The next meeting of the New York Junto will be as always the first Thursday of the month, December 2, at 7:15 pm at the Mechanics Institute at 20 West 44th Street with Heather MacDonald talking about "classical music's new golden age". All are welcome.



In order to avoid a US dollar debacle, it is important [for the US] to defeat possible credible alternatives. The only one is the Euro. Therefore, the US may have an interest in the acceleration of the PIIGS crisis. How to measure the forces at work in this grandiose scheme and chess game. Who is the weakest? What is the role of speculators? Is there a way to "influence" speculators' targets?

Gary Rogan writes:

It's more likely that the US, or more precisely Geithner and Bernanke want to to prolong the PIIGS thing for as long as possible without it getting resolved rather than accelerate it. It's hard to imagine a good outcome for them if the Euro goes completely caput in a short time. It may also be bad if it falls too rapidly with respect to the dollar. The biggest question is if ANYONE is in control. As Roubini said today, Spain is too big to fail and too big to save, and of course Italy is even more so. I don't know how to tell anything in particular, but it seems like something is up with Portugal and it's worth watching exactly what noises the US will be making about it. It's also worth watching how the Irish population will be handling being told take one for the European unity team after having rejected the whole concept so many times.



 It must be difficult to model the growth of seeds into trees when the seeds of future trees are now barely visible.

Go back 10-20 years before each development, and estimate the economic impact of what ultimately became the automobile, radio, telephone, nuclear weapons, television, personal computer, internet, etc.

There are a few things happening now which will change the world, and several companies which will be the next Microsoft. Spin the wheel, pay the man, take your chances.



Mr. Round Day before end of month harmonizes.

Ken Drees adds:

It gave bears hope and bulls sustenance.

Dow 11000 fence straddle.

Bulls feel better below 11 and bears feel better above.

Basketball play where the team purposely slows the tempo and slowly walks the ball down floor for a planned play comes to mind here.

Steve Ellison comments: 

EUR/USD at 1.3002.

Gary Rogan writes:

It continues today: now S&P at 1200, dow at 11200. NAS can't quite find a really good round number after yesterday's 2500, but still glued to 2550.



Over the past six decades, tax revenues as a percentage of GDP have averaged just under 19% regardless of the top marginal personal income tax rate. The top marginal rate has been as high as 92% (1952-53) and as low as 28% (1988-90). This observation was first reported in an op-ed I wrote for this newspaper in March 1993. A wit later dubbed this "Hauser's Law." W. Kurt Hauser.

The IRS provides historical tax data, which (along with a source for real per-capita GDP) was used to construct the attached chart.

The blue line is the ratio (total income tax paid) / (total income), 1945-2005, which ranged from about 9% in 1949 to 16% in 1981 (total income includes salary and wages, dividends and interest, business net income, net capital gains, and all other income). The red line is real per-capita GDP adjusted to fit on the same chart ( /100,000).

Real per-capita GDP has risen in a nearly linear fashion in the post war period, while the fraction of total income taxes has remained basically flat (but variable). To the eyeball, the fluctuation in income taxation did not seem to effect GDP growth; which calls for some statistical testing:

Real per-capita GDP yearly change was calculated and regressed first against contemporaneous income tax / income:

Regression Analysis: PCGDP rate versus total (tax/income)

The regression equation is PCGDP rate = 0.0043 + 0.108 total (tax/income)

Predictor               Coef      SE Coef     T      P
Constant               0.0043   0.0370  0.12  0.909
total (tax/income)   0.1084   0.2761  0.39  0.696

S = 0.0301101   R-Sq = 0.3%   R-Sq(adj) = 0.0%

No significant relationship. But it is possible that last year's tax rate effected this years GDP growth, so here is the same regression lagged by one year (This year's real per-capita GDP yearly change regressed against prior year's income tax / income):

Regression Analysis: PCGDP rate L1 versus tax/inc lag1

The regression equation is
PCGDP rate L1 = 0.0735 - 0.410 tax/inc lag1

Predictor        Coef  SE Coef      T      P
Constant       0.0735  0.0363   2.02  0.048
tax/inc lag1  -0.4096   0.2705  -1.51  0.135

S = 0.0295713   R-Sq = 3.8%   R-Sq(adj) = 2.1%

Still not significant, but more of an effect than contemporaneous. And the negative slope coefficient suggests that higher taxes last year were associated with lower per-capita GDP growth this year.



This recalls arguments against ending the draft in the 1970s; to the effect that an all-volunteer military won't cut it. 35 years and a few skirmishes later, it is hard to argue the US military is worse than before the draft was abolished.

One possible explanation is incentives: military pay, training, experience, and status can make sense for young people without such opportunities as well as those with opportunity (military academies are academic powerhouses).

Why not incentivize voluntary payment of extra taxes?

1. Option to pick the branch of government (military, education, NSF, CIA, etc), or level of government (fed, state, muni, etc)
2. Extra services for extra payment? Enhanced postal service, concierge police or fire department, 911 hotline, parties with officials, easier state college admissions.

Of course we already have taxation with benefits: political donation and lobbying



 The lame duck Congress might get around to passing the Food Safety Modernization Act, which the president has indicated that he will sign. This law, if enacted will be one of the greatest thefts of our freedom by the planners. Imagine a world where it is illegal to grow your own food in a garden, share food with your neighbors, sell extra produce from your garden, even have a bake sale….this is a distinct possibility. Here is a link to an editorial, which is opinion and not fact, but the authors get the gist of the bill.

The NYT's Scholsser is for the bill, at least on the op-ed page, which is proof that the bill is fundamentally wrong. He creates the spin that all planners wish to create, the elimination of victims of corporate evil. What is really going on here is the government attempting control over our food supply.

With Government in control of the banking, insurance, automakers, health care, insurance industry, and others, it is only natural for them to go after the food supply.



 I dislike regulated monopolies in general, and especially ones I have to deal with. Comcast, for example, provides cable access in my town. And only Comcast. So if I want cable TV or fast Internet, I have to deal with Comcast with their terms, their products, and their prices. Digital phone service is provided by another monopoly. Maybe there is competition 22,000 miles out in space for satellite tv providers. Dilbert creator Scott Adams worked for Pacific Bell from 1986 to 1995, so his negative perspective on office politics and capitalism was shaped by a regulated monopoly. Apple computer has a monopoly on the supply of macs, iPhones, and iPods, but not on desktop or laptop computers, smart phones, or mp3 players. Apple designs and builds great products so they charge more and can dictate terms of use for their services. Just like Leon's Barbecue, west of San Francisco. Their food is so good, and prices so reasonable, that they can and do treat customers rudely. If you don't like it, eat somewhere else. Can't do that with regulated monopolies. Can do that with Wal-Mart.

1. Wal-Mart innovation and distribution efficiency has done more to delivery quality products that poor and middle-income people can afford–in American, Mexico, and other countries–than any or all government agencies (one of many articles here: "Walmart's Bottom Line")

2. Oil companies continue to discover, develop, and deliver reasonably-prices oil and gas to Americans, even as they face complex and often arbitrary regulations, high taxes, and generally ignorant media coverage.

3. Private contractors lower the costs and dangers of war for American taxpayers and soldiers. Unfortunately, lower-cost military contracting may make various marginally-important overseas conflicts more plausible to interventionists.

4. Monsanto brings astonishing increases in crop yields, reducing land under cultivation so leaving more land for conservation and wilderness. Biological pests and blights work 24/7 to adapt and consume world crops. Millions would likely starve if anti-biotech activists are able to block GMO research and development by Monsanto and other firms. Large numbers die now in Africa in part because European farmers and anti-GMO activists block use of pest-resistent GMO crops in Africa.

5. Microsoft has a monopoly of Microsoft products, and they are seeing the sand shift under their feet and 70% of college students use Macs and iPods. But Microsoft earned its market power by developing top-rated software (Word, Excel) and dramatically lowering prices for consumers. Microsoft's early commitment to developing for the early Macintosh's graphic platform gave them a key advantage over competitors in the DOS world.

6. The FTC blocked smaller tobacco companies advertising their low-tar cigarettes in the 1950s. Before advertising was banned by the FTC, the Tar-Wars reduced smoking more than any federal campaign, as companies promoted the benefits of their brands with repeated scenes of smokers hacking and coughing with competitor's cigarettes. The FTC blocked these ads perhaps to protect established companies and brands (claiming more research was needed to prove health claims of low-tar cigarettes). This episode is mentioned, among others, in this Regulation article.

7. Remote controls can instantly banish Fox News from any TV (and remotes can be programmed to not even pass Fox stations). And a quick call to the WSJ can stop home delivery. Unlike NPR and PBS, citizens are not forced to pay taxes to promote political and ideological views they may disagree with.

8. Regulated utilities have a long and peculiar history in American. Major public relations campaigns by AT&T and Chicago Edison subsidized newspaper articles and even economics textbook authors to promote the claim that some monopolies were "natural." Private firms were awarded monopoly power and granted guaranteed profit margins. Notes here


In the early 1900s, electric utility pioneer Samuel Insull of Chicago Edison led a nationwide public relations campaign to convince politicians (the easiest), newspaper editors (a bit harder) and the general public (the hardest) that utilities should be regulated as monopolies rather than be subject to competition. Historian Marvin Olasky has found that as president of the National Electric Light Association (NELA), a major utility trade group, Insull's goal was to "show the public that competition in public utilities was unfeasible." Other major executives shared Insull's view, as well as his strategies to promote regulated monopolies. Insull's first strategy was to "heighten fears of socialism in order to promote acceptance of government-regulated monopoly as a less-undesirable alternative." The NELA advanced its agenda, according to Olasky, with the unwitting help of the news media: "Annual payments of $84,000 from Insull's NELA allowed Hofer [an Oregon public relations firm] to send out almost 13,000 newspaper articles annually. The articles usually appeared as unattributed, 'original' editorials."

McDonald's serves amazingly healthy food. From fresh eggs and orange juice for breakfast to a variety of salads and fruit smoothies. But they don't force people to eat their salads and smoothies. Like Wendy's, Burger King, and other fast-food chains, the options for healthy and inexpensive fast-food has never been better. Jamba Juice, Panera's Chipotle, and many other chains bring tastier and healthier international foods to American consumers, just as McDonalds, Starbuck's and other U.S. firms take their food and drink options to overseas consumers. Each firm relies on persuasion rather than force to survive.

Most of the companies I used to hate have gone out of business. Only the regulated monopolies are still here, and still making steady profits. Most all the government agencies I used to and still do hate are now larger and more intrusive than they used to be. The great exception is the Civil Aeronautics Board (CAB), which happily was abolished (the great Commanding Heights segment is here.



  Over the last weekend I finished reading Popes and Bankers: A Cultural History of Credit and Debt, from Aristotle to AIG by Jack Cashill and enjoyed it a great deal. It's not a perfect book, but it has a lot going for it: the amount of information contained in it is simply amazing for a relatively thin, easy-to-read paperback and it is written from an ethical perspective that I believe most members of this list will find agreeable. I certainly could disagree with very little of the moral and ethical commentary contained therein.

The book is really a collection of loosely tied essays and historical notes on the origins and use of credit and money. Surprisingly, more than anything is is also a kind of a history of Jewish people in Europe and, to a lesser degree, in the US. It is also a cautionary tale about "prodigals" turning on the "usurers" through history demonstrating that little is new under the sun in the financial area other than the technical innovations. The specific distinct areas of the book are too numerous to mention, but even after having a lifelong interest in the origins of money and credit I learned a great deal about the contributions of the Greeks and Romans, the Medicis, Luther and Calvin, as well as Marx and Aristotle and the almost endless parade of German and American Jews. For those who have read more than one description of the various early European manias and the creation of the Fed, those in the book can be safely skipped, but it was worth it for me to pick up some details I wasn't aware of before.

On the negative side, while interesting there were too many citations from Michael Lewis with respect to the modern American portion of the material. These made for a somewhat amateurish quality of those chapters, and of course reminded me of our host's lack of respect for the man. Overall though it was a very satisfying book so I highly recommend it.



 The sound of applause begin hesitantly by the door and soon erupted into a cacophony of hoots and hollers as the old man entered the club. He made his way slowly through the crowd, smiling from ear to ear, greeting people, pausing for photographs, acknowledging his adoring fans. We stood, clapping and hooting with the rest, he smiled as I raised my camera and snapped a picture of a man I have idolized for years. He had to be escorted up the steps to the stage as it had become difficult for him to walk. My wife and I shuddered with anticipation and a touch of trepidation as he made his way to the keyboard with small, shuffling steps. Our fears were assuaged however the moment he touched the keys and we could see that he was definitely still "all that". The noise slowly died down, he introduced the band and we sat back and sank into a deep trance, nay, rapture as Dave Brubeck brought the Blue Note Cafe to life. I was immediately awed by his ability to combine multiple rhythms into the same piece, and found myself trying to analyze this and of course became hopelessly confused. Better to just listen, let the music flow over and around me.

To quote his son Chris:  "In Dave's playing you always hear much of the stylistic history of jazz piano, but you also hear those idioms turned inside out with his own personal twists. In addition to polytonality, Dave employs the concept of polyrhythms. Again, this is the notion that two time signatures can exist simultaneously and both "feels" can live in the same passage of music with fascinating results."

"On many nights I have heard him play with one time feel in each hand, which is sort of the musical equivalent of daring to ride two horses at the same time. The effect is a captivating tension, like a juggler with musical chainsaws. Audiences may not know what is going on technically but they perceive the meter pulls and pushes of the polyrhythmic approach. You will probably not be surprised to know that Dave will often get cooking polyrhythmically and then really spice things up by playing in two keys at once. Polyrhythms and polytonality are just two of many new musical ideas that Dave brought into the modern jazz vocabulary."

Dave's great granddaughter was in the audience and he begged our indulgence as his daughter had asked him to play "Somewhere Over the Rainbow" and saxophonist/flautist Bobby Militello transported us away, doing things with a flute that I found difficult to believe. Onstage, Dave reminisces to us about visiting Poland in 1958. "Eisenhower sent us over to eastern Europe in 1958 under a program called People for People. When I was in Poland I visited Chopin's house and saw all his pianos there. I began thinking about Chopin and I wrote this piece and we didn't have time to rehearse it, so when we got up to play I said to the guys, 'Just follow me and pray!'. This piece is called Dzie;kuje. Are there any Poles in the audience?" A single booming "YES!" from a woman across the room. "Can you tell us what it means my dear?" "Thank You" says she. "Yes. Thank you. This is a thank you to the polish people. Thank you for hanging on and surviving through communism."

And it seemed like Chopin was on the stage, playing Chopin with a jazz tilt. "You know I would love to play 'Blue Rondo ala Turk' for you. (incredible applause) I don't play it much anymore. I was at a concert and they asked me to play it and I had a student get up there and play it for me and he goofed it up. He missed one note. After the performance he said to me, 'Mr. Brubeck I can't seem to ever play that piece perfectly, I always screw it up somehow.' And I said 'Join the Club!' Anyway, I would like to play it for you but I was in the hospital for 18 days and you know, you lose your chops. I had a pacemaker put in and its working GREAT! But I appreciate your wanting to hear it." "So who wants to hear 'Take Five'? and the crowd erupts into insane cheering as the band sets up to play Dave's signature piece that was written by his long time collaborator Paul Desmond. Along with the other pieces from the 1959 platinum album "Time Out".

"Take Five" is written in an odd time signature, in this case 5/4. Brubeck was famous for experimenting with different time signatures, believing that listeners would be able to follow them without becoming lost or muddled. We were not disappointed. Dave played with a smile on his face and he and Militello blew us away. Dave has been performing and composing for seventy years. His discography reads like War and Peace. He is responsible for introducing millions of people like myself, otherwise mystified by the chromatic sounds of jazz, into a world where jazz is accessible and understandable while not the least bit dumbed down. Quite the contrary. Brubeck is a timeless hero of a uniquely American style of music.

Dave admonished us to please watch a new documentary produced by fellow pianist Clint Eastwood for Dave's 90th Birthday called "Dave Brubeck: In His Own Sweet Way " premiering on Turner Movie Classics on Dec. 6th at 5:00pm.

As the show ended, Dave made fun of his advanced years and asked the rest of the band "Are we done?" A standing ovation and countless minutes of applauding later the man made his way off the stage and we left with a feeling of utter delight having finally seen and heard the song and the man that introduced me to jazz.

I feel this quote says it so well: 

 Despite the controversy and criticism that his unconventional style seemed to draw, Brubeck never wavered from following his own path. 'Every individual should be expressing themselves, whether a politician or a minister or a policeman,' Brubeck says. 'What's more important — to play the way you want to play? Or play the way they want you to play? For me it was more important to play the way I wanted to play. Often it got me fired.'

But Brubeck's unique rhythms and style resonated with audiences. Dave not only won the hearts and loyalties of millions of jazz fans, he created a sound that had cross-over appeal, introducing jazz to new listeners." 



 Following is a link (and opening text) to an interesting story about an ongoing experiment in ecological rewilding from an unusual global warming proponent –finding the right predator-prey balance, however, may be difficult for the Russian quantum physicist Zimov to achieve.

Given the amount of frozen genetic material preserved from wooly mammoths (I believe one was served as a dinner to the Explorer's Club or some such organization in NYC in the late 1800s), it would appear possible that those creatures might one day reappear also. It should be noted that a Saber cat skull was found in Nashville, Tn back in the 1970s when the foundation for a bank building was being excavated and those Smilodon predators in fact ranged into Florida along with many other Ice Age animals.

One wonders though if New York City (not to mention Canada) would appreciate a return to the Ice Age and an advancing one mile thick glacial ice sheet. The glacial erratic (boulder) in Central Park testifies to the power of these ice sheets. 

Of course Long Island presents the earth-moving examples of a terminal morraine. 

Better yet are stories of the transportation of diamonds from the far north to Wisconsin:

Wild horses have returned to northern Siberia. So have musk oxen, hairy beasts that once shared this icy land with woolly mammoths and saber-toothed cats. Moose and reindeer are here, and may one day be joined by Canadian bison and deer.

Later, the predators will come — Siberian tigers, wolves and maybe leopards.

Russian scientist Sergey Zimov is reintroducing these animals to the land where they once roamed in millions to demonstrate his theory that filling the vast emptiness of Siberia with grass-eating animals can slow global warming.



Optimism's bete noire has an ardent admirer, it would seem…

Albeit one who fancies style over substance.

"…Few people can make words sing as well as Alan Abelson can when he takes quill in hand to wax eloquent on our state of financial being. More poet than economist, his weekly take on Mr. Market’s gyrations is the top of my DO NOT MISS list. Abelson remains the standard against which all other American financial writing is to be judged….He is the American Shakespeare of economic commentary…"

After having read that bouquet of a last sentence, I will never look at a Barron's again without thinking of the Globe Theatre.

But then, most all financial media is theatre by other means anyway.

Of the vaudeville variety.



Well, after a choke-filled performance in the second men's semifinal 3 months ago at the US Open denied tennis purists a dream final, we are at long wait going to be treated to a fantastic confrontation tomorrow in London when the game's two best again square off in the final of the ATP's season ending tournament.

It is probably more important for Stocks that Federer wins rather than for Federer to win for himself. I recently gave up my sports prediction and wagering business even though I have a better record at that than predicting markets. But, Federer will win any way.



Disregarding the penumbra of small moves, 5 big 10 reversals in a row… what does it portend?

Anatoly Veltman writes:

In the good old times, when charting still worked– increased choppiness of this magnitude tipped pending "previous trend" reversal. Currently, "previous trend" would have to be the up-move from 1000 to 122.

George Parkanyi writes:

I would agree with Anatoly in this situation. Quiet day today, yet treasuries and VIX up a lot on a relatively mild 8 point S&P drop. Major skittishness here I think precursing a downdraft. (Asian markets looking scared in particular with China's anti-inflation sabre-rattling.) But all the bailouts and easings won't just vanish either, so I'm thinking we're at/near the top of some kind of range, to be pushed around for a while by the news-du-jour. Don't have any great conviction for where we go next, but if you put a gun to my head, short-term I would sell equities and commodities and buy treasuries or just go to cash. (And two weeks from now I'll be writing about why that was a bad idea.)



 Hi all,

Hope everyone had a great Thanksgiving… I was just wondering if there are any electronics aficionados on the list.

I've been working with an amazing little gadet called the Arduino which can be programmed to control a wide variety of devices, and have also been soldering some kits together like this one.

I am still very new to this stuff though, and was wondering if any readers had advice for a beginner including potential recommendations on books or websites for learning more.

Thanks, Dylan




Directed by Darren Aronofsky Reviewed by Marion DS Dreyfus

With Natalie Portman, Vincent Cassel, Mila Kunis, Barbara Hershey, Winona Ryder

Having for so long been in a market mindset, and the stock market has for a while now been consumed with the extrusive wonderments or lacunae of “black swans”— irregular outcroppings of more traditional or conventional events, sales, trends—I more than halfway expected this beautiful if gory and unexpectedly sexed-up film of a ballerina fighting to be Queens of the Swans (as it were) to have some sort of financial edge. I waited until the last seconds to come to the obvious conclusion that, no, there is little in the way of market tips or hunts here.

