Exactly.

But I have to point out something that upset me today: “The president-elect set no goals for reducing the federal deficit.” I”m neither, nor nowhere near, an econ or political guru, but this sounds to me like a potential long term neglect which could spur a tank 8 yrs from Jan 09 ( 2017).

But in the meantime, short-term outlook (over the course of the next 8 yrs) could be absolutely amazing or absolutely…well ….not so amazing. Im still looking for this 9525 break in the DJIA and this 1006 break on the S&P. Up until that point i’ll capitulate and concern myself with pre-positioning liquid over the next 60-90 days to take advantage of a potential opportunity. BUT. And this is a large BUT. If not….a 1565 DJIA could quite be possible. If you noticed, I mentioned liquid. positioned. By this i mean both ways. I’ll position fund liquid in a manner that allows cap gains on the downside (going short) or cap gains on the upside. I gave you my resistance #s above for what I believe cap gains can be achieved @ on an up-tick. But I wont disclose those #s on my strategie’s downtick.

Besides that I think this could look like a neckline week ending tomorrow people, markets closed on Thanksgiving, Happy Thanksgiving all! .. Heads and shoulders are still occuring, breakouts are abound. Watch sectors and your volatility on a minute by minute basis tomorrow, consider it the last day of the week. But remember one thing…..bargains are aplenty on Black Friday in the market as well……I know it’s Thanksgiving, but @ least prospect potential bargains for analysis on Monday, lol. Sunday morning we get our past-week analysis and forecasted monday analysis for monday morning. Happy Holidays, peaceeeeeee!!!!

-Ozzie.

I’ve had it so good in this world, you know.  The odds were fifty-to-one against me being born in the United States in 1930. I won the lottery the day I emerged from the womb by being in the United States instead of in some country where my chances would have been way different.

Imagine there are two identical twins in the womb, both equally bright and energetic. And the genie says to them, ‘One of you is going to be born in the United States, and one of you is going to be born in Bangladesh. And if you wind up in Bangladesh, you will pay no taxes.  What percentage of your income would you bid to be the on that is born in the United Sates?’ It says something about the fact that society has something to do with your fate and not just your innate qualities.  the people who say, ‘I did it all myself,’ and think of themselves as Horatio Alger - believe me, they’d bid more to be in the United States than in Bangladesh. That’s the Ovarian Lottery.

–Warren Buffett on page 643 of The Snowball: Warren Buffett and the Business of Life

This week Bloomberg disclosed that Warren Buffett, the man who has called derivatives a weapon of mass destruction, has himself afterall leveraged his fund Berkshire Hathaway by making a $40 billion bet in derivatives.

Little known to most investors is that Buffett’s primary source of revenue is his 50 insurance companies, including General RE, his company in which top executives are going to jail for accounting fraud associated with transactions involving AIG. The derivaties revelation was accompanied by a sharp drop in the fund price and the downgrading of Berkshire Hathaway bonds.

It is probably also time that Buffett divest himself of Moody’s, he is the bond rating company’s largest shareholder.  Moody’s played the key role in the subprime mortgage debacle and later claimed that it mistakenly overrated subprime debt due to a computer error.

It has been a tough month for Buffett in which the old expression “walk the walk” comes to mind.

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The big American homebuilders have dug themselves into a hole from which they may not emerge for years. Having been abettors and subsequently victims of the U.S. housing bubble in the early years of this decade, they may be the last to profit when buyers finally return to the market.

Berkshire also owns 21st Mortgage and Vanderbilt, the two largest lenders in the industry, assuring a certain availability of finance even in these trying times for credit.

If a buyer purchases the land and the home with the same mortgage, then the limit is the same as for anything else, up to $729,500 in high-cost areas, with a 5.0% downpayment.

There’s some instrinsic charm in manufactured homes for buyers. For one thing, even beyond the financing, they’re affordable. In 2007, factory-built homes went for $40 per square foot while site-built units cost $92.For another, they’re likely to become blue-collar chic, which would put them more in line with the ethos of the post-bubble recovery than the ostentation of the subprime period.

Tom Beers, the chief economist at the Manufactured Housing Institute, which represents 90.0% of the industry, said manufactured housing went through a subprime bubble of its own in the late 1990s. Lenders subsequently tightened up on their standards while they were still shoveling cash at underqualified buyers of traditional homes.

That cost the manufactured industry customers, but now that moral rectitude has come to the rest of the market, “we’re going to see a level playing field because everyone is now using common-sense lending rules,” Beers said.

The manufactured housing industry’s share of new-home starts was roughly a tenth of the U.S. housing market between 2004 and 2006 down from 22.3% in 2000 and 33.8% in 1995. The Manufactured Housing Institute expects that figure to grow to 14.8% in 2008 and even higher in the years to follow as the new rules kick in.

The big American homebuilders have dug themselves into a hole from which they may not emerge for years. Having been abettors and subsequently victims of the U.S. housing bubble in the early years of this decade, they may be the last to profit when buyers finally return to the market.

Berkshire also owns 21st Mortgage and Vanderbilt, the two largest lenders in the industry, assuring a certain availability of finance even in these trying times for credit.

If a buyer purchases the land and the home with the same mortgage, then the limit is the same as for anything else, up to $729,500 in high-cost areas, with a 5.0% downpayment.

There’s some instrinsic charm in manufactured homes for buyers. For one thing, even beyond the financing, they’re affordable. In 2007, factory-built homes went for $40 per square foot while site-built units cost $92.For another, they’re likely to become blue-collar chic, which would put them more in line with the ethos of the post-bubble recovery than the ostentation of the subprime period.

Tom Beers, the chief economist at the Manufactured Housing Institute, which represents 90.0% of the industry, said manufactured housing went through a subprime bubble of its own in the late 1990s. Lenders subsequently tightened up on their standards while they were still shoveling cash at underqualified buyers of traditional homes.

That cost the manufactured industry customers, but now that moral rectitude has come to the rest of the market, “we’re going to see a level playing field because everyone is now using common-sense lending rules,” Beers said.

The manufactured housing industry’s share of new-home starts was roughly a tenth of the U.S. housing market between 2004 and 2006 down from 22.3% in 2000 and 33.8% in 1995. The Manufactured Housing Institute expects that figure to grow to 14.8% in 2008 and even higher in the years to follow as the new rules kick in.

Warren Buffett’s mentor Benjamin Graham looked at stock prices against their 10-year average earnings per share to gauge value. On that reckoning stock prices are only sightly cheaper than their long-term average for the first time since 1991. Stocks have been overvalued for a long time.

Could a long period of sub-average valuations follow for stocks? Perhaps but we clearly still have to find a bottom in stock prices first. They always over-correct on the way down, a reverse of the irrational exuberance of the upside.

How long will that take? The most optimistic point to the spring next year but increasingly experts suggest the middle of next year might be the time to buy, presumably after people sell in May and go away.

To support the Graham analysis you can also turn to the q-theory. This considers the market capitalization of a company compared to the net worth of its assets. But again we sadly only arrive at the fair value position, and there is no buying signal.

In short, at this stage any rallies in stock markets should be seen as selling opportunities, if by mischance you still have US equity investments - and by implication most global stock markets will also follow this trend so lighten up there as well.

This column posited 7,000 on the Dow and 3,300 for the FTSE at the start of the autumn, and we nearly got there. It looks like 2009 will see even lower index numbers, and even then it is going to be hard to call a true bottom recalling the 1930-32 down wave (see graph).

How far US economic policy will offset the depressionary forces in place is the big call for 2009. But it is notable that at least economic policy is different this time. Whether it will work is another thing.

Dont get me wrong, I am fascinated by the concept of stock markets totally. But when individuals turn to their portfolio dashboards in the hope of their own financial freedom, i hate it because i dont believe there is any other concept than earning it “yourself”.

I have never traded stocks, but i don’t see it any different from investing/ partnering with companies / startups / ideas. We invest/ partner in/with start ups today, and for me its a simple philosophy, if i can understand the business well and having meaningful influence to make it succeed, we go ahead and explore it. I dont see why stock markets should be any different for anyone, if one cant have any meaningful influence to any company with his/ her share holding, why bother? Additionally, if you don’t have anything to contribute, then why again?

If you don’t have significant money that makes you say Carl Icahn at Yahoo / Warren Buffett at a company with reasonable influence, then seriously stay away, get back on your desk and work harder, sticking to those basics is your only shot at serious “financial freedom”.

Oh of course, the only other thing is when you know something that others don’t, Information Advantage. Most of us have full time jobs, and listening to CNBC or reading Economic Times religiously is not information advantage to say the least. Every other idiot is doing the same thing. Again stay away, the markets will bite you in your ass. They always do.

Here is the news affecting Delaware High Schools for 11/29/2008

Title: Fix Red Clay: Special Public Session of the RCCSD Board of …

A Special Public Session of the Red Clay Consolidated School District Board of Education will be held on Monday, December 1, 2008. A Public Hearing on a Class Size Waiver request (H. B. 758) will be held from 6:30 p.m. ? 7:00 p.m. The …

Title: Delaware Watch: At Least She wasn't Killed by an Islamist Extremist

Delaware Watch is committed to an alternative?progressive analysis of Delaware?s politics, history, culture, environment and economy. “It’s class warfare and my class is winning.” Warren Buffett. ?The issue of economics is not something …

Title: Prosecutors building case on Fortes? tax returns - The Delaware …

Delaware County Pennsylvania daily newspaper covering local, regional, and national news including local sports, video and multimedia coverage, and classified advertising.

Source: unknown

I wrote a post a while ago, in response to a reader question, that questioned the sanity of an entrepreur following my path and owning multiple concurrent businesses.

I said: bad idea!

However, Diane points to a number of conglomerates (a collection of related or unrelated businesses under common corporate control) that make money because they diversify into multiple businesses and sectors:

Most conglomerates are good examples of diversified businesses (GE comes to mind). One could also buy complementary businesses. Your risk level is affected the same way as it would be with diversifying any investment.

Your example of multiplying the management teams (and thereby increasing risk to each business) is interesting, Adrian. This is precisely one a buyer of companies is looking for (like your friend Brad) - inefficient management with an underlying fairly decent business. You buy and consolidate, combining the common management (HR, Acctg, IT) that runs across each company, combine anything else you can “leverage” (logistic chains, purchasing power, for examples), and save money, thereby reducing costs and making it even more attractive to investors (depending on which kind you want).

And, it’s true: a conglomerate can diversify a company’s risks, just like diversifying a stock portfolio … the problem is - just like any other diversification strategy - you equally ‘wash out’ your successes with your failures.

My issue is that this may work as a ‘risk mitigation strategy for large companies, but it’s too risky for smaller (e.g. sole, or family) operators.

Large conglomerates build up over time, usually using one successful business to fund the rest. The key is having good management in each … the risk (for a small player, like you and I) is trying to BE that management.

A great example is Warren Buffett: he started Berkshire Hathaway by buying a controlling interest in a mediocre textile company and raised cash simply by stopping the dividend stream to the shareholders …

… he used that cash to buy an insurance company, and used policyholder cash from the insurance company to buy more companies.

The interesting thing is that he does NOT look for companies with poor management; rather he buys GOOD companies with GREAT management and keeps them in place, doing what they do best: creating more cash for his next company purchase … and, so on goes Warren’s $40 Billion - $60 Billion (his personal net worth in Berkshire Hathaway) ‘cash machine’ that owns more than 75 companies!

The problem is that Warren only got to this point because he couldn’t find one company that ‘did the trick’ … he would, however, put 60% to 80% of his entire net worth in just one investment/business, if he could find it!

Great advice.

This is how the guru did in the economic crisis. Read what did he advised to the world - be greedy during others fear . So, for all of you guys who are feeling scared and wondering what to do with the economy sick how, you might want to listen to one of the richest men ever to walk the planet.

By WARREN E. BUFFETT

THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.

So … I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.

Why?

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.

A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.

Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.

Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.

Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”

I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: “Put your mouth where your money was.” Today my money and my mouth both say equities.

Warren E. Buffett is the chief executive of Berkshire Hathaway, a diversified holding company.

TraderColony.com Launches

From technical to fundamental investors or savvy support and resistance traders we’re the leading BULL in the market, its your Trader Colony…

October 10, 2008 — TraderColony.com has announced today the opening of its new website property.

This can end up being one of history’s most quintessential buying opportunities. With the recent trends with the stockmarket going down for some companies, it makes a great time for those that have the smarts and the cashflow to make things happen. When the Dow Jones industrial average was approaching its low of 577, Warren Buffett told Forbes magazine that he felt like “an oversexed guy in a whorehouse. This is the time to start investing.”

There are extraordinary opportunities on many fronts for investors, from real estate to stocks and bonds and commodities. Assets are being given away. They may not do well in the next several months, but looking ahead two or three years, investors may see some of the best opportunities of their lives.

The idea for TraderColony is to create a fun, learning atmosphere where those that are novice to experienced traders can benefit from being a part of TraderColony. While the website is still in its infancy, we are dilligently working on adding fresh new content as well as position to feature industry leaders on our site.

The website itself is focused on wealth building, trading, foreign exchange, and commodities. With integrating the social networking element we are going to reach our desired target market. With social networks like MySpace and Facebook becoming as popular as they are, it seems like a great time to resource for traders and wealth builders alike. Additionally the site works well with mobile browsers, blogs and forums, which complements our strategy.”

The founders of TraderColony.com are technically savvy media magnates whose mission is to digitally exhibit the individuals with wealth building through using the world markets who may have been overlooked by the mainstream media. The principals of TraderColony, Inc. are savvy traders themselves ranging from investments in the Nasdaq to SmallCap arena. Their visionary approach to partnerships, synergies and quality content will not go unnoticed; Promising a game changing consumer interface and a refreshing variety of quality original content.

TraderColony.com is a premium quality financial social network with integrated digital content and new media technology company with big plans for the web.

Home

Your personal number for 2008 is obtained by adding 2008 to your month and day of birth. For example, if you were born on May 29, add 5+2+9+2+0+0+8 = 26. Keep adding until you reach a single digit. 2+6=8. In this example, your yearly number for 2008 would be 8. You keep this number for the entire year, and it is the number you use to read your monthly and weekly forecasts.

This year has been a 12-month journey of restriction, practicality, determination and hard work - and you have come a long way! Isn’t it nice to know that freedom and change are the themes of next year? However, for now, timing is important, so don’t try to push too far too soon. This introspective cycle leaves no room for impulsive moves. You may feel alone or sense that something important is missing from your life. Of course, what you are really missing is something that you - and all of us - lost a very long time ago - Free Will - the freedom to truly shine at being YOU.

Top 20 Warren Buffett Quotes

Tell us your favorite Warren Buffett quote by leaving a comment.

1. I always knew I was going to be rich. I don’t think I ever doubted it for a minute.

2. I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.

3. We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.

4. Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.

5. Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.

6. We enjoy the process far more than the proceeds.

7. You do things when the opportunities come along. I’ve had periods in my life when I’ve had a bundle of ideas come along, and I’ve had long dry spells. If I get an idea next week, I’ll do something. If not, I won’t do a damn thing.

8. Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.

9. It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

11. When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.

12. You only have to do a very few things right in your life so long as you don’t do too many things wrong.

13. Time is the friend of the wonderful company, the enemy of the mediocre.

14. Wide diversification is only required when investors do not understand what they are doing.

15. If past history was all there was to the game, the richest people would be librarians.

16. The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective.

17. Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.

18. It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction.

19. Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars.

20. When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.

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Well, quickly getting the ball rolling, I want to make references to the big guns, the Well-Connected and the Influentials in the society. We are talking about people like Warren Buffett, known as the Oracle of Omaha, the #1 investor (known for his conservative style of investing) and the Owner of Berkshire Hathaway, who has bought more than about half a dozen Network Marketing companies. Of course, we cannot forget to mention New York Bestsellers - #1 Business Author and Billionaire, Donald J. Trump and #1 Personal Finance Author and Millionaire, Robert T. Kiyosaki - who co-wrote the great book that is helping to impact many lives, Why We Want You To Be Rich, and recommended Network Marketing as one of the great vessels to help the society in moving from the left side of the quadrant, from being in the “Employed” or “Self-Employed” side of the quadrant to being a Business Owner where you begin to actually direct the affairs of money in your life.

So, the raging question is: Why a home based Business Opportunity, Network Marketing, MLM or a Direct Sales Business? It’s the way by which companies now are reaching out to the masses instead of the traditional distribution model. What do I mean by that? Think about the way many particular products are usually distributed… There’s usually manufacturing by the producer, then the products are loaded on the truck and further transported out the stores out there where the products get sold. Now consider all the energy, time, efforts and resources that have gone out in just finally presenting these products to the line of sight of the consumers. That is why these home based business opportunities have stepped in… to be able to take care of all the hassles that have gone on to through the traditional distribution system. This is to say that a Home Based Business Opportunity, Network Marketing, Direct Sales or MLM are the medium by which these big companies reduce time, money and efforts for the products to get to the consumer.

This is to say the Distribution Model with Network Marketing/Direct Sales companies are clean and very efficient. They are a unique and efficient model that properly allows the money that would have otherwise gone to the payment of labor of the loading of the products on the truck, the transportation and shipping costs, the construction of many storefronts all over the country or the world and then of course, not forgetting the promoting and advertising that would have gone into place by the producer of this product.

Do you understand that those people who actually achieve true financial freedom are those who have involved in what we call the “Profit System” rather than the “Wage System”. To quote America’s Foremost Business Philosopher, Jim Rohn, in one of his classics, The Challenge To Succeed, “Profits Are Better Than Wages. Wages Make You A Living But Profits Make You A Fortune”. In other words for you to just make a living, you will be better off living in the wage system, i.e living from paycheck to paycheck but if you actually want to live and amass great fortune, it is time to move, make a shift of mentality and positioning into the Profit System because that is the only place where you’re going to achieve true Financial Freedom. And This is precisely why the Network Marketing System, the Home Based Business Opportunity, MLM or Direct Sales Business exist; the opportunity to grant the average Joe, who is willing to work hard, to amass great fortune for both himself and his family.

It’s not easy being a super rich person these days. In your own little universe, you’re paranoid about maintaining your wealth, and outside your universe, the masses are usually bitter that you can still lay claim to a private jet while they are struggling to make their gas payments. No one really wants to be your friend.

That’s why social networking sites such as Diamond Lounge (what a ghastly name) and asmallworld think they can fill the gap. Okay, so it’s hard to imagine Donald Trump trawling through his network to look for more friends. And they aren’t exactly in need of more like-minded peers. But maybe then again, they do.

Just because Warren Buffett is the world’s richest man doesn’t mean he doesn’t need tips on good wine. Or Bill Gates. While he’s kicking back — being largely out of the scene in Microsoft — all he has to look forward now are picking out a personal chef or where he can find a new country club after The Yellowstone Club went bust. So be friends with them, Carly. Don’t ignore them. They need you.

The luxury advertising dollar is still very much coveted and hasn’t been maximized online. But the problem here is how do you ensure that you have a large-enough audience for advertisers, and yet preserve that sense of exclusivity to the network? Also, how will you define rich?

Excerpted from IBD, “Job One: Wean The Economy Off Of Politics”,  Krauthammer,  November 28, 2008

* * * * * 

We have gone from a market economy to a political economy.

In the old days, if you wanted to get rich, you did it the Warren Buffett way: You learned to read income statements and balance sheets. Today you learn to read political tea leaves.

Today’s extreme stock market volatility is largely a reaction to meta-economic events: political decisions that have vast economic effects. You don’t anticipate Intel’s third-quarter earnings; instead, you guess what side of the bed Henry Paulson will wake up on tomorrow.

We may one day go back to a market economy. Meanwhile,  the two most important implications of our newly politicized economy are the vastly increased importance of lobbying and the massive market inefficiencies that political directives will introduce.

Lobbying used to be about advantages at the margin — a regulatory break here, a subsidy there. Now lobbying is about life and death.

You used to go to New York for capital. Now Wall Street, broke, is coming to Washington. With unimaginably large sums of money being given out, Washington will be subject to the most intense, most frenzied lobbying in American history.

The other kind of economic distortion will come from the political directives issued by newly empowered politicians.

For example, bank presidents are gravely warned by one senator after another about “hoarding” their bailout money. But hoarding is another word for recapitalizing to shore up your balance sheet to ensure solvency. Isn’t pushing money out the window with too little capital precisely the lending laxity that produced this crisis in the first place?

Even more egregious will be the directives to a nationalized Detroit. Sen. Schumer, the noted automotive engineer, has declared “a business model based on gas” to be completely unacceptable. He says,  “We need a business model based on cars of the future: the plug-in hybrid electric car.”

The Chevy Volt, for example? It has huge remaining technological hurdles, gets 40 miles on a charge and will sell for about $40,000, necessitating a $7,500 outright government subsidy. Who but the rich and politically correct will choose that over a $12,000 gas-powered Hyundai?

The new Detroit churning out Schumer-mobiles will make the steel mills of the Soviet Union look the model of efficiency.

* * * * *

* * * * *

I came across a recent article written by Warren Buffett, and I think that what he says is worth a thought…

“A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful.”

“I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month - or a year - from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.”

“Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts”.

Quoted from the New York Times, October 16, 2008.

Should I be listening to good old Mr Buffett? Why not? Think about it…

Even during the economic pinch, a very select group of Americans have continued to donate many of their hard-earned dollars to philanthropic causes, such as global health and education initiatives.  BusinessWeek did a great story on these “Top 50 American Philanthropists.”  You can view the article here:

http://www.businessweek.com/print/magazine/content/08_49/b4111054030529.htm

Warren Buffett tops this year’s list, giving over $40 billion to charity in the last four years.  Bill and Melinda Gates were runner’s up, a mere $38 billion shy of what Buffett gave to his various philanthropies.

Also, here is the link to the slide show of the men and women who made the list.  You can also check out the top 25 below.

http://images.businessweek.com/ss/08/11/1124_biggest_givers/index.htm?technology+slideshows

Spending the day away from Carol. Me and the family having a most excellent time. Stealing a little bit of shuteye on the sly I have to admit - but that ain’t so bad. Thinking that life couldn’t really get any better . . . And not expecting it to. Seen this warren buffett info before?

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Superior business leader and American investor Warren Buffett is often called “Oracle of Omaha” or the “Sage of Omaha” and philanthropist. (Wikipedia, 2007) Buffett is the CEO, and the biggest shareholder of the Berkshire Hathaway Company. Buffett’s has an estimated current net worth of approximately $52 billion in US funds. Forbes Magazine ranks Buffett the third richest person in the world in September 2007 behind Carlos Slim and Bill Gates.

Warren Buffett is known for his economical and plain lifestyle. Buffett still lives in the same Omaha, Nebraska house that he purchased in 1958 for $31,500 with a current value of $700,000. In 1989, Buffett spent $9.7 million of the Berkshire’s funds on a corporate jet. He jokingly named it “The Indefensible” because of his past criticisms of such purchases by other CEOs. (Wikipedia, 2007)

Warren Buffett decided to make a commitment to give his fortune to charity back in June 2006. Buffett’s charity donation is approximately $30 billion, which is the largest donation in the history of the United States. The donation was enough to more than double the size of the foundation with 83% of it going to the Bill and Melinda Gates Foundation. Buffett believed that his family had enough money to get started in life so Buffett decided to give his fortune to charity. Buffett’s annual salary in 2006 was only $100,000. In 2007, Buffett was listed among Time Magazine’s 100 Most Influential People in the World. (Wikipedia, 2007)

I just received an interesting email from my dad about the all time famous billionaire finance investor Warren Buffet, and I felt inspired yet feeling determined and ever more passionate about business, life and conflicts. All of us are talking and speculating of what is yet to come in 2009, about the next recession that is coming to hit like a tsunami. Donald Trump may have made his billions with his comeback in the 90’s but after reading this article, one can’t help but be compelled about Warren Buffet’s zen calm like qualities.

When do you plan to retire?

Why do stock market crashes happen?

How to think about Investing?

What do you think are the pitfalls in donation?

Why do you work from Omaha and not Wall Street, New York?

You seem to be so well read, tell us how it all started.

What is the 1 biggest advice you would impart to a young investor like me?

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Hope this inspires you as much as it inspires me.

1. Reinvest Your Profits: When you first make money, you may be tempted to spend it. Don’t. Instead, reinvest the profits. Buffett learned this early on. In high school, he and a pal bought a pinball machine to pun in a barbershop. With the money they earned, they bought more machines until they had eight in different shops. When the friends sold the venture, Buffett used the proceeds to buy stocks and to start another small business. By age 26, he’d amassed $174,000 — or $1.4 million in today’s money. Even a small sum can turn into great wealth.

2. Be Willing To Be Different: Don’t base your decisions upon what everyone is saying or doing. When Buffett began managing money in 1956 with $100,000 cobbled together from a handful of investors, he was dubbed an oddball. He worked in Omaha, not Wall Street, and he refused to tell his parents where he was putting their money. People predicted that he’d fail, but when he closed his partnership 14 years later, it was worth more than $100 million. Instead of following the crowd, he looked for undervalued investments and ended up vastly beating the market average every single year. To Buffett, the average is just that — what everybody else is doing. to be above average, you need to measure yourself by what he calls the Inner Scorecard, judging yourself by your own standards and not the world’s.

3. Never Suck Your Thumb: Gather in advance any information you need to make a decision, and ask a friend or relative to make sure that you stick to a deadline. Buffett prides himself on swiftly making up his mind and acting on it. He calls any unnecessary sitting and thinking “thumb sucking.” When people offer him a business or an investment, he says, “I won’t talk unless they bring me a price.” He gives them an answer on the spot.

4. Spell Out The Deal Before You Start: Your bargaining leverage is always greatest before you begin a job — that’s when you have something to offer that the other party wants. Buffett learned this lesson the hard way as a kid, when his grandfather Ernest hired him and a friend to dig out the family grocery store after a blizzard. The boys spent five hours shoveling until they could barely straighten their frozen hands. Afterward, his grandfather gave the pair less than 90 cents to split. Buffett was horrified that he performed such backbreaking work only to earn pennies an hour. Always nail down the specifics of a deal in advance — even with your friends and relatives.

5. Watch Small Expenses: Buffett invests in businesses run by managers who obsess over the tiniest costs. He one acquired a company whose owner counted the sheets in rolls of 500-sheet toilet paper to see if he was being cheated (he was). He also admired a friend who painted only on the side of his office building that faced the road. Exercising vigilance over every expense can make your profits — and your paycheck — go much further.

6. Limit What You Borrow: Living on credit cards and loans won’t make you rich. Buffett has never borrowed a significant amount — not to invest, not for a mortgage. He has gotten many heart-rendering letters from people who thought their borrowing was manageable but became overwhelmed by debt. His advice: Negotiate with creditors to pay what you can. Then, when you’re debt-free, work on saving some money that you can use to invest.

7. Be Persistent: With tenacity and ingenuity, you can win against a more established competitor. Buffett acquired the Nebraska Furniture Mart in 1983 because he liked the way its founder, Rose Blumkin, did business. A Russian immigrant, she built the mart from a pawnshop into the largest furniture store in North America. Her strategy was to undersell the big shots, and she was a merciless negotiator. To Buffett, Rose embodied the unwavering courage that makes a winner out of an underdog.

8. Know When To Quit: Once, when Buffett was a teen, he went to the racetrack. He bet on a race and lost. To recoup his funds, he bet on another race. He lost again, leaving him with close to nothing. He felt sick — he had squandered nearly a week’s earnings. Buffett never repeated that mistake. Know when to walk away from a loss, and don’t let anxiety fool you into trying again.

9. Assess The Risk: In 1995, the employer of Buffett’s son, Howie, was accused by the FBI of price-fixing. Buffett advised Howie to imagine the worst-and-bast-case scenarios if he stayed with the company. His son quickly realized that the risks of staying far outweighed any potential gains, and he quit the next day. Asking yourself “and then what?” can help you see all of the possible consequences when you’re struggling to make a decision — and can guide you to the smartest choice.

10. Know What Success Really Means: Despite his wealth, Buffett does not measure success by dollars. In 2006, he pledged to give away almost his entire fortune to charities, primarily the Bill and Melinda Gates Foundation. He’s adamant about not funding monuments to himself — no Warren Buffett buildings or halls. “I know people who have a lot of money,” he says, “and they get testimonial dinners and hospital wings named after them. But the truth is that nobody in the world loves them. When you get to my age, you’ll measure your success in life by how many of the people you want to have love you actually do love you. That’s the ultimate test of how you’ve lived your life.”

While many have criticized Warren Buffett’s recent Goldman Sachs stock buy (Goldman shares have tumbled since Buffett bought $5 billion in preferred stock on Sept. 23), Bloomberg’s Ari Levy reports that Berkshire Hathaway’s overall financial stock performance has been well ahead of the sector average in recent months. Writes Levy, “Berkshire’s bank-related investments rose 36 percent in the third quarter, while the 84-member Standard & Poor’s 500 Financials Index declined 0.2 percent.” For the past year (through September), a weighted basket of Berkshire’s financial stocks rose at an average quarterly rate of 2.3 percent, according to Bloomberg data, while the S&P financials index dropped by an average 11.4 percent per quarter over that period.

While Berkshire kept some of its largest financial stakes (those in American Express, U.S. Bancorp, and Wells Fargo) essentially unchanged in the third quarter, it cut back significantly one financial — and to its benefit. Buffett’s firm reduced its investment in Bank of America from 9.1 million shares to 5 million shares in the quarter, Levy writes. BOA’s stock has subsequently fallen about 60 percent so far in the fourth quarter.

Berkshire hasn’t fully escaped fourth quarter financial pain, however. Its financial holdings — which also include M&T Bank Corp., SunTrust Banks, Torchmark Corp. and Wesco Financial — have fallen 32 percent since the end of September (not including the Goldman investment). But they are still ahead of the S&P financial index, which has fallen 41 percent in that time, according to Bloomberg data.

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Netherlands renewable energy developer Econcern announced today that it’s expanding its wind development into China with plans to invest €863million ($1.1 billion) into onshore wind farms in the country. Venture-backed Econcern is teaming up with some big players for the move: CNOOC New Energy, part of state-owned China National Offshore Oil Corp., and Sinohydro Renewable Energy, a subsidiary of Sinohydro Corp., another state-owned business.

Econcern plans to build three wind farms with CNOOC New Energy and one with Sinohydro Renewable Energy for a total of over 720 megawatts of wind power capacity. Construction on all four projects is expected to start next year.

Today’s deals appear to be some of Econcern’s first renewable energy projects in China. The company, which also does consultancy work in renewable energy and climate change issues and has its own venture development group, works on projects in wind, biomass, and solar, as well as green buildings.

Econcern’s largest project to date is a 330 MW offshore wind farm that’s expected to go up off the coast of Belgium in the North Sea. That €900 million project is still in the development phase, but it’s scheduled to be operational by 2010.

Econcern back in May raised €300 million in financing when Rabobank and the Delta Lloyd Group came on board as joint investors, with previous investor SHV Holdings also participating in the round. At the time, Econcern said investor Good Energies had sold its holdings in the company. SHV, Rabobank, and Delta Lloyd collectively hold 50 percent of Econcern, with the remaining 50 percent owned by Econcern management and employees.

China’s cleantech sector has been attracting a number of foreign investments over the last few months, including funds from chipmaker Intel and investor Warren Buffett. In October, Intel Capital, the investment arm of Intel, said it would invest in thin-film solar company Trony Solar and large-scale electricity storage specialist NP Holdings, both based in China. And in September, Chinese electric car and battery maker BYD got a boost when Buffett, through a subsidiary of his Berkshire Hathaway investment group, put up $230 million for a 10 percent stake.

Applying philosophy to everyday problems

In Sovereign Credit is State Usury I mentioned a post about usury, the following is what I planned as the first section of that post.

Although usury was invented in ancient Sumer all three Abrahamic religions prohibit the taking of interest on debt. In ancient times money was extended by the temples to the farmers, secured by their land, after four years they either paid or the amount was doubled. When debts on the farmers grew too large there would be a general amnesty and all debt owed by farmers would be annulled. To this day orthodox Jews, marginal Christian sects and devout Muslims will have nothing to do with usury, neither a lender nor a borrower.

The good Christians soon took over this lucrative trade when the central authority declined in the second half of the thirteenth century (see The Catholic Empire) at the same time there was ethnic cleansing of Jews all over Europe. The Knights Templar, who had left crusading and turned into banking, also came under attack; their legendry fortunes did not come from the East but rather from usury. Little was found in their vaults, they had nothing to give up even to save their lives, just like modern banks that after years of record profits turned out to be bankrupt.

The practice of usury flourished in North Italy, where there was no central power to hold it back and big money oligarchy took over the government, first in republican form and when the money was concentrated in a single family, the Medici in Florence for example, power became absolute. The religious prohibition still held even in the hearts of bankers: the Italian countryside is dotted with chapels built by guilt-ridden bankers.

“Usury was still banned by the powerful Church in this period, with an interpretation concisely expressed as Quidquid sorti accedit, usura est (”Whatever exceeds the principle is usury”). So the Medici Bank could not openly adopt the modern formula of promising to pay interest on demand deposits and loaning out a fraction of the deposits at greater interest to pay for the interest on the deposit, since a depositer would gain revenue on the principal without any risk to the principal, which would have made both parties usurers and sinners; nor could they charge fees or other such devices.”

-Medici bank, Wikipedia

To get around the prohibition they would use commercial transactions to mask the usury. This kind of usury by other names is currently being practiced by Islamic Banking and in Islamic states that formally prohibits usury (e.g. Iran).

When regional central power was re-established usury was again assailed. The kings of France and England prevented their domestic merchants from becoming bankers, while at the same time ruining the Italian bankers by defaulting on huge debts-the interest paid by these Christian kings was implicit and not explicit-like king Edward III who ruined the societies of the Peruzzi and the Bardi of Florence in 1345 when he defaulted on a debt equal to 4.8 tonnes of gold (1,365,000 florins times 3.5 gram). Their ruin cleared the way for the Medici to establish their bank in 1397.

The last Tudor male sovereign, king Edward VI (1547-53), outlawed usury by parliamentary decree:

“(Act relating to Usury.) Another bill was brought in against usury, which passed both houses, and was made a statute. By it, an act passed in the 37th of the late king (Henry VIII), that none might take above 20 per cent. on money lent, was repealed; which they said was not intended for the allowing of Usury, but for preventing farther inconveniences. And since Usury was by the word of God forbidden, and set out in divers places of Scripture as a most odious and detestable vice, which yet many continue to practise, for the filthy gain they make by it; therefore, from the 1st of May, all usury or gain from money lent was to cease; and whosoever continued to practise to the contrary, was to forfeit both principal and interest, to suffer imprisonment, and to be fined at the king’s pleasure.”

-Cobbett, Parliamentary History of England, vol. I, p.596. [my emphasis]

Notice how the act prescribes the punishment while the prohibition follows from Scripture, thus equating usury with murder and theft. The anti-usury law was repealed in 1571, when the oligarchy-friendly regime of Elizabeth was in power.

There was a need not only to legalise usury, but also to legitimise it. Usury had to become a ‘normal’ part of life, not something that might be one day questioned or even condemned; in short the whole question of usury had to disappear even the word had to change its meaning.

When the Reformation exploded in 1517-The pope at the time was Leo X, the first of three Medici popes-it found its first adherents in the oppressed classes of Europe: the peasants, the artisans, the knights and the merchants. These four existed under the double alliance of nobility and church that ruled since the end of the Catholic Empire. The peasants and the artisans were being crushed by the weight on them, the knights were being constantly grinded down, while the merchants were restrained and blocked by the medieval structures of societies.

The militant knights were crushed early on in 1522, the rebellious peasants in the Peasants War of 1526. Henceforth those two only played the role of the follower never the leader. The peasants became the ardent supporters of absolute power, a central power that would protect them from local abuse.

“Martin Luther warned about the mathematics of compound interest as the monster Cacus, devouring all. Yet Luther’s denunciations of usury are excluded from his collected works in English, and are available in this language only in Vol. III of Marx’s Capital and Book III of his Theories of Surplus Value.”

-Micheal Hudson, The Big Bank Job

In 1566, two years prior to the start of the Eighty Years War, the knights summoned themselves and presented a petition against the Inquisition to the Duchess of Parma, the regent of the Netherlands at the time, while emphasising their loyalty to the king and the church. They adopted the name of the Beggars, after being described so by a royal councillor. Their time had since past and they had no role left to play except asking for mercy-like any group in the middle of two warring factions they tried to play the peacemaker, such was the end of the knights who conquered the Holy Land five centuries prior.

The artisans took their time, first developing an ideology, then organising and acting. The anti-usury Anabaptists were resolutely crushed in the Münster Rebellion (1535) leaving only an echo of itself, like European communist parties that once thundered and now squeak from parliamentary obscurity. Their ideology lived on with the pacifist wing of the movement, who quit Europe and immigrated to North America.

The sects that remained adapted to the power structure of the time, feudal Germany adopted Lutheranism and cut its ties with Rome. The merchants in the Netherlands adopted and promoted Calvinism, which in turn spread to Scotland. England ended up with a mix of Catholic, Lutheran and Calvinist church; few notice that the Anglican Church is officially an offshoot of the Catholic Church and not a protestant faction.

The choice of Calvinism by the merchants is not by chance, its doctrines more then rhymed with their economic and social interests:

“Calvin expressed himself on usury in a letter to a friend, Oecolampadius, in which he criticized the use of certain passages of scripture invoked by people opposed to the charging of interest. He reinterpreted some of these passages, and suggested that others of them had been rendered irrelevant by changed conditions. He also dismissed the argument (based upon the writings of Aristotle) that it is wrong to charge interest for money because money itself is barren. He said that the walls and the roof of a house are barren, too, but it is permissible to charge someone for allowing him to use them. In the same way, money can be made fruitful.”

-Calvinism, Wikipedia [my emphasis]

Either the Scripture is the absolute truth valid for all times or it is not. Edward VI changed the conditions when they did not comply with Scripture; the argument of “changed conditions” is an argument to change Scripture to comply with the times.

Religion is the absolute truth valid for all times and places. Philosophy is the absolute truth valid for some times and some places. Religion is by definition principles external to the world, while philosophy is the summation of all the worldly knowledge at a certain time. Hegel explains how philosophy could be absolute and yet change over time:

“Each principle has reigned for a certain time, and when the whole system of the world has been explained from this special form, it is called a philosophical system.”

-Hegel’s Lectures on the History of Philosophy, Introduction A. [my emphasis]

Religion is a blueprint for society; philosophy is a summation of society. Conditions are changed according to religion, while philosophy changes according to conditions. Sometimes philosophy turns into religion as happened with the Bolsheviks who took a social philosophy and turned it into a blueprint for social construction.

What would be Calvin’s reaction if he should come back today and witness Christian denominations that accepts female and homosexual priests because of “changed conditions”, would he accept their argument or condemn them? And in turn how would they react if, in few centuries, incest or child murder were accepted in the name of “changed conditions”? Either it is religion or philosophy; one cannot pick and choose between the two because then he will end up with the ills of both.

By adapting the principles of the Scripture to the current conditions the Protestants-unlike the Anabaptists who wanted the opposite-ensured that their creed would be forever changing, their churches forever reforming. Each new generation adapts the inherited principles to suit their conditions. This is compounded by a fast developing world in which every generation has “changed conditions”.

The Amish-who trace their ideas to the Anabaptists-tried to solve this conundrum by fixing their life at the point of time when their religion was fixed. They abhor all innovation that followed their religion, even though none of the gospels tell of Jesus taking the scenery in a horse-and-buggy. Their unnatural existence is already unravelling and will soon come under external pressure as the entire social structure of the US is transformed.

The second argument is predicated on a false premise: the walls and the roof of a house are extremely fruitful and anyone who does not agree should go outside and sit in the rain, either he will change his mind or die of pneumonia. The fruits of a dwelling could easily be monetised by renting the dwelling-In the past people never let a room stay empty, but quickly found a lodger to supplement their income-This is a fair exchange of actual value for actual money, neither side loses and the circulation of money in the economy increases.

Money, on the other hand, is indeed barren, because its value is potential and not actual, only realised after an exchange (see Defining Inflation). Interest is earned regardless of production and the creation of wealth, this exchange is actual only for the lender: if the potential profit is realised all is well and good but otherwise the borrower suffers while the creditor’s profits are guaranteed.

This exchange is unfair and will only be conducted if capital has an advantage and the lender has means to force the borrower to comply, either by his own force (e.g. loan shark) or through a legal framework that admits usury. In times when capital has no advantage it flows to rent (buying land, walls and roofs), equity (partnership in profit & loss) or charity & monuments. A finance-based economy always flourishes at the end of an era never at the beginning (end of the Roman Empire, end of he Catholic Empire, end of the British Empire, et cetera), because it is unable to produce only to consume.

Legalisation and tacit religious acceptance were not enough and there was a need to rationalise usury and make it acceptable within the new secular-humanistic paradigm.

Francis Bacon (1561-1626) was one of the “workmen in the State” (see Weekly Lesson (14)) in the golden age of big money oligarchy. In 1618 he was appointed to the position of Lord Chancellor by James Stuart, the monarch imported from Scotland to ’sit’ on the thrown. That position was similar to today’s position of prime minister.

“His public career ended in disgrace in 1621. After having fallen into debt, a Parliamentary Committee on the administration of the law charged him with twenty-three counts of corruption.”

-Francis Bacon, Wikipedia

The fact that he was prosecuted by the parliament is very important. The parliament represented the commercial and country interests, while the sovereign represented the interests of big money. This situation was reversed in the Netherlands where the parliament represented big money and the sovereign represented commercial and country interests. In the Netherlands Oldenbarneveldt, who was in a position equivalent to prime minister, was also prosecuted but by the sovereign. Bacon’s fall in 1621 followed Oldenbarneveldt’s fall from grace and execution two years earlier, though he was lucky to keep his head on his shoulders. The king remitted the high fine and his imprisonment lasted only few days.

In the Netherlands the sovereign was the rival of the oligarchy, while in England the Stuarts were chosen by the oligarchy-dominated court of Elizabeth. James saved Bacon’s head, but his son Charles failed to do the same for his own. The end of the Stuarts came when the sovereign of the Netherlands was crowned joint king of England.

Bacon tried to rationalise usury in his Essays, first he starts by listing all the objections against it:

“The discommodities of usury are, First, that it makes fewer merchants. For were it not for this lazy trade of usury, money would not he still, but would in great part be employed upon merchandizing; which is the vena porta of wealth in a state. The second, that it makes poor merchants. For, as a farmer cannot husband his ground so well, if he sit at a great rent; so the merchant cannot drive his trade so well, if he sit at great usury. The third is incident to the other two; and that is the decay of customs of kings or states, which ebb or flow, with merchandizing. The fourth, that it bringeth the treasure of a realm, or state, into a few hands. For the usurer being at certainties, and others at uncertainties, at the end of the game, most of the money will be in the box; and ever a state flourisheth, when wealth is more equally spread. The fifth, that it beats down the price of land; for the employment of money, is chiefly either merchandizing or purchasing; and usury waylays both. The sixth, that it doth dull and damp all industries, improvements, and new inventions, wherein money would be stirring, if it were not for this slug. The last, that it is the canker and ruin of many men’s estates; which, in process of time, breeds a public poverty.”

-Essays of Francis Bacon, Of Usury

In summary Bacon gives the following seven “discommodities” for usury:

First, no merchant can make a profit every year without interruption, but usury is like a hungry beast following the merchants whomever stumbles is devoured. When the cycle picks up instead of new merchants entering the market the existing merchants expand using debt, this is the reason constant growth is sought in the market. As this process is repeated it results in one giant dominating every sector in the economy with competition only coming from foreign owned companies.

This is now the case in the world, especially in the US. Let me give an example from one of the most lucrative sectors: The defence sector.

The Air Force has only supplier for fighters: Lockheed Martin with Boeing providing bids without the production capability to manufacture them, only to give cover. The result is that the Air Force has two new very expansive high-altitude fighters, F-22 & F-35, while it needs low-altitude close support aircrafts.

The supplier for cargo and tanker planes is Boeing, without even a US counterpart providing cover bids. The Air Force was so exasperated with Boeing’s illegal efforts (two people going to prison) to sell it a sub-standard tanker it chose the European bid, the outcry from Congress and the media was so loud, after all that bid was only for cover, the Air Force restarted the much delayed process of selecting a new tanker.

The Navy has one ship supplier, General Dynamics, who asked Congress to order some ships just so they could keep their shipyards working. The saga of producing the new destroyer class has oscillated between Greek tragedy and vaudeville farce until it was cancelled; a similar fate is awaiting the Littoral Combat Ship.

Some will cite sector-specific reasons for this phenomenon, but the fact that it is found in every sector means the reason must be economic and not sector-specific. The reason is simply usury: first companies that take credit in the good years get devoured in the bad years, second banks collects a huge amounts of money paying only a fixed interest then invest it in one monopoly that makes huge profits and ruins the competition (e.g. investment banks creating U.S. Steel with Carnegie as the front man, or Wall Street powering Microsoft with Gates as the front man).

Now everything is a ‘chain’: hotels, restaurants, cinemas, et cetera. In the past all such concerns were wholly owned and usually managed by their owners. They would yield enough profits to sustain a respectable living without the need for expansion or constant growth. The owners did not need credit to facilitate their business and debt was considered a stigma, those were the real middle class and not corporate slaves one paycheck from insolvency. The small business of today is a fake masquerading as the real thing, like “homeowners” with negative equities.

Second, family owned companies have become an endangered species. Small manufacturers fold, relocate or are bought by those with access to financing. Commercial companies either fold, inflate themselves by debt, franchising, et cetera and then go public or get bought out by private investors, like the odious Warren Buffett who levered his insurance companies and bought out the best run family companies; apart from this basic strategy he has no other profitable venture, losing money in silver and derivatives, his latest call to “Buy American” will be his swan song.

When people sell out and take the cash they are faced with a problem: what to do with it? Since 1971 there has been an enormous growth in the financial sector, until it became the biggest sector in the equity market at the start of 2007, and of course the most profitable. One of the reasons is the constant inflow of cash to paper securities of all kinds, not just liquidated capital but also the savings and pensions of wage earners.

“The Dutch civic élite of the mid-eighteenth century, including that of The Hague (…), thus held as astonishingly high proportion of their assets in paper securities. This meant that, at least in Holland and Zeeland, the country’s wealthy were to a high degree dependent on the state, and the VOC [colonies], for sustaining their wealth. As De Pinto stressed, bonds, obligations, dividends, shares, and foreign funds were the linchpin of civic wealth and status, the principal pillar of the social system, a situation quite unlike that existing in other European countries. De Pinto was already predicting, in the 1760s, the disaster that would ensue for Dutch society, and its élite, should the state and the VOC encounter major difficulties. For the collapse of Dutch Generality and provincial bonds would effectively mean the destruction of regent, and much other élite, civic wealth.”

