*Some Chicago Boyz know each other from student days at the University of Chicago. Others are Chicago boys in spirit. The blog name is also intended as a good-humored gesture of admiration for distinguished Chicago boys including those pictured above (we claim no affiliation), and others who helped to liberalize Latin American economies.
"Restore(s) a little sanity into current political debate" - Kenneth Minogue, TLS "Projects a more expansive and optimistic future for Americans than (the analysis of) Huntington" - James R. Kurth, National Interest "One of (the) most important books I have read in recent years" - Lexington Green
A recent article focused on satellite radio and the merger of XM and Sirius. In an interview with CEO Mel Karmazin, he said:
Ironically, one rationale for the merger was the expectation that the combined company could borrow money more cheaply. “The bankers who covered the deal believed that one of the synergies of the merger was the ability to refinance at a lower level,” says Mr. Karmazin. Consider this: five years ago, Sirius, with 300,000 subscribers and no hint that Mr. Stern would be gracing its channel lineup, borrowed money at 2.5 percent interest. Those days are long gone. “Warren Buffett managed to get a 10 percent coupon from G.E. and Goldman Sachs,” says Mr. Karmazin, speaking of the interest rate that Mr. Buffett, the Omaha investing legend, was promised for his recent investments in both companies. “So if you are Sirius XM, what should the coupon be?”
Thus the Sirius / XM stock ticker, which peaked at $9 in 2005, now trades at 12 cents. Approximately $3B in debt is outstanding for the company; since they are not cash flow positive to any significant degree and raising money through stock offerings is extremely difficult when you are a penny stock, their balance sheet is killing the company, and possibly the entire satellite radio industry as a result. Read the rest of this entry »
Because based on the images and stories below, it seems like it might be 1932 in Germany, as Nazi street thugs work to complete the destruction of the Weimar Republic.
Or it might be 1928 in one of those American cities where the Ku Klux Klan is running rampant.
Here are reports and videos from some of the anti-Israel (and often openly anti-Semitic) demonstrations that have been held around the world since Israel launched its Gaza incursion:
A recent NY Times article highlighted the impact of the financial crisis on Ireland, a country which had previously been riding high on a property boom (and also low tax rates and generally sound economic policies).
There is a photo of a property tycoon and his lovely wife (recently married), 20 years his junior, above. From the article:
The Celtic Tiger my be dead and if the banking crisis continues I could be considered insolvent. but the one thing that I have is my wife and children - and they can’t take that away from me
No, Mr. Tycoon, THEY can’t take her away from you, but your real risk is that she’ll leave on her own. Read the rest of this entry »
That woman was doing those presses of her body weight and it is very demanding. It takes complete physical fitness of almost all parts of the body to accomplish fifteen of those reps. Arms, back, legs.
Recently I wrote about the troubles in hedge funds, where easy money in terms of 2% of assets and 20% of profits (easy to find when the market was moving up) has evaporated. Another field where someone a few years out of (an elite) college can make millions is… private equity.
Wikipedia has a decent summary of private equity. Private equity typically consists of taking a public company private by purchasing their equity shares, taking actions to increase the value of the company, and then re-launching the company back in the public markets and “cashing out”. Another path to private equity consists of taking equity stakes in start up companies (like the famous venture capitalists in the dot.com era) and then earning profits when the company goes public. Often the private equity firms raise “funds” with a time horizon, typically ten years, where they invest the money in a variety of investments and then the money is returned to investors at the completion of the fund, whether it results in new profits or losses.
Along with hedge funds, private equity made up a large component of the “alternative investments” that many endowments and wealthy individuals started to invest in en masse in the late nineties and into the current decade in search of higher returns. Typically these sorts of investors put their money into public market equities, debt and real estate - this “alternative investments” were supposed to bring higher returns and also not be not correlated with equity, debt and real estate. Read the rest of this entry »
This video is excellent. It is a talk by Col. Peter Mansoor about the Iraq war. Even the Q&A is good. Col. Mansoor was a brigade commander in Iraq, and he is now a military historian at Ohio State. He wrote a book about his experiences, Baghdad at Sunrise: A Brigade Commander’s War in Iraq. After listening to this talk, I am going to read his book as soon as I am finished re-reading Clausewitz. The lecture is over 90 minutes, including Q&A. The video portion is just Mansoor standing at a lectern. So, it is easy to just have the audio going while you do other stuff. You lose nothing without the video.
