Love, Heat, and Accounting June 27, 2011March 24, 2017 So much to say – beginning with . . . I LOVE NEW YORK Hats off to New York Governor Andrew Cuomo, to 29 Democratic and 4 Republican state senators, and to so many others who helped (Mayor Bloomberg being another): New York State Friday joined Iowa, Connecticut, Massachusetts, New Hampshire, Vermont, and the District of Columbia (not to mention Canada, Holland, Belgium, Spain and Portugal, Norway and Sweden, Argentina, South Africa, and Mexico City) in adopting marriage equality. Charles and I never actually wanted to get married. But we wanted the right to do so, if we ever changed our minds, just like anyone else. What could be more fundamentally American than equal rights under the law?* I called my recently widowed full-service broker to sell Anadarko Petroleum (APC) this morning, not knowing how dependent its earnings might be on natural gas derived from shale – see below – and (because this is the sort of joking you can do with a full service broker, and one of the reasons the commission is 50 times as high) said, “Hey. You’re single. I’m single. Do you want to get married?” We’ve been friends for 35 years, after all. Long pause. “I’d have a really steep learning curve,” he said, letting me down gently and entering my order a point or two below Friday’s close. *Or the right of churches to discriminate – which is an entirely separate issue, to be handled on those churches’ own timeline. (As anyone who’s seen “The Book of Mormon” knows, God changed His mind about black people in 1978. Maybe one day He will change His mind about me.) IT HIT 117º IN TEXAS YESTERDAY Bryan Norcross: “Following up on the Al Gore Rolling Stone article, Jeff Masters is the best online climate writer/blogger there is. Everyone should read his June 24 entry about how extraordinary the weather in the last 18 months has been.” ☞ Lots of great photos, too, and this conclusion: . . . the ever-increasing amounts of heat-trapping gases humans are emitting into the air puts tremendous pressure on the climate system to shift to a new, radically different, warmer state, and the extreme weather of 2010 – 2011 suggests that the transition is already well underway. A warmer planet has more energy to power stronger storms, hotter heat waves, more intense droughts, heavier flooding rains, and record glacier melt that will drive accelerating sea level rise. I expect that by 20 – 30 years from now, extreme weather years like we witnessed in 2010 will become the new normal. . . . ☞ At which point, one assumes, there might also be the occasional abnormal year where things are even dramatically worse. According to yesterday’s New York Times, natural gas may not be as much of the answer as hoped: NATURAL GAS FROM SHALE Here’s the article that scared me out of Anadarko. Not only may the fracking be poisonous, so may be the accounting. (I absolutely don’t know the extent to which these concerns apply to Anadarko – for all I know, this may actually be a great buying opportunity – but I decided to exit until I find out.) Lots more to say tomorrow. Three Presidential Speeches, a tough critique of our financial system . . . maybe an acrostic.
The Sky IS Falling June 24, 2011March 24, 2017 I linked to Al Gore’s Rolling Stone essay yesterday, but it’s too important to leave it at that, so here is a taste of what he has to say: . . . The best available evidence demonstrates beyond any reasonable doubt that the reckless spewing of global-warming pollution in obscene quantities into the atmospheric commons is having exactly the consequences long predicted by scientists who have analyzed the known facts according to the laws of physics. . . . As with financial issues like subprime mortgages and credit default swaps, the climate crisis can seem too complex to worry about, especially when the shills for the polluters constantly claim it’s all a hoax anyway. And since the early impacts of climatic disruption are distributed globally, they masquerade as an abstraction that is safe to ignore. . . . Here is the core of it: we are destroying the climate balance that is essential to the survival of our civilization. This is not a distant or abstract threat; it is happening now. The United States is the only nation that can rally a global effort to save our future. And the president is the only person who can rally the United States. Many political advisers assume that a president has to deal with the world of politics as he finds it, and that it is unwise to risk political capital on an effort to actually lead the country toward a new understanding of the real threats and real opportunities we face. Concentrate on the politics of re-election, they say. Don’t take chances. All that might be completely understandable and make perfect sense in a world where the climate crisis wasn’t “real.” Those of us who support and admire