Anything Here Worth Our Attention? December 13, 2001March 25, 2012 We do seem awfully fickle in what consumes our attention. A multi-year investigation of a $30,000 investment in a backwater land deal? You bet. But I can promise you that by suggesting this link, I am setting myself up for e-screams from those of you who rebut my every criticism of the Republican economic agenda with arguments like . . . ‘Stop whining.’ Or . . . ‘Yeah? What about Marc Rich?‘ Or with other such well-thought-out economic and philosophical lines of reasoning. The Bush-Enron connection may prove to have been innocent, and I certainly hope it doesn’t require special prosecutors or any of that – I don’t think any of us wants to go through that again. But there is a huge shift going on in the balance between the ‘Wealthy-and-Powerful,’ on the one hand, and ‘Everyone Else,’ on the other. And to the extent the Enron saga illuminates that, it does bear scrutiny. (Half way through the Kurtz column he switches from Enron to other matters. You may want to read it all; but it’s that first half, his perspective on Enron, I thought was worth calling to your attention.) Still coming soon: Oysters
Removing Wallpaper December 12, 2001February 20, 2017 I told my friend Matt, whom I met when someone sent him to paint my hallway 15 years ago, that I would eat my hat if he ever actually got a book published. And now look at him. And speaking of terrific guys who know a level from a plumb line, my stepfather, Lew, was born 89 years ago this day, on 12/12/12. At 12:12, I like to think. Happy birthday, Lew! Coming soon: Oysters
How Much of YOUR Money Is in the Cayman Islands? December 11, 2001February 20, 2017 One of the Bush administration’s first moves, as noted here at the time, was to rein back – but not entirely squelch – the Clinton administration’s efforts to crack down on off-shore tax havens. Now Treasury Secretary O’Neill has cut a deal with one of the most notorious tax havens of them all, the Cayman Islands. The deal gives tax cheats just 25 months to move their assets elsewhere before the IRS swoops in. And the deal apparently assures that any trail of wrongdoing prior to 2004 will be permanently sealed from view, so no one’s likely to get into too much trouble for whatever they’ve done thus far in the Caymans. From Saturday’s New York Times: ‘What’s bad is people are going to think the government is doing something when this is just a fig leaf,’ said [Manhattan District Attorney Robert] Morgenthau, who disclosed last summer that Federal Reserve data show that $800 billion is being held in Cayman Island accounts for Americans, an amount equal to roughly one-third of all domestic bank deposits. Tax experts also criticized the agreement because it did not apply to cheating on estate, gift and state-level taxes. . . . These criticisms were dismissed as laughable by Mark A. Weinberger, the Treasury Department’s senior tax policy official, who hailed the agreement. The Times story made neither the front page nor even the front page of the business section. It ran on page C3. But $800 billion is not nothing (that bold-facing above was mine, not the Times’s). It’s enough to buy more than 20 million brand new BMWs with ‘4 channel, 4-wheel anti-lock braking systems’ and ‘speed-sensitive variable intermittent front windshield wipers with heated jets’ (among other features). Sitting one behind another in bumper-to-bumper traffic, these BMWs would extend around the Earth – at the Equator, where the Earth is really, really thick – more than twice (assuming BMW could actually produce that many vehicles in time to make my point, and that there were a road that ran the full length of the equator, with some very, very long causeways connecting the land masses). My point: This is a lot of money to have on deposit in a small Caribbean Island. Presumably, its owners chose the Caymans – and not, say, a bank or brokerage firm closer to home – for a reason. Could it be that they view the Caymans as a more stable nation than the U.S.? The world’s other superpower, somehow overlooked? No; that can’t be it. So what could the reason be? Could it have something to do with taxes? The 25-month delay gives tax cheats ample time to more their money to another tax haven, said Jack Blum, a Washington lawyer who specializes in financial frauds. ‘They have written this in a way so that the people who have been violating the law can get themselves out from under the mess by moving to another jurisdiction where there is no agreement,’ Mr. Blum said. ‘This is simply astonishing.’ It is, even more than usual, a grand time to be wealthy and powerful in America.
