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Friday, February 01, 2008
Tuesday, January 29, 2008
Losses and the Economy | ArthurDeVany.com
Losses and the Economy | ArthurDeVany.com
Losses and the Economy
January 29th, 2008Everyone seems to be worried about bank losses and the state of the economy. Here is a NYT article that sums up this view.
The nice thing about a financial loss is that it is an event that changes values of assets. It does not destroy assets. The real physical things that were there, like houses and factories, are still there and fully functional.
All that has happened is that prices have adjusted to new information. It doesn’t really matter that a few banks will have to restate the value of their loans. The new prices are signals that will redirect the flow of investment and spending to new assets and commodities. Some relative prices will change, but the price level may not change. If it does, that is not significant either.
What will matter is how these changes affect expectations and liquidity. A sudden revaluation would usually increase liquidity, but a slow revaluation would reduce it. A fall in liquidity would hurt because valued transactions do not take place.
Just as in a hyper inflation, people will not buy or sell if they can’t form a reasonable expectation of what an acceptable price is. I remember the story Axel Leijonhufvud used to tell of a store owner in Brazil during their hyper inflation. He had a striking vase in the window and Axel asked how much he was selling it for. The store owner said it is not for sale. Why not? Because I don’t know the price for it and if I name a price and you buy it means I was a fool.
So, the real problem is not that there are losses. It is that prices need to change and that will take a while. All the interventions that are being proposed or passed into law by an ambitious Congress will slow that process and confuse the clarity of future expectations. One thing this is not about is consumer spending; that is a discredited Keynesian idea but the Congress loves it because it empowers them to spend. People will not spend if prices have not adjusted. Giving them money will not change that. Like the Brazilian shop owner, they have to come to an understanding of what the price is.
Sunday, January 27, 2008
Wishing Wealth: GMI: 0; GMI-R: 0; 16th day of the down-trend; A great new book on the Turtles
Wishing Wealth: GMI: 0; GMI-R: 0; 16th day of the down-trend; A great new book on the Turtles
Michael Covel's new book, "The Complete Turtle Trader," is a masterpiece in describing the trading philosophy and rules used to train the famous Turtles, who learned how to make millions trading, in a two week course taught to them by Richard Dennis and William Eckhardt in the 80's. The most important thing I learned from this book was the mentors' primary emphasis on exits from a trade rather than entry. Dennis is quoted as basically saying one might profit by selecting positions by trial and error as long as one had a good exit strategy. Go into every trade as if you will lose money and you will be prepared in advance for that possibility and limit your losses. Don't take my word for this, read the book. The turtles used an extremely systematic and innovative set of rules to trade futures, which I think can be adapted for trading equities. This is a good time to be out of the market, to analyze one's prior trading performance and to, perhaps, read a great book..
Michael Covel's new book, "The Complete Turtle Trader," is a masterpiece in describing the trading philosophy and rules used to train the famous Turtles, who learned how to make millions trading, in a two week course taught to them by Richard Dennis and William Eckhardt in the 80's. The most important thing I learned from this book was the mentors' primary emphasis on exits from a trade rather than entry. Dennis is quoted as basically saying one might profit by selecting positions by trial and error as long as one had a good exit strategy. Go into every trade as if you will lose money and you will be prepared in advance for that possibility and limit your losses. Don't take my word for this, read the book. The turtles used an extremely systematic and innovative set of rules to trade futures, which I think can be adapted for trading equities. This is a good time to be out of the market, to analyze one's prior trading performance and to, perhaps, read a great book..
Saturday, January 26, 2008
Language Matters
Oil!!!!!!
the trading range of oil (the space between the red and green lines) during the last six years. Second, it shows an extended breach in that trading range – essentially, three months of trades above the red line. What used to be resistance has now become support. I consider it highly significant that oil prices popped up after touching their three-month low. In the future, oil is likely to trade above the red line.
One of the great things about technical analysis of this kind is that it is a way of imposing order (straight lines) on a market riven by noise (jagged lines.) However, technical analysis is not an excuse for not understanding what decisions help form the jagged lines of day-to-day trading. Oil prices are governed by a highly sophisticated market – one that can quickly balance innumerable pricing factors to establish appropriate prices for oil, but so doing creates endless charts of jagged lines. Herein I present my perception of how that market developed and of the major factors influencing it. As a Canuck, I will deal with the matter from a Canadian perspective.
The Background: As oil became a vital factor in western life during the twentieth century, exploration for the stuff – a new industry – found more than the world could consume. In response, big companies set prices for the oil they controlled overseas, while governments and regulators in the US helped create a parallel environment in which America’s huge domestic oil industry could prosper from higher prices. By 1970, these different policies had created a global pricing environment in which oil produced in the United States cost $3.18 (U.S.), while oil produced overseas only fetched $1.30 (U.S.)
This situation received a severe blow in 1973 when OPEC began to act as a cartel – an organization committed to keeping prices higher than the market would ordinarily allow. They were so successful that OPEC’s member states made price control the organization’s primary purpose, and for more than a decade a statement from OPEC was enough to give world energy markets the jitters.
The energy crises of the period were possible because the world was no longer awash with oil. In particular, production in the United States (then the world’s largest producer) had begun to decline. The Western world needed new supplies, and the volumes required were only available from OPEC members. This period culminated with the Iranian Revolution of 1979-80, which brought panic to oil markets. Dubai oil prices rose from about $2.00 (U.S.) per barrel in 1972 to $36 (U.S.) in 1980.
All this was far more traumatic a generation ago than the rapid oil price increases of the last ten years. The reason is that – at least, in relative terms – oil then played a much larger role in the world economy.
Spot and Futures Prices: The market responded dramatically, and predictably, to these painful price increases. Consumers used less oil while producers pumped more. OPEC soon lost the ability to keep prices high. Then, in 1986, Saudi Arabia, an OPEC leader, flooded the market with oil in an effort to re-establish market share. As a result, prices plunged. Dubai oil dropped to $13, and fluctuated around that level for more than a decade. It did not move decisively upward again until 2000, when tight oil supplies began to squeeze prices higher.
Aided by the convergence of computer and telecommunication technology and by increasing competition among global oil producers, the world’s response to these three “price shocks” – the price spikes of 1973 and 1980-1981 and the price collapse of 1986 – was to create a sophisticated global energy market. After much turmoil, this market, which now accommodates innumerable buyers and sellers, imposed a laissez-faire discipline on the matter of global oil pricing.
In this market, petroleum prices take the forms of “spot” and “futures” prices. Spot prices represent what traders charge for oil for immediate settlement – usually, delivery within two days. Futures prices are prices for delivery of oil at a certain date in the future – as soon as one month, as far into the future as nine years – at specified prices.
Driven by a global network of traders working around the clock (except weekends and holidays), spot trades take into account the needs of refineries and a constant stream of geopolitical and economic data. As the recent OPEC/events of September demonstrated, the markets are more strongly influenced by information about how much crude oil inventory is in America’s stockpiles than by OPEC statements about how much oil they are going to produce. News about hurricanes and other extreme weather events also figure into price calculations. So do rumours and worries about conditions in the world’s large economies.
The world’s energy traders bring uncountable resources, facts, needs, expectations and beliefs about the future into their collective trading decisions. This interplay of intelligence and knowledge creates a group mind capable of processing extraordinary amounts of information as it establishes global prices. Charts of spot prices changing minute by minute can be found on numerous web sites.
Benchmark Pricing: Spot prices represent the business end of crude oil pricing, but futures contracts are the ones that truly set prices. As their name implies, futures contracts anticipate what prices will be in the future. Investors and speculators buy these contracts on major commodity exchanges, and spot traders use them as their main references as they negotiate prices. Traders have developed many strategies using futures contracts. They are commonly used for financial speculation, but they also have practical business uses. Refiners can use them to secure the price they will pay for oil at certain points in the future, for example.
