Tuesday, August 31, 2004

Bruce Willis' Own Private Idaho

In the property rights chapter of my book, I use the example of building restrictions on Lake Tahoe to show how we don't have absolute property rights in the United States and why that is a very bad thing.

In brief, property rights, along with democracy and the rule of law, are necessary for a free society and a free society is necessary to earn returns in the market. From Lake Tahoe to Hollywood in Idaho we get this:

Actor Bruce Willis will pay a $21,000 fine for violating federal wetlands protection laws by clearing a half-acre island in a pond at his central Idaho home.
I don't want to argue the science of wetland protection laws (I can't) only their implementation. As has been happening around the country, the EPA deems certain land restricted and all development must stop. They don't buy the land on the marketplace; they take it by bureaucratic decree. In this case, Mr. Willis purchased the land and has been paying the taxes on it, but is unable to use it for his purposes and he hasn't been compensated for it.

This is theft.

As I summarize in The Pure Investor when speaking of nationalized industries abroad:

What incentive does an entrepreneur [or actor] in these countries have to build anything for his family or himself when a thug-dictator [EPA] can seize them at will? A country that guarantees these property rights will prosper and attract individual who yearn for the assurance that they can keep what they build.
I'm sure that a $21,000 fine isn't going to force Mr. Willis to star in The Seventh Sense: I See Naked People, but these same fines are also being imposed on regular citizens daily.

Stay You.

Monday, August 30, 2004

Chaplin's Modern Times Irritates My Daughter and Anger's Me

My beloved TIVO was nice enough to record a bunch of Charlie Chapin movie's that I tried to watch this weekend. I got through The Kid. Great. I found it hard to not watch him. Those little gestures with huge meaning. Jackie Coogan was tremendous and I guess I now know why people compare Haley Joel Osment to him after 80 years.

My daughter wanted to watch Modern Times with me after I told her about the scene with him in the machinery. This one. So we sat down and flipped it on. If you haven't seen the film, the opening scene is a bunch of sheep mindlessly being lead to slaughter that dissovles into a line of workers entering a factory. Subtle, eh? This is when the question came:

"Daddy, do the sheep work at the factory?"
"No dear, Mr. Chaplin was a saying that the workers are like the dumb sheep but instead of being led to slaughter they are being led to the factory where their souls will be slaughtered."
"That's mean. They're just daddies going to work."
"You think so?"
"Yeah, I don't like this guy (Chapin) anymore."

From the mouths of babes.

I'll forgive Charlie. He had a strong socialist bent, but, he could create wonderful things. The movie was made in 1936. This was before the purges in the USSR and all the horror of those years. So he can be excused for not knowing any better. No?

But it does illustrate a point I've always thought important. The totalitarians of the world whether they are Soviet Socialists, National socialist, Chicoms, or just some faculty marxist at a midwestern state school do envision the everyday workers as dumb sheep. The regular drudgery that we all do puts food on the table and allows us to chase our dreams. We're not killing our souls but funding our loves and passions.

The real trouble starts when these people who see workers as sheep get into government. Viewing people as sheep it makes them that much easier to kill - 20 million dead by Stalin, 10 million dead by Hitler, unknown millions for the various Asian socialists. From Napolean on.

I love that at 7, my daughter knows better.

Stay You

RNC Convention Free Zone

Too many bloggers are hitting the RNC. Not here. I shall remain RNC Convention free.

Stay tuned for more.

Stay You

Sunday, August 29, 2004

7th Letter to the Editor in Sunday Challenger

This week the Sunday Challenger published my letter on race relations in response to this article from last week.

Some idiots burned a cross in front of a black family's house in Burlington. I think anyone will admit that they've had racist thoughts and may have even acted like a racist either voluntarily or involuntarily; we should feel ashamed and correct ourselves. But to take the time to build a cross, soak it in gasoline, plant it in someone's yard and burn it is just incredible to me. Where does that hate and stupidity come from.

One item I will disagree with is the new phenomenon of "hate crimes." For one, they are persecuted unfairly. I would like to see a black guy in prison for a hate crime against a white guy, but we know that's not going to happen. Mostly, what I dislike about hate crimes is that the crime is based on the motive and not the act. These cross burning idiots broke a couple of laws starting with trespassing. Get them for that. Send them to a nice prison and let all the black guys know what they did.

Think about hate crimes this way: Imagine a woman has been raped and the county prosecutor has to decide on much to go after the guy, but first Mr. Prosecutor wants to know why the rapist did it. Hate crime theory says let's punish the guy who was just being a controlling, raping SOB more than the guy who just had issues with his mother and just wanted to feel close to someone. It doesn't matter! The woman was raped and the guy should be put away. Same for hate crimes. If I burn a sign on my neighbor's yard in the middle of the night that says "move out", I should be punished just as much as the cross burners.

