Albert Meyer's Comments

ECB and BOE: Adding Fuel to the Dollar Liquidity Fire

Mon, 30 Nov 2009 10:00:50 -0500

Yes, thank you again.

Meredith Whitney's Crystal Ball Fogs Up

Mon, 23 Nov 2009 09:42:10 -0500

Good article... mainstream media always looking for a heroine. If they can’t find one they create their own.

How to Slow Down Foreclosures

Fri, 20 Nov 2009 09:02:20 -0500

How about offering banks an incentive to forgive debt? A one dollar tax credit for each dollar of debt forgiveness up to $75,000. This way a bank will get a $75,000 bad debt deduction and a $75,000 tax credit for set off against other taxable income. The $75,000 tax deduction translates into an after-tax expense of $48,750 at 35% and a $26,250 tax benefit for a total tax benefit of $52,500. In principle, I'd prefer the government to shrink and not provide ant kind of assistance or subsidies, but as that is a pipe dream under the current circumstance, this options seems to be clean and devoid of bureaucratic meddling such as counselors, mediation and legal advisors.

Forcing banks to auction, as suggested above, is also a much better approach than the current mess. That's the freemarket approach, but we are so deep into the big government and socialist mode that I despair.

Mulling the U.S. Dollar's Outlook

Mon, 16 Nov 2009 09:05:11 -0500

Thanks.

Yet Another Ternium Convert

Thu, 05 Nov 2009 08:55:22 -0500

Tenaris [TS] is Ternium's sister company. Both companies care about shareholders, rather than concentrating on inflating executive compensation packages - no stock options, no smoke-and-mirrors.

Baidu vs. Google: A Free Cash Flow Analysis

Mon, 02 Nov 2009 11:19:39 -0500

A belated reply, following the logic of “endoftheworld” above: During the period 1995 to 2007 Cisco spent virtually the entirety of its free cash flow to repurchase approximately 2 billion shares. During the same period, it issued 2 billion shares to employees. How did shareholders benefit? Zilch. You first inflate the share count and then you mop up the dilution.

Here’s the logic: when a company issues options IN LIEU OF CASH COMPENSATION and then buys back the stock issued as a consequence of the options program, it has merely paid cash compensation by means of a two-stage process. There are stock buybacks that shrink the pie (for example, if Berkshire were to repurchase stock) and stock buybacks that merely mop up dilution (for example, Cisco’s stock buybacks, for the most part)

Cisco’s employees contributed $15 billion through stock option exercises during the period under review. Hence, my calculation of free cash includes an adjustment that calculates the cost of repurchasing the stock issued to employees net of their contributions on exercise, to arrive at “unfettered free cash flow.”

By the way, the cost of mopping up (market value minus exercise price = discount at which stock issued to employees) is the very amount that companies claim as a tax deduction for stock-based compensation.

In summary: for a more reliable free cash flow number, adjust conventional free cash flow for the cost of mopping up stock option diluting.

The Best Trades Could Be the Ones Not Entered

Fri, 30 Oct 2009 10:03:27 -0400

You have not missed anything... PAYX is the superior company... revisit this story a year or two from now and long-term investors owning PAYX will be smiling... however, in the short-term anything is possible...

On Oct 29 11:48 AM money4eds wrote:

> You compare PAYX to ADP and state PAYX is over valued. PAYX has no
> debt, better current ratio, better return on equity. They also are
> expanding their service offerings. Higher insider ownership in PAYX.
> On paper it seems to be a better investment. What did I miss?

Baidu vs. Google: A Free Cash Flow Analysis

Wed, 28 Oct 2009 10:49:41 -0400

Oh wow... we had some spirited debates... I forgot my handle... something311, I think...

On Oct 28 10:37 AM Peter Mycroft Psaras wrote:

> Yes I am the same ;-)

Baidu vs. Google: A Free Cash Flow Analysis

Wed, 28 Oct 2009 10:24:58 -0400

Thanks... are you the same Mycroft who was active on the Coke Yahoo board in 1998?

