The Genius of Dual Flush December 13, 2007January 6, 2017 TAKE 10 SECONDS TO GUIDE THE F.E.C. Please click here before noon today. Right now, small-dollar contributions to presidential candidates are matched by Uncle Sam (if the candidate agrees to abide by spending limits). The F.E.C. tomorrow considers a new rule that would exclude small-dollar contributions given through the web. Bad idea. HOUSING PRICES Craig Johns: ‘How come it’s considered a disaster that gas prices keep rising, but it’s also considered a disaster that housing prices keep FALLING? As someone who doesn’t own a house, I’d love it if housing prices kept falling, because then maybe I could own one. I find gas prices’ continuing rise much less irksome than America’s over-priced housing.’ ☞ Reason enough to live in your car. At least for now. SAVING WATER John Grund: ‘Also good, and less trouble than mounting a new urinal, are dual-flush toilets that use a small amount of water for solids and an even smaller amount for liquid waste.’ ☞ Smart. George Mokray: ‘I always used a plastic gallon jug instead of a brick inside my toilet tank – that is, until we got low flush toilets. [Meanwhile], check out No Drought in Clayton County, GA (as excerpted from the Atlanta Journal Constitution on Daily Kos): Clayton County officials say their area is the only one in Metro Atlanta not struggling with severe drought. “It’s raining every day in Clayton County,” said Michael Thomas, general manager of the Clayton County Water Authority. “We’re putting 10 million gallons of water a day back in.” Drought fears struck Clayton more than 20 years ago, and county officials started to think ahead. The result: an elaborate series of 21 man-made wetlands and reservoirs that allows the county to collect 10 million gallons of wastewater a day and eventually convert it to drinking water. While Atlanta residents may have less than 80 days left of water from Lake Lanier, Clayton citizens are well beyond 250 days, Thomas said. Construction of the wetlands has cost Clayton about $15 million in bond money. The county will spend $10 million on the fourth phase, but that will come from water and sewer fees, which have been increased for next year. Thomas says those fees are saving taxpayers in the end. The wetlands not only take up less land, they require less work. Since building the wetlands, the water authority has cut its maintenance staff from 13 to 5. Workers previously had to check 20,000 sprinkler heads daily; now, they take an occasional sample and mow grass twice a year. The wetlands also have reduced the water authority’s monthly electric bill by 60 percent. Officials say they will save another $25,000 on monthly electric costs once the fourth wetland phase is finished. “It’s all natural. Nothing is pushing the water, so there’s no power,” Thomas said. “It all flows from gravity.” Matt Ball: ‘I assume you know that a great way to save water is to not eat meat. Click here and here.’ ☞ I’m telling you, man, it’s those pigs in blankets. Now this is a meatless hot dog that packs a punch. (With enough ketchup, anything tastes good.) FMD Michael Fang continues from Monday (since which time FMD has fallen still further): ‘Don’t get me wrong – I’m not trying to talk you out of your position. It’s just that I think a distinction needs to be made between averaging down on a mutual fund as a long term investment, vs. averaging down on an individual stock – which may or may not come back. [True!] For those who really can objectively evaluate the stock when sitting on a big unrealized loss, all the better. But for myself, I feel I can’t be 100% coldly objective unless I kick the stock out of my portfolio for the 1-month probation – it is hard for me to tell what is rationalization and what is calculation when I have funds committed. I believe that in speculating (or investing), being brutally honest with oneself is critical when holding the stock, but one must also be willing to forgive oneself once the stock is out of the portfolio – no matter what the stock does subsequently.’ ☞ Like I could ever be so sane.
The Earth Has a Fever Tax Pollution, Not Work and Investment December 12, 2007March 10, 2017 Friday, I’m going to tell you how you may be able to live for hundreds of years – perhaps the least I can do after the way FMD and WM have tanked – so free up a little time over the weekend, and scrape together $1.95, to have a listen. But today (since you might just need a hospitable habitat longer than you thought), some choice words on the state of the planet. It’s not every day that someone you know wins the Nobel Peace Prize: Your Majesties, Your Royal Highnesses, Honorable members of the Norwegian Nobel Committee, Excellencies, Ladies and gentlemen. I have a purpose here today. It is a purpose I have tried to serve for many years. I have prayed that God would show me a way to accomplish it. Sometimes, without warning, the future knocks on our door with a precious and painful vision of what might be. One hundred and nineteen years ago, a wealthy inventor read his own obituary, mistakenly published years before his death. Wrongly believing the inventor had just died, a newspaper printed a harsh judgment of his life’s work, unfairly labeling him “The Merchant of Death” because of his invention–dynamite. Shaken by this condemnation, the inventor made a fateful choice to serve the cause of peace. Seven years later, Alfred Nobel created this prize and the others that bear his name. Seven years ago tomorrow, I read my own political obituary in a judgment that seemed to me harsh and mistaken if not premature. But that unwelcome verdict also brought a precious if painful gift: an opportunity to search for fresh new ways to serve my purpose. Unexpectedly, that quest has brought me here. Even though I fear my words cannot match this moment, I pray what I am feeling in my heart will be communicated clearly enough that those who hear me will say, “We must act.” The distinguished scientists with whom it is the greatest honor of my life to share this award have laid before us a choice between two different futures a choice that to my ears echoes the words of an ancient prophet: “Life or death, blessings or curses. Therefore, choose life, that both thou and thy seed may live.” We, the human species, are confronting a planetary emergency – a threat to the survival of our civilization that is gathering ominous and destructive potential even as we gather here. But there is hopeful news as well: we have the ability to solve this crisis and avoid the worst–though not all–of its consequences, if we act boldly, decisively and quickly. However, despite a growing number of honorable exceptions, too many of the world’s leaders are still best described in the words Winston Churchill applied to those who ignored Adolf Hitler’s threat: “They go on in strange paradox, decided only to be undecided, resolved to be irresolute, adamant for drift, solid for fluidity, all