-Israel, The Dutch Republic, p.1007. [my emphasis]

The equity market has since collapsed; in terms of gold it stands at a fourteen years low. People who invested their money in so-called ‘emerging markets’ made big losses on equity decline and currency exchange. People who put their lifesavings in Icelandic banks or “guaranteed” Lehman Brothers bonds lost substantially. Every pension fund, private and public, is in crisis as their combined assets falls short of their combined liabilities due to huge losses this year alone.

“But, in order to keep up their credit, the Board of XVII [of the VOC] continued to pay large dividends out of capital, with the inevitable result that the Company got into debt and had to apply for help to the State. The English war completed its ruin. In June, 1783, the Estates of Holland appointed a Commission to examine into the affairs of the Company. Too many people in Holland had invested their money in it, and the Indian trade was too important, for an actual collapse of the Company to be permitted [i.e. too big to fail]. Accordingly an advance of 8,000,000 florins was made to the directors, with a guarantee for 38,000,000 of debt [i.e. a government bailout]. But things went from bad to worse. In 1790 the indebtedness of the Company amounted to 85,000,000 florins.”

-History of Holland By George Edmundson, Chapter XXVI. [my additions]

Third, usury corrupts the law, the ethics and the morals of the people. A society needs at least two of those three to survive, usury destroy them all. As I explained above usury is basically an unfair practice. Those who lend against interest must make sure that the government will not annual their contracts if there is a poplar outcry against usury, as used to happen regularly in ancient times.

Usury will also create great wealth with very little intrinsic capital or need for labour, this means that the big lenders are not obliged to anyone or held back by mutual connections. For example the big landowners of the feudal time had mutual obligation with their tenants, there was a social structure supporting them and they existed according to the rules of that structure.

The Earl of Warwick, called the kingmaker, was not influential in the war between the house of York and the house of Lancaster during the fifteenth century because he had vast amounts of gold; most probably he never had any great amounts of cash. Warwick had agricultural land with people who lived on it and worked it; they also fought with Warwick as part of their obligations. By the time of Henry VIII that social structure was gone, the nobles had no power and the king was an absolute ruler.

Usury on the other hand produces vast amounts of income without any social obligation or structures to underpin it. This wealth is used according to the wishes of the individual who has it without any social constraint; the gold coin will then buy anything, even honour and virtue-two words that have lost meaning in this age.

Fourth, there is a need for discrepancy in wealth and income in society to enable social circulation for the benefit of the whole. Like water and air streams that circulate from the tropics to the poles driving the climate cycle and enabling life to flourish. This discrepancy must satisfy two conditions: it must be within limits and it must circulate its human composition.

Many have written on the futility of making everyone alike and how such social systems breakdown, but that is only one side of the limits, i.e. an extremely low discrepancy. The other side is an extremely high discrepancy when most of the wealth is concentrated in the top. The concentration of wealth has now entered into the most dangerous levels. Wealth is today concentrated at the top at higher levels that just prior to the depression of the thirties that swept the world and ushered global war.

In a healthy society there is a constant convection, with people rising upward while others descending downward. Although sometimes the wealthy will end up in the poorhouse and the poor will reach the top, most movement will be gradual and intergenerational. Usury cuts this circulation at the top; the rich get richer and everyone else get poorer. The only paths open to riches are the most base and frivolous, e.g. entertainment and sport.

Sometimes the state tries to hold the different social stratums from sinking, this would be like the roof trying to hold the walls upright. The state soon starts dropping those at the bottom of the welfare ladder. We see nowadays how the middle class who voted right-wing governments in the eighties to dismantle the welfare state, that supported the poorest, complain about the destruction of the middle class and demand that the state do “something” about it.

In reality the middle class has been surviving on welfare for the last thirty years, not only indirect state welfare, state higher education for example, but also corporate welfare. The latter is an invisible form of welfare, but it is just as much welfare as the games organised by rich Roman Senators at the end of the Roman Republic. Let me give one example: a large number of middle class people work for magazines that are completely financed by corporations, as opposed to readers; they can thus partake in a lifestyle beyond their means. Fashion, cars, computers, et cetera are all covered by a multitude of magazines and television programs. Considerable money is spent on a press junkets, influential bloggers are flown in private jets to preview upcoming movies, et cetera, et cetera.

All the brightest and smartest middle class people are either tied to the state sector or the corporate welfare sector, effectively binding them to the status quo. As the current crisis deepens they also will be dropped, no danger will come from them now. All social activities that depend on corporate sponsoring will greatly contract in the coming years, while the state sector will further decline in quality and quantity.

Fifth, the land in question is agricultural land. Every economy is built on agriculture, whether it is dominated by commerce or industry people have to have breakfast after waking up and supper before going to sleep. Those who try to argue away the Biblical injunction against usury as a relic from an agrarian past should make a choice: either breakfast or usury. Usury’s destruction of small farmers is beyond dispute, as the local farming sector declines food is imported from less developed areas and the populace are kept quite with bread handouts.

This has happened many times in history: Ancient Greece was dependent on grain shipments from the Black Sea area, ancient Rome on Egyptian grain, North Italy on grain from the south, et cetera. Modern Western agriculture might appear sufficient, even dumping produce in third-world markets, but in reality it is highly dependent on shipments of oil from outside the West. The Green Revolution has succeeded in transforming agriculture into a profitable business at the cost of ruining farmers. Without oil agriculture in the West would not survive a week, there is no longer a vibrant countryside or a rural society in the West there is only agribusiness.

Modern agribusiness is also highly dependent on the financial sector, like all business, making the food supply vulnerable to financial disruption, this must be added to disruption due to the weather, that despite all the technology is still unconquered. One result of this is the decline in food stores, in an effort to maximise profits, from months to weeks; worldwide grain stores would only last weeks in case of a major disruption.

The modern agriculture potential for catastrophic decline has already been demonstrated in Cuba. When the Soviet Union stopped its oil shipments to Cuba the latter’s agriculture collapsed. The West should have learned the lesson of that event and proclaimed a worldwide agricultural emergency, instead they used it to deride the regime in Cuba purely for ideological reasons.

Cheap food in the West is the modern equivalent of Roman grain dole. Instead of handing out the grain directly an environment is created in which food is cheaply produced. This is done with subsidies, tariffs, et cetera. Romans who lived on bread suffered poor health, so does their modern equivalent living on starch, fat and refined sugar.

People living in the West think they are immune from hunger. Such a thing, they believe, could only happen in backward countries in Africa. They are deeply mistaken; agricultural production in the West is falling into an abyss, once it hits the bottom people will wake up and discover the truth; then there will be no breakfast, only usury.

Despite modern technology, government subsidies and protective tariffs farmers in England are committing suicide just like the poor farmers of India. Disappearing farmers are like disappearing bees: omens of famine.

Sixth, Walter Bagehot & I completely agree, you can read Bagehot’s explanation of this process and my comments in Bagehot on Money (see bottom for Ezra Pound’s summation).

This phenomenon is now aggravated by the fact that every facet of society has been commercialised and turned into a product peddled to the consumer: art, religion, history, science, et cetera. When every aspect of society loses its quality and become just another “dull” product to be consumed, then this degradation of the environment must reflect on society itself. Now we can see how usury corrupts society, we have a whole generation brought up in a world where everything is for sale.

Seventh, a man’s estate is land rented to tenant farmers yielding him a fixed income. Why does usury ruin people on fixed incomes? To understand this let us look at Spain at exactly the time of Bacon when Cervantes was writing about a man living on a fixed income driven completely mad to the point he imagined himself a knight errant, I am talking of course about Don Quixote. In Spain what ruined the gentry was the rivers of gold pouring from the Americas, that money concentrated in the hands of the few created extravagance and inflation that ruined the Spanish national economy.

The men of estates would mortgage some land and go to the capital to obtain a court position and get ahead in life. In the capital they would have to mortgage more lands to keep up their social standing. Unlike compounding interest agricultural prices fluctuate, one bad season and the men of estates find themselves in too much debt. To get out of debt these “gentlemen” will do anything, regardless of honour. Shakespeare ridiculed such men in many of his plays. The character Falstaff is the most famous example of a ruined gentleman gambling and robbing without shame.

We see a similar process, today, with young people from middle class background; they finance their college education through debt to get ahead in the world. After graduating they either fail to find a job with high salary or even fail to find a job that demands their qualification. They try to keep up by getting into more debt, mortgage and credit cards, after which no reality show is too humiliating and no job is too demeaning from personal assistant to prostitute.

The art of Bacon’s time, from Cervantes to the melancholy songs of John Dowland, reflected the plight of those on fixed income. Next time you view a production of The Taming of the Shrew notice that Petruccio is an impoverished countryside gentleman and Katherina is the daughter of a rich city merchant, that is the central point of the whole play. Sadly the modern novel has utterly failed to rise above solipsistic drivel and pointless historical accuracy.

Religion also reflected what was happening in society, the simplicity of the Puritans was a reaction against the extravagance of the big money dominated society. The demise of the consumer driven economy will produce a new generation of frugal puritans.

Usury concentrates money in the hands of the few producing extravagance and inflation to the ruin of men living on fixed income. Today we see exactly the same process: those living on fixed income are slowly ruined, money concentrated in the hands of the few, extravagance beyond limit, et cetera.

Let me put this point in more grim and current terms: usury is the ruin of widows, orphans and old-age pensioners all of whom live on fixed income. The damage done is psychological as well as financial. Children living under such stress run the risk of two extremes: either growing up to be spendthrifts who throw their money on luxury without regard of the future or misers who horde enough money to pay the debts of a small country.

The negatives of usury cause long-term and terminal damage to the heart of society. The third point alone is enough to severely punish any who would suggest legalising usury; law is like a maiden’s virtue, once lost never regained. These deadly seven are enough, for any disinterested thinker, to reject usury. Bacon on the other hand only lists them to pre-empt any attack, the speaker’s trick of listing the ills of his subject before brushing them aside. After listing the negatives he goes on to list the positives:

“On the other side, the commodities of usury are, first, that howsoever usury in some respect hindereth merchandizing, yet in some other it advanceth it; for it is certain that the greatest part of trade is driven by young merchants, upon borrowing at interest; so as if the usurer either call in, or keep back, his money, there will ensue, presently, a great stand of trade. The second is, that were it not for this easy borrowing upon interest, men’s necessities would draw upon them a most sudden undoing; in that they would be forced to sell their means (be it lands or goods) far under foot; and so, whereas usury doth but gnaw upon them, bad markets would swallow them quite up. As for mortgaging or pawning, it will little mend the matter: for either men will not take pawns without use; or if they do, they will look precisely for the forfeiture. I remember a cruel moneyed man in the country, that would say, The devil take this usury, it keeps us from forfeitures, of mortgages and bonds. The third and last is, that it is a vanity to conceive, that there would be ordinary borrowing without profit; and it is impossible to conceive, the number of inconveniences that will ensue, if borrowing be cramped. Therefore to speak of the abolishing of usury is idle. All states have ever had it, in one kind or rate, or other. So as that opinion must be sent to Utopia.”

-Essays of Francis Bacon, Of Usury

He can think of only four “commodities” for usury, lets see if they compensate in quality what they lack in quantity:

First, is this the same merchandising that left fewer and poorer merchants? Credit fuels a boom and a bust always follows it. Whatever advantage is gained in the short term is not worth the long-term damage. In the US any advancement for industry from usury is currently beside the point, because the industrial base has been ruined and gutted. Such ‘advancement’ is akin to a man hooked on speed working fourteen hours a day, six days a week only to die from a massive heart attack at the age of forty.

Second, this reminds me of the joke: How is your wife? Compared to what! The whole discussion is about the advantages and disadvantages of this borrowing method, one cannot cite the fact that it is a ‘borrowing method’ as an advantage!

Wealth liquidation and pawning are not the only methods to obtain cash: there is mutual credit, non-interest credit, et cetera. One pawning his valuables might not be able to repay at time and thus lose the difference, but then the loss would stop there and not be compounded continuously until payment becomes impossible.

Bacon seems blind to the historically documented cruelty of moneylenders-documented in history, art and religious texts-and sees cruelty in the competitors of big money usury. Profiting from mortgages and bonds by countryside “moneyed” men is cruel, while London-based oligarchy profiting from usury becomes a public service. No wonder the career of this servant of oligarchy ended in disgrace, prosecuted by a countryside-based parliament.

Third, this seems to me the second advantage in the negative, nonetheless I will let it pass as a third advantage of usury. As the current financial crisis enfolds many commentators have remarked that debt is like a drug, the more one takes it the more one becomes dependent on it. A person might be dependent on his morning coffee or late night sherry, but that is an acquired dependency. Dependence on usury is also an acquired need, which increases with usage.

Let us imagine a world without usury, will be there a great need for it? The answer is that there would be hardly a need for usury in such a world. Let us imagine how such a world would function: The auto industry in the US in the good times should have at least fourteen companies each producing a little more than a million car of one model (a million car is the minimum economical run). There would be less engine manufacturers, because they must produce more engines to be profitable, but they would be separate companies and not consolidated vertically with car builders.

When the economy slums then those with the olds plants, the oldest models, the least efficient production methods will go bankrupt, three auto and at least one engine manufacturer will close doors; the rest will lower utilisation rates. When the economy picks up those still operating will ramp up production but they will not be able to finance further expansion. Without credit the market will provide an opportunity for those with capital to invest, new companies will be set up with new models and more efficient production methods. Capital will flow into the production sector instead of financing industrial expansion via the financial sector. Profits will flow to the investors directly without the banks taking their cut.

In reality usury has consolidated and concentrated the auto sector to just two companies: GM & Ford. Both have lost billions and now teeter on the brink of bankruptcy (they are already bankrupt).

Fourth, there has always been murder, should society, the state and the law admit it and let people kill each other. Sure merchants will always borrow money and pay interest, but only between themselves and payment will only be extracted by an honour system not by the force of organised society, i.e. the bailiff. 

Prohibiting usury is not the same as abolishing it completely from the face of the earth. Those who want to legalise prostitution make a similar mistake. Society must strive to create conditions where negative practices are suppressed by social custom and individual prohibition. Society might fail and find itself in conditions where negative practices are widespread. At such points the people must not give up and accept the status quo as inevitable, because if they do they will only invite more corruption.

In the second half of the eighteenth century it seemed that society in Britain was thoroughly corrupted, but within fifty years the Victorian age began with a complete moral rehabilitation. When society, on the other hand, accepted the post-war corruption of the twenties it started a slide that has ended in the gutter of humanity. What is truly Utopian is to think that by admitting one vice, all vices will disappear; history has proven many times that admitting one vice only invites ten other to take its place.

Bacon wants to send those who oppose usury to Utopia, such is the argument of this great ‘thinker’ against those who oppose the rule of big money: to send them to exile in nowhere! This is the last argument of the tyrant, physical elimination of all who oppose him, coached in terms of the ‘thinker’.

I would like to add few words on Utopia: Thomas More (1478-1535) was the first layman not a member of the higher nobility to be appointed Lord Chancellor. He was prosecuted and beheaded, unlike Bacon & Oldenbarneveldt it was not base corruption but because he refused to let the king, Henry VIII, rule his conscience like he ruled his body. Thomas More wrote Utopia in Latin, it tells the story of a traveller who visits an island called Utopia, he then returns to Europe and tells about its ideally constituted society, the traveller’s opinion of the governments of his day is:

“I can have no other notion of all the other governments that I see or know, than that they are a conspiracy of the rich, who on pretence of managing the public only pursue their private ends, and devise all the ways and arts they can find out.”

-Utopia

Sadly just a hundred years after Thomas More held the position of Lord Chancellor Bacon took his place. Bacon epitomized the government criticized in Utopia. Twenty years after Bacon revolution erupted and the king was beheaded.

After listing these anaemic advantages he does not make a fair balance because that would have meant rejecting usury and the whole point of this essay is to legitimise usury. In the scales of usury Bacon throws a primitive scheme for a central bank to balance the seven deadly disadvantages, disingenuously forgetting that death is incurable and usury is the death of a robust economy. I will not quote and argue his scheme because the passage of time has done our work for us, let us see what has happened since the time of Bacon:

In 1694 the Governor and Company of the Bank of England was incorporated. In 1844 the

In the old days — from the Venetian Republic to, oh, the Bear Stearns rescue — if you wanted to get rich, you did it the Warren Buffett way: You learned to read balance sheets. Today you learn to read political tea leaves. If you want to make money on Wall Street (or keep from losing your shirt), you do it not by anticipating Intel’s third-quarter earnings but by guessing instead what side of the bed Henry Paulson will wake up on tomorrow.

Today’s extreme stock market volatility is not just a symptom of fear — fear cannot account for days of wild market swings upward — but a reaction to meta-economic events: political decisions that have vast economic effects. Continue reading . . .

As economist Irwin Stelzer argues, we have gone from a market-driven economy to a politically driven economy. Consider seven days in November. On Tuesday, Nov. 18, Paulson broadly implies that he’s using only half the $700 billion bailout money.

There’s a lot I wanted to write about in the past couple of weeks, but work and travel has kept me busy. Some things of note:

The long-range thinking and individualistic type. They are especially good at looking at almost anything and figuring out a way of improving it - often with a highly creative and imaginative touch. They are intellectually curious and daring, but might be physically hesitant to try new things.

The Scientists enjoy theoretical work that allows them to use their strong minds and bold creativity. Since they tend to be so abstract and theoretical in their communication they often have a problem communicating their visions to other people and need to learn patience and use concrete examples. Since they are extremely good at concentrating they often have no trouble working alone.

—

But on to the topic of today: business ethics. There are a lot of headline cases, everything from the financial crisis to the GM bailout to CEO compensation, that from my standpoint, have everything to do with business ethics.

I just finished the other day a great piece written by Charlie Munger (for those of you at Stanford, that would be the same Munger who just paid for the new dorms for the law school - he’s also an attorney and partner of Mr. Warren Buffett) called “The Psychology of Human Misjudgment” (highly highly recommend). I thought this passage relevant:

Pure curiosity, somewhat later, made me wonder how and why destructive cults were often able, over a single long weekend, to turn many tolerably normal people into brainwashed zombies and thereafter keep them in that state indefinitely. I resolved that I would eventually find a good answer to this cult question if I could do so by general reading and much musing.

(On a side note, while Googling who exactly Mr. Munger was to Mr. Buffett, I found this notably clairvoyant interview about the housing bubble and GM’s demise held in 2005.)

In my own back and forth thinking about business ethics, I’ve been thinking a lot about 1) why businesses make bad business decisions and 2) why people tolerate unethical behavior (i.e. Enron, et al). And what I found especially interesting was Munger’s observation that there is a “strong tendency of employees to rationalize
bad conduct in order to get rewards.”

The experiment’s result has been argued to demonstrate the impressionability and obedience of people when provided with a legitimizing ideology and social and institutional support. It is also used to illustrate cognitive dissonance theory and the power of authority.

The implication here for business ethics is that if we acknowledge there is a problem in business ethics (as opposed to denying the problem as simply a case of a few bad apples), we might be able to design better business environments (by redesigning processes that encourage unethical behavior and finding ways to provide stronger financial incentives for ethical behavior) and train business leaders to make better ethical judgments (through business schools, which need to provide more financial incentives for better business ethics training).

Financial News from Across Europe

Electricite de France SA, the world’s biggest operator of atomic reactors, offered to pay $4.5 billion for half of Constellation Energy Group Inc.’s nuclear business to gain generating capacity in the U.S. and thwart a rival bid from billionaire Warren Buffett.

The proposal includes a $1 billion cash investment in preferred stock and an option for the U.S. utility to sell to EDF non-nuclear assets of as much as $2 billion, Paris-based EDF said today. Buffett’s MidAmerican Energy Holdings Co. agreed earlier this year to buy all of Constellation for $4.7 billion.

“They’re much closer to what we thought all along was the fair value of the company,” James Halloran, who helps manage about $34 billion, including Constellation shares, at National City Private Client Group in Cleveland, said in a telephone interview. “They’ll have to give it serious consideration.”

EDF, which owns 9.5 percent of Constellation, in October backed out of a $6.2 billion bid for the whole company with buyout firms KKR & Co. and TPG Capital LP. Its new approach, through a proposed joint venture with the Baltimore-based utility, is designed to ensure EDF can own and operate plants in the U.S. and avoid possible opposition to foreign ownership of nuclear facilities.

Constellation said in a statement its board will review the proposal, and it has not withdrawn or modified its recommendation of the MidAmerican offer. MidAmerican, based in Des Moines, Iowa, has no comment to make on the offer, spokeswoman Ann Thelen said.

‘Good Time’

“EDF has to come up with the cash now, which could be negative in the current climate, but it’s a good time to make acquisitions because the market is at such a low point,” said Arnaud Scarpaci, a fund manager at Agilis Gestion in Paris.

EDF slid as much as 6.6 percent in Paris and traded down 2.305 euros at 42.265 euros as of 4:24 p.m. local time. Constellation surged as much as 20 percent to $30.17 on the New York Stock Exchange, the highest price since Constellation accepted the MidAmerican offer. It was up $3.27, or 13 percent, at $28.42.

“The offer is aimed at consolidating our role in developing new nuclear in the U.S.,” EDF Chief Executive Officer Pierre Gadonneix said in an interview in Paris. “It would bring long-term resources to Constellation,” he said, adding it was “far superior” to MidAmerican’s bid.

EDF said the proposal “is not subject to a financing condition” and approval from Constellation’s stockholders is not required. The Paris-based utility said its offer values the whole of Constellation at $52 a share, more than double yesterday’s closing price.

‘Significantly Undervalues’

“Constellation is fundamentally strong and EDF, like many others, believes that the proposed MidAmerican transaction significantly undervalues Constellation and its future opportunities,” Gadonneix said earlier in a statement. The offer provides “more than sufficient liquidity” to allow it to remain a standalone company, he said.

EDF agreed to buy Eagle Energy Partners I LP from bankrupt investment bank Lehman Brothers Holdings Inc. in September to expand gas and power trading in North America. The acquisition gave it power production, gas-storage and transportation assets.

MidAmerican moved to snap up Constellation in September for less than half its end-August market value after Constellation plunged 58 percent in New York amid investors’ concern that turmoil in financial markets would wreck its energy-trading business.

Competing Offer

“The timing of the bid is worrying investors because of the current credit climate,” Chicuong Dang, a Paris-based analyst at KBL Richelieu Gestion, which has about $6.2 billion under management, said by telephone. “EDF’s offer is reasonably priced. Buffett’s offer is really low.”

Constellation has called on shareholders to approve the deal with MidAmerican, priced at $26.50 a share, in a vote scheduled for Dec. 23.

“We haven’t had any independent talks with Warren Buffett or MidAmerican,” Gadonneix said in the interview, adding he hoped Constellation’s board would examine EDF’s offer “objectively.”

EDF’s offer of $1 billion in cash and the possible purchase of non-nuclear assets for as much as $2 billion “will more than cover” liquidity needs related to the termination of the agreement with MidAmerican, the French utility said in a document filed with the U.S. Securities and Exchange Commission. EDF estimates terminating the merger accord with MidAmerican would drain $2.4 billion in liquidity.

Breakup Fee

MidAmerican would walk away with a 9.9 percent stake, $593 million in cash, and $1 billion of senior notes paying 14 percent interest, Constellation said yesterday in an SEC filing. The cash portion includes a $175 million breakup fee.

Constellation would also have to return any unused portion of a $350 million credit line.

EDF’s offer is for a 50-50 joint venture that would own Constellation’s five nuclear-power reactors in the U.S., two at the Nine Mile Point plant and another at the Ginna plant in New York, and the two-unit Calvert Cliffs station in New York. Constellation has 3,869 megawatts of nuclear assets and 6,595 megawatts of non-nuclear facilities.

Constellation and EDF already have a 50-50 joint venture that was created last year called Unistar Nuclear Energy LLC to develop new nuclear reactors in the U.S. using Areva SA’s EPR Evolutionary Power Reactor design.

U.K. Deal

The U.S. power company said yesterday that 2009 profit will fall to as little as $1.50 per share should shareholders reject the takeover by MidAmerican.

The offer comes after EDF agreed in September to buy British Energy Group Plc for 12.5 billion pounds ($18.5 billion) to become the U.K.’s biggest power producer and gain control of eight sites to build reactors.

Exelon Corp., the biggest U.S. utility company by market value, offered in October to buy NRG Energy Inc. for $6 billion in stock, betting it will be able to refinance NRG’s $8 billion in debt at lower costs. NRG, based in Princeton, New Jersey, has urged its shareholder to reject the bid, which would create the largest U.S. power producer.

J.P. Morgan is the financial adviser for EDF, the French utility said.

Just before Thanksgiving I read Jason Zweig’s WSJ blog posting “Can the Dow Go Lower?  I Hope So.”

I found the article provocative as I’m sure it was intended.  Mr. Zweig wrote that:

The famous passage from the 1997 letter is below. Following that I quantitatively model different scenarios that I think show a different interpretation of Mr. Buffett’s point.

       We gained enormously from the low prices placed on many equities and businesses in the 1970s and 1980s. Markets that then were hostile to investment transients were friendly to those taking up permanent residence. In recent years, the actions we took in those decades have been validated, but we have found few new opportunities. In its role as a corporate “saver,” Berkshire continually looks for ways to sensibly deploy capital, but it may be some time before we find opportunities that get us truly excited.“

However, to stick with the example, with respect to many investors, while we are not in the cattle business, we are speculating on hamburger prices.  Many investors have decades of investment activity behind them, in effect stockpiling hamburgers with the hope to sell those at a profit later on, together with new hamburgers purchased.  In these cases, while new purchases may be made at better rates, investors may never, or potentially have to wait many years, to recoup losses on previous investments made.  To be sure, the issue is much worse for people with larger savings relative to future contribution levels, and minimized for those with lower savings relative to future contribution levels, but I think many investors, even those in their 40’s and 50’s, are legitimately feeling large losses and may take reduced comfort from a present buying opportunity.

I ran two data series for portfolio performance.  The first data series reflects a “no correction scenario” where the correction didn’t take place - instead the portfolio appreciated at the “future rate of return with no correction.”  I then also ran a second series where the correction did take place and then the portfolio appreciated at the “future rate of return with correction.”  

As you’d expect, I found that if the rate of return in each scenario is the same, then the data series with a correction never “catches up.”  It moves lower in the first year and then it, and the original data series, grow by the same percentage rate, but the “uncorrected” data series is working off a higher base and thus always offers greater wealth for any time period.

The only way for the data series with a correction to catch up and overtake the uncorrected series, based on the inputs used above, was to increase the post correction rate of return.  Doing so produced the following catch up periods.

In these models I’m assuming that future contributions continue to grow at the rate of inflation, even into retirement.  And withdrawals or distributions haven’t been factored in either.  Stopping contributions and taking withdrawals can actually further push out the catch up date in some scenarios.

Based on the data  it seems to me that while the market correction may present a buying opportunity for new investments, the losses are very real and substantially higher rates of return are required going forward for extended periods of time to recoup these losses.  Unlike Mr. Zweig, I hope that the fire sale ends sooner and that a rebound happens sooner than later.

Unfortunately, a market like we’ve had the past year serves as a good reminder that for many of us we are not only consuming hamburgers, we’re in the hamburger business.

Hi

Most of you who do not possess a strong Financial Quotient (FQ) tend to get confused by your “Financial Advisors” or “Financial Consultants” or “Personal Wealth Manager” or “Private Banker” or any other fanciful titles from banks, brokerages, insurance companies, etc.

Frequently mentioned financial lingos like structured products, diversified stocks/unit trusts, Investment-Linked Products, warrants or junk bonds, etc seem to sound interesting but, do you really need these complex or complicated investment vehicles as part of your investment portfolio?

Don’t get excited by saying that your “advisors” or “consultants” have fully explained the products to you or they have done fact-finding or analysis with you or has assessed your risk appetite.

There are lots of other important issues that you still don’t know or even your “advisors” or “consultants” etc don’t know more in-depth about it.

Wait for my next post on investing with adapted from an e-book by a former Certified Financial Planner (CFP) and you’ll be in a great surprise or should I say shocked!

Until then, keep on coming back because my posts are dynamic, not static and it’s filled with lots of information.

What books I’m reading now:

1. How to Get Rich by Felix Dennis

2. Find Your Lightbulb by Mike Harris

3. Cracking the Millionaire Code by Mark Victor Hansen & Robert G. Allen

4. Trump University Wealth Building 101 edited by Donald J. Trump

5. Screw It - Let’s Do It by Sir Richard Branson

6. The Snowball: Warren Buffett and the Business of Life by Alice Schroeder

Dream on if you believe it, and something must be up if Karl Rove says it. In a November 28 Wall Street Journal op-ed, he called it “a first-rate economic team” while at the same time objecting to possible (not yet announced) stimulus package elements not entirely to be the kinds “conservatives” prefer like tax cuts for the rich. He nonetheless called Obama’s team “reassuring” and hopes it will leave a “market-oriented imprint.”

Not to worry, as that’s what it’s there for - the privileged elite and not the other 90% or more who at best will be very stingerly aided, and as economist Michael Hudson points out to let them repay their bank debts.

On November 24, Obama made his long-awaited announcement - his economic team to lead the nation out of its worst ever economic crisis, a task perhaps more than even Houdini could handle according to economist and author F. William Engdahl.

Nonetheless and with fanfare, the major media highlighted them with commentaries ranging from cautious to enthusiastic. The Wall Street Journal for example as follows:

“The advisors Mr. Obama named on Monday hail from the centrist part of the Democratic Party. During the Clinton years they played an important role in turning a budget deficit into a surplus. Now they argue the worsening economy requires steep deficit spending.”

The New York Times stressed the ailing economy, prospective measures to help jump-start it, and efforts to “inject confidence into the trembling financial markets” that for the moment at least were reassured, or so it seemed.

Not for long according to Merrill Lynch economist David Rosenberg in a recent commentary. In January, he was the first Wall Street economist to predict recession, called it an “epic event,” and said it will be long and painful as a result of at least three major shocks - credit, housing and oil.

He now sees the S & P 500 bottoming at around 660 or a 61.8% reversal from its high. Others see it even lower given a policy response “to get people to (spend more,) add to their debt burdens,” and exacerbate the very problem that created the crisis. Rosenberg says it’s “like giving an alcoholic another drink for his cure. We have a situation where Congress (and the Obama administration) want more credit created, even though it was excess (debt and) leverage that got us into this mess.” In other words, the cure may be worse than the disease if the Obama team continues the same failed Bush administration policies, and it looks like they will.

In earlier comments, Rosenberg offered a different prescription in saying for the US economy to expand, savings must rise to the pre-bubble 8% level, housing stocks must come way down, and the household interest coverage ratio must fall to 10.5%. The future he sees is “frugality” with households having to make very different sorts of spending decisions than the kinds they’ve been used to for years. Those days are over.

So is world stability according to UK Telegraph writer Ambrose Evans-Pritchard in his latest November 30 commentary. He sees the “political bubble bursting (with) spreads on geo-strategic risk now widening as dramatically as the spreads on financial risk at the onset of the credit crunch.”

From Mumbai to worker unrest in China to Eastern Europe and Russia at a time when it’s “too early in this crisis to conclude whether Europe’s monetary union is a source of stability, or is itself a doomsday machine” given the growing rift between “North and South” countries and Germany’s reluctance “to unpin the system with a fiscal blitz.”

He compares today to the 1930s. After the crash, stocks rallied sharply for months as though the worst was over. It was just beginning but who could know at the time. “The crisis came in pulses, each followed by months of normality - like today. The global system did not snap until September 1931,” after which one event led to another and they were all bad, both political and economic. Who knows what’s ahead today at a time debt excesses are far greater than then, and this is what  Obama’s team will confront.

According to Paul Krugman on December 1:

– today’s economic indicators are worse than at any point during Japan’s 1990s contraction;

– all conventional policy tools aren’t working;

– consumer spending is in free fall;

– investment spending is plunging;

– unemployment may top 10%; and

– recovery won’t occur before 2011.

According to Oppenheimer & Co. analyst Meredith Whitney, US credit card lenders may withdraw over $2 trillion of lines (or about 45%) over the next 18 months because of regulatory changes and to minimize risk. She calls credit cards the key source of consumer liquidity after jobs. As a result, she expects sharp consumer spending declines.

Millions of accounts will be closed, credit lines cut, and interest rates raised to minimize a tsunami of expected defaults. Whitney also said that “the entire mortgage market hit a wall, and we believe it will, for the first time ever, show actual shrinkage over the next few months.” The credit card market is 18 months behind mortgages and will begin contracting in 2010. She also expects a further 20% drop in home prices, earlier called Citigroup a goner, said it can’t remain in its current form, and believes it’s in such a mess that even (distinguished mathematician and physicist) “Stephen Hawking couldn’t turn this company around.”

She didn’t say but may feel the same about most other major banks. In early November she called the economy and financials “so far off the tracks it’s hard to see anything helping right now.” Securitization isn’t coming back, the entire mortgage market is contracting, banks aren’t lending, loan balances are getting smaller, and bank earnings going forward will be up to 70% less than consensus forecasts, and she calls this conservative. Banks are in big trouble, and none are immune.

“Dream Team” Selections

Timothy Geithner

Currently the New York Federal Reserve Bank president and vice-chairman of the Fed Open Market Committee (FOMC), he’ll head the team as Treasury Secretary along with current Fed chairman Bernanke whose term runs until January 31, 2010.

After his education, he joined (international consultants) Kissinger Associates for three years and then the US Treasury’s International Affairs division in 1988. He remained at Treasury in various posts until 2002 when he left for the Council on Foreign Relations as a Senior Fellow in the international economics department. He also served at the International Monetary Fund as director of Policy Development and Review from 2001 - 2003 after which he was named New York Fed president.

With these credentials, he’s an insider’s insider and hardly a surprising pick. Wall Street approved with a sharp rally that continued through Thanksgiving week as others on the economic team were also praised. And why not, elitists all and assembled for a common purpose that hardly needs explaining.

Geithner’s been partnered with Paulson and Bernanke in their Treasury-looting scheme. His appointment signals more of the same which is why Wall Street approves. It’s also reported that he was the principal architect behind the Bear Stearns bailout, and various other deals, including Fannie and Freddie, Merrill Lynch, Washington Mutual, Wachovia, the demise of Lehman Bros., Citigroup, and AIG.

It’s gotten $150 billion so far (and counting) to buy some of its collateralized debt obligations (CDOs) to clean out its credit default swap (CDS) insurance on them. But the effort only deals with a small part of AIG’s CDSs, and its woes are similar to what ails all of Wall Street. If Geithner won’t address them any differently, he’s the wrong man at the wrong time for a vital task to cure a very sick economy.

Take the $55 trillion CDS problem alone. If enough of them default in the coming months, no amount of bailing will save things. Yet Paulson and Geithner believe these levered bets should be paid in full.

With what, short of reckless amounts of currency debasing? The alternative apparently is off the table - the fiscal sanity of letting bankruptcy be the price for financial imprudence. In other words, take the pain upfront and not let this monster of a problem drag out for a decade or longer, leave much greater wreckage in its wake, and threaten world economies with it. Geithner will apparently risk it, and even by Las Vegas standards it’s a very bad bet.

It affects the entire financial industry as well as companies with high-risk debt like the auto giants. Even Warren Buffett’s Berkshire Hathaway who’s warned repeatedly about the problem, and this is only one among others that would challenge the most dedicated and talented of policy makers. Based on what he’ll likely do, Geithner isn’t one of them, but try hearing that through the din of praise for him.

It remains to be seen but he’ll likely continue the same failed bailout policies, pile more debt on the current unsustainable amount, and add lots of (real estate) infrastructure fiscal stimulus for the rich. As economist Michael Hudson explains:

“To a mortgage banker, a commercial developer or real estate company is a prime customer, the bulwark of bank balance sheets. It is hard to imagine a new American infrastructure program not turning into a new well of real estate gains for the FIRE (finance, insurance and real estate) sector. Real estate owners on favorably situated sites will sell out to buyers-on-credit, creating a vast new profitable loan market for banks. The debt spiral will continue upward” and make a monster of a problem even greater.

Given how strapped state and city budgets are, “privatiz(ation) from the outset” is planned and Geithner got the job to do it. He’s not for “change you can believe in” or what people voted for from Obama.

Hudson again: “The change that Mr. Obama is talking about is largely marginal to (the top 1%’s) wealth, not touching its economic substance - or its direction.” He may give wage earners some relief (to pay off their bank debts), but top earners “prefer not to earn income” and rely heavily on capital gains. They try to avoid losses and when can’t get the government to bail them out. Obama supports it, so expect billions more for the rich, crumbs for the many, and torrents of high-sounding platitudes to soothe them.

Hudson compares Obama to Boris Yeltsin - a giver who kept on giving “for the kleptocrats to whom the public domain and decades of wealth were given with no quid pro quo.” And he’s assembled the same (”anti-labor, pro-financial team”) that empowered Russia’s kleptocrats, let them loot the country, and for the most part keep it.

His key economic advisor, Robert Rubin, was Clinton’s Treasury Secretary. After leaving, he helped manage Citigroup close to collapse where it may end up anyway since it’s problems are so huge perhaps no amount of billions may save it. Now he’s manipulated his protege team into top posts (including Geithner) with the rest of them profiled below.

Even the Wall Street Journal criticizes Rubin for defending his role and taking no responsibility for Citi’s problems. The Journal asks:

“Why are Robert Rubin and other directors still employed? Another Sunday night, another ad hoc bank rescue” with taxpayers footing the bill. “Such a record of persistent failure suggests a larger, (perhaps) systemic management problem. If taxpayers have to risk so much to save Citigroup, then regulators should at least exert the discipline to break up this behemoth so it is never again too big to succeed, much less fail.”

What the Journal didn’t say is that any bank or business too big to fail is too big to exist, and anti-trust laws should never let them get this big in the first place.

As for Rubin, are his choices right for high Obama administration posts? Might they not wreck the economy the way Rubin & company hurt Citi. Worse still, were picked to do it - to suck all possible trillions out of it, then leave behind an empty hulk and mass human wreckage when they’re done. Under Bush, we’re well along toward it, so maybe Wall Street chose Obama to finish the job.

Lawrence Summers

Seeing how Wall Street loves him is reason enough to worry as he’s slated to be Obama’s chief economic advisor as head of the National Economic Council (NEC). This writer’s November 10 Obama Mania article said this about him:

“From 1982 - 1983, he served on the Reagan administration’s Council of Economic Advisors. Then in 1993 in the Clinton administration as Under-Treasury secretary for International Affairs and as Treasury Secretary from 1999 - 2001. Earlier from 1991 - 1993, he was chief economist for the World Bank where he authored a controversial memo stating that “the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.”

“Summers was later president of Harvard University from 2001 - 2006 where controversy again dogged him. For his contentious relations with faculty members and for suggesting that the presence of few women in upper-level science and math positions was because of innate differences between men and women. The combination led to his 2006 resignation.”

“He now teaches at Harvard’s Kennedy School of Government, is a consultant to Goldman Sachs, and is a managing director of the DE Shaw & Company hedge fund. His name is being floated as the leading candidate for Treasury secretary, and as Michel Chossudovsky states: “Putting a Hedge Fund manager (with links to the Wall Street financial establishment) in charge of the Treasury is tantamount to putting the fox in charge of the chicken coup,” and more evidence that Obama plans the kind of business as usual that he pledged to get rid of.”

Treasury no, NEC yes where along with Geithner and Bernanke he’ll be foxy indeed, and look at his record. In the 1990s, he helped deregulate financial markets with among other measures the 1999 Gramm-Leach-Bliley Act that repealed (1933 enacted) Glass-Steagall. It let commercial and investment banks and insurance companies combine and opened the door to the kinds of rampant speculation, fraud and abuse that created today’s mess.

In 2000, the Commodity Futures Modernization Act (CFMA) came next. It was so odious it had to be tucked undebated into an appropriations bill near the end of Clinton’s tenure. It legitimized “swap agreement” and other “hybrid instruments” at the core of today’s problems. It prevented regulatory oversight of derivatives and leveraging and turned Wall Street sharks loose on unsuspecting investors.

It also contained the “Enron Loophole” for its “Enron On-Line” - the first internet-based commodities transaction system, unregulated to let Enron do as it pleased, and the rest, as they say, is history.

After his World Bank tenure, Summers joined the Clinton administration in 1993 where he served as Treasury Under-Secretary for International Affairs and later as Secretary. As a result, he played a major role in a decade Professor James Petras calls “the golden age of pillage.” Summers was involved in all economic policy decisions ranging from fiscal ones to NAFTA, WTO, and various neoliberal responses to the decade’s financial crises:

– in 1995, the destruction of Mexico’s economy by raising interest rates to unmanageable levels and all of NAFTA’s wreckage ;

– pillaging Russia that began before his tenure, continued throughout the decade, and exploded during the country’s 1998 financial crisis; and

– the 1997 Asian crisis; manufactured in Washington; debt bondage and open markets became the solution, and human wreckage the price for resolution.

At the end of his tenure, Summers was awarded the Alexander Hamilton Medal, the Treasury department’s highest honor.

Peter Orszag

Another Rubin protege, he’ll become Office of Management and Budget director. He earlier was on the Council of Economics Advisors under Clinton and has been Congressional Budget Office director since 2007. In 2004, he co-authored a book titled “Saving Social Security” in which he predicts its insolvency and advocates a revamping by a combination of payroll and “benefits adjustments” - meaning slow destruction by cutting retiree payouts.

Christina Romer

A University of California Berkeley economist, she’s been a career academic thus far and will become Council of Economic Advisors (CEA) chairperson. She’s a student of the Great Depression, a monetarist, reportedly centrist, and according to UC Berkeley Professor Brad DeLong she’s receptive to short-run fiscal stimulus but believes that large deficits are harmful.

He’s no friend of working people and proved it during his tenure as Fed chairman. In fighting high 1970s inflation, he engineered the 1981 - 82 recession by raising the Fed funds rate to 20% in June 1981 (compared to 1% currently and nominally near zero).

In fact, his role was far more than fighting inflation. It was to destroy family farms, crush labor, reduce wages, lower living standards, send unemployment soaring, rev up deindustrialization, and supercharge the early years of financialization and casino capitalism. In August 1981, he openly praised Reagan’s firing of 11,000 striking PATCO air traffic controllers, an act that told business that the day of worker demands was over and corporate interests above all others would be served.

Volker’s been out of Washington for a while, and as one observer puts it: He’s “like a criminal returning to the scene of the crime.” He’ll continue bailing out bankers, the auto giants as well, aggressively serve business interests overall, and do it at the expense of working people who’ll end up worse off than ever under him and the entire Obama economic team. It’s not “change to believe in” unless you’re a Wall Street banker assured of getting no other kind.

Roger Biduk writes:

PARIS (AP) — Electricite de France SA said Wednesday it will challenge famed investor Warren Buffett’s planned takeover of U.S. wholesale power generator Constellation Energy Group Inc. by offering $4.5 billion for half of the company’s nuclear power business.

According to the AP.

France’s state-controlled power company, which backed down from a full takeover bid for Constellation in October, said it had offered to take a 50-percent stake in Constellation’s nuclear operations through a joint venture.

Shares in EdF sank following the announcement, falling 5.6 percent to euro42.07 ($53.42) in early afternoon Paris trading amid investor fears that a bruising takeover battle may be brewing.

EdF, which owns 9.5 percent of Constellation, said the offer values the company at around $52 per share and that the price represents a 96-percent premium to a rival takeover proposal for all of Constellation by Buffett’s MidAmerican Energy Holdings Co., which is offering $26.50 per share.

The bid is EdF’s “last chance to change minds, not of Constellation’s management, but of its investors,” said industry analyst Peter Wirtz of WestLB Research based in Dusseldorf.

He said EdF stands little chance of succeeding despite a “clearly very attractive offer” because at a time of global economic and financial upheaval, investors are more likely to be lured by MidAmerican’s complete takeover bid than by the more complex offer of EdF.

The French company’s decision to take a second run at Constellation also shows “it has no Plan B for the U.S. market,” Wirtz said.

EdF’s offer includes a $1 billion “upfront” cash infusion in Constellation, and an option to sell up to $2 billion of “non-nuclear generation assets” to the French company in a deal that could close in six to nine months.

Constellation’s nuclear business includes three nuclear power stations with five reactors located in Maryland and New York. Nuclear power accounts for 61 percent of Constellation’s total electricity generating capacity of 8,700 megawatts.

Constellation’s non-nuclear assets include coal- and natural gas-fired electric plants, as well as oil and renewable energies such as solar, geothermal and hydro power.

On Tuesday, Baltimore, Maryland-based Constellation said it likely would have filed for bankruptcy protection without an immediate $1 billion infusion from MidAmerican, a unit of Buffett’s Berkshire Hathaway Inc.

Constellation also warned in a U.S. regulatory filing that unstable market conditions make the deal with MidAmerican critical. MidAmerican announced in September that it offered to buy Constellation for $26.50 per share — plus the $1 billion cash injection.

EdF pulled its $35 per share offer in October and has called MidAmerican’s offer for Constellation inadequate.

“In the old days — from the Venetian Republic to, oh, the Bear Stearns rescue — if you wanted to get rich, you did it the Warren Buffett way: You learned to read balance sheets. Today you learn to read political tea leaves. If you want to make money on Wall Street (or keep from losing your shirt), you do it not by anticipating Intel’s third-quarter earnings but by guessing instead what side of the bed Henry Paulson will wake up on tomorrow.” –columnist Charles Krauthammer

“We’ve moved beyond show me the money. This is throw me the money.” –economist Lawrence Kudlow

“The costs of Washington’s bailout fiesta are now so huge, you can see them from space. The latest number, which includes the Citigroup rescue, is $7.7 trillion. That’s roughly half of America’s GDP.” –National Review editor Jonah Goldberg

“Bill Clinton agreed to extensive scrutiny to help get Hillary the secretary of state post. He may have to give up his speaking engagements. As secretary of state, Hillary Clinton will have to grapple with age-old battles between mortal enemies, like Sunnis and Shiites, Israelis and Palestinians, and Bill Clinton and spare time.” –comedian Argus Hamilton

Back in 1994, I came across an article by Gar Alperovitz titled “Distributing Our Technological Inheritance” in the October issue of Technology Review that I found very useful as a rebuttal of the kind of libertarianism that was thriving in Silicon Valley. Here are the opening paragraphs:

Apparently, Alperovitz has turned this article into a book, based on this review in the current issue of the Nation Magazine. I plan to read and review it myself first chance I get, despite the rather lukewarm Nation Magazine review, which characterizes it as “Fabian”, a charge that strikes me as the pot calling the kettle black:

Like you and most leftists with an interest in technology and a memory of the John Perry Barlow era of “cyberlibertarianism”, I’ve been on this point a long time. However, I would like to point out that Fearless Leader also made similar remarks in one of the debates which were widely reported as a “gaffe” (though perhaps without being widely believed to be one a la Gore’s claim vis-a-vis the Internet; easy for a handful of people to make a lot of noise these days, no?) Not quite the glorious socialist future, but also not an imagined glorious capitalist past.

