Thomas Jefferson Center

Thomas Jefferson is one of my favorite presidents because of his predilection for small government. An organization called the Thomas Jefferson Center caught my eye:

http://www.tjcenter.org/

They advocate for free speech. President Jefferson would be proud.

Charles Barkley on Politicians

I once said Ted Turner was the only famous person left who spoke his mind. I forgot about Charles Barkley:

I think politicians, they only have three jobs. Make sure we got a great public school system, make sure we have economic opportunity and make sure we're safe. That's all I want from any politician.

Makes sense to me. Full interview after the jump:

Ball Don't Lie

Stephen Fry on America

Stephen Fry on America:

If I were to run out of petrol in the middle of the night I would feel more confident about knocking on the door of an American home than one in any other country I know - including my own. The friendly welcome, the generosity, the helpfulness of Americans - especially, I ought to say, in the South and Midwest - is as good a reason to visit as the scenery. Yes, Americans are terrible drivers (endlessly weaving between lanes while on the phone, bullying their way through if they drive a big vehicle, no waves of thanks or acknowledgement, no letting other cars into traffic), yes they have no idea what cheese or bread can be and yes, strip malls, TV commercials and talk radio are gratingly dreadful. But weighing the good, the kind, the original, the enchanting, the breathtaking, the hilarious and the lovable against the bad, the cruel, the banal, the ugly, the crass, the silly and the monstrous, I see the scales coming down towards the good every time.

There is one phrase I probably heard more than any other on my travels: Only in America! If you were to hear a Briton say ‘Tch! only in Britain, eh?’ it would probably refer to something that was either predictable, miserable, oppressive, dull, bureaucratic, queuey, damp, spoil-sporty or incompetent - or a mixture of all of those. ‘Only in America!’ on the other hand, always refers to something shocking, amazing, eccentric, wild, weird or unpredictable. Americans are constantly being surprised by their own country. Britons are constantly having their worst fears confirmed about theirs. This seems to be one of the major differences between us.

I made a similar comment a while back about Americans being friendlier than most people, but it's all relative. I just had opposing counsel tell me this morning she moved from Long Island to California because New Yorkers were rough and rude (something Escape From Brooklyn mentions in her blog frequently as a reason to move to Minnesota). Personally, I liked most of the New Yorkers I met when I was in NYC. In any case, Mr. Fry is correct--as an older white male with a British accent, most Americans will fall over themselves to help him (Americans are suckers for British accents--how else can you explain Hugh Grant's popularity here?).
I think a more accurate statement is that American culture is generally less guarded than other cultures. The question is whether Americans sacrifice modesty and humility for their greater optimism and tolerance. "Whatevah," an American might say. Seems an oddly appropriate response, no?

By the way, Mr. Fry has a delightful blog:

http://www.stephenfry.com/blog/

NPR on Japan and Cars

Someone from NPR called me this morning. She asked my opinion about why the Japanese stock market had dipped when the auto bailout did not happen. Intuition would indicate that the Japanese car companies would be better off because of less competition.

I told her there were two major reasons for the Japanese stock market's dip.

1. The Japanese yen's strength. Yesterday, the American dollar dipped about 2.5% against almost all other major currencies (FXC, FXF, FXE). Basically, America's citizens lost about 2% of their international purchasing power overnight. This is major news, but you wouldn't know it from the lack of media attention. (Quite frankly, pictures of Weimar-Republic-branded wheelbarrows carrying the American dollar should be on the front page of every major newspaper.)

The Japanese yen is strong in part because Japan has a high savings rate and is the world's second largest economy; however, in a perverse result, Japan's high savings rate works against them because they export so many products to the United States, where our currency is becoming weaker. Basically, Japanese products are going to be too expensive for Americans, so Americans will either buy fewer Japanese cars, CDs, and Nintendos, or the Japanese will have to reduce their prices. Either action will cause lower profits for Japanese companies, which is one reason the Nikkei declined by over 5%.

