Monday, March 31, 2014

North Korea simmers on the back burner

The focus has been on Ukraine and Russia, on Iran, on Syria, but what about North Korea.  That country and its unpredictable young leader may be the biggest threat to stability on the planet.  The country continues its tests of ballistic missile technology, most recently on Wednesday.  A North Korean government statement last week said it "would not rule out a new form of nuclear test".   A major uranium enrichment program continues.

The hope had been that China would restrain its ally.  Reports suggest that China's influence is waning, whether because China is not trying or North Korea is not listening.  If focus on further development of, as North Korea says, "diversified and miniaturized" nuclear devices is what they claim, and these could either be transported physically or mounted on one of their developing intercontinental ballistic missiles, this is truly troubling.

The leadership background is worse.  In such an entitled leadership family the risk of megalomania developing as generations advance is more than possible.  Kim ll-sung, "Eternal President of the Republic", was absolute in his dictatorship, almost all inward looking.  His son Kim Jong-il could have taken the absolutism and isolation further, but his love of film, sex, pornography, drugs,and alcohol basically neutered him, all bluster but not seriously dangerous, easily managed by China to their whim.  The young Kim Jung-un is not so easily contained.  Despite his supposed Swiss education at some point and his youthful persona, the Dennis Rodman admiring and director of an assassination of experienced senior leaders, this chubby cheeked neophyte does not seem stable.  He could do anything.  It is entirely possible that he could do something really stupid.

From this perspective he would most likely attack some peripheral part of Japan rather than South Korea if he felt overly pressured.  Then again it may be an armed takeover of some adjacent island populated by South Koreans and, Putin style, would be "claimed" as being rightfully North Korean.

Kim Jung-un will not react to grain for concessions proposals and he will not allow any inspections of consequence of his nuclear arsenal.  His focus is not on the suffering of the majority of North Korean citizens as his growing megalomania does not allow that way of thinking to germinate.  This is an urgent issue, swept out of the news by other events and with no immediate press coverage to require focus by Obama or Kerry, or China.  Who leads who?

The situation in North Korea needs attention and one could suggest diplomatic confrontation now, not later.  More depth in the State Department is needed.  More intensity in the Executive branch is needed.  This situation is not going away, and gets more dangerous as it is allowed to proceed in the "I hope this goes away" mode that the West has adopted.

Sunday, March 30, 2014

Overweight, and the challenge to feel good

The writer of this blog is somewhat overweight.  At any superficial glance he looks to be on the skinny side.  He knows better, and knows exactly what he should weigh and exactly where the extra pounds have gone.  Doing sit-ups and stretches does not help.

He knows that there are two issues going on here.  First is the lack of endorphin pumping and metabolism quickening exercise.  That is a definite problem at the moment, as physical limitations make even well paced walking for any distance something that can become difficult.  Maybe that can improve, and he optimistically thinks that is more than wishful thinking.  He is looking for every sign that improvement is in the offing, although getting back to the old ways of innately speed walking everywhere in his suburban town and through all parts of Manhattan is quite unlikely.

The second issue is eating.  He cooks by both necessity and because most of the time he likes to do so.  Cooking for two can easily lead to too much food, good for leftovers for lunches, even breakfast, but not good for the temptation to eat too much of a just cooked meal.  He likes his own cooking.  When not cooking they buy take-out, always too much served and that leads to the same problem.

Then there are just what he views as wonderful bad habits.  He likes those little cans of Coke, one a day, and on occasion a little ginger ale refreshment.  He loves ice cream in the evening, particularly Ben and Jerry's vanilla.  Why not be forthright about just eating straight cream rather that some concoction with nuts, berries, and chocolate, all of which get stuck in his teeth.  Then there are snack foods.  Solid dark chocolate in moderation is supposed to be good for him and he enjoys believing that and nuts of almost all types are healthy as well, again in moderation and perhaps if possible without too much salt.  His father always had a salt shaker beside him when he ate already salted nuts.

Other snack foods that apparently fall easily into the "bad habits" category are potato chips, fritos, doritos, and cookies.  The problem with each of these in his mind is not the product itself but the ease with which he can overindulge, very easily.  Fortunately he has finally outgrown his long held devotion to Cheetos, not through any willpower but because removing the trans fats as few years ago really ruined the taste.  The furniture appreciates this change, regardless of the reason.

Then there is the egg thing.  He cannot make himself believe that eggs are bad for his health.  At least every other morning he eats a couple of  eggs, over easy or scrambled with finely chopped green and red pepper, both always with tabasco.  Egg by-product mayonnaise is another weakness.  His daughters would view the amount of mayo that he puts on a turkey sandwich or hamburger as obscene.  My God, that''s right, the man occasionally eats hamburgers.   

He knows the problem, but he is in a quandary.  Lack of self-control or too much exuberance has long been an issue for him, in many good ways but also in ways that were clearly not so good.  Much of this was offset for many years by energetic regular exercise and by good genes.  Now the denial of simple pleasures is difficult for him.  He knows that his chronically problematic right knee does not enjoy the extra weight and that his issues with walking endurance are probably not helped by another scoop of ice cream, another portion of chocolate cake, a second bowl of chips, or that baked potato with Marie's blue cheese dressing slathered on it.

The outlook is uncertain but he is gaining determination to eat less and more carefully, and push to get more exercise.  He lives in uncertainty but knows that he has no choice but to put one foot in front of the other and see where he ends up.

