Correctly Price That House!
By · Comments7.29.2010
Interesting article on correctly pricing a house from USA Today:
Article – Home Prices Will Sell if Priced Right; Foreclosures Have Impact
This particular line from the article my real estate friend Joe called “Shakespeare”:
“Rennie is discovering the cold reality of post-housing-bust prices: No matter what she thinks her house is worth, what matters is what buyers are willing to pay.”
I would have to agree that most people, taking the value of their home too personally, get angry when real estate agents give them a market analysis that they “feel” is too low. I catch myself falling victim to this too – no one cares what we feel our house is worth – it’s worth what the market says it is. And sometimes, that’s too tough for people to swallow…
Big Mac Index Update
By · Comments7.28.2010
The Economist Magazine has published its latest Big Mac Index - which shows the cost of the Big Mac in various countries across the world (120).
- Big Mac Cost v USD
Basically, “The Ronald” will set you back much less in Asia than in Europe which leads the Economist to conclude among other things, that the Euro is still overvalued vis a vis the US Dollar (USD).
Professor Richard Florida, well known for his ‘Creative Class” research and 2 books about the “Rise” and Flight” of the “Creative Class,” makes some interesting observations and statistical correlations of his own at his site – Creative Class. he tracks the cost of Big Macs vs quality of life and number of creative workers in an economy vs blue collar workers. His research is interesting – check it out.
By the way, have you traveled lately and have you bought a Big Mac? When I was in Asia I preferred the street food – equally cheap and delicious.
More People Seeking Careers in Asia
By · Comments7.27.2010
As I have mentioned many times previously on this blog, and every time I talk in front of students at my alma mater (Tufts) regarding jobs, the real opportunities, that come from macro growth, are in Asia and the developing world (Brazil, Eastern Europe, Turkey).
A New York Times article highlights this:
The trend is still small though picking up steam. However, as America increasingly becomes a bunch of mindless TV watchers waiting for their next government handout (sorry, when you extend unemployment benefits beyond 99 weeks, it is no longer unemployment – it’s WELFARE -99 weeks is also enough time to pick up an associate’s degree), overburdening our already bankrupt country, our remaining productive people will flee the coming crippling taxes to dynamic, growing, low tax havens such as Hong Kong, Singapore, Poland, and Brazil (yes “socialist” Brazil’s taxes in many ways are lower than ours).
We have a lot to be scared about – most people in other countries speak 2 languages or more – work harder in school, and generally desire to work to make their lives better. By the way, if your children spend the whole day playing video games, and you justify it with the excuse that their hand-eye coordination is improving, you may need to rethink. Their coordination may become even better when they can’t find a job.
Thinking About Goals
By · Comments7.26.2010
I’ve been in San Francisco now since June 30 – and will be here until August 7. I must say I have enjoyed my time here as I always do and appreciate very much having this as my “second home.” But it’s not all fun and games when I come here (even though people ask me how my “vacation” is going all the time!).
When I arrived here on the night of June 30, I had a plan to accomplish some goals – 11 to be exact. 4 were business related, 3, were related to investment management and 4 were personal/other interests. One of those goals was to get in shape – specifically to continue my plan which I started beginning of June – to be in shape to run a 10k race by mid August.
To accomplish this goal, I have enlisted the help of dailyburn.com. This excellent website with a simple interface allows me to easily track my running/walking/training progress along with my daily meal intake. And of course, they also have an iPhone App to make portable tracking easy.
dailyburn app for iPhone
I highly recommend this site as it has helped me stay accountable, in an easy way, because it’s right there on my computer (and now on my mobile) which makes tracking easy to do and hard to forget.
A nice side effect of tracking what I eat (dailyburn has most foods in their database, no need to manually enter food stats) has been that I think more about the calorie content of what I eat – which means I eat less calorie intensive food so I can eat MORE – and also, it motivates me to run and walk since it gives me more calories to burn and more I can eat!
Try it out: dailyburn.com!
PS – I have accomplished 6 out of 11 goals already, am close on another 4, and need to work hard to make sure #11 gets done! How is your summer going? Any big goals? Feel free to leave a comment!
7.23.2010
In the “SoBe” section of San Francisco (“South Beach” – no there’s no beach here), there sits not only a small slice of American coffee history – the Hills Brothers Coffee Building – but also a source of mystery as to a certain packing process for coffee.
