Tuesday, March 31, 2009

Jim Bob and Michelle Duggar...

...have eighteen kids and a reality show on the TLC network. That's not a misprint--eighteen. I'm not sure I even know eighteen people. They're conservative Christians (surprise!) and live in Arkansas. (And you probably thought with a name like Jim Bob that they lived in Berkeley or Cambridge.) All of their children's names begin with a "J," for some reason, and are home-schooled. The oldest, Josh, just got married and you can see the wedding and reception on TV. There was no booze or dancing, of course, and I can think of more than a few Irish families that could take a page from that playbook. (I've decided that as a rule white people shouldn't dance in public and Irish people shouldn't dance at all.) You see, the bride's father (who's also a piece of work) explains that when Jesus changed water into wine the Bible actually meant grape juice. Uh huh. And apparently dancing makes men lust after women. I must know a lot of perverts then because most of the men I know lust after women with or without dancing. Maybe we're just a little friskier where I come from. Now unlike some couples you may know, Josh and Anna waited until their wedding day to kiss for the first time. Again, not a misprint. And neither one is homely--honest. I could go on and on about this family but you really need to see the show for yourself.

Now anyone who knows me or reads this blog from time to time would probably think that I think the Duggars are nuts. Well, I do. But having said that, I also think they're incredibly nice and likable. What's more, they seem genuinely happy. And they also seem to be making this crazy life of theirs work. Whatever else you can say about them, they are doing something right. So if I was wearing a hat (here I go with the hats again), I would take it off to them. You go, Duggars!

I predict that if mark-to-market...

...accounting is modified this week the stock market will fall, not rise. Like reinstating the uptick rule on short-selling, it does nothing to materially effect values. It's like blaming the thermometer for the temperature outside. If anything, I think it will add to uncertainty as investors have to guess at the value of companies' assets. The stock market likes transparency, not opacity.

If you don't like mark-to-market accounting, you shouldn't be a publicly-traded company. Buy back all of your shares and function as a private equity firm or a hedge fund.

Notre Dame has invited President Obama...

...to give the commencement address this year and it's created a bit of a mini-controversy. Some in the ND community think it's a mistake to confer an honorary degree on someone with his views on abortion and stem cell research. If you had asked me my opinion on the subject, up until today I would have given you an answer much like the one Frankie "Five Angels" Pentangeli gave in "The Godfather, Part II" when asked a question about Michael Corleone: "...Yeah, sure, whatever." After all, it's an internal issue.

But this morning Pat Buchanan wrote a piece about it that has me thinking. In it he says:

Pope Benedict has yet to be heard from. But on his visit to the United States, he declared that any appeal to academic freedom "to justify positions that contradict the faith and teaching of the church would obstruct or even betray the university's identity and mission."

So the faith and teaching of the church supersedes academic freedom? Is this what Notre Dame stands for? There's more:

Chris Carrington, a political science major, regards the opposition to Obama's appearance as un-Catholic: "To not allow someone here because of their beliefs would seem a little hypocritical and contradictory to what the mission of the university and church should be."

The obtuse Carrington has stumbled on the relevant question: Is Notre Dame still a repository, teacher and exemplar of eternal truths about God and Man, right and wrong, whose mission is to convey and defend those truths in a hostile world?

Or has Notre Dame joined the secularists in their endless scavenger hunt to seek and find truth in the marketplace of ideas?

Funny, I thought the purpose of education was the pursuit of truth in the marketplace of ideas. Now, I know that Pat Buchanan doesn't speak for the University of Notre Dame, but he does raise an uncomfortable question about Catholic education. And that is, how far are they willing to go to allow for a free and open debate? Are there some things that are simply not up for discussion? It reminds me of a story that Tim Russert used to tell about his Jesuit high school. When Time magazine came out with its famous cover story in the sixties, "Is God Dead?" he said that unlike the teachers at other Catholic schools, his teacher/priest said, "Let's discuss this." They were all very self-congratulatory, but what I'd like to ask Russert (who definitely is dead), is how many minds were changed by that discussion? Did anyone leave that classroom with a different opinion about God? I'll bet not. And that's the problem with religion and religious schools. They start with the answers and work their way backwards, rather than start with questions and work forward to conclusions. That's also the difference between faith and reason. And that, not whether or not Obama speaks at graduation, is the real dilemma facing Notre Dame and other religious schools.

Monday, March 30, 2009

If I heard Robert Schiller correctly...

...this morning on CNBC, the Yale economist said that there is precedent for the U. S. defaulting on its debt. In 1933 FDR took the dollar off the gold standard. This devalued the currency and the Treasury in effect defaulted on the debt. So don't be too surprised if the U. S. allows (or encourages) the dollar to depreciate going forward to manage the current borrowing.

Saturday, March 28, 2009

Millburn High School is in the news...