Meet the Vice Pressident But Don't Ask Him Any Tough Questions December 10, 2001February 20, 2017 Did you see Vice President Cheney and Senator Clinton on ‘Meet the Press’ yesterday? Twenty minutes with Cheney followed by twenty minutes with Clinton? I thought both did very well. We are fortunate to have such exceptionally bright, decent people in public service. But Tim Russert gave the Vice President a huge ‘pass’ with respect to Cheney’s spin on the economic stimulus package. Cheney said it’s imperative we get this economic stimulus package passed in the Senate . . . that Tom Daschle is delaying it and, therefore, extending the recession and keeping people out of work. (Neither Cheney or Russert mentioned that Daschle, et al, are pushing, and the administration is fighting, what many consider to be a much better stimulus package.) Where was this question from Tim Russert: ‘But Mr. Vice President, the Democrats argue that sending $25 billion in retroactive tax cuts to companies like IBM won’t lead to any stimulus. They say IBM and most of the other big beneficiaries already have tons of cash. What do you see IBM doing with this cash that would stimulate the economy?’ And he might have asked this: ‘The Democrats say that by repealing the alternative minimum tax for corporations, and rolling it back to 1986, you are exempting many big corporations from paying any income tax at all. What do you say to charges that this so-called economic stimulus package is in large part just a gift to big business?’ (Or even this: ‘Where would you recoup that tax you are exempting IBM from? From the prescription-drug benefit that was once proposed for seniors? From future generations of working men and women, by piling it onto the national debt, which rose by $3 trillion from 1980-1992?’) And speaking of helping the big boys avoid taxes . . . well, come back tomorrow.
The Rich Get Richer (Thank Heavens!) December 7, 2001February 20, 2017 Jack S: ‘Yes, you’re right, it’s not only a good time now to be rich in America, it’s always good to be rich in America, and it’s always bad to be poor. Your real message (why don’t you just come out and say it), is that the rich should give more of their property to the poor, because after all, they get more out of society, and the poor get so little out of our society. I think when people say ‘let’s even the playing field so that everyone has an equal chance,‘ they’re really saying ‘let’s make sure everyone has an equal outcome, not just an equal chance.” ☞ I disagree, Jack. It’s always a balance. The balance shifts. Lately, the balance has been shifting in favor of the wealthy. You may believe that’s long overdue. I would argue the balance was better the way it was. (I’d also point out that wanting to assure that all children have decent health care – an equal outcome of sorts – is not the same as wanting to assure that everyone lives in a $300,000 house. Wanting to assure that all seniors can get pain-relieving drugs is not the same as wanting to assure that everyone gets a new Taurus every three years.) Even with the balance the way it was, the wealthy were leaving the poor further and further behind. According to Professor Robert H. Frank (the link from which I got this, inequality.org, seems to be on the fritz), while ‘the top 1 percent of earners now have roughly twice as much purchasing power as in 1979, the real earnings of families in the middle have scarcely grown.’ The Republican response? Let’s provide massive tax relief for that top 1 percent! Take a look at this, from the same link: Quintile 1978 1988 1998 Bottom 20 percent $13,103 $12,256 $12,526 Second 20 percent 28,415 28,541 29,482 Middle 20 percent 42,667 44,414 46,662 Fourth 20 percent 58,786 63,785 68,430 Top 20 percent 99,754 117,035 140,846 Top 5 percent 146,178 182,863 246,520 Mean Income Received by Families, 1978 to 1998 (1998 dollars) Source: Census Bureau ‘According to Business Week‘s annual executive compensation surveys, CEOs of large U.S. corporations earned 42 times as much as the average worker in 1980, but earned 475 times as much in 1999,’ Professor Frank notes. So do we conclude from all this that the balance needed shifting further in favor of the best-off? This is apparently what the Republican leadership concluded. I don’t think it’s inciting class warfare to disagree. Professor Frank then