Media Bias and Cuba

This blog is not about politics per se, but about rational thinking. If you read the news, be aware of bias, especially your own.

All lies and jests, still a man hears what he wants to hear and disregards the rest. –Paul Simon

I wrote an article in 2005 after traveling down to Cuba: http://www.babalublog.com/archives/001341.html

After seeing several Cuban children being beaten by police, I asked a Cuban woman why there is so much repression in her country? She replied, “Nadie está escuchando.”  (Nobody is listening). Perhaps this article may shed more light on why.

Carlos M. N. Eire*   Jan. 17, 2012

http://ctp.iccas.miami.edu/FOCUS_Web/Issue156.htm
Thugs take over your country. Much more quickly than you ever thought possible, one megalomaniac takes control, discards the constitution, abolishes free speech, takes over all of the news media, bans all sorts of books and films, closes down all private schools, expels most of the clergy, and abolishes all private enterprise and personal property. In the wink of an eye, he also seizes all the banks, wipes out all accounts and changes the currency so no one can have more than a week’s pay in their pocket.

In the meantime, as these changes are taking place, all who oppose the new regime are imprisoned, tortured, or executed. Some simply disappear. Spy houses are set up on each city block, to watch your every move, and these very same government agents are placed in charge of herding you to public demonstrations and telling you what to shout out. In addition to assigning you all sorts of “volunteer” tasks that amount to slave labor, these meddlers are also given control of your access to medical care, of your children’s placement in school, and of the ration cards that you need in order to survive.

Eventually, anyone suspected of being gay or too religious is rounded up and sent to concentration camps, where “experts” try to “cure” them of their “illness” through torture.

Should you murmur the slightest complaint or curb your enthusiasm, you will not only risk prison, but also imperil your family’s well-being.

Should you opt for exile, your neighbors suddenly “volunteer” to harass you constantly. You may also be forced to spend three or more years at a labor camp, working without pay, hundreds of miles from your home and family, before you are allowed to emigrate. When you finally do manage to leave, all of your remaining possessions are taken from you, including your family photos, your wedding ring, and the rosary or mezuzah your grandmother once gave you. After being strip-searched, you leave the country without a penny to your name, and only two changes of clothing in a very small bag. Suitcases are forbidden.

Or you may risk your life and flee in a flimsy raft under cover of darkness, knowing that there are many sentries patrolling the coast, with shoot-to-kill orders, and many sharks waiting to chew you up if your vessel sinks.

Then, imagine that once you get out, nearly everyone in your place of exile tells you that the totalitarian nightmare you have fled is a wonderful and praiseworthy experiment in social engineering, or even an egalitarian utopia. Imagine being scolded for disagreeing with such assessments. Imagine being told by many affluent and well-educated people that you are a selfish oaf who doesn’t give a damn about justice and can’t appreciate “visionary” leaders.

Welcome to Cuba, and also to the life of a Cuban exile.

Want to get a little deeper under this skin? Imagine this, if you can.

The megalomaniac and so-called visionary leader who has hijacked your country for five decades falls ill and appears to be near death. One of the finest newspapers in your adopted land goes out of its way to ask for your opinion, presumably because you have managed to become a well-respected scholar. But this journal, The New York Times, doesn’t really want you to speak your mind. No. Instead it wants you to pass judgment on your fellow exiles who are openly rejoicing in Miami. And they suggest the topic in the most offensive way you could ever imagine, with a remark as flippantly ignorant and insensitive as Marie Antoinette’s infamous “let them eat cake.”

“I can’t help but wonder if this rejoicing is appropriate,” says the Times editor about the street revelers in Little Havana, “since many of them were likely allowed to leave Cuba in the early 60’s with Castro’s blessing.” Then, as if this were not vexing enough, she asks you to lay all your cards on the table and state your position on this question explicitly, to see whether or not your opinion is worth considering. And when you comply and offer to sum up the ailing tyrant as the consummate Machiavellian prince, you are curtly dismissed…

“We’re afraid that this approach is not quite right,” said the editor.

Imagine that.

God knows what they were searching for at the New York Times, or what they expected of me. All I know is that the Times made me feel as if I were back in Cuba, dealing with its state-run propaganda rag, Granma. Or like a “negro” in the old South, dealing with segregationists who couldn’t understand why colored folk were so ungrateful about being rescued from Africa.

But that’s not all.