powerful to be impotent.” So today, we dumped another 70 million tons of global-warming pollution into the thin shell of atmosphere surrounding our planet, as if it were an open sewer. And tomorrow, we will dump a slightly larger amount, with the cumulative concentrations now trapping more and more heat from the sun. As a result, the earth has a fever. And the fever is rising. The experts have told us it is not a passing affliction that will heal by itself. We asked for a second opinion. And a third. And a fourth. And the consistent conclusion, restated with increasing alarm, is that something basic is wrong. We are what is wrong, and we must make it right. Last September 21, as the Northern Hemisphere tilted away from the sun, scientists reported with unprecedented distress that the North Polar ice cap is “falling off a cliff.” One study estimated that it could be completely gone during summer in less than 22 years. Another new study, to be presented by U.S. Navy researchers later this week, warns it could happen in as little as 7 years. Seven years from now. In the last few months, it has been harder and harder to misinterpret the signs that our world is spinning out of kilter. Major cities in North and South America, Asia and Australia are nearly out of water due to massive droughts and melting glaciers. Desperate farmers are losing their livelihoods. Peoples in the frozen Arctic and on low-lying Pacific islands are planning evacuations of places they have long called home. Unprecedented wildfires have forced a half million people from their homes in one country and caused a national emergency that almost brought down the government in another. Climate refugees have migrated into areas already inhabited by people with different cultures, religions, and traditions, increasing the potential for conflict. Stronger storms in the Pacific and Atlantichave threatened whole cities. Millions have been displaced by massive flooding in South Asia, Mexico, and 18 countries in Africa. As temperature extremes have increased, tens of thousands have lost their lives. We are recklessly burning and clearing our forests and driving more and more species into extinction. The very web of life on which we depend is being ripped and frayed. We never intended to cause all this destruction, just as Alfred Nobel never intended that dynamite be used for waging war. He had hoped his invention would promote human progress. We shared that same worthy goal when we began burning massive quantities of coal, then oil and methane. Even in Nobel’s time, there were a few warnings of the likely consequences. One of the very first winners of the Prize in chemistry worried that, “We are evaporating our coal mines into the air.” After performing 10,000 equations by hand, Svante Arrhenius calculated that the earth’s average temperature would increase by many degrees if we doubled the amount of CO2 in the atmosphere. Seventy years later, my teacher, Roger Revelle, and his colleague, Dave Keeling, began to precisely document the increasing CO2 levels day by day. But unlike most other forms of pollution, CO2 is invisible, tasteless, and odorless–which has helped keep the truth about what it is doing to our climate out of sight and out of mind. Moreover, the catastrophe now threatening us is unprecedented and we often confuse the unprecedented with the improbable. We also find it hard to imagine making the massive changes that are now necessary to solve the crisis. And when large truths are genuinely inconvenient, whole societies can, at least for a time, ignore them. Yet as George Orwell reminds us: “Sooner or later a false belief bumps up against solid reality, usually on a battlefield.” In the years since this prize was first awarded, the entire relationship between humankind and the earth has been radically transformed. And still, we have remained largely oblivious to the impact of our cumulative actions. Indeed, without realizing it, we have begun to wage war on the earth itself. Now, we and the earth’s climate are locked in a relationship familiar to war planners: “Mutually assured destruction.” More than two decades ago, scientists calculated that nuclear war could throw so much debris and smoke into the air that it would block life-giving sunlight from our atmosphere, causing a “nuclear winter.” Their eloquent warnings here in Oslo helped galvanize the world¹s resolve to halt the nuclear arms race. Now science is warning us that if we do not quickly reduce the global warming pollution that is trapping so much of the heat our planet normally radiates back out of the atmosphere, we are in danger of creating a permanent “carbon summer.” As the American poet Robert Frost wrote, “Some say the world will end in fire; some say in ice.” Either, he notes, “would suffice.” But neither need be our fate. It is time to make peace with the planet. We must quickly mobilize our civilization with the urgency and resolve that has previously been seen only when nations mobilized for war. These prior struggles for survival were won when leaders found words at the 11th hour that released a mighty surge of courage, hope and readiness to sacrifice for a protracted and mortal challenge. These were not comforting and misleading assurances that the threat was not real or imminent; that it would affect others but not ourselves; that ordinary life might be lived even in the presence of extraordinary threat; that Providence could be trusted to do for us what we would not do for ourselves. No, these were calls to come to the defense of the common future. They were calls upon the courage, generosity and strength of entire peoples, citizens of every class and condition who were ready to stand against the threat once asked to do so. Our enemies in those times calculated that free people would not rise to the challenge; they were, of course, catastrophically wrong. Now comes the threat of climate crisis – a threat that is real, rising, imminent, and universal. Once again, it is the 11th hour. The penalties for ignoring this challenge are immense and growing, and at some near point would be unsustainable and unrecoverable. For now we still have the power to choose our fate, and the remaining question is only this: Have we the will to act vigorously and in time, or will we remain imprisoned by a dangerous illusion? Mahatma Gandhi awakened the largest democracy on earth and forged a shared resolve with what he called “Satyagraha” or “truth force.” In every land, the truth once known has the power to set us free. Truth also has the power to unite us and bridge the distance between “me” and “we,” creating the basis for common effort and shared responsibility. There is an African proverb that says, “If you want to go quickly, go alone. If you want to go far, go together.” We need to go far, quickly. We must abandon the conceit that individual, isolated, private actions are the answer. They can and do help. But they will not take us far enough