Men movies are some of the best films ever made. So many philosophical questions are covered in the series. For example, what laws, if any, should be passed for people considered superior to others? Should people who are different be controlled in any way? If so, how? To what extent do others without unique characteristics have to bend to accommodate a minority with special traits? I could continue ad infinitum.
Here's one of my favorite scenes, from X-Men 2:
Storm: Sometimes anger can help you survive.
Nightcrawler: So can faith.
For whatever reason, this exchange is electrifying in the film.
Tuesday, August 26, 2008
Yeats and the Stock Market
It's not too often I see someone adeptly combine my two loves--the stock market and poetry--so I had to share James Surowiecki's article with you:
http://www.newyorker.com/talk/financial/2008/09/01/080901ta_talk_surowiecki
Mr. Surowiecki's topic is the market's recent volatility: "[I]n the long run volatility is a very bad thing, because it makes ordinary investors less inclined to trust markets." His best line, about investor uncertainty, is at the very end:
[F]or now we’re stuck in a Yeatsian market: the best lack all conviction, while the worst are full of passionate intensity. Let’s hope the center can hold.
If you're still not agog at Mr. Surowiecki's reference, the first part of Yeats' Second Coming is below:
TURNING and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
Yeats and the stock market--a herd of passionate intensity. That about sums it up, doesn't it?
http://www.newyorker.com/talk/financial/2008/09/01/080901ta_talk_surowiecki
Mr. Surowiecki's topic is the market's recent volatility: "[I]n the long run volatility is a very bad thing, because it makes ordinary investors less inclined to trust markets." His best line, about investor uncertainty, is at the very end:
[F]or now we’re stuck in a Yeatsian market: the best lack all conviction, while the worst are full of passionate intensity. Let’s hope the center can hold.
If you're still not agog at Mr. Surowiecki's reference, the first part of Yeats' Second Coming is below:
TURNING and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
Yeats and the stock market--a herd of passionate intensity. That about sums it up, doesn't it?
Monday, August 25, 2008
Olympics and Globalization
George Priest and Minor Meyers wrote today about globalization's benefits to America's Olympic standings (WSJ, A11, 8/25/08).
Gymnast and gold medalist Nastia Liukin was born in Moscow, Russia.
Wrestler and gold medalist Henry Cejudo was raised by a mother who was an undocumented Mexican immigrant.
The entire U.S. women's table tennis team is from China.
Globalization also helped non-U.S.-Olympians find jobs and achieve higher performance.
The Iranian basketball team's coach is Serbian.
Becky Hammon, U.S. basketball star, played for the Russian national team.
Swedish wrestler Ara Abrahamian is of Armenian descent.
Gymnast and gold medalist Nastia Liukin was born in Moscow, Russia.
Wrestler and gold medalist Henry Cejudo was raised by a mother who was an undocumented Mexican immigrant.
The entire U.S. women's table tennis team is from China.
Globalization also helped non-U.S.-Olympians find jobs and achieve higher performance.
The Iranian basketball team's coach is Serbian.
Becky Hammon, U.S. basketball star, played for the Russian national team.
Swedish wrestler Ara Abrahamian is of Armenian descent.
Sunday, August 24, 2008
Cartoonist Clay Bennett
Other than Tom Toles, I haven't been enamored with any other cartoonists...until I saw Clay Bennett. His style reminds me of Wallace and Gromit with an understated political bent. Check him out:
http://www.claybennett.com/archives.html
http://www.timesfreepress.com/news/cartoons/
Here's one cartoon students will (unfortunately) identify with:
http://www.claybennett.com/pages2/debt.html
I particularly like this one:
http://www.claybennett.com/pages2/curb_appeal.html
Bonus for your funny bone:
http://www.thingsmyboyfriendsays.com/index.html
http://www.claybennett.com/archives.html
http://www.timesfreepress.com/news/cartoons/
Here's one cartoon students will (unfortunately) identify with:
http://www.claybennett.com/pages2/debt.html
I particularly like this one:
http://www.claybennett.com/pages2/curb_appeal.html
Bonus for your funny bone:
http://www.thingsmyboyfriendsays.com/index.html
Decoupling?
Economists love to talk about "decoupling." It sounds like just what it is--a breakup, or an ability to become independent from someone else. The world economy has been humming along primarily because of U.S. demand and U.S. dollars. Recently, with the gains in Dubai, Brazil, and Russia, people believed the era of U.S.-caused growth might be over--that finally, countries could organically create growth. This NY Times article casts doubt on that hope:
http://www.nytimes.com/2008/08/24/business/24global.html?em
If the U.S. is still responsible for most growth, investors are better off just investing in the S&P 500 rather than attempting to diversify directly in international stocks or funds. But I believe decoupling will happen eventually--as the Chinese, Indians, Eastern Europeans, and Russians feel more affluent, they will spend more domestically and internationally. I've taken this opportunity to diversify my holdings and add commodities (KOL), gold (GLD), and single-country-based funds (EWM, IF, GXC) due to the pullback in most of these funds/ETFs.
http://www.nytimes.com/2008/08/24/business/24global.html?em
If the U.S. is still responsible for most growth, investors are better off just investing in the S&P 500 rather than attempting to diversify directly in international stocks or funds. But I believe decoupling will happen eventually--as the Chinese, Indians, Eastern Europeans, and Russians feel more affluent, they will spend more domestically and internationally. I've taken this opportunity to diversify my holdings and add commodities (KOL), gold (GLD), and single-country-based funds (EWM, IF, GXC) due to the pullback in most of these funds/ETFs.
USA v. Spain
Bryant, Wade lead USA to tough victory over Spain in Olympic medal showdown (or, according to the Ball Don't Lie blog: "Red, White, and Whew").
After missing the epic Nadal-Federer Wimbledon showdown this year, I wasn't going to miss Spain v. USA in the Olympic basketball gold medal match. It lived up to the hype. Were it not for Kobe and Wade each making a trey in the last six minutes to fend off Spain, Spain might have won. The final score was 118-107, but the score doesn't reflect how close the game was until the last two minutes. The last minute included four giveaway free throws from Spain to the USA, including an unsportsmanlike foul, and an easy missed layup after the outcome was in little doubt.
