Wednesday, December 22, 2010

Merry Christmas, plus a basic status

Merry Christmas to all.  Been kinda busy lately, so the posting frequency has gone down quite a bit.  Here is a short list of what is going on:

The Sun and the Weather

The sun is currently blank.  Solar activity is at very low levels.  This is consistent with the Livingston-Penn observations mentioned previously.  It is looking more and more like a mini-Ice Age over the next few decades, but prediction is hard.  Note that there has been no observed global warming since the mid-1990s -- and even then the warming of the 80's and early 90's was consistent with normal weather variation -- and the active sun of that time.

The blank sun today

England has had the coldest and snowiest December for something like 150 years.  There is snow in Australia -- and note that it is summer there.  Germany, Italy, Poland -- all of Europe --  have been posting record cold temperatures.

James Hansen of NASA GISS is a liar and a fraud.  He is the Bernie Madoff of Climate Science.


The Obama administration removed one of the two aircraft carrier strike forces that we had near Iran just before the new six-party talks started in Geneva on 6 December.  So we backed down militarily, and of course the talks were meaningless.  Iran continues to develop nuclear capabilities, although the StuxNet virus actually seems to have caused some physical damage to their centrifuges, according to Stratfor.  At this point I would be more surprised to see Obama attack Iran that I would be to see an Iranian nuke flying toward the US.  Mr. O's policies are clearly a growing danger to our country (and in other ways too).

The Big Dustup Index Fund

The Big Dustup Index Fund is no longer invested in oil or short market positions -- although the gradual gains would not be too bad right now with oil drifting upward.  You may want to check out Las Vegas Sands (LVS), which is a "hospitality" (i.e. gaming and hotels) company with significant holdings in Macau and Singapore, including the Marina Bay Sands, which opened this year and is doing astonishingly well.  We put some of the BDUIF into it and have continued to add on dips as it goes up.  The company seems strong, but I know that some people have concerns with investing in gambling.  I kinda like the idea of people in Macau and Singapore freely giving money to LVS, which then funnels into a higher stock price for us.  Money flowing from the Far East to the US is a good thing; we've seen too much of the opposite in recent years.  The BDUIF investment in LVS is up more than 40 percent just since September.  Do your research.  I am not responsible for loss, etc.

Marina Bay Sands - Singapore

N/S Koreas

I don't have a lot of insight here except to say that the jostling for power in the north, and the associated posturing as Kim Jung Il heads toward decrepitude are probably what are driving the increase in violent attacks and rhetoric.  It is causing a corresponding puffing and blowing in the south.  It certainly could lead to a war, which would be a real mess with Seoul so close to the 38th parallel.  The entire Far East economic zone would be heavily impacted.  A big live-fire drill in the south is scheduled for Thursday (i.e. mid-Wednesday US time).  Could be interesting.


I find it very interesting that Obama has greatly expanded the use of missile attacks from UAV's in Waziristan, Swat, and even the Punjab regions of  N and NW Pakistan.  We are blowing up houses right and left, killing hundred of people -- despite increasing Pakistani hatred of us.  Our drones are apparently operating all along the top part of the Durand line, trying to sniff out the Taliban village by village.  It is yet to be seen if this robot offensive will appreciably decimate their power prior to our Obama-mandated departure deadline. (US troop withdrawals start in July of next year.) My gut feeling is that the Taliban are just holing up and waiting for us to disappear.  Our sacrifices will likely be for naught.

That's all for now.

Saturday, November 20, 2010

History may not actually repeat, but it does seem to rhyme quite a bit

Here are some quotes from Will Durant's Life of Greece (1939) that seems to echo our current dilemmas in the US. It is important to recognize that Will Durant was not a right-wing demagogue. Although he had been raised a Catholic, he became an atheist and a proponent of socialism.  And yet, his comments seem to blame collectivist intellectualism for much of the fall of Athens in 338 BC.

Athens, in the 4th century BC was at the height of its Golden Age of wealth, power, and intellectual development. Tensions were building between the rich and the poor, the intellectuals and the businessmen:
In this conflict more and more of the intellectual classes took the side of the poor. They disdained the merchants and the bankers whose wealth seemed to be in inverse proportion to their culture and taste; even rich men among them, like Plato, began to flirt with communistic ideas...finally the poorer citizens captured the Assembly, and began to vote the property of the rich into the coffers of the state for redistribution among the needy and the voters through state enterprises and fees.

The politicians strained their ingenuity to discover new sources of public revenue. They doubled the indirect taxes...they resorted every now and then to confiscations and expropriations; and they broadened the field of the property-income tax to include lower levels of wealth...the result of these imposts was a wholesale hiding of wealth and income. Evasion became universal, and as ingenious as taxation. In 355 Androtion was appointed to head a squad of police empowered to search for hidden income, collect arrears, and inprison tax invaders. Houses were entered, goods were seized, men were thrown into jail. But the wealth still hid itself, or melted away...the middle classes, as well as the rich, began to distrust democracy as empowered envy, and the poor began to distrust it as a sham equality of votes staultified by a gaping inequality of wealth. The increasing bitterness of the class war left Greece internally as well as internationally divided when Philip [of Macedon] pounced down upon it.
Durant goes on to talk of corrupt lawyers, expensive political campaigns that employed catchy phrases and vast promises to lure voters (and funding). He describes endemic moral decay, the rise of professional spectator sports that replaced participatory sports, the isolation of people from nature and the natural state, and the passage of numerous restrictive laws. All ate away at the soul of Athens. He finishes his discussion with this:
Possibly subtler factors entered in the weakening of Athens. The life of thought endangers every civilization that it adorns. In the earlier stages of a nation's history there is little thought; action flourishes, men are direct, uninhibited, frankly pugnacious and sexual.

As civilization develops, as customs, institutions, laws, and morals more and more restrict the operation of natural impulses, action gives way to thought, achievement to imagination, directness to subtly, expression to concealment, cruelty to sympathy, belief to doubt; the unity of character common to animals and primative man passes away; behavior becomes fragmentary and hesitant, conscious and calculating; the williness to fight subsides into a disposition to infinite argument. Few nations have been able to reach intellectual refinement and esthetic sensitivity without sacrificing so much in virility and unity that their wealth presents an irresistable temptation to impecunious barbarians.

Around every Rome hover the Gauls; around every Athens some Macedon.

Later in the century, Athens was defeated by Philip of Macedon at the Battle of Chaeronea in 338 BC. Democracy was abolished.


The great Athenian intellectual Isocrates was 98 years old when Athens lost its freedom. He went on a hunger strike in protest of Philip's conquest, and died to no avail shortly thereafter.

The Golden Age was over.

Friday, October 29, 2010

"Happy Birthday Mahmoud Ahmadinejad"

According to the Associated Press, Secretary of State Hillary Clinton's spokesman P. J. Crowley sent a tweeted birthday greeting to Iran President Mahmoud Ahmadinejad yesterday in honor of his 54th birthday. Crowley urged Ahmadinejad to release two American hikers that Iran is holding. "What a gift that would be," Crowley said.

This is yet another example of the dangerous naivety of the Obama administration and Democrats in general. Can you imagine FDR's Secretary of State Cordell Hull wishing Hitler "Happy Birthday" during the 1930's when he was railing with hatred against the Jewish people and building up Germany's armed forces in preparation for taking over Europe?

Ahmadinejad is intent on creating a new Holocaust. Many times he has stated that he intends to wipe Israel off the face of the earth, and rule the Middle East. We should take him at his word, and do everything possible to prevent him from acquiring nuclear weapons and missile technology.

