Harry doesn’t like England

Prince Harry and I have little in common. In the fall of 2003, while I played a polo match opposite Harry’s brother William, Harry was a world away, spending time on a sheep ranch in Australia. Then he joined the military, which is something I don’t see myself doing.

Harry and I do agree on one thing, though: in an interview last week, Harry said that he “[doesn't] like England that much.” Perhaps he was referring to the British media, who seem to dwell on his drunken nightlife adventures. Still, the quote is quite telling; my question is: was his experience in wartorn Afghanistan more fulfilling than life in England?

I think England is a fantastic place to visit, but no place to live. London’s weather is garbage, its people antisocial and curt, and the cost of living is stratospheric. I feel the same way about New York City. They’re just not for me. Perhaps some of my feelings towards New York and London are just things that all big cities have in common. Everyone is in a hurry, so they tend to come off rude to outsiders. The weather is garbage because it’s a necessity for productivity. Imagine how productive those same people would be in Miami; I imagine they’d have a lot more ’sick days’ at the beach.

Harry ‘doesn’t like England,’ lashes British media

Banks are Confusing

A relative of mine, Abraham Newland, was the chief cashier of the Bank of England from 1782 until his death in 1807. Britons at the time called banknotes “Abraham Newlands” because all banknotes bore his signature. He was a pretty confusing guy. He owned a grand country estate, yet chose to sleep at the office every night for 25 years.

Bankers can be quirky, but banks take the cake:

What is now Bank of America was originally called Bank of Italy when it was founded, in 1904, not in Italy but rather San Francisco, California. It’s now headquartered in Charlotte, North Carolina. North Carolina split off from South Carolina in 1710, during Queen Anne’s reign. 19 years prior, a Scotsman named William Paterson loaned the Crown £1.2 million, becoming the Government’s exclusive banker. Thus, the mighty Bank of England was founded — by a Scot. An Englishman named Holland created the Bank of Scotland a year later.

China Reconsidering One-Child Policy

China’s one-child policy is a triumph of responsible planning.

China says its policies have prevented several hundred million births and boosted prosperity, but experts have warned of a looming social time-bomb from an aging population and widening gender disparity stemming from a traditional preference for boys. With the world’s biggest population straining scarce land, water and energy resources, China has enforced rules to restrict family size since the 1970s. Rules vary but usually limit families to one child, or two in the countryside.”

The problem in China is the same one Italy and Japan are facing: with the birthrate hovering lower than the replacement rate of 2.1 children per female, a country’s population ages while the younger generation comparatively shrinks in size. This poses problems of logistics, economics, and taxation, as a smaller workforce could be stretched too thin to support an larger society.

China’s birthrate is 1.8 children per female.

“We want incrementally to have this change,” Vice Minister of the National Population and Family Planning Commission Zhao Baige told reporters in Beijing.“ Still, the government has previously expressed concern that too many people are flouting the rules. State media said in December that China’s population would grow to 1.5 billion people by 2033, with birth rates set to soar over the next five years. Officials have also cautioned that population controls are being unraveled by the increased mobility of China’s 150 million-odd migrant workers, who travel from poor rural areas to work in more affluent eastern cities. China has vowed to slap heavier fines on wealthy citizens who flout family planning laws in response to the emergence of an upper class willing to pay standard fines to have more children.

China already fines those with the means for having more children, but what is missing is a national target for births linked to a variable fine to keep births in line with their desired projection. This would allow anyone to have as many children as they want (as long as they are willing to pay for the extra strain their children exert on society’s resources), while ensuring that population growth doesn’t get out of control. Also, there are some external effects that would be very positive. For instance, allowing only the wealthy to have more than one or two children ensures that those children will have access to better education and more opportunities. As we’ve seen in North America, where everyone is allowed to reproduce without fine or consequence, we see the opposite effect: that of more reproduction among the poorer classes, who likely have less time and resources to ensure their children have every opportunity in education and personal development.

My hope is that China makes only subtle changes to its already very successful program, for the benefit of both the Chinese people and the world.

China may scrap one-child policy, official says

Sterilization is the Law

Los Angeles is now requiring all pets to be spayed/neutered by the age of 4 months. The reason: too many pets are euthanized every year in shelters, and stopping the breeding will eliminate a large portion of the unnecessary euthanizations. The effort goes towards making L.A. a “no kill” city.

Luckily, the law isn’t overreaching and doesn’t apply to everyone. Breeders and people who compete in dog shows and competitions are exempt, as are police dogs and guide dogs.

Also, the whole system is pretty fair. Non-adherents are fined and assigned community service, and subsidized spaying services are on offer to make them more accessible.

My question is, when will we roll this law out to reign-in the already out of control human population?

Pet Sterilization Becomes Law in LA

Hot IPOs

Yesterday, an acquaintance asked me if I’d consider buying shares of Visa’s IPO. It’s really gotten people talking. As many of you know, MasterCard had an IPO in 2006 and shares were priced at $39. They’re now trading for $195, a 400% gain in less than two years. Hot IPOs are back.