To create futures markets, exchanges had to settle on particular kinds of oil to serve as benchmarks. The price of a barrel is highly dependent on both its grade (which is determined by factors such as its specific gravity and its sulfur content) and its point of delivery. In North America, the benchmark price on the New York Mercantile Exchange (NYMEX) is West Texas intermediate oil (WTI), delivered at Cushing, Oklahoma. The following technical chart of futures pricing illustrates trends in oil prices since about 2000. The green and red lines suggest a “trading channel” which prices seem bound to follow.
There are other benchmark crude oil contracts. Of these, the most important is Brent light, delivered at a port in the north of Scotland. Traded on the International Commodity Exchange in London, this oil contract essentially determines the price of oil in Europe and Africa. Oman oil, which is traded in Dubai, helps determine the cost of oil in the Middle East.
The US government’s Energy Information Administration uses an entirely different approach to oil price calculations. It calculates the weighted average cost of oil imports (including oil from its biggest supplier, Canada) to determine the world oil price for the United States. Known as the Imported Refiner Acquisition Cost index, this is a lagging indicator. Instead of giving information about what prices are or will be, it describes what they have been.
Edmonton Par: Although Canada is a large and growing oil producer, we are a price taker rather than a price maker. Canadian prices are established by reference to the benchmarks of New York, especially, and of London. Those benchmarks are the price makers.
The “real” price of oil is its spot price – the amount a buyer will pay for oil for real, immediate delivery. One important Canadian pricing standard is Edmonton light oil. How prices for that oil are established illustrates spot pricing in action.
Initially, the price for Edmonton light is set by the companies – Imperial Oil, Petro-Canada, Shell and Suncor – with facilities at Refinery Row, near Alberta’s capital city. Each morning they post the price they will pay for Edmonton light. Those prices closely track the most recent closing price for NYMEX futures contracts. The daily average of the prices offered by those four refiners is known as Edmonton Par, and it is the standard used for calculating oil prices in Western Canada.
Foreign buyers (mostly located in Chicago) negotiate deals that take into account Edmonton Par, the futures price in New York, the spot price in Edmonton, the date the oil will be delivered, the difference in quality between Canadian light and WTI, the cost of transportation and the availability of competing supplies. As with other efficient markets, the price of Canadian oil reflects a balance of the needs and intelligence of many buyers and sellers.
Canada’s Split Personality: Global markets have had quite a big impact on the distribution of oil within Canada and across North America. In particular, they have helped determine which parts of North America use Canadian oil, and which use oil from the US and overseas.
Refiners avoid the high transportation charges required to pipeline oil from Alberta to Toronto and points east. Instead, they buy oil from offshore Newfoundland or from international markets. That oil is delivered to ports in eastern Canada or to a pipeline terminal at the ice-free harbour in Portland, Maine. From those delivery points the oil is piped to major refining centres in Come-by-Chance, Nfld.; Saint John, NB; Montréal and St. Romauld, PQ; and Nanticoke, Ont.; and to smaller eastern refineries.
Oil from western Canada is another story. It is highly competitive from Vancouver to Sarnia, and in parts of the US West and Midwest. Many refiners in those areas have developed equipment designed to refine specific kinds of oil from Canadian producers. That specialized equipment is one part of the industrial infrastructure that has created secure markets for Canadian oil. Another is North America’s complex network of interconnected pipelines, which make delivery relatively easy.
In practice, Canada has a split personality in the matter of oil imports and exports, and this is mostly a function of our planet’s market pricing for oil. We are the seventh largest exporter of oil in the world, but also the seventh largest importer. In 2006, each day Canada exported 1,784,000 barrels of crude oil, mostly from the west. At the same time, however, we imported 849,000 per day into the east. Canada was thus a net exporter of 935,000 barrels of oil per day.
Because a great deal of our oil production is lower-quality heavy oil, in 2006 Canadian production on the whole sold for less than the $66 per barrel fetched by West Texas Intermediate. However, those net exports added more than $55 million per day to our trade balance with the world.
The creation of a sophisticated global marketplace for crude oil coincided closely with the years in which Canada joined the big leagues of global oil producers and exporters. As we have seen, market pricing now suffuses the sector, and it has helped put the industry into its present form. An example is Canada’s decision to import oil for its eastern refineries while exporting oil from the west. In this instance and many others, efficient markets have helped create a cost-efficient industry.
the trading range of oil (the space between the red and green lines) during the last six years. Second, it shows an extended breach in that trading range – essentially, three months of trades above the red line. What used to be resistance has now become support. I consider it highly significant that oil prices popped up after touching their three-month low. In the future, oil is likely to trade above the red line.
One of the great things about technical analysis of this kind is that it is a way of imposing order (straight lines) on a market riven by noise (jagged lines.) However, technical analysis is not an excuse for not understanding what decisions help form the jagged lines of day-to-day trading. Oil prices are governed by a highly sophisticated market – one that can quickly balance innumerable pricing factors to establish appropriate prices for oil, but so doing creates endless charts of jagged lines. Herein I present my perception of how that market developed and of the major factors influencing it. As a Canuck, I will deal with the matter from a Canadian perspective.
The Background: As oil became a vital factor in western life during the twentieth century, exploration for the stuff – a new industry – found more than the world could consume. In response, big companies set prices for the oil they controlled overseas, while governments and regulators in the US helped create a parallel environment in which America’s huge domestic oil industry could prosper from higher prices. By 1970, these different policies had created a global pricing environment in which oil produced in the United States cost $3.18 (U.S.), while oil produced overseas only fetched $1.30 (U.S.)
This situation received a severe blow in 1973 when OPEC began to act as a cartel – an organization committed to keeping prices higher than the market would ordinarily allow. They were so successful that OPEC’s member states made price control the organization’s primary purpose, and for more than a decade a statement from OPEC was enough to give world energy markets the jitters.
The energy crises of the period were possible because the world was no longer awash with oil. In particular, production in the United States (then the world’s largest producer) had begun to decline. The Western world needed new supplies, and the volumes required were only available from OPEC members. This period culminated with the Iranian Revolution of 1979-80, which brought panic to oil markets. Dubai oil prices rose from about $2.00 (U.S.) per barrel in 1972 to $36 (U.S.) in 1980.
All this was far more traumatic a generation ago than the rapid oil price increases of the last ten years. The reason is that – at least, in relative terms – oil then played a much larger role in the world economy.
Spot and Futures Prices: The market responded dramatically, and predictably, to these painful price increases. Consumers used less oil while producers pumped more. OPEC soon lost the ability to keep prices high. Then, in 1986, Saudi Arabia, an OPEC leader, flooded the market with oil in an effort to re-establish market share. As a result, prices plunged. Dubai oil dropped to $13, and fluctuated around that level for more than a decade. It did not move decisively upward again until 2000, when tight oil supplies began to squeeze prices higher.
Aided by the convergence of computer and telecommunication technology and by increasing competition among global oil producers, the world’s response to these three “price shocks” – the price spikes of 1973 and 1980-1981 and the price collapse of 1986 – was to create a sophisticated global energy market. After much turmoil, this market, which now accommodates innumerable buyers and sellers, imposed a laissez-faire discipline on the matter of global oil pricing.
In this market, petroleum prices take the forms of “spot” and “futures” prices. Spot prices represent what traders charge for oil for immediate settlement – usually, delivery within two days. Futures prices are prices for delivery of oil at a certain date in the future – as soon as one month, as far into the future as nine years – at specified prices.
