Saturday, March 31, 2012

Starbugs Frapuccino a Little Crunchy?

Oops, I meant Starbucks.  "Starbucks' use of crushed beetles in food colouring for its frapuccino products - which it had labeled vegan - is merely the tip of the iceberg. The cochineal beetle, often used in red food dyes, is one of many disgusting ingredients found in everyday foods. Between yogurt, maraschino cherries, jams, cakes, and tomato products, you've probably consumed at least one pound of red dye in your life. That means that you've also ingested at least 70,000 cochineal beetles, according to a petition on The bug is crushed up to make red dye. Food companies might advertise natural flavors, low calories and vitamins A through Z, but they're much less likely to promote their use of fish bladders, sand, or human hair. And you won't believe what beaver anal glands - that's correct - are used for." Read more at: The Business Insider  "The cochineal (Dactylopius coccus) is a "scale" insect in the suborder Sternorrhyncha, from which the crimson-colour dye carmine is derived. A primarily sessile parasite native to tropical and subtropical south America and Mexico, this insect lives on cacti, feeding on plant moisture and nutrients. The insect produces carminic acid that deters predation by other insects. Carminic acid, which occurs as 17-24% of the weight of the dry insects, can be extracted from the insect's body and eggs and mixed with aluminum or calcium salts to make carmine dye (also known as cochineal), today primarily used as a food colouring and for cosmetics." (Wikipedia)

Friday, March 30, 2012

U.S. "Not Winning" the Battle With Hackers

By Devlin Barrett of The Wall Street Journal: "The FBI's top cyber cop offered a grim appraisal of the nation's efforts against hackers: "We're not winning," FBI Assistant Director Shawn Henry said. The current public and private approach to fending off hackers is "unsustainable.'' Criminals are simply too talented and defensive measures too weak. His comments came as Congress considers two competing bills designed to buttress the networks for critical infrastructure, such as power plants and nuclear reactors. Though few experts disagree on the need for security improvements, business advocates have argued that the new regulations called for aren't likely to better protect networks. Mr. Henry said companies need to make major changes in the way they use networks to avoid further damage to national security and the economy. Too many companies fail to recognize the risks they are taking. "I don't see how we ever come out of this without changes in technology or changes in behavior. You never get ahead, never become secure, never have a reasonable expectation of privacy or security''. James A. Lewis, at the Center for Strategic and International Studies, said that, as gloomy as Mr. Henry's assessment may sound, "I am actually gloomier. I think we've lost the opening battle with hackers.'' Mr. Lewis said he didn't believe there was a single secure, unclassified computer network in the U.S. Mr. Henry said FBI agents are increasingly coming across data stolen from companies whose executives had no idea their systems had been accessed. "We have found their data in the middle of other investigations,'' he said. "In many cases, they've been breached for many months, in some cases years.'' But even when companies build up their defenses, their systems are still penetrated, he said. "We've been playing defense. You can only build a fence so high, and we've found that offense outpaces, and is better than, defense,'' he said. Testimony Monday before a government commission assessing Chinese hackers underscored the dangers. Richard Bejtlich of Mandiant, a cybersecurity company, said that in cases where intrusions were traced back to Chinese hackers, 94% of the companies didn't realize they had been breached until someone told them. The median number of days between the start of an intrusion and its detection was 416, or more than a year. In 2010, a group of Chinese hackers breached the network of the US Chamber of Commerce, and gained access to everything stored on its systems, including info on its three million members. In the debate over cybersecurity legislation, the Chamber has argued for a voluntary, non-regulatory approach. The FBI's Mr. Henry said there are some things companies need to change immediately. He said their most valuable data should be kept off the network altogether. And companies need to do more than just react to intrusions. Companies "need to be actively hunting inside the perimeter of their network". Companies also need to get their entire leadership involved. "If leadership doesn't say, 'This is important, let's come up with a plan right now; let's have a strategy,' then it's never going to happen".

Thursday, March 29, 2012

Healthcare and The Court: GOP Tricked?

An interesting take on the current U.S. healthcare law Supreme Court challenge is offered by Robert Reich in The Business Insider: "The dilemma at the heart of the new law is that it continues to depend on private health insurers, who have to make a profit. Yet the only way private insurers can afford to cover everyone with pre-existing health problems, as the new law requires, is to have every American buy health insurance. This dilemma is the product of political compromise. The Administration couldn’t get the votes for a single-payer system. Not a single Republican would even agree to give Americans the option. But don’t expect the Supreme Court to address this dilemma. It lies buried under a constitutional argument. Those defending the law say the federal government has authority to compel Americans to buy health insurance under the Commerce Clause of the Constitution, which regulates interstate commerce. Those opposing the law say a requirement that individuals contract with private insurance companies is coercion. Unhappily for the Democrats, most Americans don’t seem to like the bill very much anyway. Many on the right believe it a threat to individual liberty. Many on the left object to being required to buy something from a private company. Obama and the Democrats could have avoided this dilemma in the first place if they’d insisted on Medicare for all, or at least a public option. After all, Social Security and Medicare require every working American to “buy” them. But because they are financed by payroll taxes they don’t feel like mandatory purchases. Americans don’t mind mandates in the form of payroll taxes for Social Security or Medicare. In fact, both programs are so popular even conservative Republicans were heard to shout “don’t take away my Medicare!” at rallies opposed to the new health care law. There’s no question payroll taxes are constitutional, because there’s no doubt that the federal government can tax people in order to finance public benefits. But requiring citizens to buy something from a private company is different because companies aren’t directly accountable to the public. They’re accountable to their owners and their purpose is to maximize profits. Even if private health insurers are organized as not-for-profits, there’s still a problem of public accountability. Moreover, compared to private insurance, Medicare is a great deal. Its administrative costs are only around 3%, while the administrative costs of private insurers are 30% to 40%. Medicare’s costs are even below the 5% to 10% administrative costs borne by large companies that self-insure. So why not Medicare for all? Because Republican strategy has been to demonize government and privatize everything that might otherwise be a public program financed by tax dollars. Then they go to court and argue that any mandatory purchase is unconstitutional. Obama and the Democrats should do the reverse. If the Supreme Court strikes down the individual mandate in the new health law, private insurers will swarm Capitol Hill demanding that the law be amended to remove the requirement that they cover people with pre-existing conditions. When this happens, Obama and the Democrats should say they’re willing to remove that requirement - but only if Medicare is available to all, financed by payroll taxes. If they did this the public will be behind them - as will the Supreme Court."  An interesting scenario indeed.  Was Obamacare designed to fail to trick the Republicans?  Read more at: Robert Reich