If it were only the New York Times, maybe all of us Cubans would be in better shape, in exile as well as on the island. But, unfortunately, it’s not just the Times that loves to idolize the Castroite Revolution. It’s most of the North American and West European media, and their glitterati. Or so it seems, most of the time.

When Fidel Castro visited New York in 1995 to give a speech at the United Nations, he was the toast of the town’s news oligarchs: Mort Zuckerman, then editor of U.S. News and World Report, hosted a lunch for the tyrant at his plush Manhattan apartment, where he and others such as Barbara Walters, queen of tear-jerking interviews, and Diane Sawyer, first prime-time anchorwoman of ABC News swooned in his presence, as if he were a rock star. (1) Barbara and Diane are in good company. Dan Rather, former anchorman of CBS news, called Fidel Castro “Cuba’s own Elvis.” (2) Imagine Hitler or Mussolini being compared to Elvis.

Imagine all of this happening to Idi Amin, Sadam Hussein, or Augusto Pinochet.

Imagine even worse.

If it were only the news media, then maybe we Cubans would stand a chance of redemption. But the American entertainment industry seems to love the tyrant and his henchmen too. Robert Redford glorifies Fidel’s sidekick Che Guevara on film in “The Motorcycle Diaries,” and since that is apparently insufficient, Steven Soderbergh follows suit with a six-hour epic hagiography that might as well have been entitled “Saint Che.” Director Oliver Stone praises Fidel as “one of the world’s wisest men.” (3) Actor Jack Nicholson calls him “a genius.” (4)

Supermodels Kate Moss and Naomi Campbell gush after meeting Fidel that this was “a dream come true.” (5) Not to be outdone, novelist Norman Mailer pronounces Fidel “the first and greatest hero to appear in the world since the Second World War.” (6) But in the end, no one could trump the French, those supreme arbiters of good taste. After all, long before Hollywood stars made pilgrimages to Havana existential philosopher Jean-Paul Sartre had already crowned Che, rather than Fidel, as “the most complete human being of the twentieth century.” (7)

No wonder we Cuban exiles are seen as the fiends and villains of our own story, and of American politics. No wonder we’re loathed by intellectuals and commoners alike. No wonder the Washington Post and scores of American newspapers can get away with publishing this cartoon with impunity.

Imagine any other immigrants or any ethnic group in that boat. Imagine the firestorm of protest that would ensue.

Imagine the charges of bigotry and racism leveled against the cartoonist and the newspapers who would print such an offensive cartoon.

One final meditation. Imagine this, if you can.

Imagine a New York Times or Washington Post that would dare to print this essay, or apologize for their abysmal ignorance and bigotry.

_________________________________________________

 Notes

(1) Servando González, The secret Fidel Castro: deconstructing the symbol (InteliNet/InteliBooks, 2001), p. 35.

(2) “The Last Revolutionary”: interview of Fidel Castro by Dan Rather, CBS News, 18 July 1996.

(3) Myles Kantor, “Oliver Stone’s Cuban Lovefest,” www.frontpagemag.com, 5 May 2004.

(4) Army Archerd, “Nicholson, Castrow powwow in Cuba,” Variety, 15 July 1998. http://www.variety.com/article/VR1117478496?refCatId=2

(5) BBC News. News. http://news.bbc.co.uk/2/hi/americas/59225.stm

(6) Arnold Beichman, “Mona Charen Exposes Menace of Senseless Liberals,” Human Events, 17 February 2003.

(7) Frank Rosengarten, Urbane revolutionary: C.L.R. James and the struggle for a new society (University Press of Mississippi, 2008), p. 108.

_________________________________________________

*Carlos M. N. Eire is Professor of History and Religious Studies at Yale University and author of Waiting for Snow in Havana and Learning to Die in Miami. This article is based on a lecture he delivered at the Institute for Cuban & Cuban-American Studies, University of Miami, on November 21, 2011.

_________________________________________________

The CTP can be contacted at P.O. Box 248174, Coral Gables, Florida 33124-3010, Tel: 305-284-CUBA (2822), Fax: 305-284-4875, and by email at ctp.iccas@miami.edu. The CTP Website is accessible at http://ctp.iccas.miami.edu.

Wal-Mart Discount Stores’ Operations 1985 Case Study Analysis

 Capital isn’t scarce; vision is.

