Save $100 and a Loved One’s Brain January 16, 2006March 3, 2017 It’s all about you: YOUR DEMOCRACY Some of you get angry when I tell you our elections in America are not secure and need to be fixed with, among other things, auditable paper ballots. This should not be a partisan issue. Only fascists should oppose fair elections. From Sunday’s Miami Herald: . . . Sancho, Leon County’s supervisor of elections, allowed a couple of computer scientists to try hacking into his voting system last year. With the same access as one of Sancho’s election workers, the scientists were able to switch around votes willy-nilly. ”I’m positive that an eighth-grader could do this,” computer science professor Herbert Thompson told The Miami Herald after he redirected 5,000 votes from one hypothetical candidate to another. . . . YOUR BRAIN ‘If you, or anyone you know, is over 50’ (as those TV ads for rip-off life insurance used to begin) . . . You may have seen the lead story on ‘CBS Sunday Morning,’ Sunday morning, about brain plasticity and how it appears the brain can rewire itself to overcome difficulties, including memory degeneration – even perhaps retarding Alzheimer’s. Last month, the Wall Street Journal covered much the same subject: “The majority improved 10 or more years in neurocognitive status, so 80-year-olds had the memories of 70-year olds,” says Prof. Merzenich. “With more training, I expect we could get it to 25 years.” The start-up private company at the center of much of this, Posit Science (full disclosure: I own a sliver), offers a home version of its program for $495 – use promotional code gn0604a to knock $100 off – which is either: (a) an awful lot for a CD, a DVD, a pair of headphones, and some software; (b) the bargain of the age if it actually works; (c) the cost of 45 days’ worth of BiDil; (d) all of the above. [Answer: (d).] If you decide to take a look, note that you can: (a) increase the tiny text size by clicking the largest of the A’s at upper right [AAA]; (b) learn ‘How It Works‘ (and ‘Why It Works‘ better than doing crossword puzzles); (c) get a mini-demo. As you know, my list of noncredentials is long. I am not a rocket scientist, I am not a brain surgeon, and – of particular relevance here – I lack even a single degree in neurocognition. What I bring to the table is personal knowledge of the CEO, who is honest and smart. So when he tells me this is for real, and that most people who’ve tried the Brain Fitness Program really like and benefit from it, I think there is a reasonable chance you or loved one will, too. And when his company offers a 90-day money-back guarantee (less shipping and handling), I expect there is a reasonable likelihood it would be honored. YOUR PUTS One way to find the money to buy the Brain Fitness Program is to sell your puts – with NTMD stock down from $22 in July to $12.50 at the close Friday, you should have made out OK. But, so long as this is still money you can truly afford to lose, I would hold on. I could be wrong (and there will be spikes in the stock price along the way even if I’m not). But it would appear that the company is headed on a course to lose $60 or $70 million this year, maybe more, which is most of its remaining cash. To my knowledge, about the only thing the company has is one product, BiDil, which is comprised of two widely available, long-prescribed generics, and which it sells at about six times the cost of the two purchased separately. The company hoped convenience would trump cost. It still may. But after six months on the market, it’s looking dicey. Happy Birthday, MLK, Jr.! Wednesday: And You Think YOU Have Problems?
You’re Doing a Heck of a Job January 13, 2006January 16, 2017 CULTURE OF CORRUPTION Post-Scandal Cleanup Chicago Tribune By Clarence Page January 12, 2006 “It’s not healthy to blow your favorite evening beverage through your nostrils. But that’s how surprised I was to hear National Democratic Chairman Howard Dean deny that any Democrats took money from Jack Abramoff. “Unless you’ve been on the moon for a while, you probably have heard that Abramoff is a formerly well-connected Republican who has pleaded guilty to federal charges tied to his lobbying operations. Right-wing bloggers and others pounced on Dean and flailed away, since a number of Democratic senators and congressmen already have given Abramoff-associated money to charity. How, then, could Dean say otherwise? Right? “But I checked it out and, guess what? Dean was right.” . . . THE DEFICIT On the news last night, the 2006 federal deficit was revised upward to $400 billion. But as usual, this is without the very real $200 billion or so we’re borrowing from the Social Security surplus. So the real deficit this year is now projected at $600 billion or so, nearly a quarter of the federal budget. Got that? For every four dollars Uncle Sam is spending, three come from taxes and one is borrowed from your children. (Well, from the Chinese and Saudis, too, but it is your children whose future will be weighed down with the debt.) By the time keys to the White House change hands, in January, 2009, the National Debt will approach $10 trillion – nearly $8 trillion of it racked up under just three Presidents: Reagan, Bush and Bush. Meanwhile, the interest on all that debt – currently around $350 billion a year – amounted to nearly 40% of the $893 billion we paid in personal income tax in 2005. And that was at today’s low interest rates, and on ‘only’ the $8 trillion in debt. If interest rates rise, and as the debt itself rises, 40% will be remembered as the good old days. Remember when Republicans were shouting for a Balanced Budget Amendment? (Not a good idea, actually, but they were shouting for it loudly.) Now that they control the government, the only Constitutional Amendment being pushed is one to discriminate against gay families. LEA, AMP, AXP The smart friend who suggested LEA around $28 not long ago – it’s dropped to $24 on bad news – says he’s holding on but not buying more. He still thinks it could be a $40 stock in a couple of years, but then again, it might not. He did not expect this news. We’ve done better with American Express, especially those who bought LEAPS (which raise the risk but lever the reward). The stock is barely a point higher than the $52.50 at which it was suggested last May, but that’s after we got a share of Ameriprise (AMP) for each five shares of (AXP). With AMP at $44, that adds nearly $9, so we’re up just shy of 20% in eight months. Both AXP and AMP are probably worth hanging onto (as are the 2007 and 2008 LEAPS you may own); but if you have them in a nontaxable account, you might take your profit in AMP and either reinvest it in more AXP or . . . if you’re ready to branch out into something new . . . buy a few shares (or LEAPS) of Wal-Mart (WMT), $45.74 last night. It could be $65 or $70 by the end of next year. (If you’re boycotting Wal-Mart, that’s another matter; but boycotting Wal-Mart may have less practical, positive impact than using the profit from its stock, if you make one, to further the causes you believe in.) LINKING TO THE TIMES Alan Atwood: ‘In today’s column you posted a link to the story about the IRS seeking to deny ‘fraudulent’ refunds to low income Americans while ignoring fraud from the wealthy. The thing with the New York Times is that after a period of time all their stories go into their archive and are available only to paying subscribers. If two weeks from now someone were to pull up your column and try to follow the link, all they would get is an abstract and an offer to buy access or sign up for Times Select. Thankfully, there is a way to generate permanent links to most New York Times stories with a tool that the Times itself endorses and makes available with bloggers in mind. The tool generates a permanent link which never goes behind the archive firewall. They even have a ‘bookmarklet’ that you can drag to your Internet Explorer or Firefox bookmarks bar to make link generation as simple as a single click while you’re viewing a Times story. For example, this is the non-expiring link to David Cay Johnston’s story on the IRS withholding refunds from the poor.’ ☞ Thanks! I’ll try to remember to use this. I do have a Times Select subscription, not least because the New York Times is a company I hope to see thrive. PETER BROWN’S SUGGESTION FOR NEW ORLEANS To the Editor New Orleans Times-Picayune I am a New Yorker, but the incredible reputation of New Orleans’ creative food innovations has inspired me to propose that the City of New Orleans create a brand new taste treat, which could be marketed nationally, with the proceeds used in the rebuilding effort. It is: THE NEW ORLEANS BROWNIE Baked in New Orleans, every package sold will contain a certificate stating that the consumer has contributed to the rebuilding of your great city. It would memorialize the famous observation of President Bush: ‘BROWNIE, YOU’RE DOING A HECK OF A JOB,’ and become known as the brownie that helped save New Orleans. Peter A. Brown New York City, New York 1/7/06 Have a great weekend. (Don’t forget to send in your fourth quarterly estimated tax payment by Tuesday, if you need to.)