"It's a wonderful world", or let's just say it's an aspirational world for now.

Friday, March 28, 2014

Obama rhetoric again, to what purpose

It is reported that today on "CBS this morning" President Obama called on Russia "to pull back its troops immediately" from the Ukrainian border in order to reduce tensions, de-escalate the situation, and lay the groundwork for negotiations.  I am sure that Putin is eager to be seen as accommodating such a U.S. demand.  That's not true.  I am in fact sure that Putin will be more adamantly opposed to acting on such a request after hearing it.

Could Obama have simply demanded that Russia work to put conditions in place to stabilize relations with the West and with Ukraine, and address the takeover by Russia of Crimea.  That would not appease Putin but it also would not incite him to stonewall the process.  The guess here it that Obama's words were more harmful than helpful. 

Obama's take on diplomacy is muddled.  It is unclear whether it is a reflection of his lack of maturity in dealing with foreign affairs or the absence of experienced and candid advisers to him in the State Department, Defense Department, or in the West Wing.  Does he listen to anyone?  Today's remarks suggest that he trusts his own intelligence and intuition to be the best guide available.

There is no question here that what Obama suggests is the best way forward.  The question is how to achieve it.

Thursday, March 27, 2014

Time to get serious about NCAA bball watching

During the regular season of college basketball, no games were watched here.  The newspaper can be read, provides updates, and they keep one informed.  Not only is the suspense not really there in the regular season for one who does not have a serious favorite team or teams, not watching is an easy way to avoid college basketball announcers and their incessant and annoying patter.

Now is the time when every game counts.  16 teams remaining and it will all be over for 12 after this weekend.  At this point the sound can be turned down or off if the announcers are too disruptive to enjoyment of the game.  While only in the rarest circumstance will a game be watched here from beginning to end, it can happen and I am open to it if a game is that good.  Otherwise on this Thursday and Friday there may be some channel surfing to see progress of simultaneous games, and of course if interest wanes a book will be nearby.

Among tonight's four games, Dayton vs. Stanford and UCLA vs. Florida are what interests me.  Without any great special knowledge and subject to change, Dayton is my biggest interest in the first game.  There is a transfer from Georgetown on the team who has been playing well, and early in my banking career the town of Dayton was part of my corporate calling territory.  Armco and NCR were names that I remember, and the Pine Room was seemingly the lone good, really good in fact, steakhouse in that sort of woebegone town at the time.  Dayton has a solid basketball history, but it is mainly history, well in the past.  Stanford regularly has good teams but this was not one its best years.  Johnny Dawkins, the former Duke star, is the coach and some say that he needed the two tournament wins thus far.

The other game of interest here tonight is Florida vs. UCLA.  Florida is apparently the team to beat this year and UCLA carries a big tradition around.

In tomorrow's four games the interest here is Virginia vs. Michigan State and Kentucky vs. Louisville.  Unfortunately they are both the late game, so the remote will be in use.  Home state Virginia has to be a favorite here and their calling card is good defense.  There has not been a Virginia team at this level since Ralph Sampson days.  Michigan State, while not earning a top seed, is viewed by many as one of the toughest teams in the tournament.

Kentucky vs. Louisville is a vivid memory from the past here, although there is much that is different.  I lived in Louisville in the 1970's and was an over the top fan of the Cardinals.  Kentucky was their huge home state rival with a storied history.  The drama now starts with the fact that Kentucky won the NCAA tournament in 2012 and Louisville won in 2013.  How they meet in the round of 16 is interesting but the committee that sets the brackets seems to always like nuances like this, the opportunity of rivals to meet in the middle of the tournament.  Calipari's freshman team in their NBA prep year versus Pitino's experienced Cardinals could be entertaining, maybe exciting.  If anyone runs away with it, prediction here is that it will be Kentucky.  Louisville needs a close back and forth game to wear down the opponent.

Well, that's it.  We'll see how long I last tonight before a book, a film, or a bag of potato chips takes over. 

Wednesday, March 26, 2014

Equity market today --- profit taking or reality check

Today's activity in the U.S. equity market started out as reassuring, modest gains through mid-day indicated a welcome calm relative to some of the volatility in the last two weeks.  Relative calm is said because that relative volatility has been in the aggregate moving the market down recently.

Then out for an afternoon of errands here and when I returned it appears that the market did not like my choice of food for dinner or did not appreciate the collating and copying done in preparation for meeting our tax accountant tomorrow.  Not that I take the market's collapse this afternoon personally.

On the surface the past week has looked like pure profit taking unrelated to any changes in financial performance.  Some stocks that had been particularly high octane in 2014 were retracing a portion of their gains quickly.  Stocks in general, most with no news of consequence or no news at all, were sliding.  Green was not a prominent color on most screens.

Is this just profit taking after a solid start to 2014, especially in some sectors, or should one take a step back and wonder whether this is reality showing up.  Has the market been naive and overpricing stocks relative to the strength of the economy and the outlook for growth.  Might one say broadly "what meaningful growth"?  Soon the "we had a really bad winter" excuse for any disappointment will run out.  What comes next?

Just because there is no other game in town, with bond yields unattractive and commodity prices weakening apart from food., does not mean that the market cannot fall.  Over the long term supply and demand does not determine equity values, real returns do.  That is what the overall market in its collective wisdom may be searching to determine at the moment.