But all is not lost. Aronofsky has created a drama that holds one’s interest from position one to position umpteen. There is a gorgeous ‘turnout’ in the luminescent Natalie portman’s demeanor, acting and first-rate ballet. Unlike an earlier 2010 favorite, MAO’S LAST DANCE, which concerned a Chinese male dancert overcoming vast negatives to succeed in the American ballet pantheon, and the popular Shirley MacLaine/Anne Bancroft 1977 dance lenser, THE TURNING POINT, BLACK SWAN keeps a steely focus on the bleeding agony of practice, coping with the (yes) casting couch mentality of becoming prima ballerina in any production, the rack of toe shoes, and the unrelenting pain of the committed artistic life.

Vincent Cassel as dance impresario/master is not above compromising his lustrous stars, importuning them without cease. Women barely past 30 are unwillingly ‘retired,’ like it or not, as happens to the still-immaculate Wynona Ryder. And stars are often stellar because their hovering-helicopter parents (Barbara Hershey, here, a Lady MacBeth of manipulation and fanatic I-coulda-been-someone-if-I-hadn’t–had-you) chivvy them day and night to keep them on the very straight and narrow. Not to mention the Machiavellian designs of stop-at-nothing competitors who do not scruple to drug, undress, delay and disarm their prima prey. Adding to the eye-filling scenarios are the delusional moments Portman experiences that take the gorgeous fever of performance into a whole other realm of strangeness.

Transcendent scenes of Swan Lake, of course, even for a reviewer–full disclosure–who saw the Bolshoi in Moscow perform it two years ago. Caution: There is some raunchy girl-on-girl material. And funky backstage times in Lincoln Center, our own back yard (where we practiced with a Lincoln Center staffer when we were rehearsing an Off Broadway play, The Invitation, some years ago. The flamingo-like dancers in their starchy-fluffy tutus would enter the elevator in which we–diminished and miniaturized–rode, and would chirp and flutter, oblivious of our height-challenged personhood right next to them. Ah, fame).

Industry scuttlebutt is that Portman is Oscar bait already. All this, plus sublime Tchaikovsky?



At year end 1999, I purchased a red wood bear about 10 feet high carved by a prominent American Indian sculptor as a symbol and reminder of the perils of bull markets. I placed it in a prominent spot on my driveway, and I joined it in subsequent years with several more examples of bears made with chain saws from State Agricultural fairs. Little did I think at the time, that ever since I purchased the bears, the market has not metaphorically had an up period. Indeed, in real life the market is down some 25% since I bought my first bear. and we've gone through what must be the first or second worst 10 year period in the history of the stock market. It's enough to turn one into a pessimist of the market, and to actually believe the bearish underlying view of the Triumphal Trio despite the ineluctable optimistic force of their enumerations and statistics for all existing markets.

I thought it was time to turn the situation around. Fortunately, I met Mr. Zura Bushurishvili , a sculptor, outside of his metal working shop in Williamsburg. I liked the optimistic, emotional,and representational stance of his sculptures. I retained him to sculpt a bull out of brass for me, hoping that it would be a symbol, and a sign of the turnaround. I believe he has created a masterpiece. and that it will counterbalance all the woes that the bears have caused.

An unveiling took place on Thanksgiving at a home in the suburbs and suitable words concerning the glory of skillful sculpture, bulls ready for all comers, and the dignity and value that immigrants bring to this country   (Zura has been here 10 years from Georgia) were uttered.



 This Thanksgiving one would like to have an uplifting story to tell to the assembled guests and many non-flexions who read our site.

I propose a contest for a good original Thanksgiving story in the line of how a great hero celebrates or handles Thanksgiving. Someone like Stubby Pringle, or Jack Aubrey, or Jean Valjean, or Matt Dillon.

I'll offer a prize of $1,000 for the winner. Thank you.

[And by tradition we always like to repost a popular DailySpec post on Thanksgiving  and economic incentives. ]

[For those not familiar, our favorite Christmas story is Stubby Pringle by Jack Schaefer. ]

[Ed.: you may submit your contest entry as a comment to this post, or email it to vic2009 AT, inserting an at sign in place of _AT_ ].



 The Best Day of the Year

As Hershel Lamont drove up to the rigs, he used his arm to shield his eyes from the already blazing early morning Texas sun. The old sun visor just won't do it in this part of the country but there's nuthin' a good cowboy hat and a raised arm can't block. He parked his pickup in the usual place; behind the wide-body trailer that served as his office, so the truck's interior would stay cool most of the day. Stepping out onto the dry soil as he had for the last five years since graduating from Petroleum & Mineral School, he surveyed his small yet adequate oil exploration operations. “Wildcatting”, Hershel said out loud, “the word alone sounds like something decent folks wouldn't do, couldn't do, shouldn't do…” But Hershel knew if given the chance, he still wouldn't choose any other life. As he strode up to the trailer, he stopped for a second to knock the dirt off his boots. Chuckling he thought, “Always easier to talk to myself when none of the crew has arrived yet. Lest they think I'm nuts.”

So what was it about this business called Wildcatting that drove him to it? It was damn hard work; the hours grueling, dirty and hot most days, dangerous as hell when you least expected it. Other times were marked by hours of boredom when all ya can do is watch the equipment and wait for the pumping process to unfold for better or worse. What was it gonna be coming up the pipe this time; water or something worthy of a noble effort? “Hot damn though”, Hershel said while slapping his leg, “there is nothing like hitting a gusher, when black gold shoots 30 ft. into the sky and somehow watching it flow, it washes away all the fatigue and pain you've been carrying around in your bones seemingly forever.” Prospecting has a way of aging you fast and the elixir of a find comes at just the right time; that is most times.

Five rigs wouldn't make Hershel rich, he knew that already, but he had a knack for the business. And something about it kept him springing out of bed every morning, most days before the rooster crowed. Many guys couldn't keep their prospectin' running past the first year and Hershel had lasted five times as long. It had to count for something in the big game. Keeping his budget tight, he could get by on two rigs and with the other three producing even modest amounts, the cash flow would build up a kitty to buy a few more rigs and double his acreage in the next year. He hoped old widow Kelly would be agreeable to a similar land deal since he had been fair with her on price the last time and she had no one to leave the ranch to. Besides they both knew there were no guarantees the ground would yield anything; Boss Kelly had tried his damndest and failed. But he hadn't tried hard enough by Hershel's estimation. “…Ahh, another benefit of wildcatting! Little by little, if you stick with it long enough; what some call grit, an unshakable faith in yourself builds. Ya just get a sense that through thick and thin when the smoke clears you'll be left standing to live another day.”, Hershel surmised.

Sure it took smarts to get into this business and stay in it. He studied hard at Western Amarillo College but there were always going to be smarter fellows. That didn't mean harder working though since he had seen his fair share of sharpies who were lazy and wasted their God given talents. Some of them couldn't find water if they stepped into a bucket; they were too lazy to lift their heads from their naps. Anyway, it took him more time than he expected to adjust from broncho busting to sitting at a desk and studying chemical structures of oil, rig setups, subsurface formations and the like. Even though some days he could barely contain the ants in his pants, somehow he plowed through the required courses graduating with admirable grades. But grades did not get you far in this volatile business and it took more than a bit of luck which not everyone has. Hershel recalled that old Navajo sitting in front of the general store on the first day he arrived in the little town of Soudan. Out of the blue, the Indian gave him a cockeyed glance and said “You look like you're here to hunt oil…In a few years, you'll almost be able to smell where it is.” Hershel thought he caught a scent every once in a while and his rigs were working flat out right where he first placed them. “Boy, did I sweat those final days of studying soil samples. Thought my eyes would go bad if I looked at them any longer”, Hershel said. Still, he reckoned he had a few more years till it would come that easy to him.

“Hells Bells”, said Hershel looking at the faded Snyder Oil calendar on his desk, “Tomorrow is Thanksgiving! I have been working so hard, it crept up on me this year.” Of all the holidays, this was Hershel's favorite. New Years Day was usually spent laying in bed taking the day very slow after imbibing too much the night before in some Honky Tonk bar. Didn't really matter which one and frankly Hershel usually didn't remember the name of the place he stumbled out of. Now before you get any ideas, Hershel allowed himself one day every year to really rip it up, speak his mind and feel free from his obligations. After all, every man has to cut loose once in a while. Sure Valentine's Day was a hoot and he liked the girls plenty. But he hated hauling into town as fast as he could after work to get cleaned up, run over to the store for flowers and barely make it to the girls' homes to pick them up for a proper dinner and dancing afterwards. He always felt a bit disheveled and sheepish pulling into his chosen date's driveway. You wouldn't find him complaining about the benefits of that holiday though; the after-effects felt like walking on clouds for a week. Christmas was always special with most of the day spent in Church; the only day Hershel found the time to go, and swapping gifts with family and close friends. Mostly enjoying folks he didn't see very often.

 Thanksgiving just seemed different. Yea, there was the over-eating and over-drinking of the other holidays but on Thanksgiving, Hershel always felt it was a day of gratitude. Mind you, not just the normal gratitude for what others had done for him but something deeper. A day to sit back and recognize his own accomplishments. It sounds a little selfish and luxurious to some but how often can ya take note, if only for one day, of all that you've surmounted? Most days were spent handling all the little details which put a small business on the road to becoming a big one. And Hershel knew hardship. “Yep, it has been a rough ride and the weight on one's back seems unbearable but sticking to it sometimes life just has a way of giving you a break too.” Hershel was proud of all he had done– from small town, broncho busting hick with two buffalo nickels and a folding knife in his pocket to bona fide professional oil driller with the sky's-the-limit opportunity. He was his own man; beholden to no one and didn't have to dress in fancy clothes or socialize with folks he didn't respect in order to run his outfit. His hard work and sacrifices translated into accumulating all the land he could see from his office, selling off all the petroleum he could bring up from the ground and supporting his crew of roughnecks and their families. As for the other townfolk, his supply orders brought all sorts of vendors selling their goods to the general store, his pipes and fittings needs kept the blacksmith's forge running hot, and old Doc Mackson's sleeves seemed to be permanently rolled up ready to patch up a few of his boys. Grinning, Hershel said, “I always smirk seeing Mr. Cobbs the banker hop up from his chair and greet me at the door when I walk in to make another deposit after selling my barrels.” So Thanksgiving isn't just about blessings which we should consider every day if we know what is good for us but it is also about admiring the good and decent which comes from pursuing what compels you; what drives you. Beaming with pride, Hershel said, “From one man's dream chasing and the early results of it being realized, my business touches and improves the lives of forty to fifty people I imagine. One has to give thanks for that…”



I am grateful that, by sheer accident, I met the Chair and was invited to be a part of this group. My life has been enriched by the friendships I have made and the knowledge I have gained.

This group represents to me what capitalism is all about. Each member standing on their own two feet, giving their best to the group and receiving more in return than they can possibly give……but never demanding that anything is owed to them. Friendships that turn into business relationships when it is discovered that mutual profit can be made. That is how true value is added to the world.

That is the gratitude that I would like to express to this group!

Thanks for letting me be a member!



I come back to the trading desk after a few days on music and find you've closed the Market across the Pond. All I see on CNBC is Maria in Singapore. Oh well, I can do some preparation for tomorrow.

Quite hard returning from the Studio yesterday, had to wait for a wall of hundreds of chanting gentlemen to pass along Tottenham High Street. Potential dangers were clear, and it later transpired a bus was attacked during the day.



 No car idled in the parking lot as Sean Mac Breen exited the train…not unusual. No one answered his call home…very unusual. Though rarely received with excessive familial warmth, Sean was accustomed to a modicum of hail-fellow-well-met cheer on Friday evenings. It was, after all, payday. For the past year, the oldest brother's paycheck, though modest, promised to keep the wolf at bay for one more week.

Perhaps the Old Man, Connor Mac Breen, had finally found a position for the chemist he had been sending out on interviews for the past two weeks. He was hawking the young man for $13,000 a year. Success meant a ten percent commission, split equally with the engineers-only head hunter firm.

If this was the case, experience dictated that he would be found in the Deer Blind Tap, sipping vodka and sharing the wealth. Though checking this out entailed adding another mile to an already tiring three mile hike, Sean took a chance. Had it been December rather than June, he would have chosen otherwise. No one living in far northern Illinois walks an extra mile in winter.

As he entered the Tap, owner Charlie Guzack, who seemed to know the exact age of every young man in Sylvia Lake, greeted him.

"Sorry, Sean, you still have another year before your legal."

"I know, Mr. Guzack," said Sean, " I thought I might find Dad here."

"Not tonight. Haven't seen him in several days. You might check the bowling alley."

That received a hearty laugh from the several patrons. It was no secret Mac Breen's father regarded bowling as a pseudo-athletic exercise pursued by those who could do nothing else. That one of the town's best bowlers was legally blind lent this observation a gram of validity. Nor was it a secret that a goodly number of bounced checks had made the elder MacBreen unwelcome. An unfortunate circumstance since located in a dark nook was a pinball machine that the Old Man had mastered and viewed as a small, non-taxable annuity.

As he headed out the door Sean was followed by Lou Hahn, the local vet.

"I saw your Dad with all the kids early on Wednesday heading toward the Expressway. Had one of those rented trailers hitched to the back, too. I waved, but he ignored me…again."

"Probably thought you wanted your money," observed Sean absently.

"Naw, gave up on that a long time ago."

Though he didn't show it, Sean was jolted by the information. No one in his right mind would hitch a trailer and load four kids in a beat up '48 Plymouth and expect to get far. But then someone running from something might well try something that stupid. He headed home.

By the time he arrived it was completely dark; as was the house. All the drapes and blinds were drawn and little looked different…other than the new locks on the front, rear, and basement doors. It seemed that the other shoe, airborne for so long, had finally landed. The MacBreens had broken the most sacred of American covenants and been pinned with the appropriate scarlet letter "E"… for Evicted.

This was a communal sin shared by all family members. The money borrowed was not from some New York facility but from the bank in town. The bank where Sylvia Lakers saved. The MacBreen's hadn't stiffed the bank, they had stiffed their neighbors.

Actually, the event should have occurred much earlier but Sean's mother, Maria Therese, was a very much admired woman in that small community. Not that admiration is enough to warm the heart of a banker. But any woman with terminal cancer and four children under 10 presents the flintiest banker with an image problem. So they waited six months and then dropped the hammer.

With this in mind, Sean had little choice but to hike down the road to the home of his nearest neighbor, Carl Brenner. He hoped to get some more information but it was an encounter he had been avoiding for two years. Carl's son, Dale, had been a neighbor and classmate for six years; in that time Sean had probably spoken with him on a dozen occasions - and then only briefly.

Dale was always a quiet guy who never joined anything nor seemed interested in much. He never spoke in class unless called upon to do so. The space beneath his picture in the senior yearbook was blank. Three days after graduation Dale committed suicide. Although his father never said anything to us, it was common knowledge that he felt Dale's classmates' collective refusal to even once extend a hand of friendship played no small role in his ultimate decision. At the time most thought he was nuts; Sean wasn't so sure.

Brenner was sitting on the porch when Sean arrived.

"I've been expecting you, Sean. Have a seat. Want anything to drink?"

"No thanks, Mr. Brenner. Why were you expecting me?"

"Your father dropped by with something he wanted you to have," said Brenner, handing Sean a small box.

The box contained two prescription bottles and a note with a short message: "Consider the renewed prescriptions a gift. Don't bother going to the bank, don't call me at work, and don't look for us."

The note, though brief, was revealing. First, Sean, an epileptic, may have temporarily forgotten about his meds, but the Old Man hadn't. Of course he hadn't. Both were inordinately expensive and a never-ending drain on the family budget. They also provided a regular reminder that the unexpected inheritance which appeared to be a godsend a decade earlier had been immediately dissipated by the necessary brain surgery. Though Sean survived, a lot of dreams died on that operating table.

The more jarring element in the note was the mention of the bank. As a serial check-kiter, Connor had been rejected by every bank in a three-state area. Sean, along with Maria Therese, did the family banking; for the past six months Sean carried on alone. The check writing consisted of little more than paying the utility bills and auto insurance.

Yet with Maria Therese's death, Connor had shared less and less of the few commission checks he had since received. As a result, mother's old friend, Virginia, from the water company, was once again alerting the family to imminent shut downs. It's amazing how quickly a disciplined family can fill every tub, sink, pot, pan, and bottle. (Glass bottles were still the standard container; we had six, all of which were filled weekly with the much cheaper, unpasteurized product from a local farm.) For reasons Sean could never discover, the electric company was more compassionate and gave a week's warning when they were moved to act.

Well aware of his father's ability to con the unwary teller, it appeared that the Old Man had tapped out the checking account. However, of greater concern was the secret (he hoped) savings account he had opened three months earlier.

"Mr. Brenner, did he say anything at all?"

"Nope. Just thanked me and drove off." He paused for a moment and went on, "I'm assuming you still have business to settle and it's obvious your place is shut tight. If you need a place to stay, you're welcome to use Dale's old room."

Sean could certainly "use" Dale's old room, but he doubted he could sleep in it. Among his several private pursuits, Dale was manic about his model planes and ships. While most of us made the occasional attempt, we were satisfied to finish without any left-over parts. Dale not only finished but went on to give each a custom paint job, secure it from the ceiling (or to the wall), and dust it weekly.

Dale had taken on a presence he had never possessed in life. Hamlet fondly remembered Yorick for carrying him around on his back; Dale, Sean felt, was a painful memory riding the back of his once-indifferent neighbor.

"Mr. Brenner, we've talked more tonight than we ever have in the past seven years; but I know from others that you feel we - I - treated Dale poorly and I'm curious why you're being so nice?"

"I'm surprised at you, Sean. You're about the only one of Dale's classmates I still see at church on Sunday. Don't you listen Father Pearce's words? Or are you there to admire the subtle charms of Cindy Broderick?"

"I don't know that Cindy's charms are that subtle. And Father's repeated pleas to cling to the Golden Rule are hard to ignore -especially considering the downside. Frankly, it's easy to suggest it, but just about impossible obey. I mean I continually forgive Cindy for ignoring me for the past three years…so it's not totally impossible."

"Keep working at it. You're still too much like your father. Continue on and you'll turn into a real jerk, too."

"Sounds like he remains unforgiven."

"Not so," said Brenner with force, "it's easy to forgive cripples. Your father is a very frustrated man. He was going to be a real star - but Hitler and Mussolini screwed him up and he never got over it. The war did that to many, but most overcame it. A few, like Ted Williams, came back and triumphed. The rest of us just had to pick up the best we could. And, frankly, we've done quite well in spite of the early inconvenience - if that's the right word."

"How about "bad luck" instead?"

"No, no, no. Nobody born in this country can ever, ever plead 'bad luck.' Almost anyone born anyplace else might lay claim to that excuse. But to be born in America during this century - well - go pick up Thucydides, Herodotus, Josephus, or Gibbon and discover how miserable a world you could have been born into."

"You're beginning to sound like a history or philosophy teacher…"

"Once upon a time I was."

"And you gave that up to be a firefighter?"

"Oh, yes. Better pay, better pension, better hours, and the public I deal with is a lot more grateful, rarely criticizes my style or personality, and never claims to be able to do it better. And if I get hit in the head with a brick, it's almost certain to have come from a damaged building and not a vengeful teen…anyway, let's call it a night. I begin my next 48 tomorrow at ten and I'll drop you in town on my way."

 It was a long and revealing night. In addition to the models, Dale had put together a substantial library. In addition to the adventure classics Dale had read were a number of old beaten up selections: Rider Haggard's "She (who Must Be Obeyed)", Gogol's "Taras Bulba", Spengler's "Decline of the West", and Hugo's "Toilers of the Sea". The real discovery was Giuseppe di Lampedusa's "The Leopard" which he spent the greater part of the night reading and was given permission to borrow.

As he feared, the Old Man had not only found his savings book but also a pliable young teller. Surely this gentleman with four young children in tow wouldn't attempt to swindle the bank. And, yes, he had heard that the MacBreen's were moving on so the request to close both checking and savings accounts seemed reasonable. Sure the names weren't identical but everyone knew Sean was still a minor and that he would certainly defer to his father. Especially since he was driving in to Chicago specifically to pick Sean up for their destination "out west."

Had it happened to almost any other patron and the bank might have been willing to deal. But the MacBreens weren't just regular patrons; they were deadbeats. And the bank president, rather than being apologetic, was outraged that Sean would even contemplate hiring an attorney. No local attorney would accept him as a client and were one to come forward what would he use as a retainer?

He reluctantly withdrew and realized that the Food Stamp Pyramid would have to be rebuilt. No big deal. His loss amounted to $882, but with his $750 in working capital he'd have it back in a year. How does money compound at at roughly 9% per month?

Any government program offers untold wealth to the person in the right place at the right time with cash on hand, patience, and modest goals. It began innocently enough at Sean's first job in a mail order house. His duties consisted of receiving an invoice listing the ordered products and the products themselves. There could be as few as two items or as many as twenty. The first procedure was to check the invoice against the products provided. Half the time items were either missing or had been duplicated.

After assuring the correct items were present, he picked a box that could most economically fit all the items.The larger the box, the more the postage, the less the profit. Too small a box couldn't accommodate enough cushioning newspaper and led to broken merchandise, customer anger, and less profit. With newcomers like myself, the floor manager, Claude Harper, provided the box he felt would be most appropriate. His judgment was generally quite good but on occasion slightly off.