A Grand Time – And Nobody Threw Up January 12, 2006March 3, 2017 A GRAND TIME TO BE RICH AND POWERFUL Hourly wages rose last year, but not quite enough to keep pace with inflation, so in real terms wages slipped again. Meanwhile – as the Republican leadership called for further tax cuts for the rich (and Jeb Bush here in Florida called for the elimination of a tax that only affects the wealthy) – the New York Times reports that ‘tax refunds sought by 1.6 million poor Americans over the last five years’ were denied even though ‘the vast majority’ appear to have been valid. It’s a remarkable story, and well worth the click. BROWNBAGGING IT John Vassallo: ‘Taking a lunch to work can save a lot of money (I didn’t see it mentioned in your book). You don’t even need to buy deli meats, etc. I just make extra at dinner time and bring the leftovers to work. I also drink the free coffee (yes, I know, it’s barely passable). I am surprised at the large number of colleagues who buy lunch and gourmet coffee every day. The company fridge is practically empty. Brownbagging would easily save them $500 to $1000 a year.’ GOOD SENSE ON IRAQ In case you missed it: Zbigniew Brzezinski in Sunday’s Washington Post. SMART GUYS AIM BETTER One reason to be so proud of, and confident in, our military is the quality of our recruits. As detailed here: that quality is now slipping. (One partial solution would be to allow gay and lesbian Americans to serve their country, as they serve in the militaries of practically all our major allies. As Barry Goldwater noted, you shouldn’t have to be straight to serve, just be able to shoot straight.) PEOPLE WERE MOVED. NOBODY THREW UP Perhaps not the greatest review of ‘Brokeback Mountain’ – ‘People were moved. Nobody threw up.’ – but an interesting perspective nonetheless. I hereby give you permission not to see the movie; just please may we have equal rights?
The Optimists Expect a Loss of $38 Million January 11, 2006March 3, 2017 FREE 411 Just dial 800-FREE-411, even from your cell phone. You might or might not have to listen to a 12-second ad first. (Here‘s a little background.) FREE STOCK QUOTES FROM YOUR PHONE . . . . . . and weather and scores . . . movie times, calling a cab, connecting to an airline . . . getting directions, checking the time . . . 800-555-TELL. HELP FIGURING OUT WHICH DRUG PLAN TO SIGN UP FOR Lisa Doggett, in yesterday’s New York Times, makes a good case for your helping your folks or granparents figure this out. You may find this helpful. And speaking of overpriced drugs . . . NTMD The company is cutting back its sales force from 195 to 150 and cutting back its estimated expenditures for 2006 to around $100 million. That’s the OUTgo. As of January 8, the 7-day rolling average for BiDil prescriptions (the company’s only product) was 145, or about the same rate as for December, when, in the course of the month, an estimated 4,600 prescriptions were written. That works out to an annual sales rate just under $9 million. That’s the INcome. Hmmm . . . $100 million going out, $9 million coming in. Why is this good? UBS Securities remains bullish on NTMD, even though sales for 2005 came in at about one-tenth their initial estimates. It has now cut its price target on the stock from $32 a share to $24, but that’s still up from yesterday’s closing price of $13.90. And it still works out to a market valuation of $732 million for the whole company (30.5 million shares at $24 each). If prescriptions continue to rise and quadruple by the end of this year, the company will have lost about $80 million in 2006. (That would be a blend of today’s $9 million sales rate and perhaps a $36 million rate by the end of the year, for maybe $20 million for the full year, less $100 million in expenses.) UBS is wildly more optimistic, expecting sales not just to quadruple but to positively explode, with a loss of only $38 million for 2006 (double the loss they’d previously estimated). For 2007, UBS now projects a $3 million profit (about one-tenth what they had previously projected). Looking out to 2008 and 2009, they see profits of $36 million and $68 million, respectively. They believe a great many people will want to buy BiDil at six times the cost of its two generic ingredients. And they could be right. Even so, don’t sell your puts. SYSTEMS Hans Hecht: ‘I love the Super Bowl indicator for two reasons. It was discovered/invented by Len Koppett and it seems to have worked better than random chance since it was discovered. Obviously, God is a traditionalist and feels better when an old NFL team wins the Super Bowl. So, contrary to what you think, the Super Bowl indicator is PROOF of intelligent design. ‘Meanwhile, I was one of the people who wasted far too much time ‘proving’ that the Foolish Four had no basis at all except back testing. The Dogs of the Dow basically pick up on the statistical quirk that the high dividend stocks on January 1 did well during the next 12 months. The Motley Fool kept tinkering with the indicator until they came up with the ultimate tweak. They used the dividend divided by the square root of the price and then excluded the highest stock and purchased the next 4. [Got that? – A.T.] ‘They had people who backtested the indicator for months other than January. It showed a weakening of the indicator as the months progressed until it got better again in the fall as it approached January again. No one has ever been able to come up with ANY logical reason why it works better in January than any other month or why it seems to work best for holding the stocks for exactly one year. ‘What I showed is that if you look through the backtested data on stocks that appeared in the Foolish Four (or any of the Dogs of the Dow) for stocks that appeared during any month other than January AND did not appear on either the previous or future January list then you would have identified a stock that was selected as a Foolish Four stock and was not tainted by backtesting. ‘Amazingly, those Foolish Four stocks that were not tainted by backtesting, obviously including all Foolish Four stocks since the publication of Motley Fool’s book, have performed randomly and have not outperformed the other Dow stocks. The Foolish Four didn’t stop working because people started bidding up the stocks, it never worked to begin with.’
