David Bruce Has Done His Taxes March 31, 2005March 1, 2017 Meanwhile, the Saudi Royal family continues to make an extra $250 million or so A DAY from today’s higher oil prices. That’s extra, beyond what they were making before the price of oil shot up from $25 or $30. (Just thought I should remind you what a grand time this has been for Bandar Bush, as he’s known – the Saudi Prince who’s virtually a brother to our President – and for the oil crowd generally.) And now . . . DON’T LET OEDIPUS ANYWHERE NEAR MY FEEDING TUBE Richard Vroman: ‘In California there is a place to specify who may not in any circumstance have input into health care and end-of-life decisions. This could be very useful for those who anticipate that there might be a fight. If such clauses are available in other states, they could prevent a lot of problems.’ DAVID BRUCE HAS DONE HIS TAXES David Bruce: ‘Last year, it became apparent that some of your readers don’t realize that people making incomes in the $30,000-range pay income taxes. In 2004, I made $34,269.51. I paid $2,571 in federal income tax and $386 in Self-Employment Tax. I paid $726 in state income taxes. I paid $565.46 in local income taxes. I take the standard deduction, and I am in the State Teachers Retirement Program in Ohio. Frankly, I don’t mind paying my fair share of taxes. To me, taxes are the price that we pay for civilization. Of course, I would like the money spent responsibility, and I believe that it is spent more responsibly when we have Democratic leadership.’ APPLE ALERT James Jensen: ‘The bags of ‘Gala’ Michigan apples you bought could really come from Michigan in March. Nitrogen-rich refrigerated warehouses allow last year’s harvest to stay fresh for months.’ ☞ Next you’ll be telling me dinosaur bone marrow can be preserved for 70 million years. YOUR WEIGHT BEFORE AND AFTER EATING THAT APPLE Judy: ‘You SAY you’ll never speak of this again, but you KNOW you’re going to get some physicist telling you why a man weighs more or less when he does or doesn’t….etc….and it will go on and on until you start eating avocadoes.’ ☞ You cut me to the core. John Ebert: ‘I agree the guy and the apple weigh the same before and immediately after eating. But the digestive process is a bunch of chemical reactions, with food molecules combining with oxygen molecules and so on. Some products of those reactions add to the body and some are waste products. In turn, the waste products are either stored for later excretion or exhaled in breathing. So after ingestion but before excretion we have a “closed system” – except for respiration. Any change in weight would depend on the difference between the weight of air inhaled and the weight of air exhaled. Since a CO2 molecule exhaled weighs more than an O2 molecule inhaled, we’d expect there to be a gradual weight loss – unless there are more O2 molecules inhaled than CO2 molecules exhaled. (More precisely, unless the ratio of O2 molecules inhaled to CO2 molecules exhaled exceeds about 1.375).’ ☞ Didn’t Einstein say that weight loss was 2% respiration and 98% perspiration? I thought I weighed gradually less because I was evaporating. OK, not another word about this.
The View from Morgan Stanley And Carrots, Prisons -- the Works March 28, 2005March 1, 2017 HYPOCRISY I guess you’ve heard by now that Tom DeLay did not object to pulling the plug on his own father after an accident left him severely brain damaged – even though he had left no written instructions. And it’s by now old news that George Bush signed the Texas law that routinely pulls the plug on patients in Terri Schiavo’s condition even if their families unanimously object (unless they can pay). (You probably also saw that the House Ethics subcommittee has been revamped to avert any further investigations of Tom DeLay – only a Republican can trigger such investigations, and the ones who might have have been replaced with DeLay loyalists. ABC’s Nightline covered this Thursday.) How can the Republican leadership focus so much attention on Terri Schiavo yet be so indifferent to the suffering of so many sensate human beings? How can they make tax cuts for the wealthy their top priority and then claim to follow the Bible? Last thought: If I and most others are wrong and Terri IS aware of what’s going on around her, imagine the hell it must be. Desperately bored, desperate for someone to scratch her itch or turn on the TV (or turn it off) . . . desperate for people either to find a way for her to communicate, ala Helen Keller, or to end the hell she is in. On the TV show ’24’ a few weeks ago they kept the Secretary of Defense’s son in sensory deprivation for just a few hours – a few hours! – and it was the worst torture. Imagine 15 years of it! All because she never put her wishes on paper. More likely, of course, she is aware of nothing, has none of the thoughts or memories that were Terri, and in that sense, tragically, left the world 15 years ago. By all accounts, she was a wonderful woman. Whatever side of this one is on, it is impossible not to feel awful for all involved. PRISON Ever wonder why New York’s draconian ‘Rockefeller drug laws’ never get changed, even though they wreck lives and cost New York taxpayers a fortune? Here may be one clue, from an