without collective action. At the same time, we must ensure that in mobilizing globally, we do not invite the establishment of ideological conformity and a new lock-step “ism.” That means adopting principles, values, laws, and treaties that release creativity and initiative at every level of society in multifold responses originating concurrently and spontaneously. This new consciousness requires expanding the possibilities inherent in all humanity. The innovators who will devise a new way to harness the sun’s energy for pennies or invent an engine that’s carbon negative may live in Lagos or Mumbai or Montevideo. We must ensure that entrepreneurs and inventors everywhere on the globe have the chance to change the world. When we unite for a moral purpose that is manifestly good and true, the spiritual energy unleashed can transform us. The generation that defeated fascism throughout the world in the 1940s found, in rising to meet their awesome challenge, that they had gained the moral authority and long-term vision to launch the Marshall Plan, the United Nations, and a new level of global cooperation and foresight that unified Europe and facilitated the emergence of democracy and prosperity in Germany, Japan, Italy and much of the world. One of their visionary leaders said, “It is time we steered by the stars and not by the lights of every passing ship.” In the last year of that war, you gave the Peace Prize to a man from my hometown of 2000 people, Carthage, Tennessee. Cordell Hull was described by Franklin Roosevelt as the “Father of the United Nations.” He was an inspiration and hero to my own father, who followed Hull in the Congress and the U.S. Senate and in his commitment to world peace and global cooperation. My parents spoke often of Hull, always in tones of reverence and admiration. Eight weeks ago, when you announced this prize, the deepest emotion I felt was when I saw the headline in my hometown paper that simply noted I had won the same prize that Cordell Hull had won. In that moment, I knew what my father and mother would have felt were they alive. Just as Hull’s generation found moral authority in rising to solve the world crisis caused by fascism, so too can we find our greatest opportunity in rising to solve the climate crisis. In the Kanji characters used in both Chinese and Japanese, “crisis” is written with two symbols, the first meaning “danger,” the second “opportunity.” By facing and removing the danger of the climate crisis, we have the opportunity to gain the moral authority and vision to vastly increase our own capacity to solve other crises that have been too long ignored. We must understand the connections between the climate crisis and the afflictions of poverty, hunger, HIV-Aids and other pandemics. As these problems are linked, so too must be their solutions. We must begin by making the common rescue of the global environment the central organizing principle of the world community. Fifteen years ago, I made that case at the “Earth Summit” in Rio de Janeiro. Ten years ago, I presented it in Kyoto. This week, I will urge the delegates in Bali to adopt a bold mandate for a treaty that establishes a universal global cap on emissions and uses the market in emissions trading to efficiently allocate resources to the most effective opportunities for speedy reductions. This treaty should be ratified and brought into effect everywhere in the world by the beginning of 2010 – two years sooner than presently contemplated. The pace of our response must be accelerated to match the accelerating pace of the crisis itself. Heads of state should meet early next year to review what was accomplished in Bali and take personal responsibility for addressing this crisis. It is not unreasonable to ask, given the gravity of our circumstances, that these heads of state meet every three months until the treaty is completed. We also need a moratorium on the construction of any new generating facility that burns coal without the capacity to safely trap and store carbon dioxide. And most important of all, we need to put a price on carbon–with a CO2 tax that is then rebated back to the people, progressively, according to the laws of each nation, in ways that shift the burden of taxation from employment to pollution. This is by far the most effective and simplest way to accelerate solutions to this crisis. The world needs an alliance–especially of those nations that weigh heaviest in the scales where earth is in the balance. I salute Europe and Japan for the steps they’ve taken in recent years to meet the challenge, and the new government in Australia, which has made solving the climate crisis its first priority. But the outcome will be decisively influenced by two nations that are now failing to do enough: the United States and China. While India is also growing fast in importance, it should be absolutely clear that it is the two largest CO2 emitters–most of all, my own country–that will need to make the boldest moves, or stand accountable before history for their failure to act. Both countries should stop using the other’s behavior as an excuse for stalemate and instead develop an agenda for mutual survival in a shared global environment. These are the last few years of decision, but they can be the first years of a bright and hopeful future if we do what we must. No one should believe a solution will be found without effort, without cost, without change. Let us acknowledge that if we wish to redeem squandered time and speak again with moral authority, then these are the hard truths: The way ahead is difficult. The outer boundary of what we currently believe is feasible is still far short of what we actually must do. Moreover, between here and there, across the unknown, falls the shadow. That is just another way of saying that we have to expand the boundaries of what is possible. In the words of the Spanish poet, Antonio Machado, “Pathwalker, there is no path. You must make the path as you walk.” We are standing at the most fateful fork in that path. So I want to end as I began, with a vision of two futures–each a palpable possibility–and with a prayer that we will see with vivid clarity the necessity of choosing between those two futures, and the urgency of making the right choice now. The great Norwegian playwright, Henrik Ibsen, wrote, “One of these days, the younger generation will come knocking at my door.” The future is knocking at our door right now. Make no mistake, the next generation will ask us one of two questions. Either they will ask: “What were you thinking; why didn’t you act?” Or they will ask instead: “How did you find the moral courage to rise and successfully resolve a crisis that so many said was impossible to solve?” We have everything we need to get started, save perhaps political will, but political will is a renewable resource. So let us renew it, and say together: “We have a purpose. We are many. For this purpose we will rise, and we will act.”