...today and it got my attention because that's where I would have gone to high school if I hadn't gone to the Catholic school. Apparently, Millburn High has come up with a new plan to use dogs to search for drugs on campus this spring. And I have to ask, is this really necessary? The principal wrote in an e-mail, "I willingly risk student trust if it saves a single life." The article doesn't say how many students have died in the last year or so from using drugs but I'll bet it's somewhere in the neighborhood of zero. It does mention that a sampling of the police blotter from this month showed two teenagers were charged with drinking and three others with possessing alcohol. Is this the problem the dogs are supposed to remedy? I doubt it. I'll bet they're there to sniff out marijuana, maybe cocaine. I don't know if dogs can sniff out pills or alcohol, so I'll bet this is mostly about pot. And although it seems like some stupid college kid dies each year from drinking too much booze in too short a time, I've never heard of anyone dying from smoking pot. And then there were the two 16-year-old girls who said that most of the incidents involving drugs or alcohol happened outside of school. Gee, like maybe Friday or Saturday nights? Who woulda thunk it? Oh well, it's the taxpayers' money; they can spend it any way they want. But it sure seems like a waste to me. Instead, how about having an honest conversation about why kids and parents use drugs and alcohol in the first place? You could save a few bucks, leave the dogs to do what they do best (like chasing squirrels), and actually put everyone's time to a better use.

Friday, March 27, 2009

I just read one of the best articles...

...on the whole financial mess by Matt Taibbi of Rolling Stone. It's called The Big Takeover and you can also find it on RealClearPolitics.com. It's long but readable and explains in English how AIG spun out of control and how this whole bailout process got underway. It gets a little conspiratorial near the end, especially about Paulson and Goldman, and I'm not much for conspiracy theories. He also doesn't talk much about the role of Bernanke in all this which is not an unimportant omission. But I still liked it and would recommend it to anyone trying to make sense of all this.

Thursday, March 26, 2009

Am I just being taken in by the latest Zeitgeist...

...or is Tim Geithner making a dramatic recovery as Treasury secretary?

Nicholas Kristof has another good column...

...in the NYT today entitled "Learning How to Think." He makes two good points especially. The first is that the predictions of experts are, on average, only a tiny bit better than random guesses. So be wary of those financial, political, and sports shows that offer experts' opinions. (You might end up like a certain blogger who concluded after countless hours of watching this stuff that Romney would square off against Hillary in '08.) The second point Kristof makes is the hazard of adopting a hedgehog's, as opposed to a fox's, approach to reality. This idea must be in vogue now because this is the second time I've seen it. In a nutshell, it says that a hedgehog sees the universe through an ideological prism while a fox tends to be more pragmatic. According to Kristof, the foxes tend to be right more often.

As a recovering hedgehog, I can appreciate this. It's a common human tendency to adopt a worldview from which to order the universe. It's comforting to have a framework in which everything fits neatly. It's also intellectually lazy. Most people would rather massage the facts than rethink their ideology. It's just too unsettling; they'd have to scrap their worldview and start all over. So rather than reconsider their assumptions, they continuously force square pegs into round holes. As a result, the pursuit of truth takes a back seat. Alan Greenspan is one notable exception. After a lifetime as a laissez-faire economist, he recently admitted that some of his assumptions were flawed. I give him enormous credit for that; he should be an example for all of us.

Monday, March 23, 2009

Just two unrelated thoughts...

...on a Monday afternoon in March. Today's stock market rally was great and I hope Geithner's plan is as popular six months from now as it is today. But what I really found encouraging was the February existing home sales number which was up 5.1%, way above expectations. The median price for an existing home dropped 15.5% last month, but I think that's also encouraging. The more the price of real estate falls, the closer we'll get to a bottom. And housing is what this recession is ultimately about.

Howard Dean joined the CNBC crew this morning as a contributor, whatever that means. I always thought he got a bum rap in the 2004 election. Dean was the only Democrat I know of that had the cojones to come out against the Iraq War in 2002 and '03. You know, the war that just had its 6th anniversary and shows no sign of ending any time soon. I assume Dean must have been abrasive or arrogant in person because people like Tim Russert didn't seem to like him personally. That never helps a campaign. Dean was the front-runner until Al Gore endorsed him and Jimmy Carter sort of endorsed him; that was the kiss of death because he was no longer seen as an insurgent. His popularity never recovered and he lost the Iowa caucus to John Kerry. His detractors made much of his famous scream that night but it was already over by then. Kerry was the safer choice and went on to lose to Bush narrowly. I wonder if it would have been better to nominate someone like Dean and have him lose but at least go down fighting. Oh well, he looks prescient on Iraq, did a great job as chairman of the DNC and will probably see his favorite issue, health care reform, become a reality under Obama.

Sunday, March 22, 2009

Four unrelated thoughts...

...on a Sunday night in March. First of all, after all these years I finally pulled the trigger and bought a lawn mower. I went with a Black & Decker cordless electric model with the mulch feature. I'm not so terribly concerned with my carbon footprint; I just like the idea of not having to fuss around with gas, oil, etc. I want to thank everyone for their input; I'll let you know how it all works out.

March Madness continued as Duke beat Texas last night and earned the right to play No. 3 Villanova next week. Jon Scheyer had thirteen points and made a nifty play late in the game to save a ball from going out of bounds. I'll be rooting for Duke, of course, not least because I can't stand any place that calls itself 'Nova. Where I live that's a type of lox.