Beating the Market, Saving Democracy (Oh - and don't sell your puts) January 10, 2006March 3, 2017 THE LITTLE BOOK THAT BEATS THE MARKET Hubert Heller: ‘I bought The Little Book that Beats the Market on your recommendation and I can see two main problems with the approach: 1. Trading costs. To buy and sell 30 stocks every year costs $237 per year at foliofn.com. That’s 2.4% a year of $10,000 invested – a big expense drag, especially if the system doesn’t outperform by as much as it claims to. 2. Backtesting. Most backtested stock market systems don’t work in the forward direction for very long (e.g. Motley Fool’s Foolish Four model). Any thoughts?’ ☞ Yes: 1. Trading costs: To buy and sell 30 stocks every year costs $237 per year at foliofn.com. That’s 2.4% a year of $10,000 invested. Wait till you’ve accumulated $20,000? Start with 15 stocks instead of 30? 2. Backtesting. Most backtested stock market systems don’t work in the forward direction for very long (e.g. Motley Fool’s Foolish Four model). Right you are. I spent two whole chapters of one of my books (long out of print) making fun of stock market ‘systems,’ the sillier they were, the better. (Why should there be any forward correlation between the winning league in the Super Bowl and the direction of the stock market?) But Greenblatt’s system is grounded in the thought that, over time, the stocks of intrinsically good businesses selling at low valuations will do better than the stocks of intrinsically bad businesses selling at high valuations. To me, that makes a lot more sense than investing in stocks whose symbols begin with P (even though I’ve had good results with P’s in the past). So then the question is: how can you tell if a business is ‘intrinsically good’ (and, even if it is, that it will continue to be)? And to me, the Joel’s answers are persuasive. What’s more, unlike the Foolish Four, this system is not likely to be self-defeating. With the Four (if I recall right: buying the second through fifth highest-yielding of the 30 Dow stocks at the beginning of each year), it became so widely followed that the price you had to pay for those four stocks went up, making them less good buys. Greenblatt’s method is spread out over a great many more stocks . . . and in the event it did become a widely adopted investing strategy, it would be somewhat self-defeating – but in a positive way: it would tend to give good businesses higher valuations and less good businesses lower ones, thus improving the rational allocation of capital – which is good for the economy. DR. deHAVEN-SMITH Hank Porter: ‘I actually had a couple classes with Dr. deHaven-Smith for my master’s program. He’s no partisan. He and I talked about many of these issues 3-4 years ago, and I say, ignore him at your own peril. He’s the leading political scientist specializing on Florida. I’m glad to know his book is out. I’ll buy it today.’ ☞ Not everyone should spend $75 on that book, but everyone who cares about his country – Dem and Rep alike – really should take a few minutes to read the interview. FAREED ZAKARIA Pete Costello: ‘Thank you for directing us to that insightful interview. Also check out Future of Freedom by Fareed Zakaria.’ ☞ From Publisher’s Weekly: ‘. . . Zakaria contends that something has also gone wrong with democracy in America, which has descended into ‘a simple-minded populism that values popularity and openness.’ The solution, Zakaria says, is more appointed bodies, like the World Trade Organization and the U.S. Supreme Court, which are effective precisely because they are insulated from political pressures. Zakaria provides a much-needed intellectual framework for many current foreign policy dilemmas, arguing that the United States should support a liberalizing dictator like Pakistan’s Pervez Musharraf, be wary of an elected “thug” like Venezuela’s Hugo Chavez and take care to remake Afghanistan and Iraq into societies that are not merely democratic but free.’ I’d vote for Zakaria for almost anything. But in the meantime: if you missed it Friday, do try to find a few minutes to read the deHaven-Smith interview. It’s about more than just perverted election results, but that’s no small thing itself. If we can’t trust our own elections, as the Government Accountability Office essentially concluded we couldn’t (see, also, yesterday‘s column), we have a problem both teams should want to fix – fast.
A Book Review January 9, 2006January 16, 2017 HOW FAR WE’VE COME I am listening to 1776 on my Nano, and it’s 2 degrees Fahrenheit (in Boston, in 1776) and people are dragging 120 tons of cannons from Ft. Ticonderoga 300 miles to General George Washington in Dorchester, and the suffering of the troops – civilians like you and me, who’ve left their families to fight the British – is astounding. Sentries are literally freezing to death. And all I can think about is how upset we get if we’re assigned a middle seat. ETERNAL VIGILANCE Because our democracy has always been here and we’ve always been the world’s economic superpower – at least as long as any of us has been alive, which is perhaps the most realistic definition of ‘always’ – it’s easy to forget the sacrifices made to get here. Or that more sacrifices may be needed. (One friend of mine couldn’t honor his pledge to the DNC last year because the cost of maintaining five residences got the better of him.) Eternal vigilance is the price of liberty, and I’m beginning to wonder if we’re being vigilant enough. I know this leads quickly to criticism of war-time tax cuts (tax cuts? is that the sacrifice the wealthy are now called upon to make in wartime?) . . . and from there to carping about unwarranted wire taps (even though the law allowed the warrants to be obtained 72 hours after the tap, to keep from impeding critical intelligence work). Next you’ll be suggesting that we didn’t really go into Iraq ‘as a last resort,’ as we were promised. . . . or that Iraq really was not involved in attacking us on 9/11, as so many were led to believe. . . . or that ‘by far the vast majority’ of candidate Bush’s proposed tax cuts didn’t ‘go to people at the bottom of the economic ladder,’ as he insisted they would. Is there no end to your cynicism? Will you suggest, next, that a CIA agent’s cover was purposely blown? Or that we actually do torture? Are you – while we’re at it – one of those nut jobs who believes that the 2000 election was stolen? Who believes the recent GAO Report that elections involving paperless ballots could easily be stolen? Who believes that democracy fails if election results can’t be trusted? Well, then, this book review from the Christian Century is right up your alley . . . and an interesting follow-up to Friday‘s interview with Professor deHaven-Smith. To make my own position clear: Yes, I have little doubt Al Gore won both the national and the Florida popular votes in 2000 . . . No, I don’t think John Kerry won in 2004 – but I agree with the GAO Report that we really have no way of knowing. And thus my own bottom line is that – whether or not you buy what follows (it sounds strident to me) – one thing is clear: Republicans and Democrats alike ought to be insisting on election machines with auditable paper trails, and safeguards befitting our democracy. One Amazon.com reviewer writes: ‘I came to this book with, I think, the usual preconceptions: it will present a paranoid conspiracy theory, it’s just a Democrat’s sour grapes, it will be the left-wing equivalent of an Ann Coulter or Joe Scarborough rant – in other words, nothing new to say, shrieked at top volume. Instead . . . [I found it to be] a powerful and terrifying book. It is well documented and makes its case, if anything, too abundantly.’ So here’s the review: January 6, 2006 Bad Faith: Media Silence and the Assault on Democracy Fooled Again: How the Right Stole the 2004 Election and Why They’ll Steal the Next One Too (Unless We Stop Them) By Mark Crispin Miller Basic Books, 363 pp., $24.95 By Robert C. Koehler In early 2004, Pat Robertson divined the outcome of the presidential election, then ten months away. ‘I think George Bush is going to win in a walk,’ he said on a broadcast of ‘The 700 Club.’ ‘I really believe I’m hearing from the Lord it’s going to be like a blowout election in 2004.’ God – or at least the fervent, all-justifying, ‘Christian soldier’ belief in God, and of course God’s opposite, evil – is the real topic of Mark Crispin Miller’s new book, Fooled Again: How the Right Stole the 2004 Election and Why They’ll Steal the Next One Too (Unless We Stop Them). The volume is a primer for the many appalled students of the last presidential election, which was won by the incumbent not exactly ‘in a walk,’ as Robertson predicted, but by a healthy enough margin that Bush could declare the next day, ‘America has spoken,’ and claim, as though he needed one, a mandate. It is a meticulously researched explication of the case that there was serious fraud in that election, both blatant (myriad dirty tricks) and invisible (manipulation of electronic voting), and as such takes its place along several other recent books that examine the topic in gory detail. What Miller’s book does in addition is place election fraud – or election theft – in a psychological and religious context. Referring to Robertson’s faith-based prediction, which he quotes at the beginning of Fooled Again, Miller comments, sardonically: ‘That the statement was a little crass does not make it wrong. Certainly no other worldly factor can account for that amazing win, which no human pollster could foresee, and which no mortal has been able to explain in rational terms.’ Miller, a professor of media studies at New York University and a frequent political commentator on radio and TV, makes a compelling case that virulent, anti-democratic forces fueled by religious fervor are making an all-out assault on American democracy, but to my mind the most troubling aspect of Fooled Again is his indictment of the media, democracy’s watchdog, which is letting it happen. This is the part of the story that hits home hardest for me and pushes the crisis into ‘oh my God’ mode – the fact that the institutions that are supposed to be protecting us for the most part simply aren’t. On one hand we have what Miller calls the ‘Christo-fascist right,’ a determined army of zealots who have nothing but contempt for secular, pluralistic, tolerant and democratic American society and feel called upon by a higher power to subvert it; on the other hand we have a meek and blandly ‘balanced’ punditocracy that refuses to stand on principle or seriously challenge the right. Speaking of the fight over the 2000 election and the cacophony of voices screaming that Al Gore – in fact the winner of the popular vote nationwide and, as it turned out, the winner in Florida as well – Miller writes: ‘The voices of sanity were few, and even fewer those sane voices that spoke with the requisite bluntness.’ Lack of requisite bluntness is certainly one way of describing how the media covered the heart-stopping news that Gore did indeed win Florida, and hence the presidency, in 2000, according to a recount commissioned by the media itself, or a consortium of its most prominent names, including the New York Times, the Washington Post, the Associated Press, the Los Angeles Times, the Wall Street Journal and CNN. The New York Times, for instance, in a story headlined ‘Study of Disputed Florida Ballots Finds Justices Did Not Cast the Deciding Vote,’ published on Nov. 12, 2001, not only buried the news in paragraph 14, but phrased it with such glib dismissiveness a reader needs several passes through the verbiage to grasp what’s being said: ‘In a finding rich with irony,’ the Times informs us, ‘the results show that even if Mr. Gore had succeeded in his effort to force recounts of undervotes in the four Democratic counties, Miami-Dade, Broward, Palm Beach and Volusia, he still would have lost, although by 225 votes rather than 537. An approach Mr. Gore and his lawyers rejected as impractical – a statewide recount – could have produced enough votes to tilt the election his way, no matter what standard was chosen to judge voter intent.’ (italics added) Come again? If Gore had recounted all the votes he would have won? What’s telling about this sentence, aside from the mockery, is that the point of view seems almost extraterrestrial in its indifference to these findings. Psst, Gore blew it! There’s not the least awareness that the voters who cast their ballots for him, not to mention the American public at large and the democratic process itself, are also interested parties, who, according to the apparent rules of this preposterous game, are hostage to the candidate’s choice of legal strategies. This story was not written on their behalf. What we have in this country are media that believe in nothing, and are therefore ripe for manipulation by zealots who believe utterly in themselves. Miller puts their movement into historical context: ‘If the Soviet threat was dangerous to this country, so too were the consequences of its disappearance. When that occurred, surprisingly, in 1991, that old crusading animus, all stoked up but with no place to go, exploded here, affecting U.S. politics and culture with a kind of blowback not envisioned by the CIA. The disaster started with the evangelical crusade against Bill Clinton and continues with the full complicity of Bush & Co., whose soldiers now crusade against their fellow citizens, and against democracy itself.’ Most of the book is sheer documentation of this phenomenon. Miller collected news accounts from all over the country of the irregularities and wholesale disenfranchisement that occurred on Nov. 2, 2004, culminating in the re-election of George W. Bush. Though foreseen by Pat Robertson, Bush’s victory was at statistically outrageous variance with state-of-the-art poll results, especially in such swing states as Ohio, Florida, Pennsylvania and New Mexico. How did this happen? Fooled Again is a mosaic of isolated answers gathered together to reveal the larger pattern. It’s an exercise in dot-connecting. For instance: “In South Carolina, a posse of Republicans converged on Benedict College, a black institution in Columbia, demanding to see drivers’ licenses and challenging the right of several dozen people, mostly students, to cast votes. … Some of the students left in tears, according to … the college president, who also noted that the operation slowed things down so much — there was a four-hour wait at one point — that would-be voters had to call it quits.” “The Republicans were especially active in South Florida, doing all they could to frighten Kerry voters into going home, or staying home. This sort of intimidation was already going on throughout the early-voting period. The early voters (in a predominantly black section of Jacksonville) … found themselves under surveillance as they came to cast their ballots, a private detective filming everyone from behind a car with blacked-out windows.” “Forty-three percent of expatriate voters, or would-be voters, never received their ballots or received them too late, according to the Overseas Voting Foundation. … While thousands of expatriates had no way to vote for president, the military had a great surplus of write-in ballots — enough to give each service member two. … According to (a high-ranking officer in the military), the Pentagon is uninterested in helping ‘non-propagandized people’ vote.” The point is that these are not isolated incidents. Many, many precincts around the country — especially in minority and student areas — were plagued with troubles: “epidemic dysfunction” … “statistically impossible bad luck” … “reminiscent less of democratic process than of martial law.” There were too few voting machines; the machines broke down. Republican challengers and poll watchers were rude and intimidating. Voters were directed to the wrong polling places, the wrong lines. People tried to vote for Kerry and their machines registered Bush. This happened over and over and over. These anti-democratic machinations are not a “conspiracy” in the normally understood, easily dismissed sense, anymore than the Jim Crow South of yesteryear was a “conspiracy.” Most of the tactics are out in the open or, at best, thinly veiled. They have the enthusiastic participation of ordinary, everyday Americans who happen to believe they’re doing what they must. “The project here is ultimately pathological and essentially anti-political, albeit Machiavellian on a scale, and to a degree, that would have staggered Machiavelli,” writers Miller. “The aim is not to master politics but to annihilate it. Bush, Rove, DeLay, Ralph Reed, et al. believe in ‘politics’ in the same way that they and their corporate beneficiaries believe in ‘competition.’ In both cases the intention is not to play the game but to end it — because the game requires some tolerance of the Other, and tolerance is what these bitter-enders most despise.” Fooled Again is a wakeup call. Just because the mainstream media — and the mainstream Democratic Party — refuse to be appalled and can at best summon an occasional and perfunctory defense of our democratic principles, doesn’t mean the danger isn’t real. If we want our children to inherit a free, democratic and open society, the time to start rebuilding it is now. This article appears in Christian Century, January 10, 2006 edition. Robert Koehler, an award-winning, Chicago-based journalist, is an editor at Tribune Media Services and nationally syndicated writer. You can reach him at bob@commonwonders.com. Author’s Website: CountEveryVote.BlogSpot.com. ☞ I’ve not yet read the book – but I’ve ordered a copy.
