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  • President Obama says House Speaker Boehner has decided to walk away from debt limit negotiations. Earlier today, Boehner had suggested talks would continue.  [View news story]
    Yeah, well, when I was 30, I didn´t think I would live to see 60, but here I am still alive and kicking.

    I don´t know why Obama is talking about Social Security now, as it is not the real issue. I think it is just a scare tactic to moblilize senior voters against the Republicans.

    There will still be a government pension when your reach 60 or 70, I am sure, but at the same time you do need more than Social Security if you want a prosperous retirement.

    I have pensions from jobs in three countries, plus deferred compensation which I saved voluntarily in addition to my job´s pension, plus the expectation of some Social Security in a couple of years time. You need at least three legs for your retirement stool, if not four, but for an awful lot of people Social Security is an important factor.

    It doesn´t exist in many third world countries, and the alternative is that older people become the dependents of their own children, or become beggars and soon die. Maybe that is what we want in the United States, but programs like Social Security and Medicare were originally set up earlier in the 20th century so as to get away from that.
    Jul 23 08:46 PM | Likes Like |Link to Comment
  • Nassim Taleb told us of the rare, unpredictable events that our minds are poorly equipped to deal with: "black swans." So what about the swans that are flashing neon because their imminent arrival is blindingly obvious? A debt-ceiling cataclysm looks more certain every day, and yet investors are closing their eyes.  [View news story]
    It seems to me that it is not that complicated. Clinton left the nation with a surplus and then George W. Bush blew it with his income tax cuts, two unfunded and unnecessary wars, and the collapse of the banking system.

    In his 2002 speech Obama pointed out, before we attacked Iraq, that an invasion of Iraq would run up almost infinite costs. Had there been a Tea Party at the time, he would surely have been hailed as their leader.

    Now if we want to reverse engineer that process, surely cutting defense spending and reversing the Bush tax cuts should be the fundamental underpinnings of action to correct the situation.

    I also agree that fundamental reform of Medicare could save a lot of money, so why on earth are the Republicans opposing ¨´Death Panels¨? Death Panels, if that is what you chooose to call them, are exactly what is needed to cut Medicare spending and stop paying out billions of dollars for intensive medical care in the last few months of life, which people in most countries don´t get anyway.

    With Social Security, I know that eventually the funding will run short in about 2050, but I am sure some adjustments to contributions, age of receipt, etc. will make it possible to push that well forward into the future.

    I really don´t understand why both parties can´t come to an agreement over this. It just isn´t that complicated.
    Jul 23 08:07 PM | 5 Likes Like |Link to Comment
  • President Obama says House Speaker Boehner has decided to walk away from debt limit negotiations. Earlier today, Boehner had suggested talks would continue.  [View news story]
    ¨In addition, more employees would be likely to contribute themselves since they had more of their own money suddenly not heisted from them by a WDC do-gooder, cold hearted bureaucrat. And their return would be MASSIVELY higher over the years.´´

    In your case, yes, or maybe, since if you fit the typical SeekingAlpha demographic, you are probably white, professional or business owner, college educated, etc.

    However, don´t you think it is possible that many people would be swindled out of their life savings by Wall St. hucksters, etc. or would put their money in get rich quick unsuitable investments?

    For a start it is clear that anyone who spends their spare money on lottery tickets is not playing with a full deck, and that is a lot of people just to start with.

    And if everyone could beat the return on investment of Social Security, then surely the Government could invest the money and get an even better return. Why not put every citizen in the same retirement pension plan as the members of Congress? And give them the same health insurance? The answer, of course, is that it would never work, because these boondoggles are subsidized.

    How much experience do you, Wyatt, actually have with living and working with ordinary working people who are not college educated or financially literate? Did you know that about 80% of the people in this country believe that most of the details of their lives, especially their sex lives, are governed and supervised by an all seeing, all knowing sky god, a completely irrational belief that runs contrary to all known experience?

    What examples of other countries can you show us where the population as a whole benefits from the lack of a goverment retirement pension?

