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  • India's government has revoked the patent on Roche's (RHHBY.OB) expensive Pegasys drug for hepatitis C, part of a series of revocations for multinational drug companies' expensive treatments in the country. India's drug market is expected to grow to $74B in 2020 from $11B last year. [View news story]
    The analogy is a poor one.

    1. In eminent domain seizures, fair compensation must be given, typically FMV, and that compensation can be reviewed by the courts. No compensation is being given or offered here.

    2. Unlike real property, technical innovations exist only because of investment; that investment is made in part on the basis of the ability to obtain and enforce patents.

    3. Eminent domain is primarily a tool for corrupt politicians to enrich themselves and their cronies at the expense of property owners, and cannot be held up as an example of good public policy. The world would be a far better place without it.

    The problem here is the balance of power. There is nothing to prevent a corrupt, populist, or other defective government from simply declaring that their country will offer no patent protection and will produce drugs itself. Simply refusing to do business in or with that country doesn't help; unless the manufacturing process is beyond their technical abilities, they can just make their own and pay nothing. It's a classic freeloader problem, and India's policy in this area is deliberately exploitative. The only solution is the use of devastating force against India and the confiscation of its property in sufficient quantity to not only obtain compensation but also to set a compelling example; prisoners should not be taken and losses should be crippling.
    Nov 4, 2012. 08:02 PM | 2 Likes Like |Link to Comment
  • India's government has revoked the patent on Roche's (RHHBY.OB) expensive Pegasys drug for hepatitis C, part of a series of revocations for multinational drug companies' expensive treatments in the country. India's drug market is expected to grow to $74B in 2020 from $11B last year. [View news story]
    India's is as rotten a government as any that has ever been in power. It is Tammany Hall writ large. This has nothing to do with drugs and everything to do with a government that is out of control and will steal anything and everything in sight.
    Nov 4, 2012. 04:55 PM | 2 Likes Like |Link to Comment
  • India's government has revoked the patent on Roche's (RHHBY.OB) expensive Pegasys drug for hepatitis C, part of a series of revocations for multinational drug companies' expensive treatments in the country. India's drug market is expected to grow to $74B in 2020 from $11B last year. [View news story]
    If you want to change the rules on what is patentable or for how long, fine. The position that patent protection is excessive is defensible. But make that change through legislation, and do so with an effective date far enough out that existing investment based on existing law is not devalued. Confiscation of this type should be met with confiscation of Indian government property by force. Governments are way too uppity; they need to learn that there are limits to their power and that they are entirely replaceable. In this case, it's corporations that need to teach them that lesson, but there are plenty of others in which the citizenry needs to do so as well.
    Nov 4, 2012. 04:52 PM | 1 Like Like |Link to Comment
  • India's government has revoked the patent on Roche's (RHHBY.OB) expensive Pegasys drug for hepatitis C, part of a series of revocations for multinational drug companies' expensive treatments in the country. India's drug market is expected to grow to $74B in 2020 from $11B last year. [View news story]
    Roche is large enough to raise an army. It's time for investors to assert themselves on the world stage, and this is the perfect opportunity. Confiscatory governments need to go to the gallows.
    Nov 4, 2012. 12:51 AM | 2 Likes Like |Link to Comment
  • Buyback Should Provide Floor In American Capital Agency [View article]
    It's hard to argue with any of this. But the problem with selling something that's paying you is that you have to find something else to buy that will pay you more down the road. I don't care about the market price of my securities, but I care very much about the sum total value they will pay me over their lifetime. If I think I'm paying $33 for $20 worth of future dividend purchasing power, obviously that's a terrible investment. But I would need to find somewhere to put that $33 that I an reasonably confident will pay me $40+ in purchasing power over its lifetime. If I'm not confident of that, then I have to be that much more confident that holding AGNC is a bad move in order to sell it. All a long-winded way of saying that a 14% dividend that gets cut in half over the next 5 years is still better than a 2% dividend that goes nowhere in that time. And unfortunately that's basically what's available out there. 2% nominal is -4% real and I simply refuse to hold an asset guaranteed to lose real value. The only other choice is gold, and I already own way too much of that; it's not an investment as it pays nothing. The amount of gold I own is a good barometer of my frustration with the investment climate, and that frustration is currently at an all-time high. AGNC is one of a few things that looks tolerable right now. And I do mean tolerable, not great. It really is just a vehicle for recovering the agency subsidy from the government. At some point it will no longer be effective for that purpose, and when that day arrives it will be time to sell.
    Nov 1, 2012. 11:08 AM | Likes Like |Link to Comment
  • Buyback Should Provide Floor In American Capital Agency [View article]
    Yes, I own AGNC in an IRA.
    Oct 31, 2012. 10:42 PM | 1 Like Like |Link to Comment
  • Buyback Should Provide Floor In American Capital Agency [View article]
    Oh, it's definitely too good to be true, all right. The issuers of the debt the agency mREITs own are bankrupt and in a free and fair society would have been liquidated long ago with significant losses to creditors like the mREITs. In fact, given the amount of leverage they employ, it's unlikely that any of them would still be in business. But everyone forgets this because agencies are deemed to be Treasuries that pay more. What's not to like, right?