President Obama understand how difficult the politics of this issue are in the context of the massive opposition to doing anything at all — or even to recognizing that there is a crisis. And assuming that the Republicans come to their senses and avoid nominating a clown, his re-election is likely to involve a hard-fought battle with high stakes for the country. All of his supporters understand that it would be self-defeating to weaken Obama and heighten the risk of another step backward. Even writing an article like this one carries risks; opponents of the president will excerpt the criticism and strip it of context. But in this case, the President has reality on his side. The scientific consensus is far stronger today than at any time in the past. Here is the truth: The Earth is round; Saddam Hussein did not attack us on 9/11; Elvis is dead; Obama was born in the United States; and the climate crisis is real. It is time to act. Those who profit from the unconstrained pollution that is the primary cause of climate change are determined to block our perception of this reality. They have help from many sides: from the private sector, which is now free to make unlimited and secret campaign contributions; from politicians who have conflated their tenures in office with the pursuit of the people’s best interests; and — tragically — from the press itself, which treats deception and falsehood on the same plane as scientific fact, and calls it objective reporting of alternative opinions. All things are not equally true. It is time to face reality. We ignored reality in the marketplace and nearly destroyed the world economic system. We are likewise ignoring reality in the environment, and the consequences could be several orders of magnitude worse. . . . ☞ May I suggest you take a little time to read the whole essay? It starts out with professional wrestling – you won’t be bored. Have a great weekend. (Turn off the lights when you leave the room.)
When Heroes Collide June 23, 2011March 24, 2017 FCSC Guru was right; the FDA approval came through yesterday. The stock shot from $1.16 to $1.60, but there was a lot of “selling on the news” (“buy on the rumor, sell on the news,” goes the adage), so the stock closed the day up just a penny, at $1.17. If Guru continues to be right, FCSC has more upside than downside over the next year, so my plan is to sit tight, with money I can truly afford to lose. HOT COFFEE Chris: “I still don’t understand how one is unaware that coffee is hot. Or that it might spill. This could not have been the first time this woman ever experienced coffee and she must have been aware that brewed coffee starts out life hot. Just like the edge of a knife is sharp, the burners on a stovetop and light bulbs get hot when in use, and the tip of a pencil can puncture one’s skin. Not having followed the whole story, I assume there are reasons the judge didn’t throw the case out immediately. I suppose it’s good that the case didn’t result in coffee growers having to label each unroasted bean.” ☞ You “still don’t understand” because you haven’t seen the full story. Her injury was horrendous (wait til you see), the car was not moving, the coffee, as a matter of policy, was served at a truly scalding temperature – even after 700 previous claims for the same injury had not led to a change in policy. All she was asking for was $10,000 in medical reimbursement; McDonalds offered $800 and basically was going to make her #701 and just keep ignoring this. The jury was unanimous in its verdict. Karl Rove and the Chamber of Commerce would have you think that all 12 jurors are idiots, but after you see the film, may begin to think Karl Rove is a bit of a sociopath. Premieres on HBO Monday. And extends in reach way beyond the hot coffee case. Must-see TV. HOT BOOK DEAL So Amazon is now selling the only investment guide you’ll ever need – EVER! – for $5.98. At least as of last night. The Money Magazine plug must have bumped it up to a better discount. It actually costs less than the e-book (imagine that: nothing to print or ship, no paper required, yet it costs more than the physical book) and just 3 cents more than the 1978 hardcover edition – which in 2011 dollars would have been $21, and which some dreamer is offering new, 33-years-old though it may be, for $75.91. WHEN HEROES COLLIDE Here is Al Gore – who won the Presidency in 2000 with both the popular vote and, had all the overvotes and chads been counted, Florida’s electoral vote – in a long, important essay faulting President Obama – who in the face of phenomenally difficult circumstances is doing a spectacular job – for not forcefully enough leading on climate change. My guess is that the President would agree with most of what Gore has written. In any event, this being the only planet available to our species for the moment, it’s worth reading what he has to say.