Each Wal-Mart store should reflect the values of its customers and support the vision they hold for their community.
High expectations are the key to everything.
I had to pick myself up and get on with it, do it all over again, only even better this time.
I have always been driven to buck the system, to innovate, to take things beyond where they’ve been.
Outstanding leaders go out of their way to boost the self-esteem of their personnel. If people believe in themselves, it’s amazing what they can accomplish.
There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.
We let folks know we’re interested in them and that they’re vital to us. cause they are.
We’re all working together; that’s the secret.
               — All quotes are from Sam Walton

Wal-Mart Case Study 1986

Analysis of Wal-Mart http://www.scribd.com/doc/78543427/WMT-Case-Study-1-Analysis

See: http://www.scribd.com/doc/78527294/Wmt-50-Year-Chart

Who wants to move deeper into analyzing WMT and see the HBS Case on WMT for 2003? …………or

Ready to move onto to the Coors Beer Case Study which is a lesson on what happens if a company loses its regional economies of scale advantage?

Lessons learned so far?

If you had read this case study when it was published in 1986 would you have bought WMT and held on for five or seven years?  What analysis would you need to do?

Tomorrow I will post another strategic view of Wal-Mart so you can see other perspectives.

VALUE VAULT Additions, Unintended Consequences, Studying the Theory of Money and Credit

Before I speak, I have something important to say. —Groucho Marx

VALUE VAULT Additions*

  • You will find Money Management Interviews from 2005 to 2011, 1938 page PDF.
  • Howard Marks on the Human Side of Investing, 42 page PDF
  • Investors and Austrian Economics, 7 page PDF

All from generous, anonymous contributors. Thank you!

*Access to VALUE VAULT is given by emailing:  aldridge56@aol.com with VALUE VAULT in subject line. For your personal use only

Unintended Consequences of Goernment Action

Matt Damon in Good Will Hunting giving a 3-minute lecture on unintended consequences or Why I Won’t Work for the National Security Agency (NSA): http://www.youtube.com/watch?v=l8rQNdBmPek

Studying Von Mises’ Theory of Money and Credit at The Mises Academy

Readers should know that if ever I benefit from a reveral/advertisement, I will alert you upfront about any conflict of interest or incentive-based bias.

Mises Academy (http://academy.mises.org/) has an eight week course on Mises’ Theory of Money and Credit taught by Robert Murphy.  I have taken a few courses from Prof. Murphy, and he is an engaging lecturer. Go here: ( http://consultingbyrpm.com/blog).

This would be a great course–though advanced–to sink your teeth into Austrian monetary theory with an excellent teacher.  I will take this course and if enough people here are interested, I could try for a group discount. Your only risk is $25.00. But, I warn you, the course is demanding. See the texts below:

http://files.libertyfund.org/files/1061/Mises_0070_EBk_v6.0.pdf

http://mises.org/books/theory_money_credit_studyguide_murphy.pdf

The course:   Econ 400 — with Robert P. Murphy

Cost: $145 Length: 8 weeks       Dates: February 1, 2012 – March 27, 2012
Click here to register for this course

This course will tour Ludwig von Mises’ classic work, Theory of Money & Credit. Space constraints prevent us from covering the entire book. Instead we will focus on Mises’ two crucial achievements in the book: (1) His unification of “micro” and “macro” by successfully applying the modern subjective theory of value to money, and (2) his development of (what we now call) Austrian business cycle theory. The course will showcase not only Mises’ brilliance as a novel thinker, but also his excellent command of the literature and his selection of the best ideas from other schools.

Lectures

The video lectures are online. Lectures will be Wednesday evenings, 6:30 – 8:00 pm Eastern Time. They will be recorded and made available for enrolled students to download.

Reading

All readings for the course will be free and available online.

Grades and Certificates

The final grade will depend on quizzes. Taking the course for a grade is optional. The Mises Academy is currently not accredited, but this course is worth 3 credits in our own internal system. Feel free to ask your school to accept Mises Academy credits. You will receive a digital Certificate of Completion for this course if you take it for a grade, and a Certificate of Participation if you take it on a paid-audit basis.

Refund Policy

If you drop the course during its first week (7 calendar days), you will receive a full refund, minus a $25 processing fee. If you drop the course during its second week, you will receive a half refund. No refunds will be granted following the second week.

