Quote of the Day
The person who says it cannot be done should not interrupt the person doing it.
Chinese proverb
'The Donald' Phenomenon: Additional Comments
I have to admit I've been very intrigued by Trump's Celebrity Apprentice this season. First of all, there's a tall, drop-dead gorgeous Texas beauty on the women's team, Hope Dworaczyk, the reigning Playboy Playmate of the Year. (I have previously opined on the topic on Texas women. I'm not saying the other women on the show are dense, but there was a recent project task to promote a sun tanning product, and none of them thought of using Ms. Dworaczyk as a model for their display; men would have a contest to see whom would get to put sun tanning lotion on bikini-clad Hope.) Second, it has easily been the funniest show on television with space cadet actor Gary Busey on the men's team (only Gary's unkempt hair could trump Donald Trump's je ne sais quoi hairstyle). Firing Gary Busey was about the closest thing possible to a no-brainer; I think Trump deferred the execution, knowing Busey made for compelling television (I mean, if Busey escaped at least one boardroom (I haven't seen all the episodes) for reasons other than ratings, Trump has lousy managerial judgment). Busey had one of my favorite players, the unflappable country singer John Rich, going slightly paranoid, thinking "crazy-like-a-fox" Busey was sabotaging the men's team purposefully so congenial Busey would suddenly rise to the surface in the resulting boardrooms, befuddled by teammate criticisms, charming the Donald into shedding the stronger male players. Sorry, John, but there's a guiding principle we have in computer user interface design: "WYSIWYG". I don't know how Trump will top this season--maybe Charlie Sheen will make himself available.)
I have to admit, though, I'm not sure how to take Donald Trump's prolific, astounding pronouncements: he's willing to take control of Iraq's oil (versus let Iran get it after we leave) and sell enough oil to pay us back for the cost of the war/occupation; if China doesn't float its currency (which Trump and others feel is an unfair trade practice), Trump will slap China with 25% tariff; Trump is going to jawbone OPEC into cutting oil prices below $100 "or else"; Trump will deliver on simpler, fairer taxes; Trump wants Saudi Arabia to pay for our implicit military protection; Trump is going to hold up any foreign aid to Pakistan until it delivers Osama bin Laden; and Trump wants to militarize our border with Mexico.
I understand it is cathartic to hear someone stand tough against ungrateful, unresponsive, arrogant foreign adversaries. But to a certain extent, I have to wonder if Donald Trump is simply conducting a promo for his upcoming GOP candidacy: act now and apologize later. You get into power, like Obama, and then you spent the next 4 years complaining that you never realized how bad your predecessor left things, or you blame the opposition, or you find your hands are tied in delivering on those promises.
I think in part you have to judge the character of a prospective officeholder. Consider this excerpt from an ABC news morning show:
Another viewer, Michael Swaile from Toledo, OH asked how Trump, whose businesses have entered bankruptcy, can defend his fiscal policy? Trump said he personally never went bankrupt - he used the bankruptcy laws to help his business. “We’ll have the company. We’ll throw it into a chapter. We’ll negotiate with the banks. We’ll make a fantastic deal. We’ll use those. But they were never personal,” he told me.
“I’ve used the laws of this country to pare debt. In one case, with the casinos, which I don’t-- which I haven’t even run for many years…And what I did is reduce the debt from a billion eight to like $300 and some odd million, by using intelligently the laws of this country,” Trump said.
I can just see it now... Trump is going reduce our massive debt to China and Japan "by using intelligently" international laws... In fact, Trump companies have filed for bankruptcy 4 times: 1991 Taj Mahal in Atlantic City ($3.4B in debt), 1992 Trump Plaza Hotel ($550M), 2004 Trump Hotels and Casino Resorts ($1.8B), 2008 Trump Entertainment Resorts (missing a $53.1M interest payment on a $1.74B debt). In essence, banks or bondholders wrote down at least a portion of debt in exchange for equity: banks thought it was in their best interests not to wipe out Trump financially but use him to mitigate any realized losses:
[Lynn LoPucki, a bankruptcy expert and professor at UCLA Law School] said it was very unusual for anyone to have that many large businesses go through bankruptcy. Most of the debt Trump incurred was through bonds that were sold to the public. "People knew who Donald Trump was and for that reason were willing to trust the bonds, and they got burned," LoPucki said. "The people who invested with him or based on his name lost money, but he himself came out pretty well."
My worries? The American voter will vote for Trump because they trust him; will they find themselves burned with American blood and treasure?
Let me briefly discuss some of Trump's stands above. First, the last thing we need in Iraq is to validate the allegations by Islamic terrorists that the war in Iraq was all about oil. I hardly believe that the world community would accept the right or precedent of invading countries to bill the targets for their expenses. If you don't want the expenses, don't invade the country. Thousands of Americans have died or suffered permanent injuries in Iraq and Afghanistan; these efforts were not business transactions.