In my reading I came across another hot IPO that might surprise you:

“I found a hot company with the most interesting story. It went public on July 4th at $25 per share. On its first day of trading, it jumped to $40, then $50. A month later, on August 10th, it was trading at $280 and on August 11th, it peaked at $310. The next day it fell to $212 and by the 15th it was down to $172, ending the year at $150. Amazon.com? Internet Capital Group? Yahoo!? Guess again. The year was 1791. The stock was the Bank of the United States, set up by Alexander Hamilton in 1790 to help restructure the new government’s $80 million of debt from the Revolutionary War and General Washington’s bar tab. And you just won’t believe it, but this hot IPO somehow ended up in the hands of 30 members of Congress, the Secretary of War and wealthy citizens. Some things never change.”
-Andy Kessler, How We Got Here

Stockbrokers’ Mayday

The stock market had once been Wall Street’s greatest source of revenues.  Commissions were fat, fixed, and nonnegotiable.  Each time a share changed hands, some broker somewhere took out a handsome fee for himself, without necessarily doing much work.  A broker was paid twice as much for executing a two-hundred-share order as for a one-hundred-share order, even though the amount of work in either case was the same.  The end of fixed stock brokerage commissions had come on May 1, 1975-called Mayday by stockbrokers-after which, predictably, commissions collapsed.  Investors switched to whichever stockbroker charged them the least.  As a result, in 1976, revenues across Wall Street fell by some six hundred million dollars.  The dependable money machine broke down.

-Michael Lewis, Liar’s Poker, page 62

Though it wasn’t too helpful to stockbrokers, the deregulation of the brokerage industry helped bring down fees and ultimately allowed people of more humble means to own common stocks.  Some brokerage firms did benefit from the change, like the disruptive enfant terrible Charles Schwab.  Schwab was the posterboy for discount brokerages and reigned supreme all the way up until brokerage fees took another fantastic fall toward zero with the advent of electronic trading over the internet.

Michael Bloomberg on Intrade

Intrade, a prediction market where you can make money by correctly predicting outcomes in political races, awards shows — even the weather — has a tradeable contract for Michael Bloomberg (my choice for America’s next president). Bloomberg has repeatedly denied that he’s running in 2008 as an independent, but that’s normal behavior for someone who has yet to declare their candidacy. Hillary Clinton herself jumped around the issue of her candidacy for years, denying it right up until she announced she’d run.

Asked Monday at his regular news conference whether it’s too late for third-party candidates to be entering the race, Bloomberg gave a long answer that showed he is well-informed about the intricacies of ballot access rules.

In recent months he has sought the advice of ballot access experts like Clay Mulford, who served as campaign manager for another billionaire third-party candidate, H. Ross Perot.

These developments have been reason for the price of Bloomberg’s Intrade contract to rise in value, but most punters are still pegging the chances of his run at only about 10%. I think that’s an underpriced contract, and I’m considering buying some myself, though the low trading volume on the contract means I wouldn’t get far without drastically ballooning the contract price. Maybe I could find someone who’d enter a derivatives contract with me on this.

Here’s a historical chart of the contract’s price (if Bloomberg runs, each contract picked up now for $0.10 pays out $1.00):

(click to enlarge)

Bloomberg - Intrade

Just for kicks, here is the graph of the Dem nominees:

(click to enlarge)

(click to enlarge)

Good Corporate Governance: Starbucks

I was perusing the 2008 Starbucks Proxy Statement in preparation for the upcoming shareholders meeting, and came upon this gem:

Executive Stock Ownership Guidelines
We adopted stock ownership guidelines for senior executives during fiscal 2007 to ensure that our executives have a long-term equity stake in Starbucks. The guidelines apply to all executive vice presidents and above. The guidelines require covered executives to have achieved a minimum investment in Starbucks stock within five years.

Minimum investment levels for each job title are:

President and CEO - 5,000,000
Chairman - 5,000,000
CEO - 2,000,000
President - 2,000,000
Executive V.P. - $750,000

The unrealized value of vested, in-the-money stock options counts for up to 25% of the required minimum investment.

This is a fantastic way to ensure that all of the executives have their interests aligned. I think all organizations - no matter the size - should adopt rules like this one.

Gilded Age: Brown Ends Tuition

Brown University has ended tuition for students whose families earn less than $60,000 per year, and is providing grants in place of loans to students whose families earn less than $100,000.

This comes at a time when Harvard, Yale, Dartmouth, and Stanford are also moving toward more progressive tuition, charging less (or nothing) to lower-income students while wealthier students along with the universities’ endowments bear the rest of the charges.

University endowments have been growing very large over the past 20 years, and many have seen a boon from non-traditional investments such as investments in private-equity and hedge funds.

Brown’s endowment hovers around $2.8 billion, about $285,187 per student. Assuming a conservative rate of return of 10% (university endowments tend to average a higher rate of return), Brown can spend nearly $30,000 per student per year. Though this may seem large, Brown ranks 32nd nationally in endowment dollars per student. Princeton’s endowment boasts ~$2,000,000 per student, more than six times Brown’s relatively humble amount. Yale, Rice, Harvard, and Stanford each have more than $1,000,000 in endowment dollars per student, which makes it easy to comprehend how they can continue to decrease tuition for lower-income students.