Wednesday, March 28, 2012

Preemies of Note ... Hmmm

"PMA = Preemie Mental Attitude"
From the Things That Make You Go Hmmm Department: While reading about Chuck Darwin the other day I found out why I am of just average intelligence; "preemies" are the real movers and shakers in the world!  To wit: Johannes Kepler: German astronomer and mathematician. Born 1571. Lived 59 years. Estimated I.Q. 160. He was a seven month baby. A founder of modern astronomy and physics. Sir Isaac Newton: British mathematician, astronomer, and physicist. Born 1642. Lived 85 years. Estimated I.Q. 170. Born on Christmas Day, a three pound baby. Sir Winston Churchill: British statesman. Born 1874. Lived 91 years. Not expected until January, he arrived on November 30. Anna Pavlova: Ballerina. Born 1885. Lived 46 years. Albert Einstein: Physicist, Nobel Prize Winner. Born in Ulm, Germany, 1879. Died Princeton, N.J., 1955. His parents worried about his initial language delay. Charles Darwin: British Naturalist. Born 1809 in Shrewsbury, England. Died 1882. John Keats: English poet. Born 1795. Died 1821. He wrote a series of odes that remain among the most popular poems in English. Mark Twain: Writer. Born 1835. Died 1910. Entered the world 2 months early, weighing only 5 lbs. One of the most famous personalities in American literature. Victor Hugo: French poet and novelist. Born 1802. Died 1885. He told Alexandre Dumas that even at 15 months he could not hold his head erect. He went on to become one of the greatest writers of all time as well as a major figure in French politics. His best-known works are Les Misérables and The Hunchback of Notre-Dame.  Jean-Jacques Rousseau: French writer and philosopher. Born 1712. Died 1778. Rousseau's political ideas greatly influenced the French Revolution, socialist theory and growth of nationalism.  Sidney Poitier: Award winning actor, film director and activist. Born 1927. First male black actor to be nominated for an Academy Award and first to have won Best Actor.  Other famous preemies include Napolean Bonaparte (French Emperor), Voltaire (French writer and philosopher), Renoir (Impressionist painter), Johann Wolfgang von Goethe (German poet, dramatist and novelist), Thomas Hobbes (English philosopher), and Michael J. Fox (American actor), among many others.

Tuesday, March 27, 2012

Most Interesting Man 10

Tall and good-looking, he is a born outdoorsman - a longtime denizen of Waterton Lakes National Park.  As the gregarious tour guide on the International, he kept the passengers apprised of the local flora and fauna (and in stitches thanks to his stand-up comedy) as that ancient ship plied those storied waters.  His early goal was to eschew stuff, possessing only those worldly goods that he could pack into his car, but then he met Her - a fellow boat person, and future soulmate!  A career evolved thereafter, our hero studying his buns off to enter that most hallowed of professions; paramedic-firefighter.  One who risks life and limb for his fellow man.  First comes love, then comes marriage ...  New adventures beckoned he and his bride, always somewhere exotic and adventurous for him (and with a white sand beach and boat drinks for her) - hiking, zip-lining, scuba diving, tsunami-watching, and the like.  (Did I mention he is a Maya worshipper and harmonicat?)  Domestic duties seem only to highlight other of his innate abilities, having landscaped two properties in three years (the last showcasing a fence worthy of Fort Knox), as he feathered their nests.  And somewhere along the way he again learned to like stuff; five flat screens for two people (but it is a big house, we admit). ... Then comes our hero with a baby carriage!  Who is this solid citizen, this hockey hound, this surround-sound sports fan, this special dad?  He is The Most Interesting Man in The World!

Monday, March 26, 2012

Verbatim: Ruger Runs Out of Guns

Maybe Sarah Palin knows why.
"Outgunned! Sturm Ruger Says it Can't Keep Up with Orders, Shares Surge! Written By Dunstan Prial, FOXBusiness. Shares of Sturm Ruger & Co. (RGR) soared as much as 9% on Thursday after the gun maker said first-quarter orders were so strong the company is temporarily suspending new orders. The Southport, Conn., company said it received orders for more than one million units in the first three months of 2012. The shares were up $3.29, or 7.8%, at $45.59 in Thursday trading. CEO Michael O. Fifer said in a statement late Wednesday that retailer programs initiated by the company were successful in attracting orders from larger gun retailers and independent wholesale distributors. “Despite the company's continuing successful efforts to increase production rates, the incoming order rate exceeds our capacity to rapidly fulfill these orders. Consequently, the company has temporarily suspended the acceptance of new orders,” Fifer said in the statement. Sturm Ruger hopes to be accepting orders again by the end of May, the company said. Shares of the company’s rival gun manufacturer Smith & Wesson (SWHC) have risen in sympathy, surging more than 12% to a 5-year high." Read more at: foxbusiness  All I gotta say is, why are Americans buying so many guns?