asks a particularly pregnant question. Which of these two imagined worlds would you rather live in? World A: You earn $110,000 a year, others earn $200,000. World B: You earn $100,000 a year, others earn $85,000. In World A, you could actually buy $10,000 more stuff or save more money for retirement or drive a bigger car. Yet my guess is that you chose World B. The point? It may not be enough that the lower-income groups now have TV sets and telephones, where once they didn’t. For the very same reasons you might have chosen World B, they might chafe knowing that they work hard for $16,000 a year while someone they ride the elevator with – who also works hard – earns 20 times as much. (I note that Bear Stearns chief James Cayne, chastened by the need to lay people off as Christmas approached, has cut his own bonus from $30 million to just $12 million this year.) Well, chafe they must, because almost no Americans believe in ‘equal outcomes.’ I sure don’t. But to shift the balance even further in favor of the best off? As the estimable Hendrik Hertzberg put it in his November 12 New Yorker column . . . ‘[T]he ‘stimulus’ package that has emerged from the House of Representatives [the one Tom Daschle is currently trying to derail in the Senate – A.T.] is truly shocking. The bill, which was passed October 24 by a vote of 216 to 214 (seven Republicans dared to vote ‘no’), consists overwhelmingly of handouts to the prosperous and the influential. It would earmark more than $140 billion in tax cuts for wealthy individuals and corporations.’ One $25 billion piece would wipe out the corporate ‘alternative minimum tax’ – retroactively for 15 years. Hertzberg notes that this $25 billion ‘is nearly double what the bill contains in relief for taxpayers of modest means. And while all the cuts for the rich are permanent or quasi-permanent, those for the non-rich are (as any tax cut aimed at stimulating immediate demand ought to be) a one-shot deal.’ The genius of the Republicans is that they are able to sell this to so many people who are hurt by it. The huge tax cuts in the Reagan years were phenomenally good for the wealthy, but when Social Security tax was added to the equation, taxes on everybody else stayed about the same or even rose. Yet the tax cuts for the wealthy were wildly popular. And because they drove us deep into deficit, adding $3 trillion to the National Debt, mortgage and auto-loan rates were higher for middle- and lower-income Americans than they would otherwise have been. (Not a problem for the wealthy, who can buy for cash.) Yet there were few complaints. The Clinton/Gore team – without a single Republican vote – passed a budget that hiked taxes on the best off (but only on the best off), bringing the top bracket partway back up from Reagan’s 28% to 39.6% – though still well below the 50% rate of Reagan’s first term or the 70% rate that had prevailed under the prior five presidents or the 90% top rate under Eisenhower. The Clinton/Gore rate proved to be a great balance. Low enough to allow the best-off to continue to outstrip everyone else (see the table above and others like it) . . . how could they complain about that? . . . yet high enough to give the bond market confidence that we would rein in our giant deficits. It set off a ‘virtuous cycle.’ America added 22 million new jobs and turned its giant budget deficit into ‘giant surpluses’ that the Bush team told us confidently, in ramming through its tax cut for the best-off, would ‘stretch as far as the eye could see.’ From 1993 to 2000 we had a good balance. But the Republicans have been hell-bent on shifting it ever further in favor of the best-off. It is a grand time to be wealthy and powerful in America. Even greater than usual, Jack. Have a wonderful weekend. [Full disclosure for the benefit of readers new to this column: the writer is treasurer of the Democratic National Committee. These comments, however, are entirely his own.]
Schedule Change December 6, 2001March 25, 2012 The column that would ordinarily run today will run tomorrow. Tomorrow’s column ran yesterday. Welcome to the International Date Line. (Because of which, in case you were wondering — and I am indebted to Lewis F. Davis for knowing — the Northernmost, Easternmost and Westernmost of the United States are: Alaska, Alaska, and Alaska. The Southernmost is Hawaii.)
