Books on Investing: Discussions, Reports &amp; Suggestions

Top 107. Mar 20, 2004 9:39 AM

» Jas_Jain - Re: Re: The Oil Factor: How Oil Controls the Economy and ...

In response to message posted by Kirk:

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"As an engineer, I find some of their alternative energy solutions unworkable but their insight into the price of oil, rising debt and coming inflation is insightful and compelling."

Thanks, Kirk, for forwarding your comments. I was already aware of the book and the issues related to higher oil prices.

Kirk, YOU KNOW NOTHING ABOUT DEFLATION, because rising debt in the present is HIGHLY DEFLATIONARY for the future, as the debt for current consumption borrows from the future consumption. No? Also, HIGHER OIL PRICES ARE DEFLATIONARY, because they are depressionary for rest of the economy.

You keep drawing wrong conclusions because of very shallow thinking and accepting the arguments that appeal to all the simpletons. Think beyond the obvious!

The best arbiter of inflation/deflation debate IS 10-year Treasury Note. When it hits 2.xx%, you know we are headed to deflationary depression. Your dreams of 5% will have to wait a very long time. Crooks have been pushing Scams, especially, Semiperformer Scams. They have been trashing bonds as never before for the past 8 months. You can draw your own conclusions from that alone.

Jas

-- posted by Jas_Jain

Top 108. Apr 17, 2004 10:34 AM

» Normxxx - Bull's Eye Investing

Bull's Eye Investing full text

by John Mauldin April 17, 2004

<img src="http://images.amazon.com/images/P/0471655430.01._PE32_PI_SCMZZZZZZZ_.jpg">

This week, I am going to depart from the regular format, as my book, "Bull's Eye Investing: Targeting Real Returns in a Smoke and Mirrors Market" is in the trucks on the way to a bookstore near you, as well as Amazon.com and Barnes and Noble.com. I have arranged for a nice 32% discount on the book for you courtesy of Amazon.com and I launch a special letter just for readers of my book.

Today, we are going to look at some of the content in the book. Yes, a lot of the book has been in these pages over the last year. But my guess is that at least half of the book is new material, and the 50 plus graphs and charts really add to the usefulness. The chapters on actual investment strategies have not graced this weekly letter and I hope are of great value. Being able to make a thoughtful and logical case, step-by-step, for the future direction of the economy, rather than piecemeal in this weekly letter will give you a much better understanding of the problems and opportunities confronting us.

As I look through the 435 some-odd pages of the book, I find that it is very relevant to today's markets and economy. Too often by the time a book is published, it is out of date. I must admit that has been a concern. I feel I have dodged that bullet. The book speaks to the very issues confronting investors today, and much of the research and material I use will be of use years from now. As long-time readers know, I believe in backing up your beliefs with solid research. There are 14 pages of footnotes and bibliography. You can disagree with my thinking (and many do!), but you better do your homework.

The early reviews (my publisher sent out lots of manuscripts for publicity and comments) have been more than kind. While I am proud of the book and feel that it can stand on its own, it is always nice to read kind words from your peers (and superiors!) and readers. (I post a few comments below.)

This book will surprise many of my long time readers. After making what I feel is an extremely strong case that we are in the first innings of a secular bear market, I spend three very full chapters telling you how and why to buy stocks. Ironically, in a secular bear market, the little guy has a big advantage over the larger institutions and funds. I show you the sorting screens and give you access to the research which will guide you to successful investing in stocks. If you own stocks or mutual funds, these three chapters will give you a new and unique view of the stock market. Oh, to have had this when I was just starting out in the investment world. This is a book many of you will want to get for your young adult (and even older!) kids to read.

The Bull's Eye Club

I want to do something special for those of you who read the book. If you will respond to this letter and let me know you have ordered or bought the book, I am going to create a special "Bull's Eye" email list, and update various topics in the book every quarter or so, as well as do some letters where I answer reader's questions. There are certain subjects in the book that if I wrote about them in the regular letter, it would require lengthy explanations to set up the three page update. It makes much more sense to simply send those updates to people who have already read the chapters.