Both teams shot around 50%. Kobe committed several unnecessary fouls, because he always plays hard on defense, even when his team is ahead and should strategically avoid going for the steal. USA would have lost without Kobe--other than one poorly attempted three pointer, it didn't seem like Kobe missed a shot in the last four minutes. His four-point play--when he made a trey and the ensuing free throw--caused an eventual breakdown in Spain's composure, as it caused a Spanish player to foul out at a crucial time.
From my vantage point, the referees did not favor either side--they let the teams play, which is one reason the game was so close. But when the refs take a hands-off approach until the last few minutes, some calls will be questioned because of the inconsistency.
The rule differences between the NBA and Olympic rules are well explained here:
http://community.sportsbubbler.com/blogs/the_bob_boozer_jinx/archive/2008/08/07/ten-things-you-should-know-about-olympic-basketball.aspx
The surprises of the game? First, Juan Carlos-Navarro. He currently plays in the Euroleague, so he's more familiar with the Olympic rules, which allow a zone defense. (Spain's 2-3 zone defense was stellar, forcing USA to take more outside shots). Navarro broke down the USA man-to-man defense at will, scoring teardrop layups on almost every possession. He played so well, Jose Calderon didn't get much floor time.
Second, Rudy Fernandez, who signed with the Portland Trailblazers, played intelligently and effectively. Portland is going to have a monster team--here is their expected 2008 roster:
PG Brandon Roy
SG Rudy Fernandez
C Greg Oden / Joel Przybilla
SF Martell Webster
PF Ike Diogu / Channing Frye
Young, but deadly. No other NBA team has this kind of young talent, especially if Jerryd Bayless lives up to the hype. Anyway, back to the Olympics.
Dwight Howard seemed absent in the game, but that's due to outsized expectations--if he doesn't pull down 15 boards a game, we say he's having a bad day.
Lebron had some nifty passes and steals, but didn't score much. He's always been criticized for not scoring enough, but the Olympics confirmed this bias--he is definitely more comfortable passing than scoring. Blame Magic Johnson and the dazzling "Showtime" highlight reels.
Bottom line: Kobe and Wade took over--Lebron's time will come later.
Update on 9/15/2008: Bill Simmons' take on this incredible game is similar to mine:
http://sports.espn.go.com/espnmag/story?section=magazine&id=3575385
After missing the epic Nadal-Federer Wimbledon showdown this year, I wasn't going to miss Spain v. USA in the Olympic basketball gold medal match. It lived up to the hype. Were it not for Kobe and Wade each making a trey in the last six minutes to fend off Spain, Spain might have won. The final score was 118-107, but the score doesn't reflect how close the game was until the last two minutes. The last minute included four giveaway free throws from Spain to the USA, including an unsportsmanlike foul, and an easy missed layup after the outcome was in little doubt.
Both teams shot around 50%. Kobe committed several unnecessary fouls, because he always plays hard on defense, even when his team is ahead and should strategically avoid going for the steal. USA would have lost without Kobe--other than one poorly attempted three pointer, it didn't seem like Kobe missed a shot in the last four minutes. His four-point play--when he made a trey and the ensuing free throw--caused an eventual breakdown in Spain's composure, as it caused a Spanish player to foul out at a crucial time.
From my vantage point, the referees did not favor either side--they let the teams play, which is one reason the game was so close. But when the refs take a hands-off approach until the last few minutes, some calls will be questioned because of the inconsistency.
The rule differences between the NBA and Olympic rules are well explained here:
http://community.sportsbubbler.com/blogs/the_bob_boozer_jinx/archive/2008/08/07/ten-things-you-should-know-about-olympic-basketball.aspx
The surprises of the game? First, Juan Carlos-Navarro. He currently plays in the Euroleague, so he's more familiar with the Olympic rules, which allow a zone defense. (Spain's 2-3 zone defense was stellar, forcing USA to take more outside shots). Navarro broke down the USA man-to-man defense at will, scoring teardrop layups on almost every possession. He played so well, Jose Calderon didn't get much floor time.
Second, Rudy Fernandez, who signed with the Portland Trailblazers, played intelligently and effectively. Portland is going to have a monster team--here is their expected 2008 roster:
PG Brandon Roy
SG Rudy Fernandez
C Greg Oden / Joel Przybilla
SF Martell Webster
PF Ike Diogu / Channing Frye
Young, but deadly. No other NBA team has this kind of young talent, especially if Jerryd Bayless lives up to the hype. Anyway, back to the Olympics.
Dwight Howard seemed absent in the game, but that's due to outsized expectations--if he doesn't pull down 15 boards a game, we say he's having a bad day.
Lebron had some nifty passes and steals, but didn't score much. He's always been criticized for not scoring enough, but the Olympics confirmed this bias--he is definitely more comfortable passing than scoring. Blame Magic Johnson and the dazzling "Showtime" highlight reels.
Bottom line: Kobe and Wade took over--Lebron's time will come later.
Update on 9/15/2008: Bill Simmons' take on this incredible game is similar to mine:
http://sports.espn.go.com/espnmag/story?section=magazine&id=3575385
Saturday, August 23, 2008
Must-Read Poems
Here is a website with some famous love poems:
http://www.frazmtn.com/~bwallis/lovlost.htm
Pablo Neruda's Poema Veinte ("Love is so short, and forgetting takes so long") is a must-read.
Read Theodore Roethke's "I Knew a Woman," and ee cummings' "since feeling is first," and you will gain an appreciation for what's important in life. Roethke's poem is below:
I knew a woman, lovely in her bones,
When small birds sighed, she would sigh back at them;
Ah, when she moved, she moved more ways than one:
The shapes a bright container can contain!
Of her choice virtues only gods should speak,
Or English poets who grew up on Greek
(I'd have them sing in chorus, cheek to cheek.)