2. A chain reaction disrupting the global auto market. Car companies are more connected than you might think. A GM bankruptcy impacts a wide array of other companies, like steel manufacturers, chipmakers, etc. Companies that had the Big Three as primary customers would have to lay off workers and stop hiring, which puts less money in the hands of potential car buyers worldwide.

Also, in addition to joint ventures, such as NUMMI, car companies buy materials from the same suppliers. If one supplier, let's say Delphi, loses a major customer like GM, their cash flow is reduced, and they may need to lay off workers, delaying projects, new orders, and even existing orders, further disrupting the auto market.

Globalization means more and more companies, especially large ones, are interconnected. This has advantages and disadvantages. One major disadvantage is that if one large company is reckless, it creates problems for numerous smaller companies. Delphi still exists, but has been in Ch 11 bankruptcy since October 2005. Delphi's bankruptcy filing was probably the writing on the wall for the Big Three.

3. I also said any value left in GM, Chrysler, and Ford was in their finance arms. In plain sight, American car companies became subprime banks. They were practically giving away their products in exchange for a stream of steady cash payments, with interest. All those 0% financing commercials? That's the equivalent of a "no money down," ARM home mortgage, but on a smaller scale. Car loan interest is where the Big Three receive a large chunk of their income, because margins on non-SUV autos have been consistently declining. Like the banks, GM and Ford took on too many subprime borrowers and overestimated expected income streams. The result is now all too predictable.

Washington Lawyer on Free Trade

I am currently licensed as an attorney in both California and Washington, D.C. It's not as impressive as it sounds--there are procedures for mutual cooperation between the two bar associations, so you can waive into D.C. if you meet certain criteria. The D.C. bar publishes a magazine called Washington Lawyer. This month's cover feature a story on free trade, by Sarah Kellogg:

http://www.dcbar.org/for_lawyers/resources/publications/washington_lawyer/december_2008/free_trade.cfm

While the majority of Americans favor trade, that majority has been shrinking. Fifty-three percent of Americans had a positive view of free trade in 2008, according to the Pew Global Attitudes Project, a public opinion survey of the Pew Research Center. That’s down from 59 percent last year and 78 percent in 2002. What’s shocking in the numbers is that the United States ranked last among developed nations in terms of public support for free trade. The next closest nation was Egypt at 57 percent.

Trade’s financial benefits and costs are constantly being debated, but there’s no denying exports play an important role in the U.S. economy. In 2007 exported goods and services accounted for 12 percent of the Gross Domestic Product. One of three U.S. acres is planted for export, and manufacturing exports have increased by 128 percent since the last multilateral- trade round more than a decade ago, according to the Office of the United States Trade Representative.

Wall Street to Reid: Cool Down

Senate Majority Leader Harry Reid was featured on every news channel last night, talking about how Wall Street would collapse this morning because the Senate rejected the auto bailout.

Well, the stock market was steady early this morning, and the Nasdaq was actually up around 8:00AM.

The White House just said it might step in to assist the car-makers, causing the market to move higher:

http://news.yahoo.com/s/ap/20081212/ap_on_go_co/meltdown_autos

Goshdarn it, if there's one thing Americans should know by know, it's that whenever George W. Bush gets involved, efficiency, financial stability, and prosperity follow. Right? Right?

Michael Malone in the Santa Clara Magazine

My alma mater's publication, the Santa Clara Magazine, continues to impress. This month's issue had a great essay by Michael Malone, who believes America's future depends on its continued willingness to encourage entrepreneurs:

http://www.scu.edu/scm/winter2008/entrepreneurs.cfm

Half of all new college graduates now believe that self-employment is more secure than a full-time job. Eighty percent of the colleges and universities in the United States now offer courses on entrepreneurship. Sixty percent of Gen Y business owners consider themselves to be serial entrepreneurs. And, most tellingly, 18- to 24-year-olds are now starting companies at a faster rate than 35- to 44-year-olds.

Don’t think that the rest of Generation Y is still dreaming of a gold watch: 70 percent of today’s high schoolers intend to start their own companies.

It looks like the new college grads aren't buying into the seniority paradigm. That's what I like about Santa Clara County--with all the new people here from so many different places, corporate seniority is less respected. Results, not tenure, are what count, which is the way a meritocracy ought to work.