There was one other wrinkle today.  The closely watched Russia/Ukraine/the West situation seemed to hit another stress point as new sanctions against Russia were back on the discussion table after yesterday they seemed to be off.  I can't keep up with this, and think that the impact of this is day to day, and exaggerated by market pundits today.

Something else is afoot.

Tuesday, March 25, 2014

Boomer retirement shortfall significant

Financial firms can send voluminous amounts of mail and have commercials on every radio and television program every hour, but that is not going to address the retirement challenges ahead for the majority of baby boomers.  Most of that promotion is focused on the minority of boomers whose wealth surely is worth competing for.  Many others face a tougher reality than in the past.  (ok here, fortunate at least on this front, it seems so far)

Why is it different now?  Here are some reasons:

---the majority of boomers do not have defined benefit plans.  Those bulwarks of middle class prosperity were phased out by most private corporations in the early 1990's, and now are mostly confined to the public sector, some areas of which will ultimately have trouble funding them.  Almost everything in the private sector rotated to 401K plans, which are finite and subject to discretionary early draw downs.

---Social Security does not come close to providing a reasonable cost of living in most parts of the country.  The best that can be said is that one possibly could get by on it marginally.  The government inflation factor that increases have been based on does not include food and energy, two things that all older people are sure to need, and seems to underweight health care costs.  It is also not cost of living adjusted by area, so what might be helpful in Danville, VA would be almost useless metropolitan New York.

---For the past seven years and looking forward for perhaps many more, principal safe savings accounts and conservatively managed money market funds have had almost no return, almost zero interest.  That means that those who were prudent savers are hardly benefiting at all from the magic of compound interest, in the past a mainstay of retirement security.

---The parental bailout is for the most part over.  That cushion that protected many boomers through financial ups and downs for many years has by definition dissipated broadly, and certainly if a benefit is there it is also finite.  Other living relatives in general will be focused on their own challenges now.

---The dream of home ownership being the ultimate bailout is not what it once was.  In most areas house prices are below what they were five years ago and are definitely not on any consistent rise.  Options to sell, reap a profit, and move are more challenging due to mobility costs and transaction costs that would often not be offset significantly by the lower gain on sale than had been expected 10 years ago.

---Small businesses traditionally and now are not places with pension funds and robust 401k's.  Their retirement benefit has always been the continuity of the business, from one generation to the next or from one set of employees to the next.  For many reasons, that apple cart has been upset.  The growth of more intrusive Federal, state, and local regulation has not helped.  National chains in restaurants, hardware stores, clothing outlets, groceries, and all manner of other consumer goods have ended that life cycle of small business in many cases.    When that cycle is broken, there is no chair left for someone running around the table, and no value in the business to retire on.

---Retirement home living is generally expensive, of course not covered by Medicare, and run by sketchy companies in many cases, especially when on the surface it is affordable.

 All of that can sound somewhat gloomy, but it is just one more manifestation of the squeeze on the once robust middle class.  Years of prosperity duped many into not only going too far out on a limb in real estate, but also in aspiring to a lifestyle that sapped some of their long term savings.  Car costs that became a visual and visceral imperative were part of being American. College costs have been no small part of this spending phenomenon as well.  The lure of easy money, too easy, before 2008 led to a hangover that still exists for many and the fear ingrained by the recession kept many from investing in equities, or just staying in equities, and recouping their losses.   

Many boomers will be in the workforce as long as they can hang in, earning wages that have now been through the adjustment wringer of the Great Recession.  Maybe for some it will be time for a fortunate bailout by successful children, but broadly speaking that will require a return of a growth economy.

How can some kind of optimistic conclusion be reached here?  What about some humor? Hmm.  It may all come down to the strength of communities, something that can be encouraged by government action but cannot be created by the government.  Communities were where the boom all began years ago. Real cohesive communities provide both material and mental sustenance.  Time to go back?   Time to find a new one?  "Time, Time has come today." 


Sunday, March 23, 2014

Eyes on Putin and the Ukraine

There are no doubt a gazillion comments in the blogosphere this weekend speculating on geopolitical crisis outcomes, with the lynchpin of it all at the moment being the Russia/Ukraine/West stand-off.  Why not add to it all from here, but as a great starting point there is Ross Douthat's op-ed piece in the  NYT today, "Russia Without Illusions".  It is a well written description of the "two dangerous  illusions" that the West, most specifically the U.S., has generally wanted to believe since the end of the Cold War and has based its foreign policy on when dealing with Putin and Russia.

Douthat concludes that "what's needed, after these illusions, is a more realistic assessment of both Russian intentions(which are plainly more malign that the Obama administration wanted to believe) and Western leverage(which is more limited than Obama's hawkish critics would like to think)."  He goes on to say at the close of his commentary that, "What we need is realism, to use the powers that we have, without pretending to powers that we lack."

All of that is well and good and sane, but what do we do now given the imminent outcomes that loom ahead.  Douthat does not speculate about that.  Here we can do that without fear of ridicule, so here goes.

Putin will find a pretext for an incursion into broader eastern Ukraine in the near term.  Any defense by Ukraine will be a disaster.  Putin will be baiting the inexperienced, unsteady, unelected, and relatively unknown government in Kiev that can only be cautiously supported by a West that does not want to get drawn into a broad conflict by such neophytes.  Putin could also use proxies and spies to stir up pro-Russian activity in eastern parts of countries such as Moldova, Estonia, and Belarus.  The result of these possible scenarios is unknown, but there is little reason to think that Putin is going to be a shrinking violet in the face of modest sanctions and a more troubled economy.  He does not care about the Russian people's prosperity.  He will exploit nationalistic fervor to overcome any hardships of the people.