There was a good article in the New York Times magazine today by Roger Lowenstein about a possible bubble forming in Treasury securities. It raised the issue of exactly how risk-free Treasuries are and reminded me of something I read once. On the eve of World War I in 1914, the government bonds of Germany, Austria-Hungary, and Russia were considered among the safest investments on the planet. Four short years later, however, when the war ended in 1918, the Hohenzollern, Hapsburg, and Romanov Empires had all collapsed and their bonds were essentially worthless. Now I don't think the U. S. is in danger of defaulting, but I do think the Treasury's strategy will be to continue to devalue the currency in order to pay back the debt with cheaper dollars. George Will seemed positively shocked when he considered this a few weeks ago on This Week with George Stephanopoulos. He shouldn't have been; the dollar has been depreciating for decades. It's always been in the borrowers' interest to pay back debts with cheaper dollars. So they're really not risk-free after all.

Finally, Guy Fieri would be proud of me. A couple of weeks ago my son and I went to Dell Rhea's Chicken Basket on the old Route 66 in Willowbrook, Illinois. We got there at about 7:00 and were told that the wait was an hour. What were we to do? I drove about 45 minutes to get there and wasn't about to turn around and go home. I didn't know any other spot nearby so I was positively flummoxed as to what to do next. Then, just like a deus ex machina, I noticed that people at the bar were eating and there were spaces available.
"Can we eat at the bar?" I asked.
"Sure," said the owner.
"Can my son sit at the bar?"
"As long as he doesn't order a drink."
Why didn't you say so; I'm not even going to order a drink. So we bellied up and ordered their signature fried chicken baskets with french fries and home-made biscuits. Unfortunately, they were out of their macaroni and cheese that was featured so prominently on Triple D. It was all very delicious, though, and we even got to talk to some interesting people at the bar. I don't think my son realized that you could make casual conversation with strangers like that in a public place. But on the way home I realized that the broasted chicken behind my house was even better, a lot cheaper, and only a two minute walk. It's at a place in Glenview called Goode & Fresh Pizza Bakery and has been around since 1983. Pizza is obviously their specialty but I'd put their broasted chicken up against anyone's. I also went to a place in Morton Grove this weekend called Mr. Zee's on Dempster. The BBQ chicken was quite tasty and the rest of the menu looked good as well. I think Guy Fieri should pay a visit to both of these spots. Moral of the story? There's no reason to leave the northern suburbs of Chicago for good chicken.

Saturday, March 21, 2009

I thought I had the answer to California's budget crisis...

...but apparently I'm behind the curve. Last Friday Time magazine ran an article which began:

Could marijuana be the answer to the economic misery facing California? Democratic state assemblyman Tom Ammiano thinks so. Ammiano introduced legislation last month that would legalize pot and allow the state to regulate and tax its sale — a move that could mean billions of dollars for the cash-strapped state. Pot is, after all, California's biggest cash crop, responsible for $14 billion a year in sales, dwarfing the state's second largest agricultural commodity — milk and cream — which brings in $7.3 billion a year, according to the most recent USDA statistics. The state's tax collectors estimate the bill would bring in about $1.3 billion a year in much needed revenue, offsetting some of the billions of dollars in service cuts and spending reductions outlined in the recently approved state budget.

The article doesn't even mention the potential savings from the costly War on Drugs and the effect legalizing pot would have on crime. Have you noticed what drug lords are doing to Mexico? It's worse than Chicago during the Roaring Twenties. Let's put aside all the hysteria and have a grown-up discussion about drugs in this country. How can it be, for instance, that executives making over $250,000 working for firms that take TARP funds can be taxed at 90% while all those associated with the $14 billion marijuana industry in California pay nothing? And that's just California. Is it any wonder that one of Roosevelt's first orders of business in 1933 was the repeal of Prohibition? Has anyone ever said we should revisit that decision?

March Madness, Part II...

...begins with Jon Scheyer scoring 15 points to lead Duke over No. 15 seed Binghamton on Thursday. The 6'5" Sophomore from Northbrook, Illinois was 3 for 9 from the floor with 5 rebounds and 1 assist. The Blue Devils suit up tonight against the No. 7 seed Longhorns from Texas.

After singling them out in my blog Thursday I have to give props to Siena for knocking off No. 8 Ohio State in double overtime Friday night. The Saints will take on No. 1 Louisville on Sunday.

Western Kentucky upset my home state favorite, Illinois, on Thursday and will now play Bing Crosby's alma mater, Gonzaga. Another Big Ten team getting beat by a school I know nothing about! How can that be? So I did a little research on WKU. It's in the town of Bowling Green (why do so many colleges seem to be located in towns called Bowling Green? And where did they get that name from anyway?). The web site lists its leading alums. This ought to be good, I figured. Among them was Jim "Big Ick" Weaver, from the class of '28. Apparently he was the first Hilltopper to play professional sports. It doesn't say how he got that charming nickname and frankly I'm not sure I want to know. Just as I was moving into Full Smart Aleck Mode I noticed that Cordell Hull was an alum. He was secretary of state under FDR in the period leading up to and including the first few years of World War II. He also drew up the charter for the United Nations and was awarded the Nobel Peace Prize in 1945. I always figured he was a classmate of Roosevelt's from Groton or Harvard, especially with an aristocratic-sounding name like that. But Hull grew up in a log cabin in Tennessee and graduated from law school before he was 21! Donald Kendall is also an alum. I'd heard of him, too. He was chairman and CEO of PepsiCo when it became one of the 25 largest corporations in the U. S. He started out in sales and ended up marrying some European baroness. Cool! Duncan Hines also went to WKU. I trust his name rings a bell with most people. He got his start by including in Christmas cards a list of 167 outstanding restaurants. After popular demand, he turned his list into an annual edition. I guess that was his era's equivalent of a blog. The list goes on and on and made me wonder if Illinois had as many distinguished alums.

