Willem's Planet

(This is a late post; it is Friday already).  It was quite a whipsaw week in the stock market.  And on Thursday Walt Zimmerman from ICAP Information Services opined that by 2013 the S&P 500 index will be at 570.  (Pictures from CNBC’s broadcast Thursday).  570! Say what?  The index closed at 1178 on Friday.   The market is following the same ‘5 wave pattern’  that it did from 2007 to 2009, Walt says.   Hey, I’m not an expert or a stock market guru (and who is? is anyone anymore?).   But the consensus is that there are not enough similarities when comparing the US economy in 2008 vs 2011, or the world economy in 2008 vs 2011, to justify this gloomy prediction.  We can only hope the consensus opinion has it right.

Here are three books I recently got (I went looking for the first one, liked the second one on the table at Barnes and Noble well enough to buy it, and then got the third one free).   Super Sad True Love Story by Gary Shteyngart is fiction.  It’s a 2011 publication, has gotten great reviews and has already been translated into German ( I saw it in Frankfurt).  The synopsis from the cover : In the near future, America is crushed by a financial crisis and our patient Chinese creditors may just be ready to foreclose on the whole mess.  Then Lenny Abramov, son of a Russian immigrant janitor and ardent fan of “printed, bound media artifacts” (aka books), meets Eunice Park an impossibly cute Korean American woman with a major in Images and a minor in Assertiveness.  Could falling in love redeem a planet falling apart?

A quote from the Physics of the Impossible (I love it): If you haven’t found something strange during the day, it hasn’t been much of a day. – John Wheeler.   And the third books tells of half-truths, the illusions of patterns and of false positives.    Life is not simple!

Bryan, Gary, Ken, Steve and I went to Columbia City Ale House (the red balloon on the Seattle map) for beers and dinner – and scored some free Newcastle Summer Ale beer glasses!  The Washington state town of Newcastle is not far away (purple balloon), and of course there are several more in the world, and one in South Africa as well, I pointed out.

And when I opened Tuesday’s Wall Street Journal, lo and behold, there was a story in about Newcastle South Africa’s textile firms.   It’s a tough business, and the minimum wage laws in South Africa is forcing factories to close up shop.   I think minimum wage laws are good, but then : is any wage not better than none at all?  From the newspaper article : ‘We’ve not gone a direction other countries have gone, where it’s about squeezing workers to the maximum and basically paying them slave wages’ says Etienne Vlok, a research director at South Africa’s clothing union.  ‘We’ll never win by keeping wages low’ he says, ‘just like nobody else will ever win’.

My tennis shoes that I bought on Zappos.com arrived today, one day early.   The Wikipedia entry for Zappos makes for interesting reading.   Zappos comes from zapatos, Spanish for shoes.  Seems I had the same reason for ordering them on-line than founder Nick Swinmurn had in 1999 : couldn’t find my favorite tennis shoe at the mall (in his case it was a pair of brown Airwalks).   Footwear in the US is a 40 billion dollar market, and Zappos sells about 1 billion dollars worth of shoes every year.  That is a lot of shoes! The company is now owned by Amazon but still abides by these ten core values :

• Deliver ‘wow! through Service  .. an anecdote has it that after a late night of bar-hopping, CEO Tony Hsieh (picture from Wikipedia) bet a Skechers rep that if he called the Zappos hotline, the employee would be able to locate the nearest late-night pizza delivery.  The call center employee, although initially confused, returned two minutes later with a list of the five closest late night pizza restaurants.
• Embrace and Drive Change
• Create Fun and A Little Weirdness
• Be Adventurous, Creative, and Open-Minded
• Pursue Growth and Learning
• Build Open and Honest Relationships With Communication
• Build a Positive Team and Family Spirit
• Do More With Less
• Be Passionate and Determined
• Be Humble

Gliese 581c was mentioned in Discovery’s program ‘Into the Universe with Stephen Hawking’ that I watched on Sunday night.   It’s the first planet really similar to what Earth is like and was discovered in 2007.   Nice to know, since humans will have to ditch Earth once the sun starts to exhaust its hydrogen supply in a few billion years !

Of course, the challenges to get there is of galactic proportions.   This planet is 20.5 light years away .. which means that it will take 75 years to get there with a spacecraft that can travel at 10 times the speed that our little-spacecraft-that-could Voyager 1* travels (11 miles per second).    And where will the resources come from to build it?

*From Wikipedia : The Voyager 1 spacecraft is a 722-kilogram (1,592 lb) space probe launched by NASA on September 5, 1977, to study the outer Solar System and eventually interstellar space. Operating for 33 years, 11 months and 3 days as of today (8 August 2011), the spacecraft receives routine commands and transmits data back to the Deep Space Network. It will be the first probe to leave the Solar System and is the farthest man made object from Earth.

The final picture is from an old 2007 post from the UK’s Daily Mail, showing a possible view from the ‘new earth’.

S&P, you may recall, is one of the ratings agencies (the others being Moody’s and Fitch) that greased the skids of the financial crisis by awarding AAA ratings to tranche after tranche of mortgage bonds called collaterized debt obligations, or CDOs. Recall that, unlike U.S. Treasuries, backed by the full faith and credit of the U.S., CDOs were underwritten by garbage mortgages — that is, backed by no-documentation “liar loans” and other Alt-A subprime pond scum handed to borrowers who otherwise couldn’t get a nickel’s worth of credit at their local dry cleaner.

