Pierre Omidyar at eBay's 2009 shareholder meeting. Bonus points if you can correctly guess the ethnicity and birthplace of these two men.
"And if an epitaph be my story, I'd have a short one ready for my own: I had a lover's quarrel with the world." -- Robert Frost
Monday, October 19, 2009
eBay's Founder (2009)
Pierre Omidyar at eBay's 2009 shareholder meeting. Bonus points if you can correctly guess the ethnicity and birthplace of these two men.
Sunday, October 18, 2009
Plus ca change, plus c'est le meme chose
From the 1938 Frank Capra film, You Can't Take It With You:
Lincoln said, "With malice toward none; with charity to all." Nowadays they say, "Think the way I do, or I'll bomb the daylights out of you."
The more things change, the more they stay the same. Military-industrial complex and animal spirits, 1; human wisdom, 0.
Lincoln said, "With malice toward none; with charity to all." Nowadays they say, "Think the way I do, or I'll bomb the daylights out of you."
The more things change, the more they stay the same. Military-industrial complex and animal spirits, 1; human wisdom, 0.
Saturday, October 17, 2009
Friday, October 16, 2009
Teachers' Unions
The NYT on schools:
http://www.nytimes.com/2009/10/15/opinion/15kristof.html
The effort to remove the [allegedly incompetent] teacher is expected to cost about $400,000, and the outcome is uncertain. In New York City, with its 80,000 teachers, arbiters have removed only two for incompetence alone in the last couple of years.
Whoa.
http://www.nytimes.com/2009/10/15/opinion/15kristof.html
The effort to remove the [allegedly incompetent] teacher is expected to cost about $400,000, and the outcome is uncertain. In New York City, with its 80,000 teachers, arbiters have removed only two for incompetence alone in the last couple of years.
Whoa.
Thursday, October 15, 2009
Dow 10K: the Higher They Rise, the Harder They Fall?
The Dow Jones Index Average (DJIA) closed above 10,000 yesterday. Unfortunately, hardly any American understands the reasons for the increase and bounce off the March lows.
Most DJIA companies receive at least half of their revenues from abroad. Coca Cola, McDonald's, Proctor and Gamble have been expanding overseas for decades. Even Walmart--unfairly stereotyped as a rural, "red state" store--has been expanding aggressively in Mexico, the U.K., and the EU.
Why are these international forays relevant? Over the past year, the American dollar has collapsed. The Canadian dollar, once the laughingstock of the world, is almost at parity (again) with the American dollar. Almost every major currency, except for the Mexican peso (FXM), has increased approximately 30% against the greenback. Thus, as a result of international sales, most DJIA companies will receive an artificial boost in earnings per share due to the dollar's decline. For example, let's say GE sold 1,000 widgets in Germany in February 2008 and made 1,000 dollars. If GE sells 1,000 widgets at the same price one year later, it will record approximately 1,300 dollars. On paper, GE appears to be making 30% more money; in reality, nothing has changed except currency values.
While the dollar's weakness has caused an artificial boost to earnings per share, the DJIA has also increased because other countries' currencies are strong or artificially depressed. For example, despite some barbed words between China and America, China continues to depress the value of its currency. China is smart to do so--its manufacturing sector is still booming (while America's is declining), and a weaker currency gives Chinese companies an advantage in exporting their products. In the meantime, the euro and yen continue to be strong. The ECB, unlike the Federal Reserve, has a singular mandate to maintain a stable/strong currency, and Japan's Finance Minister doesn't seem interested in devaluing the yen.
Where does that leave the United States? It leaves American companies in a stronger position to sell products to Europeans, the Chinese middle class, and the Japanese. In fact, I would not want to own any Japanese or EU-based stocks right now. European and Japanese companies now have to compete against American products, which will be cheaper because of the dollar's decline. Although American products used to have quality issues when compared to European and Japanese products, most American companies have closed the quality gap. Thus, I see American products cutting into "home-team" sales in Europe and Japan, especially with Germany being more willing to open up its markets to outside competition. One exception to increasing American dominance will be European healthcare companies, because European governments subsidize healthcare. Thus, if you own Sanofi-Aventis (SNY), Roche, or Novartis AG (NVS), you may ignore this paragraph. Meanwhile, the Chinese will continue diversifying away from the American dollar by buying hard assets and commodities. The Australian and Canadian dollars will continue to benefit, and the American dollar will continue to seek support.
Why should American investors care about these currency-based developments? The DJIA has increased because companies and investors expect the weak American dollar to boost spending by Europeans, British and Japanese consumers. If the foreign consumers fail to buy, the market's gains may perish.
What about Indian and Chinese consumers? Although both countries have increased the size of their middle class, Indian and Chinese consumers tend to save money, not spend it. While this cultural predilection towards saving may change in ten or twenty years, it is naive to believe that Chinese and Indian consumers will spend enough now to return the world economy to its glory days. Although it is easy to imagine Americans (and Russians) spending like drunken sailors, it is more difficult to imagine Chinese and Indian consumers spending money they don't have. (Note: I said spending money they don't have, so please don't cite Indian gold-buying binges and opulent weddings, which are usually paid with cash or some other non-credit source.)
Why do I lack faith in the Chinese and Indian consumer? Currently, Chinese and Indian culture tend to focus on family and tradition, not unbridled individualism. Such a family-oriented, traditional approach dampens unreasonable or wild materialism. Of course, this is changing, but for now, I believe my hypothesis holds true. If I am correct, that means Mr. Market expects Europeans, Russians, and Japanese to spend enough to boost the world economy, and this expectation is already priced in the DJIA. God help the DJIA if this anticipated spending fails to occur.
There are other signs Mr. Market has gotten ahead of himself. First, look at the price of gold. Gold is an excellent barometer of consumer sentiment. Right now, gold is above $1,000 an ounce, which tells you that consumers are skeptical about any long-term economic recovery.
Second, don't forget the U.S. unemployment rate. It keeps getting worse, and the BLS numbers don't seem to accurately record people working multiple jobs or people who've given up looking for work. Also, as an employment lawyer in Silicon Valley, I'm seeing some unique layoff notices, which might disrupt any steadily improving employment numbers. For example. some major companies are informing employees that they will be laid off in six months unless they find another position within the company. (This unique form of notice is done partly to comply with the federal and state WARN acts.) In addition, a small business came to me yesterday for advice on laying off one employee. My limited personal experience indicates the unemployment rate is getting worse, not better. Why does the unemployment rate matter if it's a "lagging indicator"? Without a lower unemployment rate, wages will stagnate or decline, and consumers cannot and will not spend. If American consumers do not spend, then businesses will not spend or hire. Surely, you see the problem: if the Europeans, Chinese, and Russians don't come through, and the United States continues to have a high unemployment rate, no one will be left with the financial capacity to boost the world economy.
What, then, is a conservative investor supposed to do?
1. Recognize that the DJIA's recent gains are due in part to artificial reasons, not organic reasons like increased sales or better margins.
2. Understand that cash is still king, even though it may not feel like it. I, too, grit my teeth over abysmal money market rates, but I also own foreign currencies (FXA, FXC, CYB) to earn more interest.
3. There is some debate about deflation versus inflation. I have hedged my bets by buying a seven year Treasury note paying 3% and also iShares Barclays TIPS Bond (TIP); T. Rowe Price Inflation-Protected Bond Fund (PRIPX); and Pimco 1-5 Year U.S. TIPS Index Fund (STPZ). Months ago, I added a GNMA fund (PRGMX) to earn a higher yield. Even with these investments, most of them in retirement accounts, I am still cash-heavy.
Mr. Market's recent euphoria--caused by currency fluctuations, expectations of foreign spending, and stimulus money--should subside in time. While everyone else seems happy to party like it's 2006, I will be ready to take advantage of opportunities in 2010. As the DJIA rises day by day, I am reminded of Shakespeare: "Only / Vaulting ambition, which o'erleaps itself, And falls on th'other..."
The information on this site is provided for discussion purposes only. Under no circumstances do any statements here represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence. To summarize, I do not provide investment advice, nor do I make any claims or promises that any information here will lead to a profit, loss, or any other result.
Most DJIA companies receive at least half of their revenues from abroad. Coca Cola, McDonald's, Proctor and Gamble have been expanding overseas for decades. Even Walmart--unfairly stereotyped as a rural, "red state" store--has been expanding aggressively in Mexico, the U.K., and the EU.
Why are these international forays relevant? Over the past year, the American dollar has collapsed. The Canadian dollar, once the laughingstock of the world, is almost at parity (again) with the American dollar. Almost every major currency, except for the Mexican peso (FXM), has increased approximately 30% against the greenback. Thus, as a result of international sales, most DJIA companies will receive an artificial boost in earnings per share due to the dollar's decline. For example, let's say GE sold 1,000 widgets in Germany in February 2008 and made 1,000 dollars. If GE sells 1,000 widgets at the same price one year later, it will record approximately 1,300 dollars. On paper, GE appears to be making 30% more money; in reality, nothing has changed except currency values.