Perhaps we’re at the beginning of a gilded age for universities, one in which the massive value provided to society by universities is really taken into account by benefactors, who in turn give the gift of education to the next generation at little to no cost. With their newfound popularity among philanthropists, universities may be able to eschew public funds. It’s about time universities became more financially independent because government grants have decreased their usefulness to students over the years. 20 years ago, Pell grants covered 60% of a student’s tuition, and now cover much less - closer to one-third of the tuition at a public four-year university (with a maximum payout of $4,310 per year.)

Investments in education have proved to pay outsize dividends to society. I applaud both Brown’s newfound tuition policies as well as the generosity of all benefactors who give to education.

Brown Ends Tuition for Low-Income Students
List of U.S. colleges and universities by endowment

Goldman Strikes Out, Still Swinging

Reading this month’s issue of Institutional Investor Extra:

Global Alpha, Goldman’s flagship quantitative hedge fund that began last year with $10 billion under management, continues to bleed assets following a 39 percent loss in 2007. The firm’s mathematical algorithms, which are designed to generate profit by capturing price discrepancies between stocks, stopped working in the equity market fallout from the subprime crisis. Goldman had to bail out another quant product, its Global Equity Opportunities Fund, with a $2 billion capital infusion in August when the subprime crisis caused big losses for that portfolio…

…Goldman CFO David Viniar revealed that GSAM suffered client losses of about $3 billion in the fourth quarter, with close to half of that coming from Global Alpha. He also warned of more damage to come. “We think redemptions in the first quarter will be even greater,” Viniar told analysts.

To help make up for that shortfall, Goldman is, gasp, launching a new hedge fund! Clearly, this will solve everything!

Goldman Sachs Asset Management has raised roughly $7 billion for Goldman Sachs Investment Partners, a new long-short equity hedge fund. The offering is the largest hedge fund launch ever.

“Goldman is undoubtedly the best hedge fund brand out there,” says James Hedges, president and CIO of Naples, Florida–based advisory firm LJH Global Investments.

Really? The best? Well, why is it that their flagship products have gotten hammered?

The article then gets even more gleeful, pointing to the successful hedge funds launched by guys who have left Goldman.

Sure! Great! Let’s all put our money with Goldman Sachs - the guys who couldn’t stand it there have made it big! And their flagship fund was only down 39% last year!

Goldman Sachs has a proven ability to make money when it’s their own money at stake. However, managing others’ money is a different story.

I think people should take their meds regularly, and give their assets to dedicated asset managers, not the banks who should rightfully act as intermediaries.

Obama Assassinated?

In their first meeting at the white house, President George W. Bush warned the young Barack Obama: “when you get a lot of attention like you’ve been getting, people start gunnin’ for ya.”

Barack Obama has been oft-compared to JFK. Today, on the 22nd day of February (JFK was assassinated on the 22nd of November) Mr. Obama is touring Dallas, Texas (where JFK was shot in 1963), and the Secret Service has just decided to stop weapons screening at his rally and relax security. What could possibly go wrong?

Here’s according to the Fort Worth Star-Telegram:

“The order to put down the metal detectors and stop checking purses and laptop bags came as a surprise to several Dallas police officers who said they believed it was a lapse in security. Dallas Deputy Police Chief T.W. Lawrence, head of the Police Department’s homeland security and special operations divisions, said the order — apparently made by the U.S. Secret Service — was meant to speed up the long lines outside and fill the arena’s vacant seats before Obama came on. “Sure,” said Lawrence, when asked if he was concerned by the great number of people who had gotten into the building without being checked. But, he added, the turnout of more than 17,000 people seemed to be a “friendly crowd.”

Friendly. A friendly crowd. I’m sure the crowd of people looked “friendly” in ‘63 when JFK was shot.

The order was made by federal officials who were in charge of security at the event. “How can you not be concerned in this day and age,” said one policeman.

This lapse in security (and the odd coincidences with JFK’s assassination) is a kind of curiosity to me, because this isn’t the first time I’ve heard anyone mention the possibility of Obama being purposefully assassinated.

Our conspiracy theorist is the doorman in my building, James. He seems outwardly crazy by appearance. He sometimes talks to himself, humming tunes or singing a few lines from an old song. He’s socially awkward but friendly, and his voice is rough and chalky, which adds to the grittiness of his character.

I got into a conversation with him last week in which he seemed much more composed and regular. Still, he was telling me about some conspiracy theories that he’s concerned about, something about the Trilateral Commission and the Bilderberg Group, the North American Union stealing our sovereignty, along with the Clintons trying to control our minds and our lives with propaganda and martial law. I’ve heard stuff like that before, but personally, I think it’s a little pessimistic to hold the view that everybody is always out to get you, control you, and take your freedoms. It’s possible, but not realistic.

He showed me some 12-part YouTube documentary that’s very critical of the Clintons and told me that he would vote for Barack Obama so that “Hillary wouldn’t take control,” obviously referring to some sort of conspiracy theory about her. He then postulated that “they” (the Illuminati/powers that be) would probably take Obama out at some point.

