Wednesday, July 31, 2013

Infrastructure spending --- why not bi-partisan consensus

It seems inexplicable.  Any proposals related to increased infrastructure spending seem to be blocked before they get started by Congress.

The last heyday for infrastructure spending in the U.S. was the 1950's.  The facts suggest that there should be no debate.  Many bridges, tunnels, roads, rail lines, levees, dams, and airports are in need of updating, repair, or replacement.  This infrastructure is essential for meaningful long term economic growth, not to mention near term safety.  Beginning a comprehensive program to jumpstart infrastructure spending should be obvious.  It would create job growth, capital investment, and lay the groundwork for the next generation's future.  What Republican or Democrat would openly say they are against those goals.

Governor Christie of New Jersey wouldn't say it, but he is.  When he shut down the building of a second rail tunnel from Manhattan to New Jersey he could not have been more short sighted, politically motivated, and downright selfish.   He said that New Jersey could not afford it, even though the Federal government was committed to paying around two thirds of the cost.  So now we are doomed, longer term, to one main aging commuter and freight rail tunnel that connects the Northeast to the rest of the Atlantic Coast states.  Does that represent an obvious risk?  Yes.  If there were a concept of eminent domain for the Federal government over the states, it would have been the perfect time to exercise it.

Executing an infrastructure spending plan would be complex for sure.  It would require more spending that would need to be offset but belt tightening elsewhere.  There would be an absolute need to streamline state and especially Federal bureauccrazys to get things done in a reasonable time frame.  It would require an open-minded approach to public/private partnerships.  And as President, Obama would get credit for starting an essential process which would last well beyond his time in office.  Many Republicans just choke on that idea.  They seem to put a personal vendetta ahead of American progress.

Perhaps many members of Congress have not traveled outside of the U.S., or if so only on government sponsored trips where they were shuttled  around to nice hotels and government buildings and saw next to nothing.   The infrastructure spending in much of Europe has been ongoing and is startling in comparison to what we see around us here.  Asia, well that's amazing to behold in many countries and still underway(don't ask about India).  With no means of comparison, much of Congress seems to think of the U.S. parochially as the most advanced country in the world in all respects.

With the gridlocked Congress now and a thought process over many years and Presidencies of self-satisfaction leading to deferred investments, we are in a state of denial that is unsustainable.  There will be consequences. 



Monday, July 29, 2013

Buying Facebook shares now?

Facebook has already had a storied history in the investment world, barely one year old as a public company.  A completely flawed IPO with many parties at fault, launching at $38 and within  two months going to a low of $18.  After being within a trading range in the mid-twenties for many months, with recent earnings it has now reached to the $35 level.  Why would it be a "buy" now?

The message here is that the risk/reward on this, what is perceived as a speculative stock, is hugely in favor of the reward side. One or two more quarters of progress on the mobile and ad revenue areas of the business, meaning believably turning Facebook into a real business, and the stock will easily be $50.  Over time the price could be much higher.

This is a stock that is not at a point where it can be analyzed on any traditional metrics.  What they do with their customer reach is impossible to quantify.  They have a strong management team that is still evolving and product innovators whose talents are at work.  They obviously understand everything that the lightweight pundits throw at them, such as the need to keep their youth vibe going, the challenge to keep their immense global platform intact and expanding, and how to best target the middle aged and older segment that use Facebook in a way that also could be attractive to advertisers.  Those are issues and no one could possibly imagine that they are not way ahead of the pundits on understanding this.

So with less than $2 billion of long term debt, more that $12 billion of shareholders equity, and revenue growth reliably in the double digits - 20%, 30%, higher? - there is room for this company to continue to experiment and learn how to be a public company that makes real money for shareholders.

Would FB be bought here after the significant run-up?  Thinking about it?  Being a big time skeptic on the IPO there was no move here and no interest.  The real business model was not visible.  Finally capitulating and buying at the low levels after the collapse, there is room here to buy more with a cushion.  The business model may finally be coming into place.  The institutional shareholder base is surprisingly not crowded if the recent 13-F's are still intact so there is room to grow, lots of doubters to convert.  Retail choked on the IPO and is probably staying away, but could still come back.