While the dollar's weakness has caused an artificial boost to earnings per share, the DJIA has also increased because other countries' currencies are strong or artificially depressed. For example, despite some barbed words between China and America, China continues to depress the value of its currency. China is smart to do so--its manufacturing sector is still booming (while America's is declining), and a weaker currency gives Chinese companies an advantage in exporting their products. In the meantime, the euro and yen continue to be strong. The ECB, unlike the Federal Reserve, has a singular mandate to maintain a stable/strong currency, and Japan's Finance Minister doesn't seem interested in devaluing the yen.
Where does that leave the United States? It leaves American companies in a stronger position to sell products to Europeans, the Chinese middle class, and the Japanese. In fact, I would not want to own any Japanese or EU-based stocks right now. European and Japanese companies now have to compete against American products, which will be cheaper because of the dollar's decline. Although American products used to have quality issues when compared to European and Japanese products, most American companies have closed the quality gap. Thus, I see American products cutting into "home-team" sales in Europe and Japan, especially with Germany being more willing to open up its markets to outside competition. One exception to increasing American dominance will be European healthcare companies, because European governments subsidize healthcare. Thus, if you own Sanofi-Aventis (SNY), Roche, or Novartis AG (NVS), you may ignore this paragraph. Meanwhile, the Chinese will continue diversifying away from the American dollar by buying hard assets and commodities. The Australian and Canadian dollars will continue to benefit, and the American dollar will continue to seek support.
Why should American investors care about these currency-based developments? The DJIA has increased because companies and investors expect the weak American dollar to boost spending by Europeans, British and Japanese consumers. If the foreign consumers fail to buy, the market's gains may perish.
What about Indian and Chinese consumers? Although both countries have increased the size of their middle class, Indian and Chinese consumers tend to save money, not spend it. While this cultural predilection towards saving may change in ten or twenty years, it is naive to believe that Chinese and Indian consumers will spend enough now to return the world economy to its glory days. Although it is easy to imagine Americans (and Russians) spending like drunken sailors, it is more difficult to imagine Chinese and Indian consumers spending money they don't have. (Note: I said spending money they don't have, so please don't cite Indian gold-buying binges and opulent weddings, which are usually paid with cash or some other non-credit source.)
Why do I lack faith in the Chinese and Indian consumer? Currently, Chinese and Indian culture tend to focus on family and tradition, not unbridled individualism. Such a family-oriented, traditional approach dampens unreasonable or wild materialism. Of course, this is changing, but for now, I believe my hypothesis holds true. If I am correct, that means Mr. Market expects Europeans, Russians, and Japanese to spend enough to boost the world economy, and this expectation is already priced in the DJIA. God help the DJIA if this anticipated spending fails to occur.
There are other signs Mr. Market has gotten ahead of himself. First, look at the price of gold. Gold is an excellent barometer of consumer sentiment. Right now, gold is above $1,000 an ounce, which tells you that consumers are skeptical about any long-term economic recovery.
Second, don't forget the U.S. unemployment rate. It keeps getting worse, and the BLS numbers don't seem to accurately record people working multiple jobs or people who've given up looking for work. Also, as an employment lawyer in Silicon Valley, I'm seeing some unique layoff notices, which might disrupt any steadily improving employment numbers. For example. some major companies are informing employees that they will be laid off in six months unless they find another position within the company. (This unique form of notice is done partly to comply with the federal and state WARN acts.) In addition, a small business came to me yesterday for advice on laying off one employee. My limited personal experience indicates the unemployment rate is getting worse, not better. Why does the unemployment rate matter if it's a "lagging indicator"? Without a lower unemployment rate, wages will stagnate or decline, and consumers cannot and will not spend. If American consumers do not spend, then businesses will not spend or hire. Surely, you see the problem: if the Europeans, Chinese, and Russians don't come through, and the United States continues to have a high unemployment rate, no one will be left with the financial capacity to boost the world economy.
What, then, is a conservative investor supposed to do?
1. Recognize that the DJIA's recent gains are due in part to artificial reasons, not organic reasons like increased sales or better margins.
2. Understand that cash is still king, even though it may not feel like it. I, too, grit my teeth over abysmal money market rates, but I also own foreign currencies (FXA, FXC, CYB) to earn more interest.
3. There is some debate about deflation versus inflation. I have hedged my bets by buying a seven year Treasury note paying 3% and also iShares Barclays TIPS Bond (TIP); T. Rowe Price Inflation-Protected Bond Fund (PRIPX); and Pimco 1-5 Year U.S. TIPS Index Fund (STPZ). Months ago, I added a GNMA fund (PRGMX) to earn a higher yield. Even with these investments, most of them in retirement accounts, I am still cash-heavy.
Mr. Market's recent euphoria--caused by currency fluctuations, expectations of foreign spending, and stimulus money--should subside in time. While everyone else seems happy to party like it's 2006, I will be ready to take advantage of opportunities in 2010. As the DJIA rises day by day, I am reminded of Shakespeare: "Only / Vaulting ambition, which o'erleaps itself, And falls on th'other..."
The information on this site is provided for discussion purposes only. Under no circumstances do any statements here represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence. To summarize, I do not provide investment advice, nor do I make any claims or promises that any information here will lead to a profit, loss, or any other result.
Wednesday, October 14, 2009
Judge Sanctions "Obama Birth Certificate" Lawyer
A Republican-appointed judge has sanctioned Orly Taitz, "birther movement" lawyer, 20,000 dollars. See opinion here. Apparently, Ms. Taitz clearly lacked standing to bring the motion and publicly criticized the court. At the same time, her motions may have produced a favorable result for her client--the military withdrew her client's deployment order, deeming him a distraction. Basically, because of Orly Taitz's frivolous motions, the officer does not have to go to Iraq or Afghanistan.
I've been sanctioned before, and so I generally disfavor sanctions. In this case, however, the judge warned the lawyer not to do something, and she went ahead and did it anyway. In addition, she compared herself with Thurgood Marshall and failed to comply with several procedural requirements. In the case where I was sanctioned, the federal judge--Samuel Conti--sanctioned me without a hearing and without any prior judicial warning. When I called to request a hearing, the court immediately moved the case file back to state court (opposing counsel had filed a motion to remand).
Even a lawyer like me, who generally favors pushing the envelope, has to agree that Orly Taitz got what she deserved.
Bonus: Ms. Taitz had a previous run-in with this judge. See here for details.
I've been sanctioned before, and so I generally disfavor sanctions. In this case, however, the judge warned the lawyer not to do something, and she went ahead and did it anyway. In addition, she compared herself with Thurgood Marshall and failed to comply with several procedural requirements. In the case where I was sanctioned, the federal judge--Samuel Conti--sanctioned me without a hearing and without any prior judicial warning. When I called to request a hearing, the court immediately moved the case file back to state court (opposing counsel had filed a motion to remand).
Even a lawyer like me, who generally favors pushing the envelope, has to agree that Orly Taitz got what she deserved.
Bonus: Ms. Taitz had a previous run-in with this judge. See here for details.
Kudos to Hulu.com
I just wanted to thank www.hulu.com. As I pointed out at the Netflix shareholder meeting, I watch all of my Simpsons episodes on Hulu because it has excellent online captioning.
Recently, after I was watched yet another Simpsons episode, I noticed Hulu allows users to search for shows that have captions. Awesome. Simply awesome. Thank you, Hulu. By the way, I am now watching my first episode of Heroes. I found it using the captioning search feature.
Here is my favorite part of the latest Simpsons episode, a parody of the UFC:
Lenny: "3 hours of half-naked guys fighting like animals."
Carl: "Just like the ancient Romans."
Lenny: "Yeah, except their empire was falling apart."
Carl: "Stupid Romans."
I love the Simpsons. Looks like they are back on track.
Recently, after I was watched yet another Simpsons episode, I noticed Hulu allows users to search for shows that have captions. Awesome. Simply awesome. Thank you, Hulu. By the way, I am now watching my first episode of Heroes. I found it using the captioning search feature.
Here is my favorite part of the latest Simpsons episode, a parody of the UFC:
Lenny: "3 hours of half-naked guys fighting like animals."
Carl: "Just like the ancient Romans."
Lenny: "Yeah, except their empire was falling apart."
Carl: "Stupid Romans."
I love the Simpsons. Looks like they are back on track.
Tuesday, October 13, 2009
The Decline of the GOP
I long for the day when the GOP returns to its glory days of Eisenhower and Goldwater. As it stands, the Republican Party is in disarray. See here:
Both of Ronald Reagan's natural children, Ron and Patti, endorsed Obama. President Dwight Eisenhower's granddaughter, Susan, addressed the Democratic National Convention in Denver just moments before Barack Obama appeared to accept his party's nomination.
I've already explained why the GOP needs to split up into two separate parties--one for the religious right (Bible, families first, pro-life, etc.), and another for the classical economists (low taxes, pro-business, pro-freedom). See here.
Both of Ronald Reagan's natural children, Ron and Patti, endorsed Obama. President Dwight Eisenhower's granddaughter, Susan, addressed the Democratic National Convention in Denver just moments before Barack Obama appeared to accept his party's nomination.
