Saturday, October 30, 2010

Is this possible............?

Grace Slick turns 71 today. Say it ain't so.

No, tell us how you really feel about this.....

The essay starts, "In this issue of The Institutional Risk Analyst,
we are going to slay a few dragons and eviscerate a few currently
popular myths..."

Full essay here.  Enlightening excerpt here:

"Despite examples of the success of restructuring with F(ord)
and even General Motors, the invidious cowards who inhabit
Washington are unwilling to restructure the largest banks and
GSEs. The reluctance comes partly from what truths
restructuring will reveal. As a result, these same large zombie
banks and the U.S. economy will continue to shrink under the
weight of bad debt, public and private. Remember that the
Dodd-Frank legislation was not so much about financial
reform as protecting the housing GSEs.

"Because President Barack Obama and the leaders of both
political parties are unwilling to address the housing crisis
and the wasting effects on the largest banks, there will be no
growth and no net job creation in the U.S. for the next
several years. And because the Obama White House is content
to ignore the crisis facing millions of American homeowners,
who are deep underwater and will eventually default on their
loans, the efforts by the Fed to reflate the U.S. economy and
particularly consumer spending will be futile......

"Indeed, the public embrace by the Federal Open Market
Committee of further quantitative easing or "QE", instead of
calling for the immediate restructuring of the largest zombie
banks, actually threatens to push the U.S. into a deeper and
far more dangerous economic path. According to the Q2 2010
Bank Stress Index survey conducted by IRA and our review of
the Q3 2010 earnings results, the financial condition of smaller
lenders is actually improving............

"Part of the reason for the improvement is that the FDIC and
state regulators have taken a very hard line with smaller
banks, pushing many into resolutions and distressed asset
sales. But for the healthy lenders that survive and investors
that buy failed banks, there will be a lot of money left on the
table -- profits that will come back into earnings via
recoveries and other windfalls and help to boost the private
economy. Resolution and liquidation is how a free market
economy regenerates. The trouble is, the approach taken with
the large banks and the GSEs is precisely the opposite of that
applied to smaller lenders. The policy of the Fed and Treasury
with respect to the large banks is state socialism writ large,
without even the pretense of a greater public good.

"Forget Treasury Secretary Tim Geithner lying about the
relatively small losses at American International Group
(AIG), the fraud and obfuscation now underway in Washinton
to protect the TBTF banks and GSEs totals into the trillions
of dollars and rises to the level of treason. And the sad part is
that all of the temporizing and excuses by the Fed and the
White House will be for naught. The zombie banks and GSEs
alike will muddle along until the operational cost of servicing
bad loans engulfs them. Then they will be bailed out -- again
 -- or restructured."

Thanks to Yves for pointing the way.

Surely you jest....................

A New York State Supreme Court judge ruled this week that four-
year-olds can be sued for negligence, citing years of legal

Story here.

I love anecdotal evidence..................

It feels more real than a whole bunch of statistics.  Hopeful essay
here.  Meat of the story here:

But in terms of employment, the multifamily sector seems to be
in a good position at this stage on the cycle. Unemployment
may still be an issue in most markets across the US, but for
young adults—the prime renter cohort—more jobs are
becoming available.

That was the recurring observation made by most folks I
spoke with at last week’s RealShare Apartments 2010
Conference in Los Angeles. When asked about job growth,
many property owners and operators shared that even in
weak markets, their renters are finding jobs. Anecdotal and
factual evidence shared in both conversations and panel
sessions during the conference show that occupancies for
traditional apartments in most metros are rising, thereby
allowing for rent growth as well.

A few thoughts from Steve Felix............

Steve Felix inhabits the world of institutional real estate.
He blogs here.

· The only thing the real estate industry needs to change is our
own expectations.

· Co-investment funds, for large investors, will become popular…
for a while.

· Investors have become frustrated paying fees on committed
but uninvested capital.

· The name of the game today is: execution.

· Fee structures should be changed: lower management fee; higher

· If you act like a sheep you’re going to get fleeced (investors
with herd mentality).