Finally, I noticed that the women begin their tournament today, also. And I have to ask, does anybody really care? Does anyone besides the players' parents watch these games? Does the tournament really merit coverage in the New York Times or is this just political correctness run amok? Couldn't the average boys high school team beat pretty much any of these teams? And speaking of PC, I think Don Imus did the Rutgers team a huge favor by making his comments a few years ago. It got him canned but got the Rutgers women's basketball team more publicity than did winning the tournament. Would anyone have known that they were the national champs otherwise? Reality check: who won last year's women's tournament? Don't know? Don't worry, nobody else does, either.

Friday, March 20, 2009

The Fed announced it would buy $300 billion...

...in Treasury securities on Wednesday and the dollar took a dive as a result. After an initial pop in the stock market, equities have been slowly coming back down to earth. Every pundit on CNBC says that the market is worried about inflation down the road. Makes sense; the Fed is growing its balance sheet by $1.5 trillion. And yet, I wonder if the real reason stocks sold off is that the Fed is signaling how bad things are right now. Never mind inflation in the long run; Bernanke must be really worried about deflation in the near term.

I'm already tired of this AIG story...

...and the whole financial mess, for that matter. But I did read a good article about it this morning. It's by Michael Lewis, of Liar's Poker fame, and you can find it on Bloomberg.com. I'm afraid he and Andrew Ross Sorkin of the NYT are right: as bad as it feels, it would be worse not to pay the money than to just pay it. Now Congress wants to tax it at a 90% rate? It reminds me of that Three Stooges episode where the boys are doing a plumbing job on some rich guy's house. Things just keep getting worse and worse; at one point water starts coming out of a ceiling light fixture. Finally one of the servants says, "This house has sho' gone crazy!"

Face it folks, we're all guilty. We've all been living beyond our means since Ronald Reagan said we could have it all. No wonder he crushed Jimmy Carter. Americans hate limits; they love to hear that we can do anything we want. Cut taxes, raise spending, and balance the budget? No problem! John Anderson was right. How do you do that? It's easy; you do it with mirrors.

Thursday, March 19, 2009

Now that I've gotten a look at the...

...men's bracket of the NCAA basketball tournament, I realize there are a number of schools in it that I've never heard of. Take Siena, for example. I always thought that was just a color. But I went to their web site and read a little bit about their program. There's a picture of a St. Bernard on it and I read that they started out calling themselves "the Golden Warriors. That proved too long for headlines, so soon Siena became the Indians. In March of 1989, they became the Saints." Hence the dog. Fair enough.

Reminds me a little of the University of Nebraska. Before they shortened it to Huskers, the teams were known as the Cornhuskers. Maybe this didn't sound scary enough. I don't know; I don't care for either one of them. But I do know that they are both an improvement over their previous nickname, the Bugeaters. I'm serious; you can look it up. Oh, and before that they were known as the Old Gold Knights, the Antelopes, and the Rattlesnake Boys.

It's time for March Madness...

...and I couldn't care less. Sorry, I'm just not a basketball fan. Maybe because it follows too closely on the heels of the football season and by the time that's over I'm burned-out watching sports. Having said all that, I'll be keeping one eye on Duke and its point guard, Jon Scheyer. They open up today against some school called Binghamton. Wasn't that the name of the captain on McHale's Navy? Whatever. Scheyer is from Northbrook, Illinois and went to Glenbrook North High School. From what I understand he's really coming into his own. It's cool to see a local boy make good.

Natasha Richardson's death has reminded me...

...of another pet peeve of mine (they're endless). I noticed she won a Tony for her performance in the 1998 production of "Cabaret." "Cabaret?" Wasn't that a movie back in the 1970s with Liza Minnelli? Kind of like "The Producers," also a remake of an old movie. Except that one spawned another movie in 2005. And now I hear "Equus" is back on Broadway. Hollywood is just as bad, remaking every old 1960s sitcom imaginable--none of which was as good as the original. "Sex and the City" was only off the air four years before they released the movie version. What's next? I hear "Scrubs" may be in its last season. Maybe we should hurry and sign up the cast for a movie. So here's my problem: come up with something new! Be creative! We can take it. There's an old-fashioned word for what you're doing. It's called "plagiarism."

Natasha Richardson died Wednesday...

...of head injuries she sustained in a skiing accident on Monday. She was the daughter of Vanessa Redgrave and the wife of Liam Neeson. It's been all over the news. What I'd like to know is, am I the only person in America who had never heard of her until now? How come I don't recognize any of the movies or plays she was in? Am I that hopelessly out of touch? And how come nobody's talking about the death of Betsy Blair? Now that's news. Who? You know, she was Ernest Borgnine's love interest in the movie Marty. It won the Academy Award for Best Picture in 1955. If you haven't seen it you should.