I would hope that this "greeting" is just disinformation from the State Department in preparation for us bombing Iran, but Obama's other actions and inactions suggest it is not.  I believe that Obama has already acquiesced to a nuclear Iran, the takeover of Iraq by Iran, and the destruction of Israel.

If Obama had as his goal the destruction of western civilization, what would he be doing differently?   It is certainly odd that Obama has done nothing at all to contain this threat.

In the 1930's the American people were smart enough not to elect a Hitler sympathizer to the Presidency.

Thursday, October 28, 2010

Unusual US Naval Force Deployments

According to open source information collected by STRATFOR, we now have a very large amount of naval firepower right off the southern coast of Iran, including two Carrier Strike Groups (CSG) with their associated Carrier Air Wings (CVW) and two Amphibious Ready Groups (ARG) with their associated Marine Expeditionary Units (MEU).  The ARGs are centered around Big Deck Amphibious Warfare ships -- essentially aircraft carriers under another name.

These ships have been stationed near Iran for almost two weeks now.

Here is the map:

click for larger image

In addition to an aircraft carrier, each CSG typically has two guided missile cruisers (with cruise missiles and standard missiles), one guided missile destroyer (for air defense), one destroyer (for anti-submarine warfare), two attack submarines, and at least one ammunition, oiler, and supply ship.  The makeup varies and often includes other ships.

We have not had this many ships in the area since the invasion of Iraq.

Perhaps they are to support "anti-piracy operations" near Somalia, or perhaps they are to help in "Pakistan flood relief efforts", or perhaps they are to provide force projection into Obama's favorite war zone, Afghanistan.

Or perhaps they are going to attack Iranian nuclear and missile sites.  I note that the primary site for Iranian long range missile launches was destroyed by three large and mysterious explosions several weeks ago -- perhaps taking away their ability to hit Israel.

It is interesting that another aircraft carrier from France, the Charles de Gaulle, most likely along with its support ships, was scheduled to meet with our groups on October 15th, but has been delayed "for several weeks" due to a mechanical problem with a "security valve on the aft propulsion circuit".   I am not sure where the de Gaulle is right now, but its delay may be the reason we are just hanging around for the last couple of weeks instead of doing something.

Funny that the French are a little late to the party again, as they were during the Revolutionary War.  It has been clear recently that they are probably the only friends who would help us attack Iran.

Also interesting in the presence of another CSG near Japan (where it can protect against North Korea), and three CSGs/ARGs off the east coast and three off the west coast of the US.  Usually they are scattered all over the world, but right now they seem to be stationed to protect our coasts.   It is a very unusual configuration.

I find it hard to believe that Obama would do anything about anything, but this deployment is very odd.

I think something is up.

Sunday, October 24, 2010

Before You Vote

If you haven't read these two posts of mine from July, please do so before you vote.  They contain my thoughts on what has gone wrong with our country and how, on November 2nd, we can begin to get back on track.

1.  The Decline of Liberty
2.  A New Hope 

Also please check out this very recent post of mine for a quick look at my decision process for deciding how to vote.

3.  Voting for Freedom

To understand the historical basis, and why I view all of this the way I do, please read this post:

4. Basics of American Philosophy

Our American vision of individualism and freedom has been the beacon of hope to the world.  Do not be fooled by Obama's false hope of servitude and uncontrolled governmental power.  Help to return America to a place where people can breathe free, unencumbered by a vast and controlling bureaucracy.

Vote against those who would expand government into every aspect of our lives.   Vote for those who will restrict government power.

Gateway to the West - David Wright

Voting for Freedom

I use some basic rules to determine how to vote:

First of all the federal government has exceeded its Constitutional mandate.  It does way too much already.  If governmental power were reduced to only what is allowed by the Constitution, the budget would be reduced to a level where you could probably run it on donations.

State and local governments are similarly bloated.  Let them run the schools and courts, and fix the roads, and pay the police a decent salary, and you can probably run the whole mess on a half of a percent sales tax, with no property tax at all.

So I vote "YES" on anything that restricts governmental power or reduces the amount of money it gets.  I vote "NO" on anything that gives them more money or power, including tax increases, bond issues, increases in the mil levy, etc.

I always vote all the judges out.   They tend to see themselves as an aristocracy above the people.  They should be changed frequently.  

We got into this situation because of a basic problem with democracies.  Politicians get elected by promising more and more benefits to the people -- first a chicken in every pot, now health care, food, and a house for everyone.  (That last caused the 2008 economic collapse that we are still fighting.)  Add responsibility for keeping everyone safe from anything that could possibly happen to them (i.e. all the unconstitutional government agencies), and you get a government that is totally out of control.  It consumes the wealth of the nation, and continues to amass more and more power every year -- while acting as an enormous drag on the economy.

We do not primarily lose our rights by the government taking them from us, but by allowing the government to assume our responsibilities.  It is thus that government grows to invade every aspect of our lives.

So please do not vote for politicians who promise to do more.  Instead vote for those who say they will do less.  Much less.

Knowing human nature, I suspect that the population will continue to vote for the government to do more and more, until a crisis hits where the government cannot meet its responsibilities, and a general collapse occurs.

But we have a chance now to pull away from this Obamadisaster.  Let's do it!

Saturday, October 16, 2010

Nukes Closeup

Here are some photos of nuclear weapons being detonated.  Click them for larger versions.


US Cooperating with Iran in Determining Iraq's Future

The major US media are not reporting this (from STRATFOR's 4th Quarter World Forecast):
"Washington and Tehran continue to challenge one another over the future of Iraq, and ultimately over the balance of power in the Middle East. This sparring will continue in the fourth quarter, with one rather significant exception: Washington and Tehran are likely to reach a preliminary agreement on the factional balance in Baghdad, with a new power-sharing government for Iraq emerging."
The US was unable to form a government out of all the factions in Iraq.  Now the Iranians are working to do so.

The future of Iraq is Iran.

Saturday, October 9, 2010

Noted Physicist Resigns from the American Physical Society to Protest Global Warming Fraud

An Open Letter
[emphasis mine - Scott]

From: Hal Lewis, University of California, Santa Barbara
To: Curtis G. Callan, Jr., Princeton University, President of the American Physical Society

6 October 2010

Dear Curt:

When I first joined the American Physical Society sixty-seven years ago it was much smaller, much gentler, and as yet uncorrupted by the money flood (a threat against which Dwight Eisenhower warned a half-century ago).

Indeed, the choice of physics as a profession was then a guarantor of a life of poverty and abstinence—it was World War II that changed all that. The prospect of worldly gain drove few physicists. As recently as thirty-five years ago, when I chaired the first APS study of a contentious social/scientific issue, The Reactor Safety Study, though there were zealots aplenty on the outside there was no hint of inordinate pressure on us as physicists. We were therefore able to produce what I believe was and is an honest appraisal of the situation at that time. We were further enabled by the presence of an oversight committee consisting of Pief Panofsky, Vicki Weisskopf, and Hans Bethe, all towering physicists beyond reproach. I was proud of what we did in a charged atmosphere. In the end the oversight committee, in its report to the APS President, noted the complete independence in which we did the job, and predicted that the report would be attacked from both sides. What greater tribute could there be?

How different it is now. The giants no longer walk the earth, and the money flood has become the raison d’ĂȘtre of much physics research, the vital sustenance of much more, and it provides the support for untold numbers of professional jobs. For reasons that will soon become clear my former pride at being an APS Fellow all these years has been turned into shame, and I am forced, with no pleasure at all, to offer you my resignation from the Society.