Driven by a global network of traders working around the clock (except weekends and holidays), spot trades take into account the needs of refineries and a constant stream of geopolitical and economic data. As the recent OPEC/events of September demonstrated, the markets are more strongly influenced by information about how much crude oil inventory is in America’s stockpiles than by OPEC statements about how much oil they are going to produce. News about hurricanes and other extreme weather events also figure into price calculations. So do rumours and worries about conditions in the world’s large economies.The world’s energy traders bring uncountable resources, facts, needs, expectations and beliefs about the future into their collective trading decisions. This interplay of intelligence and knowledge creates a group mind capable of processing extraordinary amounts of information as it establishes global prices. Charts of spot prices changing minute by minute can be found on numerous web sites.
Benchmark Pricing: Spot prices represent the business end of crude oil pricing, but futures contracts are the ones that truly set prices. As their name implies, futures contracts anticipate what prices will be in the future. Investors and speculators buy these contracts on major commodity exchanges, and spot traders use them as their main references as they negotiate prices. Traders have developed many strategies using futures contracts. They are commonly used for financial speculation, but they also have practical business uses. Refiners can use them to secure the price they will pay for oil at certain points in the future, for example.
To create futures markets, exchanges had to settle on particular kinds of oil to serve as benchmarks. The price of a barrel is highly dependent on both its grade (which is determined by factors such as its specific gravity and its sulfur content) and its point of delivery. In North America, the benchmark price on the New York Mercantile Exchange (NYMEX) is West Texas intermediate oil (WTI), delivered at Cushing, Oklahoma. The following technical chart of futures pricing illustrates trends in oil prices since about 2000. The green and red lines suggest a “trading channel” which prices seem bound to follow.
There are other benchmark crude oil contracts. Of these, the most important is Brent light, delivered at a port in the north of Scotland. Traded on the International Commodity Exchange in London, this oil contract essentially determines the price of oil in Europe and Africa. Oman oil, which is traded in Dubai, helps determine the cost of oil in the Middle East.
The US government’s Energy Information Administration uses an entirely different approach to oil price calculations. It calculates the weighted average cost of oil imports (including oil from its biggest supplier, Canada) to determine the world oil price for the United States. Known as the Imported Refiner Acquisition Cost index, this is a lagging indicator. Instead of giving information about what prices are or will be, it describes what they have been.
Edmonton Par: Although Canada is a large and growing oil producer, we are a price taker rather than a price maker. Canadian prices are established by reference to the benchmarks of New York, especially, and of London. Those benchmarks are the price makers.
The “real” price of oil is its spot price – the amount a buyer will pay for oil for real, immediate delivery. One important Canadian pricing standard is Edmonton light oil. How prices for that oil are established illustrates spot pricing in action.
Initially, the price for Edmonton light is set by the companies – Imperial Oil, Petro-Canada, Shell and Suncor – with facilities at Refinery Row, near Alberta’s capital city. Each morning they post the price they will pay for Edmonton light. Those prices closely track the most recent closing price for NYMEX futures contracts. The daily average of the prices offered by those four refiners is known as Edmonton Par, and it is the standard used for calculating oil prices in Western Canada.
Foreign buyers (mostly located in Chicago) negotiate deals that take into account Edmonton Par, the futures price in New York, the spot price in Edmonton, the date the oil will be delivered, the difference in quality between Canadian light and WTI, the cost of transportation and the availability of competing supplies. As with other efficient markets, the price of Canadian oil reflects a balance of the needs and intelligence of many buyers and sellers.
Canada’s Split Personality: Global markets have had quite a big impact on the distribution of oil within Canada and across North America. In particular, they have helped determine which parts of North America use Canadian oil, and which use oil from the US and overseas.
Refiners avoid the high transportation charges required to pipeline oil from Alberta to Toronto and points east. Instead, they buy oil from offshore Newfoundland or from international markets. That oil is delivered to ports in eastern Canada or to a pipeline terminal at the ice-free harbour in Portland, Maine. From those delivery points the oil is piped to major refining centres in Come-by-Chance, Nfld.; Saint John, NB; Montréal and St. Romauld, PQ; and Nanticoke, Ont.; and to smaller eastern refineries.
Oil from western Canada is another story. It is highly competitive from Vancouver to Sarnia, and in parts of the US West and Midwest. Many refiners in those areas have developed equipment designed to refine specific kinds of oil from Canadian producers. That specialized equipment is one part of the industrial infrastructure that has created secure markets for Canadian oil. Another is North America’s complex network of interconnected pipelines, which make delivery relatively easy.
In practice, Canada has a split personality in the matter of oil imports and exports, and this is mostly a function of our planet’s market pricing for oil. We are the seventh largest exporter of oil in the world, but also the seventh largest importer. In 2006, each day Canada exported 1,784,000 barrels of crude oil, mostly from the west. At the same time, however, we imported 849,000 per day into the east. Canada was thus a net exporter of 935,000 barrels of oil per day.
Because a great deal of our oil production is lower-quality heavy oil, in 2006 Canadian production on the whole sold for less than the $66 per barrel fetched by West Texas Intermediate. However, those net exports added more than $55 million per day to our trade balance with the world.
The creation of a sophisticated global marketplace for crude oil coincided closely with the years in which Canada joined the big leagues of global oil producers and exporters. As we have seen, market pricing now suffuses the sector, and it has helped put the industry into its present form. An example is Canada’s decision to import oil for its eastern refineries while exporting oil from the west. In this instance and many others, efficient markets have helped create a cost-efficient industry.
Bloomberg.com: Worldwide
Bloomberg.com: Worldwide: "Banks' $230 Billion Backlog of Debt Isn't Shrinking (Update3)"
Wednesday, January 23, 2008
Mexico's crude oil production fell 5.3 percent in 2007, year-end figures show
Mexico's crude oil production fell 5.3 percent in 2007, year-end figures show
2008-01-21 22:26:34 -
million barrels daily, «mainly due to the expected decline at Cantarell,» the company said in a news statement.
Discovered in the 1970s, the offshore Cantarell field has long been Mexico's biggest-yielding field, but recoverable oil there is now running out.
Bad weather in the Gulf of Mexico, including Hurricane Dean and other storms, also hurt production, accounting for about 40,318 barrels per day in average daily production losses. Accidents and bomb attacks directed at company pipelines also hurt production, the company said, but did not quantify their effect.
Mexico's three oil export terminals in the Gulf were closed Saturday and Sunday due to bad weather. They reopened on Monday, the transportation ministry reported.
Though export volumes declined, total export revenues grew by 9.3 percent to around US$38 billion (¤26.2 billion) in 2007 _ the highest level in Mexico's history _ largely because of a rise in prices. The average price for the market-basket of Mexican crude rose by US$8.62 (¤5.95) to US$61.66 (¤42.58) in 2007.
Crude export volume ran at about 1.69 million barrels per day, the lowest since 2000. December exports slipped to 1.5 million barrels a day, down from 1.9 million barrels daily in November.
Domestic gasoline sales rose by 5.9 percent, the company said, and natural gas production reached 6.058 billion cubic feet per day.
2008-01-21 22:26:34 -
MEXICO CITY (AP) - Mexico's crude oil production fell by 5.3 percent in 2007 as compared to the previous year, but natural gas output increased by 13 percent, the state-run oil company Pemex said in announcing year-end results on Monday.
Oil production fell by about 174,000 barrels per day to a daily average of 3.082
| |
Discovered in the 1970s, the offshore Cantarell field has long been Mexico's biggest-yielding field, but recoverable oil there is now running out.
Bad weather in the Gulf of Mexico, including Hurricane Dean and other storms, also hurt production, accounting for about 40,318 barrels per day in average daily production losses. Accidents and bomb attacks directed at company pipelines also hurt production, the company said, but did not quantify their effect.