Highly recommended.
UPDATE: The talk is extremely critical of the Bush administration, Rumsfeld and particularly Bremer. If you don’t want to hear that criticism, don’t listen.
Went to see the film last Tuesday, and I agree with Lex that it is well worth seeing. Cruise does a credible job as Stauffenberg, and most of the acting is well done, although the mix of accents…a lot of American English and various flavors of English-English, plus a bit of German…was slightly bizarre. I was particularly impressed with Halina Reijn’s portrayal of a minor character, Margarethe van Oven (secretary to the conspirators.) She had almost no speaking lines, but has a wonderfully expressive face, and uses it well to portray her character’s emotions.
“Spengler” is sometimes brilliant but sometimes he is way off the mark. His December 25 column strikes me as an instance of the latter.
The United States lived in Lever-Lever Land too long. Like Peter Pan, the country has refused to grow up. The object of the stimulus plans offered by the present and the next US administrations is to return to Lever-Lever Land, that is, to debt-financed consumption. It won’t work. Leverage is for the young, who borrow to build homes and start businesses. The financial crisis forces Americans to act their age, that is, to save rather than borrow and spend.
For a world economy geared to servicing the once-insatiable maw of American consumption, that is very bad news for 2009. Recovery cannot begin until Americans have restored their decimated wealth by saving - an effort that will take years - or until the youthful emerging markets start importing from the US, rather than exporting to it.
America’s leaders haven’t yet had the required moment of clarity. Its financial leaders still think the problem is a mere matter of confidence. These were the same people who swallowed their own sales pitch.
This analysis is too deterministic, as though an aging US population made economic decline certain. What about tax-rate reductions and other productivity-boosting incentives? Animal spirits aren’t a function of youth alone, but also of having a political and social environment that encourages entrepreneurial risk-taking. Also, what’s with the disdain for debt? If you’re borrowing at X% to make a >X% after-tax rate of return you are winning the game and should borrow as much as you can. And much of the high-yield corporate debt that Spengler frets about wouldn’t be needed if the terrible Sarbanes-Oxley law hadn’t destroyed the US IPO market.
Excessively tight credit, high tax rates, excessive regulation and political uncertainty all reduce investors’ ROR and thus chill productive activity. The solution is simple if not politically easy: repeal Sarbanes-Oxley, reduce tax rates, regulation and government spending. What drove productivity increases during recent booms was an economic environment, combining tolerable regulatory and tax conditions with a competitive market for start-up financing, that made technological and business experimentation a good bet. There may indeed have been a demographic component to it all, but to focus on demographics, debt and leverage is to miss the big picture. Incremental changes in the legal and regulatory environments since Summer 2002 have gradually choked entrepreneurial incentives, and perversely led to election of a new government that promises as a matter of policy to punish business success. (And even if the Obama administration and Democratic Congress govern pragmatically and prudently, the uncertainty they’ve created with their anti-business rhetoric is costly for businesses and individuals who must make investment decisions.) Spengler misses most of this. He also fails to ask why many countries with younger populations than ours are less productive than we are. In truth, productivity is a function not merely of youthful spirits but also of human capital (education, cultural values and societal institutions), physical capital (plant, equipment and infrastructure), investment capital and markets, and of taxes and governmental policies that encourage or discourage productive activity.
According to CNN, Governor Blago has the right to access the Senate floor. Wouldn’t it be interesting to see that clown walking and talking amongst the Senators? He is crazy enough to do it.
Roland Burris, the *legally appointed* Junior Senator from the State of Illinois does not have legal access to the Senate floor, it appears.
The aide familiar with Senate Democratic leaders’ plans said if Burris tries to enter the Senate chamber, the Senate doorkeeper will stop Burris. If Burris were to persist, either trying to force his way onto the Senate floor or refusing to leave and causing a scene, U.S. Capitol Police would stop him, said the aide.
“They (police) probably won’t arrest him” but they would call the sergeant-at-arms,” the aide said.
When asked about what would happen if he shows up and tries to be seated, Burris told the Chicago Tribune that he’s, “not going to create a scene in Washington.” He added, “We hope it’s negotiated out prior to my going to Washington.”
