Educate Yourself into Riches
by Robert Kiyosaki
Tuesday, December 27, 2005
Many of Wall Street's elite firms were being required to pay tens of millions of dollars in fines to investors, according to media reports. The penalties are for alleged bad investment advice, courtesy of New York State Attorney General Eliot Spitzer.
This brings me to one of my favorite quotes from famed investor Warren Buffett goes: "Wall Street is the only place that people ride to work in a Rolls Royce to get advice from those who take the subway."
I have been highly critical of the standard financial planning advice -- "work hard, save money, get out of debt, invest for the long term, and diversify" -- for a long time. Such guidance is often more a financial advisor's (subway rider's) sales pitch than a solid investment guide.
But while I think it's courageous that Spitzer slaps millions in fines on a few Wall Street firms for their bad investment guidance, I believe the investors who accepted that unsound advice have some responsibility, too. Isn't knowing the difference between good and bad advice part of knowing what you're doing?
The Difference Between Investing and Shopping
The problem is, most investors don't know how bad the standard investment advice is. This mantra of "work hard, save money, get out of debt, invest for the long term, and diversify" is followed by millions of investors -- who lost $7 trillion to $9 trillion between 2000 and 2004. Many are still following this bad advice today.
Not only did millions of investors lose trillions of dollars, many also missed the boom in real estate, oil, gas, and previous metals. Furthermore, despite investors' huge losses, Wall Street paid out some of its biggest bonuses in history.
However, investors should realize it's "buyer beware." Investing is different from shopping. If I go to Sears and don't like the tool or shirt I purchased, I can generally get my money back. When we go shopping, we expect value for our money. But when we invest, we do so in the hopes of making more money -- and knowing that we risk making losses. What would happen to the financial industry if brokers were sued every time a client lost money? The wheels of world commerce would grind to a halt.
My point is: The world is filled with honest people handing out bad advice. An example of honest bad investment advice is the standard one of "work hard, save money, get out of debt, invest for the long term, and diversify".
The world is also filled with biased advice, which is why people say, "Never ask an insurance broker if you need insurance, or a mutual-fund sales person if they recommend mutual funds." Furthermore, there are many crooks and con artists as well, who intentionally promote dishonest ventures.
Spotting the Difference
So while it's imperative that we have the Securities and Exchange Commission and a brave Attorney General such as Spitzer to enforce the rules, we, as individual investors, still need to be vigilant and personally responsible for the advice we receive and what we do with our money.
In my opinion, that means each of us needs to be responsible for our own financial education so we can tell the difference between good advice, biased advice, and crooked advice. If you can educate yourself to know the differences between those three types of advice, getting rich is easy.
Or, if you take investing advice from a subway rider, don't be surprised if you wind up on the subway.
Tuesday, December 27, 2005
Sunday, December 25, 2005
“All Politics is Local”
“All Politics is Local” Tip O’Neill
All questions you ask a candidate must have local affections without forgetting that one day the same person might be your national official or will be a member of your local party structure thus having access to your federal elected official.
Questions presented to a candidate for endorsement for a local office must include a series of question, that are part of the “all” even if they are out of he present scope or situations that the candidate will confront but affect all of us in all subjects from local to national level.
All interview processes must imagine your town library council member running for Congress in the not long future or have a voice at the local party level politics, that might influence the federal elected official.
What you ask today might be useful in the future.
For example the most forgotten questions are budget questions, when the issue most affecting us in our everyday day lives is the federal and local budgets.
This kind of question line gets asked when the situation is so bad that it makes them irrelevant.
At the point if which the average candidate gets asked relevant commitments and questions usually it is too late.
If the tendency is to ask a candidate if they support this war of that war, it will be more apropos to ask if the candidate will be an unbiased supporter of increase on military personnel salaries by 50% or more and introduce legislation linked to pentagon budget cuts. As counter intuitive as it might seem, it indicates one single purpose, if the civilians plan to send a military person to war they must pay fair salaries, specially the support for above average salaries of highest paid private mercenaries.
In parallel include support for legislation that, if the reserves are going to be called to an arm conflict the amount of pay must be fully replaced and a 50% increase salary for active duty while in armed conflict participation.
Although, this is not an anti-war position it is a position that reduces the easy of action to send soldiers to war and demand negotiations for peace due to reduced budgets.
For example most housing subsidies are driven to simple pay for housing via rental agreements, but not towards ownership via subsidies, candidate positioning and questions in the direction of subsidized ownership while demanding for better accommodations for the people in need. In housing is more apropos to demand ownership than to demanding for support dilapidated rental units.
A candidate will have to answer support for budget question in which there is not increase of taxes but an increase on educations and health coverage which is more progressive than tax increases. The Guns and Butter choices, when too extreme at local level go in favor of butter, call it local tax cuts.
The importance of this dialogue is to increase the level of questioning before throwing the towel in one direction based on partisan views. Needs of people are no partisan.
Most people are independent and most people need education in the subjects of need.
We all constantly need to find a common ground on our own personal needs, our town, our national needs and our international needs.
Most of the ignorance on subjects of need are driven by jingle style phrases with empty value, and driven to support idiocy and disrupt understanding and dialogue of issues.
SEC Ready to Loosen Rules on Corporations
Buried in page C14 of the New York Times was the story of the SEC newest effort to erode individual shareholders rights.
The change is pushed by corporate crooks in the making and some Congress members. The SEC vote took place under the new strategy of Chairman Cox on December 13, 2005. This will not be a date to remember for individual investors who care about their freedom to know and invest securely.
Among other supporters of this private investor erosion of rights is our own Congresswoman Sue Kelly. Congress woman Kelly, whom, she has advocated to deregulate “small business“. The problem with the term “small’ is that on these folks views “small” means anything less than $700 million. No your majority and normal town business. Also, not to forget are the elected Congress members Lowey and Engel. None of these two have raise their voice to oppose such damaging changes to investors, that increases risk to assume reporting is not manipulated and cooked by corporate crooks as we have learned in the past few years.
We have such large pool of crooks in corporate America that decimating Sarbanex-Oxley legislation will be the wrong message for the wrong reasons.
Although, Sarbox is nothing to cheer as a protection for individual investors, it is better than standing naked at 20 below zero, which will be the equivalent of this regulation change.
The politicians continued abuse of Orwellian language and non-stop redefinition of meanings, is very dangerous to any society.
The SEC latest proposals and measures affects all citizen investments, these investments are being put at a higher unnecessary risk.
The vote at the SEC went 18-1. The dissenter was the president of the Center for Financial and Market Integrity. You might wonder why the person advocating for markets integrity loses the battle, overturning 404 Sarbox (as is commonly referred). This is part of the radical right corporatist ideology, to shift risk from this new monarchy to the people.
The way it works is not too complicated. By making the alternatives to savings and returns to be placed in higher risk investments, then the laws supporting ownership of holdings get devaluated, by stripping of shareholders rights, thus eliminating accountability from the perpetrators of malfeasance, leaving the investors holding worthless paper and retirees wondering where is the next job at half minimum wage at 65 years of age. This vote an the present political position is a devastating event for individual investors.
The danger here for all of us is the lack of accountability of our elected officials, and we are the ones allowing them to walk away unquestioned.
The continued positioning of regulations deterring shareholders rights, has reach levels in which all equities and share-ownership is the equivalent of a sophisticated Ponzi scheme. This is supported by the government and fall on the backs of Americans. It is not me saying this it is, the last five Nobel prizes of economics are saying this in many ways.
It an era in which most of our savings are induced by government legislation to be placed in the riskiest of investments as in the stock market, the lack of solid pensions must has directed to strenghent private investor rights,, not to decrease them. A large amount of blame falls in the hands of mutual funds. Who by supporting crooked accounting on corporate America, have not made and statement and divest from companies that blatantly silence the truth of their accounting methods. Most of equity invest today is in untrustworthy assets, most equities have underlining worthless claims.
This is a system that it is in a path of accelerated booms and bust (as the recent stock market internet crash) moving wealth from the savers to the rulers, most of the benefits go to the very few who control the Ponzi scheme.
The pressure exercised today by Congress members and the Bush administration to annul the Sarbanes Oxley Legislation, when they should protect investors from crooked accounting and internal systems that allowed CEOs to commit fraud, it is in the opposite direction of citizens needs.
These measures are in the direction of allowing crooks to thrive again and the rest of us survive in these murky waters, and the prospective of loosening against our hard earned savings to the lack of accountability.
As Alan Greenspan said last week “if we lose trust we lose capitalism“, we have lost trust and we cannot trust reporting.
Wednesday, December 21, 2005
From Mercenaries to Peacemakers?
Scandals Confront Military Security Industry
by David Phinney, Special to CorpWatch
November 29th, 2005
Wherever Tim Spicer turns up, he carries the kind of baggage that gives the private military business a bad name. An internet video showing private contractors shooting at civilian cars in Iraq, loosely linked to his company, has ignited a firestorm about unregulated gun-wielding security convoys, escorting reconstruction or government advisors, roaming the country. [See Box]
This latest scandal comes at a time when the military security industry is reaping huge profits from the gun-carrying business in conflict zones around the world once dominated by rogue soldiers of fortune. As thousands of armed guards, working largely under U.S. contracts, travel the roads of Iraq, the industry is seeking respectability though a Washington trade group -- the International Peace Operations Association (IPOA).
The group calls itself “the most ethical and effective voice of the Peace and Stability Industry,” pledged to ensure that “their capabilities are not misused or abused.” Its members include industry heavy hitters like ArmorGroup, Blackwater, Hart, MPRI, the Olive Group and Triple Canopy.
Shooting Gallery
The grainy video (click to download) shows the view of an Iraqi street from the back of a moving vehicle. The long barrel of a gun, held by someone inside the vehicle, swings across the frame and viewers see the effect of bullets, apparently fired from the vehicle, spraying civilian cars coming up behind. Bloggers claim that the man with the gun is Danny Heydenreycher, a South African employee of Aegis at Camp Victory.
In one of the four separate incidents, after shots are fired, viewers see a Mercedes car crash into a taxi; passengers flee from the taxi, but no movement is seen in the Mercedes, suggesting that the passengers were injured or killed.
According to Robert Young Pelton, author of an upcoming book, “Licensed to Kill: The Privatization of the War on Terror,” the people driving the vehicle are part of a convoy of private military contractors. The video was originally posted on an unofficial Web site run by a disgruntled contractor working for Aegis Defence Services. (The website claims to be a voice for to "the men on the ground who are the heart and soul of the company.” The video has been deleted from the site but has taken on a life of its own in the blogosphere.)
Aegis holds several sweeping Pentagon contracts in Iraq worth over $430 million. In published news reports, Tim Spicer, the head of Aegis, insists that an internal investigation of the matter is ongoing and notes that there is no evidence that the video involved Aegis. Authorities in Baghdad are also apparently looking into the video, which has torched a firestorm of criticism as bloggers ponder if the United States uses private contractors who shoot unarmed Iraqis.
Pelton, who spent a month with armed convoys running the road from the Green Zone headquarters in Iraq of the U.S. military and government to the Baghdad International Airport, said he understands the public concerns over the conduct of armed private security companies working in Iraq. Private security companies are known to regularly fire guns in the streets as a warning to clear traffic and to caution vehicles coming up from behind.
“The US military considers all of Iraq a war zone,” said Pelton. “Contractors are the frequent target of car bombs, but there are rules and professional standards. Two of the four incidents are trigger happy contractors. It’s a good bet that all of the victims of the incidents will generate some type of retribution against the security industry. Even in a war zone, there is a clear line between professional security providers and amateurs. This video shows how not to conduct vehicle security.”
Another source who is familiar with private security operators in Iraq says that it is nearly impossible to tell the difference between a hostile vehicle carrying a bomb and innocent Iraqi civilians driving toward you. Under rules issued by the Pentagon, any private security team member is expected to wave off a possible threat, fire warning shots and then shoot at the vehicle’s engine to stop it. Team members are also allowed to shoot to kill as the last resort in a situation of pressing circumstances.
“Some team members are scared all the time and shoot a lot, some are scared once and a while and shoot once and a while, some are never scared and never shoot,” the source said. “You can never tell when you are about to get blown up, that’s why some contractors get blown up or they would have shot the driver.”
But at the same time as the industry is evolving -- becoming more corporate, more visible, and more concerned with projecting a responsible image -- private military contractors are facing scandal like the new video in circulation and unprecedented scrutiny from the news media. Some executives recognize that if the companies don’t regulate themselves, someone else might. The public, and many policymakers, sees contractors through an image shaped by accusations of war crimes, rogue operations, and photos of private contractors engaged in torture at Abu Ghraib.
To some, Tim Spicer, a Falklands Islands war veteran with weathered good looks, embodies the industry’s old rogue image. During the past 10 years, the 53-year-old former Scots Guard lieutenant colonel racked up a gun-for-hire resume littered with questionable deals and testaments to poor judgment.
Highlights of his globe-trotting career include sparking international scandals in Southeast Asia and flaunting international bans on arms trafficking in West Africa. A contract held by his now defunct company, Sandline, precipitated the toppling of the very government that hired it: Papua New Guinea. When Sandline mounted a $10 million armed operation in Sierra Leone, initially bankrolled behind-the-scenes by a shady fugitive wanted for embezzlement, Spicer was accused of legal and financial shenanigans.
And now, to the chagrin of many IPOA members, Spicer wants to join the organization. His membership bid comes just as the IPOA is trying to reposition the industry as for-profit providers of armed men as peace keepers.
In a vote several months ago, IPOA rejected Spicer’s company Aegis Defence Services. A second bid to join the only trade organization for security contractors is causing a private little war inside the IPOA sandbox.
“This is an issue about making a stand. The organization shouldn’t back away even if blood is spilled on the carpet,” said an executive in a major security company who cited commercial reasons for insisting on anonymity. “If the IPOA doesn’t get it right, it will come back to haunt it.”
Spicer was “surprised” by IPOA’s initial rejection “especially since we were invited to apply,” he said in a recent telephone interview. He flatly denies rumors that he threatened legal action against the group.
Complicating matters is the fact that London-based Aegis holds the Pentagon’s largest private security contract in Iraq. Established in September 2002, by Spicer, who owns 40 percent of the company and is its chair and chief executive, the fledgling company made headlines in June 2004 when it landed the $293-million three year contract in Iraq despite having no experience in the Middle East. The contract has since been expanded for another year, making it now worth $430 million.
Under the three-year agreement, Aegis wields considerable power and influence over the safety and effectiveness of the other security companies including many IPOA members. Spicer’s company provides daily analysis on counter-insurgency and personal protection to government officials. It also holds sweeping responsibility for electronically coordinating employees of other security convoys traveling around Iraq, working for companies with reconstruction or government contracts. The scores of contractors under Aegis’s control constitute a workforce the size to a military division; and may rank as the largest corporate military ever assembled.
Saving Africa
Doug Brooks, IPOA’s president, a passionate defender of private military contractors, had no comment about the internal spat over Spicer and declined to reveal who re-invited Aegis or why its first application was rejected. In the industry’s rough and tumble past, Brooks had defended Spicer’s former company, Sandline, telling CorpWatch more than a year ago that the company had helped save thousands of lives in Sierra Leone.