· Testifying before Congress in 1967, Nobel Laureate Paul
Samuelson proclaimed "Most portfolio decision makers should go
out of business - take up plumbing, teach Greek, or help produce
the annual GNP by serving as corporate executives."

· If you think you’re going to get 20% returns….forget it.

· Some large investors (China, Canada) are doing limited JV’s.
This is the way they will invest….for a time.

· Club Deals (5-6 investors): Do they have the same investment
strategy? The same exit strategy?

· It’s hard to see how large funds, operated by investment banks,
will make a comeback.

· Boutique fund managers, with a JV mindset, will be successful.

Friday, October 29, 2010

Let's take the long view..............

Not sure when the tendency for immediate gratification took hold
in our society, but it sure seems to have us in a strangle hold.  The
"long view" has been crowded out.. Short term thinking dominates
the news, Wall Street, and the political process.  To our detriment,
I think

I suspect that peace, love, and happiness have little to do with
immediate gratification.

The airwaves and blogosphere are now full of stories about the
mortgage and foreclosure crisises.  Most of the problems
seem to stem from both "short term thinking" (borrowing more
that one could afford to repay and lending without concern for
being repaid) and "short cuts" taken along the way by our friends
in the mortgage-backed security business.
More on that we certainly appear here later, but for now.....

Rick Platt, whose blog is worth reading, has become a Joel
Kotkin disciple.  Kotkin takes the long view, the really
long and mostly positive view.  After Rick's latest post, I
went to Kotkin's web site.  Found an interesting essay
titled Why Housing Will Come Back,  here.

Excerpt here:

But over the longer run most Americans will seek to
purchase homes –whatever the geography. Increasingly
this will be less a casino gamble, and more a long-term
lifestyle choice. As America adds upwards of 100 million
more Americans by 2050, the demand will stare us in
the face.


New friend Rob at the Hammock Papers is always worth reading.
His post from yesterday contained this beauty from my hero
Emerson.  Enjoy.

All life is an experiment. The more experiments you make the
better. What lies behind us and what lies before us are small
matters compared to what lies within us. Finish each day and
be done with it. You have done what you could; some blunders
and absurdities have crept in; forget them as soon as you can.
Tomorrow is a new day; you shall begin it serenely and with
too high a spirit to be encumbered with your old nonsense.

A chief event of life is the day in which we have encountered
a mind that startled us.

- Ralph Waldo Emerson

Trick or Treat.....................

Newark held it's "Trick or Treat" night last evening.  A very
civilized affair, starting at 5:30 and over by 7:00.   I suspect that
150+/- kids made their way through our neighborhood. The
crowd seemed younger this year.  Lots of strollers.  A surprising
number of Spiderman and Buzz Lightyear costumes mixed in with
your normal number of ninjas, witches, football players, angels,
and chain saw massacrers.  A fair number of the parents were
dressed up as well, which just adds to the fun.

Gave away mostly Milk Duds, Skittles, and Milky Way bars.
Held the Hersey Chocolate bars in reserve.  We will be snacking
on those for the next few months.

The minimalist style Pumpkin at my house

Neighbor went big.  Spooky soundtrack included

Happy Halloween

Thursday, October 28, 2010

Charlie Daniels turns 74 today.............

Charlie played the amphitheatre at Ohio State University-Newark
on fine summers' night a few years back.  My kids got the chance
to meet and talk with him for a few moments before the concert. 
He was kind and generous with them.  I liked him before that, I
really liked him after.   Happy Birthday Charlie.

We call this progress...............

story here

Doonesbury turns 40......................

We should all age so well.

Gary Trudeau

Excerpts from an interview with Gary Trudeau in The Guardian,
with quotes from Trudeau being italicized:

"One of the great things of being young is that you're not
aware, you lack self-consciousness," he says. "I was wholly
clueless about the things I was not supposed to be doing.
I didn't set out to be a troublemaker, though quite quickly
the strip became a cause of trouble."

"It is a soap opera, a tragedy, a comedy, an investigative agency,
a liberal political commentary, a scourge of pomposity and
corruption, a humanitarian exercise, all rolled into one."

"taking these highly improbable characters and having them
collide with real events".