Oh why in God's name did we give up our space capacity to rely on Russia.  Why did we allow Russia leverage in Syria when they are the prime supporter of Assad.  Why do we talk big and carry a small stick, TR thought the opposite should be the approach.

There are many possible outcomes and dangers ahead.  If only Putin would stop his J. Edgar Hoover act and just come out of the closet.  We would accept him.  We would still confront him.


Saturday, March 22, 2014

"Sweet Land"

Last night, courtesy of Netflix, we watched "Sweet Land", a 2005 independent film that received some minor critical acclaim and not much else.  It was made for $1 million, never found a distributor with any clout, and had box office receipts of a mere $1.7 million.  It was filmed in 24 days in 2004 in a small Minnesota town, using both some surprisingly good and at times well known actors, plus local townspeople as extras, grips, and providers of services.  From this perspective, it is a well made film.

The story is set in Minnesota farm country just after World War I.  An accomplished  young farmer arranges for a mail order bride, ostensibly from Norway, to join him in his Scandinavian dominated area.  It turns out when she arrives that she is German, speaks only that language, and she was also duped into signing up as a Socialist Party member when she entered the U.S.  This does not make for an easy start, for her or her prospective husband.

They are ostracized by the town and treated poorly by the Lutheran minister and officialdom.  The story goes on from there and follows their difficult striving to succeed against all odds, especially in a culture where at harvest time all hands helped all other hands.  They were on their own.

There are powerful moments in the film that are not treated with any special emphasis.  They just creep up.  One in particular, no spoiler information, is stunning and stunningly low key.  Awaiting sleep last night, acknowledging that the mind is funny thing especially at that point of the night, that scene caused a thinking back to something that had not come up in years.  In early November 1971, strolling around the left bank of Paris at night, alone and happy to be on my own,  I passed a theater at which "Joe Hill", recently released, was playing.  Serendipity brought me there and I enjoyed the film.

The exact linkage of my thoughts still escapes good explanation, because "Joe Hill" was in your face and "Sweet Land" is definitely not.  Anyway, it makes sense to me.

As an added benefit, the soundtrack is mesmerizing, just exceptional.  Maybe film cognescenti are totally familiar with "Sweet Land", and as can easily be the case I am late to the game.  Maybe Netflix has found many viewers.  For us it was just a lucky find.

Friday, March 21, 2014

"Temporary Perfections", a thoughtful legal investigation from Gianrico Carofiglio

Why not another book commentary while waiting for some bright thoughts on the economy, global politics, or the outbreak of small can sodas.

Gianrico Carofiglio, like Chang-Rae Lee, is a novelist whose books have all been read here.  His work is decidedly less aspirational than that of Lee, but they are superlative legal reads as well as insightful profiles of the protagonist, the attorney Guido Guerrieri of Bari, Italy.  "Temporary Perfections" is Carofiglio's latest work to be translated into English.  The translation is assumed to mask better writing in Italian as it defaults to American cliches a few too many times.  So be it.

This engaging mystery has no gratuitous violence, in fact none, and no murders.  How un-American.  There is a mystery, but that is at times beside the point as this first person novel is more about the life of a 45 year old divorced attorney and amateur boxer who maintains a respectable civil law practice amid the chaos and incompetence of the Italian court system while living an independent and at times solitary lifestyle.  It is a low key and satisfying reading experience, not to be found in most libraries but well known here somehow, and this latest came from an Amazon third party seller for 99 cents plus postage, in perfect condition.

Carofiglio's prior four books all had some aspect of social concern such as immigration or people smuggling.  Only tangentially does "Temporary Perfections" have any overt causes to lean on.  One could only see the strength of this book by reading it.  It should be a pleasant and thoughtful surprise to new readers, an intelligent diversion for a night or two.   

Thursday, March 20, 2014

"On Such A Full Sea", a futuristic vision from Chang-Rae Lee

"Fan couldn't help but  picture her Reg, clopping down the stairs, sleep still sanding his eyes... using his height to allow Josey to decorate the street trees for Lunar New Year, or just riding scooters again, feeling free enough to fly away.  For none of us can resist such hopeful flashes, which are, in the end, what lights our way through this ever-dimming world."

"On Such A Full Sea" describes a distant future, one could debate how distant, in which America is divided between three groups:  one of protected enclaves of great wealth(Charters);  one of lesser elite protected enclaves that produce much of the needed food and products for the Charters, and these enclaves have more or less insured levels of prosperity, patterned lifestyles, and safety; and outside of the walls of these two protected groups lies an anarchic rest of the country, unpredictable, at times wild,  but with some functioning communities that have arisen from the looming chaos and inevitable material poverty.

This novel is obviously a different turn of writing focus for Lee.  His last book, "The Surrendered", was a serious, intense, and multi-faceted book that was terrific but could not be called relaxing.  This latest book is done in a relaxed style, even if the topic is at times dire.  The writing occasionally moves into pages of almost unspeakable perfection, if such a thing is possible.

Like any futuristic novel, much of what is read can be layered over the present and that is certainly the case here.  This is done in a way that is not at all didactic or forced or even necessary to notice, but it is surely there.  "For what are we aiming for... To have built, each of us, some private fortress impenetrable to everyone save a few cousin achievers?  We allow that it's simple instinct to wish to be secured against all manner of riot, whether natural or human and to strive... We are not the kind to decry such pursuits...  We won't fret when someone perches upon his lofty black rock... At the same time, however, it chills us to think that despite how much we trust one another, some fundamental shift is underway."