Academy Courses

Hannibal Lecter’s Lecture on Strategy, Lesson on Margin of Safety

The sooner you fall behind, the more time you’ll have to catch up. –Steven Wright

Hannibal Lecter’s One-Minute Lecture on Strategy

“For any particular thing, ask, “What is it in itself? What is its nature?” — Marcus Aurelius, Meditations (c. 175); — Hannibal Lecter, The Silence of the Lambs (1991).

http://www.youtube.com/watch?v=f33ieCWRWlI&feature=related

Lesson on Margin of Safety

While studying strategy don’t forget to always invest with a margin of safety. Don’t do this: http://www.youtube.com/watch?v=7s5KFbyBmrQ

Klarman, Einhorn, Tudor Jones Readings, Hedge Funds and a Reader’s Questions

Note the chart below. Thoughts? Hedge Funds are a better deal for the fund managers than the clients.  Buyer beware.

READINGS

The Loser’s Game by Charles Ellis: http://www.scribd.com/doc/78279980/CWCM-the-Loser-s-Game

(Source: www.santangelsreview.comFailure Speech by Paul Tudor Jones (2009) http://www.scribd.com/doc/16588637/Paul-Tudor-Jones-Failure-Speech-June-2009

Einhorn on Why He Shorted Lehman Brothers’ Stock: http://foolingsomepeople.com/main/TCF%202008%20Speech.pdf

Seth Klarman Interview by TIFF: http://www.tiffeducationfoundation.org/commentaryPDFs/2009_Ed2_COM.pdf

Questions from a reader

I owe several of you replies to your questions. Bear with me as I finish reading the Wal-Mart and Global Crossing Case Studies.

 A new readers asks,

I spent about 3 hours yesterday catching up on posts from your site that I had saved in my Google Reader over the past month. I am not sure how to describe my feeling right now besides to say I was enthralled and inspired. Your website is like finding a value investor pirate’s secret treasure trove on a deserted island. There is such a wealth of material and information and it’s all such high quality thoughts that I kept thinking, “Who the hell is this guy?” Attempts to dig into posts related to answering that question yielded several tantalizing details but the mystery remains.

Are you currently or were you an MBA student? I am trying to figure out where these lecture notes are being pulled from. It says “auditing classes from 2001-2007″… that’s an awful long time and the institution and role of the note-taker are left unsaid. I get you’re trying to focus on quality, not reputation, a worthy goal, but I am fascinated simply from the stand point of why I am suddenly able to access all of this information, for free. It doesn’t really matter, I am just curious, that’s all.

My replay: Thanks for the kind words. I have never been an MBA student. I worked on Wall Street as a broker and investment banker before starting a few companies here in the US and Brazil. Upon selling those businesses, I sought to dig into value investing. I saw that the author of a value investing book was teaching at Columbia Business School so living in Greenwich, CT–only 45 minutes from the campus–I hopped the metro train and sat in on his class.  The first class was around 1999, when his students would regularly laugh at the idea of valuing companies when all you had to  was buy Price-Line or Yahoo and see the price rise five percent in an hour. All I had to do was sit in the back and keep my mouth shut. Now, I think Columbia is touchy about outsiders sitting in on classes.

But you really don’t have to do what I did. You just need to read, read and apply your independent thinking to investing. Look how Michael Burry learned (See the Big Short by Michael Lewis or search this blog). But, I do believe that becoming an “expert” or skilled investor probably takes 5 to 20 years of intensive commitment.  Of course, you never “master” investing which is why the journey is fascinating. Also, several great investors have confirmed my belief that the best way to learn about value investing is through your own efforts and application of principles that you will learn through Buffett, Fisher, Klarman, Graham and your accounting textbooks.  There are a lot of dead ends and wasted time if you do not know the proper principles and methods for investing.

SUCCESSFUL INVESTORS

Investing really is constant applied learning which is cumulative. Let me share what I have noticed with ALL successful investors:

NOT TEAM PLAYERS:

The investors work alone. Any group decisions for Buffett or Walter Schloss? They make their own deicsions, and they are little influcned by any form of group affiliation.  Buffett said of Walter Schloss: “I don’t seem to have much influence on Walter. That is one of his strengths: nobody seems to have much influence on him.” Ditto for Michael Burry.

FOXES, NOT HEDGEHOGS

These terms originate from a remark attributed to the Greek poet Archiloschu: “the fox knows many things, but the hedgehod knows on bigf thing.”  Foxes are eclectic, viewing the world through a variety of perspectives, with no allegiance to any single approach.  READ WIDELY and not just on finance and economics.

Understanding how markets work is more important to an investor than understanding technology (trading systems).

  • Few great investors are overnight successes. Many have to overcome failure.
  • Money is about freedom, not consumption.
  • They enjoy the process, not the proceeds.