Buy a Cactus December 11, 2007March 10, 2017 According to Parade last week, Americans use 151 gallons of water a day compared with 31 gallons for the average Brit. Much of that water use is indirect – the water that goes to irrigate the corn that goes to feed the pig that goes into the blanket that pops out of the oven along with the cheese puffs just as guests arrive. (As a water-saving measure, I avoid pigs in a blanket.) But a good chunk comes from flushing (pee more judiciously or buy one of these?) and from showering (see Seinfeld episode 126 and buy one of these?) . . . from pool evaporation (turn the pool into a planter or buy one of these?) and, certainly, from lawn care. If God had wanted your grass to be green, it would have rained. (The grass is always green on Wisteria Lane – but are they happy?) Leaving the water running while you brush your teeth wastes 4-6 gallons of water (so get one of these). Here are some tips (bricks in toilets may not be the best idea).
2011 Is Right Around the Corner December 10, 2007March 10, 2017 A HOUSING SLUMP BOTTOM SEEN: IN 2011 Click here. KEITH OLBERMANN ON IRAN Did you know all this? FMD Michael F.: ‘I’m a little alarmed that you’re actually averaging down on this stock. I have no opinion on FMD, never been involved with it. I don’t really care how you personally deal with your FMD loss, but I do know a lot of your readers (including me) regard you as a personal finance role model. Therefore some may actually copy and follow your act. This may be the last thing you want to hear after suffering a huge loss (believe me, I’ve been there, just go take a look at the chart of IMGN – I owned 50,000 shares in 2001 ~ 2003, and more recently, the NSTK debacle, although in a lot smaller size), but in my opinion, buying a stock you previously owned after it has plunged is just throwing good money after bad – the market is telling you you are wrong. Is it possible that your guru has moved from the realm of fundamental security analysis into the realm of boneheaded-ness and wishful thinking? ‘FMD may come roaring back – who the hell knows, it may very well happen. If that is the case, you and your readers who followed your act would have taken the wrong lesson out of this. Reading your blog through the years, I get the sense that you seem to buy individual stocks as sort of a hobby/past time using what you allocate for ‘mad money.’ which is apart from serious personal financial planning and asset allocation that you advocate in your books. That’s fine. But if it is indeed a hobby, I would assume the goal it is to make money, not character-building, a test of will, or the pursuit of ‘being right.’ ‘If the goal is to make money as a hobby, there are other ways than being a buy-and-hold investor. Perhaps a trader mentality is warranted — and what is the central tenant of a successful trader? In my opinion, famed commodities trader Paul Tudor Jones said it best, “Losers average losers.” ‘One thing I religiously do now is to follow William O’Neil (founder of Investor Business Daily)’s admonishment: whenever I suffer a 7% loss, I IMMEDIATELY sell it, no exception and excuse. I would cool my heels for a month, and then, having kicked the loser out of my portfolio, I can objectively analyze whether it is still worth a long-term hold. If it is, I will buy it back. The stocks may come back during the 1-month kick-out period, but I made peace with myself and accept that as part of the game: it is called risk management. And you know what? I seldom buy the stock back. Usually it’s because I was liberated to pursue other better opportunities.’ ☞ I admire anyone with a plan and the discipline to stick to it. But there are different ways to skin a cat – and different ways to get burned. Limiting losses to 7% will generally limit your losses to 7% on any given stock – with the occasional larger loss if a stock announces bad news after the close and opens the next morning down, say, 20%. But if you have three 7% losses in a row (perhaps the market is in a tailspin?), you’re now down 21%, when in the natural fluctuation of things the stocks might not be doomed after all. Risk management is hugely important. But in my case, I’m pretty ridiculously diversified – and that’s my principal risk management device. Often, if a stock seemed to make sense at $30 it can make more sense at $17 – and then, yes, get a bid from Carl Icahn at $36. (That’s what Lear did.) Years ago I bought Audible.com (ADBL) at $3.75 (adjusted for a subsequent split), then more at $1.98 – I liked the service! – and then lots more at 96 cents – and ultimately sold bits and pieces a year later all the way up to $30 a share. Not typical, by any means. And I definitely have had it go the other way, where I bought more of something only to see a total loss. But I prefer to look at each situation separately. And, yes, stubbornness and ‘the need