THE PAPER

A funny little guy came to my door selling the Orlando Sentinel a few weeks ago. I stopped getting the Sentinel in 2004 when they endorsed John Kerry. Two salesmen have been to my door prior to this one and I sent them away. The last dude said he was just trying to save me money with coupons. The new guy offered me 13 weeks of Wed, Fri, and Sun for 50 cents a week and I took it. I figured it would be nice to read the CALENDAR section again and the movie reviews and show times, not that I have time for the movies. That crazy Commander Coconut is still at it though he moved to the end of the section.

It use to be fun to read the Sunday travel section, but it's all wire stuff now. The sports section has a columnist that thinks referencing Paris Hilton in a college basketball quip is witty. But the previous salesman was right about saving me money on the coupons. I bought these corn/rice chips with a coupon that saved me more than a week's subscription. Decline can be great for the pocketbook, but I won't miss the paper when it finally folds. Or I should say I won't miss it once my 13 weeks introductory offer ends.

THE YANKEE YEARS by Joe Torre and Tom Verducci (A Book Review)

The Yankee Years gives you the history of the Yankees during Torre's reign with an account of how baseball changed after the Yankees won their last championship. You'll learn about the Yankees' internal problems and successes along with larger issues like steroids and the impact of Michael Lewis's MONEYBALL. Neither issue the Yankees were ready to deal with in a timely manner.

Joe Torre, ever the decent man, shares his feelings on many topics including the players he loved and the players who frustrated him. Derek Jeter was the most professional of baseball players and the greatest of teammates. Paul O'Neill was a fierce competitor. David Cone was the rare pitcher who was a team leader in the clubhouse. Jorge Posada was a leader on the field who had no problem getting in your face if you weren't working hard enough. David Wells was a talented pitcher always getting in his own way. Alex Rodriguez was a hard working ballplayer that spent too much time worrying about what was written and thought about him. Carl Pavano was a lazy dog who would do anything not to pitch. Randy Johnson just couldn't deal with the pressures of New York, nor could Javier Vazquez, Jeff Weaver, Kevin Brown, etc.

Verducci and Torre's first collaboration, CHASING THE DREAM was written more than 10 years ago and I remember it being a pretty standard sports biography although Torre's story was more intriguing than most. This seems like an entirely different kind of book, one that deals with the Yankees within the larger issues of baseball. I can't honestly remember the voice in the first book, but here Verducci's voice dominates and Torre is always close by to add a supporting quote. Any baseball fan should want to read this book just to find out how Joe Torre made it so long in that boiling pot of water.

THE NEW MONEYBALL

Now that GMs understand the old Moneyball, this is what they are doing now:

Baseball writer Tom Verducci recently noted in Sports Illustrated that teams are moving toward “placing more and more value on young players under control.” That is, they are signing their young players to contracts that extend past their years of indentured servitude. Doing so may mean paying a relative premium in the short term, but the team in turn can still afford the player after year six.

Take what the Tampa Bay Rays did with their rookie third baseman Evan Longoria. Since they considered him the cornerstone of their team, they signed him to a nine-year deal that could be worth up to $44 million. Ordinarily, the way a player of his talent (assuming he lives up to it) would earn that much money would be by toiling for a total of, say, $10 million to $15 million for six years and then signing a blockbuster free-agent deal that would pay $13 million to $15 million per year over the next three years and beyond.

As the league slowly corrects the reserve clause inefficiency by paying players what they are worth before they hit free agency, we will see a smoothing of salary distribution throughout players’ careers. Young players will not be as inexpensive and older players will not be as overpaid. Top free agents will become scarcer over time; their hometown teams have found a way to keep them. In a way, this change will be toughest on the big-spending teams that rely predominately on the free-agent market, and whose fans demand that they pursue marquee names.

THE WORLD LOVES US AGAIN. . . IN THEORY

Barack visits the Continent:

Barack Obama made an impassioned plea to America’s allies to send more troops to Afghanistan, warning that failure to do so would leave Europe vulnerable to more terrorist atrocities.

But though he continued to dazzle Europeans on his debut international tour, the Continent’s leaders turned their backs on the US President.