op-ed by Andrew Cuomo. He says that sending all those non-violent offenders upstate and throwing away the key . . . . . . works out nicely for New York’s Republican Party. Why? Because the population figures that determine Senate and Assembly districts include prison inmates. It’s simply not in the Republicans’ political interests to support measures that would let those locked up under the old drug laws go free. According to data from the Prison Policy Initiative, nearly 44,000 prisoners — mainly from downstate and mainly minorities — are incarcerated in small, upstate communities and are counted as “residents” of the communities in which they are imprisoned. Their presence in a prison adds to a legislator’s constituents — even though, as prisoners, they can’t vote. This is politically powerful for the Republican Party. There are four upstate Senate districts that qualify as districts only because they include a large prison population — and all four are represented by Republicans. The Democrats would have to take just four more seats for the Republicans to lose their majority. The leading defenders of the Rockefeller-era drug laws are upstate Republican Sens. Dale Volker and Michael Nozzolio, heads of the committees on codes and crime, respectively. The prisons in their two districts account for more than 17 percent of all the prisoners in the state. It may not be fair to say Volker and Nozzolio actually “represent” the inmates who make their districts viable. Sen. Volker told another newspaper that the cows in his district would be more likely to vote for him than the prisoners. State population statistics show that, without the inmates, Volker’s district is one of the four that would have to be redrawn. THE VIEW FROM MORGAN STANLEY Morgan Stanley’s Stephen Roach opines, in part: The US Federal Reserve is behind the curve and scrambling to catch up. Inflation risks seem to be mounting at precisely the moment when America’s current-account deficit is out of control. Higher real interest rates are the only answer for these twin macro problems. For an unbalanced world that has become a levered play on low real interest rates, the long-awaited test could finally be at hand. Note the term ‘real’ interest rates. If rates are 3% when inflation is also 3%, the real rate is zero. Roach highlights the Fed’s challenge: Yes, it has been raising rates. But inflation has also been rising. So in actuality, it has only been raising real rates very slightly (and, he says, will need to do more). One could argue (he argues) that the Fed ‘needs to be shooting for a nominal funds target of around 5.75% – or more than double the current reading.’ And that the Fed might need to get there sooner rather than later. If so, it likely halts real estate appreciation or causes a correction. And imagine what that does to the engine that’s been fueling so much consumer spending: borrowing ever more against ‘ever more valuable homes.’ (Except they are the same homes they always were, so their greater value is disputable, while the added debt is not.) Roach is not certain the Fed will bite the bullet. If not, and rates don’t rise fairly swiftly, he believes the dollar will fall fairly sharply instead (wait till you see the price of oil then!). It didn’t have to be this way [Roach writes]. The big mistake, in my view, came when the Fed condoned the equity bubble in the late 1990s. It has been playing post-bubble defense ever since, fostering an unusually low real interest rate climate that has led to one bubble after another. And that has given rise to the real monster – the asset-dependent American consumer and a co-dependent global economy that can’t live without excess US consumption. The real test was always the exit strategy. ☞ The other big mistake was undoing the sensible balance Clinton/Gore had reached in the tax burden – down from the crazy 90% top bracket under Eisenhower and nearly as crazy 70% all the way from Kennedy, Johnson, Nixon, Ford, and Carter to Reagan . . . but slashed to 28% when Reagan left office, which went too far and led to huge deficits. Clinton put it back up to 39.6%, which was just about right: the rich kept getting richer faster, after-tax, than everyone else (as is our due), but the nation’s finances came into better balance and there was room to raise the Earned Income Tax Credit and put 100,000 cops on the street and extend health care coverage to more kids and modernize the military Bush would go on to use in Afghanistan and Iraq. CARROT ALERT Kim Ness: ‘Be careful with the carrots. I love ’em, and the baby ones make them so easy to eat. But last year I found that I had become ORANGE (not tan, not nicely bronzed, but orange). Since August I haven’t eaten a carrot, except for random slices or shreds from a packaged salad – and I’m still orange. Apparently the stuff that makes carrots (and me) orange is stored in fat, and so it is harder to get rid of than stuff that is water-based.’ ☞ Not to make light of your problem, but there is a red-state-blue-state joke in here someplace. I am going to lay off the beets. Michael Fang: ‘My aunt was so obsessed with her children getting the nutrition in carrots that she made and fed them carrot dumplings. The next day my nephew was orange.’
