Monday, July 31, 2017

On the bright side he's trying something new

lets see:

Hire Scaramucci, Hire John Kelly fire Scaracucci -- 10 days it took to go from "Hey I work at the White House" to "Hey can I get my job back at Eximbank".  He's after session

Start a fight with the GOP and insiste that the Senate should do nothing else than kill Obamacare!  He said that he would sign anything, just anything that is put on his desk.  The reality of politics is killing Trump's agenda.  If he starts a fight with the Senate then what?  His projects were:


  • "Kill I say kill Obamacare" -- I suspect that this is personal rather than philosophical
  • Kill the Muller Russia investigation
  • Tax reform
  • Infrastructure project
  • Reform immigration -- he suggested a point system (that's what we use in Canada)
Aside from that he wants to make America great again, which is a good goal to have assuming he can.  I though it was idiotic of him to suggest that the stock market's rise is due to him, what happens when the stock market falls...oh yeah that will be Clinton's fault.

One may presume that bringing Kelly to the WH will help things, although the real problem of the white house is the resident of the white house.  A chief of staff is not in charge of policy or dealing with Congress (he's involved but its not his job).  He's in charge to make sure that only the important things arrive on the president's desk -- and then counsel the president.

Its hard to see how that's going to work out.  Kelly is an ex-military man and his world views are about things military.  Moreover, how does he built confidence with a man who is at heart a narcisist with OCD?

I suspect that it will go a little better for a while but fundamentally the problem of the white house is Trump. 

Friday, July 28, 2017

Donald Trump Jr. and the Russian -- Game, set and match

Well

Whatever the Russians wanted to achieve in the American electoral system part of it has been a total success.  Is Trump (son) a bought and paid for shill for Putin, of course not.  Was he a fuc&ng moron to go to a meeting with Russians (connected to Putin) to get dirt on Clinton -- Yeah!  Was Manafort a moron too (the bate was just too attractive -- Trump had asked the Russians  -- on live TV to find dirt on Clinton)?

Putin somehow destroyed the legitimacy of Trump (not that he was seen as very legitimate) by playing the Russian game of "look here, find the Cheese".  Granted Trump is probably the least qualified holder of the Oval office, on the other hand he's exactly what Ryan and McConnell were dreaming about -- a president that will sign any legislation he just doesn't care.  Trump is not that different from the other 7-9 Republican candidates (remember those). They all held similar views -- if anything Trump was at the left (better healthcare, would not touch Social Security, Medicare/medicaid).

Part of the problem is that the GOP has been lazy but also lying.  The truth is that the destruction of Obamacare (and Medicare and Medicaid) is not about healthcare, its about tax cuts, massive tax cuts to corporations (hey they are people too) and rich (GOP supporter and fund raisers) Americans.  They really fee that they didn't get their "fare share" of the American dream (I mean if you can only afford a G-IV and thot the new G-V!).

The truth is that the GOP had 7 years to craft a new legislation, to get the buy-in of the healthcare and insurance community, but they did nothing, the passed 40 different bills to kill Obamacare with the knowledge that President Obama would never sign such law...The GOP is simply doing the bidding of its paymaster -- lower taxes for us and screw the country (except bigger guns).

Now the GOP is reaping what it sowed!  Interesting to see if they pay a price at the mid-term elections, my guess is not.  These are still a year away and Americans will have forgotten, unless Trump kills Obamacare by defunding the insurance companies -- extremely stupid but he is a stupid man, who will do anything really anything (including grabbing women by their privates...


1/6th of the economy gets a 120 minutes debate, that the GOP then filibusters for 120 minutes

The seriousness of the Senate, in fact of America's entire elected body was un jeopardy last night when the Senate Republicans drafted a new version of the health bill between noon and 10 pm -- to then reveal the health care bill for a midnight vote!

Can American electoral system be more broken?  I am sure that this morning, the blame game will start in earnest; Trump will blame the Democrats -- after all they got 120 minutes to review the bill, but were not allowed to ask any question or make any amendement -- clearly their fault if the bill failed!

This morning Mike Huckabee suggested in a Tweet that the 17th amendment should be abolished -- that Senators be elected not by the legislature, as it had in the past, but by the people (BTW this is not really unusual -- in fact the French Senate elections are by elected official in each district).  Still, the GOP's view is if we don't get what we want lets change the rules -- never for one minute thinking of the impact of these changes.

