Steve Wynn – “China is Stable, Washington is Not”
By · Comments8.6.2010
Great video below – Steve Wynn, a well-known casino and resort developer in Las Vegas and worlwide (with a growing presence in China) airs it ALL out on CNBC:
“Unexpected government is the one in Washington…that’s where you don’t know what to expect tomorrow…to compare political stability and predictability in China to Washington is like comparing Mt Everest to an ant hill…Macau and China is stable, Washington is not. Is there a businessman in America that isn’t frightened about the next crazy idea in Washington…” Health care is gonna cost “a lot…it’s gonna produce the exact opposite of what they expect…”
“we’re on our way to Greece”
Video:
8.5.2010
From Bloomberg…
A handy summary and an even handier map put out by Congressman Kevin Brady’s office if you want to try your hand at tracking the many repercussions of the passing of Obamacare.
When you heard Nancy Pelosi famously say that Congress “[has] to pass the bill so you can find out what’s in it, away from the fog of controversy” you had to know that no one put any real thought into this. Here’s the map charting out the consequences:
Flow Chart of Congress' "Work of Art"
Like I said, only a crazy man (or woman, in Pelosi’s case) would put out a plan like this and boast of it to friends. I get a headache from trying to read this chart and apparently, according the website, this chart accounts for only ONE THIRD of the bill. Nice work – glad my Congressman was a big part of this. He probably read all of the 2,800+ page bill too.
Asians Most Likely to Buy Gold
By · Comments8.4.2010
In a recent survey:
Asian investors, mainly 75% of Indians & Indonesians, and over 50% of Chinese said they were likely to buy gold – only 11% of Americans said the same.
This probably results from many reasons – for example, most people are familiar with the fact that gold is popular in India as a wedding gift/sign of wealth. Also throughout Asia, saving in precious metals has been common for thousands of years. The Chinese were happy to take Silver from the Spaniards in exchange for silk as the Chinese then and now, see precious metals as a way to preserve wealth. Much more recently, China even has their government encouraging private purchase of gold. This is likely not necessary to convince the Chinese and other Asians to purchase gold. Asians have currency crises in their recent history and similar to wise people in Mexico, they know that REAL assets are the key to retaining wealth, i.e. the fruits of their labor.
Interestingly now, as Asian currencies strengthen, it will be increasingly less expensive vis a vis Americans and Western Europeans to buy gold and silver. trading paper (i.e. dollars) for gold will become much more expensive for Americans and Europeans in the future if predictions of a further declining dollar come true. Many people have likely heard the inflation argument for owning gold, but I am sure few people are calculating the effect of rising Asian currency valuation on the average Asian’s ability to purchase increasing amounts of gold and silver and the resultant demand stoked rise in gold prices for those in declining western economies.
This could further increase the dollar price of gold going forward as more Asians demand more precious metals – with average Chinese /Indonesian/ Malaysian incomes growing to the point where they can support themselves and have much extra to save and purchase precious metals. This fact coupled with the many other forces at work – money printing/dollar devaluation being one – could make real assets, including precious metals, real estate, farm land, water rights and the like, even stronger preservers of value.
It’s Illegal to Capture Rainwater Here
By · Comments8.2.2010
You let greasy politicians go as far as they can, and you will be unpleasantly surprised. When you see a dumb new rule coming into force (forcing small business owners to file 1099′s for EVERYONE they give more than $600 to for example) don’t relax because it doesn’t apply to you. File this under the ridiculous category – form Utah:
Eventually, a rule will come that does apply to you and you’ll be quite displeased. Help your neighbor defend his rights and liberty so that one day they will help you defend yours.
Do you catch rainwater to water your garden? Maybe someday some fool in a unnecessarily created government job will knock on your door and fine you for it. Don’t worry though – keep relaxing, don’t write or call your Congressman to express your thoughts as they continue to create thoughtless legislation. Just make sure you don’t miss an episode of Dancing with the Stars or whatever you watch on what my grandfather used to call “the idiot box.”
Marc Faber on China
By · Comments8.2.2010
I have not posted a Dr Doom video on my site for a while. Here’s Marc Faber on China (via Bloomberg):
Student Housing – Sustainability or the Jacuzzi?
By · Comments8.1.2010
In the increasingly competitive market for student housing, universities (or developers) compete by offering various amenities hoping that luxurious living would be the deciding factor between schools competing for top students.
Others are trying different angles for different types of students – how about a “green” housing complex? In some cases though we can’t tell if it’s the LEED certification or the hot tub that gets the students all worked up:
For those of us who graduated anytime before 2000, we can’t imagine this but there is serious competition right now for top students (and maybe their generous parents) and schools are using modern, amenity filled dorms as one way to lure the best. When I was at Tufts, some dorms resembled the interior of my grammar school bathroom – how times have changed!
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.