    Would you like to explain to us exactly what your personal professional experience is or was in the financing of health care?

    In particular, can you explain how insurance companies can make large profits for shareholders and still deliver better more cost effective health care to an elderly populations than Medicare, which is not for profit?

    If this is the case, could we not just have the Government employ insurance companies to administer Medicare funds, and let the taxpayer keep the difference of the money saved?

    Even in countries that have comprehensive health care like the UK, private enterprise is not completely excluded from the health system, and there are many levels of private contracting to provide the different kinds of services needed by a large population.

    However it seems evident that efficiencies must be achievecd by a measure of centralized planning. For example, if a given territory has double the number of maternity beds and obstetricians that it effectively needs for the number of births expected, then this cannot be cost effective. On the other hand if there are not enough, then that won´t work either. And don`t just tell me that market forces will take care of everthing. In the long run we are all dead, as Keynes said, but we can do better than that while we wait for the inevitable.
    Jul 23 07:52 PM | Likes Like |Link to Comment
  • President Obama says House Speaker Boehner has decided to walk away from debt limit negotiations. Earlier today, Boehner had suggested talks would continue.  [View news story]
    Haiti also has no effective government and an excellent climate.
    Jul 23 05:00 PM | 3 Likes Like |Link to Comment
  • Is Whitney Tilson Smarter Than These Great Investors? [View article]
    Does Tilson have a questionable reputation? Have you been to Papua New Guinea? Is there a world shortage of LNG? Can this product, assuming the reserves are as great as is claimed, be brought to market profitably by this company?

    Seeing is believing, and I will believe when I see. Anyhow, if I assume a short position on Interoil and lose all my money, you should be very happy.
    Jul 23 01:51 PM | Likes Like |Link to Comment
  • President Obama says House Speaker Boehner has decided to walk away from debt limit negotiations. Earlier today, Boehner had suggested talks would continue.  [View news story]
    I don´t know. See here for a summary of the different proposals.

    It is always a case of the devil being in the details. Just saying ¨Medicare cutbacks´´ is one thing, but detailing how they are to be implemented is another.

    Bottom line is that the US is in the process of becoming a poorer nation and we are all going to have to tighten our belts in one way or another. The negotiations are a process of discovering the fairest outcome and the one that offers the best long term outcome, or the least damaging long term outcome, depending on how you look at it.
    Jul 23 12:27 PM | 2 Likes Like |Link to Comment
  • Is Whitney Tilson Smarter Than These Great Investors? [View article]
    Well, here is an article from a somewhat controversial source that outlines some of the objections. This article also contains links to some other other sources.

    Basically the objections are that

    1. The People behind InterOil have a long history of hyping oil and gas fields in Papua New Guinea.

    2. The company continues to have negligeable earnings, yet always claims to be on the verge of great things and constantly puts out press releases.

    3. The supposedly independent reports on estimates of their gas reserves are of dubious provenance.

    4. There is an argument to be made that the spectacular gas flares from the site may not correspond to large reserves underground. I am no expert on this, but my brother in law is a professional geologist with 30 years experience in the field, and while he is not in the oil business, he knows a few things about rocks.

    5. Papua New Guinea is kind of hard to get to, if you really wanted to check the place out.

    None of this is conclusive, but there is little evidence that Interoil has a competent management that can execute and market even if there are substantial reserves of natural gas available.

    I think there are better investments in natural resources.
    Jul 22 12:26 PM | 1 Like Like |Link to Comment
  • Nokia: This Stock May Surprise You. Here's Why [View article]
    Well, my long and option position in Nokia is already showing a ROI of 10% so far in less than a week. A bit more upside and we will be talking some real money.

    If that is insanity, then you can keep any lost marbles.
    Jul 21 02:46 PM | Likes Like |Link to Comment
  • Is Whitney Tilson Smarter Than These Great Investors? [View article]
    Don´t be so sure about that. I looked into this issue in some detail last year, read many articles, annual reports, etc., had some private correspondence with an accountant in Australia and came to the conclusion that Tilson is probably right. It is also reasonable to assume that he may have some information that he has not published.