Gordon Brown was the only one to offer substantial help. He offered to send several hundred extra British soldiers to provide security during the August election, but even that fell short of the thousands of combat troops that the US was hoping to prise from the Prime Minister.

Just two other allies made firm offers of troops. Belgium offered to send 35 military trainers and Spain offered 12. Mr Obama’s host, Nicolas Sarkozy, refused his request.

If I remember correctly, Obama's supporters during the election said that Bush had tarnished our image in the world and Barack could heal that wound and the world would better help us in the war on terror.

35+12=47 and there you have it. The election of Barack Obama gained us 47 additional troops. They won't pick up a gun or anything, but they are ready to man the phones. That is leadership.

JOKE IS ON ME?

Wednesday evening in Pittsburgh I was walking from my hotel to a meeting. On the sidewalk up ahead was a peaceful demonstration by 40 or 50 anti-capitalism protestors. There were 2 police cars and 2 police motorcycles keeping the peace. The protestors were in a tight little bunch at the entry of some building. A woman in the middle was shouting something through a bullhorn. There were some signs that I didn't really read, just struck me as "Socialism good, capitalism bad" kind of stuff. It was clear from the police presence that there was meant to be separation between the throng and any onlookers, but from what I could tell there were no onlookers and no threat of disturbance. There was also no way to cross the street due to a concrete median erected for construction purposes and the fact that traffic was moving in both directions. And I was in a hurry. So I barged right past them on the sidewalk in my suit and tie. After I passed by, I heard, "Sir! Excuse me, sir!" I was concerned that it was a cop eager to tell me the error of my ways, or maybe a protestor wishing to engage my capitalist ass. I had time for neither and kept on walking without incident.

At the time I felt a bit of satisfaction as the object of their scorn. Later as I reflected on it, I couldn't make any sense of what they were doing. There were no onlookers, they weren't really roused up, there were no cameras, and I hadn't read their signs. So now I am wondering whether the whole thing was somehow April Fools related. I wish I had stopped long enough to read the signs. I checked the websites of the two Pittsburgh papers on Thursday but couldn't find anything on it. Now it lingers as one of those memories that I don't know what to do with, which cabinet to file it in.

RANDOM THOUGHTS

I know of several Obama supporters from last year who are mostly apolitical, but the country was going down the tubes with President Bush and something had to be done. Now here you have Obama following almost all of the Bush policies and on top of that spending us into an economic collapse, and we have silence from last year's critics. It was like Bush's presidency was some big reality show and now that he's voted off the island everybody is safely back to their superficial pursuits until the new season begins in four years.

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I've been reading THE FORGOTTEN MAN by Amity Shales and I recommend it to my Junto brethren. I doubt a better book on what caused the Great Depression will ever be written. The short version is that Hoover started us off with the Smoot-Hartley tariff act that made prices climb and hurt the poorest people and Roosevelt spent the 1930s experimenting so many ways that investment capital was afraid to take any risks, because the rules kept changing. The author surmises that without government action it would have been a mild recession and been over in a few years, but it instead stretch until 1942.

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Baseball season without dad is tough. Without him convincing me that the Yankee acquisitions will be fruitful I am left to consider them objectively and get depressed.

FRAID

I fear that all the activity over at Facebook marks the end of this blog. Am I wrong?

THE SECOND AMERICAN REVOLUTION

Those Thomas Paine videos that Steve has posted on Facebook have energized me. I wrote something very eloquent on this forum a year or two ago which I have been unable to find via search - it must have been written in the comments section. Anyways, I was predicting revolution in America's future and vowing to be true to the cause for the sake of our progeny as our forefathers had sacrificed to ensure our freedom. Now there are national tea parties and reminders from long dead pamphleteers indicating that the time is ripe for revolution while we can still be somewhat civilized about it. Fake Thomas Paine speaks sense and I'm all riled up about it. I'm ready to go. It's game on!

BEARER OF BAD NEWS

Periodically I get economic updates from a certain investment firm. Following is some of what they had to say this week.

I am reminded of the National Weather Service alert that went out in the days before Katrina hit New Orleans. It warned of massive destruction of property, flooding, loss of electricity and water for weeks or months, and human suffering on an "incredible" scale. It said in plain English that the area would be uninhabitable for weeks or months. And yet somehow we were unprepared to deal with a scenario that common sense and our own eyes told us was coming. At least with Katrina we could blame it on a natural disaster. This one we created ourselves. The smart money is stocking up on staples before inevitable inflation.