Of course, I had to pick the one profession, law, where seniority does count. Sigh.

Where does America get its oil?

If you think America gets most of its oil from Saudi Arabia or the Middle East, you are wrong. ExxonMobil ran an ad in yesterday's WSJ (12/10/08, A10-11) showing the sources of America's oil imports:

55% = North American (includes Canada, Mexico)
16% = Africa
14% = Middle East
12% = South America (includes Venezuela)

The remaining 3% comes from Russia/Caspian, Europe, and Asia-Pacific (includes Indonesia).

Last time I checked, the top three suppliers of American oil were Canada, Mexico, and Venezuela.

Scott Burns on Social Security

Scott Burns on Social Security--skip the first question and go to the second one:

http://assetbuilder.com/blogs/scott_burns/archive/2008/12/10/what-others-are-doing-with-their-401-k-money.aspx

I didn't know how the Social Security system really worked until I read Mr. Burn's response to the second question.

The Poor, Poor American Dollar

I have a treat for my readers--The Atlantic's (December 2008, p. 62) interview with Gao Xiqing, who oversees and invests $200 billion of China's $2 trillion U.S. dollar holdings. This interview is one of the best ones I've ever read because of the government official's openness:

http://www.theatlantic.com/doc/200812/fallows-chinese-banker

Below are my favorite two parts from the interview, one about the American dollar, and the other about derivatives:

Everyone is saying, “Oh, look, the dollar is getting stronger!” [As it was when we spoke.] I say, that’s really temporary. It’s simply because a lot of people need to cash in, they need U.S. dollars in order to pay back their creditors. But after a short while, the dollar may be going down again. I’d like to bet on that!

I have been converting my dollars into Canadian dollars recently. I already have euros (FXE) and some Swiss francs (FXF). We'll see in a year whether my decision was the right one. I felt compelled to diversify my U.S. dollar holdings, because they were earning around 1% in interest, while competing currencies had much higher interest rates and the possibility of greater upside.

As for derivatives, here is what Mr. Gao had to say:

If you look at every one of these [derivative] products, they make sense. But in aggregate, they are bullsh*t. They are crap. They serve to cheat people.

Mr. Gao explains derivatives by comparing them to multiple mirror reflections of one actual product. It's such a perfect analogy, I'm surprised no mainstream American publication has mentioned it until now.

Kudos to The Atlantic and Mr. Fallows for publishing this interview.

Investment Outlook

My personal sentiments regarding the stock market are similar to Jim Rogers'. Basically, I am overweight commodities and just bought a Commodities ETF (DBC). I also added to my Canadian dollar position (FXC), as an indirect play on commodities.

I disagree with Mr. Roger's assessment of American stocks being too expensive--many "blue chip" technology stocks appear cheap because of their high net cash holdings and market share. T. Rowe Price holds my 401(k), and around 17% of my 401(k) is in its Science and Technology fund (PRSCX). This particular fund has a relatively high percentage of its holdings in semiconductor companies.

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.

The Auto Bailout, from a Gender Perspective

Amy Siskind has this to say about the auto bailout:

Pew Research recently reported that in 43% of all U.S. homes, women make more of the decisions on household finances (men make more in 26%, and in 31% of homes it is equal). Why then is it that our automotive committee is composed of 21 senators, 20 of which are male. So while 43% of women make the decisions at home, 5% of our Senate Banking Committee is composed of women?

She makes a darn good point.

"Terrorists Are Criminals"

The SJ Merc has a great letter in today's paper (December 9, 2009, 9A): 

All Muslim organizations that I am associated with, including the local mosque, have condemned the Mumbai murders, and all Muslims I know are outraged by this incident in which innocent Hindus, Muslims, Christians and Jews were killed. Yet, people still demand something from Muslims. Terrorists are criminals who represent no one but themselves, and if they happen to embrace the same religion as you or I, then so be it. Religion is intended to teach us about God and how to worship and help others, so people of all faiths must join against the ignorance of terrorism and false accusations. 