The $64,000 Question Do we wake up and smell the coffee? Or, having smelled it, wake up? March 24, 2005March 1, 2017 THE $64,000 QUESTION John Lemon: ‘As a result of your concerns (as well as those of Mogambo) about the national debt and the future of our economy, are you beginning to rethink your longstanding advice to young and middle-aged people to regularly invest in equity index funds?’ ☞ Yes and no. With an emphasis on no. The yes part is easy: there’s lots to be concerned about. America’s financial position is growing increasingly precarious. We are borrowing most of the world’s savings rather than saving on our own – and for what? To finance oil imports that we burn into thin air; to finance tax cuts for our wealthiest citizens. Well, you read all that yesterday and the day before. The ‘no’ part comes in several pieces: These concerns could be ill-founded. Things could go better than expected. That would be good for the periodic investor in index funds. I’ve long recommended that these regular monthly or quarterly or annual investments be not just in domestic funds, but perhaps a third or more in international funds. That could help the periodic investor. Over the long run – and it can be very long – the market tends to price its wares in such a way that it rewards investors for taking their risks. Not always, and certainly not with every stock (or risky bond); but over time, and over asset classes, the least uncertain – e.g., the 90-day Treasury bill – offers the lowest return. Risks wisely taken, and by those with the staying power to wait, and the resources to diversify and spread that risk, tend to reward their risk takers. (This is one reason the rich get richer; they can afford the risk.) By investing periodically and steadily, you get the benefit of dollar-cost averaging . . . buying more shares when they’re cheap, fewer when they’re dear (because $1,000 will buy only twenty shares of a stock at $50 but fifty shares when it falls to 20), so in the long-run, the odds are stacked in your favor. (Say the stock – or, in the case of index funds, ‘the market’ – see-saws equally above and below $50 for a long, long time. And ends up at $50. It was $50 in 2005 and it’s $50 in 2030. You’ve gotten nowhere! But actually, on top of any dividends along the way, you would have done well. Just how well depends on the frequency and amplitude of the fluctuations around that $50 price. But the concept is clear: you bought a lot more shares below $50 than above $50, so taken together you have a nice profit.) Historically, ‘you gotta be in it to win it.’ Market gains tend to come in spurts, unpredictably. If you try to ‘time’ the market, you could very well miss much of the growth. There’s much to be said for not breaking the habit/discipline/routine you’ve developed. If you have found a way to shunt 10% of your pay (say) regularly and (by now) painlessly (because by now you barely notice it, having come to accept the notion that you live as if you earned 90% of what you actually do) . . . why break a good habit? But might it be wise to up from 33% to 50% your allocation to international index funds? It might. And is the problem more complicated as you get older? It is. If you’re nearing the time that you’ll be taking money out of your fund rather than putting more in, you would want to rethink the proportion on your total pie you’ve committed to equities. So maybe what it really comes down to, as I try to weasel out of your very good (nay, $64,000) question, is how you define “middle-aged.” WHERE TO DONATE THAT OLD COMPUTER? Click here. They can often match what you have with the needs of a local group that will pick it up from you. PRIVATE ACCOUNTS There are just so many reasons not to borrow trillions of dollars from the Chinese and Japanese to fund President Bush’s proposed Social Security partial privatization. A brief excerpt from one more: The Post’s Jonathan Weisman quotes both Jeremy Siegel, a stock market enthusiast, and Kevin Hassett of the conservative American Enterprise Institute in support of Shiller’s views. All three agree that balanced investment portfolios are unlikely to earn 3% a year over the next few decades. . . . Bottom line: any kind of prudent investment is likely to leave a lot of people worse off than they are under current Social Security law. As with any financial scheme, you should be mighty cautious about signing on the dotted line when you’re dealing with a fast talking huckster who’s seems a little too eager to sell his goods without giving you time to read the fine print. WAKE UP AND SMELL THE COFFEE Longtime readers of this page will know we have long-since answered which came first, the chicken or the egg. (Hint: the egg.) But what about this? Do we wake up and smell the coffee? Or – smelling the coffee – do we wake up? I lean toward the latter. After all, think of smelling salts. I have never seen or to my knowledge smelled smelling salts and don’t know exactly what they are. But they appear frequently in literature, for reviving fainted ladies. Swoon; sniff; revive. Everyone seemed to carry a vial, just in case. So isn’t it really, ‘Smell the coffee and wake up!’ ?
Paws with a Cause Dogs, Lions, and Bugs March 15, 2005March 1, 2017 But first . . . ACTIVIST JUDGES A decision by a California judge yesterday, certain to be appealed, held that these gay couples – including one that has been together more than 51 years – are entitled to the same legal rights as any other married couples. Judges in New York City, Washington State – and of course Massachusetts – have found the same thing. It’s amazing anyone cares so much whether gays get drivers’ licenses, marriage licenses, liquor licenses, or any of the other civil stuff law-abiding citizens get . . . but on the specific issue of ‘activist judges,’ something funny has happened, at least in Massachusetts. The state legislators who voted in favor of gay marriage were all reelected, while some of those who voted it down have been voted out. It’s expected that when this issue next arises in the Massachusetts legislature, the elected representatives themselves will affirm the Court’s decision. So at least in some small pockets of civilization (Canada is another that comes to mind) it’s not just crazy judges who are interpreting ‘equal protection under the law’ to include gays – it’s legislators. This is great news for the Republicans, who will try to use gay marriage to cut Social Security benefits, thwart funding for education and health care, impose a global ban on embryonic stem cell research, eliminate the estate tax, criminalize abortion, drill in ANWAR, attain a filibuster-proof lock on all three branches of government – the whole list. The longer gay marriage can be kept in the news, the better. But what are judges to do? Conclude that a couple of 51 years should be entitled to equal protection under the law – but then rule otherwise? It is a dilemma. Yet attitudes are changing. Soon, a majority of Americans may decide it’s just not that important to them to deny Rosie O’Donnell’s partner and their kids Social Security survivor benefits . . . or to insist that Phyllis Lyon and Del Martin, a committed couple of 51 years, remain ‘strangers in the eyes of the law.’ What is so fragile about Senator Rick Santorum’s marriage that it is threatened by the happiness and commitment of Phyllis and Del? Interracial marriage, so long illegal, may not be your cup of tea – but how does it threaten or weaken your own? Justice Clarence Thomas is married to Virginia, a white woman. But if he had been married to Virginia in Virginia prior to 1967, he could have been arrested. Let’s hope he remembers that when, eventually, all this comes before him for a decision. And now . . . WOOF! WOOF! Kevin Smith: ‘Another excellent organization is Canine Companions for Independence, which trains assistance dogs for sighted, but otherwise handicapped people. The program is similar to the Guide Dogs program, with early training being provided by volunteers and then intensive training afterwards before being matched with a person. If for some reason the dog does not pass the intensive training, the original trainer has the first right to keep the dog for a small fee. We’ve had several of these dogs in my office (an auditing department), and it’s been a great experience all the way around.’ Michael Roth: ‘Another part of Guide Dogs is that they cull out of the program really well-behaved dogs with good genetics and use them as breeding stock. They are looking for people to house these animals (‘Breeder-Keepers’). The role involves keeping the dog in your home, following the rules of the school, and taking care of them properly. This offers another wonderful opportunity for people to contribute to Guide Dogs and the Guide Dog mission. I am currently a Breeder-Keeper for Genie, a wonderful Golden Retriever, who has had three litters of pups who have gone on to be Guide Dogs.’ LIONS Tony Spina: ‘Did you know that there are about 60 organizations in the US that train dogs to be eyes for the Blind? Paws with a Cause is one, and my personal favorite is Leader Dogs for the Blind in Rochester Michigan. And I would like to add two additional facts: All of the year-long training of the dogs that you wrote about and the weeks-long lodging/feeding/training of the dog’s blind future partner is completely free. Also dogs are given to people living all over the world, not just in a particular state. Lions International is a charity that focuses mainly on blindness. So by joining your local Lions Club, you support research to cure and prevent blindness throughout the world, and help your communities while you are doing it. The biggest share of the donations from the Lions Club that I am a member of (Addison Township, Michigan) is sent to Leader Dogs. With more than 46,000 clubs in 193 countries and geographical areas there is a Club to join near you! Click here for the speech by Helen Keller in 1925, eight years after the Lions founding, that changed its purpose to helping the blind.’ Mike Wallin: ‘While I love the heartwarming stories about guide dogs and the heart burning stories about Brussels sprouts, can you occasionally mention something about money?’ ☞ Tomorrow! BUGS Peter Vanderwicken: ‘How come I no longer get your column by email? By the way, Brussels sprouts are best cooked by boiling for 10 minutes, then drenching in red wine vinegar.’ ☞ Fixed. Toby Gottfried: ‘You mark some paragraphs with a little hand and outstretched index finger – in Internet Explorer anyway. In Mozilla Firefox, this wingding shows up as the letter F.’ ☞ That’s F for Firefox.
Minimum Wage Bankruptcies Sprouting Up All Over March 11, 2005March 1, 2017 TO EACH HER OWN April Stevens: ‘At the sight of Brussels sprouts my husband will dramatically clutch his heart and cry, ‘No, not green balls of death!’ I have learned to measure and cook them for one.’ BANKRUPTCY Jim Petersen: ‘When Harry Truman’s business went bust, he did not declare bankruptcy – instead, he worked hard and lived poorly for many years to pay back his debtors. I respect him for it. This is an uncommon value today. I do wish Congress would find a way to support people whose medical expenses exceed their capacity and pay our troops more, but don’t agree that encouraging them to declare bankruptcy is the answer.’ ☞ I think anyone with the talent, charisma, and good health to become President of the United States should be ashamed to go bankrupt. And I agree: providing adequate health care to the uninsured would be a great way to reduce personal bankruptcies. Ed Biebel: ‘Hearing about the change in the bankruptcy laws and all of the disparagements of the people who file bankruptcy drives me up a wall. Back in July 2003, I wrote you about my brother and his travails with his epilepsy and his hospital bills. You’ll see in that piece that, though hard-working, my brother had incurred a large debt through the despicable behavior of his employer. This company owner led employees to believe that they were insured and was taking premiums from their pay but not sending them to the insurance company. My brother was blocked from filing for bankruptcy by the tenacious lawyers from the hospital. My point in writing you is that many people ask why my brother didn’t pursue a claim against his employer. The answer is that the owner of the company and the company itself filed bankruptcy and were protected. Why do I have a feeling this new bankruptcy law will not one whit to protect people from unscrupulous companies that go into bankruptcy? It is a great time to be rich in America.’ Munch: ‘You link to Paul Krugman on the Administration’s bankruptcy bill – ‘tightening the screws on the least fortunate among us, as we gradually turn the clock back to the 1890s,’ as you put it. With the ascendancy of the religious right and corporatism, I would expect to start seeing quotes like this reappearing.’ CARAMELIZED Marie Coffin: ‘Slice in half and broil until the outside is nearly black. Eat. Yum. Broiling seems to caramelize the sprouts and make them even sweeter and tastier.’ MINIMUM WAGE Doug Jones: ‘I agree with your position on minimum wage in general. However, Washington and Oregon have relatively high minimum wages, $7.35 per hour give or take. Some McDonald’s restaurants now have call in centers for their drive thru windows, eliminating one or two employees. The call-in centers are located in North Dakota! There’s very little stopping McDonald’s from locating these overseas. So, even some of these jobs can be outsourced to a lower cost provider.’ ☞ Talk about Yankee ingenuity. You drive up to the window and ask for Chicken McNuggets or Kibbles & Bits and someone in Pakistan enters this order. Even so, the bulk of the work of fast food chains or motel maid staffs is likely to remain in situ. My hope is that the relatively few jobs lost in a minimum wage hike – I agree there surely would be some – would be more than made up for in the increased economic demand those higher wages created. WITH KETCHUP John Kasley: ‘Place rinsed sprouts in microwave dish. Add a generous slug of ketchup (yes, ketchup). Roll them around in it. Cook for a while. Eat from dish.’ ☞ Now you’re Cooking. Monday: More of Your Minimum Wage Comments, and a Real Dog color code: sprouts are green; bankrupts, deep in the red; minimum-wage earners, dirt poor
Boil, Salt, Eat, and Click March 10, 2005March 1, 2017 Tomorrow: Your thoughts on the minimum wage. Today: Don’t miss the links beneath these sprouts. BRUSSELS SPROUTS Mark Kirby: ‘I hope your praise of this unjustly maligned vegetable will encourage others to come forth.’ ☞ And forth they came . . . Bart: ‘A moment’s more work, creating a taste that has received enthusiastic endorsement from every Brussel Sprouts eater ever invited to our table. Boil sprouts in a generous amount of plain chicken broth. Do not overboil to point of mush. Drain all the broth from sprouts. Roll wet sprouts in and coat well with bread crumbs seasoned with a generous amount of ground black pepper and oregano. Lightly brown the sprouts in butter in a hot skillet. Serve immediately. When possible, purchase the sprouts still on the stalk. We generally prepare this as a last minute dish. Removing the stalk of sprouts from the refrigerator sparks conversation and allows one to extol the dish.’ ☞ They come on stalks? I thought they were like little vegetable plums. In any event, Bart’s concept of ‘a moment’s more work’ does not quite jibe with mine. To me, a moment’s more work is putting them on a plate instead of eating them straight from the colander. David: ‘Boil a bit, sauté a bit with butter and walnuts or pecans. Mmmm, good.’ ☞ Sauté? What is this, sauté? We are Cooking Like a Guy™, may I remind you, not like a Guy de Maupassant. Michael Ammerman: “Just as there is an S on ‘Cliffs’ in ‘Cliffs Notes,’ there is an S on ‘brussels’ in ‘brussels sprouts,’ the name derived from the Belgian city.” ☞ Well, I checked before I put that up – Google has 118,000 references to Brussel Sprouts. But in response to this e-mail, I checked and see 328,000 hits for Brussels Sprouts . . . so henceforth I will go with the crowd. TWO LINKS WORTH CLICKING Here is James Grant with his dour view of the investing landscape (if Warren Buffett has $43 billion parked on the sidelines, maybe the sidelines are not an entirely dumb place to be). And here is Paul Krugman on the Administration’s bankruptcy bill (tightening the screws on the least fortunate among us, as we gradually turn the clock back to the 1890s).
A Global Minimum Wage March 9, 2005March 1, 2017 BRUSSEL SPROUTS Buy. Boil. Salt. Eat. One of life’s simplest underappreciated pleasures.* RELIVE YOUR YOUTH This site – thanks, Roger – reminds you how old you were when big things happened. Don’t miss the links that show how old you likely were when you first heard certain songs or saw certain movies. You can even print personalized, if somewhat gruesome, birthday cards (‘You were 7 years old when the Challenger blew up – Happy Birthday!’). And now . . . WHAT SHALL WE PAY THE NIGHT WATCHMAN? Brooks: ‘I understand and basically agree with the principled reason for not raising the minimum wage: namely, that higher wages will reduce total employment because some employers will not be able to keep as many employees on payroll at the higher rate.’ ☞ We no longer sew a lot of clothes – those jobs are already gone. Typical minimum wage jobs these days can’t easily go overseas. Hotel maids and fast-food employees are not going to lose their jobs to the Chinese if their pay is raised (for the first time in 9 years) from $5.15 to $7 an hour. If all the competitors in an industry must raise wages, no one competitor is disadvantaged. The price of a burger might go up a nickel; the cost of a hotel room, a dollar . . . but people will not abandon fast food for home cooking over a nickel or sleep in their car over a dollar. If it’s not overdone, raising the minimum wage should have far more positive effects than negative. It enhances the value of work and personal dignity. It creates more spending power among people who might actually spend it. And that boosts the economy, creating more jobs and profit. Certainly raising the minimum wage nine years ago did not raise unemployment, which fell to the lowest levels in our history. Hiking the minimum wage gives people at the bottom a fairer shake, but also helps employers who want to give that fairer shake, yet can’t now because doing so unilaterally would put them at a competitive disadvantage. The U.S. should espouse a global treaty requiring each signatory to establish a minimum wage – however low – and requiring ‘best efforts’ to raise that wage each year until it reaches the median minimum wage for all the signatories. All voluntary, but a matter of national pride and, when quantified this way, something to shoot for. *For a few words on underappreciated vegetables generally, click here.
