Friday, September 28, 2007

Presidential commentary

Interesting post by James (see below).

I generally agree that we haven't had a solid President since Eisenhower.

Nixon had a rational, thoughtful foreign policy (his China initiatives will be written about for centuries). Give a fair measure of credit to Kissinger. But his economic policies were silly, and he was, well, a crook and a liar.

Clinton had the best economic policies of the last fifty years, largely courtesy of Robert Rubin, but simply no foreign policy whatsoever.

Bush II has recognized what I believe will be a multi-generational battle with radical Islam, but no rational foreign, economic or domestic policy.

No one seems to be able to have a complete set of policies.

James may be right - they just can't build a cabinet of great people. (I must add that Kennedy had a great cabinet - but he was mediocre...).

Tuesday, September 25, 2007

Columbia University

Columbia University President Lee Hollinger, flush with international publicity for the appearance of Iranian President Mahmoud Ahmadinehjad announced today the Axis of Evil speaker series.

"We had a faculty meeting, and discussed how many opportunities we had lost", said Hollinger "we could have had Hitler in the thirties, and more recently Idi Amin (Dada), Pol Pot, Robert Mugabe, a whole list. So, we are going to move aggressively to schedule as many bloodthirsty dictators, despots and tyrants as we can find."

"In that vein, we are extending an invitation to Kim Jong-Il. He is welcome here at Columbia at any time."

In related developments, the university is also scheduling a rock concert series to match up with the speakers. Signed so far is Megadeath and Anthraxx with rumors of a reunion appearance of Dead Kennedys.

"Most of us here at Columbia don't believe in The Devil" continued Hollinger "but if Satan exists, we want him to know that he'll get a fair hearing at Columbia. He really hasn't managed his PR very well, and as a leading journalism school, we understand PR better than anyone else."

Sunday, September 23, 2007

Presidential race continued #5

There have been extraordinary politics this past week.

First, Hillary and Newt on the Sunday news show circuit.

Hillary and Newt made the talk show rounds today. Hillary is cementing her position as front runner - laid out the details of a comprehensive health care coverage. Newt announced during a speech this week that Hillary had over a 90% chance of getting the nomination and an 80% chance of getting elected. Hillary, in an extraordinary streak, appeared on all five major news talk shows.



We could quibble, but I would guess that Newt's math is generally correct.



His motives - maybe a little trickier. He is on record that if his team gets $30 million of pledges, he'll run. And he knows that no one fires up Republicans like Hillary. Newt generates ideas like a forest fire generates sparks. He is bright, experienced and articulate. He is also pudgy and has an ugly divorce in his past. He would fire up the Dems even faster then Hillary fires up the Republicans. I'm wild about his point of view, real conservative opinions and small government approach. But, I'm extremely doubtful and the possibility that he could get elected.


Second was Alan Greenspan's book publication and the reporting thereafter.

Also making the rounds over the last few days was former Federal Reserve chief Alan Greenspan. Also as smart as they come, adroit in his language and arguably one of the finest central bankers ever.



He talked straight about the economic policies of the Bush administration (full disclosure: in this blog I've been very critical of those very policies, or perhaps the lack of a policy). He feels that the loss of majority positions was not merely a result of Iraq, but also of profligacy of the reigning Republican majority. And that President Bush, by failure to veto anything, enabled the gargantuan deficits that won't hurt me that much, but diminish my (theoretical) grandchildren's prosperity.

This became great grist for editorial writers.

And the Bush administration came back with an all-time lame excuse - Dennis Hastert, Republican and former Speaker of the House and all-world financial profligate, didn't want the President to veto anything, so he didn't. Not exactly a position that one would expect from the leader of the free world.

Thursday, September 20, 2007

Business 2.0 RIP

TechCrunch is reporting that Business 2.0 is ceasing publication with the October issue.

Damn I hate that - it was my favorite business magazine. A few years ago I was a Red Herring fan - and it bit the dust as well. Both of them covered the tech space, VC activity, developments in Internet business, as well as some insightful ideas on business opportunities. There was a third related kind of magazine - Industry Standard maybe? I never got into it.

I'm a long time Wired reader as well, and it appears to be doing well - generally a lot of ad pages - but it has become more of a general interest magazine with a technology slant - not a business focused publication.

Not too mention I paid for subscriptions to both. Fortunately for Business 2.0, not too far in advance anyway.

There must be some good editors and writers looking for work so I shouldn't complain about the few dollars I'm out.

Good luck guys.

Federal Reserve Action

The Federal Reserve was in a tight spot.

Congress and the Adminstration have given it absolutely no help with fiscal policy, running up deficits of unimaginable size. In the long run, deficits do matter.

Commercial paper was drying up. Only the best, most credit-worthy borrowers could get loans and mortgages.

So, they voted to cut rates - certainly more steeply than I expected. Oil jumped over $80 per barrel; gold shot through $700 per ounce and kept moving. The dollar fell against everything - settling even against the Canadian dollar! Six years ago - a Canadian dollar bought about 68 U.S. cents - now 100. Given the number of commodities that America now must import - wood pulp, copper, oil just to name a few, this creates inflation. So, the agency responsible for holding inflation in check just shook the genie out of the bottle.

They were in a tight spot.

Stock pick

See the comment below - long time expert James likes Gatehouse Media (GHS). Read his comment.