It is of course, the global warming scam, with the (literally) trillions of dollars driving it, that has corrupted so many scientists, and has carried APS before it like a rogue wave. It is the greatest and most successful pseudoscientific fraud I have seen in my long life as a physicist. Anyone who has the faintest doubt that this is so should force himself to read the ClimateGate documents, which lay it bare. (Montford’s book organizes the facts very well.) I don’t believe that any real physicist, nay scientist, can read that stuff without revulsion. I would almost make that revulsion a definition of the word scientist.

So what has the APS, as an organization, done in the face of this challenge? It has accepted the corruption as the norm, and gone along with it. For example:

1. About a year ago a few of us sent an e-mail on the subject to a fraction of the membership. APS ignored the issues, but the then President immediately launched a hostile investigation of where we got the e-mail addresses. In its better days, APS used to encourage discussion of important issues, and indeed the Constitution cites that as its principal purpose. No more. Everything that has been done in the last year has been designed to silence debate

2. The appallingly tendentious APS statement on Climate Change was apparently written in a hurry by a few people over lunch, and is certainly not representative of the talents of APS members as I have long known them. So a few of us petitioned the Council to reconsider it. One of the outstanding marks of (in)distinction in the Statement was the poison word incontrovertible, which describes few items in physics, certainly not this one. In response APS appointed a secret committee that never met, never troubled to speak to any skeptics, yet endorsed the Statement in its entirety. (They did admit that the tone was a bit strong, but amazingly kept the poison word incontrovertible to describe the evidence, a position supported by no one.) In the end, the Council kept the original statement, word for word, but approved a far longer “explanatory” screed, admitting that there were uncertainties, but brushing them aside to give blanket approval to the original. The original Statement, which still stands as the APS position, also contains what I consider pompous and asinine advice to all world governments, as if the APS were master of the universe. It is not, and I am embarrassed that our leaders seem to think it is. This is not fun and games, these are serious matters involving vast fractions of our national substance, and the reputation of the Society as a scientific society is at stake.

3. In the interim the ClimateGate scandal broke into the news, and the machinations of the principal alarmists were revealed to the world. It was a fraud on a scale I have never seen, and I lack the words to describe its enormity. Effect on the APS position: none. None at all. This is not science; other forces are at work.

4. So a few of us tried to bring science into the act (that is, after all, the alleged and historic purpose of APS), and collected the necessary 200+ signatures to bring to the Council a proposal for a Topical Group on Climate Science, thinking that open discussion of the scientific issues, in the best tradition of physics, would be beneficial to all, and also a contribution to the nation. I might note that it was not easy to collect the signatures, since you denied us the use of the APS membership list. We conformed in every way with the requirements of the APS Constitution, and described in great detail what we had in mind—simply to bring the subject into the open.

5. To our amazement, Constitution be damned, you declined to accept our petition, but instead used your own control of the mailing list to run a poll on the members’ interest in a TG on Climate and the Environment. You did ask the members if they would sign a petition to form a TG on your yet-to-be-defined subject, but provided no petition, and got lots of affirmative responses. (If you had asked about sex you would have gotten more expressions of interest.) There was of course no such petition or proposal, and you have now dropped the Environment part, so the whole matter is moot. (Any lawyer will tell you that you cannot collect signatures on a vague petition, and then fill in whatever you like.) The entire purpose of this exercise was to avoid your constitutional responsibility to take our petition to the Council.

6. As of now you have formed still another secret and stacked committee to organize your own TG, simply ignoring our lawful petition.

APS management has gamed the problem from the beginning, to suppress serious conversation about the merits of the climate change claims. Do you wonder that I have lost confidence in the organization?

I do feel the need to add one note, and this is conjecture, since it is always risky to discuss other people’s motives. This scheming at APS HQ is so bizarre that there cannot be a simple explanation for it. Some have held that the physicists of today are not as smart as they used to be, but I don’t think that is an issue. I think it is the money, exactly what Eisenhower warned about a half-century ago. There are indeed trillions of dollars involved, to say nothing of the fame and glory (and frequent trips to exotic islands) that go with being a member of the club. Your own Physics Department (of which you are chairman) would lose millions a year if the global warming bubble burst. When Penn State absolved Mike Mann of wrongdoing, and the University of East Anglia did the same for Phil Jones, they cannot have been unaware of the financial penalty for doing otherwise. As the old saying goes, you don’t have to be a weatherman to know which way the wind is blowing. Since I am no philosopher, I’m not going to explore at just which point enlightened self-interest crosses the line into corruption, but a careful reading of the ClimateGate releases makes it clear that this is not an academic question.

I want no part of it, so please accept my resignation. APS no longer represents me, but I hope we are still friends.



Harold Lewis is Emeritus Professor of Physics, University of California, Santa Barbara, former Chairman; Former member Defense Science Board, chmn of Technology panel; Chairman DSB study on Nuclear Winter; Former member Advisory Committee on Reactor Safeguards; Former member, President’s Nuclear Safety Oversight Committee; Chairman APS study on Nuclear Reactor Safety Chairman Risk Assessment Review Group; Co-founder and former Chairman of JASON; Former member USAF Scientific Advisory Board; Served in US Navy in WW II; books: Technological Risk (about, surprise, technological risk) and Why Flip a Coin (about decision making)

Wednesday, October 6, 2010

Super-Rich Buying Gold By the Ton

From Reuters, dated Monday:

GENEVA (Reuters) - The world's wealthiest people have responded to economic worries by buying gold by the bar -- and sometimes by the ton -- and by moving assets out of the financial system, bankers catering to the very rich said on Monday.

"They don't only buy ETFs or futures; they buy physical gold," said Stadler, who runs the Swiss bank's services for clients with assets of at least $50 million to invest.

UBS is recommending top-tier clients hold 7-10 percent of their assets in precious metals like gold, which is on course for its tenth consecutive yearly gain and traded at around $1,314.50 an ounce on Monday, near the record level reached last week.

"We had a clear example of a couple buying over a ton of gold ... and carrying it to another place," Stadler said. At today's prices, that shipment would be worth about $42 million.

read more

Tuesday, October 5, 2010

Michael E. Mann Under Investigation for Fraud

Some readers thought I was a little over the top a few days ago when I posted the following:
"The word for all of this is fraud. Global warming scientists such as James Hansen of NASA GISS, Michael E. Mann of Pennsylvania State (the inventor of the now-discredited "hockey stick" chart used by Al Gore), and Phil Jones of East Anglia University (UK) should be indicted for fraudulent misuse of government funds and sent to prison."
Well, in the case of Michael E. Mann, the fraud investigation is now underway.  Mann used to ply his con game at the University of Virginia.  On September 29th, 2010, a Civil Investigative Demand (CID) from the Attorney General of Virginia was served on the Rector of the University of Virginia, alleging a violation of the Virginia Fraud Against Taxpayers Act (FATA).

The CID requires that pretty much every document, note, or correspondence relating to Michael E. Mann's work from January 1st, 1999 through December 31st, 2006, including both paper and electronic archives such as email, be delivered to the Attorney General.

It is alleged that Mann fraudulently applied for and received a grant in 2003, knowing that his previous works, upon which it was based, "contained false information, unsubstantiated claims and/or were otherwise misleading."
"Specifically, but without limitation, some of the conclusions of the papers demonstrate a complete lack of rigor regarding the statistical analysis of the alleged data....To the extent that Dr. Mann did reference or rely on his past work in these papers (or others like them) to aid in the winning of the grant when he knew or should have known of the potential of the papers (or others like them) to mislead the grantor, such actions would subject him to potential FATA liability....Further, if the work on the grant built on any prior work that suffered from the same or a similar flaw, Dr. Mann would also be subject to liability."