In Sean's case, they were all off. He was told it was an easy job and one he'd quickly learn. What Sean failed to appreciate was that this was still the "slow season" and his fellow workers, all from well south of the Mason-Dixon line, loved to haze the new kids. The truth was made known after two days but he couldn't understand why Harper would allow the deliberate accumulation of wastage that occurred in those days.

A week in the lunchroom taught Sean why. Old Claude was quite a pinochle player and each day did his best to fleece his employees out of their $1.60 per hour. On those occasions when he found himself losing he merely told his opponents to ignore the bell and play on. While the rest of us returned to work, Harper had his assistant punch in the remaining players and the game continued.

Lunch wasn't a big deal at first as Sean didn't have enough money to buy it. A round trip ticket on the Milwaukee Road cost $2.80 daily -a monthly ticket $42.30. The only money he had was in his coin collection and since the Old Man had assured him his aunt was sending a check for both their travel expenses, he sold enough Morgan quarters and halves to pay for a week's transportation. The downtown coin dealer Sean dealt with - and the only one within walking distance of the office - gave him less than fair value.

With nothing to do but sip coffee and read Sean noted two men always sat a table far away from all the other employees, addressed each other in an unfamiliar tongue, and ritualistically prepared their lunches. Every day each had his own lunch box and a thermos of coffee. Each day they pulled from the box two large pieces of rye bread, a small block of Philadelphia Cream Cheese, a half dozen or so green olives (with pimento), and an apple, orange, or banana.

After methodically spreading the cream cheese over one piece of bread they would slice the olives four or five times, sprinkle them over the cream cheese, and lay the second piece of bread on top. Then they would pull out a chess board with a diagram detailing where the pieces had been prior to quitting the day before. It became apparent that their separation from the rest was more at the direction of Claude. He may have been a conniver with everybody else but with these two he recognized talent.

Sean discovered that Kornel and Sandor were father and son, medical doctor and chemistry professor, Hungarian refugees, and the best sorters and packers on the floor. As a result they demanded and received a higher wage: $1.80 an hour. And this caused the southern contingent tons of grief.

Why were they packing boxes a full five years after escaping the Russian tanks? Because the AMA and the relevant university boards refused to recognize their credentials.

Sean learned this at the Monday lunch break when he steamed into the room with a measly three dollars he had received for three very nice Morgan halves. Kornel, the father, approached Sean as he sat chewing on his coffee cup.

"We saw you run out of here over to the coin store and come back angry. You do business there?"

"Yes, or to be accurate it was partially business, partially robbery."

"What kind of coins do you have?"

"Mostly Morgan quarters and halves, about a dozen Morgan dollars, a bunch of Peace dollars and some really old dimes and nickels, and Indian Head pennies."

"If you bring them in, we'll bring the coin book and give you fair price. After a while if you want them back, we'll sell them to you for same price."

"That's very fair, but why would you do such a thing when there is so little benefit?"

"Because there might be big benefit. We think these coins are good value and we will hold for long time. And even if you do buy them back, we will have made a friend; something it is difficult to do around here."

And so began Sean's first friendship of the work world. Several more obstacles presented themselves with the arrival of his first paycheck. Expecting $64, he was stunned to see $49.18. When he brought it to Harper, he was told to look at the stub attached to the check. Withholding tax and FICA. What's a FICA? Then he had to get the check cashed.

He quickly learned that there are banks and commercial banks. The latter can be found on just about every block in Chicago's "Loop." Unfortunately, commercial banks didn't sully their balance sheets with check cashing facilities for the day laborer. Only through the intervention of an imposing traffic cop and fellow Irishman did one of the banks relent and cough up the loot.

But winter was coming on and he still needed warmer clothes for the walk to Union Station across the Chicago River and toward the Lake. He thought northern Illinois was cold but at least it didn't have a giant body of cold water with a persistent northeast wind blowing over it.

Walking to the train station would be a little easier but lately the Old Man had been catching an earlier train home as Maria Therese's condition worsened. Those long walks in winter would be equally challenging. So he sold Kornel $250 worth of his coins, hid it away carefully, and spent it judiciously. A real nice new coat or jacket would be a tip-off to hidden wealth and a subsequent third degree on the source of funds. A new garment from Robert Hall, on the other hand, was a badge of impending pauperism and discouraged even the most avaricious.

He learned of food stamps at the beginning of the next month. Sean had heard of them but really didn't understand how they worked, and knew no one (or so he thought) who received them. Imagine his surprise when at least half of his fellow workers got together one day at lunch and started naming stores and prices.

It worked like this. For the eligible, every $6 purchased $10 worth of food stamps. A good deal in anybody's book. But no one wanted to admit they needed or used them. And those who lied to qualify (which his fellow employees did) wanted to get rid of them for as much cash as possible. Saloons and restaurants were not allowed to take them. So, as one would expect with any government program a black market quickly developed. Who would offer stamp holders the best deal?

The poorer the neighborhood the worse the deals. Saloon owners (who always knew someone who would factor the merchandise) gave less than anyone else; usually around .76 to .83. Grocers who didn't fear gaming the system might go as high as .94 or .96. With Maria Therese in bad all the time now, Sean had become the designated shopper. Bargains and coupons were quickly becoming a way of life even though Marie Therese insisted that all food money come out of Connor's pocket or out of his allowance.

This didn't last long as the Old Man's extended stays at home limited his already limited income generating opportunities. In short order it was determined that Sean would kick in one week's pay, With that and another $43 going for train fare, Sean was left with $104 a month. The ideal solution would be to emulate Kornel and Sandor. Unfortunately, a pre-made sandwich in a home with four growing and perpetually hungry young children had the life expectancy of a fly hitting a windshield.

The Eighty-Niner special at B&G ( a small sandwich and a cup of soup) was eighty nine cents, Add a cup of coffee and tax and it came to $1.09. Two dishes of hash browns at the Huddle House were $.90 - with coffee and tax, $1.06. The monthly meds now ran to $22. That knocked off another $45. That left $59 - two bucks a day barring any emergencies.

Food stamps offered a way to ease the burden. Sean would have had an easier time had he suggested the re-introduction of the Volstead Act. After determining that the local food store accepted food stamps he sold another $350 worth of coins and when food stamp day rolled around, Sean sat in. Prices bounced around but seemed pretty much in the $.83-$.86 range.

Sean offered $.89 and received $281 in stamps for a $250 outlay. That was for the family's use. The other $100 brought in $107 from one of the named groceries that paid $.96 on the dollar.

Pocketing the weekly funds for food purchases and using the already purchased food stamps, Sean was now clearing about $38 every month, Sean sold the remainder of his coins for another $400 and combined it with the other proceeds. He refused to go over $1000 a month. It was a big pie and no one bothered over a nibble here and there. But take a big bite and everyone got concerned.

A grand was chump change in the program and on a straight deal with an established grocer he could realize $90 a month, $1080 a year. If he played around the fringes, he could make a bunch more but each new buyer and each new seller presented an added threat of exposure. Nine percent a month couldn't be beat; but neither could it last. Things that were too good to be true were too good to be true.

Sean had gained some additional influence when it was discovered he could spell, touch type, and do complex math problems in his head. He was promoted to "chief label typer and postage man." The extra nickel an hour didn't make him any friends but it didn't create much antagonism either. As long as he was paying top dollar for the stamps, he was OK with those who counted.

It was hard to believe that the one course he had taken (actually Connor forced him to take it) and received a "C" in, was the one that gained him a promotion. Lightening was to strike a second time when he applied for an entry level job at one of the big newspapers. He went through the process to keep Maria Therese happy - it had been her contention that Sean would be best off at a newspaper. All because he had been an editor in high school.

When he was offered the job Sean was surprised and ambivalent. No doubt the new job was cleaner with better hours, no post-Christmas layoffs, and easy transportation from the train station. The paper also employed women!

The downside would be the loss of his sideline business, a $1 a week pay cut, and the expenses involved in upgrading his wardrobe to something appropriate to white collar employment (this had been emphasized when offered the job).

Out of curiosity he asked his boss-to-be what it was that got him the offer He was told he had done very well on the 50 question test. But others had done well, too. Of all the candidates, though, only he had passed the typing test - so much for the high school editorship and writing ability.

His major responsibility would be composing mass-mailing letters directed to food retailers, large and small. The thrust was an urgent call to stock up on Aunt Nellie's Peas or Hormel Spam as upcoming advertising featuring 15-cent-off coupons would have customers flocking to the store, stripping shelves, and demanding more.

It was a great job and really challenging. Every national advertiser (and there were many) was guaranteed a merchandising program the cost of which would equal 1% of the ad budget. While most consisted of letters on stock stationery with gimmicky headlines, the larger budgets involved the selection of appropriately related "premiums" (like specially designed ties with the advertiser's logo and the current theme stitched on).

The workload increased substantially when Sean's fellow copywriter and a member of the National Guard was called up for the Cuban missile crisis. (Sean was called in for his third physical, once for Berlin and twice for Cuba. He flunked it with flying colors. He asked the examining doctor if there was ever any chance he would ever be drafted. The doctor looked at his record and said, "Son, when the Russians cross the Michigan Avenue bridge, you'll be at the top of the list."

A big change was dictated by his new finances. So he left home and moved into what can best be described as a boarding house on the far north side. The building was owned by the Archdiocese of Chicago, was 4 stories high, with five 8'x12' rooms on every floor, and for men only (Christian men, preferably Catholic). Although each room had its own sink, the remaining bathroom facilities were in one large room on each floor. Everybody adjusted their schedules accordingly. The building was overseen by two ancient Irishmen (Mike and Brian), and the rent was $13 per week.

Three months later Maria Therese died. There were a lot of tears, a lot of relief, and a little bitterness. Sean's married sister was especially upset since she had married only 18 months earlier after solemn assurances from Sean that the illness wasn't that serious and the prognosis good. He well knew Susan would call off the wedding and hang around rearing the children. The Old Man knew this, too, and wished to tell her the truth. Sure he did. It would guarantee him an unpaid babysitter for years; but Sean's threat to walk out and quit contributions to the family budget dissuaded him.

Marie Therese's death brought significant changes. For the first time, Connor began drinking at home. He went to work less and less. Sean's younger sisters now 7 and 8, felt a sympathetic bond and began skipping school to care for him. Had I attempted that at the same age, I would have received a real thumping. But it appeared Connor enjoyed being the center of a tragedy and the girls, never enthusiastic scholars, enjoyed the absence of school. Of course, Sean learned none of this from them; it was only through Mr. Brenner that he was kept abreast of the situation. (Another big development for young Sean - his own phone - admittedly an office phone but, still, his own office phone.

His new living quarters had been found through the recommendation of Sandor who, with his father, had both lived there when arriving in Chicago. Though they were sad to see me leave they assured me it was for the best: "You're young, but you must think long - look to future - there is none here." We kept in touch and got together on an occasional weekend at one of their favorite Hungarian restaurants.

My new neighborhood was also inhabited by several guys from the mail order house. They, too, had moved there on Kornel's recommendation. He had informed them it was cheap and that they would find many other southern boys in the area. At first, this appeared to be a joyful development which foretold the continuation of my food stamp sideline. I was warned by Blitzer (a former Tide second string linebacker) that this was not a good locale for this type of business. The locals didn't like competition. I looked for competition but found none. Almost every retail outlet. restaurant, and service outfit was owned by an Asian - some Korean, some, Cambodians, some Chinese, some Japanese, and a few Thai.

Ethnic neighborhoods had long been a hallmark of Chicago. But, despite the common Asian background, this was really an extraordinarily diverse amalgam. I made regular stops at the local diner to keep in touch with my old comrades attempting to drum up business that, mysteriously, remained sparse. Not only that, but the local merchants wouldn't trade for the stamps; except at a significant loss to me. Something just wasn't right and I had to learn why…before I went broke.

If anybody knew what was happening in the area it would be Mike and Brian who had been watching over that building for more than 15 years. Both knew what my sideline was, heartily disapproved ("yes you're offering them a better deal, but it still isn't a fair deal -they're still not getting full value"), and had decided not to boot me out only because they knew I'd fail.

"Why will this fail? it's worked before with the same people."

"Yes, the same individuals, but now you're a part of this neighborhood - they, your opposition, know who you are and how to frustrate you," said Mike - Brian rarely spoke and then only to Mike.

"I still don't get it. I've looked for competitors but find none and find no one willing to do business with anyone."

"But you see, they are doing business with someone. They still trade for the stamps at discounts but only with the individuals to whom they're issued and at prices they set. What's the first thing you notice about the area that strikes you as unusual."

"No Jewish delis, no Irish-owned bars, no Italian restaurants, no ethnic bakeries - nothing but outlets of various Oriental backgrounds."

"Exactly. This is an exceptionally different Chicago neighborhood -the typical ethnic groups are absent. Things like this don't happen by accident, they occur by design."

"So, whose the designer?"

"You've heard of Bobby Chu?"

"Sure owns a huge joint in China Town - very successful - gives tons to charities, loves the Cubs, loves publicity more."

"Yes, that's him. He's been in Chicago for years. Was one of the pioneers and has been marvelously successful. But Bobby has always loved to expand; he currently owns three places in China Town but everything worth owning is owned and is not for sale."

"So why doesn't he look elsewhere?"

"He is. And you're witnessing it. Bobby wants to create a China Town North right here on Lawnmore Ave. This is the starting point and you're an aggravation."

"It will never happen. The cost of buying out all the locals out will be huge, the cost of rebuilding huger, and the aggravation he'll catch from City Hall isn't anything compared to mine."

"Let's take that a point at a time, Sean. First, there are no locals. All the Orientals you see running shops and stores were brought in and financed by Bobby. The titles may have their names on them but, trust me, they'll be signed over to Chu when the word comes down. Point two, financing. That's never been a problem for the Chinese. They know how to make, save, and invest money. Third, City Hall would love nothing more than to see this neighborhood cleared of rednecks and populated by highly productive, politically loyal, tax-paying citizens and enterprises.

"Next week it will be announced that a new group of investors have purchased the Armitage Hotel and that, due to much needed renovations, it will be closed down in three months."

The Armitage was a nine-story red brick structure of many years. It was a dump but because of its low rates, it was popular with the southerners I had come to know. This move would effectively displace them permanently.

"So Chu is aware of the kind of people he's about to turn out?"

"Of course."

"Mike, I don't mean any disrespect but these are not pliable people. They've been brought up rough, they've lived rough, and they have a curious sense of right and wrong. And if they feel they've been wronged, they'll not go gently."

"There's not a thing they can do, Sean."

"Probably not, Mike, but suddenly the neighborhood has lost much of its charm. And, I might ask, why aren't you concerned?"

"Nobody, but nobody, plays power games with the Cardinal. He'll get his price or this building will be here for the last trump."

If things weren't bad enough, Connor upped and died. A quickly called family conference determined all four would move to Nebraska with my sister before the state could get involved. So, after a brief funeral, lightly attended, Susan took off with the young ones and beyond the state line.

I returned to the city after a funeral dinner with Brenner, who was the only one from the old home town who showed up. I outlined what was occurring, my concerns, and my plans to move elsewhere before things got hot.

I stopped at the diner before going home and found Blitzer looking very content.

"Did ya hear what happened last night, Fingers?" (A nick name I acquired due to my typing skills.)

"Nope, Blitz, I was otherwise occupied."

"Buried the old man, huh? Sorry to hear it."


"Well, Sean guess who got the hell kicked out of himself right here on Lawnmore?"

"No idea, Blitz.."

"Bobby Chu! He and the driver got real thumpings and were left in the street."


"Nope. Ole Bobby still had his Rolex and a wallet full of cash and the keys were still in the ignition of his beautiful Caddy. The police can't figure out a motive."

"Yeah, Blitz, that's a real head scratcher. Probably a rival tong."


I found a new apartment for December 1st occupancy; same owner, different managers, right across from the Cathedral. Fifteen bucks a month. Location, location, location.

I called Brenner and told him what had happened. The word was going around that Chu was having second thoughts but nothing was certain. He asked what I was doing for Thanksgiving, and I told him I planned to spend my ill-gotten gains on a nice dinner for Kornel and Sandor. I wanted to do something with the six holdovers from the mail order house but couldn't find a place that would welcome a crew like ours.

Brenner said we'd talk again before the holiday.

On Wednesday night of Thanksgiving week, Kornel, Sandor, and I dined at a very nice, but very expensive Hungarian restaurant. We were treated like royalty - and the two of them were a sort of royalty in that crowd - they had actually defied the Russians and lived to tell about it.

By prior arrangement, the Mail Order Gang held a 10 o;clock meeting at the diner. Over much happy banter regarding Chu's change of heart was the quiet sadness experienced by those away from home on a family holiday. Around 11 o'clock a paddy wagon pulled up outside and two very large officers came in. They approached our table and announced we were all under arrest. Meanwhile another squad with two more officers pulled up.

"Let's not fight this, guys," I counseled, "let's just find out what the problem is and get it over with."

Although this was a first for me, several of my fellows seemed familiar with the routine. several commented that, for a paddy wagon, this was really clean and didn't smell like - well, it didn't smell. It was also pointed out that the driver wasn't making any of the real sharp turns that some seemed to delight in.

"I don't know where we're going," observed Blitz, "but it sure isn't the local station. We would have been there five minutes ago.'

We drove on for another 10 minutes, pulled into a building and rolled to a stop. The backdoor opened and revealed a huge hook-and-ladder truck in the background with two long trestle table in the foreground. Both were set for a formal dinner and already large plates of food were being laid.

Carl Brenner smiled and greeted us.

"Happy Thanksgiving, gentlemen, and welcome to Firehouse 732. If you don't see what you want, ask. If we don't have it, we'll get it. If we can't get it, then it just too darn bad. Barring an alarm, we have three hours. You'll be driven home in the paddy wagon so feel free to drink as much of the Jack Daniels as you wish. Sean has so graciously supplied an ample quantity.

"There will, of course, be leftovers. Firemen never under-serve. If you want sandwiches to go, speak up, if you want biscuits and gravy to go, let us know, if you want to take some booze home, that's too darn bad."

And so a bunch of urban ethics shared their Thanksgiving with a group of rural rednecks.



 Thanks and Giving: A Working Community Program as Model

Starting a local newspaper is no easy feat. Keeping a local newspaper going these days is even harder. Pressure from competing technology, escalating price of printing, advertising competition and other business challenges haven't slowed down The Spirit of Bainbridge


It keeps standing tall and arrives free to everyone's mailbox every three weeks to the local Bainbridge / Auburn, Ohio community in Geauga county. Anne and John Bauswein are the owners of this newspaper that highlights local activities, local groups, organizations, and schools. They cater to the local businesses, the healthcare community, and the non-profit groups that make the close knit community what it is-a network of caring and committed people all trying to improve the hometown and stimulate others to get involved in local affairs and events.

But what this husband and wife newspaper team started 20 years ago is a quieter and more remarkable creation-it's the "Pantry", or better known as Bainbridge Area Food for Friends. John Bauswein told me that after working closely with the community in building a successful newspaper, a person winds up knowing more about the town than most people know. After talking with the police, the fire department, the schools, churches and synagogues, He found out that not everyone is always "fine". One finds out that hard working people sometimes run into hard times. And you find out that the "government programs" aren't always working for everyone. There are gaps where people don't qualify for assistance. And sometimes people are too proud to apply for a welfare program.

Bainbridge Area Food for Friends was created to bridge the gap. To provide a program that connects a person or family in need with the local giving strength of the community. This program ensures that your donations stay in the community and help the people that are essentially your neighbors. A spouse passes away, you get laid off, you get hurt and can't work, a daughter and a baby move back in, medical bills pile up-the list of conditions that can temporarily set a family back are too numerous to list. But these families do need help, even though they might not be classified as impoverished. These are working folks who will do what it takes to keep food on the table. If they fall short, fall on tough times, a helping hand is ready to take the pressure off of the family for a month.

The program will give the family enough groceries to get them through 4 to 6 weeks. This includes canned goods, fresh vegetables, and meat. It takes away one major daily worry and buys time for the family to financially recover from the setback, whatever it may be. There is no government official involved, no red tape or paperwork, and the pantry visit is made discreetly and with a smile from a volunteer.

The pantry started as most great inventions do, out of a need not being met. The institution grew and flourished through old-fashioned hard work, promotion, grass roots organization and inclusion of business and personal donation.

How does the pantry stay stocked? Count the local schools to have multiple food drives. The local businesses offer product discounts for food donations. The fire and police departments sponsor events, and large chain stores give money and products. The worship community always is there and even the local post office has a massive food drive once a year where they collect bags of food hung from the mailboxes on their postal routes.

The Bausweins housed the pantry initially in their basement, then it moved to a local church, then to a larger building in the township, and now Bainbridge Area Food For Friends is under co-sponsored control of the Bainbridge Civic Club-a long standing organization that prides itself on community involvement. What a journey over twenty years! It took a lot of effort to start, but now it's a local institution that has a life of its own based on the individuals who give it a life that keeps giving back to the community. Thanksgiving is a holiday once each year. But local business owners, John and Anne Bauswein, created a giving gift that channels the good of the community to the thankful every day.

Be inspired to create your own local food pantry. This is the type of organization that our founding fathers believed in, no government role–community supported. Harness the generosity that is there in your owb back yard and create a program that uses local donations to help your own neighbors that need it the most. Charity begins at home and this type of gift can help keep a community strong, especially in these tough economic times. Happy Thanksgiving all year round!