Nicholas Kristof's column today in the NYT...

...should be required reading for everyone. In a nutshell, he argues that people generally read pieces and watch shows not for information but rather to confirm their prejudices. I'm as guilty as anyone; I can't stand Fox News or the Wall Street Journal editorial page. Even certain reporters on CNBC drive me nuts, such as Joe Kernan and Michelle Caruso-Cabrera. But do yourself a favor; read the piece. You can find it online for free.

Wednesday, March 18, 2009

I wish this bounce in the stock market was for real...

...but I'm afraid it's only a rally in a bear market. Don't get me wrong; they can be thrilling. In one year during the Great Depression the Dow nearly doubled. But I'm afraid that a true bottom would be met not with capitulation or extreme bearishness but rather a complete lack of interest. For example, the bottom in the last great bear market was on December 4, 1974. Trading volumes were anemic as most people had given up on the stock market altogether. I was only 16 back then so I can't remember the sentiment too well. I was more focused on getting my driver's license. I do know that when I came down to the Merc in 1981 no one was talking about equities. Commodities were the hot topic, particularly precious metals. The Hunt brothers had just tried to corner the silver market in the late '70s and gold had rallied up to around $750 an ounce. It came back down to earth, however, and for years was out of everyone's consciousness while financial assets exploded. Can you recall the low in gold prices and the year it bottomed out? Me neither. Which is exactly my point. Stocks will reach a bottom when everyone stops looking for one. People will stop talking about the market and (gasp!) CNBC may have to go off the air for lack of interest.

Tuesday, March 17, 2009

I made some awesome cole slaw yesterday...

...with the cabbage I had left over from my corned beef and cabbage dinner Sunday night. I had never made it before and discovered that it's kind of like making an omelet--you just put anything in there that you have in the house. Besides the cabbage, I used green pepper, celery, red onion, sour cream, mayonnaise, dill weed, and salt and pepper. It was delicious and much better than the stuff you get in most restaurants. The only thing I could have used would have been a little carrot, but I used them all on Sunday night.

Sunday, March 15, 2009

Another pet peeve of mine...

...is this ad campaign for The Partnership for a Drug-Free America, whoever they are. There's one in the "Week in Review" section of the New York Times this morning. Its title is "How to talk to your kids about drugs if you did drugs." First of all, let's start with the biggest problem I have. There's no mention at all of the most abused drug in America: alcohol. The ad implies that drug use is some adolescent experimentation with marijuana, cocaine, meth, whatever. It isn't. Drug use includes drinking, and almost every adult in America does it. That include teachers, coaches, the clergy, everyone. So let's be honest about that before we go any further.

The paragraphs are numbered, so let's take each one at a time. Number 1 includes the sentence, "Afraid we'll be asked that very uncomfortable question: 'Mom, Dad...did you do drugs?' " I have a better idea. Let's ask Mom and Dad if they currently use drugs, i. e. alcohol, and why.

Numbers 2 and 3 address the issue of honesty. They mention correctly that if parents aren't honest they might "risk losing credibility if their kids discover the real story from a talkative uncle at a family party." I'll go you one better. Be honest out of respect for yourself and your kids.

Number 4 includes the hysterical "no need to reveal you smoked marijuana 132 times!" How many people who smoked pot more than once or twice can tell you how many times they got high? Can you recount how many times you got drunk? What planet are these people living on?

Number 5 mentions that drugs are "expensive." So is golf! What does that have to do with anything? The only person that that's going to deter is me.

Numbers 6 through 9 talk about why you did drugs, what you've learned, how it was a mistake, and how dangerous drugs are. How about referring back to numbers 3 through 5 and being honest about your experiences. And maybe telling your kids that the subject is more nuanced than that. First of all, kids aren't stupid. They already know it's nuanced. So respect their intelligence and be honest. Some drug experiences are good, some are not so good. Going to a concert high can be great, driving home can be downright dangerous. Drinking beer until you puke is your business, drinking too much liquor too fast can cause liver failure and sudden death--it seems to happen at least once a year on some college campus. The important thing is to show concern for their safety. After all, these are your kids.

The last section, number 12, has probably the best sentence on the whole page. "So even if you're nervous, don't put off having the conversation." I agree. And while we're at it, let's talk about all the booze in the house and what that's all about. It could be constructive for Mom and Dad to talk about their pain, too.

Saturday, March 14, 2009

I saw Jim Cramer on Jon Stewart this week...

...and I didn't think Stewart necessarily got the better of him. In fact, I think the subject is quite a bit more complicated than he thinks and Cramer was actually very polite and patient with him.

I watch CNBC more than most people (I hope) and I think for all its faults it's actually a good network with a lot of serious journalists who are interested in pursuing the truth. I also think that anyone who watches it as much I do should quickly realize that it's really infotainment. That is, aside from providing the viewer with the latest economic numbers, earnings releases, and other breaking news affecting the markets, it's a show meant to entertain as much as to inform. It reminds me a lot of the political shows I watch or the football pre-game shows my son watches. They are just for people who love the subject and can't get enough of it. But I wouldn't recommend you betting on the football teams these ex-coaches and players recommend any more than I would advise you to invest based on anything you've heard on CNBC. For another example, I watch more political shows than any normal person should and predicted that Mitt Romney and Hillary Clinton would get their parties' nominations in 2008. Morale of the story? Watching these shows doesn't make you any better at predicting the future. So take what you see and hear on CNBC with a large grain of salt.