How well her wishes went! She stroked my chin,
She taught me Turn, and Counter-turn, and stand;
She taught me Touch, that undulant white skin:
I nibbled meekly from her proffered hand;
She was the sickle; I, poor I, the rake,
Coming behind her for her pretty sake
(But what prodigious mowing did we make.)
Love likes a gander, and adores a goose:
Her full lips pursed, the errant note to seize;
She played it quick, she played it light and loose;
My eyes, they dazzled at her flowing knees;
Her several parts could keep a pure repose,
Or one hip quiver with a mobile nose
(She moved in circles, and those circles moved.)
Let seed be grass, and grass turn into hay:
I'm martyr to a motion not my own;
What's freedom for? To know eternity.
I swear she cast a shadow white as stone.
But who would count eternity in days?
These old bones live to learn her wanton ways:
(I measure time by how a body sways.)
http://www.frazmtn.com/~bwallis/lovlost.htm
Pablo Neruda's Poema Veinte ("Love is so short, and forgetting takes so long") is a must-read.
Read Theodore Roethke's "I Knew a Woman," and ee cummings' "since feeling is first," and you will gain an appreciation for what's important in life. Roethke's poem is below:
I knew a woman, lovely in her bones,
When small birds sighed, she would sigh back at them;
Ah, when she moved, she moved more ways than one:
The shapes a bright container can contain!
Of her choice virtues only gods should speak,
Or English poets who grew up on Greek
(I'd have them sing in chorus, cheek to cheek.)
How well her wishes went! She stroked my chin,
She taught me Turn, and Counter-turn, and stand;
She taught me Touch, that undulant white skin:
I nibbled meekly from her proffered hand;
She was the sickle; I, poor I, the rake,
Coming behind her for her pretty sake
(But what prodigious mowing did we make.)
Love likes a gander, and adores a goose:
Her full lips pursed, the errant note to seize;
She played it quick, she played it light and loose;
My eyes, they dazzled at her flowing knees;
Her several parts could keep a pure repose,
Or one hip quiver with a mobile nose
(She moved in circles, and those circles moved.)
Let seed be grass, and grass turn into hay:
I'm martyr to a motion not my own;
What's freedom for? To know eternity.
I swear she cast a shadow white as stone.
But who would count eternity in days?
These old bones live to learn her wanton ways:
(I measure time by how a body sways.)
Friday, August 22, 2008
On the Money: Relationship Test
I was watching CNBC's new show, On the Money, hosted by Carmen Ulrich, author of Generation Debt. When I saw it for the first time, I thought, "Oh no, not another Susie Orman." But Carmen, as she likes to be called, seems a little better, and she has a good financial compatibility test here:
http://www.cnbc.com/id/26353188/site/14081545/
A 33 year old Texan woman called into Carmen's show. She said her boyfriend of one year initiated a breakup after she wanted a prenup. Carmen told her that love trumps money, and a real partnership also includes a financial merger. The woman replied that she was generally a trusting person, but not with her money. I didn't catch any real resolution, but I love the idea of women demanding prenups--it's a good indicator of gender parity and how far we've come from the all-too-common scenario of men demanding their fiancees sign a prenup the night before the wedding. (Off the top of my head, without fact-checking, I read somewhere that Barry Bonds and Larry Ellison did this. As a result, Barry Bonds changed pre-nup law in the entire state of California, making it harder to enforce them.)
In other news, Muhammad Yunus, "banker to the world's poor," says he has a 98-99% payback success on his "sub sub sub subprime" micro-loans, without lawyers or insurance. In smaller environments, such as villages, people with nothing can be more trustworthy than people with money. The problem with a large place like Texas is it's too difficult for the 33 year old woman to get an accurate measure of her boyfriend's trustworthiness and integrity. She is behaving rationally, especially after only one year. My suggestion would have been to get back together with him, but on two conditions: one, ask him to wait for another year before proposing; and two, ask to see his monthly bills and bank statements to get an idea of his spending habits. Yes, she'd be a financial narc, but if a prenup is out of the question, how else is she going to allay her fears?
http://www.cnbc.com/id/26353188/site/14081545/
A 33 year old Texan woman called into Carmen's show. She said her boyfriend of one year initiated a breakup after she wanted a prenup. Carmen told her that love trumps money, and a real partnership also includes a financial merger. The woman replied that she was generally a trusting person, but not with her money. I didn't catch any real resolution, but I love the idea of women demanding prenups--it's a good indicator of gender parity and how far we've come from the all-too-common scenario of men demanding their fiancees sign a prenup the night before the wedding. (Off the top of my head, without fact-checking, I read somewhere that Barry Bonds and Larry Ellison did this. As a result, Barry Bonds changed pre-nup law in the entire state of California, making it harder to enforce them.)
In other news, Muhammad Yunus, "banker to the world's poor," says he has a 98-99% payback success on his "sub sub sub subprime" micro-loans, without lawyers or insurance. In smaller environments, such as villages, people with nothing can be more trustworthy than people with money. The problem with a large place like Texas is it's too difficult for the 33 year old woman to get an accurate measure of her boyfriend's trustworthiness and integrity. She is behaving rationally, especially after only one year. My suggestion would have been to get back together with him, but on two conditions: one, ask him to wait for another year before proposing; and two, ask to see his monthly bills and bank statements to get an idea of his spending habits. Yes, she'd be a financial narc, but if a prenup is out of the question, how else is she going to allay her fears?
Percentage of Union Workers in U.S.
Interesting fact: according to today's WSJ (August 22, 2008; A11),
In the U.S., just 7.5% of private-sector workers are union members, and about 12% of all workers, including government workers. In the euro zone, 18% of private-sector workers and 22% of all workers, are unionized.
Unions themselves are neither good nor bad for the economy. In fact, theoretically, unions provide stability to workers and reduce replacement and retraining costs for employers, so they should be economically favorable. The problem with modern-day unions, especially government unions, is their benefits, such as pension and health care liabilities, are uncertain. Without some direct tie-in to the present value of funds in the budget, government union benefits could expand exponentially, sapping more and more taxpayer dollars. In addition, many union negotiations occur behind closed doors, providing no check on expanded taxpayer liabilities.