*** Official Information Below from Bainbridge Area Food For Friends

Bainbridge Area Food For Friends continues its tradition of serving those in need, and is anticipating an increase in families needing assistance during the fall holiday season.

We remind local organizations, school groups and churches that the local pantry receives no government funding, and relies solely on the generosity of local people and organizations.

Currently, the most needed items at the pantry include: toiletries, toothpaste, canned pumpkin, peaches, pears, Manwich and jelly. Monetary donations may be made to the Bainbridge Area Food for Friends account at PNC (formerly National City Bank) on E. Washington Street in Bainbridge. Non-perishable items may be dropped off at the pantry (lower level of Bainbridge Town Hall) or in the lobby bin at Bainbridge Library.

If you or someone you know needs the confidential assistance please call 543-6181, 543-7901 or 708-9829 (leave a message).

Anne and John Bauswein founded Bainbridge Area Food For Friends in 1990. Now co-sponsored by Bainbridge Civic Club and Spirit of Bainbridge, it is a local entity supported totally by local donations and fundraising events.

The pantry is open every morning, call for an appointment. Emergency food is provided to those in need during a temporary hardship in Bainbridge Township, Auburn Township, and South Russell Village. Eligibility is determined per case and not for those eligible for government or other assistance.



 Sheriff McWorther always got his man. Everybody knew that, and everybody knew he'd be looking for him. So when Stubby Pringle opened the door of the cabin and let the Sheriff and two deputies in, he wasn't too surprised to see him, but he was surprised to see two guns pointed at him. "Stubby, how long have I known you?" asked the sheriff. "I reckon since I was thirteen and when Pa died and you came to take him away" answered Stubby.

"That's right son. And do you remember what I told you?" continued the sheriff.

"I sure do James, I sure do, and I stayed out of trouble just like I promised you" said Stubby. Sheriff McWorther didn't say anything and just motioned to Stubby to come along. Stubby's new bride Abigail peeked in from the kitchen where she was preparing their Thanksgiving feast. It was to be the best dinner since they got married . The night before Stubby went hunting and shot a wild turkey to make it a proper feast.

Abigail just stared at the four men silently without saying a word. Very slowly, without ever averting his eyes from the deputies with the guns Stubby walked over toward the kitchen door, touched Abigail's hand and said "I will be back soon. Just make sure Old Jake gets fed just as soon as he shows up" and walked past the Sheriff through the front door grabbing his fleece-lined jacket from the nearby chair on the way.

It has been three months since Stubby and Abigail got married after a long courtship following their chance meeting at the Christmas dance the previous year. Abigail was an orphan just like Stubby and had been on her own since the age of fourteen after she ran away from her aunt in Oklahoma. She was barely making a living at the saloon in the valley when they met. Her clothing was not in a much better shape at the dance, but Stubby never looked at anything but her face that reminding him of an angel. He rode to the saloon the very next day and proposed to her right there. She wanted to say yes, but being shy and cautious by nature after being hurt all her life by strangers she talked him into waiting until summer. The wedding itself was a pretty small affair with just Old Jake, wouldn't miss Stubby "jumping the broom" for the world, in attendance. This was the only good dinner they ever had together. The Thanksgiving feast was to be the second one.

Outside Stubby was getting handcuffed. He wasn't saying anything and neither was anyone else. Deputy Parnell saddled Stubby's roan, and then tried to help him get onto it. For the first time Stubby's face expressed an emotion, contempt, as he pushed his hand away. "Don't be tryin' to paddle now, son" said the Sheriff as Stubby got onto the roan in a single motion barely using his cuffed hands for support.

They rode into the valley with Sheriff McWorther leading the way, then Stubby, and the two deputies behind him with their guns still drawn. The road was only slightly covered with snow so it didn't take them long to make it to the county jail. They uncuffed Stubby and put him in one of the four cells. Every other one was empty because there was not a lot of law-breaking going on in the county under Sheriff McWorther's watchful eye. Usually. This time was different: Hutch Handley's body was discovered the night before, slumped over his horse that wandered aimlessly near the ranch. Hutch Handley had only one enemy: Stubby Pringle and other ranch hands had seen them arguing earlier in the day when his and Stubby's paths crossed after Stubby's turkey hunt.

As it was Thanksgiving, the Sheriff and deputy Hampton left to enjoy their own feasts, leaving only the rather unhappy looking Parnell to watch over Stubby. "You want to confess?" asked Parnell, but Stubby just stared into the distance without acknowledging his presence. "The Sheriff is sure as a gun you did it, so you might as well" continued Parnell getting the same silent reaction. After adding that Stubby was "in a peck of trouble", Parnell got out his pipe and very slowly started filling it with tobacco to pass the time.

It was getting dark outside and Old Jake finally made it to the cabin. Old Jake was not well and expected that he had only a few months to live. This Thanksgiving was probably going to be his last and he wanted to enjoy like one would want to enjoy their last dinner on earth. He found Abigail in tears and after asking her about what had happened Old Jake opened the front door and just stared into the darkness outside. Abigail interrupted her sobs and told Jake about Stubby wanting to make sure Jake got fed. "Might as well et'" said Jake, surprising Abigail who expected him to try to help Stubby in some way or at least wait for his return. She served him turkey with elderberries and muskidines, ham, mushrooms and buckweats. He ate slowly stretching his one glass of whiskey for as long as he could. When he got his fill, he got up, put on his jacket and after giving Abigail a quick hug walked out the door. And hour later he was in the valley at the door of the county jail.

Deputy Parnell woke up from his deep slumber after several hard knocks on the door. "What do you want Old Jake?" was how he greeted the tired and shivering man at the door who was barely able to breath the freezing air without coughing. "I want to confess Marvin. I done killed that lickspittle Hutch." said Jake while placing himself in the chair next to Parnell's. "Get the Sheriff here now.". Parnell handcuffed Jake and placed him in the cell next to Stubby's who also just woke up. Parnell then locked the front door and went to Sheriff's cabin only a half a mile away. "Had a good dinner Jake?" asked Stubby Pringle. "I sure did Stub, I sure did" answered Jake and who then has to pause to catch his breath.

Soon Parnell shows up with the Sheriff who asks Jake to tell him exactly what happened. Jake describes how he came across Hutch arguing with Stubby, and threatening to kill him. "That made me mad as a hornet" adds Jake, "soon Hutch was gettin' real proddy and when he tried to wap Stubby I done shot him twice". Sheriff McWorther unlocks Stubby's cell and lets him out. "We'll fix this flint tomorrow, but you best be on your way now Stub." Stubby smiles at Old Jake who smiled back at him, and leaves without saying a word. Jakes eyes close as he fell asleep with the smile still on his face. Jake's breathing becomes less labored and soon can't be heard at all. Stubby Pringle is now at his cabin enjoying the turkey and all the trimmings with Abigail whose tears are now gone. He pours what's left in the whiskey bottle into Jake's glass and drinks it while looking at the moon that's now bright and visible through the window.



 The moon shone overhead as the sea mist drifted to shore to lull the town into a peaceful slumber. The sea salt filled the young sailor’s nose. The ship was to be docked for a week. The man stared out to sea reminiscing on how he came to be on this ship.

A year had passed since he first laid eyes on this ship. A year ago he had tried to convince his father to let him go to work. It had been an age old argument. He was young. He didn’t need to go on any ship. He could be seriously injured. A man doesn’t need to prove he is a man by sailing. What would his mother think, him coming back a drunken sinful sailor? No, no, it was out of the question.

Like most young men however, his heart yearned for something it could not have, and it had not the wisdom yet to know how to achieve. Promises were still fresh. Life had a certain romance about it as well as danger. Adventure kept boys alive and the teenagers who had come into town from the seas had such independence about the town. They strutted like peacocks, grabbed onto women, and could earn respect. Chip was small, call it Napoleon syndrome, he was small and had to show the world he could conquer it. As a child, he played sailor with other boys in the schoolyard and cussed his way into a so called delinquent. Dads were unreasonable; they couldn’t see how the world was changing. There were more opportunities out there in the world you know? Chip had run off, a year ago, and joined the navy.

His black hair was greased down and a sailor cap decorated his head with particular vivacious vibrancy. His uniform had room to fill into but he stood erect gazing out at the sea. His eyes began to mist. That was the sea salt in his eyes, of course. Any man would tell you that, the salt could get to a man’s eyes if he wasn’t careful.

Women did not adore him. He however found plenty of women. They gave their respect to the good old red, white, and blue. He had charm and a bouncy charisma like the other guys. He even had a gentleman’s manners to woo a young girl’s heart. These romances though were not meant to last, the ship had to sail, the girl’s were looking for a fling to help them know they still had it, and men moved on. The men he had respected so much were the worst on the crew. Promises were not kept. Men were the greatest liars when it came to women, or just about anything deserving of praise from the boys. He did not go to the bars and drink like the other men because he wanted to show his mother he could come back respectable, although it was excruciatingly tempting on particular occasions. Cussing flamboyantly however, was undeniably a part of life.

“Chip, you better go, you only have a day or two.”

“Thank you admiral.”

Chip did a little hop walking off deck, after reaching the board his feet drooped and his head dropped like a defeated man. Admiral Johnson shook his head and went on with his duties.

He had to find a date; the fellas would laugh if he just went home for Thanksgiving. He had to have some kind of story to cheer the spirits on deck. He couldn’t leave the town though without even giving word to his folks he was here. How would his mom feel if he left without stopping in? Would his dad even let him in the front door? His eyes looked up to the sky and the sailor said a prayer. He hadn’t said one in awhile, but he was hoping for safety of some sort.

“Hey buddy, my they really do shape you up in the navy don’t they?”

“Yes, they do Jack.” Chip said with a grin.

“You’re old man know you’re here?”

“Nope, just came in tonight. The sea is sure sparklin’ tonight ain’t it?”

“Sure is, enough to make a man dream on a night like this.”

“Aw, don’t be gettin’ soft in the head.” Chip warned.

“See ya around, I don’t know about your man, but your mother has been dyin’ to see you.”

“That right?” Chip turned around making direct eye contact in an urgent manner.

Jack nodded.

“Well, thanks, Jack.”

“Anytime, Eugene.”

Eugene, or “Chip”, scowled as Jack walked away. Nobody said his real name, he never liked Jack anyway. Undecided about what a wise move would be Chip walked alongside a fence that outlined the schoolyard. The moon was a nightlight for a nice stroll. The playground had two swings outside of it. Chip carefully eased his way onto a swing, afraid of how much he had grown since he last sat on it. Girls played on the swings during recess but boys gathered there after school. As if to fulfill his memory, a boy of about five years of age came darting around the corner screaming profanities. Chip tip toed over to the side of the school. The boy ran right into Chip’s arms. “Put me down!” the boy screamed shrilly.

“Not until you stop screamin’ so damn hard.”

The boy stopped screaming and turned over as much as he could without falling out of Chip’s arms. The boy has brown hair and blue eyes that sparkle. “Hey, hey mister, are you a sailor?”

“Yes I am.”

“A real one?”

“Sure am.”

“I’m gonna be a sailor too, but first, I’m gonna be a hermit, Joe said that hermits live in caves, I want to live in a cave. Then I’ll be a real sailor after that.”

“You are, huh?” Chip asked amused.

“I was practicing my swearin’, sailors cuss a lot, mom says, but daddy died and mom says that I can’t run off. But I will, I’m going to be a sailor.”

“I can’t let you do that.” Chip said.

“Why not? You’re a sailor, oh the boys won’t believe it, I met a real sailor. I gotta go tell them.” The boy cried squirming for his freedom.

“You ain’t goin’ to tell the boys nothin’”

“And why not?” The boy asked crossing his hands in dissatisfaction.

Chip smiled and bent down to the boy’s level, “Can you keep a secret?”

The boy’s eyes lit up, “Yeah.” He whispered enthusiastically.

“I’m on a secret mission.”

“For what?” The boy asked with curiosity and imagination running wild.

“I need you though. Can you be my partner? It’s going to be quite an adventure, I don’t know if such a young man can handle it, perhaps another boy.” Chip said shaking his head.

“No, no! I can do it!” The boy yelled fiercely.

“You got a fighting spirit in you yet. Alright, but first young man, I must know your name, if we are going to have to work together we must become good friends.”

“I’m Donald.”

“Like Donald Duck?”

“Why do you think I want to be in the navy?”

Chip sighed, he had his work cut out for him. “Okay, so you have to show me where your home is.”

“Why? So you can take me home? No sir, I’m joining the navy.”

“No, because the people in your home could be in grave danger.”

“Nope, don’t have a home.”

“What do you mean you don’t have one?”

“Well mom lives near the theater, she lives in the little shop right around the corner from there, you know, the one with the lights.”

“I didn’t think anybody slept there.”

“She often says ‘Donald, those lights keepin’ you up, they are keepin’ me up, we should move Donald’”

“Okay, so it’s that store?”

“Yeah? Why?” Donald asked suspiciously.

“How old is your mother?”

“Oh, I don’t know, she’s pretty old.”

“Okay. Well how about you take me there, because that store has some very good supplies needed for the mission.”

Chip wanted to have a talk with his mother. No respectable mother would just let her kid run around wild at night cussing down the street. He was a respectable sailor, he would bring honor to the navy, if that was possible. Donald held Chip’s hand and led him to the store, “here it is,” He clapped his hands in delight, “What do we need?”

“Hey, is that your mother?”

“Yeah. That’s her.”

“She is pretty, she doesn’t look pretty old.”

“She looks as old as you.”

“Gee thanks,”

“Go on, you can meet her if you want to but don’t tell her I’m here.”

“But you know I can’t let you go without your mother’s permission, the navy can’t just sweep you away, we’ll enlist you for the future, how does that sound, in the future, you can be on a special team.”

“Oh, boy, thanks mister, hey, mister, what’s your name?”


“Chip? My mom wants me to stay for Thanksgiving, do you think I should?”

“Yeah, sailor, every sailor knows any time you have the chance to get good home cookin’ you go for it.”

“Chip, isn’t the navy food good?”

“Not as good as your mom’s.”

“How do you know? You haven’t had my mom’s”

“Would you let me?” Chip asked eyeing the figure in bright red lipstick that seemed to come down from the window to haunt him.

“Sure Chip.”

The two of them scrambled up some side steps and knocked on the rickety door above the shop. “Hey mom, guess what? This is Chip, he is a sailor, he is going to let me go on a sailor’s mission if I get your permission. He wants food.”

Chip blushed, “Actually I saw him, runnin’ around cussin and sayin’ he was gonna run off, and I just figured you wanted him home. I’m awfully sorry about your husband miss, he has been givin’ me his life story, I was just tryin’ to get some information out of the little man so I could take him home. I’m awfully sorry, and who may I have the pleasure of greeting this evening, he didn’t tell me your name.”

“Oh I’m Jane.””

“Nice to meet you Jane. Do you have any plans for Thanksgiving?”

“No,” Jane blushed, “I haven’t been able to scrape up enough money to cook with, and we have no family here.”

“Oh, that’s fine, may I call you Jane?”

Jane nodded opening the door to show she had on a stunning black dress, “And you young man,” she turned cold looking down at Donald, “are going to your room for now, you aren’t supposed to be out, especially out cussing, my name could be spoiled you know, I’m trying to make my way in this town. I’m at least trying to make some friends.”

Donald went to a couch with his head hung low.

“I’m very sorry, mister, I’m sorry I didn’t catch your name.”


“Eugene? Aren’t you the Frantz’s kid? They didn’t say you were so old. They spoke of you as a child.”

“And Donald told me you were old, but I’m glad you’re not.”

“And I’m glad you’re not as young as Donald.” Jane flashed a pearly white smile.

“Well, uh, you’re invited to our house if you want.”

Eugene started to sweat, what had just gone on was beyond his capabilities to determine right now. Mom was a young widow named Jane about Chip’s age. She had just moved in so she could not know how much of a delinquent he was in the town, unless his family had gossiped his whole life away since he had left, which he could believe that. He did not even know if his dad would let him in and he had invited a girl? Maybe that would give him more of a chance. This relationship might work, this girl lived in his old hometown and he could come back.

They walked together hand in hand, Donald in the middle, skipping along down to Eugene’s house. Having no girl, no family, no real food, and friends that were only sea scoundrels showed how little he had that year. This Thanksgiving, fate had offered a new gift from Providence. When he knocked on his old front door, his mother answered. His father heartily invited him in and told him he had been a bit too rough on him. The smell of pumpkin pie and turkey lingered in the air. Fresh rolls had just been baked. Hope filled his life as well as Jane and Donald. Donald already looked up to this newly discovered sailor and Jane gave heartfelt thanks for allowing them to spend Thanksgiving with his family. Being alone with no money and in a new town trying to take on her husband’s role was hard on her and she gazed at Eugene, who was like a gift from God. He had the same charms her husband had, but was a completely different man.

“Eugene?” Jane inquired.


“Thanks, for everything, and I hope I’m not just another girl to you.”

“No, no, you’re quite refreshing. You’re a real girl, with substance, and character. You’re not throwing yourself at me, you have responsibilities, you aren’t being stupid.”

“Are a lot of the girl’s you meet stupid?”

Chip winced, “Yeah. That sounds about right.”

“Eugene? Can I call you Gene?”

“Please do, what is it?”

“When you come back, will there be a place here for me? I would love to stay with your family Would you mind, I don’t even know how to ask, we just met.”

“Dating you? Supporting you?” Chip jumped in, “ Either one sounds pretty good. I know we just met, but you just taught me the most valuable lesson in the world. I was a selfish man before I left, but when I am able to come back I will. I will come back and we can sort it out then. I’ll write you and save all my leaves for you. My family thanks God that I just came home, and I think you will thank them, because I think they just decided you were family.” Chip said pointing to his mother who was heading toward Jane with an excited expression.

“You make the perfect girlfriend. I knew once you said you were single last year, you’d be perfect for my Gene. Oh, I’m just so thankful he is here. You, you Jane, have to stay. We will take care of you. He likes you I can tell. Oh, all those dames out there have taught him to hold onto a real woman when he sees one. Oh, from hardship comes new blessings. It’s a true Thanksgiving. God’s hand upon us.”

Eugene smiled and silently thanked God for answering his silent prayers.



To deter me from forgetting a decimal point when entering a price and placing trades unduly large, I have sought for a maximum allowable trade size in TWS, and think I have found it at Configuration, Options, Precautionary settings, Total Value Limit. This is Option as in the much beloved method of trading. Has anyone tried this and verified that it works?

Another thing I'm thinking of doing, as I am away over virtual manuscript paper for much of the time, is to preset closing orders for when my position reaches a target. Seems logical, though I would rather do it "by hand" somehow. The obverse closure, to reduce losses automatically, I would never do, as one suspects a price might temporarily, as if by magic, reduce to scoop up my offering before returning to its prior level. Such things should not happen but one imagines they do.



 1. Will someone please note that the amount of profit you can devolve is related to the amount of capital at your disposal for traders, the same way the profits of a company are related to its total capital, via the rate of return. When a firm such as a former broker now a bank et al, received hundreds of billions extra in capital availability through bailouts, investments from flexions, borrowing at the federal fund fate of zero, or having a fixed buyer in line for its assets, and many other emoluments such as having your former boss, or his nephew at the dept of the interior, that is the wherewithal that enables the entire profits pool to exist, and the bonuses that the public pays for through this increase in capital.

2. Here's an interesting kettle of empirical finance queries. Given that 6 of the last 7 days are up, what are the chances that the last day was up? One finds for bonds that there were 50 such occurrences when the last day was up. and 4 days when the last day was down. It's interesting to reflect back on your binomial formulas for this. And it's also interesting as a stepping stone for some useful counting for futures.

3. One can never read Mahlon Hoagland and Bert Dodson's work The Way Life Works recommended as the best biology book by James Watson without being amazed at the regularities it reveals in all aspects of life and markets.

4. Germany, Sweden, and Turkey up over 15% lead all the others. What mega trends does this reflect?

Gary Rogan comments: 

Germany and Sweden seem to be an affirmation of the rise of fiscal conservatism in Europe and soon around the world. Turkey seems to be a special case with a somewhat peculiar government getting a grip on a number of local problems plus their re-emergence as a leader in the Muslim world. 

Alston Mabry adds:

from the Globe and Mail this morning:

While it may seem odd, Germany appears to be benefiting from the European sovereign debt turmoil," said BMO Nesbitt Burns economist Benjamin Reitzes, who tracked the performance of German stocks and bonds since the beginning of the year.

Germany has become a driving force during the debt crisis, which has sidelined Greece and Ireland, and now threatens to engulf Portugal and Spain, pushing up borrowing costs and forcing harsh austerity measures.

"Weakness in peripheral Europe drives money into Germany, a safe haven, lowering German yields and stimulating the economy," Mr. Reitzes said.

"Another side effect of the crisis is a weaker euro, which benefits German exporters. No wonder Germany's economy is outperforming and the DAX is among the top performing stock markets in 2010. (+14 per cent year to date).



 Here's an interesting interview with rogue trader, Jerome Kerviel. 

There's something very disconcerting in his attitude where he feels his blame should be minimized because his allegation that the bank and his superiors all knew exactly what he had done. He seems like one who doesn't want to take responsibility for his actions, yet claims that others need to take responsibility. His mildly whining tone, his sense of being a scapegoat is irritating to me, a person who has been humbled by the markets all my life in one way or another.

As cold blooded as it may seem, I don't feel sorry for him.