AS WE EXPECTED, THE WORLD STOCK MARKETS BEGAN A SUBSTANTIAL RALLY
It should continue for at least another few weeks, possibly for a few months. It is typical of major bear markets to have major rallies. Initially, we chose to participate in this rally by buying some of the heavily shorted stocks in the financial area, we have been quick to take profits after these rose. More recently, we have been buying more oil and gold shares on dips, and have purchased some technology companies that are selling at very low valuations versus their growth rates. We also view the technology purchases as short term. We view the oil and gold share purchases as longer term.

We will also be buying undervalued companies in various industries in the U.S. and China, which we believe are attractively valued and have proven to have long term growth prospects.

So many absurd moves are being made by the U.S. Government; it is hard to keep track of them.

1. Continued auto industry bailouts are ridiculous, and history has shown time and again in other countries that it is a disaster for taxpayers. Eventually, the auto companies and their suppliers end up failing, but only after massive amounts of taxpayer money has been wasted trying to revive an inefficient, short sighted, and uncompetitive industry. The Swedes are demonstrating wisdom by refusing to nationalize Saab.

2. Quantitative Easing, or in plainer English, PRINTING MONEY TO PAY DEBTS, is another costly endeavor. Our politicians had better read up on their history. This is an immense mistake...and the VERY SAME MISTAKE that has set off disastrous inflations in numerous countries, bankrupted millions of honest citizens around the world, and caused serious economic and social disruptions including wars, revolutions and national bankruptcies.

Politicians opt for Quantitative Easing because it serves their purpose. The politicians had a big role in causing the financial problems, with their decades of cheerleading for Fannie Mae and Freddie Mac, and with their pressure on banks to make home loans to those who had no hope of paying their lenders back.

PLEASE DO NOT GET CONFUSED BY THE CHANGE IN TERMINOLOGY...THE TOXIC ASSETS ARE DERIVATIVES.
The politicians looked the other way and cheered for more broad home ownership while:
· buyers who could not afford the houses they were buying lied to lenders (many downloaded from the Internet fraudulent K-1's and 1099's to submit to lenders to help with their deception)
· real estate finance and sales professionals engaged in several kinds of fraud due to the high commissions and fees they earn from each transaction
· greedy bankers from Wall Street (whose crimes have been plastered in the papers in recent weeks) who created new derivatives that made it easy to sell the toxic assets to themselves and others
· greedy accounting and rating agency participants who helped perpetrate the overvaluation of the toxic assets

Now, to deflect the blame from themselves, the politicians are engaging in the theatre of blame...pretending that they did not know about so many of the things that they have known all along, such as big pay and bonuses to their big donors at Fannie Mae, Freddie Mac, Wall Street firms, and in the real estate industry (which was for years the biggest political donor in the U.S.).

The politicians must think the public is so stupid as not to realize what a fraud has been perpetrated by all of the various parties.
Maybe the public is slow to gather the details, but they get the general thrust of the problem. There were too many greedy people making too many political donations to Congress...and too little oversight by the supposed regulators.

None of this is new. Please feel free to review our archives at www.guildinvestment.com to see what we have said about the derivatives crisis numerous times in the years before the problem came to public attention. A further review of our archives will show that we have discussed many global economic and financial events long before they hit the public's radar.

In our opinion, one of the worst mistakes thus far is currently being made, and in a few months or years the public will come to realize it. Just as we notified our readers about the problems with derivatives/toxic assets years before the public became aware of it, this latest tragic mistake is another one that we will discuss in our letters long before the public comes to understand it.

With respect to fixing the banking system, our leaders in Washington appear to be ignoring the advice of former Fed Chairman Paul Volcker, who as one of President Obama's advisors, suggests going back to a much less levered banking system. Paul Volcker suggests returning to something much like the banking system that existed under the Glass-Stegal Act. Instead, the politicians are opting for Treasury Secretary Geithner's plan which includes continuing with a more highly levered banking and finance system.