to be right’ probably do enter into the equation, and at a not inconsiderable cost. All that said: the risk in FMD is definitely real, but I wouldn’t sell, or necessarily fail to buy more, just because it’s half price. Isn’t one of the recipes of success to buy a good company after a devastating – but survivable – misstep or shock? Like American Express after the salad oil swindle? FMD may not turn out to be that kind of story. But the freeze-up in the credit markets was not of FMD’s doing; and it may one day thaw. Here’s the Motley Fool’s take. BANKRUPTCY AND FMD’s STUDENT LOANS Sam: ‘In most instances, as you say, bankruptcy does not dismiss the obligation of a student loan, but it is up to the judge’s discretion. Over the history of the federal student loan program fewer than 300,000 loans have been discharged due to bankruptcy out of the 242 million loans issued.’ ALDABRA 2 This site is devoted to SPACs – blank-check companies – like Aldabra (which became Great Lakes Dredge & Dock, giving us a five- or ten-fold gain on our warrants last year) and Aldabra 2 (which is becoming Boise Cascade Paper, and whose warrants are up about 50% since July and will be up five-fold if, by 2011, the underlying stock, hit $14.50 or so). I’m not a member of the site, but someone sent me this emailed summary: Tuesday, December 04, 2007 12:49 PM Subject: AII – Aldabra II / Boise Cascade Paper, Packaging & Newsprint Road show started last week, Aldabara 2 remains a top pick as it still undervalued despite drop in peer multiples, current fair value range $10.25 to $16.10 * AII remains a favorite idea despite peer multiples coming down in the past month * On a 2007 EV/EBITDA outlook, AII is now fairly valued at $10.25 vs $11.00 one month ago * AII is fairly valued at $11.20 to $13.75 on a 2008 EV/EBITDA basis and $12.55 to $16.10 on a 2008 adjusted EPS basis (reflects the benefits of a low tax rate from the acquisition amortization tax shield) * Thus at minimum AII should currently trade at $10.25 and should move towards the $11.20 to $16.10 range as confidence increases of hitting the 2008 EBITDA targets * Boise Cascade (BCC) 3rd Q results gives confidence they will hit the $250M EBITDA target for 2007 * 2008 EBITDA range of $315M to $367M * $315M EBITDA target appears highly likely as it reflects LTM EBITDA adjusted for October commodity paper (UFS) price increase and the annualized effect of recent mill conversions/enhancements and it does not include price increases in 2008 of several of product lines that are forecasted by industry analysts as well as anticipated input cost declines * $367M EBITDA target appears reasonable as it includes all or part of the positive impacts of announced and anticipated price increases and excludes the benefits of declining input costs * Strategically, AII is the best way to invest in the paper and packaging industry as it the direct beneficiary of the higher commodity prices from the capacity shut downs of its peers * BCC has not participated in the capacity shut downs because it has a minority market share and thus enjoys the benefits of the higher prices driven by its peers who are doing the heavy lifting of reducing production in line with market demand declines * If annual demand declines for paper and newsprint continue at the same pace then eventually Boise Cascade will have to cut production or invest more capex to switch production to other products, but for the next several years it should be able to continue to drive the same production with no shut downs especially if declines in UFS revert back to the normal 1% to 2% range from this years 6% decline * BCC has 100% USD based operations which is an additional positive as some of its peers are being hurt by foreign currencies strengthening against the USD * The Aldabra 2 management team has credibility (GLDD), good business acumen and a strong understanding of what they need to deliver to get investors excited and they have been regular buyers of AII common in the open market * We see this deal as a high probability yes given it has a 40% max redemption, solid story and good valuation * However, we acknowledge that it is hard to get excited about any paper company if a recession occurs and this could become a situation where a cheap solid name just gets cheaper * We maintain AII as a top pick since the US is currently not in a recession, the recent trends in paper inventories are not concerning, Boise Cascade is strategically more interesting than its peers and AII currently trading below estimated cash per share of $9.72 should currently trade at $10.25+ creating a win-win investment * We would not be surprised to see AII repeat the performance of Aldabra 1 where the common crept higher towards the vote and then had a nice break higher once the deal was approved. Please click on the Link to read the full analysis. ☞ Don’t sell your warrants.