Sunday, March 25, 2012

KT Redesigns The Semi-Private Room

It was inevitable.  One of the lighter aspects of the past few days was provided by New Mom re-inventing the semi-private hospital room she has largely been confined to.  She's always had a flare for interior decorating, and - in addition to her penchant for being ultra-organized (she invented the term "spreadshit" to describe the family obsession with same) - it was only a matter of time, we suppose, until she took on something like this.  The day after she was admitted and C-sectioned, the place was transformed - as much as an institutional space can be, overnight.  It goes without saying that her text-friendly cellphone and iPad were back in business in 24 hours, and that she commandeered hubby's iPhone almost immediately for HD photography and videos of The Babe.  In addition, excess clothes and precious gifts from well-wishers were sent home for safekeeping, and to create usable space.  Then hospital staff were requested to take away the electric fan and other superfluous equipment, etc. cluttering her vanity area.  Next, the narrow standard-issue wheeled dinner table was converted into a mini-desk (all those pamphlets to read and forms to fill out, you know - plus her stash of chocolate, of course).  Even the curtains intended to provide some semi-privacy were re-arranged to do just that - with a slight re-pinning to allow an unobstructed view of Home and Garden TV.  (New Dad had already been enlisted to get the aging television hanging from the ceiling to work properly.)  In short, "a place for everything and everything in its place" - so much so that visitors were visibly taken aback at the transformation.  Listen up hospital administrators everywhere: those rooms needn't appear so dowdy and cluttered - just ask KT!

Saturday, March 24, 2012

The Alberta Wildrose Alliance Party

Danielle Smith
"Leader Danielle Smith identifies herself as a fiscal conservative and - while she believes in libertarian principles - the party is home to many social conservatives. Two Wildrose task forces were created in late 2009 to help build party policy. The energy task force was to review controversial changes to the provincial oil royalty scheme and the process for energy transmission, both of which the Wildrose Party argues has damaged Alberta's economy. The second task force was to scrutinize the pay and benefits of MLAs and government employees. The party plans to launch additional task forces on agriculture and health care. Election reform is a focus of the Wildrose Alliance. The party proposes to set fixed election dates. It would allow more free votes in the legislature and would seek to elect the province's Senators rather than have them appointed. The party also plans to introduce a bill giving voters the right to recall their MLA. The Wildrose Party proposes numerous changes to how the province delivers health care, as well as controls on government spending. The party is also critical of international climate change treaties, believing corruption and politicization have surfaced in the scientific peer review process, thus climate change science remains inconclusive. Opposing politicians have criticized the Wildrose Party's policies as vague and undefined (including the topic of gun ownership). Polling indicated that the party had retained the support of 25% of the electorate throughout 2010 but by July 2011, the Wildrose's support had fallen to 16%, while PC support had risen to 51%." (Wikipedia)  I know.  You haven't stopped laughing long enough to absorb a single word since seeing Danielle Smith's campaign bus(t) picture.  Do Albertan's really want these people promoting our province to the world?  Seriously?

Friday, March 23, 2012

Whoa, That Was Fast!

A new word entered my consciousness yesterday, "preemie" - as in "premature baby".  All babies are special, yet because of the sudden, unexpected arrival of this one, he seems more so right now.  Mother and child are fine, ensconced amid the best medical care on the planet, as Day 2 dawns.  We've been told that today is skin-to-skin contact day, but only for the mother of course.  That's fine with me.  Despite all the time I've spent in hospitals, this is new territory for me.  We've all been very impressed so far with the medical team.  The feeling you get is that they all, every one of them, are in that ward because they want to be there. That's good.  As yesterday's euphoria wears off and the realities of life return, we all know the weeks ahead will be complicated.  This baby has everything going for him though.  From the parents' quick reactions to the prompt, seamless care during delivery, and the obviously dedicated NICU staff, the stars all aligned for him yesterday.  He's a feisty, cute little guy, with amazing parents.  His real advantage in the months ahead, however, is this family - especially its women, who humble me with their knowledge and love everyday.

Thursday, March 22, 2012

The Very First Chinese Inflation?

After spending every market hour reading everything financial, in the late evening I like to settle in with a good book.  Having just re-read a couple of Ron Paul's tomes, imagine my surprise as I read A Brief History of Khubilai Khan by Jonathan Clements last night, and discovered the following passage about one of his (and my) favourite economic topics: Khubilai Khan used all means to conquer China, and, starting in 1252, "as one of Khubilai's incentives, he did as his brother had done, and authorized the printing of paper money. Mongols had little use for actual money, but were intrigued by the concept that a roundel of copper might be traded for something more than its intrinsic value, simply because of the number it bore on its face. It was a short step from this discovery to money made out of paper, bearing values that bore no relation to the cost of the paper itself. In the early stages, such chits allowed the Mongol pacification bureau to draw huge numbers of workers into their realm, and to keep them there, as the paper money was worthless outside Mongol territory. In time, of course, the temptation was irresistible to simply print more money if times were hard, as inevitably happened, creating inflation that would threaten later periods of Mongol rule."  Am I crazy or does Helicopter Ben Bernanke resemble this guy?  Yikes!

Wednesday, March 21, 2012

"US likely sucked into war with Iran"

From (the NY Times via) The Irish Times: "If Israel launches attacks against Iran, a war simulation exercise held this month forecasts a wider regional war which could draw in the US and leave hundreds of Americans dead. The war game was not designed as a rehearsal, and the exercise’s results were not the only possible outcome, but the game has raised fears that it may be impossible to preclude US involvement. The war game played out a narrative in which Iranian missiles struck a US navy warship in the Persian Gulf, killing about 200 Americans. The US then retaliates by launching its own strikes on Iranian nuclear facilities. Pentagon planners have said that America’s arsenal could do far more damage to Iranian nuclear aspirations - if President Obama were to decide on a full-scale retaliation. The exercise was designed specifically to test military communications among battle staffs in the Pentagon, Tampa, FL (Central Command HQ), and the Persian Gulf. In the end, the war game reinforced to military officials the unpredictable and uncontrollable nature of a strike by Israel and a counterstrike by Iran. Israel would probably give the US little or no warning before striking. Officials said that, under the chain of events, Iran believed that Israel and the US were partners in any strike against Iranian nuclear sites and therefore considered US military forces as complicit in the attack. Iranians thus launched missiles at a US warship, viewed as an act of war that allowed an American retaliation. Some military specialists believe that the last thing Iran would want is a full-scale war on its territory. They argue that Iran would not directly strike US military targets. Their analysis, however, also includes the broad caveat that it is impossible to know the internal thinking of the senior Iranian leadership and is informed by the awareness that even the most detailed war games cannot predict how nations and their leaders will react in the heat of conflict.”

