Year: 2007

‘The modern conservative is engaged in one of man’s oldest exercises in moral philosophy: that is, the search for a superior moral justification for selfishness.’
— John Kenneth Galbraith

Ouch. But rich conservatives who want ever lower taxes must occasionally have a pang of doubt.

Well, some of them must.

No?

THE SENATOR FROM VERMONT DRAWS A CONTRAST

In this clip, a Bush nominee is asked whether he thinks it makes sense to repeal the estate tax on the Walton family, which would save them $30 billion, while cutting back on healthcare for kids.*

As I have been saying for some time now, it is a grand time to be rich and powerful in America.

*The Senator notes that 18% of American kids live in poverty, ‘the highest rate in the world.’ Presumably, he meant the industrialized world.

SAD TIMES FOR THE WALL STREET JOURNAL

From Bill Press‘s latest column:

Lured by the irresistible bait of $5 billion, the Bancroft family finally agreed to sell the Wall Street Journal to right-wing robber baron Rupert Murdoch. . . .

Will Murdoch be able to resist the temptation to push his political views off its editorial page and into the news stories? No way. Look at his track record. . . . He took the New York Post, once the Big Apple’s most liberal paper, and turned it into a far-right megaphone. He turned the mighty London Times into another British tabloid.

With every property he has purchased, Murdoch has pledged to run a “hands-off” operation – and broken that pledge within weeks. No doubt, sooner or later, he’ll do the same thing with the Journal and the new Fox Business Channel. It’s in his genes. He can’t help himself. . . .

And what does Murdoch do with all those media properties? He builds political support for his conservative politics. During the run-up to the Iraq war, for example, all 175 newspapers around the globe controlled by Murdoch enthusiastically supported an invasion of Iraq. Every last one of them. Coincidence? Hardly. But it shows the power Murdoch has and is not afraid to use to further his right-wing brand of politics.

SiCKO

The Bourne Ultimatum has opened at 8.9 stars, even as the Simpsons has slipped to 8.3. SiCKO holds firm at 8.5. (Harry Potter: 7.7.)

HAPNW

Andy Frank: ‘Andy, I know there’s no shooting fish in a barrel in the stock market, but aren’t the HAPC warrants at least pretty close? The warrants to buy HAPN at $5 are now selling at 29 cents with the underlying stock selling at $5.81. Since September 26 has now been set as the date to vote on the acquisition of InfuSystem, and since these votes virtually always pass, wouldn’t the warrants likely be worth more than 0.81 (or at least about that) once that happens? I know the warrants become worthless if the acquisition doesn’t go through, so this should only be with money one can afford to lose; but as the odds of this going through are likely greater than 90% while the warrants are priced as if it were a 1 in 3 chance – isn’t this a great bet? If I’m missing something here, please correct me.’

☞ As regards the bullet-ridden fish, you’re right. We’ve covered that. And, yes, it would appear the deal is likely to go through. But note:

• Warrant holders must wait four months after the deal closes to exercise. Who knows where the stock might then be?

• If the deal doesn’t go through, HAPN shareholders would get their $5 back sometime next year. (Or at least I think that’s how it works.) So maybe come September 26 the market has tanked and holders would prefer the cash to buy something else.

• I have learned through long, sad experience – starting in 1968 with a company called Nationwide Nursing Homes (which was in the steel business, and whose shares I was able to buy at $8 at the very same time as they were trading publicly at $22, because my shares could not be sold right away – and had become worthless once I could) – when things seem unreasonably cheap, there is quite often a reason.

Then again, sometimes they are just cheap. I hope this is one of those times. Because, ordinarily, a 44-month warrant on a $5.75 stock is worth a heck of a lot more than 29 cents.

FOREVER STAMPS

Mark Lefler: ‘Your ‘forever stamp’ program is a hit – 1.2 billion sold since April and climbing! Click here.’