Stay You

Friday, August 27, 2004

The Times, They Are Not A-Changin'

In a chapter of The Pure Investor unimaginatively titled, Think Long-Term, I advocate what academics call time diversification. Simply put: give your well-chosen funds enough time, the returns will normalize to the historical average. While this is easy to say, convincing my clients, and sometimes myself, of this is not always easy, so I use practical, tangible items to illustrate it.
Framed above the toilet of the upstairs bathroom of our office is the business section of the Cincinnati Equirer dated December 5, 1991. It is framed because the president of our firm has his picture in the center and is quoted in an accompanying article called "West Siders won't give up on their CDs." It is above the toilet as an in-office joke, but after looking at it several times, I realized it's a great teaching aid.

Along with the above mentioned article there are several others. I'll list their headlines.
First the bad:

  • Reports show slipping recovery (oh, no!)
  • Stocks decline in profit taking (drats!)
  • National Steel moving (local job losses to Japan!)
  • Mac might appeal (big fines, local layoff expected)
  • Pension fund probed (corporate corruption)
  • Pan Am 3rd Airline to fail in '91 (airport loses business/jobs)
Now the good/neutral:

  • Hanna-Barbera sale closes (Turner bought 'em. Big deal)
  • Enterprise arrives (great, another place to rent cars. Big deal)
That's a 3:1 positive/neutral to negative. At this point the Gulf war is over, but Clinton is about to start campaigning with the daily "It's the Economy, Stupid" mantra that it's the "worst economy since the Depression." Sound familiar? Anyone reading this in 1991 would be inclined to think that it's a good time to get out of the market.

One item seems to argue against the depressing news and coming campaign rhetoric. In the lower right hand corner is an article: Execs urge U.S. to build supercomputer network. From the lede:

America's biggest computer companies want the government to help develop a high-speed data network that would let everyone from university scientists to grade-school students use supercomputers.


Supercomputers...are hugely expense, but the proposed high-speed communications network - ultimately shared by perhaps millions of users - could make pro rata expenses reasonable.
The tone of the article is fanciful like those futuristic movies from the '30s showing flying cars in the '80s and I don't think the reporter Richard Vernaci had any idea the import of what he was writing; how this "supercomputer network" would increase productivity, spawn industries and expand knowledge.

With all the bad news, the Dow was at 2889.09 and the S&P was at 377.39. Now look at where they are at. It hasn't been 15 years since that was written. That's half an average retirement for at 65 year old retiree who dies at 95 (not unlikely).

So during rough seas when you hear nothing but negative, remember to keep you eyes on the horizon and not the waves.

Stay You

Thursday, August 26, 2004

NRO Author Responds

Mr. Gessing, who wrote the National Review article I referred to in my earlier post, e-mailed me the following:
Point taken. The tack taken in the column was entirely my own, but I don't think the President shares your viewpoint on the moral basis for free trade. I wish he did!
That last sentence makes me want to buy Mr. Gessing a drink. Maybe a brown liquid imported from Canada?
If you don't know Mr. Gessing's employer, the National Taxpayer's Union, take a look at their accomplishments. Maybe you'll even want to donate some of the taxes they helped you save.

Stay you.

NRO's Cement Head Article

National Review Online irritated me quite a bit with this article about the trade restrictions put on Mexican cement. The author takes the tack that Bush could help his chances of winning Florida by lifting the restrictions on the Mexican Cement and making it easier for the people of Florida to rebuild.

Shouldn't Bush lift the restrictions just as a humanitarian gesture? Isn't that the moral thing to do instead of keeping artificially high prices? Shouldn't NRO point this out? NRO goes right for the politics without thinking about the people - which is why the restrictions were put into place in the first place.

Stay You.

Wednesday, August 25, 2004

Buy My Book

Please buy my book!!

Birthday Girl

Yesterday was my eldest daughter's 7th birthday. As is customary she got to choose the restaurant and as custom dictates she picked the Hong Kong Buffet at the Newport Plaza.

How does this tie in with The Pure Investor and my book? - easy. One of The Five Taxes I write about is Immigration Control. I call immigrants and their work ethic and productivity the high octane fuel of the US economic engine. Any limits on legal immigration is a tax on business that lowers the returns available to The Pure Investor. If you want to know more, go buy the book.

In this particular restaurant in heavily white/Appalachian Newport, Kentucky I sat with my pretty blonde wife, my blonde eldest daughter and redheaded younger daughter. At the next table were two 20-something Hispanics who looked liked they had worked at some filthy job all day. Serving us were the same young Chinese waitresses who are always there. Whether we go on a weekday evening, a Sunday brunch or Saturday dinner - the same waitresses are there.

Sometime during the meal, the Hispanic guys started flirting with the Chinese waitresses in English - their unfamiliar, uncommon language. They did the best they could trying to interpret each other's amorous words and signals through three cultures and languages.

The Hispanic guys at the next table and the waitresses have been working hard all day - you can see it in their faces - trying to make a living, and now are flirting. My two girls didn't even take notice of them when they got a little loud. They were doing what young people have been doing for years. And I thought, "This is Northern Kentucky, this scene is new here but not in other parts of the country and the U.S. is still strong and, in some ways, stronger than it ever has been before." The national complexion may become more Hispanic or Asian or Indian, but the working, the living, and the dreaming is about the same as it was for the English, the Irish, and Italians. It made me happy. I hope they succeed. They probably will. I know their kids are going to be doing my grandkids heart transplants or curing their cancer someday, but for now they work hard where they can, eat out when they can, and flirt with each other.