It’s an interesting idea. An upstart motivational candidate who seeks to foment change is just too much of a risk for the corrupt, dealmaking elites, who take out the upstart so that their horse (who will maintain the status quo in politics) will win the race. It’s definitely possible - but considering where the idea came from, the seemingly crazy doorman full of conspiracy theories, maybe assassination is less likely, just like all of his other wild ideas that haven’t come to fruition.

Police concerned about order to stop weapons screening at Obama rally - Fort Worth Star-Telegram
Undoing Obama: Inside the Coming Effort to Dismantle A Candidate

Boombox Application Killed by Facebook?

UPDATE: Facebook’s PR firm got back to me - according to them, Boombox’s developer took the application down on their own.

My favorite Facebook application, Boombox, is dead.

Yesterday I noticed that its flash component in my profile wasn’t working, instead the Boombox profile widget just lists song titles using quintuple-spacing. Now it doesn’t turn up in application searches, and its old profile listing has been removed.

Facebook has, in the past, yanked a popular application without notifying any of its confused and disappointed users.

The former #2 application in the Music category of Facebook applications was called Audio, which boasted more than 750,000 users. VentureBeat gave this description of the applicatoin: “Audio allowed users to upload audio files in mp3 format, share them with each other and listen to them within Facebook.” According to the application publisher, it was given a DMCA takedown request from a record label, sent via the RIAA — then Facebook decided to take Audio offline while the matter remained unresolved.

Audio is now back, and has made some changes so as not to draw the ire of record companies. “To lessen the possibility of illegal activity, Audio does not include a song directory — a feature that, if abused, allows users to share and duplicate copyrighted material.” However, the new Audio application isn’t as powerful as Boombox, which allowed up to 20 songs to appear in a tidy playlist. Audio allows only one.

Boombox used a model very similar to that of the old Audio application. There was a song directory of music uploaded by other users, which one could browse and then post on their own profile. When Audio was taken down last July, it was no surprise that Boombox was next. Another thorn in the RIAA’s side was that songs in Boombox had to be hosted on a public webservers and be accessible to all - hardly something the music industry would encourage.

It’s a really painful thing to login to Facebook and have your favorite application missing, with no explanation. This is a PR blunder for Facebook, and they should be more transparent about applications being removed in the future. A simple explanation as to why the application was taken down would suffice.

Facebook’s PR people got back to me:

Regarding your question about Boombox, the application was taken down by the developer.

Thanks,
XXXX

Digg This Article

Facebook kills Audio for copyright violations - VentureBeat

Piracy on Facebook is as Easy as Mosoto Remix - TechCrunch

Italiano:

La mia applicazione favorita di Facebook, Boombox, è guasto. Ieri ho notato che il relativo componente istantaneo nel mio profilo non stava funzionando, invece il widget di profilo di Boombox elenca appena i titoli di canzone usando il quintuplo-gioco. Ora non gira in su nelle ricerche di applicazione e il relativo vecchio elenco di profilo è stato removed.

Blatant Generalizations

Hillary Clinton is poised to increase taxes on hedge funds and private-equity partnerships if she is elected. Oddly enough, her daughter Chelsea works for a hedge fund that would be adversely affected, and John Edwards worked for a hedge fund as recently as last year. Barack Obama has been echoing her calls for tax reform (he even went as far as co-authoring a bill to end the tax loophole available to funds who form overseas). However, I don’t think Barack Obama will ever go as far as increasing taxes on private investment partnerships because a) he’s a logical man who can mull over the potential consequences, and b) a lot of the money and support he’s received has come from hedge fund managers. He doesn’t want to bite the hand that feeds him. Basically, his criticism of hedge funds has been muffled a bit.

That doesn’t stop his supporters from writing about their feelings that hedge funds need to be taxed at higher rates. In a google search, I came upon this entry by Walter Hecht, a Barack Obama supporter from St. George, Utah:

Hedge funds are tax loopholes that allow the rich to become richer with little risk to themselves by using borrowed money to speculate, that is gamble, in financial markets where you and I the taxpayers bear most of the risk.

If you or I invest in the stock market, we can borrow no more than 50% of what we invest. That is a government regulation. On the other hand, a hedge fund in some cases can borrow as much as 99% of their investment. That means a 1% increase in the worth of the investment can double the hedge fund’s money. A decrease of 1% can wipe them out. The kicker is that hedge funds borrow so much that banks and governments cannot allow their losses to stand because the shock to international markets could cause the worldwide financial system to collapse. It’s a case of heads they win, tails the taxpayers lose.

Only the wealthy are allowed to invest in hedge funds which are largely unregulated. The taxes the wealthy pay are less than what are paid by investors in the stock markets. Hedge funds charge their investors 2% per year to manage the funds and take 20% of the gains if any that they manage to win. No wonder hedge funds can afford to pay their owners/managers 100’s of millions per year.

How do I start a hedge fund? Hire a bunch of smart people to write computer programs (algorithms named after former VP Al Gore the inventor of the internet) that spot differences in the markets for financial products wherever they occur on earth. The differences can be momentary and small but the sums of money involved are huge. The computer programs model the real world and work well until the unexpected occurs. Then huge losses are a possibility and you and I will be forced to stand those losses through taxes that finance government giveaways.