Why, after all of the problems caused by excess leverage, would they opt for the Geithner plan? Could it be that the financial institutions are too connected, and have been huge donors to many of the politicians at the national level?

England, Switzerland, the U.S., and many other countries have begun to use quantitative easing "money printing" to create a lower currency so they can export their way to prosperity. The countries want to state that they are pro free trade, so they will use the excuse that 'our currency has fallen, and that is why our exports are up and imports are down' argument. This, of course, is a misrepresentation.
When you lower the value of your currency to increase economic activity, it usually leads to more trade, more exports, and more cash in the financial system to spur consumption. Another result is that you encourage inflation. It will work. You will get inflation and perhaps some small economic growth. So it may still be a depression, but an inflationary depression.

The very politicians who are posturing that they care about the elderly, the retired, and low income groups are today creating a circumstance that will devastate those very groups with inflation. Inflation hurts primarily the poor, those on fixed income, and the retired. This is because it is hard for them to work and earn money at the new inflated pay rates. They are forced to sit by and watch as their savings be gradually eaten up by inflation, which erodes the purchasing power of their money.

We expect the U.S. dollar to fall and will invest accordingly.

SEXTING ON TRIAL

Grown-up lawyers are trying to figure out how the law applies to all the things kids do with technology.

In one of the first civil rights suits to focus on the growing practice of "sexting," lawyers for the ACLU of Pennsylvania will be asking a federal judge today to protect three teenage girls from the threat of criminal charges for using their cell phones to take and send semi-nude photographs of themselves.

I think about the parents when I hear about cases like this. The parents of the teenage girls are placed in the position of having to argue for the right of their precious babies to send topless pictures of themselves to be passed around the school. And spend two years of their lives doing it. And I thought I had problems.

THE BURSTING BUBBLE

This is an excellent rendering of what has happened in the economy:

The central banks hold $845 billion in gold. But of course, currency is no longer pegged to gold.
The money supply = $3.9 trillion = notes + coins + reserves.
$39 trillion was borrowed against it, using the "fractional reserve" system that is built on the premise that everybody won't want their money at once.
Derivatives got around the limits on how much could be borrowed, to the tune of $62 trillion.
Easy money created a huge asset bubble of $290 trillion, where the price of assets greatly exceeded any measure of the world's wealth.

It was all happy time as long as people bought in to the idea that the economy would keep growing and growing -- an irrational idea but people were making money by pretending that it could be true. Eventually, of course, the Ponzi scheme collapses like a house of cards and many get screwed.

JUNTOBOYS NEWS REPORTS:
Live from the ORLANDO TEA PARTY

ORLANDO TEA PARTY

It was a fun time. Steve, Donovan and I enjoyed lunch and quite a few spirited speakers.

Instapundit linked these picutres:
Here is the Orlando Sentinel story:

Here are some photos from my phone:

WOW

President Obama's budget increases federal govt spending from 20% to GDP to almost 30% in HIS FIRST YEAR IN OFFICE. What can be said about that but WOW. He'll be on the cover of the history books all right.

THE OTHER BLACKLIST

Remember Dwight Schultz from the A-Team? This is an interesting article about trying to make a living as a conservative actor in Hollywood.

Big Hollywood also has an article that explain how Jon Stewart and Bill Maher for hide behind comedy while delivering a steady partisan message.

Both were interesting.

E's BEST BUSINESS BOOKS

I have on my shelf a book called THE BEST BUSINESS BOOKS EVER and another called THE 100 BEST BUSINESS BOOKS OF ALL TIME. The lists have quite a bit of overlap, as you would expect, and I've read 18 on each list. If I had to recommend just five personal favorites, and using a broad definition of "business book," I'd start here (with main takeaways, from memory):

1. THE EFFECTIVE EXECUTIVE by Peter Drucker.
a. The only thing you can measure is results. And the only thing you should measure is results.
b. Results exist only on the outside.
c. Know thy time. Most people don't have a very good idea of how they actually spend their time.
d. Time is an utterly non-renewable resource (unlike money, capital, workers) and must be invested purposefully.
e. Make strengths productive.
f. Do not spend valuable time trying to turn weaknesses into mediocrities.