On the show Jon Stewart made a number of assertions that need to be addressed. The first is that CNBC is "in bed with corporate America." This doesn't square with my experience. As I mentioned, the reporters on CNBC are serious journalists who are after the truth. They are also after a breaking story and would have no trouble reporting bad news. In fact, they would be thrilled because it would be a boost to their careers.

The second is that the reporters on CNBC should have "seen this coming." I don't think anyone saw this coming, except maybe Nouriel Roubini, and I've already voiced my skepticism about him. (Did he put his money where his mouth was? Was he short the last year or so? I wonder.) Jon Stewart ridiculed the notion that this was a "once-in-a-lifetime tsunami." But it was. Any year that the most successful investor in history, Warren Buffett, is down 60% is probably an anomaly. In fact, if you had told anyone the events of 2008 they would have found them hard to fathom: Bear Stearns and Merrill Lynch being sold at fire-sale prices; Lehman Brothers going out of business altogether; AIG, Citigroup, Fannie Mae, Freddie Mac, Bank of America and others being bailed out by the federal government; and the stock market losing 50% of its value in a year. This was the equivalent of a "one hundred year flood."

Another assertion is that Wall Street somehow did all of this with our money and at our expense and got away with millions. Granted some, like Stan O'Neal at Merrill, presided over the demise of his firm and walked away with a fortune. But others, like James Cayne of Bear Stearns and Dick Fuld of Lehman, watched their wealth go down with their firms. Sandy Weill, who built Citigroup, is no longer a billionaire. "Cry me a river," you might say. But there is a lot of hurt on Wall Street as well as Main Street. And no one, least of all the money men, wanted the market to crash and the party to end.

Finally, Stewart claims that Wall Street is in conflict with the public. He shows clips of Cramer discussing ways of manipulating the markets to make his point. But this is a false choice. There are two tiers on Wall Street, but they don't necessarily operate at cross-purposes. There is the hot money crowd, the insiders, the dealers who compete with each other. This is who Cramer was referring to when he talked about spreading rumors or marking the futures down. The second tier is the public, who should be investing for the long-term like for their kids' college education or their retirement. The two should rarely intersect. If Cramer spreads a rumor about Apple or sells futures to protect his short position, this should only influence the market for a short time. He's trying to beat other hedge funds and fast money types, not you or me. The public, i.e. long-term investors, shouldn't even pay attention to these short-term gyrations in the market. They should have their eye on the big picture. And the big picture says that over the long haul equities should outperform all other investments. If you need your money in the near future you should have it in fixed-income securities or cash. Which brings up the subject of Stewart's 75-year old mother. Why is she watching Cramer and why is she still in the stock market at her age?

Friday, March 13, 2009

The Sears Tower is changing its name...

...to the Willis Tower after some British insurance company. So what, who cares? It was a bad idea in the first place. Any time a company builds the tallest building in the world it's a sell signal. As a friend of mine once said, "An ego can be an expensive habit." And if you'll notice, Sears as a company has gone straight south ever since it moved in back in 1973. (I asked my uncle once what it was like to work in the World's Tallest Building. He said it was great. He worked on the fourth floor in the old one and the third floor in the new one.) I always thought the Sears Tower was built to compete with New York anyway, which is a dumb reason. (Chicago is famous for its inferiority complex vis-a-vis New York.) And besides, it ceased being the world's tallest building a long time ago. That distinction goes not to New York, but to some structure in Dubai. And I'm sure New Yorkers haven't thought about it in years. They don't have to; they've got bigger things to think about--like being the Capital of the Known Universe (which they are, let's face it). It's kind of like Los Angeles not needing an NFL franchise to feel good about themselves. They know they're cool. So good riddance, I say. Maybe this will signal a new Golden Age for Sears, although I doubt it. I can't believe that ship of fools is still in business anyway. And maybe it's the high-water mark for Willis, not that I care.

So Chicago's still a great city--very affordable and very livable. If only we could do something about these horrible winters! At least in Minneapolis they spin it with "I like the cold winters here; keeps the riff-raff out."

I really enjoy good writing...

...wherever it is and whatever it's about. I've often thought that I don't care as much about the subject of a book or a magazine or newspaper article as long as it's well-written and compelling. (Ditto for TV shows while we're at it. I used to like watching Dick Cavett because he could make any topic or guest interesting.) Most of my reading is newspapers and most of that is the New York Times. I love reading their puff pieces because they are often so well-written. These first two paragraphs of the Escapes section caught my attention this morning. All I can think of when I read things like this is: I wish I could write like that.

THE alligator crouched on a bank in the Okefenokee Swamp and leered its tight-toothed grin — a sphinx daring travelers to pass.