Tuesday, March 20, 2012

Verbatim: "We have not learned a thing"

January 2013: here we go!
From Bruce Krasting, one of the best daily reads on the internet (use the permanent link below at right):  "I think we are about to re-make many of the mistakes of 1936/37. The programmed spending cutbacks, couple with the many impending tax increases on 1/1/2013, will certainly cause a sharp contraction in economic activity. Bernanke’s Fed has sworn that it won’t make the mistakes of 1936/37. But I've shown (and the Fed’s own research confirms) that Fed policy was not the cause of the '37 crash. Bernanke is relying on a false interpretation of history to justify his monetary policy today. We will face an economic slowdown due to lower federal spending, and at the same time, inflation will be rising as a result of the excessively loose monetary policy. Stagflation is in our future. Should this be the result, the historians will say that both the Fed and fiscal policy are to blame. In other words, we have not learned a thing from our past mistakes."  My thoughts?  Canada, of course, exports 70% of its goods to our southern neighbour, including 60% of their energy requirements (last time I looked).  What will be the resultant effect on Canada of a deep American "stagflation"?  Another thought: Ron Paul is the only Republican nominee that "gets it".  And a final one: It wasn't ideology that brought the old USSR to its knees, it was crushing debt.

Monday, March 19, 2012

Verbatim: "Pink Slime Not Used in Canada"

From The Calgary Herald (March 9, 2012): "Pink slime" is not used in Canadian beef, says industry. "On the Season Premiere of Jamie Oliver's Food Revolution aired on April 12, 2011, Jamie demonstrates how 70% of America's ground beef contains leftover cow parts (a.k.a. "pink slime") containing e.coli and salmonella that has been treated with ammonia. Ammonia treated meat can be found in virtually all conventional grocery stores, fast food restaurants, many national restaurant chains, and school cafeterias. ... Fear not, Canadian carnivores. The so-called “pink slime” ... is not used in Canada. ... McDonald’s restaurants in the United States dropped the use of “pink slime” earlier this year ... The issue really took off this week thanks to a report by U.S. news service The Daily that the U.S. Department of Agriculture is continuing to buy “pink slime” for U.S. school lunches. “I have a 2-year-old son,” microbiologist Gerald Zirnstein told The Daily. “And you better believe I don’t want him eating pink slime when he starts going to school.” In Canada, however, “pink slime” and ammonium hydroxide are not used in ground beef, according to Heather Travis, the director of public relations for Canada Beef. “In Canada we do not use ammonia in ground beef ... it has not been approved for use in packing plants by Health Canada,” Travis wrote in an email. Although ammonium salts are approved for use in some foods by Heath Canada, and ammonium hydroxide is endorsed for many foods by the World Heath Organization, Travis said “pink slime” is not used in Canada. “Source ground beef is ground from a piece of beef, like a sirloin steak,” she wrote. “Canadian legislation does require that imported meat products meet the same standards and requirements as if they were produced in registered establishments in Canada.” McDonald’s Canada’s website says its burgers are made from 100 per cent beef." Read more: The Calgary Herald

Sunday, March 18, 2012

Verbatim: "It's Pink, Therefore It's Meat"

From ABC News: "Gerald Zirnstein grinds his own hamburger these days. Why? Because this former USDA scientist and, now, whistleblower, knows that 70% of the ground beef we buy at the supermarket contains something he calls “pink slime.” Pink slime is beef trimmings. Once only used in dog food and cooking oil, the trimmings are now sprayed with ammonia so they are safe to eat and added to most ground beef as a cheap filler. It was Zirnstein who, in a USDA memo, first coined the term “pink slime” and is now coming forward to say he won’t buy it. “It’s economic fraud,” he told ABC News. “It’s not fresh ground beef. It’s a cheap substitute being added in.” Zirnstein and his fellow USDA scientist, Carl Custer, both warned against using what the industry calls “lean finely textured beef,” widely known now as “pink slime,” but their government bosses overruled them. According to Custer, the product is not really beef, but “a salvage product" ... made by gathering waste trimmings, simmering them at low heat so the fat separates easily from the muscle, and spinning the trimmings using a centrifuge to complete the separation. Next, the mixture is sent through pipes where it is sprayed with ammonia gas to kill bacteria. The process is completed by packaging the "meat" into bricks. Then, it is frozen and shipped to grocery stores and meat packers, where it is added to most ground beef. The “pink slime” does not have to appear on the label because, over objections of its own scientists, USDA officials with links to the beef industry labeled it "meat". “The Under Secretary said, ‘it’s pink, therefore it’s meat,” Custer told ABC News, who has learned the woman who made the decision to okay the mix is former undersecretary of agriculture, Joann Smith. It was a call that led to hundreds of millions of dollars for Beef Products Inc., the makers of pink slime. When Smith stepped down from the USDA in 1993, BPI’s principal major supplier appointed her to its board of directors, where she made at least $1.2 million over 17 years. Smith did not return ABC News’ calls for comment and BPI said it had nothing to do with her appointment. The USDA said while her appointment was legal at the time, under current ethics rules Smith could not have immediately joined the board."  What I want to know is if pink slime exists in Canada.

