H.J. Huneycutt

Buffett: "Our country's future prosperity depends on its having an efficient and well-maintained rail system. Conversely, America must grow and prosper for railroads to do well. Berkshire's $34B investment in BNI is a huge bet on that company, CEO Matt Rose and his team, and the railroad industry. Most important of all, however, it's an all-in wager on the economic future of the U.S. I love these bets." (PR)

Good move by Buffett. If nothing else, it makes one of the nation's most powerful investors an advocate for more rail. We need to end our dependence on foreign oil and rail is the best solution. I only wish that Buffett would speak more about the need for passenger rail, as well.

J&J's New Acquisition Strategy Makes Sense

The stock price is the same, but they've been paying out a 3% - 4% annual dividend for most of that time. It has actually outperformed a great deal of the market over the past 10 years.

JNJ is what it is --- a consistent, low-growth, dividend stock. If you want that steady stream of income, it's fantastic for that. If you want high-growth or deep value - then buy into something else.


On Oct 30 05:21 AM davidbdc wrote:

> The J&J CEO has been in his position for about 8 years now.
> The stock price is basically the same. Perhaps the other Pharma
> acquisitions have failed due to his poor leadership?
>
> This is not a strategy. They are just taking a scattershot approach.
> Throw enough money around and something will have to be successful.
> They need a Pharma veteran running that division, not the consumer
> woman they have there now.
>
> The only thing J&J has done in his tenure that is successful
> was the Phizer OTC acquisition.....the rest of it has been a disaster.
> Its time for a clean sweep of the executive suite. This has the
> look and feel of a "yes" culture that needs to be changed back to
> a business first culture.

How to Boost U.S. Exports

If you believe that, you haven't been paying much attention to American electoral politics. The primary reason we have one-sided "free trade" deals where we are expected not to have barriers to trades, but the other parties are allowed to have them, is because our politicians mindlessly pander to lobbyists representing industries that stood to benefit from the trade deals.

"Free trade" is great, when it's actually "free", but accepting lopsided trading terms does not actually promote greater economy efficiencies, nor does it really benefit the US in the long-run. The lopsided trading terms are definitely a sign of the weaknesses of American politicians. Which is amusing because they are known for pounding their chests in international diplomacy (which is counter-productive), but they are ready to capitulate without prompting on trading terms.

On Oct 27 10:01 AM Alan Young wrote:

> That was quite a leap from balance-of-trade issues to finding fault
> with "American democracy." Since we've had balance-of-trade problems
> through the last 4 or 5 administrations, it seems to be a more deep-rooted
> problem with our economy, not tied to electoral politics.

JPMorgan lifts Monster Worldwide (MWW) to Overweight with a price target of $24, saying online employment is well positioned for economic recovery. "While we still expect soft results for the next few quarters, we are becoming increasingly confident in improvements made to Monster's product offering and competitive positioning," firm says. MWW +6.5% to $18.22.

Naturally, MWW is up about 200% since March, proving once again that analysts are spectacularly good at predicting the past!

Not that I disagree with their hypothesis on MWW; I haven't looked into it, but if your professional job is to follow a set of stocks, I don't see how you are "neutral" on something when it's down in the gutters and then turn bullish on it after it's already up 200%!!!

Elliott Wave's Robert Prechter on the dollar: "If these markets continue to be contra-cyclical, as I think they will be, you're going to see a rising dollar for quite a period of time." (video, 6:36)

You've got it backwards. It's the policy of our government to keep the dollar as "strong" as possible, but a strong dollar is one of the causes for the destruction of our manufacturing sector. A weak dollar would actually make more sense, but the idiots in Washington like the word "strong" and blindly pursue a "strong Dollar" policy despite the fact that it makes little sense for us.

In truth, it's silly that this is an issue at all, and it emphasizes the need for an international currency backed by a hard commodity. Until we have that, countries like China will manipulate their currency to boost exports and countries like the Japan and US will suffer on the basis of having a "strong currency".

On Aug 17 08:27 PM Archman Investor wrote:

> Well thats just it.
> It is the unspoken policy of our government to keep the dollar as
> weak as possible. Why?
> All of our major corporations rely on a weak dollar to boost their
> bottom lines. They in turn "give" millions if not billions of dollars
> to Washington for favors.
> Like it or not that is the way it is.
> The dollar will have it's moments of strength, but overall, it a
> currency that will manipulated downward to fatten the bottom lines
> of those companies who truly own and control America.
>
> compdivplan.com

Before you get too excited about Germany's stimulus-less recovery, Paul Krugman says, remember this: "There’s a dissonance between what Germany says and what it does: the Finance minister denounces Keynesianism, but at least according to the IMF Germany’s actual stimulus package is quite substantial - comparable to that of the United States!"