This is the unusual book that upon closing the cover, it was decided here to reread it in a few weeks or months, for both the language and the overall impact.

The major accomplishment of this book commentary is that it managed to avoid one of the words of the year in fiction reviews, and that is "dystopia".  There it is, are you satisfied? 

Wednesday, March 19, 2014

Obama, Biden, and Kerry keep talking

Yesterday President Obama apparently said that Bashar al-Assad's "days were numbered"  (Cue in soundtrack from a Sergio Leone Clint Eastwood western).  It seems that almost daily our leaders talk off the cuff in ways that seem lazy.  Are they just talking in cliches for an American audience.   These are difficult days broadly and the outcomes in various situations, with history as a guide, are always unpredictable.  Obama must fear that he could look too serious, but he could at least give it a try.

He's not going rogue with his language, he's going George Bush.

Tuesday, March 18, 2014

The "Lost" Malaysian Airlines flight dominates television news

There is sympathy and concern here about the lost Malaysian Airlines flight.  There is not, however, the desire to see virtually every network news program open with the story for days on end, except for the sanity of PBS of course.

Apparently, through almost real time market surveys and focus groups, the major networks, cable networks, and even local news stations have determined that viewer interest in this flight is intense and not going away.  When a network news program is chosen here it is always NBC, due to the fact that Richard Engel is viewed as the best Middle East and now Eastern European correspondent out there.  With a world political crisis clearly in process, a showdown between Russia's Putin and the Western powers, uncertainty about who the interim Ukraine leadership really is, the annexation of Crimea by Russia, the ongoing devastation in Syria, the unsettled economy in China, with all of that and more, almost every day for the last 12 days NBC has led with the Malaysian Airlines Flight 370 story.  Each day there is almost no incremental news, or just enough to take a minute or two but not six or seven minutes.

It was reported today that CNN's constant coverage of the story has led to a significant increase in ratings.  A CNN executive was quoted saying, "this is a story in our wheel house."  The interest in this story is understandable, the obsession with it could be viewed as troubling.  It is diverting, and everyone can wonder and wait and not think.  Some have said that the highly popular television program "Lost" is partially due to this attention and to various theories at to what happened.  Here the constant rotation of a handful or two of "experts" adding little or no new information is boring and bizarre.

Monday, March 10, 2014

Paris remembered

On Page C1 of the New York Times today is an article, "Glimpsing a Lost Paris..." that has an archway that is completely familiar to me.  Maybe there were many such archways and maybe my memory is flawed.  But this one led to a Moroccan restaurant in which at the next table was Francois Mitterand , eating heartily with one of his mistresses.  We went to this restaurant with our girls and with friends many times until I was no longer able to find it.  Look I did, as in my many trips to Paris I walked constantly.

This is a Paris which was not lost, just lost to me.   

Why not a Ghibli

"We have prepared, now strike".  That's the advertisement for the Maserati Ghibli that came in the mail today.  It certainly looks like a nice car.  All wheel drive and completely dressed out it retails for supposedly $77,000, lots of money   Zero to sixty at 4.7 seconds.  Just what I need.  Just what I don't need, but it does give me pause. 

We have too many cars already.  One that is 13 years old that I am fixated on, a Mercedes of quality that just doesn't go away.  It is like a rock.  Repairs, however infrequent, can cost a fortune.  Then there is one car, a small BMW that has multiple dents from a 3 tenure in St. Louis and that drives like a rocket if driven well, but it is eight years old and deemed to be the car of one of my daughter's, driven when she chooses to require from it from her Brooklyn perch.  It too requires expensive repairs from time to time.  German cars are that way.  And then we have a two year old entry level Lexus which younger daughter has adopted as the only car that she will drive, but she is away in China and India, hopefully returning alive and well in July wanting "her"car.

It may sound sort of stupid to maintain these two older cars but what could they be sold for at their age  --- $1000 to $5000 maybe.  There's one other consideration.  I like them.

So we obviously have too many cars, ones that need inspection stickers and verification certificates, that seem to be constantly required.  It's amazing how time now flies on this stuff. 

Yeah, the Maserati looks wonderful to me.  Is there such a thing as an old life crisis.  Just in my dreams as I think about the potential costs of those golden years

Sunday, March 09, 2014

Sunday thoughts

Who has ever heard of Patrick Industries, Trinity, Greenbriar, or Valmont.  They are among the five or ten largest holding here along with Google, Apple, Facebook, Costco, and Ebay. How did these  four stocks get here.  They were early holdings of Jeff Gendell, who I copycatted for some years.  They survived his calamitous fall.  Now each of them is among our largest holdings,  so much so that trimming some is in my mind.  Trinity is now our largest holding after Apple.  That just slipped up and up.  How can it be   Buy and hold seems to work with good companies.  You wait and the market catches up.

Saturday, March 08, 2014

Giving up power

In November, John Kerry told a gathering of at the Organization of American States that, " the era or the Monroe Doctrine" is over.  Why say it.  That fact is well known and capitulating in public is not necessary.  Obama's abysmal foreign policy goes on around the world.  He must feel completely clean, but he is creating a dirty mess. His ambivalence and disengagement is on full display.  What choices does he have?  None it seems, the way he plays it as a game.  He has destroyed his reputation as a global leader for five years, and there may be no coming back.