No business or government can survive by continuing to add undefined, potentially unlimited benefits while running major deficits.
More on California's government unions HERE. More on California's teachers' unions HERE.
More on the general topic of government unions here (Warren Buffett); here ("Rotting from Within"); and here (Road to Bankruptcy).
Update on February 15, 2010: the NYT and Phyllis Korkki have their own percentages on union membership HERE. Basically, in 2009, 12.3% of wage and salary workers were union members. 7.9% of the aforementioned 12.3% were government workers, meaning just 4.4% of private sector workers were unionized.
Among government workers, local government workers like teachers, cops, and firefighters (as opposed to state and federal government workers) had the highest rate of public sector membership, at 43.3%.
See THIS chart for more information (Catherine Rampell, NYT, June 1, 2010). In California, 13.7% of all employees were state and local government employees in 2009. That doesn't sound like a huge percentage, but most elections inspire only 50% to 70% of eligible voters to come out and vote. That means union members often supply 20% to 25% of the total voters on a proposition or candidate.
Update on May 3, 2012: according to a Alasdair Roberts Bloomberg article ("Can Occupy Wall Street Replace the Labor Movement?") published May 1, 2012,
"In 1981, the labor movement was already in decline, and the trend accelerated afterward. In 1960, one-third of the private-sector workforce had been represented by trade unions. Today, only 8 percent is. The missing army of private-sector union members--that is, the number of additional workers that the movement would include today if unionization rates had stayed at levels of the 1960s and 1970s--is about 20 million people."
Update on May 7, 2012: Amanda Paulson, Christian Science Monitor (online, seen May 7, 2012):
"Less than 7 percent of private-sector workers now belong to a union, compared with more than 30 percent in the 1950s. Since 1983, about 3 million fewer people are represented by unions...The public sector, however, has been somewhat cushioned...Some 36 percent of state and local workers belong to unions (and that includes "right-to-work" states that prohibit union-only workplaces and have far smaller union rosters)."
Update on December 12, 2012: CNN has a map that shows union membership per state: http://money.cnn.com/interactive/news/economy/union-membership-by-state/
In the U.S., just 7.5% of private-sector workers are union members, and about 12% of all workers, including government workers. In the euro zone, 18% of private-sector workers and 22% of all workers, are unionized.
Unions themselves are neither good nor bad for the economy. In fact, theoretically, unions provide stability to workers and reduce replacement and retraining costs for employers, so they should be economically favorable. The problem with modern-day unions, especially government unions, is their benefits, such as pension and health care liabilities, are uncertain. Without some direct tie-in to the present value of funds in the budget, government union benefits could expand exponentially, sapping more and more taxpayer dollars. In addition, many union negotiations occur behind closed doors, providing no check on expanded taxpayer liabilities.
No business or government can survive by continuing to add undefined, potentially unlimited benefits while running major deficits.
More on California's government unions HERE. More on California's teachers' unions HERE.
More on the general topic of government unions here (Warren Buffett); here ("Rotting from Within"); and here (Road to Bankruptcy).
Update on February 15, 2010: the NYT and Phyllis Korkki have their own percentages on union membership HERE. Basically, in 2009, 12.3% of wage and salary workers were union members. 7.9% of the aforementioned 12.3% were government workers, meaning just 4.4% of private sector workers were unionized.
Among government workers, local government workers like teachers, cops, and firefighters (as opposed to state and federal government workers) had the highest rate of public sector membership, at 43.3%.
See THIS chart for more information (Catherine Rampell, NYT, June 1, 2010). In California, 13.7% of all employees were state and local government employees in 2009. That doesn't sound like a huge percentage, but most elections inspire only 50% to 70% of eligible voters to come out and vote. That means union members often supply 20% to 25% of the total voters on a proposition or candidate.
Update on May 3, 2012: according to a Alasdair Roberts Bloomberg article ("Can Occupy Wall Street Replace the Labor Movement?") published May 1, 2012,
"In 1981, the labor movement was already in decline, and the trend accelerated afterward. In 1960, one-third of the private-sector workforce had been represented by trade unions. Today, only 8 percent is. The missing army of private-sector union members--that is, the number of additional workers that the movement would include today if unionization rates had stayed at levels of the 1960s and 1970s--is about 20 million people."
Update on May 7, 2012: Amanda Paulson, Christian Science Monitor (online, seen May 7, 2012):
"Less than 7 percent of private-sector workers now belong to a union, compared with more than 30 percent in the 1950s. Since 1983, about 3 million fewer people are represented by unions...The public sector, however, has been somewhat cushioned...Some 36 percent of state and local workers belong to unions (and that includes "right-to-work" states that prohibit union-only workplaces and have far smaller union rosters)."
Update on December 12, 2012: CNN has a map that shows union membership per state: http://money.cnn.com/interactive/news/economy/union-membership-by-state/
Stocks Update, 8/22/08
Numbers below are based on prices at mid-day on August 22, 2008. Positions below have at least a $2,500 basis or current value of at least $2,500.
What's new? I don't list my mutual fund activity here, because activity is so sparse, but I added to my mutual fund positions in T. Rowe Price's EMERGING EUROPE & MEDITERRANEAN fund (TREMX). The fund is 61% Russian stocks and its value decreased after Russia invaded Georgia (imperial notions are considered bad for any economy). I cite TREMX and its majority Russian holdings because it's important to look at the actual composition of a mutual fund before buying it. Many people think they are diversifying when they buy funds with different-sounding names. Mutual fund companies are selling similar products and have to differentiate based on names and other advertising. I had a friend recently show me his portfolio, and he wondered why he had lost so much money over the last year when he felt diversified. I looked at his portfolio--almost all the funds held the exact same names (e.g., Google, Chevron, and other well-known big caps). Lesson: always look deep inside the fund, not just at the cover.
Having said that, I've taken my own advice and diversified. I recently opened new positions in Gold (GLD), China (GXC), and KOL (energy ETF).