"Sandline was remarkably effective," Brooks said. "Their goal of restoring the democratically elected government was achieved. They maintained a low profile but played a critical role in the success."
The lanky 43-year-old head of IPOA is more circumspect these days. “This is an internal matter,” Brooks said. “But I do think we should try to be inclusive.”
Brooks, a son of a professor of African studies with an unfinished doctorate in international security, says his long-time interest in Africa inspired him to start IPOA in April 2001. At the South African Institute of International Affairs, and during years of teaching and traveling in Africa, he says he saw impoverished nations with ill-equipped armies struggle against violent insurrections as developed nations stood by, unwilling commit their own forces.
The hands-off policy allowed butchers to storm across the continent while United Nations peacekeepers frequently fell short of the task, he said. For example, in 2000, Sierra Leonan rebels routed 17,000 poorly-trained and equipped UN security troops, and then rampaged through the countryside dismembering unarmed citizens and creating hundreds of thousands of refugees.
"We still don’t know how many died," Brooks said. "But I spoke to hundreds of Sierra Leonans about the failure of the UN peacekeeping force. They are all very vocal and pissed off.
It was the private companies such as Pacific Architects & Engineers (PAE) and International Charter Incorporated (ICI) of Oregon (now IPOA members) that "stayed put," providing airplanes and logistics support for the local military and, according to Brooks, gained the trust of the people.
Spicer defends his work in Sierra Leone and Papua New Guinea as “defending democratically elected government that were removed in violent coups.”
Robert Young Pelton, author of an upcoming book, “Licensed to Kill: The Privatization of the War on Terror,” offers a different take, noting that Sandline's predecessor, Executive Outcomes, had intervened in Sierra Leone in 1995 and saved lives.
"But the Sandline "Arms to Africa" debacle in 1997 did little to save lives. It's a common confusion that Spicer allows," he says. "In PNG Spicer's involvement actually ended up deposing a democratically elected government. Both jobs resulted in resource concessions being granted to Sandline owners or backers."
Whatever the industry’s past faults, Brooks believes in its future. It was the willingness of private military companies to do the work that developed nations refuse, he said, that led him to found IPOA and seek the support of policy makers.
"I think the industry is a huge resource that should be tapped,” explained Brooks, who represents the industry at defense contracting conferences and meetings with the State Department. "There are times when government won’t send their own troops, but they are willing to write a check."
Business Booms in Iraq
Check writing is exactly what has been happening in Iraq, where billions of dollars in new Pentagon contracts have supercharged the growth of private security companies and spawned multimillion-dollar companies overnight. Private security accounts for at least one quarter of the $24 billion earmarked for rebuilding, according to a recent report by the U.S. Special Inspector General for Iraq Reconstruction (SIGIR). Much of this money goes to the estimated 25,000 to 30,000 armed contractors who were swiftly sucked up from a global pool of ex-military and law enforcement personnel.
The sharp demand for personnel has led to varied (some say lower) standards of training and military experience in workers from dozens of countries including the Britain, Colombia, Chile, El Salvador, Fiji, Nepal, Peru, Serbia, South Africa, and the United States.
Tim Spicer
Controversy follows Tim Spicer as surely as contractors follow armies into war. His former private military company, Sandline International, which was involved in several international scandals in the late 1990s, continues to be a classic case study of what can go wrong when private military companies wage war.
The government of Papua, New Guinea hired Sandline in 1997 to quell a nine-year rebellion on the island of Bougainville and to secure one of the world’s largest copper mines. The plan backfired after local military leaders learned of the deal and staged a coup. (Spicer’s contract for $36 million dollars -- more than the country’s annual budget -- included providing two Soviet-made attack helicopters, several assault helicopters, six rocket launchers and grenade launchers, according to research by Brookings Institute military expert Peter Singer.)
Riots broke out, Prime Minister Julian Chan stepped down, and the government imploded. Soldiers apprehended Spicer at gunpoint, jailed him on a weapons charge, and then booted him out of the country amidst a fog of allegations that public officials had been bribed.
Despite botching the operation, Sandline demanded and collected an outstanding $18 million balance from new government in Papua New Guinea.
Sandline next appeared in Sierra Leone in 1998 as part of an effort to restore the government of ousted President Ahmad Tejan Kabbah. Spicer was accused of violating a United Nations and United Kingdom embargo on arms smuggling – punishable by up to seven years in prison. Prior to receiving the $10 million contract, Spicer is reported to have accepted $70,000 businessman Rakesh Saxena to bankroll a Sandline expedition to recapture Saxena’s Siera Leonan diamond and bauxite mining interests. At the time, the Indian-born Thai national was awaiting extradition to Thailand to face charges of embezzlement from a bank in Thailand and traveling on the passport of a dead Serb.
Sandline’s shipment of 30 tons of arms to Sierra Leone ignited a news storm in Britain after Spicer disclosed that British and U.S. officials had secretly encouraged him. The “Arms-to-Africa Affair,” as it came to be known, rocked Tony Blair’s government, triggered a high-profile British House of Commons investigation, forced the resignation of former British high commissioner in Sierra Leone, Peter Penfold, and elicited unsuccessful calls for Foreign Secretary Robin Cook to step down.
“Our attempts to uncover the structure, ownership, and business connections of Sandline were met with extraordinarily evasive answers by Mr Spicer,” states a government report. “A follow-up memorandum from Mr. Spicer was thin and opaque—and failed to provide a number of promised answers. Nevertheless, Mr. Spicer's business is not unlawful, and he is a British citizen with a record of service in the armed forces.”
In April 2004, around the time that Aegis received its mammoth security contract in Iraq, Sandline officially shut down. A notice on its website explained that the company was going out of business because of waning government support for peacekeeping missions. “Without such support, the ability of Sandline to make a positive difference in countries where there is widespread brutality and genocidal behavior is materially diminished.”
Both the Iraqi and U.S. governments have complained about the training and behavior of private contractors in Iraq. In an April performance review, SIGIR faulted Aegis’s compliance in five areas of its contract, including inadequate employee background checks and slack verification of qualifications and training. After sampling records of 20 of Aegis’s 125 Iraqi employees, the review concluded that the company conducted no police checks on 18 and failed to interview six; there were no records at all for two of the men.
"There is no assurance that Aegis is providing the best possible safety and security for government and reconstruction contractor personnel and facilities," concluded the audit, which recommended stricter enforcement of the contract.
The Iraqi Ministry of Interior has repeatedly complained about reckless gunplay by the private security convoys that barrel through densely populated cities with weapons waving out the windows to clear the streets.
Even U.S. military officials have chaffed that the increasing reports of indiscriminate shootings and other war crimes endangers their own troops. However, under an order issued by the Coalition Provisional Authority before the U.S. government officially departed Iraq in June 2004, all private military contractors are immune from prosecution in Iraq.
“They shoot people, and someone else has to deal with the aftermath. It happens all over the place,” Marine Brigadier General Karl R. Horst told The Washington Post in a September 10th story. “These guys run loose in this country and do stupid stuff. There's no authority over them, so you can't come down on them hard when they escalate force.”
Horst, deputy commander of the 3rd Infantry Division, which is responsible for security in and around Baghdad, said that between May and July, he tracked at least a dozen shootings of civilians by contractors.
Some private contractors argue that the dangers of a war zone necessitate shooting at, and possibly killing, people who turn out to be civilians. Since the violent resistance in Iraq makes little distinction between them and enlisted personnel, they say, contractors must act aggressively for their own protection.
The military itself has given mixed signal to private contractors in Iraq. In a major incident in May 2005, 19 security contractors working for Zapata Engineering were detained for allegedly shooting recklessly in the streets of Fallujah and nearly hitting U.S. forces. Later Marines searched, roughed up members of the convoy, and jailed them for three days without charges.
The Zapata contractors were released, but complained that the U.S. military had blacklisted and banished from working in the security business in Iraq -- although none ever was charged with a crime.
Another U.S. Army investigation last spring was based on an anonymous four-page letter detailing allegations of wrongdoing by the contractor USIS, according to a recent story in The Los Angeles Times. The letter writer accused USIS of deliberately reducing the number of trainers to increase its profit margin and detailed two incidents in which USIS contractors allegedly had witnessed or participated in the killing of Iraqis during the assault on Fallujah a year ago. (Private security contractors are not allowed to conduct offensive operations.)
The letter also claims that a USIS employee saw Iraqi police trainees kill two innocent Iraqi civilians, then covered it up. A USIS manager "did not want it reported because he thought it would put his contract at risk," according to the letter.
The head of the probe, Army Colonel Ted Westhusing, reported the allegations to his superiors, but told them that he believed USIS was complying with the terms of its contract. U.S. officials investigated and found "no contractual violations," and “these allegations to be unfounded, according to The Los Angeles Times. (Westhusing subsequently committed suicide, distraught over his experiences in Iraq)
Marriage Rules Without Divorce or Alimony
Brooks and his IPOA members know full well how such incidents and grievances feed into the image of private security workers as macho mercenaries unbound by laws of war or decency and loyal only to cash. IPOA has crafted a code of conduct -- now in its 10th revision -- that Brooks believes establishes self-regulation among IPOA members and "a deep sense of responsibility."
The rules call for "effective legal accountability," transparency, and dedication to the “greatest benefit of humanity.” IPOA members pledge to observe international human rights laws; cooperate with investigations of contract violations; and work only for legitimate, recognized governments, international organizations, non-governmental organizations, and lawful private companies. (Pelton says the rules resemble the "vows of marriage and without the divorce or alimony" noting that it is a self-adminstered code with no enforcement.)
IPOA now boasts of 18 member companies. All are in the business of war or post-conflict stabilization. Most are active in Iraq, specialize in providing armed security forces or training, and are staffed by former military personnel. Others provide expertise a wide variety of tasks traditionally handled by the military: de-mining, building, transportation, and equipment maintenance.
The conflicting views and the code’s legitimacy are now being tested behind closed doors as IPOA considers membership for Aegis. Given the track record of many private military contractors around the world, it may be that IPOA’s rejection of Spicer’s application has more to do with old-fashioned competition than with new-found principles. Indeed Spicer believes that criticism of him and the rejection of his membership bid "may be commercially and politically motivated.”
Mark Whyte, an executive with the British security company, Pilgrims, whose company protects business and media clients in Iraq, tends to agree with that conclusion.
“While I'm no personal fan of Spicer, this is little more than professional jealousy in my view,” Whyte said.
Pilgrims does not belong to IPOA and Whyte takes issue with some of the organization’s more politically-charged goals of nation building, but adds: “If you look at the values espoused by IPOA, I would say that Aegis is one of the few companies that actually try to live up to them in Baghdad.”
Whether that assessment is accurate or not, Aegis is certainly aiming to position itself as a respectable member of a legitimate industry. In addition to its bid to join IPOA, it has hired former U.S. and British government figures including Robert McFarlane, former national security adviser to President Ronald Reagan, Lord Peter Anthony Inge, former British chief of defense staff, and Nicholas Soames, former British armed forces minister. All hold advisory or non-executive positions.
"This is only just becoming an industry,” Mark Bullough, Aegis managing director, told the Financial Times on November 4, referring to the new appointments. “There has been a question mark over how respectable it is. Certainly the reassurance of the non-executive names offers an endorsement of our company and points of reference for people not used to dealing with the sector.”
David Phinney is a journalist and broadcaster based in Washington, DC, whose work has appeared in The Los Angeles Times, New York Times and on ABC and PBS. He can be contacted at: phinneydavid@yahoo.com.
by David Phinney, Special to CorpWatch
November 29th, 2005
Wherever Tim Spicer turns up, he carries the kind of baggage that gives the private military business a bad name. An internet video showing private contractors shooting at civilian cars in Iraq, loosely linked to his company, has ignited a firestorm about unregulated gun-wielding security convoys, escorting reconstruction or government advisors, roaming the country. [See Box]
This latest scandal comes at a time when the military security industry is reaping huge profits from the gun-carrying business in conflict zones around the world once dominated by rogue soldiers of fortune. As thousands of armed guards, working largely under U.S. contracts, travel the roads of Iraq, the industry is seeking respectability though a Washington trade group -- the International Peace Operations Association (IPOA).
The group calls itself “the most ethical and effective voice of the Peace and Stability Industry,” pledged to ensure that “their capabilities are not misused or abused.” Its members include industry heavy hitters like ArmorGroup, Blackwater, Hart, MPRI, the Olive Group and Triple Canopy.
Shooting Gallery
The grainy video (click to download) shows the view of an Iraqi street from the back of a moving vehicle. The long barrel of a gun, held by someone inside the vehicle, swings across the frame and viewers see the effect of bullets, apparently fired from the vehicle, spraying civilian cars coming up behind. Bloggers claim that the man with the gun is Danny Heydenreycher, a South African employee of Aegis at Camp Victory.
In one of the four separate incidents, after shots are fired, viewers see a Mercedes car crash into a taxi; passengers flee from the taxi, but no movement is seen in the Mercedes, suggesting that the passengers were injured or killed.
According to Robert Young Pelton, author of an upcoming book, “Licensed to Kill: The Privatization of the War on Terror,” the people driving the vehicle are part of a convoy of private military contractors. The video was originally posted on an unofficial Web site run by a disgruntled contractor working for Aegis Defence Services. (The website claims to be a voice for to "the men on the ground who are the heart and soul of the company.” The video has been deleted from the site but has taken on a life of its own in the blogosphere.)
Aegis holds several sweeping Pentagon contracts in Iraq worth over $430 million. In published news reports, Tim Spicer, the head of Aegis, insists that an internal investigation of the matter is ongoing and notes that there is no evidence that the video involved Aegis. Authorities in Baghdad are also apparently looking into the video, which has torched a firestorm of criticism as bloggers ponder if the United States uses private contractors who shoot unarmed Iraqis.
Pelton, who spent a month with armed convoys running the road from the Green Zone headquarters in Iraq of the U.S. military and government to the Baghdad International Airport, said he understands the public concerns over the conduct of armed private security companies working in Iraq. Private security companies are known to regularly fire guns in the streets as a warning to clear traffic and to caution vehicles coming up from behind.
“The US military considers all of Iraq a war zone,” said Pelton. “Contractors are the frequent target of car bombs, but there are rules and professional standards. Two of the four incidents are trigger happy contractors. It’s a good bet that all of the victims of the incidents will generate some type of retribution against the security industry. Even in a war zone, there is a clear line between professional security providers and amateurs. This video shows how not to conduct vehicle security.”
Another source who is familiar with private security operators in Iraq says that it is nearly impossible to tell the difference between a hostile vehicle carrying a bomb and innocent Iraqi civilians driving toward you. Under rules issued by the Pentagon, any private security team member is expected to wave off a possible threat, fire warning shots and then shoot at the vehicle’s engine to stop it. Team members are also allowed to shoot to kill as the last resort in a situation of pressing circumstances.
