Singapore, Part Deux

My earlier post on Singapore received quite a few hits:

In Defense of Singapore

Here is an article from www.theonlinecitizen.com about Singapore's political system:

http://theonlinecitizen.com/2008/12/current-system-lacks-accountability

The existence of The Online Citizen shows that Singapore does indeed have forums for anti-government debate, and the highly connected nature of Singapore--both communally and technologically--limit the government's power to impose overly rigorous speech codes.

American Lawyers

Attorney Raoul Felder recently talked about job prospects for lawyers in the WSJ, only partly tongue-in-cheek:

Meanwhile, Congress might consider a bailout plan for lawyers. There are now some 1,162,124 lawyers in the U.S., and the law schools are spewing out graduates at a rate of 43,518 a year, all set adrift upon a public that increasingly wants doesn't have money to pay for their services. There is no other profession more dependent on discretionary spending, except perhaps the oldest one.

Oh, the reality.

O' Canada

A lot of lovely, lovely numbers showing debt levels of various countries:

http://dollardaze.org/blog/?post_id=00536

I recently bought some Canadian currency (FXC). Because of the decline in commodity prices, the Canadian dollar has gone from parity with the U.S. dollar to only 71 U.S. cents. Looking at the Canadian debt load, especially in comparison to other countries, the drop seems overdone.

Earlier, I wrote about currencies in the following post, singling out the Canadian dollar and the Swiss franc as possible diversification tools:

http://willworkforjustice.blogspot.com/2008/11/currencies.html

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.

Stocks Update: Keeping Score

A year ago--December 7, 2007, to be exact--a good friend and I started arguing about how to invest. My friend and I don't usually agree on stocks--he's more of a technical analyst, and I'm more into macro-economics. For example, he hates Coca-Cola (KO), saying he'd never invest in sugar water, while I like its consistent dividend and international business. He looks for major growth stories, while I look primarily at balance sheets and avoid companies with too much debt. When he and I have agreed on stocks, however, we've never been wrong, at least not in the short-term. Still, we decided to resolve our differences by opening up virtual trading accounts to compete against each other and also decided to keep track of our actual investment performance. This way, if we continued to argue, we would have both actual and virtual evidence to support our investing styles.

I am winning in both the virtual stock games (http://vse.marketwatch.com/Game/Homepage.aspx), but that's because I kept most of my investments in cash, while my friend bought commodity-based companies.

In real life, I have been tracking my retirement accounts. My friend won't tell me exactly how badly he's doing, but apparently, I'm doing better (I'm down "way more" than that, he told me, after receiving news of my percentage drop). I am not gloating at all--I had positive performance through the first week of September 2008. I should have sold everything then, but didn't.

As a result, from December 7, 2007 to December 5, 2008, my retirement portfolio has declined around 23.5%. I can't provide an exact percentage, because I added monies and invested them at different times throughout 2008. In fact, I made so many trades in my 401(k), T. Rowe Price barred me from trading again until late January 2009.

Meanwhile, the S&P 500 declined 41.77% during the same time period (December 7, 2007 (1,504.66) to December 5, 2008 (876.07).

So, I beat the S&P 500 by around 18 percentage points. Ordinarily, I'd be elated, but this year, for obvious reasons, I am not happy at all.

I am looking forward to continuing the competition for the next twenty years. My prize in winning against my friend this year? A Peet's (PEET) coffee of my choice. I do love their eggnog lattes, but I was so close to having positive performance, it will be painful to sip that latte. I am in my early 30's, so I have plenty of time to ride out this recession. But oh, what a difference a few months makes.

Update: my non-retirement accounts should be in positive territory for 2008, because I am typically risk-averse with my liquid assets. I am now 100% in money market funds in my non-retirement accounts. Excepting day-trading and short-term trades, I have probably kept 80%+ of my liquid assets in money market funds this year. Off the top of my head, my two worst performers, in terms of actual monetary losses, have been JMBA and YHOO.