“In an uncertain environment, what do you need? You need trust in management. Don’t hunker in the bunker.”

– American Express (AXP) chairman and CEO Ken Chenault in an interview today at the Fortune 500 Forum. Chenault talked about becoming CEO in 2001, amidst both a crisis in confidence in American Express (”A number of folks were almost writing us off,” he said) and the crisis of 9/11. He learned then — and is applying the lessons now — to get out and be seen, to tell people he that he doesn’t know all the answers, and also to invest. “Take your cudgel out” to cut expenses and fund investment. “In times of challenge — that’s when you can get your competitive edge.”

Chenault, by the way, has plenty of fans these days. One is Berkshire Hathaway (BRK.B) CEO Warren Buffett, American Express’s largest shareholder. Also, some Citigroup (C) investors have mentioned Chenault as a possible replacement for CEO Vikram Pandit if things go from bad to worse there.

People usually make their resolutions in the new year but i figured if i wanted to do smth, i will do it right away, makes no sense to wait for new year if i’m serious about it.  Right now there are 2 things that i really wanna achieve for next year.

1. Participate in 7 running events

2. Build up an investment system

Goal  #1 will be something of a life achievement for me, not everyone runs that many events in a year…7 is a realistic number but i’ll run 10 if everything goes on really well.  Training will start as it already has monday.  All i need to do now is to keep focused on my goal and push forward.

Goal #2 is a little more difficult.  I will need to start with a few pointers.

Now all i need to a basic structure to build on, i already have a basis to start with but its still shaky.  I think i need to go to the library now to get his book or reserve it if need be.

Bought a new book yesterday entitled ” The essays of warren buffett”.  I tink its a good keep.  Should take me some time to disect the book up and digest everything inside.

A toast to my new resolutions!  And this time next year, i’ll be celebrating the fulfillment of my resolutions.

Turning to the future, what can we realistically expect of an Obama administration? We have two sources of information: actions and rhetoric.

The most important actions to date are selection of staff. The first selection was for vice-President: Joe Biden, one of the strongest supporters of the Iraq invasion among Senate Democrats, a long-time Washington insider, who consistently votes with his fellow Democrats but not always, as when he supported a measure to make it harder for individuals to erase debt by declaring bankruptcy. The first post-election appointment was for the crucial position of chief of staff: Rahm Emanuel, one of the strongest supporters of the Iraq invasion among House Democrats and like Biden, a long-term Washington insider. Emanuel is also one of the biggest recipients of Wall Street campaign contributions, the Center for Responsive Politics reports.

The Election

The word that immediately rolled off of every tongue after the presidential election was “historic.” And rightly so. A Black family in the White House is truly a momentous event.

There were some surprises. One was that the election was not over after the Democratic convention. By usual indicators, the opposition party should have had a landslide victory during a severe economic crisis, after eight years of disastrous policies on all fronts including the worst record on job growth of any post-war president and a rare decline in median wealth, an incumbent so unpopular that his own party had to disavow him, and a dramatic collapse in US standing in world opinion. The Democrats did win, barely. If the financial crisis had been slightly delayed, they might not have.

A good question is why the margin of victory for the opposition party was so small, given the circumstances. One possibility is that neither party reflected public opinion at a time when 80% think the country is going in the wrong direction and that the government is run by “a few big interests looking out for themselves,” not for the people, and a stunning 94% object that government does not attend to public opinion. As many studies show, both parties are well to the right of the population on many major issues, domestic and international.

It could be argued that no party speaking for the public would be viable in a society that is business-run to an unusual extent. Evidence for that is substantial. At a very general level, evidence is provided by the predictive success of political economist Thomas Ferguson’s “investment theory” of politics, which holds that policies tend to reflect the wishes of the powerful blocs that invest every four years to control the state. More specific illustrations are numerous. To mention just one, for 60 years the US has failed to ratify the core principle of international labor law, which guarantees freedom of association. Legal analysts call it “the untouchable treaty in American politics,” and observe that there has never even been any debate about the matter. And many have noted Washington ’s dismissal of conventions of the International Labor Organization as contrasted with the intense dedication to enforcement of monopoly pricing rights for corporations (”intellectual property rights”). There is much to explore here, but this is not the place.

The two candidates in the Democratic primary were a woman and an African-American. That too was historic. It would have been unimaginable forty years ago. The fact that the country has become civilized enough to accept this outcome is a considerable tribute to the activism of the 1960s and its aftermath.

In some ways the election followed familiar patterns. The McCain campaign was honest enough to announce clearly that the election wouldn’t be about issues. Sarah Palin’s hairdresser received twice the salary of McCain’s foreign policy adviser, the Financial Times reported, probably an accurate reflection of significance for the campaign. Obama’s message of “hope” and “change” offered a blank slate on which supporters could write their wishes. One could search websites for position papers, but correlation of these to policies is hardly spectacular, and in any event, what enters into voters’ choices is what the campaign places front and center, as party managers know well.

The Obama campaign greatly impressed the public relations industry, which named Obama “Advertising Age’s marketer of the year for 2008,” easily beating out Apple. The industry’s prime task is to ensure that uninformed consumers make irrational choices, thus undermining market theories. And it recognizes the benefits of undermining democracy the same way.

The Center for Responsive Politics reports that once again elections were bought: “The best-funded candidates won nine out of 10 contests, and all but a few members of Congress will be returning to Washington .” Before the conventions, the viable candidates with most funding from financial institutions were Obama and McCain, with 36% each. Preliminary results indicate that by the end, Obama’s campaign contributions, by industry, were concentrated among Law Firms (including lobbyists) and financial institutions. The investment theory of politics suggests some conclusions about the guiding policies of the new administration.

The power of financial institutions reflects the increasing shift of the economy from production to finance since the liberalization of finance in the 1970s, a root cause of the current economic malaise: the financial crisis, recession in the real economy, and the miserable performance of the economy for the large majority, whose real wages stagnated for 30 years, while benefits declined. The steward of this impressive record, Alan Greenspan, attributed his success to “growing worker insecurity,” which led to “atypical restraint on compensation increases” - and corresponding increases into the pockets of those who matter. His failure even to perceive the dramatic housing bubble, following the collapse of the earlier tech bubble that he oversaw, was the immediate cause of the current financial crisis, as he ruefully conceded.

Reactions to the election from across the spectrum commonly adopted the “soaring rhetoric” that was the hallmark of the Obama campaign. Veteran correspondent John Hughes wrote that ” America has just shown the world an extraordinary example of democracy at work,” while to British historian-journalis t Tristram Hunt, the election showed that America is a land “where miracles happen,” such as “the glorious epic of Barack Obama” (leftist French journalist Jean Daniel). “In no other country in the world is such an election possible,” said Catherine Durandin of the Institute for International and Strategic Relations in Paris . Many others were no less rapturous.

The rhetoric has some justification if we keep to the West, but elsewhere matters are different. Consider the world’s largest democracy, India . The chief minister of Uttar Pradesh, which is larger than all but a few countries of the world and is notorious for horrifying treatment of women, is not only a woman, but a Dalit (”untouchable” ), at the lowest rung of India’s disgraceful caste system.

Turning to the Western hemisphere, consider its two poorest countries: Haiti and Bolivia . In Haiti ’s first democratic election in 1990, grass-roots movements organized in the slums and hills, and though without resources, elected their own candidate, the populist priest Jean-Bertrand Aristide. The results astonished observers who expected an easy victory for the candidate of the elite and the US , a former World Bank official.

True, the victory for democracy was soon overturned by a military coup, followed by years of terror and suffering to the present, with crucial participation of the two traditional torturers of Haiti, France and the US (contrary to self-serving illusions). But the victory itself was a far more “extraordinary example of democracy at work” than the miracle of 2008.

The same is true of the 2005 election in Bolivia . The indigenous majority, the most oppressed population in the hemisphere (those who survived), elected a candidate from their own ranks, a poor peasant, Evo Morales. The electoral victory was not based on soaring rhetoric about hope and change, or body language and fluttering of eyelashes, but on crucial issues, very well known to the voters: control over resources, cultural rights, and so on. Furthermore, the election went far beyond pushing a lever or even efforts to get out the vote. It was a stage in long and intense popular struggles in the face of severe repression, which had won major victories, such as defeating the efforts to deprive poor people of water through privatization.

These popular movements did not simply take instructions from party leaders. Rather, they formulated the policies that their candidates were chosen to implement. That is quite different from the Western model of democracy, as we see clearly in the reactions to Obama’s victory.

In the liberal Boston Globe, the headline of the lead story observed that Obama’s “grass-roots strategy leaves few debts to interest groups”: labor unions, women, minorities, or other “traditional Democratic constituencies. ” That is only partially right, because massive funding by concentrated sectors of capital is ignored. But leaving that detail aside, the report is correct in saying that Obama’s hands are not tied, because his only debt is to “a grass-roots army of millions” - who took instructions, but contributed essentially nothing to formulating his program.

At the other end of the doctrinal spectrum, a headline in the Wall Street Journal reads “Grass-Roots Army Is Still at the Ready” – namely, ready to follow instructions to “push his agenda,” whatever it may be.

Obama’s organizers regard the network they constructed “as a mass movement with unprecedented potential to influence voters,” the Los Angeles Times reported. The movement, organized around the “Obama brand” can pressure Congress to “hew to the Obama agenda.” But they are not to develop ideas and programs and call on their representatives to implement them. These would be among the “old ways of doing politics” from which the new “idealists” are “breaking free.”

It is instructive to compare this picture to the workings of a functioning democracy such as Bolivia . The popular movements of the third world do not conform to the favored Western doctrine that the “function” of the “ignorant and meddlesome outsiders” - the population — is to be “spectators of action” but not “participants” (Walter Lippmann, articulating a standard progressive view).

Perhaps there might even be some substance to fashionable slogans about “clash of civilizations.”

In earlier periods of American history, the public refused to keep to its assigned “function.” Popular activism has repeatedly been the force that led to substantial gains for freedom and justice. The authentic hope of the Obama campaign is that the “grass roots army” organized to take instructions from the leader might “break free” and return to “old ways of doing politics,” by direct participation in action.

Latin America

In Bolivia, as in Haiti, efforts to promote democracy, social justice, and cultural rights, and to bring about desperately needed structural and institutional changes are, naturally, bitterly opposed by the traditional rulers, the Europeanized mostly white elite in the Eastern provinces, the site of most of the natural resources currently desired by the West. Also naturally, their quasi-secessionist movement is supported by Washington , which once again scarcely conceals its distaste for democracy when it does not conform to strategic and economic interests. The generalization is a staple of serious scholarship, but does not make its way to commentary about the revered “freedom agenda.”

To punish Bolivians for showing “the world an extraordinary example of democracy at work,” the Bush administration cancelled trade preferences, threatening tens of thousands of jobs, on the pretext that Bolivia was not cooperating with US counter-narcotic efforts. In the real world, the UN estimates that Bolivia ’s coca crop increased 5 percent in 2007, as compared with a 26 percent increase in Colombia , the terror state that is Washington ’s closest regional ally and the recipient of enormous military aid. AP reports that “Cocaine seizures by Bolivian police working with DEA agents had also increased dramatically during the Morales administration. ”

“Drug wars” have regularly been used as a pretext for repression, violence, and state crimes, at home as well.

After Morales’s victory in a recall referendum in August 2008, with a sharp increase in support over his 2005 success, rightist opposition turned violent, leading to assassination of many peasants supporting the government. After the massacre, a summit meeting of UNASUR, the newly-formed Union of South American Republics, was convened in Santiago Chile . The summit issued a strong statement of support for the elected Morales government, read by Chilean President Michelle Bachelet. The statement declared “their full and firm support for the constitutional government of President Evo Morales, whose mandate was ratified by a big majority” — referring to his overwhelming victory in the referendum a month earlier. Morales thanked UNASUR for its support, observing that “For the first time in South America’s history, the countries of our region are deciding how to resolve our problems, without the presence of the United States .”

A matter of no slight significance, not reported in the US .

The Administration

Turning to the future, what can we realistically expect of an Obama administration? We have two sources of information: actions and rhetoric.

The most important actions to date are selection of staff. The first selection was for vice-President: Joe Biden, one of the strongest supporters of the Iraq invasion among Senate Democrats, a long-time Washington insider, who consistently votes with his fellow Democrats but not always, as when he supported a measure to make it harder for individuals to erase debt by declaring bankruptcy.

The first post-election appointment was for the crucial position of chief of staff: Rahm Emanuel, one of the strongest supporters of the Iraq invasion among House Democrats and like Biden, a long-term Washington insider. Emanuel is also one of the biggest recipients of Wall Street campaign contributions, the Center for Responsive Politics reports. He “was the top House recipient in the 2008 election cycle of contributions from hedge funds, private equity firms and the larger securities/investme nt industry.” Since being elected to Congress in 2002, he “has received more money from individuals and PACs in the securities and investment business than any other industry”; these are also among Obama’s top donors. His task is to oversee Obama’s approach to the worst financial crisis since the 1930s, for which his and Obama’s funders share ample responsibility.

In an interview with an editor of the Wall Street Journal, Emanuel was asked what the Obama administration would do about “the Democratic congressional leadership, which is brimming with left-wing barons who have their own agenda,” such as slashing defense spending (in accord with the will of the majority of the population) and “angling for steep energy taxes to combat global warming,” not to speak of the outright lunatics in Congress who toy with slavery reparations and even sympathize with Europeans who want to indict Bush administration war criminals for war crimes. “Barack Obama can stand up to them,” Emanuel assured the editor. The administration will be “pragmatic,” fending off left extremists.

Obama’s transition team is headed by John Podesta, Clinton ’s chief of staff. The leading figures in his economic team are Robert Rubin and Lawrence Summers, both enthusiasts for the deregulation that was a major factor in the current financial crisis. As Treasury Secretary, Rubin worked hard to abolish the Glass-Steagall act, which had separated commercial banks from financial institutions that incur high risks. Economist Tim Canova comments that Rubin had “a personal interest in the demise of Glass-Steagall. ” Soon after leaving his position as Treasury Secretary, he became “chair of Citigroup, a financial-services conglomerate that was facing the possibility of having to sell off its insurance underwriting subsidiary.. . the Clinton administration never brought charges against him for his obvious violations of the Ethics in Government Act.”

Rubin was replaced as Treasury Secretary by Summers, who presided over legislation barring federal regulation of derivatives, the “weapons of mass destruction” (Warren Buffett) that helped plunge financial markets to disaster. He ranks as “one of the main villains in the current economic crisis,” according to Dean Baker, one of the few economists to have warned accurately of the impending crisis. Placing financial policy in the hands of Rubin and Summers is “a bit like turning to Osama Bin Laden for aid in the war on terrorism,” Baker adds.

The business press reviewed the records of Obama’s Transition Economic Advisory Board, which met on November 7 to determine how to deal with the financial crisis. In Bloomberg News, Jonathan Weil concluded that “Many of them should be getting subpoenas as material witnesses right about now, not places in Obama’s inner circle.” About half “have held fiduciary positions at companies that, to one degree or another, either fried their financial statements, helped send the world into an economic tailspin, or both.” Is it really plausible that “they won’t mistake the nation’s needs for their own corporate interests?” He also pointed out that chief of staff Emanuel “was a director at Freddie Mac in 2000 and 2001 while it was committing accounting fraud.”

Those are the actions, at the time of writing. The rhetoric is “change” and “hope.”

Health Care

Internationally, there is not much of substance on the largely blank slate. What there is gives little reason to expect much a change from Bush’s second term, which stepped back from the radical ultranationalism and aggressive posture of the first term, also discarding some of the extreme hawks and opponents of democracy (in action, that is, not soothing words), like Rumsfeld and Wolfowitz.

Israel-Palestine

The immediate issues have to do mostly with the Middle East. On Israel-Palestine, rumors are circulating that Obama might depart from the US rejectionism that has blocked a political settlement for over 30 years, with rare exceptions, notably for a few days in January 2001 before promising negotiations were called off prematurely by Israel. The record, however, provides no basis for taking the rumors seriously. I have reviewed Obama’s formal positions elsewhere (Perilous Power), and will put the matter aside here.

After the election, Israeli president Shimon Peres informed the press that on his July trip to Israel, Obama had told him that he was “very impressed” with the Arab League peace proposal, calling for full normalization of relations with Israel along with Israeli withdrawal from the occupied territories – basically, the long-standing international consensus that the US-Israel have unilaterally blocked (and that Peres has never accepted – in fact, in his last days as Prime Minister in 1996 he held that a Palestinian state can never come into existence). That might suggest a significant change of heart, except that the right-wing Israeli leader Binyamin Netanyahu said that on the same trip, Obama had told him that he was “very impressed” with Netanyahu’s plan, which calls for indefinite Israeli control of the occupied territories.

The paradox is plausibly resolved by Israeli political analyst Aluf Ben, who points out that Obama’s “main goal was not to screw up or ire anyone. Presumably he was polite, and told his hosts their proposals were `very interesting’ - they leave satisfied and he hasn’t promised a thing.” Understandable, but it leaves us with nothing except his fervent professions of love for Israel and dismissal of Palestinian concerns.

Iraq

On Iraq , Obama has frequently been praised for his “principled opposition” to the war. In reality, as he has made clear, his opposition has been entirely unprincipled throughout. The war, he said, is a “strategic blunder.” When Kremlin critics of the invasion of Afghanistan called it a strategic blunder, we did not say that they were taking a principled stand.

By the time of writing, the government of Iraq seems close to accepting a Status of Forces Agreement (SOFA) with Washington on the US military presence in Iraq - with reservations, according to Prime Minister Maliki, who said that this is the best Iraq could get and it was at least “a strong beginning.” The talks dragged on, the Washington Post reports, because Iraq insisted on “some major concessions, including the establishment of the 2011 withdrawal date instead of vaguer language favored by the Bush administration [and] also rejected long-term U.S. military bases on its soil.” Iraqi leaders “consider the firm deadline for withdrawal to be a negotiating victory,” Reuters reports: Washington “long opposed setting any timetable for its troops to withdraw, but relented in recent months,” unable to overcome Iraqi resistance.

Throughout the negotiations, the press regularly dismissed the obstinate stance of the Maliki government as regrettable pandering to public opinion. US-run polls continue to report that a large majority of Iraqis oppose any US military presence, and believe that US forces make the situation worse, including the “surge.” That judgment is supported, among others, by Middle East specialist and security analyst Steven Simon, who writes in Foreign Affairs that the Petraeus counterinsurgency strategy is “stoking the three forces that have traditionally threatened the stability of Middle Eastern states: tribalism, warlordism, and sectarianism. States that have failed to control these forces have ultimately become ungovernable, and this is the fate for which the surge is preparing Iraq . A strategy intended to reduce casualties in the short term will ineluctably weaken the prospects for Iraq ’s cohesion over the long run.” It may lead to “a strong, centralized state ruled by a military junta that would resemble the Baathist regime Washington overthrew in 2003,” or “something very much like the imperial protectorates in the Middle East of the first half of the twentieth century” in which the “club of patrons” in the capital would ‘dole out goods to tribes through favored conduits.” In the Petraeus system, “the U.S. military is performing the role of the patrons — creating an unhealthy dependency and driving a dangerous wedge between the tribes and the state,” undermining prospects for a “stable, unitary Iraq .”

The latest Iraqi success culminates a long process of resistance to demands of the US invaders. Washington fought tooth and nail to prevent elections, but was finally forced to back down in the face of popular demands for democracy, symbolized by the Ayatollah Sistani. The Bush administration then managed to install their own choice as Prime Minister, and sought to control the government in various ways, meanwhile also building huge military bases around the country and an “embassy” that is a virtual city within Baghdad - all funded by congressional Democrats. If the invaders do live up to the SOFA that they have been compelled to accept, it would constitute a significant triumph of nonviolent resistance. Insurgents can be killed, but mass nonviolent resistance is much harder to quell.

Within the political class and the media it is reflexively assumed that Washington has the right to demand terms for the SOFA. No such right was accorded to Russian invaders of Afghanistan , or indeed to anyone except the US and its clients. For others, we rightly adopt the principle that invaders have no rights, only responsibilities, including the responsibility to attend to the will of the victims, and to pay massive reparations for their crimes. In this case, the crimes include strong support for Saddam Hussein through his worst atrocities on Reagan’s watch, then on to Saddam’s massacre of Shiites under the eyes of the US military after the first Gulf War; the Clinton sanctions that were termed “genocidal” by the distinguished international diplomats who administered them and resigned in protest, and that also helped Saddam escape the fate of other gangsters whom the US and Britain supported to the very end of their bloody rule; and the war and its hideous aftermath. No such thoughts can be voiced in polite society.

The Iraqi government spokesman said that the tentative SOFA “matches the vision of U.S. President-elect Barack Obama.” Obama’s vision was in fact left somewhat vague, but presumably he would go along in some fashion with the demands of the Iraqi government. If so, that would require modification of US plans to ensure control over Iraq ’s enormous oil resources while reinforcing its dominance over the world’s major energy producing region.

Afghanistan, Pakistan …

Obama’s announced “vision” was to shift forces from Iraq to Afghanistan . That stand evoked a lesson from the editors of the Washington Post: “While the United States has an interest in preventing the resurgence of the Afghan Taliban, the country’s strategic importance pales beside that of Iraq , which lies at the geopolitical center of the Middle East and contains some of the world’s largest oil reserves.” Increasingly, as Washington has been compelled to accede to Iraqi demands, tales about “democracy promotion” and other self-congratulatory fables have been shelved in favor of recognition of what had been obvious throughout to all but the most doctrinaire ideologists: that the US would not have invaded if Iraq’s exports were asparagus and tomatoes and the world’s major energy resources were in the South Pacific.

The NATO command is also coming to recognize reality publicly. In June 2007, NATO Secretary-General Jaap de Hoop Scheffer informed a meeting of NATO members that “NATO troops have to guard pipelines that transport oil and gas that is directed for the West,” and more generally to protect sea routes used by tankers and other “crucial infrastructure” of the energy system. That is the true meaning of the fabled “responsibility to protect.” Presumably the task includes the projected $7.6-billion TAPI pipeline that would deliver natural gas from Turkmenistan to Pakistan and India , running through Afghan’s Kandahar province, where Canadian troops are deployed. The goal is “to block a competing pipeline that would bring gas to Pakistan and India from Iran ” and to “diminish Russia ’s dominance of Central Asian energy exports,” the Toronto Globe and Mail reported, plausibly outlining some of the contours of the new “Great Game.”

Obama strongly endorsed the then-secret Bush administration policy of attacking suspected al-Qaeda leaders in countries that Washington has not (yet) invaded, disclosed by the New York Times shortly after the election. The doctrine was illustrated again on October 26, when US forces based in Iraq raided Syria , killing 8 civilians, allegedly to capture an al-Qaeda leader. Washington did not notify Iraqi Prime Minister Maliki or President Talabani, both of whom have relatively amicable relations with Syria , which has accepted 1.5 million Iraqi refugees and is bitterly opposed to al-Qaeda. Syria protested, claiming, credibly, that if notified they would have eagerly apprehended this enemy. According to Asia Times, Iraqi leaders were furious, and hardened their stance in the SOFA negotiations, insisting on provisions to bar the use of Iraqi territory to attack neighbors.

The Syria raid elicited a harsh reaction in the Arab world. In pro-government newspapers, the Bush administration was denounced for lengthening its “loathsome legacy” ( Lebanon ), while Syria was urged to “march forward in your reconciliatory path” and America to “keep going backwards with your language of hatred, arrogance and the murder of innocents” ( Kuwait ). For the region generally, it was another illustration of what the government-controlled Saudi press condemned as “not diplomacy in search of peace, but madness in search of war.”

Obama was silent. So were other Democrats. Political scientist Stephen Zunes contacted the offices of every Democrat on the House and Senate Foreign Relations Committees, but was unable to find any critical word on the US raid on Syria from occupied Iraq .

Presumably, Obama also accepts the more expansive Bush doctrine that the US not only has the right to invade countries as it chooses (unless it is a “blunder,” too costly to us), but also to attack others that Washington claims are supporting resistance to its aggression. In particular, Obama has, it seems, not criticized the raids by Predator drones that have killed many civilians in Pakistan .

These raids of course have consequences: people have the odd characteristic of objecting to slaughter of family members and friends. Right now there is a vicious mini-war being waged in the tribal area of Bajaur in Pakistan , adjacent to Afghanistan . BBC describes widespread destruction from intense combat, reporting further that “Many in Bajaur trace the roots of the uprising to a suspected US missile strike on an Islamic seminary, or madrassa, in November 2006, which killed around 80 people.” The attack on the school, killing 80-85 people, was reported in the mainstream Pakistani press by the highly respected dissident physicist Pervez Hoodbhoy, but ignored in the US as insignificant. Events often look different at the other end of the club.

Hoodbhoy observed that the usual outcome of such attacks “has been flattened houses, dead and maimed children, and a growing local population that seeks revenge against Pakistan and the US .” Bajaur today may be an illustration of the familiar pattern.

On November 3, General Petraeus, the newly appointed head of the US Central Command that covers the Middle East region, had his first meeting with Pakistani President Asif Ali Zardari, army chief General Ashfaq Parvez Kayani, and other high officials. Their primary concern was US missile attacks on Pakistani territory, which had increased sharply in previous weeks. “Continuing drone attacks on our territory, which result in loss of precious lives and property, are counterproductive and difficult to explain by a democratically elected government,” Zardari informed Petraeus. His government, he said, is “under pressure to react more aggressively” to the strikes. These could lead to “a backlash against the US ,” which is already deeply unpopular in Pakistan .

Petraeus said that he had heard the message, and “we would have to take [Pakistani opinions] on board” when attacking the country. A practical necessity, no doubt, when over 80% of the supplies for the US-NATO war in Afghanistan pass through Pakistan .

Pakistan developed nuclear weapons, outside the Non-Proliferation Treaty (NPT), thanks in no small measure to Ronald Reagan, who pretended not to see what his ally was doing. This was one element of Reagan’s “unstinting support” for the “ruthless and vindictive” dictator Zia ul-Haq, whose rule had “the most long-lasting and damaging effect on Pakistani society, one still prevalent today,” the highly respected analyst Ahmed Rashid observes. With Reagan’s firm backing, Zia moved to impose “an ideological Islamic state upon the population.” These are the immediate roots of many of “today’s problems - the militancy of the religious parties, the mushrooming of madrassas and extremist groups, the spread of drug and Kalashnikov culture, and the increase in sectarian violence.”

The Reaganites also “built up the [Inter-Services Intelligence Directorate, ISI] into a formidable intelligence agency that ran the political process inside Pakistan while promoting Islamic insurgencies in Kashmir and Central Asia ,” Rashid continues. “This global jihad launched by Zia and Reagan was to sow the seeds of al Qaeda and turn Pakistan into the world center of jihadism for the next two decades.” Meanwhile Reagan’s immediate successors left Afghanistan in the hands of the most vicious jihadis, later abandoning it to warlord rule under Rumsfeld’s direction. The fearsome ISI continues to play both sides of the street, supporting the resurgent Taliban and simultaneously acceding to some US demands.

The US and Pakistan are reported to have reached “tacit agreement in September [2008] on a don’t-ask-don’ t-tell policy that allows unmanned Predator aircraft to attack suspected terrorist targets” in Pakistan , according to unidentified senior officials in both countries. “The officials described the deal as one in which the U.S. government refuses to publicly acknowledge the attacks while Pakistan ’s government continues to complain noisily about the politically sensitive strikes.”

Once again problems are caused by the “ignorant and meddlesome outsiders” who dislike being bombed by an increasingly hated enemy from the other side of the world.

The day before this report on the “tacit agreement” appeared, a suicide bombing in the conflicted tribal areas killed eight Pakistani soldiers, retaliation for an attack by a US Predator drone that killed 20 people, including two Taliban leaders. The Pakistani parliament called for dialogue with the Taliban. Echoing the resolution, Pakistani foreign Minister Shah Mehmood Qureshi said “There is an increasing realization that the use of force alone cannot yield the desired results.”

Afghan President Hamid Karzai’s first message to president-elect Obama was much like that delivered to General Petraeus by Pakistani leaders: “end US airstrikes that risk civilian casualties.” His message was sent shortly after coalition troops bombed a wedding party in Kandahar province, reportedly killing 40 people. There is no indication that his opinion was “taken on board.”

The British command has warned that there is no military solution to the conflict in Afghanistan and that there will have to be negotiations with the Taliban, risking a rift with the US , the Financial Times reports. Correspondent Jason Burke, who has long experience in the region, reports that “the Taliban have been engaged in secret talks about ending the conflict in Afghanistan in a wide-ranging ‘peace process’ sponsored by Saudi Arabia and supported by Britain .”

Some Afghan peace activists have reservations about this approach, preferring a solution without foreign interference. A growing network of activists is calling for negotiations and reconciliation with the Taliban in a National Peace Jirga, a grand assembly of Afghans, formed in May 2008. At a meeting in support of the Jirga, 3,000 Afghan political and intellectuals, mainly Pashtuns, the largest ethnic group, criticized “the international military campaign against Islamic militants in Afghanistan and called for dialogue to end the fighting,” AFP reported.

The interim chairman of the National Peace Jirga, Bakhtar Aminzai, “told the opening gathering that the current conflict could not be resolved by military means and that only talks could bring a solution. He called on the government to step up its negotiations with the Taliban and Hizb-i-Islami groups.” The latter is the party of the extremist radical Islamist warlord Gulbuddin Hekmatyar, a Reagan favorite responsible for many terrible atrocities, now reported to provide core parliamentary support for the Karzai government and to be pressing it towards a form of re-Talibanization.

Aminzai said further that “We need to pressure the Afghan government and the international community to find a solution without using guns.” A spokeswoman added that “We are against Western policy in Afghanistan . They should bury their guns in a grave and focus on diplomacy and economic development. ” A leader of Awakened Youth of Afghanistan, a prominent antiwar group, says that we must end “Afghanicide — the killing of Afghanistan .” In a joint declaration with German peace organizations, the National Peace Jirga claimed to represent “a wide majority of Afghan people who are tired of war,” calling for an end to escalation and initiation of a peace process.

The deputy director of the umbrella organization of NGOs in the country says that of roughly 1,400 registered NGOs, nearly 1,100 are purely Afghan operations: women’s groups, youth groups and others, many of them advocates of the Peace Jirga.

Though polling in war-torn Afghanistan is a difficult process, there are some suggestive results. A Canadian-run poll found that Afghans favor the presence of Canadian and other foreign troops, the result that made the headlines in Canada . Other findings suggest some qualifications. Only 20% “think the Taliban will prevail once foreign troops leave.” Three-fourths support negotiations between the Karzai government and the Taliban, and more than half favor a coalition government. The great majority therefore strongly disagree with the US-NATO focus on further militarization of the conflict, and appear to believe that peace is possible with a turn towards peaceful means. Though the question was not asked, it is reasonable to surmise that the foreign presence is favored for aid and reconstruction.

A study of Taliban foot soldiers carried out by the Toronto Globe & Mail, though not a scientific survey as they point out, nevertheless yields considerable insight. All were Afghan Pashtuns, from the Kandahar area. They described themselves as Mujahadeen, following the ancient tradition of driving out foreign invaders. Almost a third reported that at least one family member had died in aerial bombings in recent years. Many said that they were fighting to defend Afghan villagers from air strikes by foreign troops. Few claimed to be fighting a global Jihad, or had allegiance to Taliban leader Mullah Omar. Most saw themselves as fighting for principles - an Islamic government — not a leader. Again, the results suggest possibilities for a negotiated peaceful settlement, without foreign interference.

A valuable perspective on such prospects is provided by Sir Rodric Braithwaite, a specialist on Afghanistan who was UK ambassador to Moscow during the crucial 1988-92 period when the Russians withdrew (and the USSR collapsed), then becoming chair of the British Joint Intelligence Committee. On a recent visit, Braithwaite spoke to Afghan journalists, former Mujahideen, professionals, people working for the US-based “coalition” - in general, to “natural supporters for its claims to bring peace and reconstruction. ” In the Financial Times, he reports that they were “contemptuous of President Hamid Karzai,” regarding him as another one of the puppets installed by foreign force. Their favorite was “Mohammad Najibullah, the last communist president, who attempted to reconcile the nation within an Islamic state, and was butchered by the Taliban in 1996: DVDs of his speeches are being sold on the streets. Things were, they said, better under the Soviets. Kabul was secure, women were employed, the Soviets built factories, roads, schools and hospitals, Russian children played safely in the streets. The Russian soldiers fought bravely on the ground like real warriors, instead of killing women and children from the air. Even the Taliban were not so bad: they were good Muslims, kept order, and respected women in their own way. These myths may not reflect historical reality, but they do measure a deep disillusionment with the `coalition’ and its policies.”

Specialists on the region urge that US strategy should shift from more troops and attacks in Pakistan to a “diplomatic grand bargain — forging compromise with insurgents while addressing an array of regional rivalries and insecurities” (Barnett Rubin and Ahmed Rashid in Foreign Affairs, Nov.-Dec. 2008). They warn that the current military focus “and the attendant terrorism” might lead to the collapse of nuclear-armed Pakistan , with grim consequences. They urge the incoming US administration “to put an end to the increasingly destructive dynamics of the Great Game in the region” through negotiations that recognize the interests of the concerned parties within Afghanistan as well as Pakistan and Iran, but also India, China and Russia, who “have reservations about a NATO base within their spheres of influence” and concerns about the threats “posed by the United States and NATO” as well as by al-Qaeda and the Taliban. The immediate goal should be “Lowering the level of violence in the region and moving the global community toward genuine agreement on the long-term goals,” thus allowing Afghans to confront their internal problems peacefully. The incoming US president must put an end to ” Washington ’s keenness for `victory’ as the solution to all problems, and the United States ‘ reluctance to involve competitors, opponents, or enemies in diplomacy.”

It appears that there are feasible alternatives to escalation of the cycle of violence, but there is little hint of it in the electoral campaign or political commentary. Afghanistan and Pakistan do not appear among foreign policy issues on the Obama campaign’s website.

Iran

Iran, in contrast, figures prominently — though not of course as compared with effusive support for Israel ; Palestinians remain unmentioned, apart from a vague reference to a two-state settlement of some unspecified kind. For Iran , Obama supports tough direct diplomacy “without preconditions” in order “to pressure Iran directly to change their troubling behavior,” namely pursuing a nuclear program and supporting terrorism (presumably referring to support for Hamas and Hezbollah). If Iran abandons its troubling behavior, the US might move towards normal diplomatic and economic relations. “If Iran continues its troubling behavior, we will step up our economic pressure and political isolation.” And as Obama informed the Israeli Lobby (AIPAC), “I will do everything in my power to prevent Iran from obtaining a nuclear weapon” - up to nuclear war, if he meant what he said.

Furthermore Obama will strengthen the NPT “so that countries like North Korea and Iran that break the rules will automatically face strong international sanctions.” There is no mention of the conclusion of US intelligence with “high confidence” that Iran has not had a weapons program for 5 years, unlike US allies Israel, Pakistan, India, which maintain extensive nuclear weapons programs in violation of the NPT with direct US support, all unmentioned here as well.

The final mention of Iran is in the context of Obama’s strong support for Israel ’s “Right to Self Defense” and its “right to protect its citizens.” This commitment is demonstrated by Obama’s co-sponsorship of “a Senate resolution against Iran and Syria ’s involvement in the war, and insisting that Israel should not be pressured into a ceasefire that did not deal with the threat of Hezbollah missiles.” The reference is to Israel ’s US-backed invasion of Lebanon in 2006, with pretexts that are hardly credible in light of Israel ’s regular practices. This invasion, Israel ’s fifth, killed over 1000 Lebanese and once again destroyed much of southern Lebanon as well as parts of Beirut .

This is the sole mention of Lebanon among foreign policy issues on Obama’s website

Deep Green: Atomic renaissance interrupted | Greenpeace UK

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My father always encouraged us to live well below our means.  As my professional confidence grew and I learned the basics of accounting, I explained to him that I would “focus on the revenue side of the equation rather than the cost side.”  That was my smug way of telling him (a science guy without formal business training) that I would earn enough to live large.   He then explained the mathematics of compounding interest to me and added that I should take into consideration that capital gains are lower than income tax rates for those in my desired tax bracket — further fueling the mathemagic of compounding interest.  

This is a hard lesson to learn.  Harder still when you have easy access to capital, as do many wealthy individuals and companies.  When you spend $1,000, you aren’t spending $1,000 — you are giving up the opportunity cost of what the $1,000 could have been worth (see the table below, or download the Excel document entitled value_of_money.xls here).  

Now apply this idea to your business.  If you work at a large company, chances are that your managers are not thinking about every dollar spent this way.  If they do, your company is likely very valuable.  Startups have the advantage, if you will, of not having enough capital to be [as] wasteful.  But even many startups spend their cash without thinking about the opportunity cost of their capital.

I have noticed an interesting correlation amongst many of the successful people I know — they’re cheap.  The table above explains why.

Before you arrive at the end of this sentence, another baby boomer will turn 50. By the time the last boomer turns 65, the number of Americans 65 or older will have doubled since 2000. Baby boomers control half of all discretionary purchases and 80% of the personal wealth in the United States. They’re also the demographic most likely to visit a shopping mall. Along with all that, the 50-plus population presents a huge opportunity for companies serving the healthcare industry.

American industry is waking up to this market. The Department of Labor estimates that seven of the 20 fastest-growing occupations are related to healthcare. Healthcare will generate 3 million jobs between 2006 and 2016, more than any other industry. This is truly a seismic shift in the composition of the U.S. economy, which historically has been driven by the production of other goods and services. Healthcare now employs more people than manufacturing.

For investors, it can be very lucrative to invest in an industry with strong growth trends behind it. Energy and commodities produced enormous gains for investors over the past five years as demand for energy swelled around the world. Compared to those, healthcare has enormous advantages, because it isn’t cyclical. Most industries go through blips where demand falls, growth slows, and stock prices plummet. The good thing about healthcare is that demand should grow steadily for the next decade or two.

But just because an industry is growing doesn’t mean all companies can make bagfuls of money. Government regulation and competition can lower returns — just take a look at airlines or automakers, both in industries with good secular growth but where companies have a hard time earning a decent return on their capital. So it’s not just enough to invest in the right industry — you have to pick the winners — companies with competitive advantages that can earn a solid return on their shareholders’ investments.

One competitive advantage in healthcare is scale, and our two recommendations have this in spades. When you’re the biggest kid in the lunch line, you are going to get your choice of lunch, and a big portion at that. It’s the same in business — size gives you the ability to set terms for the rest of the industry. And while you’d usually expect to pay a sizable price for such dominance, this is one of the few occasions when the market gives us a chance to own these great healthcare businesses at a bargain price.

No one likes the big managed healthcare providers these days. Rising medical costs, lawsuits, shaky Medicare and Medicaid reimbursement, and the uncertainty of healthcare reform have all weighed on the industry. But the valuation of UnitedHealth Group (NYSE: UNH) reflects these prospects and then some. The future of health insurance is anything but declining, and with 73 million members, UnitedHealth is one of the dominant companies in the industry.

The health insurance game boils down to size. Large insurers can negotiate lower rates on behalf of their customers, be they governments, companies, or individuals, and this leads to a virtuous circle. Doctors and hospitals rely on a network of tens of millions of patients, which affords UnitedHealth tremendous pricing power, allowing it to pass savings on to its paying members. In turn, the variety of healthcare providers and lower negotiated rates attract more people to the network. And the circle is complete.

UnitedHealth’s database is also a huge asset — it includes comprehensive clinical data covering 85 million people and pharmaceutical histories for 250 million — that enables the company to smartly underwrite risks. Plus, according to government data, UnitedHealth is getting the biggest slice of the new Medicare drug plans and Medicare Advantage plans. Its share was also boosted by a marketing arrangement with AARP and the PacifiCare acquisition. This is one of the key growth drivers for the company.

The rising costs of healthcare are a top concern. Reimbursement rates from the government on Medicare and Medicaid are constantly at risk of being cut. Large companies are increasingly moving toward service contracts in which they take on the risk of healthcare costs and have companies like UnitedHealth manage their programs, which lowers revenue but reduces risk.

Lawsuits are also part of the health insurance business. The latest: The New York State Attorney General’s Office announced its intent to sue UnitedHealth, which could lead to a cash payout but shouldn’t affect the stock’s valuation.

Occasionally an entire industry falls out of favor with Wall Street for reasons that are unclear — and temporary. It is in times like these that investors can hardly go wrong in picking up the strongest companies in the sector, including UnitedHealth. Over the next five to 10 years, UnitedHealth should thrive.

The Motley Fool owns shares of UnitedHealth.

A major provider of healthcare services and benefits, WellPoint boasts one of the largest medical memberships in the United States, with 35 million customers, compared with 73 million forUnitedHealth (NYSE: UNH), 16.8 million for Aetna (NYSE: AET), and 10.2 million for CIGNA (NYSE: CI). Its membership is roughly a 50-50 mix of fully insured and self-funded members. For the fully insured, the company receives a premium and takes on the risk, making it responsible for covering the cost of medical services. For the self-funded, it charges a fee for services such as administrative work and fee negotiations, but the employer or plan sponsor reimburses all or most of the healthcare costs.

As does UnitedHealth, WellPoint has a size advantage over the competition. Being big means it can spread nonmedical costs over a larger membership base, which improves profit margins. Larger networks are more valuable to healthcare providers — imagine having access to WellPoint’s 35 million members — and therefore such networks can negotiate lower prices. This is a win-win for members, who have access to cheaper health insurance and a wider selection of healthcare providers.

The national network has a local effect, since people tend to use healthcare services close to home. WellPoint is the exclusive licensee for Blue Cross and Blue Shield brands in 14 states, giving it the No. 1 or No. 2 market share in these areas. On top of its scale and price advantages, WellPoint’s membership base has yielded reams of historical data that should help the company understand underwriting risks and plan its business on economical terms.

Like all insurance companies, WellPoint earns considerable interest on its premium float, unearned premiums paid plus unpaid losses. In 2007, interest on WellPoint’s cash plus its float exceeded $1 billion and free cash flow was $4 billion. WellPoint has been using this strong free cash flow production to buy back shares — a worthy use of capital at today’s low stock price.

WellPoint isn’t a fast growing company — mid-single-digit growth should come from 1% to 1.5% enrollment growth and 4% to 5% price increases. And the medical-cost ratio could inch up as cost increases slightly outpace price increases — though management is confident that it can match the two.

Systemic health-care reform presents a small risk, but I expect the largest insurers, like WellPoint, to do well while smaller rivals suffer more and experience further consolidation.

If the medical-cost ratio rises higher than expected it could lower the value of WellPoint. Also, as is the case for all insurance companies, WellPoint has an investment portfolio, including in mortgage-backed securities. Almost all these securities are guaranteed by government-sponsored entities, but that doesn’t preclude risk.

WellPoint is an extremely fit company selling at a significant discount to its true value, based on little more than uncertainty. In turn, Wall Street has priced the shares as though the business is in terminal decline. Underwriting results will inevitably wax and wane, but WellPoint’s long-term prospects are anything but declining. It operates in an industry with long-term growth built in as baby boomers age, and WellPoint should produce healthy returns far in excess of the market.

I hope you’ve enjoyed this special report.

My name is Philip Durell. I’m the founder and senior advisor ofMotley Fool Inside Value.

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As Warren Buffett’s longtime business partner Charlie Munger says, “All intelligent investing is value investing.”

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The same holds true for any stock recommended in Motley Fool Inside Value. My proven formula for identifying hugely profitable companies with high intrinsic values and low stock prices has led me to recommend:

Returns as of 10/3/2008

This is just a small sample of the stocks that are widely overlooked by Wall Street but can yield massive returns. In Motley Fool Inside Value, you’ll see a proven formula for identifying hugely profitable companies with high intrinsic values and low stock prices. Plus, how you can avoid the trap of buying stocks that look cheap.

Value investing comes as close to “hands-free,” no-worries investing as you’ll ever get. And it’s no coincidence that this same strategy has helped our tight-knit group to rack up a stunning track record. There’s never been a time when our group failed to beat the S&P 500. In fact, I’d like you to experience this remarkable service for yourself.

Let’s quickly look at what you can expect to gain…

Think about it this way. Remember back in 1987 when the market crashed?

If you owned a company like Berkshire Hathaway back then, would you panic and dump your stock to rescue your gains? What about six years ago when Internet stocks collapsed? I certainly don’t remember anybody running from these kinds of value investments then.

That’s because these are the kinds of stocks SAFE ENOUGH TO HANG ONTO… but STRONG ENOUGH THAT THEY MOVE. And go up, adding value to your portfolio outside of the usual ebb and flow on Wall Street. This is the only way I know of to get big gains without big risks.

It’s as simple as that. And you risk nothing by giving Inside Value a try.

For a limited time, I invite you to try Motley Fool Inside Value FREE for 30 days, with no obligation to subscribe. To get started, simply click here.

By Charles Krauthammer

In the old days — from the Venetian Republic to, oh, the Bear Stearns rescue — if you wanted to get rich, you did it the Warren Buffett way: You learned to read balance sheets. Today you learn to read political tea leaves. If you want to make money on Wall Street (or keep from losing your shirt), you do it not by anticipating Intel’s third-quarter earnings but by guessing instead what side of the bed Henry Paulson will wake up on tomorrow.

Today’s extreme stock market volatility is not just a symptom of fear — fear cannot account for days of wild market swings upward — but a reaction to meta-economic events: political decisions that have vast economic effects.

As economist Irwin Stelzer argues, we have gone from a market-driven economy to a politically driven economy. Consider seven days in November. On Tuesday, Nov. 18, Paulson broadly implies that he’s using only half the $700 billion bailout money. Having already spent most of his $350 billion, he’s going to leave the rest to his successor. The message received on Wall Street — I’m done, I’m gone.

Facing the prospect of two months of political limbo, the market craters. Led by the banks (whose balance sheets did not change between Tuesday and Wednesday), the market sees the largest two-day drop in the S&P since 1933, not a very good year.

The next day (Friday) at 3 p.m., word leaks of Timothy Geithner’s impending nomination as Treasury secretary. The mere suggestion of continuity — and continued authoritative intervention during the interregnum by the guy who’d been working hand in glove with Paulson all along — sends the Dow up 500 points in one hour.