My daughter's had seven good years and I think will have several more.

Stay you.

Monday, August 23, 2004

Comments on Points of Inflection/B-shares and Regulations

In my book The Pure Investor (have you bought one yet?), I didn't touch on choosing a share class. This has become quite a hot topic with various regulators and SROs. See here, here, and here, for a flavor.

Professionals in my field of investment advice sometimes feel like their being shot at from all sides. The markets are hurting them, clients are becoming more demanding, regulators are demanding more and more disclosure and seem suspicious anytime we get paid. Often times, what each of these groups want and need are in direct conflict with one another. I noticed such a case in a recent article by Peter L. Bernstein by the CFA Institute Conference Proceedings.

Mr. Bernstein lays out the problem as such:

The open-ended format of many investment managment relationships forces managers to look to the short-term only. Open-ended means that you can fire a manager easily - once a year - or in the case of a mutual fund, but you can hire and fire the manager daily by buying or selling shares. This open-ended format doesn't allow the manager to exploit long-term market inefficiencies, thus potential returns are being given up for the convenience of liquidity.

To quote Mr. Bernstein:

The open-ended really has two ends: one where money comes in and one where money goes out just as easily. As a result, managers are tied much more tightly to short-term strategies than they might like because they cannot persuade their clients to wait for the period of time that is required for a longer-term strategy to work out.
What's Mr. Bernstein's solution? He believes that managers should emulate hedge funds, real estate, and private equity. To quote:

So, how about a five-year contract that the client signs, but the client can purchase options to quit at the end of any year, with the price of those options declining year by year? IF a client wants to get out the first year, that option is very expensive. If the client wants to get out the third year, that option does not cost the client so much up-front. If the client wants to stay for the whole five years, the fee will be that much less.....The idea is to give the manager the money for an extended period of time so that the manager is in a position to make longer-term bets than he or she could under the open-ended format, where money can go out when the client chooses. That ability for money to come and go at will has to demand a price.
What Mr. Bernstein has decribed is what I would call silk handcuffs; they don't really hurt but they keep the client from hurting themselves. Another name for what he decribes is b-shares - exactly what the NASD is warning against inappropriate use above.

My main job as an investment advisor is to control my clients behavior. What Mr. Bernstein proposes helps do that as well as b-shares. However, if I use b-shares too much or what they term "inappropriately" I will bring down a world of hurt upon myself.

Conclusion: I walk a tightrope between doing what's best for my clients and what those that regulate me think are best for my clients. Who knows best? Me, but they sure do have a big hammer to hit me with if they disagree.

Letter to the Editor

Didn't feel great yesterday. Took a nap but didn't sleep well, same for last night. Today's worries set to the rythem of past worries. Strange.

Had another letter to the editor in the Sunday Challenger again. I'm writing them mostly as an exercise and as a hobby. It gives me something constructive to do on a Sunday evening. But I do wonder if they thing I'm some sort of crank obsessivly writing letters like grandpa Simpson. Dear Sirs, Everything sucks.

The letter was in response to this article/issue dealing with education issues. The Divine Mrs. M. things it was a little blunt and will get me in trouble with the local. They are proud of their school and are actively involved. Much of my bluntness came from my history with teachers. I never really encountered one I liked and many simply had a distaste for me and let me know it, so I wrote off the entire species. Possibly it was me, but come on I was just a kid. Most likely it was them. Now as an adult working 10-12 hours a day and taking 2 weeks off when I can and always checking in with the office during those 2 weeks, I don't want to hear complaints from teachers about their pay or lack of respect from society. You get 3 months off and just about every holiday as well as a few fake holidays and a week in spring. Shut up! But they're doing a job. What I'd really like to know is what all the administors and counselors and whatnots do?

I'll check out my oldest daughters school tonight. It's some kind of welcome night where the kids get to met their teacher and see their room and start to feel at home before the new school year starts. It's Catholic school and - from what I can tell - somewhat old school Catholic. Self-esteem seems to come from accomplishment, education comes from work. Nice formulas I wasn't taught until my early 20s and am still fighting against.

Stay You.

Thursday, August 19, 2004


Date of Birth: 4/16/1970
Place of Birth: Rota, Spain

Parents: Howard Lorne McEwen, Sr. & Karen Cross McEwen
Siblings: Tara Corinne Hull


Wife: Alicia Hissong McEwen, MA
Children: Dagny Hissong McEwen & Harper Hissong McEwen

Bellevue, Kentucky

Branch Manager, Makris Financial Group, 1999 - Current
Fidelity Investments, 1993 - 1999

Corporate Cover-up!!!