How Did the Wage / Benefit Gap Between Public and Private Sectors Get So Huge?

Wed, 28 Oct 2009 09:40:38 -0400

Moon Kil Woong.

"Bush Jr. didn't "dump" hundreds of thousands of young Americans in a desert somewhere with no real mission." - Moon Kil Woong
("We have to protect the integrity of the United Nations," he said.")

The mission was to annex the oil fields of Iraq and payback Sadam for cheating his dad on an oil deal decades ago. US oil services companies (Cheney's buddies) were lining up to make billions.

Bush lied, our barve men and women died; and are still dying. Millions of Iraqi's are refugees, thousands innocent Iraqis died needlessly.

Track the cost of this disaster here:

costofwar.com/

U.S. Treasury Supply Continues

Tue, 27 Oct 2009 10:21:45 -0400

Thanks...

18 High Dividend Canadian Stocks

Mon, 19 Oct 2009 10:46:00 -0400

Precision Drilling suspended its dividend and using the cash to payoff debt after the Grey Wolf acquisition.

Remember Mark-to-Market?

Mon, 19 Oct 2009 10:13:19 -0400

"Fair-value" accounting isn't accounting at all; it's quarterly books valued at the prevailing hysteria/euphoria of traders.” Tack

Correct. Those in favor of "fair-value” accounting, approach it from a purely theoretical construct. For a market to produce fair values, it has to be transparent, liquid and deep. You can no doubt add more characteristics, without which one cannot trust or rely on the fair values produced. FASB failed to see that Mark-to-Make Believe was a doomsday device. The world is a better place without FASB and the SEC. Both bodies engender a false sense of security.

FASB is an enigma full of contradictions. The fair value of an employee stock option is the difference between the current market value and the strike price. Yet, FASB threw out the intrinsic value approach, which, take note, is the cost that companies deduct as stock-based compensation on their tax returns, and, instead, gave us a 280-page rule-book to calculate the cost of an employee stock options. That way, the obfuscation is so surreal that nobody bothers to question the whole system that essentially transfers wealth from hardworking Americans into the bank accounts of the executive elite who, in turn, bankrolled our members of Congress…. who, in turn, protect the system. Ask yourself the question: Where did the $470 million come from that Countrywide’s Mozilo banked after exercising his stock options? Mostly from people who invested in Index funds, because Countrywide was part of the S&P 500 and Nasdaq. Legalized theft. I could go on…

China Wants a Global Currency? Here's How

Thu, 08 Oct 2009 09:26:32 -0400

"The supply of mineable gold is too limited, and efforts to back up currency with gold would result in chronic shortages of liquidity and global deflation."

Please substantiate this with research. I've seen compelling research to the contrary. Refute this notion and support your assertion with substantive evidence. I'm neutral on this debate.

American Debt Falls for First Time Since 1954

Tue, 29 Sep 2009 09:38:52 -0400

Biden also said, during the VP debate, that we (you and me, taxpayers) should build more schools in Pakistan... The Financial Times reported last week that we gave Pakistan $5.5 billion and have promised another $1.5 billion per annum... regardless who is in power... both parties are bent on expanding our foreign empire (some put the cost at $1 trillion p.a. costofwar.com/)... and in the process bankrupting us here at home... this is a one-party state

On Sep 28 05:43 PM Jason Tillberg wrote:

> Reminds me of what Biden said back in July.. sic "if we don't spend,
> we go bankrupt."
>
> www.youtube.com/watch?...;feature=related>
> Debt based money system, he's right.

Outlandish CEO Pay: How to Fix the Problem

Wed, 23 Sep 2009 09:54:06 -0400

First, the IRS needs to withdraw the provision in the tax code that allows companies to deduct the discount at which they issue stock to employees. For years, companies have maintained that stock-based compensation was not an expense, but they have eagerly taken a huge tax deduction on that account in their tax returns.