But James and I both recommend that you do your own due diligence - if homebuilders or GHS don't work out, don't come whining to us that you invested all your retirement nest egg and lost it all and you are having to live on Alpo so you are suing us.

While we are great stockpickers we have - once or twice - I don't exactly remember when - picked a stock that went down when we expected it to go up.....

Early or wrong?

Well, so far I've picked a recent top as my entry point into home builders....but my gold buy looks fabulous - if way too small.....

Wednesday, September 19, 2007

Osama Redux

So Osama has emerged from some remote cave (or, plausibly, from New York City where he drives a cab) with a new look and new script.

He now has that Just for Men beard thing happening. And, apparently Big Business is responsible for most of the injustice in the world. The Democratic Party should have reined-in Big Business, stopped the war as they were elected to do, and all would be right in the world. Or something along those lines.

Somewhere his history timeline was a little out of whack as to whom was U.S. President at what time, and Don Rumsfeld is kind of a real-life Forrest Gump, in a position of power, manipulating others as a grand puppet master, through the last 50 years or so. My recollection of some of that conflicts with OSL, because I think Rummy ran G. D. Searle and Monsanto for a while....

And his new closing line is to embrace Islam and get a tax cut. I've actually heard worse political promises...

I guess some people will take all that seriously; some will even believe it. I now doubt that finding or killing him will much matter to events. But I sure would like to see it happen nonetheless.

Stock picks

My QQQQ Fibonacci series play which I posted here a few weeks ago, is still live.

With the market rally yesterday, I am in plus territory and still looking for a few hundred points further up on the NAS before closing it.

Additionally today I took opening positions in HOV, CTX, KBH and PHM. There are more homebuilders that are out there, but Bill Miller of Legg Mason Value Trust owns the later three, and that is good enough for me. This is clearly an early play - I don't expect a housing rebound sooner than one year - but the stock price may anticipate the demand. At least that is what I hope....

Saturday, September 15, 2007

Alan Greenspan

Alan Greenspan said in his new book what many of us fiscal conservatives have been saying for a long time (and I've posted about many times here), that the Republicans got what they deserved in the last election.

The most disgusting of the performances was the parade of Congressmen and Senators on the conservative talk shows before the election whining about how much worse it could be if the Democrats were in power. Well, maybe so, but we didn't work so hard for so many years to get conservatives elected and a Republican majority in both the Senate and the House, and a Republican President, to see spending soar.

In my vocabulary today, it is no longer spending like a drunk sailor, it is spending like a Congressman.....

10,000 earmarks on the highway bill. Not a single veto.

We traded a Democratic administration with sorry personal discipline but good fiscal discpline, for a Republican administration with excellent personal discipline, but fiscal profligacy.

Mr. Greenspan: you are completely right.

Monday, September 03, 2007

La Gloria Cubana and Roads End Pinot Noir

Don Mills sent me another batch of cigars from the Germantown TN Tobacco Superstore. So, after a stressed out day last week, I fired up two: an Onyx Maduro robusto followed by a La Gloria Cubana Churchill.

Both lit immediately. The Onyx burned smoothly to a nice long ash and was milder than I expected; a nice smoke. The folks behind La Gloria have been working to improve it, and have succeeded in my view, I found it to be excellent. I don't need a Fuente Opus Opus everyday; my tastes run to a milder smoother cigar. The La Gloria was just that. Smooth easy draw, long perfect ash.

I paired them with a glass of Dave Grooter's outstanding pinot noir: Roads End Oregon Pinot Noir. It is a limited production wine - I suggest you get your order in for a special treat. It stood up nicely with the cigars. (Frequently cigars just overwhelm wine, hence why they are generally paired with scotch or bourbon).

Econorama continued

I continue to review the mortgage mess with a view of what it might mean to investors. The story gets curiouser and curiouser....we were probably closer to a debt market meltdown than we knew - about three weeks ago $46 billion of short-term paper in Europe need to rollover, and suddenly there were no buyers. On the same day, several billion in the U.S. couldn't find buyers either. Shortly thereafter, Countrywide announced drawing about $11 billion in bank lines because it couldn't sell commercial paper. And, while Countrywide dealt in higher credit risk loans, it also did a large business in strong credit mortgages. So, a key home lender couldn't sell its paper - some, or even most, of which would be very creditworthy.

Here is the part that seems the most curious: wasn't the big problem of S&L's that triggered that series of bankruptcies - and a REAL government bailout (remember Resolution Trust Company?) borrowing short and lending long? Isn't 5, 10, 15, 30 year loans supported by commercial paper an extreme case of borrowing short and lending long?

What remains fuzzy to me is what happens when a very strong credit calls their bank and asks for a mortgage? If weak credits can't find the mortgage they could have, say, a year ago, I don't see that as more than a short term problem. The U.S. savings rate is a long way from where it should be, and if those potential homeowners really want to own a home, they should save until they get a serious down payment. If strong buyers can't get a mortgage, that is a very different problem....

Where is this leading? I've been looking at the homebuilder stocks. They have lost 50% to 75% of their peak value. Calling a bottom is always a difficult task, and generally not worth even trying. On the other hand, one doesn't want to see a further 50% drop after making a purchase, much less a bankruptcy...

If there are any readers out their tracking homebuilders, please post...