Facebook still has significant challenges, many unknowns, of course.  That's a real risk.  The potential reward could be much greater.

Sunday, July 28, 2013

Chevrolet Impala best new car says Consumer Reports?

For the first time in 20 years an American car was named the best new sedan by Consumer Reports.  As a magazine that does not accept advertising and is widely viewed as doing credible testing, it's a significant endorsement.  The Chevrolet Impala is a mid-sized car that has apparently been completely remade, revamped, and revitalized for the 2014 model year.

With the post office's new more efficient systems in this area, most of our magazines arrive about five days later than they did for the last 25 years, just about the time they are ready to go off the news stands so have not seen this issue yet.  From what has been read in other media reports they stress that it is a car that drives really well, is comfortable, and has many amenities that are not too difficult to use.

That seemed almost too good to be true.  I have not seen a Chevy Impala in quite a few years except sitting in rental car lots.  This must really be an entirely different car from its legacy model.  It sounds like a great positive for GM.

Then a price was mentioned on one news report --- $40,000.  That was way beyond what was expected here.  That's around the cost of a Lexus ES350, perhaps a tad smaller than the Impala but a proven car year end and year out, even if a little boring at times but Lexus is definitely working on that.  It's definitely been powerful enough in recent years.

So the new Impala may be great, but given the prices of other entry level premium cars it's going to be an uphill slog at first to find buyers who step away from proven cars at that price and ones with, well, a far superior brand.  Would people be more inclined to buy an Impala or have that signature L or another well known marque on their hood.

It will be interesting to see. 

Saturday, July 27, 2013

Yet another Commissario Brunetti mystery

Readers of this blog know that every time Donna Leon publishes a new book in the Commissario Guido Brunetti mystery series, it is read here as soon as the library stocks it, and if not Amazon comes to the rescue.  These are the elegant crime pieces set in Venice and peopled by Brunetti and his family, the same group of detectives, growing older when thinking about the young people and aging when thinking about others.  Like Andrea Camilleri's Inspector Montalbano series set in Sicily, the reader naturally ages along with the characters.  There is some interesting identification.

Leon has written around 20 of these books, all built around characters and their daily life.  Meals are detailed at every turn, conversations about daily life can be low key but meaningful, and the patterns of life in Venice as it changes are a backdrop.  Unlike many, or most, crime books written by U.S. based writers, these mysteries are generally solved by intelligence rather than beatings, shootings, stabbings, or sex.   The writing is unforced.  The books are relaxing reads that usually last here no more than two days.

"The Golden Egg" is the latest book.  What a relief.  Like any writer of entertainment literature, a body of work can be uneven, and the last two books had seemed slightly sub-par relative to others.  This one is not.  If this is what one is looking for, it is a perfect reflection of all of the best characteristics of the series.     

Monday, July 08, 2013

New Investments

Who knows when to invest money, but with so much in cash equivalents unattended my 25 year old daughter decided to put a portion of it at risk.   Average in is the idea, so if it works well, if she wants to buy a building in South Williamsburg Brooklyn, that's her decision and capability.  For those who follow symbols, today was sell EFA  and buy BRKB, VWINX, FESEX, BUFBX, and YAFFX.

Who knows, bad move, good move,  one never knows.  I do know that diversity in young person's portfolio is risk worth taking, far better than a large ignored cash position.  Average in.  

At the library

It's so darn hot that it is hard to go anywhere.  I used to brag that I liked hot weather.  I did.  That changed a bit when I spent summer in Arizona in 1980.  120 degrees is really hot, especially in an ancient room with an "air cooler" in the ceiling, what ever that was.  At least there was a pool outside of my room and relationships everywhere.  Today reminds me of that time because I could not touch my steering wheel when I first got into the car.  Too HOT.

The library is a respite, cool and surrounded by books.  No one talks to me.  I need that.