“Some team members are scared all the time and shoot a lot, some are scared once and a while and shoot once and a while, some are never scared and never shoot,” the source said. “You can never tell when you are about to get blown up, that’s why some contractors get blown up or they would have shot the driver.”
But at the same time as the industry is evolving -- becoming more corporate, more visible, and more concerned with projecting a responsible image -- private military contractors are facing scandal like the new video in circulation and unprecedented scrutiny from the news media. Some executives recognize that if the companies don’t regulate themselves, someone else might. The public, and many policymakers, sees contractors through an image shaped by accusations of war crimes, rogue operations, and photos of private contractors engaged in torture at Abu Ghraib.
To some, Tim Spicer, a Falklands Islands war veteran with weathered good looks, embodies the industry’s old rogue image. During the past 10 years, the 53-year-old former Scots Guard lieutenant colonel racked up a gun-for-hire resume littered with questionable deals and testaments to poor judgment.
Highlights of his globe-trotting career include sparking international scandals in Southeast Asia and flaunting international bans on arms trafficking in West Africa. A contract held by his now defunct company, Sandline, precipitated the toppling of the very government that hired it: Papua New Guinea. When Sandline mounted a $10 million armed operation in Sierra Leone, initially bankrolled behind-the-scenes by a shady fugitive wanted for embezzlement, Spicer was accused of legal and financial shenanigans.
And now, to the chagrin of many IPOA members, Spicer wants to join the organization. His membership bid comes just as the IPOA is trying to reposition the industry as for-profit providers of armed men as peace keepers.
In a vote several months ago, IPOA rejected Spicer’s company Aegis Defence Services. A second bid to join the only trade organization for security contractors is causing a private little war inside the IPOA sandbox.
“This is an issue about making a stand. The organization shouldn’t back away even if blood is spilled on the carpet,” said an executive in a major security company who cited commercial reasons for insisting on anonymity. “If the IPOA doesn’t get it right, it will come back to haunt it.”
Spicer was “surprised” by IPOA’s initial rejection “especially since we were invited to apply,” he said in a recent telephone interview. He flatly denies rumors that he threatened legal action against the group.
Complicating matters is the fact that London-based Aegis holds the Pentagon’s largest private security contract in Iraq. Established in September 2002, by Spicer, who owns 40 percent of the company and is its chair and chief executive, the fledgling company made headlines in June 2004 when it landed the $293-million three year contract in Iraq despite having no experience in the Middle East. The contract has since been expanded for another year, making it now worth $430 million.
Under the three-year agreement, Aegis wields considerable power and influence over the safety and effectiveness of the other security companies including many IPOA members. Spicer’s company provides daily analysis on counter-insurgency and personal protection to government officials. It also holds sweeping responsibility for electronically coordinating employees of other security convoys traveling around Iraq, working for companies with reconstruction or government contracts. The scores of contractors under Aegis’s control constitute a workforce the size to a military division; and may rank as the largest corporate military ever assembled.
Saving Africa
Doug Brooks, IPOA’s president, a passionate defender of private military contractors, had no comment about the internal spat over Spicer and declined to reveal who re-invited Aegis or why its first application was rejected. In the industry’s rough and tumble past, Brooks had defended Spicer’s former company, Sandline, telling CorpWatch more than a year ago that the company had helped save thousands of lives in Sierra Leone.
"Sandline was remarkably effective," Brooks said. "Their goal of restoring the democratically elected government was achieved. They maintained a low profile but played a critical role in the success."
The lanky 43-year-old head of IPOA is more circumspect these days. “This is an internal matter,” Brooks said. “But I do think we should try to be inclusive.”
Brooks, a son of a professor of African studies with an unfinished doctorate in international security, says his long-time interest in Africa inspired him to start IPOA in April 2001. At the South African Institute of International Affairs, and during years of teaching and traveling in Africa, he says he saw impoverished nations with ill-equipped armies struggle against violent insurrections as developed nations stood by, unwilling commit their own forces.
The hands-off policy allowed butchers to storm across the continent while United Nations peacekeepers frequently fell short of the task, he said. For example, in 2000, Sierra Leonan rebels routed 17,000 poorly-trained and equipped UN security troops, and then rampaged through the countryside dismembering unarmed citizens and creating hundreds of thousands of refugees.
"We still don’t know how many died," Brooks said. "But I spoke to hundreds of Sierra Leonans about the failure of the UN peacekeeping force. They are all very vocal and pissed off.
It was the private companies such as Pacific Architects & Engineers (PAE) and International Charter Incorporated (ICI) of Oregon (now IPOA members) that "stayed put," providing airplanes and logistics support for the local military and, according to Brooks, gained the trust of the people.
Spicer defends his work in Sierra Leone and Papua New Guinea as “defending democratically elected government that were removed in violent coups.”
Robert Young Pelton, author of an upcoming book, “Licensed to Kill: The Privatization of the War on Terror,” offers a different take, noting that Sandline's predecessor, Executive Outcomes, had intervened in Sierra Leone in 1995 and saved lives.
"But the Sandline "Arms to Africa" debacle in 1997 did little to save lives. It's a common confusion that Spicer allows," he says. "In PNG Spicer's involvement actually ended up deposing a democratically elected government. Both jobs resulted in resource concessions being granted to Sandline owners or backers."
Whatever the industry’s past faults, Brooks believes in its future. It was the willingness of private military companies to do the work that developed nations refuse, he said, that led him to found IPOA and seek the support of policy makers.
"I think the industry is a huge resource that should be tapped,” explained Brooks, who represents the industry at defense contracting conferences and meetings with the State Department. "There are times when government won’t send their own troops, but they are willing to write a check."
Business Booms in Iraq
Check writing is exactly what has been happening in Iraq, where billions of dollars in new Pentagon contracts have supercharged the growth of private security companies and spawned multimillion-dollar companies overnight. Private security accounts for at least one quarter of the $24 billion earmarked for rebuilding, according to a recent report by the U.S. Special Inspector General for Iraq Reconstruction (SIGIR). Much of this money goes to the estimated 25,000 to 30,000 armed contractors who were swiftly sucked up from a global pool of ex-military and law enforcement personnel.
The sharp demand for personnel has led to varied (some say lower) standards of training and military experience in workers from dozens of countries including the Britain, Colombia, Chile, El Salvador, Fiji, Nepal, Peru, Serbia, South Africa, and the United States.
Tim Spicer
Controversy follows Tim Spicer as surely as contractors follow armies into war. His former private military company, Sandline International, which was involved in several international scandals in the late 1990s, continues to be a classic case study of what can go wrong when private military companies wage war.
The government of Papua, New Guinea hired Sandline in 1997 to quell a nine-year rebellion on the island of Bougainville and to secure one of the world’s largest copper mines. The plan backfired after local military leaders learned of the deal and staged a coup. (Spicer’s contract for $36 million dollars -- more than the country’s annual budget -- included providing two Soviet-made attack helicopters, several assault helicopters, six rocket launchers and grenade launchers, according to research by Brookings Institute military expert Peter Singer.)
Riots broke out, Prime Minister Julian Chan stepped down, and the government imploded. Soldiers apprehended Spicer at gunpoint, jailed him on a weapons charge, and then booted him out of the country amidst a fog of allegations that public officials had been bribed.
Despite botching the operation, Sandline demanded and collected an outstanding $18 million balance from new government in Papua New Guinea.
Sandline next appeared in Sierra Leone in 1998 as part of an effort to restore the government of ousted President Ahmad Tejan Kabbah. Spicer was accused of violating a United Nations and United Kingdom embargo on arms smuggling – punishable by up to seven years in prison. Prior to receiving the $10 million contract, Spicer is reported to have accepted $70,000 businessman Rakesh Saxena to bankroll a Sandline expedition to recapture Saxena’s Siera Leonan diamond and bauxite mining interests. At the time, the Indian-born Thai national was awaiting extradition to Thailand to face charges of embezzlement from a bank in Thailand and traveling on the passport of a dead Serb.
Sandline’s shipment of 30 tons of arms to Sierra Leone ignited a news storm in Britain after Spicer disclosed that British and U.S. officials had secretly encouraged him. The “Arms-to-Africa Affair,” as it came to be known, rocked Tony Blair’s government, triggered a high-profile British House of Commons investigation, forced the resignation of former British high commissioner in Sierra Leone, Peter Penfold, and elicited unsuccessful calls for Foreign Secretary Robin Cook to step down.
“Our attempts to uncover the structure, ownership, and business connections of Sandline were met with extraordinarily evasive answers by Mr Spicer,” states a government report. “A follow-up memorandum from Mr. Spicer was thin and opaque—and failed to provide a number of promised answers. Nevertheless, Mr. Spicer's business is not unlawful, and he is a British citizen with a record of service in the armed forces.”
In April 2004, around the time that Aegis received its mammoth security contract in Iraq, Sandline officially shut down. A notice on its website explained that the company was going out of business because of waning government support for peacekeeping missions. “Without such support, the ability of Sandline to make a positive difference in countries where there is widespread brutality and genocidal behavior is materially diminished.”
Both the Iraqi and U.S. governments have complained about the training and behavior of private contractors in Iraq. In an April performance review, SIGIR faulted Aegis’s compliance in five areas of its contract, including inadequate employee background checks and slack verification of qualifications and training. After sampling records of 20 of Aegis’s 125 Iraqi employees, the review concluded that the company conducted no police checks on 18 and failed to interview six; there were no records at all for two of the men.
"There is no assurance that Aegis is providing the best possible safety and security for government and reconstruction contractor personnel and facilities," concluded the audit, which recommended stricter enforcement of the contract.
The Iraqi Ministry of Interior has repeatedly complained about reckless gunplay by the private security convoys that barrel through densely populated cities with weapons waving out the windows to clear the streets.
Even U.S. military officials have chaffed that the increasing reports of indiscriminate shootings and other war crimes endangers their own troops. However, under an order issued by the Coalition Provisional Authority before the U.S. government officially departed Iraq in June 2004, all private military contractors are immune from prosecution in Iraq.
“They shoot people, and someone else has to deal with the aftermath. It happens all over the place,” Marine Brigadier General Karl R. Horst told The Washington Post in a September 10th story. “These guys run loose in this country and do stupid stuff. There's no authority over them, so you can't come down on them hard when they escalate force.”
Horst, deputy commander of the 3rd Infantry Division, which is responsible for security in and around Baghdad, said that between May and July, he tracked at least a dozen shootings of civilians by contractors.
Some private contractors argue that the dangers of a war zone necessitate shooting at, and possibly killing, people who turn out to be civilians. Since the violent resistance in Iraq makes little distinction between them and enlisted personnel, they say, contractors must act aggressively for their own protection.
The military itself has given mixed signal to private contractors in Iraq. In a major incident in May 2005, 19 security contractors working for Zapata Engineering were detained for allegedly shooting recklessly in the streets of Fallujah and nearly hitting U.S. forces. Later Marines searched, roughed up members of the convoy, and jailed them for three days without charges.
The Zapata contractors were released, but complained that the U.S. military had blacklisted and banished from working in the security business in Iraq -- although none ever was charged with a crime.
Another U.S. Army investigation last spring was based on an anonymous four-page letter detailing allegations of wrongdoing by the contractor USIS, according to a recent story in The Los Angeles Times. The letter writer accused USIS of deliberately reducing the number of trainers to increase its profit margin and detailed two incidents in which USIS contractors allegedly had witnessed or participated in the killing of Iraqis during the assault on Fallujah a year ago. (Private security contractors are not allowed to conduct offensive operations.)
The letter also claims that a USIS employee saw Iraqi police trainees kill two innocent Iraqi civilians, then covered it up. A USIS manager "did not want it reported because he thought it would put his contract at risk," according to the letter.
The head of the probe, Army Colonel Ted Westhusing, reported the allegations to his superiors, but told them that he believed USIS was complying with the terms of its contract. U.S. officials investigated and found "no contractual violations," and “these allegations to be unfounded, according to The Los Angeles Times. (Westhusing subsequently committed suicide, distraught over his experiences in Iraq)
Marriage Rules Without Divorce or Alimony
Brooks and his IPOA members know full well how such incidents and grievances feed into the image of private security workers as macho mercenaries unbound by laws of war or decency and loyal only to cash. IPOA has crafted a code of conduct -- now in its 10th revision -- that Brooks believes establishes self-regulation among IPOA members and "a deep sense of responsibility."
The rules call for "effective legal accountability," transparency, and dedication to the “greatest benefit of humanity.” IPOA members pledge to observe international human rights laws; cooperate with investigations of contract violations; and work only for legitimate, recognized governments, international organizations, non-governmental organizations, and lawful private companies. (Pelton says the rules resemble the "vows of marriage and without the divorce or alimony" noting that it is a self-adminstered code with no enforcement.)
IPOA now boasts of 18 member companies. All are in the business of war or post-conflict stabilization. Most are active in Iraq, specialize in providing armed security forces or training, and are staffed by former military personnel. Others provide expertise a wide variety of tasks traditionally handled by the military: de-mining, building, transportation, and equipment maintenance.
The conflicting views and the code’s legitimacy are now being tested behind closed doors as IPOA considers membership for Aegis. Given the track record of many private military contractors around the world, it may be that IPOA’s rejection of Spicer’s application has more to do with old-fashioned competition than with new-found principles. Indeed Spicer believes that criticism of him and the rejection of his membership bid "may be commercially and politically motivated.”
Mark Whyte, an executive with the British security company, Pilgrims, whose company protects business and media clients in Iraq, tends to agree with that conclusion.
“While I'm no personal fan of Spicer, this is little more than professional jealousy in my view,” Whyte said.
Pilgrims does not belong to IPOA and Whyte takes issue with some of the organization’s more politically-charged goals of nation building, but adds: “If you look at the values espoused by IPOA, I would say that Aegis is one of the few companies that actually try to live up to them in Baghdad.”
Whether that assessment is accurate or not, Aegis is certainly aiming to position itself as a respectable member of a legitimate industry. In addition to its bid to join IPOA, it has hired former U.S. and British government figures including Robert McFarlane, former national security adviser to President Ronald Reagan, Lord Peter Anthony Inge, former British chief of defense staff, and Nicholas Soames, former British armed forces minister. All hold advisory or non-executive positions.
"This is only just becoming an industry,” Mark Bullough, Aegis managing director, told the Financial Times on November 4, referring to the new appointments. “There has been a question mark over how respectable it is. Certainly the reassurance of the non-executive names offers an endorsement of our company and points of reference for people not used to dealing with the sector.”
David Phinney is a journalist and broadcaster based in Washington, DC, whose work has appeared in The Los Angeles Times, New York Times and on ABC and PBS. He can be contacted at: phinneydavid@yahoo.com.
Friday, December 16, 2005
Trust in One Cent
If you read the latest comment from the retiring Ryanite Alan Greenspan, he said, "the biggest cloud over America financial system is: trust, the present lack of thereof is troublesome."
The lack of trust is driven from the corporate boards feud to add one more cent per share to their earnings, just for the shake of sharing it among themselves.
Thus the linkage.
As side note, today the media covered the salaries of corporate board members has reached a all time high, included poor attendance records with astronomical give aways. Such arrogance with self-dealing is not healthy and the future price is too high and surely will back fire the hard way.