Mexico's three oil export terminals in the Gulf were closed Saturday and Sunday due to bad weather. They reopened on Monday, the transportation ministry reported.
Though export volumes declined, total export revenues grew by 9.3 percent to around US$38 billion (¤26.2 billion) in 2007 _ the highest level in Mexico's history _ largely because of a rise in prices. The average price for the market-basket of Mexican crude rose by US$8.62 (¤5.95) to US$61.66 (¤42.58) in 2007.
Crude export volume ran at about 1.69 million barrels per day, the lowest since 2000. December exports slipped to 1.5 million barrels a day, down from 1.9 million barrels daily in November.
Domestic gasoline sales rose by 5.9 percent, the company said, and natural gas production reached 6.058 billion cubic feet per day.
Wishing Wealth: GMI: 0; GMI-R: 0; 1,453 new lows; safely in cash-- and patient
Wishing Wealth: GMI: 0; GMI-R: 0; 1,453 new lows; safely in cash-- and patient
"When I began this blog in 2005 I wrote that I was a chicken and had successfully avoided all significant market declines since 1995. It appears that my indicators have kept me out again. While I do not make recommendations on this blog I did tell you when I went to cash in my pension plan and in my trading IRA. I hope that many of you looked at my indicators and also took actions to protect your funds. The market signaled this decline weeks ago and if we heeded its warnings and ignored most of the "stay invested" media pundits it was possible to emerge unscathed.
The market will signal a bottom at some point and it is critical to concentrate on its behavior. The trick is to wait for the turn and to wade in slowly. Anticipating bottoms is a fruitless exercise. I am very willing to miss quick short-term bounces and to wait for the signs of a real change in trend. When the GMI returns to 3 or 4 and the QQQQ is in an up-trend there will be ample time for me to profit from the rise. In 2003 after the bear market my account gained over 50% in the market rise, without margin (not allowed in an IRA) or the use of options. I have learned over the past 40 years that the secret of success is to be in the market (on the long side) only when the market is in a confirmed up-trend. So I will remain in cash now and monitor the IBD100 stocks for possible future leaders. (See yesterday's post.) As Jesse Livermore once said, the most money is made in the sitting, not in the trading....."
Friday, January 04, 2008
Forget oil, the new global crisis is food
Forget oil, the new global crisis is food: "But Mr. Coxe warned U.S. corn exports were in danger of seizing up in about three years if the country continues to subsidize ethanol production. Biofuels are expected to eat up about a third of America's grain harvest in 2007.
The amount of U.S. grain currently stored for following seasons was the lowest on record, relative to consumption, he said.
'You should be there for it fully-hedged by having access to those stocks that benefit from rising food prices.'
He said there are about two dozen stocks in the world that are going to redefine the world's food supplies, and 'those stocks will have a precious value as we move forward.'
Mr. Coxe said crop yields around the world need to increase to something close to what is achieved in the state of Illinois, which produces over 200 corn bushes an acre compared with an average 30 bushes an acre in the rest of the world.
'That will be done with more fertilizer, with genetically modified seeds, and with advanced machinery and technology,' he said."
The amount of U.S. grain currently stored for following seasons was the lowest on record, relative to consumption, he said.
'You should be there for it fully-hedged by having access to those stocks that benefit from rising food prices.'
He said there are about two dozen stocks in the world that are going to redefine the world's food supplies, and 'those stocks will have a precious value as we move forward.'
Mr. Coxe said crop yields around the world need to increase to something close to what is achieved in the state of Illinois, which produces over 200 corn bushes an acre compared with an average 30 bushes an acre in the rest of the world.
'That will be done with more fertilizer, with genetically modified seeds, and with advanced machinery and technology,' he said."
Forget oil, the new global crisis is food
Forget oil, the new global crisis is food: "A new crisis is emerging, a global food catastrophe that will reach further and be more crippling than anything the world has ever seen. The credit crunch and the reverberations of soaring oil prices around the world will pale in comparison to what is about to transpire, Donald Coxe, global portfolio strategist at BMO Financial Group said at the Empire Club's 14th annual investment outlook in Toronto on Thursday.
'It's not a matter of if, but when,' he warned investors. 'It's going to hit this year hard.'"
'It's not a matter of if, but when,' he warned investors. 'It's going to hit this year hard.'"
Friday, August 31, 2007
The Skeptical Optimist: The second law of thermodynamics isn't all it's cracked up to be
The Skeptical Optimist: The second law of thermodynamics isn't all it's cracked up to be
Hydrogen from Water using Gallium w/ non useful energy
Hydrogen from Water using Gallium w/ non useful energy
Thursday, August 30, 2007
Wednesday, August 29, 2007
Patterico’s Pontifications � Huang v. Hsu — 1996 v. 2008: Question — Will Hillary’s Rivals Attack Her While Her Husband Got a Pass?
Patterico’s Pontifications � Huang v. Hsu — 1996 v. 2008: Question — Will Hillary’s Rivals Attack Her While Her Husband Got a Pass?
Huang v. Hsu — 1996 v. 2008: Question — Will Hillary’s Rivals Attack Her While Her Husband Got a Pass?
[Posted by WLS]
The blogosphere is starting to buzz a little bit over Hillary’s “John Huang”. Articles in yesterday’s WSJ, a follow-up today, and even a piece in the LAT have got to have the Clinton camp worried about what to say about Norman Hsu.
http://online.wsj.com/article/SB118826947048110677.html?mod=Politics-and-Policy
http://online.wsj.com/public/article/SB118835199704811801.html?mod=blog
John Fund at the WSJ has now posted a entry at the sites Political Diary that he made available to Powerline.
As a refresher, recall from 1996:
Bill Clinton benefitted from the political largesse of the Lippo Group, owned by the ruling Riady and Suharto families from Indonesia.
John Huang was a formerly the head of US Operations for the Lippo Group, controlled by the Riady family of Indonesia, before being named a mid-level Commerce Dept. official in the Clinton Admin. He enjoyed enormous access to the WH for such a mid-level employee. As a DNC fundraiser in 1996, he raised $3.4 million for the party and the Clinton re-election effort — mostly from the Aisan-American community. Huang had been hired in the early 1980s by the Riady Family-owned “Worthern Banking Group” in Little Rock.
Huang took a 50% pay cut to join the Clinton Admin in 1993, but the blow was softened by a $750,000 severance package from the Lippo Group. Among the dubious contributions obtained by Mr. Huang was $200,000 donated by an Indonesian gardner, who later had to return to Indonesia to avoid testifying in the Senate investigation into 1996 fundraising practices. Charlie Trie was the Arkansas restaurantuer and generous financial contributor who received wire transfers of hundreds of thousands of dollars from the Bank of China, but mysteriously relocated to Bejing when subpoenas started to roll out.
Now Hillary has the ubiquitous Mr. Hsu.
As reported by the WSJ, Mr. Hsu — a wanted felon and fugitive from justice for a fraud conviction in California — has raised more than $1 million already for Hillary’s campaign, including more than $45,000 from the Paw family in San Francisco, who have contributed more than $200,000 to various Democrat candidates and organizations through Mr. Hsu.
Mr. Paw is a mail carrier, earning $49,000 a year. He donated $4600.
His wife is a homemaker. She donated $4600.
Their four adult children have various occupations — one is an executive at a mutual fund, while another is a local high school “attendance liason”. All donated $4600.
The recently refinanced their 1200 square foot house near SF Airport for $270,000.
What else they all have in common is that their contributions closely track the contributions made by Mr. Hsu to the same candidates and organizations.
The question is whether Hillary’s rivals on the Demo crowd will want to make an issue of this.
Bill got a pass in 1996 because he had no challenger, and the key facts didn’t come out until after the 1996 election.