Saturday, March 17, 2012

Art Cashin Scoops Mainstream Media

Bye-bye Bo Xilai!
"In Wednesday's Cashin's Comments, Art Cashin pointed to an under-reported moment from Chinese Premier Wen Jiabao's recent speech. 'Wen warned that major political change is needed lest the nation fall victim to another “cultural revolution”. Was this a lightly veiled reference to the recent actions and statements of that other Chinese leader, Bo Xilai? We’ll try to do some research on that as its implications could be enormous. A power struggle in China is clearly not priced into world markets.' Later, China's Xinhua news agency reported that Bo Xilai is out: 'BEIJING, March 15 (Xinhua) - Zhang Dejiang has been appointed Party Chief of Chongqing, replacing Bo Xilai, according to a decision of the Communist Party of China (CPC) Central Committee announced Thursday.' Bo will no longer serve as secretary, standing committee member or member of the CPC Chongqing municipal committee, according to the decision. Bo, born in July 1949, became mayor of Dalian, Liaoning province, in 1993. He served as governor of Liaoning and Minister of Commerce before being appointed Party Chief of Chongqing in 2007. This is big news in China as Bo Xilai was in line to become a major player in the Communist party. The Financial Times reports that Zhang Dejang is a North Korean-trained economist." From The Business Insider

Friday, March 16, 2012

Of Muppets and Golden Geese, Part 2

"Muppets always go for the 'nads, Mike"
From Bloomberg News by Michael J. Moore:  "Mayor Bloomberg Visits Goldman Employees After Smith Op-Ed:  New York City Mayor Michael Bloomberg visited Goldman Sachs' headquarters in Manhattan in a show of support after a departing employee publicly criticized the firm’s culture yesterday. “The mayor stopped by to make clear that the company is a vital part of the city’s economy, and the kind of unfair attacks that we’re seeing can eventually hurt all New Yorkers,” said Stu Loeser, a spokesman for the mayor. Bloomberg visited the firm and met with Chief Executive Officer Lloyd C. Blankfein and numerous employees, Loeser said."  This visit seems bizarre in the extreme to your humble scribe.  After all, no one "went postal" at Goldman Sachs.  A guy just quit, albeit very publicly.  Is Mayor Bloomberg so worried about the hit GS's share price took that he feels he has to become the firm's cheerleader to protect his investment?  Or perhaps he's worried about a muppet backlash and felt he had to choose sides?  Let's back up here a moment.  First of all, we don't know if it was an "unfair attack".  Life is unfair, and after all, nothing new was revealed by this one grumpy employee.   Further, given previous revelations about Goldman, its management and employees are perfectly able to take care of themselves.  The guy will be lucky not to end up in a canal with concrete overshoes.  And it's hard to see how this episode "can eventually hurt all New Yorkers" - unless, that is, all New Yorkers are moral scumbags like Blankfein.  (Gee, I hope not.  My youngest is hobnobbing in The Big Apple on Spring Break as we speak.)  At any rate, I don't know much about Mayor Bloomberg - but he has just come down a moral notch in my eyes.  You can tell a lot about a man by the company he keeps.

Thursday, March 15, 2012

Of Muppets and Golden Geese

"You hold it by the neck like this ..."
From the Tell Us Something We Didn't Know Dept. (by Greg Smith, [now former] Executive Director of Goldman Sach's U.S. Equity Derivatives business in Europe, the Middle East and Africa, via The New York Times):  "Why I am leaving Goldman Sachs. Today is my last day at Goldman Sachs. After almost 12 years at the firm - in New York, and now in London - I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it. To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates ... When the history books are written, they may reflect that the current CEO, Lloyd C. Blankfein, and the President, Gary D. Cohn, lost hold of the firm’s culture on their watch. I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival. ... Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted ... What are three quick ways to become a leader? a) ... persuading your clients to invest in the stocks or other products that we are trying to get rid of ... b) ... get your clients ... to trade whatever will bring the biggest profit to Goldman. ... c) ... trade any illiquid, opaque product with a three-letter acronym. ... a client’s success or progress was not part of the thought process at all. It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” ... Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not ... the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact."  Ouch!  Goldman Sucks shares may seem a good investment, after all - they make money.  But that will end if its clients feel screwed and head for the hills.  Fewer muppets means fewer muppets to screw.  GS share value dropped by $2.2B after the above was published.  No business can flourish unless customer service and confidence is paramount.  That is exactly why integrity in business matters.  It's a lesson not only for the Young Turks of Wall Street, but also for the Blankfeins and Cohns of the world who are so insulated from reality by the outrageous greed they harbour that they are destroying the goose that laid the golden egg.  Or was that the Goldman that laid this goose egg?  As for Vampire Squid employees: watch out folks, here come the new, stricter confidentiality clauses to be signed and appended retroactively to your employment contracts!

Wednesday, March 14, 2012

Dick Cheney Fears Canadian Mayhem

Deadeye Dick
From the Things That Make You Go Hmmm Department: in The National Post yesterday:  "Former U.S. Vice-President Dick Cheney has cancelled an April appearance in Toronto citing concerns Canada is too dangerous. 'He felt that in Canada the risk of violent protest was simply too high,' said Ryan Ruppert, president of promotions company Spectre Live Corp., which had booked Mr. Cheney for an April 24 appearance at the Metro Toronto Convention Centre. In September, Mr. Cheney was speaking at a private club in Vancouver when protesters massed outside the front door harassing ticket holders and in one instance, choking a security guard. The former Vice-President was reportedly held inside the building for more than seven hours as Vancouver Police in riot gear dispersed the demonstrators."  On one hand I'm happy that Dick "Shotgun" Cheney isn't coming to Canada to spread his neo-con spew (Spectre Live indeed!), on the other hand this episode says something about the current lack of law and order in Canada.  G-20 Toronto arsonists, and Vancouver Stanley Cup rioters famously walk free with a slap on the wrist (if that) thanks to Canada's weak-kneed revolving-door justice system, while innocent civilians, their businesses, and their property are too often the collateral damage of these punks.  On the other hand, Tricky Dick needs to be reminded that in the U.S., where everyone can be assumed to carry a concealed weapon, politicians don't get stuck in their hotel rooms for hours if there's a security lapse - they get shot.