Not really. The story is here. A DHL plane went down a few nights ago on a golf course near the airport here in Cincinnati, Kentucky really. The co-pilot was killed; the pilot survived. An investigation was launched. However, that didn't stop DHL from sending out someone to paint over their logo so it wouldn't show in the media.

This is standard operating procedure - SOP as the article's headline states. I never would have thought that airlines did this. Isn't it a bit like taking off a fallen soldier's rank insignia?

The other thing I find strange is the painter. Who is he? I would think a crash site investigation would be a sensitive place? Do they just send out some intern with a bucket of paint and a brush? That doesn't sound smart. The kid could make a day of it with his buddies, get drunk, strap each other in the seats and slap each other with barf bags. Maybe it's just some union guy who wants a day out of the hanger. But who gives the order? Who thinks, "We have a plane on the 9th hole, get me a cleaner before the press arrives!" Maybe there a professional whose job this is? Is there one located at each airport ready to go paint "fallen birds?" Or is this a guy who anonymously travels the country, maybe a pilot himself, that takes care of these things when he sees them on the news on a contract basis with the airline industry? Possibly his pay is based on how fast he can get logo's painted over. Possibly he's a "cleaner" like Jean Reno in Le Femme Nikita or Harvey Keitel's "cleaner" roles in Point of No Return and Pulp Fiction.

There's a book here somewhere.

Wednesday, August 18, 2004

Killing the National Sales Tax/Value Added Tax Baby

In recent weeks, statements form Denny Hastert and Pres. Bush has signaled - and then withdrawn - a preference for a national sales tax or a vat.

This baby needs to be killed in the cradle.

I'm a strong believer in the doctrine that once a government program is started it never ends. Why would conservatives, libertarian, and Republicans want to create a National Sales Tax or VAT? Apply some practical politics to this (for economic reasons, see here). An income tax would still be around in some form or, if eliminated, would creep back in a few years if one of these ideas is implemented. Income taxes are not going away! They are a hated but accepted part of society and once something is accepted, it's they are easier to bring back. We'll be stuck with both!

The current income tax system was conceived at the beginning of the last century and birthed by the 16th amendment. Small and weakly when young, it has now grow into an overweight, sullen, grumpy 40-something adult with no prospects still living with its parents, always in the couch and complaining about there being no food in the house - it's annoying, takes up too much space, and smells at times. Why birth him a baby brother?

Stay you.

Tuesday, August 17, 2004

Moving to Idaho

It's things like this that are seeping into everyday life that make me want to bundle up the family and dog and become an isolationist gun nut in Northern Idaho. (Nod to Avery.)

Thanks world.

Stay you.

Practical Effects of a "Good" Regulation

I received a phone call this week from a printer who have done work for my firm. He wanted to know about my expected printing for this fall and winter. He normally does several thousand dollars worth of flyers, handout, and mailers each year for my firm's seminars at the local high schools regarding the college financial aid process. The schools appreciate us coming; we give lots of info and helpful tips and most importantly we take the scare out of parents who have built tuition into a gigantic bete noir of their lives.

This year we will not be doing any of that. Our motivation to do it was that we would get our company name out, meet with parents individually, and generate some business directly and also generate alot of goodwill in the community.

This will all come to a stop because of the Federal and State Do-Not-Call Regulations.

To get enough people to the seminar we need to take several approaches. We advertise in the paper, place posters around the school, and send direct mail. That generates a 1% response rate. Not worth my time. To get a 10% response, we would hire telemarketers to call the school's parents and politely tell them about the seminars. This last item was essential. We've gotten many thanks and very little complaints.

Since complying with the Do-Not-Call regulations has made this too costly and takes up too much of our time, we decided to end the seminars.

What are the effects of this?
Four telemarketers will not be hired (they did this for the family Christmas money)
the printer revenue will be down by a few thousand dollars (by the looks of it, this will impact his bottom line hard)
the newspaper doesn't get my ad revenue
the parents don't get the education they need

The Do-Not-Call Regulations stopped all this economic activity generated by my small firm and I'm not sure why. Is a ringing phone a problem that deserves the full force and attention of the Federal Government. I love being in a society whose biggest problem is telemarketers, but is it really a problem? Not for my family. We don't have caller i.d. (What, $2/month) and if we get a telemarketer we politely say "no thanks" and go on with our lives. It just doesn't bother us.

My favorite quote from my book is from John Stuart Mill: "Every departure from (laissez-faire), unless required by some great good, is a certain evil."

Stay you.

Monday, August 16, 2004

Taxing Ideas

The Tax Foundation has a nice study out today. It's here. Conclusion is that the top 20% of income earners keep paying more and more. Why does this make me nervous? Because the guy who I work for is one of them. I'm with him when he makes his quarterly tax payment. The numbers are quite a bit larger than mine. Any way, if trends continue and he keeps paying a larger and larger portion, at some point, he'll have to make up for it out of my salary and/or benefits. This is not good! I'm just joking - a little.

It's been said before by somebody, but if you tax something, you get less of it. If you tax incomes (work), you get less work. If you tax investment, you get less of it. At what point does a guy whose making a nice income say that it's just not worth it to go to work anymore.