Overall, the shamefulness comes from the elected body taking serious decision in the worse partisan way possible -- most GOP senators didn't know what the legislation was they were going to vote on either.  While Obamacare was in committees for months, got input from the various participants -- the GOP version (Trumpcare "I will sign anything, just bringing!) got up to 120 minutes of debate that was truncated by one Senator taking the full 120 minutes to talk about almost anything (except healtcare), the intent was to stuff down the new legislation down the throat of America.

Then again, 'merica is getting the government it deserves!


The Value/Price of research -- an update

Soooo

I had a very pleasant dinner with a very good friend -- a big cheese in one of Canada premier investment bank -- that has Canada's largest research budget...by far.  I mentioned, en passant, that Nomura had set an annual price of $120,000 for its gold plated research, and that I was thinking that few would pay that kind of money.  He disagreed fundamentally.

In his view, research is not about paper but about access, access to special conference where every American tech CEO is present (you never hear about those conferences -- private and no journalists) they give "prime" investors the CEO's thinking -- that's privileged information (but legal).  Usually these conferences (Goldman has the best) are limited to 50/100 investors -- their top clients which is where the problem arises, in a sense, there are a lot more than 50/100 real investors, and for them this information simply doesn't exist!

My very good friend only though of his 50 best clients - those who, by the way, represent the vast majority of his trading income.  But here is the problem, this represents a massive breakdown in the objective of the market to have the players pay for research., and a level playing field.  Lets not forget that the objective here is to democratize information.

The paying for research is doing the exact opposite; those who don't have the top premium package just get the standard drivel -- for a paltry $200,000 per anum you get research, you get to speak to analysts the usual stuff.  If on the other hand you are a "Black Card Owner"  then you get full access. Because access is all that matters to my friend.  When he thinks of research he only thinks of those 50 client, the others simply don't exist.

In conclusion:  Its interesting that for banks they don't care if anyone wants their research they are welcome to get it, but they don't count anyway.  A different perspective that the regulator has not addressed -- which in fact it cannot address!

Wednesday, July 26, 2017

Financed was borned yesterday -- 4,000 ago a contract was written with default interest...priceless


Ending obsolescence

Obsolescence is a feature of the 20th and 21st century manufacturing process, but does our society require obsolescence.  The reason the question is intersting is a relatively recent TED talk with Elon Musk where we spoke about his new solar roofs -- one of the main features was that because the tiles are made of glass they don't wear out.  Essentially a solar roof made by Musk's company could outlast the house on which it has been installed.

Modern cars have hundreds of moving parts (on average 1,500) a Tesla model S around 45...The engine has one moving part, the wheels and breaks account for a bunch more, trunks, door handle, steering wheel and pedals -- things that don't really wear out anyway.

Musk's two main products (cars and solar roofs) seem to have very very long lifespan.  The often told story is that the first light bulbs were made to last for every, but consumer society allowed manufactures to make them disposable -- true but not for the reason most people assume - the cost of material on the original light bulbs was very high, each very long lasting lightbulb, so the original lightbulb manufacturers looked at cheaper, less durable, material.

Now, a one man revolution is occurring.  Not only is Tesla redefining driving -- lets be honest 99.9% of all driving is boring as hell! He is possibly redefining car ownership, and he may well be redefining roofing material and lifespan.

As for the car, the main changed features is the self driving.  Once level 4 has been reached -- driving without human supervision, the need to "own a car" may well disappear!  Think about it, why own a car when you can own a dozen with friends -- that are shared by the owners when needed?  The issue of capital cost is far less important, you may only own 1/3 or 1.4 of a car...It is more than likely that your next car will be your last car!  As for solar panels, the new products that Musk has introduced have no lifespan limitation because the tiles are made of glass -- a very durable product.  In Musk's words the roof may outlast the house (imaging selling the roof of a house you wish to demolish).

That means that the 20 year roof lifespan is a thing of the past -- this changes things.  The implication is two fold first that a substantial capital good will change in the means of ownership.  What will be important for new cars is not the features, but the comfort and durability -- because with very few moving parts don't breakdown and hardly wear out.

Truly a new world is emerging.  Will Tesla win the self driving contest?  It doesn't matter, all car manufacturers are aiming at that holly grail of level 4 self driving cars -- Musk thinks that level 4 will exist by 2020 -- literally one more car.