Tuesday, March 13, 2012

Verbatim: "It's a Race to the Bottom"

From a recent article on currency wars at the Capital Research Institute:  "Since individuals purchase goods in the local currency the price impact of local exported goods is insignificant, since the price for those items at home does not change. The real impact is the loss of purchasing power for imported goods, since those now become more expensive due to the devalued currency that is used to import them. The two imported items that individuals spend most of their disposable income on besides housing are gasoline and food; both become more expensive due to competitive devaluation. Currency wars cause the standard of living of individuals to decrease as prices of imported goods increase. The excess liquidity from loose monetary policies leads to commodity price inflation and a loss in purchasing power of all major currencies since the end of the gold standard in 1971. Currency wars and competitive devaluation are the reasons why the Capital Research Institute recommends diversifying your wealth by buying gold and silver. We consider physical gold to be one of the best currencies as it holds its intrinsic value while fiat currencies decrease. Gold represents a thousand year old store of value, since 1971 currencies have lost purchasing power year over year as central banks continue to print money. It is a race to the bottom and individuals that hold fiat currencies will ultimately pay the price."

Monday, March 12, 2012

Krasting's Trading Words To Live By

In today's volatile markets "Buy-and-Hold" seems a forlorn strategy in the opinion of many, increasingly being referred to as "Buy-and-Hope".  Even value investors are finding that the blue-chip dividend-paying stocks in their portfolio need to be monitored closely, and occasionally traded either to take profits or avoid losses.  Interestingly, it seems that everyone from newsletter gurus to day-traders like myself to investment club types and TV talking heads are independently arriving at some very similar trading rules.  The very sage Bruce Krasting (his blog at is highly recommended), a retired professional trader who still trades currencies for himself recently summed up the thinking of many - no matter what it is they're investing in - as follows:  "Folks have asked me about where I set stops.  The answer is I don’t.  I do set mental levels where I will take a gain or a loss. I try to make 5% or lose 2%.  I try to ride winners; I’m good about taking losses. This is a winning strategy in a trending market.  It’s a cold loser when markets trade sidewise.  The hard part is to be disciplined and stay out of the markets when there is no action."  An intelligent approach that seems to be used by many these days; ride your winners and sell your losers - and be content with 5% gain short-term.  Then look for another value to invest in.  Trends for the foreseeable future are going to be short-term only, so learn to love volatility - it's not going away soon.

Sunday, March 11, 2012

Saturday, March 10, 2012

Friday, March 9, 2012

Was That Really Necessary, Mr. Baird?

"Hey, it's just a piece of paper."
Is Canada incapable of showing its support for prominent pro-democracy advocate, opposition leader, and Nobel peace laureate Aung San Suu Kyi without giving her honourary Canadian citizenship?  It devalues the product that it should be given out so cavalierly, and no doubt irritates the hell out of those patiently going through the proper procedures and waiting their place in the queue to become Canadians legally.  (Why, even the Dalai Lama had to be greeted by "private citizen" Stevie Harper, but then China - future owner of all Canadian resources - was the puppeteer in that case, right?)  Or has the Canadian government now decided to bestow citizenship willy-nilly in Asia rather than wait for decrepit old freighters to bring folks here 500 at a time?  To be fair, "Baird also presented her with a silver Maple Leaf charm bracelet as a gift".  (What, no maple syrup?  Tsk, tsk.  McGuinty won't like that!)  The Myanmar regime is one of the most oppressive in the world, and to his credit, "at his meeting with the president in Myanmar’s capital, Baird raised the prospect of revisiting sanctions against the regime".  Was that before or after Baird "presented gifts to the Speaker of one of the houses of Parliament"?  Kind of an awkward juxtaposition there - but perhaps they both got the maple syrup.  (Calm down, Dalton.)  Of course, there is one more possible reason for Baird's Suu Kyi largesse: with the current national debt galloping along as it is, the Feds can always use another taxpayer!  (quotes from The National Post)

Thursday, March 8, 2012

Why The Greek Debt Exchange Matters

The International Swaps and Derivatives Association (ISDA) will determine today if a default occurs re: Greece's debt exchange.  The Wall Street Journal: "The Greek government’s intention of invoking "collective action clauses" (CACs) will become clear today, when private bondholders have to indicate whether they want to participate in the deal or not. As part of (another) bailout, private-sector investors (PSI) will have to take a 53.5% loss on their principal and swap their old Greek bonds for new ones. At least 90% of the principal amount currently outstanding has to be tendered for exchange. If the participation rate is between 75% and 90%, Greece would consult the EU on whether to proceed. If it’s less than 75%, the exchange will fail. That could derail the bailout and cause a disorderly default. CACs force all bondholders to take part if a pre-determined majority approves it. Greece has so far resisted the use of CACs for fear of triggering the payout of credit default swap (CDS) contracts. Many analysts feel Greece will not get a high enough participation rate and will have to invoke CACs to push the deal through. If CACs are activated, a debt exchange may no longer be seen as “voluntary” but “coercive,” triggering the payout of CDS contracts. Euro-zone governments have long feared that triggering CDS payouts could create contagion effects throughout the European banking system, similar to those caused by the 2008 global financial crisis. For that reason, officials took pains to come up with a debt restructuring plan for Greece that would be seen as voluntary. But a failure of the CDS to offer protection against blatant adjustments to Greece’s bond contracts could do even more damage, rendering the entire CDS market worthless in the eyes of investors. That in turn could drive investors to dump the bonds of Portugal, Ireland, Italy and Spain, believing that they no longer enjoy the protection of default insurance. Most market participants feel that the impact of a payout of CDS contracts would be limited given the small net exposure of banks that have written these contracts. (A net $3.2 billion of CDS are outstanding on Greek debt according to the latest figures.) Some market participants feel that a CDS trigger may actually benefit peripheral euro zone government bonds by preserving the sanctity of CDS as a useful hedging instrument."