"Satire is unfair. It's rude and uncivil. It lacks balance and
proportion, and it obeys none of the normal rules of engage-
ment. Satire picks a one-sided fight, and the more its
intended target reacts, the more its practitioner gains the
advantage. And as if that weren't enough, this savage,
unregulated sport is protected by the United States
constitution. Cool, huh?"

40: A Doonesbury Retrospective.   Sweetie, this is what the
kids can get me for Christmas.

Thanks to Nicholas for pointing the way

Doonesbury over the years..............

The first one  10/26/1970

Some fall day in the early 1970's




Yesterday's 10/27/2010

Jonah Goldberg probably reads Doonesbury too......

Column in Wednesday's Dispatch here.

Interesting excerpt here:

"This is a serious point. Like never before, it's now possible
to get all of your news from avowedly non-liberal or
explicitly right-wing media outlets. (It's been possible to dine
exclusively on liberal fare since World War II, at least.)
Growing media diversity is great, but with it comes the
danger of ghettoization. If we all retreat to our respective
clubhouses and simply consume the news and views that are
most conducive to our worldviews, the odds for political
progress diminish.

This is neither a strictly conservative point nor some gauzy
celebration of moderation and compromise. Politics is
ultimately about persuasion, and if you can't understand
where your opponents are coming from, you'll never be
able to convince them they're wrong or convince the
majority of Americans your arguments are right. In fact,
you may not even have the better arguments if you've
never tested them on people who don't naturally agree
with you.

Wednesday, October 27, 2010

Who says Economics is the "dismal science"?

The attack is here

I tried to load the video, but my computer says something about
the tag being broken - I don't know how to fix it.  Ergo, you have
to journey via the above link to Greg Mankiw's site where you
can watch Stephen Colbert attack him.  Mankiw wrote an essay
for the NYT, suggesting that Mankiw could be disincentivized by
income tax increases.  I sense that Colbert is both pleased and
amused at that prospect.

The defense is here:

People who refuse to take themselves seriously are so refreshing,


Globe Street reports on a Multi-Family Housing Conference

Fun excerpts here:

"The industry’s greatest problem these days isn’t the slow economy
or lack of movement; it’s the pervading sense of negativity among
market participants. That was the general consensus of the experts
on the Industry Leaders Panel, a featured session during the Real
Share Apartments 2010 conference, held Thursday at the Westin
Bonaventure Hotel in Downtown Los Angeles.

When discussing the economic rebound, Al Brooks, president
of commercial lending for Chase, said that although it’s a
slow turn-around, the situation overall is good. “We’re so
hung up on looking for the negatives that we don't notice the
enormous wind at our backs,” he commented.

Putting it more bluntly, Ric Campo, chief executive officer of
Camden Property Trust, said, “We whine too much about
the economy. The psychology is more negative today than it
ought to be.”

Something to make you smile...........

Oh yes, John Cleese was born this day in 1939.  A funny,
funny man.  Happy Birthday and Thanks.

"How Prosperity Evolves"..............

".......The Dark Ages were a massive experiment in the back-
to-the-land hippy lifestyle (without the trust fund):  you
ground your own corn, sheared your own sheep, cured your
own leather and cut your own wood.  Any pathetic surplus
you generated was confiscated to support a monk, or maybe
you could occasionally sell something to buy a metal tool
off of a part-time blacksmith.  Otherwise, subsistence
replaced specialization..................."

     "But meanwhile, the torch passed east.  As Europe sank
back into self-sufficiency, Arabia was discovering gains
from trade.  The sudden emergence of an all-conquering
prophet in the middle of a desert in the 7th century is
rather baffling as the tale is usually told- one of religious
inspiration and military leadership.  What is missing from
the story is the economic reason that Arabs were suddenly
in a position to carry all before them.  Thanks to a newly
perfected technology, the camel, the people of the Arabian
Peninsula found themselves well place to profit from trade
between the East and West....................."

"..........Not coincidentally, the free-trading Arabs
exchanged ideas as well as goods and culture thrived.
As they spilled out of their homeland, Arabs brought
luxury and learning to an area stretching from Aden to
Cordoba, before the inevitable imperial complacency
and then severe priestly repression set in back home...."