Saturday, July 06, 2013

Cereal killer

Taking a break from anything serious on an incredibly hot and humid afternoon, this post turns to a breakfast ritual.  Cereal here, for me, after coffee, juice, and water, watered down by an hour with the Times and overnight e-mails.

The formula - first an initial dose of Uncle Sam, cereal of such healthy credibility that here it cannot stand on its own, rough whole wheat flakes and flax seed so dense that it take a rough sponge always to get the stuff off of the offending bowl.  To cut Uncle Sam, Trader Joe's raisin bran, or honey, almond, and , yeah, flax whole grain crunch cereal is added.  Then maybe, depending on the day, a portion of Post Great Grains cereal, with either raisins, dates, and pecans, or dried cranberries and almond.  The coup de gras is a topping of either corn flakes or cheerios.   Hey, I am of this country.

To all of this will be added, depending on what's in store, walnuts, blueberries, blackberries, or raspberries.  Then there is the fat free milk.  I call it "cereal killer" in the title because it is a filling meal that sets me back for awhile, especially on those days when I decide to add a couple of fried eggs with salt, pepper, and tabasco just to make sure that my cholesterol is not too low.

That's the non-message from this relief of a post.

Two follow up thoughts --- one could wish that those everywhere would have these choices, and I can wonder whether given Snowden's revelations the title of this will lead to some technological misinterpretation and have the police at my door.

Friday, July 05, 2013

Assad "jubilant"

This is truly repulsive.  Assad of Syria is calling the removal of Morsi a vindication for his horrific attack on his own country.  The "jubilant" description comes from the headline of an informative NYT article today.

One must remember that the resistance to Assad's military rule, discrimination against Sunnis, and ruinous economic policies began as peaceful protests.  Remember two years ago seeing apparently actually happy protestors marching in the streets of Homs and other cities to make their grievances public.  After a short while of tolerating this, Assad put sharpshooters on the roofs of buildings to mow them down.   Then he started assaulting towns with abandon, with tank propelled rockets into civilian areas.  The most telling report of this was arranged by Richard Engel, the incomparable NBC reporter on the Middle East, who interviewed a senior and older spokesperson for the Assad regime, a spokesperson who reminded me of the Tariq Aziz of Saddam Iraq fame.  He was immaculately dressed, spoke perfect English, acted the elder statesman role, and claimed that without question the Assad regime was not attacking Homs.  NBC had one quarter of the television screen(upper left) with video of the tanks sending bombs into civilian areas intertwined with the carnage as this interview of an unrepentant liar took place.

Assad created his own Islamist extremist problem, to the extent that there is one, and one could presume there is a big one.  This weak lightweight just followed the dictates of veterans of his father's military ideology.  Crush any opposition at all brutally and quickly and they will go away.  NOW he is jubilant?

What happened in Egypt and Cairo has nothing to do with Assad,  nothing to support his actions and his arrogant approach to mass murder, supported by his fashion obsessed wife.

Syria may well end up in Islamist hands eventually given Assad's actions to date.  Hopefully not, and both the Islamist groups, the more secular Sunnis, and even the Assad supporters can take some lessons from this Egyptian experience if they choose to think, if that is possible in the Middle East.  Being "jubilant" is not one of them. 

Thursday, July 04, 2013

No mercy for Morsi

The need for the Egyptian military to remove Mohamad Morsi from his democratically elected role as President of the country is a tragedy for democracy in a region with a desperate need for an example of democratic success.  From this perspective, Morsi has only himself and his senior Muslim Brotherhood handlers to blame.

With the economy faltering, businesses failing, and basic necessities not being managed or provided by the Morsi government, his primary goals seemed to be consolidating power, appointing only the more Islamist members of his party to major roles, expanding his own powers to exceed that of the judiciary, weakening expected Constitutional protections, not even bothering to create the appearance of an inclusive government, and referring to opposition parties as traitors, all while ignoring basic governance and the competence of his appointees.