Old News / New Observations January 6, 2006March 3, 2017 In case you missed the current issue of Florida State University’s Research in Review, you need to read this interview with Professor Lance deHaven-Smith. The least of it is the old news – immediately to be shouted down by the Tom DeLay staffers who stopped the Florida recount, and Tom DeLay fans everywhere – that, guess what, Al Gore really did win the election: Lance deHaven-Smith: There were 175,000 votes overall that were so-called ‘spoiled ballots.’ About two-thirds of the spoiled ballots were over-votes . . . Those votes are not ambiguous. When you see Gore picked and then Gore written in, there’s not a question in your mind who this person was voting for. . . . Bush got some of those votes, but they were overwhelmingly for Gore. Tens of thousands of them, mostly from black precincts – all thrown out. LdHS: [W]hen you look at the history of black voting in Florida, these are people that have been disenfranchised, intimidated. In the history of the early 20th century, black votes would be thrown out on technicalities . . . So you can understand why African Americans would be so careful, checking off Gore’s name on the list of candidates and also writing Gore’s name in the space for write-in votes. But because of the way the vote-counting machines work, this had the opposite effect: the machines threw out their ballots. So, yes, the sad turn our country has taken over the last five years was massively tainted from the start. (The overvotes are just one piece of it.) But now what? Professor deHaven-Smith’s observations on the systemic perils to our democracy are worth reading in their entirety – and sharing. Kudos to FSU and to Frank Stephenson, editor of Research in Review, for getting this out there. The interview continues: Research-in-Review: One of the reasons, you argue, that the most popular candidate ended up losing the election is because so many Americans favored partisan rhetoric over an unbiased search for truth during the recounts in 2000. How do you explain this? LdHS: As far as I can tell, it’s the way societies work. One of the things we’ve learned with public opinion research, the most fundamental finding of public opinion research of the past 50 years is that the masses follow the elites. Most people don’t have time to learn about all these things, and they look to a particular person that they trust. It may not be the president, it may be Jesse Jackson, you know, it could be Rush Limbaugh, it could be somebody who’s not in government, but they look at that person and defer to that person. It’s a normal thing. I don’t see that changing. It really is a matter of elites being willing to be committed to democracy and the rule of law and the rule of reason. RinR: And this can be a problem because? LdHS: Unfortunately, the history of democracy is that leadership philosophy is eroded as the competition between elites becomes more intense. That’s what happened with Athenian democracy; that’s what happened in the Roman Republic. So you look at our system today; you see our elites doing it, and you know we’re in big trouble. It’s in my lifetime that this has happened, that elites have begun to put winning ahead everything else, ahead of truth and country. When Watergate was prosecuted, there were Republicans in Congress that were after Nixon. They thought what he was doing was unconscionable, and today that’s not the case. Today, Democrats stick with Democrats, and Republicans stick with Republicans. They don’t care what their party leaders have done. Just in my lifetime, I’ve seen this civic culture go from something that’s respectful of democracy to something that is manipulative of it. The problem is if you let this go uncorrected, the Democrats are going to do something worse later, and then the Republicans. It’s just an arms race almost, and it will just tend to degenerate. RinR: How does the 2000 election fit into that view? LdHS: I think my book is at times rather blunt about the illegalities I think that were committed and the political motives that ran rampant. I wish I could say, ‘Well, we’ll leave it alone; we won’t look at it because it would shake people’s confidence in our society.’ But I’m afraid the elite discourse-unless it’s corrected, unless elites start recognizing that they have a responsibility to maintain a democracy among themselves-we’re going to have a big problem. RinR: So, what’s the overarching theme of The Battle for Florida? LdHS: It really tells a simple story in some ways. It essentially says that the people responsible for administering the election had a conflict of interest and that they, in a variety of ways, prevented the recount from being conducted. I go into explaining…why would it operate like this? One factor that drove it this way is essentially that the Republicans are on the losing side of a huge demographic trend in this state: an increasing minority population. And they know this—it’s not a secret. One reason there was administrative sabotage of the recount was because a number of steps had already been taken to try to lock in the Republican control of Florida in the face of these demographics that are running in the other direction. The other thing the book looks at, in addition to the long history leading up to this event, is also what came out afterwards, what was done, were problems corrected, what investigations were conducted? And the story there is, gee, there was really very little investigation, amazingly little, given the importance of the election and the controversy. Frankly, I would never have written this book had there been any careful investigation done afterwards. That was what shook me after the election, I was expecting people would go into it, find out what had happened and straighten out the problems so it wouldn’t happen again. RinR: But Florida’s 2001 Election Reform Act has been described as a model for the nation. They banned the punch cards; they gave $6 million for voter education; and they’re requiring computer systems to let voters know, once they’re in the booth, if they’ve voted too many times or failed to cast a valid vote. Are you saying those changes are just cosmetic? LdHS: They were worse than cosmetic. They focused on the technology, which was not the real problem. The problem was you just had partisans running the system at every level, even on the Supreme Court. It was everywhere. So if you wanted to correct this system, you’ve got to get that partisanship out of the process. And that was not done. And the touch-screen system—it’s a terrible thing that’s being done with this technology, because you can’t double-check it. You have no paper trail on it. RinR: Aren’t the new machines supposed to let you know if you didn’t cast a valid vote? LdHS: No, that’s one of the problems. It’s obviously not letting people know. There was a special election in the spring, where only one contest was on the ballot. I think it was the spring of 2004, in Palm Beach County where several hundred voters came…and turned in ballots that didn’t register a vote. [Robert] Wexler, a congressman there, sued to try to get the touch-screen machines either decertified or require a paper ballot because he said, “People aren’t going to come out for this one thing and not cast a vote.” It shows that the machines have got a problem. But the state wouldn’t act. RinR: There’s been a profusion of books and essays already written about the election. What do you bring to the table? LdHS: For one thing, I study Florida politics and know the law. I’d been director of the local government commission several years earlier, which looks at all the local governments and how they’re staffed, how they’re organized, what their financing is. I had also been the executive director of the cabinet reform commission in 1996. What both of those commissions ended up exposing was a fairly arcane, poorly understood cabinet system and inter-governmental system that is really how our elections are run, how