Note that Michael Burry accumulated his investment knowledge gradually, from his own experience and from reading others’ experience via bulletin boards, rather than from finance textbooks. (Hint: study the www.valueinvestorsclub.com or www.yahoo.com finance boards of intelligent contributors).

Successful investing is a practical craft, not an academic discipline, and certainly not a science. The craft of investing is comprised of heuristics: a toolkit of approximate, experience-based rules for making sense of the world. (See the book: FREE CAPITAL by Guy Thomas).

GOALS FOR THIS BLOG

My goal is placing all this material here is multi-fold:

I have the material so I might as well post for the 20 or so hard-core students who will wish to use it. Many talented investors helped me, so giving back is my responsibility, though sharing this material helps me as much as anyone. I do not expect many readers because few people are suited for long-term, intensive self-directed learning.

There are those who are already in the business who think they already know everything; others seek a conventional route of the MBA; while some want investment ideas/tips–not theory, case studies and practice.   I wanted the material on the web for easy searching and access.

Secondly, many people have made excellent contributions to the value vault. Like the quarterback who hands the ball off to the running back who then runs 98 yards down field while breaking 7 tackles and leaping into the end zone, I receive too much credit.

Thirdly, interactions with curious readers help keep my thinking sharp.

Other questions:

I have a friend who has been working on developing a grass-based, intensive rotational grazing miniature farm on an acre of land about an hour north of Los Angeles, California. He looks at all the reading, time, energy and money he has spent on this project so far (and in the future) as the cost of acquiring a “personal MBA in agriculture” (yes, he gets that agriculturalists don’t get MBAs, but he’s approaching this project from the mindset of a businessman).

When I read through your site, I realize I could do the same thing using some of your material, as well as other blogs I follow and various recommended readings, as a launching point to pursue my own “personal MBA in investing” over the next 12 mos or so. The focus on case studies, and the ability to directly apply my learnings to my own small portfolio in real-time provide the perfect means to make real-world application to the theory being taught in the “classroom.” I think this is a big idea and I am very excited as I consider it more and more seriously. I plan to blog my entire journey and produce various supporting course materials along the way (such as reading list, top blog posts, favorite video lectures links, etc.) as well as keep a running tab on costs, so at the end of it all I can show other people what I learned and how much it cost to get the knowledge.

Yes, use the material how you wish. Start a study group and work on several of the cases. Eventually, there will be sections on special situation investing, competitive analysis, valuation, Austrian Economics.  Or you can take a case study and develop it further.  Seek higher; you can also sign up for courses at the Mises academy (www.mises.org) or go to www.thomasewoods.com to learn about Austrian economics.

I want to thank you again for the resources you place on your site. I’ve only just begun to dig into them and it may be some time before I begin actively participating in your site’s discussion but I do think it’s wonderful already.

And I absolutely LOVE that you’re into Austrian economics, as well. Finally, I’ve found someone else who is interested in synthesizing these two great (and in my view, complimentary) philosophies/disciplines, just as I am:   http://valueprax.wordpress.com/about/ (going to need to re-write that soon, though, to reflect my slightly new direction for the site, ie, cataloging my progress in acquiring a “personal MBA”)

My reply: I became interested in Austrian Economics because Rothbard and von Mises had the only coherent theory and explanation for booms and busts. But as I studied fruther, I learned more about the structure of production  and time preference which helps you understand the risks in different businesses. Every wonder why a steel company fluctuates more in earnings and price than a beverage company? The distance from the consumers in terms of time and production structure. Look at your watch. How long did it take to make? Two hours? Well, who mined the sand to make the glass? Who mined the metal to make the case? Who killed the cow to make the leather wrist-band? And who planned all the production? Perhaps your watch took two years from the moment of assembly to the first production of the materials.  You need to understand this if you EVER invest in a highly cyclical company–what company isn’t at some level cyclical?

Okay, that’s all for now. Thanks for sending the link to the Value Vault. Where are you located geographically, generally speaking? East Coast, West Coast? Big city, small town?

I live in Greenwich, CT home of many hedge funds, but I have never been to one.

Good luck on your journey.

Buffett’s Investments in Franchises

A long-term durable competitive advantage in a stable industry is what we seek in a business.

I look for businesses in which I think I can predict what they are going to be like in ten to fifteen years’ time. Take Wrigley’s chewing gum. I don’t think the Internet is going to change how people chew gum.

—Warren E. Buffett

Old, established and Predictable

Predictable products equal predictable profits. It seems Buffett loves OLD, ESTABLISHED companies. Note the proclivity in his private life to repeat what he likes—burgers and Cherry Coke with Sees’ Candies frenzy as desert.

