Read This January 31, 2008March 10, 2017 But first . . . From the Borowitz Report: Nader Warns Bloomberg Not to Run Only Room for One Egomaniac in Race, Activist Says Not so fast. That was the message delivered today to New York Mayor Michael Bloomberg by consumer activist Ralph Nader, who warned Mr. Bloomberg, ‘If some egomaniac is going to jump in and screw up this election, it’s going to be me.’ Mr. Nader established an exploratory committee for a presidential bid today to let Mr. Bloomberg know that there was ‘only room for one self-absorbed gas-bag in the 2008 race.’ At a press conference in Washington, Mr. Nader said that voters who are looking for someone to spoil the 2008 election should be suspicious of Mr. Bloomberg’s motives: ‘Michael Bloomberg has a track record of winning elections, not screwing them up.’ In contrast, Mr. Nader said, ‘I know how hard it is to wreck an election, and I am prepared to put in the long hours necessary to mess this one up big-time.’ . . . And now READ THIS ‘If Americans were to reduce meat consumption by just 20 percent it would be as if we all switched from a standard sedan to the ultra-efficient Prius.’ That and other assertions in this important New York Times story give us all the more reason to tilt our consumption back toward pasta, pizza, and eggplant parmesan. (Okay, and egg white omelets, salads, tomato and mozzarella with basil and extra virgin olive oil, a little salt and pepper . . . mmm, mmm!) It’s amazing the impact of a hamburger on our environment. And it’s probably not that great for your arteries, either. It’s time we all read this story and found our own happy medium. For some, this might mean replacing beef with chicken much of the time (it takes 7 pounds of grain to make a pound of beef, but only 3 pounds of grain to make a pound of chicken). For others, it might mean replacing chicken with ‘grain’ much of the time (it rather obviously takes just 1 pound of grain to make a pound of grain) – namely, all those dread carbohydrates like bread and pasta that I avoid. For still others, it might mean eating less (haven’t you been telling everybody you need to lose five pounds?). Anyway, if you’re not already a vegan (and I’m not), this is one of the most interesting articles you’ll read all year. (For example: coming soon, it says: ‘meat without feet.’) Seriously. Click this.
One Thin Dime January 30, 2008January 5, 2017 HAIR CLUB FOR MICE As you may have seen on the Today Show yesterday, or read elsewhere, we may now be just a few years from being able to use stem cells to grow new hair follicles. It already works on mice; there is a large economic incentive to move full speed ahead with human trials. What this means is that the photo, top left – now about 15 years out of date – will by 2013 or so, with some luck, be about right. THE FALLING DOLLAR I went for my five-mile ‘power walk’ Sunday but stopped to ‘stretch’ against a nearby parking meter. This involves putting one’s hands on the top of the meter, planting one’s feet far enough back so that you form a sort of right triangle with the meter and the sidewalk; and, of necessity, burying one’s head between one’s outstretched arms and looking down. Got the picture? So there I am looking down at the sidewalk, thinking, ‘I really should stretch more, but it’s so boring and stupid,’ and what do I see but a dime. Well, even so, it was just a dime, and, doing a little instinctive calculus (sloth divided by greed), I am a little embarrassed to say I did not pick it up. I finished my 30 seconds of stretching (isn’t that enough?), clicked PLAY on my iPhone, and took off briskly through the streets of Eighteenth Century New York listening to Ron Chernow’s wonderful biography of Alexander Hamilton. That was Sunday. Yesterday, I went for the same walk, found myself at the same parking meter in the same stance – and the dime was still there. Do you see what I’m saying? No one else had picked it up, either! First pennies, then nickels, now dimes – will quarters (I still stoop for quarters) soon be next? What kind of currency have we? This is embarrassing! THE UNDERWATER iPOD If you