Now such pass for Hillary.
FORGOTTEN PROPHETS: Hot Sex
FORGOTTEN PROPHETS: Hot Sex
Senator Larry E. Craig is a conservative Idaho Republican who has on a number of occasions voted against redefining "marriage" to include same-sex couples. He seems to believe that marriage is between one man and one woman at a time. He also seems to believe that marriage includes soliciting strange men in public toilets for sexual activity. He was arrested in June in a Minneapolis airport commode for just this proposition, and pled guilty to disorderly conduct. Now he's on TV recanting his plea. Hm. Every time I'm charged with a crime, I plead not guilty. To do otherwise would be perjury.
Similar charges have followed him throughout his quarter-century Congressional career. In 1982 he was accused of feeling up boy pages or somesuch. A Boise paper has just published a six month investigation of his alleged sexual inclinations. "I am not gay," says the Senator. Well, he should know.
Remember bill clinton? Wagging his chubby at us and saying ... ahem ... wagging his chubby finger at us and saying with stern assurance, "I did not have sex with that woman, Monica Lowinsky"? Remember? Indeed, clinton did not have sex with that woman, as he equivocatingly redefined the meaning of the word sex in his head. Sex is intercourse, of course. He did not have intercourse with that woman. See? And there was no relationship with her. Truly. Because it depends on what the meaning of was was ... is is. Git it? There is no relationship [right now, at this very moment that I'm giving testimony] with that woman. When we're allowed to have secret definitions in our heads, we never have to lie out loud.
Is Sen. Larry E. Craig gay? Who the hell cares. I don't. I suppose his wife does, but she would have made her bargain with that devil long ago. We can only imagine the, uh, conversations that will be going on behind their closed doors. But we, we certainly need not care in the least about whether or not Craig is gay. We do need to care about whether he sucks the dicks of strange men in public toilets. It's not just that it's unhygienic, it's illegal. I myself have been known to engage in questionable behavior in public toilets. I once didn't wash my hands after urinating. I know, I'm dirty. But it was a long time ago, and I've grown up since then. I was six at the time. As for Craig, he looks to be in his 70s ... oh, he's only 62 ... hasn't been living clean, evidently.
Craig tapped his foot repeatedly outside the cop's stall, which means Let's have sexual relations in gay subcultural non-verbal argot. He ran his hand along the bottom of the partition, which means I want to fellate you. (Oh, the things I know.) That, as stated, would be unhygienic. But none of us are likely to come into intimate contact with him, say, kissing him, so we need not concern ourselves with his oral hygiene. Likewise, we need not concern ourselves with the apparent disconnect between his private -- or rather, public toilet -- inclinations and his public voting record in the Senate. Public policies such as gay marriage should have little to do with the bus station exploits of glory hole fetishists. The former has to do with principle and the values that one aspires to. The latter has to do with the darkest urges of a man's tormented spirit.
No, the idea that Craig is a hypocritical cocksucker is meaningless. We all have our flaws. We hope that they remain private. And that's the problem. Craig's judgment. His judgment. Judgment. If we require anything of our leaders, it must be that they display some sort of wisdom. There must be some indication of growth, over a span of, say, 25 years. Feeling up pretty page boys in 1982, and getting away with it, is one thing. But it's another millennium, and the behavior is unchanged. The behavior of getting caught. Aren't there bars for this sort of thing? -- where such conduct might even be legal? It's just stupid.
Craig likes weeners. Well, so do a lot of women. I like my own weener. Nothing wrong with liking weeners. And I'm at the point in my life when I don't have to worry about the legal conduct of other people. Tonight as I was rolling, there was a lot of chatter from some fellas about sex. Specifically, about two guys with one woman. Lots of debate -- you wouldn't do it even if she was really hot? ... you just know that somehow swords are going to cross ... that sort of thing. Really inappropriate. Frankly, it was a bit sickening. I have never had the slightest interest at all in sex involving more than two people, no matter the genders involved. It seems to be increasingly acceptable nowadays for guys to admit that they like watching lesbians. Yuck. Absolutely yuck. I honestly do not see the slightest difference between gay sex with men and gay sex with women. But I don't have to worry about it, any of it -- menages, or gay sex, or any of it. I'd prefer not to know about it, but if I do, I don't need to worry. The worst that would happen is that I'd lose respect for someone I like.
Yes, I do have a point. Hardly any sex should be made public. Talk is inappropriate enough, under most circumstances. Acting on it is unacceptable. And that's where Senator Craig is a hypocrite. So what if he's homosexual. That's between him and his wife, and God. So what if he makes an equivocal distinction in his head, about the difference between homosexual, which is a behavior, and gay, which is a political and social philosophy. Craig is a hypocrite not for these things. He is a hypocrite because he makes laws about social policy on the Senate floor, yet he breaks similar laws in public toilets. That sexual sin is taken into the body, and is therefore more damaging, more dishonoring -- that's a personal matter. Alcoholism or drug abuse is likewise damaging to the body and the character and the mind. God cares about these things, so that strangers don't have to.
Men can fall. Men can fail. We might meet such failures with forgiveness, when we see repentance. But repentance isn't a feeling. It's a behavior, of turning away from the troublesome act. In the absence of such change, forgiveness of consequences is inappropriate. Who will change, without consequences? But the senator's soul is not our affair. His judgment is, and he has demonstrated criminal judgment. He will resign. Of course he will. In private life his fetish will be a matter for local law enforcement, and we need have no feeling about it. It will not affect us, any more than the countless other anonymous sexual encounters that take place between lonely and self-loathing people in parking lots and under park bushes and in vomit-smelling alleyways.
Why does sex have to be so hard? Without temptation, we'd all be good. With it, we can at least tell who has good judgment.
Senator Larry E. Craig is a conservative Idaho Republican who has on a number of occasions voted against redefining "marriage" to include same-sex couples. He seems to believe that marriage is between one man and one woman at a time. He also seems to believe that marriage includes soliciting strange men in public toilets for sexual activity. He was arrested in June in a Minneapolis airport commode for just this proposition, and pled guilty to disorderly conduct. Now he's on TV recanting his plea. Hm. Every time I'm charged with a crime, I plead not guilty. To do otherwise would be perjury.
Similar charges have followed him throughout his quarter-century Congressional career. In 1982 he was accused of feeling up boy pages or somesuch. A Boise paper has just published a six month investigation of his alleged sexual inclinations. "I am not gay," says the Senator. Well, he should know.
Remember bill clinton? Wagging his chubby at us and saying ... ahem ... wagging his chubby finger at us and saying with stern assurance, "I did not have sex with that woman, Monica Lowinsky"? Remember? Indeed, clinton did not have sex with that woman, as he equivocatingly redefined the meaning of the word sex in his head. Sex is intercourse, of course. He did not have intercourse with that woman. See? And there was no relationship with her. Truly. Because it depends on what the meaning of was was ... is is. Git it? There is no relationship [right now, at this very moment that I'm giving testimony] with that woman. When we're allowed to have secret definitions in our heads, we never have to lie out loud.
Is Sen. Larry E. Craig gay? Who the hell cares. I don't. I suppose his wife does, but she would have made her bargain with that devil long ago. We can only imagine the, uh, conversations that will be going on behind their closed doors. But we, we certainly need not care in the least about whether or not Craig is gay. We do need to care about whether he sucks the dicks of strange men in public toilets. It's not just that it's unhygienic, it's illegal. I myself have been known to engage in questionable behavior in public toilets. I once didn't wash my hands after urinating. I know, I'm dirty. But it was a long time ago, and I've grown up since then. I was six at the time. As for Craig, he looks to be in his 70s ... oh, he's only 62 ... hasn't been living clean, evidently.