And now, let me give you the basic thrust of the book.

Which Way to Go?

"Would you tell me, please, which way I ought to go from here?"
"That depends a good deal on where you want to get to," said the Cheshire Cat.
"I don't much care where--" said Alice.
"Then it doesn't matter which way you go," said the Cat.
"--so long as I get somewhere," Alice added as an explanation.
"Oh, you're sure to do that," said the Cat, "if you only walk long enough."
--Lewis Carroll, Alice's Adventures in Wonderland

Every hunter knows that you don't shoot where the duck is, but where the duck is going to be. You've got to "lead the duck." If you aim where the duck is at the moment you shoot, you will miss your target (unless the duck is flying very slowly or is very close!).

Bull's Eye Investing simply attempts to apply that same principle to investing.

In this book, I hope to give you an idea of the broad trends that will be evident for the remainder of the decade and help you target your investments to take advantage of these trends. Successful investing for the period 2004 through 2010 will require you to do things differently than you did in the 1980s and 1990s. We started the last bull market with high interest rates, very high inflation, and low stock market valuations. All the elements were in place to launch the greatest bull market in history.

Now we're in the opposite environment. The stock market has high valuations, interest rates have nowhere to go but up, the dollar is dropping, and the twin deficits of [massive] trade imbalance and government debt stare us in the face.

Which way is the stock market going? Which way are bonds going? Gold? Real estate? Where should I invest?

Wall Street and the mutual fund industry say, "The market is going up; you should buy stocks and now is the time to buy. You can't time the markets, so you should buy and hold for the long term. Don't worry about the short-term drops. And my best advice is to buy my fund."

The folks on Wall Street are in the business of selling stocks because that is how they make their real money. Whether the shares are sold directly or are packaged in mutual funds or as initial public offerings (IPOs) or in wrap accounts or in variable annuities or in derivatives, these folks primarily want to sell you some type of equity (stock), preferably today. Unfortunately, the vast majority of investors believe these pitches and don't know there are better investment alternatives.

Their advice--buy what they sell--has been the same every year for a century. And it has been wrong about half the time. There are long periods of time when stock markets go up or sideways and long periods of time when markets go down or sideways.

These cycles are called secular bull and bear markets. ("Secular" as used in this sense is from the Latin word saeculum, which means a long period of time.) Each cycle has different types of good investment opportunities. We are currently in just the first few innings of a secular bear market. The problem for Wall Street is that the products brokers primarily sell do not do well in secular bear markets. So they have to tell you that things will get better so you should buy now. Or they advise you to "have patience, and please give us more of your money."

In secular bull markets investors should focus on investments that offer relative returns. By that I mean we should look for stocks and funds that will perform better than the market averages. The benchmark by which you measure your investment strategy is the broad stock market. If you "beat the market," you are doing well. Even though there will be losing years, staying invested in quality stocks will be a long-term winner.

In secular bear markets, that strategy is a prescription for disaster. If the market goes down 20 percent and you go down only 15 percent, Wall Street proclaims your performance to be "winning." But you are still down 15 percent.

In markets like those we face today, the essence of Bull's Eye Investing is to focus on absolute returns. Your benchmark is a money market fund. Success is measured in terms of how much you make above Treasury bills. In secular bear markets, success is all about controlling risk and carefully and methodically compounding your assets.

Some will say, as they say each year, that the bear market is over: that this book is writing about ancient history. But history teaches us that is not the case. Secular bear markets can have drops much bigger than we have already seen, and last for up to 17 years. The shortest has been eight years. They have never been over when valuations have been as high as they are today.

Investors who continue to listen to the siren song of Wall Street will be frustrated at best, in my opinion, as the research I present clearly shows we have a long way to go in this bear market cycle. For those who plan to depend on their stock market investments for retirement within a decade, the results could be particularly devastating.