☞ Well, it’s hardly ‘my’ program – it’s inconceivable to me that many others hadn’t been pushing the same idea for decades. But then, it’s also inconceivable to me that the Postal Service wouldn’t just make all first-class stamps ‘forever’ stamps, whatever their price might be in any given year. Not only would this be so obviously customer-friendly, it would also spare the Postal Service the idiotic chore of returning a letter for an additional 2 cents.

People could hoard forever stamps, if they wanted to beat the price hikes. But that would mean, in effect, their lending money to the Postal Service at 0% above the inflation rate – a cost of funds the Postal Service should accept with enthusiasm.

My question: why would anyone buying first-class stamps not buy the ‘forever’ variety? (Thus far, most don’t.) And my follow up: why would the Postal Service want them to buy anything but?

GABBROIC DYKES

So the joint venture partner of Borealis subsidiary Roche Bay says it has completed 8 of its planned 52 drill holes and that:

The Roche Bay, iron formation deposits are interpreted to be steeply dipping isoclinally folded iron formation flanked by calc-silicate metasediments. Geologic analysis suggested the eastern flank of the “C” Zone has been intruded by late stage gabbroic dykes. Accordingly zone 2 is likely part of zone 1 which has been separated by a gabbroic dyke. Depending on the thickness of the separated iron formation units and amount and thickness of the intercalated dykes, zone 2 is also as a significant iron ore target. More detailed mapping and geophysics is required to better define the more promising target areas before more systematic drilling is undertaken.

☞ If you understand even one sentence of that, you are a better man than I am. But I’m not selling my Borealis.

TECHNICAL ANALYSIS

(Which I dissed Friday.) George Hamlett: ‘Boy, are you going to hear it from the technicians. I’ve always found technical analysis very useful in timing both buys and sells. For what it’s worth, I sold FMD in mid-February when its chart got weak – at $50. I haven’t followed it since. I use technical trading signals to determine entrance and exit points for stocks – but not to choose which ones to follow. I don’t do the charts myself. For the past couple of years I’ve been using MarketEdge, and their signals have worked well for me. No, it hasn’t doubled my net worth. That requires outright speculation. It’s just a question, basically, of watching the effects of money flows to shorten the odds of owning appreciating stocks, and lengthen the odds of owning downers. Before I did this, I got smoked pretty good in the tech wreck, and I started to pay more attention after that. I haven’t joined any of the value-growth-smallcap-largecap-tech- fundamental ONLY churches. I’m a committed pragmatist. No Kool-Aid around here. This year I’m up about 20%, but that includes a generous portion of Gold ETF as well as some small speculations.’

☞ I think one could have avoided the tech wreck even with old-fashioned fundamental analysis and common sense. But I do know smart people who keep an eye on the charts as one more input in informing their decisions.

BACK PAIN

Jim M: ‘Charles should run (not walk) to egoscue.com. The technique is all about biomechanics, and correcting musculoskeletal problems that you never knew you had. One office visit (and regular application of some very simple stretching exercises) resolved five years of chronic neck and jaw pain for my fiancée.’

RUNNING MYM FULL SCREEN

Tony Fonseca: ‘Here‘s a site I believe will be useful to MYM 12 users. It lets you download DOSBox Ver. 0.71. With it, and my Windows Vista Home Premium Edition OS and 19″ monitor, I get full-screen horizontally and about 1″ margin on the top and bottom.’

FMD

James Troutman: ‘Just passing this along FYI, in case you didn’t see it.’

☞ Not to say he will necessarily be wrong; but this analyst seems to know (and care) nothing about the student loan business generally or FMD’s special position in it specifically – only about the shape of its stock chart. Technical analysis, as this is called, has its adherents. But to me, it’s only a half step up from astrology (though, granted, even half a step is something).

GLDD

Steve MacArthur: ‘Here is a link about dredging – ‘$342 million set aside for newest Soo Lock in House Bill.’ ‘

WASHINGTON – The House overwhelmingly passed a $20 billion water projects bill Wednesday night despite a promised veto by President Bush, who complains the bill is laden with costly pet projects and shifts new costs onto the government.