Lawyers and the Economy

To all those aspiring lawyers--beware:

ABA Article

The legal biz ain't recession-proof.

CHP Blunders Yet Again

If you loved the 60's, you will love this story from Sacramento County:

Two women arrested for displaying breasts at a protest get $150,000

The California Highway Patrol (CHP) arrested two women for baring their breasts at a rally. The women recovered $150,000. On November 7, 2005, Sheba Love and Sherry Glaser were protesting the government's definition of "decent" in front of the state capitol building in Sacramento. Ms. Love and Ms. Glaser, members of the political group Breasts Not Bombs, asserted that displaying their breasts was an act of free speech, and therefore was protected under the Constitution. The defense contended that the protest permit had a clause stating that participants who expose their private parts would be subject to arrest.

Love v. Brown, No. 06AS04799

The specific causes of action were ASSAULT AND BATTERY; FALSE ARREST & IMPRISONMENT; INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS.

Here is the organization's blog (some posts NSFW):

http://breastsnotbombs.blogspot.com/

The specific blog post on the CHP lawsuit is titled, "To all our Bosom Buddies."

Oh, the loveliness.

_______________________

I mentioned the CHP's incompetence on this blog in the case of Grassilli v. Barr (2006):

Post on Buffett (referring to the Grassilli-CHP case)

Specific allegations from the 150K Complaint are here:

PARTIES

3. Defendant CALIFORNIA HIGHWAY PATROL (CHP) is an arm of the State of California.
5. Defendant OFFICER TROY is and was, at the time of the incident, a CHP officer, acting under the color of law and in the course and scope of his employment for the Defendant CHP.
7. At all times mentioned here, DOES 1-30 were employees and agents for the Defendant CHP. These unidentified employees and agents are sued individually and in their capacities as police officers for the CHP. By engaging in the conduct described herein, the Defendant DOES acted under color of law and in the course and scope of their employment for Defendant CHP. By engaging in the conduct described herein, Defendant unidentified employees and agents exceeded the authority vested in them as employees of the CHP.
9.10.At all times mentioned, each named and DOE Defendant was the agent or employee of co-defendant CHP and BROWN and in doing the things alleged were acting within the course and scope of such agency or employment and with the actual and implied permission, consent, authorization, and approval of CHP and/or BROWN.

STATEMENT OF FACTS COMMON TO ALL CAUSES OF ACTION

11. Defendant, CHP Officer TROY issued the group a permit which stated, “protest of this special election (ANY PERSON WHO EXPOSES PRIVATE PARTS IS SUBJECT TO ARREST FOR CALIFORNIA PENAL CODE SECTIONS 314 AND 647(a). This permit is immediately cancelled and also future requests for permits on state property.”
13. On November 7, 2005 BNB members, men and women, including plaintiffs, participated in political protest at the permitted time and location. During the protest, Plaintiffs SHERRY GLASER and SHEBA LOVE took off their clothing tops exposing their bare breasts.
15. Following the wrongful arrest, SHERRY GLASER and SHEBA LOVE were falsely imprisoned by DOE Officers and detained for twelve hours before being released.
17. As a proximate result of Defendants’ conduct, Plaintiffs suffered severe emotional and mental distress.
19. Plaintiffs were wrongfully arrested, depriving them of their liberty in violation of the law. The charges against them were eventually dropped. However, they paid thousands of dollars in attorneys’ fees to fight the charges.
21. Plaintiffs found it necessary to engage the services of private counsel to vindicate their rights under law. Plaintiffs are therefore entitled to an award of all attorneys’ fees incurred in relation to this action for violation of his state civil right to be free from harassment due to the violation of the civil rights and due to the violations of their civil rights based on their gender.

FIRST CAUSE OF ACTION
(False Arrest and Imprisonment)
(AGAINST CHP, BROWN, TROY, STALLMAN AND DOES 1-100)

23. The Defendant officers named herein, without probable cause, detained Plaintiffs for violations which they did not commit. Defendants could not have reasonably believed that Plaintiffs committed such violations, particularly in light of the fact that the Sacramento County District County clearly deemed that the Plaintiffs actions were not in violation of California Penal Code Section 314 or 647(a).
26.As a proximate result of Defendants wrongful conduct, Plaintiffs suffered damages as set forth.