A Grand Time December 5, 2001February 20, 2017 Things are going well in Afghanistan, and I think the Bush Administration deserves high marks for that. Here at home, the consistent theme remains: it is a grand time to be rich and powerful in America. There are so many examples it’s hard to keep up. The two big examples, of course, are, first, the Bush budget, which provided massive tax cuts for the wealthy to be carved painlessly out of the massive budget surpluses that, we were told, even allowing for recession, would stretch as far as the eye could see (except now we’re back in deficit) . . . and, second, the Republican emergency economic stimulus package, now being debated in Washington, which would send billions of dollars to wealthy corporations that simply have no need of the stimulus, and would rehire not a single laid-off worker as a result. But there are so many ‘little’ examples. Like using the anti-terrorism legislation rushed through Congress in the wake of September 11 to shield U.S. tobacco companies from foreign lawsuits. That should throw the terrorists for a loop. (Click here if you missed that Monday.) Or like this one that I meant to run last month but only now have rediscovered. I yield the balance of my time to young Florida State Senator Kendrick Meek. Blessed are the meek, someone said – but let’s for heaven’s sake not have them showing up at public hearings! [Bold-facing is mine, to make for quicker skimming.] November 7, 2001 STATEMENT OF STATE SENATOR KENDRICK MEEK ON THE NEED TO INFORM THE PUBLIC ABOUT HEARINGS ON ELECTION STANDARDS Florida’s Division of Elections is holding public hearings for its new proposed election and ballot-count standards. There’s only one thing missing: The public. The first of these six hearings was held on Monday, October 29 in Miami. A grand total of four people showed up. Is the public in love with these new standards? Not at all. The sad fact is that the public doesn’t know about these standards. Even worse, it doesn’t know about these hearings because the state Division of Elections has done a disgraceful job of publicizing them. Here are the facts. Even though the first hearing was planned for Miami, people in Miami were not informed in advance about the hearing. On Friday morning, November 2, my chief-of-staff contacted the state Division of Elections and inquired as to what notice, if any, the agency had provided to the public. The answer is hard to believe. The Division of Elections had only announced the public hearings in Administrative Weekly, a document that reaches only a small segment of the legal community. There was no concerted effort by the Division to alert either the general public or the news media about the hearings. In addition, the state director of Arrive With Five, a nonpartisan voter participation project [nonpartisan, but decidedly meek], has informed me that she, too, had received no advance notice of the hearings, in spite of the fact that a staff person from Arrive With Five visits the Division’s headquarters every single week. Even as late as Nov. 2, the home page of the Division of Election’s Web site made absolutely no mention of upcoming hearings. The home page informed us that the Division’s headquarters soon would be moving, but what it failed to report was how election reform was moving. I am outraged that Secretary of State Katherine Harris and other state officials failed to make a significant effort to alert the public to these important hearings. The election reform legislation that we passed earlier this year provided millions of dollars specifically for the state election officials to improve their public outreach. Yet, they have failed miserably at notifying the public about these hearings. Holding public hearings without providing adequate notice to the public makes no sense at all. Haven’t Secretary Harris and other state officials learned anything from the disgraceful events of last November? The need for voter education was identified by the governor’s task force on election reform, as it was in the report by the U.S. Civil Rights Commission. The way these hearings have been planned and executed, however, leaves me deeply concerned that voter education is not a priority for Secretary Harris and other state officials. To think that the comments of only four people could accurately reflect the diverse views and concerns of our city is foolish. . . . Indeed, there is much to be said about these changes . . . Florida needs a fair and uniform method of voting, but these standards only perpetuate the status quo. If you happen to reside in a wealthy county, the best and most reliable technology will be made available to you. If you happen to live in a poor county whose finances make the purchase of new technology impossible, you will continue to use voting equipment that is much more prone to fail. That is simply wrong. These new standards also err by declaring that no “overvotes” will be counted, regardless of whether the voter’s intent can be reasonably determined. When someone has “overvoted” but has made a clear indication of the mistake and attempted to correct it, this vote should be counted. We owe the people of Florida – all of our people – full and fair election reform. Proposing new standards and then holding public hearings with no “public” is unacceptable. ☞ Unacceptable? But it doesn’t hurt the rich and powerful, so why are people getting so riled up?! Florida’s ‘intangible property tax’ was cut in half by Governor Jeb Bush – isn’t that really the main thing? In half! Who could be unhappy about that? Where once the tax nicked two-tenths of one percent from the growth of stock and bond portfolios above a certain size – a burden on the wealthy even more onerous than Florida’s zero percent top income tax bracket – now the tax nicks you for just one-tenth of one percent. That saved me a pretty penny (seriously – it did!), and if it means Florida has 35 kids in an elementary school classroom, why is that my problem? It is a grand time to be rich and powerful in America. And that has nothing to do with ‘class warfare,’ it’s just a happy, happy fact.