FMD Changing Symbol to UGH December 7, 2007March 10, 2017 FMD I feel terrible for the paper losses I have caused some of you in FMD. But – for those who can afford the risk – it seems well worth hanging onto. I already have an awful lot, but could not resist buying a little more yesterday. No matter what, kids will still go to college and many of them may still need loans. FMD has really good underwriting expertise in this field. What’s more, student loan obligations survive bankruptcy – and most of FMD loans are cosigned by parents. My guru writes: There is very real potential that FMD will not be able to get a 4th quarter deal done on reasonable terms. What the bears don’t mention though, is that the financial markets are seized up, and that this is not an FMD-specific problem. Almost no Asset-Backed Securities deals are getting done right now (across many asset classes) – the terms being offered are ludicrous. If they can get a deal done on acceptable terms in December (acceptable definition open to interpretation), this would be a very, very, very positive sign. If they can’t get it done (and this is likely), then we’ll have to sit on our hands for a while and see how the markets firm up. The good news is that FMD has ample cash to sit idle for a while. Personally, I feel like I’ve been ridden hard and put away wet – but this too shall pass. BOREF Each Borealis share represents one Roche Bay share (because Borealis is sliced into 5 million shares and happens to own slightly more than 5 million Roche Bay shares). The RCHBF shares, albeit ultra-thinly traded, are currently $9 bid, $12 asked. (Which means someone is will to pay $9 to buy shares and someone else would sell a few at $12.) Meanwhile, BOREF is $6.50 bid, $7.25 asked. (Meaning that if you paid $7.25 to buy a share of BOREF, you would effectively get a $9 share of Roche Bay and get the rest of the company, like WheelTug™, for free.) Roche Bay’s development partner, AXI, just announced it had found $65 million in financing. Inch by inch, we move through the frozen tundra toward a warm, sunny retirement. QUOTE UNQUOTE Jim Reed: “For your quote list (from salon.com) . . . ‘I have to say this is one of the most arrogant, incompetent administrations I’ve ever seen or ever read about. They have failed the country.’ – Republican Sen. Chuck Hagel, speaking before the Council on Foreign Relations in New York, November 28, 2007 My thanks also to Randy Wolman, who shared with me a whole lot of his own favorite quotes, several of which I’ve lifted for rotation in the box at left. E.g.: “The press [should be] a watchdog. Not an attack dog. Not a lapdog. A watchdog. Now, a watchdog can’t be right all the time. He doesn’t bark only when he sees or smells something that’s dangerous. A good watchdog barks at things that are suspicious.” – Dan Rather “Keep the company of those who seek the truth, and run from those who have found it.” – Vaclav Havel
What Was THAT?! December 6, 2007March 10, 2017 SNEEZING LIKE A GUY (SORT OF) I am a loud sneezer. When I sneeze, people notice. Heads bolt upright, like gazelles on the savannah . . . what just happened? what might come next? . . . when in fact it was only me, sneezing. And what comes next, generally, is a second sneeze. And then it’s over. I type this on my Blackberry, waiting for my train, having just left the sushi place in the Food Mall in the basement of Union Station. (Obviously, Charles is not with me.). Moments ago, sitting, sipping my diet Coke, suddenly — ha-SHEEESH! The sushi chef’s head snapped up from his work. Passers-by swiveled. A transit cop reached for her gun. But then, almost as fast, shoulders relaxed and looks of amusement crossed people’s faces as they began to make sense of it. ‘It’s okay,’ I waved, smiling. ‘Everything’s all right. I’m a loud sneezer.’ To which I added gestures that said, in effect, ‘No need for applause; thank you very much; tell your friends.’ An attractive young couple standing at the sushi cash register smiled broadly. Anything is novel and noteworthy when you’re young and in love. The guy smiled broadly as he and his girl friend departed, California rolls to go. I could see we had made a momentary connection, so I said, ‘Hey, I’m sitting down. You should see me sneeze standing up. I stamp my foot and everything. It’s quite a show.’ ‘God bless you he said,’ almost a little too earnestly, leaving me to wonder whether he was playing along or a young missionary come to work for the Romney campaign. I figured I might find out on the trip to New York, but they were evidently headed someplace else.
Mozy December 5, 2007March 10, 2017 ANTI-SYMANTEC Gary: ‘Googling ‘Symantec sucks‘ (in quotes) gets you 4732 hits. It’s a useful trick.’ ☞ And by the time I tried it, ‘Symantec sucks’ was up to 4,840. Then again, Googling ‘AVG sucks‘ gets you 2,130 hits. So life in the Twenty-first Century is just plain hard. Emerson Schwartzkopf: ‘You didn’t try to use Symantec’s Norton Go Back, did you? I’ve managed to wipe out two hard-drives’ full of data using it. Or maybe you’ve dealt with Symantec’s Automatic Renewal efforts, where it keeps clicking away on your credit card for computers you sent down the recycling path years ago.’ Bill Spaced: ‘I agree with all of your readers [about Norton anti-virus]. Plus, there are a few great free anti-virus programs around, Comodo, for one. AVG is good, too. Symantec long ago lost its way. I think when Peter Norton was there, it was truly great. Now, not so much. But I wanted to tell you about a FREE online storage utility. It offers 50GB for free. Sign up is all that’s needed. The only limitation I’ve come across is it only allows uploads of about 2GB at a time. No doubt, somebody’s working on a utility to synchronize this service with your PC. It’s called Adrive. Google is also coming out with an online storage system. Stay tuned for that one. Surely, it will kill them all.’ John Perko: ‘I’ve been using a highly-regarded password protection program called Roboform for the last year. It’s excellent.’ ☞ Others wrote in to recommend Roboform, also – as they did Mozy.com, below. Les Rosenbaum: ‘I can recommend Mozy.com for your backup needs. After you install a program they provide it allows you to select folders and files to backup. Or it selects them for you. Or a combination of the two methods. They don’t really encourage you to backup your entire PC, only your data files. You get 2 gigabytes of storage for free and if that isn’t enough, unlimited storage for $4.95 per month. I have used Mozy on both a PC and a Mac. Now if the computers unexpectedly explode, I’ll be able to download my data onto a new one or, for a fee, have Mozy send me my data on DVDs. There are other similar services available online, but I’m content with Mozy.’ BUT I HOPE NOT ANTI-SEMITIC Paul Buddenhagen: ‘I was searching your site for the last ‘blank check’ company (found it – NAQ) and serendipitously came across The Jewish Parrot Joke. What with all the issues you’ve been writing about lately (energy, subprime loans, FMD, WM, etc) and with Chanukah here, maybe time to retell it? Made me laugh.’ ☞ Okay, every 10 years it gets an airing. But rather inflict it on anyone by reposting it, let’s make it an ‘opt-in’ joke. Anyone who wants to read it, click here.