As a side note, my ex-brother in law owned a DB9, the Aston Martin super car that cost...a lot.  I was impressed how uncomfortable the car was on the motorway-- it was, like most high performance cars, tuned to perform best on the Nuremberg Ring.  Important fact, the car was registered in the US, it would never, ever run on the Nuremberg ring!  Yet every day, my brother in law would use the car to get from the office to the house -- not on the Nuremberg ring, but on the highway!

Wednesday, July 5, 2017

Trump's failure to appoint

This is not original but it does explain why Trump is having such a hard time appointing people to serve his administration:  people just don't want to work for him!

Trump fired Comey more than 2 months ago, and the White House said they would nominated a new head of the FBI within days, it took nearly 6 weeks to find a willing candidate and as far as I know the confirmation process has not even started...considering that Congress is in recess until September. That means that to replace one of the most visible figures in US law enforcement will take more than 7 months.  Its important to note that its not Congress that has been slow, the process is driven by the White House, they're not sending anything to Congress (although in Trump's reality its still the fault of Congress).  By this time, Obama had more than 200 posts filed in 2009 -- its even more for Bush and Clinton.  Trump, the number is 51, that it.  Right now there are only two or three names in the pipeline and Congress is doing nothing, because the paperwork has not been sent; they are literally unable to discharge their obligation until all the paperwork has been filed.

Today I was reading about one of Trump's ex-lawyer (claim to fame was getting the Ivana divorce settled).  He was Trump's principal lawyer for 15 years, so he knows the man.  The most telling comment was that in had been in DC to meet with the White House -- he was offered a job, but he declined.

I suspect that if you are a GOP supporter and a prime candidate for a post in Government -- the last (was it the first) cabinet meeting where everyone "thanked trump for the opportunity" -- like a grade school play where the thank you is long rehearsed, corny and obligatory was a real shocker to anyone considering government service under Trump -- not only would it be of short duration but may damage your career permanently.

I suspect that the White House, under the radar, approaches prospective candidates and they get turned down in the gentlest  way possible, timing is wrong, my children, my wife my current job. Anything not to participate in what will be remembered as one of America's worse administration.  Its not so much a boycott as a reading of the tea leaves -- this is not a plus to your CV.






Italeave: No longer a a taboo subject

These are the forces at work in Italy right now:

The path to Italeave is a difficult one, requiring a referendum and a constitutional change, but trouble is brewing on a huge number of fronts simultaneously:


  • The Italian banking system is insolvent
  • Another refugee crisis is brewing (this time via boats from Libya)
  • Italy’s youth unemployment is a whopping 37%
  • The ECB is the buyer of only resort for Italian bonds
  • Italy’s debt to GDP ratio is over 130% to the consternation of Eurozone officials
  • The global recovery is extremely long in the tooth
  • Italy made no progress during the recovery
  • The topic of Italeave is no longer taboo


Any number of things could start a chain reaction making Italeave look good to a majority of Italian voters.  Political parties tend to follow (from the front), 2/3 of all Italians political parties are pro exit, in a sense the negociations between Europe and the UK are going to be key here.  Italy accounts for 12% of Europe's GDP and is Europe's third largest bond market (a big big deal).

More problematic, recent analysis (econometric studies) seem to indciate that the cost of exit is substantial, but not "insane".  Italy's economy has gone nowhere for the past decade...and the "recovery" is close to the end of its cycle.



Who are you calling a homo Sapien...I am no homo!

This was a line from an 1980's movie about a "meat head" who is called by a New York smart ass a Homo Sapiens...hilarity (and a fight) ensues!  Its the same for some un-name trump supporter who referred to Clinton supporters an a sign as "Morans".

Yesterday was America's birthday -- literally it marks the day America declared independence "and the church bells of Philadelphia were ringing", against the reign of "mad" king George. Now, NPR, that hot bed of leftist crazies has for almost 30 years read out the declaration of independence, and this year, I guess having a bit of fun with the twitter madness that has overtaken the oval office has decided to tweet the whole thing 140 character at a time...

Part of the declaration of independence refers the a people's right to abolish a government and form a new one...some true Trump supporter thought that this was a dig at Trump -- being completely unaware that it referred to King George...

Anyway, the anti NPR force had a field day, as usual "these people" revere a document that they have neither read or understood.  They probably think that the Americans through the tea in the water to make a salty brew...who knows.