I've already explained why the GOP needs to split up into two separate parties--one for the religious right (Bible, families first, pro-life, etc.), and another for the classical economists (low taxes, pro-business, pro-freedom). See here.
Monday, October 12, 2009
Government Workers Double-Dipping
The LA Times' Patrick McGreevy exposes public sector double-dipping here.
David Turner retired as a state fire chief in 2004, went back to work for the state firefighting agency two days later and is still employed there. He collected $65,229 in salary in the last fiscal year in addition to a state pension of $105,000.
Paul W. Anderson is a psychiatrist at Napa State Hospital who retired two years ago from the state Department of Mental Health. His pension is $117,840. He also received $104,200 in state wages in the last fiscal year.
"Public service" work now allows some people to earn almost a quarter of a million dollars a year. Astounding, isn't it?
David Turner retired as a state fire chief in 2004, went back to work for the state firefighting agency two days later and is still employed there. He collected $65,229 in salary in the last fiscal year in addition to a state pension of $105,000.
Paul W. Anderson is a psychiatrist at Napa State Hospital who retired two years ago from the state Department of Mental Health. His pension is $117,840. He also received $104,200 in state wages in the last fiscal year.
"Public service" work now allows some people to earn almost a quarter of a million dollars a year. Astounding, isn't it?
Sunday, October 11, 2009
Saturday, October 10, 2009
1.57 Billion Muslims
Here is an interesting report on the number of Muslims worldwide.
Does this mean I can no longer impress/shock Americans by asking them to name the most populated Muslim country? Sigh.
The Pew Forum has published lots and lots of good stuff. If you're interested in religious discussion, check them out.
[Editor's note: links have been updated.]
Friday, October 9, 2009
Thursday, October 8, 2009
California Dreamin' Over?
The Guardian has a somber story on California's decline here. Read it and weep. And then do something about it. Here's a short "To-Do" list:
1. Do not pass any more propositions that require taxpayer funds [without accountability]. In the alternative, make sure you read the actual text of any proposed laws/propositions before you vote in favor of them. If you can't understand a proposition's actual language, vote against it. Force legislators to use plain language statutes.
2. Do not allow the state government to get bigger--it's big enough already. If you don't believe me, look here and here.
3. Whenever someone starts talking about California's so-called education crisis, remind them about Proposition 98. Prop 98 requires California to use a large portion of the growth in General Fund revenues for K-14 education. Basically, Prop 98 forces California to use at least a certain percentage of its revenue for education, even if California needs funding for other projects, and even if it constrains funding for other portions of the state's budget. Prop 98 passed (barely) with a 50.7% vote and amended the state Constitution, Article 16, Section 8. Here's subsection (a):
From all state revenues there shall first be set apart the moneys [sic] to be applied by the State for support of the public school system and public institutions of higher education.
Read that Constitutional provision carefully, and don't ever let anyone whine about California education--not only are the kids set, the Constitution puts them first in line for money. And if any government employee--including a teacher--starts whining about pay, remind him/her that state employees' pensions and health care benefits are helping bankrupt California. Side note: it's not like government workers, including teachers, are going to be destitute if we cut their medical benefits and reduce their pensions--CalPERS already has almost $200 billion for state workers' pensions. Yes, that's "billion" with a "b." Guess who paid all that money? If you work in the private sector and paid taxes, you did. Do you have a pension, a relatively safe job, and the possibility of lifetime medical benefits? I'm just sayin'.
4. Stop trying to divide the state by race or immigration status. We're all in this together. No one's going to be happy if we try to deport millions of people, because mass deportation would require us to separate mothers from their American-born kids. It won't happen anyway, so what's the point of bad-mouthing your neighbors? Turn your attention to helping everyone assimilate, regardless of race.
5. Spend your money on local businesses. Use yelp.com to separate the wheat from the chaff. 6. If you're really brave, consider a Treasury Note or a California bond. These investments will hurt you if inflation hits, but some of the bonds are yielding more than average money market rates.
That's all for now. Vaya con dios. We may need divine intervention to help get us out of this mess, but we'll get through it.
Bonus: The LA Times'
1. Do not pass any more propositions that require taxpayer funds [without accountability]. In the alternative, make sure you read the actual text of any proposed laws/propositions before you vote in favor of them. If you can't understand a proposition's actual language, vote against it. Force legislators to use plain language statutes.
2. Do not allow the state government to get bigger--it's big enough already. If you don't believe me, look here and here.
3. Whenever someone starts talking about California's so-called education crisis, remind them about Proposition 98. Prop 98 requires California to use a large portion of the growth in General Fund revenues for K-14 education. Basically, Prop 98 forces California to use at least a certain percentage of its revenue for education, even if California needs funding for other projects, and even if it constrains funding for other portions of the state's budget. Prop 98 passed (barely) with a 50.7% vote and amended the state Constitution, Article 16, Section 8. Here's subsection (a):
From all state revenues there shall first be set apart the moneys [sic] to be applied by the State for support of the public school system and public institutions of higher education.
Read that Constitutional provision carefully, and don't ever let anyone whine about California education--not only are the kids set, the Constitution puts them first in line for money. And if any government employee--including a teacher--starts whining about pay, remind him/her that state employees' pensions and health care benefits are helping bankrupt California. Side note: it's not like government workers, including teachers, are going to be destitute if we cut their medical benefits and reduce their pensions--CalPERS already has almost $200 billion for state workers' pensions. Yes, that's "billion" with a "b." Guess who paid all that money? If you work in the private sector and paid taxes, you did. Do you have a pension, a relatively safe job, and the possibility of lifetime medical benefits? I'm just sayin'.
4. Stop trying to divide the state by race or immigration status. We're all in this together. No one's going to be happy if we try to deport millions of people, because mass deportation would require us to separate mothers from their American-born kids. It won't happen anyway, so what's the point of bad-mouthing your neighbors? Turn your attention to helping everyone assimilate, regardless of race.
5. Spend your money on local businesses. Use yelp.com to separate the wheat from the chaff. 6. If you're really brave, consider a Treasury Note or a California bond. These investments will hurt you if inflation hits, but some of the bonds are yielding more than average money market rates.
That's all for now. Vaya con dios. We may need divine intervention to help get us out of this mess, but we'll get through it.
Bonus: The LA Times'
Wednesday, October 7, 2009
Muslim Themed T-Shirt or Bumper Sticker?
Idea for a t-shirt to be worn by Muslims:
I'll apologize for 9/11 when white people apologize for Timothy McVeigh, Jews apologize for Bernie Madoff, and Mormons apologize for Glenn Beck.
The point? It's ludicrous to demand someone apologize for an event or person just because someone of his/her religious or racial background happens to be involved.
I'll apologize for 9/11 when white people apologize for Timothy McVeigh, Jews apologize for Bernie Madoff, and Mormons apologize for Glenn Beck.
The point? It's ludicrous to demand someone apologize for an event or person just because someone of his/her religious or racial background happens to be involved.
Tuesday, October 6, 2009
Debate on Mahmoud Ahmadinejad
In case anyone is interested in my latest attempt at reasoned discourse, check out the comments section of this post.
Excepting Ken's comments, I call it, "The Triumph of Rhetoric over Reason." It's not a pretty day for logic.
Neil Postman, author of Amusing Ourselves to Death, would be both proud and sad that his predictions have come true.
Excepting Ken's comments, I call it, "The Triumph of Rhetoric over Reason." It's not a pretty day for logic.
Neil Postman, author of Amusing Ourselves to Death, would be both proud and sad that his predictions have come true.
Fascinating Discussion on Iran, the U.S., and Nuclear Weapons
Interesting discussion on Iran, the United States, and aggression.
Monday, October 5, 2009
Thomas More and The Law
Roper: So now you’d give the Devil benefit of law!
More: Yes. What would you do? Cut a great road through the law to get after the Devil?
Roper: I’d cut down every law in England to do that!
More: Oh? And when the last law was down, and the Devil turned round on you–-where would you hide, Roper, the laws all being flat? This country’s planted thick with laws from coast to coast -- man’s laws, not God’s -- and if you cut them down -- and you’re just the man to do it -- d’you really think you could stand upright in the winds that would blow then?
Yes, I’d give the Devil benefit of law, for my own safety’s sake.
–Robert Bolt, A Man For All Seasons
Now, replace the "the Devil" with "terrorist," and think about the Patriot Act's loosening of government/legal restrictions.
More: Yes. What would you do? Cut a great road through the law to get after the Devil?
Roper: I’d cut down every law in England to do that!
More: Oh? And when the last law was down, and the Devil turned round on you–-where would you hide, Roper, the laws all being flat? This country’s planted thick with laws from coast to coast -- man’s laws, not God’s -- and if you cut them down -- and you’re just the man to do it -- d’you really think you could stand upright in the winds that would blow then?
Yes, I’d give the Devil benefit of law, for my own safety’s sake.