our law-enforcement policies are implemented, road planning, things like that—things people don’t think that much about. So I knew about all that. I was in Tallahassee. I got to watch a lot of the election controversy itself. And I had the political science background on the demographic trends, the election trends. So I really had a unique combination of background experiences and subject matter expertise and then plain old luck in being … in the capital city of the state where it happened. RinR: Throughout the book, you repeat that Florida’s election law—especially the rule that no vote “shall be declared invalid or void if there is a clear indication of the intent of the vote”—is in fact much more straightforward than was made out during the controversy. So then, who do you fault the most for making it all seem so murky? LdHS: I would say [then-Secretary of State] Katherine Harris in terms of murky—in terms of what the law intended and what it meant. There was a contradiction in the law. What it said was you have to get the recount done within a very short time, and it just wasn’t possible. But that’s not uncommon. You just have to interpret it with common sense. Part of what was going on was the stakes were really high; the people involved were very inexperienced; Harris didn’t know [Attorney General Bob] Butterworth; they were not cordial. But if it had been a group of leaders who had been around for a while, they would have sat down and easily said, “Well, here’s a way to resolve this problem.” But that wasn’t the aim of the people involved. The aim was from the beginning to stop the recount. Yet if you looked at the law and if you looked at the case law, what Florida had consistently said was if you can count the votes, you must count the votes. You cannot penalize the voters for mistakes that the administrators make or that the law may make. You really have to give the voters the advantage. RinR: Throughout The Battle for Florida, you claim the law was bent out of shape to satisfy partisan goals. Does that mean you think some of the actions by Florida’s elected officials merit a legal investigation? LdHS: Yes, absolutely. To me, I think what this election teaches us is, first of all, we need to strengthen the penalties for election tampering and we need to return to an earlier understanding of “high crimes and misdemeanors.” We’ve gotten to the point today where we’re looking for smoking guns all the time. And the truth is that these officials take an oath of office to uphold the constitution, and that oath is a broad requirement that they enforce the laws with good intentions. But there wasn’t even a cursory investigation of the events, which points to another legal requirement…that we develop some kind of mechanism to investigate the government. We have the government investigating itself, and inevitably it’s unlikely you’re going to get much investigation. If you look at the last 40 years at government investigating itself, the only time we’ve gotten aggressive investigation is when one party controlled Congress and the other party controlled the executive branch. (During) Watergate, it was Democrats investigating a Republican; Iran-Contra, Democrats investigating a Republican; Monica Lewinsky, the Clinton impeachment, Republicans investigating a Democrat. There, you get some aggressiveness. But otherwise, you really have a system that’s not accountable because it won’t investigate itself. And if it investigates itself, it exonerates itself. RinR: Isn’t that just human nature? LdHS: Absolutely, and that’s what our institutions are designed to do: Take the human beings with all their best and worst and structure them in a way that we can produce a democratic, responsible government. We’ve come a long way. I mean, if you think about it, secret balloting is a relatively new invention. In Reconstruction, when blacks were first voting, they did it in public. You had a specific ballot that you took in for a particular candidate, and they knew who you were voting for. It’s all part of the historical developmental process where we try to make our government more democratic, more responsive, more transparent. But we’ve still got a long way to go. RinR: What about recount procedures? Have those been clarified? LdHS: There are now specified standards. So let’s say we need to have a recount: You would now have standards that would be uniform across the state as opposed to under the law in 2000, (when) the election commissions at the local level were supposed to determine that. But the reality was (in 2000) people were using rules of thumb. Now…the law specifies what the requirements are. RinR: How do you think your political beliefs influence your views? You call yourself an independent, right? LdHS: Certainly when I came to Tallahassee in 1994, I viewed myself as part of a professional leadership class in the state. There was a group of professional, ex-politicians – [Former Governor] Reubin Askew would have been one—of people who were knowledgeable and active and interested and not really partisan. But state politics changed. When [Gov. Lawton] Chiles beat Jeb Bush by 60,000 votes, it was one of the closest elections up to that time. I remember Chiles saying that he had never experienced a campaign like that. Jeb Bush had brought in a Washington-style, highly effective, highly professional campaign and nearly beat him. Chiles was a legend in Florida, an incumbent governor, and he almost got beat. By 1998, Jeb Bush…went about really consolidating authority, and it became a very partisan system. And at that point, frankly, my political orientation quit mattering. What started mattering to me was having a democracy, having a government that was actually responsive. One of the things I would hear a lot is people would say, well, if the Democrats were in, they would do the same thing. And I thought about that, and…my conclusion…is “hell no, they wouldn’t.” I know the Democrats; I know Reuben Askew. That guy would have been an absolute maniac about being technically and legally and ethically straightforward and correct in the application of the law. If there had been a recount under his administration, he would have been bending over backwards to make sure it was right. (But) today, the belief in the truth, that there (even) is a truth, has pretty much vanished across the board. It’s not just Democrats; it’s not just Republicans. But it’s been replaced by cynicism. RinR: Finally, I’d like to go back to the “big picture” theme of your book. You call for an unflinching search for truth in the tradition of the Ancient Greeks who questioned everything. But Socrates, the top truth-searcher of the day, was put to death for constantly prodding citizens to examine whether their convictions were grounded in a firm foundation of facts—suggesting he was “too democratic” to live in a Republic. Two thousand and some years later, what makes you think a majority of Americans—or anybody else, for that matter—want to stare their democratic shortcomings in the face? LdHS: I’m not sure that they do. After Socrates was executed, Plato, his student, went out to the countryside to buy a piece of land. He bought it from the family of a war hero named Academus. … And the academy today is called that by virtue of this decision. The reason Plato went out of town is, he realized the town people didn’t want to hear that their beliefs about the gods were myths, that their institutions were founded somewhat arbitrarily, that they didn’t know what they were talking about when they said they wanted justice. You’d like to hope that in the 21st century people would be mature enough, but I don’t know. This is a turning point potentially for us. If we don’t recognize the disorder, I don’t think we have many years left of democracy in the United States. I’m not entirely convinced that it’s not too late, even as we speak. ☞ Am I crazy, or do these observations deserve an even wider audience than F.S.U.’s Research in Review? Have a great weekend.