The S&P 500 futures opened down on Globex and never traded above Monday's close all day Tuesday. After the last 13 Knicks-like performances, the S&P 500 the next day was up 6 times and down 7 times:

     Next day
    Date        change
 3/30/2009    1.3%
 4/20/2009    1.8%
 4/27/2009   -0.6%
 5/11/2009   -0.2%
 6/15/2009   -1.3%
 8/17/2009    1.2%
 9/24/2009   -0.3%
 2/25/2010    0.1%
 3/15/2010    0.8%
 4/16/2010    0.4%
 8/10/2010   -3.1%
 8/11/2010   -0.5%
11/11/2010   -1.3%



 So at long last the Holiday season is just about upon us. I know the malls and stores started playing Muzak versions of Rocking Around the Christmas Tree before we even sent the little ghosts and goblins out to extort candy from the neighbors but to me the Holidays start with Thanksgiving. It is one of the most perfect of holidays with excessive amounts of good fattening food, oceans of wine, lot of laughter and of course football in the extremis. I am not a fan of the retail rush to Christmas. In fact I hate it. There is no evidence it increases sales or profits and in fact it irritates me to the point I want to slap the crap out of fat guys with beards and short people wearing green on general principle. It's just annoying. As my old partner in the door to door book business used to point out the rest of the year I'm just a grouchy a-hole but this time of year I become some sort of happy-happy ho-ho mother something or another. I write this every year a day or two before the actual day occurs. Tomorrow is Thanksgiving Eve and generally I start cooking the night before. The stuffing gets made and there are onions to sauté, celery to chop and sausage of several varieties that need to be fried and mixed into my savory creation.

There will be butternut squash to whip and sweet potatoes that cry out for roasting and smashing. Others will be getting their junk touched by aggressive TSA officials at the airport, or perhaps posing for suitable for framing portraits of their nether regions in one of the new scanners, as the travel back to hearth and home for the occasion. Many others will be enjoying the spectacle of lights a twinkling…brake lights that is as they endure the back up of turnpikes, beltways and interstates on their way back to the bosom of family and friends. Still others will be jammed into trains and buses as they head home for the company of those they could not wait to escape when they left home in the first place.

It can be a special time. It is a chance to renew acquaintance with the obnoxious cousin you have pretty much hated since birth. We share apple pie and the opportunity for Mom to suggest we need to lose weight and change our hairstyle or pester us about grandchildren we have no intention of bearing. Doubtless Aunt Juniper will pass out in the rocking chair again this year have consumed too much of her the fruit of her namesake berries and it's a safe bet Uncle Herb will pinch your wife on the ass again this year in an annual ritual of shameless buttockal groping. Its a magical time to eat drink and remember exactly why you never liked your second cousins third husband and rediscover all the ways your particular family puts the fun un dysfunctional. All joking aside it is a time for families and for gratitude. We have a bunch of family and friends coming to Chez Melvin this year and we would not have it any other way. There will be wine, there will be pie, a giant turkey bird and all the trimmings my warped little mind can think of to enjoy throughout the day. There will be football. Above all there will be gratitude for all we have and the life we are so lucky to live and share together. We find much to be grateful for this time of year and here is just some of my list.

How can we not be thankful for the magic that is life itself? We lose track of it all someday but life brings so much to love, to savor and to enjoy. It is critical that we do not let the day to day garbage makes us lose sight of all that makes life so simply wonderful. There are full moons, sunsets and as I have discovered this year sunrises you can see without staying up all night (more on that later). We live in a world that has books full of knowledge, adventure dreams, hope, answers, questions, poems, relaxation and inspiration. We have music from the soul solacing sounds of Mozart and Beethoven to the gut crunching guitar licks of Stevie Ray and JJ Cale, We can enjoy the melodical pattern woven by John Coltrane and the lyrical twisting of a Lyle Lovett (how can you not love a line like "I'd ride my pony on my boat) song. There is food of every description from steaks on the grill done to a sizzling perfection to seafood fresh from the bay and everything in between for us to enjoy and fuel our journey through the days.

More than ever I am grateful for friends of all stripes. We live in a land of slow breezes, fast boats and quick laughter here on the island and I have been blessed with incredible friends. The mix of people I am fortunate to call friend ranges from the married up tire guy to the Mr. Clean look alike firefighter, form the goat and the shacked up freeloader to the bread man, from tic tacs and meatballs to cupcakes and wedding planners ,crack babies to shaky electricians and just about everywhere and everyone in between.

Friends goes beyond the island as well. There is everyone from the irascible curmudgeonly options trader to the cheese head and they have all added much to my life. The world's only Iranian Jew was just here for a visit just before he went into viral celebrity for a brief but good visit. The handicapper is in NYC running stock market cartoons and projecting some sort of lines on charts, the spread trader stops his fun filled journeys to war torn nations and famine stricken banana republics long enough to check in from time to time. The Wiz and the Professor are still doing exactly whatever it is they do to hammer on the markets and the chairman still does his best to deflate ballyhoo and avoid hoodoos of all stripes. The counter count, the chartists chart and the opinionated opine and I am happy to call them all friend. They have added much to my life and my world.

Of course I am grateful for my children even when I am contemplating locking them in a dank dungeon full of James Joyce novels and leaving them in there until they can rationally explain Ulysses to the average person. My son's twisted sense of humor and sarcastic mannerisms hide a sharp mind and a kind heart. I probably do not tell him enough but I am proud of him and the success he has already begun to achieve in his short time here on the planet. His mind naturally grasps the concept of business and profits and he is wise far beyond in 22 years in the ways of commerce. My daughter still has her too loud infectious and a voice that climbs a decibel with every sip of wine. She is adamant about being a teacher and has shown a perseverance and determination to reach the goal she set for herself. She has overcome the five years of being sick, worked her way through the first few years of school and is now at 26 finally a full time student closing to reaching her goal of being broke and happy as an elementary school teacher. I am plotting to get Tim Hewson to immigrate and marry her so I don't have to pay the extras for the rest of my life. I figure if we are going to have an Ayn Rand loving libertarian school teacher in the family we might as well add an Irish trader with good taste in booze and books. I love watching the two of them continue to grow and learn to love life. Now If I could just get my son to read a book.

There is an addition to the list this year. There is now a seven year old step daughter in the mix and the madness here at Chez Melvin. This energetic young Mensa candidate is either going to keep me young or wear me out in short order. She is a blonde haired, earlier rising sweet heart of a girl named for an Irish cattle stealing Queen and she is a welcome addition to the family. As a sign of her extraordinary intelligence he adores Lisa already, is getting used to her step brother and is altogether unsure about myself. Told you she was smart! She is a reader, with a sharp mind and loving heart who adds much to our family mix.

With a stepdaughter of course comes the person for whom I am most grateful this year. After giving up on the concept of ever finding someone who could put up with me it actually happened this year. I met the one person I really think I was destined to be with for life and maybe even beyond. I will spare all…okay some…of the romantic sappy stuff but when I look into Erin's eyes I am sure I have had my last first kiss. We met in May, married in September and I cannot imagine my life without her ever again. She is everything I never thought I would have in my life. I was not looking anymore but the universe put her in my life and she has become my world. Above all this year I am thankful for my wife and the love we share and the grand adventure of life we have before us.

Life has its bumps and bruises. Almost nothing is going to go as planned. Life is unpredictable. Quit bitching about it and enjoy the journey. No matter your circumstance of current situations there is much about life for which to be grateful. There are raucous nights and quiet Sunday mornings. We have grand symphonies and party time rock and roll. Here is knowledge to be gained and lessons to be learned. There are bright sunny days for play and majestic rolling thunderstorms to watch in awe. Life is here like or not. Learn to embrace it, to enjoy it and above all to be thankful for it as this holiday of gratitude comes upon us this week.

I will lift my glass to you my friends on Thursday. I wish for you to have laughter and love, a thirst for knowledge, a zest for life and above all a sense of gratitude for the many wonderful moments that make up our lives and I thank you all for being a part of my life. I am off to pour a glass of wine and begin to slip into my happy happy ho-ho state of mind.



 The principal of my children's former Montessori school wrote this in the school newsletter for Thanksgiving. A good Thanksgiving tale as only Mary Z. can tell:

Dear Montessori Parents,

Earlier this week I wrote a few words about the Deliciousness Factor, a taste so good, so compelling and infusive, it cannot be contained. It's Umami, the quality of delicious that goes on at The Montessori School every day. Today at Gathering, a group of children presented a "thankfulness turkey" they'd cut from paper with an abundance of paper feathers containing handwritten words. "The words are things we're feeling thankful for, like mothers and birthdays and warm houses and sticks and pajamas and jokes and friends". "And my grandpa," someone else said. It was a brief and earnest chorus of Thanksgiving, spontaneously amended by other students; so many words we had to stop. And every word was a delicious reflection of the things that matter most in life. Moving into the holidays, the pace will step up, expectations will escalate but our children's truest, simplest desires will not change a bit. What we mark, they will be marked by. What we bless is what blesses them.

May Umami be present around your tables this week, in your choices and your celebrations. May it enrich reunions and compel the stories told and heard. May it appear in your favorite recipe or come along when you take a walk. May it enliven a family game or embolden conversation. May it be present in your laughter, in your listening and the time you take for little things. May it sparkle at the heart of giving thanks, inspire and reassure you. It is the enduring factor of delicious, right here, right now.

With love,

Mary Z.



Here are some links of stuff online that might be helpful to do with your children:

Take Time to Teach Your Children Well

Divorce Therapy (the chart is good thing to bring up with your spouse and then ask them what you and they are doing to raise your kids to be Child A)

Also here is something you could try for Thanksgiving.

Happy Thanksgiving to all!



At the time of his death on March 31, 1913 J.P. Morgan had an estate worth $80 million. Compared to his peers of the era, especially Rockefeller, it was not such a large estate. In fact, Rockefeller's comment at the time [after reading the pages and pages of obituaries, was rather sniffy:], "And to think he wasn't even a rich man."

Source: Ahamed: Lords of Finance






 Neil Peart, the drummer, frontman, and principal lyricist for the Canadian rock band Rush, is the quintessential rock and roller. However, in addition to his excellent musical chops, he is also a staunch Libertarian with his core beliefs coming out in many of his lyrics. A lifelong drummer, Peart believes in multi-tasking while playing the drums, often playing other instruments while maintaining a very complex beat on his insanely cool drum set-up.

Peart has been very strongly influenced by the likes of jazz drummers Gene Krupa and Buddy Rich, but has proven to be at least as good as his idols. As far as rock drummers go, a strong case could be made that Peart blows the socks off any drummer in rock and roll. He's certainly better than drummers like Ginger Baker, John Bohnam, or Keith Moon. Peart strongly believes in hard work, continuously reinventing his style and revisiting new drumming methods. He still takes drum lessons from jazz coach and drummer Freddie Gruber, always perfecting his craft and staying ahead of the curve. While I can talk all day about how good of a drummer Peart is, as the old saying goes, one picture is worth a thousand words and here is a 9 minute drum solo. If this doesn't blow you away after the first five minutes, then nothing will.

Sifting through Neil Pert's lyrics, one finds a great deal of Objectivist/Libertarian philosophies entwined in the prose. In fact, Rush's biggest album of the 1970s 2112 was dedicated to Ayn Rand.

Here are some lyrics from his song, The Trees:

There is unrest in the forest,
There is trouble with the trees,
For the maples want more sunlight
And the oaks ignore their pleas.

The trouble with the maples,
(And they're quite convinced they're right)
They say the oaks are just too lofty
And they grab up all the light.
But the oaks can't help their feelings
If they like the way they're made.
And they wonder why the maples
Can't be happy in their shade.

There was trouble in the forest,
And the creatures all have fled,
As the maples scream "Oppression!"
And the oaks just shake their heads

So the maples formed a union
And demanded equal rights.
"The oaks are just too greedy;
We will make them give us light."
Now there's no more oak oppression,
For they passed a noble law,
And the trees are all kept equal
By hatchet, axe, and saw.

Here are some lyrics from his song, "Something for Nothing" from the album 2112:

You don't get something for nothing,
you can't have freedom for free.
You won't get wise with the sleep still in your eyes,
no matter what your dreams might be.

Peart's song "Free Will" from the album Permanent Waves:

You can choose a ready guide in some celestial voice.

If you choose not to decide, you still have made a choice.

You can choose from phantom fears and kindness that can kill.

I will choose the path that's clear, I will choose free will.

Peart has been the drummer for the band Rush since 1974. I first discovered them when I was in high school and was blown away by the Objectivist lyrics on many of Peart's songs. For me, Rush changed rock music altogether. Many musical styles have come and gone since 1974, but Rush's complex style of rock is still going very strong. Their concerts are always sold out and tickets are always traded at a premium. Peart believes strongly in giving the audience a good show, with the band performing at the highest level. They are the tightest band in rock, and their hours of practice and deduication to their craft does not go unnoticed. Furthermore, there is no three man band that puts out such an amount of pure music on stage than Rush. Not ones to rest on their laurels, Rush is constantly stretching new boundaries in rock. One will never see Rush perform and not be blown away by their dedication, expertise, and fine music. Their Objectivist lyrics are a bonus. I consider them to be the icing on the cake.



 Following four up-sessions, metals bulls appear in control and all forgot the worries of Nov. 9th exhaustion top experience. Two factors are not widely heeded:

1. That Silver is trading tonight at the highest level that Asia has seen in thirty years.
2. That tomorrow is Tuesday. In front of the U.S. market holidays, no less.

Well, I am prepping for an active Tuesday!

Anatoly Veltman writes:

Never have I yearned for my pit trading past as I do having watched these events unfold.

On the floor the outsize returns were always on the downside, as the moves were mercilessly violent and geography no small consideration. As such, I'd lay on my pillow these nights with thoughts of the avalanche selloffs like visions of sugar plums dancing in my head, to borrow some seasonal verse



 The economics of buying a chainsaw highlights some of the ideas on how to value time. How do I calculate, cost, benefits and lost opportunity and what should I consider as leisure, exercise, entertainment time versus labor? For the issue at hand, there is a forest abutting my back yard, and with the recent wind storms a few downed trees. They could lay there for a few more years, but on the other hand they present and eye sore in the other wise organized forest. Second, winter in coming and I am down to around 1/2 cord of fire wood and will need roughly another 1/2 cord to make it through. Market price around here for a full cord delivered is $180 give or take. The chain saw I want is a sparkling new Husqvarna 40cc for around $350. Not considering labor it is a 2-year pay back on the wood alone.

There are other factors though. For one, I like doing yard work and spending time in the woods. Being outside, throwing on the coveralls and getting muddy is definitely a benefit. Running a chain saw is fun as well, (positive marginal utility), though I am sure I would feel differently if I was a full time lumberjack (downward sloping utility curve). Lets assume it is safe and I am somewhat skilled. The exercise involved is fairly high, probably 8 to 10 hours to cut, move, split ½ cord. So I list this as a benefit. Then there the satisfaction part afterward of looking at the neatly pilled wood stack and the peaceful spot in the woods where the dead tree no loner resides.

Opportunity wise, I could always be doing more research as a trader, or spending time with my family, the later being the most important. So there are costs there, but time in nature has benefits as well, like long walks, swimming, rowing.

Add it all up I am leaning strongly toward making the purchase and heading out to the woods this holiday. If anyone has any good arguments for or against let me know.

Craig Mee writes: 

Chainsaws and markets… mmm!

This reminds me of a young broker years ago who went on his first interstate trip. On arriving in Melbourne, Australia, he went to take a bank client out to lunch. The client says "let's forget lunch, and hit the hardware store for a spot of shopping" ! Well he promptly got the young guy, who didn't know any better, to buy him the latest chainsaw with his company Amex…and once the client's boss at the bank found out, the client promptly got fired!



 My wife makes a suggestion. How about a list of the 100 most hated companies. Dilbert's Scott Adams points out that he hates Wells Fargo, because they bought all the companies that went bankrupt for him, including Worldcom and Enron, but their stock went up. And he hates Apple so he bought that one too. Taking a look at the companies that the sage owns, one would hate them, and even the average person must know what a sanctimonious self serving poseur he is. Perhaps they would be good ones to buy also. But how would you come up with the other 98% ?

Steve Ellison comments:

I would actually nominate Apple as one of the most loved companies, with many users having a near-religious devotion to Apple products. However, I have many politically liberal relatives and Facebook friends who regularly express outrage at "corporations" (said with a tone of disgust), especially the following:

1. Wal-Mart drives competitors out of business and allegedly underpays and denies health benefits to its employees
2. The entire "Big Oil" sector raises gasoline prices whenever it can and pollutes the environment; Exxon Mobil is the biggest company, but BP is now more hated.
3. Halliburton got no-bid contracts to profit from the war in Iraq
4. Monsanto develops genetically modified crops, never mind that humans have been genetically modifying plants and animals for over 10,000 years using lower-tech methods
5. Microsoft is a monopoly
6. The tobacco sector allegedly tried to suppress evidence that smoking is harmful to health
7. News Corp. owns Fox News and the Wall Street Journal
8. The utility sector raised rates and built nuclear power plants or CO2-emitting coal-fired plants
9. McDonald's serves unhealthy food that can lead to obesity; some interpret the sight of a McDonald's restaurant outside North America as a tragic destruction of local culture.

Jeff Watson writes:

Somehow, I suspect the most reviled companies are probably the best run, most profitable companies in their sectors. The general public always despise a winner that does it on their own terms, a la Readon. 

Ken Drees suggests:

Halliburton and BP are hated as enviro haters.



 A Forecast That Obama Could Love

You might not think so, given the flow of news lately. His foreign policy has met with limited success, at best. And, back home, unemployment is mired at 9.6 percent. Earlier this month, in a major political blow, Democrats lost more than 60 seats and control of the House of Representatives.

So what is there for Mr. Obama and his supporters to cheer about? Try this: Based on the facts at hand right now, Mr. Obama is likely to win the 2012 election in a landslide. That, at least, is the prediction of Ray C. Fair, a Yale economist and an expert on econometrics and on the relationship of economics and politics.

What's the basis of this forecast? In a nutshell: "It's the economy, stupid."



Capitalism rests in an energetic sense on one and only one assumption: that the total useful energy surplus keeps going up for a fixed amount of input (either energetic or monetary). This hasn't been true now for a while.

Kim Zussman adds:

To Tyler's point, the attached chart plots annual change in hourly output (blue), and annual change in unit labor cost (red), 1970-2009. Recession-era peak/valley years are noted adjacent to their respective peaks and valleys.

Over the past 40 years, the general trend has been a lower rate of increase in cost of labor and increasing hourly output, with a marked transformation after about 1982 (coinciding with the inception of the great bull market in stocks). Another change was the nature of recessions: The recessions of 74, 80, and 82 were associated with large jumps in labor costs and declines in hourly output. 1990 exhibited this pattern as well, though with much smaller magnitude. However the recessions of 02 and (thus far) 09 go the opposite direction; decline in labor costs and increase in hourly output.

Perhaps some of this change is due to decreased unionization of labor.

Tyler McClellan replies: 

Wel,l basic economic theory, Marxist, Hayekian, Ricardian, are all in agreement that rich countries should benefit from explosive growth in poorer countries even if they are becoming relatively poorer due to comparative advantage. And in that vain all list members can rest assured that global energy use ( of exclusively fossil fuels even) has been going up very evenly per capita even as the population has exploded. 



 This is guaranteed to happen if you're giving your money away to charity without tax at death, and have climbed up the slippery slope by avoiding service payments yourself, and if you are person to invest in government guaranteed high yield convertible preferred.

Gary Rogan writes:

Even judas goats aren't usually this obsessive-compulsive about their assigned task.

Sam Marx writes:

What Buffett leaves out when he says that he pays a lower tax rate on his income than his secretary is that the lower tax rates on the dividends he receives is because they've already been taxed as corporate profit.

If Buffett feels the really rich (over $500 million I'll assume) should pay more taxes, then he should write a larger check to the govt. as an example.

An Anonymous Writer writes in: 

With all his businesses set up to help the rich avoid taxes, (of course, those that sell these products often make more than 50% of what is "saved" without the change in tax risks the avoiders face), or to take advantage of the heirs when the business man dies with his lending of last resort status, he will scoop up the widows and orphan bargains. (Nobody will scream too loud since they are rich widows and orphans.) No wonder he wants to tax the rich more. And he's screaming because he sees the Republicans are going to get their way.



 An email my Dad sent me after discussing some of the implications of Obamacare:

…The Obamacare bill has some very good things in it but there is a lot not to like, and if it is not changed it will come back to bite us you know where. The bill creates a whole new expensive bureaucracy and will force many small businesses to cancel their employee health insurance benefits. We will be seeing real significant health care premium increases in the next 6 months to a year. Yet my re-reimbursement is going down 21% by Jan 1st. NYS just imposed an additional % income tax increase on those making $ more than 200,000. If the Bush tax cuts expire or do not cover my salary range, I will see the largest tax hike in income tax in the history of the USA. My employees work 7 hours a day plus 1/2 hour for lunch and two 15 min breaks. At 68 years old, I work 12 to 14 hour a day often without lunch or breaks but I am the bad guy. I and my partners created 59 employee positions in our offices but I am the bad guy. I do not use any more service than the average guy but I do not pay my fair share according to my congressman and the Obama administration . I guess $xxx,xxx in federal income tax is not enough. If you include state and other taxes I pay close to $xxx,xxx in taxes but I do not pay enough. It is getting to the point that retiring is looking better and better. They are destroying our healthcare system. There is not enough money to provide the kind of care they have proposed. Oh well, let me get back to work since I am on call.