Sell Apple, Eat a Strawberry December 10, 2004February 28, 2017 The market is high, given the huge problems we face. Bill Gross’s December letter is well worth the read. The dollar will continue to sink – especially against the eventually-to-be-revalued Chinese Yuan. The price of imported goods will rise. And sooner or later inflation and interest rates will rise here, too. Of course, one of the (few?) justifications for the Dow over 10,000 here is that, relative to the Euro, say, it’s actually fallen to bargain levels, and will get cheaper still. When the Euro was at 90 American cents, buying $10,000 worth of the Dow at 10,000 (say) cost 11,111 Euros. With the Euro at $1.32, the same Dow at 10,000 now costs a mere 7,575 Euros. So it seems to us unchanged, but to the Europeans, it’s 32% cheaper. And if the Chinese can buy IBM’s PC business, who’s to say, as they revalue their currency upward, they may not buy other U.S. assets and shares, driving up their prices and pumping funds into the bank accounts of the sellers, to be reinvested in other shares? Moreover, while it is easy to envision all kinds of terrible scenarios – and there is a real chance one or more may materialize – we should never rule out brighter possibilities. With Arafat gone, the world really might be able to make peace in the Middle East, beginning a virtuous cycle as the seeds of bitterness and terror gave way to the power of hope and dreams. The election in Iraq could take place as scheduled and things could actually begin to get better (even though the CIA seems to think they will get worse). As King Abdullah II of Jordan told Chris Matthews yesterday, no one knows if this will happen. But if Iraq could join the modern world, it would be the beginning of a much brighter future. So there is much to hope for – who among us did not hope we’d be greeted with flowers when we invaded Iraq? – and, I think, even more to be worried about. SELL APPLE Suggested here last November 25 at around $4 when the stock was just above 20, Apple’s long-term calls (known as LEAPS) are now around $43, with the stock at 63. Stupidly, foolishly, and reprehensibly, I suggested selling half at the end of March, for little more than a double (what was I thinking?). And later, when the LEAPS had tripled, I suggested perhaps selling a like number of out-of-the-money calls to make for what would have been a likely quadruple while you waited for the LEAPS to go long-term. So if you followed these suggestions, you would have long since doubled half your money and quadrupled the other half, but be sitting here like me, rocking back and forth wringing your hands, imagining how sweet life would be if you had just held on. But while I can make an (uninformed, seat-of-the-pants) case for AAPL at 200 a few years from now, I have to think that if you had the good fortune not to see or act on my earlier profit-taking suggestions, now you surely should. Sell. Yes, the company has no debt and close to $6 billion in cash and marketable securities (so you’re in effect paying ‘only’ $19 billion for the company, not its full $25 billion market cap). And yes it has a great young CEO and a phenomenal brand with fanatically loyal customers. But it earned only $276 million in fiscal 2004, which isn’t such a hot return even on $6 billion in cash and securities, let alone a $25 billion market cap. And if you had adjusted those earnings to account for stock option grants, as corporate America is likely to have to start doing this coming year, the $276 million, I’m told, would have been just $168 million. (And 2003 and 2002 would both have shown losses.) Indeed, you might want to take a small bit of your realized profit from the LEAPS and buy (say) a July, 2005, 75 put, which last traded at $14.80 ($1,480), so that if the stock were $55 next July, you’d have turned your $1,480 into $2,000 . . . and if it were $45, you’d have turned it into $3,000, doubling your money, before taxes, in little more than 6 months. But I’m not doing this (and at least for now missed my chance to do something like it when the stock hit $69), because Apple might just stay where it is or go up. One of my friends, who shorted Apple at a painfully lower price, scoffs at its 2% share of the computer market. But what if those millions of iPod owners not only continued to buy iPod add-ons and next-generation iPods, and all that . . . but began buying Macintoshes and, over the next few years, Apple’s market share rose from 2% (or whatever sliver it actually is) to 10%? Or even 5%? Profits could well rise out of proportion to sales (tripling sales might only double costs), and maybe Apple’s profits jump 10-fold. You could have a $200 stock. I am absolutely, positively, definitely not predicting this. But to me, Apple’s price here, while unattractive, is not necessarily bubblesville. See how hard this is? I own an iPod, I’ve been to business school, I’ve spent at least half an hour thinking about all this, and still I don’t know what to do. I’m very happy having taken my lovely profit and now being off on the sidelines, neither long nor short, watching. (My friend who is short thought Apple, instead of Lenovo, the Chinese firm, should buy the IBM PC business. What a nice little irony that would have been.) COOKING LIKE A GUY™ The work proceeds apace. Like a soufflé (which you’ll find nowhere in my book), it cannot be rushed. Principal photography has begun. (I am having creative differences with the photographer. I need scruffy. I need ketchup stains.) In any event, I present you: Recipe 19 – Sinless Strawberry Sin Step #1: Buy fresh strawberries and a can of fat-free Reddi-Wip. Step #2: Having uncapped and shaken the Reddi-Wip – and marveled that the entire can, at 5 calories a serving, has just 200 calories – grab a strawberry by its green-leafy handle and swivel your wrist so that the berry itself faces mouthward. Step #3: Shuzzle a snowdrift of Reddi-Wip on top . . . eat . . . repeat. Step #4: Once all the strawberries are gone (this being America and you being a guy), invert the Reddi-Wip and place its nozzle in your mouth like a straw. Shuzzle one final crescendo. If there is a heaven, it must be very much like this. YOUR WEEK-END ASSIGNMENT And it will take you only 5 minutes: Bill Gross’s aforelinked December letter.
