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Showing posts from June, 2013

So much for that "smart diplomacy"

After being bitch-slapped by Hong Kong and Russia, Obama gets bitch-slapped by Ecuador:
"Ecuador will not accept pressures or threats from anyone, and it does not traffic in its values or allow them to be subjugated to mercantile interests," government spokesman Fernando Alvarado said at a news conference.

In a cheeky jab at the U.S. spying program that Snowden unveiled through leaks to the media, the South American nation offered $23 million per year to finance human rights training.

The funding would be destined to help "avoid violations of privacy, torture and other actions that are denigrating to humanity," Alvarado said. He said the amount was the equivalent of what Ecuador gained each year from the trade benefits.Didn't America get some respect in the world back in the old days?

Trader Joe’s ~ You’re So Close to Nirvana

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Belo Horizonte ~ I found a gas station that sells unbelievable premium beer here in Belo Horizonte. In a country where light lager rules, the micros, Belgians and and local micro brew movement is taking a stand. It just happens to be at a Petrobras gas station, and I don’t mind.

The gas station even sells the finest Anderson Valley, Sam Adams and Rogue offerings as well as one of my favorite breweries in the world, Brew Dog out of Scotland whose mission is to replicate California’s IPA movement in the UK. Fantastic beer.

But the purpose of this post is to point out how Trader Joe’s teases to appease. Those that shop there in California will recognize this light lager offering from the Netherlands called Oranjeboom:

It’s a very satisfactory light lager if that’s what you are in the mood for. But I also found this ambrosia here in Brazil that TJ's fails to offer:


That 14 means what it advertises. This is a 14% “light” lager that is reeelllyyy graaatteee. I’ve had 3 so farrr …

Supreme Court doesn't give gays the courtesy of a reacharound

Celebrating the Prop 8 ruling? Not so fast. The Supremes didn't rule on Prop 8 at all, just that Prop 8 supporters didn't have legal standing to challenge the lower court's ruling against 8. And since Governor Jerry Brown and Attorney General Kamala Harris don't like Prop 8 and refused to defend it, there's no one to take the case to court.

In fact, the ruling undermines the California initiative process by allowing the Governor and Attorney General to refuse to defend anything they don't like. How about Prop 13? Legal professors are already saying this opens a door to kill it. Somebody sues against Prop 13 in federal court, Brown and Harris refuse to defend it, et voilà, game over!

Gay marriage advocates deserved their day in court. They probably would have gotten Prop 8 ruled unconstitutional. They didn't get it. This was a trick by Brown and Harris that backfired, and a punt by the Supremes.

Brazilians LOVE soccer

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Sign post in the Horto neighborhood of Belo Horizonte.

Riot: Brazil scored 2, Uruguay scored 1, Protesters scored 0. When Brazil wins an international soccer match ain't nothing going to stop the party or make people care about political issues afterwards. Thank goodness they won though. Had they lost things might have gotten nuts.

UPDATE: the destruction and violence I didn't witness was extraordinary yesterday here in Belo Horizonte. It's surreal how I can mingle in a section of the city that is in pure euphoria because of a soccer win while a nearby section of the city is in complete turmoil and violence.

I had a cab ride today with a cabbie that went off on how absurd this soccer tournament (Confederations Cup) is and how it's so negatively impacting the average Brazilian. Fifa is a mafia and I am pleased with the population that is rising up to illustrate this even if I somehow end up sections of town where all that matters is the game. That's a pec…

John Bogle: Social Security is the new fixed income

With last week's epic bond slaughter, and the brutal 14% face-ripping that Apple bond buyers just got in two months, it's worth listening to the advice of sages on bond investing.

Here's Vanguard legend John Bogle: Are retirees holding too many bonds?
“Social Security's the greatest fixed income you'll ever get,” Mr. Bogle said.

With that in mind, it would behoove retirees to pay more attention to dividend-paying stocks in a retirement account.