-Excerpts from The Rational Optimist by Matt Ridley

Tuesday, October 26, 2010

Two for Tuesday....................

We were all a lot younger back then...........................

Chris Guillebeau goes to college..............

    "My undergraduate career was relatively undistinguished,
aside from two things.  First, I skipped high school to go
straight into college.  I wasn't a genius or kid wonder- I was
just bored with high school and not good at following rules.
After one disastrous year and one decent year where I was
awarded the prize for 'Most Improved Student,' I decided to
consider the award my diploma and just didn't go back for
the third or fourth year.

    "Yes, I was a high school dropout, although thankfully I
didn't continue on the conventional dropout path.  The same
year I quit high school, I enrolled in a local community
college.  By the time the registrar's office noticed that I had
never finished high school, I had already finished my first
full quarter.  My grades weren't perfect (one A and two B's),
but they agreed to let me keep going.  'This isn't Stanford,
you know,' one of the administrators told me.

    "A couple of quarters later, I had racked up enough
credits to transfer to a four-year university,  Like my
community college, it was far from  prestigious (a small
state university with 3,000 students), but I enjoyed the fact
that I was now a fully enrolled college student without a
high school diploma.

     "My grades were all over the map- straight A's for the
major I would eventually stick with (Sociology), and
several C's and D's from the classes I simply gave up on.
In a pattern that continues to this day, I worked harder
than anyone I knew on the subjects that I liked....and for
the other work, well, the results weren't pretty."

-an excerpt from The Art of Non-Conformity, by
Chris Guillebeau

"Be kinder than necessary."

Michael Wade gives a lesson in goal/priority setting:

This Week: Things to Do In the coming week:

   Reprimand less and discuss more.

   Talk less than you listen.

   Listen more for what is meant than for what is said.

   Don't send an e-mail, call.

   If possible, don't call but visit.

   Stop whenever you find yourself emphasizing turf over

   Do the same when emphasizing rules over logic and

   Be kinder than necessary.

   Count your blessings. There are millions of people
   for whom your life would be a beautiful dream.

Hoops anyone?

Thanks Megan

Ah, computers.....................

I still cannot make Bloggers "add image" function work on my
home computer, but the office computer lets me do it.  Must
have done something at home that needs undone.  If I only
knew what it was...

Anyway, one of the posts from Sunday referred to a chart that
featured a new and different relationship ( that started around the
year 2000) between earnings and dividends and stock prices.

Home Blogger couldn't load it, Office Blogger just did.

Not sure what it means, but lines on charts that go vertical
always make me nervous.

Monday, October 25, 2010


Pablo Picasso, the prolific Spanish artist,
was born this day in 1881.

Picasso's father was an art teacher who
believed that "proper training required
disciplined copying of the masters."

By the time Picasso was 13, the father
acknowledged that the son was his

 With tens of thousands of creations,
        in mediums from paint to pencil to
        ceramics to tapestry to sculpture,
        Picasso was ever the artistic
        adventurer and experimentor.

        We are all the richer for it.

Don Quixote   1955

Three Musicians   1921

The Actor   1904

Guernica   1937

Some quotes from Picasso...................

One must act in painting as in life, directly.

He can who thinks he can, and he can't who thinks he can't. This
is an inexorable, indisputable law.

I am always doing that which I cannot do, in order that I may
learn how to do it.

My mother said to me, "If you are a soldier, you will become a
general. If you are a monk, you will become the Pope." Instead,
I was a painter, and became Picasso.

I'd like to live as a poor man with lots of money.

Only put off until tomorrow what you are willing to die having
left undone.

Inspiration exists, but it has to find us working.

It takes a long time to become young.

Love is the greatest refreshment in life.

Action is the foundational key to all success.

All children are artists. The problem is how to remain an artist
once he grows up.

Computers are useless. They can only give you answers.

If there were only one truth, you couldn't paint a hundred
canvases on the same theme.

Every act of creation is first an act of destruction.

Youth has no age.

Everything you can imagine is real.