Stuff like this is almost incredible:
"Any and all e-mails or pieces of correspondence from or to Dr. Michael Mann since he left the University of Virginia that are in your possession, including but not limited to, those stored on any computer, hard drive, floppy drive, tape drive, optical drive, desktop, laptop, file server, database server, email servers or any other systems, and all backup copies used for archive, continuity or disaster recovery purposes, where data was transmitted or stored on purpose, or captured as a result of transient use of a system or application in the course of day to day research or to produce any work product or result.  Include messages that may have been kept by individuals who interacted on the grant."

I am amazed by the scope of the investigation.  The Attorney General is requiring any and all records whatsoever, and requires documentation of any removal or destruction of any records in the past.  In the appendix, there is a large list of people with whom Mann may have corresponded that includes all the "guiding lights" of world climate science.

They should all go to prison for fraud.

Monday, October 4, 2010

Israel and Iran and the Mideast

With the recent Iranian military incursion into Iraq, and the extensive support of Shiite insurgents, and a veiled threat to help form the Iraqi government (since the Americans failed at building any kind of coalition), Iran is looking to forge the first conquest of the New Caliphate. See the latest little blurb below.

I also note an enormous number of Iranian diplomatic initiatives in the last month (not reported in the major US media, but available in the Iranian and Gulf States media, as well as STRATFOR). Now that Iran has their reactor, and no one can bomb it without causing a radiological incident, all the countries in the region are meeting with the Iranians to improve relations. Iran is now the big cheese in the region. "Everyone else is number two." Even Sri Lanka sent a delegation recently.

Iran will take it slow, especially with tons of US combat troops still in Iraq. (Obama lies about that, by the way.) But their intent is clear: Iraq will be a part of Iran sometime in the next 10 years, Israel will be destroyed, and the Caliphate will rule the Mideast.

There is not much anybody can do about it without a war, and our leader is not about to start a war, especially if nukes are involved.

We had a window to attack the facilities in the summer of 2008, but Bush decided not to take it, mostly because he was afraid that starting a war and sinking the economy would put Obama in power.  He should have done it. 

I really believe it is too late to do anything to stop Iran short of nuclear missiles. A conventional attack would be ineffective long term -- and maybe even short term. But I doubt that Israel has the guts to fire off their Jericho II's and III's. Once Iran has their own nukes and missiles, it will be too late even for that.

Unfortunately, now is the time to put together a plan to move yourself, your family, and your business out of Israel, and indeed out of the Mideast. You may have a couple of years yet, but if it were me, I'd go now.

In ten years, even Europe will be at risk.


October 3, 2010


Iranian Ambassador to Iraq Hasan Dana'ifar said there may be "security repercussions" in Iraq if the formation of a new Iraqi government is delayed, Al-Sharqiya reported Oct. 3. Dana'ifar said any country that interferes with the formation would be insulting the Iraqi public, and said Iran does not have a specific candidate it is backing for prime minister.


Sunday, October 3, 2010

Basics of American Philosophy

I wrote the following on August 19th, 1994.

When I mention "our current administration", I am referring to Clinton.  But Clinton never even dreamed of the sweep of power wielded by Obama.  We are now, in 2010, much further down this completely un-American road. We have further separated into two camps: those who still believe in freedom, and those who believe in government control of just about everything.  I have watched these trends for 30 years or more.  It is an inevitable march to crisis.


Basics of American Philosophy

As a free American, I have a right to own anything I want, and to do anything I want.  I can own land.   I can own and carry firearms.  I can defend myself at all times.  I can start a business and reap its rewards.  I can build what I want, how I want it.  I can travel wherever I want to go.  I can say what I want and print what I want.

I don't have to get permission from anyone to exercise these rights.  I am not beholden to any master on earth.

My only restriction is that I may not violate the right of others to be free in their lives and property.  In that restriction, I am responsible for my actions.

I don't have a right to be fed, or a right to a house, or a right to medical care, or any other "right" that is dependent on others providing it to me.  To grant these things to me would violate the rights of others.  I do have a right to be free from force and other interference as I purchase whatever I want.

I do have important moral responsibilities to my fellows, but it would be immoral if any person or organization took my property from me by force and gave it to others.   Besides, to be dependent on handouts can destroy any future ability to provide for yourself -- just like animals in a zoo.

Americans have delegated certain things, for the sake of convenience, to an association of citizens that we call a "government."  It provides a structure for common defense, for criminal punishment, for settling disputes, and for coordinating those few efforts that involve us all.  But it is a small thing, with strictly limited power.  If it were to become oppressive, we would simply dissolve it; after all, we brought it into being ourselves.

The people we choose to lead this association can never create a tyranny and threaten us because we retain the right to be well-armed.  We are always careful to stay more powerful than the government.

Our freedom is our most prized possession.  Many Americans have died for it.  In other countries -- even the so-called 'free' countries -- the people are tightly controlled.  They may be democracies, but their people are not free.  They have traded away their freedom for a false security -- false because it is the security of the slave.

Americans are always skeptical when other countries are portrayed as examples for us to emulate.  Americans' love of individual liberty makes us unique among all nations.  We don't want to be like England, or France, or Japan.  We value our freedom more than governmental promises of protection from want, crime, and the pressures of a free market.  We would rather control our own lives, accept our own risks, and pay our own way, than be told what to do.

We don't need or want a governmental parent constantly protecting us, providing for us, and scolding us.

Americans have always known intuitively that if you must ask permission, you are not free.  If much of your wealth is being taken from you, you are not free.  If you are denied the tools to defend your life and your freedom, you are not free.  If you are being watched, measured, and monitored, you are not free. If you let others provide for you, you are not free.

When the founders of our country decided to revolt against British rule, these thoughts were basic to their philosophy. We remained true to their ideals for many decades, but in the middle of this century we tentatively took the first steps down a completely different path.

We began innocently enough by providing more aid to people.  But now every necessity for living is considered a 'right,' the only question being how to tax enough to provide them.

The government is larger and more controlling than anything the founders could have ever conceived.  We pay more in tax and have less liberty than the colonists did under British rule.

We still have a democracy -- so far -- but almost all of the thousands of new laws created every year are made by un-elected bureaucrats in government agencies.  They are authorized to do whatever they think the people will tolerate.  Every aspect of human behavior has become an excuse for a new program, more control, more government.

With our current administration, this process has greatly accelerated. Soon everything in your life will be infiltrated by the government.

Thomas Sowell explained the situation well in the November 19th, 1993 New York Post:
"What the welfare state is saying, whether in this new 'Health Security Act' or in a thousand other programs, is that we are not to be a nation of independent people controlling our own lives, but a nation of clients whose lives are controlled by bureaucrats, dispensing taxpayers' money according to the vision of the anointed.

"This is not a new idea, however much the advocates of the welfare state proclaim 'change.' Most of the history of the human race has been a history of the masses of ordinary people having their lives controlled and their destiny decided by some elite.

"It has taken centuries of struggle, agony, sacrifice and bloodshed to get out from under the thumb of those who acted as if they had been born into this world 'booted and spurred, to ride mankind.' Now we are turning around and heading backward, toward a world where people's fates are not in their own hands but in the hands of some puffed-up political 'leaders.'"


I am fascinated by Mr. Sowell's reference to welfare state advocates proclaiming "CHANGE" all the way back in 1993.  Nothing is new, is it?

We have an opportunity this November to turn the tide.  Obama's policies are not part of the America I know and love.  He may or may not actually be a foreigner, but his policies are certainly foreign, and indeed are repugnant to true Americans.

If you love freedom, vote against those who support him.  Throw them out now.

Then throw him out in 2012.