Solutions December 4, 2007March 10, 2017 Tomorrow, some potentially good solutions to my on-line storage problems, and perhaps yours. Today, two even bigger problems to solve: AN ENERGY SOLUTION Here’s something interesting: In 1900, the American industry was able to deliver electricity with 6% efficiency. Meaning that 94% of the theoretical energy that could be derived from burning fuel was lost along the way. This being America, we got better at it every year. By the end of the Eisenhower administration, in 1959, efficiency had climbed to 32%. Two-thirds of the energy potential was still being wasted, but it was still an awful lot better than it had been, and the upward trend was inexorable. Except that then it stopped. As my friend Tom Casten asks – his Recycled Energy Development group recently raised $1.5 billion – ‘Can anyone name another industry still operating at 1959 efficiencies? Does any other industry throw away two thirds of its raw materials?’ We could be doing a lot better, he argued in the Albuquerque Journal last week, if only the Senate does not cave to the interests of the electric utilities as it completes work on its energy bill this month. The final bill needs to lift the impediments to energy recycling. . . .Energy recycling works by using energy that would normally be wasted. For instance, when manufacturers create energy-intensive products like metals and glass, they emit loads of waste heat, resulting in smokestack after smokestack of untapped power. Converting that heat into clean electricity or steam – that is, recycling it – would dramatically improve efficiency, simultaneously reducing our country’s energy prices and carbon footprint. Another form of energy recycling occurs when manufacturers and large institutions install small power plants on site that recycle excess heat to produce both electricity and steam. These facilities are typically more than twice as efficient as conventional power plants. Indeed, the potential in energy recycling is an order of magnitude beyond anything else being proposed in the global warming debate. Recycling waste energy could provide 200,000 megawatts of new, clean power, cutting our country’s greenhouse gas pollution by over 20 percent. That’s more progress on global warming than we’d achieve by taking every car in the country off the road. Moreover, energy recycling belies the claims of those who insist we can’t do anything about climate change without wrecking the economy. As energy efficiency rises, costs fall, resulting in a bigger bang for the energy consumer’s buck. Sound too good to be true? Tell that to Denmark, which produces more than 55 percent of its power capacity through energy recycling. The U.S. rate, by contrast, languishes in the single digits. As a result, we use more than twice as much energy to produce a dollar of GDP as Denmark does. If recycling energy is so efficient, why isn’t more being done? The answer is simple: government regulations protect monopoly utilities. In today’s energy system, power is generated mainly by large plants that state-regulated, regional utilities control. By law, these utilities are protected from competition and have no incentive to be efficient. Little wonder that the efficiency of the U.S. power industry has stagnated at about 33 percent since the 1950s. That means three units of fuel are required to produce one unit of power; the rest is wasted. In a free market, manufacturers could harness waste energy and reduce their dependence on inefficient utilities. Indeed, recycling waste energy is so efficient that it often produces more electricity than manufacturers need, allowing them to sell the excess to neighboring businesses. But in the real world, government regulators have largely insulated utilities from such threats. Manufacturers that recycle are discouraged or even prevented from selling their excess power. And, unlike utilities, they don’t have their capital investments guaranteed by the public. Amid such obstacles, Congress has a golden opportunity. Tucked away in the energy bill the House of Representatives passed earlier this year is a provision that would galvanize energy recycling. Among other things, it would give manufacturers incentives to recycle, allow energy recycling projects to qualify for federal grants, and create a federal standard to promote renewable energy initiatives such as energy recycling. That’s the good news. The bad news is the Senate’s energy bill includes no such provisions- and utilities are now pressuring Congress to drop energy recycling from the final legislation. With the scientific community certain the global warming threat is real and catastrophe imminent, Congress has no more excuses. [New Mexico Senators] Bingaman and Domenici, the chair and the ranking Republican on the Senate energy committee, should make sure energy recycling is included in the final energy bill. ☞ Know anyone in New Mexico who could call their Senators and put in a good word for energy recycling? A SUBPRIME SOLUTION Jeff H.: ‘My sister (50 yrs old) bought her first home (Brentwood, CA) with a sub-prime mortgage three years ago. The first three years were principal only and then it bumped to principal and interest. Her payments went from $2,200 to $3,700. Her modest income couldn’t cover the payments. We discussed for several months what she should do. Finally, she wrote a letter to Chase showing her current budget and explaining that if they didn’t help, she would be forced to abandon the house. Chase responded by converting the remainder of her mortgage to a fixed rate at 5.008. Her new payment is $2,700. This is good news for her. I hope others fare as well.’ ☞ A useful example for someone you know, perhaps – and a guidepost to the sort of wider solution that it will be a challenge, but important, to try to work out. (Treasury Secretary Paulson and Congress are working on it.) On the one hand, it makes perfect sense for those least able to pay to be charged the highest interest rates (because the risk to the lender is the greatest). On the other hand, it is a paradox that, in many cases, if only those struggling were charged the same rate as those not struggling, they could pay. However all this plays out, the lenders will clearly lose money. Multi-billion-dollar write-offs are already underway. The lenders’ money-losing choice, at least with loans like those to Jeff’s sister, is between losing part of the interest that had been anticipated – or potentially losing a lot more by sitting on a vacant home, accruing basic tax, utility and maintenance expenses (homes show better when the lawn is mowed and the electricity is on) and ultimately recouping only, say, two-thirds of the money they lent. If that. Years ago, I was able to buy a 3,200-square-foot waterfront luxury Miami condo from a bank that had loaned $250,000 against it in better times. Now, after months and months and months and months, the bank was just fed up. And not just with this particular condo. ‘Get that stuff off the books before year end!’ the order apparently had come down from headquarters. And so, when I offered $82,000, they took it. And netted, after all those vacant months’ taxes and condo fees and closing costs and whatever else, perhaps $50,000 on a $250,000 mortgage. This is an extreme example; but lenders really don’t want to foreclose on homes if they don’t have to.