My main regret so far? I wish I'd waited before going into the Malaysia ETF (EWM) and Indonesia Fund (IF). I've been averaging down, and it's getting expensive.
I continue to believe IF will be a good long-term hold over a 10 year horizon. Indonesia was part of OPEC until a few months ago. It left OPEC after being unable to meet its production targets. Although Indonesia is blessed with natural resources, including crude oil and natural gas, it now imports more oil than it exports. Once Indonesia is better run, gains should come. I also love its national motto: "Unity in diversity."
Malaysia is in an enviable situation with good weather, peaceful citizens, natural resources, and many entrepreneurial residents who understand Chinese culture and can attract investment from China and neighbor Singapore. I am hoping both EWM and IF will be lifetime holds in my portfolio.
What's my outlook for the market? Choppy, lots of sharks still circling around, and any chum thrown in the water may result in a feeding frenzy. In plainer English, the market will probably move sideways due to short sellers still making bets and hedge and mutual funds not moving in to buy stocks just yet. Any bad news may result in a temporary market capitulation. I'm a not a posterboy for the practice, but it's hard to be a "buy and hold" investor these days. My advice? Keep the faith, but diversify.
Open Positions
CCT = +1.82
EWM =-6.42
EWS = -9.31
EZU = -4.39
GLD = 0% (excluded from avg)
GXC = +0.32%
IF = -9.49
KOL = +6.88
SWZ = -6.51
YHOO = -4.69
[Average of "Open Positions": losing/negative average 3.53%]
Closed Positions:
Held more than seven days but less than one year (from May 30, 2008):
CNB = +10.0
EQ = -8.83
GE = -6.4
INTC = 0.0 (excluded from average; insignificant movement)
PFE = -5.5
PNK = -16.7%
PPS = -2.8
VNQ = +2.37 [sold 8/7/08]
WFR = +0.9 (approx; based on partial sales week of 8/4/08 in two separate accounts)
WYE = +2.4%
[Overall Record: Lost an average of 2.82%]
Held less than 7 days:
DUK = (0%, excluded from avg) [8/07/08 - 8/14/08]; GE (1.0%); GOOG (0.8%) [7/28/08 - 7/29/08]; GRMN (-6.2%) [Sold 8/5/08]; ICE (2.0%), MMM (0.5%), MRK (0.1%), NVDA (8.0%) [8/12 to 8/13/08]; PFE (1.3%), SCUR (15%); SO (-0.3%) [Sold 8/5/08]; TTWO (4.3%) [partial sales on 8/5/08, 8/7/08, and 8/8/08]
[Overall Record: Gained an average of 1.68%]
Daytrades:
PFE = +0.5%
GE = +0.5% (Updated on July 14, 2008; bought at 27.15, sold at 27.30)
XLF = +4.3% (Updated on July 15, 2008)
[Overall Record: Gained an average of 1.76%]
Compare to S&P 500: losing/negative 6.92%
[from May 30, 2008 (1385.67) to mid-day August 22, 2008 (1289.80)]
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.
What's new? I don't list my mutual fund activity here, because activity is so sparse, but I added to my mutual fund positions in T. Rowe Price's EMERGING EUROPE & MEDITERRANEAN fund (TREMX). The fund is 61% Russian stocks and its value decreased after Russia invaded Georgia (imperial notions are considered bad for any economy). I cite TREMX and its majority Russian holdings because it's important to look at the actual composition of a mutual fund before buying it. Many people think they are diversifying when they buy funds with different-sounding names. Mutual fund companies are selling similar products and have to differentiate based on names and other advertising. I had a friend recently show me his portfolio, and he wondered why he had lost so much money over the last year when he felt diversified. I looked at his portfolio--almost all the funds held the exact same names (e.g., Google, Chevron, and other well-known big caps). Lesson: always look deep inside the fund, not just at the cover.
Having said that, I've taken my own advice and diversified. I recently opened new positions in Gold (GLD), China (GXC), and KOL (energy ETF).
My main regret so far? I wish I'd waited before going into the Malaysia ETF (EWM) and Indonesia Fund (IF). I've been averaging down, and it's getting expensive.
I continue to believe IF will be a good long-term hold over a 10 year horizon. Indonesia was part of OPEC until a few months ago. It left OPEC after being unable to meet its production targets. Although Indonesia is blessed with natural resources, including crude oil and natural gas, it now imports more oil than it exports. Once Indonesia is better run, gains should come. I also love its national motto: "Unity in diversity."
Malaysia is in an enviable situation with good weather, peaceful citizens, natural resources, and many entrepreneurial residents who understand Chinese culture and can attract investment from China and neighbor Singapore. I am hoping both EWM and IF will be lifetime holds in my portfolio.
What's my outlook for the market? Choppy, lots of sharks still circling around, and any chum thrown in the water may result in a feeding frenzy. In plainer English, the market will probably move sideways due to short sellers still making bets and hedge and mutual funds not moving in to buy stocks just yet. Any bad news may result in a temporary market capitulation. I'm a not a posterboy for the practice, but it's hard to be a "buy and hold" investor these days. My advice? Keep the faith, but diversify.