Gretchen Morgenson in the New York times has done a laudable job uncovering born or to be born crooked accounting techniques and its perpetrators in a few cases wanabes perpetrators.
There is too much infatuation with the money of corporatism and the new royalty it has created, as all monarchies, they become abusive, as we are seen today in Washington DC, and eventually if people are healthy and understand the ludricous behavior, the spade of Damocles and the wrath of Gods will come to demand their share of justice.
The lack of trust is driven from the corporate boards feud to add one more cent per share to their earnings, just for the shake of sharing it among themselves.
Thus the linkage.
As side note, today the media covered the salaries of corporate board members has reached a all time high, included poor attendance records with astronomical give aways. Such arrogance with self-dealing is not healthy and the future price is too high and surely will back fire the hard way.
Gretchen Morgenson in the New York times has done a laudable job uncovering born or to be born crooked accounting techniques and its perpetrators in a few cases wanabes perpetrators.
There is too much infatuation with the money of corporatism and the new royalty it has created, as all monarchies, they become abusive, as we are seen today in Washington DC, and eventually if people are healthy and understand the ludricous behavior, the spade of Damocles and the wrath of Gods will come to demand their share of justice.
Tuesday, December 13, 2005
Why the Rich Get Richer
Another great article by one of my favorite personal financial writers.
Why the Rich Get Richer
by Robert Kiyosaki
Tuesday, December 13, 2005
Words have the power to make you rich -- or keep you poor. For example, you have to know the difference between an "asset" and a "liability." An asset is something that puts money in your pocket, and a liability takes money from it.
Take your house, for example.
"Our house is an asset," my poor dad would say.
But, my rich dad saw things differently. "Your house is not an asset, but a liability," he said.
You see, even though my poor dad thought of his house as an asset, the fact is that every month it took money from his pocket via mortgage payments, utilities, and upkeep.
Now my rich dad owned several houses. But instead of depleting his wallet, those homes were rented out. They generated enough income to cover his expenses -- with money left over. That's a true asset.
Now or Later?
In addition to "asset" and "liability," there are two other very important concepts you need to understand: "Cash flow" and "capital gains."
One of the reasons I was able to retire at age 47, and my wife, Kim, at 37, was simply because we had enough cash flow coming in (primarily from our real estate investments). It wasn't much -- about $10,000 a month -- but we only had about $3,000 in monthly expenses. That left us with $7,000 a month to do with as we pleased.
On the other hand, capital gains are when you buy a stock for a dollar, and it goes up to $10 so you make $9 a share. Or, you buy a house for $100,000, and it appreciates to $150,000. You sell it and make $50,000.
One of the reasons people do not become financially free is because most of them are focusing on capital gains rather than cash flow. Chasing capital gains alone is gambling -- not investing. Want proof? You don't have to go back very far to find it: Between 2000 and 2003, millions of investors lost trillions of dollars in the stock market.
"When you invest for cash flow," my rich dad said, "you're investing in a money-back guarantee. If you invest for capital gains, you invest in hope. The biggest thief of all is hope."
Most retirement plans are based on hope and promises stretched over many years. That makes very little sense to me, yet it seems to make a lot of sense to the millions of investors who are hoping the money they expect will be there at age 65.
There's nothing wrong with capital gains. I would like my properties and stocks to go up in value, but I don't play this game that much. My primary focus, like that of most successful investors, is cash flow -- not capital gains.
Powerful Combo
The key to financial intelligence is how to use both cash flow and capital gains to grow wealthy. So many people are not successful, because they're generally focusing on only one of the two. The majority is focusing on capital gains.
In my opinion, one of the primary reasons people invest in tomorrow, rather than today, is simply because they think they cannot find or afford an investment that pays them today. As a result, they often become believers in tomorrow. These are the people who often fall prey to financial predators selling dreams of the future.
As my rich dad said, "An investment needs to make money today and tomorrow."
Why the Rich Get Richer
by Robert Kiyosaki
Tuesday, December 13, 2005
Words have the power to make you rich -- or keep you poor. For example, you have to know the difference between an "asset" and a "liability." An asset is something that puts money in your pocket, and a liability takes money from it.
Take your house, for example.
"Our house is an asset," my poor dad would say.
But, my rich dad saw things differently. "Your house is not an asset, but a liability," he said.
You see, even though my poor dad thought of his house as an asset, the fact is that every month it took money from his pocket via mortgage payments, utilities, and upkeep.
Now my rich dad owned several houses. But instead of depleting his wallet, those homes were rented out. They generated enough income to cover his expenses -- with money left over. That's a true asset.
Now or Later?
In addition to "asset" and "liability," there are two other very important concepts you need to understand: "Cash flow" and "capital gains."
One of the reasons I was able to retire at age 47, and my wife, Kim, at 37, was simply because we had enough cash flow coming in (primarily from our real estate investments). It wasn't much -- about $10,000 a month -- but we only had about $3,000 in monthly expenses. That left us with $7,000 a month to do with as we pleased.
On the other hand, capital gains are when you buy a stock for a dollar, and it goes up to $10 so you make $9 a share. Or, you buy a house for $100,000, and it appreciates to $150,000. You sell it and make $50,000.
One of the reasons people do not become financially free is because most of them are focusing on capital gains rather than cash flow. Chasing capital gains alone is gambling -- not investing. Want proof? You don't have to go back very far to find it: Between 2000 and 2003, millions of investors lost trillions of dollars in the stock market.
"When you invest for cash flow," my rich dad said, "you're investing in a money-back guarantee. If you invest for capital gains, you invest in hope. The biggest thief of all is hope."
Most retirement plans are based on hope and promises stretched over many years. That makes very little sense to me, yet it seems to make a lot of sense to the millions of investors who are hoping the money they expect will be there at age 65.
There's nothing wrong with capital gains. I would like my properties and stocks to go up in value, but I don't play this game that much. My primary focus, like that of most successful investors, is cash flow -- not capital gains.
Powerful Combo
The key to financial intelligence is how to use both cash flow and capital gains to grow wealthy. So many people are not successful, because they're generally focusing on only one of the two. The majority is focusing on capital gains.
In my opinion, one of the primary reasons people invest in tomorrow, rather than today, is simply because they think they cannot find or afford an investment that pays them today. As a result, they often become believers in tomorrow. These are the people who often fall prey to financial predators selling dreams of the future.
As my rich dad said, "An investment needs to make money today and tomorrow."
Wednesday, December 07, 2005
The Science of One Stock Picker
I am the scientist and have lost my science!
As surprising as it might seem, this is the best it has happen since the evolution of the internet, scientists losing their science to the global community of services is such wonderful event, specially for living room amateurs like myself.
As individuals, in our living rooms, making a buck trading (or applying the law of the next sucker) we were comfronted with the constant threat of the asymetric knowledge and these are serious disavantages. The asymetric knowledge is build on the system of monpolized superior information by corporate greed supporters.
In fact, today many large trading corporations follow the moves of some of the larger systems of trading. The purpose of teh effort is to cannibalize on those opportunites. Watch out! If you are using trading method that is well advertized all over, and you have a hard time getting the promised results, you better be aware that some big boys are in it for the take, and your money is their play ground. You are their take.
As we continue this infatuation with risk by privatizing all support systems for our future, the stock market is the easiest way to gamble pensions and other assets. Thus, the need to learn some of the statistical help one can get for gambling in Wall Street with your money.
The kind of gambling that occurs with equities is more dangerous than playing Texas hold-en. When you engage Wall Street in your game, you are engaging the souless people in this planet willing to do anything to take your money and use any method force any law to accomplished. You will hear more stories of grandiosity than of terror, the fact of the matter is that equity trading has a ratio of 20 stories of deception for one of affection. The reason you hear the affection stories is becuase the people who get caught in the losing end are usually "small people" as Leona Hemsley put it and we are insignificant for the news, becuase we lose a little at the time, but when the winner of South Street call it, the win is or gargantuan proportions. As an example this year the average bonus for a middle to top management employee in the firms of Wall street is going to celebrate Santa with a check of two million plus. Do you hear well, two million for X-mas in bonus at an average, or playing with OPM. Well this guys are also the big spenders in lobbyst against minimum wage and secure pensions for the rest of us.
Let's put this out of the way and to the meat of the post.
If you plan to gamble some money in stocks, you must follow a few fellows tactitians who have done well with a few formulas. The first idea is: No all stocks react similarly to all markets conditions, thus some stocks are profitable using specific indicators to buy and take profits(sell). By using RSI 14 (.75-.25) for long an short entries some stocks demostrate excellent behavior others are just dogs, stay alert and narrow your winners to their most profitable and reliable mathematical behavior. Second some very bright guys have follow consistent methods and they have the accumulation of returns on their bank, my favorites screens are: Martin Zweig on value and growth, next is the neofacist O'Neill growth, then in "dull" markets like the present stagnant situation, Graham value and enterprising is the one method to follow. The difficulty here is to select the top winners of the three selection methods. This is where the science begins.
You can use the resources of msn.com screener or my favorite aaii.com. I also use Schwab screens as additonal tool. After I have a list I screen every single stock using investors.com ratings. But my final decision is to intuitively base my picks on going forward strength based on their fundamentals and people who manage the company.
Monday, December 05, 2005
Losing The Benefit of the Doubt
Every honorable person has the right to be believed honorable and trust-worthy of telling the truth. Every community gains the same right and every country is granted this gracious courtesy of diplomacy. Many people choose to lose their right to honor, and communities follow them and countries cave to powerful interests.
While fighting the corporate abuse predators and robber barons kings of their monopolies something back fired to this arrogant stance, residents of the North American colonies rebelled against corporate greed. Strong minded individuals and small business owners perceived and they were right to support their business, realized of the serious threat that the “Company” will do to them and took it to the streets. After incredible amounts of blood won the hard fought battle. The soldiers were send to fight the so called rebels, corporations always use the power of the military to fight rebels, and ended up realizing who they were supporting in many cases deserting. Armies in most cases succeed in suppressing the freedom fighters.
Today, we must be alert and recognized the fact of the power of corporations to kill for profit and they are unapologetic about using all citizen assets; from the rubber war of Viet Nan to the oil war of Iraq, stopping in the diamond war of Angola and the water war of Palestine and Israel.
There is not question power has corrupted individual and most importantly people’s leaders. The present motto of honor has truncate it into “if we do not get caught in the deception, then we are supreme.”
This not a new event or logic to justify dishonorable actions.
Such justifications come from a retired intelligence services people and other retired military individuals since Mesopotamia generals raid the land of Egypt and used methods that will seem incredible familiar today, six thousand years later the Roman leaders took great leaps and created the utmost despicable machine of people’s deception, and today we continue to be served with such tricks every single minute thanks to the communications advances.
Today, it is easy to see this logic in Fox News political and military commentators. Such candor expressed is a display to justify the insertions of bought “ true news” in Iraqi newspapers, the operation of secret jails and torture while denying they exist, black face killings under the idea of target killings, or the sophisticated wording of civilian “collateral damage” by American operators abroad. The tendency is justify every single item as do good. But in fact not all those justifications are seen equally and they are not a healthy way so show people the real good that can be developed with good will and
honesty. The distortions are a daily event, but reason must raise and fight to prevail, or redemption will not come easy.
Such unhealthy contentions to support deception are asserted as “the fact that we do all this unpleasant stuff is not important, the bad part if that we get caught,” a so called expert, continued saying on Fox News “secret operations are not for the faint of heart, many things we do they might seem bad and in fact they are bad, but you cannot get caught” his connotation was clear, doing bad things are a fact of secret operations, that’s why they need to be secret or people will revolt, we need to perfect how we do those bad things and do not get caught.
There is a clear popular stance that doing “what it takes” it is an acceptable position and procedures for most people do not need to be revealed, this acceptance ranges from enforcing illegal operations under the fancy name of “extraordinary renditions“ to the outright drug dealing with dictators, or support for corporations that break every single international law.
When such attitude starts to cross boundaries of human acceptance, it must be understood that without much warning this unhealthy behavior starts to cross dangerous borders of arrogance.
To arrive to such state of arrogance requires a blunt desire to disregard all common sense rules of decent behavior.
There is an evolving and growing displeasure with the acknowledgement that the American government due to actions that are unacceptable, even for the most fanatic supporter. It is becoming “too much.”
This is nothing new among leadership, some roman emperors were the creators of present populace manipulation, master popular manipulation to the extend of self-destruction, and we might be witnessing it if we do not start to recant some of the present accepted social behaviors instilled by leaders.
Friday, December 02, 2005
Business As Usual: Corrupt
Below is an wonderful article about our present American reality.
Kisnley is a wonderfull human being a witty writer and thoughful American. On its article one can read the underling malasie we are getting too use to accept as matter of fact.
When you lose the benefit to be doubted, as is happening today to American leaders, it is an indication your ways are so corrupt. Today, the most capable negotiatior representing Amrican interests encounters resistance for teh most simplest negotiation. Therefore, it is an indication of your ways been tremendously corrupt and becomes too late for redemption. This is the earth grounded reality that many good-doers are encoutering around the planet, under the burden of qualifications the present American admistration.
A very sad and radical and poor image driven by fanatism and uncontrolled absolutism under the flag of nationalism. You cannot find common ground when you fight your adversary, fighting brings never ending revenge, there is not pace in fighting.
Business As Usual: Corrupt
By Michael Kinsley
Friday, December 2, 2005; A23
It used to be said that the moral arc of a Washington career could be divided into four parts: idealism, pragmatism, ambition and corruption. You arrive with a passion for a cause, determined to challenge the system. Then you learn to work for your cause within the system. Then rising in the system becomes your cause. Then, finally, you exploit the system -- your connections in it, and your understanding of it -- for personal profit.
And it remains true, sort of, but faster. Even the appalling Jack Abramoff had ideals at one point. But he took a shortcut straight to corruption. On the other hand, you can now trace the traditional moral arc in the life of conservative-dominated Washington itself, which began with Ronald Reagan's inauguration and marks its 25th anniversary in January. Reagan and Co. arrived to tear down the government and make Washington irrelevant. Now the airport and a giant warehouse of bureaucrats are named after him.
By the 20th anniversary of their arrival, when an intellectually corrupt Supreme Court ruling gave them complete control of the government at last, the conservatives had lost any stomach for tearing it down. George W. Bush's "compassionate conservatism" was more like an apology than an ideology. Meanwhile, Tom DeLay -- the real boss in Congress -- openly warned K Street that unless all the choice lobbying jobs went to Republicans, lobbyists could not expect to have any influence with the Republican Congress. This warning would be meaningless, of course, unless the opposite was also true: If you hire Republican lobbyists, you and they will have influence over Congress. And darned if DeLay didn't turn out to be exactly right about this.
No prominent Republican upbraided DeLay for his open invitation to bribery. And bribery is what it is: not just campaign contributions but the promise of personal enrichment for politicians and political aides who play ball for a few years before cashing in.