Friday, March 07, 2014

Bad Haircut

In the daily routine of no bad news, spats with others, or major events, is there anything more traumatic than a really bad haircut.  That's the kind of haircut that can't be overwhelmed by gel or spray for several weeks, that is just embarrassing.  The last one I had was maybe 17 years ago when a first time female hair cutter who may have been attracted to me decided to give a young look to yours truly that led to almost shaved sides and a rooster top.  I was headed to my hometown the next day.  There was nothing I could do and it was obvious that my mother was appalled, as was yours truly.  People in general, like my mother, were too polite to comment

Yesterday was a day for a needed haircut.  It turned out that I was on the cusp of a really bad haircut.  My regular barber shop, old style pole spinning outside, has lost its two most reliable barbers and my last cut there had led to a growing out pattern that had the sides of my head robustly full in a way that was not appealing, sort of grotesque, at least to me.  This time I was assigned to a young man who had no idea what he was doing.  He used the electric clipper almost totally and trimmed with scissors minimally.  When he thought that he was done, sides still way too long, I protested and he gave me advice on how to comb my hair.  I had a poor reaction to that, inappropriately saying that I know how to comb my #%^&*! hair.  The owner of the shop, an elderly man who knows me, came to the rescue and spent 15 minutes repairing the damage for the most part.

For maybe ten years this local town traditional barbershop had been a place of relaxation and relief.  There was a regular barber who I had met at various community events and meetings, and he gave me reliable attention, always dealing with my eyebrows, ears, and nose, and even at times a complete shave which with great trust and done well is a lost art almost.  He was from Uzbekistan, from the capital Tashkent, as was his friend who had the chair next to him.

He had been from a wealthy family there but, upon the disintegration of the Soviet Union, protections and rights for native Russians in that region and in particular Russian Jews, all fell apart.  Eddie and his entire extended family seem to have come to the U.S. in 1991 and 1992.   One could be tempted to mention Afghanistan, which under a Soviet style non-democratic rule had uniformly open rights for women to be educated, become doctors and lawyers etc., and participate in society, a rule which was ended by "Charlie Wilson's War", blindly lauded in the U.S., and which led to the vicious rule of Sharia and the Taliban.  I will avoid that temptation of course.

Eddie was a good friend and a good barber, and now he is nowhere to be found.  His car was spotted in town last week so I presume that he will show up at some point.  I know that he and his compatriot must have had some other sources of income as $17 a head plus tip would not have paid for Eddie's nice Acura or his friend's five children.  I will not speculate on what that other source of income might be, but one can speculate about his Brighton Beach connections, the Russian area where he regularly took his mother to dinner.  This is New York, and one can have next door neighbors with connections of various sorts that are fairly obvious and of no business to those who do not need to know.

Well, this musing about a bad haircut certainly took a turn in a different direction, but I am free to do that.  Hopefully I find Eddie. 

Thursday, March 06, 2014

Equities --- time for a short term correction?

On February 19th, just a couple of weeks ago, there was a post here entitled "The coming equity market surge".  It was an optimistic full year outlook based on the underlying vitality of the U.S. equity market that would be more visible as the year progressed and as government and weather released their grip on the economy.

That view is still subscribed to here, but with the carefully if somewhat randomly chosen stocks watched most closely here (there are quite a few, especially small caps, that are presumed to be below the radar of many investors), the surge has already been taking place over these last two weeks.  Stocks are levitating while economic news is still not so chipper.  Geopolitical news is fraught with growing risks.  Emerging markets stocks are still in the crapper.  Taxes for 2013 not already paid will be due in April as well as estimated tax for the first quarter of 2014(liquidity need).   Obama's budget proposal announced two days ago is ludicrously anti-big business, especially multinational businesses, and is even anti-middle class on the margin.  It will never pass and was not seriously meant to pass but is indicative of his views.  Now it is just a marker for the mid-term election campaign, solidifying his base.

All of this suggests that a correction in the equity market could happen sooner rather than later.  A correction of 5% would be healthy as it would shake out some investments that have become overvalued and give a pause to enthusiasm that may not be fully justified.  A market that goes straight up builds the potential to be one that goes straight down.  A healthy correction would provide entry points for new investors.  A zig zag pattern up is one that gives pause to evaluate investments and is not just built on momentum.  A correction of 10% would be frightening but easily survivable for those not on margin, and it would be erased over time by the themes postulated in the prior optimistic post of 2/19 previously mentioned.

Of course, one could only be positive about the rise in equities now taking place, but here there is a thought to look at a rebalancing of accounts(to where God only knows), maybe only for the near term, maybe longer term.   That is especially true for non-taxable accounts like IRA's where losses have no value.

May the good times continue to roll and may we not be naive.  Is that a tightrope that one can stay on?

Tuesday, March 04, 2014

Kerry speaks in Kiev

It is unclear what flexibility Secretary of State John Kerry had today with his remarks in a speech in Kiev today.  He praised the brave protestors who risked everything to overthrow the corrupt and Russian owned Yanukovych.   He discussed the merits of an orderly democratic process and the elections now scheduled for May 25.  He offered loan guarantees of $1 billion, a drop in the bucket but an urgently needed first step before the IMF and the European Union can come up with an aid plan.  All of this seemed to be as expected.