[As an aside, another famous competitor, Folgers Coffee, was 2 blocks from the Hills Building but that is a different story for a different time.] The Hills Brothers were actually real brothers – R.W. (Reuben) and Austin who came to San Francisco in 1873 with their father (Hills Bros website says they came from England – a book I mention below says Maine – perhaps they meant “New England?” – Yet another mystery).
They bought a food distributor business in 1878 (Arabian Coffee Co. ) selling milk, coffee, tea etc. on Harrison Street – including selling butter to American troops during the Spanish-American War (1898):
Austin & Reuben in front of Arabian Coffee
Soon, the brothers outgrew their original space (pictured above) and expanded to another part of San Francisco not far away. Around 1900 according to the official Hills Bros. history website, “Reuben, an incessant tinkerer, stumbled upon” the idea for vacuum-packed coffee to help maintain freshness:
The Infamous Vacuum Packing Process - Who's Idea Was It?
Describing the Vacuum Process
The words “stumbled upon” used by the Hills Bros. website almost made me believe that R.W. came up with the idea through his “tinkering.” However, I am guessing this book – Uncommon Grounds, the History of Coffee and How it Transformed Our World – has the correct history on vacuum sealing. My take is that any author, and in this case Mark Pendergrast, who takes the time to write about the history of coffee in the US, likely did the full research before writing his book (see sample on Google Books Here). he states that R.W. met up with Norton Brothers in Chicago who “perfected” the idea of vacuum packing coffee. Pendergrast also goes on to state that Hills negotiated a one year Pacific Coast license to the process but no West Coast competitor copied it until 13 years later (MJB Coffee).
Uncommon Grounds...by Mark Pendergrast
Interestingly, further tinkering on my own through the website of the current owner of Hills says it was Chase and Sanborn, now a sister company of Hills, that was the “first to pack and ship” coffee using this idea. I’m not sure whom to believe now – maybe Chase was “first” but Norton Brothers “perfected” it. Ahhhhhhhhhhh I don’t even drink coffee! How exasperating! (not really)
Nonetheless, the year was 1900 when Hills marketed their first vacuum-packed coffee for sale (source: Pendergrast). And after this, they were able to ship their coffee all over the Western US – there’s even a picture at the Hills Building of a Hills Sales exec bringing coffee to Alaska by plane!
Nonetheless, continuing our Hills timeline… the fire/earthquake of 1906 caused significant damage to their business – but they bounced back and rebuilt. In 1924 they started construction of a new factory and headquarters on the corner of Harrison Street and Embarcadero (they were really growing!). The construction site needed to be filled in due to the quality of the land. This was common then as it was in my hometown of Boston.
The building was completed in 1925 and along with the 10 foot tall letters proclaiming Hills Bros Coffee on the roof, it made quite a statement.
Hills Brothers HQ
Bean Testing With a View of the Bay
The Hills Brothers died in 1933 & 1934 leaving the business to their children.
Portraits of Reuben & Austin Hills
Many years later, after the children and grandchildren got involved, Hills Brothers was purchased by Nestle – in 1985; and subsequently Sara Lee in 1999. Finally Massimo Zanetti Beverage USA purchased the company from Sara Lee in 2005 – they interestingly own MJB, Chock Full of Nuts and Chase and Sanborn among other brands (I didn’t know that!). Hills Brother Plaza is still in San Francisco at 2 Harrison Street, housing many companies and a daycare and Gordon Biersch on the first floor.
Hills Brothers Building from Harrison looking toward Embarcadero
The building has been refurbished and is actually a very classy building. You can find a photo history of the building on the first floor or go to this site for a timeline of events in the life of Hills Brothers or this page for Wikipedia.
San Francisco has many interesting historical stories. If I can dig up information on the Folgers family I will. and I recently solved a minor mystery involving the name of an alley street in SF’s financial district (aka: “FiDi”): Liedesdorff – which I will try to investigate further for your entertainment. As for who was the original inventor of the vacuum-sealed process? Read Pendergrast’s book and do your own investigating. Perhaps you will come up with a different answer. In the meantime, check out the history of the Hills Brothers – it’s a great American success story!
P.S. sorry for the slight rambling – this post became a lot longer than I originally planned due to that little mystery about who invented vacuum packing!