Bull's Eye Investing is not, however, some gloom and doom book. Despite what Wall Street wants you to believe, there is no connection between how the economy will do and how the stock market will perform. As we will see, the economy should be fine, with just the usual corrections sandwiched between periods of growth. The world as we know it is not coming to an end. It is merely changing, as it always has. There are numerous possibilities for investment growth in a secular bear market. They just don't happen to be in the standard Wall Street fare.

What I hope to do is give you a road map to the future by looking at how and why markets have behaved in the past. We will debunk many of the myths and "scientific studies" used by Wall Street to entice investors into putting their money into buy-and-hold, relative return investments. The Wall Street insiders, not surprisingly, use theories, statistics, and so-called facts that are blatantly biased and in many cases just plain wrong. When the market goes down, they just shrug their shoulders like Chicago Cubs (or my own Texas Rangers) fans and say, "Wait till next year. And buy some more, please."

Basically, in the first half of the book I am going to teach you how to fish, and in the second half I am going to tell you where the fish are. I would politely suggest that you not skip the first half of the book--do not turn to the last part simply looking for the quick investment fix. If you don't understand what is happening in the economy and world markets, you will not have confidence in your investment strategy and you'll end up chasing the latest hot investment, which is usually a prescription for pain in any type of market.

Here's how the book is organized:

First, we look at what history teaches us about the potential for stock market returns over the rest of this decade. We examine six major (and very different) ways to look at the stock market. As a quick preview, the evidence is heavily weighted to suggest that at the end of this cycle the stock market will not be too far from where it is today. The historical and mathematical analysis of bubbles also suggests that we could see the stock market drop much further before beginning the next bull market. We examine several of Wall Street's favorite sales tools, the famous Ibbotson study,Jeremy Siegel's Stocks for the Long Run, and Modern Portfolio Theory (MPT), and see why you should exercise extreme caution when they are used in a sales presentation.

We then look at why the economy can do just fine and stock markets still can fall: It all has to do with the expectation for earnings and the value investors put on those future earnings.

Most analysts track a simple bear market from peak to trough (top to bottom). Bear markets (or 20 percent plus corrections) can happen in secular bull periods (think 1987 or 1998), just as bull markets (20 percent plus up reversals) can happen in secular bear markets (think 2000, 2001, 2002, 2003). Analysts also view a secular bear market as the lengthy period over which the market makes a top, enters into a decisive down phase, and then once again returns to the old high.

I suggest that we view a secular bear market a little differently, as the period in which the price-earnings (P/E) ratio goes from very high to quite low. It is in these periods of low valuation that we can once again begin to confidently put our money back into stocks, as the rubber band is getting ready to snap back. Of course, Wall Street folks will trot out all sorts of studies that show that stocks are always undervalued and you should buy today. They did so in 2000, 2001, and 2002, and 2003. They are doing so as this book is written and published. They cheer each move up as proof they are right, and each down move as a buying opportunity. They are wrong, and we will examine why they're wrong.

That means earnings are important, and thus for a few chapters we focus on earnings. We see why Wall Street analysts are so consistently wrong (by about 50 percent per year too much), what the prospects for real earnings growth are, and how to put it all into perspective.

Next, we look at risk. As I've said, investing in secular bear markets is all about controlling risk. I believe this chapter is one of the most important in the book, but it may also be the most fun.

We discuss the most common mistakes investors make and how to avoid them. Statistics show that investors do not do as well as the funds or stocks they invest in, and we look at the causes. We examine why today's hot fund is likely to be tomorrow's loser, and what types of funds you should be looking for in this market.

We look at the future, including the demographics of the baby boomer generation, and how it will impact our investment potential. We analyze the direction of interest rates, deflation, and inflation. Then we examine the world economy and the dollar and see if we can find a potential winning theme (we do!).

The consequences of these economic problems will require some painful adjustments from those who do not make the effort to protect themselves. I show you where and how to turn problems into opportunities by seeking absolute returns in turbulent markets.

After the first section, the book focuses on specific types of investments. After telling you why we are in a secular bear market for stocks, Chapters 16 through 18 explain precisely how to invest in stocks today. Ironically, in a secular bear market, the little guy has a big advantage over the larger institutions and funds. There are great opportunities in the stock market if you know where to look. During the last secular bear market, companies like Microsoft and Intel were launched. I show you a simple way to find the hidden gems sought after by the savviest investors.