(Read/listen to Buffett discuss Coke and P&G during his lecture at the University of Florida: http://wp.me/p1PgpH-1N and the videos start: http://www.youtube.com/watch?v=ogAxzPaU5H4

Note the difference between Buffett’s style and Venture Capital investing:
Two VC’s explain their company: http://www.youtube.com/watch?v=3iQTvJIGArc&feature=related

We are studying competitive analysis in case studies to help us determine the strength and durability of a company’s future cash flows (depth and width of moat). Eventually we will circle back to tie franchise analysis in with valuation.

Warren Buffett selectively buys stocks when others are rushing to sell. And he has cash when others don’t as in 1973/74 thanks to his closing up his investment partnership in 1969. When Berkshire had $37 billion in cash, he pounced during the crash of 2008/2009.

Note the franchise and non-franchise companies

EPS       EPS          EPS              EPS
Year              Coke       JNJ          Ford     Adv. Micro Dev.
2011              $3.85     $4.85       $2.00           $0.55
2010              $3.49     $4.76       $1.66           $0.64
2009              $2.93    $4.63       $0.86            $0.45
2008              $3.02     $4.57     -$6.50          -$4.05
2007               $2.57     $4.15      -$1.43          -$5.09
2006              $2.37    $3.76       -$6.72          -$0.28
2005               $2.17    $3.50       $0.86            $0.37
2004              $2.06     $3.10       $1.59           $0.25
2003               $1.95     $2.70      $0.35          -$0.79
2002               $1.65     $2.23       $0.19           -$3.81
2001               $1.60      $1.91     -$2.95            -$0.18
TOTALS  $27.66  $40.16  -$10.09      -$11.94

Johnson & Johnson http://www.scribd.com/doc/78158910/JNJ-35-Year-Chart

Advanced Micro Devices http://www.scribd.com/doc/78159095/AMD-35-Year-Chart

Ford: http://www.scribd.com/doc/78159068/Ford-35-Year-Chart

Coca-Cola: http://www.scribd.com/doc/78158885/Ko-35-Year-Chart

Now, the charts do not imply that purchasing a franchise company at any price is wise, but look how profitable growth puts time on your side vs. the non-franchse companies.

When the market crashes, Buffett isn’t buying the Grahamian bargain he cut his investing teeth on. Instead, he is focusing on the exceptional businesses–the ones with a durable competitive advantage (DCA).

Arguments/Discussion/Disagreements

A few readers preface their remarks with an apology for disagreeing with my comments. Don’t. The purpose is to learn not be right.  If you reason with logic and facts you will convince like this: http://www.youtube.com/watch?feature=fvwp&NR=1&v=1jQP0Y2T2OQ

There is no point in discussing an opposing view with a person who acts on blind faith or belief rather than reason: Frailty: http://www.youtube.com/watch?v=Y_rVU40BTw4&feature=relmfu

Please feel free to disagree, but I warn you the last person to do so met this fate: http://www.youtube.com/watch?v=QHH9EYZHoVU  And I want….. http://www.youtube.com/watch?v=WcxiEOqk_w4

Remember today is Friday the 13th; be careful.

Chanos Testimony on Enron, Slide into Tyranny? Federal Reserve Theft?

“First They Came for the Jews” By Pastor Niemoller

First they came for the Jews and I did not speak out because I was not a Jew.

Then they came for the Communists and I did not speak out because I was not a Communist.

Then they came for the trade unionists and I did not speak out because I was not a trade unionist.

Then they came for me and there was no one left to speak out for me.

America’s Slide into Tyranny

Or the “Patriot” Act’s stomping on the 4th, 5th and 6th Amendments to the US Constitution. Who has ever heard of the Bill of Rights? http://www.archives.gov/exhibits/charters/bill_of_rights_transcript.html

When I read this, I puked on new suede shoes. http://lewrockwell.com/goyette/goyette22.1.htmlay

Pay close attention. This is how it happens…

President Obama found a moment of reduced visibility, in an unwatched hour on New Year’s Eve, to sign the latest assault on the Fifth Amendment. In signing the National Defense Authorization Act of 2012 on New Year’s Eve, Obama knew the nation’s attention would be elsewhere, diverted by revelry, football, New Year’s Day, and a Monday national holiday.