Within the wide-ranging bill, $342 million was earmarked for the building of a new super lock in the Sault. The projected Soo Lock would be at least 110 feet wide and 1,200 feet long and replace the two northern locks. The mega lock would improve access for large freighters.

Shippers say that if the existing Poe Lock had to close for any reason, it would stop most Great Lakes shipping trade, as only the Poe Lock can handle the 1,000 feet-long freighters.

Funding from the bill also targets the much needed dredging throughout the Great Lakes. The Army Corps of Engineers would get funds to step up navigational dredging at many key points. Low water levels has resulted in Great Lakes freighters being forced to carry lighter loads, which reduces the money they make for moving freight. Glen Nekvasil, vice president of the Lake Carriers Association, said that dredging is ‘critically important’ to the freighter industry and that dredging of the lakes has been ‘underfunded for decades.’

Shepherded by Rep. James Oberstar, D-Minn., chairman of the House Transportation and Infrastructure Committee, the bill was seven years in the making and finally passed the House on a 381-40 vote after it was agreed upon by House-Senate negotiators. He said he expected Congress would quickly override any veto by the president.

‘There is urgent, pent-up demand to address the nation’s water resources needs,’ Oberstar said. ‘Divide the cost by the number of years that have passed since we last passed this critical legislation, and the cost is understandable.’

Earlier Wednesday, administration officials said Bush will veto the bill if it isn’t pared down. ‘Indeed, it seems a $14 billion Senate bill went into a conference with the House’s $15 billion bill and somehow a bill emerged costing approximately $20 billion,’ complained White House budget director Rob Portman and Assistant Army Secretary John Paul Woodley Jr.

This year’s bill includes some $3.5 billion for Katrina-damaged Louisiana, plus more than $2 billion for projects in California and $2 billion for Florida, mostly for restoring the Everglades. Another $1.95 billion is included for seven new locks on the upper Mississippi and Illinois rivers and $1.7 billion for repairing the region’s ecology.

In May, the Senate approved its version on a 91-4 vote. The House passed a similar bill in April on a 394-25 vote. Even if a final bill becomes law, the money must be appropriated later.

☞ Urgent, pent-up demand can’t hurt.

CHARLES’ MRI

LJ Kutten: ‘My insurance company is always denying my claims. Numbers 1-3, below, always fix that:

1. Read your policy carefully and follow its exact terms.
2. Appeal the decision internally. Normally this works.
3. If #2 fails, file a complaint with your state’s insurance commissioner.

Also:

4. Buy a copy of Make Them Pay by Rhonda Orin.
5. Next time, have the hospital/doctor (not Charles’s assistant) call for the approval. There is always a way around the waiting time. You just need to make the case in appropriate medical terminology.’

Gray Chang: ‘Excruciating, intractable back pain is sometimes triggered by emotional conditions. Did anything stressful happen to Charles when the back pain started, such as the death of a parent, or problems at work? Before he agrees to surgery, please have him take a look at the book, Healing Back Pain by John Sarno, MD. Just go to amazon.com and see what the reviewers have to say about the book. A member of my family was helped tremendously by it.’

☞ Life with me can be a little stressful. I’ll get him the book.

Gary Diehl: ‘Clearly Charles needs to print out and carry a SiCKO card.’ ‘

SiCKO

Joel Margolis: ‘Too bad you guys don’t live in Canada. The average for MRI’s in Canada is over 10 weeks (not a measly three days). Of course, if you lived in Canada you could always find a physician in the US who could provide an MRI more quickly.’

Thor: ‘Michael Moore suggests we be more like Canada. A filmmaker I know made a bunch of shorts that I think you should watch – here. The testimonies in this and his other films are astonishing. Healthcare in the U.S. may be messy but socialized/single-payer systems are a lot messier.’