Friday, October 1, 2010

The Problem with James Hansen

James Hansen, the director of NASA’s Goddard Institute for Space Studies (GISS) was arrested again on Monday 27 September 2010 at an environmental protest. He was arrested once before at another protest in 2009.

Hansen is a radical environmentalist.

  • He is credited with starting the global warming movement with his testimony to Congress in June 1988 (in a room with the air conditioning purposefully compromised).
  • He predicted in 1988, that the West Side Highway in New York City would be underwater by 2008 due to global warming making the ocean rise.
  • He encourages people in the US and in Great Britain to rise up and protest power plants, and “coal trains of death” in order to stop global warming.
  • He has said that “deniers” of global warming should be tried for “high crimes against humanity”.

Oddly, NASA’s Goddard Institute for Space Studies has nothing to do with studies of space anymore.  Hansen has completely overthrown its original mission. It is now devoted solely to studies of global warming. In his role as director, Hansen is responsible for the creation and management of:
  • Climate models that predict global warming, and whose results are used in the IPCC reports to world governments.
  • The most well-known and frequently cited temperature database (GISTEMP), tracking the overall temperature of our planet.

Please note that the man in charge of modeling the climate to predict global warming is also responsible for the database of temperatures that is used to verify the model -- an enormous conflict of interest.  The “corrections” to the raw temperature data are the foundation of global warming. There is no warming without the corrections (his and others). He is one of a handful of scientists that control the various models and databases of global warming.

And he is a radical environmentalist.

Do you see the problem?


Sunday, September 26, 2010

The Decline of the Sun Continues

UPDATE 26 September 2010:  I changed the final paragraphs correcting "upper atmosphere" to "lower atmosphere" and adding some additional information.

Dr. William Livingston and Dr. Matthew Penn, of the National Solar Observatory in Tucson are continuing to take measurements of both the intensity ratio of sunspots compared to the normal surface of the sun, and of magnetic fields in sun spots. The sunspots have been getting paler and the magnetic fields less intense in an almost linear trend since about 1990.

The sun is behaving in a way we have never seen during the modern era. It is hypothesized that similar behavior caused the dearth of sunspots during the Maunder Minimum of 1645 to 1715 AD. This lull in solar activity coincided with the Little Ice Age, a time of extremely cold temperatures, crop failures, famine, plague, and enormous suffering and death. However, it is still being debated whether or not the reduced solar activity actually caused the cold weather.  (There were volcanic eruptions too, and the temperature decline seems to have started long before the solar decline, maybe.)

Here is the latest Livingston-Penn data through September 6th, 2010, graphed by me.

click for full size image

The measured values form clouds rather than obvious trends, because the data is quite variable.  But the trends are there nonetheless.  The lines are not just eyeballed and drawn in, but are rather mathematically-fit logarithmic curves based on the data, thus showing the true trends.  The large dots are yearly averages, centered in the middle of each year, or in the case of 2010, in the middle of the months collected so far in the year.

The latest data fall right on the curve.  If the trends continue, sunspot intensity ratios will go to 1 (i.e. no contrast) and sunspot magnetic fields will average less than 1500 Gauss sometime between the years 2015 and 2020.  At these levels, there will be virtually no sunspots, regardless of the state of the 11-year cycle.

Decline in solar activity causes a decline in the strength of the interplanetary magnetic field.  This causes an increase in the flux of cosmic rays reaching the earth.  One theory is that increased cosmic rays reaching the lower atmosphere cause increased water vapor nucleation, and thus the formation of more clouds.  More clouds reflecting sun away means a cooler earth.  But comparing the 11-year solar cycle state to global cloud cover, we don't see a real correlation.

As in all climate studies, we just don't have enough data to say anything definitive about whether the future will be warmer or colder than "average".

But I am guessing that we could be in for some cold times, and even food shortages, in the next 10-20 years.

The frozen Thames River in London, 1677

Saturday, September 25, 2010

Obvious Fraud in Global Warming

In the below graph of temperatures at Darwin Australia, the blue is the true measured data, the red is the “corrected” or “homogenized” data, and the black line is the difference, i.e. what was artificially added by the scientists in order to show a warming trend.

Note the blatant stair steps in what was added.

 Analysis and Graph by Willis Eschenbach

The corrections were made by the Global Historical Climatology Network (GHCN), a system managed by the National Climatic Data Center (NCDC), Arizona State University, and the Carbon Dioxide Information Analysis Center.

The GHCN is the foundation dataset for virtually all other temperature studies in the world today. Jim Hansen’s NASA GISS and Phil Jones’s East Anglia CRU use this GHCN data and massage it even more in what they call an attempt to remove additional “biases”. This extra massaging adds even more artificial warming to the data. Mr. Hansen even subtracts numbers from the raw temperatures in the 1800s and early 1900s in order to make the past look colder.

Then it is used in the Intergovernmental Panel on Climate Change (IPCC) reports.

Then it is used to make laws that we are forced to obey.

Without these “corrections”, the worldwide raw data set shows only a very slight warming which is most likely due to growth of cities and infrastructure around measurement stations over the last 50 years.

Recent studies by Anthony Watts and others have shown that less than 10% of the temperature stations in the US are sited correctly. The remaining 90% violate the National Oceanic and Atmospheric Administration's own standards by being too close to warm infrastructure such as air conditioner exhausts, pavement, and buildings -- even BBQ grills have been documented. Over time, temperature stations become surrounded by these kinds of heat sources as cities grow to encompass formerly rural areas, leading to a slight upward trend, especially in  night-time temperatures.

Anthony’s project has surveyed 82% of the stations in the US, so far. I would imagine that temperature stations in the rest of the world are even worse.

The word for all of this is fraud.

Global warming scientists such as James Hansen of NASA GISS, Michael E. Mann of Pennsylvania State (the inventor of the now-discredited "hockey stick" chart used by Al Gore), and Phil Jones of East Anglia University (UK) should be indicted for fraudulent misuse of government funds and sent to prison.

Hansen, Mann, Jones

Sunday, September 19, 2010

Obama as the Destroyer of the Modern World


Most people think Obama is a socialist or a marxist.  They miss the truth.  He is actually a feudalist.  By imposing punishing taxes on anyone who makes more than $250,000 a year (or is it $150,000, or perhaps $75,000?), he is systematically destroying the freedom that, over the last 250 years, has created the modern world where people actually have plentiful food and shelter.   He is destroying the engine of human wealth, and replacing it with handouts from an all-controlling government.  As Victor Davis Hanson says:
Once again, in [Obama's] peasant view of a limited world, wealth is finite: If we have three-car families, people in a basket case like Zimbabwe pay for our excess by having none. To suggest that Zimbabwe’s problems are entirely its own doing, and are not connected to post-colonial trauma or to exploitative wealth creation by the West — and that with radical social, cultural, political and economic changes Zimbabwe could easily be another Switzerland (which lacks Zimbabwe’s natural resources) — is to reject almost all that Obama has learned from his teachers and friends, and as an astute navigator in the world of identity politics.

I wonder how far down the road to feudalism Obama can take us without serious consequences. The world economy, burdened by Obama and other feudalists like him, is already unsustainable.

A singularity approaches.  The golden goose is being tortured and killed before our eyes.  If we implement the feudal, confiscatory tyrannies of Africa in our country, we will be as poor as Africa.

Obama's father-figure and mentor from age 10 to 18:  Communist/Pedophile/Cocaine-Dealer Frank Marshall Davis, whom Obama calls "Frank" in his book "Dreams of My Father"

Saturday, September 11, 2010

Bushehr is the Turning Point

Now that the Russians have fueled Iran's Bushehr reactor, it is off-limits to Israeli or American strikes.  Any attack would spread radioactive materials, contaminate a large area, and potentially kill thousands of civilians.  So it is now a safe zone.