    I would be extremely wary of taking a long position in Interoil, or if I did, I would want it very well hedged, but I think there are better investment opportunities elsewhere.
    Jul 21 08:02 AM | Likes Like |Link to Comment
  • Nokia: This Stock May Surprise You. Here's Why [View article]
    Not exactly, because the devil is always in the details, and with the options trade the stock could be down, but you would still be in profit. However, selling puts IS a long position,and the supposition is that there is an excellent chance that Nokia stock may recover from its current swoon if the Windows phone catches on.

    With the Facebook-Skype-Nokia hookup, you could see a worldwide epidemic of phone sex that would make billions. (I know, I know, but one has to look at potential real life applications!)
    Jul 20 04:41 PM | Likes Like |Link to Comment
  • Nokia: This Stock May Surprise You. Here's Why [View article]
    At current stock prices there is certainly great potential for NOK to yield some nice returns.

    Today, for example, you could sell the January 2013 $7.50 puts for $2.55 per share.

    Worst case scenario is that by January 2013 NOK is bankrupt and you have lost $495 per contract.

    Alternative scenarios include

    1. Options expire with stock higher than $7.50 in January 2013 and you make 35% profit over 18 months.

    2. Options expire with the stock at $4.95, and your trade breaks even.

    3. Options expire with stock between $0 and $4.94 and you take a loss in proportion to stock price.

    4. Nokia stock price recovers sharply by early 2012 and you are able to buy back the short puts at a nice profit and redeploy your capital.

    5. If the trade really goes badly for you, you could take a shorter position by selling an at or in the money call if the stock reaches, say, $3 and effectively mitigate further losses on your position.

    I am not a registered investment advisor and anyone who follows this strategy may lose all their money and then some.

    I am long Nokia, but less than 1% of my portfolio at this time, so not betting the farm on it.
    Jul 20 12:38 PM | 1 Like Like |Link to Comment
  • Former President Bill Clinton says he would declare the debt limit unconstitutional "without hesitation" if Congress does not raise it in time. It's an idea The Washington Post's Ezra Klein calls the best of a number of bad options if you consider the severe economic ramifications a Treasury default or prioritized payment plan could produce.  [View news story]
    Clinton probably reckons that the Supreme Court, nutty though it is, would not dare to overturn this and turn the whole world into financial chaos.
    Jul 19 06:45 PM | 2 Likes Like |Link to Comment
  • Tempting Tuesday: Murdochs Testify to Parliament [View article]
    Excellent piece. One of the few commentators in North America who ¨gets it¨.

    I´m not in favor of punishing the rich for being rich and I fully acknowledge that the amount of money spent by Medicare on Americans in the last 6 months of life is obscene, but this is supposed to be a democracy, and if we are going down, then we all need to go down with the economic ship together.

    My solutions. Grant anyone aged 60 or over the right to accept a lump sum cash payment instead of Medicare. Ditto Social Security.

    This would have the effect of hugely reducing government without impoverishing the poor, so would be wildly popular with both political gangs, and would reduce dependency on government.

    Disband 80% of our unnecessary military forces and make these welfare recipients and their families earn an honest living. Keep defense forces only to guard the borders of the US homeland and outlying territories.

    Also abolish unemployment and welfare, but remove all restrictions on business activity, including zoning allow anyone to make a living any place and any way they can. No more arresting young girls for having a lemonade stand without a permit. because there will be no more permits. If I want to make a living by selling hamburgers and carwashes in my back yard or any public place, I should be free to do so. No more restrictions on dealing in drugs, selling sexual services, or paying open bribes to politicians.