Sit Right Down and Write Yourself a Letter January 5, 2006January 16, 2017 CIRCADIAN RHYTHM Hey, have you noticed? The days are getting longer! (Circadian: from the Latin, ‘circa,’ not the Locust, ‘cicada.’.) CICADIAN RHYTHM Bob Fyfe: ‘Very interesting table in your column Monday. You wrote (in part): ‘Commodity prices have already jumped a bit since 1999 (oil comes to mind).’ Gold and silver come to mind, too. As for the 17 year cicadas, there’s a very interesting theory as to why cicadas come in 17 (and also 13) year cycles. It has to do with the numbers being primes. Look at this from the Baltimore Sun:’ . . . By springing forth from the ground by the millions, cicadas help ensure that no single predator can devour them, a tactic that evolutionary biologists now call the “predator satiation” strategy. And by emerging every 13 and 17 years, Gould argues in his 1977 book, cicadas minimize the chance that their infrequent invasions will sync with the life cycles of birds and other creatures that dine on them. For example, imagine bird species that wax and wane on a five-year cycle. If cicadas emerged every 10 years, their arrival might coincide with the peak of this avian predator, setting up a pattern that could drive the cicadas to extinction. By cycling at a large prime number, cicadas minimize the chance that some bird or other predator can make a living off them. The emergence of a 17-year cicada species, for example, would sync with its five-year predator only every (5 multiplied by 17) 85 years. . . ☞ Or (says the article) maybe not. But it’s fun to puzzle over. DOW THEORY In the old days, brokers – ‘customers’ men’ – charged fixed commissions, read Barron’s on the train in from Mt. Kisco and Princeton Junction, and paid attention to a thing called Dow Theory, invented a century ago by Charles Dow. More than a few investors still pay attention to it, and one of them sent in the following from Richard Russell’s Dow Theory Letter: The Transports continue to advance into new record high territory, thereby leaving the Dow far behind. This is one of the most extraordinary and flagrant non-confirmations that I can ever remember. The Industrial Average represents the manufacturing capabilities of the US. I think the message of the stock market is clear. A massive amount of goods are being shipped by the burgeoning Transports — but a large percentage of those goods are goods that have been MANUFACTURED IN OTHER COUNTRIES. That, sad to say, is the message I’m receiving from this dramatic Dow Theory non-confirmation. And I guess the decline in the stock of General Motors is symbolic of the fact that the US is steadily losing its manufacturing base. So question – what in God’s name is the US producing here in 2005? Answer – Basically, what the US is producing (in huge quantities) are Federal Reserve notes – we call them dollars. Yes, the US is still in the manufacturing business, but the main item that the US is manufacturing is oceans of fiat currency. Thus, the big question is simply this – how long will the rest of the world be willing to swap their merchandise and services for paper dollars that the Fed can produce at will in any quantities desired? Answer — they’ll continue this weird swap just as long as it serves their purposes. Thus, the so-called prosperity that the US is enjoying today is a “house of cards” prosperity. It is one of the strangest periods ever in world economic history. Is it any wonder that real money, gold, is creeping ever higher? RUNNING FAST TO STAND STILL Matthew Yglesias notes: ‘Median [inflation-adjusted] household income in 2004 was $44,389. [In] 1998 it was $45,003.’ SIT RIGHT DOWN AND WRITE YOURSELF A LETTER Here‘s a site that will send you an e-mail from yourself on a date you specify – your 50th birthday, say, which could be kind of neat if you’re 12 now. (‘Dear Me – If this works, you’re 50 today. Dear me, indeed! Oh, me, oh my. Of course, by the time you read this, 50 may be no big deal – you may have the body of a 25-year-old and million-terabyte brain implants that make you smarter and faster than anyone ever was in 2006. But I’m really writing you – me – to remind you what I was thinking when I was 12. In case you forgot, I also sent us a copy to be delivered when we turn 90. (What: your g-mail address is still good 78 years later? Has Google bought planetary naming rights yet? Are we living on Google, or is it still called Earth?’ Etc.) Or maybe you just want to send yourself an email next Tuesday reminding you to pick up your shirts. Read about FutureMe.org on CNN.com. And consider, also, myLastEmail.com and LastWishes.com, where you can say your piece in peace, or perhaps arrange to send your loved one your password. (‘Darling, I never trusted you with this in life, but now I want you to know that the password on all my accounts is our dog’s name – backwards.’)
Of Monomania and the Laffer Curve January 4, 2006January 16, 2017 ARC – sell The smart person who recommended ARC just above $14 fifteen months ago no longer has confidence in the company’s eventual recovery, so I’ve sold the balance of my shares. Next to the total wipe-out of my Google puts, I think this is the worst one we’ve had (down about 30% after dividends if you didn’t lighten up along the way). Sorry. NTMD Suresh Sunku: ‘Thanks for NTMD. I may sell my June puts in the next 30 days as I may need money.’ ☞ Sell them immediately – puts are no place for money you might need. BOREF Robert: ‘I saw this posted on the Raging Bull Borealis thread recently. Perhaps you could comment?’ There will be no qualified product for installation in any class of commercial airliner before it is fully blessed and certified by the FAA. A process that will probably take the greater part of a decade . . . There is no way Borealis has the resources to fund the airframe qualification program the FAA requires. The company communications have long been wildly optimistic – constantly projecting far more than they achieve. This may be how management keep their spirits up for what is inevitably a long haul. Consider that TV was invented in 1926. It did catch on, eventually (you may have one yourself), and it made some people money. But it took 25 years to get going. My hope is that as progress continues to be made across Borealis’s various technologies – if it does continue – the company’s market value, $75 million today, will rise. We’ll see. As to the FAA certification process, my hunch is that a thing that drives the plane on the ground may not take a decade to approve. New engines or a new wing design might. But a new way to push the plane back from the gate? In any event, if the Chorus Motor can move a 767, it can probably move a forklift. Does the FAA have jurisdiction over forklifts? MONOMANIA John Leonarz: ‘The reader who criticized your monomania – obsession with a single subject – reminded me of this. As I recall, it’s from See Here, Private Hargrove, back around 1940, and the story goes that an Army draftee, much put out with the conditions of his military draft service, could say only ‘That’s not it.’ He was referred to one office after another. Each time, paying no attention to persons in the room, he would start rifling through all the papers in the office, and for each paper would glance at it, say ‘That’s not it. That’s not it.’ and throw it away. Office after office, always the same. Finally he is sent to the personnel office and they hand him a medical discharge. Triumphantly he yells, ‘THAT’S IT!” TAX CUTS DON’T INCREASE REVENUES Republicans love to say that cutting taxes on the richest Americans actually increases revenue. It’s the famous Laffer curve – and it’s true, up to a point. When the top bracket was 90% under Eisenhower, then 70% under Kennedy, Johnson, Nixon, Ford, and Carter, people jumped through hoops not to pay it. Even 50% in Reagan’s first term was too high. Lower the rate and you stimulate economic activity . . . you take much of the juice out of risky tax avoidance schemes . . . and you get investors to take more – taxable – profits. All that raises tax revenues. Swell. But Laffer recognized that at some point, what you gain from these effects is more than lost from simply collecting at a lower rate. (Imagine a rate of zero if you doubt this, and then work back up from there.) Just where that ‘some point’ is . . . well, it’s hard to know precisely. (One clue: At the 39.6% top rate we had under Clinton/Gore – 20% for long-term capital gains – revenues and economic activity were strong. It seemed to be a pretty good balance.) Now comes this column by Daniel Altman from Sunday’s New York Times. In most important part: EARLY last month, without much fanfare, the Congressional Budget Office released a paper called “Analyzing the Economic and Budgetary Effects of a 10 Percent Cut in Income Tax Rates.” At a modest seven pages, it didn’t elicit the same sort of interest as the budget office’s budgetary and economic outlooks. Yet it may be one of the most important government publications in years. [. . .] [It] dismisses the idea that tax cuts may actually improve the government’s fiscal situation. Even in his most generous scenario, only 28 percent of lost tax revenue is recouped over a 10-year period. The United States, it seems, is firmly planted on the left side of the Laffer Curve. [The side on which tax cuts lower, not raise, tax revenue. – A.T.] Recent experience corroborates this prediction. In the second quarter of 2001, just before the first of President Bush’s tax cuts took effect, federal receipts from personal taxes accounted for 10.3 percent of the economy. By the end of the post-recession slump, receipts had dropped to 6.4 percent. But in the third quarter of 2005, with the economy booming, they were still under 7.5 percent – an enormous difference. In dollar terms, federal receipts from personal income taxes, at $802 billion in 2004, are still lower than they were in 1998 ($826 billion) and much lower than in 2001 ($994 billion). . . . Meanwhile, the interest we paid this past year on the National Debt was equivalent to about 40% of all the money we paid in personal income tax. And as the debt – and interest rates – rise further, the interest we pay will eat up an even higher percentage of tax revenues. That matters, because instead of using future tax revenue to meet urgent needs and strengthen our country, we will be paying it in interest to our friends the Chinese and Japanese and Saudis, from whom Presidents Reagan, Bush, and Bush have borrowed it on our behalf. That won’t hurt the wealthy. The Reagan-Bush-Bush era – under which 80% of our soon-to-be $10 trillion National Debt will have been borrowed by the time President Bush steps down – has been a grand time to be rich and powerful in America. But it will hurt the other 99% of Americans. And their kids.