As reported by Debka:
"Iran has begun secretly moving some of its most sensitive nuclear research facilities and materials from North Tehran and the Arak heavy water plant to huge storage areas around the newly-fueled reactor at Bushehr, along with advanced missiles from the southern province of Khuzestan....  Already on Aug. 22, Iran’s National Security Council discussed exhaustively how best to take advantage of this immunity and the large storage depots the Russians had built around the reactor for their heavy equipment to hide their most secret projects, weapons and materials. Their six-hour session produced a detailed plan which was submitted to supreme ruler Ayatollah Ali Khamenei, who is commander-in-chief of Iran’s armed forces. He gave it the go-ahead on Aug. 26."

It makes sense that Obama allowed the Bushehr reactor to be fueled, if the following is to be believed.  His family, several generations back, may actually have been from Bushehr:

"Dr. Andy Vashol, from the research institute of MIT university says according to his research team Obama is Muslim from south of Iran. As he says, Obama’s family are the same family who were living in Bushehr during the Qajars’ dynasty time. Then they were forced to leave Iran and in few generations they came to U.S.A. His forefather, Mir Hassan khan Obamaee was one of the famous Mirabs in Bushehr (Mirab is a person in charge of water)."
Regardless, Bushehr will now be Iran's primary site for nuclear weapon and missile development.  It is the foot in the door that will allow Iran to become a nuclear and ICBM power, thus leading to the re-founding of the Caliphate, the destruction of the Jewish people, and Iranian rule of the Mideast.


Friday, September 3, 2010

War Talk Heating Up Again

Chatter has been increasing again this week about a possible attack on Iran. But this time around, some different elements are in play:
  • The impetus is coming mostly from the Saudis. They liked the protective buffer our presence in Iraq provided, and are very concerned that Iran will fill the power vacuum as we withdraw.
  • While Iran's potential nuclear capability is still a concern, the Saudis see the whole Iranian military as a threat.
  • The prime actor would likely be the US instead of Israel, since Israel does not have the power to deal with these new concerns -- plus the situation has grown beyond their parochial interests.
  • A potential reaction from Hezbollah may have been mitigated by visits of Saudi King Abdullah to Lebanon and Syria, leaving an Iranian mining of the Strait of Hormuz as the largest concern. 
  • The initial strike would likely be against Iranian military capability in the Strait, followed by attacks on their nuclear infrastructure.  The aerial bombing at Bandar Abbas and other Iranian naval bases and military sites would be of a more strategic nature -- something the US is best at.
An attack would certainly negatively affect economic markets worldwide, and increase the price of oil dramatically.  The new moon is on Wednesday, but attacks could be performed outside of that window.  US markets will be closed on Monday for Labor Day.

Thursday, September 2, 2010

In Obama's Hip Pocket

If the elections in November look like they are going to go bad for the Democrats, I figure that Obama will just push the Congress to enact an extension of most of the Bush tax cuts (along with some increases for the wealthy in order to feed the class-envy engine).

The lack of certainty regarding what is going to happen to taxes on January 1st is a big drag on the economy and the stock market. A positive announcement of an extension will dramatically improve both -- and decrease the number of Democrats that will be kicked out.

Once the election is over, it is back to business as usual.  Expect major tax increases in the first half of 2011, along with another economic dump.

Unless the Republicans take over.

Friday UPDATE:  Others see this happening too:
"Congress and the White House may throw a curveball and roll out a tax cut ahead of the midterm elections rather than boost stimulus spending to aid the struggling economy, Harvard University History and Business Professor Niall Ferguson told CNBC Friday."


Obama's Supporters Turning Against Him

Daniel S. Loeb is the founder of Third Point LLC, a New York-based hedge fund managing over $5.5 billion in assets.  He is a registered Democrat and has raised hundreds of thousands of dollars for the campaigns of Democrats.  He was a early and strong supporter of Barack Obama.

But his recent letter to shareholders, the first part of which is copied below, makes him sound like he is getting ready to join Glenn Beck.

Loeb's views are representative of the concerns I keep hearing from investors and business leaders:  Obama is imposing governmental power onto almost every aspect of the economy.  While capitalism and freedom are so strong they can bear up under large governmental loading, the new Obamanation socialist bureaucracies that are being built are truly enormous both in size and power.

And worst of all, no one can predict what is coming.  In the past, businesses and investors could count on being free to make decisions and run their companies without being told every detail of what they could and could not do.  Now, every month there are new and expensive requirements, many of which are ill-defined and open-ended.  The new financial regulation law for example, empowers a new governmental agency to make just about any kinds of rules that the leaders see fit.  It sets up a financial regulatory dictatorship, run by unelected appointees, that are answerable only to Obama.

New government taxes, subsidies, regulations, and directives are what swings the fortunes of companies in the Obamaworld, not the basics of products and markets.  Investments are now analyzed based not on the fundamentals of the company or instrument, but on what the government may or may not do.  "Public policy" is the first thing to look at when assessing whether or not to buy a stock.  A bad balance sheet doesn't matter if the company is politically correct and well-connected.  A good balance sheet won't help a company that is in the crosshairs of policy.

In this environment of uncertainty and arbitrary rule, people are becoming more and more afraid to invest. Gold is at a new high.

All of this reminds me of a quote from Ayn Rand's Atlas Shrugged:
"When you see that trading is done, not by consent, but by compulsion—when you see that in order to produce, you need to obtain permission from men who produce nothing—when you see that money is flowing to those who deal, not in goods, but in favors—when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you—when you see corruption being rewarded and honesty becoming a self-sacrifice—you may know that your society is doomed."
Loeb's letter is long, and I thought about excerpting a few key parts. But the whole commentary portion is really good data to have.  I have highlighted the most important statements -- and be sure to read the quotes at the front.  The remaining part of the letter that I did not transcribe is mostly numerical summaries of the performance of the fund.


Third Point LLC
August 27, 2010
Second Quarter 2010 Investor Letter

All, too, will bear in mind this sacred principle, that though the will of the majority is in all cases to prevail, that will to be rightful must be reasonable; that the minority possess their equal rights, which equal law must protect, and to violate would be oppression.
  – Thomas Jefferson, First Inaugural Address, 1801

A wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned - this is the sum of good government.
  – Thomas Jefferson, Writings, 1743-1826

I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of the people.
  – Thomas Jefferson, Letter to Thomas Cooper, 1802

One of the traditional methods of imposing statism or socialism on a people has been by way of medicine. It’s very easy to disguise a medical program as a humanitarian project. Most people are a little reluctant to oppose anything that suggests medical care for people who possibly can’t afford it.
  – Ronald Reagan,, 1961

You know, there's a lot of talk in this country about the federal deficit. But I think we should talk more about our empathy deficit - the ability to put ourselves in someone else's shoes; to see the world through the eyes of those who are different from us - the child who's hungry, the steelworker who's been laid-off, the family who lost the entire life they built together when the storm came to town. When you think like this - when you choose to broaden your ambit of concern and empathize with the plight of others, whether they are close friends or distant strangers - it becomes harder not to act; harder not to help.
  – Barack Obama, Xavier University Commencement Speech, 2006

It is that fundamental belief, I am my brother's keeper, I am my sister's keeper that makes this country work. It's what allows us to pursue our individual dreams and yet still come together as one American family. E pluribus unum. Out of many, one.
  – Barack Obama, Democratic National Convention Speech, 2004

I think when you spread the wealth around it's good for everybody.
–Barack Obama’s Comments to Joe “the Plumber” Wurzelbacher, 2008

The secret of US success is neither Wall Street nor Silicon Valley, but its long-surviving rule of law and the system behind it... American system is said to be “designed by genius and for the operation of the stupid.”
  – General Liu Yazhou, Phoenix Magazine, August 2010

Review and Outlook

As we entered the second quarter of 2010, many measures of confidence and economic activity were showing consistent improvement, leading us to increase our exposures in select undervalued companies which we thought would benefit from a favorable economic environment. Most pundits initially attributed the subsequent turn in the markets and investor sentiment to the Greek crisis, concern over the Euro, the Oil Spill in the Gulf, and vague rumors concerning faltering Chinese growth. However, it is apparent to us that the turning point in both investor and consumer confidence came on April 16th, with the filing of the government's suit against Goldman Sachs over its mortgage CDO activities. This politically-laced lawsuit was a tipping point for shaky investor confidence against an increasingly worrisome landscape of new laws and proposed regulations that are perceived by many market participants to promote "redistribution" rather than growth, and are contrary to free market ideals.