    The Supreme Court has already boldly started this process. Let us move forward together. In no time at all our country will be as free as Haiti.
    Jul 19 01:23 PM | 4 Likes Like |Link to Comment
  • Debt Ceiling Deal a Prelude to Ultimate Default [View article]
    ´´I simply stay true to the vision of the Founders. If you read the Constitution, the Declaration of Independence, the Federalist papers and the writings of thinkers that inspired them like John Locke, you will see that their vision and mine match. Were they selfish racists without a desire for good governance or stable democracy? ´´

    No, but they lived in a preindustrial plantation economy run by wealthy landowners, based on slavery, a society in which it was unthinkable that women would ever be allowed to vote, and in which, as I recall, the right to vote depended on owning property.

    They were products of the Enlightenment and were clearly influenced by contemporary works such as Gibbon´s Decline and Fall of the Roman Empire, and they wanted to build a system that would avoid some of the mistakes made by Rome, so, for example, they decided not to have an official state religion.

    However, they also lived in an era before modern science, and were not able to benefit from reading works like The Origin of Species (1859) which provided some of the intellectual underpinnings for Emancipation.

    The Constitution in its initial form represented the thinking of the educated and wealthy class of its time, and has gradually evolved ever since.

    Unfortunately the constitution they put together, even with a number of Amendments, is creaking badly and the US is rapidly becoming ungovernable. One of the obvious problems is that the way the Senate is constituted gives a disproportionate influence to some states with very small populations.

    I will take your word for it that you are not arguing for your personal economic benefit, but I´m afraid that for most people who take your side, that is exactly the case.
    Jul 15 12:55 PM | 2 Likes Like |Link to Comment
  • Debt Ceiling Deal a Prelude to Ultimate Default [View article]
    "First, the implicit precursor to what you’re saying is that because we have a fiat currency and an economy built upon it, that money and everything it buys was first given to us by the government, and therefore, they can take it away. Correct me if I’ve misinterpreted you."

    Sure. What I am saying is that any wealth we may accumulate as individuals comes from being part of a society that makes it possible to create wealth.

    Let me give you a simple example. In terms of foreign exchange or purchasing power an airline pilot or doctor earns much more money in the US than in China--for doing the same work!

    Each person needs to contribute according to their ability to the family, community, and nation that gave them life, education, the use of its language and culture, the opportunity for health and happiness.

    Your arguments are entirely abstract and theoretical and do nothing that I can see to improve the overall human condition and do not stem from a real desire for good governance or stable democracy.

    I deeply suspect that your views simply support your own personal desire to pay as little tax as possible on your income. I live in Florida and there are many retired residents who moved there because there is no state income tax, who have this attitude and care nothing for the overall well being of Florida and its people.

    Taxes are collected for the collective well being. Everything that you see around you, good roads, clean water, affordable power, the education system, garbage collection, sewerage, the army that defends our country from foreign invasion, public health initiatives to eradicate contagious diseases, comes to greater or lesser extent from collective endeavor.

    Obviously a democratic society is a very imperfect one, because there are so many voices to be heard, and we have violent disagreements one with another over how the government should spend money. For example, in my opinion the US wastes an unconscionable amount of money on so-called defense, that is mostly spent on wars of aggression.

    On the other hand, many people in Florida deeply resent expenditure on programs like food stamps, and the underlying reason is that they perceive that many of the people who receive food stamps are African Americans, althought they do not usually admit to this and may not even be aware of their own motives.

    Remember that long before he was elected Obama warned strongly that the war in Iraq would cost a vast amount of money and that no one could predict how long the occupation would last. You would have thought this would have won him the enduring support of the Tea Party, but apparently not, as the Tea Party did not exist at that time when Obama was a proto-Tea partier ahead of his time.

    "I know that even a successful war against Iraq will require a US occupation of undetermined length, at undetermined cost, with undetermined consequences. I know that an invasion of Iraq without a clear rationale and without strong international support will only fan the flames of the Middle East, and encourage the worst, rather than best, impulses of the Arab world, and strengthen the recruitment arm of al-Qaeda."

    "I am not opposed to all wars. I'm opposed to dumb wars."

    [B. Obama 2002]
    Jul 15 10:20 AM | 2 Likes Like |Link to Comment