power swim instead of power walk – but how could you? It’s so boring without something to listen to or some way to talk on the phone or read the paper as on a stationary bike – then this device might change your life. (Thanks, Jesse B.) THE $9,000 MASSAGE David Poneman: ‘You miss a crucial step in this psychological device you suggest to encourage frugality: Annuitize the annual obligation that comes with a life as a caffeine fiend. TIPS are the only truly prudent investment for retirees in these treacherous times, and they pay about 2%. So in order to support your Starbucks habit, you will need an additional $100,000 in your retirement nest egg to throw off that $2,000 a year.’ ☞ An annuity throwing off an inflation-adjusted $2,000 for life would not cost quite $100,000 once you reach retirement age. But you make a good point. Not only does the $4.50 five times a week mocha grande work out to be $2,000 a year (with tip) – which you have to earn $3,000 before taxes to produce. Once your earning years are over, you better have saved up several tens of thousands of dollars just to throw off enough cash to support this one expense. Jeff Rasmussen: ‘You stated that a $774,000 nest egg equals a $56,000 annual payout, which by my calculations works out to a 7.2% payout; and a $1,000,000 nest egg equals a $78,000 annual payout – 7.8%. Conventional wisdom says take no more than a 4.0% annual payout if you want your nest egg to last 30 years. How are you able to almost double the payout for a 30 year period?’ ☞ Good question. I was assuming your remaining principal would continue to grow at 6% after inflation and taxes (inside a Roth IRA, say) even after you had begun withdrawals. Using that assumption, the money lasts 30 years. To be on the safe side, it’s probably wiser to assume just 3% growth after inflation and taxes, not 6%. But I was trying to make “frugality” appear as attractive as I could (hey, anything to get folks to take their medicine) . . . without falling into the abyss of shameless trickery by (as is often done in these situations) ignoring inflation and taxes. (‘If you invest $5,000 a year for 40 years at 11%, you will have $2.9 million, which could then provide $333,000 a year for 30 years!’ – which is true if you can earn 11% after taxes and inflation, but you can’t.) So my example was on the aggressive side (in a good cause) but not, I think, over the edge.
If I Were a Rich Man – AII dil AII dil AII dil AII dil AII dil AII dil AII dil d’AII All Day Long I'd Learn a Little Dutch . . . Let It Be, Oh Let It Be, a Tie January 29, 2008March 10, 2017 Yesterday, we talked about getting rich, or at least rich-ish. Today, as promised: RICHISTAN Here’s a snippet from an interesting story on our ever widening income inequality (thanks, Alan): Here’s what Richistan looks like: Lower Richistan. About 7.5 million households worth between $1 million to $10 million. However, “many Richistanis say that Lower Richistanis don’t even belong in their country. They refer to the Lowers as ‘affluent,’ the ultimate Richistani insult,” Frank writes. Middle Richistan. More than two million Americans have a net worth between $10 million and $100 million. This may also include many in Thomas Stanley’s “The Millionaire Mind” published in 2000. Their average net worth was $9.2 million, but inflation may protect them from that snarky “affluent” insult. Upper Richistan. Frank says there are “thousands” with $100 million to $1 billion. Sadly, the Uppers recently increased with the firings of several greedy CEOs from Citi, Bear, Merrill and Countrywide. Billionaireville. Forbes listed only 13 in 1985. By 2007, more than 400. Since 1995 their wealth has more than doubled to over a trillion. Another source says there are more than 1,000 American billionaires, many under the radar. ☞ It’s great to be rich, if earned honestly, as it generally is. (And thin, if you’re not anorexic, as you’re generally not.) But tell me again why we have skewed the tax code ever so much more favorably, these last seven years, toward the very, very wealthy? DON’T SELL YOUR AII WARRANTS They are speculative, to be sure – and