☞ If Canada decided to spend anywhere close to the same proportion of its GDP on health care that we do – and if it decided to allow the rich to pay to fly “first class’ on elective stuff(at a nice high rate that helped subsidize everyone in the back of the plane) – it would not take 10 weeks to get an MRI.

I think this is a pretty crucial point. Sure, Canada’s not perfect. But they spend half what we do. Imagine if they were rich enough to spend as much as we do. That could go a long way, no?

JEREMY GRANTHAM

Prasanth Manthena: ‘I don’t know if you have the time or inclination to comment on Jeremy Grantham’s latest newsletter (available with free registration).  His take on a global asset bubble is interesting.  I think it came out before the recent correction; but considering that the ‘correction’ only takes us back to levels seen back in May, I think his very bearish outlook remains pertinent.  I’ve followed your advice and Less Antman’s ever since I got a real salary (I’ve made a lot of money going 50/50 domestic/international while dollar cost averaging along the way), but given the fact that I don’t see anything out there that really can be considered a ‘value’ buy – and the dependence of this economy on consumers who now have a net NEGATIVE savings rate – I’ve slowly moved what was a nearly 100% equity asset allocation into about a 35% split btw muni’s/treasuries/international bonds.  I can’t fully describe the ludicrousness of a housing market that forms the backbone of this consumer economy: I make a ridiculous amount of money and I barely could afford a starter home here in LA if I were dumb enough to buy right now.”

☞ Jeremy Grantham is as smart as they come.  Hope this doesn’t ruin your weekend.

BOREF

In Paris, too, they’re intrigued by the potential for WheelTug. Of course, that and $972 will get you a small room at the Ritz. But for what it’s worth, ‘cliquez ici, s’il vous plait.’

ALDABRA 2

At Ameritrade, the on-line symbol for the warrants is AII+. But remember (in case last week didn’t make it obvious): the stock market is risky. And these warrants, even if a good speculation, are riskier still. I have high hopes.

THE MARKET

The best things the market has going for it are that (a) it’s cheaper than it was a week ago; (b) it’s denominated in dollars, which makes it cheaper still to Europeans who’ve watched the value of our currency sink by about a third since 2001; (c) a change in national direction looms, 18 months hence; (d) China, India, Eastern Europe, Russia – for so long stunted – are fast adding to the power of the global economy; (e) technology races on, enhancing productivity that, in turn, enhances prosperity.

On the other hand, we have an awful lot of chickens potentially coming home to roost.

• Our National Debt – not quite $1 trillion when Ronald Reagan took over – will hit $9 trillion in a few weeks. (Where it was equivalent to around 32.5% of our Gross Domestic Economy back then, it is equivalent to around 65% now. Double.)

• The projected costs of Medicare and Medicaid, and the structural problems our health care system generally, are a huge drain on our future.

• Many of our kids are not leaving school equipped to compete with their counterparts abroad.

• The housing bust, and a general credit tightening, may feed on itself and lead
  to really widespread pain.

I don’t profess to know where the market is headed. If it’s making you really nervous, I’d suggest selling enough shares to make you less so – for three reasons. First, being nervous is not good for your health. Second, if you’re nervous now, you might get really nuts if things got worse, which could lead you to bail out at the bottom (wherever that will be), as so many investors do. Third, it might turn out you were nervous for good reason.

PURPLE AMERICA

This is long . . . but if you follow politics, I think you’ll find it interesting – and if you’re a Democrat, I think you’ll find it heartening. It’s from the August 13 issue of THE NATION.

It begins:

Purple America
Bob Moser
North Wilkesboro, North Carolina

What on God’s green earth has gotten into the Wilkes County Democrats? Here it is, the first pretty April Saturday of a snowy, blowy spring. There’s yards to mow, balls to toss, plants to plant, Blue Ridge Mountains to hike – all of which you’d think would be mighty tempting on Democratic convention day in a place where Republicans have a damn near two-to-one edge.