Love you, Dad



What began as denial, denial, denial for an Ireland bailout is now $160B which is about $80B higher than the highest estimates I casually collected. Not exactly Paulson's bazooka but more like a light anti-tank weapon. Portugal and Spain have repeatedly said they are not in need given their debt schedules. Will the bond vigilantes strike again (and again)?…



It has been three months since the confirmation of the Hindenburg Omen, and the S&P 500 is up 12% since then.

Larry Williams writes:

True on H Omen sell but….there was what I call a H Omen buy on 8/27 and 8/30. I am writing a paper about this.

Jim Sogi writes: 

Steve's point is why I believe that quantitative price analysis must be augmented with game theory such as Chair's infrastructural and and natural observations, but also with Mr. E's macro observation and political gamesmanship. This helps with the cycle analysis.



 The shortest knight at King Arthur's table was Sir Cumcision. The knights didn't drink much whiskey back then but instead favored Merlin's Magic Ale which produced special magic spells known as "Aleutions". Every knight had his own private TV where he sat and thus they became known as the Knights of the Round Cable, except one couldn't watch because he was blind. He was always searching for the Holy Braille. The knights were very religious and were rewarded with a lot of Prophet who helped them hold their Masses which were frequently interrupted by Guinevere who thus became known as "the weapon of Mass destruction". Feeling betrayed, King Arthur wanted to get rid of her and the gambling knight, Sir Chancelot so he hired a lawyer Mordred. But as expected that just lead to more dread for the heartbroken king. And thus he got into his Avalon and drove off never to be heard from again.



 Many assume the continuation of trends beyond their turning points. Such thinking is evident in the news. The opposite view is the statistical lack of trends and the assumption of reversion to the mean. However trends exist in a random or due to macro effect such as government (mis)policy or herding, none of which can be ignored except to one's detriment. The pure quantification of price makes discernment of the change of cycles hard to see except in retrospect, thus other forward and current input seem worthy to consider. There are tells to macro effects if they can be discerned. The random trends also may have their characteristics. Philosophers like to define their terms, and traders also need to define their time frames to clearly state the issues. This seems to be a common point of misunderstanding in debates on these issues.

Steve Ellison writes:

As long as governments feel the need to intervene whenever their economies are considered bad, there will be business cycles that result in multi-year trends in earnings and prices.

In a much shorter time frame, order flows can cause intraday trends. If a mutual fund has a quota to buy a certain number of shares before the close, the fund's buying may push the price up. When there was floor trading in cotton, the locals loved to push prices to levels where stop orders were clustered. Every once in a while, the price would rise or fall by several percentage points within minutes as waves of stop orders were triggered.

In academic theory and simulations, trends occur when markets are mispriced, as informed traders use market orders to buy undervalued assets or sell overvalued assets (see, this chart, for example).

Finally, as Mr. Sogi notes, some trends may be random. Professor Aronson suggests flipping a coin 300 times and charting the cumulative difference of heads and tails to get an idea of what a random walk can look like. My first attempt resulted in the attached chart, which appears to have clear trends even though the underlying process was random. 



 There is something so unique about this situation that it makes one nostalgic for other noteworthy decisions of a uni-directional nature.

Namely, the Comex Board's 'liquidation only' decree for silver back in 1980. It's a full three decades ago now, but time has hardly taken the bloom off that nefarious rose. Skulduggery at its finest. The ultimate inside job.

Actually, though, I'd imagine that the Comex powers would argue even more strenuously than the the Big Ten officials of today that were guided by nothing more than the well-being of the "players" :

CHICAGO — Northwestern, Illinois and the Big Ten have agreed to run their offenses in only one direction Saturday at Wrigley Field because of concerns that the stadium's outfield wall is too close to the field behind one end zone. Illinois sports information director Kent Brown said Friday the conferences and schools agreed that the offenses will run only toward the west end zone…



I'm sure this review, on p D10 of today's WSJ, of Kevin Cook's book "Titanic Thompson," will be of interest to many on the List.

Thompson was the real-life inspiration for Damon Runyon's Sky Masterson.



I love the contrast of this. Living, as we do, essentially day-by-day (and I know some of you trading jocks live it second-by second) with the nearly imerceptible changes in long-term sentiment, the following contrast I find fascinating:

First, the PBS Frontline Series of 1997 and the article today.

And that's perhaps the largest part of why I cannot help but be bullish, especially when my long-term system of rates and breadth is long. Couple that with the fact that we've had a downer decade, a bottom in March of 09 with all kinds of socioeconomic flags (and technical ones as well) consistent with a bottom, the 7 year cycle which bottomed in 09, and I cannot help but think we are at the beginning of a bull market whose magnitude I wouldn;t venture a guess at– it may be feeble, it may not be, I just can't tell.

I know there are many who (quite convincingly) argue that we are in a very long term down period. But suppose they're right. Even in the smash of 08 people MADE money. I even made (a little) money in that period trading stocks from the long side only! There were some who made a lot of money on the short side. So when I hear the woman as in the article today proclaim that the market "Has just gotten weird," I say "So?" Get weird, stay weird. I'm staying long, buying more with limit orders under this market.



1. Showboating is a form of exaggeration. It is often done because there is a missing need in your life. Often in sports it tries to cover the weakness in your game. Say spectacular slam dunking to hide the lack of outside shot, or perhaps more directly playing up the 3 pointer because they know it does not happen enough. It shows known vulnerability and suggest it is soon time to attack. Often the "weakness" is simply being worn out. Very much like a toddler going on a rampage, right before bedtime and then crashing. At the race line most everyone knew where everyone else's best times stood. Bragging about them before the race meant you were not in your best shape and you were feeling vulnerable. Leave the bragging to us over the hill folks whose game is well past being able to improve upon. And our one time best will only get proportionally better as we look back at it with the distance of time.

2. To answer Mr. Tucker on why some people consistently have to start over, even to the point of suicide, going to the other side of life. I had a friend that self sabotaged many races, seasons and his potential by constantly getting in and out of shape. He would stop running, start eating and gain 20, 30 even 40 pounds. Then suddenly he was a man on a mission. Running 100 + mile weeks soon after 0 mile weeks. He would take trips to far extreme places like mountains or the desert or even different countries. No regular tourist, he would only camp and run. He would regularly call me excitedly tell me of his weight loss, his times dropping and his renewed racing conquest. He loved clawing back, from a nobody, an also ran, to a winner. First of local races and then regional races. But as the competition got tougher and the progress got slower and more gradual you could see the commitment wane and doubt creep back in to his training. Some people love the chase more than the success. My whole Senior year in college I dated a man eater. She simply wanted the thrill of finding someone new to feed the ego. She loved the chase, but hated the day to day doldrums and tasks of a real a relationship. She was a drama Queen.

This is also called the missionary syndrome, where a missionary is "called" to some exotic place. They learn a new vernacular and the inspiring complexity of any culture. It is all new, full of excitement, starting a church, getting it going, meeting new people, changing their lives… Then suddenly they stall, money gets tight and the newness wears off. Then they start realizing the filth, the poverty, the disease, the lack of opportunity for all their converts. They learn the vulgarity of the language and culture. Once the enormity of the task sets in and the hard work begins suddenly they get a new "calling" or start losing the faith. Or they may start drinking carousing with women or a myriad of other sins that disqualifies a spiritual leader. Often time they would simply miss handle the church's money for amounts that State side would hardly tempt anyone, let alone a professed contentious spiritual leader.

Often they would simply mishandle the church's money for amounts that State side would hardly tempt anyone, let alone a professed contentious spiritual leader. But it would seem clear in hindsight all along that you should have watched the church's offering plate and purse strings a little closers with those charismatic leaders that were overpromising and under delivering. Perhaps this is the string that binds them all charismatic, great promise but demons keep them from delivering on those promises.It sometimes hard to distinguish those that are apparently fearless from those that are truly courageous. Except the supposed fearlessness comes from not being afraid to start over, but still always carry the bigger fear of not having a new exciting all consuming goal. The courageous, focus on the goal and are not disturbed by boredom, but thrive on it.

3. For those of you who want just the facts on QE. One must look back to the early 90s to see a period where interest rates on the 10 year took such a 6 month spikes up and down and the 80s to see a down up down spike of such large BPS moves. A interest rate changes. Are we in for another spike up next 6 months? Why does it feel like the 80s are in vogue? Perhaps it is the nostalgia of a simpler time when everything hits the fan; at least the Fed understood what needed to be done to win, "Whip Inflation Now". One wonders why the Sage must write the NYT. It could not be that the Flexion victory see the need to help rewrite history as the rest of the US and world currently views it. Nor could it be and the President medallion given during a lame duck period is some last minute editing of the history books before the political winds shifts power, could it? It makes sense in the information age to make sure you spend the last hours of your reign to make sure your message is etched in the hardest stone or metal known, a medalian.

Speaking of 80s and campaign slogans and QE it all reminds me of the "Save Ferris" campaign except QE chant should be "Save Flexions". Perhaps just the slogan, Ben, Buffet and President are looking for to make the rest of us thankful this Thanksgiving for the benevolence of our leaders in maintaining the status quo. Of course there must be some more creative acronym with a constant "D"in Deflation, instead of the easy vowel like "I".

4. Of course Rocky has a point why should the Fed change tactics and give the Flexions such a blatant quantifiable gift. Consider GM IPO it apparently makes the public whole, because even the best accountant can not add up the lost opportunity cost or the missed creative destruction cost to kicking the can down the road of such a dinosaur. No ones saying Lackey that GM does not make great cars the Corvette comes to mind, or the high minded hybrids that people will rush to buy when everybodies coffers are full. But one cannot expect an economy to always support the high legacy cost, by only offering the high margin high dollar option every time. One cannot help but wonder where the hides must have come from that are being used to make the leather seats in those cars, if they were not simply stole by this opportunity cost versus accounting cost switch from other automakers and ultimately taxed into everybodies car buying bill and lost jobs an prosperity used to spend on real innovative start ups and things beside broken windows.. Piece by piece these hides come out of everybodies wallets. Likewise and similarly where are the hides coming from that are being used to reupholster the Flexion's balance sheets. Is it not it understandable for the public to notice how much lighter their wallets are lately and conclude that somehow those bankers took it from them. And The Question:

I am familiar with the break-down of the Black Scholes equation when a stock drops near zero as it means death to the company. The distribution matters rather than normal volatility. Does a low 10 year rate and with a limit of zero interest rate have such similar effect on how we normally would measure volatility?

Given that there is some upper limit to bond prices when rates hit zero, is there is a similar barrier to the distribution of the bonds prices?

However unlike stock prices interest at zero does not mean death to the underlying. And if so, how does one assume at least the non-Japanese scenario where interest rates do eventually revive. Does it mean the ab-normal distribution varies disproportionally by time? What does this say about the current volatile state of bonds… does it mean that this volatility effect is even more pronounced as the rates goes lower?

These are real questions,not just theory, does this should this and is this effecting hedging cost? How about modeling of interest rate scenarios? Perhaps the bonds prices and BPS recent volatility should be considered even more adnormal is such a low interest rate environment due to this static effect of a possilbe zero rate. 



These polls drive me nuts, and I used to ignore all news when at best.

Mr. Vic sent a note about 1pm Tuesday a few off the lows, and the response was "what bearishness?". Markets move much faster now a days, yet the gist is the same.

So everyone was right! It wasn't a bunch of bearishness. It was a lack of bullishness.

After Hitting 3 Year High, AAII Bullish Sentiment Plunges By Most In 2 Years

Submitted by Tyler Durden on 11/18/2010 09:21

For a stark demonstration of market momentum euphoria look no further than the AAII weekly bullish/neutral/bearish sentiment. After hitting 57.56% in the week ended November 11, the highest since 2007, bullish sentiment plunged by 17.56%, to 40.00%, the biggest drop since January 2009, and the fourth biggest shift in sentiment since 2006. Alas, this is the kind of bipolar sentiment shift that will accompany a market in which everything continues to correlate with near precision to the dollar, and in which no bad news matter until they matter, and from all in buying the mood shifts to relentless selling…



 An article that would suggest the Knicks have less skilled players and team winning % will not be helped by mean reversion. Given Tversky, Gould, Buffett, and Graham are all mentioned I wonder if all the conclusions reached by M have validity:

"Professional basketball in the U.S. certainly stands out as the sport where skill plays the largest role in shaping results. One intriguing explanation for the NBA's strong skill contribution is the height of the players. In most sports, the most skillful players within a wide range of heights can make it to the pros. But a relatively small percentage of the population is tall enough to play in the NBA. In their book, only about 3 percent of the male population in America is 6' 3" or taller, and a tiny percentage is above 6' 10" (about four standard deviations from the average). Yet almost 30 percent of NBA players are at least 6' 10". They conclude that a "short supply of tall people" contribute to the talent disparity and hence the greater relative role of skill. The right tail of the height distribution does not overlap completely with the right tail of the skill distribution. The Wages of Wins, David Berri, Martin Schmidt, and Stacey Brook note that…"

George Zachar comments: 

Occam's razor: The Knicks' owner, James Dolan, is a hoodoo.



 One of the ways guaranteed to lose in racket sports is showboating. It takes energy from you, upsets your rhythm, and energizes your opponent. One of the ways the Knicks lose is by showboating. Their coach is a show boat and has his own tv program, that must distract him from teaching the players such things as how to shoot a free throw, and how to get a rebound. But worst of all is Gallinari, the italian stallian, who looks just like all my opponents when he finally makes one of his non-percentage 3 point shots, on which it's impossible to even hope for a rebound. He gloats, looks at the bench, expands his chest, looks for a teammate to shake hands with, and struts backwards as he finally gets into bad positin for the defense. I beat Martie Hogan that way in racket ball, as he gloated every time he won a point, and I caught him 21-20 in the third game, being the only person in history to have a + record on him.



This article makes a seemingly profound point. Is this a fundamental shift due to better supply chains or just a temporary but completely natural result of a decade-long liquidity glut that will resolve itself by predictable supply destruction?

…over the last decade, the global economy has experienced a fundamental and historic shift from centuries during which supply and demand were roughly balanced, to our current situation in which supply significantly outstrips the demand available to absorb it. This is largely the result of the relatively new science of Supply Chain Management, which systematized the process of marshaling resources to bring products and services to market. The implication is that most modern business strategies are now obsolete, as the new competitive battlefield has now shifted from supply to that of finding remaining pools of profitable demand. That alone is enough to provoke a radical change in how businesses are organized and how they behave. It suggests that most companies, including the most successful, no longer have a lock on survival because the ground has suddenly shifted beneath their feet. That, of course, is the recipe for a…



 Obama to award Warren Buffett Medal of Freedom

WASHINGTON (Reuters) – President Barack Obama will name Warren Buffett as one of fifteen winners of the 2010 Medal of Freedom, a White House official said on Wednesday.

Buffett, one of the world's most successful investors who has donated a vast chunk of his multibillion dollar fortune to charity, will receive the medal at a White House ceremony early next year. The award is the highest U.S. civilian honor.

Buffett is one of Obama's closest defenders in the business community and the president has sought his counsel dating back to the 2008 presidential campaign and since.

Nigel Davies adds:

A person in Sage's position would be wise to support both sides so that whoever wins will be grateful.

Scott Brooks comments:

Whoever wins will go to him with cup in hand. He's a "made man".

Jeff Watson shares:

Barry Ritholtz, on his blog, crafted an excellent parody of the Oracle's thank you to Uncle Sam note in the NYT.

Scott Brooks adds:

We as a nation have foolishly allowed the federal government, which was set up to by the states to serve the states and endowed with less than 20 enumerated powers, to exceed it's mandate. Today, we not only have a nearly omnipotent federal government, that is controlled by two political parties that are only nominally different in key area's (i.e. they are taking different paths to the same destination), but we have a single leader that is so powerful that our entire country revolves around this one man, regardless of who "he" is.

We are learning the hard way that when we put together a "gang of voters" to elect a person ("our guy") to give us favors, that we are endowing that "office" (position) with the power. And when "our guy" is no longer in the office, power to "give favors" doesn't leave with him, they stay with the office and are/can be used the person who occupies that position next.

That is legacy of Lincoln playing out before our eyes. He saved our nation is a contiguous geographical/demographic cohort, but the ultimate legacy of his power laid the groundwork for what we are as a nation today. (that noise you just heard was Stefan's head exploding.)

Stefan Jovanovich responds: 

I can't argue with Scott about the disease– imperial Federalism; but he and I will always have very different opinions about its causes. Lincoln had no actual legacy; that is why he was a safe saint for everyone who wanted to ignore the 14th Amendment. Anyone who takes the trouble to watch Birth of a Nation will see that. What makes my hero, Grant, a universally-reviled figure is that he was willing to use his powers as Commander in Chief to enforce the individual rights granted to citizens by the Constitution (which is what the powers are there for) and, at the same time, he had no taste for having the government "manage" life in America or the country's money. The Big Lie in the tradition of American conservatism is how much the doctrine of "states rights" was about imposing slavery on the territories and free states by using the Federal power and how much it continued to be about keeping the darkies down and those awful immigrants away from our shores. Conservatives were more than happy to extend government's reach for those purposes. Roger Taney's career– first as the enabler of Jackson's "spreading the wealth around" with the state banks and then as Chief Justice - is the best evidence of this unavoidable historical truth.

I know it does not fit Scott's construct, but it is what happened. Thanks to Grant and his Republicans, the Federal government had far less power of citizens' lives in 1890 than it had in 1848; and, if you exclude the political tyranny over black citizens, the country's government as a whole was not only smaller and less expensive but also less authoritarian under Harrison than it had been under Polk. The modern expansion of Federal authority has its sources in the two World Wars and the Progressive reforms in banking and trade laws that preceded them. Lincoln can rest in peace. As for my head, the only thing that even gives it an occasional ache is the continuing belief of otherwise sensible conservatives that the tyrannies of county sheriffs and the state drug laws are somehow less offensive than those of the Department of Agriculture. As my favorite Justice– Hugo Black– once said, "No law means no law". We have far too much of all kinds in this country, and that - not the relative distribution of the presumption of authority - remains the problem.

Gary Rogan writes:

Once again an excellent educational post from Stefan. I just have a quibble with this statement: "As for my head, the only thing that even gives it an occasional ache is the continuing belief of otherwise sensible conservatives that the tyrannies of county sheriffs and the state drug laws are somehow less offensive than those of the Department of Agriculture." Without commenting on the "merits" of either form of tyranny, anything Federal IS more offensive because (a) the Founders' idea was that you could escape a state much more easily than the Federal government if the state becomes offensive, by moving to another state as opposed to leaving the country, thus actually providing feedback to the state that it has gone too far (b) ANY claim by the Federal government of non-enumerated powers is likely un-constitutional and against the spirit of the founding of the country.

Stefan Jovanovich responds:

 I wish what Gary wrote was true. Mobility in 1787 was practically non-existent. People rarely moved between counties, let alone between states. There were more French soldiers at Yorktown than American because the French could move on ships while the Americans had to march. Gary may know the Constitutional debates better than I do; but I can't find a single remarks by any of the Founders regarding the idea that a citizen could somehow escape state tyranny by moving. What the Anti-Federalists disliked most about the Constitution was that it placed real limits on the claims of the states to absolute authority. Patrick Henry is, in that regard, all too typical: brave words about tyranny followed by persistent lobbying that the boundaries of the state of Virginia should extend as far west as the Pacific Ocean. The Founders who voted in favor of the adoption of the Constitution wanted a Union that would guarantee citizens' Federal rights and a supremacy clause that would assure that those rights could not be abolished by State or local action. They wanted the doctrine of "non-enumerated powers" to apply as much to the states as to the Union, and they were so adamant about establishing a balance of authorities precisely because the states had behaved so badly during the Revolution. I should have recommended Calvin H. Johnson's book, Righteous Anger at the Wicked States: The Meaning of the Founders' Constitution before now. It is the best history on the subject, and - like Grant - it remains thoroughly unpopular because it refuses to accept the rightist cant of slave-states rights or the leftist fantasy of inherent Federal moral superiority.

As always, the historical truth struggles to get its boots on.

"A lie can travel halfway round the world while the truth is putting on its boots." - This quote has been attributed to Mark Twain, but Twain stole it ("geniuses steal") from Charles Haddon Spurgeon (1834-92), who said: "A lie will go round the world while truth is pulling its boots on."



 With gold around $1400 per oz. I took the opportunity while in Alabama last week to head to the Alabama Gold Camp (AGC) near Cragford  to learn how to pan for gold. It was a pleasant 2-hour drive from Montgomery through bright fall colors to get to the site.

Once at the AGC "country store" it became readily apparent to the proprietress (an extremely helpful and nice husband and wife team run the facility for the landowner) that I was a pure greenhorn lacking the proper equipment and skills needed for the job (no need to mention the geology degree here for sure).

Although it was mentioned that a high banker dredge/sluice system could be rented for about $35 for several hours that would do the work of several panning prospectors, I passed on the labor saving device and insisted on the purist pursuit of gold panning proficiency.