I much prefer having bought them at $1.47 and $1.18 this summer than at $2.45 yesterday. But, having sold a few at $3.20 several weeks ago (well, they were in a tax-sheltered account and I couldn’t resist) – I yesterday bought them back. Because the real goal here, if things work out, is not $3.20, but $7-and-change sometime between now and early 2011. Nearly a triple from here. The warrants give us the right to buy the stock at $7.50 a share through early 2011. If the underlying stock is $7.50 or lower when the warrants expire, they will expire worthless. But the stock closed last night at $9.59, and a recent research report by Ladenburg Thalmann suggested a fairer price might be $13.50. At that price, the warrants would have an intrinsic value of $6 ($13.50 minus $7.50). And if at sometime in the next three years the stock goes even higher, then the company would likely “force conversion” of the warrants, as it is allowed to do once the stock stays above $14.50 for 20 days, limiting our selling price to a little more than $7 (however much above $14.50 minus $7.50). The warrants will also expire worthless if the underlying company, Aldabra 2, is unable to conclude a successful acquisition. But it seems on the verge of closing its deal to acquire the paper products division of Boise Cascade. So could Ladenburg be on target in its assessment? Haven’t they heard of the looming global recession? While anything is possible, one knowledgeable observer (with a strong vested interest, so beware wishful thinking) suggests the Ladenburg $13.50 valuation may actually be low: * For 2008, Ladenburg has assumed an EBITDA of $336 million which was based on RISI’s May 2007 price projections for various paper grades. Subsequently, in December, RISI updated these price projections. If these hold true, Aldabra’s 2008 EBITDA would be meaningfully higher. It’s important to note that all the UFS (uncoated free sheet paper) producers just announced a $60/ton price increase which (if fully implemented) will result in prices being even higher than RISI’s most recent forecast. This company has the potential to be a monster free cash flow generator. * On a 2008 EV/EBITDA basis and assuming the old 2008 EBITDA projection of $336 million, Aldabra is trading with a multiple of just 5.6x compared to the mean of Ladenburg’s comparables at 8.6x. And Aldabra’s multiple should be further reduced by an additional $150 million in net present value of future tax savings due to the step-up in asset values as a result of the acquisition. This should reduce the multiple by an additional 0.4-0.5x (i.e., to 5.2x or so) compared to comparable paper companies. * One of the primary risks highlighted in the report is deal financing. However, Aldabra has already received a commitment from Goldman and Lehman to underwrite $908 million of bank financing required to close the Boise paper acquisition. * The report mentions the OfficeMax contract as a material risk, but misses two major points: 1) the contract runs through 2012 (and then, if not renewed, peters out over 4 years); 2) OfficeMax isn’t an end-user, which means that Boise would simply sell to those who are in some other way. The industry is running at 95+% of capacity, so end-users will get Boise paper one way or another. * Finally, Ladenburg writes quite a bit about Boise’s newsprint exposure. But newsprint is approximately 8% of Boise’s business and contributed approximately 1% to trailing EBITDA. With the recently announced price increases by Abitibi Paper, it’s actually a business with upside. All this said, a monster recession could obviously weaken the demand for paper, pricing, earnings, capacity utilization, and all the rest. So this is truly a speculation, and you could truly lose every penny. LEARNING DUTCH Keith Larson: “That HEMA page is a cute, fast-paced version of a very slow-paced art film by two Swiss artists. It’s called The Way Things Go (Der Lauf der Dinge), and there’s a Wikipedia page for the film here.” THE FLORIDA PRIMARY Oh, please, PLEASE let it be a tie (or close to a tie), so it won’t actually matter that Florida’s delegates don’t count.