Of Acorn Squash and Condoleezza Rice November 17, 2004February 28, 2017 CONDI The good news is that naming an extraordinarily talented black woman Secretary of State sends a terrific message, both to people here at home (especially young African-Americans) and to people around the world (especially in nations that oppress women or that would prefer to think of America as racist). Condoleezza Rice is a quadrilingual, figure-skating, concert piano-playing star. The bad news is that, unlike her two predecessors (who were, combined, a black woman), she is the wrong person for the job. Where Bill Clinton arguably needed a Secretary of State who could help him go to war in Serbia (namely, Madeleine ‘What’s the point of having this superb military . . . if we can’t use it?’ Albright) . . . and George Bush certainly needed a Secretary of State to slow his rush to war in Iraq (namely, Colin ‘you break it, you own it’ Powell) . . . what Bush gets in Rice is not a counterbalance but rather, in effect, a co-conspirator. Or so one fears. So State may be purged of dissenting voices, as the CIA will be; the House and the Senate are already under tight rightwing control; the Judiciary tilts ever more rightward, as does the press. What ever happened to checks and balances? YES BUSH CAN You may recall that I erroneously billed this group (yesbushcan.com) as Kerry converts, when in fact they were pro-Kerry all along, just having a little fun. ‘Other stunts they’ve pulled,’ I just now learn from one of your pre-election e-mails I’m catching up on, ‘include stealing Barbie and GI Joe dolls off store shelves and swapping the voice boxes, so Barbie wants to go to war and GI Joe wants to go shopping and do his nails.’ I’m beginning to get the picture. IS IT ME, OR IS IT HOT IN HERE? Dan Kinsella: ‘It would appear that the global warming increase in the last 100 years that you referred to a few days ago is actually due to bad math. Click here. That doesn’t mean that global warming isn’t happening, just that the study that everyone refers to as ‘proof’ is wrong. More refereed studies would have to be run to see if the temperature has actually changed much in the last 100 years.’ ☞ The temperature may not have changed much in the last 100 years. What I couldn’t tell from clicking that link is whether the two premises I’ve been operating on are wrong. The first is a spectacular rise in CO2 levels in the past century or so – after 400,000 years of moderate, regular cycles. (This data derived from glacial ice samples. The deeper you drill, the older the ice and the air trapped within. Or so I’m told.) The second, is the way, over those 400,000 years, temperature seemed consistently to follow the CO2 cycle. Did the bad math undermine either of those premises? If so, I need to post a correction here. But I’d also ask: Do we really need to be 100% sure before we do something? What if there were only a 20% chance of catastrophe . . . would that not be worth beginning to take action to avert? And doesn’t common sense suggest that the modern-day activities of 6 billion people likely would have an effect on the environment? I’m not saying that if we all stamped our feet at the exact same moment the planet would shatter, although if we all gathered in one corner, like a pimple on a baseball, I feel sure we’d wobble its rotation. But why wouldn’t burning 70 million barrels of oil a day into the atmosphere (and however many tons of coal) eventually have some impact? STUFF I OWE YOU It’s just so hard to catch up! But . . . the Ten Commandments of E-mails (thanks to your refinements) . . . the Calico Cat Denouement . . . some more of your thoughts about the election . . . an (insincere) apology for talking so much about the election . . . responses to your responses to my responses about the election . . . my acorn squash recipe* . . . and coming soon, I hope: ‘Bin Thinking About the Dollar.’ *Oh, okay, here it is: BUY one acorn squash, STAB it once with a knife so it doesn’t explode, MICROWAVE for 8 minutes unless it’s very small (6 minutes) or your microwave is pretty lame (10 minutes). Voila! CUT in half, SALT and BUTTER (I Can’t Believe It’s Not Butter Lite), DIG IN – and yes, it’s fine to eat the seeds and all the rest, though I eschew the skin. My God the things you learn from this column you never got from Rukeyser.