WHEREFORE, Plaintiffs pray for relief as set forth herein.
SECOND CAUSE OF ACTION
(Intentional Infliction of Emotional Distress)
(AGAINST CHP, BROWN, TROY, STALLMAN AND DOES 1-100)

The conduct of the defendant officers, as set forth herein, was extreme and outrageous and beyond the scope of conduct which should be tolerated by citizens in a democratic and civilized society. The Defendants, acting under color of law, falsely arrested and imprisoned Plaintiffs for 12 hours. The Defendants’ actions humiliated Plaintiffs and created enormous frustration for them. Defendants’ decision to arrest peaceful political protesters despite their permit resulted from an unfounded animosity. Defendants deliberately arrested the Plaintiffs and did the aforementioned unnecessary detainment with the intent to inflict severe mental and emotional distress upon the Plaintiffs.

The lawyers involved are here:

LAW OFFICES OF MATTHEW KUMIN
MATTHEW KUMIN, CSB # 177561
870 Market Street, Suite 1262
San Francisco, CA 94102
Tel: (415) 434-8454
Fax: (415) 434-8453

ROTHSCHILD WISHEK & SANDS
MICHAEL CHASTAINE, CSB 121209

In Defense of Singapore

Investing requires some knowledge of international culture, because a truly diversified portfolio contains shares of international companies. Understanding Asian culture is especially important for Americans and Westerners because the spending behavior of Asian citizens, especially the Japanese and Chinese, may determine how long and deep an American recession will be.

One way to understand Asian culture is through the story of Gopalan Nair, who has returned to the Bay Area from Singapore. I wrote about him and the differences between Singaporean and American culture here: Post on Singapore (June 2008)

Here is what happened to Mr. Nair: http://www.insidebayarea.com/ci_11098813 [Link no longer works, but the following one does: https://www.eastbaytimes.com/2008/11/28/fremont-attorney-released-from-singapore-jail/] 

After Singapore found the Wall Street Journal to be in contempt of law, a Singaporean government official lambasted the WSJ in its own letters section (Dec. 4, 2008, Chan Heng Chee letter). To its credit, the WSJ printed the letter. A report on the dispute is here:

http://www.radioaustralia.net.au/programguide/stories/200811/s2431123.htm

Professor Tan explains the Singaporean government's position accurately:

PROF KEVIN TAN: The position of the Singapore law is that the media should censor itself to make sure you don't have things which are untruthful, defamatory or contemptuous going out there. I think that is indeed the case. Let us put it another way - if somebody writes a letter which is clearly defamatory of somebody else, the editorial ward of the publication should ensure that letter doesn't get published because if indeed the writer of the letter gets sued for defamation then you become an accessory to this whole defamatory process as well, you see, because defamation requires publication.

As I've said several times, Singapore has created an incredibly successful and diverse state and deserves the benefit of the doubt. There are two issues that ought to be discussed whenever mentioning Singapore's speech restrictions:

1. Singapore experienced racial riots in 1964 shortly before its separation from Malaysia. [Note: the previous sentence has been updated since the original posting.]  Singaporean leaders wisely remember their history and the violence that occurred fewer than 50 years ago. American newspapers almost never mention Singapore's history, which has caused it to place a premium on racial harmony over unfettered free speech. Behind Singapore's speech restrictions is a government that feels it would be negligent if it allowed a repeat of its devastating racial riots. Although Singapore's position is not entirely different from Germany--Germany bans swastikas and other racial symbols and speech because of its own recent violent history--Singapore is singled out for its attempts to maximize racial harmony. France has also ruled that its own citizens, such as Brigitte Bardot, may have their speech limited (see BBC on Bardot). Here's another writer's take:

http://library.thinkquest.org/04oct/00301/project%20thinkquest/pages/p8.html

At the end of the day, Mr. Nair is naive if he believes he can refer to any judge in any country as a "prostitute" and not suffer some consequence. American judges have jailed American citizens and sanctioned lawyers for insults much more benign.