Wednesday, March 7, 2012

Verbatim: "Crimes Have Gone Unpunished"

Death To My Hometown 
by Bruce Springsteen/E Street Band

No cannonballs did fly
No rifles cut us down
No bombs fell from the sky
No blood soaked the ground
No powder flash blinded the eye
No deafening thunder sound
But just as sure as the hand of god
They brought death to my hometown
They brought death to my hometown

No shells ripped the evening sky
No cities burning down
No armies stormed the shores for which we’d die
No dictators were crowned
High off on a quiet night
I never heard a sound
The marauders raided in the dark and brought death to my hometown, boys
Death to my hometown

They destroyed our families’ factories and they took our homes
They left our bodies on the plains
The vultures picked our bones

So listen up, my Sonny boy
Be ready for when they come
For they’ll be returning sure as the rising sun

Now get yourself a song to sing and sing it ’til you’re done
Yeah, sing it hard and sing it well
Send the robber baron’s straight to hell
The greedy thieves that came around
And ate the flesh of everything they’ve found
Whose crimes have gone unpunished now
Walk the streets as free men now

And they brought death to our hometown, boys
Death to our hometown, boys
Death to our hometown, boys
Death to our hometown

Tuesday, March 6, 2012

The Most Interesting Woman in the World 6

Today is her day.  She shone as a skipper in the Queen Charlottes, hauling seventy pound weights and fifty pound fish aboard with aplomb - and wound up a cover girl!  Born in England, she's well-travelled - from Machu Picchu to Montreal, Langley to London, Pincher Creek to Paris - a Spanish-speaking Canadian beauty now ensconced in Cowtown, which is just fine with her.  Down the hallowed halls of BJ she plied her craft as barrister and solicitor, gracing that honourable profession with her intelligence and wit for a time.  Now her days are devoted to her three boys, a handful for any woman!  From Gymboree to Brilliant Beginnings, and the Zoo to the Science Centre, she shuffles her precious charges - seldom finding a moment to put her feet up or take time for herself.  She keeps fit as a fiddle - though surfing, tennis, and the soccer pitch will have to wait for now.  (As will her violin.)  Yes, she is the very model of a modern woman, yet her presence inevitably evokes the term lady.  Who is she?  She is the Most Interesting Woman in the World!

Monday, March 5, 2012

Verbatim: "Not What They Were Designed For"

From Jeff Carter at Points and "... in Senate testimony, Senator Corker asked a lot of questions of Bernanke on the Volcker Rule. In essence, he was asking broad questions about market making that have little or no relation to what the Volcker Rule’s actual intent was. Corker was trying to build a case that the banks should be allowed to trade, based on their market making capabilities. I have a few perspectives on that to share. First, if the banks didn’t make markets, what would happen? If there was value to making those markets, someone would step into the void. I can recall in a trading pit when a big trader would retire, or take a vacation, people ask, “Who will pick up the slack?” Without fail and immediately, someone would. Financial markets are highly competitive. If banks weren’t making markets someone would. Another perspective is this. In the early 1990′s, we did a survey of the largest volume traders in the Eurodollar pit at the CME. There was a lot of controversy between locals and order fillers because locals thought that order fillers were stealing trades from them. In fact, when the data poured in, it turned out that something like 15 of the top 20 traders in the pit were order fillers. Most of them were simply trading against their decks. Eventually we banned dual trading and volume actually increased. The market didn’t skip a beat. Think of everyone as a local, and the banks as order fillers in this illustration. Banks use their market making function to trade against their customers and earn relatively risk free profits. That’s not what markets were designed for. I maintain that if you took the proprietary trading function away from banks, the market wouldn’t miss a beat and we might actually see an increase, not decrease, in liquidity. The structure of the market place is wrong. Recall the financial melt down. It was shown that while Goldman was selling junk to their customers, their prop traders were taking the other side of that junk and reaping humongous profits. Nothing wrong with a profit, but they weren’t taking any risk. When banks and hedge funds are allowed to pay for order flow, internalize order flow, it messes with the integrity of the marketplace. I agree the Volcker Rule isn’t perfect. Actually, it’s been so defanged it won’t make much of a difference. What we ought to be doing is looking at the function someone is performing in the marketplace. If they are filling an order, they should be paid for that service-and not allowed to take the other side. If they want to trade and risk their capital, they shouldn’t be able to fill orders. It’s pretty simple."

Sunday, March 4, 2012

Weekender: The Cape Cod Firelighter

We were always told it was an "ale muller" when we were growing up, that shiny brass thing with the decorated rod sticking out of it.  It made sense too, as ale mulling was a popular way to drink a pint when you came in from the cold in Jolly Olde, and this thing appeared to fit the bill.  Alas, it isn't true.  What we really have here is a Cape Cod Firelighter.  (Our family's, pictured here, was made in Canada, and uses the 'HMS Victory' emblem on the top of the firelighting wand.)  Jefferson Kolle relates its use: "In the fall, my grandparent’s evening ritual on their farm in Rosemont, NJ, involved a small pitcher of Manhattans, a fire in the fireplace, and the nightly news on a black and white television. I still have the Cape Cod lighter that Pop used to get the flames going, and I used it last night. A Cape Cod lighter is made a short metal rod with a piece of absorbent soapstone peened onto the end. The rod rests in a little pot. (Mine is brass with a hinged lid.) You fill the pot with lamp oil (probably whale oil in the original ones) and when you want to start a fire you set the rod on the hearth and pile on the wood. Hold a match to the oil-soaked stone, sit back, and watch the flames build." (The Balf: apparently pumice was also used as the "stone" on the end of the rod.)  And from Molly Miller: "In my almost 70 years on the planet, Cape Cod lighters had kerosene as the fluid held by the pot. It is flammable, but not explosive, so it is not a hazard to store next to the fireplace. Of course, once hot and removed from the fire, do not put it back in the pot until cooled!"  I guess I'm still tempted to use mine to mull some ale, but I don't know what the kerosene residue might do to my innards!  Late-breaking:  The maker's mark, Mitchell, Canada, appears on the bottom of the tankard, which is made from an old 4" artillery shell casing!

