WHEELTUG SIGNS AIRLINE #5
Turkey’s “largest privately owned airline,” Onur Air, follows El Al, Alitalia, Jet Airways, and Israir in signing a letter of intent to lease the WheelTug system. Borealis closed at $13.70 yesterday. People seem to be allowing for the possibility that WheelTug is real. Which would mean that at least some of the other claimed (and patented) Borealis technologies might be real. The current $68.5 million market cap begins to approach the $110 million some guy paid for a spectacular New York City penthouse recently. The difference being that the penthouse, though it has a better view, costs God knows how much in taxes and common charges to maintain each year, where just this one Borealis subsidiary, if it worked out, might generate $100 million in annual profits. (E.g., 2,000 systems leased to power 2,000 planes at a net of $50,000 each). Or $500 million in annual profits (10,000 planes). This is anything but a sure thing; but as each new airline signs on, and now that we’ve seen video of the system inside actual nose wheels driving actual planes, it seems less and less far-fetched. Summer fun, anyway. (We can be cavalier about this because we bought these shares only with money we can truly afford to lose.)
BEN FRANKLIN – II
Joel Grow: “Another very important Ben Franklin quote: ‘Beer is proof that God loves us and wants us to be happy.’ OK, so it’s a tad off-topic….but still.”
Well it is off-topic (here was the topic). But it raises an important point: Can you imagine how more certain of God’s intentions he would have been if Franklin had had cold beer? If warm beer pleased him, what transport of joy would a lightning strike that electrified a kite string attached to one of these have brought him?
Paul Krugman nails it for the New York Times — as usual:
Once upon a time a rich man named Romney ran for president. He could claim, with considerable justice, that his wealth was well-earned, that he had in fact done a lot to create good jobs for American workers. Nonetheless, the public understandably wanted to know both how he had grown so rich and what he had done with his wealth; he obliged by releasing extensive information about his financial history.
But that was 44 years ago. And the contrast between George Romney and his son Mitt — a contrast both in their business careers and in their willingness to come clean about their financial affairs — dramatically illustrates how America has changed.
Right now there’s a lot of buzz about an investigative report in the magazine Vanity Fair highlighting the “gray areas” in the younger Romney’s finances. More about that in a minute. First, however, let’s talk about what it meant to get rich in George Romney’s America, and how it compares with the situation today.
What did George Romney do for a living? The answer was straightforward: he ran an auto company, American Motors. And he ran it very well indeed: at a time when the Big Three were still fixated on big cars and ignoring the rising tide of imports, Romney shifted to a highly successful focus on compacts that restored the company’s fortunes, not to mention that it saved the jobs of many American workers.
It also made him personally rich. We know this because during his run for president, he released not one, not two, but 12 years’ worth of tax returns, explaining that any one year might just be a fluke. From those returns we learn that in his best year, 1960, he made more than $660,000 — the equivalent, adjusted for inflation, of around $5 million today.
Those returns also reveal that he paid a lot of taxes — 36 percent of his income in 1960, 37 percent over the whole period. This was in part because, as one report at the time put it, he “seldom took advantage of loopholes to escape his tax obligations.” But it was also because taxes on the rich were much higher in the ’50s and ’60s than they are now. In fact, once you include the indirect effects of taxes on corporate profits, taxes on the very rich were about twice current levels.
Now fast-forward to Romney the Younger, who made even more money during his business career at Bain Capital. Unlike his father, however, Mr. Romney didn’t get rich by producing things people wanted to buy; he made his fortune through financial engineering that seems in many cases to have left workers worse off, and in some cases driven companies into bankruptcy.
And there’s another contrast: George Romney was open and forthcoming about what he did with his wealth, but Mitt Romney has largely kept his finances secret. He did, grudgingly, release one year’s tax return plus an estimate for the next year, showing that he paid a startlingly low tax rate. But as the Vanity Fair report points out, we’re still very much in the dark about his investments, some of which seem very mysterious.
Put it this way: Has there ever before been a major presidential candidate who had a multimillion-dollar Swiss bank account, plus tens of millions invested in the Cayman Islands, famed as a tax haven?
And then there’s his Individual Retirement Account. I.R.A.’s are supposed to be a tax-advantaged vehicle for middle-class savers, with annual contributions limited to a few thousand dollars a year. Yet somehow Mr. Romney ended up with an account worth between $20 million and $101 million.
There are legitimate ways that could have happened, just as there are potentially legitimate reasons for parking large sums of money in overseas tax havens. But we don’t know which if any of those legitimate reasons apply in Mr. Romney’s case — because he has refused to release any details about his finances. This refusal to come clean suggests that he and his advisers believe that voters would be less likely to support him if they knew the truth about his investments.
And that is precisely why voters have a right to know that truth. Elections are, after all, in part about the perceived character of the candidates — and what a man does with his money is surely a major clue to his character.
One more thing: To the extent that Mr. Romney has a coherent policy agenda, it involves cutting tax rates on the very rich — which are already, as I said, down by about half since his father’s time. Surely a man advocating such policies has a special obligation to level with voters about the extent to which he would personally benefit from the policies he advocates.
Yet obviously that’s something Mr. Romney doesn’t want to do. And unless he does reveal the truth about his investments, we can only assume that he’s hiding something seriously damaging.
Of course, none of this matters to — or even gets considered by — the large chunk of the country who “know” Iraq played a role in attacking us on on 9/11 and that climate change is a hoax and that our Muslim President is plotting to confiscate our guns. Who nod when Rush Limbaugh, red faced and bursting with outrage, labels “the four pillars of deceit” — “academia, government, science, and the media.”
Down this anti-science, anti-tax path lies the Romney/Ryan austerity budget. By throwing so many out of work just when we should be hiring them to rebuild our crumbling infrastructure, it out-Hoovers Hoover and presages the kind of dark times that the last great depression led to: wars and fascism (look at the nascent Nazi party in Greece).
None of this is going to happen, because — in a cliffhanger victory your support is crucial to assuring — Barack Obama is going to be reelected and we will continue to make slow, but more or less steady, progress out of the incredible mess Mitt Romney’s Harvard Business School classmate, George W. Bush, left behind.
That progress will be faster if we also hold the Senate and take back the House. Which we will do if our drive to turn out the vote trumps their drive to suppress it.
Quote of the Day
That I'm their competition.~Famed hedge fund manager Michael Steinhardt, when asked the most important thing an investor could learn from him.
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