    The bottom line is that the agency mREITs are the vehicles by which we may, in our own small way, recover some of the money we pay in taxes to support, insure, and sustain these obnoxious, unnecessary, and uneconomic behemoths. I'm as happy as anyone to reclaim what I can, but I don't for a moment deceive myself into believing this business model makes any sense. We're simply taking money out of the pockets of the American people and putting it into our own, 100% legally and risk-free. You can't get something for nothing, and it is too good to be true. But it will continue for as long as the suckers keep paying their taxes and electing major-party candidates to high public office. Hopefully by the time they stop doing those foolish things, I'll have stolen enough from them to retire somewhere very far away.
    Oct 30, 2012. 01:01 AM | 1 Like Like |Link to Comment
  • U.S. stock markets will close Monday and perhaps Tuesday due to concerns about market integrity related to Hurricane Sandy, Reuters is reporting. [View news story]
    You're confusing this with an actual hurricane of the kind Florida occasionally sees. This is nothing more severe than your average Gulf of Alaska storm, the kind the West Coast sees at least 10 of each year. Cat 5 storms will do serious damage anywhere, but very rarely make landfall. To place this storm in the same bucket as those is silly. This is a very weak category 1 hurricane, which is probably being categorised "conservatively" as part of a public awareness effort and is really at most an extratropical gale, and not a single point on land will see 64-knot winds, much less the 120+ knot winds of a major hurricane. If you read between the lines in the technical analysis by the meteorologists that's all very obvious. It's just a typical wind and rain storm. Nothing much to see, but they'll cover their asses just in case (taking a lesson from the Italian seismologists, because no one ever goes to jail for ordering needless evacuations and shutdowns). If a storm like that can really do $15B of damage, the eastern states need to take a very hard look at their infrastructure and emergency management practices. And that includes the exchanges.
    Oct 29, 2012. 01:27 AM | 1 Like Like |Link to Comment
  • U.S. stock markets will close Monday and perhaps Tuesday due to concerns about market integrity related to Hurricane Sandy, Reuters is reporting. [View news story]
    Pathetic. The West Coast sees easily a dozen storms a year no smaller than this one, and we don't shut our cities down. The East Coast does this kind of nonsense every year; either their infrastructure is hopefully brittle or they're just looking for an excuse for a day off. Perhaps we need to move the exchanges to a place they can remain open every day of the year every year.
    Oct 28, 2012. 11:31 PM | 1 Like Like |Link to Comment
  • Making A Case For U.S. Treasuries [View article]
    The problem is that their money isn't any good either. Hold cash, you lose value. Hold Treasuries, you lose value. If you are in the bond market, you must be a trader and you must be leveraged. Otherwise, stay away.
    Oct 28, 2012. 08:03 PM | Likes Like |Link to Comment
  • Ben Bernanke has told close friends he probably will not stand for another term at the Fed even if Obama is re-elected, reports Andrew Ross Sorkin (his term ends in January 2014). At the top of the list for his replacement under Obama would be Larry Summers. Under Romney, it's Glenn Hubbard, who has described Bernanke as "a model technocrat" who deserves a 3rd term. That would seem to disqualify Mr. Hubbard. [View news story]
    Earnings. It's all about earnings, and they're all "bad" so everyone wants to sell all the stocks they bought 2 weeks ago at a loss and buy -5% yielding Treasuries instead. Some people just aren't happy unless they're losing money. Rumours about Bernanke's future are basically irrelevant because neither the outcome of the election nor the next president's appointment will change Fed policy one iota. All central bankers come from central casting.
    Oct 23, 2012. 02:25 PM | 2 Likes Like |Link to Comment
  • As Bond Yields Continue To Drop, Investors Should Start Looking Elsewhere [View article]
    Bonds and other loans may have a place on the balance sheets of leveraged financial entities; i.e., banks, hedge funds, leveraged CEFs, etc. The leverage hedges out the effect of negative real interest rates and allows them to profit from the spreads regardless of the absolute rates, even if they are negative. However, for normal individual investors, such leverage is not available, or is not available at a low enough cost or in sufficient quantity, to make that a viable strategy. So real money investors should never own bonds, bank deposits, etc. when real interest rates are negative.
    Oct 22, 2012. 07:18 PM | Likes Like |Link to Comment
  • Amazon Web Services (AMZN) is witnessing another big outage at its East Coast data centers. Affected services include Pinterest, Foursquare, Airbnb, Reddit, and Salesforce.com's (CRM) Heroku cloud app development/hosting platform. As always, enterprise concerns about the reliability of public cloud services come into focus when significant downtime occurs. (June outage[View news story]
    It's important not to confuse "the public cloud" with AWS. There are other providers in the space that do not share AWS us-east's horrible track record. People should be looking at these repeated issues as a company-specific problem and asking tough questions of Amazon's management team.
    Oct 22, 2012. 04:09 PM | Likes Like |Link to Comment
  • As Bond Yields Continue To Drop, Investors Should Start Looking Elsewhere [View article]
    It doesn't matter how many dollars you have, it matters what you can buy with them. Preservation of capital means preservation of purchasing power. Dollar-denominated bonds of any kind fail to provide that. Regardless of whether there's a nominal capital loss through default or sale and regardless of the recovery rate, erosion of the principal value over the term of the bond will crush you. Therefore bonds are, like equities, inappropriate vehicles for preservation of capital.
    Oct 22, 2012. 03:42 PM | Likes Like |Link to Comment
  • As Bond Yields Continue To Drop, Investors Should Start Looking Elsewhere [View article]
    If something is overvalued, it's fine to sell it and buy something undervalued instead (which needn't be equities -- could be junk bonds or almost anything that provides a return). But cash is never undervalued, pays nothing, and is a wasting asset. Uninvested capital should be stored in gold, not cash.
    Oct 22, 2012. 01:29 PM | Likes Like |Link to Comment
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