2. The East-West cultural divide is neatly expressed in the WSJ-Singapore dispute. One possible reason for the dispute is that Westerners may not understand how much Asian culture values non-confrontation. In many Asian cultures, for example, it is a sign of immaturity to lose one's temper. In contrast, in Western culture, where individualism is highly valued, confrontation is not seen as immature or even terrible per se. This difference in cultural values has led to many misunderstandings between East and West.

At the end of the day, all Singapore is saying is that it does not want someone to criticize its judiciary with unfounded accusations. In other words, if someone is going to criticize its hardworking judges, that person needs to have evidence to support his or her allegations. That is not an unreasonable request in a country that has ranked consistently in the top five worldwide in transparent government practices and which lacks systemic corruption (See Transparency.org 2007 Report). The United States, in contrast, barely made the top twenty in the international government transparency rankings. Furthermore, the United States, unlike Singapore, has suffered several instances of judicial corruption--see, for example, the Dickie Scruggs matter: Dickie Scruggs, Judicial Corruption.

In addition to its world-renowned transparency, Singapore has other unique factors that make it highly protective of its judicial system. The relatively small size of the Singapore population and its even smaller legal population provide self-enforcing mechanisms for good conduct on all sides. The small legal community means that judges and lawyers interact more with each other, which creates a less adversarial system where lawyers are taught to be facilitators rather than zealous litigators. In a cooperative-style system, if Singaporean judges are going out of their way to work hard, read the papers, and to be fair, and there has been no evidence of corruption, why should they be subject to unfounded, baseless accusations?

From an Eastern perspective, the West's insistence on allowing unfounded accusations to harm peaceful, hardworking people is barbarism. The Western system forces hardworking people to spend time defending themselves against baseless public attacks rather than engage in productive activity. In contrast, Singapore's broad defamation laws create an incentive to work together and to avoid confrontation if possible. It is difficult to find fault with such a system in a country that is transparent, affluent, and diverse. Moreover, when accusations of human rights violations are leveled at Singapore from Americans--whose history includes judicially-sanctioned segregation (Plessy v. Ferguson), judicially-approved slavery (Dred Scott v. Sandford), nuclear weapon use against Asian civilians, far more abject poverty, and a sitting President who approved Guantanamo Bay--it must be especially galling.

From an investment standpoint, if you believe Singapore has a bright future, you can invest through the iShares MSCI Singapore Index. Its symbol is EWS and according to Yahoo Finance, it offers a yield of approximately 9.00%.

Disclosure: I own shares of EWS but my positions may change at any time. I am NOT providing investment advice, nor am I licensed to do so. You are responsible for your own due diligence.

Update on December 5, 2008: interested readers should check out the "comments" section of this post. One reader posted this link on Francis Seow:

http://www.singapore-window.org/1028judi.htm [Link no longer works, but the following one does: https://remembering1987.wordpress.com/whos-who/francis-t-seow-2/] 

I am not sure what to make of this and need more information, but it's quite troubling. 

Obama, India, and Terrorism

I'm back. Cabo San Lucas was relaxing, and I will write more on that later. For now, I just wanted to share an interesting article on Obama and make some comments about the senseless massacre in India. 

1. The LA Times (Nov 30, 2008) thinks Obama should be sworn in as President using his full name, including his middle name: 

http://www.latimes.com/news/opinion/editorials/la-ed-oath30-2008nov30%2C0%2C7859834.story 

I like their gusto, but I don't think it's going to happen. 

[Update on December 10, 2008: I was wrong--see Barack Hussein Obama] 

2. The tragic killings in India have resulted in many commentators blaming Pakistan. One specific, recurring comment has been that "ordinary Pakistanis" need to be marching in the street, condemning the violence. Meanwhile, the Indian government is on record saying that they will get information from one of the captured killers and make him "sing like a canary." One Indian official, according to the WSJ, talked about having certain methods that would make the captured killer talk. 