When Rep. Randy "Duke" Cunningham pleaded guilty this week to accepting a comic cornucopia of baubles, plus some cash, from defense contractors, the vast right-wing conspiracy acted with impressive speed and forcefulness to expel one of its most doggedly loyal loudmouths and pack him off to a long jail term. Even Bush, whose affable capacity for understanding and forgiveness on the personal level is one of his admirable qualities, seized an unnecessary opportunity to wish the blackguard ill. There was no talk of "sadness" -- the usual formula for expressing sympathy without excusing guilt.
This astringent response would be more impressive if the basic facts about Cunningham's corruption hadn't been widely known for months. The San Diego Union-Tribune reported in June that a company seeking business from the Pentagon had bought Cunningham's Southern California house from him, held it unoccupied briefly and sold it -- in the hottest real estate market in human history -- for a $700,000 loss. You didn't need to know that Duke's haul included two antique commodes to smell the stench. Yet all the Republican voices now saying that Cunningham deserves his punishment were silent until he clearly and unavoidably was going to get it.
Like medieval scholastics counting the angels on the head of a pin, Justice Department lawyers are struggling with the question of when favors to and from a member of Congress or a congressional aide take on the metaphysical quality of a corrupt bribe. The brazenness of the DeLay-Abramoff circle has caused prosecutors to look past traditional distinctions, such as that between campaign contributions and cash or other favors to a politician personally. Or the distinction between doing what a lobbyist wants after he has taken you to Scotland to play golf and promising to do what he wants before he takes you to Scotland to play golf.
These distinctions don't really touch on what's corrupt here, which is simply the ability of money to give some people more influence than others over the course of a democracy where, civically if not economically, we are all supposed to be equal. So where do you draw the line between harmless favors and corrupt bribery?
It's not an easy question if you're talking about sending people to prison. But it's a very easy question if you're just talking: The answer is that it's all corrupt bribery. People and companies hire lobbyists because it works. Lobbyists get the big bucks because their efforts earn or save clients even bigger bucks in their dealings with the government. Members of Congress are among the world's greatest bargains: What is a couple of commodes compared with $163 million worth of Pentagon contracts?
Perhaps conceding more than he intended, former Democratic senator John Breaux, now on K Street, told the New York Times that a member of Congress will be swayed more by 2,000 letters from constituents on some issue than by anything a lobbyist can offer. I guess if it's a lobbyist vs. 1,900 constituents, it's too bad for the constituents. That seems fair.
kinsleym@washpost.com
Kisnley is a wonderfull human being a witty writer and thoughful American. On its article one can read the underling malasie we are getting too use to accept as matter of fact.
When you lose the benefit to be doubted, as is happening today to American leaders, it is an indication your ways are so corrupt. Today, the most capable negotiatior representing Amrican interests encounters resistance for teh most simplest negotiation. Therefore, it is an indication of your ways been tremendously corrupt and becomes too late for redemption. This is the earth grounded reality that many good-doers are encoutering around the planet, under the burden of qualifications the present American admistration.
A very sad and radical and poor image driven by fanatism and uncontrolled absolutism under the flag of nationalism. You cannot find common ground when you fight your adversary, fighting brings never ending revenge, there is not pace in fighting.
Business As Usual: Corrupt
By Michael Kinsley
Friday, December 2, 2005; A23
It used to be said that the moral arc of a Washington career could be divided into four parts: idealism, pragmatism, ambition and corruption. You arrive with a passion for a cause, determined to challenge the system. Then you learn to work for your cause within the system. Then rising in the system becomes your cause. Then, finally, you exploit the system -- your connections in it, and your understanding of it -- for personal profit.
And it remains true, sort of, but faster. Even the appalling Jack Abramoff had ideals at one point. But he took a shortcut straight to corruption. On the other hand, you can now trace the traditional moral arc in the life of conservative-dominated Washington itself, which began with Ronald Reagan's inauguration and marks its 25th anniversary in January. Reagan and Co. arrived to tear down the government and make Washington irrelevant. Now the airport and a giant warehouse of bureaucrats are named after him.
By the 20th anniversary of their arrival, when an intellectually corrupt Supreme Court ruling gave them complete control of the government at last, the conservatives had lost any stomach for tearing it down. George W. Bush's "compassionate conservatism" was more like an apology than an ideology. Meanwhile, Tom DeLay -- the real boss in Congress -- openly warned K Street that unless all the choice lobbying jobs went to Republicans, lobbyists could not expect to have any influence with the Republican Congress. This warning would be meaningless, of course, unless the opposite was also true: If you hire Republican lobbyists, you and they will have influence over Congress. And darned if DeLay didn't turn out to be exactly right about this.
No prominent Republican upbraided DeLay for his open invitation to bribery. And bribery is what it is: not just campaign contributions but the promise of personal enrichment for politicians and political aides who play ball for a few years before cashing in.
When Rep. Randy "Duke" Cunningham pleaded guilty this week to accepting a comic cornucopia of baubles, plus some cash, from defense contractors, the vast right-wing conspiracy acted with impressive speed and forcefulness to expel one of its most doggedly loyal loudmouths and pack him off to a long jail term. Even Bush, whose affable capacity for understanding and forgiveness on the personal level is one of his admirable qualities, seized an unnecessary opportunity to wish the blackguard ill. There was no talk of "sadness" -- the usual formula for expressing sympathy without excusing guilt.
This astringent response would be more impressive if the basic facts about Cunningham's corruption hadn't been widely known for months. The San Diego Union-Tribune reported in June that a company seeking business from the Pentagon had bought Cunningham's Southern California house from him, held it unoccupied briefly and sold it -- in the hottest real estate market in human history -- for a $700,000 loss. You didn't need to know that Duke's haul included two antique commodes to smell the stench. Yet all the Republican voices now saying that Cunningham deserves his punishment were silent until he clearly and unavoidably was going to get it.
Like medieval scholastics counting the angels on the head of a pin, Justice Department lawyers are struggling with the question of when favors to and from a member of Congress or a congressional aide take on the metaphysical quality of a corrupt bribe. The brazenness of the DeLay-Abramoff circle has caused prosecutors to look past traditional distinctions, such as that between campaign contributions and cash or other favors to a politician personally. Or the distinction between doing what a lobbyist wants after he has taken you to Scotland to play golf and promising to do what he wants before he takes you to Scotland to play golf.
These distinctions don't really touch on what's corrupt here, which is simply the ability of money to give some people more influence than others over the course of a democracy where, civically if not economically, we are all supposed to be equal. So where do you draw the line between harmless favors and corrupt bribery?
It's not an easy question if you're talking about sending people to prison. But it's a very easy question if you're just talking: The answer is that it's all corrupt bribery. People and companies hire lobbyists because it works. Lobbyists get the big bucks because their efforts earn or save clients even bigger bucks in their dealings with the government. Members of Congress are among the world's greatest bargains: What is a couple of commodes compared with $163 million worth of Pentagon contracts?
Perhaps conceding more than he intended, former Democratic senator John Breaux, now on K Street, told the New York Times that a member of Congress will be swayed more by 2,000 letters from constituents on some issue than by anything a lobbyist can offer. I guess if it's a lobbyist vs. 1,900 constituents, it's too bad for the constituents. That seems fair.
kinsleym@washpost.com
Monday, November 21, 2005
The real outrage: pensions, not petrol
Another great piece in the subject of wealth and pensions by William Fleckenstein and a good follow up to the prior one by Bob Kiyosaki.
If you have not read Robert Kiyosaki books, I will suggest you read every single one, they are very helpful and they illustrate the need for awareness on the value of accumulating wealth.
My personal interest on pensions has to do with my believe and personal views about the value of community and the social structure of a community as support system for evolution.
I am seriously concerned about what I see in people's attitudes in non-challange way to neglect the weakest. This is accomplished by the use of fallacies and religion as tool to supress teh inmorality of their actions with weekly cleanings of their wrong doings. The justification are insane, in fact it is totally contradictory to what the preach, this arrogant stance has consequences. We all deserve the punishement for this outirght darwinian behavior. We are allowing to continue to thrive rapantly and unchecked.
It will not take much imagination to see all the present corruption that surround us from government elected officials to thier cronies in a rush to pilfer anything at the reach of their hands.
All this greed running amok is not sustainble. The present situation is arrogant and outright acceptable about stealing from any vulnerable person or institution.
***
The real outrage: pensions, not petrol
Forget all the hoopla about oil price gouging; markets set oil prices. For real cases of rich execs cheating real people, study what they're doing to corporate pension plans.
By Bill Fleckenstein
Outrage is an emotion that's always intense -- but not always justified. This week's column will take a look at both kinds, as it swings from the oil patch to the pension-accounting arena. First off, a rant on the lunacy surrounding the fact that oil companies are making money.
The weather vanes in the Senate have held hearings about oil-company price manipulation. There has also been plenty of incoherent chatter about price gouging, much of it coming from TV talking heads who ought to know better.
To begin with, the price of oil is set in the marketplace. The Russians, Canadians, Mexicans and OPEC generically have a hell of a lot more to say about the price of oil than do our domestic oil companies.Start investing with $100.
Explore our
new ETF center.
The price of oil is up thanks to money-printing by the Fed and every other central bank, which has triggered the global boom that everyone seems to love. People drive Hummers and other urban-assault vehicles, yet they expect the oil companies not to make money, as though they were charitable institutions?
'Home'-free from scrutiny?
Amidst the talk of taxing the oil companies on windfall profits, why isn't there a windfall-profits tax on the home builders? Why aren't there any hearings about price gouging in real estate? How come nobody complains about the price of bottled water being as expensive as it is? Because they don't see water companies making a whole bunch of money?
And how come the public never complained about Microsoft's (MSFT, news, msgs) price-gouging practices, as it had monopoly status in operating systems? Or when Intel (INTC, news, msgs) was the only game in town and able to charge whatever it felt like charging? Microsoft (publisher of this Web site) and Intel are the reason why PC prices aren't 50% lower than they are. The public didn't complain about that. Why? Because they were giddy about making money speculating in their shares.
Greed and broken promises
If the Senate and TV commentators want to be outraged, why not look into the real abuses occurring in the somewhat obscure pension-accounting arena? It essentially impacts only a few dozen large corporations, but it affects hundreds of thousands of lives.
What prompts this discussion: three well-written articles in last week's New York Times and Wall Street Journal that point out:
The potential problems for the folks counting on the past promises of these corporations.
How the corporate chieftains running them can jigger their pension assumptions to make their companies' earnings look good.
Of course, the two groups don't have their interests aligned. Those running the show have an entirely different agenda -- to boost the stock they hold options on, and probably their bonuses -- even if it puts all these hundreds of thousands of people at risk. It's a classic case of greed and broken promises.
The inflate-the-rate elixir
Probably the best primer on how the "math" works was "Pension Inquiry Shines Spotlight on Assumptions," an article in the Nov. 9 Wall Street Journal. It led off with General Motors (GM, news, msgs) because the SEC is now looking into the assumptions used in its pension accounting.
The article pointed out that there are two ways to make your results look better. One is to pick a high "assumed rate," which is the rate of return you expect your pension assets will yield. (Until 2002, GM had assumed 10% and has recently taken it down to 9%.) The second way is to manipulate the discount rate used to put a value on your future liabilities. The higher the rate you use, the lower the present value of that future liability looks and the more stable you appear.
The discount rate GM uses is 5.75%, down from 7.8% in 1999. A 25-basis-point (0.25 percentage point) change in the discount rate would impact its pension liabilities by $160 million. Similarly, a 25-basis-point change in the expected rate of return would affect GM's obligations by $220 million.
An example of how that was used to the benefit of corporations -- and to the detriment of workers -- was noted in "Pension Accounting Rule, Sometimes Murky, Is Under Pressure," a Nov. 8 New York Times article: "In 2004, for instance, Lucent Technologies (LU, news, msgs) said it earned $1.2 billion from operations. But $1.1 billion of that actually resulted from pension calculations." As you can see, moving these numbers around can change your results quite dramatically.
No-can-do candor
The New York Times article passed along another nugget to show the size of the potential discrepancy: "Last summer, the Securities and Exchange Commission said that it had studied a sample group of companies and found that they had told their shareholders they had an aggregate surplus of $91 billion in their pension funds, when a more honest accounting would have shown an aggregate deficit of $86 billion." (The emphasis is mine.)
Now, I don't know exactly what the words "more honest" mean. Nor do I know how real-world those calculations might be, as the numbers could be better or worse. If I had to guess, they would be worse, but, in any case, the size of the discrepancy is already quite large.
IBM (IBM, news, msgs) was a serial abuser of those same variables. The Times story noted that the company's reported earnings for 1999 to 2003 would have been reduced from $36 billion to $21 billion, "once the pension effect was removed." The article also pointed out that by putting more money in riskier assets, the plan sponsors can thereby justify higher assumed rates of return, thereby making the current levels of funding look better, thereby raising earnings and helping the bosses' narrow self-interests.
In the end, these strategies almost certainly place all the people in the plan at greater risk. But by then, the executives will be long gone -- and living large on the money they "earned" while pulling these levers.
Pension cop tails GM
When the chickens come home to roost, companies wind up (if things get bad enough) at the door of the Pension Benefit Guaranty Corp. According to another article in the Nov. 9 Wall Street Journal, titled "Pension Agency Casts Shadow on GM Sale," the PBGC, which partly guarantees defined-benefit pension plans, is concerned that the automaker's plans are underfunded to the tune of $31 billion, as opposed to being fully funded, as GM asserts.
The PBGC calculations don't even vary any of the overly optimistic assumptions I've already discussed. The agency arrives at its determination by assuming that GM's plans are terminated today instead of on some future date.
Grubby paws vs. pensioners' cause
The actions by the PBGC may cause headaches for Kirk Kerkorian, the investor who's been assembling a large stake in GM. As the Journal article noted: While GM is hoping to raise $11 billion to $15 billion by peeling off a stake in its consumer-finance arm, the agency may force the company to put some of the proceeds into the pension plan. That's probably something Kerkorian and other GM bulls hadn't counted on, as the stock is now lower than it was before he first showed up back in May.
To repeat, these problems only pertain to certain companies. But they do turn out to matter to plenty of people. This example of greed and broken promises is the type of behavior that gives capitalism a black eye.
Bill Fleckenstein is president of Fleckenstein Capital, which manages a hedge fund based in Seattle. He also writes a daily Market Rap column on his Fleckenstein Capital Web site
If you have not read Robert Kiyosaki books, I will suggest you read every single one, they are very helpful and they illustrate the need for awareness on the value of accumulating wealth.
My personal interest on pensions has to do with my believe and personal views about the value of community and the social structure of a community as support system for evolution.
I am seriously concerned about what I see in people's attitudes in non-challange way to neglect the weakest. This is accomplished by the use of fallacies and religion as tool to supress teh inmorality of their actions with weekly cleanings of their wrong doings. The justification are insane, in fact it is totally contradictory to what the preach, this arrogant stance has consequences. We all deserve the punishement for this outirght darwinian behavior. We are allowing to continue to thrive rapantly and unchecked.
It will not take much imagination to see all the present corruption that surround us from government elected officials to thier cronies in a rush to pilfer anything at the reach of their hands.