Go Dutch, Save Money January 28, 2008March 10, 2017 Note the easy way we’ve added – at left – to set up RSS feeds for this page with Yahoo, Google, AOL, and the rest. If you prefer a free daily email of the actual column you can still use the qPage button at the bottom of this page. LEARNING DUTCH It’s not really that hard. Dutch words like ‘ghettoblaster’ and ‘confetti’ are easy. Dutch words like ‘broodrooster’ (breadroaster, which is to say ‘toaster’) are fun. A ‘flueitketel’ whistles when the water boils. ‘Handzeep’ is handsoap. Charles’ and my favorite Dutch word – not found on this site, but worth mentioning – is the word for what the waiter brings at the end of your dinner – ‘de rekening.’ But actually (thanks, Peter, for forwarding this), this is a page for a Dutch department store chain. Don’t scroll down – just wait a couple of seconds and see what happens. BUDGET TRICK Here’s a little trick that may help you – voluntarily – be more frugal, thereby to build more wealth as you get older. (If you’re already older, pass this on to your wards.) To wit: Whenever you spend money on something optional – not the mortgage, but a mocha grande, say – do the math. Annualize it. It’s not a $4.50 coffee, it’s a $2,000 coffee because you go for these about five times a week = $25 with the tip times 52 weeks = $1,300 which is all you net, after deductions, from a $2,000 paycheck. It’s not a $125 massage, it’s a $9,000 massage, because you get one almost every week = $6,000 which is what you have left after earning $9,000. This is not to say you shouldn’t have the mocha grande or the massage; it’s just to give you the big picture, which might make you want to not have it, and to bring a thermos of coffee from home, or take a really nice hot bubble bath, instead. Or want to go for the Bud instead of the Black Label. Want to go for the $20,000 2006 Prius that gets 45 miles to the gallon instead of the $30,000 2008 Ford Explorer that gets 15 – and thus save, beyond the initial $10,000 and the cheaper insurance premiums, $40 a week on gas, if your driving is typical, which is $2,000 a year, which is what you have left after earning $3,000. (My last car cost only $10,000. I’d have bought a $4,300 car if I were just starting out.) Saving $5,000 a year that might otherwise have gone to bottled water (buy one bottle, refill with tap), books (go to the library), and long distance phone charges (with Skype, it’s all but free) – and investing it to earn 6% after inflation, which ain’t easy but should be possible – will give you, if you’re 25 now, $774,000, in today’s buying power by age 65. Which paid out gradually over 30 years would be enough to supplement all your other retirement income by $56,000 a year through age 95. Not to mention that frugal people with retirement savings tend not to need to borrow at high rates against their credit cards, often saving 8% or 18% or even as much as 29% on everything they charge. That could be another $2,000 a year in savings on credit card interest alone, which, with the same assumptions as above, now bumps the retirement nest egg past $1 million in today’s dollars and your annual pay-out, age 65 to 95, past $78,000. The great joy about being rich, or even just rich-ish, is that you don’t have to think about relatively small things like this. Think twice about buying a boat – but a latte? A massage? Yet unless you’ve inherited your wealth (which brings with it its own set of demons) or married it (potential ditto as well), you first have to get rich. And doing that means living beneath your means and investing the difference. Tomorrow (speaking of rich): Richistan
Another Survey This One from the RNC January 25, 2008March 10, 2017 AND HAVE YOU STOPPED BEATING YOUR WIFE? I love the Republican Party. Here is a CENSUS DOCUMENT QUESTIONNAIRE that I, as ‘one of our most loyal Republicans,’ am sent to fill out, with questions like: Should we do everything we can to stop Democrats from repealing critical border and port security legislation? [] Yes [] No [] Undecided A nit: No Democrats are trying to repeal this legislation. In fact, it was not until the Democrats took over Congress that we finally wrote into law the recommendations of the 9/11 Commission, theretofore opposed by the Administration. (Otherwise, this is a fair question.) Should we make our fight against the Democrats’ massive tax hikes a central part of the 2008 campaign? [] Yes [] No [] Undecided A nit: No Democrat is proposing any tax hike, let alone a massive one, on the kind of people being sent this ‘census questionnaire’ with its appeal for $25, $35, $50, $100, $250 or $500. It’s the folks who might be asked for $5,000, $10,000, and $28,500 – namely, those making more than millions of dollars a year, or at least fractional millions – who will be asked to go back to something like what we had under Clinton/Gore. So the question might more fairly be phrased: Should we fight to keep Waren Buffett’s tax rate lower than his secretary’s? Fight to continue borrowing hundreds of billions of dollars from your children and grandchildren in order to extend the massive tax cuts for the wealthy that we enacted? [] Yes [] No [] Undecided Here’s one I love: Should Republicans renew the fight for a Balanced Budget Amendment? [] Yes [] No [] Undecided Republicans seem to have put a temporary hold on that fight while they controlled both houses of Congress and the White House. And yet most of the budget’s imbalance has come on their watch. The National Debt now stands at $9.2 trillion. This is the accumulation of all our annual budget deficits since 1776. Of this, nearly 85% was racked up under Republican Administrations – indeed, nearly 75%* under just 3 of our 43 presidents: Reagan, Bush, and Bush. *It’s more like 72% now but will be 75% be the time Bush leaves office. STATE OF THE UNION VIDEO In preparation for Monday’s State of the Union address, here‘s a quick video that reviews last year’s State of the Union address. (Thanks, Roger and Alan.) It’s not exactly dispassionate – but what is there really to be dispassionate about these days? SYMZ The shareholders are fighting back. I’m holding on.