The Surprising Truth About Tort Reform Insect Repellent -- The App June 22, 2011March 24, 2017 HOT COFFEE Remember the woman who held her drive-through coffee between her legs, scalded herself, and won a $3 million lawsuit against McDonalds? I got to see a preview of ‘Hot Coffee,’ the HBO documentary that debuts Monday. It begins by making fun of her, using the Seinfeld episode where Kramer sneaks hot coffee into the movie theater by putting it in his pants. And sues? Loved that one. But you will quickly conclude (I think) that – far from being a frivolous lawsuit and a runaway jury – McDonalds got off easy. Were you aware of that? Almost no one is. Turns out, we have been sold a bill of goods on this case and much else about frivolous lawsuits (with Karl Rove to thank for a lot of it) and you have already lost many of your rights as a consumer. As someone who edited a Twentieth Century Fund report of medical malpractice tort reform recommendations thirty years ago, and who put three (moderate, sensible) tort reform initiatives on the March, 1996, California ballot, I’m no shill for the trial lawyers. But I’m awfully glad they’re there. And you will be too – and outraged after you watch this must-see documentary. You really will be. Even if you are one of my more conservative readers. Set your TiVo. Make a date to visit a friend who does get HBO. This is must-see TV. BUGSPRAY APP Just when I thought all was lost – there’s serious talk this will be the last season the community I visit sprays for mosquitoes . . . there’s an app for that. Search iPhone’s app store for Bug Spray Ultrasonic (which emits one of three high pitched tones) and even if you don’t download it (free) – not least because all of the scary disclaimers and waivers of liability – you might enjoy the comments. (‘Tried this app on a horsefly it pissed him off and he gave me a black eye, so I am scared to use it anymore.’) According to many of the comments, it works.
Borealis, Which Owns WheelTug Which Now Has Some Competitors June 21, 2011March 24, 2017 LET’S TALK ABOUT WHAT’S REALLY IMPORTANT Is it possible – note photo at left and now here – that I’m not boyish anymore? Who cares about infrastructure or biotech at a time of crisis like this? And while I’m asking questions, who is this guy plugging index funds? Has he ever even seen the site you’re now on, riddled as it is with nutty speculations (to be made only with money you can truly afford to lose)? What on earth would he think of Borealis? BOREALIS Robert C. Brown: “Worthy WheelTug competitor?” ☞ I suppose the name Honeywell inspires a bit more confidence than the name Borealis. It remains to be seen whether our head start (and patents) will pay off. I am counting no chickens. WHEELTUG ‘FRONT-WHEEL DRIVE’ FOR AIRPLANES IMPROVES AVIATION GROUND OPERATIONS PARIS, 21 June — The revolutionary onboard electrical drive system for aircraft being developed by WheelTug plc has stimulated aerospace industry efforts to revamp ground operations. Recent developments are being unveiled at the Paris Air Show this week. The WheelTug system brings front-wheel drive to aircraft, with twin electrical motors in the nosewheels giving aircraft greater maneuverability and efficiency during ground movements such as reversing from a gate and taxiing to a runway, as well as reducing fuel consumption and emissions. New to WheelTug’s display space at the Paris Air Show ((Hall 4-5, Booth G10) is the latest WheelTug unit, designed for narrowbodied aircraft such as the Boeing 737NG and Airbus A320. WheelTug is also showing a hands-on demonstration WheelTug cockpit control panel by which the pilot will be able to control the system and maneuver the aircraft on the ground. The WheelTug team has been working on developing WheelTug’s system design over the past year, and moving towards certification and entry into service. While independent ground maneuverability by aircraft has long been an industry dream, WheelTug’s innovative engines-off taxi technology is becoming a widespread industry expectation in the near future, far sooner than government-devised industry roadmaps projected. A new European Union agenda for the aeronautics industry, called Flightpath 2050 and set by the European Commission on Mobility and Transport, calls for aircraft to be emissions-free during taxi by 2050. WheelTug, which first demonstrated proof of concept hardware allowing taxiing without engines in 2005, expects to conduct on-aircraft tests within 6 months and to introduce the system into service in 2013. “WheelTug will deliver in 2013 what the E.U. has set as a target for 2050,” said Isaiah W. Cox, the company’s president. “We are pleased to have successfully guided the industry here, first by demonstrating that the technology is viable and then by showing that the system’s overall operating cost savings well exceed $500,000 per year on a typical narrowbody aircraft.” Now that WheelTug has proven both the concept and its potential value to the industry, several competitors have emerged. Taxibot is a pilot-driven tug system primarily for use on larger aircraft. The German Aerospace Center (Deutsches Zentrum für Luft- und Raumfahrt; DLR) have shown an in-wheel design for use on the A320. And just this week, Safran and Honeywell announced a joint venture to offer an engines-off taxi solution in 2016. The patented and proprietary WheelTug® electric drive system uses high-performance electric motors, installed in the nose landing gear wheels of an aircraft, to provide full mobility while on the ground without the use of the aircraft’s jet engines or tugs for both pushback and taxi operations. WheelTug enables aircraft to be electrically driven from the terminal gate to the takeoff runway, and upon landing from runway exit to the gate. The resulting improvements in efficiency, flexibility, fuel savings, and reduced noise and engine foreign object damage (FOD) yield projected savings of more than $500,000 per aircraft per year, plus substantial reductions in CO2 and other greenhouse gas emissions. The WheelTug system is being developed initially for the Boeing 737NG, one of the world’s most widely-flown aircraft; systems for other commercial and military aircraft will follow. WheelTug is developing the system with a team of partner companies capable of providing airlines with fully-operational systems years ahead of any competitor.