How Do the Locusts Know? January 2, 2006March 3, 2017 You don’t want to miss the locusts. But first: 1. Happy New Year! 2. I flew home on a 37-seat commuter jet yesterday and walked past the nosewheel, where two (count ’em: two) humans were attaching a tow bar to the vehicle that would maneuver the plane out of the gate area. The flight attendant guessed we were about one-tenth the weight of a 767, so my guess is that it would take a Chorus Motor only the size of a grapefruit – not a watermelon – to run this thing around the tarmac like a golfcart. I am hoping one day we make some serious money from these grapefruits. Don’t sell your BOREF. 3. Don’t sell your puts, either: LEXINGTON, Mass. (AP) — Pharmaceutical company NitroMed Inc. said Thursday that its joint research program with medical device maker Boston Scientific Corp. studying its nitric oxide-enhancing technology will conclude on Dec. 31. A company spokeswoman said the agreement, which had been in place since November 2001, was scheduled to end. The deal contributed about $1.5 million to NitroMed’s revenue this year, and some $3 million over the term of the deal. The two firms were researching the use of the technology in connection with restenosis in balloon angioplasty. Restenosis is the closing or narrowing of an artery that was previously opened by a cardiac procedure such as angioplasty. NitroMed said it plans to continue to explore the use of its nitric oxide-enhancing technology in medical devices. NTMD ended 2005 at $13.95, down from $22 in July when those of us with money we could truly afford to lose bought puts, betting the stock would go down. Sales of BiDil – Nitromed’s only product – will almost surely continue to rise, but probably not by enough to make the company profitable. Why would an unprofitable company with a single product that combines two readily available, widely prescribed generic drugs sell for $420 million (30.5 million shares at $13.95 each) when a company with what may be a revolutionary electric motor is valued at $80 million (5 million shares at $16 each)? One never knows, but my bet is that it would make more sense if the market valuations were reversed . . . which would put NTMD at $2.75 and BOREF at $84. Needless to say, if that bet turns out to be anywhere close to right – as it may not! – 2006 will be a Happy New Year indeed. HOW DO THE LOCUSTS KNOW? They’re actually cicadas, they come every 17 years, and they do not coincide with the 17-year cycle of the U.S. stock and commodities markets. But wait – cicadas aside, is it possible there are 17-year cycles in the U.S. stock and commodities markets? (And how come the Jewish calendar has 7 leap months in every 19 years? Oy!) One of you sent me this: Commodities Stocks Years 1914-1930 -14% 159% 16 1930-1947 244% -30% 17 1947-1965 -18% 503% 18 1965-1981 123% 35%* 16 1981-1999 -9% 1054% 18 1999-2016 ? -? 17 Data source: CRB Index and S&P 500, from Globalfindata.com *Negative if adjusted for inflation. [The Dow closed at 874.12 on December 31, 1964; at 875.00 on on December 31, 1981 – up less than one point in 17 years. The table above shows a 35% gain in roughly the same cycle, but those figures include dividends (as they should). What they don’t include is inflation: that 35% gain would have been a sharp loss in real dollars.] Do you see a pattern here? Every 17 years or so something seems to switch and you have a period that’s great for stocks but bad for commodities (like soy beans and copper) . . . and then it switches back to a period that’s great for commodities but lousy for stocks. If you had started with $1,000 in stocks in 1914, then switched back and forth until the end of 1999, your $1,000 (ignoring taxes and inflation) would have grown to $1.7 million – versus $4923 – again, ignoring the ravages of inflation (you’d have had only about $40 in inflation-adjusted 1914 dollars) – if you had adopted the same switching strategy but gotten the cycles backwards. It’s possible all this is coincidence and silly. It’s possible that it’s not, but that whatever rational cause underlay the effect will have changed or been outweighed by other factors (or speeded up by the faster pace at which news and capital now flow). But assuming there’s something to it, the main thing to note is that some significant portion of the ‘effect’ for the current 17 years has already happened. Commodity prices have already jumped a bit since 1999 (oil comes to mind). And stocks have already disappointed. So it’s possible much of the effect of the 17 year cycle, if there is one, has already been felt. (In others words: why the hell didn’t I tell you all this in 1999?) And possible we ain’t seen nothin’ yet. The conclusions I would draw from the table above are: (a) As always, it would be prudent to live beneath your means and save as much as you can: you may not be able to count on stock market returns to balloon your retirement fund over the next decade. (b) It pays to diversify globally. (The figures above are for U.S. stocks.) (c) Our timber stock (symbol: PCL), up about 50% including dividends since first suggested here in 2003, could still have a bright long-term future. If you haven’t bought any, I think it’s worth a look. (d) As tempting as it is to take profits on oil stocks (APC is up 67%), I continue to think we should probably hold on. (e) None of this will have anything much to do with the success or failure of specific speculations like NTMD puts or BOREF shares – so one might still play with them, albeit (all together now:) ‘only with money you can truly afford to lose.’ (f) Nor will it likely diminish the edge you might get by using the ‘magic formula’ investing suggested here a few weeks ago. Coupling that with the power of dollar-cost averaging, you might be sitting pretty 10, let alone 20, years from now. (g) Vote Democrat. Historically, the stock market does better under Democratic Administrations. (Really. Look it up.) (h) There is more to life than money. This could be a tough year for the average American household – whose median income, unlike that of CEOs, did not go up 30% in 2004, but rather has been falling in inflation-adjusted dollars in each of the past five years. But if you can arrange things in such a way as to be comfortable, even if you have to scale back some dreams, then you might be pleasantly surprised. To begin with, this glum money outlook could prove entirely unfounded. And even if it’s not, you can have the astonishing fun of enjoying the good things that will come over the next decade, including spectacular sunsets and cool summer breezes; reruns of Seinfeld and new episodes of Boston Legal; amazing new inventions and friendships and children; and the progress that, let us hope, will lead to the better cycle that should begin peeking its hopeful little face through the curtain around 2015.