‘Welcome to red-hot Republican territory,’ says Dick Sloop, a career-military retiree turned antiwar protester who’s the new county Democratic chair. ‘We’ve been like the homeless around here: silent and invisible. The best we ever did in my lifetime, we had two Democrats once on a five-seat county commission.’ Even here in western North Carolina, where Republicans have proliferated since the Civil War (when the woods were full of Union sympathizers rather than pro-lifers), Wilkes County – Bible-thumping, economically slumping – has stood out for its fire-and-brimstone conservatism. It’s been a stiff challenge to find folks willing to run against the Republicans. Hell, it’s been rare to hear anybody publicly admit to being a Democrat. ‘You’ve got a lot of people in this county who probably couldn’t tell you if they’ve ever met one,’ Sloop says.

But in a scene playing out this year all across ‘red America,’ from these lush hills to the craggy outcroppings of the Mountain West, previously unfathomable crowds of Democrats are streaming up the steps of the old county courthouse, past bobbing blue balloons and Welcome Democrats! signs. They’re hopping mad about the national state of things but simultaneously giddy with a new-found hope – finally! – for their party . . .

The single oddest thing about [Howard Dean’s] fifty-state strategy is surely the adjective often attached to it: “controversial.” . . .

HOW TO DEFLECT AN ASTEROID – AND OTHER HOPEFUL THOUGHTS

Freeman Dyson is one of those intellectual giants you’ve either heard about – like Buckminster Fuller or Robert Oppenheimer – or, well, you now have.

His remarkable daughter, Esther, grew up in Princeton and would occasionally run into family friend Albert Einstein. You may know her from her newsletter, books, or Huffington Post posts. This Fall, for reasons she explained in Wednesday’s Wall Street Journal, you will be able to access her medical records – and her genome – on the Internet.

And I haven’t mentioned Freeman Dyson’s father, who was a composer, or the son who is a historian of technology, or his ideas for colonizing space.

Michael Axelrod was kind enough to send along this interview, which he calls ‘a must read for every curious person about the way the universe works’ (which could be you, but The Simpsons opens today, and I know it’s hard to read while standing in line.)

If you do read the Dyson interview, you’ll find at the very end the right way to deflect an asteroid. (And here you were thinking we’d just nuke it.)

And then – if The Simpsons is sold out, or after you do see it – you might want to read Professor Dyson’s ‘Our Biotech Future,’ in last week’s New York Review of Books. (‘I predict that the domestication of biotechnology will dominate our lives during the next fifty years at least as much as the domestication of computers has dominated our lives during the previous fifty years.’)

ONE OTHER THING TO DO THIS WEEKEND

Have you seen SiCKO? In early voting (what, were these all the production crew of the movie plus the studio employees?), The Simpson eclipses it with nine stars. But SiCKO still beats out everything else – and, unlike, The Simpsons, is subversive in a more practical way. (If it led to a more rational health care system, it could ultimately, for example, save your life, or save a loved one from bankruptcy.)

ALDABRA 2

Jim Skinnell: ‘Oh, how wrong you were! Godfather 1 and 2 were both masterpieces – 3 was the weak link. In fact, 2 has been touted by some as the single best sequel ever, and others as being better than the 1st.’

Mike Wallin: ‘They both won best picture Oscars.’

☞ You’re right! I was confused! This can only bode well for Aldabra 2 warrants.

(Several of you asked me for the symbol. The underlying stock is AII; on Yahoo Finance, the warrants are AII-WT. But on Ameritrade, et al, you may need to place your order with a human – this new security does not seem to be up on every quote system.)