–Robert Bolt, A Man For All Seasons
Now, replace the "the Devil" with "terrorist," and think about the Patriot Act's loosening of government/legal restrictions.
Sunday, October 4, 2009
Islam and Economics
Not sure how I missed this post about Islam and economics.
Not that surprising, if you ask me. Islamic traders/businessmen seem to have prospered in almost every time period in the world.
Not that surprising, if you ask me. Islamic traders/businessmen seem to have prospered in almost every time period in the world.
Saturday, October 3, 2009
Tax Policy
The NYT had an interesting chart that showed--at least in 2003--total tax distribution:
http://graphics7.nytimes.com/images/2003/01/20/business/21DOUBLE.chart.jpg
The breakdown, by percentage of income, was similar, supporting the idea that American tax policy was equitable.
If anyone finds a similar chart for 2008, please leave a comment with a link.
http://graphics7.nytimes.com/images/2003/01/20/business/21DOUBLE.chart.jpg
The breakdown, by percentage of income, was similar, supporting the idea that American tax policy was equitable.
If anyone finds a similar chart for 2008, please leave a comment with a link.
Friday, October 2, 2009
Satire: Healthcare Reform
Awesome post on healthcare reform here. My fav?
The government is incapable of running anything efficiently, and if allowed to offer a health care option, will run health care so efficiently that it will put private insurers out of business.
And I thought satire was dead.
The government is incapable of running anything efficiently, and if allowed to offer a health care option, will run health care so efficiently that it will put private insurers out of business.
And I thought satire was dead.
Thursday, October 1, 2009
Franklin Templeton Limited Duration Fund's Shareholder Meeting (2009)
I attended Franklin Templeton Limited Duration Income Trust’s (FTF) annual shareholder meeting on September 24, 2009. This meeting was held by the specific fund, not Franklin Templeton (BEN) itself.
I was the only shareholder attending. No refreshments were available. There was no prepared informal presentation.
Four other persons, all from the mutual fund, attended the meeting. Glenn Voyles (Portfolio Manager); Helen Dong (Inspector of Elections); VP Karen Skidmore; and Sr. Corporate Counsel Jason Venner. I was most impressed with Mr. Venner. After the meeting’s formal portion concluded, I asked several questions.
Some background is necessary before explaining my first question. FTF is a closed-end mutual fund. Such funds typically trade at either discounts or premiums due to several factors, including potential liquidity issues. More specifically, unlike open-ended mutual funds, buyers may only purchase shares from existing owners. I asked about FTF’s approximately 8% discount to its net asset value (NAV). I also asked whether FTF’s approximately 20% Fannie Mae and Freddie Mac bond holdings might be the reason for the discount.
Mr. Voyles said there was “no fundamental reason for” the discount. He said during the last fiscal year, there were “more sellers than buyers,” meaning the fund's price was affected by supply/demand issues. He did not believe Fannie Mae and Freddie Mac had anything to do with the discount. He indicated he did not believe the fund would reduce its exposure to Fannie Mae or Freddie Mac.
Mr. Voyles also talked about “mortgage dollar rolls.” I’ve never encountered this term before. According to FTF’s 10K, page 30, mortgage dollar rolls are “agreements between the Fund and a financial institution to simultaneously sell and repurchase mortgage-backed securities at a future date...The risks of mortgage dollar roll transactions include the potential inability of the counterparty to fulfill its obligations.” Did you get that? I didn’t, so I asked what they were.
Mr. Voyles said that these rolls were a form of leverage. He said that before investing in these rolls, the Fund’s leverage was in the form of auction rate preferred shares. He explained that the rolls were a form of leverage backed by mortgage-backed securities and increased the fund’s liquidity. However, he also said he could not tell me exactly how it works because he was involved in a different research department. (Mr. Voyles is on the high yield bond team, not the mortgage or leveraged loan team.) Mr. Venner was kind enough to show me the exact page in the 10K that defined the term.
When I asked about the auction rate securities (ARS) market, Mr. Voyles said Franklin Templeton was not experiencing any problems. The problem, he said, was that the secondary market (for ARS) has frozen.
Interestingly enough, Mr. Voyles said the “use of leverage has helped returns” by approximately 5 to 6 percentage points (from June 2008 to June 2009). FTF currently holds approximately 100 million dollars in ARS, down from 190 million dollars.
At this point, VP Karen Skidmore seemed concerned I was asking so many questions and told me I could ask only one more question.
I asked why anyone should choose Franklin Templeton over Vanguard or another investment firm. Mr. Voyles said that FTF had a large, experienced team, and its “fundamental research” was outstanding.
I don’t think FTF was prepared to have shareholders attend their annual meeting. I was pleased FTF’s senior counsel was able to show me the definition of mortgage dollar rolls, but I was concerned that even after the meeting, I still didn’t understand how FTF was using mortgage dollar rolls as leverage. My investor "spidey-sense" started going off when no one seemed to be able to explain exactly what the heck these things were.
Investors interested in preferred shares ETFs may also consider PGF, PFF, or PSK, but these investments seem heavily supported by financial companies. In addition, it is unclear whether these ETFs have been paying out dividends consistently.
Overall, I wish FTF was more prepared for its annual meeting. Other than Mr. Venner, I was unimpressed with everyone else at the meeting.
Disclosures: I own an insignificant number of FTF shares. I sent this article to FTF's corporate counsel prior to publication but did not hear back from him.
Wise Words from Neil Postman
From Neil Postman's Amusing Ourselves to Death:
George Orwell feared those who would deprive us of information. Aldous Huxley feared those who would give us so much that we would be reduced to passivity and egoism. Orwell feared that the truth would be concealed from us. Huxley feared the truth would be drowned in a sea of irrelevance. Orwell feared we would become a captive culture. Huxley feared we would become a trivial culture, preoccupied with some equivalent of the feelies, the orgy porgy, and the centrifugal bumblepuppy.
I love the centrifugal bumblepuppy, even though I have no idea what it means. I highly recommend Amusing Ourselves to Death.
Bonus: "The law is what legislators and judges have written. In our culture, lawyers do not have to be wise; they need to be well briefed." -- Neil Postman
Bonus II: hat tip to Popehat's Patrick for finding THIS incredible visual graphic/comic of the Huxley-Orwell divide.
Wednesday, September 30, 2009
Riots in Pittsburgh
Here is sgtrob88 commenting on a youtube video of police tear-gassing students at the University of Pittsburgh:
I would imagine 75% or more of these kids are liberal, yet going through this will probably not dissuade any of them of the notion that over-sized government is BAD. Like their hippy parents they will continue to allow government to increase in size and power all in the name of "caring for the little guy," while ignoring their own experiences in governmental abuse. While corporations are no saints, government is the one able to beat your *ss and get away with it.
Makes sense to me, except we need to differentiate between government actions that have the power to harm citizens (police, unnecessary laws, etc.) and government actions that can protect the public (public defenders, VA hospitals, etc.). Of course, since few people will agree on which government actions will either harm or protect the public, it seems appropriate to have a bias against broad laws or power of any kind.
I would imagine 75% or more of these kids are liberal, yet going through this will probably not dissuade any of them of the notion that over-sized government is BAD. Like their hippy parents they will continue to allow government to increase in size and power all in the name of "caring for the little guy," while ignoring their own experiences in governmental abuse. While corporations are no saints, government is the one able to beat your *ss and get away with it.
Makes sense to me, except we need to differentiate between government actions that have the power to harm citizens (police, unnecessary laws, etc.) and government actions that can protect the public (public defenders, VA hospitals, etc.). Of course, since few people will agree on which government actions will either harm or protect the public, it seems appropriate to have a bias against broad laws or power of any kind.
Reason #15,473 Not to Go into Law: You Might Become a Real Prostitute
Reason number 15,473 not to go to law school: if you don't pass the bar, you might end up becoming a high-priced escort. See here for the story of a Stanford Law graduate who ran a high-priced call girl service.
If the link doesn't work, try googling "Cristina Warthen," "Brazil," and "Stanford Law." From the SJ Merc article:
Warthen gained notoriety when she was busted as a jet-setting call girl who sold her services to pay off her Stanford Law School debts. She got her law degree from Stanford in May 2001.
I wonder if she ever met Eliot Spitzer...
If the link doesn't work, try googling "Cristina Warthen," "Brazil," and "Stanford Law." From the SJ Merc article:
Warthen gained notoriety when she was busted as a jet-setting call girl who sold her services to pay off her Stanford Law School debts. She got her law degree from Stanford in May 2001.
I wonder if she ever met Eliot Spitzer...
Tuesday, September 29, 2009
Monday, September 28, 2009
Guess Who?
Guess who made the following comment:
You’ve got to cut spending, you’ve got to balance the budget, you’ve got to stop fighting these wars, you’ve got to bring our troops home, you’ve got to quit expanding the welfare state here at home...
Hint: it's one of the few honest members of Congress.
You’ve got to cut spending, you’ve got to balance the budget, you’ve got to stop fighting these wars, you’ve got to bring our troops home, you’ve got to quit expanding the welfare state here at home...
Hint: it's one of the few honest members of Congress.