Walter’s article was riddled with generalizations and inaccuracies, which I kindly pointed out to him:

First, hedge funds are not tax loopholes. They’re limited partnerships, just like many other businesses.

Second, not all (or even most) hedge funds gamble/speculate. Only certain hedge funds use the kinds of leverage or derivatives that you say contributes to their volatility (and risk to the broader financial markets in the case of a loss/default). Many hedge funds actually increase returns with less than average risk, by buying stocks as well as selling them short, minimizing their net exposure to day-to-day market gyrations. In many ways, these hedge funds are SAFER investments than mutual funds (mutual funds are 100% exposed to market gyrations both up and down, such as the ones we’ve seen recently in august 2007 and january 2008, which have been costly for mutual fund investors as well as index fund investors).

Your contention that, somehow, hedge fund investors pay less taxes than traditional investors is just plain false. The managing partners of hedge funds make investments, and their gains are taxed as capital gains just like anyone else’s. Their income comes from their investment gains, and is not in the form of a salary and should not be taxed as such.

Also, you mischaracterize hedge funds as being all quant/algorithmic, controlled by computers finding small inefficiencies in markets and taking positions to capitalize upon their eventual movement. However, all investors since the dawn of time have been opportunistic, hoping to make a gain from price movement. There are a few hedge funds that are quantitative/algorithm driven, but these don’t make up the brunt of the industry. Most of the industry is composed of investment managers who deal in common stocks, not complex mathematical arbitrage with tons of leverage.

I agree that regulation is important so that the worst cases (like Long-Term Capital Management and Amaranth, which used the methods you so vilify) would be eliminated. I believe that transparency is important, and that strong risk management standards that the industry could agree on would be helpful to financial market stability. However, increasing taxes on investment partnerships just chases away the very investors that make our markets so efficient in the first place. That would be a step in the wrong direction.

I really wish that people would get rid of their preconceived notions about hedge funds. We’re not all bad.

I really hope that we get some sensible legislation as to risk management standards for investment funds. Standards that the industry can agree on. Standards that could protect investment banks from lending out too much leverage or having too much derivative exposure to over-extended funds (like LTCM). Also, I agree with Obama that these funds out to pay their fair share of taxes. If they’re located in Connecticut, they should pay CT and federal tax, and not be taxed as a firm based in the Cayman Islands, as they are treated today. However, raising the tax rate on the whole industry would be cause for many firms to shut down, and we’d end up with a less efficient marketplace.

America’s Waistline By The Numbers

Bespoke Investment Group just posted some interesting graphs on domestic retail sales trends.

“…over the last ten years, Americans have been spending more of their money on eating out and less of their money on playing sports.“

Perhaps the extra food/drink and the less exercise has something to do with our obesity epidemic.

Also, I read recently about a new term being being tossed around, passive obesity.

It’s definition: “flabbiness caused by physical inactivity rather than caloric excess.” Recent studies blame much of the obesity epidemic on the increasing amount of time people spend seated — at desks, in cars, and on couches. Corpulence, the theory goes, is the fault of modern lifestyles, not individual behavior.

I combat this daily by reading news and doing work while walking on the treadmill at three or four miles per hour (and switching to the stationary bike if I want to get my heart rate up a bit higher). I find the exercise keeps me on task (it’s good for your brain/productivity), and keeps me in decent shape.

Wired Magazine - Jargon Watch: Passive Obesity

Bespoke Investment Group - Retail Sales Review: More Food, Less Sports

American Apparel Being Snapped Up By Funds

American Apparel (which has only been publicly traded on the AMEX since December) is getting a lot of attention from hedge funds. Some recent SEC filings indicate that Morgan Stanley, Fir Tree, and SAC Capital Advisors each own in excess of 5% of American Apparel (AMEX: APP). SAC has a notable record of finding moneymakers in youth retail, making this development something to watch.

Click over to the article at FashionInvestor for more.

(Full disclosure: author owns shares of American Apparel both directly and indirectly at the time of this writing.)

Estadísticas

El post anterior (escrito ayer) my hizo pensar sobre las estadísticas:

Torture numbers, and they’ll confess to anything.

-Gregg Easterbrook

Statistics are like bikinis. What they reveal is suggestive, but what they conceal is vital.

-Aaron Levenstein

La estadística es la ciencia según la cual si tu tienes dos gallinas y yo ninguna, ambos tenemos una gallina.

(Statistics is the science in which, if you have two hens and I have none, then we each have one.)

-Frikipedia Español, Estadísticas

En la Ciudad del Vaticano hay dos Papas por kilómetro cuadrado.

(In the Vatican City, there are two popes per square kilometer.)

-Ivan Skvarca, en Estadísticas Tramposas

Estadísticas papales - Microsiervos
Estadísticamente hablando - Microsiervos

An Unscientific Poll

The following is a graph of my Facebook contacts’ political support by candidate, sorted largest to smallest:

Barack Obama seems to be winning when it comes to the support of people I know by quite a large margin. This isn’t surprising, as I tend to know young people who often support Obama over his opponent.