He did choose to go further than this in ways that may not prove to be constructive.  As one could guess and had been expected, he attacked Russia for its invasion of Crimea and detailed Russian "lies".  Why go into the "lies" portion of his presentation.  Providing a graceful way out of this would  not have changed anything Putin is doing but it may have softened the rhetoric for the ethnic Russian residents of Ukraine, more than one third of all residents of eastern Ukraine and 58% of those in Crimea.

The other part of his speech that really stood out was his comment that the U.S. would "stand by" Ukraine.  We really don't have good insight into this current interim unelected government, at least that is not clear from the media and from informed commentators from academia or with related foreign service experience.  Kerry's statement could be misinterpreted by some as suggesting that a military confrontation or provocation would attract some support from the U.S. and western Europe.  It will not because that would be imprudent and practically speaking is impossible.

Encouraging Putin to "de-escalate"(is this one of those made up words) the situation is only a stopgap approach but the thought seemed to be right.  Putin will not react to these words and he has said that he won't budge on his actions in Crimea(in fact he denies any action by Russia in Crimea) but has no immediate plans to get involved in other parts of eastern Ukraine or Ukraine as a whole.  His caveat is that the situation was subject to changes in the situation, not a comment to hang one's hat on.

Monday, March 03, 2014

Are Kerry and Obama thinking through all of their threats

One could easily wonder whether John Kerry is fully thinking through all of the "consequences" for Russia that he details in what can seem like a knee jerk reaction as he travels the world.  The same could be said for President Obama who manages from afar with limited detail to his comments.  Of course, Russia's invasion of the Ukraine is a huge challenge for our foreign policy and one that needs to be promptly and thoughtfully addressed, but it is unclear whether either Obama or Kerry have the credibility to be influential.

With Syria and his red line, Obama eventually, for all practical purposes, ceded authority over the chemical weapons situation to Russia, the Syrian government's largest supplier of conventional weapons.  The pressure on Obama was relieved but it is unclear whether the solution has been even close to becoming a reality.  His comments on Ukraine were doomed from the start to anyone with a pulse.  Now Russia not only has moved troops into Crimea but has given a 5am Tuesday deadline to Ukrainian troops there to surrender or be subject to force.

Of course Russia's move into Ukraine is a blatant violation of a sovereign country's border.  That fact is completely clear but there are some complications.  Russia essentially got away with doing the same thing with two breakaway provinces of Georgia in 2008.  Russia has a long term agreement with Ukraine to maintain a major Black Sea military port in Crimea.  They are saying that the intervention is to protect their interests and those of the Russian aligned people who live there.

If confined to Crimea this situation can likely be worked out over time, however difficult and unseemly that may be.  If this is just the beginning of an annexation of major parts of the industrial eastern, primarily Russian-speaking, Ukraine that is a big issue, much more problematic than Crimea.  If Russia can then lure Ukraine into defending their country, Ukraine would likely be crushed in short order.

The pressure of the West's threatened economic isolation could have a large impact on the Russian people and the Russian economy.  The problem is that it is unclear that Putin gives a darn about the Russian people.  He certainly doesn't really care what other countries think of him.  He's KGB.  He can cut off 25% of Europe natural gas supply in a heartbeat.  He can use his U.N. security council position to veto any proposals on Iran or Syria or any country where his alignment with the West could be important.  He resents what he views as the U.S. pushing NATO to his borders on all fronts.  He is not without some negotiating points.

From this perspective, the main thing that Obama and Kerry need to do is not make threats that they cannot follow-up on and not to be naive about who they are dealing with.  The U.S. also needs to drop its swagger and stop suggesting that it is leading the response to Putin(done without equivocation by a deputy secretary of state in a interview while Kerry was traveling).  There is no purpose in having this attitude.  Germany is as important in this as the U.S. if not more so, and Poland has played a constructive role.  Switzerland with its banks could be influential and England with its preferred London lifestyle for many oligarchs, Russian and Ukrainian, is not without clout.  Tone it down is the advice for the State Department and Obama. 


Sunday, March 02, 2014

Politicians focusing on the future, rarely on the now

"The most hopeful thing that he's done is signal this week what he'll be up to after he leaves.  He will work with young minority men.  Good.  He is a figure of inspiration to them, and they need and deserve encouragement.  This also leaves  us understanding for the first time the true purpose of his so far unsuccessful presidency:  to launch a meaningful postpresidency.  I'm glad that's clear."

The above is from an op-ed in the Weekend Wall Street Journal by Peggy Noonan, the articulate conservative speechwriter and commentator.  While not agreeing completely with Noonan's inflexible comment, here there has been a nagging intuition that Obama can't wait to cross the finish line and then have a public speaking and advocacy career in a mold somewhere between Jimmy Carter and Bill Clinton.

This looking forward mentality is an epidemic in Washington.  First evidence of that is obviously the shut down of any Congressional legislation of consequence before the mid-term elections that are seven months away, seven months wasted and not addressing crucial issues.  Why?  No risk taken means no mistakes that could damage a candidate's or party's reputation.  Obama as president should be able to pressure his party to put some bills on the table concerning immigration and a job creating infrastructure rebuild program, but he is apparently not doing that or doesn't have the power to do that.  He could temper his requirement that any bill be comprehensive on those issues and go ahead and help in passing some of the constructive pick and choose immigration policies that House Republicans have proposed while adding a few of his own, but no way in his mind, comprehensive rules the day.  He will look for opportunities to take executive actions that he gets credit for and that royally piss off those that he could work on comprises with.  Why not get some constructive piecemeal improvements to the immigration laws now and plan to do more later.