Jim Zanghi 

I expressed similar sentiments in an earlier blog post (Anti-Terrorist Sentiment Does Not Require Overt Public Acts): 

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. 

Countries act against their own interests when they force ordinary citizens to choose between their religion and supporting law enforcement in the battle against terrorism. Governments need to condemn associating terrorism with any single trait, whether religion or race, so as to ensure the broadest possible cooperation among their citizens.

Guanabee

Here is a little-known website that is apparently targeting a Latina audience--I am giving it props, just because:

http://guanabee.com/

It's written in an informal style, and some material is NSFW, but it's a fun website if you like gossip and pop culture. Here's the page that led me to the overall website:

http://guanabee.com/2008/12/guanabee-presents-5-most-epic-quinces-fails.php

An Auto Bailout is Unjust

Here's an audacious question: How is an auto bailout not preferential corporate welfare?

There is no contention that America suffers from an automobile shortage. Honda and Toyota are perfectly capable of increasing production to fill in any gap caused by a GM and Chrysler bankruptcy (I don't mention Ford, because it appears to be the healthiest of the Big Three). Meanwhile, Japanese car companies have created thousands of jobs in the South and are schooling Americans in how to run an efficient, profitable auto manufacturing operation.

To its credit, the UAW has responded to charges that it is asking American taxpayers to subsidize the Big Three's inefficiency. Unfortunately, its arguments are misleading. For example, the UAW has mentioned state incentives given to Japanese car companies as support for a federal bailout (See Autonews Article).

First, states like Alabama provided incentives to Japanese companies because the UAW was opposed to relocating to the deep South. (Southern states generally favor "right-to-work" laws, which are code for anti-union laws.) The UAW's refusal to support American production in the deep South allowed the Japanese to enter those states without competition. The UAW and the Big Three could have requested Southern state incentives, but they failed to do so on reasonable terms. As a result, any tax incentive given to other companies was due to the UAW's own unwillingness to be flexible. It's akin to losing a war because you refused to go to the most advantageous territory to fight--and then calling the other side dirty for going where you wouldn't.

Second, speaking of the Japanese, we criticized them for years because they bailed out their banks after their speculative bubble. Indeed, almost every American economics study found that bailing out inefficient companies exacerbated the Japanese recession. Just google "Japan's lost decade" for more. (Here's one particularly relevant link from a google search result: http://www.guardian.co.uk/business/2008/sep/30/japan.japan)

Third, the Japanese car companies received only $3 billion since 1992--far below the UAW's request for $25 billion (see penultimate paragraph of Autonews article). The disparate amounts of incentives requested indicate that subsidies aren't the reason for the Big Three's woes. In addition, while it's easy to forget now, the Japanese took a major risk in coming to the South to do business. Just fifteen years ago, no major entity was considering investing billions of dollars in the deep South because of its less-than-cosmopolitan reputation. This reputation required the Japanese to take major risks, such as opening manufacturing plants in places where some residents had never met a Japanese person and where pro-white groups still exist.

There's a happy ending to the Japanese and their risk-taking. Although various Americans continue to refer to Southerners as uneducated and backwards, it is now apparent that these so-called "backward" Southerners have outworked the Midwestern UAW. (It will be interesting to see if Southerners will return the favor and call non-Southern workers lazy and handout-prone). In short, the Japanese should be lauded for taking a risk when the Big Three and UAW refused to consider the South as a viable business destination. Moreover, $3 billion is not what the UAW is demanding, making their reference to the South irrelevant.

The UAW's remaining argument is based on emotion. It talks about the loss of thousands of jobs, implying that without taxpayer monies, the Big Three's employees will be in breadlines and bankruptcy courts. By resorting to this argument, the UAW has taken a page out of Naomi Klein's Shock Doctrine. The UAW fails to mention any other option except demanding billions of dollars in taxpayer monies. For example, it fails to advocate increasing the length of time and amount of payments given to unemployed workers nationwide. Yet, the $15 to $25 billion requested could be used to extend unemployment benefits for all Americans, and at higher amounts. Using this method, no industry receives preference, and taxpayer money benefits Americans nationwide. After all, it's not just the auto workers being affected by this recession, but engineers, accountants, and food service workers. Don't these workers have families to support, too? By demanding money only for auto employees so they can continue in an inefficient business, the UAW is essentially admitting it wants preferential treatment over every single American worker who has been laid off and those who will be laid off. Its attitude is unacceptable if you believe that government should consider the welfare of all its people, not just one particular group.