One big surprise was that both Ron Paul and John Edwards found more support than Hillary Clinton, though Edwards is no longer in the race. Also, Clinton ties Michael Bloomberg, who has not entered the race in the first place.

Support still exists for Reagan, showing that there is indeed support for the election of a dead president. Whether he’d be effective at governing from the grave is yet to be proved.

On The Record: Dave Reichert

Yesterday, I wondered aloud why the United States continues to shower Israel with billions in aid. Israel is a country blessed with a very high standard of living when compared to the global average, and we ought to allocate our aid dollars elsewhere.

One of the idiots in Congress who supports this reprehensible giveaway of our tax dollars is Dave Reichert, Republican Representative from Washington’s 8th district. From his website:

“Congressman Reichert supported the FY06 Foreign Operations Bill that included $2.52 billion in assistance for Israel.”

Another gem that I came across is that Congressman Reichert is an original co-sponsor of the Charitable Giving Act of 2005.

Reichert is charitable indeed: supporting irresponsible and massive giveaways of my hard-earned dollars to a well-off and undeserving foreign government.

Perhaps being charitable isn’t such a positive thing - the determinant is who you’re being charitable to.

Dave Reichert - Israel

Reshaping Foreign Aid

As President Bush embarks upon his 6 day tour of Africa, visiting Benin, Tanzania, Rwanda, Ghana, and Liberia, I find it a good time to reflect on America’s aid to developing nations.

I’ve heard quite a few criticisms of the way US foreign aid is doled out. For instance, with regard to country appropriations, political considerations often trump the demonstrated needs of countries for aid. One common example of this is our financial support of Israel. Israel comprises just .001 percent of the world’s population yet receives 1/3 of U.S. foreign aid. Is Israel a third-world country desperately in need of aid? Not in the least. Israel has one of the world’s higher per capita incomes. Israel’s GNP is higher than the GNPs of Egypt, Lebanon, Syria, Jordan, and Palestine combined. At $28,800, Israelis enjoy a higher per capita income than oil-rich Saudi Arabia, and are on equal footing with Monaco, Greece, and Spain. In 2007, the Bush administration asked Congress for $20 billion in foreign aid: $2.4 billion to Israel, while Ukraine (with 1/10 the GDP per capita of Israel and much more need for aid) received $71 million, 1/35 of Israel’s haul. This amount does not include loans to Israel that are often forgiven. With these loans taken into account, the much needier Ukraine gets 1/100th the financial support given to Israel.

Why does Israel get 100 times the amount of aid given to its poorer neighbor?

Another common criticism of our foreign aid is our food aid program, which has caused quite the controversy. The U.S. insists that its food aid be grown at home, and this extra demand for domestic grain amounts to a subsidy to American farmers. “Many European NGOs argue that this policy, coupled with the U.S. law that 75% of food aid be carried by U.S. ships, means food often arrives too late, floods local markets and damages indigenous farming.”

Flooding local markets and damaging indigenous farming doesn’t equate to help. Isn’t help what aid is supposed to be?

Food aid shouldn’t exclusively come from major mechanized producers, it should be grown locally to where it is distributed. This is a more permanent kind of aid because it encourages farmers to build a sustainable infrastructure that will pay dividends far into the future by stimulating farm employment. Reporter Eben Harrell says that E.U. policy reflects this sentiment: “less than 10% of [the E.U.'s] food-aid budget is [...] reserved for European-grown food.”

Obviously, something needs to be done to change our foreign aid system, whether it is distributed as hard-currency or food. And the man asking for change may surprise you.

It’s none other than George W. Bush.

“We have also revolutionized the way we approach development,” Bush said Thursday. “Too many nations continue to follow either the paternalistic notion that treats African countries as charity cases, or a model of exploitation that seeks only to buy up their resources. America rejects both approaches. The United States demands clear results for the billions of taxpayer dollars [sent] to Africa.” He accused other nations of exploiting the continent’s resources or irresponsibly offering aid as charity, according to the Associated Press. “America is serving as an investor, not as a donor,” Bush said.

“The between-the-lines message is that countries that shower budget support on all countries, such as the World Bank and the Europeans, are often merely pouring good money after bad,” said Joel Barkan, a specialist in African issues at the Center for Strategic & International Studies. He said Bush’s comment was also likely a “not so subtle dig at the Chinese,” who are a major investor in the African continent and a competitor for oil and other resources.

Along with trade and education initiatives, Bush is touting a broad investment package that, in his view, shows the generosity of the American people.

This package may be just what the doctor ordered.

Time Magazine - CARE Turns Down U.S. Food Aid
Israel still top recipient of US foreign aid
Bush Says Paternalism Over in U.S. Aid
Fiscal Year 2008 Budget Request (PDF)

Your Eyes’ Gaze Mapped: Newspaper

This is what a map of your gaze while reading a newspaper looks like:

The Newspaper via Microsiervos.

Punched

Mike Tyson, on risk management:

“Everybody has a plan until they get punched in the face.”

Happy Valentine’s Day

 Thanks to Washington Mutual for lighting Seattle up properly.