Ahh Government’s Health Insurance Coercion IS a Tax
By · Comments7.22.2010
In case you didn’t notice in the NY Times, The Obama Administration is calling the new health care law forcing people to buy insurance a “tax,” something they were quick to dispute during their push for it.
The reason they are calling it a tax now is to defend it in court against lawsuits by states and other groups – the administration is using the ‘tax’ definition to defend their power to use this law as a power to “tax” that is granted to the government (see there is no express power to force people to buy things so if they can finagle the definition – like all good lawyers do – they can pass judicial muster).
More greasy government brought by greasy politicians – my fingers are getting slippery just typing this…
Recession or Worse? You Pick
By · CommentsGreat Summary here by Denninger
Basically echoes a point I have made before – if you want a painful but short recession, don’t bail anyone out, don’t rescue anyone (think Panic of 1907 – it was a panic but notice the title – “of 1907″ – only one year). If you want 10-20 years of economic malaise (at best – and hyperinflation/deflation/depression at worst) then have government types try to “steer” the economy (think US during GREAT DEPRESSION – 15+ years of government meddling caused by easy Fed credit beforehand).
Think of how foolish that thought is – trying to steer the American economy – do you really think that people in Washington, academics like Bernanke, or former slips and falls lawyers like half of Congress are qualified to steer the economy? I would argue no one is capable of such a task – and government is only capable of making mistakes trying. (furthermore, that group with so many favors to pay back, you know, would not do the right things with an open checkbook – point proven in 2008-2009)
So enjoy the fact that we didn’t crash deeper, but lament the fact that this grinding back and forth will likely be with us for a while – and for those of you not paying attention, outside of the home equity pop, most people have not progressed over the past 10 years. I blame the public emphasis on getting rich using assets and leverage, vs saving and working hard, as a major culprit.
The Future of Energy
By · Comments7.19.2010
Curious about how the energy industry will play out in the coming years? Will we wean off of oil or continue to be enslaved to black gold? Will some new technology take its place?
Extremely well-respected resource investor Rick Rule lays out his thoughts on the coming years in energy in this excellent inteview:
Rick Rule
Rick gives maybe one interview every quarter so we don’t see or hear from him often – but when he appears, it pays to listen.
“Blowback” in Uganda – When Will We Learn
By · Comments7.19.2010
["We" meaning those who make decisions on such matters]
Here’s the latest terrorist problem – Uganda in Wall Street Journal
One of the most telling moments in the 2008 Republican presidential debate was the interchange between Ron Paul and Rudy Guiliani when Congressman Paul explained the concept of “blowback” (mentions blowback at about 3:20 of the video):
Blowback is the idea taught by our CIA that when the US government interferes in one place in the world it would cause unintended consequences in other places. In Uganda last weekend, we had terrorist bombings that were carried out and financed through Somali Islamic elements who are claiming allegiance to Al Queda – as reported by the Wall Street Journal.
As Ron Paul said, if we continue to station our soldiers on Muslim lands, including keeping soldiers in Saudi Arabia, which is Muslim holy land and very offensive to many Muslims, then terrorist organizations will have an easy time to recruit young hotheads or someone who’s relatives were killed in ‘collateral damage’ or such. Paul gave the example – would Christians like it if Muslim soldiers were stationed in the Vatican? The displeasure of the US by more and more young/armed Muslims continues to grow – and we can expect these problems to pop up in more and more areas. And, by the way, we don’t have the army to police 150+ countries.
President Obama won in 2008 in large part because a good chunk of his supporters thought he would end the wars. In a sign that the Military Industrial Complex is going full force, Obama has expanded the wars. It is likely that the ‘blowback’ will expand too – at a major cost to all, especially our incredibly brave soldiers.
4,000 Repossessions Per Month in South Florida
By · Comments7.17.2010
Here’s the story – Condo Vultures – 4,000 foreclosures/month
Banks likely know they need to repossess now if they hope to get anything for these houses in a rising rate environment. Therefore, now that the Zero Interest Rate Policy (ZIRP) of the Fed has allowed the banks to borrow at Zero and lend out at 5% (a margin much larger than average), they have cash on the balance sheets – enough to take the losses that they misleadingly didn’t show on their balance sheets over the past year or 2 (banks have to put “non-performing loans” and “real estate owned” on their financial statements – both numbers are negative to bank valuation if rising).