“Dividends go up virtually every year with two exceptions: the Great Depression and 2008. I don't think that's likely to happen again,” Mr. Bogle said.  Traditional asset allocators have rules of thumb like that your equity exposure should be 100% minus your age, e.g. a 30-year-old should be 70% equity and a 70-year-old should be 30% equity. I think that's bunk, and it seems Bogle agrees. Perhaps such a model could be defended when real interest rates are significantly positive, but with nominal rates still n…

A Socialist's Response to Protest

Belo Horizonte ~ Former Brazilian bank robber, and current socialist Brazilian President, Dilma Rousseff has, in response to the protests SWEEPING the nation of Brazil, called for numerous changes that actually violate the constitution of Brazil. This seems so familiar to this American. But the difference from the response in the United States is the opposition parties (yeah plural, crazy that) have expressed extreme outrage bordering on traitorous declarations. This is very refreshing after witnessing the Republican party not really express anything other than the sound of their swallowing while on their knees. Dilma backed down from her requests. It's nice to see a real opposition party instead of the Democratic Republican representatives we have in Boehner, Graham and McCain. Although from what I've understood from the current administration, no one avoids using teeth better than they.

HSBC BRAZIL ATM TRAVEL ADVISORY

Belo Horizonte ~ If you have an HSBC USA account that you regularly use in Brazil, be advised that last month HSBC Brazil lowered the daily limit one could withdraw from an account from 1000 reals ($500) to 200 reals ($100). HSBC USA still has a daily limit of $500 but HSBC Brazil explained to me today that FOR MY PROTECTION the limit was reduced to 200 reals and it was not possible to get more than that. In further banking comedy HSBC defines a day as a business day which on the weekend is from Friday at 8AM until Monday at 4PM. One is only allowed to withdraw a total of 200 reals during that period. An entire weekend for 4 people on $100. Grab the Let's Go Brazil book!

This makes it impossible to use HSBC to get cash to pay for my needs. A hotel costs more than 200 reals a night, the cab to the airport is 90 reals, a typical dinner for 4 is 150 reals and the bus costs 3 reals here in Belo Horizonte. Further in Brazil the credit card fee is generally paid by the custome…

Glasnost, a quarter century on

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Charlie McDanger:
Imagine you're talking to somebody from 1988 and you tell him that in 25 years, a US intelligence agent will reveal state secrets, be labeled a traitor and a spy, and flee to Russia. And a majority of young Americans will be rooting for him.

Brazil Protest - Belo Horizonte

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From the communication I'm getting from the states the image the news must be presenting is total chaos in Brazil. The protests are definitely real and dangerous but in typical Brazilian fashion it only impacts a small area of each city while the rest of the areas act as if nothing is happening.

Yesterday I attended the Confederations Cup match Mexico vs. Japan in Belo Horizonte. Walking to the stadium was an event. The military police, what they call the police here that carry guns, were out in full force and so where the protesters demanding free health care and the cancellation of the World Cup and Olympics here. It was extremely tense. But past the police checkpoint that only let those with tickets continue the scene was total Brazilian soccer celebration. It was a different population of people at the game and most were Brazilians there to cheer on the Brazilian national team even though they were playing a thousand miles away in Recife. It was a blast really. Not…

Brazil is Just a Riot These Days

Reporting from Niteroi, Rio de Janerio, Brazil: I had a lovely evening 2 nights ago when hundreds of thousands of Brazilians rose up to protest a .10/.20 increase in bus fares, or so I was originally told. I found out later that the Brazilian masses are actually protesting the absurd corruption that is being exhibited in Brasilia and the latest scandal which caught a bunch of congress folk breaking many laws only for the congress to introduce legislation that made those illegal acts legal. It's funny how when the people's candidate is elected, Dilma, the administration becomes more corrupt than the previous. Kind of like the good ol'US of A. Except here when the new administration exhibits behavior that is criminal the people rise up, close bridges and ferry terminals and express their general dissatisfaction with the situation.

I was actually really angry with the situation initially because these protests ruined my dinner plans in Rio, for the love of God! But up…

The signs were there; you should have bought connections before

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In light of this week's epic slaughter in the bond market, let's revisit November 2012's Remedial investing:




Whatever happened to the Schumer-Boehner Reich Flight Tax?

Remember the Schumer-Boehner proposal to seize the assets of Americans fleeing the regime?

Whatever happened to that? Rich Americans are still renouncing their citizenship.