For some reason Dennis Hastert turns me off. Can't someone get him a treadmill, decent haircut and contacts? But if he is pushing forward the sales tax idea, I might have to write him a check.

Stay you.

Letter to the Editor - Overcrowding Jails, Death Penalty

In response to this article in the Sunday Challenger, I submitted this letter to the editor. Maybe I sound a bit angry, but I don't have alot of compassion with prisoners. Really? How hard is it to stay out of jail? Besides a ticket and social situations, I haven't spoken to a cop for any longer than 5 minutes in my life.

I'm weakly against the death penalty. What does weakly mean? I think it's a bad idea to give the state that much power over a citizen, but I'm not going to be one of these people who stays out in the cold night of an execution saying prayers and weeping when the lights flicker. But I wouldn't abolish the death penalty and keep the situation the same as now. I would like to have a cage you put these murders in and give them 3 squares and a Bible or Judy Bloom to read and forget about them - no release, no parole, no compassion.

Friday, August 13, 2004

NJ Gov. James McGreevey Resigns Responsibly

I haven't followed James McGreevey's follies at all and just read this blip.

The article quotes McGreevey:
"Shamefully, I engaged in an adult consensual affair with another man, which
violates my bonds of matrimony," McGreevey said, without mentioning the lawsuit.
"[It was] wrong, foolish and inexcusable. I ask the forgiveness of my wife. She
has been extraordinary throughout the ordeal, blessed by virtue of love and
"Let me be clear: I accept total and full responsibility for my
actions. However, I am required to do now what is right, to correct the
consequences of my actions, and to be truthful to my loved ones, friends, family
and myself."

Why after reading this do I like the guy after having an affair and playing slap and tickle with homeland security? Oh right, someone's is actually exercising personal responsibility. He's protecting his state and family from his actions by sacrificing his own position and ambitions. This guy must not have learned the lessons of Bill Clinton.

A CEO as President

Pete DuPont had a nice piece yesterday on who makes a better President - an executive or a legislator?

One thing I have noticed during this election cycle is the absense of a celebrity CEO being offered up as president. The reason is easy: corporate scandals and the market being down. CEOs are out of fashion. There has been no-one that has captured and/or inspired the country. The CEO as savior has been a pretty regular occurence in the past 25 years. Lee Iacocca, Ross Perot, Jack Welch and Donald Trump, have all been seriously discussed. I hear the ego of Marc Cuban swelling up to join this club also - give it 15 years.

In my book, I write that CEOs are a group that shouldn't be listened to on how to grow the economy. I've always argued to CEOs would make lousy Presidents.

Reason #1 being that they don't know how government functions. Bureaucracy is a different animal than a corporation. The corporation has strong lines connecting the CEO on down to the janitor. If the CEO pulls one of those lines the Janitor jumps. If not, the CEO can come in and knock some heads. Not so with government. The President may have direct control of the White House, but beyond that, he must rely on suasion and the power of his person to control the many fiefdoms in a bureucracy. How often has the State Department worked against and undermined a President? The military? More often than we would want to know.

Reason #2 is the mental attitude of a CEO. By definition, they have to tell their workers what to do to get success from them. You can't tell Americans what to do. They're going to do what they want. In fact, they'll do exactly opposite of what you tell them just to show you. A CEO's first instinct is to control: Iacocca proposed higher taxes, restricted trade, required "public service." While specific policies may sound attractive, in a free country, command and control does fly.

Reason #3: History. Who have been our presidents with business backgrounds? Hoover, Carter, and, now, Bush. No further comment required on the first two. As for Bush, I'll reserve judgement until Hillary is president, but the fact that he's the first MBA President never made me comfortable.

Thursday, August 12, 2004

Personal Responsibility - BOOORING

IV's been giving me grief on this thread regarding drug companies pimping their products in glossy magazines to an ignorant public who will gobble down any pill that will give them an erection. Philosophically, I don't like large corporations, but recognize them as a necessary element and their accrual to much power seems to be self correcting. That is, unless they team up with the Feds to protect each other.

But what I think IV is getting at is the discussion of personal responsibility. A topic I find totally boring, but in this discussion worth an exploration.

Where does a person's responsiblity for their own behavior and consumption end and where must government step in to protect people from being influenced by corporations or even the culture?

Some hypotheticals:
Should restrictions be placed on drug ads as IV argues?
Should people not be allowed to buy into the equities markets at certain
times? People where throwing money at tech funds in the winter of 2000, should
money magazine be liable for putting 5 stars on the funds in January of 2000
that got clobbered over the next couple of years.

Let's get away from the corporate world:
Should the government be waging a War on Drugs to save people from
willing getting high?
Should an unwed mother with too many kids and no self support be

I can't think of any more examples now, but can and will. My problem with saying yes to the above is that all that's being done is taking power away from individuals and, yes, corporations and putting that power into the hands of government. At times, I sound anti-government or anti-corporations, but I'm just anti-concentration of power.

Ok, I've got to get to work. I'm speaking today to this group. Let's hope somebody shows up.