Germany has different standards than most countries. It's well known that German accounting encourages companies to hide away "reserves" for the bad times. This is actually part of a broader system that is supposed to take into account the interest of "all parties" including management, government, and labor.

The upside of this system that it cushions the fall in the bad times. The downside is that as a small investor, it's more difficult to understand what's truly going on.

While this might be a bit broader than accounting standards, those familiar with German attitudes towards finance and economics are aware of these tendencies. Krugman is likely alluding to this.

I wouldn't disregard the fact that government can stimulate the economy. It's a certifiable fact that government can do that. The bigger question is whether that's prudent for the long-run. Germany has been using the "cash for clunkers" deal for quite awhile, on top of other measures. Still, they've been much more fiscally prudent than most of the world.

On Aug 16 07:23 PM Tack wrote:

> Simpler explanation:
>
> Krugman, socialist that he is, cannot believe or accept that capitalism
> actually works.

Laying the Foundations for a Post-Oil Age Economy

Everyone wants a sprawling mansion with 5 swimming pools, maid service, and a full staff. Doesn't mean it's practical. Americans have been living beyond their means and they've been using the government to subsidize their living patterns.

Suburbia is the greatest example. The gas taxes don't fully pay for the road/highway system any more. Instead, the Federal government and state governments have to shift general income taxes to road building and maintenance. Let's not even mention the fact that governmental services have to increase as we sprawl ever further upwards. More governmental services means more taxes.

The problem is that the government has distorted the market in favor of excessive luxury living in the suburbs. Instead of building, upward, energy efficient cities, we built these Federally and state subsidized sprawled out 'burbs. There are lots of reasons for this and to simply peg it on one thing would be nonsense, but the fact of the matter is that suburban living is less of a choice and more of a necessity due to skewed governmental policies.


On Jul 15 10:24 AM A Barrel Full wrote:

> Economic policies that promote upward, urban development.
>
> Problem is, most of us want a house with its own back yard.
>
> As an observer from afar, I think that the US consumer could us far
> less energy, without too much compromise in living standards, simply
> by moving to more efficient vehicles. The only mechanism that would
> make this happen however is gasoline taxes, something that no politician
> will countenance.

Laying the Foundations for a Post-Oil Age Economy

Tony,

I live in the sprawl too. Most people do. They have no choice. Government policies have distorted the market so thoroughly so that costs have been shifted more heavily to inner-city taxpayers. If I live in DC, I have to pay astronomical taxes. Whereas, if I live in Northern Virginia, I don't.

If I live in DC, I have to pay the astronomical fees to ride a public transit system that is starved to death. If I live in Northern Virginia, I get to use a heavily subsidized road/highway system. If I live in DC, I pay astronomic property taxes since the system is based around property values rather than property usage. Whereas, if I live in Nova, much lower property taxes, which also means lower rents.

Why do you believe the government should subsidize your living patterns at the expense of others? Why do you favor the heavy government distortions in the market that promote sprawl, but deter economic efficiency? That's my question.

I live in NoVa, but I'd live in the city in a heartbeat if I had an option. I don't favor governmental policies that force people to live in inefficient suburbs with no sense of community.

The White House is considering new mortgage aid for jobless homeowners, including options to delay or skip monthly payments. The potential policy is still evolving, but some are worried it will create perverse incentives that further distort the housing market.

I still don't, for the life of me, understand why I am being punishing for spending my money responsibly over the past few years, while people who bought homes they couldn't afford are being rewarded.

There's nothing wrong with renting. It's an idea our policymakers need to come to grips with. Renting is neither better nor worse than home ownership. Both have their positives and negatives.

If President Obama wants to pay mortgages for jobless homeowners than he should also pay rent for the same. No reason homeowners should get favorable treatment under the law.

Madoff: "I cannot offer you an excuse for my behavior. How do you excuse deceiving an industry you helped to build?" "How can you excuse deceiving a wife of 50 years?"

He's still trying to play the 'my wife wasn't involved with this' card.

Rumors of the U.S. decline as a global economic superpower are greatly exaggerated, The Globe & Mail's Neil Reynolds writes. "The U.S. is not a colonial power ... And it has no credible competitor."

The author makes several good points, but also becomes overly reliant on the whole "the United States is a capitalist nation" and the only competition is "socialism" nonsense. I've long said that the "capitalism vs. socialism" debate is sheer crap that distracts people from the real issues facing the economy.

Capitalism is not a uniform system. It takes many different shapes and sizes. It does not magically produce success, nor is it magically doomed to failure. It was merely the economic system that evolved in our particular culture post-Manorialism.

The issue isn't "capitalism vs. socialism vs. religious extremism" --- it's the structure of the economy. Does the economic system reward those who work hard and those who are innovative? Does the system punish those who are reckless and greedy? Does the system have a consistent and coherent set of rewards and punishments? Does the system create opportunities for most of the population? Does the system promote openness and creativity?

