Last week, Oregon Governor Ted Kulongoski clinched a deal to bring Nissan’s pure-electric cars to his state. Then, he went on to Shenzen, China. “At BYD Auto Co., China’s fast-growing automotive star, a plug-in electric hybrid sedan is just weeks from meeting millions of Chinese consumers” writes the Oregonian. “The F3DM, which runs up to 80 miles on a single charge and packs a 7-gallon tank, will probably launch in the United States by 2010.” The Governor wants it to be built in Oregon. On Friday, he met with BYD President Wang Chuanfu. On a 10-day business trip through Asia, Kulongoski had laid out his vision to automakers in Japan and China: Electric charging stations every 60 miles along interstates. Tax incentives for Oregonians to buy electric cars. Tax bonuses for drivers to build car chargers in their garages. And, unspoken, but you can bet on it: generous incentives for those who bring their factories to Oregon. Then, Kulongoski has guanxi, connections, indispensable for a successful Chinese deal…
Monthly Archives: November 2008
Time to look at bonds but keep an eye on our heroes
Someone once said there are certain things that cannot be adequately explained to a virgin, either by words or pictures. It is therefore with some trepidation that I attempt to outline our investment policy. We are bullish on agriculture and bearish on the financial community. For 10 years we have contended that equity markets can, and do, stagnate for periods as long as a quarter of a century. Accordingly, we have refused to follow the market, choosing instead to invest in unleveraged sectors which have endured long bear markets.
However, there are complicating cycle considerations. A process of debt liquidation is under way that resembles a turning point heralding weaker global growth. This undermines almost all risk taking, including agriculture, and for this reason we presently favour only government bonds.
According to Prada: “There is a rejection of fakeness – the fake avant-garde.” And the inflation scare that took the price of oil to almost $150 per barrel, and created a hawkish central banking community, was perhaps the biggest head-fake of all. Certainly, the market for 10-year government bonds is beginning to think so. It is trading near a record high.
And today, even those regional Fed governors and hawkish European central bankers seem to see it as well. As I say, this is the time to own government bonds. But we are aware of just how out of sync we are with our heroes. Can the combined intellectual weight of Mark Faber, George Soros and James Grant all be wrong? Why do they insist on shorting Treasuries during the worst financial crisis since the Depression? I blame the Romans.
Memorandum to US Treasury Secretary Hank Paulson
A former chief executive officer of Goldman Sachs Group Inc. does not mingle with boat dealers; he mingles with investment bankers; and the first rule, before handing out taxpayer money, is to have mingled with the people you want to hand it to.(That way they know whom they owe). I admire your ability to recognize your “circle of competence” and live within it.
Still, I do feel that in me, and my little literary business, there is opportunity for you, and your $700 billion. Allow me to explain why.
Be Fair
1) By giving the money to me, instead of someone less deserving, you will make the world a fairer place.
As much as I admire all of your decisions I can’t help but notice that the main qualification of the bankers to whom you have been giving money, so that they might make smart loans, is that they have gone almost bankrupt by making stupid loans.
As your mind is subtle, I can only assume that you secretly believe that the American economy right now needs not smart loans, but more stupid ones — and thus that you have targeted the bankers who have proven they can make them.
I, unfortunately, have not flirted with bankruptcy, or made any stupid loans. But here’s my point: I haven’t been given the chance! Allow me to prove my financial ineptitude to you. I swear to you that when I return for my second round of assistance I will have proven myself fully qualified to receive it.
Fall Into Winter – More
Photographed while raking leaves this weekend. More here.
You’ll fit right in being poor in Berlin
If you show up in Berlin strapped for cash, you’re in good company. The German capital’s sizable student population, high unemployment rate and swelling starving artist contingent makes penny-pinching a citywide obsession.
This is, after all, the city that has not only been dubbed one of the hippest in Europe because of its raging nightlife, plethora of museums, independent art galleries and concert spaces, but it’s also known for being wracked with debt. So much so that in 2003, Mayor Klaus Wowereit lent it the accidental slogan: “We’re poor, but sexy.”
Fall into Winter
Photographed while raking leaves.
The End of Wall Street’s Boom
To this day, the willingness of a Wall Street investment bank to pay me hundreds of thousands of dollars to dispense investment advice to grownups remains a mystery to me. I was 24 years old, with no experience of, or particular interest in, guessing which stocks and bonds would rise and which would fall. The essential function of Wall Street is to allocate capital–to decide who should get it and who should not. Believe me when I tell you that I hadn’t the first clue.