Monday sees a 400-point increase, the biggest two-day (percentage) rise since 1987. Why? Three political events: Paulson’s weekend Citigroup bailout; the official rollout of Barack Obama’s economic team, Geithner and Larry Summers; and Paulson quietly walking back from his earlier de facto resignation by indicating that he would be ready to use the remaining $350 billion (with Team Obama input) over the next two months.

That undid the market swoon — and dramatically demonstrated how politically driven the economy has become.

We may one day go back to a market economy. Meanwhile, we need to face the two most important implications of our newly politicized economy: the vastly increased importance of lobbying and the massive market inefficiencies that political directives will introduce.

Lobbying used to be about advantages at the margin — a regulatory break here, a subsidy there. Now lobbying is about life and death. Your lending institution or industry gets a bailout — or it dies.

You used to go to New York for capital. Now Wall Street, broke, is coming to Washington. With unimaginably large sums of money being given out by Washington, the Obama administration, through no fault of its own, will be subject to the most intense, most frenzied lobbying in American history.

That will introduce one kind of economic distortion. The other kind will come from the political directives issued by newly empowered politicians.

First, bank presidents are gravely warned by one senator after another about “hoarding” their bailout money. But hoarding is another word for recapitalizing to shore up your balance sheet to ensure solvency. Is that not the fiduciary responsibility of bank directors? And isn’t pushing money out the window with too little capital precisely the lending laxity that produced this crisis in the first place? Never mind. The banks will knuckle under to the commissars of Capitol Hill. They control the purse. Prudence will yield to politics.

Even more egregious will be the directives to a nationalized Detroit. Sen. Charles Schumer, the noted automotive engineer, declared “unacceptable” last week “a business model based on gas.” Instead, “We need a business model based on cars of the future, and we already know what that future is: the plug-in hybrid electric car.”

The Chevy Volt, for example? It has huge remaining technological hurdles, gets 40 miles on a charge and will sell for about $40,000, necessitating a $7,500 outright government subsidy. Who but the rich and politically correct will choose that over a $12,000 gas-powered Hyundai? The new Detroit churning out Schumer-mobiles will make the steel mills of the Soviet Union look the model of efficiency.

Taken from: www.thinkingmanagers.com/business-management/managing-mistakes

How, why and by how much should people be incentivised? Are incentives and motivation identical partners? Why do gross errors occur, and how do you guard against them? And how exactly do you use error as a springboard for excellence?

The supposition is that high brainpower is a protection against low stupidity. In harsh fact, the brighter they are, the further they fall. Very clever people are all too often very arrogant – and arrogance is one of the last attributes that people of power can afford to let rip. Yet many, if not most, do precisely that.

The reality is that the quest for personal reward diverts managers from their allegedly prime job – managing the organisation to achieve optimum corporate results.

You can’t exactly blame the beneficiaries. As I’ve often stressed, give a man a blank cheque and carte blanche to fill in the figures to his pleasure, and he’s not going to be overcome by modesty. Greed is the word. The evidence indicates overwhelmingly that these sums, however gigantic, have no impact on the quality of management. They have a most potent effect on motivation, true. But that can work against the supposed effect of incentives to stimulate collective performance. Motivation to enhance personal gains, on the other hand, has only that enhancement in its sights.

The most distressing aspect of incentives which have no true incentive element is not that they demoralise those who don’t share the gravy (which is a major adverse influence), but that the engine seems to surge on regardless of all criticism.

Negative incentives are at least as important as the positive variety. Yet there is nothing secret about what causes poor motivation, or about whether it is occurring. The grumbling and unresponsiveness are deafening, if you care to listen. And there are plenty of highly trained consultants who can tell you what’s going wrong and why – but all their help is no use to people who won’t face hard realities.

Gross errors occur because of denial. It follows that the best protection against error is denying the deniers. Often the latter are simply peddling lies. The Wall Street masterminds, when forced to confess their subprime losses, mostly began with much lower numbers than those that are now apparent (and very possibly still growing). The denials served no purpose save to put off the evil day.

That day arrives all the same – and the mark of the Supermanager is that error is not only admitted, but is tackled with the same energy as success.

Persisting in serious error perpetuates sin and shuns opportunity. Positives can be born even from negatives -and such birth is the most powerful incentive and motivational force of all.

This is an extract from the December 2007 edition of Robert Heller and Edward de Bono’s monhtly Letter to Thinking Managers. Read the full article with a two-month free trial subscription.

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The Bill & Melinda Gates Foundation will spend less than it previously planned on grants next year, a sign that even the biggest players in philanthropy aren’t immune to the turmoil hitting financial markets.

Officials at the Seattle-based foundation said they will expand the charity’s payout of grants in 2009 by 10%, which is less than they originally planned. The officials didn’t provide the original growth plan nor give a total amount of grants the foundation expects to make next year.

The Gates Foundation’s decision was described in a letter on its Web site by Jeff Raikes, its chief executive officer. “The financial crisis is affecting everyone, from our foundation to our partners,” he wrote.

The former Microsoft Corp. executive, who moved to the foundation in September, wrote that he has asked the foundation’s employees to reduce expenses. “We are closely scrutinizing our budget,” he wrote.

The payout refers to the money that the foundation plans to actually spend next year, which includes grants and administrative costs. It doesn’t include the value of all grants the foundation will decide to make next year, many of which will be paid out over the course of several years.

As of Oct. 1, the Gates Foundation had a $35.1 billion endowment. U.S. tax law requires a private foundation each year to pay out at least 5% of the average market value of its total assets. The Gates Foundation’s payout has always exceeded that minimum, and recently has been around $3 billion a year.

In addition, the foundation must distribute all of an annual gift from billionaire Warren Buffett, who gives the Gates Foundation an installment each year from 10 million shares in Berkshire Hathaway Inc. that he pledged to the foundation in 2006. The foundation received an installment of $1.8 billion from that gift in July.

How the Gates Foundation responds to the economic crisis will be closely watched because of the large number of nonprofits it funds and the vast number of projects it touches world-wide. The foundation is one of the largest financial backers of efforts to combat AIDS and is a major donor to educational projects in the U.S. and to areas such as financial services in developing countries.

The Gates Foundation has predicted a steep increase in its grant-making following the 2006 gift from Mr. Buffett.

Write to Robert A. Guth at rob.guth@wsj.com

if brains are changeable and new routes for information can be created if the old ones are damaged, what does that mean?

It means that how your brain is today, how you think, what you believe yourself to be, in fact, what you think you were born with or without is all changeable with a focused plan and some discipline.

It means that what we think we are, how we think, can all be changed to what we want to be, how we want to think. We can consciously redesign ourselves.

Science has not found the math gene and I am sure Warren Buffet was not born with the Billionaire gene, these traits are all made, sometimes intentionally, sometimes not from environment and hard work.

Buffet’s father was a stock broker, he grew up around investing, and if you had started learning how to invest at the age of say seven, at twenty years of age you would be an expert (remembering the ten year rule). The other twenty year old’s around you who had not spent thirteen years studying it, would not be as good, and in fact considering today’s educational environment, they would know nothing, and they would consider that person a genius. And they would believe, as would the others around them, and resources would go to them, people would reinforce their belief in them, and soon, you have a Warren Buffett.

This means if you are bad at math, you didn’t miss the math gene, because there isn’t one. It means you need more practice.

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Love him or hate him, Bill Gates has single-handedly shaped the technological future of the twenty-first century. Created through the independent research of bestselling author Janet Lowe, Bill Gates Speaks documents the life and ambitions of one of the world’s most unique business and cultural leaders. The only book to compile Gates’ actual words-culled from articles, newscasts, and interviews-this profile reveals what Gates has to say on everything from financing a start-up to running a conglomerate, developing technology, to raising a family.

Love him or hate him, no matter how you feel about Bill Gates, you’ve got to respect him. As the richest man in the world and leader of the most successful company of our day, Gates has achieved a level of success that even the Almighty might be jealous of. In Bill Gates Speaks, Janet Lowe captures much of the Gates legend by weaving together stories and quotes attributed to Gates in speeches, newspapers, and interviews in a short and easy-to-read volume. The book covers everything from Gates’s time at Harvard to the construction of his “home” on the shores of Lake Washington near Seattle. The result is a well-rounded look at the man who has helped to shape our present more than any other individual alive today. –Harry C. Edwards

Other Products of Interest

Why is debt supposed to be good?

I had an accounts program for my business once which would warn me, whenever I did a “health check” on the business, that my level of debt in comparison to capital was “below an acceptable ratio”.

I did not take any action at that time, but have since noticed that the software company is now out of business.

Debt is not necessarily bad, but there does seem to have been an assumption leading up to the present crisis that companies should have debt to optimise their profits.

Now many of those businesses which had followed that trend are scurrying to replace debt with capital. I had four mailings from companies last week suggesting how I could benefit from buying additional shares in various lots from $500 to $10,000. They seem to have discovered that it takes only 100 small shareholders with $10,000 each to give them a million, 10,000 to give them a billion.

One even suggested that I might like to reinvest dividends in new shares — something I used to do but which most companies had stopped offering, presumably feeling that all those little transactions were not worth bothering with when they could go out to world investment banks and funds to borrow.

I have to disappoint them. I started slowly converting from shares to cash around two years ago and am not planning to go back just yet. However, I am still reinvesting dividends with those companies where I have kept shares following the basic principle that Warren Buffett espoused of buying shares only if you’d want to buy the company if only you had enough money.

But what of the smaller business? Basic principles remain as they always have. If you can buy something and then sell it for more and cover the total of your costs, including your own living costs, then you have a good business.

Whether it is a market stall, an agency, a magazine, a newspaper or whatever, then a good business will survive. Some may have to adapt, but, for example, I continue to puzzle over why people will spend hundreds of dollars on a coffee maker for their own kitchen when for that they can buy hundreds of expertly made espressos and cappuccinos from friendly locals in their own high street. When families do not have the funds or security to go on an overseas holiday, they may well spend more on a coffee and cake and the occasional meal at a local bistro.

And a business which starts now, offering goods and services which people want, will be ready to show its expertise when the good times return. That is, provided the business does not borrow beyond its means. Debt is for use when money is needed short term, such as for a new commercial coffee machine which will immediately boost daily turnover, or for other equipment or even premises which will continue to have a value greater than the amount borrowed.

Just as a home mortgage remains a good debt provided you can meet the repayments and know that at worst you can sell up and have enough for the rental deposit on an alternative place to live, then debt is good for business if it is kept within similar bounds and you still make a profit after paying the interest charges.

I mention in one of my books the colleague who sold his car replacing it with a new one on lease in order to get cash back to buy a piece of equipment. And that was someone who had worked in the finance and banking industry… who obviously did not know the difference between good and bad debt.

Do it the smart way: Compare a stock’s price with its ‘value’.

How is price different from value?

While there is no guarantee that the price will not go below Rs 80, the probability is low.

This principle is called the ‘margin of safety’ and finds it roots in the teachings of legendary investors — Warren Buffet and Benjamin Graham.

If you are willing to walk that extra mile, then pay heed to these valuation methods that Warren Buffet swears by:

Thumb rule: My preference to pay not more than two-thirds of such value for a stock.

Now let us know how  the PE ratio helps to determine true value

Let’s assume you buy a share at Rs 550 whose EPS is Rs 50. In one year, you earn Rs 50 on an investment of Rs 550, that is, a return of about 9 per cent.

You can earn 8-9 per cent risk-free returns on bank deposits as well. So, the margin of safety in this case is practically nil.

To reduce the risk, we must have a higher gap.

Thumb rule: Warren Buffett recommends this gap to be at least 1.25-1.5 per cent.

Last word: During a bull run, investors pay a high price for any and every share. So, it becomes difficult to find stocks with a high margin of safety.

It is in bear markets, as the one we are in now, that there are opportunities to spot the gems.

Disclaimer: While we have made efforts to ensure the accuracy of our content (consisting of articles and information), neither this blog nor the author shall be held responsible for any losses/ incidents suffered by people accessing, using or is supplied with the content.

Perspectives on Capital Markets

Stochastics are of course not a new indicator in technical analysis. However, it is an indicator that ive been known to loath in the past. I used to say everything stochastics told me i could find in price action alone without another indicator cluttering up my chart. That it only worked for trending markets.

But, it was simply because i had the wrong application and interpretation of it. Reminds me of people who buy on a 33 DMA (or pick your random number)  because theyve found it to work on one specific stock in the past 90 days. I should have remembered that Ignorance breeds frustration.

Thankfully, i listened to a lecture by George Lane, the inventor of this indicator. I now am going to be adding it into my growing list of General Conditions indicators. In fact, I believe it is going to revolutionize the trade. After reading and listening to Warren Buffett so much ive learned to often listen for codes from older legendary traders. So when George hesitated when talking about using stochastics with Elliott Wave and finished with, “and dont be afraid to use numbers like 21 and 34″ I instantly got the implication. Use them!

The parameters for this are full stochastics (34,5)  on a weekly chart for $SPX. What i found with this indicator is that when we marry it with our MA indicators;

George also talked about looking for things in 2’s and 3’s (Fibonacci numbers). Look for divergences that happen two to three times. This helps anticipate bull and bear turns and looking at recent history i can say it is actually faster than the moving average crosses.

And perhaps what is most important to me,

Im in no way implying I should stop looking for more indicators, but we now have a very nice collection of checks and balances to help identify and anticipate market turns.

Monthly charts include 5 EMA, 12 MA, 24 MA, 144 MA, 260 MA, 12 and 55 ROC, %R 25, CMO 16

Weekly Charts have 13 EMA, 62 MA, 110 MA, MACD, 39 ROC, 4 week (or 20 day) ATR, and now 34,5 Stochastics.

Found this on the web.  It is notes from a Warren Buffet interview.  Great stuff!  As my regular readers know, I am a big fan of Warren Buffett.  He has proven his abilities over the last 50 years, so it probably pays to listen to him.

http://all4one4all.wordpress.com/2008/12/06/listening-to-warren-buffett/

Enjoy

Guess What?

The scaredy cats who keep spreading this crap are no longer your competition. These are the same people who say “I wish I would have jumped on Microsoft stock back when it was low”

They will keep missing the boat because they dont know what they are talking about!!

If you want to be a player in real estate get out there and start making it happen. Soak in as many of these HUGE deals as you can. When everything “turns back around” you will be sitting pretty!

Take action and make it happen for yourself!

You have nothing to lose and CA$H to gain!

Thanks

Cash hungry consumers with big holiday bills may find their problems solved by selling their unwanted gold to GoldFellow™.

The company is one of the highest paying gold buyers in the industry and pays customers their cash for gold within 24 hours of their acceptance of the gold price GoldFellow™ quotes them. And more than 99 percent of those who send their unwanted gold jewelry to GoldFellow™ via its free and insured FedEx® shipping system accept the company’s offer.

“The owners of GoldFellow™ are the most honest and ethical dealers I have had the pleasure to do business with,” says Carla Stern who first tried to sell her unwanted jewelry to two other Internet gold buyers. “GoldFellow™ paid me $1,800 for the same package I had sent to a highly advertised on TV and Internet dealer, who tried to pay me only $310.”

GoldFellow™ also is one of the most trusted names in the gold buying industry. There are no complaints against it on the Better Business Bureau’s website, www.BBB.org, while other <a href=”https://www.goldfellow.com/buyers-of-gold.aspx”>gold buyers</a> have had from 96 to 217 complaints in the past 36 months. The complaints against competitors range from pricing discrepancies to customer service issues and claims for lost shipments.

As described on GoldFellow’s™ website, www.goldfellow.com, the company also differs from other gold buyers in that it provides every customer with free FedEx® shipping and insures each package for up to $1,000. Its complete online payment schedule is updated daily and, unlike many competitors, GoldFellow™ customers must see and accept their offers before they are paid.

“GoldFellow.com was created to provide consumers a safe, competitive and easy method to sell unwanted gold, sterling silver and platinum,” said Michael Gusky, founder of GoldFellow™ and a 30-year gold jewelry industry veteran.

Gusky, who sold his gold jewelry manufacturing company to billionaire Warren Buffett’s Berkshire-Hathaway in 2007, strongly recommends consumers reading a company’s website and comparing policies and gold pricing before choosing a gold buyer.

“Ask how much you will be paid for one pennyweight of 14 karat gold jewelry and compare gold prices. Ask if you will be notified of your value before you’re paid,” he suggests. “And for goodness sake, never agree to drop your valuables in a regular mailbox. There’s no record or proof that it has been mailed - and it’s not insured although many of our competitors would like you to believe otherwise.”

GoldFellow.com is committed to providing consumers the safe and easy way to get the most money for their unwanted gold, silver and platinum. And GoldFellow™ delivers cash for gold payments for gold and other precious metals fast – within 24 hours of customer quote acceptance.

It’s been a long time I since my last post on entrepreneurship and my entrepreneurial endeavors. A lot has happened since ; I sold my businesses, met new people, realigned my goals and moved to the Capital. I have done all of this to pursue my “new” passion in the world of Finance and Investments. To start a new journey. To become a  financial entrepreneur.

I first stumbled upon this passion last year.

At first, I loathed the people in the finance world. Because, I always thought of them as greedy people trying to make money by pushing papers and adding no value whatsoever to the world they live in. These people sure did make a lot of money. But that fact never enticed me.

I had paradigm shift when my mentor talked about his hero; Warren Buffett. I have seen this guy regularly on Forbes’ list of the worlds richest people. He has been in the top ten ever since I started reading the magazine. I usually research everyone in the top one hundred, but I always skip people who are in the list through investments (and inheritance). I just thought they didn’t deserve it. But boy, was I wrong.

Being very curious about the person who inspired my mentor, I started digging into books and articles about Warren Buffett. I read probably 4 books and dozens of articles on him but was not yet convinced. That is, until I read “Buffett: The Making of an American Capitalist” by Roger Lowenstein. After that book, my world view changed. I saw a whole new light.

From then on, I switched gears to become a financial entrepreneur. I learned (and am still learning) everything that I can. I read every book about investments that I could find. I took the Investment Manager’s exam to test my knowledge, and passed. Now I’m taking on the Holy Grail of exams in the finance world; The CFA program. I’m taking all of these measures to enhance my understanding about the industry and as preparation to starting my own investment firm. So far, this “venture”  has been the most researched, tedious and tiresome venture in my business life. And I haven’t even gone pass the preparation phase.

Besides preparing by acquiring the theories and technical know how, the next thing to do is to gain experience. A lot of people suggested working for a financial corporation. Being the stubborn person that I am, I relented. I once promised myself that there is no way I would work at company thats not mine. But I realized that I have to do whatever it is necessary to achieve my goals.

I got the same assurance and support from Muhammad Maulana of Saratoga Capital. He added: “As long as you still have the entrepreneurial spirit, it doesn’t matter what you do or where you work. Just don’t let that spirit die”. (Thanks and I will never let that happen, Mas). My awesome cousin, Harun Temenggung, told me something simple, but relevant: “Keep your eyes on the prize”. (He is the master of words in our family, btw)

I once wrote a post about not having to become an employee first  to start a new business. I also argued that you should only do it if you know what kind of industry you want to jump into, and find experience in a relevant position. But, there is one thing that I forgot to write in that post. It’s an advice from Warren Buffett that I saw on youtube. He said: “If you have to work, you might as well work for your hero” (or something like that).

This makes perfect sense in a lot of ways, especially when your hero is a veteran in the industry you want to jump into. It won’t be easy. Even Mr. Buffett had to wait a few years before he got the chance to work for Benjamin Graham. But he never gave up. Neither will I. Neither should you.

The start of a new journey

So, here I am. Having started up and folded several businesses, Starting yet another new journey. A great friend of mine, Saptuari Sugiharto (owner of the Kedai Digital Franchise), said that a person’s failure is limited. The only thing is, we don’t know how much failures we will have to endure before striking gold. The catch is to rise up after every failure, in hopes that the next venture will be a hit.

So, here I am, letting go of my previous businesses. Cutting my losses (and some profits). Focusing my life and efforts on a single goal.

So, here I am, at the start of a new journey.

The months to come will be interesting for sure.

Well, quickly getting the ball rolling, I want to make references to the big guns, the Well-Connected and the Influentials in the society. We are talking about people like Warren Buffett, known as the Oracle of Omaha, the #1 investor (known for his conservative style of investing) and the Owner of Berkshire Hathaway, who has bought more than about half a dozen Network Marketing companies. Of course, we cannot forget to mention New York Bestsellers - #1 Business Author and Billionaire, Donald J. Trump and #1 Personal Finance Author and Millionaire, Robert T. Kiyosaki - who co-wrote the great book that is helping to impact many lives, Why We Want You To Be Rich, and recommended Network Marketing as one of the great vessels to help the society in moving from the left side of the quadrant, from being in the “Employed” or “Self-Employed” side of the quadrant to being a Business Owner where you begin to actually direct the affairs of money in your life.

So, the raging question is: Why a home based Business Opportunity, Network Marketing, MLM or a Direct Sales Business? It’s the way by which companies now are reaching out to the masses instead of the traditional distribution model. What do I mean by that? Think about the way many particular products are usually distributed… There’s usually manufacturing by the producer, then the products are loaded on the truck and further transported out the stores out there where the products get sold. Now consider all the energy, time, efforts and resources that have gone out in just finally presenting these products to the line of sight of the consumers. That is why these home based business opportunities have stepped in… to be able to take care of all the hassles that have gone on to through the traditional distribution system. This is to say that a Home Based Business Opportunity, Network Marketing, Direct Sales or MLM are the medium by which these big companies reduce time, money and efforts for the products to get to the consumer.

This is to say the Distribution Model with Network Marketing/Direct Sales companies are clean and very efficient. They are a unique and efficient model that properly allows the money that would have otherwise gone to the payment of labor of the loading of the products on the truck, the transportation and shipping costs, the construction of many storefronts all over the country or the world and then of course, not forgetting the promoting and advertising that would have gone into place by the producer of this product.

Do you understand that those people who actually achieve true financial freedom are those who have involved in what we call the “Profit System” rather than the “Wage System”. To quote America’s Foremost Business Philosopher, Jim Rohn, in one of his classics, The Challenge To Succeed, “Profits Are Better Than Wages. Wages Make You A Living But Profits Make You A Fortune”. In other words for you to just make a living, you will be better off living in the wage system, i.e living from paycheck to paycheck but if you actually want to live and amass great fortune, it is time to move, make a shift of mentality and positioning into the Profit System because that is the only place where you’re going to achieve true Financial Freedom. And This is precisely why the Network Marketing System, the Home Based Business Opportunity, MLM or Direct Sales Business exist; the opportunity to grant the average Joe, who is willing to work hard, to amass great fortune for both himself and his family.

With an estimated fortune of $62 billion, Warren Buffett is the richest man in the entire world. In 1962, when he began buying stock in Berkshire Hathaway, a share cost $7.50. Today, Warren Buffett, 78, is Berkshire’s chairman and CEO, and one share of the company’s class A stock worth close to $119,000. He credits his astonishing success to several key strategies, which he has shared with writer Alice Schroeder. She spend hundreds of hours interviewing the Sage of Omaha for the new authorized biography The Snowball. Here are some of Warren Buffett’s money-making secrets — and how they could work for you.

1. Reinvest Your Profits: When you first make money, you may be tempted to spend it. Don’t. Instead, reinvest the profits. Warren Buffett learned this early on. In high school, he and a pal bought a pinball machine to pun in a barbershop. With the money they earned, they bought more machines until they had eight in different shops. When the friends sold the venture, Warren Buffett used the proceeds to buy stocks and to start another small business. By age 26, he’d amassed $174,000 — or $1.4 million in today’s money. Even a small sum can turn into great wealth.

2. Be Willing To Be Different: Don’t base your decisions upon what everyone is saying or doing. When Warren Buffett began managing money in 1956 with $100,000 cobbled together from a handful of investors, he was dubbed an oddball. He worked in Omaha, not Wall Street, and he refused to tell his parents where he was putting their money. People predicted that he’d fail, but when he closed his partnership 14 years later, it was worth more than $100 million. Instead of following the crowd, he looked for undervalued investments and ended up vastly beating the market average every single year. To Warren Buffett, the average is just that — what everybody else is doing. to be above average, you need to measure yourself by what he calls the Inner Scorecard, judging yourself by your own standards and not the world’s.

3. Never Suck Your Thumb: Gather in advance any information you need to make a decision, and ask a friend or relative to make sure that you stick to a deadline. Warren Buffett prides himself on swiftly making up his mind and acting on it. He calls any unnecessary sitting and thinking “thumb sucking.” When people offer him a business or an investment, he says, “I won’t talk unless they bring me a price.” He gives them an answer on the spot.

4. Spell Out The Deal Before You Start: Your bargaining leverage is always greatest before you begin a job — that’s when you have something to offer that the other party wants. Warren Buffett learned this lesson the hard way as a kid, when his grandfather Ernest hired him and a friend to dig out the family grocery store after a blizzard. The boys spent five hours shoveling until they could barely straighten their frozen hands. Afterward, his grandfather gave the pair less than 90 cents to split. Warren Buffett was horrified that he performed such backbreaking work only to earn pennies an hour. Always nail down the specifics of a deal in advance — even with your friends and relatives.

5. Watch Small Expenses: Warren Buffett invests in businesses run by managers who obsess over the tiniest costs. He one acquired a company whose owner counted the sheets in rolls of 500-sheet toilet paper to see if he was being cheated (he was). He also admired a friend who painted only on the side of his office building that faced the road. Exercising vigilance over every expense can make your profits — and your paycheck — go much further.

6. Limit What You Borrow: Living on credit cards and loans won’t make you rich. Warren Buffett has never borrowed a significant amount — not to invest, not for a mortgage. He has gotten many heart-rendering letters from people who thought their borrowing was manageable but became overwhelmed by debt. His advice: Negotiate with creditors to pay what you can. Then, when you’re debt-free, work on saving some money that you can use to invest.

7. Be Persistent: With tenacity and ingenuity, you can win against a more established competitor. Warren Buffett acquired the Nebraska Furniture Mart in 1983 because he liked the way its founder, Rose Blumkin, did business. A Russian immigrant, she built the mart from a pawnshop into the largest furniture store in North America. Her strategy was to undersell the big shots, and she was a merciless negotiator. To Warren Buffett, Rose embodied the unwavering courage that makes a winner out of an underdog.

8. Know When To Quit: Once, when Warren Buffett was a teen, he went to the racetrack. He bet on a race and lost. To recoup his funds, he bet on another race. He lost again, leaving him with close to nothing. He felt sick — he had squandered nearly a week’s earnings. Warren Buffett never repeated that mistake. Know when to walk away from a loss, and don’t let anxiety fool you into trying again.

9. Assess The Risk: In 1995, the employer of Warren Buffett’s son, Howie, was accused by the FBI of price-fixing. Warren Buffett advised Howie to imagine the worst-and-bast-case scenarios if he stayed with the company. His son quickly realized that the risks of staying far outweighed any potential gains, and he quit the next day. Asking yourself “and then what?” can help you see all of the possible consequences when you’re struggling to make a decision — and can guide you to the smartest choice.

id="blog_description">The gateway to your MBA dreams!

Georgetown’s MBA program helped me achieve my goals, but I have seen many classmates return to their pre-MBA employers because Georgetown did not help them advance in their careers. — Consulting

Georgetown, regrettably, seems to be a “me-too” b-school. The level of education and instruction was below what should be expected from a school of Georgetown’s stature. Some of the core course professors had no prior teaching experience. — Finance

Ultimately, I landed a great position with a top management consulting firm, which is what I came back to school for. — Consulting

The biggest complaint that many students have is the lack of strategic vision from the school. There have been three or four deans in a short period of time, and the school has not identified its core capability or its position among its peers. — Finance

The courses challenged me, but not so much that I felt I could not complete the coursework. The class size was small enough that I knew everyone, but big enough that there were diverse experiences to learn from. — Marketing

The quality of teaching could be better at a top 15 school. Also, recruiting is somewhat challenging because recruiter diversity is limited. — Finance

While I am happy with my experience, Georgetown did not draw the marketing/brand opportunities that many other programs did. As a result, 85% of my internship search and 100% of my full-time job search was focused on non-Georgetown Career Management opportunities. — Marketing

Georgetown is a smaller, intimate program that doesn’t have the attitude of larger MBA programs. — Marketing

As Georgetown climbs in the rankings, more high-quality companies are recruiting on-campus. For example, Goldman Sachs, Nike, and Yahoo all came here for the first time this year. — Finance

Georgetown has a great international focus and is well-positioned in Finance, Marketing, and Consulting. Students have been extremely successful in landing internships and full-time jobs with companies that do not recruit on campus, largely because of the school’s reputation. — Investment Banking

The Washington, D.C. experience was great. I lived in Georgetown, next door to George Stepanopolous and around the corner from Bob Woodward, and I interned at a real-estate fund across from the White House. It was like living on a movie set. — Consulting

The workload can be daunting because of the quarter system, and finals can clash with crucial recruiting times. — Venture Capital/Private Equity

Being in D.C., we are close to a number of other key cities (i.e., NYC) and get great access to some of the best minds in the world. We have had on-campus events with people like Christopher Cox, Warren Buffett, Rupert Murdock, Jim Cramer, and Bill Clinton, to name a few. — Investment Banking

The Georgetown MBA program is relatively young (~25 years old), and it operates in the shadow of the School of Foreign Service and the Law School. But the quality of education I received here was fantastic. — Finance

D.C. isn’t for some people, and highly competitive people aren’t really appreciated in our culture. We like smart, capable people, but they better be nice and fun, too. — Marketing

For more information and FREE online practice tests visit www.tenaday.in

Source: http://www.businessweek.com/bschools/rankings/full_time_mba_profiles/georgetown.html

Apparently there’s not enough news to keep the press interested in Obama’s transition efforts. Coincidentally, Frank Rich and WaPo reporter Alec MacGillis wrote Sunday pieces seeking to revive a failed attack line from the primary season and apply to the nascent Obama transition team.  The articles’ narratives are so similar, it’s almost as if they collaborated to tag-team like flamboyant professional wrestlers against Obama, facts to contrary be damned.  Both contort themselves mightily to argue the Obama administration is inevitably doomed because it’s composed of academic elitists.

Let’s start with MacGillis’s front page article.  She suggests that we should be concerned that Obama has chosen gifted, talented and well experienced people for his administration.  She implies that Obama’s team is overloaded with “elite” education pedigrees.  Before getting into the merits of whether this is a bad thing per se, let’s check the facts from the WaPo’s own chart accompanying the article.  It turns out a minority of Obama’s cabinet picks to date are graduates of elite colleges (and there’s a fair argument to exclude the OMB director as a non-cabinet position):

The same is true with Obama’s White House staff selected to date: only a minority hail from “elite” colleges:

When it does run into cases that seemingly conflict with the meme, such as the fact that George W. Bush graduated from Andover, Yale and Harvard, it discounts the conflict by suggesting Bush’s elite education doesn’t count because he didn’t emphasize it. Really? I recall quite a bit of bragging about how Bush’s Harvard MBA would make him a modern “CEO”-like president.  This point also falsely suggests that Obama emphasized his Ivy League education. I suspect if you conducted a national poll, less than 20% of Americans would correctly guess Obama attended Columbia for his last two years of college. Did Hillary emphasize her Wellesley degree as she belted down shots with her beer in Ohio and Pennsylvania? I must have missed that. Yet her education counts for purposes of this meme, and George Bush’s does not.

And what about the merits of the meme - that somehow the gifted and talented are ill-equipped to serve the country? What is it about well educated folks that should invite our doubts about their abilities before they’ve even had their first day on the job? Is there any scientific analysis suggesting that mediocre intellects serve the people better? If there is, we should quickly shut down elite universities as a patriotic imperative.

Hypocritically, the first person MacGillis cites to offer criticism of Obama’s team is a “libertarian” professor at the University of Chicago, Richard Epstein. Why is he qualified to forecast that Obama’s team will be “too clever by half” and always “choose complexity” when an easier solution will do? Does Professor Epstein’s credibility derive from (drumroll please) his association with an elite university? Unless he has a proven gift of clairvoyance, I fail to see how his negative speculation is any more reliable than the carping of Bill O’Reilly or Rush Limbaugh.

Frankly, the article is a lazy effort to resuscitate an attack that never stuck when Hillary and McCain tried it.  It relies on selective examples, and ignores the mitigating factor that many of the people cited with prestigious degrees were hardly the beneficiaries of legacy aristocracy.  Many are women, minorities or first generation Americans.  Eric Holder, for example, came from a very modest upbringing against difficult odds before ultimately attending Columbia for college and law school.  Susan Rice is an African American who became a Rhodes Scholar (a nice twist of fate given the scholarship’s ties to the infamous race supremacist and British imperialist, Cecil Rhodes).  Indeed, many on Obama’s team have had more in common with Obama’s own improbable path to an elite education than the likes of George Bush.  And the majority have “non-elite” educational pedigrees, such as Obama’s first and most important pick, Vice-President Joe Biden, and the man who will be the face of the administration to the press, Robert Gibbs.

As a big fan of Frank Rich, his column is an even bigger disappointment.  Rich ties his thesis to the fact that in a later edition, David Halberstam clarified that the title of his famous book about President Kennedy’s team, “The Best and the Brightest,” was intended to be a jab, not a compliment.  Rich argues that this same team “ultimately” got America mired in Vietnam, and therefore obviously lacked wisdom.  This is a bit of a cheap shot, as Rich is blurring the performance of JFK’s national security team with their conduct after they stayed on under President Johnson, when America’s effort in Vietnam was escalated enormously.  A cabinet, of course, follows the direction of the president.  Without making any apologies for McNamara and Bundy, President Johnson infamously micromanaged the escalation and strategy of the Vietnam War.

After raising the example of JFK’s over-achieving national security team, Rich takes an odd turn and lets Obama’s national security team off the hook for the elitist charge.  Instead, he focuses his ire on the Obama economic team.  But in doing so, he plays a confusing game of guilt by association.  First, he raises the specter of Robert Rubin as his bogeyman.  To Rich, Citibank’s recent failure is evidence that Rubin is an infectious disease of hubris and myopia.  Never mind that Citibank was quite successful for nearly a decade while Rubin was involved with it (although never as its CEO), and is hardly alone now in suffering from the financial crisis. And never mind that the U.S. economy performed extremely well while Rubin guided its economic policy.

But hold on, what’s all this about Robert Rubin?  Obama didn’t pick Robert Rubin to serve in his cabinet, so how does Rich use Rubin to make his case?  First, horror of horrors, Rubin attended an early transition meeting of economic advisers (a meeting which included a wide range of experts, including former Republican economic officials and investor great, Warren Buffett).  Apparently to Rich, Citibank’s recent troubles are grounds to banish Rubin forever.  That seems a bit much, but it’s not too rich for Rich.

Second, Rich explains that Timothy Geithner, Obama’s pick for Treasury Secretary, was a “Rubin protege” because he served in the Treasury Dept. while Rubin was Treasury Secretary during the booming Clinton years.  Again, what is it about Rubin’s government record that Rich finds so disturbing that should make this association both relevant and disturbing? Rich doesn’t say.

He adds that Larry Summers also served with Rubin and therefore also suffers from the same guilt by association as Geithner (in addition to being generally boorish).  He then tries to complete his Halberstam thesis by arguing Obama’s economic team, like JFK’s national security team, has never been “elected sheriff” and lacks practical wisdom.  Well that’s a bit unfair — Rich conveniently took Obama’s national security team off the table, which actually includes elected officials:  the very popular, twice-elected governor of Arizona, Janet Napolitano, and the very popular, twice-elected U.S. Senator Hillary Clinton.  True, Obama’s economic team doesn’t include elected officials — but is this horrible recession the time for a politician in a key economic position or is it time for someone with serious economic experience?  The answer is clearly the latter.  And like most critics of the choice of Timothy Geithner as Treasury Secretary, Rich fails to offer the name of someone else who would be a wiser choice.

I guess Rich and MacGillis don’t know enough sheriffs with degrees from Fresno State.

1. A frugal billionaire Buffett believes in simplicity. He advises investors to take easy decisions. Never buy when you are doubtful. Invest only if you understand the businesses well.

2. Focus on not losing money rather than making it. Don’t own any stock for 10 minutes that you wouldn’t own for 10 years.

3. A proponent of value investing, he believes that one must take decisions on his own. He doesn’t believe in listening to analysts or brokers. The best investing decisions come from oneself.

“It is not necessary to do extraordinary things to get extraordinary results.”

4. Buffett advises to invest in ‘old economy’ businesses, companies, which have been around for fifty years and will continue to have a long innings.

5. We have often heard of people suffering heart attacks when markets crash. Well, Buffett advocates a sound temperament for stock market success.

7. Buffett always looks at businesses he can understand, look at the profits in the past, long-term potential of the company, good top level management of the company and companies that have a good value proposition. The strategy is to think about the business in the long term.

“You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.”

8. Invest in businesses with great management. Always keep a track of the management of the company. The top decision makers have a lot to do with the company’s performance.

9. One of Buffet’s biggest strengths is independent thinking. Many people go by what the experts says or what others do but belief in one’s own judgement is the key to stock market success.

10. Patience pays, says Buffet. He says one must not worry too much about the price of the stocks. What’s more important is the nature of business of the company, earnings capability and its future potential.

11. Don’t target just stocks, look at businesses. How a company performs is key to its stock market performance. You must know the track record of a company before you invest in it.

“Price is what you pay. Value is what you get.”

12. Prices keep changing. Don’t get worried by the ups and downs. Investing is all about creating wealth. It’s important to understand the value of a stock than its price.

13. He believes that franchisee businesses are good opportunities to invest in. Avoid hi-tech, complex businesses. Look for businesses that are set to diversify and grow.

15. He advises to avoid diversification. Invest in companies with sound business models. Choose a few good ones and stay invested, it will give you the benefits.

“I don’t look to jump over 7-foot bars; I look around for 1-foot bars that I can step over.”

16. Doing nothing pays at times! One must not jump at price fluctuations and take impulsive decisions.

17. Don’t get carried away by market forecasts. Ignore market swings and remain an investor with a good business sense.

18. Buffett advises to be fearful when others are greedy and greedy when others are fearful. Buy when people are selling and sell when people are buying.

19. Make a list of companies, sectors that you find safe to invest in and try to stick to the list.

20. A sound business, strong management, good fundamental and low stock price should be a must-buy.

“Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.”

21. Try to ignore stock charts, says Buffett. They may not give the right indicators. A stock which may have done well earlier may not do so in future.

22. Buffet spends a lot of time on reading and more importantly thinking. Reading helps investors, so spend a lot of time reading about the stocks, companies and markets. A good investor must have a good knowledge base.

23. A good investor also needs to be efficient. Investors may have great capabilities but many do not make use of it. One needs to hone skills to meet the targets.

24. Good investors never rush to make money. They give time, thought and work on investment decisions. The mistakes that others make should be a lesson for you.

Time Magazine’s Top Ten Non-Fiction Books of 2008:

Comments anyone?

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La lista dei libri più venduti in U.S.A. Settimana dal 23 al 29 novembre.

FICTION

1. “Eclipse” Stephenie Meyer (Little Brown)

2. “Breaking Dawn” by Stephenie Meyer (Little Brown)

NONFICTION

2. “Last Lecture” by Randy Pausch, Jeffrey Zaslow (Hyperion)

4. “Dewey: The Small-Town Library Cat Who Touched the World” by Vicki Myron, Brett Witter (Grand Central)

7. “Barefoot Contessa Back to Basics” Ina Garten (Clarkson Potter Publishers)

8. “Hot, Flat, and Crowded” by Thomas Friedman (Farrar, Straus and Giroux)

So here we are, one month removed from one of the biggest events of our lifetimes and I must admit that I am still in awe of what happened. He won. He really won. It’s almost like I keep waiting for Ashton Kutcher to run out from behind a Chevy Aerostar to tell me that I’ve just been Punk’d. That could still happen before January 20, but for now let’s just focus on the accomplishment.

Running for president is the biggest job interview in the world. What’s crazy, though, is that the election season of the past two years played out like the public official version of “The Apprentice.” Think about it, we started off with two teams, and each team had its own name, color and mascot. The teams were then given instructions to compete in these challenges called “primaries” and based on their performance in those events, someone would be sent home.

Week after week, contestants were called into the boardroom and were sent packing until we were left with one person from each team to compete in the final challenge. To spice things up, the final challengers were allowed to bring back someone from earlier in the show to help them in the final task. Shockingly, one contestant temporarily forgot which show he was on and brought back a contestant from America’s Next Top Model instead.

Oh and remember when Donald Trump asked the first black winner, Randall Pinkett, seconds after he hired him, if he would also hire Rebecca? Does that remind you of the pressure being put on the Barack Obama to “hire” a certain female competitor as his running mate??? Talk about life imitating, uh, reality shows. Does NBC know something we don’t know? The similarities are kinda creepy

I really liked The Apprentice when it came out because I thought it was one of the smarter reality shows and it was fun to try to match wits with the contestants on the show. I know Randall Pinkett and as soon as I found out that he was on the show I knew that he would win because he is a brilliant thinker with great interpersonal skills; sound like anyone else you know? I also liked it because I learned things as I watched and I took notes. This “show” that was the presidential election was no different. I think we can learn a lot from the outcome of the election that can help us replicate that tremendous level of success.

Are you focused enough to sense an opportunity when it arises?

You must have the faith and foresight to do things differently in order to be successful.

You must understand what value you bring to the table and be able to communicate it clearly to anyone who will listen.

You must surround yourself with people that are smarter than you if you want to take your game to the next level.

Lots of people have great ideas, but very few people execute on them. Will you?

Rob Wilson is a financial advisor at a major national financial services company. Don’t worry, it’s one of the firms that hasn’t suffered a catastrophic bankruptcy in the last few months. He can be reached at bigchipsblog@gmail.com with your financial questions and comments.

There was one big reason Jeff pulled ahead of the pack: He always knew he’d be rich. The reality is that 80 percent of Americans worth at least $5 million grew up in middle-class or lesser households, just like Jeff.

Wanting to be wealthy is a crucial first step. Says Eker, “The biggest obstacle to wealth is fear. People are afraid to think big, but if you think small, you’ll only achieve small things.”

It all started for Jeff when he met a stockbroker at a Christmas party. “Talking to him, it felt like discovering fire,” he says. “I started reading books about investing during my breaks at the grocery store, and I began putting $25 a month in a mutual fund.” Next he taught a class at a local community college on investing. His students became his first clients, which led to his investment practice. “There were lots of struggles,” says Jeff, “but what got me through it was believing with all my heart that I would succeed.”

One of the biggest obstacles to making money is not understanding it: Thousands of us avoid investing because we just don’t get it. But to make money, you must be financially literate. “It bothered me that I didn’t understand this stuff,” says Steve, “so I read books and magazines about money management and investing, and I asked every financial whiz I knew to explain things to me.”

He and his wife started applying the lessons: They made a point to live below their means. They never bought on impulse, always negotiated better deals (on their cars, cable bills, furniture) and stayed in their home long after they could afford a more expensive one. They also put 20 percent of their annual salary into investments.

Within ten years, they were millionaires, and people were coming to Steve for advice. “Someone would say, ‘I need to refinance my house—what should I do?’ A lot of times, I wouldn’t know the answer, but I’d go find it and learn something in the process,” he says.

In 2003, Steve quit his job to become part owner of a company that holds personal finance seminars for employees of corporations like Wal-Mart. He also started going to real estate investment seminars, and it’s paid off: He now owns $30 million worth of investment properties, including apartment complexes, a shopping mall and a quarry.

“I was an engineer who never thought this life was possible, but all it truly takes is a little self-education,” says Steve. “You can do anything once you understand the basics.”

She stuck with it, even after her husband died three years later. “I live by the law of abundance, meaning that even when there are challenges in life, I look for the win-win,” she says.

The positive attitude worked: Jill’s backyard company, Tastefully Simple, is now a direct-sales business, with $120 million in sales last year. And Jill was named one of the top 25 female business owners in North America by Fast Company magazine.

There are endless ways to make extra money for investing—you just have to be willing to do the work. “Everyone has a marketable skill,” says Langemeier. “When I started out, I had a tutoring business, seeing clients in the morning before work and on my lunch break.”

A little moonlighting cash really can grow into a million. Twenty-five years ago, Rick Sikorski dreamed of owning a personal training business. “I rented a tiny studio where I charged $15 an hour,” he says. When money started trickling in, he squirreled it away instead of spending it, putting it all back into the business. Rick’s 400-square-foot studio is now Fitness Together, a franchise based in Highlands Ranch, Colorado, with more than 360 locations worldwide. And he’s worth over $40 million.

When extra money rolls in, it’s easy to think, Now I can buy that new TV. But if you want to get rich, you need to pay yourself first, by putting money where it will work hard for you—whether that’s in your retirement fund, a side business or investments like real estate.

At 29, Dave was broke, living in a small apartment near Boston and wondering what to do after ten years in a local rock band. “I looked around and thought, If I don’t do something, I’ll be stuck here forever.”

He started a landscape company, buying his equipment on credit. When business literally froze over that winter, a banker friend asked if he’d like to renovate a foreclosed home. “I’m a terrible carpenter, but I needed the money, so I went to some free seminars at Home Depot and figured it out as I went,” he says.

After a few more renovations, it occurred to him: Why not buy the homes and sell them for profit? He took a risk and bought his first property. Using the proceeds, he bought another, and another. Twelve years later, he owns apartment buildings, worth $143 million, in eight states.

It’s not a fluke: According to the 2007 Annual Survey of Affluence & Wealth in America, some of the richest people “spend their money with a middle-class mind-set.” They clip coupons, wait for sales and buy luxury items at a discount.

No kidding! Talk show host Tyra Banks calls herself the Queen of Cheap and keeps perfume samples from magazine ads in her purse for quick touch-ups.

Sara Blakely, founder of the $100 million shapewear company Spanx, gets her hair trimmed at Supercuts.