Craig tapped his foot repeatedly outside the cop's stall, which means Let's have sexual relations in gay subcultural non-verbal argot. He ran his hand along the bottom of the partition, which means I want to fellate you. (Oh, the things I know.) That, as stated, would be unhygienic. But none of us are likely to come into intimate contact with him, say, kissing him, so we need not concern ourselves with his oral hygiene. Likewise, we need not concern ourselves with the apparent disconnect between his private -- or rather, public toilet -- inclinations and his public voting record in the Senate. Public policies such as gay marriage should have little to do with the bus station exploits of glory hole fetishists. The former has to do with principle and the values that one aspires to. The latter has to do with the darkest urges of a man's tormented spirit.
No, the idea that Craig is a hypocritical cocksucker is meaningless. We all have our flaws. We hope that they remain private. And that's the problem. Craig's judgment. His judgment. Judgment. If we require anything of our leaders, it must be that they display some sort of wisdom. There must be some indication of growth, over a span of, say, 25 years. Feeling up pretty page boys in 1982, and getting away with it, is one thing. But it's another millennium, and the behavior is unchanged. The behavior of getting caught. Aren't there bars for this sort of thing? -- where such conduct might even be legal? It's just stupid.
Craig likes weeners. Well, so do a lot of women. I like my own weener. Nothing wrong with liking weeners. And I'm at the point in my life when I don't have to worry about the legal conduct of other people. Tonight as I was rolling, there was a lot of chatter from some fellas about sex. Specifically, about two guys with one woman. Lots of debate -- you wouldn't do it even if she was really hot? ... you just know that somehow swords are going to cross ... that sort of thing. Really inappropriate. Frankly, it was a bit sickening. I have never had the slightest interest at all in sex involving more than two people, no matter the genders involved. It seems to be increasingly acceptable nowadays for guys to admit that they like watching lesbians. Yuck. Absolutely yuck. I honestly do not see the slightest difference between gay sex with men and gay sex with women. But I don't have to worry about it, any of it -- menages, or gay sex, or any of it. I'd prefer not to know about it, but if I do, I don't need to worry. The worst that would happen is that I'd lose respect for someone I like.
Yes, I do have a point. Hardly any sex should be made public. Talk is inappropriate enough, under most circumstances. Acting on it is unacceptable. And that's where Senator Craig is a hypocrite. So what if he's homosexual. That's between him and his wife, and God. So what if he makes an equivocal distinction in his head, about the difference between homosexual, which is a behavior, and gay, which is a political and social philosophy. Craig is a hypocrite not for these things. He is a hypocrite because he makes laws about social policy on the Senate floor, yet he breaks similar laws in public toilets. That sexual sin is taken into the body, and is therefore more damaging, more dishonoring -- that's a personal matter. Alcoholism or drug abuse is likewise damaging to the body and the character and the mind. God cares about these things, so that strangers don't have to.
Men can fall. Men can fail. We might meet such failures with forgiveness, when we see repentance. But repentance isn't a feeling. It's a behavior, of turning away from the troublesome act. In the absence of such change, forgiveness of consequences is inappropriate. Who will change, without consequences? But the senator's soul is not our affair. His judgment is, and he has demonstrated criminal judgment. He will resign. Of course he will. In private life his fetish will be a matter for local law enforcement, and we need have no feeling about it. It will not affect us, any more than the countless other anonymous sexual encounters that take place between lonely and self-loathing people in parking lots and under park bushes and in vomit-smelling alleyways.
Why does sex have to be so hard? Without temptation, we'd all be good. With it, we can at least tell who has good judgment.
Saturday, August 25, 2007
Brutally Honest
Brutally Honest
Marriage
And I think a good starting place for us is a paragraph from the ‘Book of Alternative Services of the Anglican Church of Canada’ that I read at the beginning of every wedding service:
Marriage
And I think a good starting place for us is a paragraph from the ‘Book of Alternative Services of the Anglican Church of Canada’ that I read at the beginning of every wedding service:
Marriage is a gift of God and a means of his grace, in which man and woman become one flesh. It is God’s purpose that, as husband and wife give themselves to each other in love, they shall grow together and be united in that love, as Christ is united with his Church.
‘Marriage is…a means of God’s grace’. The phrase ‘means of grace’ is used in the Christian tradition to describe ways in which God channels his love and strength to us. So we talk about Bible reading and prayer, coming to worship and receiving Holy Communion, as ‘means’ of grace’. The paragraph is telling us that in the Christian understanding, marriage is also a way in which God channels his love and strength to us.
Let me try to unpack this. It’s as if God in his infinite love and kindness looks at one of the human beings he has created, and says to himself, “What can I do for her to help her experience my unconditional love and strength, day in and day out, for the rest of her life?” And then God has a brainwave and says, “I know what I’ll do! I’ve got just the guy for her! As he loves her in a gentle and faithful and unconditional way, she’ll experience not only his love, but my love as well”. And then God looks at the man she loves, and says to himself, “Hey, this is a really good idea, because it’ll work the other way around as well! As they each love the other in a gentle and faithful and unconditional way, they’ll both experience my love through one another”.
This is a beautiful thing, and I hope couples can see how significant this makes their marriage and their love. It’s wonderful enough that they’ve found each other and that they have been able to care for each other and love each other in a special way. But this view takes their love even higher than that, because each of them has been given the sacred calling of being a channel of God’s love to the other.
However, there’s a problem here, and it’s to do with the definition of the word ‘love’. We live in a culture in which ‘love’ is mainly an emotional word; ‘falling in love’ is not seen as a choice you make, but as something that happens to you. you’re the helpless victim of it, and if it chooses to leave you, there’s nothing you can do about it; best leave your partner and find someone else.
But in the Bible love is not a feeling but a choice and a way of life. To love someone, in the Bible, means to choose to be a blessing to them by caring for them and helping them in practical ways, whether you feel like it or not. And that’s why we can ask couples to make promises to each other. It’s pretty hard to make promises about feelings; feelings come and go, depending on all sorts of factors. But actions? Yes, we can make promises about them.
But we can get even more clarification than this. If we accept the idea that Christians are called in their marriages to act out the love of God toward their marriage partner, we can go further and ask, “Well, what’s God’s love like?”
God’s love is unconditional. It doesn’t depend on whether or not we’re good enough. We mess up every day, but God doesn’t give up on us in disgust; he forgives us and helps us get up and try again. He is infinitely patient and kind toward us. And thank God for that!
We all experience this in our marriages, if we’re honest. How many of us have asked ourselves from time to time, “Given the sort of person I can be when I’m not at my best, why on earth does she stick with me?” I’ve certainly asked that question, knowing how hurtful I can be when I’m doing my best grizzly bear imitation!
God’s unconditional love calls us as husbands and wives to accept the fact that just as we are not perfect, so our partners are not perfect either. Just as they forgive us, so we forgive them too. In another place Paul says, ‘Do not let the sun go down on your anger’ (Ephesians 4:26); in other words, be quick to apologise, quick to forgive, and quick to be reconciled. That’s what God’s love is like; we’re called to ask him to help us imitate his love.
Connected to this is the idea that God’s love is faithful. To be blunt, this means that God does not give up on us, or leave us when he sees a more attractive and deserving subject of his love around the next corner. God has pledged himself to us and he will be faithful to us throughout our lives and through all eternity as well.
So we’re called to live that out to one another as married couples, to be faithful to one another until death parts us. And here I want to declare war on a phrase that I hear so often: the phrase, “If it doesn’t work out”. I’ve been married for nearly twenty-eight years, and I have to say that I always knew that it was up to me to make it work out. I’m not a helpless victim of circumstances; I’m a free human being with the ability to make decisions and act on them, to say ‘No’ to my selfish nature and ‘yes’ to the way of love and gentleness and grace. So I say to the couples who ask me to officiate at their weddings, “Don’t sit back and wait to see if your marriage will work out! Rather, pray every day for God’s strength, and then you go and make it work out! You can do it, with God’s help!”