Is That Guacamole on Your Face or Are You Just Green with Envy? January 24, 2008March 10, 2017 YESTERDAY Bear markets often end with a dramatic intra-day reversal like yesterday’s. But something tells me this one still has a way to run. WHAT IS TO BE DONE? This op-ed by Joseph Stiglitz pretty well nails it. We need to go yet further into debt to get through what could be a long recession – but debt that gives us the most bang for the buck. WHAT *YOU* NEED TO DO Live beneath your means; diversify; vote Democrat. Speaking of which . . . Thanks for taking the survey. Surveymonkey is one powerful, user-friendly tool. You liked Obama best (35%), then Edwards (24%), Clinton (20%), and McCain (12%). Among the 21% of you identifying as Independents, the rank order was the same. Nearly 80% of you rated Giuliani unacceptable – ‘Agh!’ – topped only by Huckabee and Thompson (88%). Romney – who will likely be the Republican nominee – was the first choice of 5% but unacceptable to 72%. McCain, the second most likely candidate, was unacceptable to 40% of you. By contrast, only 7% of you found Obama unacceptable (15%, Edwards; 19%, Clinton). (Surveymonkey takes all these numbers out to a decimal place. I’ve rounded off.) A third of you identify as liberal Democrats, 29% as moderate Democrats, 21% as Independents, 10% as moderate Republicans (thank you for having the open-mindedness to visit this site), just 1.5% as Conservative Republicans (thank you, too!) and 4% as Libertarians. Fewer than 2% of you are not eligible to vote (foreigners, felons, fifteen-year-olds); fewer than 1% admitted to being not registered to vote. You live in blue states (52%), red states (29%), purple states (13%), and Florida (5%). A fifth of you have household income in excess of $200,000 . . . 38% between $100,000 and $200,000, . . . 33% between $50,000 and $100,000 . . . 10% below $50,000. In the high-income group, Obama was still first (34%), then Clinton (24%), then Edwards (19%) and McCain (12%). More than one of you is a vegetarian (‘ovo-lacto – pasture-fed only, see here and here‘ comments one). And more than one of your fails to fall into the expected mold: I was struck by the conservative Republican who put McCain as his first choice and Obama as his second. The only other two marked ‘acceptable’ were Romney and Edwards. And by the liberal Democrat who put Obama first but McCain second and Giuliani as the only other acceptable choice. There was little enthusiasm for giving me your phone number. One Romney / Giuliani supporter wrote, ‘So you can discuss the fact that I as an evil rich person pays too little in taxes? I don’t think so.’ For the record: there is nothing evil about being rich. There may be something a little callous about being rich and wanting to finance the war by cutting taxes on the rich while tightening the bankruptcy law and watching median household income fall. But not evil. BE FINE You know how I get enthusiastic about stuff? Here’s something I’m enthusiastic about that I haven’t even tried yet: Be Fine skin care products. Made from food, like almonds and avocados, cucumbers, coconut and rosemary. And cocoa and pomegranate and jojoba. Have you never thought to slather guacamole on your face? No? After a few margaritas? I am running down to my local CVS – and in a couple of weeks my local RiteAid – to Be Fine and buy it for all my friends. And you should, too, for a very simple, compelling reason: they let me invest in the latest round of private financing. Wish me luck. It could be the next Honest Tea.