The UAW's selfishness exposes another issue with an auto company bailout--the slippery slope. What will Congress do when other industries come knocking? Will taxpayers be forced to support all affected industries that happen to have highly paid lobbyists? Once Americans understand that Congress probably wouldn't take seriously a bailout request from restaurants waiters and waitresses, they have to ask why their government is focusing on the Big Three to the exclusion of other industries.

The only reason to provide an automobile bailout is because of the Big Three's legacy costs, which may be shifted onto taxpayers anyway through the PBGC. Unfortunately for taxpayers, it seems that all roads lead to pillaging of their wallets.

Update on December 21, 2008: a 12/20/08 WSJ letter pointed out that the Southern states didn't get loans--they received tax deductions, which are useless, unless the companies actually invest in a particular state and expect to make a profit. In other words, without the tax breaks, a state like Kentucky would get 0 dollars for its residents. But with the tax deductions, a company might come to Kentucky and bring jobs and other positive benefits--none of which would have happened without the tax incentives. So Kentucky and its residents received a net gain because of the tax incentives. GM and Chrysler, on the other hand, are asking for loans directly from taxpayers, which force Americans to own a stake in American car companies and which do not create new jobs. The loans are high-risk and it remains to be seen whether American taxpayers will come out ahead.

Update on 12/23/08: Madoff's investors are already asking for a taxpayer bailout:

"There's no doubt that hearings will be held on this, and some government aid is a very logical request," said Robert Schachter, an attorney with New York-based Zwerling, Schachter & Zwerling, which is representing several Madoff victims. "If we're bailing out Wall Street and the auto industry, maybe these individuals should be bailed out too."

Can you say, "slippery slope"?

Basketball: Don Nelson

The San Francisco Magazine interviewed Golden State Warriors coach Don Nelson (October 2008 edition). They emphasized his humble beginnings:

By 1976, when he retired as a player, Nelson had won five championship rings and paid off his house, yet he was anything but rich. In most years, he made around $30,000, and he still drove [Coach] Red Auerbach's hand-me-down Buick. His marriage was also on the rocks...His accountant said Nelson couldn't send his four kids to college. "He was always worried about money, trying to stay ahead," says Donnie [Nelson], who remembers moonlighting with his dad at YMCAs and Rotary Clubs where Nelson would give brief speeches, tossing out the same three jokes for $100 a pop. "Failure simply wasn't an option."

Sometimes, life's second acts are much more profitable. Mr. Nelson has not won an NBA championship as a coach.

On the player side, Corey Maggette is problematic for the Warriors. He plays like Kobe Bryant--if Kobe had mediocre shooting and defensive abilities. Essentially, the Warriors are left with a shooter without a conscience, but one who can't shoot consistently. Something tells me this won't end well, especially with the more experienced Stephen Jackson and Jamal Crawford needing to take at least 12 shots a game for the Warriors to be competitive. On the bright side, Al Harrington seems like he's doing better in New York.

The Baron-Davis-led Warriors were something special, and they will be missed. Right now, the Warriors need a consistent PG--like Chris Duhon, Jose Calderon, or Deron Williams--to keep their gonzo playing style from becoming self-destructive. Baron, shaky knee and all, provided stability to his team, and now, the Warriors have no one to provide steady passing and ball control. The Warriors should offer the Toronto Raptors a mutually beneficial deal: Maggette for Calderon, straight-up. Two other PGs to consider: Antonio Daniels (his quickness will fit perfectly with the Warriors) and local Stanford grad Brevin Knight. Even when Monta Ellis returns, the Warriors will need an experienced backup PG. Just my two cents.

Santa Clara County's Diversity

I've always thought the best way of learning was to listen to people. Living in Santa Clara County provides many opportunities for cross-cultural education. In my law practice, for example, I've had the opportunity to interact with people from all over the world.