Updates June 20, 2011March 24, 2017 KEITH OLBERMANN DEBUTS TONIGHT And five nights a week thereafter – 8pm (7pm central) on Current TV, one of your cable channels (enter your zip to find it). [Fill disclosure: I have a stake in Current TV.] OUR LGBT DINNER WITH THE PRESIDENT THURSDAY . . . . . . made the front page of yesterday’s New York Times. (Not mentioned: our host for the evening, Neil Patrick Harris, who hosted the Tony Awards.) It’s not too late to sign up. Folks coming from 22 states. Straight allies welcome! [Full disclosure: we all have a stake in seeing the President re-elected.] AMRN Guru (who, as I told you, exited at $19 a share, up from $7.10 when suggested three months ago): “Given the cautious outlook for the market and the company’s recent comments that they may not complete a partnership til 2012, I can’t make a case for holding on now [with the stock down at $13.69]. I think there may be better buying opportunities.” EMIS Guru (who watched the stock drop 50 cents back to $1.15 Friday, down from $1.25 when first suggested last August): “Oh well. All we know is that the PTH study didn’t work as Novartis wanted it to. We dont know why. Lots of reasons a thing might not work. Today’s announcement has no impact on the validity of the previous 8 oral calcitonin studies, which were positive, or on the 3 previous studies on oral glp-1, which were positive. It does, however, remind us that consistency in biology goes only so far and that in oral delivery of protein, we have had a lot of failures. EMIS at $1/share is really like an option: if the data are positive in calcitonin in the 3Q 2011, the stock should rally significantly from here. If not, it drops to zero. Today’s announcement probably means it will rally less than if PTH had succeeded: I was hoping that the calcitonin data would be a validation of this technology in lots of proteins, but today’s announcement says we really must proceed on a case-by-case basis. It’s hard to believe that if Novartis announces in 3Q 2011 that oral calcitonin has reduced fractures in women with osteoporosis that EMIS won’t rally towards 3 or more, perhaps more like 5. It gives them a drug that can be sold in the marketplace for significant revenue. Also, the NVO multi dose trial of glp-1 is going on and we should hear that data later this year. The NVO multi-dose trial is based on some kind of success NVO saw in a single dose trial last year. BUT always lots of uncertainty in this business.”