2. THE AUTOBIOGRAPHY OF BEN FRANKLIN.
a. Timeless principles of industry, frugality, self-management, enterprise and leadership.
b. Lessons in technology transfer from a renowned inventor-capitalist.
c. A useful history lesson.
d. A useful model for writing anything in terms of structure and style.

3. WARFIGHTING by USMC.
a. The object of war is to win.
b. You gain decisive advantage by hitting your enemy decisively at their point of greatest vulnerabilty.
c. Moral considerations trump direct orders.
d. Some prefer THE ART OF WAR by Sun Tzu or ON WAR by von Clausewitz. I like this one.

4. GOOD TO GREAT by Jim Collins.
a. First get the right people on the bus and the wrong people off the bus.
b. Don't worry about where you're driving the bus until you have the right people on and the wrong people off.
c. You don't have to worry about how to motivate people when you get the right people on the bus.
d. Get people in the right seats.
e. Then decide where to steer the bus.
f. Great leaders have a paradoxical combination of humility and professional will.
g. Great organizations commit to doing just a couple of things relentlessly well.

5. THE KNOWING-DOING GAP by Pfeffer and Sutton.
a. Something has to get done, and somebody has to do it.
b. If you do it, then you will know.
c. In America you get ahead more by sounding smart than by being smart. You sound smarter when you are critical than when you agree.
d. Successful problem solvers think when they've had the discussion and solved the problem, they're done. But nothing actually changes until something happens next.
e. Good strategy is obvious. What separates winners from losers is disciplined implementation of the obvious.
f. Disciplined implementation isn't sexy, just successful.

Honorable Mention:
6. MANAGING TRANSITIONS by William Bridges. Managing organizational change is about dealing with the emotions people have around letting go.
7. THE 7 HABITS OF HIGHLY EFFECTIVE PEOPLE by Stephen Covey. Because we are humans not Pavlovian dogs, we can choose how we respond to stimuli. Seek first to understand, then to be understood.
8. THE FIFTH DISCIPLINE by Peter Senge. Every system is perfectly designed to produce the outcomes it produces. Whoa.
9. THE VISUAL DISPLAY OF QUANTITATIVE INFORMATION by Edward Tufte. The higher the information-to-ink ratio, the more effective your communication.
10. PLEASE UNDERSTAND ME by Kiersey and Bates. Understanding personality types is critical to working effectively with others. Understanding your own personality and temperament will set you up for success rather than failure.

Articles:
1. "Management Time: Who's Got the Monkey?" by William Oncken. Don't let others' monkeys jump from their shoulders to yours for care and feeding.
2. "Leadership That Gets Results" by Daniel Goleman. Discusses six main leadership styles, when to use each, and which ones generally work best.

I would love to hear your favorite books in this or any genre.

ARI VS. MATHEWS

Sorry to be throwing all of these film clips on here, but Ari Fleisher's performance on HARDBALL is worth seeing. Via The Corner:

BILL CLINTON AND SCIENCE

Have yet to meet. . .



How does Bill Clinton create an embryo without fertilization? Rhodes Scholar? What can explain it?

A CONGRESSMAN WITH WIT

via Big Hollywood

HE'S NOT EVERYTHING WE READ INTO HIM

The ranks indeed are filling with the disaffected and the disappointed — Chris Buckley, Maureen Dowd, David Brooks, David Gergen, and even that gynecological sleuth and blogger Andrew Sullivan. And then there is the very angry Marty Peretz. Their complaints are varied but expressed with equal amounts of remorse and bitterness. They all have been done wrong by Barack.

They and the rest of the country are figuring out the bitter truth: Obama bears little resemblance to the moderate and soothing figure who tied up John McCain in knots. He bears even less resemblance to the Agent of Change. Rather he’s pretty much the Chicago pol who went to the Senate to be its most liberal member.

And for the wounded Obama supporters, we can offer just one bit of counsel: you have lots of company. There are trading floors filled with sympathetic souls and businesses filled with stunned executives. They didn’t get what they bargained for either. Just ask Jim Cramer. Oh yes, please do invite him to your sessions when he’s not busy with the “I lost my life’s savings” support group.

It's worth reading the whole thing, because he quotes each of the authors who were duped.