Wednesday, August 11, 2004

Block Quote Apologies

Sorry for the block quotes being messed up on recent posts. I'll leave this til the evening or weekend to figure out. If you use blogger and know, please send me an e-mail.

Hello IV and Reuter's Hires Jolly Bengalis

The first comment posted to this fine new blog is by my friend IV (pronounced Fore! like the Huey Lewis album). Thanks IV! You can read what he has to say here. IV has always been one of my favorite people and I'm glad we're back in touch.

I hope he continues to post and keep me on my toes. He has a diverse educational background which I hope he'll tell us about and isn't afraid to irritate me (in fact, I'm sure he would enjoy it.) He grew up on the mean streets of Fort Wayne near the intersection of Monarch Drive and Maplecrest Avenue. That was a tough neighborhood. He lives in Chicago now and works for a firm that is a CIA front "consulting" firm that specializes in either using technology to disrupt the plans of America's enemies (the French) or bioweapons designed to eliminate third world poverty (they ain't poor if they're dead). I'm not sure which.

Now for the topic of the day: Trade Restrictions, Tax Two from The Pure Investor

What brings this up? The announcement found here from Reuters that they are shipping some editorial jobs to India. I dislike Reuters for their inability to call "terrorist" terrorist. Also, another friend of mine (unidentified until he posts a comment) who lives in Seattle wishes to get into trade with that fine country. This friend has recently spent much time in India and has brought in a priceless import. Finally, John Kerry has been going around calling the head of companies who outsource jobs to India "Benedict Arnold CEOs." Let me get this straight: He wants to internationalize the war, but be xenophobic towards trade. So they're good enough to go die with/for us to make the war cheaper, but not good enough to trade with.

Anyone who has read my book (not many of you) knows I'm not a fan of many CEOs. But their stated sole job is to get the cheapest labor possible to provide higher returns to their shareholders. That's it. It's all about the benjamins, baby!

Two reasons I'm not afraid of outsoucing: First, in the short-term the loss of jobs helps the US economy sort out efficiencies in our systems. This discussion bores me. Second, in the long-term, the problem will take care of itself. This is done by the monetary exchange system.

From my book on why we need not have been afraid of Japan during the 80's.
The Pure Investor doesn’t worry that other countries are not buying
American goods. If they wish to continue to trade with the U.S., they will
be forced to open up their system. Monetary exchange is the pry bar that does
it. When Toyota builds cars in Japan and sells them in the U.S., the
Pure Investor knows that they are paid with U.S. dollars. The Pure
Investor knows that the Japanese company must convert the dollars they were paid
into Japanese yen to get them back Japan. But, like any commodity, as they
sell dollars and buy yen, the price of the yen will rise and, conversely, the
price of the dollar will fall. If the yen continues to rise, it will take
more dollars to buy a yen and Japanese products will become progressively more
expensive to Americans. The American goods will become cheaper relative to
Japanese goods until no one is willing to buy anything made in Japan over
something made in the U.S.

Taken a little bit further, the Pure Investor
contemplates what else can Japanese manufacturers do with the U.S. dollars they
earned from selling to Americans other than converting them to Yen and taking
them back to Japan. First, they can buy U.S. goods. While this
hasn’t happened to the extent that American business and government would like,
the Japanese people are hurt more than U.S. citizens are. Their government
has imposed on them a limited number of goods that they can purchase.
Japanese freedom has been limited. The second thing the Japanese can do
with their dollar is to invest in U.S. securities. If they do this, they
obviously value U.S. businesses and believe it has a good future and will offer
a good return. When this happens, U.S. companies use the Japanese money to
expand their own businesses that increase U.S. employment and stock
prices. The third thing that the Japanese can do with their U.S. dollars
is to build factories in the U.S. to build their goods. They have already
done this to a large extent. This has increased U.S. employment and tax
revenue. Toyota has a factory in Georgetown, Kentucky; Mercedes Benz
opened a plant in Tuscaloosa, Alabama; Nissan’s facility is in Smyrna,
Tennessee; and BMW manufacturers the ultimate driving machine in Spartanburg
County, South Carolina. Across the United States, communities once solely
dependent on agriculture have diversified their economic bases with foreign
industry. The final option the Japanese have is to trade their dollars for
the currency of another country with someone who wants U.S. dollars. The
effect of this is the same as listed above; the U.S. benefits.

Monday, August 09, 2004

Mr. Monk and Federal Regulator Creep

Don't think I can link my book The Pure Investor to my watching too much television. Think again. Friday at 10:00 p.m. The Divine Mrs. M. likes to watch Monk on USA. From the official site:
Adrian Monk (Tony Shalhoub) was once a rising star with the San Francisco Police Department, legendary for using unconventional means to solve the department's most baffling cases. But after the tragic (and still unsolved) murder of his wife, the devastated Monk became obsessive-compulsive. His psychological disorder has caused him to develop an abnormal fear of virtually everything: germs, heights, crowds... even milk. His condition eventually cost him his job, and continues to pose unique challenges in his daily life.