Claptrap – 3 June 17, 2011March 24, 2017 Robert Reeves: “Thought you would be interested in what the right wing is circulating. If it is untrue, someone should respond.” From: DavidXXXXX@aol.com [email obscured to protect naïve sender] Sent: Saturday, June 04, 2011 1:53 PM Subject: Will you sell your house?? If this is true (see below), then this tax may be the nail in the coffin of the housing & real estate markets. When will they get it? Also, what will this do to the banks if homeowners have a market value near their mortgage balance? Many will walk away and make the foreclosure crisis much worse! —– Original Message —– WILL YOU EVER SELL YOUR HOUSE? Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it? That’s $3,800 on a $100,000 home etc. When did this happen? It’s in the health care bill. Just thought you should know. SALES TAX TO GO INTO EFFECT 2013 (Part of HC Bill) Why 2013? Could it be to come to light AFTER the 2012 elections? REAL ESTATE SALES TAX So, this is “change you can believe in”? Under the new health care bill – did you know that all real estate transactions will be subject to a 3.8% Sales Tax? The bulk of these new taxes don’t kick in until 2013. If you sell your $400,000 home, there will be a $15,200 tax. This bill is set to screw the retiring generation who often downsize their homes. Does this stuff make your 2012 vote more important? Oh, you weren’t aware this was in the Obamacare bill? Guess what, you aren’t alone. There are more than a few members of Congress that aren’t aware of it either. Why am I sending you this? The same reason I hope you forward this to every single person in your address book. VOTERS NEED TO KNOW. ☞ It’s ridiculous, of course. If you sell your home for $100K, or even $400,000, there is no “sales tax.” The higher capital gains tax is on the profit only – and only to the extent that profit exceeds $250,000 (or $500,000 if you file jointly) – and only to the extent THAT extra gain puts your total income above $250K. So, yes, if you sell your house with a $1 million gain, you’ll pay 3.8% more on a portion of that gain – but still less, even on that portion, than you would have paid back in those awful Clinton/Gore years. Not too many folks are sitting on $1 million gains in their homes these days. And how awful were the Clinton/Gore years, anyway? The people who wrote this nonsense are, I think, deeply cynical. The people passing it on are quite literally “mis-guided.” Both groups are rightly alarmed by the size and trajectory of our National Debt . . . which was gradually worked down from 121% of GDP after World War II to a far healthier 30% when Reagan took over – at which time the top federal tax bracket was 70% on dividends and interest, 28% on long-term capital gains. Under Reagan, Bush, and Bush, the Debt exploded from the 30% of GDP that Reagan inherited to the 100% of GDP Bush handed Obama – handng him, too, a $1.5 trillion 2009 deficit (set before he was even elected) and an economy on the brink of depression. All this despite Clinton’s turning then deficit around, leaving Bush 43 “surpluses as far as the eye could see.” If high tax rates kill jobs and low tax rates make for tremendous job creation, then 1946-1981 should have seen a disastrous economy (but didn’t), 1981-1992 should have been boom years (but weren’t), 1993-2000 should have been a bust (22 million new jobs were created), and 2001-2011 should have been the best economy the world has ever seen. Give . . . me . . . a . . . break.
Dirty Spending Secrets June 16, 2011March 24, 2017 FCSC Karen Olson: “I’m hoping Guru has some thoughts on FCSC, given the large pull back in price. The expected approval/denial date is just a week away and unfortunately the share price has come back to where it was when you originally suggested it. Does Guru still believe it’s worth holding onto for the $1.50 target within the next week prior to approval or is there just too much risk at this point?” ☞ Guru – who it’s important to remember is generally but not always right – replies: “Expect they will get approved on June 22. Nothing to indicate that they won’t. As this is partly a process – you must take skin from the patient, grow it and give it back to them – I don’t expect it to ‘fly off the shelf’ the way a new pill would. But given the billions spent each year on wrinkle and acne treatment, I expect this product will take a reasonable share of that market. They are treating you with your own healthy skin. If that is so, the stock is likely $2-$3 over the next year and so still a good buy at $1.” CLAPTRAP – I “Low taxes on the best off create jobs.” Oh, yeah? How come we created almost none during the Bush years? “Hiking taxes on the best off, like successful small business owners, destroy jobs.” Oh yeah? How come, after Clinton raised taxes on the best off, the economy created 22 million new jobs? CLAPTRAP – II This rightwing “Dirty Spending Secrets” quiz is making the rounds. One of you asked what I thought. I think it is almost completely stupid . . . and that it is completely completely counterproductive. (It’s not completely stupid because waste is bad, obviously, even when on a relatively small scale. It’s completely counterproductive