In case you haven’t heard, the National Defense Authorization Act allows the government to detain people indefinitely – yes, it includes American citizens who can be taken even on our native soil and imprisoned – merely on the basis of accusations.

The measure is “so radical,” says Human Rights Watch, “that it would have been considered crazy had it been pushed by the Bush administration.” And although Obama appended a signing statement as he put his name to the act, solemnly assuring the nation that the power he insisted on having won’t be used recklessly, it is a political gesture that has no more force of a law than attaching a little yellow sticky note to the bill. If the clear language of the Constitution itself cannot bind the governing classes, it is hard to imagine a post-it note having much effect on the current or future presidents now that the indefinite detention of Americans without trial has been legislatively countenanced.

There you have it in a nutshell, the new American way: Guilty until proven innocent. This is how once-free people slip into state tyranny and slide into martial law.

I ask if any here feel safer?

So Where Does the Federal Reserve Earn the Money?

http://www.economicpolicyjournal.com/2012/01/nutty-77-billion-dollar-profit.html

The Federal Reserve turned $76.9 billion over to the U.S. Treasury last year, close to the record amount transferred to the government’s coffers in 2010, amid a strong profit generated from its expanding portfolio of securities.

Preliminary unaudited results released by the central bank Tuesday showed the Fed had net income of $78.9 billion in 2011 mainly thanks to higher earnings on securities it bought to counter the recession and promote recovery….the Fed’s crisis-lending programs have produced profits. The increase in 2011 income was primarily a result of $83.6 billion in interest earnings from holdings of U.S. Treasurys, federal agency debt and securities held by government-run mortgage finance firms Fannie Mae and Freddie Mac, the Fed said.

Got that? The Fed printed billions of new dollars and earned a profit after all this nonsense. For the record the money supply (M2) grew in 2011 by nearly $ 850 billion. The total monetary base came in at aprox. $8.5 trillion.

Note: Don’t try this at home. You would get arrested for counterfitting. But do you think you could “earn” a profit of $77 billion, if you printed, over-time, some $8.5 trillion to buy Treasury securities and the like, which means, as part of the circus, you could give the Treasury the money to pay you the interest that you then give back to them and release a press release about your financial acumen?

Quiz: Any guess as to where this money actually comes from? Who loses? 

Enron Case Study Addition

We have discussed Enron in prior posts here:

http://wp.me/p1PgpH-1R Enron so What is it Worth?

http://wp.me/p1PgpH-2U  Analysis of Enron Case Study

http://wp.me/p1PgpH-34 Video of Enron Collapse

An alert reader gave me a heads up to add this to the Enron Case Study:

Full Hearing Testimonies on the Enron Scandal:  http://republicans.energycommerce.house.gov/107/action/107-83.pdf

Chanos Testimony: http://energycommerce.house.gov/107/hearings/02062002Hearing483/Chanos782print.htm

Please stop me before I post again…..but I had to alert you to the above. Most will enjoy reading the Chanos testimony. Note how he FOUND the idea. From our prior study of this case we know that great businesses do not need to layer on complicated debt to grow. Complexity in financial statments is a RED FLAG.

Buffett Discussing Strategy with Raikes of Microsoft

I almost had a psychic girlfriend but she left me before we met.

OK, so what’s the speed of dark?

How do you tell when you’re out of invisible ink?

If everything seems to be going well, you have obviously overlooked something  –Steven Wright

Buffett Discusses Strategy with RaiKES

A generous reader shared this:http://www.scribd.com/doc/78033425/Buffett-Raikes-Email-Discussing-Competitive-Advantages-and-Companies

This weekend I will post the analysis of Wal-Mart and Global Crossing.

Thanks for your patience and perseverance.

Emphasis on Global Crossing Case; Good Health

A conclusion is the place where you got tired of thinking. –Steven Wright

Every man who says frankly and fully what he things is so far doing a public service. We should be grateful to him for attacking most unsparingly our most cherished opinions. –Sir Leslie Stephen

Know The Global Crossing Case Cold

I joke while presenting the Global Crossing case, but you should spend time to really understand what happened and why.  Always in these situations there is much noise and hoopla over new technology, massive growth, booming profits, etc. But you have to stand back to listen: http://www.youtube.com/watch?v=1INb5FM_1lE&feature=related.  Obviously, growth does not occur without investment, and growth without profits is DESTRUCTIVE.

….And think strategically. A friend took out margin to buy a huge bundle of out of the money puts on Global Crossing and Level Three (LVLT).   See the chart on LVLT here—the collapse will take your breath away. http://www.scribd.com/doc/77916697/Lvlt-Chart.