So now they will start plowing through all the non-performing loans and foreclose those people…
Interesting Web/nonWeb Business Idea
By · Comments7.16.2010
This is a great article in IBD about a company that helps people who don’t use computers do tasks online:
The company does a lot of work with non-tech savvy seniors and is appropriately located in South Florida. What an idea!
Proves you can turn almost any idea into a business…
A Debt-Induced Growth Cycle Ends in Disaster
By · Comments7.16.2010
Following up yesterday’s talk about the thought that, during the long prosperity of 1985-2000 and in the 1920′s, people were of the opinion that modern economic policy had eliminated the risk of economic turbulence – but was merely the calm before the storm.
Here is a follow up to that – a lecture by Steve Keen on the correlation of using debt to expand the economy and its eventual disastrous climax:
He argues that the speed of the downturn is not as quick as the Great Depression due to government spending; but the rate of private deleveraging is increasing faster than that.
Keen also argues that Greenspan and Bernanke caused the Great Recession with cheap credit – low interest rates. We should have had a milder recession not what we are getting.
It seems to be an interesting argument. So many people have opinions – perhaps it just makes sense to keep your bills low, stay flexible, keep a safe place to live and save some money – because the future is unknown, but is sure to be exciting!
Your HOA Can Foreclose on You Too
By · Comments7.15.2010
Just so you know – if you were thinking you could use the gym and pool without consequence:
FYI…
Calm Before the Storm
By · Comments7.15.2010
As I mentioned before, “News from 1930” is a treasure of a website for us history buffs – full of great insight into the headlines of the time, you get a very strange feeling that we really do repeat the same thinking & actions – using different inputs- and that humans are the same in their thinking/responses regardless of era or place.
From the site News from 1930:
Another special reader response edition – a belated reply to Onlooker, who wrote a week or two ago asking if he was accurate in remembering reading about big companies building up cash earlier in the blog, since we’re hearing similar things today. In fact, the same thing had struck me, along with another strangely familiar theme – the idea that apparently became widespread in the 1920′s that the business cycle had been tamed to some extent thanks to better economic information and policy (today commonly referred to as The Great Moderation).
and regarding specific commentary in the WSJ at the time:
Jan. 2, 1931: C. Snyder of Fed. Reserve NY: Contrary to “phantasies of a ‘new era’ of unending prosperity so widely prevalent but little more than a year ago,” it’s clear that the business cycle is still with us “in all its force.”
Mar. 2, 1931: W. Muller, NY Curb Exchange pres., says 1930 left lasting impression on financial world, refuting conclusively the “plateau of prosperity” theory that had overtaken the “business cycle” theory in 1928-29. Even in early 1930, stubborn belief persisted that the business cycle had been defeated, as “organized and determined” multi-billion effort was exerted by business to “dissipate by intervention the already existing forces of depression.”
June 25, 1931: NYSE pres. R. Whitney reviews events of past year. … After the 1919-22 depression, much study was devoted to statistical and economic research, particularly toward understanding of the business cycle. “Unfortunately the long period of great prosperity from 1925 to 1929 persuaded many … that the business cycle had been definitely abolished, and that it had become possible steadily to increase general prosperity indefinitely, without the danger of serious depressions.”
Feb. 20, 2004: B. Bernanke. One of the most striking features of the economic landscape over the past twenty years or so has been a substantial decline in macroeconomic volatility. [What the .... how'd that one get in there? Must be some sort of virus ...]
Many well-known economists, including Mr Bernanke, previously felt, and of course by their actions still do feel, that government spending and money printing can moderate any financial turbulence. They though that in 1928 and they thought that throughout the 1990′s – as the Federal Reserve simply opened the floodgates to cheap money anytime the economy got a little sick. Both times it was simply the calm before the storm
We still have to pay for that foolishness…
Paperwork Nightmare for Small Business
By · Comments7.14.2010
Just sent this off to Ed Markey:
Note: I am barely civil any more in these letters – the things this Congress has done go so beyond ridiculous I can’t even discuss them without getting heated…I am on both knees praying that many of Ed’s friends lose their job in 4 months – Ed won’t because for some reason, in my district, no one of substance runs for Congress