Sunday, September 27, 2009
Unusual Tax Deduction
No joke--a lawyer tries to deduct expenses relating to prostitutes and pornography:
http://taxprof.typepad.com/taxprof_blog/2009/09/tax-court-denies-.html
The Tax Court shoots down his argument, of course.
http://taxprof.typepad.com/taxprof_blog/2009/09/tax-court-denies-.html
The Tax Court shoots down his argument, of course.
Saturday, September 26, 2009
Educational Discrimination: Race Baiting?
I just had a major argument with someone about educational benefits. It got so bad, her boyfriend was ready to fight me inside a Marie Callender's.
Apparently, this woman's friend had complained that a school district denied her white child benefits because of his race. This woman then said her friend raised this issue at a public school meeting and was "brave" for doing so. This woman specifically said that "only minorities could apply for these benefits," which riled me up. (Later, in an online discussion, she wrote, "my friend's child was not allowed to obtain government assistance because an administrator determined that the program was for minority groups only.")
I said several times that the government could not deny public educational benefits to anyone based on race. She reiterated that only minorities could apply for these benefits. After several minutes of heated back-and-forth discussions, I heard her say the law and reality were two different things. In other words, the law itself might not discriminate against white kids, but in reality, the school district wasn't allowing white kids to apply for certain benefits. (I guess what she meant to say earlier was, "In practice, school districts allow only minority children to apply for certain benefits.") I asked for the name of this anti-white program. She couldn't tell me the name of the program.
Then, some other people at the table jumped in. One person said teachers were giving undeserving minorities passing grades so their schools could get funding. I said it sounded like teachers were passing stupid people (of all races) to get funding. He agreed. I said if stupid people are being passed, we're not necessarily talking about minorities--we're talking about stupid people. He clarified that a certain percentage of minority students had to be passed each year to get funding. Once again, no one was able to cite a specific law or program.
Afterwards, I thought about "No Child Left Behind." The law apparently rewards school districts for retaining children from disadvantaged groups, including disabled kids and economically disadvantaged kids. I suppose a teacher who wanted to game the system would pass an ever-increasing percentage of black kids each year. My friend's husband probably meant to say that teachers are unfairly promoting stupid kids who happen to be black, not black kids because they are black. Maybe it's a subtle difference, but it's an important difference. I didn't see any federal funding tied to ensuring a certain number of minority kids pass a particular grade. (If I am wrong, I hope someone will leave a comment citing a U.S.C. or C.F.R. section.)
Someone else then mentioned a school program that allows black kids from a poor section of town to attend an affluent Atherton, California school. The problem? These black students live outside Atheron's mainly white and rich county, so their parents don't pay the same amount of local property taxes as the white Atherton parents. In essence, it seems these black kids are getting a free ride, i.e., a special benefit because they are black--or at least that was the insinuation.
After a few questions, I found out these black kids live in a county (maybe an unincorporated area?) without a school. Because they don't have a school in their county, the nearby Atherton school allowed them to attend. I pointed out that these kids weren't getting a free ride because of their race--they had to go to school, and their county didn't have a school. It sounded like someone saw a bus dropping off a bunch of non-white kids at the mainly white Atherton school district and assumed there was a pro-minority government program. In the alternative, perhaps there was a busing program to help desegregate various schools. In these programs, both white kids and minority children may attend schools in other districts. [See below for more information on this Atherton busing program. The Tinsley Act/Program, aka VTP, does create more opportunities for minorities; in fact, the district's own webpage specifies that "Students of Color living in the Ravenswood City School District entering kindergarten, first, or second grade" are eligible. Minority students, aka "students of color," are assigned limited placements through a lottery system; however, white children from the better-performing Atherton schools may apply to attend the poorer-performing Ravenwood School District.]
If anyone knows of any government program that denies benefits to anyone because of race, s/he should contact this legal foundation (Pacific Legal Foundation). In America, the government cannot legally prevent anyone from receiving educational benefits because of their race. See here for a relevant U.S. Supreme Court decision, and my analysis of the decision here.
In six years of legal practice, I have seen legitimate complaints about anti-white government programs only in two instances: allegedly improper promotions or unqualified hires in government jobs, especially in police departments. If, however, you believe the government is denying educational benefits to white children because of their race, you should know that such programs may be illegal. Again, see here.
I find this notion of anti-white government programs ludicrous. I mean, an entire swath of teachers, parents, lawyers, boards, PTAs, and administrators would have to knowingly violate the law (or stay silent) for schools to deny "special" benefits to white children because they are white. We're talking about tens of thousands of people involved in a de facto conspiracy to violate the law and prevent white children from applying for public benefits.
Now, there may be special programs to assimilate Spanish-speaking children in schools, but such programs are not based on race. For example, an Argentinian immigrant of German ancestry could benefit from such a language-assimilation program. In addition, I favor opening the desegregation program to all poor children, including white children, from East Palo Alto.
Once again, to the extent there are programs that assign special benefits to children because of their non-white race, you should contact the Pacific Legal Foundation or the Cato Institute. You may also contact me. I am very interested in learning whether widespread anti-white discrimination exists in the administration of educational benefits in California.
Anyway, whew! Not what I expected on a Friday night. In the future, I hope all children and adults study Occam's razor--the idea that in most cases, the simplest explanation is the right one.
Update: I researched the law extensively to see whether I could find something on point. Here is what I found: see 20 USC 1703: "No State shall deny equal educational opportunity to an individual on account of his or her race, color, sex, or national origin..." After Brown v. Board of Education, this country has taken numerous steps to ensure that all children have equal access to educational benefits.
I thought about the idea that some teachers were passing kids who didn't deserve to pass. I looked up the No Child Left Behind law again. It doesn't force teachers to pass kids of any race; however, it does establish vague goals, like "closing the achievement gap between high- and low- performing children, especially the achievement gaps between minority and nonminority students, and between disadvantaged children and their more advantaged peers." It appears to authorize programs for lessening the achievement gap, but it is unclear who is funding these programs.
In one section, however, NCLB establishes a specific grant for "students with disabilities, ethnic minority students, and students with migrant parents" for the sole purpose of visiting Washington, D.C. (It looks like more of a pro-tourist grant than a race-based grant.)
There are other sections of NCLB that focus on children with disabilities and "ethnic minority groups," but every single provision provides a reward for adult teachers and government workers of *any* race if they improve "retention" of low performing kids, including minority kids. I did not see any benefits that were restricted to minorities only. All educational programs must be open to all students, but schools appear to be rewarded for boosting the academic performance of ethnic minorities. In any case, it is unclear to me how a white student is negatively affected if a minority student unfairly passes a grade. If anything, the undeserved promotion probably hurts the minority student.
Outside the educational sphere, I did see some government programs that favored minorities over non-minorities. For example, certain government contracts are open only to minorities--see 10 U.S.C. § 2323. However, within the educational sphere, it appears that teachers and administrators of *all races* may get more school funding if they promote academic achievement for economically disadvantaged children, including minorities and disabled children.
This country has racial issues and a major economic divide, but playing up "white victimization" isn't the way to solve anything. Just my humble opinion.
Update: I started looking at California state laws, too. One Education Code section is interesting:
54402. For purposes of this chapter, a "disadvantaged minor" is a minor who is potentially academically able but scholastically underachieving, and must compensate for inability to profit from the normal educational program. He is a minor who...(c) Is, because of home and community environment, subject to such language, cultural, economic, and like disadvantages as will make improbable his completion of the regular program leading to graduation without special efforts on the part of school authorities...
Sections 54403 and 54405 allow the State Board of Equalization to establish K-12 programs to assist "disadvantaged" minors. The word "race" isn't used anywhere, so the law does not prevent linguistically slow or culturally disadvantaged white kids from participating in the programs; however, it is clear that many minorities will participate in these programs. The reason many minorities will participate in these programs is because their parents, unlike domestic-born kids of any race, probably have no idea how to help their kids with homework. If your parents don't speak English and haven't been to school here, then obviously, they will have difficulty helping their kids understand their homework.
I realize single or poor white mothers may also lack the time to help their children with their homework. Under the law, no school may deny disadvantaged or low performing white children entry into these remedial/extra programs.
By the way, other sections authorize programs to assist "migrant" workers, but these are remedial programs and are not based on race. For example, Swedish kids who came to California in September and knew they wouldn't stay a long time would be able to participate in these programs. Fishing migrants and many other categories of migrant workers are included, not just agricultural migrants.
Update: I just thought of something that might clarify the discussion. Some people might argue ESL and other language-assimilation programs are anti-white b/c they sap resources from schools that would otherwise go to native-born kids, many of whom happen to be white. I can see why some people think this way; after all, 99% of the kids in ESL programs are probably non-white. Perhaps if you walk into a class with 99% minorities, it's easier to believe that your white child, who isn't getting special language classes, is somehow harmed (even if your white child is taking advanced English).