Innovation On Sale

One of the things I like most about being an investment manager is winning. Winning when it’s easy.

Over the course of the year, I predict that investors who overweighted their investment portfolios to equities in late January or early-to-mid February will come out as some of the biggest winners this year.

The market has had a row of negative sentiment, and, when that happens, it’s often an overreaction. I believe that’s the case right now. Stocks have been battered into value territory, and I intend to capitalize upon it.

Innovation is on sale. Take a look at Apple (NASDAQ: AAPL). It’s off more than 35% from its December high, and it’s gaining market share quickly with its Mac computers as well as breaking into whole new industries with the iPhone. Apple’s trojan horse is surely the iTV, which allows HD movie downloads and rentals without going to one’s mailbox like NetFlix customers do. NetFlix is planning a competing device in collaboration with LG, but it might be too little, too late. Apple is trading at a price/earnings multiple of 28. That’s richer than I’d like to see, but for the amount of growth and opportunity you’re buying with these shares, hardly a stretch. You’d do well to take a look at Apple’s historical price/earnings multiple, which has hovered as high at 85 (ouch!).

I hate to say this, but Google’s getting closer to an accurate valuation. It’s trading today at $527/share, down from its November high of $741. Google’s got a potential upside boost in Yahoo!, as the smaller fish in search has been rumored to be switching/outsourcing to Google for ads (Google wrings two times the amount of money per search as Yahoo! does). This would make sense for both Google and Yahoo!, and Yahoo! is going to be pressured to do something radical to drive earnings and share price after they snubbed Microsoft’s generous buyout offer which would’ve greatly benefited shareholders.

Motorola’s been more than cut in half from its highs, and their current handset offerings (specifically the RAZR2 and the Q9) are fantastic and selling well.

I’m going super-long equities right now.

(Full disclosure: author owns shares of Apple and Motorola.)

The Sony-Ericsson XPERIA X1

I’m not the biggest fan of Sony-Ericsson phones (with the exceptions of their fantastic high-resolution cameraphones like the K850i, but they’ve certainly proved me wrong today with the introduction of their new XPERIA X1 mobile phone.

This is a huge step for Sony-Ericsson because it’s a departure from their usual OS (UIQ/Symbian) to Windows Mobile which is one of my favorite phone operating systems due to the large amount of software available for it.

This isn’t just any regular old Windows Mobile phone, however. Sony-Ericsson took the road paved by HTC with their touch Touch of customizing the user interface running on top of Windows Mobile to make it more usable with fingers. Their proprietary “Panel Interface” looks quite a bit like Seattle-based Zumobi’s UI, with shrunken representations of program windows so you can see what programs are running and switch between them.

It’s got a 3.2MP camera, a 3 inch WVGA touchscreen (that’s more pixels than the iPhone with a little less screen area), A-GPS, Wi-Fi, EDGE/UMTS/HSPA data on all bands you’d find around the globe (oddly including 1700 MHz, which matches up with T-Mobile’s AWS spectrum for HSPA in the United States, a truly rare frequency offering on a global mobile phone).

Press Release - Sony Ericsson

Article on Engadget Mobile

Microsoft Fails

All of my contacts on my Motorola Q9C were deleted today by Microsoft’s own software.

This is ridiculous.

A few months ago, I plugged my Q into my MacBook running Vista, and couldn’t sync any contacts between my computer and the device. That’s called failure, Microsoft.

I found out that I had to install Outlook in order to sync contacts. So I downloaded a trial, installed it, and synced my contacts from my previous Verizon Q onto my new shiny Sprint one.

A few days ago, the Outlook trial ended, and, when I plugged my phone into my computer, Windows Mobile Device Center (another piece of utter failure) couldn’t find any contacts on the computer to sync, so it DELETED ALL OF MY CONTACTS OFF MY PHONE WITHOUT ASKING ME.

WHAT THE !@#$?!?!?!

I honestly feel like this is theft. Digital theft. Somebody is responsible, and I want my contacts back.

Microsoft, try harder next time. I won’t be buying your garbage that doesn’t work anymore, I’ll just move 100% to BlackBerries.

Dynamically-Sized Offspring

“…Animals have evolved a balance between offspring and effort. Some can even adjust how many offspring they produce, depending on whether they are under stress or live comfortably.”

Why have a large brood when food is scarce?  For humans, the same question should be asked when the economy isn’t provident, or when the cost of raising a child well is more than one’s income.

“Ruth Mace, an expert on family size at Imperial College London, argues this week in the journal Science that humans are governed by the same kinds of rules as animals. When the standard of living goes up, the cost of living goes up too. It takes a family in Addis Ababa (the urban capitol of Ethiopia) a lot more money to raise an additional child than a family out in the Ethiopian countryside. That may be one reason why the population is exploding in rural Ethiopia, while in Addis Ababa it is actually shrinking.”

I’m a strong proponent of quality over quantity with regard to human reproduction. More time and resources should be spent educating our children so that they can flourish. Having more children is a statement that says just the opposite.