Second, cash spent on buying back shares that were issued to employees in lieu of cash compensation should be reported in the operating section of the cash flow statement. If the IRS wants to grant companies a compensation deduction, then base it on these cash outflows. Cash outflows relating to stock repurchases should only be reported as a financing activity, i.e., an allocation of capital, once it has been shown that all dilution caused by stock-based compensation has been mopped up. Executives would have us believe that the stock-based compensation expense, as recognized in the income statement, is a non-cash expense. Cash spent on stock repurchases to combat dilution caused by stock-based compensation betrays this notion, and if properly disclosed as suggested above, would better inform shareholders of the true cost of share-based compensation.

Mutual fund, MIRZX, shuns companies that use stock-based compensation, unless used minimally, i.e., great companies like Telefonica, Nestle, Syngenta, TransCanada, StatOil, Tenaris, Southern Copper... to name a few.

The Sensationalist WSJ

Wed, 23 Sep 2009 09:38:49 -0400

I agree with you. The neocons have taken over at the WSJ.

costofwar.com/

ECB's Nowotny: No Dollar Shortage in Europe Anymore

Fri, 11 Sep 2009 13:17:52 -0400

"The first camp does not appear to recognize the significance of what appears to have been one of the Federal Reserve's most successful programs. The currency swap lines with foreign central banks. At their peak they amounted to nearly $650 bln... The media also appears to have lost sight of this..."

Perhaps ypu cold explain to those in the media and simpletons like me, how these swap lines were instituted and how they distort the normal flow of funds?

I was in the first camp, until I read this article, which is why I appreciate your contributions. A previous contribution, which highlighted the fact that part of the trade deficit is just US companies importing finished goods from their foreign-owned manufacturing plants, was a reminder of very imporant fact when people get all antsy about trade deficits. There is more than meets the eye, as also in the case with these swap lines, but not that obvious.

What’s My Payment?

Fri, 11 Sep 2009 13:07:56 -0400

Good article, thanks.

"The $10.5 trillion of mortgage debt will need to be paid down or written off over many years, before the housing market will reach equilibrium again"

Isn't this a little bit extreme? The collateral value of the $10.5 trillion of mortgage debt is $19 trillion, not so?

Total US household net worth is $53 trillion, not so?

Just trying to add another perspective, although there is nothing about your article that should make us proud, but then our government leads the way, not so? A healthcare program will add another $1 trillion to national debt over the next ten years - low-balling the estimate of course. Do they undertsand what the word "immoral" means.

The war was supposed to cost $80 billion... $908 billion and counting. This makes household debt fade into insignificance.

costofwar.com/

How Much of China's Export Industry Is Owned by U.S. Corporations?

Fri, 04 Sep 2009 08:24:02 -0400

"It also explains why the idea of "bashing" China for the current account deficit is pointless, as is the debate of the value of the Yuan. All China provided was an environment where free markets and free enterprise could prosper, Yankee know how and ingenuity did the rest. There is no reason why America can't do that, but "Stimulus Packages" and intrusive government, won't achieve it."

Thank you. Very important points that need to be kept in mind by those who agnonize about trade deficits and call for protectionism. We are slouching towards socialism. China is marching towards capitalism, however slowly. Our ingenuity is being crushed by the neocons' trillion dollar foreign entaglements:

costofwar.com/

Reports of the Dollar's Death Are Greatly Exaggerated

Mon, 31 Aug 2009 11:18:55 -0400

costofwar.com/

a visual.. for those who can't read...

On Aug 30 04:03 PM The Recusant wrote:

> Aaargh...three points to counter your statements.
> 1. Unemployment erodes the national wealth.
> 2. Investors and other countries lack confidence in the US dollar.
>
> 3. Military overspending burdens the government budget.
>
> Bye-bye dollar.