The same goes for infrastructure spending.  The Republicans are obsessed with the possibility that it will lead to more deficit spending and any measure they would approve would likely need to reduce transfer payments to the needy, to veterans, to the disabled, and the elderly.  Republicans have some ready gibberish about not burdening future generations with debt.  How about not burdening future generations with broken down airports, roads, bridges, levees, dams, and water systems, that will ultimately make business investment in this country unattractive.  Infrastructure spending will obviously increase good jobs that will lead to more tax revenue, not less, and more consumer spending.  This all doesn't happen day one, but it will happen sooner rather than later if the morass of federal, state, municipal, and union regulations are radically simplified so the so-called "shovel ready" projects can actually get done when they are ready.  Obama could focus on that while a bill is negotiated.

At the moment it unfortunately and irresponsibly looks as if January 2015 is the next time that Congress as a whole can focus on these and other important issues.  That window of opportunity will last about a nanosecond before all hands on deck focus on the 2016 Presidential election.  One could say that the long term is just a series of short terms and since our dysfunctional Congress aided and abetted in a stubborn way by the executive branch can agree on nothing in the short term, any long term solutions will simply not materialize.  The gridlock continues and there are no heroes around.



Saturday, March 01, 2014

Preparing for snow, AGAIN

The forecast suggests that we will have another big snowfall on Sunday late evening into Monday morning or later.  Gone are the days when forecasters were often wrong or exaggerating.  For the most part this year the storms have been too big for them to miss.  We now know the drill well and so does everybody else.  We went out this afternoon to stock up at the grocery store before the Sunday rush, but everyone now thinks alike and there we were in the Saturday rush.

These at least 8 inch snowstorms with wind that creates drifts are not something that we can shovel easily now.  So the son of the guy who cuts the grass, cleans the gutters, and trims the bushes does it with his jeep and snow blade plus a little shoveling around any cars left out.  We have never had an arrangement like this and never needed one.  The bill for winter to date came Thursday and it was jaw dropping.  He takes about 15 minutes to clear the circular driveway and the entrance way to the garage.  I am embarrassed to detail the charges but will discuss with the guy.  There really was no other option that was clear here, although before next winter I will check for some competition.

Now we have our breakfast, lunch, and dinner needs in the house for the next three days as well as snack needs such as nuts, dark chocolate bars, potato chips, tortilla chips, and salsa, all essential .  Since after the storm the weather is projected to stay below freezing at all times for the following four days, black ice can prevail.  We may go out tomorrow early morning for a few things at a more flexible store than Whole Foods.

So there are plenty of books here and our new newspaper deliverer is prompt and reliable, although we are prepared to count Monday out.  All of this preparation in place is fine, but the enforced isolation that these storms bring is getting really old.  With our daughters dispersed, one in Brooklyn with her own independent life and one in China and India until July, the house is too quiet when we are anchored to it.  

The gloomy CBO forecast offers little new insight

The Congressional Budget Office, a generally non-politicized agency, released its latest forecast two days ago.  It is not at all optimistic, and generally speaking takes all of the characteristics of our economy today and extrapolates them over forward looking ten year period.  As the Great Recession has not led to anywhere near a great recovery that is apparent in the economy as a whole,  nothing groundbreaking happens in the foreseeable future.  It's truly a bleak outlook.

A Friday NYT business section article by Floyd Norris does what is seen here as a good job looking at both the CBO's analysis in some modest detail and the CBO's mixed track record.  There's no need to repeat that here.  The focus here is on the rationale behind the CBO's conclusions.

Forecasting has always been a tough game for both government analysts and for investors.  There is a mentality that often leads to overly cautious conclusions.  To be cautious and negative is often seen as being honestly analytical and forthright.  There are some who see minimal downside to that, as while there can be significant opportunity cost that can be huge for a government or investor who follows these forecasts, nominal dollars lost are contained.  Those forecasts that are optimistic can risk being called naive, or the writer or institution responsible being called a fool, plus following optimistic forecasts has the potential to lead to real monetary loss of some consequence.

During my working days I regularly attended the annual Montgomery Securities Financial Services Conference in Newport Beach, CA, not bad duty.  Each year they did a poll that all attendees could participate in, and that poll was to forecast the Dow close 12 months forward with the winner being recognized at the next conference and rewarded with premium bottles of California wine.  With more than 200 institutional investors attending, representing hedge funds to pension funds to mutual funds, and a handful of riff-raff like myself representing their corporate name to those investors, the poll had a large following.  Amazingly, I won the poll three years in a row, 1992, '93, and '94, just by putting in the highest number possible while being remotely within the realm of reason.  It seems that all of the investors, most of whom were on the surface far more knowledgeable than yours truly, were constrained by the negative implications of being seen as too positive.  Since that was not an issue for me, I owned the high end going with my intuition(no fool, I gave part of my wine haul each of those years to my boss, the CFO).

I tell this old tale because it is relevant relative to the CBO report, at least in my tangled mind.  How can the CBO look ten years forward and see no innovations, no significant changes in this society that focuses on entrepreneurship and technological change.  Heck, the immigration issue may be addressed during a ten year period and that could be a major boost for the economy.  I don't get it.  The CBO could be right but if so it will more likely be due to global events beyond their scope and not due to a lack vitality in the U.S.for that long of a period.