Ah, Hindsight December 4, 2001February 20, 2017 David Maymudes: ‘Did you ever do a follow-up from your column of 11/15/99 (the day before the initial Borealis column)? It appears that just one of the six stocks did decently, and I wanted to hear if you were long or short that one.’ ☞ I forgot all about that! But, yes, it’s a fair question. Let’s see. The column was in the context of ‘year-end specials’ – doggy stocks so beaten down by tax-selling that they might just bounce when January rolled around. This is a phenomenon that may even have some logical underpinning, and which you may be able to use to your advantage in the next few days. Say a stock is down from $32 to 50 cents but is really, almost surely ‘worth’ $1.50. (Not that one can usually tell that with much assurance what a stock is worth, but let’s pretend.) Why would any rational investor sell you his shares at 50 cents? Taxes. It can make perfect sense to sell at 50 cents, because realizing the $31.50-a-share loss might save the seller the equivalent of $5 or even $10 or $15 a share in taxes. (Say that between federal and local income taxes the seller is in the 48% tax bracket, and that this loss could be used to wipe out otherwise-taxable short-term gains. In that case, selling the stock lowers his tax bill by an amount equal to 48% of his $31.50-a-share loss – better than $15 a share. This is an extreme example, but makes the point that selling for 50 cents – a mere third of what the shares are worth – can make sense for the seller even if the stock does then triple in January and February, once the tax-selling pressure has been relieved, and once some of those tax-sellers, having waited the requisite 30 days, have come back in to re-purchase their shares, adding to demand, because they agree with you that the shares they sold are worth more than 50 cents.) That said, a lot of dogs really are dogs, and you can lose a lot of money blindly buying Enron at 22 cents just because a lot of investors who paid $70 or $80 or $90 may be selling ‘at any price’ to lock in their tax loss before year’s end. I know nothing about Enron’s prospects, but you have to allow for the possibility that the 100,000 shares you might buy for a mere $22,000 today could be worth exactly $0 at some point in the future. So two years ago I wrote that column giving examples of six dogs, two of which I owned for the bounce, two of which I was short, thinking they’d drop even further, and two of which I knew nothing about. I didn’t want to tell you which were which, because I was afraid you might follow my lead and lose money and hate me. At least I got that part right. (I then proposed that each of you decide which two of these six to go long and which to go short and e-mail me your hypothetical portfolios. Almost none of you took the bait, leading me to think that a lot of you say you want these columns to be about money, but you really just come here for the politics and recipes.) I forgot about this column and never followed up. But now that David has reminded me, here were the six dogs: Clayton Homes (CMH) U.S. Floral (ROSI) Iomega (IOM) Criimi Mae (CMM) CompUSA (CPU) Ultralife Batteries (ULBI) ‘Remember,’ I wrote at the time, ‘I am NOT recommending you buy or short any of these. If you do look into one and decide it’s going lower and it does – more power to you. I hope it’s one of the two I’m short. And if you decide another is going higher and it does – more power to you for that, too. I hope it’s one of the two I’m long. As for the two I have no interest in either way, I hope – well, what do I hope? I guess I hope they just prove very boring.’ (I went on to stress that shorting stocks ‘is a very bad life choice for almost everybody; and buying doggy stocks is almost as risky. So this is more for fun than anything else.’) So how did my dogs do? The two I owned were U.S. Floral, which went to zero, and CMM, which I still own. It is down pretty sharply, but along the way distributed some preferred shares to its common shareholders and then did a reverse split. In the long run, I like to think I may do fine. But I sure didn’t get any bounce out of this one in January, 2000, or, for that matter, in January 2001. Overall, had I invested equally in each of these two, I’d guess I’d be down by about 70%. The two I was short, Iomega and CompUSA, were a mixed bag. Iomega is down by about two-thirds, which is good (if you’re short). But CompUSA got bought out – a short’s worst nightmare – at about a 40% premium. So on balance I came out a little ahead on the shorts, but not much. As for the two I knew nothing about (it would appear, with hindsight, I didn’t know a whole lot about the other four, either), Clayton Homes is up about 20% and UltraLife Batteries is about where it was. Have I mentioned a lifetime of periodic investments in low-expense, no-load index funds? This is the sensible way for most people to invest in the stock market. And yet I have my eye out for some year-end specials.