My canoe measured 17 feet, and this refugee from the Jurassic Age looked about half that size. Even so, it seemed that a flick of its thick tail, as jagged as a buzz saw, could send the boat (and its unnerved cargo) reeling. Instead of a thump or a bump, though, the alligator slipped indifferently away, nosing beneath the dark water, until just a few bubbles marked its passing.

Tuesday, March 10, 2009

The last time the stock market corrected...

...in 2000-01, the scandals were all of a corporate nature: Enron, Tyco, Worldcom, Global Crossings, etc. The sector that was hit the hardest was technology. This time the scandals all involve individual money managers: Bernie Madoff, Walsh-Greenwood, Allen Stanford, etc. And the financials are the hardest hit group. Someone told me recently that history doesn't necessarily repeat itself but it does echo.

I don't have an opinion on stem cell research...

...but I can't help noticing how much Nancy Reagan is in favor of it. Her husband was of course a champion of the pro-life movement in the eighties (although he really only gave lip service to the cause). But when it was revealed that he had Alzheimer's Disease after leaving office his wife suddenly became a big advocate for research on stem cells. Funny how circumstances can change a person's mind.

A few random thoughts...

Today is Osama bin Laden's birthday. How can this guy still be at large almost eight years after the 9/11 attacks?

Crude oil may have found a bottom. If so, this could be bullish for the stock market. Do you think we'll look back on these days and kick ourselves for not buying Citigroup at less than $2 a share?

And finally, let's stop pretending that Ann Coulter is good-looking. She's thin and has long blond hair but that's it.

One of my many pet peeves...

...is when everyone starts using the same word over and over. I first noticed this when I was in business school in the late eighties. It seemed like everyone there was "proactive" except me. I had never heard this word before and wondered if someone there had made it up. It made me realize how reactive I'd been all my life. A little later I noticed that everything that used to be considered "weird" was now "bizarre." I had only heard that word used once before, by the Joker in a Batman TV episode in the sixties. Now suddenly everyone was using it. How do these things spread? Then in the late nineties things gradually became "surreal." Where did that word come from and how did it gain such currency? And would everyone stop using it so indiscriminately now?

I hate lemmings. Be an individual; be original. Think before using the latest "fad" word. You've heard of "noise pollution?" This is kind of like "conversation pollution."

Monday, March 9, 2009

I just had the best pot roast...

...of my life. It takes about three hours to cook but besides that it's really easy--and healthy. Combine it with a sweet potato and some broccoli and you've got a delicious meal for these still-chilly March days. If you don't like corned beef it would serve as a good substitute on St. Patrick's Day. I got the recipe from Alton Brown who is rapidly challenging Guy Fieri for my attention in regard to food matters. Give it a try; you won't be disappointed.


One thing that's safe to say...

...is that the market bottom will come when it's least expected and won't be apparent until a long time after the fact.

Anybody out there...

...see the movie "Jesus' Son?" I watched it yesterday and I can't decide if I liked it or not. It was made in 1999 and starred Billy Crudup. That's a bad last name. Wouldn't you change that?

Ted Kennedy was honored last night...

...by his niece, Caroline, with a John F. Kennedy Profile in Courage Award. Washington pols and Hollywood luminaries gathered at the Kennedy Center in Washington for a 77th birthday celebration for the ailing senator. Kennedy has been much in the news since being diagnosed with a brain tumor last spring. Much was made of him at the Democratic convention last August as he was revered as the "Lion in Winter." Chris Matthews has been positively gushing lately that Kennedy is the "greatest modern senator." He was even given an honorary knighthood from Britain's Queen Elizabeth recently.

And yet, I can't help remembering that this is the same guy that was responsible for the death of a young campaign worker, Mary Jo Kopechne. The same guy that has never paid a price for that. Can you imagine getting away with what he did? "But it cost him the presidency!" Kennedy admirers would say. Boo-hoo! It should have cost him at least his senate seat and his career. Anyone else would have done jail time.

Sunday, March 8, 2009

Did you see President Obama...

...at the Columbus, Ohio police graduation? The one with about 25 guys in white caps and white shirts standing behind him? Did they look like policemen to you? Whatever happened to dark shirts and dark hats? Even the goofy yellow-and-black checkerboard pattern on a Chicago cop's hat is more intimidating (makes me wonder which Daley relative got the contract for those). I couldn't decide if they looked more like the latest batch of Good Humor men or a bunch of guys auditioning for the role of Maytag repairman.

Saturday, March 7, 2009

My question for Bobby Jindal...

...would have nothing to do with his recent speech in response to President Obama's non-State of the Union Address. I saw enough of it to agree with the pundits' claims that it seemed like he was addressing a bunch of third-graders. One speech doesn't make or break a career, however; just ask Bill Clinton, whose speech to the Democratic convention in 1988 was generally considered a disaster. Four years later he was elected president. And Jindal has time to recover. Even if he waits until 2040 to run for president he'll still be younger than John McCain was last year.