In reality, language-assimilation programs are not race-based; for example, German immigrants who don't speak fluent English would be allowed to enter ESL programs. It just so happens that a lot of our recent immigration has been from so-called non-white countries. In the future, if most of our immigration comes from Sweden, and we spend lots of money on ESL programs, I have a hard time believing that anyone would say such "special" programs are anti-white or deny benefits to white children.
I already mentioned language-assimilation programs earlier, but I'm not sure if I was clear. I really don't see any evidence that schools discriminate against white kids because they are white. I rest my case on the inability of anyone to specify a single specific program where schools deny benefits to white kids (who, by the way, don't need remedial English courses). I do understand that someone may argue that desegregation or busing programs discriminate against white children to the extent white children cannot apply for these programs.
I'd appreciate seeing some specific evidence of harm to white children as a result of desegregation programs. Without specific evidence, it is hard to have a productive discussion. For example, at the dinner, I felt like Richard Dawkins, trying to refute creationists--no matter how many times I demanded proof, someone expected me to accept allegations of anti-white K-12 discrimination on faith. Sigh.
Update: here is a friend/teacher, who sheds some more light about the Atherton issue:
I am glad that someone is taking the time to dispel the many misconceptions people have about society and education. You are correct about NCLB. It is essentially an unfunded federal mandate that actually has nothing to do with grades. It has to do with scores on standardized tests but has no bearing on passing or failing classes or moving on to the next grade.
Also, there is a desegregation program that allows East Palo Alto minorities to attend Palo Alto, Atherton, Mountain View schools (some others too). Our district (Palo Alto Unified) does bus in minority kids from East Palo Alto every day in what we call the Voluntary Transfer Program which is only available to minority students even though they have a district of their own (Ravenswood). It was a court mandated ruling from the 70's called the Tinsley Act. You should look into it. It was designed to provide equal opportunity to minority kids from East Palo Alto in the form of better teachers, books, etc. I do think that white children can apply even though there aren't many in East Palo Alto.
Fascinating. See here, here, and here for more on the Tinsley Act. The district's own page states, "Students of Color living in the Ravenswood City School District entering kindergarten, first, or second grade" are eligible for the program. At the same time, California's Constitution allows voluntary desegregation programs. See Article I, Section 7:
Bonus: according to John Barton, while "California is ranked near the bottom in student test scores, the state is 25th in per-pupil spending for the current K-12 operations, according to the National Center for Education Statistics, part of the U.S. Department of Education. It is No. 1 in teacher salaries nationwide -- the U.S. average is $45,810 while the California average is $56,283 (2002-03)."
Apparently, this woman's friend had complained that a school district denied her white child benefits because of his race. This woman then said her friend raised this issue at a public school meeting and was "brave" for doing so. This woman specifically said that "only minorities could apply for these benefits," which riled me up. (Later, in an online discussion, she wrote, "my friend's child was not allowed to obtain government assistance because an administrator determined that the program was for minority groups only.")
I said several times that the government could not deny public educational benefits to anyone based on race. She reiterated that only minorities could apply for these benefits. After several minutes of heated back-and-forth discussions, I heard her say the law and reality were two different things. In other words, the law itself might not discriminate against white kids, but in reality, the school district wasn't allowing white kids to apply for certain benefits. (I guess what she meant to say earlier was, "In practice, school districts allow only minority children to apply for certain benefits.") I asked for the name of this anti-white program. She couldn't tell me the name of the program.
Then, some other people at the table jumped in. One person said teachers were giving undeserving minorities passing grades so their schools could get funding. I said it sounded like teachers were passing stupid people (of all races) to get funding. He agreed. I said if stupid people are being passed, we're not necessarily talking about minorities--we're talking about stupid people. He clarified that a certain percentage of minority students had to be passed each year to get funding. Once again, no one was able to cite a specific law or program.
Afterwards, I thought about "No Child Left Behind." The law apparently rewards school districts for retaining children from disadvantaged groups, including disabled kids and economically disadvantaged kids. I suppose a teacher who wanted to game the system would pass an ever-increasing percentage of black kids each year. My friend's husband probably meant to say that teachers are unfairly promoting stupid kids who happen to be black, not black kids because they are black. Maybe it's a subtle difference, but it's an important difference. I didn't see any federal funding tied to ensuring a certain number of minority kids pass a particular grade. (If I am wrong, I hope someone will leave a comment citing a U.S.C. or C.F.R. section.)
Someone else then mentioned a school program that allows black kids from a poor section of town to attend an affluent Atherton, California school. The problem? These black students live outside Atheron's mainly white and rich county, so their parents don't pay the same amount of local property taxes as the white Atherton parents. In essence, it seems these black kids are getting a free ride, i.e., a special benefit because they are black--or at least that was the insinuation.
After a few questions, I found out these black kids live in a county (maybe an unincorporated area?) without a school. Because they don't have a school in their county, the nearby Atherton school allowed them to attend. I pointed out that these kids weren't getting a free ride because of their race--they had to go to school, and their county didn't have a school. It sounded like someone saw a bus dropping off a bunch of non-white kids at the mainly white Atherton school district and assumed there was a pro-minority government program. In the alternative, perhaps there was a busing program to help desegregate various schools. In these programs, both white kids and minority children may attend schools in other districts. [See below for more information on this Atherton busing program. The Tinsley Act/Program, aka VTP, does create more opportunities for minorities; in fact, the district's own webpage specifies that "Students of Color living in the Ravenswood City School District entering kindergarten, first, or second grade" are eligible. Minority students, aka "students of color," are assigned limited placements through a lottery system; however, white children from the better-performing Atherton schools may apply to attend the poorer-performing Ravenwood School District.]
If anyone knows of any government program that denies benefits to anyone because of race, s/he should contact this legal foundation (Pacific Legal Foundation). In America, the government cannot legally prevent anyone from receiving educational benefits because of their race. See here for a relevant U.S. Supreme Court decision, and my analysis of the decision here.
In six years of legal practice, I have seen legitimate complaints about anti-white government programs only in two instances: allegedly improper promotions or unqualified hires in government jobs, especially in police departments. If, however, you believe the government is denying educational benefits to white children because of their race, you should know that such programs may be illegal. Again, see here.
I find this notion of anti-white government programs ludicrous. I mean, an entire swath of teachers, parents, lawyers, boards, PTAs, and administrators would have to knowingly violate the law (or stay silent) for schools to deny "special" benefits to white children because they are white. We're talking about tens of thousands of people involved in a de facto conspiracy to violate the law and prevent white children from applying for public benefits.
Now, there may be special programs to assimilate Spanish-speaking children in schools, but such programs are not based on race. For example, an Argentinian immigrant of German ancestry could benefit from such a language-assimilation program. In addition, I favor opening the desegregation program to all poor children, including white children, from East Palo Alto.
Once again, to the extent there are programs that assign special benefits to children because of their non-white race, you should contact the Pacific Legal Foundation or the Cato Institute. You may also contact me. I am very interested in learning whether widespread anti-white discrimination exists in the administration of educational benefits in California.
Anyway, whew! Not what I expected on a Friday night. In the future, I hope all children and adults study Occam's razor--the idea that in most cases, the simplest explanation is the right one.
Update: I researched the law extensively to see whether I could find something on point. Here is what I found: see 20 USC 1703: "No State shall deny equal educational opportunity to an individual on account of his or her race, color, sex, or national origin..." After Brown v. Board of Education, this country has taken numerous steps to ensure that all children have equal access to educational benefits.
I thought about the idea that some teachers were passing kids who didn't deserve to pass. I looked up the No Child Left Behind law again. It doesn't force teachers to pass kids of any race; however, it does establish vague goals, like "closing the achievement gap between high- and low- performing children, especially the achievement gaps between minority and nonminority students, and between disadvantaged children and their more advantaged peers." It appears to authorize programs for lessening the achievement gap, but it is unclear who is funding these programs.
In one section, however, NCLB establishes a specific grant for "students with disabilities, ethnic minority students, and students with migrant parents" for the sole purpose of visiting Washington, D.C. (It looks like more of a pro-tourist grant than a race-based grant.)
There are other sections of NCLB that focus on children with disabilities and "ethnic minority groups," but every single provision provides a reward for adult teachers and government workers of *any* race if they improve "retention" of low performing kids, including minority kids. I did not see any benefits that were restricted to minorities only. All educational programs must be open to all students, but schools appear to be rewarded for boosting the academic performance of ethnic minorities. In any case, it is unclear to me how a white student is negatively affected if a minority student unfairly passes a grade. If anything, the undeserved promotion probably hurts the minority student.
Outside the educational sphere, I did see some government programs that favored minorities over non-minorities. For example, certain government contracts are open only to minorities--see 10 U.S.C. § 2323. However, within the educational sphere, it appears that teachers and administrators of *all races* may get more school funding if they promote academic achievement for economically disadvantaged children, including minorities and disabled children.
This country has racial issues and a major economic divide, but playing up "white victimization" isn't the way to solve anything. Just my humble opinion.