Saturday, March 3, 2012

Weekender: Today's Geography Lesson

The geography of a woman:  Between 18 and 22, a woman is like Africa.  Half discovered, half wild, fertile, and naturally beautiful!  Between 23 and 30, a woman is like Europe.  Well developed and open to trade, especially for someone of real value.  Between 31 and 35, a woman is like Spain, very hot, relaxed, and convinced of her own beauty.  Between 36 and 40, a woman is like Greece, gently aging but still a warm, and desirable place to visit.  Between 41 and 50, a woman is like Great Britain, with a glorious, and all conquering past.  Between 51 and 60, a woman is like Israel, has been through war, doesn't make the same mistakes twice, takes care of business.  Between 61 and 70, a woman is like Canada, self-preserving, but open to meeting new people.  After 70, she becomes Tibet.  Wildly beautiful, with a mysterious past, and the wisdom of the ages.  An adventurous spirit, and a thirst for spiritual knowledge.  Unfortunately men, their whole lives, are like Iran - ruled by nuts!

Friday, March 2, 2012

Verbatim: "There were no secrets discussed"

Yesterday, by Bruce Krasting:  "A very big question is what the hell is going to happen between Iran and Israel. I spoke with a fellow in Europe I know who has an informed opinion. There were no secrets discussed, but his thoughts on some of the variables were interesting. Will Israel allow Iran to develop a nuke? Not a chance in hell. What is the “over - under" on timing? Certainly less than two years. Does Israel have the capacity to take out concrete hardened facilities in Iran? Yes, but this is by no means an easy task. Explain? It is not possible for the Israel Air force to attack without going over some other country’s border. The choices are Turkey (Iraq then Iran), Jordan (Saudi Arabia, Iraq then Iran), Syria (Iraq then Iran) or Saudi Arabia (direct to Iran). Which route will Israel choose? It will go over Syria. There would be hell to pay if Israel went over Turkey or Jordan. If the Saudis “permitted” it, the Iranians would retaliate by assassinating Saudis all over the world. So it will be Syria. This is especially true as the country is in chaos today. Will Syria attempt to shoot down Israeli aircraft flying over its territory? Yes, it has surface-to-air capability and it also has MiG-23 and MiG-27 fighters. The Israelis will escort their bombers over Syria with their F16s. These fighters will wipe out anything that Syria puts up. The ground-based defenses are old, and no doubt, poorly manned these days. Is it a problem if Israeli attack bombers fly over Iraqi territory? No one gives a shit about Iraq anymore. What happens when the Israeli bombers get over Iranian air space? This question has no answer. If it happens, this would be the most advertised air attack in history. The Iranians have sophisticated radar and surface-to-air capability they bought from China. It would be a mistake to assume that an attack can be made without losses. How would the attack take place? Israel will use its F15s. Each plane will be armed with a single laser-guided bunker buster bomb. It will use their F16s as escorts. As of today, Israel “officially” has only thirty of these bunker bombs. It has a total of 100 F15 attack bombers, so it needs more bombs to fully utilize their strike capability. Look for a sign on this. If the US agrees to supply more bombs, the timing is close. What is your guess on the outcome? It is not possible to predict what will happen in Syria. The chaos today creates the best opportunity for Israel. Who knows what can happen in six-months? Every week Iran's defenses get stronger. This will be resolved, one way or the other, in less than six-months."  To which I (the Balf) can only add: the Israeli operation will be preceded by a cyber attack.  Oh, and remember, the first time Israel loses a war is the last time Israel fights a war.

Thursday, March 1, 2012

Verbatim: "Germany May Exit Soon"

See ya!
"Europe has now reached the point where: 1) Germany will not put up more money unless Greece essentially gives up its fiscal sovereignty. 2) The G20 will not give more money to Europe via the International Monetary Fund unless Germany and other EU nations create a "firewall" by putting more capital into the European Stability Mechanism mega-fund. 3) The European Central Bank has announced Greek bonds are not eligible collateral for its Long Term Refinancing Operations, so if banks need more liquidity, they need to go to national central banks (read Germany). This is quite a turn of events. The ECB is increasingly going to make Europe's problems Germany's problems. Both have a lot to lose. Over 25% of the ECB's balance sheet is made up of PIIGS debt. And German banks have plenty of exposure as well. However, it is Germany that appears to have grasped the reality of the situation more clearly: there is no "good" way out of this mess, that austerity measures only cripple economic growth and make defaults even more likely. This is obvious in the fact that Germany doesn't want to commit more funds to the ESM. It's also illustrated by Germany's intense demands of Greece, demands it knows Greece won't possibly accept. After all, Germany has its own problems to deal with. German banks are some of the most highly leveraged in Europe, German Debt-to-GDP is north of 200% including unfunded liabilities, plus you have an increasingly outraged German populace. Germany is in a squeeze. On one side the ECB and G20 want Germany to step up with more money, while German CEOs, voters, and even the courts, are increasingly wanting out of the Euro. It is my view Germany is going to do all it can to force Greece out of the Euro before March 20th (the date that the next round of Greek debt is due) or will simply pull out of the Euro itself." - Graham Summers, Chief Market Strategist, Phoenix Capital Research