Boing! December 3, 2001January 20, 2017 So Friday afternoon there was this press release from Boeing – ‘Boeing Completes Evaluation of Borealis Cool Chips Technology’ – and Borealis stock went “boing!” Boeing seems to have concluded that the company’s claims may actually have some basis. (“Cool Chips™,” according to Borealis’s web site, “are solid-state devices that pump heat to produce cooling, refrigeration, or air conditioning. They are small, lightweight, nonpolluting and noncorrosive and are projected to be more efficient than any existing thermal management technology.”) And what that means, to this layman, is that . . . well, if this preposterous claim may have merit, perhaps Borealis’s other claims have merit as well. One of those claims, you will recall, is a significantly more efficient electric motor that they call the “Chorus™ motor” – which a Canadian elevator manufacturer last week announced it would license for the world’s elevator market. (“We are confident that elevators using the Chorus™/Beckett Technology will increase the reliability of tomorrow’s elevators,” Beckett was quoted as saying.) So I’m thinking, hmmm. That’s elevators. Don’t other things use electric motors as well? What about all those damn golf carts? And what about the fork lifts at Costco that put ten tons of tuna up in the rafters, out of reach? And trains? Haven’t some of them been converted from steam to electricity? And isn’t there some kind of motor in my refrigerator? And then you scroll a couple of inches further down the Borealis web site and come to “Power Chips™.” These, claim the company, are devices – similar to Cool Chips™ – “that absorb heat to produce electrical power. They are silent, nonpolluting, scalable, portable, and can operate anywhere there is a source of heat. We expect them to replace most existing technologies for generating electricity.” Neither Boeing nor Beckett nor anyone else so far as I know has leant credence to that preposterous claim. But if there are grounds to think that the Chorus™ motors and Cool Chips™ might actually be real, and economical, who knows? Maybe Power Chips™ could have merit as well. (The company speculates that, “[b]ecause Power Chips™ generate power by absorbing heat, including body heat, they will extend the usefulness of portable devices such as cellphones and MP3 players; maybe even PDAs. People will be able to produce their own power while sitting, walking, or jogging. And Cool Chips™ will enable laptops to run cooler and more efficiently.”) And, yes, if you keep scrolling down the web site, you come to a few other throwaways, unconfirmed by any credible source I know. There’s the little item that would revolutionize the world’s steel industry. And there’s the disclosure that the company owns billions of tons of two kinds of metal ore principally used (at least by me) as Scrabble words. (“The magnetite is very large grained and as such is very friable,” claims the site, which makes me think there may be some kind of Cooking Like a Guy™ angle in it for me. Even though, technically, I once knew what friable means.) So here’s my point. There has to be some horribly disappointing conclusion to all this, for the simple reason that, as I have told you repeatedly for nearly two years, I own a ton of this stock. (It was about $3.50 a share when I first wrote about it, and then jumped from $5 to $8 Friday afternoon. Boing!) Still, maybe now that Boeing and Beckett have lent it a whiff of credibility, it would not be completely irresponsible to imagine how one might go about valuing this thing. The first thing to say is that it remains, in my view, even after these promising signs, highly, highly speculative. You should absolutely not invest money in Borealis (traded under the symbol BOREF on the “bulletin board,” which is why your broker may not immediately even be able to find a quote for you) that you cannot truly afford to lose. The second thing to say, in my opinion – and I stress it’s only my opinion (and that “Wrong” would be my middle name if my middle initial were not P) – is that if you happen to have bought 100 shares at $3.50 a while back, you should absolutely not rush to sell your stock here at 8 or wherever it goes this week. (Knowing this wacky, wacky company, the stock could go back to 2 by the end of the week, but I can’t imagine why it would.) Because the point of this wild speculation was not to get a double or triple. The point was to make many times your money. But what is this thing worth? Well, if it turns out that Boeing and Beckett have been “had” . . . or that insurmountable problems arise in actually trying to commercialize these technologies . . . or that, though real and commercial, management somehow manages to snatch defeat from the jaws of victory . . . then it is worth zero. Let’s assume the chances of that are 90%. But let’s also assume there is a 10% chance that one of its claims proves out as envisioned. Remember, as regards Power Chips™, the company “expects them to replace most existing technologies for generating electricity.” It’s pretty hard to imagine that, if real, the company’s patents would not be worth a couple of billion dollars. I know people worth a couple of billion dollars. Krispy Kreme is worth a couple of billion dollars. Borealis claims to have just under 5 million shares outstanding and no debt. So it’s divided into 5 million slices, valued at $8 per slice, when the market closed Friday. About $40 million for the whole pie. If the pie were actually worth a couple of billion dollars instead, then the stock would be worth $400 ($2 billion divided by 5 million slices). But given the probability I snatched from the air – the 90% chance it will all be a complete bust – you’d lop 90% off that $400 a share and be left with a rational value, accounting for the likelihood of failure, of $40. If the chance of failure is actually 99% instead of 90%, then the stock might rationally be priced at just $4 – unless you think the company’s claims, if true, would ultimately be worth a couple of tens of billions of dollars, in which case you’re back to $40 even with a 99% chance of failure. Isn’t this fun? I have zero technical background with which to evaluate the true chances of success, let alone the actual value Borealis could realize by licensing its technologies to power and cool the world. I truly have no clue what will happen. (Well, that’s part of the fun, I suppose. As is the notion that if viable, these technologies would make the world more efficient and prosperous and improve its air quality.) And I still expect to lose my money. But with Boeing and Beckett having weighed in, I don’t think this is quite the preposterous speculation it once was. I won’t be selling at $8. And, should it ever get to $40 – one-tenth the value of Krispy Kreme – I’m not sure I’ll be selling there, either. * * * “I got it purely from smoking.” – George Harrison, speaking in 1997, when his cancer first appeared. Harrison died in Los Angeles on November 30. He was 58. (Thanks to Mike Defert for passing on this quote from CNN.com.) “The Bush administration sought to use anti-terrorism legislation, rushed through Congress in the wake of the Sept. 11 attacks, to shield U.S. tobacco companies from foreign lawsuits alleging cigarette smuggling and money laundering.” – An Investigative Report of the Center for Public Integrity, November 29, 2001.