The United States succeeds on some fronts. In particular, you won't find a more open system out there, which is why many of the most innovative minds in the world come to America. At the same time, unemployment is over 10% right now (and that's a downward exaggeration --- realistically speaking it's more like 15%). Why was the government more concerned about padding the capital cushions of banks rather than providing a bigger safety net to the millions of unemployed?

On top of the ridiculous bank bailouts, the government keeps pumping money to the auto manufacturers in stealth ways. Mr. Market keeps saying "we don't want more cars. They are inefficient are the alternatives are better." Yet, the government and its lobbyist pals know better. So we got billions of dollars wasted on the auto industry, coupled with hundreds of millions of dollars siphoned via general tax revenues into the underfunded highway system, and now the government is passing more auto handouts like "cash for clunkers" that makes no sense.

My basic point is that via flawed government policies, our reward/punishment system has become completely arbitrary and random. Or even worse, it may be actively encouraging reckless behavior.

That's just the tip of the iceburg, but I see a lot of negative signs in our economic structure. We're still the most power nation in the world by far, but we're not going to stay atop our perch if we continue doing what we're doing.

"I believe we will look back on the 'Chinese economic miracle' as the sickest joke yet played on investors," says one Credit Suisse analyst, after noting falling earnings at China's industrial companies.

"Resolve and determination"?

What about the fact that the China's "miracle growth story" of this decade was directly related to America's "miracle growth story"? That is, China was manipulating its currency and buying US debt to pump up their own export market. How are they going to continue to have monstrous growth if the US isn't borrowing at astronomical rates?

To be sure, the US is still a debtor nation, but eventually, the Obama Administration is going to put the clamps down on spending. People can make silly arguments like "HE"S A LIBRUL" and "THE GOVERNMENT NEVER SHRINKS", but this is simple economics. If the yields on treasury bonds keep rising, the US can't afford to borrow any more. Eventually, the US govt is going to find itself faced with the same situation that California faces --- and the only option is going to be to cut back spending.

The US would've faced this decision sooner if China hasn't been buying treasuries at a monstrous pace. But the decision is coming one way or another.

Having lived through a bunch of recessions, Ben Stein says this time really does feel different: "The suffering among individuals and families close to me is incomparably worse than I have ever seen it before."

Ben Stein getting pessimistic almost makes me more optimistic about the future. Has that guy ever been right about anything? And how on Earth does he have even the slightest ounce of media credibility?

Let's see he's a (a) creationist who distrust science and believes evolution is a "belief system" (rather than a scientific fact established through fossil records) and (b) he was urging people to buy into the market in September of 2007 --- even going so far to say that a lot of the stocks that absolutely imploded were deals of a lifetime.

If you read the linked column, you'll notice he uses the word "feel" a lot to substantiate his beliefs. He has no credible evidence to back up his arguments --- he simply "feels" this time is different. Sorta like he felt that 2007 was different and the market could go up forever.

I heard him labled as an "economist" by the media the other day and I started giggling. If Ben Stein is a credible "economist", then I'm an astronaut.

I'm not saying we're in for good times any time soon --- but let's take Stein for what he is: a go-along guy whose economic (and science) views deserve no merit whatsoever. He's an actor, a lawyer, and speechwriter --- in essence, he's similiar to nearly every boneheaded politician out there.

Paul Krugman says California's collapse has him rattled, and wonders if America will follow it into ungovernability. "Who would have thought that America’s largest state, a state whose economy is larger than that of all but a few nations, could so easily become a banana republic?"

California is ungovernable, but it's a question of size more than anything else. The entire premise behind Federalism was that democracy could not work in massive-sized states; therefore, the nation is divided up into small governable districts ("states"). Unfortunately, people seem to have slowly forgotten this principle over time and we ended up with Goliath-states like California and Texas.

California is particularly problematic because it is so culturally diverse, on top of being geographically and economically diverse. With its massive size, it was bound to become a giant staging ground for ideologues to battle over whatever wedge issues they saw fit without any regard to reality. No surprise that the CA government is completely screwed up.

Jon Friedman is disenchanted with Warren Buffett's "crocodile tears" for the newspaper industry. "If Buffett truly believed our nation will be a poorer place without a thriving newspaper industry, why can't he step up and direct his laser intelligence to easing, if not solving, the problem."

Buffett is wealthy and powerful, but let's not kid ourselves --- no one on Earth could've saved the telegraph and Buffett isn't going to save the newspapers. With the exception of some of the big, national publications that attract a signficant online following (e.g. Washington Post), most of them are gonners.

This isn't necessarily good nor bad --- it's just different. The media has seen numerous shift in format, style, and organization since America's founding --- this is simply the newest shift. Over the next decade or two, I think we'll see some new trends.