Update: I started looking at California state laws, too. One Education Code section is interesting:
54402. For purposes of this chapter, a "disadvantaged minor" is a minor who is potentially academically able but scholastically underachieving, and must compensate for inability to profit from the normal educational program. He is a minor who...(c) Is, because of home and community environment, subject to such language, cultural, economic, and like disadvantages as will make improbable his completion of the regular program leading to graduation without special efforts on the part of school authorities...
Sections 54403 and 54405 allow the State Board of Equalization to establish K-12 programs to assist "disadvantaged" minors. The word "race" isn't used anywhere, so the law does not prevent linguistically slow or culturally disadvantaged white kids from participating in the programs; however, it is clear that many minorities will participate in these programs. The reason many minorities will participate in these programs is because their parents, unlike domestic-born kids of any race, probably have no idea how to help their kids with homework. If your parents don't speak English and haven't been to school here, then obviously, they will have difficulty helping their kids understand their homework.
I realize single or poor white mothers may also lack the time to help their children with their homework. Under the law, no school may deny disadvantaged or low performing white children entry into these remedial/extra programs.
By the way, other sections authorize programs to assist "migrant" workers, but these are remedial programs and are not based on race. For example, Swedish kids who came to California in September and knew they wouldn't stay a long time would be able to participate in these programs. Fishing migrants and many other categories of migrant workers are included, not just agricultural migrants.
Update: I just thought of something that might clarify the discussion. Some people might argue ESL and other language-assimilation programs are anti-white b/c they sap resources from schools that would otherwise go to native-born kids, many of whom happen to be white. I can see why some people think this way; after all, 99% of the kids in ESL programs are probably non-white. Perhaps if you walk into a class with 99% minorities, it's easier to believe that your white child, who isn't getting special language classes, is somehow harmed (even if your white child is taking advanced English).
In reality, language-assimilation programs are not race-based; for example, German immigrants who don't speak fluent English would be allowed to enter ESL programs. It just so happens that a lot of our recent immigration has been from so-called non-white countries. In the future, if most of our immigration comes from Sweden, and we spend lots of money on ESL programs, I have a hard time believing that anyone would say such "special" programs are anti-white or deny benefits to white children.
I already mentioned language-assimilation programs earlier, but I'm not sure if I was clear. I really don't see any evidence that schools discriminate against white kids because they are white. I rest my case on the inability of anyone to specify a single specific program where schools deny benefits to white kids (who, by the way, don't need remedial English courses). I do understand that someone may argue that desegregation or busing programs discriminate against white children to the extent white children cannot apply for these programs.
I'd appreciate seeing some specific evidence of harm to white children as a result of desegregation programs. Without specific evidence, it is hard to have a productive discussion. For example, at the dinner, I felt like Richard Dawkins, trying to refute creationists--no matter how many times I demanded proof, someone expected me to accept allegations of anti-white K-12 discrimination on faith. Sigh.
Update: here is a friend/teacher, who sheds some more light about the Atherton issue:
I am glad that someone is taking the time to dispel the many misconceptions people have about society and education. You are correct about NCLB. It is essentially an unfunded federal mandate that actually has nothing to do with grades. It has to do with scores on standardized tests but has no bearing on passing or failing classes or moving on to the next grade.
Also, there is a desegregation program that allows East Palo Alto minorities to attend Palo Alto, Atherton, Mountain View schools (some others too). Our district (Palo Alto Unified) does bus in minority kids from East Palo Alto every day in what we call the Voluntary Transfer Program which is only available to minority students even though they have a district of their own (Ravenswood). It was a court mandated ruling from the 70's called the Tinsley Act. You should look into it. It was designed to provide equal opportunity to minority kids from East Palo Alto in the form of better teachers, books, etc. I do think that white children can apply even though there aren't many in East Palo Alto.
Fascinating. See here, here, and here for more on the Tinsley Act. The district's own page states, "Students of Color living in the Ravenswood City School District entering kindergarten, first, or second grade" are eligible for the program. At the same time, California's Constitution allows voluntary desegregation programs. See Article I, Section 7:
Nothing herein shall prohibit the governing board of a school district fromThere is also controversy about whether the Atherton school is subsidizing the students from the other side of town. For example, one person commented, "The [Palo Alto/Atherton] district gets $3,500 per student in return. But Palo Alto spends approximately $10,300 per student, so it is 'subsidizing' these students by about $6,800 apiece for a total of $3.7 million a year." If anyone has more information about the Tinsley Program, please leave a comment.
voluntarily continuing or commencing a school integration plan after the effective
date of this subdivision as amended.
Bonus: according to John Barton, while "California is ranked near the bottom in student test scores, the state is 25th in per-pupil spending for the current K-12 operations, according to the National Center for Education Statistics, part of the U.S. Department of Education. It is No. 1 in teacher salaries nationwide -- the U.S. average is $45,810 while the California average is $56,283 (2002-03)."
Friday, September 25, 2009
Symantec's Annual Shareholder Meeting (2009)
I attended Symantec’s annual shareholder meeting on September 23, 2009. The company offered shareholders a goodies bag that included a complimentary copy of Norton Online Backup; a zip-up notebook; a nice pen; and a small padlock (symbolizing Symantec’s security focus). Approximately thirty attendees were treated to coffee, juice, and pastries.
I was looking forward to this meeting for two reasons: one, the Investor Suffrage Movement asked me to move Proposal No. 3 on behalf of another shareholder; and two, this would be new CEO Enrique Salem’s first year handling the annual meeting.
Chairman and former CEO John Thompson opened the meeting and introduced various Board and executive team members. After Mr. Thompson was done, Executive VP and General Counsel Scott Taylor allowed me to move Proposal No. 3 (sponsoring shareholder: Kenneth Steiner) and to provide a short explanation of the proposal. I’ve been to many shareholder meetings, but this was my first time moving a proposal. I delivered a short summary about the proposal and then sat down.
One quick aside: I attended Symantec’s meeting last year and was very impressed with then-CEO John Thompson. I was looking forward to seeing him again this year, but had forgotten that corporations tend to despise outside shareholder proposals. Responding to such proposals takes up attorney time and internal resources. The usual corporate attitude is that if shareholders don’t like the way the executives run the company, they can sell their shares. So perhaps I should not have been surprised that while I was reading the presentation, Chairman John Thompson, seated only several feet from me, was staring at me with a “Make My Day” expression. (To his credit, Mr. Salem recognized me from last year and skipped the stare-down.) Thankfully, after the meeting, Mr. Thompson was his usual charismatic self, entertaining various attendees with some stories. Mr. Thompson appears to be in great shape and has lost some weight since last year.
After I moved the proposal and delivered the short summary, Mr. Taylor closed the polls and announced preliminary results. Proposal No. 3 passed. After Symantec takes additional steps--such as amending its bylaws--the threshold for calling special meetings will be 10% ownership, down from 25% ownership.
Mr. Taylor then introduced President and CEO Salem, who delivered a brief presentation about Symantec’s accomplishments. I’ve listed what I consider to be the most interesting information below:
1. 120 million consumers use Symantec’s software.
2. Symantec’s customer base is 30% consumer, 70% enterprise.
3. Symantec wants to “commoditize infrastructure,” which means driving costs out of the environment (I asked Mr. Salem to clarify this term after the meeting. He gave me an example of a consumer choosing between two hard drives--Symantec wants to give the consumer the same capabilities in each product so the consumer can choose based on price. For more information, see page 3 of the Annual Report, under “Enable our customers to simplify their heterogeneous environments and reduce costs...”)
4. Symantec is growing its data loss prevention and “online backup” business. Symantec anticipates a lot of growth from its “online backup” business.
5. Symantec’s growth comes from both “organic innovation and acquisitions.” For example, Symantec is testing “reputation-based” analytics (i.e., should this software run on my computer?) and has an impressive R&D budget. (Note: Symantec's reputation-based analytics feature is live in Norton's 2010 products.)
After the informal presentation, Mr. Salem opened the meeting to questions. A shareholder made several comments about Proposal No. 3, which he opposed. He said that labor unions hated Mr. Robert Miller (who was singled out several times in the proposal) because he was a tough CEO. He said American corporations are being “denigrated” by activists.
Mr. Salem, like most corporate executives, is no fan of outside shareholder proposals. He could have taken the bait and criticized the proposal; instead, he showed admirable diplomatic skills. He indicated he would work with Symantec’s largest shareholders, and he was committed to shareholder success. I immediately realized Symantec had chosen a CEO with excellent PR skills, which is important for any service-oriented company.
Another shareholder, Tony Mazzapelle, questioned a large goodwill writedown. Mr. Salem acknowledged the unusually large writedown of approximately $7.4 billion and explained that at one point, the dislocation of the stock market had caused Symantec’s goodwill to be valued more than the corporation itself. The company recognized the issue and complied with SEC rules to resolve the matter. He also clarified that the large goodwill was the result of several acquisitions, not just one.
Mr. Mazzapelle then raised an issue dear to my heart, which is non-GAAP vs. GAAP accounting. Personally, I hate non-GAAP results. Even though it’s legal and common to use them, non-GAAP numbers allow accountants too much leeway. Here, for example, using non-GAAP numbers allowed Symantec to report operating income of approximately $1.88 billion for Fiscal Year 2009. During the same time period, however, using GAAP, Symantec reported an operating loss of approximately $6.5 billion. Slight difference, no?