There will no doubt be some who blame the U.S. for this calamitous failure of democracy, but there is no indication from this perspective that the Obama administration wanted this outcome or encouraged it.  From all reports seen here, our ambassador to Egypt worked closely with Morsi(perhaps too closely) and others to encourage interaction between different factions, and at least in public the U.S. did not comment at all on the Morsi government's aggressive pressure on the Christian community or women's rights.  Obama appeared to want more time to work things out to preserve the "will of the people", at least at the time of the vote.  With the economy crumbling, my bet is that the U.S. thought that a cautious approach now and ultimately the carrot of more economic aid could force some reconciliation by Morsi with his varied opposition.

The Egyptian people could not wait.  The military, a country unto itself, stepped in.  They have suggested that they are not there to run the country but to maintain order and to oversee the implementation of a new constitution and new parliamentary and presidential elections in the coming six months, maybe an optimistic target.  If that happens, there is a chance that something can be salvaged from this mess.  If not, who knows.  Certainly not this less than completely informed writer from afar.


Wednesday, July 03, 2013

Home generator now in place - guaranteeing no repeat of Sandy

After several months of planning and waiting, our home generator is hooked up and works.  To keep in good shape it is timed to run for 15 minutes one day a week.  I chose Wednesdays at 10am, a choice based on assuming no neighbors would still be sleeping or have started napping.

Others in the neighborhood have these powerful generators as well that will run their entire house automatically in the event of a power shutdown, and those shutdowns are more or less certain to happen here in storms or for no reason at all given the incompetence and corruption at LIPA and on Long Island, all discussed in detail in prior posts here.  When they are turned on at other houses we can certainly here them, but with houses not so closely packed together it is not an annoyance of any consequence.

Today's first real trial 15 minutes worked perfectly.  It was seamless.  The generator took over for the 15 minutes and there was no blip of change in the house, no minor dimming of lights on the change, just nothing.  What was noticeable when I stepped outside is that it sounds like a '57 Chevy with a defective muffler up close.  We can't hear it in the house in any inconvenient way as it is located at the back left corner of the garage, but outside...   I guess at times when it is needed neither we nor our neighbors will be lounging outside anyway.

We chose a Kohler machine, modestly more expensive than the most popular brand as it is generally viewed as better made and quieter.  I guess the less expensive choice sounds like a motorcycle revving up.  What is interesting is that there are three manufacturers of these generators, all based in an area of Minnesota.  Just like centers of excellence and talent for technology - Palo Alto, Cambridge, Research Triangle, Austin, and now the Flatiron district and extending to west 10th in NYC etc. - there are centers of  talent for many other products as well.  Generators now discovered, and through investing, at first not so well, and then exceptionally well, I discovered that the center for Recreational Vehicles and their parts suppliers is in some parts of small town Indiana. 

Next step, get the new gas line connected to the boiler and heat with gas instead of the incredibly expensive oil, which is more expensive by the gallon than gas at the pump.  This is the next step of coordinating workers, but the first big step is now successfully done.


Monday, July 01, 2013

"Sweet Tooth", Ian McEwan

Rarely is a novel written about that doesn't have unqualified endorsement here.  McEwan's books generally attract and deserve critical acclaim with his writing talent in the forefront.  The subjects vary widely, often relationship driven with some type of recognizable precisely described current or historical backdrop.  This book fits that pattern.

It is set in 1972 at a time of economic crisis and social unrest in England, and with the cold war very cold, but also intensely active on the cultural and academic front.  A young college graduate, bright, well-educated, and attractive but without much direction finds herself being lured into the intelligence services, an interesting and secretive challenge even at a low level position.  My intent here is not to detail the story but only to provide that set-up.  It meets all McEwan criteria, with writing worth reading, relationships with imperfections, and bringing alive a historical period.

The one qualification is that this is a book that is best read in big gulps, at least that was the experience here.  What began as a chapter a night read did not grab my attention, and the book was put down.  Then due to a few days of not feeling up to par, I picked the book back up, reviewed the 50 or so pages that I had already read and partially forgotten, and then finished it off over parts of the next two days.  There was still at times a bit of wonder at where this novel was going and what its real intent was.  It all came together in the last 25 or so pages in a way that was completely rewarding.