Our goals can only be reached through a vehicle of a plan, in
which we must fervently believe, and upon which we must
vigorously act. There is no other route to success.

Painting is just another way of keeping a diary.

Success is dangerous. One begins to copy oneself, and to copy
oneself is more dangerous than to copy others. It leads to sterility.

The artist is a receptacle for emotions that come from all over the
place: from the sky, from the earth, from a scrap of paper, from a
passing shape, from a spider's web.

We all know that Art is not truth. Art is a lie that makes us realize
the truth, at least the truth that is given to us to understand.

The chief enemy of creativity is "good" sense.

Art washes away from the soul the dust of everyday life.

The older you get the stronger the wind gets - and it's always in
your face.

The world today doesn't make sense, so why should I paint
pictures that do?

We don't grow older, we grow riper.

You mustn't always believe what I say. Questions tempt you
to tell lies, particularly when there is no answer.

Seemed like a Blue Man kind of day........

A Poem for Monday....................

       The Peace of Wild Things

When despair for the world grows in me
and I wake in the night at the least sound
in fear of what my life and my children's lives may be,
I go and lie down where the wood drake
rests in his beauty on the water, and the great heron feeds.
I come into the peace of wild things
who do not tax their lives with forethought
of grief.  I come into the presence of still water.
And I feel above me the day-blind stars
waiting with their light.  For a time
I rest in the grace of the world, and am free.

-Wendell Berry

Sunday, October 24, 2010

Something feels fundamentally wrong with this...........

"70% of trading volume on the major exchanges is conducted
by high-frequency traders who hold a stock for an average of
11 seconds."

Story here.  The comment section is also worth reading.

A more detailed explanation here.   Excerpt here:

"The Tradeworx computers get price quotes from the
exchanges, decide how to trade, complete a risk analysis
and generate a buy or sell order — in 20 microseconds.

The computers trade in and out of individual stocks,
indexes and exchange-traded funds, or E.T.F.’s, all day
long. Mr. Narang, for the most part, has no idea which
stocks Tradeworx is buying or selling.

Showing a computer chart to a visitor, Mr. Narang zeroes
in on one stock that had recently been a winner for the firm.
Which stock? Mr. Narang clicks on the chart to bring up the
ticker symbol: NETL. What’s that? Mr. Narang clicks a few
 more times and answers slowly: “NetLogic Microsystems.”
He shrugs. “Never heard of it,” he says.

Silly me.  I always thought of the stock market as a critical
part of the free enterprise system. You know, an important
source of  capital as well as a system allowing intelligent
allocation of capital.

Turns out it has become a glorified computer game.  The best
programmers with the most powerful computers extracting a
penny, or a fraction thereof, per share per trade.  Can't
really call it investing.  Given the power of the computers, you
can't really call it speculating.  It feels like in exchange for
providing massive liquidity to the market, the computer
jockeys get to extract a "tribute" from the market.

And how does this make our Country- our economy-
better, stronger, more productive, and healthier?

Speaking of the Stock Market.....

I was going to post an interesting chart that shows how closely
stock prices followed the path of earnings and dividends from the
year 1870 until around the year 2000.  At that time the
relationship between earnings/dividends and the stock price
simply unhitched.  Earnings rose, stock prices totally soared.

Not sure what it all means, but it struck me as something worth

Unfortunately Blogger does not concur.  For some reason
I lost the ability to add images to this blog Saturday afternoon.

Very frustrating.  Don't know what is wrong.  Don't know
how to fix it.  Doesn't appear to be anybody to call.


Want to get your heart rate up..........?

Pray they don't open the car door............

thanks to E.

A verse for Sunday

You who were created by love like itself can hold no
grievances and know your Self.  To hold a grievance is to
forget who you are.  To hold a grievance is to see yourself as
a body.  To hold a grievance is to let the ego rule your mind
and to condemn the body to death.  Perhaps you do not yet
fully realize just what holding grievances does to your mind. 
It seems to split you off  from your Source and make you
unlike Him.  It makes you believe  that He is like what you
think you have become, for no one can conceive of his
Creator as unlike himself.

A Course in Miracles:  Workbook for Students
Lesson 68:1