CALIFORNIA ENERGY CRISIS

Jayson Smith: ‘As a Californian, the most upsetting part of the state’s energy crisis was the pooh-poohing of the conservation efforts we undertook to try to undercut the insane rate hikes. As consumers, that was the only thing we could do – try to use less and beg the government to help us. Governor Gray Davis did what he could (and paid for it with his political career – the $10 billion budget hole was almost exclusively due to measures taken to save us from the energy crisis), but Bush and Cheney told us to ‘go Cheney ourselves’. So it appears at the same time that Cheney was saying it’s all our fault for not building enough supply, he’s suppressing evidence that companies are artificially removing supply (Cheney Suppressed Evidence in California Energy Crisis). Here‘s an old CNN archive article detailing Davis’s reaction to Cheney’s comments.’

WHAT THE DEMS SHOULD DO?

We need to take the gloves off, says this Philadelphia Inquirer op-ed.

WHY THE DEMS MAY WIN

Kids are coming our way, says this report on the Millennial Generation.

The sleeper development that was widely overlooked in the 2006 election was the 22-percentage-point margin of support given to Democrats by 18-29 year-olds, almost all of them members of the up-and-coming Millennial Generation. This was just the latest piece of evidence about a generation that has been trending progressive and increasingly voting Democratic in large numbers. But a comprehensive review of available data from a range of polls and surveys in recent years shows just how fortuitous this generation is for progressives. Millennials are emerging as an enormous asset for progressives going forward – as enormous as the sheer size of this, the largest American generation ever. . . .

☞ Young at heart? Vote Democrat.

FLIGHT INFO – GREAT TIP!

Bob Fyfe: ‘Simply send a text message or e-mail to info@ezflt.com with the airline code and flight number and you receive back the status of the flight. It’s a great help when you are picking someone up at the airport . . .’

☞ . . . or when you’re going to the airport yourself. I just sent ezflt an email with AA 1197 in the subject line – nothing more – and moments later got back:

From: ATL
Sch: Jul 24 8:10am
Act: Jul 24 8:07am
Gt: T9
To: DFW
Sch: Jul 24 9:20am
Act: Jul 24 9:16am
Gt: C27/C
Bag Clm: C26

They say it works with all U.S. carriers except Jet Blue and Southwest (‘coming soon’) and major overseas carriers. As you know, American = AA, Delta = DL, Continental = CO, United = UA, Northwest = NW, and so on.

ANOTHER SPAC

Regular readers of this column know about SPACs – Special Purpose Acquisition Companies (also known as ‘blank check companies’) – formed to make an acquisition even before the company has identified a target.

Aldabra was such a SPAC. It went on to acquire Great Lakes Dredge & Dock, and the Aldabra warrants, which became Great Lakes warrants, did well for us (the drop in GLDD stock over the last couple of days to $7.79 notwithstanding) (well, withstanding a little, but this much drop I can withstand).

Some of us have bought warrants in another SPAC, as well – symbol HAPNW – which, like the first bet, is a complete speculation. I remain hopeful. Better odds, I hope, than a lottery ticket.

And now the Aldabra folks are back with Aldabra 2 – literally, that’s its name – which leads immediately to your thoughts about Godfather 2 (wasn’t it only #1 and #3 that were masterpieces?), but which seemed worth my mentioning anyway. I bought a bunch last week at $1.43. Yesterday, the warrant closed at $1.47.

The structure with this one is similar to the original, except that each ‘unit‘ carries with it one warrant instead of two (which may be why the warrants cost about double what they did the first time) . . . that allows you to buy the stock at $7.50 (instead of $5) . . . and that can be the subject of a forced conversion if the underlying stock trades at $14.50 (instead $8.50).

So if it doesn’t work out, you lose $1.43 (or whatever you paid for the warrants), and if it does, the warrants go to about $7 (because with the stock at $14.50, if it ever gets there, the right to buy it at $7.50 is worth about $7).

As before, you can’t exercise the warrants right away. But, as before, you have years before the warrants expire. (About four years in this case.)

So basically, this is a bet that the same folks who did okay the first time will find a way to do okay the second time. If they don’t, you lose everything. If they do, you roughly quintuple your money (before long-term capital gains tax if held more than a year and a day).