And Warren Buffett, the third richest person in the world, according to Forbes, lives in the same Omaha, Nebraska, home he bought four decades ago for $31,500.

source: http://www.rd.com/advice-and-know-how/secrets-of-successful-entrepreneurs/article50301-1.html

As long as I’m posting about the literary quality of a mid-century Supreme Court decision, I should probably add a timely political document released today about Illinois’ Governor Rod Blagojevich. The Governor was arrested today on several federal charges. You can read the whole complaint here (which you should), but know that it does not read like a typical complaint. Federal Rules of Civil Procedure 8(a)(2) requires requires a “short and plain statement” of the claim, but this thing reads like a rough screenplay. Here’s an example:

ROD BLAGOJEVICH said that the consultants (Advisor B and another consultant are believed to be on the call at that time) are telling him that he has to “suck it up” for two years and do nothing and give this “motherfucker [the President-elect] his senator. Fuck him. For nothing? Fuck him.” ROD BLAGOJEVICH states that he will put “[Senate Candidate 4]” in the Senate “before I just give fucking [Senate Candidate 1] a fucking Senate seat and I don’t get anything.” (Senate Candidate 4 is a Deputy Governor of the State of Illinois). ROD BLAGOJEVICH stated that he needs to find a way to take the “financial stress” off of his family and that his wife is as qualified or more qualified than another specifically named individual to sit on corporate boards. According to ROD BLAGOJEVICH, “the immediate challenge [is] how do we take some of the financial pressure off of our family.” Later in the phone call, ROD BLAGOJEVICH stated that absent getting something back, ROD BLAGOJEVICH will not pick Senate Candidate 1. HARRIS re-stated ROD BLAGOJEVICH’s thoughts that they should ask the President-elect for something for ROD BLAGOJEVICH’s financial security as well as maintain his political viability. HARRIS said they could work out a three-way deal with SEIU and the Presidentelect where SEIU could help the President-elect with ROD BLAGOJEVICH’s appointment of Senate Candidate 1 to the vacant Senate seat, ROD BLAGOJEVICH would obtain a position as the National Director of the Change to Win campaign, and SEIU would get something favorable from the President-elect in the future.

[...]

Later on November 10, 2008, ROD BLAGOJEVICH and Advisor A discussed the open Senate seat. Among other things, ROD BLAGOJEVICH raised the issue of whether the President-elect could help get ROD BLAGOJEVICH’s wife on “paid corporate boards right now.” Advisor A responded that he “think[s] they could” and that a “Presidentelect . . . can do almost anything he sets his mind to.” ROD BLAGOJEVICH states that he will appoint “[Senate Candidate 1] . . . but if they feel like they can do this and not fucking give me anything . . . then I’ll fucking go [Senate Candidate 5].” (Senate Candidate 5 is publicly reported to be interested in the open Senate seat). ROD BLAGOJEVICH stated that if his wife could get on some corporate boards and “picks up another 150 grand a year or whatever” it would help ROD BLAGOJEVICH get through the next several years as Governor.

[...]

On November 11, 2008, ROD BLAGOJEVICH talked with JOHN HARRIS about the Senate seat. ROD BLAGOJEVICH suggested starting a 501(c)(4) organization (a non-profit organization that may engage in political activity and lobbying) and getting “his (believed to be the President-elect’s) friend Warren Buffett or some of those guys to help us on something like that.” HARRIS asked, “what, for you?” ROD BLAGOJEVICH replied, “yeah.” Later in the conversation, ROD BLAGOJEVICH stated that if he appoints Senate Candidate 4 to the Senate seat and, thereafter, it appears that ROD BLAGOJEVICH might get impeached, he could “count on [Senate Candidate 4], if things got hot, to give [the Senate seat] up and let me parachute over there.” HARRIS said, “you can count on [Senate Candidate 4] to do that.” Later in the conversation, ROD BLAGOJEVICH said he knows that the President-elect wants Senate Candidate 1 for the Senate seat but “they’re not willing to give me anything except appreciation. Fuck them.”

Refer to anything you don’t understand as an “arcane financial instrument.” No one knows what that means.

Quote liberally from Warren Buffett’s letters to Berkshire Hathaway shareholders. If you don’t know who that is or what those are, just introduce some folksy, homespun wisdom by saying, “To paraphrase the Oracle of Omaha….” Everyone else will know who that is and what that means.

Acronyms and abbreviations: use them. If you absolutely must use an entire word or phrase, radically change its part of speech (e.g. deflationary, recessional, volatilatronic).

Dress Wall Street, talk Main Street, drink Bourbon Street, and don’t make eye contact with the homeless, ever.

Talk about the Panic of 1873 – It’s the super-rare 7″ of financial catastrophes.

If someone challenges you on an economic issue, make a dismissive, mean-sounding pun involving the name of a famous financier (e.g. “Jesus Christ, Tim, we’re not playing Soros says!”)

Blue Chip is a stock or firm with stable earnings and few liabilities, not a blue chip made of blue corn, or Blue Chips, the movie with Shaquille O’Neal and Nick Nolte. Never bring up the movie.

Bureau of Labor Statistics’ Graph of the Day: Look at it every morning. If you have a bad memory, draw it on your hand. If you’re sweaty, tattoo it on your forearm. If you’re afraid of needles, quit being a wimp, because when the markets go to pot we’re going to need fighters, not babies crying about how they’re afraid of needles.

Make up stuff about Adam Smith (e.g. “Did you know Adam Smith and Sam Adams were cousins? Yeah, they totally were. No, definitely, definitely. Hell yeah they got drunk!”)

The G-20 Seating Chart establishes where world leaders sit when they get together. Next time you have people over, assign everyone a nation, then let them know that they’ll be sitting in accordance with the G-20 chart. If that doesn’t impress them, kick whoever represents Turkey out of the room. If they’re still hassling you, let Argentina know that they could be next. Do not mess with China.

Check your Blackberry all the time, especially if you’re driving. If you don’t own a Blackberry, stare at your cell phone while rubbing your thumb on the front of it.

If someone asks you a question and you have no idea what to say, take a deep breath, look them in the eye, and say, “It would put me in a compromising place to discuss the finer points of that at this particular juncture.” If they inquire further, check your real or fake Blackberry. If they figure out it’s a fake Blackberry, quote Warren Buffet. If you end up quoting Jimmy Buffet by accident (e.g. “I’m just a cheeseburger in paradise”), vomit on their shoes and excuse yourself.

I was pleased to see (as mentioned in the December 2nd Chronicle of Philanthropy) that my old colleague Paul Schmitz, CEO of Public Allies is on this working group advising Obama.

“Two Charity Heads Among Leaders Advising Obama on Innovation

Two charity leaders have been appointed to a group of more than 30 people that has been asked to help the incoming Obama administration devise an “innovation agenda.”

They are: Cheryl Dorsey, president of Echoing Green, in New York, which provides fellowships to entrepreneurial nonprofit leaders; and Paul Schmitz, president of Public Allies, in Milwaukee, which trains young people for nonprofit and public-service careers.

Their group — the Technology, Innovation, and Government Reform Policy Working Group — will recommend ways to modernize government; use technology to expand the economy and solve pressing national problems; and promote “active citizenship” and government partnerships with civil-society organizations, according to the Obama transition project’s Web site.

President-elect Barack Obama has special ties to Public Allies: he served on its founding board, and his wife, Michelle, opened the group’s Chicago office in 1993. (See The Chronicle’s article about the organization and its ties to the Obamas.)

The working group also includes Michele Jolin, a senior fellow at the Center for American Progress, in Washington, who has publicly advocated creating a White House Office of Social Entrepreneurship. She made the proposal in a chapter of a “progressive blueprint” that was co-published last month by the Center for American Progress Action Fund, the liberal think tank’s advocacy arm. She said it would give innovative nonprofit leaders a “greater voice in the public policy debates of the day.”

Howard W. Buffett, the grandson of Warren Buffett, the investor and philanthropist, is another member of the group. Mr. Buffett is an adviser to the United Nations Office for Partnerships, which promotes alliances between the UN, foundations, and businesses, and head of Cliffspringer, his own strategic-advisory group. His father, Howard G. Buffett, runs a foundation in Decatur, Ill.

Sonal Shah, head of global development at Google.org, the search-engine company’s philanthropic arm, co-chairs the group, along with Blair Levin, managing director of Stifel Nicolaus, a financial-services firm; and Julius Genachowski, co-founder of Rock Creek Ventures, a new-media investment company.

The working group is divided into four committees: Innovation and government, innovation and national priorities, innovation and science, and innovation and civil society. Spokesmen for the Obama transition team declined to say who would serve on the committees or give any other information beyond what appears on the Web site.

On the campaign trail, Mr. Obama said he would expand national-service programs, establish a Social Entrepreneurship Agency to coordinate federal programs that help innovative charities, and create new funds to stimulate entrepreneurial social projects.”

Naturally, when I sit down to write I try to think of a title for each entry that has ‘headline’ appeal (Makes you want to read more) and is pertinent to the topic at hand. So, I guess I better get busy and explain myself before people start knocking on my door wanting me to invest in the next big thing.

What do I have in common with Warren Buffett and Bill Gates? Is it billions of dollars? No, not yet any way.

What I, you and everyone else has in common with the two richest men in the world is that each day we all wake up and have the same amount of time. Bill and Warren’s days are no longer than yours or mine.

We are in the season for construction where, even in good times, things slow down. ‘Back in the day’ at CMD (Construction Market Data) the time between now and the first of the year saw fewer reports in each weekly issue of the Bulletin. Seasonally, construction slows down due to weather in some areas and the week between Christmas and New Years…things really, really slowed down.

So, here we find ourselves in a certified recession, construction at a near stand still and now we are coasting into the deadest time of the year. What do we do?

I took a call today from a business development person doing a little networking and he mentioned how slow things are on his end as they were wrapping up four projects with nothing new on the horizon. I took a call yesterday from a regional subcontractor who just lost their major client and was really in a pinch. I met with a building product manufacturer this morning and he wanted to know what his sales staff should be doing.

If you have read my blog before, you will know that I am a big believe in (1) everyone in a company is in sales and (2) never stop looking for new ways to do things better, smarter and faster.

In my entry ‘Magic & Sushi – Parts 1 & 2’ I talk about how one should look at situations differently and try to see a new way to get things accomplished, that was the ‘Magic’ part and to be willing to try something new, that was the ‘Sushi’ part.

One of the biggest ‘ah-ha’ moments of my career was about 15 years ago when all the upper level managers were taking a time management course. This was before Palms, PDA’s and Blackberrys. The course came with a large, leather, three-ring binder, expensive charts and forms which I thought was completely ridiculous. It was almost a ‘Star Belly Sneetches’ kind of thing…for the Dr. Suess fans amongst us.

Finally, I caved, took the course and got my own huge binder. However, this time, I once again, ‘tasted the sushi’ and loved it. What I learned in that course was, and still is, one of the best investments I have made…even though I did not have to pay for it.

If you find yourself with extra time on your hands, look around for some opportunities to invest that time that will pay off when things pick back up. Take a look at a Dale Carnegie course; create your own leads group; attend a lecture on marketing; see about visiting a local SMPS chapter meeting.

Have a brain-storming session with your staff; get organized; do some ‘spring cleaning’ in December; review your business plan if you have one, get one if you don’t; create an action plan; review your collateral material; update your case study inserts; ask someone to critique your website; hold a contest so see how many ideas you can come up with to save money; give the winner a dinner at your favorite special occasion restaurant, a gift card or just good ole cash.

The thing is, do something!

Ask yourself this, what is the number one thing your company needs right now? What ever that is…start doing it and don’t stop until it is done.

At the end of the day, Bill Gates, Warren Buffett, you and I will all go to sleep having had the same amount of time. Finances aside, what separates each of us is what we do with that time.

——————–

Bobby Darnell is the founder and Principal of Construction Market Consultants, Inc. An Atlanta based management consulting group specializing in business development, sales, marketing and profitability as well as executive placement for the Architectural, Engineering and Construction industry.

www.cmconl.com

Bobby can be reached at bobbydarnell@cmconl.com

So I live in Illinois and I’ve never really liked Blagojevich…especially after reading about all the corrupt things he’s done. Although I wasn’t protesting on the streets for a recall, I figured it was only a matter of time before something like this happens…

(from http://network.nationalpost.com/np/blogs/posted/archive/2008/12/09/218068.aspx)

Reuters reports that Illinois Gov. Rod Blagojevich was arrested on criminal charges on Tuesday, including trying to sell the U.S. Senate seat being vacated by fellow Democrat President-elect Barack Obama, federal prosecutors said.

Blagojevich was also accused of threatening to withhold substantial state assistance to the Tribune Company in connection with the sale of the Chicago Cubs’ baseball home Wrigley Field “to induce the firing of Chicago Tribune editorial board members sharply critical” of him.

The 51-year-old Blagojevich and his chief of staff, John Harris, were charged in a 76-page federal indictment with conspiracy to commit mail and wire fraud and solicitation of bribery. Both were taken into custody at their homes in Chicago.

Of course, on these type of stories, featuring minor Democratic figures, we defer to the judgement of our pals at The New Republic, who have been having a field day pulling apart the 76-page indictment (read it here for yourself, .pdf):

WARNING: The excerpts that follow are laced with profanity and graphic suggestions.

[snip]

On November 3, 2008, ROD BLAGOJEVICH talked with Deputy Governor A. This discussion occurred the day before the United States Presidential election. ROD BLAGOJEVICH and Deputy Governor A discussed the potential Senate seat vacancy. During the conversation, ROD BLAGOJEVICH told Deputy Governor A that if he is not going to get anything of value for the open Senate seat, then ROD BLAGOJEVICH will take the Senate seat himself: “if . . . they’re not going to offer anything of any value, then I might just take it.”

Later on November 3, 2008, ROD BLAGOJEVICH spoke with Advisor A. By this time, media reports indicated that Senate Candidate 1, an advisor to the Presidentelect, was interested in the Senate seat if it became vacant, and was likely to be supported by the President-elect. During the call, ROD BLAGOJEVICH stated, “unless I get something real good for [Senate Candidate 1], shit, I’ll just send myself, you know what I’m saying.” ROD BLAGOJEVICH later stated, “I’m going to keep this Senate option for me a real possibility, you know, and therefore I can drive a hard bargain. You hear what I’m saying. And if I don’t get what I want and I’m not satisfied with it, then I’ll just take the Senate seat myself.” Later, ROD BLAGOJEVICH stated that the Senate seat “is a fucking valuable thing, you just don’t give it away for nothing.”

On November 4, 2008, ROD BLAGOJEVICH spoke with Deputy Governor A. This was the same day as the United States Presidential election. With respect to the Senate seat, Deputy Governor A suggested putting together a list of things that ROD BLAGOJEVICH would accept in exchange for the Senate seat. ROD BLAGOJEVICH responded that the list “can’t be in writing.” Thereafter, ROD BLAGOJEVICH discussed whether he could obtain an ambassadorship in exchange for the Senate seat.

On November 4, 2008, ROD BLAGOJEVICH spoke with JOHN HARRIS regarding the potential vacant Senate seat. ROD BLAGOJEVICH stated that the “trick . . . is how do you conduct indirectly . . . a negotiation” for the Senate seat. Thereafter, ROD BLAGOJEVICH analogized his situation to that of a sports agent shopping a potential free agent to various teams, stating “how much are you offering, [President-elect]? What are you offering, [Senate Candidate 2]? . . . Can always go to. . . [Senate Candidate 3].” Later ROD BLAGOJEVICH stated that he will make a decision on the Senate seat “in good faith . . . but it is not coming for free. . . .It’s got to be good stuff for the people of Illinois and good for me.” ROD BLAGOJEVICH states “[President-elect], you want it? Fine. But, its got to be good or I could always take [the Senate seat].”

On November 5, 2008, ROD BLAGOJEVICH spoke with Deputy Governor A regarding positions that ROD BLAGOJEVICH might be able to obtain in exchange for the soon-to-be vacated Senate seat. Among the potential positions discussed were Secretary of Health and Human Services and various ambassadorships. Deputy Governor A noted that the cabinet position of Secretary of the Energy is “the one that makes the most money.” Deputy Governor A stated that it is hard not to give the Secretary of Energy position to a Texan, but with ROD BLAGOJEVICH’s coal background it might be a possibility.

On November 5, 2008, ROD BLAGOJEVICH spoke with JOHN HARRIS regarding what ROD BLAGOJEVICH could obtain for the Senate seat. After discussing various federal governmental positions that ROD BLAGOJEVICH would trade the Senate seat for, ROD BLAGOJEVICH asked about “the private sector” and whether the President-elect could “put something together there. . . .Something big.” Thereafter, HARRIS suggested that the President-elect could make ROD BLAGOJEVICH the head of a private foundation. ROD BLAGOJEVICH told HARRIS that he should do “homework” on private foundations “right away.” ROD BLAGOJEVICH asked whether he could get a high-ranking position at the Red Cross. HARRIS stated that “it’s got to be a group that is dependent on [the President-elect],” and that a President probably could not influence the Red Cross. ROD BLAGOJEVICH told HARRIS to “look into all of those.”

[snip]

On November 5, 2008, ROD BLAGOJEVICH talked with Advisor A about the Senate seat. During the phone call, ROD BLAGOJEVICH stated that the President-elect can remove somebody from a foundation and give the spot to ROD BLAGOJEVICH. In regards to the Senate seat, ROD BLAGOJEVICH stated “I’ve got this thing and it’s fucking golden, and, uh, uh, I’m just not giving it up for fuckin’ nothing. I’m not gonna do it. And, and I can always use it. I can parachute me there.”

On November 6, 2008, ROD BLAGOJEVICH talked with Spokesman. ROD BLAGOJEVICH told Spokesman to leak to a particular columnist for the Chicago Sun-Times, that Senate Candidate 2 is in the running for the vacant Senate seat. According to ROD BLAGOJEVICH, by doing this, he wanted “to send a message to the [President-elect’s] people,” but did not want it known that the message was from ROD BLAGOJEVICH. Thereafter, ROD BLAGOJEVICH and Spokesman discussed specific language that should be used in the Sun Times column and arguments as to why Senate Candidate 2 made sense for the vacant Senate seat. A review of this particular Sun Times column on November 7, 2008, indicates references to the specific language and arguments regarding Senate Candidate 2 as a potential candidate for the Senate seat, as discussed by ROD BLAGOJEVICH and Spokesman.

And on and on. You can read the rest starting at about Page 60.

–Jason Zengerle

ROD BLAGOJEVICH said that the consultants (Advisor B and another consultant are believed to be on the call at that time) are telling him that he has to “suck it up” for two years and do nothing and give this “*** [the President-elect] his senator. *** him. For nothing? *** him.” ROD BLAGOJEVICH states that he will put “[Senate Candidate 4]” in the Senate “before I just give fucking [Senate Candidate 1] a fucking Senate seat and I don’t get anything.” (Senate Candidate 4 is a Deputy Governor of the State of Illinois). ROD BLAGOJEVICH stated that he needs to find a way to take the “financial stress” off of his family and that his wife is as qualified or more qualified than another specifically named individual to sit on corporate boards. According to ROD BLAGOJEVICH, “the immediate challenge [is] how do we take some of the financial pressure off of our family.” Later in the phone call, ROD BLAGOJEVICH stated that absent getting something back, ROD BLAGOJEVICH will not pick Senate Candidate 1. HARRIS re-stated ROD BLAGOJEVICH’s thoughts that they should ask the President-elect for something for ROD BLAGOJEVICH’s financial security as well as maintain his political viability. HARRIS said they could work out a three-way deal with SEIU and the Presidentelect where SEIU could help the President-elect with ROD BLAGOJEVICH’s appointment of Senate Candidate 1 to the vacant Senate seat, ROD BLAGOJEVICH would obtain a position as the National Director of the Change to Win campaign, and SEIU would get something favorable from the President-elect in the future.

[snip]

Later on November 10, 2008, ROD BLAGOJEVICH and Advisor A discussed the open Senate seat. Among other things, ROD BLAGOJEVICH raised the issue of whether the President-elect could help get ROD BLAGOJEVICH’s wife on “paid corporate boards right now.” Advisor A responded that he “think[s] they could” and that a “Presidentelect . . . can do almost anything he sets his mind to.” ROD BLAGOJEVICH states that he will appoint “[Senate Candidate 1] . . . but if they feel like they can do this and not fucking give me anything . . . then I’ll fucking go [Senate Candidate 5].” (Senate Candidate 5 is publicly reported to be interested in the open Senate seat). ROD BLAGOJEVICH stated that if his wife could get on some corporate boards and “picks up another 150 grand a year or whatever” it would help ROD BLAGOJEVICH get through the next several years as Governor.

[snip]

On November 11, 2008, ROD BLAGOJEVICH talked with JOHN HARRIS about the Senate seat. ROD BLAGOJEVICH suggested starting a 501(c)(4) organization (a non-profit organization that may engage in political activity and lobbying) and getting “his (believed to be the President-elect’s) friend Warren Buffett or some of those guys to help us on something like that.” HARRIS asked, “what, for you?” ROD BLAGOJEVICH replied, “yeah.” Later in the conversation, ROD BLAGOJEVICH stated that if he appoints Senate Candidate 4 to the Senate seat and, thereafter, it appears that ROD BLAGOJEVICH might get impeached, he could “count on [Senate Candidate 4], if things got hot, to give [the Senate seat] up and let me parachute over there.” HARRIS said, “you can count on [Senate Candidate 4] to do that.” Later in the conversation, ROD BLAGOJEVICH said he knows that the President-elect wants Senate Candidate 1 for the Senate seat but “they’re not willing to give me anything except appreciation. *** them.”

Who’s Senate Candidate 1? Valerie Jarrett? Does all this explain the final bit of Jodi Kantor’s Jarrett profile:

After the election, speculation that Ms. Jarrett might seek Mr. Obama’s Senate seat coursed through Chicago. After a career of helping formidable men, she could finally “be the sun,” as Marilyn Katz, a friend, put it. But the Obamas saw her place in Washington.

“I told her,” Mrs. Obama said, “that I wanted her there, in that position, that it would give me a sense of comfort to know that he had somebody like her there by his side.”

After several long conversations with Mr. Obama, Ms. Jarrett took herself out of the running for the Senate seat. Or, rather, Mr. Obama did: she let him make the call.

“He knows the Senate, he knows me, and he knows what he was looking for in the White House,” she said. “I trusted him to make the decision.”

The incredible thing about all this is, what if Obama had played ball with Blagojevich? The feds would have had the president-elect dead to rights.

–Jason Zengerle

In addition, in the course of the conversations over the last month, ROD BLAGOJEVICH has spent significant time weighing the option of appointing himself to the open Senate seat, and has expressed a variety of reasons for doing so, including frustration at being “stuck” as governor, a belief that he will be able to obtain greater resources if he is indicted as a sitting Senator as opposed to a sitting governor, and a desire to remake his image in consideration of a possible run for President in 2016, avoid impeachment by the Illinois legislature, make corporate contacts that would be of value to him after leaving public office, facilitate his wife’s employment as a lobbyist, and assist in generating speaking fees should he decide to leave public office.

Blago ‘16: Tanned, Rested, and Ready!

Later in the conversation, ROD BLAGOJEVICH said he knows that the President-elect wants Senate Candidate 1 for the Senate seat but “they’re not willing to give me anything except appreciation. *** them.”

And:

ROD BLAGOJEVICH said that the consultants (Advisor B and another consultant are believed to be on the call at that time) are telling him that he has to “suck it up” for two years and do nothing and give this “*** [the President-elect] his senator. *** him. For nothing? *** him.”

Incidentally, “Senate Candidate 1″ appears to be a woman (the complaint mentions that she removed “herself” from consideration); so odds are Jason’s right and it’s Valerie Jarett. But the really fun question is who “Candidate 5″ might be, the candidate who allegedly sent an emissary to Blagojevich: “We were approached ‘pay to play.’ That, you know, he’d raise me 500 grand. An emissary came. Then the other guy would raise a million, if I made him (Senate Candidate 5) a Senator.” Yeah, that guy’s in trouble…

–Bradford Plumer

Following on from earlier (The Zanzibar Gazette), I offer some highlights from Rod Blagojevich (The Financial Times).

On the opportunity of appointing the new Senator:

“I’ve got this thing and it’s fucking golden, and, uh, uh, I’m just not giving it up for fuckin’ nothing.”

Apparently, Blagojevich considered asking Obama to solicit as much as $15 million from Bill Gates and Warren Buffett for a non-profit - which Blagojevich, of course, would run and, I assume, profit from. In return he would appoint a candidate of Obama’s choice. God knows how he approached them and what he asked exactly, but the Obama campaign’s response did not impress Blagojevich:

“They’re not willing to give me anything except appreciation. Fuck them.”

While Barack Obama is a multi-fascetted man, Blagojevich felt only one word was necessary to describe the President-Elect of the United States of America:

“motherfucker.”

Yes, sir. That is the 40th Governor of the Great State of Illinois speaking.

JDR

I am not going to spend much time here discussing our disgraced governor.  He was disgraced before this arrest, but the misconduct alleged in the criminal complaint is truly mind-boggling.  Chicago Tribune columnist Eric Zorn posted a link to a text version of the complaint here, and provides some interesting commentary to boot, including a quote from my State Rep., Joe Lyons, from last year, calling the hopefully soon-to-be outgoing governor “a madman” and “insane,” and not in a good way.

I will say that Blago took office as a reformer, and brought a number of smart, dedicated, and honest hardworking people into the administration, including several people I know.  Not least on the tally of the damage he has caused is the unfair taint that may follow them long after he’s gone.

Update at 11:15pm: I have now gone through the complaint, and — assuming the allegations are true — what this guy did was so bad you have to wonder if he was planning for an insanity defense.  The frustrating thing was also how stupid he comes across.  Not just in the sense of how could he think he wouldn’t be caught, but in simply not understanding how the world works.  He seemed to think that the President has the power to remove officers of not-for-profit organizations and replace them (say, with departing Midwestern governors), or that Obama could pick up the phone and call Warren Buffett and Buffett would write a check for $10 million to fund a private foundation for Blago to run (at a nice salary).  Delusional.

When I was much younger, I had an interest in a political career (it was finally cured by a two-year term on the board of our 500-unit condominium association).  At some point when we were in college and I was still relatively new to Illinois, I expressed an interest to the future Mrs. Unfocused in some day running for governor.  Don’t even think about it, she told me.  I don’t remember her exact words, but the sense of it was that Illinois politics is a cesspool, and my ambition shouldn’t be to jump into it.  You want to go into politics, she said, fine, but go national and stay out of Springfield.

Now I’ve done her one better, and dropped the whole idea, but the point is, she’s a smart lady, which is one of the reasons I married her.

Huffo Pos- Sam Stein

December 9, 2008 01:51 PM

Various elements of the Rod Blagojevich arrest today are unavoidably humorous — whether it is his completely cynical approach to politics, the idea that he was even considering a possible run for President in 2016, his wife’s disdain for the Chicago Cubs, or the fact that he and his aides contemplated shaking down Warren Buffett for cash (allegedly, of course).

In fact, when authorities rang Blagojevich this morning to let him know that they were coming to arrest him, he responded: “Is this a joke?”

There was an almost cartoonish-aspect to the corruption exhibited by the Illinois Governor. And now, that buffoonery has rubbed off on all aspects surrounding the case. On eBay, a poster from Illinois has put up a listing for the United States Senate Seat, a nod to the auction that Blagojevich was apparently hoping to host from within the confines of his own office.

The current bid is a mere $0.99 cents. And the end time for the bid is December 19, 2008.

After yesterday’s review of the latest entry into the piggyback investing game (read what piggyback investing is and why it’s important), alphaCLONE, I came across a chart that I felt needed to be shared.

The chart below is the chart of a fabled value investor, Bill Miller, of Legg Mason. It was part of a write-up in today’s WSJ.  I recommend reading it here.

Guru investors can have years, perhaps even decades, of outperformance.  At some point, most of them fall back to the mean and either end up tracking the greater market or even trailing it.  In this case, Miller has essentially given back all his gains over the S&P 500 throughout his storied career.

Investors should be aware of this tendency to revert back to the mean.  It happens to the greatest of investors.  Very few people have outperformed the markets for a significant amount of time.

Investors utilizing piggybacking strategies always need to decide if the manager is in a temporary or permanent slump.

Check out our interview with John Reese of Validea who has been tracking certain guru strategies (like Ken Fisher and  Warren Buffett) over a multi-year period.  He’s found that while they occasionally lag the market, they typically make up the loses and ultimately outperform.

Mr. Egan gives us “Roll Over, Abe Lincoln,” in which he says Gov. Rod Blagojevich of Illinois even used financing for a hospital as leverage points for a shakedown. Abe probably did a triple lutz in his grave.  Mr. Friedman, in “While Detroit Slept,” says someone is already developing an alternative to Detroit’s business model. I don’t know if it will work, but I do know that it can be done — and Detroit isn’t doing it.  MoDo is off today.  Here’s Mr. Egan:

For some time now, the most unpopular governor in the United States, Rod Blagojevich of Illinois, has been treated like a flu virus at a nursing home.

“He’s kryptonite,” one state representative called him in a Chicago Magazine profile last February. “Nobody wants to get near him.”

But it wasn’t until Tuesday, and the filing of a 76-page criminal complaint centered around the auctioning of a Senate seat, that we got a full X-ray of politics at its sickest.

Putting aside the peculiar dialect of desperation that made the governor sound like a John Malkovich character in a David Mamet play, the complaint showed a man trolling the depths of darkness.

The beloved Cubs, the sainted Warren Buffett, editorial writers from the Chicago Tribune, even financing for a children’s hospital — all were targets or leverage points for a shakedown.

The surprise is that he didn’t offer to sell out exclusive rights to deep-dish pizza.

If the world was roused by the sight from Chicago barely one month ago, hundreds of thousands of people streaming into Grant Park to celebrate the triumph of possibility over tainted history, the arrest of Governor Blagojevich on a dark and drizzly Chicago dawn was quite the opposite image.

Abe Lincoln may have rolled over once in pleasant surprise at the election of Barack Obama, and another time in revulsion at Blagojevich’s arrest, as prosecutor Patrick Fitzgerald said. More likely, Abe did a triple lutz in his grave on Tuesday.

If nothing else, Blagojevich did Obama the favor of a nonendorsement quote for the ages. According to the federal transcript, the governor showed disgust, barely a week after Obama’s election, that he could not get anything in return for offering the Senate seat to an ally of the president-elect.

“They’re not willing to give me anything except appreciation,” the governor says, as outlined in the criminal complaint.

It would be somewhat comforting if there were a larger lesson here, or a map out of the banality of evil. But there is no trend or modern twist, no evidence of a greater criminal web, no overarching moral. Like a kid who beats up old ladies just because he knows no other way, the allegations against Blagojevich amount to what Fitzgerald called a crime spree, of the political variety.

The prosecutor’s narrative of plotting bad intentions and narcissism — Blago actually thought he was a viable candidate for president in 2016 — is a particularly graphic example of why some men see things as they are and ask: what’s in it for me?

Fitzgerald, who prosecuted Scooter Libby under the pressure of a White House not used to getting questioned by anyone, is the son of a Manhattan doorman and the product of Catholic schools at their finest. It’s unlikely that his dad ever heard anything to match the conversations captured by federal wiretaps in Illinois.

Like all damaged politicians, the Blagojevich in the complaint knows the price of everything and the value of nothing.

What’s a Senate seat worth? “Golden,” and the governor vowed that he would not give it up for nothing.

How about help for the Tribune Company’s attempt to sell Wrigley Field and the Cubs? That would require getting rid of editorial writers who had called for his resignation. Fire them all, Blagojevich is quoted as having said, adding, “And get us some editorial support.”

Aid for a children’s hospital? That would require a contribution of at least $50,000.

On and on it goes, trash talk of the want-to-be-rich-and-infamous. Even by Illinois standards, where the path from the Statehouse to the jailhouse holds the footprints of numerous governors, Tuesday’s arrest and complaint was breathtaking.

“If it isn’t the most corrupt state in the United States,” said Robert Grant, a F.B.I. special agent, “it’s one hell of a competitor.”

On Monday, the eve of his arrest, Blagojevich showed that he could include hubris among his many flirtations with disaster. At a rally of out-of-work factory hands soiled by his presence, he all but asked to be followed and recorded.

“I should say if anybody wants to tape my conversations, go right ahead,” he said. “I can tell you whatever I say is always lawful.”

Then, like Huey Long at his most egregious, he cast himself as the person who has nothing to sell but an honest day’s labor. If you were to tape him, he added, you would hear a governor “who tirelessly and endlessly figures out ways to help average, ordinary working people.”

Substitute one word — himself — for working people, and you have the essence of Governor Blagojevich.

Here’s Mr. Friedman:

Why do I bring this up? Because someone in the mobility business in Denmark and Tel Aviv is already developing a real-world alternative to Detroit’s business model. I don’t know if this alternative to gasoline-powered cars will work, but I do know that it can be done — and Detroit isn’t doing it. And therefore it will be done, and eventually, I bet, it will be done profitably.

And when it is, our bailout of Detroit will be remembered as the equivalent of pouring billions of dollars of taxpayer money into the mail-order-catalogue business on the eve of the birth of eBay. It will be remembered as pouring billions of dollars into the CD music business on the eve of the birth of the iPod and iTunes. It will be remembered as pouring billions of dollars into a book-store chain on the eve of the birth of Amazon.com and the Kindle. It will be remembered as pouring billions of dollars into improving typewriters on the eve of the birth of the PC and the Internet.

What business model am I talking about? It is Shai Agassi’s electric car network company, called Better Place. Just last week, the company, based in Palo Alto, Calif., announced a partnership with the state of Hawaii to road test its business plan there after already inking similar deals with Israel, Australia, the San Francisco Bay area and, yes, Denmark.

The Better Place electric car charging system involves generating electrons from as much renewable energy — such as wind and solar — as possible and then feeding those clean electrons into a national electric car charging infrastructure. This consists of electricity charging spots with plug-in outlets — the first pilots were opened in Israel this week — plus battery-exchange stations all over the respective country. The whole system is then coordinated by a service control center that integrates and does the billing.

Under the Better Place model, consumers can either buy or lease an electric car from the French automaker Renault or Japanese companies like Nissan (General Motors snubbed Agassi) and then buy miles on their electric car batteries from Better Place the way you now buy an Apple cellphone and the minutes from AT&T. That way Better Place, or any car company that partners with it, benefits from each mile you drive. G.M. sells cars. Better Place is selling mobility miles.

The first Renault and Nissan electric cars are scheduled to hit Denmark and Israel in 2011, when the whole system should be up and running. On Tuesday, Japan’s Ministry of Environment invited Better Place to join the first government-led electric car project along with Honda, Mitsubishi and Subaru. Better Place was the only foreign company invited to participate, working with Japan’s leading auto companies, to build a battery swap station for electric cars in Yokohama, the Detroit of Japan.

What I find exciting about Better Place is that it is building a car company off the new industrial platform of the 21st century, not the one from the 20th — the exact same way that Steve Jobs did to overturn the music business. What did Apple understand first? One, that today’s technology platform would allow anyone with a computer to record music. Two, that the Internet and MP3 players would allow anyone to transfer music in digital form to anyone else. You wouldn’t need CDs or record companies anymore. Apple simply took all those innovations and integrated them into a single music-generating, purchasing and listening system that completely disrupted the music business.

What Agassi, the founder of Better Place, is saying is that there is a new way to generate mobility, not just music, using the same platform. It just takes the right kind of auto battery — the iPod in this story — and the right kind of national plug-in network — the iTunes store — to make the business model work for electric cars at six cents a mile. The average American is paying today around 12 cents a mile for gasoline transportation, which also adds to global warming and strengthens petro-dictators.

Do not expect this innovation to come out of Detroit. Remember, in 1908, the Ford Model-T got better mileage — 25 miles per gallon — than many Ford, G.M. and Chrysler models made in 2008. But don’t be surprised when it comes out of somewhere else. It can be done. It will be done. If we miss the chance to win the race for Car 2.0 because we keep mindlessly bailing out Car 1.0, there will be no one to blame more than Detroit’s new shareholders: we the taxpayers.

Read all this

http://cannonfire.blogspot.com/

If it is JJJr — and I think it is — it’s going to be very, very bad. From Paragraph 115 a:

In a recorded conversation on October 31, 2008, ROD BLAGOJEVICH described an earlier approach by an associate of Senate Candidate Five as follows: “We were approached ‘pay to play.’ That, you know, he’d raise me 500 grand. An emissary came. Then the other guy would raise a million, if I made him (Senate Candidate 5) a Senator.”

Could Emil Jones get that kind of money? I know that JJJr could.

(I hear a baritone from the grave: “Yes, but it would be wrong.”)

It turns out that Blagojevich may have discussed a bribe with Rahm Emmanuel, Obama’s pick for Chief of Staff. You have to read the indictment past paragraph 100 or so.

Keep two things in mind:

1. Rahm currently represents the Fifth Congressional District of Illinois. It appears that Blago can appoint a replacement until a special election is held.

2. Blago became fixated on a wacky scheme in which he would take charge of a well-funded 501(c)4 lobbying organization. This was to be backed by Warren Buffett and Bill Gates, acting at Obama’s request. The org was to be Blago’s nest egg after leaving office.

Blago thought he could make a quid-pro-quo arrangement with Obama: He (Blago) would appoint Obama’s preferred candidate, Valerie Jarrett, to the Senate — and in return, Blago would get that comfy sinecure, a place where he could live well and regain his political muscles.

…according to Advisor B , from the President-elect’s perspective, there would be fewer “fingerprints” on the President-elect’s involvement with Change to Win because Change to Win already has an existing stream of revenue and, therefore, “you won’t have stories in four years that they bought you off.”

Blago preferred the 501(c)(4) idea because he wasn’t sure whether Change to Win would stay in business.

How do I know that the person called “President-elect advisor” was Rahm? Here’s how.

On November 13, Blago spoke to John Harris (who plays Robin to Blago’s Batman). Blago told Harris to call the above-referenced Obama adviser and ask for “10, 15 million” for the 501(c)(4) project. You know, enough to get started.

Let this sink in.

But on November 23, 2008, his senior adviser David Axelrod appeared on Fox News Chicago and said something quite different.

Governor Rod Blagojevich of Illinois — identified in previous posts as Obama’s partner in corruption — has been arrested. Here is the indictment.

A wiretap caught him in the act of trying to sell Obama’s soon-to-be-vacated Senate seat. He also stands accused of trying to rake in as much pay-for-play money as possible before new a new ethics law kicks in. He also tried to strongarm the Chicago Tribune into canning an anti-Blago editor. (The Tribune needs the Governor’s help in order to go forward with the sale of Wrigley Field, owned by the Trib.)

This is whitewater all over.

Blagojevich is innocent Kossaks. These charges are bullshit.

…what we have here is another Don Siegelman case.

Time to take out the trash. How in the world did Obama come out of the cesspool of Chicago politics so clean?

Oh jeez. Oh jeez. It’s so sad to encounter a poor, deluded bastard who refuses to read a single article that does not flatter his preferred hallucinations.

Of course, TPM has been attracting some towering intellects as well:

I’m reading this stuff, and so far I have seen nothing to substantiate the charges in what Fitzgerald made public.

The main TPM article tries to imply that Fitz has cleared Obama. Nothing could be further from the truth.

Look at the facts, people:

How was Blago caught? Wiretaps.

1. Fitz wants to pressure Blago into testifying against an even bigger fish. Right now, the only bigger fish is Obama.

2. Fitz wanted to haul in Blago before the transition of power. After this arrest, if Obama quickly replaces Fitzgerald, the stench of rat will become so overpowering as to penetrate even a Kossack’s nostrils. If Obama shuts down the investigation, he’ll be as villified as Nixon was after the Saturday Night Massacre.

So what would Fitzgerald want Blago to talk about? Oh, gosh — any number of things. You can read about them in Evelyn Pringle’s work. Here’s one very important, very basic matter that I’ve mentioned in this column before — a fine bit-o-sleaze that all of the pro-O “progressive” bloggers have, so far, refused to acknowledge:

There is a specter haunting the Democratic Party, and that specter is Illinois State Senate Bill 1332. Why is that bill so important? Allow a bit of self-quotation:

Sarah Palin got it wrong. She said that Barack Obama has authored two autobiographies but no legislation. He stood behind one terribly important piece of legislation during his time in the Illinois State Senate, although he may not have penned the exact words.

Remember that number. Bring it up anytime someone asks why you have the crazy idea that Barack Obama is corrupt.

Senate Bill 1332 was Obama’s baby. The legislation — completely unneeded, from the standpoint of the public — reduced the state’s hospital board from 15 to 9, and insured that the corrupt governor of Illinois, Rod Blagojevich, would control the board which controlled a huge pile of public funds.

The corrupt members appointed included three doctors who contributed to Obama.

The first order of business concerned a hospital which experts said was not needed…

That would be Edward Hospital. Board member Stuart Levine — who was appointed by a previous Republican administration, but who soon transferred his affections to Blago — asked the folks who wanted to build that hospital to send him a stiff kickback. And the money did not just go to Levine — it went, via straw donors, to Democratic candidates who were part of Blago’s cartel.

Favors like that explain why Blago made sure Levine could stay on that board after his term expired in 2004.

Levine pled guilty and became a star witness at the trial of his former partner, Tony Rezko. Rezko — as we have established beyond the point of rational debate — was Obama’s mentor and partner throughout Obama’s career in Chicago politics.

True, Obama was not the author of 1332, but no-one pushed for the bill harder. The thing simply would not have passed without his tireless work.

All that is necessary to make the case against Obama is for Blagojevich to admit that which is already apparent to anyone unhypnotized by Barack-mania: Obama pushed for the passage of Senate Bill 1332 to help line the pockets of the Governor (who was then considering a run for the presidency) and his comrades — a group which included Obama himself.

Blago was pissed because Obama wanted “senate candidate 1″ to take his seat but would not pony up any dough. Blago’s exact phrasing

:

…the FBI says it heard Blagojevich complain he has to give this “motherf***er [the president-elect] his senator. F*** him. For nothing? F*** him.”

The governor is heard saying he will pick another candidate “before I just give f***ing [Senate Candidate l] a f***ing Senate seat and I don’t get anything.”

By the way, note this:

Blagojevich also sought a high paying job for his wife, according to the FBI. “Is there a play here, with these guys, with her” to work for a firm in Washington or New York, he reportedly asked.

The FBI affidavit said Blagojevich had been told by an adviser “the president-elect can get Rod Blagojevich’s wife on paid corporate boards in exchange for naming the president-elect’s pick to the Senate.”

Blagojevich’s current antipathy toward Obama may loosen his lips. On the other hand, he surely must understand that a President Obama would be a powerful ally.

This is from the indictment, paragraph 35 — under the heading “Corruption of the Planning Board”:

As described more fully in following paragraphs, Mercy Hospital, which sought permission fromt he Planning Board to build a hosptial in Illinois, received that permission through Rezko’s exercise of his influence at the Planning Board after Rezko was promised that Mercy Hosptial would make a substantial campaign contribution to ROD BLAGOJEVICH. Rezko later told a member of the Planning Board that Mercy Hosptial received the permit because ROD BLAGOJEVICH wanted the organization to receive the permit.

During his testimony, Levine described a plan to manipulate the Planning Board to enrich himself and Friends of Blagojevich. The plan centered on an entity commonly known as Mercy Hospital (”Mercy”) that was attempting to obtain a CON to build a nw hospital in Illinois. Levine knew the contractor hired to help build the hospital. In approximately November 2003, on behalf of the contractor, Levine checked with Rezko to determine whether Rezko wanted Mercy to obtain its CON. Rezko informed Levine that Mercy was not going to receive its CON. According to Levine, he asked Rezko whether it would matter to Rezko if Mercy’s construction contractor paid a bribe to Rezko and Levine and, in addition, made a contribution to ROB BLAGOJEVICH. Levine testified that Rezko indicated that such an arrangement would change his view on the Mercy CON.

Long story short: Mercy made the pay-off to Blago, and got the necessary CON. (Note that Rezko, who held no elective or appointed office, is the prime mover behind this public board. Rezko was also the man who started Obama’s career. And yet Rezko claimed that he was nearly bankrupt at this time.)

Paragraph 41 of the indictment:

Mercy received its CON as a result of a controversial and irregular vote at a public planning board meeting… Rezko stated: “The Governor wanted it to pass.”

This Washington Post article, published on August 27, 2008, reveals that Hunter Biden — the Veep-elect’s son — is a lobbyist. One of his clients is Mercy Hospital. The primary person he lobbied was Senator Obama. And the lobbying was successful — Mercy got millions, despite Obama’s public denunciations of earmarks.

“Hunter Biden met with the Obama Senate office, not with Senator Obama,” Wade said. “It’s hardly surprising that a Senator from Illinois would fight for investments in Mercy Hospital, Thorek Hospital and St. Xavier University right in Illinois, or that he’d be joined in that effort by a Republican colleague, Representative Judy Biggert.”

“Wade” is David Wade, an Obama campaign spokesperson. His blandishments seem less soothing now that we know that Mercy willingly participated in the pay-to-play scheme, and that Obama’s cronies Rezko and Blagojevich were getting loot from Mercy.

Fitz now has a month-and-a-half to get Rezko and Blago to rat out Obama.

The other possibility — which I favor — is that Rahm was the “go between” guy who offered Blago the bribe involving a cushy job for Blago’s wife. If this scandal does not destroy Obama, it may at least stop Emmanuel.

A belated thought: Is this the single dumbest racket ever attempted by a major politician? He knew the U.S. Attorney was investigating him, he knew he couldn’t trust his cronies — and yet he was still willing to talk openly about selling a seat in the United States Senate?

Incidentally, speculation has it that Jesse Jackson Jr. Senate candidate #5. Candidate 1 (Obama’s pick) was female, probably Valerie Jarrett.

As recently as Dec. 4, in separate conversations with Advisor B and Fundraiser A, Blagojevich said that he was “elevating” Senate Candidate 5 on the list of candidates because, among other reasons, if Blagojevich ran for re-election, Senate Candidate 5 would “raise money” for him.

Blagojevich said that he might be able to cut a deal with Senate Candidate 5 that provided Blagojevich with something “tangible up front.”

Noting that he was going to meet with Senate Candidate 5 in the next few days, Blagojevich told Fundraiser A to reach out to an intermediary (Individual D), from whom Blagojevich is attempting to obtain campaign contributions and who Blagojevich believes is close to Senate Candidate 5.

Blagojevich told Fundraiser A to tell Individual D that Senate Candidate 5 was a very realistic candidate but Blagojevich was getting a lot of pressure not to appoint Senate Candidate 5, according to the affidavit.

All of this tends to point to JJ Jr. Note the date: December 4. Now note this story, from December 8:

Following a 90-minute audition meeting today with Gov. Rod Blagojevich, Congressman Jesse Jackson Jr. said he was confident in the process the governor is using to make his choice for a Senate successor to President-elect Barack Obama.

Jackson has mounted the most highly visible campaign among several people who are being considered for the Senate post. He said the meeting with Blagojevich amounted to a “very productive conversation, very thoughtful” that covered a broad range of issues.

“I am convinced that the governor has a very thoughtful process that he has put in place and is wrestling and weighing a number of issues in this enormous decision that he has to make,” Jackson said.

On Dec. 4, Blago said that he would meet with Candidate Five within a few days. The ONLY candidate he met with during that time period was Jesse Jackson Jr. — the man who insulted Hillary so disgustingly during the primaries.

Ask not what your country can do for you; ask what you can do for your country.

December 10, 2008 at 10:46 pm

This is an great article on the history of the sub-prime mortgages and some of the people who saw the problem and the inevitable results early on.