Open Positions
CCT = +1.82
EWM =-6.42
EWS = -9.31
EZU = -4.39
GLD = 0% (excluded from avg)
GXC = +0.32%
IF = -9.49
KOL = +6.88
SWZ = -6.51
YHOO = -4.69
[Average of "Open Positions": losing/negative average 3.53%]
Closed Positions:
Held more than seven days but less than one year (from May 30, 2008):
CNB = +10.0
EQ = -8.83
GE = -6.4
INTC = 0.0 (excluded from average; insignificant movement)
PFE = -5.5
PNK = -16.7%
PPS = -2.8
VNQ = +2.37 [sold 8/7/08]
WFR = +0.9 (approx; based on partial sales week of 8/4/08 in two separate accounts)
WYE = +2.4%
[Overall Record: Lost an average of 2.82%]
Held less than 7 days:
DUK = (0%, excluded from avg) [8/07/08 - 8/14/08]; GE (1.0%); GOOG (0.8%) [7/28/08 - 7/29/08]; GRMN (-6.2%) [Sold 8/5/08]; ICE (2.0%), MMM (0.5%), MRK (0.1%), NVDA (8.0%) [8/12 to 8/13/08]; PFE (1.3%), SCUR (15%); SO (-0.3%) [Sold 8/5/08]; TTWO (4.3%) [partial sales on 8/5/08, 8/7/08, and 8/8/08]
[Overall Record: Gained an average of 1.68%]
Daytrades:
PFE = +0.5%
GE = +0.5% (Updated on July 14, 2008; bought at 27.15, sold at 27.30)
XLF = +4.3% (Updated on July 15, 2008)
[Overall Record: Gained an average of 1.76%]
Compare to S&P 500: losing/negative 6.92%
[from May 30, 2008 (1385.67) to mid-day August 22, 2008 (1289.80)]
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.
Thursday, August 21, 2008
I.O.U.S.A.
Nothing particularly exciting going on these days in the world of economics. The market is going sideways, with not much to kickstart it. Here's an article on the release of an interesting film, I.O.U.S.A.
http://news.yahoo.com/s/ap/20080822/ap_en_mo/buffett_box_office
Some excerpts:
Peterson said the meager U.S. rate of savings today means that roughly 70 percent of the nation's debts are being bought by foreign investors, and that could create geopolitical and economic problems for the country.
[70%?! Seventy percent of our debt is owned by other countries? &^!$#!]
The U.S. government owed roughly $53 trillion more than it had at the end of the 2007 fiscal year
[53 trillion?! &^!$# &^!$#!]
Sometimes I dream we live in a perfect world, and the new President's Cabinet will include Pete Peterson, David Walker, and Richard Fisher. [crossing fingers]
http://news.yahoo.com/s/ap/20080822/ap_en_mo/buffett_box_office
Some excerpts:
Peterson said the meager U.S. rate of savings today means that roughly 70 percent of the nation's debts are being bought by foreign investors, and that could create geopolitical and economic problems for the country.
[70%?! Seventy percent of our debt is owned by other countries? &^!$#!]
The U.S. government owed roughly $53 trillion more than it had at the end of the 2007 fiscal year
[53 trillion?! &^!$# &^!$#!]
Sometimes I dream we live in a perfect world, and the new President's Cabinet will include Pete Peterson, David Walker, and Richard Fisher. [crossing fingers]
Tuesday, August 19, 2008
Property Tax Info, 2006
The link has old data, but still worth a look-see:
http://www.taxfoundation.org/research/show/22607.html
Even after Prop 13, California is in the top 10 in median real estate taxes paid ($2,510).
The Tax Foundation's research section is fun to browse. I found this report, comparing state spending with federal money inflow:
http://www.taxfoundation.org/research/show/266.html
How is New Mexico getting twice as much back as it's paying to D.C.? Also, I assumed California (#43) was getting the worst shake of all, but New Jersey, Nevada, and Connecticut are getting the least back from D.C. relative to the taxes they've paid to D.C. The only state with nothing to complain about? Rhode Island, which pays out a buck and got a buck back from the feds.
http://www.taxfoundation.org/research/show/22607.html
Even after Prop 13, California is in the top 10 in median real estate taxes paid ($2,510).
The Tax Foundation's research section is fun to browse. I found this report, comparing state spending with federal money inflow:
http://www.taxfoundation.org/research/show/266.html
How is New Mexico getting twice as much back as it's paying to D.C.? Also, I assumed California (#43) was getting the worst shake of all, but New Jersey, Nevada, and Connecticut are getting the least back from D.C. relative to the taxes they've paid to D.C. The only state with nothing to complain about? Rhode Island, which pays out a buck and got a buck back from the feds.
Monday, August 18, 2008
Book Excerpt
Saw this in the Atlantic Monthly, and had to share.
William Graebner, in his book, Patty's Got a Gun, talks about consumerism. He explains the last eight years, a time of extended executive power and debt, in one neat paragraph:
[There was] the sense that ordinary people had been conditioned by the public schools and drugged by materialistic consumer affluence into uncritical acceptance of their circumstances.
In other words, pass the soma. Even Mr. Huxley couldn't have said it more concisely.
William Graebner, in his book, Patty's Got a Gun, talks about consumerism. He explains the last eight years, a time of extended executive power and debt, in one neat paragraph:
[There was] the sense that ordinary people had been conditioned by the public schools and drugged by materialistic consumer affluence into uncritical acceptance of their circumstances.
In other words, pass the soma. Even Mr. Huxley couldn't have said it more concisely.
Yahoo to Google: Et tu?
"Google Faces Defamation Lawsuit in India," read a recent WSJ article. Here is a summary of the article:
A small Indian construction company is demanding Google disclose the name of a person who used its blogging service (blogger.com). A blogger using the name, "Toxic Writer," criticized the Indian construction company, running afoul of local defamation laws. An Indian court ordered Google India to reveal the identity of the blogger. Google's India subsidiary removed the blog, but hasn't yet revealed the identity of the blogger.
Stay tuned... Jerry Yang and Terry Semel must be watching this with no small measure of schaedenfraude.
A small Indian construction company is demanding Google disclose the name of a person who used its blogging service (blogger.com). A blogger using the name, "Toxic Writer," criticized the Indian construction company, running afoul of local defamation laws. An Indian court ordered Google India to reveal the identity of the blogger. Google's India subsidiary removed the blog, but hasn't yet revealed the identity of the blogger.
Stay tuned... Jerry Yang and Terry Semel must be watching this with no small measure of schaedenfraude.
May You Live in Interesting Times
After applauding the federal courts and their judges, I received a loss in one federal case (after the judge sat on the opinion for over 8 months), and the very next day, another federal judge issued sanctions against me (a first) and my clients for over 11,000 dollars, without a hearing, because he believed we should have kept a case in state court rather than assert federal court jurisdiction. Although the removal to federal court provided my clients additional time, and the sanctions were paid in full, the net result still left me questioning the experience my clients received.