Then we look at the world of fixed income investments. The rules are changing, and what worked in the 1980s and 1990s will in all likelihood be a losing proposition for the remainder of this decade.

We then analyze what are, in my opinion, some of the better potential sources of absolute returns: certain types of hedge fund styles. We look at how Wall Street has rigged the market against small investors getting the best deals. The richest investors and largest institutions with the best-paid advisors choose these high-fee, unregulated private investments because they deliver better risk-adjusted performance than one-way buy-and-hold mutual funds. We show you how to find and gain access to these private funds, and how to use some of their strategies in your own portfolios.

Finally, we take a more thorough look at the future, and why you should be optimistic. In 1974, only a few people saw the changes and opportunities that computers, telecommunications, and the Internet would bring. The world was bemoaning the losses of basic American industry as jobs were being lost to world competition.

Today, we find ourselves once again faced with serious competition for American jobs. Our core seems to be slipping away, as the market doesn't respond. The world sees us in a much different light than just a few years ago. Few notice the new revolutions that are happening in small firms and research departments that will form the basis for the next wave of American prosperity because we haven't even begun to imagine the ways in which the next waves of change will affect us.

Will there be winners and losers in this process? Of course. Anytime there are periods of upheaval and great change, there are always those who benefit from the change and those who suffer. I will try to show you how you can position yourself to be a winner.

There is a centuries-long, if not millennia-long, pattern to these cycles. Good markets are followed by bad markets, which are again followed by good markets. They are as predictable as winter and summer. These cycles have been happening since the Medes were trading with the Persians. While no one can predict the exact day winter weather will arrive, it is a pretty good bet that winter will come. You can prepare for winter just as you plan for summer. As investors, you can be successful if you understand the economic and investment seasons we are in and plan your investments accordingly.

So, let's get you started on your way to successful Bull's Eye Investing. You can order the book by clicking on the link above or below. They have it at a 32% discount. I am told it will ship as soon as it gets there (by about 1 May).

A quick note to brokers and investment advisors: most of you are going to hate this book. But some of you "get it." You understand why you are in the business - the prosperity of your clients, and you don't buy the Wall Street pitch. You are going to love the book and want your clients to read it.

Some Quick Comments About the Book

"This book has more wisdom per page than any reader has the right to ask for. John Mauldin knows the score and tells the reader how to join him in keeping count."
--Peter L. Bernstein, author of the bestseller Against the Gods

"John Mauldin's widely heralded new book, Bull's Eye Investing, is a breath of fresh air and a treasure trove of market insights and information. When you think you've read 'em all, my suggestion is that you turn to this book. Simply put, Bull's Eye Investing provides information and perspective that you will not find anywhere else."
--Richard Russell, publisher of Dow Theory Letters

"Bull's Eye Investing is a lucidly written, lambently cautionary, edifying, and diverting must-read guide to the ways and means of hitting the gyrating target of a 'Muddle Through Economy.' Mauldin is the Ben Graham of the new millennium, but unlike Graham, he combines investment savvy with a sense of humor and a gift of style."
--George Gilder, author of Wealth and Poverty and the editor of the Gilder Technology Report

"Mauldin dances and weaves through a mountain of fascinating research, taking us on a well-argued tour of the past and giving us a spellbinding preview of the future. He then lays out in clearly documented detail where the investment opportunities and pitfalls of the next decade will be. In a world where the right investment information is the key to success, Bull's Eye Investing is one book that should be close to every investor's desk."
--Bill Bonner, author of the New York Times #1 business bestseller, Financial Reckoning Day

"This book is lucid, cogent, and useful. Overall, it provides an excellent guide to better investing habits and an effective antidote to standard Wall Street bromides."
--Robert R. Prechter Jr., author of Conquer the Crash