I asked him, “Are you out of your $%^&*! Mind? What the heck is the matter with you?” He replied serenely, “Have you ever read The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail by Clayton M. Christensen and the Disk Drive Industry?” http://www.readinggroupguides.com/guides_i/innovators_dilemma3.asp

“No,” I said, “I am too busy reading the Lehman report on Global Crossing.”

Research by Lehman on Telecom, Fiber Optics and Global Crossing 1998 http://goodbadstrategy.com/wp-content/downloads/LehmanReport.pdf

“Too bad,” he replied. “Because it is the same situation with the telecom companies only worse.  (WHAT is the situation he is talking about____?) Ask yourself what is the WORST industry structure you could possibly design to destroy profits?  Sometimes it is easier to know which companies will face certain death than pick the winners. Also, here is the coup de grace—what happens when marginal costs decline to $0.00!?”

One more time: “Can anyone tell me in two or three words what is the first thing when looking at a company/industry? _____  _____  ______

At the end of the weekend, there will be an analysis of the Global Crossing Case.

So what happened to my friend? Here he is: http://www.youtube.com/watch?v=mmMS9nvi6eg&feature=related

Health

At the age of 97 years and 4 months, Shigeaki Hinohara is one of the world’s longest-serving physicians and educators. His secrets to a healthy long life:

http://www.japantimes.co.jp/print/fl20090129jk.html

Podcast on Why We Get Fat by Gary Taubes: http://www.lewrockwell.com/lewrockwell-show/2012/01/11/247-why-we-get-fat-and-what-to-do-about-it/

Strategic Logic Case Study Part 2 Global Crossing

 

If you think nobody cares about you, try missing a couple of payments. –S. Wright

Everything has been said before, but since nobody listens we have to keep going back and beginning all over again.” –Andre Gide

Part 1 of this case was presented yesterday here: http://wp.me/p1PgpH-hj

If readers don’t grasp the significance of this case then I will QUIT posting and join them: http://www.youtube.com/watch?v=J_kRDcfTKrg

Invest in Global Crossing February 2000

Part 2: You are about to meet the fund manager in 30 minutes to give your recommendation.  Take a glance at Global Crossing’s 10-K. http://www.scribd.com/doc/77824423/Global-Crossing-1999-10-K What’s it worth?  The price is near $61 or about $37 billion in market cap.

Forget the financials you think, after reading Gilder’s Technology Report (background on George Gilder, the Guru of the Telecosm: http://www.wired.com/wired/archive/10.07/gilder_pr.html) on the telecosmic Global Grossing, your confidence increases because growth will double every 100 days.

Since you leave nothing to chance, you call up David Cleevely, the managing director of Analysys, in Cambridge, England. Cleevely is a well-regarded observer of the new telecommunications economics.  He tells you, “The key thing to understand is the huge advantage of the fat pipe (or high-capacity fiber optic channels).  Remember that the cost of laying fiber is mainly the cost of right-of-way and digging or of laying it under the ocean. Recent advances let companies install enormous capacity at no more cost than building a narrow pipe. The economies of scale of the fat pipe are decisive. The fat pipe wins.”

Next you pull a slide from the company’s power point presentation on Where is the Company is Going.

The company will be in a market with EXPLOSIVE growth, competition, capacity on demand, no capital required from telecom carriers, and responsive to market demands.

Your secretary knocks on the door and asks whether you want to read about strategic logic from csinvesing?  You are handed some papers, and you immediately slam dunk the research into the circular file (waste-basket). “Who needs this bullsh@t,” you mutter.

Riches?

You are thinking of the riches you will make and what you will do with your new car: http://www.youtube.com/watch?v=uo5E-2_2mgg&feature=related

You know that economies of scale are important. The logic seems simple—the fat pipes of the new-wave telecom builders and operators gave them much lower average unit costs (Think about how average cost curves are formed). I sat back and thought a moment about fat pipes, scale economies, and telephone calls. What was the “cost” of moving one telephone call, or one megabyte of date, under the Atlantic Ocean?

But the thoughts of massive wealth kept interrupting my thoughts. “Would putting in a fur-lined sink be in bad taste?” I wondered.

What critical aspect of analysis is missing here? If you need a hint go back to the connection between industry structure and profit.

The time is late February 2000 and with your supporting materials and 10-K you wait here for the big boss to arrive. http://www.youtube.com/watch?v=TulxjdKsROI