The number of people in Santa Clara County who were born outside of the United States is around 40%. Most cities near ports or oceans tend to attract ambitious travelers, and San Francisco has attracted what appears to be some of the most ambitious Asians, who have brought their cultural values of education and family to California:

SJ Merc on Diversity

California may suffer from inept government--the budget crisis is still ongoing, for example--but the people who live here tend to be open-minded, which allows California government to make mistakes that would not be tolerated elsewhere. It remains to be seen whether California's signature open-mindedness and tolerant attitude will continue its status as a magnet for ambitious immigrants, or whether its high spending will cause a decline in competitiveness.

Love in the Time of Famine

For all those who think love should be analyzed in terms of economics, here is your article:

http://www.cambridgeblog.org/2008/09/james-flynn-in-the-new-scientist

The crucial thing is whether men operate in a seller’s or a buyer’s market. As usual, market analysis oversimplifies, but it isolates an important “exchange”: women provide sex and men “pay,” ideally by helping to support children. When viable men are scarce, they can get sex without paying a high price. On the other hand, women who want children must provide sex and hope for a husband, rather than being able to expect one.

Can you feel the romance just oozing from the page? What palpable romance you bring, sir.

Hat tip to E.S. Fortune for the link.

Santa Clara Magazine and Hyperinflation

I graduated from Santa Clara Law School and get their alumni magazine, The Santa Clara Magazine. The managing editor, Steven Saum, in the most recent edition (Vol. 50, No. 3), talks about hyperinflation:

A few years after the Soviet empire collapsed, I lived in Ukraine, in a town where Russian officers were once sent into exile, and I counted among my friends those whose life savings were devoured overnight by hyperinflation: when money set aside--bit by bit, payday by payday--for two decades in anticipation of a daughter's wedding in the end only covered the cost for half a watermelon at the reception.

He writes such an eloquent defense of fiscal responsibility, I had to share it. The fact remains that when the government prints money, it causes inflation--perhaps not immediately, but eventually, the chickens come home to roost. It is worth repeating the fact that inflation is the #1 enemy of the average citizen, who, like Mr. Saum says, works hard to save a little money, bit by bit, only to see external forces mock his patience.

Jaromir Jagr a Libertarian?

In The Atlantic's December 2008 edition, Jaromir Jagr, a former All-Star U.S. hockey player, sounds positively libertarian: 

"I came to Omsk [Siberia] because I wanted to. Here in Russia, you have real freedom, which is not like U.S. freedom. Back there you have so many rules." He smiled. 

See how fast the world moves? Mr. Jagr's jersey number is 68, to commemorate his Czech heritage and the 1968 "Prague Spring," when Czechoslovakia enacted a series of economic and political reforms. The Soviets opposed the reforms, which called for a decentralized government, and invaded Czechoslovakia in response, occupying it until 1990. 

A decentralized government, of course, is a hallmark of American-style governance. Mr. Jagr, an avowed anti-communist and supporter of the 1968 Prague Spring, now lives in Russia. The world has seemingly flipped overnight. America is being called the land of Soviet-style laws, while Russia has the designation as the land of "real freedom." 

From my perspective, much credit needs to be given to the Department of Homeland Security for taking us away from the America our founders envisioned. 

Oh, the shame.

Barry's Picks

Barry Ritholtz, who manages around 100 million dollars, talks about investing:

We are now running about 70% cash, which is inordinately high, but some of the names we’re watching, and have owned in the past, are NuVasive [NUVA], a medical-device company, Stanley Works [SWK], a great infrastructure story, LG Display [LPL] and Luminex [LMNX]. Industries we like are infrastructure, defense, biotech and medical devices.

It's good to see a Wall Street insider mentioning specific company names as opportunities for investment. As for me, I do believe the market will go up, but the question is whether Obama's swearing-in in late January 2009 will represent a firm baseline, or a temporary peak for the stock market.

Graph of U.S. Bear Markets

From "dshort" at Calculated Risk blog:

http://calculatedrisk.blogspot.com/

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.