All this greed running amok is not sustainble. The present situation is arrogant and outright acceptable about stealing from any vulnerable person or institution.
***
The real outrage: pensions, not petrol
Forget all the hoopla about oil price gouging; markets set oil prices. For real cases of rich execs cheating real people, study what they're doing to corporate pension plans.
By Bill Fleckenstein
Outrage is an emotion that's always intense -- but not always justified. This week's column will take a look at both kinds, as it swings from the oil patch to the pension-accounting arena. First off, a rant on the lunacy surrounding the fact that oil companies are making money.
The weather vanes in the Senate have held hearings about oil-company price manipulation. There has also been plenty of incoherent chatter about price gouging, much of it coming from TV talking heads who ought to know better.
To begin with, the price of oil is set in the marketplace. The Russians, Canadians, Mexicans and OPEC generically have a hell of a lot more to say about the price of oil than do our domestic oil companies.Start investing with $100.
Explore our
new ETF center.
The price of oil is up thanks to money-printing by the Fed and every other central bank, which has triggered the global boom that everyone seems to love. People drive Hummers and other urban-assault vehicles, yet they expect the oil companies not to make money, as though they were charitable institutions?
'Home'-free from scrutiny?
Amidst the talk of taxing the oil companies on windfall profits, why isn't there a windfall-profits tax on the home builders? Why aren't there any hearings about price gouging in real estate? How come nobody complains about the price of bottled water being as expensive as it is? Because they don't see water companies making a whole bunch of money?
And how come the public never complained about Microsoft's (MSFT, news, msgs) price-gouging practices, as it had monopoly status in operating systems? Or when Intel (INTC, news, msgs) was the only game in town and able to charge whatever it felt like charging? Microsoft (publisher of this Web site) and Intel are the reason why PC prices aren't 50% lower than they are. The public didn't complain about that. Why? Because they were giddy about making money speculating in their shares.
Greed and broken promises
If the Senate and TV commentators want to be outraged, why not look into the real abuses occurring in the somewhat obscure pension-accounting arena? It essentially impacts only a few dozen large corporations, but it affects hundreds of thousands of lives.
What prompts this discussion: three well-written articles in last week's New York Times and Wall Street Journal that point out:
The potential problems for the folks counting on the past promises of these corporations.
How the corporate chieftains running them can jigger their pension assumptions to make their companies' earnings look good.
Of course, the two groups don't have their interests aligned. Those running the show have an entirely different agenda -- to boost the stock they hold options on, and probably their bonuses -- even if it puts all these hundreds of thousands of people at risk. It's a classic case of greed and broken promises.
The inflate-the-rate elixir
Probably the best primer on how the "math" works was "Pension Inquiry Shines Spotlight on Assumptions," an article in the Nov. 9 Wall Street Journal. It led off with General Motors (GM, news, msgs) because the SEC is now looking into the assumptions used in its pension accounting.
The article pointed out that there are two ways to make your results look better. One is to pick a high "assumed rate," which is the rate of return you expect your pension assets will yield. (Until 2002, GM had assumed 10% and has recently taken it down to 9%.) The second way is to manipulate the discount rate used to put a value on your future liabilities. The higher the rate you use, the lower the present value of that future liability looks and the more stable you appear.
The discount rate GM uses is 5.75%, down from 7.8% in 1999. A 25-basis-point (0.25 percentage point) change in the discount rate would impact its pension liabilities by $160 million. Similarly, a 25-basis-point change in the expected rate of return would affect GM's obligations by $220 million.
An example of how that was used to the benefit of corporations -- and to the detriment of workers -- was noted in "Pension Accounting Rule, Sometimes Murky, Is Under Pressure," a Nov. 8 New York Times article: "In 2004, for instance, Lucent Technologies (LU, news, msgs) said it earned $1.2 billion from operations. But $1.1 billion of that actually resulted from pension calculations." As you can see, moving these numbers around can change your results quite dramatically.
No-can-do candor
The New York Times article passed along another nugget to show the size of the potential discrepancy: "Last summer, the Securities and Exchange Commission said that it had studied a sample group of companies and found that they had told their shareholders they had an aggregate surplus of $91 billion in their pension funds, when a more honest accounting would have shown an aggregate deficit of $86 billion." (The emphasis is mine.)
Now, I don't know exactly what the words "more honest" mean. Nor do I know how real-world those calculations might be, as the numbers could be better or worse. If I had to guess, they would be worse, but, in any case, the size of the discrepancy is already quite large.
IBM (IBM, news, msgs) was a serial abuser of those same variables. The Times story noted that the company's reported earnings for 1999 to 2003 would have been reduced from $36 billion to $21 billion, "once the pension effect was removed." The article also pointed out that by putting more money in riskier assets, the plan sponsors can thereby justify higher assumed rates of return, thereby making the current levels of funding look better, thereby raising earnings and helping the bosses' narrow self-interests.
In the end, these strategies almost certainly place all the people in the plan at greater risk. But by then, the executives will be long gone -- and living large on the money they "earned" while pulling these levers.
Pension cop tails GM
When the chickens come home to roost, companies wind up (if things get bad enough) at the door of the Pension Benefit Guaranty Corp. According to another article in the Nov. 9 Wall Street Journal, titled "Pension Agency Casts Shadow on GM Sale," the PBGC, which partly guarantees defined-benefit pension plans, is concerned that the automaker's plans are underfunded to the tune of $31 billion, as opposed to being fully funded, as GM asserts.
The PBGC calculations don't even vary any of the overly optimistic assumptions I've already discussed. The agency arrives at its determination by assuming that GM's plans are terminated today instead of on some future date.
Grubby paws vs. pensioners' cause
The actions by the PBGC may cause headaches for Kirk Kerkorian, the investor who's been assembling a large stake in GM. As the Journal article noted: While GM is hoping to raise $11 billion to $15 billion by peeling off a stake in its consumer-finance arm, the agency may force the company to put some of the proceeds into the pension plan. That's probably something Kerkorian and other GM bulls hadn't counted on, as the stock is now lower than it was before he first showed up back in May.
To repeat, these problems only pertain to certain companies. But they do turn out to matter to plenty of people. This example of greed and broken promises is the type of behavior that gives capitalism a black eye.
Bill Fleckenstein is president of Fleckenstein Capital, which manages a hedge fund based in Seattle. He also writes a daily Market Rap column on his Fleckenstein Capital Web site
Friday, November 18, 2005
Why the Rich Get Richer
I found this article by Roberth Kiyosaki to be a good copilation of knowledge on retirement. Each person should add some present knowledge of the situation of many presetn retirees, with that at hand, most people should have clear picture of what to expect in their late days on life.
Why the Rich Get Richer
by Robert Kiyosaki
So Long Pensions, Hello Fees
by Robert KiyosakiUtility Links
Tuesday, November 15, 2005
From 1945 to 1974, the Western World -- including America - was more socialistic than capitalistic, more pro-labor than pro-business. While that may sound surprising, when taken in context it makes perfect sense.
World War II had just been won and the Great Depression was still fresh in most Americans' minds. Having lived through these challenging times, Americans wanted a more benevolent, worker-friendly government. And they weren't alone. In England, Winston Churchill lost the 1945 election -- even though he was a war hero -- primarily because the English people wanted a pro-labor government, not a pro-capitalist government. Back in the U.S., President Franklin Delano Roosevelt's pro-worker policies were already in place, including the New Deal and Social Security.
This trend began to shift in 1974 with the passage of the Employee Retirement Income Security Act (ERISA). Under ERISA, companies were allowed to switch from defined benefit plans to defined contribution plans. Simply put, the primary responsibility -- as well as the expense and long-term consequences of retirement -- passed from the employer to the employee. As a result, pension plans gave way to self-managed plans like the 401(k) and Roth IRA.
Retirement Investor, Meet Wall Street
One might think that employers were the biggest beneficiaries of the changes ERISA put in motion over three decades ago, but I'd argue that biggest beneficiary was actually Wall Street.
Let me explain.
When I buy a piece of real estate, I may pay a 6 percent commission once. Even though I make money every month for years from my investment, I still only pay my real estate broker once. If I sell, I may or may not have to pay a commission. The choice is mine.
Yet when I invest in mutual funds (the vehicle of choice for most retirement plans), I very often pay a commission, or "management fee," every month -- even if I lose money.
Now I'm not against paying fees or commissions -- as long as I'm making money. But I do have a problem paying commissions or fees every month for bad advice. And most mutual fund advice has been bad, especially since March of 2000.
The Feeling Isn't Mutual
In his book "Unconventional Success," Yale University Chief Investment Officer David Swensen writes, "Sales charges from buying funds and tax burdens from churning funds combine to reduce already poor investor returns. Owners of actively managed mutual funds almost invariably lose." He goes on to say, "Other factors -- unethical kickbacks and indefensible distribution practices -- remain generally hidden from view."
Swensen also quotes a 20-year study which examined mutual fund returns over two decades ending in 1998. The study shows that over two decades mutual funds had miserable returns, an average shortfall of -2.1 percent when compared to the Vanguard 500 Index. And, the study ended in 1998 near the highs of the market!
In other words, most mutual fund managers cannot beat a mechanical method of investing, such as an index fund. But that doesn't stop them from regularly collecting "management fees."
In fact, says Swensen, the fees themselves are one reason many mutual fund managers don't manage to beat index funds. "A significant portion of the ... underperformance arises from the payment of management fees," he writes.
So if you're thinking about parking your retirement money in a mutual fund, be sure to ask about commissions and management fees. Or, even better, consider an index fund.
Why the Rich Get Richer
by Robert Kiyosaki
So Long Pensions, Hello Fees
by Robert KiyosakiUtility Links
Tuesday, November 15, 2005
From 1945 to 1974, the Western World -- including America - was more socialistic than capitalistic, more pro-labor than pro-business. While that may sound surprising, when taken in context it makes perfect sense.
World War II had just been won and the Great Depression was still fresh in most Americans' minds. Having lived through these challenging times, Americans wanted a more benevolent, worker-friendly government. And they weren't alone. In England, Winston Churchill lost the 1945 election -- even though he was a war hero -- primarily because the English people wanted a pro-labor government, not a pro-capitalist government. Back in the U.S., President Franklin Delano Roosevelt's pro-worker policies were already in place, including the New Deal and Social Security.
This trend began to shift in 1974 with the passage of the Employee Retirement Income Security Act (ERISA). Under ERISA, companies were allowed to switch from defined benefit plans to defined contribution plans. Simply put, the primary responsibility -- as well as the expense and long-term consequences of retirement -- passed from the employer to the employee. As a result, pension plans gave way to self-managed plans like the 401(k) and Roth IRA.
Retirement Investor, Meet Wall Street
One might think that employers were the biggest beneficiaries of the changes ERISA put in motion over three decades ago, but I'd argue that biggest beneficiary was actually Wall Street.
Let me explain.
When I buy a piece of real estate, I may pay a 6 percent commission once. Even though I make money every month for years from my investment, I still only pay my real estate broker once. If I sell, I may or may not have to pay a commission. The choice is mine.
Yet when I invest in mutual funds (the vehicle of choice for most retirement plans), I very often pay a commission, or "management fee," every month -- even if I lose money.
Now I'm not against paying fees or commissions -- as long as I'm making money. But I do have a problem paying commissions or fees every month for bad advice. And most mutual fund advice has been bad, especially since March of 2000.
The Feeling Isn't Mutual
In his book "Unconventional Success," Yale University Chief Investment Officer David Swensen writes, "Sales charges from buying funds and tax burdens from churning funds combine to reduce already poor investor returns. Owners of actively managed mutual funds almost invariably lose." He goes on to say, "Other factors -- unethical kickbacks and indefensible distribution practices -- remain generally hidden from view."
Swensen also quotes a 20-year study which examined mutual fund returns over two decades ending in 1998. The study shows that over two decades mutual funds had miserable returns, an average shortfall of -2.1 percent when compared to the Vanguard 500 Index. And, the study ended in 1998 near the highs of the market!
In other words, most mutual fund managers cannot beat a mechanical method of investing, such as an index fund. But that doesn't stop them from regularly collecting "management fees."
In fact, says Swensen, the fees themselves are one reason many mutual fund managers don't manage to beat index funds. "A significant portion of the ... underperformance arises from the payment of management fees," he writes.
So if you're thinking about parking your retirement money in a mutual fund, be sure to ask about commissions and management fees. Or, even better, consider an index fund.
Monday, November 07, 2005
Proverbs and Sayings Save Energy
One of the healthiest ways to live a healing life is in parallel with a series of well known advice from our ancestors. Via proverbs sage people have ruled in wise ways. Present economic implications have direct link to energy savings and those proverbs. A little change in our daily modus operandi following the sage advice of the past might prove to be an enriching experience.
A few classic old proverbs to prove my point:
“Rise with the sun and rest with the sun and your wealth will abound.” I will add here the obvious if there is no much need for electricity you will save a few bucks every day. Natural light will also provide the much need it vitamins for a good looking and healthy skin.
“Read to your soul to gain in your brain.” Well, and easy one here no more TV for a while, and pick one of the many greatest authors from your local library and enjoy the ride.
“Dress me slowly that I am in a rush, I need to walk far away.” This one came to me from my great-grandmother. In the process I learned physics and it proved her right. Walks farther and slower you will save in gasoline and keep better cholesterol levels. Clearly, we all need to walk farther and often, and we do not do so, if as a community decide that all we need must be in walking distance, we can revive our local economies, supporting local businesses and healthier lives. A very simple equation, it supports a better tomorrow.
If you find proverbs and sayings to be entertaining, find a book at your local library and enjoy!
Monday, October 31, 2005
Must Reads
Building pensions via savings or any other method after a person working live was understood as an advance. Today many people are in the path of 100 years ago: poverty at late age.
Many people are starting to suffer in poverty, and they thought it could happen to them. Any safety net gained over two generations is being reversed, the gains of your great-grand parents will be lost soon. I doubt that many will not support their genrational fight for a better future of their kin. But politicians andc corporate lobbyist continue to destroy the gains of the past 100 years.
The present question is:
Why American Leaders Are Neglecting 80% of the Citizens settings out the ground for proverty to be status quo? My answer is: apathy. Most Americans have become apathic and lost the meaning of solidaruty to other citizens except in extremenis. do we need to be destroyes to attrack attention?
The folloiwng web links will give you a sense of the present and I am sure it will send few chill in your spine. The upcoming future is not as bright as portrayed. You better be ready. Most likely you too will pay the price of the present elite and leaders policies in favor of coporatocracy.
READ:
http://www.time.com/time/archive/preview/0,10987,1122017,00.html
http://www.nytimes.com/2005/10/30/magazine/30pensions.html?ex=1131426000&en=86dedbed66b5ca34&ei=5070
Saturday, October 29, 2005
One and Two
One
In early 2002 when the drums of war were directed towards Iraq, many arguments were made today most proved wrong or decimated by comparable measures.
I usually provide the argument, when discussing of people deaths in concrete killing. Is the killing of people is about the quality or the quantity of the kill? Who are we to measure that Godly and tragic event?