I’d never taken an accounting course, never run a business, never even had savings of my own to manage. I stumbled into a job at Salomon Brothers in 1985 and stumbled out much richer three years later, and even though I wrote a book about the experience, the whole thing still strikes me as preposterous–which is one of the reasons the money was so easy to walk away from. I figured the situation was unsustainable. Sooner rather than later, someone was going to identify me, along with a lot of people more or less like me, as a fraud. Sooner rather than later, there would come a Great Reckoning when Wall Street would wake up and hundreds if not thousands of young people like me, who had no business making huge bets with other people’s money, would be expelled from finance.
When I sat down to write my account of the experience in 1989–Liar’s Poker, it was called–it was in the spirit of a young man who thought he was getting out while the getting was good. I was merely scribbling down a message on my way out and stuffing it into a bottle for those who would pass through these parts in the far distant future.
Veteran’s Day: The Allied Advance, 1916
WHEN the Germans launched, five months ago, that terrific onslaught on Verdun, which has been sustained by the French with such incomparable heroism, the enemy’s offensive was welcomed by our Press, as certain to cost him sacrifices in men greater than his gain in territory. Nevertheless, the same newspapers which have called for, and now enthusiastically welcome, the Franco-British offensive, seem hardly to have realised what that advance has already meant to thousands of their readers and to many more thousands of stricken heroes in terms of human suffering. Let us neither minimise nor exaggerate the success so far gained. Everyone is discussing it, now that a halt is called. Intense pride we must all feel in the superb courage shown by our officers and men under this ordeal; but that pride should not blind us to the cost. We do not know what are the casualties incurred in the week’s fighting that started last Saturday morning; but we do know that heavy sacrifices of life and limb must be made at every “push,” and that a town must be depopulated of its young men for every village gained. That is the experience of this war; for every previous attempt at an advance, whether on our own part or on that of the Germans, during the general deadlock of the last 18 months, has only served to prove, the truth of the contention of M. de Bloch, set out in the Economist of January 1st. The Polish writer foretold what trench warfare would mean between conscript armies. “Battles,” he says, “will last for days, and at the end it is very doubtful whether any decisive victory can be gained.” The decision, he predicted, supposing diplomacy to be excluded, would come through famine, not through fighting.
EBay Cars under $10,000
Nissan’s announcement last week that it would offer a stripped-down version of its Versa model for under $10,000 -– a Sub-Versa, if you will -– occasioned a lot of media attention and interest, as if there was something to celebrate. To me it sounds like 1.6 liters of boredom, a mouthful of sand to thirsty car-buyers. Please. Ten grand? I can put you in automotive paradise for $10,000. Walk this way.
Go to www.motors.ebay.com and follow the link to “Cars & Trucks.” Don’t specify a make or model but simply order the 50,000 or so listings by price, and use the advanced search function to specify items with a “Buy It Now” price. What you’ll discover is an Elysian field of depreciation as the awesome rides of yesteryear -– in some cases cars that dominated automotive buff book covers just a couple of years ago –- are dispensed with for a fraction of their original sticker. With the recent spike in gas prices and the downturn in the economy, people are eating their cars -– “literally!” as Joe Biden would say.
Yes, these cars are a little older, but if you were to compare, wheel-to-wheel, the new Versa with, say, a 1991 BMW 850i –- a 12-cylinder supercoupe on 18-inch Hamann wheels and with only 47,120 miles on the clock –- well, your head would explode. The Bimmer has more technology in its ashtray.
The Crisis Last Time
For writers who seek to influence public affairs, timing plays a paramount role. And few writers have had better timing than Adolf Augustus Berle.
In the summer of 1932, with America trapped in the greatest financial crisis in its history, Berle published “The Modern Corporation and Private Property,” a scholarly yet readable analysis of America’s largest companies and their managers. Berle is largely forgotten today, yet with that book he succeeded in persuading Americans to see their economic system in a new way — and helped set the stage for the most fundamental realignment of power since abolition.
The stock market had plunged vertiginously three years earlier, and by 1932 Americans were desperate to reverse the much wider collapse that had ensued — and to make sure it wouldn’t happen again. The New Republic was soon hailing “The Modern Corporation” as the book of the year, while The New York Herald Tribune pronounced it “the most important work bearing on American statecraft” since the Federalist Papers. Louis Brandeis would cite its arguments in a major Supreme Court ruling on corporate power. Running for president, Franklin Delano Roosevelt recruited Berle — a Republican Wall Street lawyer who had supported Hoover — to join his “brain trust,” and that fall entrusted him with drafting what became the most important speech of the campaign. After the election, Berle remained in New York, yet his connection to the president he audaciously addressed as “Dear Caesar” was such that Time would characterize “The Modern Corporation” as “the economic bible of the Roosevelt administration.”
Fascinating.