Carl Zimmer has written a brief but fantastic article on the varied state of reproduction around the globe:

The Natural History of the Only Child - Wired

Insider Buying Shows Its Hand

If any of you thought that insider buying wasn’t a fantastic predictor of/factor in stock outperformance, do go ahead and check out this link to Bespoke Investment Group, who’ve gone through the trouble of highlighting big insider sales/purchases and the subsequent change in stock value in homebuilding stocks like Toll Brothers and Hovnanian:

(click to enlarge)


(click to enlarge)

A New Line of Business For The Homebuilders: Stock Trading - Bespoke Investment Group

Sprint’s ‘Unlimited’ Plan That Isn’t

Today, Sprint has made its unlimited plan available beyond the initial trial markets it launched last year, and for $120/month, subscribers across the U.S. will get unlimited voice minutes, web access, email, MMS, and SMS.

Why is it that I get roughly the same plan through Sprint for only $49.99? And why would Sprint announce this after MVNO Helio just anounced an unlimited plan for $99?

This shows how out of touch Sprint is with the marketplace. When you launch a new offering, you make it better or cheaper than the competition, and adoption will soar. Sprint’s offering is $20 more expensive than Helio’s, and offers the same or perhaps less services, considering Helio phones all have free, built-in GPS and EVDO 3G data.

Another gripe about Sprint’s new plan is the farcical statement on their microsite, sprintunlimitedaccess.com, that plainly states that the $119.99 plan with unlimited data/email is “Available on all Sprint phones.” This is a bold-faced lie. BlackBerry users are out of luck; they’ll have to tack on $39.99/month extra to this (and indeed any) Sprint plan to get wireless data/email.

That’s ridiculous.

If Sprint wants to sell more BlackBerries and stop hemorrhaging customers, they’ll have to stop penalizing BlackBerry users.

Sprint Unlimited Access

Undersea Cables The New Oil Pipelines?

Now that a fourth undersea cable has failed, conspiracy theorists really do have some cannon fodder. How did these cables go out of service? Were they cut by someone bent on doing so?

Today, the cause of the problem has been fingered as being an anchor, “but what if it is sabotage tomorrow?” asked Colonel R.S. Parihar, the secretary of the Internet Service Providers Association of India. “These are owned by private operators, and there are no governments or armies protecting these cables.”

My question is, keeping in mind the US Military’s mandate to protect American interests abroad (i.e. oil supply in the Persian Gulf), will the US Military also enlarge that mandate to include global data flow? After all, the nearly universal ideal of free, open society is best served by a free press and equal access to data. Certainly by severing data transmission cables, enemies of open society might’ve score a small win.

Perhaps this isn’t an ideological battle between open society advocates and fascists — the fight may be a little more personal.

Allow me to explain.

In 2006, one of India’s largest private-sector firms, Reliance Industries, was split between its two heirs, Mukesh Ambani and his brother, Anil Ambani. Anil calls his part Reliance ADA (standing for Anil Dhirubhai Ambani) Group, which just happens to own two of the undersea data cables that have been cut this last week.

Could his brother, Mukesh Ambani, be at all responsible for disrupting Reliance ADA’s business? Or perhaps someone else holding hostility towards Anil Ambani?

Hopefully, culpability will be further investigated soon, and data to India and the Middle East normalized.

IHT - Ruptures call safety of Internet cables into question

Anheuser-Busch Promotes Drunk Driving

During the Super Bowl (which I’m now watching), Anheuser-Busch ran a humorous spot that has a subtle reference to drunk driving — and even makes the practice look admissible.

The ad starts when a couple arrive at a quiet, pedestrian wine and cheese party. The women are all in the living room, socializing, and the men have commandeered the kitchen. The arriving man is holding a gigantic cheese wheel, but, once safely in the company of his fellow males, the man lifts the cheese-wheel cover/façade to reveal a hidden six-pack of Budweiser. The other men follow suit, cracking their baguettes open and disassembling their boxed wine to reveal hidden Budweisers.

It was all fun and good, until the last scene.

Presumably after drinking the six-pack of Budweiser in the kitchen, our male character heads for the front door and tells his spouse that he’s off to the store to get more cheese (obviously referring to a secret beer run).

I assume he’s driving to the store after downing a six-pack.

Did Anheuser-Busch just f*** up big time?

I mean, it’s a funny ad. It’s not serious. But Anheuser-Busch sells alcohol, and they’ve got to be ultra-sensitive about this.

They could’ve solved this easily by making it clear that the man was walking to the corner grocery store, or taking a taxi.

I think they ought to make a little donation to Mothers Against Drunk Driving to compensate. Doing that at least is a step in the right direction. And next time, Anheuser-Busch should choose an ad agency that is sensitive to their unique moral responsibility, being in the alcohol-bottling business as they are.

Edit:

Apparently, insensitivity is popular this year. Salesgenie.com’s halftime spot features a Panda family and their business, and all of the pandas have really deliberate and almost comical Chinese accents, and characters named Ling-Ling. Really, this isn’t a big deal (I don’t think the Budweiser ad is anything to cry over either). I just think that, in each case, both the advertiser and the marketing firm should’ve thought more about potential negative reactions (including overreactions). Have they learned nothing from the overreaction over Jar-Jar Binks?