There is a big difference in the approach one is quantitative the other is qualitative and both are related to humans actions and does not matter the perpetrator. It is not impossible to asses who is a good killer and who is a bad killer in the face of religion. The act is solid and carries no counter-argument.
We can take religions and as a simple example the self indulgence, in catholic law ten commandments is considered the supreme law. The rules were given to Moses to comply and pass along to its followers. In the most ancient text of these rules they have no caveats for human interpretation and was said not to be interpreted by humans or altered by humans. The rules in case of human interpretation, those rules will become unfit to be Godly. For centuries after the first document was accepted humans have found ways to unfit those rules by building caveats and convenient interpretations. I will challenge anyone who is familiar with the commandments to randomly choose three of them and write below them accepted interpretations. For Example: Thou should no kill.
Does any one who kills be a Christian no following of the laws of God?
Once we crossed the threshold of justifications, we bias the fact. Thus knowingly we manipulate by convenience the event of killing. This is a normal procedure of self-justification, convenient and self exculpatory. It is the old rhetoric at work. We will not find many incarcerated folks that will admit any wrong doing. We might not find many killers no finding a good justification for their action at the time of kill.
Being true to my own knowledge, I can assert a few things in my spiritual being, one is that I can support killing and also I can support no killing. But I will not fail in the hypocrite camp and call myself something I am not and support killing.
Two
When the drums were already aligned by Colin Powell in the UN and the attack in the land of Iraq was imminent I made the following commentary:
“ If the neo-cons are going to bring death, destruction, obliteration of towns with depleted uranium bombs, bring back home thousands of maimed young volunteers, they better plan for the best. This is the time to show the world that not only bombs are going to be dumped by the thousand and thousand will be killed because interests of corporations are superior to interest of humans, but we are also going to rebuild Iraq to become an example of intellectual power, superior economic standing, Towns that Iraqis will be in awe, schools and museums to envy its neighbors, have such superior capacity to make Iraqis proud of this invasion; that is going to put the fear of their own people into those dictators that are under the same spade of Damocles that Iraqis were under Saddam. The day after the fall of Baghdad and it will fall Baghdad, an edit calling for full employment of Iraqis via job centers, focused to build hosing for all Iraqis with local materials, using local know-how of craftsmanship teams all paid in dollars at 20% above prevalent salaries. This presently exist and most structures will survived
If we do not fail to neglected and engage ourselves in continued bombing. By making Iraq such example, the president should make a national call for volunteers to ask for two million people to go to Iraq and build the most unique process ever seen. Nothing less, will evolve into a long a possible self destructive and new form dictators looking for revenge under the wraps of the war, time will tell but the signs of the paths we take today will the judge in time. Time will judge us all and our actions.”
Today, I can say we have fought a war in the cheap, but still have time to correct some of the mistakes, and made proud on our actions. I do not see the will to accomplish it, we are too wrapped up in mediocrity, a simple adjective to define the present process: we are Walmartized.
Every day the cheapest product, with the cheapest labor, with the poorest quality.
Sunday, October 16, 2005
Give Me Five
A few days back I was cornered and begged to expose what are my top rules when dealing with money or its interactions. Is one of the present interactions considered to be the freedom that relates to money? In our present social structure it is. The better individuals understand the capacities that wealth accumulation provides the more active and wide open series of possibilities are available to experience.
I do not pretend to have wide global answers except my own and for myself. If you are stopping-by and have a few minutes; it will be gracious, if you would share your “secret” rules to manage your assets or how building assets have provide you with unique experiences.
Here are my latest basic behavioral actions:
1. Know how much you need, down to the dollar.
2. It isn't easy, so work at it.
3. Think in decades, not in years.
4. Buy one lottery ticket per month as a reminder of how easy it is to throw away money.
5. Find an investment strategy that produces positive results at twice the rate of inflation.
6. If you are going to work for money, save 50% of your earnings and treat your job like your own business. If you want to make even more money, start your own business.
7. Follow the John Tempelton rule: never spend over 16% of your income on renting shelter and never take a home mortgage exceeding 1/2 a year's income.
8. No money manager cares as much about your money as you do - learn how to manage your own money.
9. Accumulating wealth is not about money, it's about the freedom that wealth provides.
10. Stay focused on your plan.
Thanks for sharing your ideas.
Friday, September 30, 2005
Seven Lucky Questions:
1) If energy costs are at record highs and energy is costing you more than 40% than last year…..fast…….who is the Secretary of Energy? In other words, do you really care what are they doing to you energy bill?
2) Nearly 99% of locals taxes have increased in the past seven years, the excuse used by municipalities and the states are consistent with "federal taxes were re-allocated sending less to local coffers." If your local taxes increase but your federal taxes declined. Do you know if your total tax bill increased of declined or stayed the same?
3) Do you know how long and how much will cost the country to invest in terminating the dependence on foreign energy?
4) Do you know how much you and your kids owe every month to the Communist Government of China?
5) Do you know the US world ranking on children mortality rate?
6) We all know that we invented the modern internet “malgrais” Al Gore. Could you tell where the US global rank is on broadband deployment?
7) Could place in other of most corrupt to least country to do business of the following: Hong Kong, Canada, USA, Finland, Singapore
If you get the seven right:
Congratulations!!!!! You really know your place in this planet
If you get 4 to six right: I am very impress…..keep it up to get them all right next round.
If you get one to three right: You can do better you have interst but not enough
If you do not get any one right: Go Get a life and read a little more and not Harry Potter or Fox News talk shows....Seriously
Answers:
A) Samuel Bodman In case you decided he needs to hear from you, send him your thoughts @
http://www.whitehouse.gov/interactive/interact_1.html
B) A national review on taxes by the IRS asserts that most people had a tax increase of 11% in the past seven years as of Jan 2005. www.irs.gov
C) Experts and various universities lead by MIT have run models and believed that it will take less than 20 years to become totally independent of foreign energy and the cost will be null. Actually, it could create an average of $145 billion a year profits to Americans, and generate around five to seven million new jobs. All we need, it will be the re-allocation of expenditures and sweetheart tax breaks on the present federal budget.
If peolple demadn from their elected official a moon kind of project to be directed to the purpose of energy independence, the whole global economy will thrive as never seen before.
D) Each American is paying around $84 a month to the Chinese in the interest and principal.
The Communist Government of China is buying an average of $480 million dollars a month of American debt for the past fifteen years. www.fed.gov
Most of this debt is being incurr during the Bush 43 adminsitration.
E) The US ranks 42 below Cuba and other quality countries.
Based on the CIA fact book http://www.cia.gov/cia/publications/factbook/rankorder/2091rank.html
F) BROADBAND NATION?
http://www.foreignaffairs.org/20050501faessay84311/thomas-bleha/down-to-the-wire.html
In the first three years of the Bush administration, the United States dropped from 4th to 13th place in global rankings of broadband Internet usage. Today, most U.S. homes can access only "basic" broadband, among the slowest, most expensive, and least reliable in the developed world, and the United States has fallen even further behind in mobile-phone-based Internet access. The lag is arguably the result of the Bush administration's failure to make a priority of developing these networks. In fact, the United States is the only industrialized state without an explicit national policy for promoting broadband.
H) The answer is USA, Hong Kong, Canada, Singapore, Finland.
http://www.transparency.org/
Money, Money, Money, Moooooney
Forbes Magazine reported this month that the richest in this earth had grow their wealth by 10% last year alone. MSNBC reports that CEOs pay is at the highest ever, versus employees has lost ground at a rate of 1% year and pensions for mayor corporations are unfunded and the same managers of these pensions paid themselves handsomely to a ration of 4000 times their average employee salary. Forbes also reports, as an average, to make to the top 500 wealthiest in this our planet, a person needs to be near one thousand times millionaire. To put this in contest, the top 500 wealth accumulators have as a whole more than 99.5 % of all countries, they all bunched up and live in a single country they will be second to the US economy. All this, while poverty is at its highest ever in the number of people affected and wealth distribution is at its lowest. Laws continue to be enacted by the elite to continue their trip to who knows where.
That stated, let’s see if I can make some sense in talking money. Since I started to talk about oil a few years back and I did a kamikaze move by buying more than 60 % of my portfolio in natural gas and oil related Canadians trusts, I felt as I bought it all, last month I sold it all. My reason is simple, like always I sell early, and I follow the rule of the taxi driver.
When a taxi driver tells me it is time to get into anything in the stock market.
If I own what he is talking about, in this case oil, like I did, I will sell it, and if I do not own it I will stay at the sides and in a prudent way, short the commodity. So I am staying with a large cash position, until a clear pattern starts to develop. My first impression after one month in cash is that there is a repositioning of capital into large caps that are being hammered, and growth funds are also getting influx of money. I will suggest look for battered big caps with positive cash flows and growth of sales above average. As of yet, there is not a clear trend, but when allocations of funds start to take people in one direction, that trend becomes over a short period of one year or so the prevalent over priced area. The early the trend can be bought the easier is to capitalize on the price appreciation. We are too many darn people buying the same things so eventually the mass over weights rationality and we return to our mean value and senses. The theory of many says when many act in one direction the majority will follow the mean trend of that direction. When people vote with their dollars the argument is that because the size of the pool is so large the extension of the price paid at the transaction will eventually outpace the actual value. Some might say it is supply and demand, the problem is that, the supply can be altered in a matter of days and demand can become irrational in matter of years.
The other bubble people are talking about is real estate, it is well funded to some extend.
By the other hand it is the result of capital risk value. The risk involved in getting into investing in real estate is being compensated like other rational investment. Thus commanding comparable and fair market value returns.
At a macro level, the price of money drives the financing and pricing of housing, that is clear for all of us novices.
Plus, housing due to global migration and global investing is getting affected by global pricing of commodities and global flow of money.
As an example Manhattan market sales of top priced properties – two million or more dollars- are in pace to be above 50% for its fourth year purchased by foreign owners.
The rational behind is the simple item mentioned above: the cost of money.
The EU right now has interest rates far below the US, thus folks with access to capital can borrow at discount and their currency. The Euro has outpaced the dollar for the third year in the row to a revaluation of more than 40%. Thus, affecting the global capital market, top market buyers are attracted to the US, as a direct investment. In the debt area, because the interest rates are higher here and the majority of median priced houses are sold to the local market, the mortgage debt generated is been sold in the international market. A very sound strategy, that can back fired if not well timed.
Three years ago you could take $1 dollar and buy 1.35 of goods in the EU. Today, the reverse $1 occurs $1 dollar buys $0.85 cents of Euro and the cost of money is higher in the US than it is there, making a lot of sense to bring euros into dollars. Specially invest in bricks and mortar in our very mobile market. This is not limited to Europeans buying it is global reaction. Thousands of brokers are selling US houses or villas -how they are marketed in EU- to anchor US real estate sales.
Some market as Chief Alan said are overextended, this does not mean they will collapse. We should expect some decline or stagnation in pricing in those over priced areas, but do not expect bargain prices, and if for one reason occur they will not be that way for too long. The first of trouble will be to tabulate the number of listed properties at the HUD web site www.hud.gov. If the number of houses in the area you are interest starts to increase and the time of sales increases, there you have a declining market. With the national average sale at $216,000 per unit, as an investor you will do OK if you can start with that number and bring it down 20% to 30% and if sales occur at those levels, it is time to jump. Now, timing is of consequence, so do not rush into it, but do not overanalyze waiting for Godot.
Wednesday, September 21, 2005
A Better Alternative to Mediocrity
A Better Alternative to Mediocrity
I will not engage the dialogue by giving into a Straussian view of the need for deception to justify any mean to support the rationality of elitism. The funny thin is that most people feel that they are elite of something, when in reality elite means a total different status.
Thus, the need for a harder look to where are we going as a people and country.
We must start to learn to ask for better structures, from better roads to better food. We might get cheap import products. That does not mean progress, its present meaning is cheaper product with a below average quality, progress means a better product with improve quality at a cheaper price. We need to start to wake up before is too slate and start to demand better ways all around, and question every single thing and become specialist on asking for better management of the money we are taking away from and by government leaders a.k.a. politicians.
How we can demand a better investment of our efforts from the ruler politicians, I will start by suggesting the simplest way show at their offices and rest there your concerns, following up by showing up at meetings where decisions are being made to spend your money. You might choose to be apathetic and think that you do not have time for that. Around 40% of all your income, in your apathy, you are allowing it to be dispersed without your supervision. If you think you can trust politicians, think twice, they have proved untrustworthy except from the money they garner from your pockets.
Better than?
Let’s start by each individual. If you are satisfied with your medical care and medical prevention, then look no further.
If you are not satisfied, you must learn what others are doing this planet. This earth has 5 billion plus people, it means, we are a mere drop in the bucket and other developed countries must be doing something else, and if we believe the way we measure others, we rank below the 20th in care providing and far lower in healthy kid development, with a very low ranking in new birth survival, this is an indicator of how poor a society is acting upon its whole medical system.
If you are satisfied with the prospects of your education, look no further.
If you are not satisfied, and if you think that importing PhDs from abroad is the fountain of youth for the system, think twice. Brain-draining from other countries has evolved into brain loss at home. If we import people as we import cars, we continue to pay a price for purposes not all good for the good of citizens and weakening our educational system. Keeping education far away and weaken responsibilities during formation years of the family is a disastrous choice. Responsibility and coordination and constant higher goals need to be re-instated if we want to recoup the loose of ground of the past 10 years. The competition that is emerging from abroad is so large that is giving chills to the most severe.
You might be satisfied with the roads you drive. If that case you deserve mediocre roads and will miss to improve using a mediocre transportations system.
If you think that there is no better. You might want to drive around in another developed country to see is you are satisfied with the streets and roads around you.
As oil continues to grow in pricing, the cities and towns infrastructure of oil dependence will eventually prove to be obsolete and inefficient. With the present small spike on costs it is already showing signs of poor competitive capacity.
If you think that hugging trees is some malaise, well stay that way, but the price you will pay for thinking that way will be impossible to come up in the near future, and the signs are all over to be encounter.
As we continue to deny the ecology its right. The weather changes will continue this path of warming the planet. Until, we realize the solutions are difficult, to stop global warming is going to be an effort that is proving to test humans as the case in England is showing signs of impossibility.
Many countries are serious about saving the earth, some people are building the will to fight against earth destroyers. That approach is not an enhancing event for us who with less than 5% of the earth population we are using 25% of all its resources.
If you think the war in Iraq is an example of good planning, honesty, giving example of doing good and resolution. Then you must skip this one.
We must think of wars as temporary choices, the war in Iraq is proving to be an awful choice and no one is paying the price of poor or neglected decisions, Iraq is proving to be the most outrageous case of fraud. No only, from its purpose to carry out an action, but from the economic point, riddled of fraudulent and outright pilfering of funds, with already American officials arrested for fraud.
If you think that the largest military spender and powerful is also the most organized and resolute to support its citizens at home in case of disaster, then skip the subject of the latest related weather events.
The disasters of the latest weather related events in the Gulf of Mexico are proving damaging to the global economy, and more severely to the local economies around the United States. Moreover, the image that has project around the globe is of a half developed almost third world country dealing with large amounts of poverty in face of natural disaster that scientist have warmed for decades.