because it leads people to misunderstand whom they should be angry at and to vote against the national interest.) If you actually delve into each of the spending items lambasted, you might find plausible reasons for some of them – or find inaccuracies or mischaracterizations. For example, we’re told we are paying for 1,125 idle postal workers! A small army of them! Who do nothing all day! Being paid with our tax dollars!!! Yet that’s 1,125 out of 596,000 . . . so fewer than two-tenths of one-percent (worth noting, for context?) – AND the postal service is not part of the US government budget – has not received a government dime since the 1980s (so how would firing them reduce our deficit?). But let’s assume each of the outrages presented is accurate and fairly presented. OK. So what? Everyone agrees that “bridges to nowhere” (not included in the quiz) and idle postal workers are always worth trying to root out. But the sum total of all the stuff in the quiz – and everything like it – is trivial as a percentage of the hole. (Before you try to add a W to make it “percentage of the whole,” consider the hole we’re in.) We need to raise taxes and to cut the military budget – those items dwarf the rest of this. Neither is mentioned in the quiz. We need to bend the entitlement curves down a little (in the case of Social Security) and significantly (in the case of finding ways to restrain health care costs over time). Very important. I didn’t see anything about that, either. This quiz is simply an effort to redirect people’s outrage from lightly-taxed multi-billionaires (at whom the average guy should feel outrage but seems not to) to their government (at which the average guy should not feel outrage, yet – because of manipulative quizzes like this – often does). Tomorrow or soon: Claptrap – III and Claptrap IV
You Can Tell A Guy From Notre Dame But You Can't Tell Him Much June 15, 2011March 24, 2017 2nd QUARTERLY ESTIMATED TAX Don’t forget to mail in your second quarterly 2011 estimated income tax today if you’ve had appreciable income on which tax has not been withheld. HARVARD Mike Myler: “I enjoyed your piece [from Money, decades ago, about paying to go to a prestigious school]. I’m glad my son didn’t listen to me. He could have gone to S. Illinois Law School free (which I recommended) but he said no, he kept taking the LSAT test and got into U. of Illinois Law School and it is working out well for him. Your column reminded me of a joke that is probably only heard much in the Midwest but everyone (almost) agrees it is true. You walk into an auditorium with 500 men, all of them dressed in business suits – how do you pick out the one who attended Notre Dame? [Long Pause.] You don’t have to . . . he will find you and tell you.” PARALLEL PARKING Very quick. Oh, my. And while we’re at it – yikes! Gad! Not possible! (Thanks Mel.) My own skills are more like this. CONGRESSMAN WEINER New York Times Bob Herbert answered Rachel Maddow persuasively last night, I thought, when she asked why family-values Republicans never called for prostitute-patronizing Senator Vitter or best-friend’s-wife-shagging Senator Ensign – yet Democrats call for Weiner’s resignation. Isn’t that just unilateral disarmament, she asked? Isn’t that just cementing the double standard? Herbert made several good points. (Realistically, he said – and as unfair as it might be –photos and a problematic last name give Weiner’s story legs the other two stories don’t have). But his most compelling point was that he’d like the Democrats to hold themselves to a higher standard. So he’s glad the Democratic leadership has called for Congressman Weiner’s resignation, even though the Republican leadership, with Vitter and Ensign, did not. I think he has a point; as Rachel Maddow has about the double standard. Tomorrow: Claptrap!
PIIGS June 14, 2011March 24, 2017 OOPS I got so carried away with the gravity of yesterday’s moment (in cosmic time) I forgot the final paragraph (added mid-day) – that, yes, agriculture may have led to the population explosion, but now that we’re all here, and unless the plan is for most of us to starve, eating less meat would really help. At least until, as mentioned last Friday, we find an efficient way to grow meat cells in the lab. TORT REFORM The New York Times describes a new approach to medical malpractice tort reform – “judge-directed negotiation” – that they say is seen by the Obama administration as offering states a way to curb health care costs. It’s a great idea that should spread like mad. No panacea, but one more step in a sensible direction. SHOULD YOU GO TO HARVARD? I went Googling for the July issue of Money – to see how much older I look in the photos they took than in the one at upper left from a previous century – and chanced on this piece I evidently wrote for them 20 years ago that I thought might amuse you. (I have to think that in the original I used paragraph breaks.) GREECE A very smart friend who saw the last credit-default-swap crisis coming tells me that the banks have been writing similar insurance on sovereign debt on the PIIGS – Portugal, Ireland, Italy, Greece and Spain. If so, it could be a challenging summer. Tomorrow, or soon: Claptrap