As every student of American history knows, this country’s core founding principles included non-punitive taxation, Constitutionally-guaranteed protections against persecution of the minority, and an inexorable right of self-determination. Washington has taken actions over the past months like the Goldman suit that seem designed to fracture the populace by pulling capital and power from the hands of some and putting it in the hands of others. For example, a well-intentioned government program gone awry is the new CARD Act that restricts banks from repricing interest rates on borrowers who fail to meet their revolving credit obligations.

The effect of this legal prohibition has been to force the banks to raise the interest rate paid by all borrowers, to compensate for losses they are now being forced to take on delinquent borrowers. The effect is a redistribution of wealth from people who pay their debts on time to those who do not.

Laws and regulations such as these justifiably raise questions about this government's commitment to free-market capitalism and the articulated rule of law. Arguably unconstitutional Bills of Attainder, such as the special "Enterprise Tax" proposed to be levied on hedge fund managers and other managers of private partnerships who wish to sell their management companies (ostensibly in order to extend unemployment benefits beyond the current 99 weeks) send a vivid message that this Administration is operating from a playbook quite different from the one we are used to as American business people; a thought that chills all participants in these free markets.

On the other hand, it is not hard to understand the source of the popular distrust in capitalism today. Many people see the collapse of the sub-prime markets, along with the failure and subsequent rescue of many banks, as failures of capitalism rather than a result of a vile stew of inept management, unaccountable boards of directors, and overmatched regulators not just asleep, but comatose, at the proverbial switch. When we hear the chorus of former executives and regulators exclaim that the crisis was "impossible to see coming”, while at the same time walking away with millions or going on to greater levels of responsibility in government, it is both puzzling and demoralizing. It is easy to see why so many people have concluded that the entire system is rigged.

This crisis of trust in our system is not limited to inept executives in regulated financial institutions who bury their shareholders and then walk away with ill-gotten sacks of loot. Having analyzed hundreds of proxy statements from the outside and having had the "pleasure" of sitting on several corporate boards, giving me a chance to walk the sausage factory floor, I have personally witnessed the incompetence of many boards of directors. One can only conclude that the incentive systems put in place for directors reward luck and station more than they do talent, skill or creation of shareholder value.

Not all boards are bad, of course. Private equity firms have a terrific model of appointing energetic members of their firms and outside experts to oversee the affairs of the companies they govern. They tend to have real "skin in the game", spend days reviewing strategy and other matters, and have their own staffs to analyze numbers produced by the company. Board fees tend to be irrelevant to the members of such firms as they are keenly focused on strategies to deleverage and to create long/medium term shareholder value. Even some public companies have similarly engaged corporate boards.

However, many of the boards we have come across are populated by individuals who rely on the stipends they receive from numerous corporate boards and thus appear motivated primarily to ensure continuing board fees, first-class air travel and accommodations, and a steady diet of free corned beef sandwiches until they reach their mandatory retirement age. We are therefore encouraged by the recently finalized proxy rules, which will ease the nomination and election of directors by shareholders.

All of the above leads us to conclude that America faces not only a crisis of confidence among consumers unwilling to spend and businesspeople unwilling to invest, but also a crisis of leadership. So long as our leaders tell us that we must trust them to regulate and redistribute our way back to prosperity, we will not break out of this economic quagmire. One can hope only that this Administration, composed of brilliant academics that have had experience in creating the very regulation and overseeing the very institutions that have failed, has learned from its mistakes and will set us down the right path. Perhaps our leaders will awaken to the fact that free market capitalism is the best system to allocate resources and create innovation, growth and jobs. Perhaps they will see the folly of generating greater deficits by "investing" in programs that lead to corruption and distortions of the system. Perhaps too, a cloven-hoofed, bristly haired mammal will become airborne and the rosette-like marking of a certain breed of ferocious feline will become altered. In other words, we are not holding our breath and are focused instead on navigating these murky waters for the benefit of our funds.

As capital allocators, it is important to remain dispassionate amid the volatility. We have given a great deal of thought about the impact that public policy has on individual companies, industries, and the economy generally. It was this decision framework that led us to shed our investments in large cap US banks in January due to concerns over increasing regulatory headwinds (in advance of the announcement of the Volcker Rule). We have also sold other regulated industries and eliminated our position in Wellpoint, an HMO that is a statistically cheap stock owned by several hedge funds, but which we saw as being overly exposed to unpredictable government regulation.

On the other hand, our perspective on the government's increased willingness to use its regulatory muscle enhanced our short positions in the for-profit education space. Indeed, this summer certain government actions taken regarding these companies served to accelerate the unfolding of our thesis on these names.
As we discussed in June’s letter and on our Quarterly Investor Call a few weeks ago, we began to bring our gross and net exposures down significantly throughout May, primarily in our equities portfolio. We continued this process through the remainder of the Second Quarter, carving out most positions without definitive hard catalysts on the equity side, also reducing positions in Europe, and avoiding sectors entirely where US government intervention remains likely. Gross and net exposures in our portfolio today are at their lowest levels since March 2009, and have been decreasing all summer in accordance with our political and economic framework.

Additionally, we have initiated a number of "asymmetrical” trades using derivatives, options, and debt securities to hedge against extraordinary global events. We have budgeted the cost of such trades to amount to approximately 1% of fund assets per annum but may increase that to 2% (or more) should opportunities arise.

While we are concerned about this environment and have responded, we retain high conviction in our portfolio. We expect our mortgages and post-reorganization equity positions to produce solid gains over the long-term. We have added to the risk arbitrage portfolio in recent months, and we are encouraged that this August has been the most active month for M&A volume this year. We remain excited about the risk-arbitrage opportunities that will abound should this spike in deals continue. However, we still expect anemic growth in the US for the remainder of the year, and for markets to remain insecure and choppy. We are aware that our opinion is certainly not contrary in the sense that the sidelines is perhaps the most “crowded trade”, and the market could very well experience sharp rallies. So far, at least, we have done a reasonably good job neither getting suckered into chasing rallies nor panicking into inevitable corrections.

Leading up to the November elections, we will be alert for opportunities to redeploy capital into what may turn out to be a rapidly changing landscape.

Tuesday, August 24, 2010

Full Hindenburg Omen Tripped


A stock market Hindenburg Event occurred again on Friday August 20th, after appearing once before on Thursday August 12th.  Two Hindenburg Events in a single 36-day period is a full Hindenburg Omen, which portends a stock market "crash and burn".  The creator of the Hindenburg Omen, Jim Miekka, a blind mathematician, has exited the market.