Mr. Market, meet Mr. Minsky

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Ben Bernanke would have done well to study Hyman Minsky's financial instability hypothesis before he set about trying to centrally plan the markets.
The second theorem of the financial instability hypothesis is that over periods of prolonged prosperity, the economy transits from financial relations that make for a stable system to financial relations that make for an unstable system.

In particular, over a protracted period of good times, capitalist economies tend to move from a financial structure dominated by hedge finance units to a structure in which there is large weight to units engaged in speculative and Ponzi finance. Furthermore, if an economy with a sizeable body of speculative financial units is in an inflationary state, and the authorities attempt to exorcise inflation by monetary constraint, then speculative units will become Ponzi units and the net worth of previously Ponzi units will quickly evaporate. Consequently, units with cash flow shortfalls will be forced to …

Markets freaking out as Zimbabwe Ben hints at eventually pulling out

James Gandolfini dead at 51

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Greatest series-ending scene ever:



Best analysis of that scene here.

Get your rocks on

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The Economist has a column Rocks for the Long Run that discusses a new research paper showing great long-term real returns to hard commodities (agricultural commodities, not so much).



Besides having strong long-term returns, the article points out the very volatile price cycles.  This is a good thing for long-term investors, because every down cycle is an opportunity to load up at low prices, and positions can be trimmed in the up cycles.

We were fortunate enough to sell a large position in the Pimco Commodity Real Return Fund (PCRIX) in mid-September near the QE3 announcement highs.  We've been very slowly value-cost-averaging in since then.  Once fully invested, we'll set up a semi-annual portfolio rebalancing between commodities, domestic stocks, and foreign stocks, to take advantage of the differing price cycles, trimming what's up and adding to what's down.  We expect this strategy to produce lower risk, and quite likely higher returns, than a stock-only portfolio…

Almost heaven, West Virginia

Two years ago, we brought you one of West Virginia's most famous sons, the bath-salt-abusing transvestite goat molester.

Today brings news of the pastimes of the best and brightest at West Virginia's elite private universities:
At about 1:30 a.m. on May 1, 2011, the fraternity was having a house party both Louis Helmburg III and Hughes were attending, according to a complaint filed Jan. 23, 2012, in Cabell Circuit Court.

Helmburg, who played for Marshall University’s baseball team at the time but wasn’t on the Thundering Herd’s 2013 roster, claimed Hughes became intoxicated and attempted to “shoot bottle rockets out of his anus on the ATO deck.”

When doing so, Hughes startled Helmburg, who then jumped back and fell off of the deck of the fraternity house and was injured, according to the suit. He was lodged between the deck and an air conditioning unit.

The Chinese called. They want their gold.

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Remember when we advised:
With citizens in the developing world gaining wealth and sure to want their share of gold at some point, do you really want to be underweight gold the next 10, 20, 30 years? It looks like that point is now.

Stunning images from China: Ten thousand people waiting in line to buy gold.





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Del Mar sunrise

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Baby boomers become suicide boomers

WaPo: Baby boomers are killing themselves at an alarming rate.
[...] an alarming trend among baby boomers, whose suicide rates shot up precipitously between 1999 and 2010.

It has long held true that elderly people have higher suicide rates than the overall population. But numbers released in May by the Centers for Disease Control and Prevention show a dramatic spike in suicides among middle-aged people, with the highest increases among men in their 50s, whose rate went up by nearly 50 percent to 30 per 100,000; and women in their early 60s, whose rate rose by nearly 60 percent (though it is still relatively low compared with men, at 7 in 100,000). The highest rates were among white and Native American and Alaskan men. In recent years, deaths by suicide has surpassed deaths by motor vehicle crashes.

As youths, boomers had higher suicide rates than earlier generations; the confluence of that with the fact that they are now beginning to grow old, when the risk traditionally goes up, has e…

Are Scandis the most ironic people on earth?

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HT: Capitalism

To be fair, Krugman got his Nobel before he abandoned economics to become a political hatchet man, and for a topic that had nothing to do with deficit spending. And Obama received his Nobel before he started drone striking children, for his outstanding achievement in having an awesome aura.