"Finally, an easy-to-read but very comprehensive study on investments in a world where, sadly, common sense is no longer so common."
--Marc Faber, editor of the Gloom, Boom & Doom Report

"Bull's Eye Investing is a scintillating tour of the art and science of long-range forecasting. With his eye fixed as it should be on the great sweep of history, John throws a much-needed splash of realism onto the wishful thinking of recent years."
--Neil Howe, Partner, LifeCourse Associates coauthor of Generations and The Fourth Turning

Field of Dreams

I feel somewhat like Kevin Costner in Field of Dreams (one of my favorite movies). I have built the "field," but will they come? Before this letter or any media or reviews go out, the book is number 28,006 at BarnesandNoble.com and number 1,115 on Amazon. If you have a website and would like to have a graphic of the book to link to Amazon or my book site (coming next week) let me know.

I will be in Las Vegas speaking at The Money Show from May 11-13. This is a massive event. They expect over 10,000 attendees, and you can register for free at http://www.moneyshow.com/main/main.asp?s...

Next week we will get back to economic events. I will probably write about the possibility of the Fed raising rates before the election. Jim Bianco said today he thinks they will raise rates at the June meeting. Jim, my friend, I will take that bet. In fact, I will raise and say not even in August. Next week we look at my reasoning. And it does make a difference as to how you position yourself.

Have a great week.

John Mauldin
Frontlinethoughts.com

John Mauldin is president of Millennium Wave Advisors, LLC, a registered investment advisor. All material presented herein is believed to be reliable but we cannot attest to its accuracy. Investment recommendations may change and readers are urged to check with their investment counselors before making any investment decisions. Opinions expressed in these reports may change without prior notice. John Mauldin and/or the staff at Thoughts from the Frontline may or may not have investments in any funds cited above. Mauldin can be reached at 800-829-7273.

http://www.amazon.com/exec/obidos/ASIN/0...

-- posted by Normxxx

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<img src=http://images.amazon.com/images/P/097155143X.01.LZZZZZZZ.jpg >

Top 109. Apr 22, 2004 1:07 PM

» Kirk - Covered Call Writing with Qs and Diamonds

Covered Call Writing with Qs and Diamonds: Double-Digit Returns on Ready-Made Portfolios by Paul D. Kadavy

Only $16.95

Book Description

Covered Call Writing With Qs And Diamonds: Double-Digit Returns on Ready-Made Portfolios" is not just another new book about covered call writing. It is a highly focused and readily understandable educational tool with a unique easy-to-follow implementation program. It is designed for investors who either do not have the time or the desire to research individual stocks and administer such a portfolio, yet who seek an opportunity to achieve double-digit investment returns by using covered call writing.

Ownership of the ready-made portfolios available to you with the Qs (ticker symbol QQQ: the 100 largest companies on the Nasdaq) and Diamonds (ticker symbol DIA: the stocks composing the Dow Jones Industrial Average) eliminate the need for stock research. And, the call writing choices you have available to you with them are far broader than any individual stocks, making them the perfect equity investment to use in conjunction with covered call writing. The book delves deeply into the subject of how to obtain double-digit returns from both out-of-the-money calls and in-the-money calls. It also provides short-term technical analysis tools to assist in guiding market forecasts and making appropriate call writing decisions.

On May 3, 2003 after the annual meeting of his company, Warren Buffett (Chairman of Berkshire Hathaway) said to Maria Bartiromo of CNBC: "If you own equities, over the next twenty or thirty years you’ll get a reasonable return...maybe its 6%, maybe its 7%. People who expect 15% a year are doomed to disappointment." If you believe that "The Oracle of Omaha" is right about a slow-growth market for decades to come, then everything that you need as an investor is here for you in this book to develop and implement a covered call writing program using two of the world’s most liquid, highly diversified equity portfolios.