The funny thing, looking back on it, is how long it took for even someone who predicted the disaster to grasp its root causes. They were learning about this on the fly, shorting the bonds and then trying to figure out what they had done. Eisman knew subprime lenders could be scumbags. What he underestimated was the total unabashed complicity of the upper class of American capitalism. For instance, he knew that the big Wall Street investment banks took huge piles of loans that in and of themselves might be rated BBB, threw them into a trust, carved the trust into tranches, and wound up with 60 percent of the new total being rated AAA.

But he couldn’t figure out exactly how the rating agencies justified turning BBB loans into AAA-rated bonds. “I didn’t understand how they were turning all this garbage into gold,” he says. He brought some of the bond people from Goldman Sachs, Lehman Brothers, and UBS over for a visit. “We always asked the same question,” says Eisman. “Where are the rating agencies in all of this? And I’d always get the same reaction. It was a smirk.” He called Standard & Poor’s and asked what would happen to default rates if real estate prices fell. The man at S&P couldn’t say; its model for home prices had no ability to accept a negative number. “They were just assuming home prices would keep going up,” Eisman says.

As an investor, Eisman was allowed on the quarterly conference calls held by Moody’s but not allowed to ask questions. The people at Moody’s were polite about their brush-off, however. The C.E.O. even invited Eisman and his team to his office for a visit in June 2007. By then, Eisman was so certain that the world had been turned upside down that he just assumed this guy must know it too. “But we’re sitting there,” Daniel recalls, “and he says to us, like he actually means it, ‘I truly believe that our rating will prove accurate.’ And Steve shoots up in his chair and asks, ‘What did you just say?’ as if the guy had just uttered the most preposterous statement in the history of finance. He repeated it. And Eisman just laughed at him.”

Just a stunning expose of the mess that the financial institutions made and how most of them didn’t even know it was happening.

Saw this over at Blunt Object who also points to neo-neocon and Coyote Blog.

“The conduct would make Lincoln roll over in his grave,” Fitzgerald said as he detailed the breathtakingly brash display of pay-to-play political machinations detailed in the 76-page affidavit against Blagojevich.

“We were in the middle of a corruption crime spree, and we wanted to stop it,” said Fitzgerald, who dubbed the accusations against the two-term governor “a truly new low.”

That’s how US Attorney Patrick Fitzgerald described the charges against Illinois Governor Blagojevich.  Yes what he is doing is illegal and wrong but is it really shocking and a “truly new low”?  I don’t think it is at all.  Let’s look at some of the things Blagojevich was caught saying:

First on the empty senate seat:

“I’ve got this thing and it’s f- - -ing golden and uh, uh, I’m just not giving it up for f- - -in’ nothing. I’m not gonna do it,”

“I’m going to keep this Senate option for me a real possibility, you know, and therefore I can drive a hard bargain,” he allegedly said on tape.

“You hear what I’m saying. And if I don’t get what I want and I’m not satisfied with it, then I’ll just take the Senate seat myself.”

Everyone in politics or half a brain knows that this is a true statement.  Having the power to name that senate seat is just that power.   He would be stupid to just give it away and not use that as leverage.  He’s not going to be governor forever.

Second, on him wanting to make money:

“I want to make money”

Looking for a hefty salaried job for himself at a foundation or group linked to labor unions - even musing that Obama supporter and billionaire Warren Buffett could be coerced into kicking in millions to create an outfit where Blagojevich could work.

Any of that shocking to you?  That happens all the time in politics.  You don’t get into politics for the salary..you get in to make connections to make money when you get out or while in office.

Third, on his wife:

 Seeking to get his wife Patti named to a corporate board where she could earn a stipend up to $150,000

Yeah that follows the same rule as above.  How many corporate boards have ex governors, senators, etc on them?  And yes their spouses are on these as well…easier to hide.

Fourth, campaign funds:

Pushing to exchange funding for local programs in exchange for campaign cash

This is laughable to me…this happens at every level of government and ALL the time.  Again, I’m not saying it’s right but let’s be adults here.   So in my opinion none of this is shockng or “truly new low”.  It’s politics as usual.  My real question is how did he get caught and why?  Who did he piss off?  My guess is that someone was going after Obama and had to settle for him.   I’m all for sending this jerkoff to jail but let’s not play favorites here…don’t stop here, get the rest of them.

A spike in sales on Black Friday and some modest growth on Cyber Monday may have helped salvage some of the holiday season, but unfortunately aggressive promotional events haven’t been enough to rescue the retail market. Consumer electronics chain Tweeter closed its doors right in the heat of the holidays and Sears announced plans to close more stores amidst what Best Buy CEO has described “the most difficult climate we’ve ever seen.”

Unlike the banking and automotive businesses it’s doubtful that retailing will have its day on Capitol Hill pleading for government money. The credit crisis and resulting consumer spending drop will need to be reckoned with by innovation, executive intelligence, customer intelligence, and hard work.  As Warren Buffett has said: “Time is the friend of the wonderful company, the enemy of the mediocre.” Retailers have the tools, and have proven their commitment, to endure. But instead of finding the latest gloomy numbers to focus on, it’s time to start asking and answering some tough questions if they expect to survive and thrive in the future.

We’re not privy to discussions in the board rooms of major retailers, but if they want time to be a friend we expect that there are 10 core questions they may be (or at least ought to be) asking themselves in order to help them  get a handle on what happened and more importantly what will happen to their business.

2. How has the shopping frequency of our best customers changed in the past quarter? This answer is irrelevant if it does not include cross-channel purchases. Retailers must investigate their shopping data to define cross-channel shopping behavior, including recent changes and trends.  Strategies in Q1 and Q2 will flow from this data. Related follow up discussions should address the ability to measure activity across channels as well how channel preferences and shopping behaviors have changed for key customer groups. Most merchants have seen a decline in average ticket size as well as traffic figures this season, the smart retailers will gain an edge by digging into which customers visited more often, those who never visited,  and which customers changed their shopping patterns.

3. How well are we measuring conversion rates across channels? Conversion rates equal revenue. Defining conversion metrics provides a path to missed revenue opportunities and lost margin due to inefficient operations. If you don’t think conversion rates are important consider that Coremetrics found that during Black Friday, the new visitor conversion rate, which measures the percentage of new visitors that complete an order, dropped 13 percent drop of conversion compared to Black Friday last year. That’s 13 percent of new customer orders gone.

4. How relevant was our messaging to our customers during the key inflection points of the holiday selling season? Do you have campaign tracking tools in place, as well as the ability to personalize messaging based on past purchase history and brand preference? Research consistently shows one of consumers’ biggest frustrations is being flooded with emails on product offerings that are of no interest to them. Industry research has consistently shown trigger-based messages outperform traditional outbound marketing by 10 to 1. By tapping into customer analytics, leading retail partners have been able to make adjustments to cross-channel campaigns, and send personalized offers to their best customers, resulting in increased store visits, bigger basket sizes, higher margins and reduced customer attrition.

Autonomous: News, Commentary, Humor, Culture, Entertainment

John Nichols, TheNation.com.

Illinois Gov. Rod Blagojevich, a scandal-plagued Democrat who, among other things, was preparing to appoint a senatorial successor to President-elect Barack Obama, was arrested Tuesday by FBI agents on what can only be described as breathtaking charges of corruption.

Needless to say, this is more than just another bust of another allegedly crooked governor of a state that has sent a good many of chief executives to prison — including Blagojevich’s predecessor, Republican George Ryan.

What are the ramifications?

First off, Obama is going to face questions about Blagojevich, a fellow Chicago pol with whom the president-elect served in the Illinois statehouse during from 2003 to 2005, when Blagojevich was governor and Obama was a state senator. The president-elect is not saying much beyond a standard “it’s a sad day for Illinois” lamentation.

What is clear from the transcripts of tapes contained in the 76-page indictment is that Blagojevich was not satisfied with the response from the Obama team. The governor was overheard saying of the transition team, “they’re not willing to give me anything except appreciation. F**k them.”

At another point, the Blagojevich used the same epithet with regard to Obama.

It appears that the governor sought various and sundry benefits for himself, his wife and his campaign in return for Obama’s seat. Blagojevich is quoted as saying that a Senate seat “is a f**king valuable thing, you just don’t give it away for nothing.”

Reflecting on the governor’s actions and statements, U.S. Attorney Patrick Fitzgerald declared, “The breadth of corruption laid out in these charges is staggering. They allege that Blagojevich put a ‘for sale’ sign on the naming of a United States senator…”

One of the allegations is that the governor offered to appoint a favorite of organized labor in return for a top-level union job. And it just gets uglier.

Fitzgerald says, “(Blagojevich) involved himself personally in pay-to-play schemes with the urgency of a salesman meeting his annual sales target; and corruptly used his office in an effort to trample editorial voices of criticism.”

That final reference is to an alleged scheme by the governor and his chief of staff to demand the firing of editors of the Chicago Tribune — a newspaper that has long been critical of Blagojevich — in return for state aid for the financially troubled Tribune Co.’s sale of Chicago’s Wrigley Field.

What emerges is a picture of a governor gone wild — including scheming to shakedown billionaires Warren Buffett and Bill Gates — and the FBI reportedly has the tapes to prove it.

The question of course, is who, if anyone, will go down with the governor.

In addition to Obama, many Illinois politicians with national reputations are going to be facing questions about their relationships with Blagojevich.

Included on the list will be Reps. Danny Davis, Jesse Jackson Jr. and Jan Schakowsky, all of whom served in the House with Blagojevich before he became governor and all of whom have been angling for appointment to Obama’s seat. Jackson, for instance, met with Blagojevich on Monday.

If Jackson was cooperating with the investigation, he could come out as a hero, and perhaps a senator. Certainly, there will be speculation about that prospect because of the timing of the arrests of Blagojevich and his chief of staff Tuesday morning.

Any pol who spoke with Blagojevich will likely be on those FBI tapes, and if conversations took a corrupt turn, then the investigation could spread far beyond the governor’s office.

Perhaps the most intriguing twist in the whole sordid tale is this: Blagojevich’s arrest makes it likely that someone else will be appointing the next senator from Illinois.

If the governor is forced to resign — or is impeached — his office would go to Illinois Lt. Gov. Pat Quinn, a veteran reformer and rabble-rouser who has often, although not always, been at odds with Blagojevich. (In fact, Quinn’s record over the past several decades has been one of battling the Illinois political and corporate establishment. He won the nomination for his current post by upsetting the candidate preferred by Blagojevich and the Democratic machine.)

As word of the federal investigation of Blagojevich and his aides spread in recent weeks, Quinn was outspoken in demanding that the governor “come forward and level with the people of Illinois.”

Frankly, if Quinn is empowered to select Obama’s successor, both Illinois and the Senate will be better served. Of course, a special election would be an even better option — and that democratic route seems to have been opened at the encouragement of Illinois Sen. Dick Durbin, a Democrat.

That’s the bottom line: No one should mourn for Blagojevich.

Rather, we should be interested in answering all the questions about corruption in Illinois and about when and if Quinn will be in a position now merely to send a new senator to Washington — or to arrange a special election — and to begin cleaning up the mess in Springfield.

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Yesterday I introduced the idea of real prosperity, and mentioned that there are really 4 P’s to real prosperity – prosperity in line with God’s calling for you:

Yesterday we reviewed perspective and purpose, and why you should get these in focus before you move on to the plan and products integral to your prosperity.  If you didn’t read yesterdays post, you should do so, then come back.

Reality includes evolution, global warming, and peak oil.

Remember that 1999 represented the very height of the dot-com bubble. Buffett’s statement was bursting the bubble of business success stories like Bill Gates who sat in the audience, and gasped at this prediction.

Yet how wise the Sage of Omaha has proven to be. The dot-comers have seen their fortunes shrink and not recover from the bust. And the Dow today is substantially lower than in 2000.

Why then did Warren Buffett put out a buy notice on stocks last month? Is this not a contradiction of his own prediction about 1999-2016?

Well, to be fair the Dow has rallied 20 per cent since his call. But is this therefore nothing more than a bear market rally?

If we are to take the seminal 1999 statement from Warren Buffett seriously, and he has not denied it and presumably endorsed its inclusion right at the front of his new biography, then that has to be the conclusion.

However, it could be that the inflation outlook has changed so dramatically in the wake of the $8 trillion in bailouts and stimulus packages now being thrown at the US economy that Buffett is having a re-think.

Stocks could well be buoyed upwards by a hyper-inflationary economy. This has happened most recently in Zimbabwe though this is hardly an economic model worth replicating in the world’s biggest economy.

Russell Napier, author of the definitive book ‘Anatomy of the Bear’ reckons stocks could rise for a couple of years on the back of the money being injected into the global economy, but this will ultimately fail and lead to stocks plunging to new lows.

According to Q-theory - which values stocks by reference to replacement value of their assets - the Dow market bottom is at around the 4,000 level or another 55 per cent down.

The ride from 4,000 back to 14,000 would be a very substantial roller-coaster ride, and that might indeed take until 2016 as Warren Buffett suggested in 1999.

But in the short term a two year bull market in an inflationary environment, and presumably with a weakening dollar, would be highly positive for precious metals, and particularly their stocks.

Cash-strapped consumers are finding bonanzas in their jewelry boxes as they sell their unwanted gold to pay for holiday gifts — but more and more are complaining some gold buyer dealers aren’t ethical or offering fair prices.

The biggest offenders, according to a recent tally on the Better Business Bureau’s website, BBB.org, are gold buyer companies advertising heavily to buy unwanted gold jewelry on cable television channels. One company had 177 complaints in the previous 36 months. Another company had 96. The complaints range from cash for gold jewelry discrepancies and misleading advertising to customer service issues and claims for lost gold jewelry shipments.

“Not every Internet gold buyer is dishonest,” says Michael Gusky, whose company, http://www.Goldfellow.com has no complaints against it and an “A” rating from the Better Business Bureau.

A 30-year gold jewelry industry veteran, Gusky attributes his company’s success and rapid growth to a higher level of trust achieved through his company’s transparent business practices and higher payments.

“The owners of Goldfellow(TM) are the most honest and ethical dealers I have had the pleasure to do business with,” says Carla Stern who first tried to get cash for gold jewelry to two other Internet gold buyers. “Goldfellow(TM) paid me $1800 for the same package I had sent to a highly advertised on TV and Internet dealer, who tried to pay me only $310.”

Gusky has a theory for why his pricing is so much higher than the competition’s.

“We could spend millions on television like the competition — or we could put the cash for gold in our customer’s pockets. We prefer to pay the customer higher prices,” he says. According to the company’s Web site, www.goldfellow.com, Goldfellow’s(TM) competitive differences include providing every customer with free FedEx(R) shipping and insuring each package for $1,000. Its complete online payment schedule is updated daily and unlike many competitors, Goldfellow(TM) customers must see and accept their offer before they are paid.”Don’t take my word for it,” says Gusky. “Do your homework.”

Gusky strongly recommends reading through a company’s Website and comparing policies and pricing before choosing a gold buyer.

“Ask how much you will be paid for one pennyweight of 14 karat gold jewelry and compare prices. Ask if you will be notified of your cash for gold value before you’re paid,” he suggests. “And for goodness sake, never agree to drop your valuables in a regular mailbox. There’s no record or proof that it has been mailed — and it’s not insured although many of our competitors would like you to believe otherwise.” Gusky, and his wife Robin who is also active in the company, made their reputation during 30 years in the gold jewelry business. Their company grew to become the largest karat gold jewelry manufacturer in America, culminating with a sale to billionaire Warren Buffett’s, Berkshire-Hathaway in 2007.

But an unscientific survey of USA TODAY’s panel of CEOs and other evidence suggest that baldness might be a blind spot for many.

TELL US: If you had to change your hair or your height to make it to the top of the corporate ladder, which would you choose?

CEOs say being bald doesn’t impede success and, given a choice, it’s better to be bald than short. So widely held is this conventional wisdom among top executives that when asked to choose, most CEOs say they’d take 2 more inches of height over a full head of Robert Redford hair.

“I don’t believe it ever (affected) my career. But as I progressed, it became less and less of an issue until it is now a point of pride and a personal branding advantage,” says Steve Carley, the 6-foot-1 bald CEO of El Pollo Loco. “It encourages approachability.”

As smart as they are, CEOs have been known as a group to get it wrong. It now appears that was the case just months ago when they almost universally said they didn’t see a recession looming. Could they also be collectively clueless about hair vs. height?

It’s not that being short is a career launching pad. Plenty of studies have found that taller men make more money, gain more success and attract more women. In his book Blink, Malcolm Gladwell says 30% of Fortune 500 CEOs are 6-foot-2 and taller — vs. just 4% of all men.

Bald men are a much bigger slice of the general population. The International Society of Hair Restoration Surgery estimates that 50% of Caucasian men older than 45 and 60% older than 60 have clinical balding. Stress can cause hair to fall out, so all things being equal, the percentage of bald leaders might be expected to be a little higher than average. Yet:

•If elected, John McCain would be the first bald U.S. president since Dwight Eisenhower. To be fair, baldness, unlike height, can be a matter of opinion. At 71, some might say McCain is doing OK in the hair department for his age group. But pictures of 42 presidents indicate that less than 25% were bald or balding, when statistically it should be at least half.

•There are 41 male state governors. Those who are bald or balding make up less than 20% and, yes, that includes the aptly named John Baldacci of Maine. The hair-loss club dropped a governor Wednesday when New York Gov. Eliot Spitzer announced he would resign after being linked as a client to a prostitution ring. He will be replaced by Lt. Gov. David Paterson, who is not bald. Only 10% to 20% of the 84 male U.S. senators are bald or balding.

•Among corporate CEOs, women run four of the largest 125 companies on the Fortune 500. USA TODAY examined photos of the men and considered about 25% to be bald or balding. Bald men running the nation’s largest companies include Chevron’s David O’Reilly, Home Depot’s Francis Blake, Morgan Stanley’s John Mack and Goldman Sachs’ Lloyd Blankfein.

•It may be more difficult to be bald and extremely rich. Warren Buffett, the richest man in the world, according to Forbes magazine, has lost hair in the past year but at 77 still retains a respectable amount. The richest American on the Forbes 400 list who is truly bald is No. 15 Steve Ballmer, CEO of Microsoft. The response of “no comment” was as much a male pattern among CEOs as was their hairline, and Microsoft was among the large corporations with bald or balding CEOs that did not respond to USA TODAY’s requests.

The 11 male U.S. billionaires ahead of Ballmer on the Forbes list have their own hair, or at least appear to. Hair transplants and toupees are still relatively uncommon. Sales of male wigs peaked in the 1970s, and New Hair Institute founder Dr. William Rassman says CEOs are probably no more likely to have rugs or plugs than all men of their age group.

Only 1% of 1,138 professionals making $100,000 or more who responded to an unscientific survey by TheLadders job website said they were bald and trying to cover it up; and just one hair transplant is performed on men for every five breast augmentations performed on women, according to the American Board of Plastic Surgery.

But the success rate of transplants has improved, and they cost less than $7,000 on average, $20,000 on the high end, no more than a one-way ride aboard a corporate jet. Rassman says he has performed hair-transplant surgery on more than 30 billionaires. He declined to identify them.

A 6-foot-6 man creates a commanding presence when he enters a meeting — a feat more difficult to achieve for someone inches shorter, says George Jones, the “follicly challenged” 5-foot-9 CEO of bookstore chain Borders Group. He oversees 34,000 employees and $4 billion in annual revenue.

USA TODAY surveyed its panel of CEOs, retired CEOs and leading executives. There was a lower response rate than for surveys on other topics, but 95% of the 74 who responded said, if given a choice, they would rather be bald than short. More telling is that the 31 CEOs who identified themselves as bald or “headed in that direction” in the unscientific survey were unanimous in saying that being vertically challenged is more detrimental to an aspiring executive’s career.

USA TODAY asked TheLadders to follow up with a survey. The job-search site for high-income professionals got 1,138 responses. Half said they still had as much hair as they did when teens, while 15% said they were bald, and 35% said they were headed in that direction. Among all respondents to the unscientific survey, 67% said 2 inches more in height would be better for career success, vs. 33% who said a full head of hair.

Those results mirrored another unscientific survey taken at USA TODAY’s request by Vistage International, an organization of CEOs. Vistage asked its membership: “If appearances count, what aspect is most helpful in advancing a person’s career?” Of the 219 responding, 66% said taller is better; 34% chose hair.

“I think they are in denial,” Rassman says. He says bald men of power have confessed to him that even they discriminate against other bald men.

Baby-face bias

Academia has largely ignored the impact of balding on success, but Yale University psychology professor Leslie Zebrowitz has written extensively about how people with round faces and other traits that resemble babies are perceived to be more immature in the workplace and in the courtroom by juries and judges.

Zebrowitz says she knows of no research that has tried to determine whether bald men are more likely to have baby faces than men with hair. But if bald men do look more babyish, “Then that could account for their under-representation among CEOs,” she says.

Nicholas Rule, who wrote the paper “The Face of Success,” published in February’s issue of Psychological Science, says bald men may be more likely to be victims of the “baby-face bias” described by Zebrowitz. In his study, Rule had Tufts University students look at photos of CEOs and offer their gut reactions about their leadership capabilities. At USA TODAY’s request, Rule examined the data and found that the photos of bald CEOs were considered by the students to be warmer but less powerful than CEOs with hair.

“A great smile is much better” than hair or height, says Howard Behar, the 5-foot-10 and bald former president of Starbucks North America. “I mean, look at Mitt Romney. Lots of hair. Tall and good-looking. Sure didn’t help him. Compare him to the Dalai Lama: short, no hair and not exactly a looker. Just call me the Dalai Behar.”

Some say that worse than bald is trying to cover it up with a “comb-over” that uses remaining hair to cover the exposed scalp. “Like most CEOs, I’m cognizant of my appearance,” says Bob Kodner, CEO of The Crack Team franchiser that fixes leaking basement cracks. Five years ago, Kodner saw his cranium in an elevator mirror and thought someone had “thrown a piece of baloney on my head.” Ever since, he’s been shaving his head once a week. His advice: Don’t “prolong the inevitable.”

Craigslist founder and Chairman Craig Newmark is bald and “almost” 5-foot-7. Company CEO Jim Buckmaster is a foot taller and rich in hair.

“The general Net community does regard me as eye candy, a la George Costanza” from Seinfeld, Newmark says, but he adds that neither bald nor short is a good thing in corporate life. When pressed to make a choice, Newmark says, “I’d prefer to be a few inches taller.”

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 The American economy is going to do fine. But it won’t do fine every year and every week and every month. I mean, if you don’t believe that, forget about buying stocks anyway. But it stands to reason. I mean, we get more productive every year, you know. It’s a positive-sum game, long term. And the only way an investor can get killed is by high fees or by trying to outsmart the market.

 ZFG Mortgage: “If You Need A Home Loan or Mortgage, You Need ZFG Mortgage.”

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Bush rewards domestic terrorist

As Hilzoy notes the Presidential Citizens Medal was intended to be bestowed upon citizens who have “performed exemplary deeds of service for the nation”. Bush celebrates Human Rights day by giving it to Chuck Colson,

“As special counsel to the president, he was Richard Nixon’s hard man, the “evil genius” of an evil administration. According to Watergate historian Stanley Kutler, Colson sought to hire Teamsters thugs to beat up anti-war demonstrators, and he plotted to raid or firebomb the Brookings Institution. He eventually pleaded guilty to scheming to defame Daniel Ellsberg and interfering with his trial. In 1974, Colson served seven months in federal prison.”

The late segregationist Strom Thurmond also received the Presidential Citizens Medal. So not the first time the medal’s intentions have been compromised. Though Colson, the domestic terrorist seems especially ironic post 9-11. In a recent memo to White House staff and his own proclamations Bush describes himself as being honorable. If he can’t recoqnize his own failings to be honorable little wonder that he can’t see the same failings in a fellow rabid ideoloque.

Former U.S. Contractor Alleges 9-Month Detention in Iraq

For months, he worked closely with American soldiers, ferreting out threats to the troops and forging a relationship with a key sheikh who went on to lead the Sunni awakening. But when this 52-year-old translator and veteran of the U.S. Army headed for his annual leave as a contractor in Iraq, he claims he was wrongfully imprisoned for nine months by American forces, with no access to a lawyer and no contact with his family for months.

The allegations are laid out in a lawsuit against former Defense Secretary Donald Rumsfeld, recently filed in federal court in Washington where the former contractor for Titan, and a naturalized U.S. citizen, alleges that his due process rights were violated when he was detained and held in “torturous conditions.” “There was no justice in what happened to me,” the translator said in an exclusive hour-long phone interview with ABCNews.com. “There was no justice involved in it.”

What are you going to do when they come for you comes to mind. Here’s a U.S. citizen and veteran, one among several at this point, who would have never imgined that they would be held without the slightest of due process.

A Spy CEO for Obama By David Ignatius. The title got my attention. The DNI (Director of National Intelligence) thought by many to be an answer to pulling together the myriad intelligence gathering agencies has turned into just another bureaucracy. Does Ignatius have the answer?

Should the Obama administration continue the DNI structure? The answer is probably yes, because yet another reorganization would drive everyone bonkers. But what should this intelligence czar do? In a perfect world, he would be the Warren Buffett of intelligence.

David makes the case the DNI isn’t working, but do not try reorganizing. Kind of a head spinner. The idea that a super manager will make it work smacks of GM thinking.

I would add that the left-right slugfest — in which liberals stress accountability and conservatives emphasize performance — is wrong. The intelligence community needs more of both, urgently.

That just sounds so bipartisan he must be right. The problem seems to be that the effectiveness that David thinks the Right stands for has compromised national security by way of torture, illegal renditions and detentions. There cannot be effectiveness without accountability. People who might well be acting in what they believe are good faith are committing crimes in the name of every American. That tends to undermine any case we as a country make for democracy and justice. And spare me the crocodile tears for John Brennan.

Interesting statistic from this article considering the constant whining by the Right that the judiciary is too liberal, Liberal Legal Group Is Following New Administration’s Path to Power

Administrations are permitted to take politics into account when selecting judges and making political appointments. Under President Bush, the Federalist Society flourished; 46 percent of his appeals court judges had connections to the conservative network.

But the Justice Department’s inspector general found that officials also used such affiliations to make hiring decisions for career civil-service jobs, including blocking interviews with American Constitution Society members and soliciting the Federalist Society for recommendations.

That 46 only accounts for Right leaning appeals judges with connections to the Federalist Society. According to this article Conservatives make up a sizable majority of the federal bench,

Republican-appointed judges, most of them conservatives, are projected to make up about 62 percent of the bench next Inauguration Day, up from 50 percent when Mr. Bush took office. They control 10 of the 13 circuits, while judges appointed by Democrats have a dwindling majority on just one circuit.

The Inauguration Day referred to is the day President Obama takes office.

I love reading about successful people. Men and women throughout history that are great in their chosen area. I study these folks because I want to be great too. I have goals and dreams that I want to achieve and learning about someone else’s struggle helps me stay on track for my own.

Who do I consider great? Just to name a few, business leaders like Warren Buffett, Michael Dell, Mary Kay Ash and Meg Whitman. Political leaders like Barack Obama, Hillary Clinton, Nancy Pelosi and Elizabeth Dole. Historical leaders like Ida B. Wells, Sojourner Truth, Malcolm X, Dr. Martin Luther King Jr., etc. This list could go on all day.

PERSISTENCE

In your journey through life, you will come across obstacles. At times they will seem insurmountable. Some people find it easy to give up and find an easier route. The persistent person will find a way around, over or even through that obstacle. A hard fought battle helps you learn lessons about life that you would never have received going the easy route.

RISK SEEKING

We all know it’s scary to take risks. As project managers, it’s our responsibility to do proper risk analysis and use all the risk management techniques so that we can mitigate any risks to the project. But at the end of the day, when all the analyses are in, sometimes you have to take the risk. A well played risk can net you a big payout - but it can also mean a big failure. You have to decide what your priorities are and what you value.

GOAL ORIENTED

This is by far, the most important part of being great. ALL great leaders had goals. It is the very rare person that has achieved greatness by accident. Most people have to work hard towards the success they have achieved in life. We’ve all heard of SMART goals. It’s important to set your long and short term goals.

You don’t have to become president of the United States or the richest person in the world to be a success. Define what success means for you. It could just mean being a kick-ass project manager or making sure that your kids are happy. No matter what it is, set your goals, don’t give up and take a chance.

Warren Buffett’s Berkshire Hathaway now owns almost 20% of Burlington Northern after put options it wrote were exercised. Over the past year or so, Buffett has continued to buy up shares in Burlington Northern, the country’s second largest rail company. He has previously said that “railroads have good long-term prospects and are healthier today than in past years,” according to the Associated Press.

CNBC’s Warren Buffett’s Watch, written by Alex Crippen, provides additional detail on the option trade that resulted in Berkshire buying another 3.3 million shares of the railroad.

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David Ignatius in the New York Times on Obama’s intel approach:

Should the Obama administration continue the DNI structure? The answer is probably yes, because yet another reorganization would drive everyone bonkers. But what should this intelligence czar do? In a perfect world, he would be the Warren Buffett of intelligence. That is, the DNI would be the chief executive of a diverse portfolio of intelligence agencies. The director would maintain accountability and quality control but let the agency heads run their businesses.

What’s needed is an experienced, first-rate manager “who is less interested in briefing the president in the morning than in ensuring that the community has the best tools and processes to make the PDB [President's Daily Brief] a world-class product,” says one former top-level intelligence official.

I would add that the left-right slugfest — in which liberals stress accountability and conservatives emphasize performance — is wrong. The intelligence community needs more of both, urgently.

I concur.

Gee, Mrs. Cleaver, can Wally come out?

How about his name? Does Mark Zuckerburg ring a bell?

Before you know it, bada-bing, bada-boom, his company is worth $15 billion and his net worth is an estimated $1.5 billion. That’s billion with a B. Number 321 on the list of the 400 richest people. At 23, he was the youngest self made billionaire in the U.S. and in the world. You know you’re rich when you can lose $499 million and still be a freaking billionaire.

Ten years ago, this dude was probably playing with pokemon cards at recess, now he’s loaded down with more dollar bills then there are people in the USA. Eat your heart out, Bill Gates. Tom can’t touch that kind of money.

But here is the main point. When I was 23, I was busy drinking 75c tequila shots at Wichita bars on the weeknights chasing women of questionable character. At that same age, this guy was working on a revolutionary social networking platform and amassing stupid amounts of money while he was doing it. Okay, so I don’t really think Facebook is all that, but it’s alright for what it is. As overrated as the website may be, you can’t deny that this kid has some serious dough.

Granted, this article was written in September before the stock market started tanking. Facebook might have shed some of its value on Wall Street. Our young hero might have lost a little bit of his net worth, but I don’t think babyface here is going anywhere soon. He’ll be up in Omaha playing bridge with Warren Buffett in no time.

That is, if he’s not too busy hanging out in a vault full of coins that he can swim in like Scrooge McDuck.

In this week’s Validea Hot List newsletter, Validea CEO John Reese writes that “more and more of the world’s most successful investors — including many who correctly believed that the market was overvalued before its recent crash — are saying that stocks are now good values”. Among them are Jeremy Grantham, David Dreman, Jeremy Siegel, Bruce Berkowitz, Warren Buffett, and Marty Whitman. The fact that these gurus are seeing value in the market is a great sign, Reese says, especially given that many of them foresaw the recent crash.

The growing number of bullish gurus doesn’t necessarily mean we’ve hit a bottom, however, Reese adds, noting that markets often overshoot fair value not only on the way up, but also on the way down. But good long-term investors snatch up good values when they see them, whether the market is going to go up today, tomorrow, or a month from now, Reese says, and in the long run they are rewarded.

In the newsletter, Reese also takes a closer look at the Guru Strategy computer model that he bases on the writings of mutual fund star John Neff. During his 31-year tenure at the Windsor Fund, Neff averaged a 13.7 percent annual return, more than 3 percentage points per year better than the S&P 500. He did it by focusing on stocks with P/E ratios that were low, but not too low, because very low P/Es can often indicate that the company is a dog. He thus looked for P/Es that were 40 to 60 percent of the market average.

Neff’s strategy also looked for moderate, sales driven EPS growth. And he liked to see strong dividend payouts, because he found that stocks usually moved solely on their price appreciation potential, meaning that investors essentially got dividends for free. In fact, Neff says that about two-thirds of his 3 percent per year outperformance of the market was attributable to dividends. A favorite tool of his was the Total Return/PE ratio, which divides total return (EPS growth plus dividend yield) by a stock’s P/E ratio.

Among the current holdings in the 10-stock Validea Neff-based portfolio are:

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So charmed was King Carl XVI Gustaf of Sweden, that his majesty took Michigan Governor Jennifer Granholm up on her invitation and visited the state himself in September 2008.

“It was very exciting to have royalty in Michigan,” Granholm admits. “Our efforts in Michigan are putting our state at the center of in-demand research and development of technology that will help reduce reliance on fossil fuels. Sweden has really paved the way, and I think we can learn from their leadership. This was an important visit as we continue to build our relationship with Sweden and grow jobs in the alternative energy sector.”

A year earlier, Granholm, Michigan’s 47th governor, re-elected for her second and final term in 2006, strengthened her state’s ties with Sweden, according to her husband Dan Mulhern.

“Even though she is a few generations removed from Sweden, she has recruited businesses from there as if we were first generation,” Mulhern says. “She has brought their expertise in energy to our country.”

She also reminded the king and CEOs in Sweden that her name, Granholm, means “peninsula of trees,” an eerily appropriate descriptor of Michigan’s Upper Peninsula. The king of Sweden saw the real Granholm—she’s a charmer.

Jim Epolito, appointed president and CEO of the Michigan Economic Development Corp. (MEDC) by Granholm, says the governor has incredible energy and total focus.

“She has undertaken a ‘go anywhere, do anything’ approach to creating jobs in Michigan,” Epolito says, and that is in fact her spoken motto.

“Six overseas investment missions have led to commitments from 42 companies to invest in our state,” he says. “The pace of these successes—our ability to bring them to Michigan so quickly—is breathtaking. They are a direct result of our governor’s drive, focus, intellect and personality.”

Granholm, a compelling and poised speaker, with a sense of humor and an all-business wardrobe, is confident and convincing.

“I personally know how persuasive the governor can be,” Epolito says. “When she first talked to me about heading up the MEDC three years ago, she made such a strong pitch I couldn’t refuse despite some reservations. That’s why when another CEO tells me about their meeting with the governor, I have to smile, because I know exactly where they’re coming from.”

Google, Hemlock Semiconductor, Keebler and Whirlpool are among the companies that have selected Michigan for relocation or expansion, and Granholm’s investment missions to Japan, Austria, Germany and Sweden resulted in more than US$944 million in new investment and the creation and retention of more than 10,600 jobs.

A fit and active runner, Granholm was frustrated when she had to put her international investment missions on hold to undergo emergency surgery (from which she has fully recovered) just hours before leaving for Israel and Kuwait.

She made good on that trip several months later, visiting Israel and Jordan to meet with leaders of the countries’ advanced manufacturing, alternative energy, homeland security/defense, venture capital and water treatment technology sectors.

These trade missions are mostly business, but Granholm does get some personal satisfaction from them. She takes a breath and considers Israel’s place in history … and possibly her own.

“Israel is an amazing place. It’s awe-inspiring. It’s moving for anyone of faith to go there,” she says.

During another trip, Epolito accompanied Granholm to Asia and got to see her in action.

“In Japan, where the business culture is often viewed as very reserved, Governor Granholm’s engaging personality, intelligence and understanding of our need to grow and nurture relationships resulted in companies such as Aisin and others coming here and expanding in Michigan, even during the downturn in the economy,” Epolito says.

“I reiterated to [Biden] that Michigan has the most challenged economy in the nation, having lost 400,000 jobs [in the past 8 years],” she reveals. “I told him that we need a partner in the White House—a leader who will fight for fair trade, fight for our workers and Michigan families.”

Two days after the U.S. presidential election, Granholm was named to an economic advisory board for President-elect Obama’s transition to the White House, meeting with both Obama and Biden in Chicago. The board also included investment whiz Warren Buffett, former U.S. Labor Secretary Robert Reich and former U.S. Treasury Secretary Robert Rubin.

While Granholm’s support of Senator Hillary Clinton for the democratic presidential nomination may preclude her from a cabinet post in the Obama administration, political pundits are convinced that President Obama, should he have the opportunity, would strongly consider nominating Granholm to the U.S. Supreme Court.

“I don’t know where [the pundits] get their information,” she counters, dismissively.

Former Michigan Governor James Blanchard, a democrat who left office in 1990 and now works in Washington, D.C., says this potential development will be interesting to watch unfold.

“She has said that she plans to serve the remainder of her last term as governor … but we’ll see,” Blanchard said. “Those things can change.”

In 2002, Granholm was elected Michigan’s first female governor.

“Michigan is truly blessed to have Governor Granholm leading the way as our chief saleswoman. She is a leader with a bold vision for our state, and she does an amazing job connecting with company leaders who have visions for their companies,” Epolito says. “The feedback I get from CEOs who meet with the governor is always extremely positive. They are typically impressed with her knowledge of their business and the sector that they compete in. She has the uncanny ability to sell Michigan’s strengths and how those strengths can help a company thrive here.”

One of Granholm’s perks for being Governor of Michigan is the use of a historic, 1902, three-story summer residence perched on a bluff high atop scenic Mackinac Island, an idyllic, horse-drawn destination reachable only by ferry and air and devoid of motorized vehicles. From the porch swing, the governor, a wife and mother of three, can see Lake Michigan and Lake Huron and the inspiring spot where the two meet under the iconic Mackinac Bridge.

“You can’t top a bike ride around Mackinac on a warm, breezy summer day,” Granholm says. “I have many wonderful memories that I have shared on the island with my family, too.”

But the 49-year-old, educated at the University of California at Berkeley and Harvard Law School, doesn’t spend a lot of time enjoying the view, because she can’t help but extend her sights far beyond the steeples, sailboats and sunsets below as she searches for ways to diversify Michigan’s economy and create financial opportunities during tough economic times. Her state has relied on its heritage of automobile manufacturing—an industry in severe decline but seeking to reinvent itself with alternative fuel vehicles and shared resources through mergers.

“The downturn in the auto industry is obviously the greatest economic challenge working against Michigan,” Epolito says. “Our state is seven times more dependent on this industry than any other state. So, when the industry gets a cold, Michigan gets the flu.”

That flu is now a full-blown pneumonia.

By the time Granholm was sworn in on New Year’s Day, squables began over how to solve Michigan’s $800 billion budget deficit.

By Mother’s Day, the governor was at her wit’s end.

“How long have I been a nice person? I mean, I’ve been very gentle througout my years as governor. But at some point you have to draw the line,” Granholm said while speaking before a group of education and health care officials. “I’m a very gentle soul, but at some point, you get frustrated because one side isn’t compromising.”

In the meantime, major corporations such as Pfizer and Comerica Bank closed their operations or moved out of the state; homeowners struggled for an average of more than two years to sell their houses; and Wall Street analysts downgraded their assesment of Michigan’s credit rating.

Epolito saw Granholm trying to put out fires at the same time she was inviting outside corporations to jump into the frying pan.

The Travel Michigan division of Granholm’s economic development program persuaded meeting planners and tourists to visit through the popular “Pure Michigan” ad campaign, featuring glossy scenes of Michigan’s lakes, rich forests, ski hills, golf courses, beaches and resorts, voiced by another of Michigan’s most popular sons, actor and comedian Tim Allen.

Mulhern thinks his wife is the essence of “pure Michigan”—even though she’s a Vancouver, British Columbia, native.

“I would describe her as being gorgeous on the outside and magnificent on the inside. She is quick and determined, fearless and optimistic, full of integrity and deeply kind,” says Mulhern, who admits balancing their family life with Granholm’s frenetic schedule has been more difficult than expected. “In this life, there is no typical day. She strives to be home for dinner, but evening commitments regularly interrupt that pattern. And she works at her desk at home every evening and weekend. Like so many busy parents these days, we go from work to asking the kids about their day. Sports, writing college applications, homework and music lessons are the focus of our evening jobs. If we’re lucky, we have a little quiet time together before we both conk out around 11 p.m. She’s always back at it by 5 a.m.”

Mulhern was personally responsible for originally bringing Granholm to the state she would eventually govern.

“My husband grew up in the Detroit area,” she explains, “and after many visits to his home, I knew that Michigan would be a perfect place to settle, live and raise a family.”

And that decision to stay was a significant moment in her life and career.

It is high-profile business, though, that Granholm, now something of a star with the Hollywood crowd, has been able to lure to Michigan this year. Thanks to bipartisan support in the state house and senate, Michigan has offered the nation’s most generous tax rebate to filmmakers—more than 40 percent. This effort has been a resounding success. Movie stars and directors that have since begun filming in Michigan include Drew Barrymore (Whip It!), Clint Eastwood (Gran Torino), Rob Schenider (Virgin on Bourbon Street) and Sigourney Weaver (Prayers for Bobby). Movie spending in the state could exceed $250 million in 2009 according to S3 Entertainment Group, a production company that moved to Michigan when the incentive package passed in the winter of 2008.

But who would play Granholm in a movie about her life?

“Oh, gosh … I haven’t thought about that,” she demurs before accepting Joan Allen or Meryl Streep as suitable suggestions.

President-elect Barack Obama insists he didn’t have any contact with Illinois Gov. Rod Blagojevich or anyone else who might have been scheming to sell the president-elect’s U.S. Senate seat. But he has not yet given his transition staff the same clean bill of health — perhaps with good reason. An examination of the FBI complaint against Blagojevich and the days immediately following Obama’s historic election victory suggests the governor was highly interested in Obama confidante Valerie Jarrett as a potential Senate appointee, albeit with a steep price tag.The 76-page complaint contains multiple references to “Senate Candidate 1,” whose description clearly fits Jarrett, a former finance chief for Obama’s earlier campaigns and incoming senior White House adviser.

In secretly recorded conversations, the Democratic governor said he’d be willing to appoint Jarrett — Obama’s supposed favorite to replace him — in return for a high-paying job at a national union organization called Change to Win.

At a news conference Thursday, Obama said his office was assembling any information about possible contacts “between the transition office and the governor’s office,” and that he intended to release any such detail in the next few days.

“But what I’m absolutely certain about is that our office had no involvement in any deal-making around my Senate seat,” Obama said. “That I’m absolutely certain of.”

It remained unclear whether anyone on Obama’s team had been in contact with Blagojevich or his associates regarding the Senate seat.

According to the complaint, Blagojevich met Nov. 5 with an official of the Service Employees International Union-Local 1 who is believed to be Tom Balanoff, a longtime Obama supporter who spoke at the Democratic National Convention.

Blagojevich “understood” that the SEIU official was “an emissary to discuss Senate Candidate 1’s interest” in the Senate seat. Though just a day after the election, media reports had already identified Jarrett as being interested in the job.

SEIU officials released a statement Thursday saying the organization had been in contact with the U.S. attorney’s office and had no reason to believe the union or any union official had been involved in misconduct. The statement said the union, and specifically Balanoff, were “fully cooperating” with the probe.

During a Nov. 5 call, Blagojevich said the Senate appointment was a thing of value, something not given away “for nothing.”

Two days later, Blagojevich allegedly suggested he’d be willing to “trade” the Senate seat to Jarrett in exchange for the Health and Human Services secretary’s job. He repeated that desire during a separate, three-way call involved Blagojevich, Chief of Staff John Harris and someone identified only as “Advisor B,” a Washington-based consultant.

Harris noted that Blagojevich also would consider being appointed to a high-paying position at Change to Win and that Balanoff, who declined numerous requests for an interview with The Associated Press, could guarantee the appointment.

In return, Obama would be expected to help Change to Win with its legislative agenda on a national level, said Harris, according to the criminal complaint.

As the FBI listened in, Harris suggested the three-way deal would give Obama “a buffer so there is no obvious quid pro quo” regarding Jarrett. And “Adviser B” said “they should leverage the President-elect’s desire to have Senate Candidate 1 appointed to the Senate seat” in exchange for a big job at Change to Win.

On Nov. 10, Blagojevich, his wife, Harris, the governor’s chief counsel William R. Quinlan and several Washington-based advisers conducted an extraordinary two-hour conference call.

Blagojevich conceded he probably wouldn’t get the HHS job or an ambassadorship because of so much negative publicity surrounding him.

Using several expletives, Blagojevich said he was reluctant to give Obama “his senator” without anything in return; he said he’d appoint a deputy governor before giving the job to Candidate 1. He also considered appointing himself to the job to avoid impeachment.

During the next 36 hours, the governor grew angry and suggested Obama’s camp was not interested in making a deal.

“They’re not willing to give me anything except appreciation. (Expletive) them,” Blagojevich told Harris in an intercepted call Nov. 11. The men talked about alternative candidates and perhaps starting a nonprofit organization that could possibly be funded by a wealthy Obama supporter, perhaps Warren Buffett.

Asked Thursday why the governor might have believed the Obama camp wasn’t going to cooperate, Obama refused to speculate.

“I can’t presume to know what was in the mind of the governor during this process,” he said. “All I can do is read what was in the transcripts, like the rest of you have read it, and shake my head.”

On Nov. 12, major news organizations, including the AP, quoted sources as saying Jarrett was not interested in the Senate seat. The Chicago Tribune said it had received an e-mail from Jarrett declaring, “I am not interested in the Senate seat.”

But as the day wore on, Blagojevich continued to discuss the possibility of appointing “Senate Candidate 1″ in a series of calls; Blagojevich would stay on as governor and ostensibly run the nonprofit.

“Adviser B” told the governor he liked the Change to Win job best because “from the President-elect’s perspective, there would be fewer `fingerprints’” because the union organization was already in existence and fully funded.

During one of the calls, Blagojevich informed the union official — believed to be Balanoff — that he’d heard Obama now wanted other candidates considered. Balanoff said he would find out if “Senate Candidate 1″ wanted to keep pushing for the Senate seat.

The discussion during a Nov. 13 call between the governor and “Adviser A” made it clear Blagojevich wanted a deal from Obama whether his pick was Jarrett or someone else, according to the complaint. And in subsequent recorded conversations, the governor indeed moved on to other possible candidates, including Rep. Jesse Jackson Jr.

On Nov. 15, Obama announced the appointment of Jarrett as one of his key advisers. And yet nine days later, Blagojevich may not have given up on the idea that Jarrett was still his way to cash in: According to Sen. Dick Durbin, D-Ill., he spoke to the governor about Jarrett on Nov. 24.

“The governor asked me, `What about Valerie Jarrett? Do you think she’s serious?’” Durbin said, an apparent reference to her withdrawal from consideration.

“I said, `Yes, I talked to her. She said she doesn’t want this. She’s going to stick with Obama,’” Durbin said.