Second, the primary issue in American manufacturing jobs has to do with increasing productivity; many jobs have disappeared because high labor costs made items uncompetitive. China right now is trying to expand its domestic consumer spending and there have been wage increases in factories; one result is the fact that some countries (e.g., Vietnam) have lower costs and are winning some outsourced business. Trump's moves would only be the opening shot in a ruinous trade war, with China immediately raising tariffs in response on American-produced imports, likely impacting exporter jobs and sales.
Third, OPEC's prices have more to do with supply and demand, in particular, escalating consumption from developing countries. OPEC has no incentive to push economies into recession, which lowers purchases and prices of oil. Trump should really be focused on the far more salient issue which is expanding our own domestic exploration and production.
Fourth, it's difficult for us to bill other countries for a military presence which largely reflects our own interests. What Trump should be discussing is why we, versus other powers, are serving as the world's policeman. I think what we should do is focus on more regional control of free seas and destabilizing regimes.
Fifth, talk is cheap: everyone likes low taxes, Mom and apple pie. You need to discuss the big issues: are you going to deal away with popular deductions, like home mortgage interest? Are you going to consumption taxes? What level(s) business and individual taxes? The devil is in the details.
Sixth, the Pakistan government has never had a strong military presence in the northwestern area of the country where Osama bin Laden is allegedly located. Pakistanis feel that America has been bullying them already, drone damage to Pakistanis and properties is a matter of tension already between the allies, and if anything, the ordinary Pakistani feels that he or she is being targeted by religious fanatics because of the alliance with Washington DC.
Finally, militarization of the border? I would be very careful on this front; there are a number of profound civil liberty issues at stake.
Dollar Drops to 2.5 Year Low
We are seeing the dollar drop against a variety of currencies (including the euro), and there is discussion of a one-off large revaluation of the renminbi by China (see above discussion by Trump). No doubt the S&P's negative outlook is influencing the currency markets....
Fukushima Nuclear Incident Update
The Fukushima Daiichi site remains in serious but stable condition with slow recovery efforts. As a result, the blogs I've been tracking on a regular basis are transitioning from daily to periodic postings, including the IAEA site, which gave notice it will post its next update (barring any significant interim events) next Tuesday. As countries and companies back away from all things nuclear in the anti-nuke Fukushima backlash (and the climate change scientists strangely silent about the most viable supportive technology), at least one savvy energy corporation CEO remains a voice of reason:
Nuclear energy is too important for world leaders to allow it to decline, said ExxonMobil Chairman, President and CEO Rex Tillerson. He said that the Fukushima Daiichi incident would not stop nuclear's growth but simply "delay" it. "Ultimately, my expectation is the component of nuclear energy that will be in the future mix 25 years from now, or 30 years from now, is probably not changed," Tillerson said.
The old investing saw is: "buy when there's blood on the streets". This is not an investment blog, but let me point a few things: uranium prices plunged from $68/lb. to $50 and have since recovered to $57. Similarly, industry leader CCJ has dropped from the mid-40's to the upper-20's. We still have a long-term supply imbalance with a large base of installed nuclear plants. I do not currently hold any relevant industry stocks (I have a more general concern about sustainability of current stock market valuations, which I think in part reflect the Federal Reserve's easy money policies), but I like the long-term picture.
NEI notes:
- daily: The recently started dewatering of the reactor 2 turbine building basement will take just over 3 weeks. Regular coolant injections or topping of the spent fuel ponds continue as needed. Robots indicate radiation levels are high, even for short-term stays for reactors 1 and 2, no related information available yet on reactor 3. Debris in the buildings will slow recovery work.
IAEA notes:
- daily: Additional liquid glass was inserted in tunnel/trench cavities earlier this week. White smoke continues from reactors 2 through 4. Four of 103 recent food/milk samples from the region violated Japanese LNT thresholds for cesium, all vegetable samples from Fukushima prefecture. Yesterday restrictions were placed against marketing the only type of sea food (sand lance) with LNT test exceptions off the Fukushima coast.
Political Humor
"Sarah Palin has a 61 percent unfavorable rating in Alaska. That number jumps to 100 percent if you only ask the animals." - Conan O'Brien
[Sarah Palin may not be able to count on those 3 electoral votes from her home state and the people whom know her best, but she finds comfort in the Bible (Matthew 13:57)... And I'm not sure investors want Mama Grizzly anywhere near the stock market...]
Denmark is the happiest nation, and Sweden and Finland are No. 2 and No. 3. I call these countries the “axis of perky.” - Craig Ferguson
[Well, Craig, I suspect you just made the Fins and Norwegians very unhappy because they were rated #2 and #3 in last July's Forbes list...I've lost a lot of my regular Danish readers; I guess my blog made them very unhappy. I might be mistaken, but the Danes may be mostly happy that Barack Obama, Harry Reid, and Nancy Pelosi don't live there.]
Musical Interlude: My Favorite Groups
ABBA, "Dancing Queen". If ABBA has a signature song, it's this one. It's one of those songs instantly recognizable from the very first notes. On some of these videos (e.g., "Does Your Mother Know"), they feature Swedish young people intensely dancing to their music; you can see adorable Swedish girls in this one vying to be the dancing queen... Frida and Agnetha are brilliant as usual--singing, wardrobe (I like their choices of solid colors in this video), dancing...