In fact, my point is about America's education system is in real trouble; more than once a member of congress has confused the declaration of independence with the American constitution. Or a congressman recently said "I serve at the pleasure of the President"  not really understanding that he serves at the pleasure of the people in his state -- that the president has no control over who it elects.

More than once in my life have I corrected Americans as to how their government functions.  I am still surprised how many, smart and educated Americans don't understand their constitution, or the federalist papers, or the creation of the system to elect the president (a clue its not one man one vote...)

How can Americans understand their rights and freedom if they don't understand their own political system?


Monday, July 3, 2017

Florida: Parents can now object to the school curriculum

Parents who object to the concept of evolution or global warming can now make sure that their kids will never hear such things!  This is the new law past last Friday in Florida.  The ideal is to shape the minds of young Americans to a reality where God is central and where science is banished to the sidelines. It used to be more complicated, and getting Harry Potter out of school libraries was a major victory for the Christian right (no joke) they also objected to Catcher in the Rye

The idea seams to be removing anything "objectionable" from the young minds so that they get the party line early -- now American education (second most expensive after Luxemburg) and which ranks the US in 30th position in reading, math and comprehension, is rather bad at doing what its suppose to do.  Needless to say that top schools still teach important facts, but there too the rot is spreading.  Just last week a national TV presenter assumed that an aircraft accident had occurred because of the metric system -- which was "too complicated", which is amazing considering that everything is divided by 10 (unlike miles...)

Anyway, a good friend of mine was so proud when here granddaughter was accepted into "Teach America" an incredibly difficult program for top schools so that they can teach in less privileged environments.  This young women, after 4 years at Harvard, took two years to teach underprivileged children.  Her degree was in liberal arts (she speaks 6 languages) and so she became a math teacher, with no formation, no support and little ability to do anything.

Now I get that Teach America is a non-profit high visibility program, but those who are part of it, leave disabused about its effectiveness.  The first issue is that teaching is hard, its very hard work, and in some schools the environment is lethal (literally and figuratively), children have neither: good education support at home or at school and they can see the writing on the wall -- both their prospects and life expectancy are somewhat limited...

Now Florida parents can be sure that their children don't face any facts they don't like.  Remove hard science (or make intelligent design its equal), remove discussions on family planning (aka its a condom stupid...), there is no doubt that there is no discussion on sexuality, and now teachers can be told what can be taught at the school level...this will end well!

The tragedy of America's school system is that on one side you have dogmatic teacher's unions and on the other side you have dogmatic government officials that see short term battle that are politically advantageous while it hurts children, the future of America, they generally don't care because as far as they are concerned these people don't count.

The real tragedy is that in America a good education is seen as a privilege, and not a right -- because its the country that is penalized when its workers have poor education!

A side note, I've been in the aerospace business for a few years -- and for many of these years there were too many available pilots, so that wages and conditions, especially in the small regional players (such as Horizon) were terrible.  It was hardly a living, however, the surplus of pilot is now thing of the past.  Horizon's business model was built on cheap labor (pilots and other crew) and now that the number of pilots has shrunk, they are complaining -- there is a easy solution:  increase wages!  But that doesn't work for Horizon or its shareholders (for now) eventually they will see the light (either face reality or go under).  Right now the solution is flight cancellation -- clients don't like that.

The reality of corporate America is that it has had, for the past twenty years a cheap labor deal, that is about to expire.  We are back at the education issue; the real problem is that airlines such as Horizon are labor predator, using the capital of others (new pilots) to make money -- now that the ride is over, Horizon and its friends are not to sure what to do, because they've never seen it as part of their "social obligation" to train new pilots.

Education in America is treated this way, if you are rich you get a good education, if you are poor you get little education (functional illiterate) and you "survive" America is squandering its largest natural ressource as if it had no implication.  Now that America is closing its doors to the world's best and brightest -- would you take the chance of doing your PhD in America if you may not guarantee of retaining your student visa?  In Canada, we are worried about PISA scores, while in the US we worry of our students don't have access to intelligent design (aka God created earth in 6 days and its 6,500 years old)

Education is the battle ground for political points -- if the kids are in the way too bad.  The idea that you don't want to hear what 99.999% of all scientists have to say about global warming or evolution is the beginning of the end.