Earn 45% — Fully Secured November 30, 2001February 20, 2017 Have you gotten this one? I assume they send it to millions of people with a single click, and what interests me is not the 45% you earn, fully secured – quarterly, no less – but that someplace there is a seedy, sad world you and I have no real contact with (I hope) in which some small number of people send out these deceptive e-mails at 3:37 in the morning, and some larger number of people, apparently, wake up a few hours later to the great news and get sucked in (or else why would it pay even to make that one click?). Here was the e-mail: Tired of taking a roller coaster ride. Date: 11/29/01 3:37:07 AM Eastern Standard Time From: nchandra@lettucefly.com To: gemenip@aol.com MAKE 45% QUARTERLY Learn how you can make 45% paid quarterly in advance factoring commercial accounts receivables. Discover what factors (Corporate Money Lenders) have been doing successfully for decades, lending money to businesses. Harness the power and liquidity of fully secured account receivables (receivables are titled with UCC-1 Filings) Contact us for your “FREE” in-depth information package. Look into how you can get a return of 45% paid quarterly in advance and “Fully secured”. It is true there is a class of lender called a ‘factor.’ It is true that ‘factors’ lend against the value of a company’s accounts receivable. Well, not lend, exactly – they buy accounts receivable at a discount. (Say you make orange juice squeezers and sell them to distributors who normally take 60 or 90 days to pay you. Those unpaid bills you’re waiting to have paid are your ‘accounts receivable.’ And if you’re desperate for cash and can’t wait the 60 or 90 days, a factor might agree to buy them and pay you immediately, in return for title to those accounts receivable. Only he wouldn’t pay you 100 cents on the dollar; he’d deduct a chunk for his trouble, his risk, and a return on his money.) I don’t know much about this business. All I know is that the e-mail would appear to say that you can earn 45% per quarter in something fully secure. And to suggest that there are people who have been doing so . . . for decades! At 45% per quarter, if you started with just one penny – doubtless hard to do, but for the sake of argument – and if you let your 45% return ride for two and a half decades, you would have $137 trillion. Not only would you be the wealthiest man or woman in the world, after just 25 years, starting with just a penny (the same penny you almost didn’t even bother to pick up off the sidewalk!), you would have more or less ALL the wealth in the world. Assuming, that is, you made this investment under the umbrella of a tax-sheltered retirement plan. I will grant (reluctantly) that upon closer reading, the e-mail might more accurately be interpreted to promise 45% annually (but paid in quarterly installments). But even that is preposterous. It could certainly happen in some year. Ask any loan shark. But how many billionaire loan sharks – or factors – do you know? Start out with $50,000 (which would still not make you much of a factor), and after three decades at 45% you’d have $3.5 billion. What’s the catch? The catch is, I don’t have the nerve even to find out what the catch is, because I wouldn’t feel comfortable giving out the personal information required to get the promised FREE in-depth information package. But wouldn’t it be interesting – if a little depressing – to see all this come to life on ‘Dateline’ or ’60 Minutes?’ Interviews with the folks who wrote and sent the e-mail; interviews with folks who got the e-mail and sent in for the FREE in-depth information package; and then some sort of denouement, as we learn how well or poorly those folks ultimately did?