Take My Survey — Please! January 23, 2008March 10, 2017 Well, if you’re getting on in years, you have the core of your retirement fund in TIPS, which have done very nicely the last couple of weeks. So that’s a silver lining. (I wouldn’t rush to buy them now; they’re not cheap.) And if you’re young, then your plan of living beneath your means and investing the difference every month is working brilliantly: With the recent carnage, you get to buy your shares on sale. Huzzah! (You can tell I’m a little shellshocked when I start Huzzahing. A first for this column. Huzzah!) I continue to hold out considerable hope for the individual stocks and warrants I’ve mentioned. But I don’t think yesterday morning was the cheapest we’ll ever see things. (Fortunately, I am usually wrong. Huzzah!) In eras past, rough times for the market have sometimes stretched on a long time. The Dow that first touched 1,000 in 1966 did not make contact again until 1982 – 16 years. And that could be the case this time, too – we’ve dug ourselves quite a hole. Then again, the world has speeded up (and the Dow was not particularly high at 14,000 when measured in Euro or gold terms – the dollar has fallen drastically in 7 years). I wouldn’t be amazed to see America begin to get back on track with a new Administration next year. By 2011 (when some of our SPAC warrants expire), housing prices might still not be where they were last year, yet we might look back and see good gains in some of our speculations. Or not, which is why we make them only with money we can truly afford to lose. And speaking of a New Administration: A POWERFUL NEW WEBSITE Or new to me, anyway. Create your own web-based surveys at surveymonkey.com. I couldn’t resist trying it out, and now I want to see how it works collecting data. I’ve asked you about your preference for President. I chose the option to have all the names listed randomly – so just because YOU see Ron Paul listed first doesn’t mean I’ve given him top billing. Someone else may see him last. All four questions are optional – and will take just a minute or two to answer. Ba-bing, ba-bing, ba-bing. Huzzah! I chose the option NOT to receive your IP address, in part because I’m not sure what an IP address is and in part because I believe in a secret ballot. THANK YOU FOR COMPLETING THIS SURVEY. If it works, I’ll report the results in the next day or two.
Cucumbers January 22, 2008January 5, 2017 There’s a lot to be said for cucumbers – and it rarely is. [Long pause while you think about that.] But I don’t have time to say it now, either, because, let’s face it, we’re in (sorry) a bit of a pickle. All those chickens we’ve been talking about coming home to roost? Well, the air is now, sadly but inevitably, pretty well full of them. Homes purchased for more than people could afford; trillions sent abroad to buy things we didn’t need (tell me you don’t have a closetful) or will be putting in land fills or have burned up and sent out our exhaust pipes into the atmosphere; another trillion, all in, on a war of arguable necessity. Unlike the war in Vietnam, where we were determined to have guns and butter, with this war we’ve had guns and extra butter – tax cuts for the rich. So it’s hard to see how inflation will not follow, as it did after Vietnam. The Fed could get tough on interest rates to damp down inflation, and someday will. But for now quite the opposite will happen: the Fed will lower interest rates to try to ease the mortgage misery and avert recession (themselves inflation-inhibitors). Except that the Fed can only control short-term rates. ‘The market’ controls long-term rates, and it cannot be assured that investors around the world will want to own long-term dollar-denominated debt if they think the dollar is headed lower. (If – a European – you had bought 2008-maturity U.S. Treasury bonds on the day our current President was inaugurated, you would have gotten your interest payments timely and your principal repaid. But that principal would have lost 40% of its value when you went to convert it back to Euros.) So what is to be done? The current plan (to shorthand it) is to give everybody $800. And some tax incentives to business. (The President had hoped to use this crisis to push through, as well, his ‘permanent tax cut’ which would, among other things, trim the estate tax on billionheirs from 45% to . . . zero. But the Democratic Congress said no. A big deal, in my view, that got little note or applause because it was so obviously the right thing to do.) And where is this $150 billion of financial stimulus to come from? Our children and grandchildren, of course. We will add it on to the National Debt. The hope is that those $800 checks will be used not to pay down credit cards or augment rainy day funds, but rather get spent . . . which is good news for the Chinese and others who make many of the things we will spend it on. This is not to say that quick, significant stimulus is a bad idea. A lot of economics is self-fulfilling. All we have to fear is fear itself. People and businesses do need to be encouraged to feel ‘the sun will come out tomorrow’ – because if they keep working hard, and investing in the future, it will. But the real sunshine will begin to break through the clouds, if you ask me, when the world (and we ourselves) sees we have new, competent leadership that is investing not in rebate checks for consumer spending, but in incentives to create millions of new jobs greening America, ultimately to make us dramatically more energy efficient and thus far stronger economically. (A little money channeled to dredging our ports and waterways would be a good idea, too. Hint, hint.) (And how about pumping $1 billion into doubling the number of customs agents and launching the Greeter Corps to make the world feel truly welcome once again to come vacation, study, and do business here, as suggested here and here.) Can you imagine how much labor would be needed to retrofit most of our millions of residential and commercial structures for energy efficiency? In many cases, the payback is under years five year – which means a 20% return on investment. Not to mention all the jobs, potentially, in solar and wind. Yes, it’s best to leave market forces to drive as much of this as possible. (Surely, faced with the lessons of OPEC in 1973, Detroit would never again let the Japanese come to dominate fuel efficiency, right? Adam Smith’s invisible hand and the forces of capitalism would lead GM and Ford to lead the world in energy efficiency, generously licensing ingenious American technology to Toyota. Right?) But at times like this, when you’re doling out cash to keep things moving, there can be a role for government to give a targeted, well-considered nudge. And I would argue – even though this argument will go nowhere in the short-term – that the $150 billion should not be borrowed from our children and grandchildren. How about a one-time 10% surcharge on all 2007 personal income above $1 million? So a hedge fund manager who made $35 million last year, instead of being taxed on it at a 15% rate (you are taxed at a higher rate), would be taxed at a 25% rate (all in, you likely are still taxed at a higher rate)? It’s a sacrifice, to be sure. But this country has been awfully good to the rich, and particularly so the last several years. You will recall that President Bush sold his tax cuts this way – ‘Most of the tax reductions go to the people at the bottom end of the economic ladder’ – when in fact what he meant to say was at the top of the economic ladder (sometimes, a single word can make all the difference). You will also recall that, on his watch, median household income in America has fallen, even as the net take-home of those at the very top has gone through the roof. While celebrating the accomplishments of those who earn $1 million or $5 million or $35 million a year – and while never wanting to go back to the crazy and counter-productive 90% tax brackets of the Eisenhower era, or the 70% top bracket of Kennedy, Johnson, Nixon, Ford, and Carter, or even the 50% top bracket of Reagan’s first term – it should be possible to roll back the George W. Bush tax cuts on that portion of a family’s income that exceeds, say $200,000 a year. Not to punish anyone, but as an important step in getting our economy back in balance, for the benefit of all. Anyway, fasten your seatbelts. The $800 will be lovely, but this hang-over we’re beginning to experience will not be soon gone. (From pickles to roosting chickens to hangovers. Clichéd metaphors run wild. It’s a good thing this column costs as little as it does or I’d say you wuz robbed.) More on cucumbers, and cucumber cosmetics I want you to buy, real soon.