This brings me to Rafat Rule #2: systems don't matter--people matter (more specifically, people with integrity).
We assume the U.S. system is the best in the world, in no small part because of the rule of law. But any system requires people to behave with integrity and honesty, and any system that attracts such people will succeed. Thus, even if the federal court system is better than the state court system due to several factors--more efficient discovery rules; the ability to call a judge during a deposition instead of having to get up and file a protective order or motion to compel; lifetime appointments, allowing judges more leeway to make tough decisions; clear deadlines issued at the beginning of each case, etc.--if you have an octogenarian federal judge who hasn't practiced law in 40+ years or who delegates to law clerks that lack extensive practical experience, even an inherently superior system won't necessarily lead to fair results.
Our systemic superiority should not cause us to be less vigilant. For example, even if the free market system is inherently better than centralized planning or socialism, if the people in the system do not have the relevant or recent experience or are out-of-touch, results will be poor. This is why Singapore, despite not practicing Western-style free markets, is more successful than the U.S. in spreading wealth and stability--with the best people in government, Singapore's system can be more centralized, and as long as it adjusts quickly to any mistakes, Singaporeans will be prosperous. What does this mean for Americans as we adjust to a period of less prosperity? It means we can learn from other countries, and we cannot assume our systemic superiority will allow us front seats to economic growth.
In principle, I agree a constitutional republic should be more successful than a country with centralized planning. The advantages of a constitutional republic with elected representatives are twofold: one, eventual accountability; and two, the diffusion of power, allowing a statistically higher chance of having good (and bad) representatives. But without honest, diligent people in any system, there is nothing inherently good or bad about an American political or economic system versus a British system, or a Russian system vs. Singaporean system. For example, one could reasonably argue the Singaporean and Russian systems, despite being more centralized, created more wealth and prosperity for more of their people than the British and American governments in 2008. This recent, perhaps brief, reversal in economic prosperity is going to create a conundrum for political scientists and economists. How do they explain why a Singaporean system has done better for its people than the American system, if centralized planning has no place in politics or economics? This reversal in fortune should lead to more analysis of the roles of ethics and accountability in government systems.
With Singapore, my hypothesis is smaller communities automatically generate some form of accountability, and this accountability leads to more "morality" in the form of closer ties in the community. All this takes me back to Rafat Rule #2: systems don't matter--people matter.
Update on October 17, 2008: the company that received sanctions of around 11,000 dollars just filed for Ch 11 bankruptcy. Looks like the lawyers might be the primary people benefiting at the end of the day.
This brings me to Rafat Rule #2: systems don't matter--people matter (more specifically, people with integrity).
We assume the U.S. system is the best in the world, in no small part because of the rule of law. But any system requires people to behave with integrity and honesty, and any system that attracts such people will succeed. Thus, even if the federal court system is better than the state court system due to several factors--more efficient discovery rules; the ability to call a judge during a deposition instead of having to get up and file a protective order or motion to compel; lifetime appointments, allowing judges more leeway to make tough decisions; clear deadlines issued at the beginning of each case, etc.--if you have an octogenarian federal judge who hasn't practiced law in 40+ years or who delegates to law clerks that lack extensive practical experience, even an inherently superior system won't necessarily lead to fair results.
Our systemic superiority should not cause us to be less vigilant. For example, even if the free market system is inherently better than centralized planning or socialism, if the people in the system do not have the relevant or recent experience or are out-of-touch, results will be poor. This is why Singapore, despite not practicing Western-style free markets, is more successful than the U.S. in spreading wealth and stability--with the best people in government, Singapore's system can be more centralized, and as long as it adjusts quickly to any mistakes, Singaporeans will be prosperous. What does this mean for Americans as we adjust to a period of less prosperity? It means we can learn from other countries, and we cannot assume our systemic superiority will allow us front seats to economic growth.
In principle, I agree a constitutional republic should be more successful than a country with centralized planning. The advantages of a constitutional republic with elected representatives are twofold: one, eventual accountability; and two, the diffusion of power, allowing a statistically higher chance of having good (and bad) representatives. But without honest, diligent people in any system, there is nothing inherently good or bad about an American political or economic system versus a British system, or a Russian system vs. Singaporean system. For example, one could reasonably argue the Singaporean and Russian systems, despite being more centralized, created more wealth and prosperity for more of their people than the British and American governments in 2008. This recent, perhaps brief, reversal in economic prosperity is going to create a conundrum for political scientists and economists. How do they explain why a Singaporean system has done better for its people than the American system, if centralized planning has no place in politics or economics? This reversal in fortune should lead to more analysis of the roles of ethics and accountability in government systems.
With Singapore, my hypothesis is smaller communities automatically generate some form of accountability, and this accountability leads to more "morality" in the form of closer ties in the community. All this takes me back to Rafat Rule #2: systems don't matter--people matter.
Update on October 17, 2008: the company that received sanctions of around 11,000 dollars just filed for Ch 11 bankruptcy. Looks like the lawyers might be the primary people benefiting at the end of the day.
Friday, August 15, 2008
Greenspan Wants More Educated Immigrants
According to yesterday's WSJ (8/14/08, David Wessel, A1), Greenspan agrees with my pro-immigration views, at least with respect to educated immigrants:
"The most effective initiative, though politically difficult, would be a major expansion in quotas for skilled immigrants," he said...
"Perhaps 150,000 of [new households] are loosely classified as skilled...A doubling or tripling of this number would markedly accelerate the absorption of unsold housing inventory for sale--and hence stabilize prices."
So far, so good; however, the Journal makes a mistake when it tries to do its own analysis:
The only sustainable way to increase demand for vacant houses is to spur the formation of new households. Admitting more skilled immigrants, who tend to earn enough to buy homes would accomplish that...
The Journal doesn't seem to understand that skilled immigrants mainly come to the States by way of H1-B visas and would settle in already-strong economic areas, such as San Jose, San Francisco, Chicago, and other large, diverse cities.