No, I wouldn't ask Jindal about The Speech. Nor would I ask him about his teenage conversion to Catholicism (kind of like volunteering to be drafted by the Detroit Lions) or the exorcism he apparently participated in at Brown. (Jindal is not a Jesuit or even a lowly diocesan priest; Bill Maher said that it must have been like a citizen's arrest or something.) I would be tempted, but wouldn't ask, how a biology major who turned down medical and law schools at both Harvard and Yale could support the teaching of intelligent design in public schools. No, and I wouldn't even think of asking him why he signed the Sex Offender Chemical Castration Bill authorizing chemical castration of those convicted of certain sex offenses. I don't even know what "chemical" castration is and I'm sure not in any hurry to find out. Sounds like something out of a Quentin Tarantino movie.

No, what really interests me is why he chose to call himself "Bobby." You've probably heard the story. He got it from the youngest brother on the "Brady Bunch." But why Bobby? Why not Greg, or at least Peter? (Barry Williams, who played Greg, came down to the Merc floor once. Way cooler than Colin Powell, George H. W. Bush, or anyone else for that matter.) He could have picked Mike, the father's name. Or even Sam, Alice the housekeeper's butcher boyfriend. But Bobby? Why name yourself after that little twerp? Forget the rest of it; that alone should be enough to disqualify Jindal for higher office.

Friday, March 6, 2009

George Stephanopoulos was asked recently...

...what advise he would give the Republican opposition. He muttered a few banalities about what a difficult position they are in and how they lack leadership and blah, blah, blah. But it made me think of how I would advise them. And purely from a strategic point of view, I would tell them to continue doing exactly as they are doing. The way I look at it, the economy is so messed up that it could very well not recover by the mid-term elections of 2010. The most pessimistic analysts say it might not be a whole lot better by 2012. Under these circumstances, the Republicans should just continue to oppose Obama at every turn and vote "no" as a block. After all, they really don't have any solutions of their own. For example, "Drill, baby, drill" is not an energy policy, it's a bumper sticker. If the economy doesn't recover by then they can nominate some free-market troglodyte who can say he opposed the bailouts, the stimulus package, that new-fangled wheel invention and every other initiative put forward by Obama. If they can keep Bush and Cheney away from the convention like they did in 2008 it just might work.

If the economy does recover, however, they're in for trouble. The Republicans are already the party of Southern, white, Christian males--not exactly a growing demographic. But, hey, unless you have a better answer I'd say it's your best bet.

Obama's been in office for a little over six weeks now...

...and already the Wall Street Journal and its amen corner at CNBC are blaming the market decline on him. Imagine, six weeks and he hasn't solved the worst financial crisis since the Great Depression. What is he waiting for? The Journal keeps referring to the "Obama Economy" and the crew at CNBC (Joe Kernan, Larry Kudlow, Michelle Caruso-Cabrera, Jim Cramer, Melissa Francis, Charlie Gasparino, and Rick Santelli are the main offenders) just won't cut him a break. I've ranted before about these characters but Francis went so far today as to say that every time Obama opens his mouth the market sells off. Clearly, Rush Limbaugh isn't the only jackass that wants the president to fail.

If you ask me, the reason the stock market has been breaking is that the economic fundamentals are horrible. Housing has yet to find a bottom since the bubble burst, several major banks are essentially insolvent, and companies have shed almost 2 million jobs in just the last three months. How could this possibly be Obama's fault? This crisis was years in the making. I wouldn't even blame Bush and I think he was one of the worst presidents in the modern era. Could Obama's critics be just a little biased? Here's how you can tell: if the economy recovers at all in the next four years take note of how many of these ideologues give Obama any credit. Can you imagine seeing a story in the Journal about the "Obama Recovery?" I can almost guarantee that you never will.

Tuesday, March 3, 2009

The stock market...

...as measured by the Dow and S&P averages has now given back about half of its gains from the rally from the lows back in 1932 to the all-time highs in October, 2007. Warren Buffett said recently that the economy is in a "shambles." This should be a good time to buy equities. I've been calling for a bounce for a couple of weeks now, and I'm beginning to feel like the boy who cried wolf in reverse. But if the market doesn't hold these levels we could see a further correction of 61.8% retracement from the October '07 highs (that's a Fibonacci number, for you math buffs.) That would bring the Dow down to around 5400 and the S&P to about 600.

Monday, March 2, 2009

A few short words...

...on deficits. Anyone who's taken a class in economics knows that deficit spending has a "crowding out" effect. In other words, to pay for deficits requires the government to borrow more thus increasing interest rates and crowding out private borrowing. Deficits can also result in higher inflation as governments print money in addition to borrowing in order to close the budget gap. Any freshman in college knows this stuff.

And yet, when I think of the three largest budget deficits in U. S. history (World War II, the Reagan years, and the Bush years) none of those fears came to pass. In each, interest rates and inflation remained well under control. So I'm a little skeptical when I hear people talking about the inflation that is sure to follow the Obama deficits. Besides, in a world where everyone is enacting stimulus packages the dollar shouldn't lose its relative value. If anything, I think the dollar will continue to strengthen as it is seen more and more as the world's reserve currency. To put it politically incorrectly, the dollar is the world's tallest midget and should continue to be. After all, where would you rather put your money, Russia or the U. S.? Based on what we've seen in the past, the Obama deficits should not result in inflation or higher interest rates.

Now this isn't to say that deficits don't matter. At some point they surely must, but I don't think we've ever seen that point and I can't imagine what it must be.