Happy Birthday, Reverend January 21, 2008January 5, 2017 ‘If a man is called to be a streetsweeper,’ Dr. King preached, ‘he should sweep streets even as Michelangelo painted or Beethoven composed music or Shakespeare wrote poetry. He should sweep streets so well that all the hosts of heaven and earth will pause to say, ‘Here lived a great streetsweeper who did his job well.’ ‘ For our part, we should treat that streetsweeper with respect for a job well done, and with genuine gratitude for doing a job we’d pay big bucks – but don’t – not to have to do ourselves. Lest you think I’m lecturing you, I should say I’ve written this largely as a reminder to myself. ‘How are you today?’ I too often forget to ask as I get into a cab. ‘Thanks – good ride!’ I too often forget to say as I leave.* * If any of this sounds familiar, you are a faithful reader indeed. I first ran this comment two thousand seven hundred fifty-two columns ago. But it’s a quote I particularly love, from a man who all ‘the hosts of heaven and earth’ surely agree did his job well. Tomorrow, which you can read today: Cucumbers
Remember Bidil? January 18, 2008January 5, 2017 Some of didn’t get your morning delivery of yesterday’s column. It was a thing of wonder. (‘I wonder how anyone could write such a long column – and can’t he even count to 20? He seems to have missed 16.’) Normally, if you set it up with Q-page, at the bottom of the screen, it should arrive at 6am. SYMZ One of you who owns a lot of SYMZ wrote in to offer this article from the New York Post (‘SYMS MARKDOWN: Stock Sinks 40% on NYSE Delisting Move’), and to say yesterday’s column missed the mark. They weren’t delisting from the NYSE – and attempting to deregister with the S.E.C. – to save money, but rather to drive the price down, the better to take the company private at a bargain price and eventually profit from its perhaps $20 a share in real estate. We’ll see. A lot of other apparel companies are down sharply, too, even without delisting. But most of them lack this potentially valuable real estate kicker. Richard Bliss, CFA: ‘Not just leaving the New York Stock Exchange but actually ceasing to be a reporting company. That is, no more 10-K’s, 10-Q’s and I guess no more worrying about the plaintiff bar since they can no longer commit securities fraud. It is remarkable to me that shareholders (and the SEC) sat still for this opting out of the protective umbrella of our securities laws. If you want to do something about this, encourage any fellow holders to instruct their brokers to register their shares in their names (as opposed to ‘street name’). If the number of registered holders goes over 300, they have become a reporting company again. But don’t become a group. I am glad your heart remains strong and not in need of BIDIL.’ NTMD Bidil! Remember this one? The miracle drug from Nitromed that combined two existing generics into a single more convenient pill at six times the price? The stock was around $20 when we bought our puts, figuring that this one-drug pony just wouldn’t fly (trot?). And then the stock dropped to $2, so we did okay. Now $1. Fred Campbell: ‘Don’t know if you noticed, but yesterday NTMD announced they had discontinued the manufacture and distribution of Bidil and were immediately laying off 90% of their employees. Based on this, you would expect the stock to drop precipitously on its way to 0. But, the stock was up 13% yesterday (90 cents before the news, one dollar afterward). Have you ever heard of a company’s value going up after admitting that their one product was a failure and basically folding up shop?’ ☞ I haven’t looked at it, but, yes, giant lay-offs often buoy a stock because investors see lower losses. Maybe NTMD still has a little of its cash hoard left. Or maybe it’s just retaining a little value as a ‘shell’ – a public company with which a private company could merge, thereby to spare itself some of the hassles and expense of going public the straightforward way. FLORIDA Jack Rivers: ‘As a former Iowan I support Iowa’s first in the nation status because I think they do a good job. That being said I think you did a good job of explaining why it hasn’t changed this year, and why it might in 2012. Contrast what you said versus this Associated Press article appearing today. I sure am glad that I am a Democrat -a party that cares about and initiates sincere discussions to include diverse populations, rather than just avoiding them, like the other party: LAS VEGAS – AP – A last-minute federal court battle over caucus rules demonstrates just how important a tight three-way Democratic presidential contest in Nevada has become in the battle for momentum headed into Super Tuesday’s votes. Hillary Rodham Clinton, Barack Obama and John Edwards are in a statistical dead heat in polling here before Saturday’s caucuses. And Nevada’s sizable blocs of Hispanic, union and urban voters could provide an indicator of where the race is headed on Feb. 5, when hundreds of delegates will be awarded in states with significant minority populations. By contrast, Republican candidates have stayed away from the diverse electorate and unfamiliar electoral landscape. WAYS TO MITIGATE THE RECESSION Live beneath your means. Keep your transaction costs low. Vote Democrat.