Saturday marked the 66th anniversary of the Hiroshima bombing.   It made me remember the words from the ‘Forever Young’ by the 80s German technopop group Alphaville :

let’s dance in style
lets dance for a while
heaven can wait
we’re only watching the skies
hoping for the best
but expecting the worst
are you going to drop the bomb or not?

There is no question that the Hiroshima and Nagasaki bombings and the Cold War ultimately led to Germany’s resolve to get out of nuclear power altogether.   And reports from Japan tell of increasing protests against nuclear power in the wake of the on-going troubles at the Fukushima facility.  Some surveys say 70% of the population want the country to follow Germany and abandon nuclear power.

It’s summer and the squirrels are up and down the trees in my backyard, sometimes jumping from one to the other.  I’ve had trouble with them some years ago, with them getting into the house’s attic.  (The roof is now squirrel-proof).  Their hyper-activity reminds me of Hammy the squirrel in the 2006 animated movie Over The Hedge.

RJ: [after making him look like a rabid squirrel] Now show me that vicious look in your eye, boy. Come on!
Hammy the Squirrel: Oh, oh, I can burp my ABC’s [burping]
Hammy the Squirrel: A, B, C…
RJ: HAMMY! I just really need you to focus right now, okay?
Hammy the Squirrel: Okay.

So as every investor knows by now – Thursday was the US stock market’s worst trading day since 2008 with the Dow Jones Industrial average dropping 4.3%.  The picture is from Friday morning’s USA today.   The red is very appropriate, blood bath that it was!    Being a long-term investor, I almost never sell any stocks in my modest portfolio on days like these.  But with the troubled US and European economies and debt problems everywhere, even the long term looks pretty bleak.   What to do if one has cash?  Sit on it? Buy more gold?

Here’s another screen shot from MSNBC.    The US debt ceiling deal ended up containing ONLY cuts.  (Note that Pres. Obama wanted 25% revenue and the Republicans at one point was OK with 15% !).

Now check out the individual federal income tax tables I posted (source www.taxfoundation.org).  A person earning $100,000 in 1962 had a marginal tax rate of 89% (!), in 1979 it was 68%, in 1985 it was 50%, and in 2011 it is 28%.    Corporations?  Supposed to pay 35% taxes (granted, one of the highest corporate tax rates in the world).   But take General Electric.  Reported worldwide profits of $14.2 billion in 2010, and said $5.1 billion of the total came from its operations in the United States.   Its American tax bill?  Zero.    Google, Microsoft, Cisco Systems and many other companies pay very little if any corporate taxes.

So now a supercomittee of 12 members has 5 months to come up with a proposal that will close the budget gap by $1.5 trillion over the next decade.   If they fail, across-the-board cuts kick in automatically (from what I can tell in discretionary spending only, not in Medicare, Medicaid and Social Security).   But those automatic cuts include education, the environment, food safety, research, infrastructure projects and : the military.   So the defense budget already gets cut right now by $350 billion and could get cut by another $500 billion over the next 10 years.  (Time to stop making war?).     A dispute between House Republicans and Senate Democrats has already forced the Federal Aviation Administration to suspend construction projects at airports around the country, idling 70,000 workers.   Does all of this make any sense?

The first picture is from Saturday Night Live’s skit of a press conference about the debt ceiling negotiations  (featuring a very fresh-faced ‘Harry Reid’ and ‘president Obama’).   And today I watched CNN and MSNBC on and off.    MSNBC finally presented the best information they had about the deal at the end of the day.   Two notes – 1. the deal still has to be ratified by Congress on Monday (just say yes!) and 2. amounts of money measured in trillions of US dollar ($1,000,000,000,000) is surreal.    Several versions of a $1T note are floating on-line; I liked the one with Ben Bernanke best.

My new washing machine and dryer were delivered today and my friend Bryan was on hand to capture the inaugural wash !  The machines are made by the Korean company LG.  The washing machine uses ‘high efficiency’ detergent : low-sudsing and quick dispersing for use in low water volume machines.   It also holds the dirt in suspension so that it does not go back into the fabric; too much foam from regular detergent will interfere with this process.    So after I selected fabric and water temperature, the machine tumbles the load back and forth to figure out how much water to use (and it seems to use very little), and displays how long it will take.   The machine can also be programmed to start the wash at a later time.   Then it goes into the classic sequence of washing,  rinsing and spinning.   The spinning cycle is very smooth, and at the end a happy little tune comes forth to indicate it’s done.

For me, it’s time for a new washing machine and clothes dryer, and so I ran out to Sears to buy a pair of front-loading machines (color : wild cherry red!) with round windows.  Sears will deliver it on Saturday.    So this little article in Wednesday’s Frankfurter Allgemeiner newspaper asks : why are all dishwashers then windowless?   The writer notes that when the first electric washing machines were sold in 1901, people were anxious to know what’s going on inside.  Is it working? Is it mangling my clothes?  And so it was not long before washing machines and dryers were fitted with windows.  Dishwashers only caught on as a mass market appliance in the 1950s, by which time consumers trusted that it can do its job.   Besides, the article notes : it’s more fun to watch one’s clothes tumble in a washer or dryer, than it is to watch those dirty knives, forks and plates sitting in one place, and getting cleaned !