This translates into having a cute 20-minute mystery so Mr. Monk gets to act strangly for 40-minutes (i.e. he demands wipes after shaking hands, he cleans up crime scenes during the investigation, etc.)

I find the show innocuous and charming, but a thought crossed my mind this Friday past. Does society consider mental disorders disabilities? If so, isn't laughing at Mr. Monk fixing the knit on a murder's sweater cruel? Isn't laughing at him having a panic attack in a locked panic room mean? If, instead, Mr. Monk hadn't the use of his legs would it be funny watching him trying to go up a too steep ramp or getting his his wheels caught on a curb and falling into the street? I think not and I'm sure there is a site protesting this somewhere. Here's one article (the writer is an editor for a new journal of literature and disability culture; there's a job for everyone). I'm shocked I didn't find more quickly, but that dovetails into my next point.

The American's with Disabilities Act was passed 14 years ago and in effect said that we need to accomodate all those with disabilities - physical as well as mental. The ADA was one of the most expensive regulations imposed on the country and the costs are still being calculated. One of the wonders of human nature is that you can't legistlate the human brain. Just because you pass a voting rights act doesn't mean racism is ended. And just because you pass the ADA doesn't mean some poor man dealing with Obessive Compulsive Disorder isn't just plain funny while a cripple falling down a flight of stairs isn't.

In my book, I deal with the costs regulations impose on the market. I call them the fourth tax. Each additional regulation is an eroding of market returns. At times, regulations also give us a glimpse into ourselves. Does society think that extending protections to those with mental disorders is as valuable as extending them to physical handicaps? I think Monk's high ratings answers "no."

Win a Free Copy of The Pure Investor

Win a Free Copy of The Pure Investor.

How? Just send me an e-mail. The first five get a copy.

I've got a stack of these things (my brilliant and insightful tract) sitting on my desk right now. I bought a few to give away and now there still sitting on my desk.

My hope is that by giving them away I'll start to seed interest around the country causing a groundswell of demand that will wash over the publishing industry and change the very landscape of the book market. Who's with me?

Stay you.

Sunday, August 08, 2004

Another Letter to the Editor

Nothing pisses me off more than companies acting stupidly. I want to be a big corporation some day and I hope that I present myself more intelligently that CSX does in this article. That's why I wrote this letter to the editor.

Stay you.

Friday, August 06, 2004

John Kerry's Military & Post-Military Service

I will not impune Sen. Kerry's military service no matter how much I think he may be pimping it. These guys here need to stop. No one should disparage any man who carries three Purple Hearts, a Silver Star and a Bronze Star.

However, after Mr. Kerry came back, he spoke before congress regarding the Winter Soldier investigation conducted in Detroit. That investigation has been proven to be constructed of total fabrications and lies. This is where the myth of the crazed, homocidal Viet Nam vet comes from.

My father was a Detroit native. My father served in Viet Nam. My father wasn't a baby killer or a rapist.

John Kerry can go to hell.

Stay you.

Tax Revolt in the Heartland

Two stories from the Cincinnati Enquirer here and here discuss how proposed school levies have were smacked down across Ohio. From the second story:
Conversations yielded some answers about the mood of voters: It's the economy.
Anti-tax advocates were well-organized. It's a vote of no confidence in school
leaders. Seniors on fixed incomes can't afford it. Neither can families who are
strapped for cash. It's one of the few taxes over which voters have a say.
I don't have much of a dog in this fight. I can see Cincinnati from my back patio in Kentucky. Also, my kids go to private school. My question is what does this mean? I've done some work for political campaigns in the area and it seems like a school levy would be a cinch. Agitate the votes of a vested minority (teachers, administrators, suppliers, etc) and win big over a dispersed majority who would pay proportionally less. But that didn't happen.

Is this a signal that Ohioians aren't going to be friendly to anyone hinting at raising taxes? I think so. I also think that the Buckeye state will take this attitude into the presidential voting booths come November. That spells bad news for Kerry in this great big vote rich battleground state.

Thursday, August 05, 2004

Bush the Ultra-Conservative! Whaaaa?

Watching coverage of the DNC last week, I learned that Bush is an ultra-conservative and that is bad.

Sorry, Bush is no ultra-conservative. In fact, when reviewing spending, trade policy, and his pet projects like his "faith-based" garbage. He may even be qualified to be called a progressive or liberal. A new report (thanks to Carrie Conko of the Center for getting it to me early) from the Mercatus Center proves it again. There will be 242,500 federal employees regulating us at a projected cost of $39.1 billion (a 5.5% increase).

Ok, it's not all bad. From the report:
After adjusting for inflation, the 2004 Budget is likely to be 5.9 percent less than in 2003. The Regulator's Budget for both 2005 and 2004 represents 1.6 percent of the total outlays estimated in the President's Budget. This is less than in 2003, when the Regulator's Budget was 1.8 percent of the total Budget.