Burris told CNN that, “We’re certainly going to make contacts with the leadership to let them know that the governor of Illinois has made a legal appointment. And that I am currently the junior senator for the State of Illinois. And we’re hoping and praying that, you know, they will see the reason in appointing me as a very qualified, capable, able and ready-to-serve individual.”
Coincidentally, the senate sergeant-at-arms, Terrance Gainer, served in the Illinois government at the same time as Burris. Gainer was the director of the Illinois State Police from 1991-95. Burris was the Illinois attorney general from 1991-95.
Senate Democratic leaders, who consider Governor Rod Blagojevich a loose cannon, also have discussed what might happen if Blagojevich shows up on Capitol Hill Tuesday, said the aide familiar with their plans. But the leaders see that move by Blagojevich as unlikely at this time.
This would be a “radioactive” situation, according to the aide, because Senate Democratic leaders could not deny Blagojevich entry, as sitting governors have floor privileges in the Senate. Governors are allowed to walk around the Senate chamber or talk with senators while on the floor, though they cannot vote or formally address the Senate.
Interesting times indeed. As Lex Green has pointed out elsewhere, the Illinois Clown Show is on the road in Washington.
By the way, the comments to that article are pretty interesting.
Glenn posts about personal safes. You know, those heavy metal boxes that are supposed to contain your valuables so thieves can’t carry them off. It seems that sales have jumped.
I have had some experience with safes, the same as just about anyone who is a responsible firearms owner, and thought everyone might be interested in hearing about the basics.
Before we get started, let me caution everyone by saying that safes do not provide a guarantee that your stuff won’t ever be stolen. It simple adds a layer of complexity to the thief’s job. Any safe can be defeated by a determined, well equipped, experienced criminal with a plan and plenty of time.
Traveling to Gaza in a stunt to aid Hamas, she complains because the Israeli navy damaged her boat. I would suggest that she got off lightly.
The activists, organized by the Free Gaza Group, said their 66-foot yacht called “SS Dignity” would defy an Israeli blockade of Gaza and ferry 16 activists and three tons of Cypriot-donated supplies. The supplies are intended to help treat the wounded from Israeli bombings against targets in Gaza, in retaliation for rocket fire aimed at civilians in southern Israeli towns.
She cared not at all when Hamas thugs were daily bombarding Israeli towns in an attempt to kill as many Jews as possible. Only when Israel defended itself was her sense of justice aroused.
Daily life near Gaza:
Moshe Turgeman spent a lot of time in Gaza before the intifada. Not only did he serve in the Israeli army there, but he used to get drinks and hang out in area frequently. “There are good people in Gaza ,” he tells me. Hearing this is rather remarkable because in August 2006, Moshe’s house took a direct hit from a Qassam rocket launched from Gaza . He managed to get his kids to safety but he was injured in the attack. I ask Moshe what life is like in Sderot today. “It’s not life,” he responds. His children are scared, he fears going outside and his disability has made it impossible to work. There were times, Moshe says, when he thought the warning siren was broken because it sounded non-stop for hours. “Forty-eight Qassams fell in a single day,” he says. “The scariest thing is that sometimes they fall without an alert—at any moment.” Moshe knows of what he speaks. One day he was ironing a shirt on the upper floor of his modest apartment. In an instant, a rocket fell meters from him and shrapnel nearly pierced his heart. He shows me the jagged hole in the window next to which he was standing during the attack. “It’s not life” he repeats.
The Commentary article from which the above quote is taken is worth reading in full.
A discussion about the financial crisis, Wall Street, management and accountability at Neptunus Lex. The initial post is merely the starting point for some insightful comments by readers. Worth reading in full.
There seems to be a trend toward diminished accountability for top members of our political and business elites. People who should resign don’t. Leaders who should fire those people don’t. The military still seems pretty good (perhaps it’s no accident that the discussion I linked is on a blog written and frequented by military people). Accountability standards in small business and many professions, where failure tends to be immediate and personal, still seem OK. But things appear to be on the decline in big institutions and government. I don’t know if that’s because government has grown so big and intrusive that it drags down standards everywhere, or because our society has deteriorated, or both. It’s a bad trend either way.
. I read the article, my hand hovered over the mouse. You know how this ends.
. After listening to this talk, I am going to read his book as soon as I am finished re-reading 