Quickly the proprietress assessed my needs and outfitted me with a $10 shovel; a green plastic, riffled, gold pan; a sieve; 5-gallon bucket; squirt bottle; a plastic "pipette" to suck up flakes of gold; a Brillo pad, and several small glass bottles to store my "sure to be found" gold. Total investment cost around $70 with the daily permit.

The AGC store, to be sure, was extremely well equipped and organized with all manner of gold sluices, dredgers and tools for sale that easily could have brought the bill into the hundreds of dollars. That there is money to be made in providing picks and shovels, food, cabins and camping facilities to prospectors is indisputable. The husband of the husband-wife AGC team, with an electrical background, noted that he intends to bring in power to run rental high bankers in the near future and replace the current gasoline fed units. The entrepreneurial spirit was quite evident at this well-run facility. (examples of the type of equipment available now for the small time prospector )

The camp proprietress then gave me a very instructive lesson in how to pan and took me to the front of the store to a water trough full of gold- bearing sand and gravel. She pointed out it was necessary to "classify" the material first, which basically meant sieving out the larger gravel and leaving orange-colored sand. Wonderful specimens of gold-laden quarz gravel were on display to emphasize and underscore the need to look carefully through the sieved gravel before tossing it aside. The gravel also was laden with small rounded garnets. If one was lucky a good size, semi-precious garnet might be found and cut into a fine ring.

After transferring some the sieved silt and sand into the gold pan, my instructor carefully washed it back and forth with water at the proper angle to prevent the unwanted loss of the finer dark auriferous sand that soon separated out into the riffles of the pan. It was readily apparent that panning takes skill and practice. The washing angle and agitation level have to be carefully undertaken. A sharp and attentive eye is needed.

Soon enough shiny material began to appear in the washed sands in my instructor's pan, but alas it was tiny flakes of muscovite (mica), that pesky phyllosilicate that mimics the flash of gold. After a few more washings, however, using the squirt bottle, my patient teacher had one speck of gold that could be distinguished from the mica. Excitedly I reached with my finger to pick the gold from the pan but was admonished and told that the tiny gold flake might pick up the oil from my skin and float out of the pan. No this gold must be "pipetted" or sucked up with the small plastic tube. It was interesting to note that the Brillo pad was needed to condition/triple-wash the new green plastic gold pan bought in the store for the same reason–oil used in the plastic forms to make the pan had to be removed before it could be used to pan for gold.

With the gold panning lesson completed, I was assigned my location on the nearby creek and told to pan material that had been removed by a track hoe and left on the banks of the creek. It turned out that a white-bearded, grizzled prospector in coveralls and boots and an old van with Alaska plates (8 years in that state as it turned out) had already set up a portable power sluice (i.e. in the same location. He was a friendly fellow though and not too territorial and told me that I would have good luck if I took a few shovel loads from his pile.

But after 2 hours of hard shoveling, sieving, panning and such, my arms ached, my tennis-shoe covered feet were cold from cool creek water and my greenhorn gold panning efforts had produced only black sand (possibly magnetite or reduced iron pyrite), mica, and a plethora of small garnets washed out from schist. No gold and the lowering sun, low light levels, and cooler temperatures told me it was time to pack it up and head for home. Meanwhile the undaunted, veteran prospectors prepared to camp out by the busy railroad tracks and wait for the next day.

Before I left the site, the AGC proprietor stopped by on a 4-wheeler and gave further panning instruction and noted that while the gold found might be small in amount, it was for him the excitement of finding something never before seen and 100s of millions of years old. He stated that one gained respect for the pre-1849ers in Alabama and Georgia who went out in the field back then with heavy gold pans, panning for endless hours with "Popeye-developed" forearms, in hopes of finding a few, gold flakes.

Gold fever reached a top in Alabama in the 1840s when a German immigrant discovered gold while digging a wine cellar near Hillabee Creek, north of present Alexander City—the find became the "Dutch Bend Mine". In fact nearby Goldville, AL had over 5000 prospectors in the early 1840s and hyperbolically handled quantities of mail rivaling New York City (perhaps enticements for investors and gold seekers?) Soon after though the prospectors headed for the more lucrative California gold fields. With WWI graphite production from Clay County became the target mineral of interest in the 1920s.

Yes, panning for gold is a fun hobby for the entire family for which there is always the potential to find a nice nugget to pay for dinner. The exercise, focused concentration on the task, and fresh country air is invigorating and conducive to a good night's sleep. And the $3 BBQ sandwich at the end of the day hits the spot.



 1. The bonds are acting more like the S&P futures of the old days, and the S&P futures are acting more like the bonds of the old days. This is the kind of co-evolution that one sees so much between plants and animals. My statement would have to be quantified, but it is patently apparent to my many followers.

2. The biggest mistake a person can make in life or markets that is easiest to correct is getting in over the head.

3. The Knicks are like the person who has a system that is guaranteed to fail because of poor money management or excessive slippage. They are endlessly creative in losing. They cant win because they have a bad coach, and what Marbury says about the coach having a system that worked 10 years ago but is not applicable could be said about most market systems. Marbury is a reprehensible personage in my book, typified by his refusal to play when asked last year. No wonder no coach will touch him, aside from the fact that he's a shooting star who's not fast or accurate enough to be good anymore, but even a reprehensible person could say something true because he's not beholden to anyone. In case, I am always inspired by the many ways the Knicks have of losing, (they're currently on a 6 game streak). Yesterday they lost never being ahead at any time during the game. Considering the number of minutes, it's highly improbable, although I would guess it's true in 15% of all games. In any case I looked to see how many times the market is up each hour of the day, and whether that's bullish or bearish. I found no regularities, except that it's bullish for the fest of the day if it's happened every hour until 300 pm, except that it hasn't worked for the last 2 years. Surprisingly the market registers up every hour of the day 1/4 of all days, and it's down every hour of the day, about 22% of all days.

4. It is an interesting exercise to estimate the expected move of a dependent variable from an independent variable being up or down on the day given it's correlation. I have found a useful approximation to be that the expected value is the mean change + 90% of the standard deviation. For example, if the correlation between bonds and stocks is 0.20 and the standard dev of stocks is 10, then when bonds are up, you can expect stocks to be up 1.8. I don't believe it sensible to give a closed form solution of this, given all the mixed up distributions and varying parameters, and relations between the absolute deviation and the standard deviation, and up or down, although one is certainly possible.

Pitt T. Maner III responds:

About the knicks: a statistical anomaly. Ostensibly a loss due to fewer free throws. Was there a dribble off the foot near the end as contributing factor?

"They made more field goals. They made more 3-pointers.
They had more rebounds.
They had more assists.
They had fewer turnovers.

And they had more blocked shots.

The Elias Sports Bureau told us that the last 266 times a team outperformed its opponent in all of those statistical categories, that team won the game.

Except the Knicks didn't win. They lost again, 120-118, their sixth straight defeat, this one starting a tough West Coast road trip.

The last team to lose a game despite meeting all of the criteria listed above were the Cleveland Cavaliers, who lost to the Toronto Raptors, 95-87 on November 22, 2006, a game Cleveland lost despite those edges, and 30 points, 10 rebounds, eight assists, and four steals from LeBron James. "…..

Lars Van Dort adds:

Dean Oliver is for basketball analysis what Bill James is for baseball analysis. Oliver is known for identifying the 'Four Factors' that win basketball games, in this ranking of importance:

1. Shooting (effective field goal percentage)

2. Turnovers per possession

3. Offensive rebounding percentage

4. Free throws per possession (can be measured as free throw attempts as well as free throws made, Oliver actually prefers the first, because he thinks getting fouled is the more variable skill)

See more.  He has a book 'Basketball on Paper' I'd like to read.

When applying the four factors to the Knicks-Nuggets game, both teams win two of them. The Knicks had better numbers in turnovers and offensive rebounding, but the Nuggets where better in shooting and getting/making free throws. Seen like this, the (2 pt) loss for the Knicks is less of a mystery. Dean Oliver actually works for the Nuggets as their Director of Quantitative Analysis.As for the mentioned 2006 Cavaliers-Raptors game that is also supposed to be an anomaly, also there both teams won 2 of 4 factors, with a massive edge in free throws for the winning Raptors.

I think assists is the most useless statistic the ESPN article mentions, how would that be of importance in winning games.

Tonight the Knicks play against Sacramento, who are on a nice 5 game losing streak themselves and are the NBA's worst defensive team. Let's see if they are motivated by the Chair's post and can score a win somehow.

Pitt T. Maner III adds:

Assists would be seemingly indicative of unselfish ball distribution and/or offensive efficiency and perhaps leadership by a good passing point guard (ie. Cousy, Stockton, Magic, Nash, Kidd, etc.). Thinking back to the Celtics with Bird, Parrish, DJ, McHale et al. or even earlier with Havlicek and JoJo White it seems that passing and assist creation were an important factor in team success. Assists reflect a thought process such that a player is normally passing the ball to a teammate who is unguarded or in a better or higher percentage shooting position—shot selection and field goal % are thus shown to be valued by the team.

Granted if you have a superstar player on the team, run and gun works well too.

A post about Dean Oliver (thanks to Lars for the book recommendation) suggests that he found assists, as a single statistic, to have a good correlation with winning percentage. Perhaps the rankings have changed with more recent data. Defensive (not offensive) rebounds (holding other teams to one shot) though might explain Dennis Rodman's longevity in the game.

Category Won Loss Tied Win %
Field Goal % 4595 1132 33 .801
Assists 4007 1414 339 .725
Def. Rbds. 3984 1485 291 .717
Ass./Turn ratio 3991 1717 52 .697
Total Rbds. 3526 1959 275 .636
FT's made 3453 2022 284 .624
Blocks 3182 1930 648 .609
Free Throw att. 3358 2174 228 .603
Fewer fouls 3256 2094 410 .601
Steals 3148 2037 575 .596
Fewer Turns 3114 2186 460 .581
Free throw % 3224 2459 77 .566
Offensive rbd. % 3205 2513 42 .560
Offensive rbds. 2452 2900 408 .461




 It's become popular in this community to bash the Fed's QE– and most recently, the story championed by some is that the Fed is "giving away taxpayer money" to the primary dealers with the mechanics of its open market purchases. This hysteria reached an embarrassing climax when the Chair chose to post a Daily Spec Website link to Zero Hedge's entirely wrong article on the subject entitled "Is QE2 a Stealthy $90 Billion Gifting Scheme to The Primary Dealers?"

I am not a fan of QE, however, the facts are quite different from the conspiracy theorists' allegation regarding the costs and mechanics.

Here is a link to today's open market operations.

An objective observer notes that the largest purchases were in securities that were between 2 and 5 basis points CHEAP on the curve. An objective observer further notes that there were no purchases in quite a few securities — and on balance, those securities were rich spots on the yield curve. Furthermore, anyone with a Cantor-Fitz broker screen can see that all of these securities trade with a 1 to 2/32 bid-ask spread.

My conclusion is that the open market desk today did a fairly good job at buying securities that represented relative value on the yield curve. And even if the NY Fed pays the offer side on its entire 600 Billion QE, that bid/ask spread totals about $187 million. That isn't chump change, but it is materially smaller than the savings which they can achieve by picking "cheap" points on the yield curve.

If the community wants to debate the philosophical and economic issues at stake, that seems productive. But I hope these facts will put to rest the baloney that the NY Fed has handed a $90 Billion gift to the dealer community — as Zero Hedge wrote — and which Mr. Rogan and the Chair gullibly accepted.

George Zachar writes:

It's been known all along that Goldman's branch at Liberty Street tends to buy the "cheap" parts of the targeted curve segment. It's childsplay for dealers knowing in advance the outlines of the NY Fed buyback program to accumulate the "right" securities, certain they'll face a forced buyer in the near future. The size of this "edge" is only known by the P/L clerks around the street.

Even if it's "only" a few hundred million dollars, it's becoming increasingly hard to view the current matrix of finance/govt interlocks as anything but a brazen conspiracy to loot a defenseless public.

Tim Melvin writes:

Of course there is NO chance the dealers bought those securities a couple of days ago and sold them "cheap on the curve" today. Such a thing would be unheard of on Wall Street. 

Rocky Humbert replies:

In the event that some members of the community have never run a treasury arbitrage book, I'll let you all in on the dirty little secret of how it works: (1) buy the stuff that's CHEAP. (2) short the stuff that's EXPENSIVE. (3) Pray that the repo-clerk doesn't screw you on the financing. (4) Wait for a real money (i.e. Pimco, Fidelity, OR THE NY FED) account to close the arbitrage. It's always nice as a broker dealer to avoid paying the bid/ask spread, however, if even LTCM (a non-broker-dealer) had stuck to this strategy, they'd still be in business.

Mr. Zachar seems "shocked - just shocked" that Goldman might buy the cheap part of the yield curve in the course of its market operations. But that is the job of a treasury trader — QE or no-QE. I'd also remind him that primary dealers are REQUIRED to provide a bid and offer to the NY Fed — whether or not they have inventory. I feel some sympathy for the hapless mid-curve trader who had to make an offer on $2 Billion of the 9%'s of 11/18 — since that issue is probably held by a bunch of widows and orphans, and the dealer would have been stuck paying a reverse rate for god-knows-how-long.

I am skeptic about the efficacy of QE — for a variety of macro-economic and feedback-loop reasons, but I refuse to stoop to unconvincing hyperbole such as "looting a defenseless public." Whatever happened to the ballyhoo deflation and the scientific method?

George Zachar recovers:

I traded on-the-run mortgage-backed securities at primary dealers for a decade…"shocked" is not exactly how I feel.

The "dirty little secret" of primary dealer flow trading is that front-running inflexible counter-parties is a central strategy. Not news.

One problem with QE2 is that the primary dealers have sympathetic decision-makers on the other side of the trade who are not trading their own capital, or even client capital that is accountable. The dealers are blissfully front-running the taxpayers of the US, with their own pals facilitating the trade.

As someone who owns high-end real estate in NYC, it is very much in my interest for the local swells to fleece the broad public, keeping a bid under my assets.

That doesn't alter the nature of what's happening to the nation's taxpayers. One man's clever arbitrage P/L is another's "looting the tax payer".

Vince Fulco writes:

On the eve of the GM deal and near the holiday season, a fine American like Rattner reminds us of all WE have to be thankful for w.r.t. the actions taken by the Bush and Obama admins. Reminds me of the recurring historical magazine cover which keeps popping into my head…anyone remember the line from National Lampoon in the 1970s, "Buy the magazine or we'll shoot this dog!"




 Just finished "Surprise" again. Aubrey went at Marengo and was hulled over 200 times with 24 pounders. He succeeded in convincing Linois that the Indiamen had a larger military escort and Linois backed down, but Surprise took a tremendous battering. Had the french gone for the rigging instead of her hull things may have been worse. The fact that Marengo couldn't open her lower (leeward in this case) gunports and bring her 36 pounders to bear (due to the swell) was sheer good fortune and provided the crux of Aubreys tactic. Things could have been much, much worse, women and wine or no!

Chris Tucker

A speculator replies:

Such a weakness was also prevalent in the boy wonder, Jesse Livermore, who was married 4 times, and had several follies girls on his payroll when he filed for bankruptcy the fourth time before committing suicide because of his excessive churning. An interesting side light is that one of his wives had 5 husbands, including him, all of whom committed suicide.

Chris Tucker writes back: 

Why is that? Must be something glandular that leads to the inevitable incorrect choice - I'm sure there's a human behavior study in there someplace.

A speculator writes:

it is guaranteed to happen when one's position is such that one cant hold for fear of ruination, and the market senses that and takes one final move to shake the weak holders out, just at the worst time as it did with me. The antidote to that terrible condition is to wait, hold the fire, as Jack Aubrey did with the French and then go right at them.

P. S. One had an excessive position in fixed income and stocks believing
that they would maintain their negative coterminous correlation and
could not appropriately hold both fixed income and stocks at the same
time, so had to choose one, and chose the wrong one. Guaranteed to

Chris Tucker replies:

Yes, though one could argue that strategy was easier for him to effect as he faced an adversary less stout than current markets.

A speculator responds:

Yes. The French were too interested in their food and women to put up much of a defense even when they had the better ships.

One had in his day in his vault, many tokens of the tendency of the French to revel in those priorities, with many exquisite French Prisoner of War sculptures, ( including one in ivory of the Guillotine), as a reminder of that all too human tendency and its inevitable consequences.



 More grist for the Chair:

Buffett Thanks Uncle Sam for Helping Economy

The Associated Press
By JOSH FUNK AP Business Writer
November 17, 2010 (AP)

Billionaire Warren Buffett wants people to know he thinks the U.S. government performed well during the economic meltdown of 2008.

So the chairman and CEO of Berkshire Hathaway Inc. wrote a thank-you note to "Uncle Sam" that the New York Times published Wednesday on its op-ed page.

Buffett used the opinion piece to reiterate his view that the government should be praised for its efforts to stabilize the economy with massive bailouts and stimulus spending.



 One wonders whether there is excessive pessimism at this time.

Vince Fulco comments: 

Where is the bolt from the blue story to save all the longs and squeeze the life out of the shorts? Something along the lines of "Berkshire asking for outsized allocation of GM…"

Rocky Humbert writes:

Forgive me for asking, but where is the excess pessimism? Last week's AAII Survey had the second lowest level of pessimism of the year. And, even after this bond market shellacking, the five year tips are still NEGATIVE 11 basis points; and yes, the commodity space is having a Niagra Falls decline– but from the highest levels since 2008. If one's time horizon is twenty minutes, perhaps this constitutes "excessive pessimism" but in my world, one hopes the Chair's barrel is waterproof and well-lined should this evolve into a real waterfall (not that I'm predicting anything). I'll see y'all down river … !

Stefan Jovanovich writes:

 There is still considerable pessimism in consumer sentiment, measured by the Conference Board and Michigan Surveys. But, at the same time, the general public has greater confidence about the possibilities of good results from the recent political change than the professionals in D.C. do.

So we have a Hugh Hendry paradox: as Rocky notes, the investor class continues to believe in the future of risk assets and is, at the same time, pessimistic about political change, while the common (sic) people know they are in hard times but have hopes that the Tea Party/Republicans will actually change things for the better.

That, and $8 will buy Vic the cup of coffee I will soon owe him.

Alston Mabry writes:

Everyone needs to fret for a while and then wake up one morning and think, "Oh yeah, the New York Fed is buying $6B a day! What was I thinking?"

Paolo Pezzutti adds:

In no way. Europe can be a better haven than the dollar as bailouts continue to be the only way to delay the payment of an expensive bill. The dollar found a wall at 1.40, which is too high even for QE.

Victor Niederhoffer responds:

Ultimately the public will go on strike. Enoch Powell predicted this so clearly 25 years ago. By what normal human instinct, can people in Germany or any other country be expected to spend their money and work, to give to visible needy in another country they've never met or who are not part of their family. When money is printed and given to a specific group, it reduces the value of everything that other people own, by that total I believe, the same way a discovery of a mineral reduces the value of every other holder of that minerals by the amount of the value of the find. Landburgh is good on this point, and I think I am correct in generalizing.

Stefan Jovanovich comments:

 The Second National Bank had been chartered to act as an American cousin to the Bank of England - a private bank that would be the nation's depository for the taxes collected by the Treasury. When Jackson campaigned for reelection in 1832, he ran on a platform of "an independent Treasury" - i.e. the nation's precious specie would not be under a single bank's control but would be held "independently". What that meant in practical terms was that the specie on deposit in Philadelphia and the Bank of the United States' branches would be transferred to banks that favored the Democrats. (My own theory is that this was the first of several wars between the New York and Pennsylvania bankers. Henry Clay's running mate, the Whig Vice-Presidential nominee, was John Sergeant was from Pennsylvania; Jackson's Vice President was Martin Van Buren, "the Little Magician" from New York.) After Jackson's landslide victory in the 1832 election, he issued an executive order transferring the Treasury's gold to seven state-chartered banks. By the end of 1836 the Treasury had accounts at ninety-one of Jackson's "pet" banks. Most of these failed in 1837, causing the Panic that ended Martin Van Buren's political career.

Jackson and Clay - the first two prominent American politicians from west of the Appalachians - thoroughly hated each other. There survives a letter that Clay wrote to Nicholas Biddle, the 2nd National Bank's President, before the 1832 election. It says volumes about Clay's inability to count votes (in the election he won only 6 of the 23 states and gained 49 electoral votes compared to Jackson's 219 and the anti-Masonic candidate's 7) and his and Biddle's naïve optimism that people actually like bankers: "You ask what is the effect of the Veto (Jackson had vetoed the renewal of the bank's charter). My impression is that it is working as well as the friends of the Bank and of the country could desire. I have always deplored making the Bank a party question, but since the President will have it so, he must pay the penalty of his own rashness. As to the Veto message I am delighted with it. It has all the fury of a chained panther biting the bars of his cage. It is really a manifesto of anarchy such as Marat or Robespierre might have issued to the mob of the faubourg St Antoine: and my hope is that it will contribute to relieve the country from the dominion of these miserable people. You are destined to be the instrument of that deliverance, and at no period of your life has the country ever had a deeper stake in you. I wish you success most cordially, because I believe the institutions of the Union are involved in it."