THE BOOK PROVIDES:

* The case for using the Nasdaq-100 Index Tracking Stock (tracks the top 100 Nasdaq stocks in market capitalization), also known as the "Qs" or "Cubes," and the Diamonds Trust Series 1 (tracks the Dow Jones Industrial Average), known simply as Diamonds, for total or substantial portfolio composition. This allows investors to achieve significantly more equity ownership diversification than from shares in individual stocks. * Details on the unique features of these two highly liquid and popular Exchange Traded Funds (ETFs) that make them ideally suitable for no hassle, easy decision covered call writing to assist in reaching consistent double-digit investment returns in a more conservative way than a buy-and-hold equity strategy.

* A detailed turnkey implementation program for call writing with the QQQ and DIA, including "out-of-the-money" calls and "in-the-money" calls, both of which can yield solid double-digit returns, when and how to effectively use them.

* Discussion on call expiration date selection to fit your needs, including the advantages of shorter-term and longer-term expirations.

* A presentation of technical analysis tools to assist investors in making short-term decisions on when to write calls, and which type of call to write.

* Use of Microsoft® Excel spreadsheets to assist in reviewing covered call writing selection alternatives and tracking your results so that the best decisions for you are reached to achieve your investment return goal.

* Use of margin, if appropriate for you, to potentially almost double the returns from covered call writing on these ready-made portfolios. (Kirk here- Stay away from margin!!!)

* Details about brokerage accounts, with special emphasis on the use of online discount brokerages for quick, very low cost execution of trades. Web sites for brokerages, charting sources and other technical information are provided.

* Presentation of the tax information you need to understand and administer the income tax aspects of covered call writing. This includes deferring taxation of income until a later tax year while enjoying the use of the income now.

With interest rates so low and a scarcity of acceptable investment alternatives available to investors, covered call writing on diversified portfolios such as the Qs and Diamonds may offer one of the best possible opportunities to achieve double-digit investment returns in the slow-growth market we seem sure to encounter ahead.

Put Option Writing Demystified: Earn Double-Digit Cash Returns While Waiting to Buy Stocks at a Discount by Paul D. Kadavy

Purchase of these books from the link provided helps support Suite101.com

-- posted by Kirk

Top 110. Apr 22, 2004 1:17 PM

» Kirk - Put Option Writing Demystified

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<img align=left src=http://images.amazon.com/images/P/0971551448.01._PE_PI_SCMZZZZZZZ_.jpg > Put Option Writing Demystified: Earn Double-Digit Cash Returns While Waiting to Buy Stocks at a Discount by Paul D. Kadavy

Only $16.95

Book Description

"Put Option Writing Demystified" is the only book devoted exclusively to the subject of generating double-digit income returns from a little-known, often misunderstood and conservative investment opportunity known as "put option writing." In fact, it can be more conservative than simply owning stocks alone. And the good news is that this strategy works best during slow growth, flat or even slightly declining markets.

This book fully stands on its own merits, but it can also be viewed as a companion text to "Covered Call Writing Demystified" (see the book description on Amazon.com for more information). Hence the similarity in name. These are the reasons:

* Put option writing and covered call writing have essentially the same reward and risk characteristics…When used as outlined in the book, they are very conservative (unlike other uses of options)

* Investors using covered call writing will find opportunities to use put option writing to achieve similar double-digit investment results, but also to have the opportunity to purchase stocks or Exchange Traded Funds at a discount from their present value.

* The put option writing and covered call writing strategies can both be used within the same portfolio to achieve similar results by differing means, depending on the investor’s objectives regarding the individual stock or ETF in question.

What is put option writing?

Have you been tempted at times to buy a particular stock, but decided not to take the plunge because you thought it might be overpriced…or, just on a hunch, you thought you might be able to pick up the shares at a lower price? Not only might it be possible for you to buy that stock for less, but what if someone were willing to pay you cash today at a double-digit return rate and also give you the opportunity to buy it at a lower price later? Does that sound too good to be true? It’s not. It’s called "put option writing," and it’s available to you on literally thousands of stocks and Exchange Traded Funds (ETFs). Put option writing can be compared with placing a limit order to buy the stock or ETF of your choice at a lower price that you set…and then being paid for it. And, you get paid whether the stock falls to your price or not!