First, India does itself no favors by implying it uses or condones torture as an interrogation tactic. Even hinting that torture is acceptable raises the stakes tremendously, because it implies that India does not comply with U.N. rules or does not take them seriously. This failure to adhere to generally accepted international standards of conduct should concern the world when both countries involved have nuclear weapons. In addition, if India does use torture or provokes an unnecessary war against Pakistanis, even the ghosts of Gandhi and British imperialism will not prevent the damaging hit to India's image as a respectable emerging superpower. 

Second, many commentators--both Indian and American--have lambasted Pakistanis for not protesting the violence publicly and in large numbers. This complaint is similar to the one lodged against Muslims post-9/11--that by not openly condemning 9/11, they were somehow implicitly supporting it or not doing enough to show their true colors. 

This argument has some emotional appeal, but fails due to its unsound assumption that silence automatically means support. This theory of "speak-or-forever-be-suspected" applies primarily to face-to-face encounters on a specific topic--such as when a person refuses to answer a question of, "Did you take that document that had trade secrets to your home?" or "Does this make me look fat?" Such questions fail to elicit any relevance when they are applied to actions or thoughts made by strangers who happen to share a similar characteristic as some other group. For example, Timothy McVeigh had white skin. When he committed his act of terrorism, did the failure of massive numbers of white persons marching in the streets of Canada imply white Canadian support for his acts? Of course not. When an unarmed black man (Amadou Diallo) in New York is shot 19 times by Christian police officers, does the failure of Christians across the United States condemning the NYPD mean they condone senseless killings? Of course not. Such examples can be made ad infinitum, and it should be fairly obvious that an absence of mass protests or vocal opposition has no relevance as an indicator of general support or non-support. 

The reasons for silence among most "ordinary Pakistanis" are simple. Muslims in Pakistan don't know the killers in India and don't feel any connection to them. To the 99.9% Pakistanis who live their lives peacefully, there is no connection to the killers in India and therefore no reason to say anything publicly about their heinous acts. I hate to be dogmatic, but anyone who says differently is a demagogue seeking to incite ethnic and religious violence. Such ignorance is dangerous and may lead to retaliatory killings of innocent Muslims in India. In addition, 40 of the 170+ victims were Muslim, showing that terrorism knows no ethnicity or religion. 

Personally, I feel tremendous sadness for all the victims of the attacks. The story of Moshe Holtzberg is particularly heart-breaking.

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:

http://www.telegraph.co.uk/finance/jobs/3492912/Bonanza-for-jobs-but-only-in-public-sector.html

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.

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.

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 footlocker.com, ladyfootlocker.com and kidsfootlocker.com. 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:

http://www.sba.gov/advo/stats/sbfaq.pdf [PDF file]

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

For more, go to http://www.sba.gov/advo/research/data.html#us

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:

http://willworkforjustice.blogspot.com/2008/05/walmarts-wmt-annual-report.html

Self-Represented Litigants

More people are representing themselves in court:

http://news.yahoo.com/s/ap/20081124/ap_on_re_us/representing_yourself

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.

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:

http://commonwealthlit.blogspot.com [Broken link]

http://weimarworld.blogspot.com [Still works as of March 2018]

http://commonwealthclub.blogspot.com [Outdated link]

Here's an interesting anti-regulation website:

http://overlawyered.com/

And an economics-related one:

http://delong.typepad.com

Dept of Homeland Security's Incompetence

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

http://www.cbsnews.com/stories/2008/11/21/60minutes/main4625729_page3.shtml

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:

http://weimarworld.blogspot.com/2008/11/ted-turner-on-old-media-plus-economic.html

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.

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.

New Treasury Secretary

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

http://www.federalreserve.gov/aboutthefed/bios/banks/pres02.htm

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.

Gold

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

INT. COIN & BULLION STORE - EVENING

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 --

YEVHEN:
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.

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.