The Federal Reserve Must Die, Part 3

Tue, 25 Aug 2009 10:14:43 -0400

You sent it to 50 senators? Not much good, 'cause they are all illiterate - voted into power by a bunch of coach potatoes. You need to put this into video format and then send it to the Senators. Enlist me for the rebellion.

Why Economic Stagnation Will Continue

Tue, 18 Aug 2009 09:10:00 -0400

Half the trade deficit can be accounted for by multinationals intra-firm trade (Marc Chandler on Seeking Alpha). The trade deficit is a raw number. A US company importing goods manufactured by its own facilities abroad adds to the trade deficit, but in the process lowers its cost of production/sales and improves its profit margin, etc.

A Close Look at China Auto Sales Data

Tue, 18 Aug 2009 09:01:27 -0400

Oops! Thank you!

On Aug 18 09:00 AM Albert Meyer wrote:

> Thak you.

A Close Look at China Auto Sales Data

Tue, 18 Aug 2009 09:00:40 -0400

Thak you.

How Should the Dollar's Impact Be Considered When Buying Stocks?

Mon, 17 Aug 2009 11:59:18 -0400

Thanks... interesting facts about exports/imports.

The WSJ's Unhelpful Aggression

Thu, 13 Aug 2009 10:04:22 -0400

The WSJ today, is a shadow of its former self. It has become a mouthpiece for the neocons. Murdoch has his hand firmly on the helm. Karl Rove is "the star attraction." Yes, soon Hannity et al might well join the team. I have bridge in Brooklyn at a real bargain price for those who believe the Journal is objective in its reporting. That said, there are still some first class journalists at the Journal. Figure that out for yourself and skip the rest.

Indonesia: A Hidden Gem

Wed, 12 Aug 2009 09:31:09 -0400

"... lots of side payments required to do business - illegal for US citizens to pay)."

We make it legal in the US by laudering the bribes through lobbying firms. We need to teach the Indonesian the art of lobbying and all the other "legal" ways in which our politicians rip us off. Telkom Indonesia (TLK) is a good way of investing in Indonesia. Mobile phone revenue prospects are encouraging in the fourth most populated country in the world. Do your own due diligence.

Leucadia Sees Huge Increase in Book Value

Fri, 31 Jul 2009 08:32:23 -0400

Thanks Black Star, at my vantage point I failed to see the tongue in cheek. I shall be more attentive in future, much appreciated. Your analysis is very detailed and it will take me time to work through it. I'm on vacation this week, so I won't have a chance to give it much thought until August 15, but it surely deserves serious consideration. As Dan says, this is very constructive.

A few things have always bothered me about management. Their covert claim to being like Buffett and yet they draw huge compensation packages, both cash and stock-based. Unlike Buffett they are happy to divest at times and like all insiders, at most opportune times - a giveaway for short sellers.

They invest in hedged funds, which for shareholders means a fee-upon-fees situation. After all the fees, is it worth it? I'm not convinced.

OK, I'll take time out later this month to "second-guess" you on your asset play, if you don't mind, but thanks for enlightning us.

Leucadia Sees Huge Increase in Book Value

Wed, 29 Jul 2009 10:25:16 -0400

For the dubious privilege of having Cummings and Steinberg run this hotchpotch of a business, the said two executives each received $21.8 million in compensation over the past three years. In 2004 and 2008, the two cashed out stock options and banked a miserly $81.3 million each. Shareholders received a dividend of $0.25 per share in December 2007 and December 2006; nothing in 2008 and 2009 is not looking that great either. $0.50 over a four year period, gives $0.125 per annum and at a yield of 3% (I'm being generous) translates into a price of $4.17 per share.

Ordinary mortals and morons like me finding it puzzling that astute investors like Bruce Berkowitz at Fairholme Capital owns 7.5% of LUK. Maybe some of the admirers of LUK could persuade Bruce to provide us with additional insights as to the merits of owning LUK, a company where insiders are regular sellers of stock.