The housing crisis is mainly in places where mortgage brokers and lenders granted credit to low-income employees or workers with unsteady incomes.
Las Vegas, NV is a prime example. Although Vegas is a strong union town, too many uneducated people entered the market with hopes of making it to the middle-class. The city simply couldn't absorb all of its new entrants. As for attracting educated foreigners, how many M.A.s in Physics does a casino need?
Stockton, CA and Merced, CA have become notorious for their high rate of foreclosures. Their residents are mainly non-college-educated workers. While that situation may change because of the new UC in Merced, for now, if you have a PhD in engineering, would you end up in Merced, CA or San Jose, CA? (And yes, that's a rhetorical question.)
When residents bought homes outside but near Boulder and Denver, Colorado, they forgot the law of supply and demand. When you live near cities with only 1/2 million (Denver) and 100,000 (Boulder) residents, there's not enough demand to justify a large, immediate increase in supply. While Denver does have Qwest and ProLogis, there aren't enough companies there to sustain an inflow of high tech talent. In contrast, in Santa Clara County, I get lost driving in Sunnyvale because there are so many little streets that lead to massive warehouses filled with tech companies I've never heard of.
Greenspan is still correct in his pro-immigration view, but there's a missing step. We need companies to open new branches outside of the major cities. Perhaps if the government changed the H1B program to increase the cap on companies willing to place educated workers in mid-sized or smaller cities, educated immigrants could be a boon to overlooked cities suffering from the economic downturn.
Greenspan has recovered some of his credibility--he said this in November 2002:
It's hard to escape the conclusion that at some point our extraordinary housing boom...cannot continue indefinitely into the future.
Then again, this is the same person who said this in October 2004:
[Home price declines] "likely would not have substantial macroeconomic implications... (2004)
And this gem comes from October 2006:
I think the worst of this [housing price decline] may well be over. (2006)
At the end of the day, we need more skilled immigrants or immigrants willing to work hard, but the question is where should they go? State governments and smaller to mid-sized cities should be more active in working with national and local corporations to set up the infrastructure necessary to attract foreign talent. It's a win-win situation for everyone. Local residents and businesses would benefit from higher prices due to increased demand. Foreign talent gets to come to America and make more here than they would elsewhere. I hope the local governments of Merced and Stockton are reading and thinking outside the box--if they don't follow the Rafat Rule ("being pro-immigration necessarily means being pro-capitalism"), more Southern cities like Louisville, KY, will beat them to the punch.
"The most effective initiative, though politically difficult, would be a major expansion in quotas for skilled immigrants," he said...
"Perhaps 150,000 of [new households] are loosely classified as skilled...A doubling or tripling of this number would markedly accelerate the absorption of unsold housing inventory for sale--and hence stabilize prices."
So far, so good; however, the Journal makes a mistake when it tries to do its own analysis:
The only sustainable way to increase demand for vacant houses is to spur the formation of new households. Admitting more skilled immigrants, who tend to earn enough to buy homes would accomplish that...
The Journal doesn't seem to understand that skilled immigrants mainly come to the States by way of H1-B visas and would settle in already-strong economic areas, such as San Jose, San Francisco, Chicago, and other large, diverse cities.
The housing crisis is mainly in places where mortgage brokers and lenders granted credit to low-income employees or workers with unsteady incomes.
Las Vegas, NV is a prime example. Although Vegas is a strong union town, too many uneducated people entered the market with hopes of making it to the middle-class. The city simply couldn't absorb all of its new entrants. As for attracting educated foreigners, how many M.A.s in Physics does a casino need?
Stockton, CA and Merced, CA have become notorious for their high rate of foreclosures. Their residents are mainly non-college-educated workers. While that situation may change because of the new UC in Merced, for now, if you have a PhD in engineering, would you end up in Merced, CA or San Jose, CA? (And yes, that's a rhetorical question.)
When residents bought homes outside but near Boulder and Denver, Colorado, they forgot the law of supply and demand. When you live near cities with only 1/2 million (Denver) and 100,000 (Boulder) residents, there's not enough demand to justify a large, immediate increase in supply. While Denver does have Qwest and ProLogis, there aren't enough companies there to sustain an inflow of high tech talent. In contrast, in Santa Clara County, I get lost driving in Sunnyvale because there are so many little streets that lead to massive warehouses filled with tech companies I've never heard of.
Greenspan is still correct in his pro-immigration view, but there's a missing step. We need companies to open new branches outside of the major cities. Perhaps if the government changed the H1B program to increase the cap on companies willing to place educated workers in mid-sized or smaller cities, educated immigrants could be a boon to overlooked cities suffering from the economic downturn.
Greenspan has recovered some of his credibility--he said this in November 2002:
It's hard to escape the conclusion that at some point our extraordinary housing boom...cannot continue indefinitely into the future.
Then again, this is the same person who said this in October 2004:
[Home price declines] "likely would not have substantial macroeconomic implications... (2004)
And this gem comes from October 2006:
I think the worst of this [housing price decline] may well be over. (2006)
At the end of the day, we need more skilled immigrants or immigrants willing to work hard, but the question is where should they go? State governments and smaller to mid-sized cities should be more active in working with national and local corporations to set up the infrastructure necessary to attract foreign talent. It's a win-win situation for everyone. Local residents and businesses would benefit from higher prices due to increased demand. Foreign talent gets to come to America and make more here than they would elsewhere. I hope the local governments of Merced and Stockton are reading and thinking outside the box--if they don't follow the Rafat Rule ("being pro-immigration necessarily means being pro-capitalism"), more Southern cities like Louisville, KY, will beat them to the punch.
Thursday, August 14, 2008
U.S. Foreclosure Activity (July 2008)
Above is a map of American foreclosure activity in July 2008. One issue is defining "foreclosure activity" in a meaningful way. Many homeowners can file for bankruptcy, thereby preventing actual foreclosure. Therefore, a particular homeowner does not necessarily lose his or her home merely by having "foreclosure activity," such as a notice of default (NOD).
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