I closed most of my long positions today.  Additionally, my large position in oil has become untenable due to events (and non-events) in the Mideast, and I reduced it last week.  I have now hedged it with additional equity shorts and an increased gold position (GLD).

Any rational leader of the free world would have bombed the Bushehr reactor.  By not bombing, we have confirmed to the world -- and the Iranians -- that we will do nothing to stop a nuclear-armed Caliphate from appearing.  In the near team this means peace, and a decline in oil prices.  (The only thing holding oil above $50 a barrel is world political/war uncertainty.)   In the 5-15 year time frame, this means a new Holocaust.  I wouldn't want to be a Sunni or a Wahhabi either.  The House of Saud is in trouble.

Our policy toward Iran reminds me of our policy toward Nazi Germany in the late 1930's.

I think WWII would have played out a little differently if Germany had had nuclear weapons and intercontinental ballistic missiles.

Barack Hussein Obama announces Middle East "Peace in Our Time"

Saturday, August 21, 2010

Walt Disney in the Year 55 BC

" is not surprising that images should move, and agitate their arms and other members, with regularity; for it happens that many an image seems to do this in our sleep.  This is to be explained in the following way; that when the first image passes off, and a second is afterward produced in another position, the former then seems to have changed its gesture.  This, doubtless, we must conceive to be done by a very rapid process..."

-- Lucretius, The Nature of the Universe, (DE RERUM NATURA) Book IV, circa 55 BC, trans. Rev. John Selby Watson, M.A. 1851
The poet Titus Lucretius Carus was speaking of the images of things that form in the mind, but his insight would certainly be a starting point for the technology of cartoon animation, and indeed even of motion pictures and television.

Thursday, August 19, 2010

Where are the Carriers?

See main page for the latest update

USS Harry S Truman CVN-75 during rudder check in the Atlantic 14 March 2009
click for much larger image

According to STRATFOR, as of 18 August, we have only one carrier strike group in the Arabian Sea off the Iranian/Pakistani coast, led by the USS Harry S Truman CVN-75.

However, the big deck amphibious warfare ship, USS Peleliu LHA-5, probably with elements of its Expeditionary Strike Group, has moved in the past week from a position off Somalia (supporting anti-piracy operations), to just off the coast of Pakistan in order to support flood relief operations.  This places them very close to the southern coast of Iran.

USS Peleliu (LHA 5) conducts operations near the Southern California coast 30 October 2007
click for much larger image

The primary mission of the Harry S Truman is to provide support to Afghanistan operations. They are also well-positioned to ensure freedom of the seas for the Strait of Hormuz and to perform raids into Iran, if we ever decide to do that.

Last month, STRATFOR reported that the USS Dwight D. Eisenhower CVN-69 and its strike group operating off Iran were relieved by the Harry S. Truman, but stayed in the area for some time, leading to speculation that a strike on Iran could be planned.  The Dwight D. Eisenhower has since returned to its home port in Norfolk Virginia.

Note that during the Bush administration, even as late as 2007 and 2008, we sometimes had as many as 3 carrier strike groups in the Arabian Sea.

We currently have five Atlantic carriers and six Pacific carriers.  One of each set are in extended maintenance and are undeployable (USS Theodore Roosevelt CVN-71 and USS John C. Stennis CVN-74).  Two of the deployed Atlantic Carriers, and two of the Pacific carriers are in their home ports.  The USS Enterprise CNV-65 is carrying out exercises off the US east coast in preparation for its upcoming deployment, which I am assuming will be in the Arabian Sea.

I recommend STRATFOR if you are interested in real information and analysis of world events.  Although the yearly cost is very high at $349 per year, if you sign up for a free trial they will send you an email offering a year for $129 -- and a free book.

The U.S. Navy Nimitz Class Aircraft Carrier USS HARRY S TRUMAN (CVN 75), with embarked Carrier Air Wing 3 (CVW-3), sails through the Atlantic Ocean on April 3, 2007, while conducting a Tailored Ship's Training Availability (TSTA) to evaluates its readiness for deployment.
click for much larger image

Wednesday, August 18, 2010

The Mosque at The World Trade Center


Yep, we have religious freedom in this country.  You can worship however you please.  The government should have no say over building your place of worship on private property.*

But tell me, what happens after a large mosque is built at the former site of the World Trade Center (which was destroyed by Islamists who were simply following the dictates of their holy book to the letter)?

What will we do when the following happens?

  • The Ground Zero Mosque, like all other mosques, is added to the list of the Most Holy Places in Islam -- and it ranks rather high on the list since martyrs died there.
  • The mosque holds an annual celebration that just so happens to occur on September 11th.
  • The mosque is used as a center for radical indoctrination against people of other faiths and against western civilization.  Freedom of speech, right?
  • A museum is established at the mosque describing the 1000 years of "continuing victories" of Islam against the infidels, culminating in the successful "Attack on the Jews in the US", and predicting the destruction of Israel.  Protected beliefs, correct?
  • The mosque becomes a center for Sharia law, punishing its members for infractions against Islam, and working with the court system to enshrine Sharia as an "alternative system of law for believers".  (This has already been done in the UK.)

Perhaps we should ask them to name it the Al-Barack-Hussein-Obama mosque.

By the way, I'd like to open a Christian church in Mecca.  Would that be OK?

 Road to Mecca

click for larger version

 The Black Stone.  The holiest relic in Islam, supposedly embedded
by Abraham in the wall of the Ka'ba

Crowds head to the "Stoning of Satan" ritual in Mina, near Mecca


*Actually, local governments routinely deny permits for churches based on land use/zoning, and sometimes based on just about any reason they can drum up.  I have personally had this happen to a church that a group of us were planning in the mid-1990's on a large piece of essentially rural private land in Riverside County, California.  This land was to be donated to us by the owner, if we would build a church on it.  We wanted to put up a steel-and-membrane arched temporary structure, identical to the types the military uses as mess halls and for sheltering aircraft  in places as diverse as the Arctic and the Mideast.  Even though other churches have used similar structures, and industrial companies in the county were already using them, the county initially stated that we could not do it due to wind, earthquake, and hail concerns.  We had the building company talk to them and explain that there was no legal argument that could be made against the building type.  So the county ratcheted up their campaign against us.  They told us the zoning of light industrial/retail would permit a church, but it was not "preferred", so could be denied.  We'd have to have a hearing.  Then they told us we would not be allowed to use the water main on the property  -- we had to use one a half a mile away and pay hundreds of thousands of dollars to bring it across an interstate highway.  (I bet that a grocery store or a restaurant on the same site would be allowed to use the water main.)  Then we were told we were not allowed to have traffic access from our parking lot to the main road -- and then we were not allowed access to the side road either, ostensibly for traffic safety reasons.  We could have access a half mile up the side road, but then we would have to buy that property too and build a parking lot road from there to our property.  We could redesign the little two lane rural intersection instead, and install a traffic light and ramps, but it would cost millions.  Plus it wasn't in the county's plan, so we would have to get an amendment -- which would take 1-2 years.  And we would have to hire a traffic consultant from their list of consultants.  So we were basically denied a water source and motor vehicle access to the property.  Even if we were able to meet these demands (which we could not with our very limited funding), we were advised that there were dozens of other roadblocks to navigate.  We heard from other churches (with similar problems) that the guy in charge of county planning simply didn't want any more churches, period.  The rumor was that he was against Christianity in general.  We had maybe about $100k in our pot.  It was looking like the cheapest we could do it, if we could negotiate access through the other property, would likely approach a million dollars -- even though the land was donated and the fully-fixtured building would only cost $80k. We gave up.