Notes From a Fundamentalist November 8, 2004February 28, 2017 SCALLOPS Frank Nash: ‘You say, ‘Turn the scallops over and push ’em around a little.’ Don’t turn them over. Cook on one side only. The result is a splendid golden crust on one side and a much juicier scallop – no need to upend the pan to drink the juice, the juice remains in the scallops.’ ☞ Chacon a son gout. (I don’t speak French and spelled haricot vert wrong yesterday, but I keep trying.) YES, BUSH CAN It seems the YES, BUSH CAN folks I’ve referred to a couple of times here didn’t really start out as Bushies and convert – they were anti-Bush all along. Sorry not to have caught that. Click here for their exploits. ARROGANCE Katie: ‘Your column beautifully illustrates why the Dems lost. You arrogantly assume that the people who voted for Bush were uninformed. The arrogance of the elites is why you lost this election. The majority of Americans can and do examine the facts and decide for themselves. That they choose to ignore you and the Dems does NOT make them uniformed. It means they disagree. But until you and your party can figure out that you do not know what’s best for the rest of us, you will continue to lose national elections.‘ ☞ If the surveys are right, 60% to 70% of Bush voters believe Iraq had a significant hand in attacking us. That’s just one of many examples, but not an unimportant one. Thomas Jefferson said, ‘If a nation expects to be ignorant and free, in a state of civilization, it expects what never was and never will be.’ My fear is two-fold. First, that our citizenry does an only so-so job of staying informed. Second, that we are served by an increasingly consolidated, increasingly intimidated press. As to the arrogance of ‘knowing what’s best for the rest of us,’ there are places where, yes, we would intrude – for example, we wanted to extend the ban on the sale of assault weapons. But that’s an area where polls show most people agree with us. At the same time, there are so many areas where your elites believe they ‘know what’s best for the rest of us.’ For example: The Bush Administration says the people of California may not use medical marijuana to relieve their pain or reduce the nausea of chemotherapy – never mind the referendum by which they enacted this. The Bush Administration knows what’s best for them. The Bush Administration says terminally ill Oregonians may not choose assisted suicide, even though the people of Oregon twice passed this by referendum. The Bush Administration knows what’s best for them. The Bush team says abortion should be illegal. They know better than women and their doctors how to make this difficult choice – even though a majority of the country disagrees. The Bush team says that Charles and I should be denied equal rights – perhaps even jailed (as per the Texas law that Governor Bush supported but that, to his dismay, the Court struck down) – because they know better than we do whom it is okay for us to love. The Bush team says we cannot adopt, even if the trained social workers and family court judge believe it would be in the best interest of the child. The Bush Administration knows what’s best for the child. So I think it maybe works both ways. ONE FUNDAMENTALIST’S VIEW From John Leonarz: I write as a fundamentalist, born-again Christian, a Democrat and a strong Kerry supporter. I drove down to Jacksonville, FL, to give three days driving voters to the polls and do my bit to preclude a repeat of the debacle of 2000, when many thousands of votes (Dem.) were uncounted in Duval County. While at the Dem HQ a lady came in to ask for a bumper sticker which would say “Christians for Kerry.” There weren’t any. Apparently the campaign never made any of them up. The Black people I assisted were very strong Christians and had no difficulty seeing that God wanted them to support the Democratic Party. Mr. Kerry was a red (blue?) flag to these people – “liberal”, Catholic, anti-Vietnam war, pro-abortion, pro-Gay, from Massachusetts, and “nuanced.” If we expect to win, ever again, we will have to meet these people at least half way with someone who is a recognizable, sincere, biblically-literate Christian. This person need not be a gay-basher, nor one who wants to re-criminalize abortion (mostly the right-wing does not want actually to recriminalize abortion). The candidate would have to begin with a simple, consistent, pro-American, pro-gun, pro-conventional-marriage base. Strong support for a proper health care system, strong defense, strong anti-terror program. The person should be a church-attending, credible veteran free of antiwar notoriety, a person with stature as a leader and politician, probably a Governor. The person must be well-vetted because the Republicans will take any incident out of context and make up stuff to discredit the person. The person must have a record of making good decisions and staying with them. Decisions should be informed, but not marked by long periods of study. Bush would have been vulnerable to a charge that he made snap decisions made on guesswork and then let himself become the prisoner of his ego. We never said that in so many words. The gay marriage issue is answered for a concurrent majority of Christians by the appeal to fairness – i.e, advocacy of the civil union, together with the comment that “God knows who is married and who is not, and only God’s opinion counts.” The gun issue is answered by taking the position that one will respect the opinions of law enforcement organizations, and that therefore gun-owning, public spirited citizens have nothing to fear from the Democratic party. Christian voters abhor the idea of giving huge tax breaks to the wealthy, to be paid for by our children and grandchildren, but would not vote for Democrats because of the general fear of creating a massively secular, big-brotherly type of society, oriented to deterioration of the family and indulgent toward unconventional sexual mores. Bush’s comment that the majority of the tax cut went to low income citizens, was misunderstood by most. What he apparently based it on was the number of persons in the categories who received tax cuts, which was unquestionably highest among those of low income. [OK, but if you gave a $5 cut to each of 100 million low-income households and a $1 million cut to the top 10,000, that would be $500 million for the people at the bottom and $10 billion to the people at the top. Wouldn’t it be purposely deceptive to deny that such a scheme gave most of the benefit to the wealthy, as Gore suggested, and state flatly, as Bush did, that “by far the vast majority” of the tax cut would go to people “at the bottom end of the economic ladder”? – A.T.] Christian voters are not as stupid as many Democrats think they are. (Some of them, of course, are.) In general, Christians were greatly annoyed at the blatant lies put out by the Republicans, and appalled at the casual way in which they made stuff up as they went along. All things equal, a Christian will vote against that kind of tactic. In future we must adhere to a well-publicized effort toward truth and fair dealing in our campaign statements. When we slip from this standard we have to be prompt and full with our explanation and recognition of the truth, even apology, which can be even more devastating than any exaggeration we might have put forth. We must recognize that Republicans are not interested in facts, only in values and impressions. If the world divides between the nerds and the jocks, they are the jocks, and the jocks are more numerous. Did it matter whether Iraq played a role in 9-11? No. Or that Bush is a heartless scoundrel (the Tucker case, the suppression of photos of the returning caskets)? No. A decent regard for the heartland religion is key, because the heartland is where the electoral votes are. Karl Rove knows that, and that will still be true in 2008.