So in real terms, I don't think The Pure Investor would be too unhappy. But that's alot of people telling me how to live, what I can buy, how to serve my clients, what I can eat and smoke etc, etc, etc. It's important to keep in mind what I wrote in my book (have you bought it yet?):
Each of these requirements is another hidden tax that once again raises the Pure
Investor's costs and lowers his return....The more regulations that are imposed, the less likely the Pure Investor will risk his capital.
Or as the slightly more reputable economist John Stuart Mill wrote:
Every departure from (laissez-faire), unless required by some great good, is a certain evil.
Bush is no conservative. In fact, if you really want to make a Republican's head explode argue that Clinton's accomplishments may actually be more conservative. I can argue this point in a later post.

Wednesday, August 04, 2004

Moderate Islam's Deafening Silence

The WSJ tried to answer a question with this piece that I've been trying to find the answer to for a while.

Mr. Ormsby writes:
One of the more puzzling and, indeed, agonizing aspects of the aftermath of
9/11--especially for those who, like myself, have spent many years teaching
and writing about Islam--has been the relative silence of American Muslims,
a silence that by and large continues unbroken.

From my college days, I've been taught that as a European I must apologize for colonialism although since I'm of Scottish heritage my people were colonized. I've been taught that as a white male I must apologize and pay reparations for American slavery although my antecedents were no where near the States yet. I been taught that as a US citizen that I must apologize for the Japanese internment camps although I was not born for another 25 years. I've been told about the trail of tears, FDRs refusal to bomb the train lines to Auschwitz, Mei Lay and most recently Abu Graib. I've been told I must apologize for all the tragedies that have occurred that my "kind" may be slightly attached to.

After having been taught all that, why can't I name one Islamic leader that has said, "I'm sorry. This was bad. This does not represent Islam." I've heard Bush say it too many times and I've seen clerics say it here and there. But not so much that I would know any of their names. Can anyone name one mullah that has adamantly gave an unqualified denouncement of Islamofacism and/or the 9/11 attacks? I'm sure the media would love to have an articulate defender of Islam to put on TV at every change. But there nothing. Only silence.

Is it a response the Muslims use because they are afraid to draw attention to themselves either way or is it because in some way they agree with what their more active brothers are doing?

Tuesday, August 03, 2004

The Art of the Wine Review - Obsession

I thought I was being creative by referring to the wife as The Divine Mrs. M., but I think I just stole it from this guy. Maybe there's not an original thought in my head? Is this how George Harrison felt when he realized he piked the He's So Fine's tune for My Sweet Lord. Oh, well, he got over it.

For a new blog; a new feature: A wine review.

The Divine Mrs. M. (I'm using it anyway) and I are not wine snobs. I do not subscribe to Wine Spectator. The most I read about wine are the little tags stuck to the shelves. If I can find something I like for $4, I'm buying it and serving it to my good friends. We do not buy wine at restaurants because it's hard to enjoy a wine when you know you've been screwed on the price. However, we do make a weekend of the Cincinnati Wine festival each year to try things we haven't before and get a little better education and we do live within walking distance of the riverfront wine oasis known as The Party Source. While we have spent mucho dinero on wines in the past, we are now in a phase of finding hidden (cheap) treasures. Currently, this means walking into the Kroger liquor store and rummaging through the discount cart.

That's how for $7 we found Obsession. A new grape to me - symphony - which is a cross of Muscat and Grenache. Another white after our long red only jag. We bought it because we had never tried the grape, but also because we like Muscat although not a big fan of grenache. We had it last night about 9 for a late dinner. We both had a large romaine and spinach salad with egg, tomatoes, bacon, and garlicly croutons. My dressing was full of onion flavor and this wine held it's own. First words are key to me: Mine was "sparkly" - not sparkling, but almost. It almost had the taste of a sparkling wine without the tickle that comes with those. Alicia said "bright". It was vibrant, but not sweet. Full mouthed, but light. A good wash down the throat to me and it stayed in the mouth longer than normal but not in a bad way. Very smooth finish. For a pairing, I would use medium flavors on light food, but I don't think it would stand up to anything robust. Nice salads, herbcious chicken would be good. We're going to see if there's any more in the discount bin.

Sunday, August 01, 2004

Please be patient

No pithy thoughts today. Just relaxation. With the girls away; the parents shall play. If you must read something brilliant from me go here. Just another letter to the editor in Northern Kentucky's newest newspaper. That makes 3 out of 4 editions.

Yesterday was filled with getting the grandparents out of the house, then watching a movie in childless quiet. Afterward, The Divine Mrs. M. and I dined at Indigo's in Hyde Park then back to Bellevue for Vodka tonics at The B-list. Bellevue being Bellevue (strongly, adamantly German) it was full of big breasted blondes. Vodka Tonics and Blondes. Perfect!

Today was church with a slight hangover to welcome the new pastor. Then clothes shopping for me to get rid of some gift certificates I got a Christmas - one pair slacks, two dress shirts, three casual shirts. The shopping goes much faster without chasing children out of the clothes racks. Brief car shopping, then back home to watch a movie that sucked.

I'm relaxed and ready for work. Better posts are promised.

Stay you.