The World’s Greatest Business Mind Announced:

After an exhaustive search spanning thousands of nominees from five continents, the International Collective Council of Excellence has announced this year’s World’s Greatest Business Mind to universal acclaim and fanfare.

The decision was unanimous despite the fact the world-class shortlist comprised such well-known names as Steve Jobs, Warren Buffett, Bruce Wayne, George Soros, and that kid who invented facebook.

From CNNMoney.com

My 87-year-old mother is a native Kansan who grew up in the throes of the Great Depression and the Dust Bowl. She is a classic “buy and hold” investor who would make Warren Buffett proud. Her investment returns always exceeded those of my father, to his eternal consternation. He actively traded his stocks and produced decent returns, but nothing like those my mother achieved by simply buying stocks of companies she understood and liked, and then holding onto them.

So I have become a strong advocate of the “basics” when it comes to investing: Do your homework, invest in securities you understand, and then hold on. As a government policymaker, I advocate informed investment decisions - not only to protect investors from losses but also because the efficient functioning of our capital markets relies on investors’ doing their homework.

The private-label mortgage-backed securitization markets are a prime example. Trillions of dollars of investor money funded millions of mortgages that borrowers had little chance of repaying. Investors relied heavily on ratings agencies, which in turn relied too heavily on mathematical models instead of analyzing the underlying loans. To be sure, borrowers, brokers, lenders, securitizers, as well as state and federal regulators, all bear responsibility for the widespread deterioration in lending standards. But the problem was compounded by the fact that those ultimately holding the risk - the investors - did not look behind their investments at the quality of the mortgages themselves. If they had, they would have seen high loan-to-value ratios, little income documentation, burdensome fees, and steep payment resets. They would have seen mortgages unaffordable from the beginning, originated based on the assumption that home prices would continue to rise and borrowers would refinance. Of course, we now know that as home prices began to depreciate, borrowers were unable to refinance, leading to massive foreclosures and further price declines. This self-reinforcing downward spiral is at the core of the economic problems we face today.

Our Joan Swirsky is right on top of the latest analysis concerning Obama, Blagojevich, Rezko and “the Chicago way,” which has now - alas - come to Washington. Thanks to Joan’s intrepid investigative journalism, you can be ahead of the game. See what Joan thinks about the possible consequences of the Blogo story.

Beside figuring out how he’ll weasel out of his recent arrest - and probable conviction - for trying to sell President-elect Barack Obama’s senate seat to the highest bidder, I wonder if the disgraced governor of Illinois, Rod Blagojevich, is contemplating the fates of Lee Harvey Oswald, Alexander Litvinenko, Vince Foster, Jim McDougal and Ron Brown - all of whom were summarily disposed of to keep them from talking.

Oswald, we know, was shot by Jack Ruby, a smalltime Dallas nightclub owner with suspected ties to the Mafia. The death effectively cemented the government’s case against the odd loner, and precluded any of the theories that tied Fidel Castro or the New Orleans mob or other numbers of people to being implicated in JFK’s assassination.

Litvinenko was a former officer of the Russian State security service, turned dissident and writer. After he accused his superiors of assassinating the Russian tycoon Boris Berzovsky, he was arrested but eventually fled to England, where he wrote two books antagonistic to the former USSR. In 2006, he died from radioactive polonium-210, suspected of having been administered by the KGB.

The deaths of Foster (chalked up to suicide), McDougal (chalked up to a heart attack) and Brown (chalked up to a plane crash) joined a long list of mysterious deaths - known as the “Clinton body count” - that took place before and during the Clinton administration.

Foster was found dead in Ft. Marcy Park in Virginia on July 20, 1993. There was a curious absence of blood at the scene and the forensic photographs disappeared. Rumor had it that the conscience-stricken Chief White House Counsel was on the verge of testifying against the president over a scandal involving the Children’s Defense Fund.

McDougal was found dead on March 8, 1998, ostensibly of a heart attack, while he was in solitary confinement in an Arkansas jail, having been convicted of 18 felony counts that had to do with bad loans made by the bank he owned, Madison Guaranty Savings & Loan. He and his wife Susan were financial partners with Bill and Hillary Clinton in real estate dealings that led to the Whitewater scandal. During the case, prosecutor Ken Starr asked for a reduced sentence for McDougal because he was cooperating in the investigation.

Brown, a former DNC Chairman and Clinton’s Commerce Secretary, was scheduled to testify in a campaign-finance scandal related to one of his employees, James Huang, who had been a multimillion-dollar fundraiser for the Democrats but was also suspected of funneling money from the Chinese government to the Clinton campaign. In the first week of April, 1996, Brown delayed testifying to travel to Bosnia-Croatia for a trade mission. The plane crashed and all 34 people aboard were killed. Subsequent investigations found a hole in Brown’s head, which appeared to be made by a bullet. But the X-rays were stolen (sound familiar?) and the theory that he was murdered because he planned to testify against President Clinton went nowhere.

The Lesson: Dead Men Don’t Talk!

Is the self-serving, wheeling-dealing Blagojevich now shaking in his boots as he realizes that the same dirty politics he’s been playing for years, with the same thugs and hardball players like convicted felon Tony Rezko, domestic terrorist William Ayers, master manipulator Rev. Jeremiah Wright, and shakedown artist Jesse Jackson - all part of Mayor Richard M. Daley’s Chicago Machine - will deal with him in the same draconian ways they’ve dealt with so many others? After all, the Chicago “body count” is formidable in its own right.

Will Blag promise prosecutors that he’ll sing like a canary to save his own hide? Come to think of it, will Rezko?

According to writer Larry Johnson, “Rezko provided the prosecutors information used to build the case against Blagojevich.” Johnson goes on to say: “Barack Obama is not sleeping well tonight… I doubt that David Axelrod is sleeping well either…Axelrod had close ties with Blagojevich. He ran his first campaign for the House. He very well may not see the inside of the White House as a Senior Advisor… Patrick Fitzgerald and the FBI could be sitting on some other tapes/wiretaps that are damaging to Obama. We also do not know what Rezko is saying at this point nor do we know what Blagojevich and Harris will spill…This scandal is not going away.”

If so, is Blag not worrying about a stray bullet or the American version of polonium-210 or a “suicide” notice or untimely “heart attack”? And is Obama not worried that his house of cards will come tumbling down?

WHY BLAG SHOULD BE QUAKING

Prosecutors of the investigation- led by U.S. Attorney Patrick J. Fitzgerald - have called Blagojevich’s actions “a political corruption crime spree.” Fitzgerald himself called the breadth and depth of charges against the governor “sinister” and “staggering.” FBI taps revealed that Blag planned to sell Obama’s senate seat for campaign cash, cushy jobs for himself and his wife, and perhaps being named a cabinet secretary in the Obama administration. The following is a tiny sample of the 76-page criminal complaint against 52-year-old Blagojevich and his 48-year-old Chief of Staff, John Harris. These are words Blag was caught saying on wiretaps:

“I’ve got this thing and it’s fxxking golden,” he said about his prerogative of appointing a new senator. “And I’m just not giving it up for fxxking nothing. I’m not gonna do it.”

“is there a play here, with these guys, with her” [his wife] to work for a firm in Washington or New York at a significantly better salary than she is making now?

Blag wanted to know whether the Service Employees International Union (SEIU) could do something to get his wife a position at Change to Win [seven unions with six million workers] until he, Blagojevich, could take a position there.

Blag discussed the open Senate seat during a two-hour conference call in which various individuals participated….

In the call, he mentioned the Senate seat and the dynamics of a new Presidential administration with the strong contacts that he had in it, and asked: “Can [the President-elect] help in the private sector…where it wouldn’t be tied to him?”

Said that the consultants (Advisor B and another consultant believed to be on the call at that time) were telling him that he had to “suck it up” for two years and do nothing and give this “motherfxxxker [the President-elect] his senator. Fxxk him. For nothing? Fxxk him.”

After being told by Advisor A that a “President-elect…can do almost anything he sets his mind to,” Blagojevich said that he would appoint “[Senate Candidate 1 [ostensibly Valerie Jarrett, Obama's first choice, and now his Senior Advisor] . . . but if they feel like they can do this and not fxxking give me anything . . . then I’ll fxxking go to [Senate Candidate 5].” Note: Candidate 5 is now known to be Jesse Jackson, Jr., currently a Representative from Illinois, who represents the southeast suburbs of Chicago].

Asked an Advisor(s), on November 11, 2008, whether “they” (believed the President-elect and his associates) could get Warren Buffett and others to put $10, $12, or $15 million into the 501(c)(4) organization. Advisor A responded that “they” should be able to find a way to fund the organization.”

Blagojevich and Harris conspired to demand the firing of Chicago Tribune editorial board members for editorials critical of the governor in exchange for state help with the sale of Wrigley Field, the Chicago Cubs baseball stadium owned by Tribune Co.

Not too subtle. In fact, a prosecutor’s dream! And why was Michelle Obama obliquely named on page 64 of Fitzgerald’s lawsuit against Blagojevitch, as PajamasMedia has reported?

WHY OBAMA MUST BE QUAKING

I haven’t mentioned David Axelrod, the chief strategist for Obama’s 2008 presidential campaign and recently appointed Senior Advisor to president-elect Obama. He, too, is a longtime operative in the Chicago Machine. But I have mentioned Blagojevich, Rezko, Ayers, Wright, Jackson, and Daley.

Who is missing from this picture? C’mon… guess!

Of course, it’s Obama himself, the man who recently dodged a bullet of his own when, last week, the Supreme Court passed on a petition to declare him ineligible for the presidency by virtue of his having failed to produce an authentic, verifiable birth certificate that attests to the fact that he meets one of only three criteria of the U.S. Constitution for the job, namely that he be a natural-born citizen of the United States. Note: Another suit is due to be heard by Justice Scalia on 12.12.08, and several other suits are pending.

What, if any, is the connection between Obama, the convicted felon Rezko, and the soon-to-be-convicted Blagojevich?

On November 23, David Axelrod was asked by a reporter on a Fox affiliate in Chicago if Obama had expressed a preference for his Senate replacement.

“He has not. I know he has talked to the governor,” Axelrod said. “There’s a whole range of names, many of which have surfaced. And he has a fondness for a lot of them.”

But the minute Blag’s indictment hit the news, Axelrod said he “misspoke.”

Misspoke? In such detail and with such intimate knowledge? As they say in my New York environs: Gimme a break!

James Taranto from the Wall St. Journal wrote: “One of these statements is false, but which one?”

As writer and editor of Newsmax Magazine, David A. Patten, has outlined, the roots of the Blag-Obama-Rezko relationships are long and deep.

In 2005, as news began to spread that federal authorities were investigating Rezko, Obama bought a house in Chicago’s Kenwood neighborhood for $1.65 million. Rezko’s wife, Rita, paid $625,000 for a lot adjacent to Obama’s new home, and the two deals closed on the same day. Seven months later, Rezko’s wife sold one-sixth of her lot to Obama for $104,500.

In March 2008, Obama said Rezko had raised up to $250,000 to help underwrite his prior campaigns in Illinois - a much higher figure than had previously been reported.

What what are Rezko;s ties to Blagojevich? Patten reports that:

The FBI says between June 2001 and August 2004, Rezko raised over $1.4 million for Blagojevich’s political campaigns, according to the Los Angeles Times.

Rezko hosted Blagojevich’s first post-election party at his mansion.

Rezko’s June 2008 trial on corruption strongly implicated Blagojevich. Blagojevich allegedly discussed a state job for a donor, after that donor wrote a $25,000 check for his campaign. During the trial, prosecutors maintained that Rezko routinely arranged shakedowns while serving as a top Blagojevich adviser.

One e-mailer wrote: “Blagojevitch is bloodless, resentful and ruthless - and a loose cannon! He could very well spill a whole lotta beans on both of the Obamas, in exchange for a lighter sentence from Fitzgerald. He’s only out for himself, and if he can shave five years off of a probable 10-year sentence in federal prison by giving up explosive information on the Obama duo, he might just do it.”

And, as David Nason has written in The Australian: “The longer this takes, the more the world will learn about the rotten political culture from which Obama has emerged and the more tainted his January 20 inauguration will be. But whatever short-term discomfort Obama might feel from a shakedown merchant stupid enough to get caught on a wiretap, it’s a walk in the park compared with the dangers ahead. This was clear when Fitzgerald…made pleas yesterday for anyone with information about corruption in Illinois to come forward. Not satisfied with getting the Governor, Fitzgerald intends to use the Blagojevich scandal to peel back whatever other layers of political corruption in Illinois he can find. Right now, the president-elect is clear. At his press conference, Fitzgerald said there was no evidence of misbehavior from Obama…It will all come down to where the concentric circles around Blagojevich and Obama overlap, but if his past record is any guide, this is where Fitzgerald, who already has the scalps of terrorists, Mafia kingpins and the likes of Conrad Black to his name, will be at his most aggressive.”

But one blogger was not so measured: “Barack Obama is now part of a cover up. He needs to be hauled before Congress and made to swear under oath…under the penalty of perjury. These are the same things which got Richard Nixon and Bill Clinton in trouble.”

THE HILLARY FACTOR

“What do the Clintons have on Obama?” asks Obama supporter Camille Paglia. “I must admit to puzzled disappointment with his recycling of Clinton era veterans, who reek of déjà vu. …Obama’s team may have underestimated the labyrinthine personal interconnections and habit-worn loyalties of that cliquish crew…both Clintons constantly view the world through the milky lens of their own self-interest.

“Given Obama’s elaborate deference to the Clintons,” Paglia continues, “beginning with his over-accommodation of them at the Democratic convention in August, a nagging question has floated around the Web: What do the Clintons have on him? No one doubts that the Clinton opposition research team was turning over every rock in its mission to propel Hillary into the White House. There’s an information vacuum here….”

Indeed, it is well known that Hillary is a good friend of Philip Berg, the Pennsylvania attorney who brought the first birth-certificate lawsuit against Obama. Coincidence?

And is it only me who thinks the timing of Blag’s arrest - after a three-year investigation! - is another “coincidence”?

More than one e-mailer has suggested to me that another of Obama’s acolytes, Rahm Emanuel - the Illinois Congressman who succeeded Blagojevich in the House and is now Obama’s Chief of Staff - may have leaked the Blag scandal to the FBI. But why would he do this? At the Clinton White House, he was initially a senior advisor, then Assistant to the President for Political Affairs, and then Senior Advisor to the President for Policy and Strategy - all lesser positions than the position he has now.

Why? Because loyalty runs deep. As one blogger put it: “I seem to recall Mr. Emanuel was working for the Clintons a few years ago. I guess it pays to have a Deep Throat in the White House if you are Hillary Clinton just waiting for the phone to ring with the words, `Madam President, are you ready for your close-up now?’”

Could we be witnessing a Clinton coup? Why have Obama’s cabinet and staff choices been overwhelmingly comprised of Clinton-era leftovers? What do the Clintons have on Obama?

If Obama survives the birth-certificate scandal and the Blag scandal, what other December or January Surprises - intended to sabotage his presidency - can we expect? And who will be pulling them out of her hat?

That will be a moot point if Blag blabs!

Joan Swirsky (http://www.joanswirsky.com/) is a New York based author and journalist who can be reached at joansharon@aol.com This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .

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1. Barack Obama wins Presidential Election and becomes the 44th President of the United States - Hope for a Change

130 Million Americans, more than in any other election since 1960, voted for a change and choose Obama, obtaining a historic victory to become the first black President of the United States, congratulating and celebrating world leaders, expressing hope, expectations and confidence in a fresh approach to the world’s challenges. Obama won the popular vote with 52% to 46% of McCain and the decisive electoral vote with 349 to 163 of McCain, requiring the Presidential election 270 electoral votes and the Democratic Party is strengthening its majorities in both Houses of Congress, in the House reaching 256 seats/up 21 seats remaining 177 seats for the Republican Party with races pending in Lousiana and Virginia and in the Senate reaching 58 seats/up 7 seats leaving 41 seats to the Republican Party with one race still pending in Minnesota, falling disapointed Democrats short to obtain a 60-vote majority in the Senate. Obama has to confront as he starts Presidency on January 20, 2009, inherited big problems like how to revive economy and the wars in Iraq and Afghanistan, and one has to accept that there are no quick and easy solutions and it will take time to solve them, nevetherless it seems to be important that he keeps promises made during his campaign and helps to overcome divides bringing the country together. The President-elect is already moving ahead with his Vice President Joe Biden to choose his team for the transition process, to take place in complete cooperation with the Bush administration, and to form his cabinet, nominating Timothy F. Geithner, president of the Federal Reserve Bank of New York, involved and experienced in handling the financial crisis, the most immediate problem facing Obama, as his future Treasury Secretary, also naming former Treasury Secretary Lawrence Summers to head his Economic Council and Peter R. Orszog as Director of the Office of Management and Budget to review and downsize Federal budget and appointing former Federal Reserve Chairman Paul Volcker as Chairman of the new White House Economic Recovery Advisory Board. Obama and his economic team are cooperating as close as possible with President Bush to inject confidence into the market, coordinating the rescue plan for Citigroup and moving to stimulate consumer spending and housing. Obama confirmed Robert Gates, a moderate Republican, asking him to remain at least one more year as his Defence Secretary, naming his former rival Hillary Clinton as Secretary of State. The Democrats had shaped a party platform setting principles that commits the party, declaring itself united behind a commitment that every American man, woman and child be guaranteed to have affordable, comprehensive health care, the expectation to complete withdrawal of US combat troops from Iraq within 16 months, promises of energy rebates to struggling families, pension subsidies, higher taxes for families earning over $250.000, for others tax brakes, Billions for economic stimulus, direct high-level diplomacy, without preconditions, in the case of Iran, negotiations to amend the North American Free Trade Agreements/NAFTA with Canada and Mexico, and more. Obama talked also about a redistribution of the tax burden to reduce economic inequality, a real plan focusing on fairness and growth. Federal budget has increased to $3,1 Trillion from $1,8 Trillion; the gross national debt is actually more than $10,5 Trillion, more than the combined GDP of China, Japan and Canada, and adding Medicaid, Medicare and Social Security commitments, as a nation there is a $50 Trillion hole, an invisible mortgage of $450.000 for every American family. Energy independence, the war on terror and federal spending are all important issues to deal with immediately, surging the federal budget deficit to a near-record amount of $454,81 Billion for the fiscal year ending September 30/3,2% of GDP up from $161,53 Billion in 2007/1,2% of GDP and soaring the projected deficit for the coming year to  $438 Billion, which could increase another 83 Billion, to a record of $521 Billion, and up to $1 Trillion considering proposals for another round of economic stimulus measures, credits for automakers, running General Motors and Ford out of cash, as well as permanent tax-cuts, made by Congressional leaders and urged by President-elect Obama, who said his economic team is working on an ambitious and significant economic recovery plan including middle-class tax cuts and the creation of up to 2,5 Million jobs during the next two years, through large infrastructure investments, school and hospital modernisation and an energy savings program for public buildings, which could cost $500 Billion to $700 Billion, to enter into effect as soon as possible after his inauguration on January 20, 2009. The Treasury Department is asking Congress to change terms of a recently approved $25 Billion loan for the car industry into direct loans, arguing the $700 bailout fund is not applicable, but a final decision keeps pending as the three carmakers presented their survival plans and needs under the worst scenario persisting recession until 2010, requesting GM $18 Billion, Ford $9 Billion and Chrysler $7 Billion, exceeding the total amount of $34 Billion the $25 Billion originally discussed. The White House and Congressional Democrats are close to agree on a short term rescue plan of about $14 Billion giving the big three carmakers  GM, Ford and Chrysler conditioned direct emergency bridge loans, creating a new White House position with enormous power the so callel ‘car szar’ and planning the United Auto Workers Union/UAW to seek for a stake in GM including a seat on its board in exchange  for concessions by its members. The House already approved the rescue plan for the car industry which is supported by Obama, however after Republican Senators opposed the initiative, President Bush said to be now open to use the $700 Billion bailout fund to help Detroit, warning that carmakers and unions would have to make meaningful concessions. It seems nearly unbelievable that President Bush apparently conditioned his support to some of the  important initiatives to help the contracting US economy to Democrats dropping their opposition to the free trade pact with Colombia and Obama is frustrated that the actual administration refuses to discuss an immediately needed second economic stimulus package. Obama had joined earlier this year a congressional delegation visiting Afghanistan, Kuwait, Iraq, Jordan, Israel, Germany, France and Britain to prove his foreign policy experience, discussing in Baghdad the future strategy and a time horizon for a withdrawal of US combat forces from Iraq, suggested to take place by the end of 2010, or earlier. The objective of his trip was to listen to leaders he has been visiting to get a sense of what their interests and concerns are, giving a clear message that if elected to the White House, America will intend to continue to show leadership but with a style less unilateral and building partnerships around the world, defending a strong relationship between the US and Europe and engaging more actively with Asia, the Middle East, Latin America and Africa. What Obama wanted to communicate on both sides of the Atlantic, the US and Europe, is the enormous potential of us restoring a sense of coming together! Reacting on the invasion of South Ossetia by Georgian forces, Russia’s massive assault on Georgia, a defiant show of strenght, produced, as expected, a more measured response from Obama and a forcefully demand from President Bush, blaming Moscow for invading its neighbor and requesting to stop military operations immediately and reciprocate without delay a ceasefire offered by the Georgian government, accepting President Medvedev a tentative peace plan brokered by French President Sarkozy, who visited Moscow on behalf of the European Union and signing a revised framework for a deal to halt fighting, making it clear that Russian troops will remain as peacekeepers in Abkhazia and South Ossetia, the two breakaway regions of Georgia pretending to join the Russian Federation. As Russia is demonstrating to be the sole military power in the strategically vital Caucasus region, NATO foreign ministers urged Russian President Medvedev to keep his word and pull out Russian combat troops from Georgia, sending President Bush American troops to Georgia to oversee a humanitarian mission, monitor if Russia was honoring ceasefire and Russian troops are withdrawing from Georgia, a provocative move, deepening US commitment in this country, an important transit corridor for oil and gas from Central Asia and the Caspian region to the West. New US tensions with Moscow could produce a more hostile Russia disrupting international order and creating problems, although there is the desire of its economic elite, with close ties to Prime Minister Putin, to integrate with the rest of the world, being Russia also member of the Group of 8 major powers/G8 and existing the NATO-Russian permanent Joint Council. As both houses of Russia’s parliament voted to recognise the independence of the two separatist regions South Ossetia and Abkhazia, decree already signed by President Medvedev, the conflict will move from a military one to a political one, putting new pressure on Georgia and adding tensions with the US and the EU, taking Russia the risk to become more isolated. Since the conflict with Georgia, to become soon jointly with Ukraine member states of NATO, foreigners have very fast pulled out of assets and the stock markets in Russia, which came under unprecedented pressure and had to suspend trading, declining Russian foreign currency reserves, the world’s third largest, to $542 Billion. After the Russian Government pledged to boost liquidity by more than $100 Billion, the ruble denominated MICEX and the dollar denominated RTS both resuming trading surged sharply. Russia also announced it will cut the duty on oil exports helping its oil companies to save a total of $5,5 Billion. But the country is not immune to global credit crisis, falling its reserves further to $484 Billion, as authorities were spending about $125 Billion to support the devaluated ruble, the stock markets and the banking system to avoid a collapse of its economy, also hurt increasingly by dropping oil prices, which could produce a budget deficit, remaining volatility and sistemic risks in Russia’s financial markets, lowering Standard and Poor’s the country’s foreign currency credit rating.  After the NATO-Russian Council failed to discuss crisis in Georgia, suspending NATO the Russian Council, the European Union, conscious of its reliance on Russian energy supplies and a growing economic interdependence, is prepared to resume a constructive dialogue with Russia through French President Sarkozy, current President of the Council of the European Union, saying after an emergency Georgia summit it would postpone talks on a real new EU-Russia partnership and cooperation accord unless Moscow withdrew its troops to pre-conflict/August 7-positions in Georgia, but did not threaten to impose sanctions considering French-German unified political position opposing such measures! President Sarkozy and President Medevedew agreed on a complete pull out of Russian troops from Georgia by the second week of October and after the deployment of at least 200 EU-observers up to the beginning of October, retreating to the two enclaves of Abkhazia and South Ossetia, having Russia established diplomatic relations with both. Rumors are currently circulating that US-VP Cheney may have sparked the crisis in Georgia as a favor to the Republican candidate, confirming eventually Prime Minister Putin’s suspicion, and there is a lot of evidence to support such a theory, as one of Cheney’s most experienced advisors, Joseph R. Wood, was in Tbilisi shortly before the Georgian army launched its military operation. McCain, who lost the Presidential election, is also a close friend of Georgian President Saakashvili, who apparently lied 100% to the world, and ordered the assault on South Ossetia before the Russian tanks entered the province, not respecting the cease-fire, attacking the civilian population while they were asleep in their beds, according to OSCE reports. Cheney confirmed during a visit to the Georgian capital that the US are donating $1 Billion to rebuild the country after Russian’s invasion! US-Russian relations are fragile and lack the necessary mutual trust, entering into a ‘ping-pong-ping’ diplomacy, hoping President Medvedev, who has launched a constitutional amendment to extend the presidential term from actually 4 to 6 years, on the arrival of the Obama Administration to restore relationship. Meanwhile President Bush concentrating on the weakening US economy, addressed the nation to convince a skeptical public to support a $700 Billion rescue initiative for the financial sector. The new legislation creating the Troubled Asset Relief Program/TARP includes basic principles, such as protection of taxpayers obtaining warrants on equity from participating companies regardsless of whether the Government is purchasing mortgage related and other troubled assets directly or buying them through an auction process, helping to ensure that taxpayers benefit in the future if share prices of the firms increase; the US Treasury Department is required to establish a mandatory financial industry-funded program to guarantee the distressed assets it acquires through the recue plan; the US President five years from now will have to ensure taxpayers are reimbursed fully for expenditures under the bailout, having the financial institutions to pay for any shortfall; participating firms can chose to unload bad assets via US-Government acquisition or by participating in a financial industry-funded insurance program, paying participating firms in that fund premiums to insure those assets; a so-called Financial Stability Oversight Board has to be established; there will be help for homeowners facing foreclosure and limits on the compensation of executives whose firms take bailout money; the amount of $700 Billion is going to be splitted in three parts, starting with $250 Billion following another $100 Billion if needed, giving the Congress 15 days to object the final $350 Billion to be disbursed. After the first draft of the bailout package was rejected by the House, the Senate approved strongly on Wednesday evening 10/01/08 voting a new version of the financial rescue plan, including a proposal from both presidential candidates to raise the federal insurance limit for consumers’ bank deposits from actually $100.000 to $250.000 to restore public confidence, allowing the bill the Federal Deposit Insurance Corporation to borrow unlimited amounts of money from the US Treasury Department in connection with this larger coverage that would extend until the end of next year, backing also up the decision of the Securities and Exchange Commission to loosen rules to figure out the value of assets for which there are no buyers, adding also $100 Billion in tax breaks for households as well as business and individual tax reductions, and an extension of unemployment pay, winning as expected the revised measure Friday 10/03/08 by a comfortable margin the approval also of the House. President Bush signed this same afternoon the bill, one of the largest-ever government intervention in the economy, formally known as the Emergency Economic Stabilization Act, into law, expecting to prevent a crisis on Wall Street becoming a crisis in communities across the country. Working the US Treasury Department already to put the rescue plan into effect, it has the responsability to design an effective program to achieve its objectives, acting soon and properly and fairly price the assets it will buy, implementing total transparency around pricing to allow market accurately value its assets, probably outsourcing the work to run auctions and manage the assets to professionals. There is some hope the new legislation will help to deal with the worthening credit crisis, restoring a more freely flow of money through the global financial system and of credit to the economy to limit extent of recession! In a coordinated emergency move with the world’s most important central banks the Federal Reserve led official rate cuts by a half point, trying to stop further global economic damage, probably a first step to lower interest rates around the world. Creating the Money Market Investor Funding Facility/MMIFF to stimulate further credit markets the Federal Reserve will lend up to $540 Billion to a group of five specially created funds administered by J.P.Morgan Chase, that will buy up to $600 Billion of three-months unsecured and asset-backed commercial paper to provide liquidity to the money market mutual funds, taking the first 10% of losses, supplementing an earlier program under which the Federal Reserve planned to by commercial paper directly from issuers. The Bush Administration, naming the Bank of New York Mellon under a contract lasting three years as master custodian firm overseeing the $700 Billion bailout fund, changed primary focus of its rescue package and is prepared, as a short time Government intervention, to spend up to the amount of the first installment of $250 Billion buying preferred equity stakes in major US banks, saying the fresh capital is not to hoard it but to deploy it, having lost valuable time to act on the worsening credit crisis, which translated into the actual international crisis after US-authorities decided not to save Lehman Brothers! Federal regulators announced they will guarantee for a fee new bank debt up to three years and extend insurance for non-interest-bearing accounts through 2009. Banks invited to join the US Treasury Department´s capital purchase program with the respective amounts proposed, encouraged to expand and look for mergers taking over competitors, are: $10 Billion each Goldman Sachs and Morgan Stanley, $25 Billion each Bank of America (including the soon to be acquired Merrill Lynch) and Citigroup, $20 Billion to $25 Billion Wells Fargo, $3 Billion Bank of New York Mellon, $2 Billion State Street Corp, another $125 Billion for smaller banks. The Federal Reserve, planning the way to use part of the $700 Billion rescue fund to buy and renegotiate mortgages, as to address the underlying fundamentals of the crisis, is working closely with the Federal Deposit Insurance Corporation/FDIC which released a new plan to refinance mortgage loans of 1,6 Million households costing the Government an estimated $24,4 Billion. Also considers widening financial rescue to insurance companies buying equity stakes to improve their balance sheets and to help troubled US car sector through their financing arm. GMAC, the financial arm of General Motors, applied to become a bank holding company to get access to capital from the $700 Billion bailout fund and to the Federal Reserve’s low interest short term emergency loans. Putting the original plan to buy troubled mortgage assets on hold, facing fresh criticism from Congressional leaders over its handling of the bailout package, and giving priority to reactivate credit markets helping consumers, not accomplished with the capital injections into banks, as consumer spending is dropping causing recession, the Treasury Department said it will focuse on banks, non-bank financial institutions and consumer lenders, eventually requesting to raise private capital to qualify, to increase availability of credit to people and stimulate consumer purchase, reducing foreclosures and providing credit card loans, student loans and car loans. The idea is committing up to $800 Billion starting February 2009 to unfreeze the consumer debt market helping households and small businesses to borrow money, providing the Federal Reserve under a new Term Asset Backed-Securities Loan Facility/TALF up to $200 Billion in nonrecourse loans to holders of asset-backed securities supporting consumer and small business loans, funding the Treasury Department through the Troubled Asset Relief Program/TARP $20 Billion to absorbe losses under the new program up to this amount. In addition the Federal Reserve plans to buy up to $100 Billion in mortgages held by Fannie Mae, Freddie Mac, Ginnie Mae and the Federal Home Loan Banks in an effort to improve their cash-flow and lower interest rates, purchasing another $500 Billion in mortgage-backed securities issued by these agencies.

http://www.BarackObama.com/

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2. Economic Outlook - Excesses & Consequences = Insolvency & Lack of Trust & Recession

The US economic growth fell sharply in the last three months of 2007, as the credit crunch took effect, slowdown triggered by a slump in building activity by 16,9%, the biggest fall in 25 years, collapsing housing prices, producing severe US financial market problems and progressively a global financial crisis causing recession. The prestigious independent National Bureau of Economic Research declared that the Nation has been in recession since December 2007, producing a significant decline of stocks, confirming negative economic projections, falling constructing spending 1,2% in October and manufacturing activity to the lowest level since 1982. President Bush has signed a two year bipartisan $168 Billion US economic stimulus plan with tax rebates for consumers and tax relief for business to calm financial markets and help desesperate homeowners and the Federal Reserve has put into force liquidity measures with repeated interest rate cuts and taking into account the worthening financial crisis, lowered interest rates for banks for overnight loans from 2% to 1,5% (Fed Funds rate) and the discount rate from 2,25% to 1,75% (Federal Discount rate) in a coordinated emergency measure with the world’s most important central banks also reducing main and direct lending  rates. Worried about more signs of a deeper recession and high volatility of stocks the Federal Reserve lowered its key rate again by half a percentage point to 1% and another interest rate cut is possible. The US economy is weakening fast, falling consumer spending, which accounts for about 70% of the US gross domestic product, at an annualized rate of 3,7% in the third quarter and 1% in October, reporting most of the big retailers double-digit declines in October and November, expecting the weakest Christmas shopping season in decades, dropping consumer confidence 23,4 points to an all time low of 38 the same month, and there is growing evidence that people begin struggling to meet their payments, declining housing prices and business investment, along with spreading unemployment reaching 5,7% in July, increasing to 6,1% in August, remaining steady at 6,1% in September, reaching 6,5% in October and jumping the jobless rate to a 15-year high of 6,7% in November loosing American economy another 533.000 jobs, climbing claims for unemployment benefits to the highest level in 26 years. Because of the financial crisis nearly 1 in 5 American households feel pressure because of tight cash and 1 in every 475 US households received a foreclosure filing in September. The US consumer price index fell 1% in October from the previous month, the biggest drop in 61 years, but excluding food and energy prices the decline was a modest 0,1%. Eroding consumer spending power and an eventual continued price decline, turning inflation negative, could produce a deflationary spiral. The IMF warned financial markets are fragile and there is still no end in sight to financial crisis, increasing its previous estimation on overall losses originated by the subprime mortgage crisis from $945 Billion to $1,4 Trillion, including loans and securities related to commercial real estate, the consumer credit market and corporations potential losses, requiring the global financial system in the coming 5 years fresh capital of about $675 Billion to mantain an at least modest credit growth. The US industrial production fell 2,8% in September, the largest decline since 1974 and US global car sales fell more than 40% in November in comparision with one year earlier, increasing concerns about the prospects for survival of General Motors, Ford and Chrysler requesting urgently federal financial aid, dropping retail sales 2,8% in October, falling compared with one year earlier 4,1%, and cutting consumers spending back for the fourth consecutive month. GDP grew 0,9% in the first quarter of this year, a seasonally adjusted healthy 2,8% in the second quarter, as exports were even stronger, far above expectations a few months ago, but economy contracted 0,3% in the third quarter and is expected to slow down also in the fourth quarter of this year as well as at least the first quarter of 2009. The IMF sees a weak 0,5% US growth for 2008 lowering its estimate for world growth from 4,1% to 3,7% or less in 2008, down from 5% in 2007, revising also global growth outlook for 2009 again downwards to 2,2% or less due to the severe global financial crisis with falling confidence of consumers and companies, afraid of a fast dropping demand. The US one year inflation increased to 5,60% in July (including food and energy), but declined to 4,94% in September and 3,66% in October. The economic growth forecast 2008 for the 27-nation European Union is being revised downwards to 1,4% declining in 2009 to 0,2% and for the 15-nation Eurozone to 1,2% in 2008 dropping to 0,1% in 2009, while inflation rate outlook this year for EU is 3,9% and for the Eurozone 3,2%, but reached 3,7% in October in the EU and hit 3,6% in the Eurozone in September falling to 2,1% in November, where it is expected to average 2,2% in 2009. The European Central Bank/ECB had raised its main interest rate from 4% to 4,25%, alarmed about inflation trends combined with lower growth increasing stagflation fears in the Eurozone, holding the rate steady at 4,25% in September as inflation risks have fallen but not disappeared, insisting that it is crucial to bring Eurozone inflation back within the target of an annual rate of 2%, but in a joint emergency decision with the world’s most important central banks lowered its key rate to 3,75%, also reducing direct lending rates. The financial crisis has changed economic outlook slowing growth worldwide, falling the Eurozone into a worsening recession after contracting their gross domestic product for the second time by 0,2% in the three months to September, suggesting projections that the economic decline will reach 0,5% in the final three months of the year, lowering the European Central Bank its key rate by another half percentage point to 3,25% and with inflation falling and Europe already in recession decided a new interest rate cut by 0,75% to 2,5%. EU leaders reached agreement on an €200 Billion economic stimulus package, the equivalent of about 1,5% of the EU’s gross domestic product, coming €30 Billion from the European Investment Bank to increase lending to small businesses and for projects supporting renewable energy and cleaner transport, including €4 Billion in soft loans for the car industry, to strengthen recovery, avoiding a deeper and longer recession in Europe. Economies of the 30 member countries of the OECD are contracting, entering Germany and Japan into a recession, and the forecast for the entire group is that their gross domestic product will drop 0,3% in 2009, falling the US economy 0,9%, Japan 0,1% and Europe 0,5%. Developing countries will not be immune from a general slowdown of economic growth and recession among wealthier nations and withdrawals of money by worried investors reducing their exposure in more risky markets are going to push some local currencies to new lows weakening their economies, recommending the IMF to make the fight against inflation to one of their top priorities! Brazil and Russia, commodity producers and beneficiaries of higher commodity prices, will have with 4,8% and 7% respectively lower growth rates in 2008, while the somewhat frenetic growth in China and India, both commodity consumers, could slow down temporarely but will continue with estimated 9,9% and 8,5% respectively in 2008. A fast weakening global economic growth is producing a decreasing demand of commodities and lower commodity prices, easing pressure on inflation, and as the interest differential between the Euro and the Dollar remains in favor of the US currency the Dollar is getting stronger and gaining grounds against the Euro, at least temporary. The Federal Reserve and the world’s most important central banks acted repeatedly to inject cash and securities into the money markets to reduce persistent liquidity pressures, increasing also size of its cash auctions and currency swaps with the European Central Bank and the Swiss National Bank in nearly 50% to provide more Dollars to their banks, which are also holders of Dollar loans in the mortgage sector needing Dollars to meet their obligations. Due to continued fragile circumstances in financial markets the Federal Reserve extended emergency lendings for banks, introduced in March, until the end of January 2009 of next year and in a coordinated action the European Central Bank and the Swiss National Bank are also extending their operations to include auctions of 84-days funds. Since the subprime mortgage crisis cash rich Sovereign Wealth Funds (SWF) injected more than $80 Billion to recapitalize and rescue some of the world’s biggest financial institutions - Citigroup, Merrill Lynch, UBS, Morgan Stanley, Barclays, Standard Chartered, HSBC). In an emergency deal authorized by the Treasury Department and the Fed, JPMorgan Chase bought the troubled fifth largest US investment bank Bear Stearns reaching worth of revised deal about $1,2 Billion. JP Morgan Chase first-quarter earnings dropped 50%, Merrill Lynch reported worse than expected earnings for the first-quarter and Citibank lost $5,1 Billion in the same period, Wells Fargo’s profit fell 11% and Bank of America’s earnings 77% to $1,21 Billion, Goldman Sachs and Lehman Brothers confirmed both smaller than expected first-quarter profit declines of 53% and 57%. However Lehman Brothers announced a  net loss of $2,87 Billion for the second quarter ending on May 31, expecting a new record loss of $3,9 Billion for the third quarter after writedowns of $5,6 Billion, and after failing to reach an agreement with foreign investors and unable to complete a rescue plan is facing liquidation after filing for Chapter 11 bankruptcy protection, owing more than $613 Billion to creditors in the US, Europe and Asia. Barclays Bank, which walked away from a possible rescue of the investment bank because it did not obtain government guarantees, bought Lehman’s core US-broker-dealer-operations in a $1,75 Billion deal, turning itself into a universal bank, as Japan’s largest brokerage Nomura acquired Lehman’s flagship operations in Asia and its equities operations and investment banking in Europe and the Middle East. While the Federal Reserve, the European Central Bank and the Bank of England have taken steps to avoid potential risks and market disruptions, 10 of the world’s biggest private banks agreed to pool $70 Billion into a liquidity fund to support liquidity and reduce financial market volatility. The S.E.C. took emergency actions to stop abusive short-selling of stocks in financial institutions in difficulties and banned temporary short-selling of 799 financial stocks and jointly with the Financial Accounting Standads Board decided to loose fair value accounting standards, without changing underlying principles of the accounting measure, giving financial companies room to employ estimates and their own judgement to value complex mortgage related assets, but need to disclose their methods to investors. Goldman Sachs earnings dropped for the second quarter by 11%  to $2,09 Billion and for the third quarter in a troubled most challenging environment to $845 Million, down 70% from a year ago, withstanding the turmoil in the credit market better than other banks but getting weaker. Morgan Stanley reported a second quarter net income of $1,026 Billion, down from $2,363 Billion/57% a year ago and a third quarter net income of $1,43 Billion, 7% less than a year earlier, generating a solid revenue growth, profitability and ROE. The shares of this two last remaining US investment banks facing a crisis of confidence came under pressure and both Goldman Sachs and Morgan Stanley changed their investment banking model transforming themselves, with the approval of the Federal Reserve, into traditional bank holding companies, getting under stricter regulations as commercial banks protected by the federal safety net, requiring them to hold more capital in relation to their portfolio of investments. Morgan Stanley is negotiating to receive a capital injection from the Mitsubishi UFJ Financial Group, the largest Japanese Bank, suspending merger talks with Wachovia and discussions about increasing the participation of the China Investment Corp/CIC, already a shareholder with a 9,9% stake. As also Japanese markets begin to feel the financial crisis, announcing the Government it will supply public funds to the country’s lenders, Mitsubishi UFJ plans to raise up to Y990 Billion/$10,5 Billion in fresh capital to improve its balance sheet, after paying $9 Billion for a 21% stake in Morgan Stanley  and $3,5 Billion to take over 100% of the Union Bank of California. In an admirable demonstration of much needed confidence Billionaire Warren Buffett/Berkshire Hathaway plans to invest $5Billion in form of perpetual preferred shares in Goldman Sachs and will have warrants to buy another $5 Billion in common stock. Goldman Sachs is going to raise at least additional $2,5 Billion in common equity in a public offer. Citigroup posted a $2,5 Billion second quarter loss, reporting mortgage and credit related costs of $11,7 Billion, having lost more than $17 Billion in the last three quarters and taken about $55 Billion in writedowns and increased credit costs since mid-2007. The firm revealed a $2,8 Billion net loss for the third quarter, the fourth consecutive period, reflecting $4,9 Billion in credit losses and an increase of $3,9 Billion in provisions for loan losses. As Citi shares have fallen more than 60% in one week finishing Friday at $3,77, showing shares as stock market tumbles its lowest level in nearly 6 years with more losses feared, the bank’s largest individual shareholder Saudi billionaire Prince Al-Waleed Bin Talal announced he will increase his stake from actually 4,3% to 5%, considering the shares actually dramatically undervalued. According to a rescue plan, negotiated by worried regulators, the Government will grant loan guarantees of up to $306 Billion, backed by residential and commercial real estate, agreeing to cover up to 90% of the losses on those securities in exchange for $7 Billion worth of preferred stock earning a dividend of 8%, also  providing another $20 Billion against preferred shares, in addition to the $25 Billion already injected out of the $700 Billion bailout fund. Citigroup will have to absorbe $8 Billion already reserved to cover assets and $29 Billion of the first losses as well as 10% of the remaining amount of potential losses. After the rescue announcement Citi shares went up 66% to $6,26 on Monday. In another deal pushed by the Federal Government Citigroup had accepted to buy banking operations of the regional bank giant, mortgage troubled Wachovia with assets of $812 Billion for $2,1 Billion in stock, assuming $53 Billion in debt, agreeing the Government to share part of future losses that might be generated by Wachovia’s failing mortgage portfolio, however Wells Fargo announced it closed a $15,8 Billion stock deal, approved by directors of each company, to buy all of Wachovia, keeping the bank intact preserving the value of an integrated company without government support, providing a superior value for its shareholders to the transaction with Citigroup. Wachovia revealed a record third quarter loss of $23,9 Billion. Merrill Lynch reported for the second quarter a $4,65 Billion loss, taking $9,4 Billion in additional writedowns of troubled assets, posting losses of about $19 Billion for the past four quarters, having taken a total of $52 Billion in writedowns since the beginning of the crisis, and is planning to raise capital selling its 20% Bloomberg stake worth about $4,43 Billion, its controlling interest in Financial Data Services with an enterprise value of about $3,5 Billion and receiving $8,5 Billion in fresh capital from shareholders, including $3,4 Billion from Sovereign Wealth Funds Singapore’s Temasek Holdings, with an 8,85% stake its largest shareholder as of June 30, and the Kuwait Investment Authority/KIA. The company reported a third quarter loss of $5,2 Billion, against a loss of $2,24 Billion for the same period a year earlier. As difficulties continued requiring Merrill Lynch to raise even more capital the company encouraged by the Federal Reserve, which now officially approved the acquisition, advanced its merger talks with Bank of America and agreed to be bought in a rescue take over for about $50 Billion, making BofA the second largest bank in the world. Bank of America, which also purchased the troubled mortgage giant Countrywide earlier this year, reported a second quarter net income of $3,41 Billion, down 41% from a year ago, tripling credit loss provisions to $5,83 Billion up from $1,81 Billion last year, and a third quarter net income of $1,2 Billion, a third of the level of a year ago, planning to sell $10 Billion in stock to raise capital and half its dividend in an effort to overcome credit crisis. Wells Fargo, the biggest bank of the West Coast, announced that second quarter profit dropped 23% to $1,75 Billion, reporting stronger than expected third quarter earnings of $1,64 Billion, while J.P.Morgan Chase posted for the same period a $2 Billion net income, down 54% from a year earlier, saying it will take total charges and other related expenses of about $10,5 Billion to clean up the balance sheet of Bear Stearns, the troubled investment bank bought earlier this year, revealing net earnings of $527 Million for the third quarter, declining 84% from a year earlier, with $3,6 Billion in mortgage related writedowns and increasing provision to $6,7 Billion to cover rising losses, after the bank bought in another emergency deal brokered by the Government, for $1,9 Billion almost all of Washington Mutual/WAMU, with $307 Billion in assets the nation’s largest savings and loan and among the worst hit by the housing crisis. WAMU account holders are guaranteed by the Federal Deposit Insurance Corporation up to $100.000 and additional deposits will be backed by JPMorgan Chase, having to absorb at least $31 Billion in losses from this take over, creating a nationwide retail franchise rivalled only by Bank of America. The Bank of New York Mellon reported a 53% drop in third quarter earnings of $303 Million, down from $640 Million a year earlier. Important rating agencies, like Standard & Poor’s, blamed for awarding high ratings to subprime mortgage securities agree to reform some of their core business practices according to regulatory suggestions from the Securities and Exchange Commission/SEC. Confidence in banking sector sank and banks continue to feel credit stress as a credible plan for necessary recapitalisation should not be only priority but obligatory and what makes crisis worse banks are not trusting any more banks and need central bank’s intermediation between them shifting requirements from overnight money towards longer maturities. The magnitude of credit related losses in the financial sector and continued concerns about major banks and insurance companies, in addition to growing speculations about deep troubles at major hedge funds and increasing doubts in relation with the unregulated credit default swap/CDS $54,6 Trillion market, are prolonging and deepening its negative impact on the stock markets and on the economy, taking financial stocks their worst losses in a generation. Investors withdraw at least $43 Billon in September from US hedge funds, which lost already more than $200 Billion in value this year, borrowing also heavily money, and as hedge fund outflows increase they will have to sell assets, estimating analists that the hedge fund industry, which managed at its peak beginning 2007 about $2.200 Billion in assets, is going to shrink according to estimates by more or less 45%/$1.000 Billion due to withdrawals and investment losses. Also smaller regional lenders are becoming increasingly vulnerable, practicing American banks a new found caution reducing even business loans! The credit crisis has conduced also to a tightening in lending terms of credit card issuers with consumers to lower risk profile, owing US households about $971 Billion ($8.299,- per household) in credit card debts, increasing charge-offs to 6,82% in August in comparison with 4,61% a year earlier, writing lenders off an estimated $21 Billion in bad credit card loans in the first half of 2008, showing 4,6% of credit card owners defaults in payment of 30 days and more in August. The Federal Reserve approved the transformation of American Express, the nation’s last big independent credit card company, into a bank company, getting greater access to the bailout package for banks, requesting about $3,5 Billion in assistance out of this fund. AIG/American International Group, the world’s largest insurance company with an overexposure in real estate and in the credit default swap market, two problem segments suffering an overall decline in asset prices, was seeking $40 Billion in emergency loans, request initially rebuffed by the Federal Reserve, but to avoid that after Lehman Brothers also AIG was forced to file for bankruptcy protection, producing unpredictable consecuences for the world financial system, the Federal Reserve agreed on an emergency support taking a 79,9% equity stake and an effective control of the troubled insurance company, replacing its chief executive, granting a $85 Billion two-year bridge loan, to be repaid with proceeds of the sale of AIG’s assets, downsizing the firm, serving all of AIG’s assests as collateral. But that rescue, without clear rescue rules layed out by the Federal Reserve, after not helping to rescue Lehman Brothers, has not calmed markets so far, not understanding how financial failures will be handled in the future, and investors are moving their money into safer investments, like gold and US Treasury bonds, making it harder for healthy firms to raise new money, only adding to inestability. With the intention to restore confidence the central banks from the US, Canada, Europe, UK, Switzerland and Japan are injecting again liquidity into the global money market to provide financial institutions with short-term Dollar funding, increasing the Federal Reserve its Dollar swap line by $180 Billion. Calming markets the US Treasury Department using its Exchange Stabilization Fund offered, at least temporarily, to protect the nation’s eligible publicly offered money market funds up to an amount of $50 Billion from outflows insuring their holdings against a fee the fund hast to pay to participate in this program. There are roughly $3,4 Trillion resting in such funds, which hold about $230 Billion in asset-backed commercial papers, accepting the Federal Reserve to lend money, via banks, against these short-term collaterized debt obligations, in an effort to stabilize the $1,7 Trillion commercial paper market, a vital funding source for US business. Urged by the Government the Congress approved a $700 Billion bailout legislation, the largest since the Great Depression, raising Federal debt l

For many years, the countries that did well financially were those that were located close to the United States, either geographically or economically.