Thirdly, God’s love is practical. It’s not just about high-sounding ideas or feelings, but concrete actions, giving us the things that we need for life and health and safety. When Jesus is expressing this, he says that God makes his rain fall and his sun shine on us, righteous and unrighteous alike. In his infinite wisdom and kindness God has designed his universe in such a way that our needs can be met through the good things he has provided for us.
Romance is wonderful and every marriage needs it, but if there isn’t a huge helping of practical love too, no marriage can survive. One of my favourite books about marriage is called Sex Begins in the Kitchen. And the title isn’t talking about kinky sex either! It’s saying that if the partners aren’t willing to serve each other in practical ways like sharing chores and cleaning up and that sort of thing – well, don’t be surprised if things don’t go too well in the more intimate parts of their marriage, either. That’s a special challenge to me, I must admit.
But finally, and in contrast to that, we also need to say that God’s love is pure magic. I mean, imagine if a famous person who you really admire was coming to town, someone who is looked up to by hundreds of thousands of people, but someone who doesn’t know you from a hole in the wall. Now imagine getting a card in the mail from that person saying, “Could we have lunch while I’m in Edmonton? I’ve always wanted to get to know you better!” Wouldn’t you be amazed? Wouldn’t you just be thrilled out of your socks?
But the Christian gospel has even better news. The one who is responsible for everything that exists – the one my friend Rob Heath calls ‘The Chairman of the Board of Existence’ – loves you personally and wants to be your friend! Doesn’t that just blow you away? It’s hard to believe that such a thing could be true, but Jesus assures us that it is!
Married couples who are deeply in love with each other have this same sense of wonder. “How did I get so lucky? I mean, she could have picked anyone, but she picked me!” Of course, in the early days of our relationship this sense of wonder is very strong. In most marriages, as time goes by it wanes a bit – the emotion isn’t as strong as it once was – but wise Christian couples know that this is natural and so it doesn’t scare them. What they do is to concentrate on living out the other aspects of God’s love for their partner – accepting one another unconditionally, forgiving one another, being faithful to one another, caring for one another in simple and practical ways, day in and day out. And as they do this faithfully, as the years go by something deeper and more lasting starts to grow, and one morning you wake up and think “Wow! No one told me about this!” That’s why you see elderly couples in their seventies walking down the street holding hands like teenagers: they’ve found the magic.
I hope that all of us who are married will continue to find that magic as we live out God’s love for one another. God has brought us together, and so, as we pray for his help every day, God will help us to grow into the sort of relationship that is his dream for us – a relationship which will cause other people to say, “You want to see what God’s love is like? Look at that couple and the way they live together – that’s what it’s like!”
Friday, August 24, 2007
dormgrandpop: What does it take to stay married 50 years?
dormgrandpop: What does it take to stay married 50 years?
Monday, May 30, 2005
What does it take to stay married 50 years?
In a blog written some days ago, I quoted the response of a friend to my question “what does it take to remain married for 50 years?”. “It ain’t easy” the this wise octogenarian lady responded. When I recently mentioned to my counselor that I was attending a 50th wedding anniversary celebration, she remarked, “…one of the few marriages that survived the 60s.”
Wednesday, August 22, 2007
My Way News - Iraq Leader Lashes Out at U.S. Critics
My Way News - Iraq Leader Lashes Out at U.S. Critics
Iraq Leader Lashes Out at U.S. Critics
Email this Story
Aug 22, 7:54 AM (ET)
By QASSIM ABDUL-ZAHRA
Iraq Leader Lashes Out at U.S. Critics
Email this StoryAug 22, 7:54 AM (ET)
By QASSIM ABDUL-ZAHRA
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DAMASCUS, Syria (AP) - Iraq's prime minister lashed out at American criticism, saying Wednesday that no one has a right to put timetables on his elected government.
Prime Minister Nouri al-Maliki blamed the U.S. presidential campaign for the recent tough words from the Bush administration and from other American politicians.
"No one has the right to place timetables on the Iraq government. It was elected by its people," he said at a news conference in Damascus at the end of a three-day visit to Syria.
"Those who make such statements are bothered by our visit to Syria. We will pay no attention. We care for our people and our constitution and can find friends elsewhere," al-Maliki said.
U.S. Sen. Carl Levin, a Michigan Democrat, said Monday that al-Maliki should be ousted and replaced with a less sectarian leader.
In addition, both President Bush and U.S. Ambassador to Iraq Ryan Crocker on Tuesday voiced frustration and disappointment with the al-Maliki government.
The harsh exchange erupted just a few weeks before Crocker and the U.S. commander in Iraq, Gen. David Petraeus, are to report to Congress on the success of the latest military campaign to reduce violence in Iraq, and the Iraqi government's progress in achieving political reconciliation.
Without naming any American official, al-Maliki said some of the criticism of him and his government was "discourteous."
Tuesday, August 21, 2007
Curmudgeonly & Skeptical�
Curmudgeonly & Skeptical�
Top 10 "Hillary Actually Said This"
Top 10 "Hillary Actually Said This"
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(To Barbara Walters about the Republicans who impeached her husband; 20/20, Monday, August 20, 2007
Value Discipline: Fear, Corrections, and Regret- Crisis of Confidence
Value Discipline: Fear, Corrections, and Regret- Crisis of Confidence
The flurry of liquidation will subside as redemptions end, as valuations come to irresistible levels, and as anxiety diminishes. Though bargains, in my view do not yet abound, considerable valuation opportunity has opened in the last week. One day leaps of faith represent little indication of anything beyond traders' bravado. Risk adjustments are taking place fairly quickly in the corporate bond realm, and it is important to recognize that you as the owner of the equity have the bottom rung or the residual position.
The malaise of the junk bond market spills over into equity markets fairly easily. Spreads which had narrowed to silly levels of 60-70 basis points over Treasuries now find themselves in a more reasonable, but hardly generous 250-280 basis points over. Think of equities as being the lowest form of junk debt to put the proper perspective in place. Hence, risk premia in Discounted Cash Flow models must open up to reflect the fact that the bond guys are getting their pound of flesh, at long last.
Though the housing market has gone to hell in a handbasket, this is hardly news. There is no entitlement to home ownership for someone with bad credit or no dough...if you think otherwise, get real. If you are worried about your CDO holdings, despite having an "investment grade" tranche of BBB, get real. There is a reason that those who were yield hogs, got slaughtered and chances are, your going-in yield on the BBB tranche was some 200 basis points over where more "normal" credits traded. It ain't going to be pretty if you find yourself stuck in one of these situations. Liquidity dries up and the only enticement is offering your tainted merchandise with a lower price. The old investment adage "the first loss is the best loss" often applies. Being mesmerized by fear of taking a loss is a horrible trait that most of us (and especially men!) have.
Make an honest assessment of the quality of your investments. If it smells (i.e. cash flow from operations is negative, increased working capital is needed as a percentage of revenues as revenues grow, increased capital intensity, diminishing interest coverage, falling profitability) just sell it. If retained earnings is a negative number on the balance sheet, your company may be selling on hope rather than fundamentals. You probably shouldn't have been there in the first place. Take time to learn what the credit rating of the underlying bonds and debenture of your equity investments might be. Despite their poor timeliness and recently tainted reputation, the bond rating agencies can generally distinguish good interest coverage from bad. If your company is below investment grade in its debt ratings, you may be in for a rocky ride as the equity valuation adjusts to the increased yield on the debt.