Mr. Mazzapelle rightfully complained that publishing both sets of numbers was confusing, and he asked whether the company would continue to publish both sets of numbers. Mr. Salem responded that Symantec would be using both GAAP and non-GAAP methodologies in the future. He said if shareholders wanted a clear vision of the company’s finances, they need only to review Symantec’s cash flow, which is approximately $1.5 billion annually. His response left even a skeptic like me satisfied.
Another shareholder questioned Symantec’s marketing costs. Mr. Salem indicated the company was aware of the issue and was focused on growth (which naturally entails significant marketing costs).
Was Symantec gaining or losing market share against McAfee (MFE)? Mr. Salem said Symantec was gaining in the large enterprise segment, but not in the small business segment. He also said, the “quality of our products has never been better.”
I asked my usual question: what is Symantec’s competitive advantage in the marketplace? Mr. Salem said that Symantec’s software could run on almost any platform (Linux, etc.) and protected consumers “against the widest range of threats.”
Overall, I was very pleased with Mr. Salem’s demeanor, knowledge, and delivery. Prior to the meeting, I was concerned that after having a CEO as charismatic as Mr. Thompson, Symantec’s next CEO would have difficulty measuring up. My concerns were clearly misplaced.
As I mentioned earlier, this is my second year attending a Symantec annual meeting. Once again, Symantec ran its annual meeting professionally. It deserves kudos for delivering a pleasing shareholder experience. Its ability to run a great meeting is especially notable because its local competitor, McAfee, doesn’t seem to emphasize its annual meetings. For example, in recent years, McAfee (MFE) hasn’t bothered with an informal slide presentation. To make matters worse, when I last attended McAfee’s annual meeting, shareholder relations staff treated me like an intruder (I appeared to be the only non-employee shareholder there, which might have bothered them). Although McAfee's stock has done better than Symantec's recently, once Symantec digests its massive (and perhaps ill-timed) acquisitions, it may outperform McAfee. In the meantime, long-term, patient shareholders may want to consider buying Symantec stock.
Disclosure: I own an insignificant number of SYMC shares. If I do add shares, I expect to hold them for several years. Also, I provided a copy of this article to Symantec prior to publication. Consequently, I incorporated some minor changes in my sole discretion. Almost all the changes related to correcting numerical values, such as changing $7.7 billion to $7.4 billion (I originally wrote $7.7 billion because that's the number I heard the shareholder say).
I was looking forward to this meeting for two reasons: one, the Investor Suffrage Movement asked me to move Proposal No. 3 on behalf of another shareholder; and two, this would be new CEO Enrique Salem’s first year handling the annual meeting.
Chairman and former CEO John Thompson opened the meeting and introduced various Board and executive team members. After Mr. Thompson was done, Executive VP and General Counsel Scott Taylor allowed me to move Proposal No. 3 (sponsoring shareholder: Kenneth Steiner) and to provide a short explanation of the proposal. I’ve been to many shareholder meetings, but this was my first time moving a proposal. I delivered a short summary about the proposal and then sat down.
One quick aside: I attended Symantec’s meeting last year and was very impressed with then-CEO John Thompson. I was looking forward to seeing him again this year, but had forgotten that corporations tend to despise outside shareholder proposals. Responding to such proposals takes up attorney time and internal resources. The usual corporate attitude is that if shareholders don’t like the way the executives run the company, they can sell their shares. So perhaps I should not have been surprised that while I was reading the presentation, Chairman John Thompson, seated only several feet from me, was staring at me with a “Make My Day” expression. (To his credit, Mr. Salem recognized me from last year and skipped the stare-down.) Thankfully, after the meeting, Mr. Thompson was his usual charismatic self, entertaining various attendees with some stories. Mr. Thompson appears to be in great shape and has lost some weight since last year.
After I moved the proposal and delivered the short summary, Mr. Taylor closed the polls and announced preliminary results. Proposal No. 3 passed. After Symantec takes additional steps--such as amending its bylaws--the threshold for calling special meetings will be 10% ownership, down from 25% ownership.
Mr. Taylor then introduced President and CEO Salem, who delivered a brief presentation about Symantec’s accomplishments. I’ve listed what I consider to be the most interesting information below:
1. 120 million consumers use Symantec’s software.
2. Symantec’s customer base is 30% consumer, 70% enterprise.
3. Symantec wants to “commoditize infrastructure,” which means driving costs out of the environment (I asked Mr. Salem to clarify this term after the meeting. He gave me an example of a consumer choosing between two hard drives--Symantec wants to give the consumer the same capabilities in each product so the consumer can choose based on price. For more information, see page 3 of the Annual Report, under “Enable our customers to simplify their heterogeneous environments and reduce costs...”)
4. Symantec is growing its data loss prevention and “online backup” business. Symantec anticipates a lot of growth from its “online backup” business.
5. Symantec’s growth comes from both “organic innovation and acquisitions.” For example, Symantec is testing “reputation-based” analytics (i.e., should this software run on my computer?) and has an impressive R&D budget. (Note: Symantec's reputation-based analytics feature is live in Norton's 2010 products.)
After the informal presentation, Mr. Salem opened the meeting to questions. A shareholder made several comments about Proposal No. 3, which he opposed. He said that labor unions hated Mr. Robert Miller (who was singled out several times in the proposal) because he was a tough CEO. He said American corporations are being “denigrated” by activists.
Mr. Salem, like most corporate executives, is no fan of outside shareholder proposals. He could have taken the bait and criticized the proposal; instead, he showed admirable diplomatic skills. He indicated he would work with Symantec’s largest shareholders, and he was committed to shareholder success. I immediately realized Symantec had chosen a CEO with excellent PR skills, which is important for any service-oriented company.
Another shareholder, Tony Mazzapelle, questioned a large goodwill writedown. Mr. Salem acknowledged the unusually large writedown of approximately $7.4 billion and explained that at one point, the dislocation of the stock market had caused Symantec’s goodwill to be valued more than the corporation itself. The company recognized the issue and complied with SEC rules to resolve the matter. He also clarified that the large goodwill was the result of several acquisitions, not just one.
Mr. Mazzapelle then raised an issue dear to my heart, which is non-GAAP vs. GAAP accounting. Personally, I hate non-GAAP results. Even though it’s legal and common to use them, non-GAAP numbers allow accountants too much leeway. Here, for example, using non-GAAP numbers allowed Symantec to report operating income of approximately $1.88 billion for Fiscal Year 2009. During the same time period, however, using GAAP, Symantec reported an operating loss of approximately $6.5 billion. Slight difference, no?
Mr. Mazzapelle rightfully complained that publishing both sets of numbers was confusing, and he asked whether the company would continue to publish both sets of numbers. Mr. Salem responded that Symantec would be using both GAAP and non-GAAP methodologies in the future. He said if shareholders wanted a clear vision of the company’s finances, they need only to review Symantec’s cash flow, which is approximately $1.5 billion annually. His response left even a skeptic like me satisfied.
Another shareholder questioned Symantec’s marketing costs. Mr. Salem indicated the company was aware of the issue and was focused on growth (which naturally entails significant marketing costs).
Was Symantec gaining or losing market share against McAfee (MFE)? Mr. Salem said Symantec was gaining in the large enterprise segment, but not in the small business segment. He also said, the “quality of our products has never been better.”
I asked my usual question: what is Symantec’s competitive advantage in the marketplace? Mr. Salem said that Symantec’s software could run on almost any platform (Linux, etc.) and protected consumers “against the widest range of threats.”
Overall, I was very pleased with Mr. Salem’s demeanor, knowledge, and delivery. Prior to the meeting, I was concerned that after having a CEO as charismatic as Mr. Thompson, Symantec’s next CEO would have difficulty measuring up. My concerns were clearly misplaced.
As I mentioned earlier, this is my second year attending a Symantec annual meeting. Once again, Symantec ran its annual meeting professionally. It deserves kudos for delivering a pleasing shareholder experience. Its ability to run a great meeting is especially notable because its local competitor, McAfee, doesn’t seem to emphasize its annual meetings. For example, in recent years, McAfee (MFE) hasn’t bothered with an informal slide presentation. To make matters worse, when I last attended McAfee’s annual meeting, shareholder relations staff treated me like an intruder (I appeared to be the only non-employee shareholder there, which might have bothered them). Although McAfee's stock has done better than Symantec's recently, once Symantec digests its massive (and perhaps ill-timed) acquisitions, it may outperform McAfee. In the meantime, long-term, patient shareholders may want to consider buying Symantec stock.
Disclosure: I own an insignificant number of SYMC shares. If I do add shares, I expect to hold them for several years. Also, I provided a copy of this article to Symantec prior to publication. Consequently, I incorporated some minor changes in my sole discretion. Almost all the changes related to correcting numerical values, such as changing $7.7 billion to $7.4 billion (I originally wrote $7.7 billion because that's the number I heard the shareholder say).
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