Places such as Canada, Israel and, to some extent, Mexico all benefited from their proximity to the American economic juggernaut.

Well, those days might be over.

As the global economic crisis ripens, many countries are feeling the pinch from the ongoing global credit squeeze.

But the ones staring at the feeblest outlooks for next month and into next year are those with the strongest — not weakest — links to the United States, which has turned from economic high-flyer to financial deadweight in six months.

Stellar performers, such as the United Kingdom, Germany and France, are all now looking at slow or no growth next year. Meanwhile, formerly weak sisters, like some South American countries and nations in sub-Saharan Africa, expect to post GDP increases upwards of five per cent in 2009.

Some of the troubled industrialized economies are suffering this fate because of those links to the United States.

First of all, with the American economy expected to shrink in 2009, the ability of Canada, Germany and the rest of these nations to sell products to U.S. consumers and make money from investments in that country is distinctly limited.

Also, many companies in these same countries also invested heavily in mortgage-backed type securities either in the United States or in their home markets. After all, if American executives and bankers thought this kind of lending was a money-maker, that theory must work in these other nations.

Unfortunately, the reverse of that logic — that if asset-backed commercial paper can lose value in the United States, then it can in other countries — held as well.

So, as stock markets sputter and growth grinds to a halt, one obvious question now becomes, if the world is going down the drain, which countries are closest to the sink hole?

The eye in the centre of the economic hurricane, the United States, has thrown $1.4 trillion US at the financial crisis in a bid to loosen up seized credit markets and give consumers and companies some hope of an eventual recovery.

But little has worked so far, not the soothing words and big bucks of Treasury Secretary Henry Paulson, not the election of a fresh face, Barack Obama, to the U.S. presidency, nor the shiny confidence of über-investor Warren Buffett.

As a result, the American growth speedometer is now stuck at less than zero, with the economy expected to shrink 0.5 per cent next year, according to the World Bank’s latest forecast.

The Bank of Montreal predicts that the U.S. unemployment rate, once the envy of the Western world, will top eight per cent in 2009, a 75 per cent jump compared to 4.6 per cent in 2007.

If the United States is a block of economic cement, that stone is hanging firmly around Canada’s neck.

For all of Ottawa’s talk about the country’s banking system being healthier than the U.S. financial system, Canada’s economic fundamentals indicate only marginal economic strength.

The International Monetary Fund forecasts that Canada’s economy will grow by only 0.7 per cent this year, with a slight acceleration to 1.1 per cent in 2009.

The jobless rate was six per cent in 2007; it is expected to reach 6.7 per cent next year.

Clouds of uncertainty swirl around even this sad economic outlook.

Will the country be led by a governing coalition in Ottawa or a straight-jacketed prime minister? Will the government implement some sort of fiscal stimulus package or stick to the strategy of maintaining a zero deficit? Finally, will Canada be able to grow even in the face of the slowing United States?

Answer those question correctly and you can probably ascertain whether this country will be closer to or further away from the economic drain.

Much of Europe trades within its own borders.

Unfortunately, the big economies on the continent and the United Kingdom are in trouble, dragged down by a financial flu that invaded the English isle through the mortgage market and that has spread to places like the Netherlands, which already had to bail out financial giant ING Group.

The entire region’s GDP is expected to contract by 0.7 per cent in 2009, with the U.K. shrinking even more, 1.3 per cent, in the same year.

Unemployment rates in the region should hold steady in the 7.7 per cent range in 2009, according to figures from the European Union.

Within that area, some countries will face high jobless rates, such as Germany, which will see its unemployment percentage rise marginally from 7.3 per cent in 2008 to 7.5 per cent in 2009.

France could perform even more poorly, as its unemployment rate is expected to hit 9.3 per cent in 2009, up from eight per cent in 2008.

Other countries, however, will continue to post decent jobless figures even as their growth slows.

The Netherlands, for instance, will see barely any GDP growth in 2009 — 0.4 per cent, compared to 2.3 per cent this year. Yet the European Commission forecasts that the tiny country’s unemployment rate will only rise marginally, to 3.4 per cent in ‘09, up from three per cent in 2008.

Across the Pacific Ocean, the economic story is on a split screen.

On the one hand, China is staring at a slowdown in its export sales to other, mainly industrialized countries, and has produced an aggressive stimulus package worth close to $600 billion US.

Japan is in a recession as the yen rises and auto sales plummet.

Yet many countries in the region look to be in decent shape to handle the ongoing economic bad weather.

Indonesia, for instance, has been hammered by falling oil prices. But the island country — and one of the biggest Islamic nations on the planet — still posted export gains of 14 per cent in the third quarter of 2008 and has its highest consumer confidence levels since February.

The IMF does expect Indonesia to lose economic steam next year, but from a GDP growth rate of six per cent in 2008, down to 5.5 per cent next year.

Malaysia was forecast to grow at 5.7 per cent this year, a rate which could be more than halved next year to 2.7 per cent in 2009. Even at the slower pace, however, the Asian country will be expanding at a faster clip than any country in Europe or North America.

The poster continent for “economic basketcase” actually will keep growing in 2009, despite plunging commodity prices and a financial crisis that could harm its access to capital.

In fact, if the IMF is correct, Africa’s GDP will expand by 4.7 per cent next year, down but only marginally so from 2008’s 5.2 per cent.

The continent, not often associated with the words “economic growth spurt,” has benefited from the worldwide commodities boom, especially rising gold prices, as well as higher oil prices.

Already, however, crude is $100 US less than its summer peak price of $147 a barrel. Other commodities also have fallen in value, putting Africa’s outlook, especially for the sub-Saharan countries, in jeopardy.

In addition, African product sales to other nations probably will suffer during the current world financial upheaval.

“Should the global slowdown prove much deeper than anticipated, fostering a sharp fall in world trade growth, the contribution of net exports to African GDP growth will diminish,” said the World Bank in its latest outlook forecast.

Still, the multilateral bank noted that, even once you subtract the regional powerhouse South Africa, GDP growth could shoot ahead by 5.7 per cent in 2009 and 6.6 per cent in 2010.

The countries south of Mexico have enjoyed decent growth over the past few years.

In the case of this region, however, much of the recovery was catch-up, as Argentina, Brazil and Mexico, a country with extensive economic links within Latin America, all endured severe economic dislocation in the late 1990s.

Because of their economic history, most of the governments in Central and South America and among the Caribbean island nations always have one eye on rising prices.

So, when higher food and crude-oil costs began to drive up prices in other parts of the economy in 2008, central banks started hiking interest rates — at the very time when other countries, like Canada, were more concerned about a financial slowdown.

Lenders stopping looking at these countries as a destination for their cash, a move that crimped GDP growth.

Still, many of these nations will posted respectable growth in 2008 and ‘09.

Colombia, for instance, will see its 2008 GDP growth of 4.0 per cent take a mild haircut, losing half a percentage point and falling to 3.5 per cent for the next year.

Venezuela, with its oil-heavy economy and unpredictable government of Hugo Chavez, appears likely to experience the biggest economic fall, stumbling to a GDP of slightly less than two per cent in 2009. That would be a substantial drop from the six per cent the country is supposed to post in 2008.

The oil-pumping nations of the Middle East and North Africa have enjoyed strong economic growth based mainly upon high crude prices.

These days, however, all regional forecasts are subjected to the caveat that oil prices are plunging so fast, it makes predictions difficult.

For example, the World Bank outlook for the global economy pegged growth for 2009 for the oil-producing countries of the Middle East and North Africa at 3.9 per cent. That level represented a comedown from 5.8 per cent in 2008 and 6.4 per cent in 2007.

But the forecast was predicated on a crude oil price in the range of $80 US a barrel. Unfortunately for these nations, current oil prices are close to half that level, at $43.

Of course, many analysts believe that some economic recovery combined with the notion that OPEC will try to push oil prices back up to the $70 level could help to refloat crude values.

Still, the longer oil prices stay extremely low, the more likely that the economic prospects of the Middle East will follow suit.

Kristin Scott Thomas, one of my favourite actresses talks about her role in the movie, “I’ve Love you for so long”  English, lives full time in France, recently on Broadway in Checkov’s The Seagull.  http://tinyurl.com/6r86lb

I’ve Loved You so Long Trailer, http://tinyurl.com/5v9emuPredictions http://tinyurl.com/5z8ghf

 The Bush Legacy: Epic Failure.  “”Bush World” is not part of the reality-based world. As an unidentifed White House aid told author Ron Suskind several years ago, ”we create our own reality.” Bush World is a world of ideological propaganda and talking points regurgitated daily from the Drudge Report, to talk radio, to Faux News, to conservative columnists, newspapers and publications. An entire echo chamber of conservative media has been built to delude Americans - and themselves - into believing that up is down, black is white, and war is peace. It is the nightmarish world of George Orwell’s 1984 writ large.

Despite this echo chamber’s best efforts to reform the legacy of George W. Bush through revisionist history, reality-based history will remember George W. Bush simply: “Worst. President. Ever.” The Bush legacy is one of epic failure.  (The descendants of Presidents James Buchanan and Millard Filmore may now rejoice in finally being relieved of their title.)

Osama Bin Laden in his wildest dreams could not have imagined causing as much destruction to the United States as George W. Bush and his sycophant supporters have succeeded in inflicting upon this country in eight short years.

Bush failed to protect America from foreign attack on 9/11, ignoring repeated intelligence warnings of an impending attack. His response was to shred the Constitution and set the Bill of Rights afire. His war of choice has ground our military into the dust of Iraq and Afghanistan, leaving our preparedness to defeat an enemy Bush has failed to defeat after seven long years still in doubt, and America more vulnerable than ever. Bush enjoyed birthday cake and playing guitar, indifferent to the suffering of his fellow Americans who were dying in the devastation of Hurricane Katrina. And for his final act, Bush has succeeded in destroying capitalism and begun our descent into socialism in an attempt to forestall possibly the next Great Depression into his successor’s administration. Someone else will have to clean up the disaster that George has made of this country.

No George, history will not be kind to you. History will condemn you, and deservedly so.”  Source:  http://tinyurl.com/6l4v7a

Nouriel Roubini

Known as Dr. Doom, the NYU economics professor saw the mortgage-related meltdown coming.

We are in the middle of a very severe recession that’s going to continue through all of 2009 - the worst U.S. recession in the past 50 years. It’s the bursting of a huge leveraged-up credit bubble. There’s no going back, and there is no bottom to it. It was excessive in everything from subprime to prime, from credit cards to student loans, from corporate bonds to muni bonds. You name it. And it’s all reversing right now in a very, very massive way. At this point it’s not just a U.S. recession. All of the advanced economies are at the beginning of a hard landing. And emerging markets, beginning with China, are in a severe slowdown. So we’re having a global recession and it’s becoming worse.

Things are going to be awful for everyday people. U.S. GDP growth is going to be negative through the end of 2009. And the recovery in 2010 and 2011, if there is one, is going to be so weak - with a growth rate of 1% to 1.5% - that it’s going to feel like a recession. I see the unemployment rate peaking at around 9% by 2010. The value of homes has already fallen 25%. In my view, home prices are going to fall by another 15% before bottoming out in 2010.

For the next 12 months I would stay away from risky assets. I would stay away from the stock market. I would stay away from commodities. I would stay away from credit, both high-yield and high-grade. I would stay in cash or cashlike instruments such as short-term or longer-term government bonds. It’s better to stay in things with low returns rather than to lose 50% of your wealth. You should preserve capital. It’ll be hard and challenging enough. I wish I could be more cheerful, but I was right a year ago, and I think I’ll be right this year too.”

My 87-year-old mother is a native Kansan who grew up in the throes of the Great Depression and the Dust Bowl. She is a classic “buy and hold” investor who would make Warren Buffett proud. Her investment returns always exceeded those of my father, to his eternal consternation. He actively traded his stocks and produced decent returns, but nothing like those my mother achieved by simply buying stocks of companies she understood and liked, and then holding onto them.

We will dig out of this. And when we do, I hope for a back-to-basics society - where banks and other lending institutions promote real growth and long-term value for the economy, and where American families have rediscovered the peace of mind of financial security achieved through saving and investing wisely. We need to return to the culture of thrift that my mother and her generation learned the hard way through years of hardship and deprivation. Those are lessons learned that the current crisis is teaching us again

We are in a period of forced liquidation, which has happened only eight or nine times in the past 150 years. The fact that it’s historic doesn’t make it any more fun, of course. But it is a pretty interesting time when there is forced selling of everything with no regard for facts or fundamentals at all. Historically, the way you make money in times like these is that you find things where the fundamentals are unimpaired. The fundamentals of GM are impaired. The fundamentals of Citigroup are impaired.

Virtually the only asset class I know where the fundamentals are not impaired - in fact, where they are actually improving - is commodities. Farmers cannot get a loan to buy fertilizer right now. Nobody’s going to get a loan to open a zinc or a lead mine. Meanwhile, every day the supply of commodities shrinks more and more. Nobody can invest in productive capacity, even if he wants to. You’re going to see gigantic shortages developing over the next few years. The inventories of food worldwide are already at the lowest levels they’ve been in 50 years. This may turn into the Great Depression II. But if and when we come out of this, commodities are going to lead the way, just as they did in the 1970s when everything was a disaster and commodities went through the roof.

What I’ve been buying recently is agricultural commodities. I’ve also been buying more Chinese stocks. And I’m buying stocks in Taiwan for the first time in my life. It looks as if there’s finally going to be peace in Taiwan after 60 years, and Taiwanese companies are going to benefit from the long-term growth of China.

I have covered most of my short positions in U.S. stocks, and I’m now selling long-term U.S. government bonds short. That’s the last bubble I can find in the U.S. I cannot imagine why anybody would give money to the U.S. government for 30 years for less than a 4% yield. I certainly wouldn’t. There are going to be gigantic amounts of bonds coming to the market, and inflation will be coming back.

In my view, U.S. stocks are still not attractive. Historically, you buy stocks when they’re yielding 6% and selling at eight times earnings. You sell them when they’re at 22 times earnings and yielding 2%. Right now U.S. stocks are down a lot, but they’re still very expensive by that historical valuation method. The U.S. market is yielding 3% today. For stocks to go to a 6% yield without big dividend increases, the Dow will need to go below 4000. I’m not saying it will fall that far, but it could very well happen. And if it gets that low and I’m still solvent, I hope I’m smart enough to buy a lot. The key in times like these is to stay solvent so you can load up when opportunity comes.

The outcome essentially depends on the ability of the Obama administration to rejuvenate capitalism’s “animal spirits” by substituting the benevolent fist of government for the now invisible hand of Adam Smith. Federal spending and guarantees in the trillions of dollars will be required to fill the gap created by the deleveraging of private balance sheets. In turn, lenders and investors alike must begin to assume risk as opposed to stuffing money in modern-day investment mattresses. The process will take time. Twelve months of the Obama Nation will not be sufficient to heal the damage of a half-century’s excessive leverage. The downsizing of private risk positions - replaced by government credit - will also result in reduced profit margins and a slower rate of earnings growth after the bottom is reached.

Investors need to recognize these titanic shifts in market and public policies and be content with single-digit returns in future years. Perhaps the most lucrative pockets of value are in high-quality corporate bonds and preferred stocks of banks and financial institutions that have partnered with the government in programs such as the Troubled Assets Relief Program (TARP). While their profitability may be restricted, their ability to pay interest and preferred dividends should be unhampered. Above all, stick to high-quality companies and asset classes. The road to recovery will be treacherous.”

 ”Meredith Whitney The Oppenheimer & Co. analyst was among the first to warn that the big banks had big problems.

What the federal government has done so far- with TARP, bailing out Citigroup, etc. - has stemmed the bleeding, but what it hasn’t done is fundamentally alter the landscape. Yes, there’s been a tremendous amount of capital thrown into the system, but my concern is that it’s just going to plug the holes. It’s not going to create new liquidity, which is what the system so desperately needs.

Where does the United States rank - Life Expectancy, Democracy, Freedom of the Press, Internet Speed, Prison Population, Corruption, Effectiveness of Education, Renewal Energy Use, Scientific Literacy, Quality of Health Care, Infant Survival Rate.

By Gary Cohn and Darrell Preston

Dec. 4 (Bloomberg) — Arthur Laupus joined AARP because he thought the nonprofit senior-citizen-advocacy group would make his retirement years easier. He signed up for an auto insurance policy endorsed by AARP, believing the advertising that said he would save money.

He didn’t. When Laupus, 71, compared his car insurance rate with a dozen other companies, he found he was paying twice the average. Why? One reason, he learned, was because AARP was taking a cut out of his premium before sending the money to Hartford Financial Services Group, the provider of the coverage.

Laupus stumbled onto something that many members of the world’s largest seniors’ organization don’t know: The group, formerly called American Association of Retired Persons, collects hundreds of millions of dollars annually from insurers who pay for AARP’s endorsement of their policies.

The insurance companies build the cost of these so-called royalties and fees, which amounted to $497.6 million in 2007, into the premiums they charge AARP members, according to AARP’s consolidated financial statement for that year.

AARP uses the royalties and fees to fund about half the expenses that pay for activities such as publishing brochures about health care and consumer fraud — as well as for paying down the $200 million bond debt that funded the association’s marble and brass-studded Washington headquarters.

In addition, AARP holds clients’ insurance premiums for as long as a month and invests the money, which added $40.4 million to its revenue in 2007.

‘Fatting the Coffers’

“At the end of the day, it’s all about fattening the coffers of the organization,” says Thomas Orecchio, who was chairman of the Arlington Heights, Illinois-based National Association of Personal Financial Advisors until September. AARP, he says, is sponsoring insurance for its members at inflated prices.

“It’s the dirty little secret,” he says.

During the past decade, royalties and fees have made up an increasing percentage of AARP’s income, rising to 43 percent of its $1.17 billion in revenue in 2007 from 11 percent in 1999, according to AARP data.

Laupus, a former teacher in Baltimore, and millions of others joined AARP in the belief it would provide discounts, services and publications. The organization ranks behind only Consumer Reports and the American Red Cross as the most trusted large group that influences U.S. politics and business, a 2007 Harris Poll found.

AARP has helped millions with tax returns, estate planning and health care advice.

‘Turbulent Economy’

With stock markets around the world plunging, savings plans in turmoil and medical costs soaring, older Americans need an organization such as AARP in their corner.

“The turbulent economy puts more people in the difficult situation of being under- or uninsured,” says Iowa Republican Senator Charles Grassley. “That’s why we need to make sure individuals aren’t taken advantage of with misleading marketing, especially by a name brand advocate who carries a high level of trust.”

Grassley sent letters to AARP Chief Executive Officer William Novelli and state insurance commissioners Nov. 3 inquiring into whether the AARP misrepresented what is covered by some health insurance policies it sold. Four days later, Novelli announced AARP would review its marketing and suspend sales of those policies.

AARP’s mission to help seniors has been compromised by its reliance on royalties and fees, says Marilyn Moon, who was director of AARP’s Public Policy Institute from 1986 through 1989.

‘Conflict of Interest’

“There’s an inherent conflict of interest,” she says. “A lot of people there are trying to do good, but they’re ending up becoming very dependent on sources of income.”

Moon is now vice president and director of the health program at American Institutes for Research in Washington.

Novelli, who co-founded a public relations company in 1972, became CEO of AARP in 2001. Since then, the organization has increasingly focused on marketing as a means to increase revenue, Moon says.

AARP officials say the organization always gives priority to the needs of seniors.

“There is no conflict of interest between the marketing of products and services to our members and our policy work,” spokesman Adam Sohn says. “Policy always comes first.”

AARP declined requests to make Novelli available for comment.

‘Benefit From Our Brand’

John Wider, executive vice president of AARP Services Inc., a for-profit subsidiary, says AARP uses royalty revenue to fund its member services. In addition, he says, insurers selling products through AARP find royalty payments are worthwhile because AARP’s endorsement lowers insurance company marketing costs and increases sales.

“There is an efficiency they gain in being able to benefit from our brand,” he says.

Novelli, 67, has broadened AARP’s reach and increased its clout in Washington. The association recently joined with industry and labor groups in a campaign known as Divided We Fail. That effort is seeking ways to ensure health care for all Americans.

Novelli has expanded AARP’s marketing to include 17 types of insurance. The association collects royalties on each of those products. Its membership rose to 40 million from 35 million, and its total revenue grew to $1.17 billion in 2007 from $520 million when Novelli took charge.

Medicare Lobbying

Nowhere were AARP’s conflicting roles more evident than in its lobbying in support of a 2003 bill proposed by President George W. Bush to expand Medicare, the federal health insurance program for people older than 65.

The bill, which for the first time added a prescription drug plan to Medicare, passed by a vote of 220-215 in the House of Representatives and 54-44 in the Senate. Thousands of AARP members complained that the legislation was a bad deal for seniors because it provided incomplete coverage and raised costs for seniors with low income.

After the Medicare bill was signed into law by Bush in December 2003, AARP was able to expand its contract with Minnetonka, Minnesota-based UnitedHealth Group Inc., which underwrites AARP’s Medicare supplemental insurance plan.

AARP increased its annual revenue from royalties by $197 million to $497.6 million from 2003 to 2007.

Not the Least Expensive

AARP advertises that its Medicare supplemental insurance can save people thousands of dollars. While every type of supplemental policy sold by all companies must offer the same exact coverage under federal rules, AARP doesn’t sell the least expensive.

The AARP/UnitedHealth basic policy costs $582 a year more than a lower-cost competitor in New York and $428 more in Los Angeles, according to data on Medicare’s Web page. AARP spokesman Sohn says everyone should shop carefully.

“The products and services AARP makes available are competitively priced,” he says. “Price is not the only factor. Service and features need to be factored in to determine full value.”

AARP’s muscle on Capitol Hill is vested in the size and geographic reach of its membership, as well as its lobbying budget. The association donated no money to candidates in 2007, federal election records show.

‘AARP’s Clout’

“They don’t even have to give any campaign contributions,” says James Thurber, director of the Center for Congressional and Presidential Studies at American University in Washington. “AARP’s enormous clout comes from the threat they could defeat people in Congress who don’t do what they want. They are the most powerful interest group in Washington.”

Rob Simmons, who served as a Republican congressman from Connecticut during 2001 through 2006, says he waited to learn AARP’s position on the 2003 Medicare legislation before deciding how to vote.

“Some people tore up their AARP cards in protest,” he says. “I told my constituents 10 days before the vote that I would wait to see what AARP had to say.”

Simmons praises AARP’s efforts to stand up for seniors. In 2005, Novelli fought President Bush’s plan to overhaul Social Security by creating private accounts. AARP launched what it called its largest political advertising campaign ever, using newspapers and television to attack the proposal.

As the president toured the country holding town meetings to win support, AARP sponsored its own forums nearby to criticize the plan. It argued that like an old-fashioned pension, Social Security should remain as a fixed payment to retirees — and the money shouldn’t be gambled in investments.

AARP Won Battle

Responding to requests from the association, AARP members wrote or e-mailed Congress hundreds of thousands of times, AARP says. AARP won the battle, and Bush dropped the proposal.

“AARP in my opinion is one of the foremost defenders of the rights of senior citizens,” Simmons says. “It has the staff, expertise and national stature to be an organization to be respected.”

AARP has provided free tax preparation assistance to 47.7 million people with middle-range and low incomes. Other services include career counseling, driver safety training, financial education programs and home heating assistance.

To help pay for its advocacy, training and lobbying, AARP gets royalties and fees for selling insurance. In 2007, the group spent $157.2 million, about 13 percent of its revenue, on advertising. It runs daily — sometimes hourly — spots on television and Internet ads saying its insurance policies can save members money.

‘Compare Us’

Its Web page on car insurance says, “Get on the road to better coverage and bigger savings. Compare us to your current policy and you could save hundreds in the first year alone!” A TV ad for AARP’s Medicare supplemental insurance says customers can save thousands of dollars.

At the bottom of its insurance Web page, AARP says, “Insurers and providers pay a fee to AARP and its affiliates for use of the AARP trademark and other services.”

AARP has been in the insurance business since its founding in 1958. Ethel Percy Andrus, a former school principal, discovered that a retired teacher couldn’t afford an apartment and was living in a chicken coop.

Andrus worked with Colonial Penn Group to provide health insurance to retired teachers starting in 1947. She expanded AARP’s offer to include health insurance for all retirees 11 years later.

Expanded Marketing

AARP stopped selling basic health insurance for seniors in 1965 after President Lyndon Johnson signed Medicare into law. The organization continued to offer several kinds of insurance, including a supplement to Medicare, offering additional coverage.

Novelli has been able to expand AARP’s marketing, having co-founded New York-based public relations firm Porter Novelli. He and his partners sold the company for an undisclosed amount to Omnicom Group in New York, the world’s largest owner of advertising agencies.

From 1991 to 1995, he was executive vice president of CARE, an international group that fights poverty. From 1995 to 1999, he ran the Campaign for Tobacco-free Kids, which works to block cigarette advertising to children.

“There isn’t any organization like AARP, and Novelli understood it,” says Tess Canja, who was president of AARP’s 21-member board in 2001, when Novelli got the post. “He’s taken AARP a notch higher.”

‘Everybody’s Happy’

Novelli has reached out to younger Americans. TV commercials portray active middle-aged people, a switch from the scenes shown in the pre-Novelli era of elderly Americans sitting in wheelchairs.

In a 29-second video on YouTube, young and old people celebrate birthdays by blowing out candles, throwing cake, spinning in office chairs and ripping paper off packages while the British punk band Buzzcocks’ song “Everybody’s Happy Nowadays” plays.

“AARP is an organization for people who have birthdays,” a female voice-over says. “That’s because what we do, we do for all. Join us in championing your future, and the future of every generation.”

What AARP has done for Laupus hasn’t made him want to celebrate. The former social studies teacher, now a lecturer on films at Towson University in Towson, Maryland, says AARP let him down.

“I was under the assumption I would get discounts for automobile insurance, health insurance, house insurance,” Laupus says. Earlier this decade, he signed up for an AARP- endorsed auto policy for a 1997 Honda Accord and a 2002 Mitsubishi Lancer.

‘Best Possible Rate’

In 2007, he followed AARP’s Internet-based advice and went shopping for rates from other companies for the same coverage. He says that of the 13 companies he checked, AARP/Hartford — a unit of the Hartford, Connecticut-based insurance company Hartford Financial — charged $700 a year more than the average.

“I figured they would be negotiating for me as a large group and get the best possible rates,” says Laupus, a tall, gray-haired man who lives in Elkridge, Maryland. “But, dumb me, when I first bought their insurance I really didn’t check around to find out what other companies were charging.”

On March 16, 2007, Laupus wrote a letter to Novelli.

“I have been a customer of AARP/Hartford auto insurance for many years and never had a claim,” Laupus wrote. He told Novelli he had compared his rates with eight companies and found AARP/Hartford to have the highest premiums.

Price Shopping

Laupus says he checked four other companies and found the same. He wrote that AARP/Hartford billed him $1,444 annually for the two cars. Laupus says Geico Corp., the insurance company owned by Warren Buffett’s Omaha, Nebraska-based Berkshire Hathaway Inc., offered a price that was half as much.

He then decided to lower that further by eliminating collision insurance on the Honda and raising the deductible for his Mitsubishi to $1,000 from $500. At the same time, he increased his bodily injury liability insurance to $300,000/$300,000 from $100,000/$300,000.

That brought the annual cost of insurance from Geico to $683.60.

In his letter, he explained those changes to Novelli. An AARP employee, Sharman Greber, replied two weeks later.

“I can certainly understand your concern over the cost of insurance coverage and would like to assure you that The Hartford’s goal is to provide the highest quality product at as fair a price as possible,” Greber told Laupus in an April 2, 2007, letter.

‘Dare I Say Kickbacks?’

Greber didn’t respond to requests for comment. On April 10, 2007, Laupus wrote back, questioning AARP’s dealings with The Hartford.

“What I’m asking, bottom line, is this: Does AARP have some ’special relationship’ with The Hartford by which it receives commissions, incentives, rebates or dare I say ‘kickbacks’?” he wrote.

Greber replied on April 25, 2007, writing that AARP contracts with The Hartford and other insurance companies include royalties. She first wrote that AARP talked to The Hartford.

“The representative did compare the quotations you received from Geico and Allstate, but was unable to match Geico’s premium,” she wrote.

She added, “The royalty fee paid to the Association is used to finance the many programs and services of AARP. The Association produced and distributed more than 11 million booklets and brochures last year free of charge to help older persons become better informed about issues from caregiving and widowhood to housing and consumer fraud.”

Laupus responded on May 2, 2007.

‘Rather Selfish’

“I don’t purchase auto insurance to provide booklets and brochures about caregiving and widowhood,” he wrote. “This may seem rather selfish of me, but I purchase auto insurance to insure my auto.”

Laupus says AARP is playing games with words. “Notice it’s not kickbacks, it’s royalty fees,” he says. “What a great euphemism.”

David Snowden, spokesman for The Hartford, says his company offers competitive rates.

“While we lack information to speculate we could match the other company’s rate in 2007, there’s little doubt we could have come closer if Mr. Laupus requested the same policy features,” Snowden says.

Landscaped Atrium

After Laupus discovered his AARP car insurance rate was too high, he became determined to learn more about how his membership money was being spent. In September, he traveled to AARP’s Washington headquarters — two 10-story buildings that are connected by an enclosed, landscaped atrium.

He strode into the lobby, dressed in khaki pants and a blue checkered shirt, hoping to take a tour. He noted the brass doors and the marble that stretched as far as he could see.

“It says to people that we’re a very wealthy organization and we can afford to spend your money,” Laupus says. After showing his AARP card and telling a guard he’d been a member for more than 20 years, he was turned away.

“We don’t give tours,” the guard told him. Laupus asked again, and the guard called AARP’s membership department, which also denied the request.

Alan Simpson, a former Republican U.S. senator from Wyoming who chaired a subcommittee in 1995 that examined AARP, says he’s not surprised the association keeps its doors closed.

‘It’s a Temple’

“It’s no wonder they don’t let you see,” Simpson, 77, says. “It’s a temple. Opulent would be the word.”

AARP spokesman Sohn says the building is closed to visitors so the staff can work.

“AARP takes the role of fighting for its 40 million members very seriously and this necessitates that our offices remain a place of business,” he says.

AARP says it uses some of the money it gets from insurance royalties to fund its efforts on behalf of seniors. But not everyone agreed its 2003 lobbying for a Medicare drug prescription plan was in the best interests of members.

President Bush pressed for prescription drug coverage for Medicare. He also wanted to turn administration of Medicare over to private companies instead of the government. AARP opposed the second goal.

Novelli and AARP’s lobbyists met with the Bush Administration and Congress and succeeded in removing privatization from the bill, says Christopher Hansen, who as AARP’s group executive officer for state and national initiatives oversaw the association’s Medicare lobbying.

‘We Forced That Out’

“We forced that out of the bill,” he says. “How? By refusing to support the legislation with that provision. It drew AARP into a big political fistfight. All AARP wanted was to get a drug benefit for its members.”

Thousands of AARP members said they objected to the legislation altogether. One reason was that the lowest-income seniors, people who had been using Medicaid, a federal health insurance program for low-income citizens, would have to pay more for medicine under the new law.

During the debate on the bill, two doctors at Harvard Medical School in Cambridge, Massachusetts, released a study that said the proposed changes would bring revenue to AARP at the expense of seniors.

“AARP derives significant income from the sale of health insurance policies, and stands to make hundreds of millions more under the Medicare Prescription Drug bill,” David Himmelstein and Steffie Woolhandler wrote on Nov. 22, 2003, as AARP was lobbying for the legislation.

AARP knew the proposal didn’t ensure complete prescription coverage, Hansen says.

‘It Wasn’t Perfect’

“It wasn’t perfect; it was flawed,” he says. AARP’s biggest concern was that the bill lacked adequate funding to fully cover the cost of drugs, Hansen says. Hansen, now CEO of Santa Clara, California-based AeA Inc., a trade association for technology companies, says Novelli had only good intentions.

Hansen also sympathizes with those who complained. “People who were against it had a right to be angry,” he says.

AARP felt it had to push an imperfect bill because it may not have had another opportunity to add a drug plan to Medicare, former board member Canja says.

“We thought our members could motivate Congress later to fix the things we didn’t like,” she says. After the legislation passed, 40,000 AARP members dropped out of the organization in protest, according to AARP.

For a While

Some members who didn’t quit have since concluded that their AARP-endorsed insurance costs are inflated. Richard Ostor of Indialantic, Florida, says he joined AARP seven years ago to get the lowest-cost car insurance.

He was satisfied with the insurance for a while — until his rates started going up even though he had had no accidents or traffic tickets. In April, his AARP/Hartford premium rose to $950 a year. He shopped and switched to Geico after he found similar insurance for $640.

“AARP has great buying power, and people should be able to get the best deal,” says Ostor, 62, a retired divorce lawyer and bar owner. “AARP fell asleep at the switch or has a very sweet deal with The Hartford. This is unconscionable, what AARP has allowed to happen.”

Bill and Helen Cochran, an Abington, Maryland, couple who retired nine years ago, say they felt the same way when they learned they were paying more than they had to with AARP’s Medicare supplemental insurance.

Met at Shoe Factory

Relying primarily on Social Security income of just less than $1,400 a month, they had sold their 1,300-square-foot (121-square-meter) condominium and moved to a subsidized apartment less than half that size.

Bill and Helen, who married 34 years ago when they both worked at the Beta Shoe Co. factory in Belcamp, Maryland, looked for other ways to trim spending. They purchased AARP Medicare supplemental insurance.

At a picnic for seniors in June 2008, the Cochrans learned they were spending $1,079 a year more than Mutual of Omaha Insurance Co. charged for the same coverage. Bill, 72, says he called AARP to see if it could match the lower price.

“They didn’t want to hear that,” he says. “I told them I’d found a better price, and they didn’t ask me who I was going with, but they said they couldn’t do anything about it.”

Bill says his experience changed his view of AARP.

“I was kind of shocked,” he says. “They’re making money on the backs of the old people. I don’t think AARP is looking out for me.”

In the current economic crisis, $1,000 a year makes a big difference to a couple living on a fixed income, he says. “It just gets you to thinking about how much money they’re getting kicked back, and then we’re suffering by paying more for our premium,” he says.

‘Rates Are Competitive’

UnitedHealth spokesman Jonathan Stone says his firm’s insurance is affordable. “We believe our rates are competitive,” he says. “Our plans all give overall value.”

AARP-endorsed life insurance policies are also more expensive than comparable coverage by competitors, says Mark Maurer of Tampa, Florida-based Low Load Insurance Services Inc., which sells policies to seniors.

A New York Life $50,000 permanent life insurance policy for a 65-year-old man available through AARP costs $286.17 a month, Maurer found. He says the same man can buy a $50,000 policy for 51 percent less from Cincinnati-based Columbus Life Insurance Co.

After a half century of serving seniors, AARP may be slipping in its mission to members as its power grows, former AARP official Moon says.

“AARP grew often for the sake of growing, and not thinking about, Is this the best way to be?” she says.

With the U.S. economy suffering the worst financial crisis since the Great Depression, AARP has to decide if charging higher insurance rates in order to bolster its revenue by $497.6 million a year is the kind of help that seniors need.

To contact the reporters on this story: Gary Cohn in Los Angeles at gochn@bloomberg.netDarrell Preston in Dallas at dpreston@bloomberg.net.

Last Updated: December 4, 2008 00:00 EST

Residents of Buffalo are in a position to profit from the current state of the Western New York Real Estate market if they know what they are doing.   That means that the savvy Buffalo Investor needs to be well educated as to what the good deals are.

We all know of Warren Buffett.  Over at Really Better Real Estate site they wrote an interesting post about the successes that Warren Buffet has experienced:

He has some great Warren Buffet quotes and it may gives some insight to Buffalo Investors as how to invest wisely in this challenging real estate market.

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About a book: Fooled by Randomness, by Nassim Nicholas Taleb

Although Taleb (very arrogantly) stated that unsolidated reviews, especially by unqualified people, are entirely unwelcomed, here’s me talking about his book anyway. Since he has also (quite accurately) pointed out that any measurements of a table done by a badly calibrated ruler is equivalent to using the table to measure the ruler, I will blatantly write as the ruler being measured by the table - I’ll state why I like his book. In no particular order,

I enjoy the subtleties

The Table that out-measures many Rulers - Taleb must be a table right? And definitely, a stool won’t be an appropriate object to use in this analogy.

Nero Tulip, the trader who outlived many high-flyers in a treacherous trading life - anything to prove, Nassim Taleb?

I agree

“I despise the moralizers beyond anything on this planet…” Well there might be things or people worse than moralizers, but moralizers are about the most irritating (and probably misguided) people around. If moral values were so clear cut, “controversy” won’t be in our dictionaries.

He’s skeptical about scientific findings. I love scientific findings, some are funny to quote, most sound intelligent enough to appear in reports, but will I bet my life on a published statistic or correlation? Hell no. The “scientific proofs” that support the hypothesis are the ones that will be published. Statistics can be calculated/interpreted to fit a requirement. Most quantified correlations are not meaningful, those that are will already be logically obvious.

He hates self-help books and people who tell you to brush your teeth. If I thought self-help books will actually help me, I would listen to my mother’s nagging.

Hindsight bias could be more rampant than we think. I always listen to what people attribute as the reason behind their success with a pinch of salt. I’m especially skeptical when people tell me ”Warren Buffett is doing it/has done it too”. Taleb attributes a lot of insanely successful projects to randomness (black swans). Well, I believe randomness/luck definitely has a large part to play. But even if luck is not the reason, what we (on hindsight) think is the reason behind our success may not really be the reason. Most of the “how I became successful” cannot be repeated in the same environment many times to test its validity. And we certainly cannot use the strategy in everchanging real life situations while expecting to obtain the same success. So unless it’s some down-to-earth advice like “work hard” or “the chances of getting a job increases dramatically after you send in an application”, fancy strategies generally don’t stick with me.

Taleb argues that the eventual performance cannot be used to judge the validity of the strategy. It’s not very intuitive, but if you think about it, certainly true. If I bought a lottery ticket and won, does that mean I should always buy loterry tickets? Sure, not all things in life are governed by pure randomness like the lottery, but the popular advice of “taking chances” is dangerous advice. By starting a niche business, I could either strike it rich or be bankrupted. Who knows the chances? Although ships are not made for staying in the harbour, they’re not meant to be crashed either.

I found out that I could be…

An above average driver - There’s that frequently quoted proof of self-delusion where a (possibly mythical) survey showed that more than 50% of people believe that they are above average drivers. Turns out it’s entirely possible. If most people are good drivers, but there exists a small amount of impossibly bad drivers (say, we measure the driving skills of drunk drivers), then the average could be something that more than half the people are above. (Taleb didn’t talk about drivers, he showed how more than 50% of the individuals can be wealthier than average). Why didn’t I think about this earlier? I could have outsmarted some professors.

Smarter than my doctor - Here’s a probability question that actually appeared in one of my notes (but I didn’t pay attention to it because I was too turned off by the mathematical notations). If the probability that a diagnostic test says that you have a disease when you don’t is 5%, and 1 in 1000 people in a population has this disease, what’s the probability of you having the disease if the test says you’re positive? According to Taleb, most doctors think it’s 95%. It’s not. The answer is actually less than 2%, ask your doctor to rerun the test.

I enjoy the honest arrogance

Despite repeated mentions that his only advantage is in knowing his fallibilities and weaknesses, there is no attempt to mask how much he thinks he’s better off than a lot of people. It’s funny how those people who believe that “only fools are sure of themselves” are so sure of skepticism.

I am always talking to my coaching clients about the importance of reading, in fact I am hounding them about it.

If you are reading this blog, I am probably preaching to the converted. So check out this quote from Charlie Munger, Warren Buffett’s off-sider.

“In my whole life, I have known no wise people who didn’t read all the time-none, zero. You’d be amazed at how much Warren reads-and at how much I read. My children laugh at me, they think I’m a book with a couple of legs sticking out”

So if that doesn’t inspire you to read I dont know what will.

Before that it can be hellishly difficult spotting them. Who would have though 70 year old, ex-Nasdaq excutive and highly respected Wall Street trader, Bernard Madoff was masterminding a $50 billion Ponzi scheme as he admitted last week.

Madoff says he is guilty of orchestrating a multi-year fraud that produced generous returns for sophisticated investors.

As BreakingViews.com explained: ‘The technique was the usual Ponzi scheme. Old investors were paid off by the new funds lured into to Madoff’s art-laden New York headquarters.’

This probably makes Madoff the biggest fraudster in history and knocks the Asian Financial Crisis’s Nick Leeson into the margins.

The historian and economist JK Galbraith has noted that throughout history speculative periods have allowed dishonest people to prosper, and the better the times the worse the outcome in terms of fraud and embezzlement.

You have to wonder if this will be the last such case. Hedge funds with their huge borrowings and opaque financial techniques have provided a legion of opportunities for malpractice.

The problem is also that frauds act as a downward pressure on legitimate investment activity. Presently US investors are buying zero-coupon t-bonds because they trust the US Government and not the banks that pay interest.

Confidence is pretty shot to pieces which is why I wonder if the current stock market rally has much life in it, and whether we will not see new lows in the first half of next year, as well as more cases like Madoff.

I love Mark Horne. Great pastor. Great theologian. I like him so much that I not only read his blog but sank $10 into his recent Why Baptize Babies? It’s going to help with all those annoying baptists in my life (not Ian though … nice chap).

However, my admiration of Horne stops when it comes to economics. Listen to this:

I have no doubt that President elect Obama means well.  But he doesn’t understand economics.  No one in power does.  Keynsianism was developed to justify the use of power at the expense of the public good, providing a rationalization for saying it was good for the public.  As long as its lies are believed, politicians will continue to consume us and their own children.  So that’s what we’re stuck with. We’d probably get a substantially identical position from McCain.  The only thing that makes Obama worse is that he may have the power to change the status quo if he could see the need to do so.

Really? No one in power understands economics? What about these guys? Huge names. An economic dream team so to speak. Furman, Summers, Galbraith, Volcker. You put these boys on an economics fantasy team and you’d kick ass. For pete’s sake, even Warren Buffett agrees with Obama’s ideas. And let me tell you, I’ll pick the oracle from Omaha over a chap with an M.Div any day of the week.

In Christian communities pastors are invested with a type of moral authority that no other vocation has. When respected pastors speak in believing communities, people listen. This is a good thing. It’s also a dangerous thing. I don’t mind when pastors talk about the Heidelberg catechism or Colossians 3, but when they start to wax poetic about economics, my skin starts to crawl. This is especially dangerous in Reformed churches that rumble on about Kuyper and Christ being Lord of all facets of life, even economics. That’s great. I agree with that. But I don’t want my M.Div trained pastor telling me how Christ is Lord over economics. How the hell does he know? Does he even know what a CDO is? (And Wikipedia’ing CDO doesn’t count).

Pastors. Be careful. People listen to what you say even when you may not know what you’re talking about.

Sometimes I wonder what a professional economist would think if they heard some of the recommendations pastors gave to people wanting to know more about economics. Henry Hazlitt’s Economics In One Lesson. Frederic Bastiat’s The Law. And heaven forbid, R.C. Sproul Jr.’s Biblical Economics. It must be the equivalent of what theologians think when a Christian economist is asked about good Christian books and he recommends Frank Peretti and Joyce Meyer.

I know the counter example to all this is Gary North. He’s got a Ph.D in economics. But he’s batshit crazy.

“One source confirmed that communications between Emanuel and the Blagojevich administration had been captured on court-approved wiretaps.