There is little solace in this great Buffett quote, "You can't tell who is swimming naked until the tide goes out." Central banks around the world injected almost $300 billion in liquidity on Thursday and Friday of last week to try to fill in for where the tide had gone out. Fear is rampant out there, apparently even among central bankers. Don't let it mesmerize you!
Personally, this feels more like a panic than a crisis...more of a rough patch that may last weeks rather than a "drag your guts in the gravel" crisis. I have heard or read three warnings of the present market resembling a pre-crash 1987 scenario...I doubt it. Unless bond and money markets becomes so disabled that we need 150-200 basis points to clear merchandise, I don't sense more than another 5% of downside in aggregate averages. Who knows? Mr. Market seems quite despondent and may overshoot my objective.
Though many investors seem to want to see a Fed rate cut, its negative impact on the dollar could reverse the flow of foreign capital...I am not counting on such Fed action.
What to do? In my view, it is late to try to raise cash. In my view, you may regret not having taken sufficient risk in buying some equities in this weakness. What's on my shopping list?
Though it flies in the face of most strategists' advice, I like a number of financial services stocks. US Bancorp (USB) and Citi (C) are two of my choices among large domestic banks. I like Allied Irish (AIB) and Credit Suisse (CS) as well for international exposure. Even some community banks, which I have avoided for some time are starting to look more reasonable to me.
Some of the business services companies such as payment processors and tax preparation companies look interesting. Kartik Mehta of FTN Midwest Securities is interviewed in this week's Wall Street Transcript (subscription required.) These companies generate a significant amount of cash flow and a significant amount of recurring revenue and have low capex needs. Frequently, they tie into small business but also have some bank exposure. Companies like First Data (FDC) and Alliance Data (ADS) have already been chased down by private equity. By the way, I continue to believe that private equity deals will continue to be part of our investment scenario for at least the next year. In the business services I like Global Payments (GPN) and Total System Services (TSS)
Here is an interesting screen of companies that have bought back stock, every year for the last five years, in excess of stock issuance as well as pay better than a 2% yield, and that are down more than 10% in the last month. This is not a buy list, but an explore list. There are some companies hear that I would not touch!
Stick to your discipline and show some patience. Buy stocks that you feel comfortable with over a longer period of time. Buy into businesses that if Mr. Market continues in his anger, you will feel comfortable to step up to the plate again and adding to your positions at even better prices!
Ignore the histrionics and the hysteria. Like your batting coach told you in Little League, "You've got to keep swing ing the bat." There should be a fair number of fat pitches coming our way!
Disclaimer: I, my family, or clients have current positions in USB, C, AIB, CS, GPN, AZN, CMA, FII, and TOT.
Fear, Corrections, and Regret- Crisis of Confidence
Corrections happen. They are painful, come up spontaneously and unexpectedly, frequently take your breath away and replace your confidence with fear. It is important , at least in my view, to remember at times like these, all of those factors that brought you into capital markets or your specific investment holdings in the first place. Don't let yourself be spellbound with fear.
The flurry of liquidation will subside as redemptions end, as valuations come to irresistible levels, and as anxiety diminishes. Though bargains, in my view do not yet abound, considerable valuation opportunity has opened in the last week. One day leaps of faith represent little indication of anything beyond traders' bravado. Risk adjustments are taking place fairly quickly in the corporate bond realm, and it is important to recognize that you as the owner of the equity have the bottom rung or the residual position.
The malaise of the junk bond market spills over into equity markets fairly easily. Spreads which had narrowed to silly levels of 60-70 basis points over Treasuries now find themselves in a more reasonable, but hardly generous 250-280 basis points over. Think of equities as being the lowest form of junk debt to put the proper perspective in place. Hence, risk premia in Discounted Cash Flow models must open up to reflect the fact that the bond guys are getting their pound of flesh, at long last.
Though the housing market has gone to hell in a handbasket, this is hardly news. There is no entitlement to home ownership for someone with bad credit or no dough...if you think otherwise, get real. If you are worried about your CDO holdings, despite having an "investment grade" tranche of BBB, get real. There is a reason that those who were yield hogs, got slaughtered and chances are, your going-in yield on the BBB tranche was some 200 basis points over where more "normal" credits traded. It ain't going to be pretty if you find yourself stuck in one of these situations. Liquidity dries up and the only enticement is offering your tainted merchandise with a lower price. The old investment adage "the first loss is the best loss" often applies. Being mesmerized by fear of taking a loss is a horrible trait that most of us (and especially men!) have.
Make an honest assessment of the quality of your investments. If it smells (i.e. cash flow from operations is negative, increased working capital is needed as a percentage of revenues as revenues grow, increased capital intensity, diminishing interest coverage, falling profitability) just sell it. If retained earnings is a negative number on the balance sheet, your company may be selling on hope rather than fundamentals. You probably shouldn't have been there in the first place. Take time to learn what the credit rating of the underlying bonds and debenture of your equity investments might be. Despite their poor timeliness and recently tainted reputation, the bond rating agencies can generally distinguish good interest coverage from bad. If your company is below investment grade in its debt ratings, you may be in for a rocky ride as the equity valuation adjusts to the increased yield on the debt.
There is little solace in this great Buffett quote, "You can't tell who is swimming naked until the tide goes out." Central banks around the world injected almost $300 billion in liquidity on Thursday and Friday of last week to try to fill in for where the tide had gone out. Fear is rampant out there, apparently even among central bankers. Don't let it mesmerize you!
Personally, this feels more like a panic than a crisis...more of a rough patch that may last weeks rather than a "drag your guts in the gravel" crisis. I have heard or read three warnings of the present market resembling a pre-crash 1987 scenario...I doubt it. Unless bond and money markets becomes so disabled that we need 150-200 basis points to clear merchandise, I don't sense more than another 5% of downside in aggregate averages. Who knows? Mr. Market seems quite despondent and may overshoot my objective.
Though many investors seem to want to see a Fed rate cut, its negative impact on the dollar could reverse the flow of foreign capital...I am not counting on such Fed action.
What to do? In my view, it is late to try to raise cash. In my view, you may regret not having taken sufficient risk in buying some equities in this weakness. What's on my shopping list?
Though it flies in the face of most strategists' advice, I like a number of financial services stocks. US Bancorp (USB) and Citi (C) are two of my choices among large domestic banks. I like Allied Irish (AIB) and Credit Suisse (CS) as well for international exposure. Even some community banks, which I have avoided for some time are starting to look more reasonable to me.
Some of the business services companies such as payment processors and tax preparation companies look interesting. Kartik Mehta of FTN Midwest Securities is interviewed in this week's Wall Street Transcript (subscription required.) These companies generate a significant amount of cash flow and a significant amount of recurring revenue and have low capex needs. Frequently, they tie into small business but also have some bank exposure. Companies like First Data (FDC) and Alliance Data (ADS) have already been chased down by private equity. By the way, I continue to believe that private equity deals will continue to be part of our investment scenario for at least the next year. In the business services I like Global Payments (GPN) and Total System Services (TSS)
Here is an interesting screen of companies that have bought back stock, every year for the last five years, in excess of stock issuance as well as pay better than a 2% yield, and that are down more than 10% in the last month. This is not a buy list, but an explore list. There are some companies hear that I would not touch!
Stick to your discipline and show some patience. Buy stocks that you feel comfortable with over a longer period of time. Buy into businesses that if Mr. Market continues in his anger, you will feel comfortable to step up to the plate again and adding to your positions at even better prices!
Ignore the histrionics and the hysteria. Like your batting coach told you in Little League, "You've got to keep swing ing the bat." There should be a fair number of fat pitches coming our way!
Disclaimer: I, my family, or clients have current positions in USB, C, AIB, CS, GPN, AZN, CMA, FII, and TOT.
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