Anti-Symantecism December 3, 2007January 6, 2017 WM Steve Baker: ‘If you liked Washington Mutual at higher prices don’t you have to absolutely love it now that it appears to have come off of a bottom? Also I note the Jan 2010 20 leaps are priced at $5.00 Bid $5.50 Asked. Now surely to God, after a year of new administration that couldn’t possibly be worse at managing the economy than this administration, things should be better. On top of the fact that they should at least be part if not mostly through working out the current problems.’ ☞ Well, it’s definitely an interesting speculation, as is the stock itself, which at recent prices is another plunge I’ve taken myself. But before plunging yourself, be sure to read another side to the story: Sophie Spence: ‘In case it hadn’t come to your attention: Executive Privilege Trumps Shareholder Interests. (Also: my husband’s company was acquired by Symantec. I feel your pain.)’ ANTI-SYMANTEC Alvin P. Bluthman: ‘I am dropping most of my Symantec products (all but their password management program, which I cannot replace anywhere else). The reason is more basic than any problems with their software – as an AOL subscriber, I get their chief competitor’s security program FREE. You should look into it.’ Nathan Johansen: ‘Love the comments on Norton, because while the initial premise behind what it was useful for was, well, actually useful, it’s since morphed into something that causes more problems and wastes more time and money than any actual virus or Internet attack that it’s supposed to prevent is likely to cause. That said, for the past four or so years, I’ve been using this free software called AVG for virus scanning and related concerns. It works. Simply. Unobtrusively. And for free. Did I mention it works? It kills me that so many people pay very good money to have the false sense of protection that comes from fancy packaged software, when the real deal, as is the case in many aspects of life, is available free of charge.’ Frank Alejano: ‘I’ve been running AVG’s free anti-virus software for a while now. It gets updated regularly, and I’ve yet to get hit by any sort of nastiness, so either it’s good or I’m too tame with my websurfing. This, combined with the also-free Ad-Aware, seems to get the job done.’ Katie Ferguson: ‘A reasonably good antivirus software (and FREE to boot) is AVG by Grisoft. You have the option of purchasing a more complex version, but I’ve used the free stuff for years and have been very satisfied. It automatically updates itself every day. Note that it is for home users only.’ Dick Theriault: ‘I didn’t bother responding to your anti-Symantec rant because (1) I knew others would and (2) having always had a Mac, I left Symantec in the polluted gutter where it belongs some years back. They used to make good stuff for both platforms, but the Mac software, especially SystemWorks, started doing actual damage to the machines instead of good maintenance. To most Mac users these days the words Norton and Symantec are reminiscent of [amusing expletive-dependent joke deleted]. There was a time when Symantec was a fine company and marketed good software. I reviewed much of their early product, and had a good, respectful relationship with the Mac team. Either power corrupted, or the ability to ‘snow-job’ the Windows world took over, but there’s no question they should have been put out of business years ago. Delighted to see some Windows users call a spade a spade.’ ☞ My own Symantec complaints aren’t even about the products, as such. A month ago, I described my frustration at getting an e-mail telling me my annual virus protection – for a computer I no longer use – was being automatically renewed unless I clicked a link . . . and then clicked the link only to be asked for some 25-digit code they didn’t need, but that someone must have realized most people wouldn’t have, so that they can’t cancel. But what drove me over the edge last week was the Norton 360 on-line storage service. It’s a great idea and something I badly wanted: it would back up all the files I designated and store them in a mountain vault someplace far from fire or flood; and then keep updating any files that I changed. The VERY short form of my misery is that the standard 2 gigabytes of storage wasn’t enough so I bought 30 gigabytes more – as easy as a couple of clicks – at which point you might think, my credit card having been charged, the ‘available storage’ in my account would show 32GB instead of 2GB. But oh, how wrong – how wildly, excruciatingly, absurdly, time-wastingly, want-to-scream wrong – you would be.