I stopped reading Griffin's book when I got to this explanation of the Second National Bank crisis: Biddle's bank "had promised to continue the tradition of moderating the other banks by refusing to accept any of their notes unless they were redeemable in specie on demand. But when the other banks returned the gesture and required that the new Bank also pay out specie on their demand it frequently lost its resolve." Whatever Nicholas Biddle's faults, "resolve" was not one of them. Biddle used his position as the de facto central bank to call in the loans of the "country banks" in the year between Jackson's veto of the recharter and the October 1833 when Jackson's executive order took effect. Jackson turned that to his benefit by announcing that the country should not come to him for money but should go to Mr. Biddle: "he has all your money." Biddle proved to be a better banker than the state banks; but he was unable to survive the ravages of the Panic of 1837. By 1841 his bank was also gone.

Gary's theory about xenophobia is interesting but it does not fit the facts. Before the Civil War "the public" was chronically short money; there was very little for a central bank to steal, and there was no central bank. The episode from the Resumption Act to World War I is the exception in our history, not the rule; it is the only time when both the people and the government were net savers and the New York Clearing House handled all the transfers now handled by the Fed without finding it necessary to try to reconcile the divergent needs of the holders of money and the buyers and sellers of credit.

Russ Sears writes:

 I guess we will see tomorrow if such a nice start deflating late in day to negative for S&P index yesterday was close enough to count.

Gary Rogan writes:

According to G Edgar Griffin, the author of "The Creature of Jekyll Island" (here's an audio link where he explains everything he believes) the only purpose of all central banks (from the government perspective) is to steal money from the public through inflation in order to avoid explicit taxation. All else is pretense. The mechanism is exactly the same: print, give to a particular group, dilute the value for all pre-existing owners. It's interesting that it takes doing this very thing, but giving the money to foreigners instead of the government which of course spends it on the favored domestic groups, for the public to become agitated. It takes xenophobia to make people care about what is equally objectionable in both cases. 

Stefan Jovanovich adds:

There is no question that the Panic of 1907 created a trans-Atlantic consensus that trade had to be "better managed" by the financial authorities in London and New York through coordinated central banking. What is usually omitted from the story is how much of that consensus came from purely mercantilist interests. Both the Brits and the Americans had been literally shocked by how effective the Norwegians and Germans had become as competitors in the North Atlantic shipping trade. (J.P. Morgan's one conspicuous failure was his attempt to create a shipping trust; the Hamburg-American Line saw no reason why they should abandon their Wal-Mart approach to fare pricing.) Cecil Rhodes and Teddy Roosevelt contributed their view that the "Anglo-Saxon" race should rule the world and its gold supply. Gary's comment about xenophobia is, If anything, too polite with regard to Aldrich-Vreeland and what followed. Our modern monetary system has its founding in a joint desire of the more leveraged British and American banks to create a permanent imperial preference that would allow them to be able to clip their own coins in the name of "the money supply". What is amazing is that this is - even now - considered a good thing by the same academics who shudder at the idea that people should be able to ship goods and send services across sovereign boundaries by paying an ad valorem customs excise and not bothering the WTO.

Read more here.

What is completely forgotten is that the pre-WW I Left in the United States and France agreed with laissez faire capitalists on the question of open trade and the gold standard. As Michael Polyani's brother Karl puts it, "where Marx and Ricardo agreed, the nineteenth century knew no doubt." The Socialists and peaceful anarchists like my grandfather agreed with their class enemies: both opposed the Federal Reserve Act because it would allow the government to spend money it had neither borrowed nor collected in taxes. Both agreed that the gold standard and trade taxed at value but not otherwise restricted were the foundations of the capitalist economic order. The Socialists like Jean Jaures assumed that the growth of international commerce would lead to a peaceful transformation of world affairs because it would make war financially impossible. They were right, of course. And a lot of good it did them.

Without the Federal Reserve's literal monopoly over international transfers, it would have been impossible for the Wilson Administration to allow the Treasury Department to (1) suspend the domestic gold standard, (2) close the NY stock exchange for 4 months, and (3) reach swap agreements with Britain and France that allowed them to run a bar tab for war supplies. If international exchange had followed the old pattern of individual banks dealing with their foreign correspondents, the more cautious American banks would very quickly have come to the conclusion that their correspondent's IOUs could no longer be discounted and they would need to ask for some gold bars to be packed in barrels and put on a ship heading west before they sent the next shipment of artillery shell casings from Pittsburgh.



What a market backdrop for GM. Can the weather be any worse for this ship?



 This article on Bloomberg provides good support to the Euroskeptics: "Euro Dominos Will Fall Until Currency Is Split"

The idea is that there is a domino effect at work. This process isn't going to stop until the euro is taken apart. First Greece went bust (is it over?). Now Ireland is on the brink of a bailout. Portugal is next, and why not Spain and Italy. In each country, it will be a different trigger that causes a collapse, but the root is the same. The economies are too different for a single central bank. This crisis will involve country after country. The only fix is splitting up the euro according to the author.

I think that what is happening in Europe is dramatic. With the slogan "the show must go on", in order to maintain the same living and welfare standards, each government for sound (?) political and internal stability reasons has decided (or there was no other choice to avoid a collapse?) to let the deficit grow, hoping that the crisis would go away after a reasonable time. However, what does "reasonable" mean? What we are missing is that the transfer of wealth toward other regions of the world is not temporary. It has become structural unless our countries are able to change significantly their social and industrial policies. Meanwhile, unless serious and unpopular measures are taken, the domino effect will continue sinking the Euro. We have to become "poorer" and lower our expectations.

This is the issue that also the US is facing. And Quantitative Easing is not the right answer. The question between the Euro and the dollar is who is going to sink first. So far, with the Euro at 1.36 it seems that a certain balance is maintained (agreed?). However, last May was the first attempt (and may be warning) that the Euro is the weak link of the chain.




One would believe that the Fed's credibility is on the line and that they might pull out all the stops to save it, and Omid's cartoon and the vitriol towards them transmitted by the interested economists, and those who would seem doomsday is not isolated.

Tim Melvin adds:

My question for the Fed is simply "If 1.7 trillion did not work, what makes you think $600 billion will?"

Victor Niederhoffer replies:

Regardless of that, they have many interested flexions who would come to the rescue around the world, not the least of whom has been mentioned by the polymathic trend follower in the context of a shout out to the academic work of the all too human friend of Summers who couldn't resist picking the pockets of the Russians.

George Zachar agrees:

There is no doubt the flexers will circle their wagons ever-tighter, and draw upon their considerable resources.

The one thing they never anticipated, anywhere in their writings or chatter, was a popular revolt by the reserve currency's masses. They have no tools other than soothing "trust us" propaganda to fight back, and it's far too late in the game for that to be effective.

Vince Fulco asks why the volte face:

One of the things I have trouble reconciling is the about face Bernanke did during the summer. At one point, he seemed quite firm in his expressed opinion that the Fed had done all it could do and it was the turn of the legislative branch do the heavy lifting. For once in recent memory, it looked like a Fed head would not be rolled by the Pols. Something or someone turned his policy course abruptly and demolished any chance of holding the fiscal deciders feet to the fire. Surely the unemployment forecasts were well known through the balance of the year. Maybe a quid pro quo for pushing thru his confirmation? If only I had listened to the well connected Larry Lindsey in the middle of the summer when he telegraphed QE2 at YE and stepping on the accelerator as the best course of action. I could be sailing the islands for the holidays. Suffice it to say, I remain doubtful of all this new found budget conservatism being bandied about.

Rocky Humbert feigns puzzlement:

It's a strange day when the United Nations General Assembly and the Chair are bedfellows. If the Russians and Chinese and Europeans are upset about QE, and are lecturing the Fed on the appropriate way to do its job, a kneejerk reaction might be to conclude that the Fed has stumbled upon something good — imagine if OPEC were to complain about the environmental hazards of natural gas fracking

Vic reemphasizes his main point:

The battle is joined, and it will work itself outself not in the fullness of time, but in just a speculative minute.



 There has been no stopping median executive compensation growth as this study shows (+139% from 1995-2005) and similar ramps from the mid 80s into the 90s to present.

I contend that a lot of wealth due shareholders has gone to the professional C-suite with a varied mix of new compensation schemes: large awards of restricted stock bestowing wealth with even modest and industry average relative changes in the shares, options (reset when they became too far out of the money), health insurance, highly remunerative life insurance, bonuses, corporate jet use even for private business, special ad hoc awards for completing deals which ultimately are shown to be dilutive, created little value but built the empire bigger. Many of these 1 ft hurdles are created by weak boards with annual goals not tied to known shareholder friendly strategies. And even when they fail they win if we take Bob Nardelli as one ignominious example. I'm not saying true value creators shouldn't be paid as well as the market will bear but let's just use real benchmarks and real implications for failure like the rest of society has to endure.

By the time protestations by TIAA-CREF and the like come into play, the stock has been driven into the ground. Perhaps the line "where are the customers' yachts" s/b changed to "where are the public stakeholders' ones?"



 Why time and cycles influence on price and markets may have changed over the years and meant different things at different times:

Time is change. No change, no time. Change is observable time. When our ancestors found regular, predictable cycles of change against which to measure the fluctuating rhythms of their bodies – their pulses and periods, their breathing and blinking – they founded the science of timekeeping. Once timekeeping started, life could never be the same again. Humans had a unique way of organizing memory and anticipation, prioritizing tasks, and coordinating collaborative endeavors….

In the Western world, we ceased long ago to observe lunar months, except for the calculation of some rather arcane religious festivals. We can no longer be sure that the sun is at its high point at noon, nor can we still set our watches by the progress of the guard stars around Polaris. We no longer even have to respect the passage of the seasons or the sequence of the days. We can measure time according to whatever convention pleases us or best suits our ways of life and habits of work.



Alternatively, muni's sold off with bonds: The attached plot of MUB/TLT (national muni bond etf / 20+yr treasuries) shows munis holding up better than taxable.




The exquisite sensibilities of this — selecting just a few high yielding securities, only doing it in modest increments, removing the % of outstanding restriction– one must applaud their discipline and endeavors for the public good while buying all the outstanding debt held by their clients. It would be nice if one owned 200% of the outstanding debt of such a security to know that the Fed was going to buy that security without regard to concentration requiremnts. Indeed, it would seem to be a license to profit et al.

Gary Rogan writes: 

They are just helping their friends, because that's what friends do.

Is QE2 A Stealthy $90 Billion Gifting Scheme To The Primary Dealers?

We have previously discussed how due to the inability to know at what price (par or market) the Fed is buying back bonds from the Primary Dealers, there is a distinct possibility that due to the par-market difference, especially with many CUSIPs trading near record prices over par, the Fed may be implicitly letting PDs pocket the market-to-notional difference. The total, as shown below, could amount to over $40 billion. Furthermore, by avoiding the tight spread of on the run bonds, the Fed is effectively allowing PDs to pocket a huge bid/offer spread, which assuming a total size of ~$800 billion (low estimate) of all USTs bought over the (initial) life of QE2, aka QE2.5 and higher pre-extensions, amounts to $50 billion over the next 8 months.

Vince Fulco writes:

Isn't this just another version of Japan's price keeping operations (PKO) done in the early 2000s and perhaps for some periods in the decade before? Just substitute govvies and drechy mortgage products for equities in the case of the rising (or is it setting) sun?



 A Game for All Ages, by Marion Tinsley (about 1980)

I think that checkers must be somewhat unique in its ability to boast grand masters at advanced ages. What a wonderful hobby it is in which people can practice, enjoy and even excel during an entire lifetime!

Although Asa Long at 76 is a truly unusual phenomenon, he is by no means exceptional in the history of checkers. James Wyllie was actively competing in his eighties and Newell Banks played the best tournament checkers of his career at Bethlehem, PA in 1958 at the age of 71. Another grand old man, T. J. O'Grady emerged from a 20 year retirement in 1946 and played actively for years. In his seventies he told me that he was playing the best checkers of his life. Harry Lieberman at 83 competed against a strong field in the 1974 Eleven-man Ballot tourney and placed 5th in spite of a retirement of nearly 50 years. One could also cite George W. Bass who at 90 was playing 500 mail games and affirmed that checkers gave him a reason for getting up each morning. And then one could mention a host of accomplished analysts and problemists (Boland, Mantell, Wiswell, etc.) who, without competing, have found a special niche in checkers literature.

It is true that there is much strain in competitive checkers and many masters are forced to give up this side of their favorite hobby because of stress related problems. However it appears true also that if a player can gain certain victories over himself, then checkers can become a therapeutic hobby greatly enriching his later years. When I was young, I thought of checkers as a young man's game, but now with the passing of years, I think a bit differently.



Perhaps one or two folks haven't come across this great article online yet. 



 I am still looking for the proper expression for pretending that you are economical when you are a spendthrift, for pretending to have the public's interest at heart , when you are giving money to your friends and clients, for pretending that you're giving someone a good deal when you're setting up a big con. Where is Zachar when you need him?

George Zachar responds: 

I'm so depressed about all this, my fingers are scraping the bottom of my bon mot bucket. The classic definition of a demagogue is someone who deliberately tells lies to people he believes to be fools, so the fed chair certainly falls into that category. But there's also an element of affinity fraud, as he evokes the cool, disinterested, public servant technocrat. It's an awful, criminal deceit being perpetrated on the whole world, given that the dollar is/was the basis for the planet's financial system. Ben Strong and Norman Montague escaped the verdict of history for engineering the 1929 stock bubble/crash and the awful decade that followed. i don't think Bernanke will have such luck.



 Kelly Slater won his 10th world title in Surfing last week. No other surfer has even come close to the records Mr. Slater has racked up. Since starting on the professional tour, Slater has won 54 events, and has had many runner ups . Looking further into his winning statistics, Slater has won 72.4% of his individual heats in surfing competitions which is equivalent to batting 720 in baseball. Kelly Slater first won the world title at the age of 20 (youngest surfer to win) and he won it at the age of38 (the oldest surfer to win). He first won the Pipeline Masters at the age of 20, and was also the oldest to win it at the age of 38 in 2009. His surfing style cannot be compared to anything ever seen in the sport. He is the most fluid surfer, the most well balanced surfer, and the most aggressive surfer in the history of competitive surfing. His style evokes the finest poetry. Mr. Slater makes surfing look easy and his effortless grace reminds me of the way Joe DiMaggio played baseball. Kelly has repeatedly stressed the need to find the best coaches, learn, and practice, practice, practice.

Originally from Cocoa Beach, Fl, Mr. Slater had a mother who supported his love for surfing and drove him down to Sebastian Inlet every weekend. Sebastian Inlet is known for having a group of the most hard core locals in the world, but Kelly was at the top of the food chain by the age of 14. In fact he was so good, by the age of 11 he had tube riding, floaters, cutbacks, off the lips, aerials , and a ton of other tricks up his sleeve. Slater became very wise to the ways of the ocean and adopted an intellectual approach to the science of surfing. He was a very talented amateur, had a great career, and became a pro at the age of 18. His career took off and since 1990, Slater has been the man to beat, and most have failed trying over the last 20 years or so. In 1992, Kelly took time off from the tour to co-star in the TV series Baywatch.

Also at this time, Slater started entertaining as a troubador showing off his excellent guitar skills and great singing voice. In 1999, he combined forces with a couple of other talented surfers to form a band, eponymously named, The Surfers . They only made one album, but it was certified gold in 2001. Since then , Slater has performed with such great artists like Jack Johnson , Eddie Vedder/ Pearl Jam, Jewel, and Soundgarden. Also, during the 1990s Kelly mastered the game of golf and carries a real 3 handicap. He is well known for his ability to bet really big on his golf games and the added tension of a large wager makes his game better.

In 2004, he wrote a book, Pipe Dreams, and in 2008 he wrote the autobiography For the Love. He has written countless articles and stories for various surfing magazines, Outside Magazine, Sports Illustrated, Esquire, and many foreign periodicals. Mr. Slater is very articulate and extremely well read. He has a sideline career of trading on his good looks as a very successful model.

One could agrue endlessly about the athletic comparisons of NFL, NHL, NL,AL, NBA players versus professional surfers. But comparing Slater's 20 year reign to athletes in another individual sport, tennis, one immediately comes up with names like Rosewall, Connors, King, Navratilova. For every Rosewall or King, there was a Laver or Evert to challenge. None completely dominated tennis like Slater does surfing.

Edwin Moses had a great career in track, won a lot of victories in a row, but only dominated his niche for 10 years.

Many golfers had long careers, names like Nicklaus, Hogan, Snead, Palmer but the opposing talent was very good and they were apt to lose quite frequently. Tiger Woods has had a stellar 13 year career, but his personal problems might mean that he will never win another event.
Boxers like Sugar Ray Robinson, Ali, and Foreman all had careers lasting into their 40's, but nobody completely dominates in a sport like boxing for 20 years and they didn't.

In basketball, Bill Russell and Michael Jordan both completely ruled their sport for periods of a little more than a decade, but had to share the limelite, Russell with guys like Chamberlin and Jordan with Bird, Magic, etc.

Ted Williams, the greatest hitter of all time had a .388 average at the age of 39, but he never played on a championship team.
One could go on and on comparing Kelly Slater to Kobe Bryant, Joe DiMaggio, Carl Lewis, but it would be a moot point. None have so completely dominated their sport like Kelly Slater has dominated surfing. Equally at ease in the smallest waves to the largest macking waves, Slater has won the Eddie Aikau contest at Waimea Bay HI as well as six Pipeline Masters, which is a feat that has never been matched.
The amazing thing is that Slater's career doesn't seem to be slowing down. All of the new blood coming into the sport, talented guys like Wickwire, Jordy Smith, and Dane Reynolds get regularly taken to the woodshead and seriously schooled by Kelly Slater on a regular basis. His career is a juggernaut, and he mows down the competition even at the age of 38.

The most important thing about Slater is that he is the penultimate example of what a good sport should be. He always loses gracefully, and congratulates and compliments the winner with absolute sincerity. He has been known to call a foul on himself for interference for example. During a contest, Slater has been known to hoot and holler and exchange a high five when an opponent scores a particululary nice ride. His polite, soft spoken demeanor, and good manners demonstrate the fact that his mother did a good job of raising him.

Naysayers in the media have said Slater was through in the years, 1992, 1997, 2002, 2006, nd 2009. Mr. Slater has proven them dead wrong, yet he treats those naysayers like old friends always willing to give an interview. He's just so polite.

Kelly Slater may not be the greatest pure athlete in surfing……..guys like Laird Hamilton and Ken Bradshaw are better athletes, but Mr. Slater is the best surfer in the world, no contest. He might also be the best sportsman in the world, but I will leave others to debate that fine point. All I know is that when he was making his run at a 10th world title, I was following pro surfing for the first time in 20 years, and these past few months reminded me of the months Sosa and McGuire were going after Roger Maris's home run record. And, that is a good thing.



 One advantage Apple has is that its CEO is its founder. From an abstract of a paper on this topic:

"Eleven percent of the largest public U.S. firms are headed by the CEO who founded the firm. Founder-CEO firms differ systematically from successor-CEO firms with respect to firm valuation, investment behavior, and stock market performance. Founder-CEO firms invest more in R&D, have higher capital expenditures, and make more focused mergers and acquisitions. An equal-weighted investment strategy that had invested in founder-CEO firms from 1993{2002 would have earned a benchmark- adjusted return of 8.3% annually. The excess return is robust; after controlling for a wide variety of firm characteristics, CEO characteristics, and industry affiliation, the abnormal return is still 4.4% annually. The implications of the investment behavior and stock market performance of founder-CEO led firms are discussed."

The agency problem, which founder-led companies avoid, is as vexing as ever. Conventional wisdom is that corporate governance is enhanced by outside directors and non-CEO chairmen of boards. Trojan academics find that actual results do not support this theory :

This paper investigates the influence of corporate governance on financial firms' performance during the 2007-2008 financial crisis. Using a unique dataset of 296 financial firms from 30 countries that were at the center of the crisis, we find that firms with more independent boards and higher institutional ownership experienced worse stock returns during the crisis period. Further exploration suggests that this is because (1) firms with higher institutional ownership took more risk prior to the crisis, which resulted in larger shareholder losses during the crisis period, and (2) firms with more independent boards raised more equity capital during the crisis, which led to a wealth transfer from existing shareholders to debtholders. Overall, our findings cast doubt on whether regulatory changes that increase shareholder activism and monitoring by outside directors will be effective in reducing the consequences of future economic crises.



 "Apple sold 4.19 million iPads last quarter, may have trouble hitting some analysts' estimates of 6 million sold in the fourth quarter".

Apple drop following to the news (may be this is an appetizer for what is going to happen this Christmas?) found new buyers at lunch time. If you read stocktwits or twitter now you can find Apple's fans brag about buying today's low. An indicator could be built using social networks' posts. The users normally are positively biased toward the stock they follow. They represent the "herd". Depending how large the group is, you could model their strength and ability to influence price in the short-term. Top trending tickers are AAPL, SPY, ES_F, GOOG, GLD. Does anyone know if this has already been tested?

Phil McDonnell comments:

A Googler did a research paper on the most searched ticker symbols on their engine and found that the top searches tended to go up for a few days. I do not have the link.



The Knicks are able to lose when being up 21 points very readily. They do so because everything is up for grabs as they try random 3 point shots more than any other team, and with about the least accuracy. The coaching they get is the worst in the world. Their performance reminds one so much of what happens when a market opens up 1% more after an up day. Slowly, gradually, the ineluctable happens.

Tim Melvin writes:

This was far from being just another Knicks loss. The game was historic. Keven Love had the first 30 pr 30 rebound game in 28 years….

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