If you think the cost of living is low and getting lower, please move to the next subject.
High price of commodities from natural gas, gasoline, plastics, wood to water and many other vital elements for economic growth will eventually test the power of the system. The private banking system and its Federal Reserve policies are showing signs of serious weakening. This week the Federal Reserve raised rates again, at mist of the cutting of 10% of all gasoline production and inflation showing signs of creeping at very fast speed where most people will start to feel the pain.
We have yet to address the fact that foreign buyers of American debt and trade deficits are at historic levels, thus, worrying many decision makers.
What is a social storm! The ignorant will be absent from asserting a better tomorrow.
Monday, September 19, 2005
Philosophy of Deception
At times, some published articles reflect what I want to share with great detail.
Here is this one, that I found worth to keep alive.
For this autunm reading season I choose author John Perkins.
You can find Perkins books at www.borders.com
http://www.alternet.org/story/15935/
Leo Strauss' Philosophy of Deception
By Jim Lobe, AlterNet. Posted May 19, 2003.
Many neoconservatives like Paul Wolfowitz are disciples of a philosopher who believed that the elite should use deception, religious fervor and perpetual war to control the ignorant masses.
Tools EMAIL PRINT DISCUSS BUY
Also in Top Stories
No Exit From the Danger ZoneAlison Stein Wellner, MotherJones.com
A Triumph for Decency at the U.N.Ian Williams, AlterNet
A Shock To the SystemBell Gale Chevigny, AlterNet
The Many Faces of Dr. CoburnMax Blumenthal, The Nation
The Great Immigrant CrackdownTram Nguyen, AlterNet
More stories by Jim Lobe
What would you do if you wanted to topple Saddam Hussein, but your intelligence agencies couldn't find the evidence to justify a war?
A follower of Leo Strauss may just hire the "right" kind of men to get the job done – people with the intellect, acuity, and, if necessary, the political commitment, polemical skills, and, above all, the imagination to find the evidence that career intelligence officers could not detect.
The "right" man for Deputy Defense Secretary Paul Wolfowitz, suggests Seymour Hersh in his recent New Yorker article entitled 'Selective Intelligence,' was Abram Shulsky, director of the Office of Special Plans (OSP) – an agency created specifically to find the evidence of WMDs and/or links with Al Qaeda, piece it together, and clinch the case for the invasion of Iraq.
Like Wolfowitz, Shulsky is a student of an obscure German Jewish political philosopher named Leo Strauss who arrived in the United States in 1938. Strauss taught at several major universities, including Wolfowitz and Shulsky's alma mater, the University of Chicago, before his death in 1973.
Strauss is a popular figure among the neoconservatives. Adherents of his ideas include prominent figures both within and outside the administration. They include 'Weekly Standard' editor William Kristol; his father and indeed the godfather of the neoconservative movement, Irving Kristol; the new Undersecretary of Defense for Intelligence, Stephen Cambone, a number of senior fellows at the American Enterprise Institute (AEI) (home to former Defense Policy Board chairman Richard Perle and Lynne Cheney), and Gary Schmitt, the director of the influential Project for the New American Century (PNAC), which is chaired by Kristol the Younger.
Strauss' philosophy is hardly incidental to the strategy and mindset adopted by these men – as is obvious in Shulsky's 1999 essay titled "Leo Strauss and the World of Intelligence (By Which We Do Not Mean Nous)" (in Greek philosophy the term nous denotes the highest form of rationality). As Hersh notes in his article, Shulsky and his co-author Schmitt "criticize America's intelligence community for its failure to appreciate the duplicitous nature of the regimes it deals with, its susceptibility to social-science notions of proof, and its inability to cope with deliberate concealment." They argued that Strauss's idea of hidden meaning, "alerts one to the possibility that political life may be closely linked to deception. Indeed, it suggests that deception is the norm in political life, and the hope, to say nothing of the expectation, of establishing a politics that can dispense with it is the exception."
Rule One: Deception
It's hardly surprising then why Strauss is so popular in an administration obsessed with secrecy, especially when it comes to matters of foreign policy. Not only did Strauss have few qualms about using deception in politics, he saw it as a necessity. While professing deep respect for American democracy, Strauss believed that societies should be hierarchical – divided between an elite who should lead, and the masses who should follow. But unlike fellow elitists like Plato, he was less concerned with the moral character of these leaders. According to Shadia Drury, who teaches politics at the University of Calgary, Strauss believed that "those who are fit to rule are those who realize there is no morality and that there is only one natural right – the right of the superior to rule over the inferior."
This dichotomy requires "perpetual deception" between the rulers and the ruled, according to Drury. Robert Locke, another Strauss analyst says,"The people are told what they need to know and no more." While the elite few are capable of absorbing the absence of any moral truth, Strauss thought, the masses could not cope. If exposed to the absence of absolute truth, they would quickly fall into nihilism or anarchy, according to Drury, author of 'Leo Strauss and the American Right' (St. Martin's 1999).
Second Principle: Power of Religion
According to Drury, Strauss had a "huge contempt" for secular democracy. Nazism, he believed, was a nihilistic reaction to the irreligious and liberal nature of the Weimar Republic. Among other neoconservatives, Irving Kristol has long argued for a much greater role for religion in the public sphere, even suggesting that the Founding Fathers of the American Republic made a major mistake by insisting on the separation of church and state. And why? Because Strauss viewed religion as absolutely essential in order to impose moral law on the masses who otherwise would be out of control.
At the same time, he stressed that religion was for the masses alone; the rulers need not be bound by it. Indeed, it would be absurd if they were, since the truths proclaimed by religion were "a pious fraud." As Ronald Bailey, science correspondent for Reason magazine points out, "Neoconservatives are pro-religion even though they themselves may not be believers."
"Secular society in their view is the worst possible thing,'' Drury says, because it leads to individualism, liberalism, and relativism, precisely those traits that may promote dissent that in turn could dangerously weaken society's ability to cope with external threats. Bailey argues that it is this firm belief in the political utility of religion as an "opiate of the masses" that helps explain why secular Jews like Kristol in 'Commentary' magazine and other neoconservative journals have allied themselves with the Christian Right and even taken on Darwin's theory of evolution.
Third Principle: Aggressive Nationalism
Like Thomas Hobbes, Strauss believed that the inherently aggressive nature of human beings could only be restrained by a powerful nationalistic state. "Because mankind is intrinsically wicked, he has to be governed," he once wrote. "Such governance can only be established, however, when men are united – and they can only be united against other people."
Not surprisingly, Strauss' attitude toward foreign policy was distinctly Machiavellian. "Strauss thinks that a political order can be stable only if it is united by an external threat," Drury wrote in her book. "Following Machiavelli, he maintained that if no external threat exists then one has to be manufactured (emphases added)."
"Perpetual war, not perpetual peace, is what Straussians believe in," says Drury. The idea easily translates into, in her words, an "aggressive, belligerent foreign policy," of the kind that has been advocated by neocon groups like PNAC and AEI scholars – not to mention Wolfowitz and other administration hawks who have called for a world order dominated by U.S. military power. Strauss' neoconservative students see foreign policy as a means to fulfill a "national destiny" – as Irving Kristol defined it already in 1983 – that goes far beyond the narrow confines of a " myopic national security."
As to what a Straussian world order might look like, the analogy was best captured by the philosopher himself in one of his – and student Allen Bloom's – many allusions to Gulliver's Travels. In Drury's words, "When Lilliput was on fire, Gulliver urinated over the city, including the palace. In so doing, he saved all of Lilliput from catastrophe, but the Lilliputians were outraged and appalled by such a show of disrespect."
The image encapsulates the neoconservative vision of the United States' relationship with the rest of the world – as well as the relationship between their relationship as a ruling elite with the masses. "They really have no use for liberalism and democracy, but they're conquering the world in the name of liberalism and democracy," Drury says.
Jim Lobe writes on foreign policy for Alternet. His work has also appeared on Foreign Policy In Focus and TomPaine.com.
Here is this one, that I found worth to keep alive.
For this autunm reading season I choose author John Perkins.
You can find Perkins books at www.borders.com
http://www.alternet.org/story/15935/
Leo Strauss' Philosophy of Deception
By Jim Lobe, AlterNet. Posted May 19, 2003.
Many neoconservatives like Paul Wolfowitz are disciples of a philosopher who believed that the elite should use deception, religious fervor and perpetual war to control the ignorant masses.
Tools EMAIL PRINT DISCUSS BUY
Also in Top Stories
No Exit From the Danger ZoneAlison Stein Wellner, MotherJones.com
A Triumph for Decency at the U.N.Ian Williams, AlterNet
A Shock To the SystemBell Gale Chevigny, AlterNet
The Many Faces of Dr. CoburnMax Blumenthal, The Nation
The Great Immigrant CrackdownTram Nguyen, AlterNet
More stories by Jim Lobe
What would you do if you wanted to topple Saddam Hussein, but your intelligence agencies couldn't find the evidence to justify a war?
A follower of Leo Strauss may just hire the "right" kind of men to get the job done – people with the intellect, acuity, and, if necessary, the political commitment, polemical skills, and, above all, the imagination to find the evidence that career intelligence officers could not detect.
The "right" man for Deputy Defense Secretary Paul Wolfowitz, suggests Seymour Hersh in his recent New Yorker article entitled 'Selective Intelligence,' was Abram Shulsky, director of the Office of Special Plans (OSP) – an agency created specifically to find the evidence of WMDs and/or links with Al Qaeda, piece it together, and clinch the case for the invasion of Iraq.
Like Wolfowitz, Shulsky is a student of an obscure German Jewish political philosopher named Leo Strauss who arrived in the United States in 1938. Strauss taught at several major universities, including Wolfowitz and Shulsky's alma mater, the University of Chicago, before his death in 1973.
Strauss is a popular figure among the neoconservatives. Adherents of his ideas include prominent figures both within and outside the administration. They include 'Weekly Standard' editor William Kristol; his father and indeed the godfather of the neoconservative movement, Irving Kristol; the new Undersecretary of Defense for Intelligence, Stephen Cambone, a number of senior fellows at the American Enterprise Institute (AEI) (home to former Defense Policy Board chairman Richard Perle and Lynne Cheney), and Gary Schmitt, the director of the influential Project for the New American Century (PNAC), which is chaired by Kristol the Younger.
Strauss' philosophy is hardly incidental to the strategy and mindset adopted by these men – as is obvious in Shulsky's 1999 essay titled "Leo Strauss and the World of Intelligence (By Which We Do Not Mean Nous)" (in Greek philosophy the term nous denotes the highest form of rationality). As Hersh notes in his article, Shulsky and his co-author Schmitt "criticize America's intelligence community for its failure to appreciate the duplicitous nature of the regimes it deals with, its susceptibility to social-science notions of proof, and its inability to cope with deliberate concealment." They argued that Strauss's idea of hidden meaning, "alerts one to the possibility that political life may be closely linked to deception. Indeed, it suggests that deception is the norm in political life, and the hope, to say nothing of the expectation, of establishing a politics that can dispense with it is the exception."
Rule One: Deception
It's hardly surprising then why Strauss is so popular in an administration obsessed with secrecy, especially when it comes to matters of foreign policy. Not only did Strauss have few qualms about using deception in politics, he saw it as a necessity. While professing deep respect for American democracy, Strauss believed that societies should be hierarchical – divided between an elite who should lead, and the masses who should follow. But unlike fellow elitists like Plato, he was less concerned with the moral character of these leaders. According to Shadia Drury, who teaches politics at the University of Calgary, Strauss believed that "those who are fit to rule are those who realize there is no morality and that there is only one natural right – the right of the superior to rule over the inferior."
This dichotomy requires "perpetual deception" between the rulers and the ruled, according to Drury. Robert Locke, another Strauss analyst says,"The people are told what they need to know and no more." While the elite few are capable of absorbing the absence of any moral truth, Strauss thought, the masses could not cope. If exposed to the absence of absolute truth, they would quickly fall into nihilism or anarchy, according to Drury, author of 'Leo Strauss and the American Right' (St. Martin's 1999).
Second Principle: Power of Religion
According to Drury, Strauss had a "huge contempt" for secular democracy. Nazism, he believed, was a nihilistic reaction to the irreligious and liberal nature of the Weimar Republic. Among other neoconservatives, Irving Kristol has long argued for a much greater role for religion in the public sphere, even suggesting that the Founding Fathers of the American Republic made a major mistake by insisting on the separation of church and state. And why? Because Strauss viewed religion as absolutely essential in order to impose moral law on the masses who otherwise would be out of control.
At the same time, he stressed that religion was for the masses alone; the rulers need not be bound by it. Indeed, it would be absurd if they were, since the truths proclaimed by religion were "a pious fraud." As Ronald Bailey, science correspondent for Reason magazine points out, "Neoconservatives are pro-religion even though they themselves may not be believers."
"Secular society in their view is the worst possible thing,'' Drury says, because it leads to individualism, liberalism, and relativism, precisely those traits that may promote dissent that in turn could dangerously weaken society's ability to cope with external threats. Bailey argues that it is this firm belief in the political utility of religion as an "opiate of the masses" that helps explain why secular Jews like Kristol in 'Commentary' magazine and other neoconservative journals have allied themselves with the Christian Right and even taken on Darwin's theory of evolution.
Third Principle: Aggressive Nationalism
Like Thomas Hobbes, Strauss believed that the inherently aggressive nature of human beings could only be restrained by a powerful nationalistic state. "Because mankind is intrinsically wicked, he has to be governed," he once wrote. "Such governance can only be established, however, when men are united – and they can only be united against other people."
Not surprisingly, Strauss' attitude toward foreign policy was distinctly Machiavellian. "Strauss thinks that a political order can be stable only if it is united by an external threat," Drury wrote in her book. "Following Machiavelli, he maintained that if no external threat exists then one has to be manufactured (emphases added)."
"Perpetual war, not perpetual peace, is what Straussians believe in," says Drury. The idea easily translates into, in her words, an "aggressive, belligerent foreign policy," of the kind that has been advocated by neocon groups like PNAC and AEI scholars – not to mention Wolfowitz and other administration hawks who have called for a world order dominated by U.S. military power. Strauss' neoconservative students see foreign policy as a means to fulfill a "national destiny" – as Irving Kristol defined it already in 1983 – that goes far beyond the narrow confines of a " myopic national security."
As to what a Straussian world order might look like, the analogy was best captured by the philosopher himself in one of his – and student Allen Bloom's – many allusions to Gulliver's Travels. In Drury's words, "When Lilliput was on fire, Gulliver urinated over the city, including the palace. In so doing, he saved all of Lilliput from catastrophe, but the Lilliputians were outraged and appalled by such a show of disrespect."
The image encapsulates the neoconservative vision of the United States' relationship with the rest of the world – as well as the relationship between their relationship as a ruling elite with the masses. "They really have no use for liberalism and democracy, but they're conquering the world in the name of liberalism and democracy," Drury says.
Jim Lobe writes on foreign policy for Alternet. His work has also appeared on Foreign Policy In Focus and TomPaine.com.
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