"Put Option Writing Demystified" is totally focused on providing (1) the education you need to fully understand the concepts behind put option writing and (2) a unique easy-to-follow program so that you can implement the strategy yourself without the help of a full-service broker or investment manager.

The book delves deeply into the subject of how to obtain double-digit returns from both out-of-the-money puts and in-the-money puts, with out-of-the money puts being the principal recommended strategy both for realizing the opportunity to achieve consistent double-digit investment returns while you wait to acquire stocks or ETFs of your choice at a discount to their present market value. It also provides short-term technical analysis tools to assist in guiding market forecasts and making even more profitable put writing decisions.

If you believe that "The Oracle of Omaha" is right about a slow-growth market for decades to come, then everything that you need as an investor is here for you in this book to develop and implement a put option writing program that will help you achieve double-digit returns.

In addition to presenting everything you need to know about put option writing and how to implement your own personal put writing program the book provides:

* Use of a uniquely designed Microsoft® Excel spreadsheet for put writing to assist in reviewing writing selection alternatives so that the best decisions for you are reached to achieve your investment return goal.

* Tax information you need for understanding and administering the income tax aspects of put option writing. This includes the opportunity for deferring taxation of income until a later tax year while enjoying the use of the income now.

How will the baby boomers be able to generate sufficient income on their investments to enjoy a secure retirement? And how will they and others younger than them be able to create a sufficient asset base to provide for their financial security with the dire predictions for the long-term future that we cannot expect markets to perform anywhere near as well as they have in the past?

With interest rates so low and a scarcity of acceptable investment alternatives available to investors, put option writing, as well as covered call writing, may offer two of the best possible opportunities to achieve consistent double-digit investment returns in the slow-growth market we seem sure to encounter ahead.

Also look at Covered Call Writing with Qs and Diamonds: Double-Digit Returns on Ready-Made Portfolios by Paul D. Kadavy

Purchase of these books from the link provided helps support Suite101.com

-- posted by Kirk

Top 111. Apr 24, 2004 5:12 PM

» Normxxx - Can they be dumb again?

The Bear's Lair: Can they be dumb again?

By Martin Hutchinson | 12/8/2003 6:05 PM
UPI Business and Economics Editor

WASHINGTON, Dec. 8 (UPI) -- "FDR's folly" (Jim Powell, Crown Forum, ~~$27.50~~ $19.25) demonstrates, by use of economic rather than political analysis, that the majority of New Deal policies (and of president Herbert Hoover's economic policies) were counterproductive, and prolonged the Great Depression. Yet neither president was stupid, or under-educated. So could such counterproductive policies be tried again, in a similarly stressful situation?

President Franklin Roosevelt has been universally hailed both in his lifetime and since as one of America's greatest presidents. By serving for three presidential terms and the beginning of a fourth, and confronting two of the greatest crises in America's history, he became a hero to political historians both of his generation and since. Even in 2003, an allegedly conservative tycoon, Conrad Lord Black, has published a laudatory biography of Roosevelt that has been received with general critical acclaim. Whatever the criticisms of his economic policies, or indeed of his foreign policies, right and left can agree that he was a consummate politician, probably the best in U.S. history.

Economists, however, have been more critical of his policies since the 1960s, and Powell goes into considerable detail on their criticisms. Output in the early 1930s dropped about as much as in the previous two depressions, of 1893-94 and 1920, but the recovery was far more sluggish than in either case. Only politically was Roosevelt more successful than at least one of his predecessors -- Grover Cleveland, the president in 1893-97, was repudiated by his own party at the 1896 Democrat presidential convention that nominated William Jennings Bryan.

There's no question that there's an economic case for Roosevelt's supporters to answer. Britain, which after 1931 pursued conventional policies of tight control of government spending and sound money (and abandoned her quixotic experiment with unilateral free trade) recovered much more quickly than the United States, and by 1934 was already reaching new heights in output. The United States was still below its 1929 level of private sector output in 1941, when World War II was declared. Yet U.S. population increased throughout the 1930s, and technological progress did not go away, so why did the economy not recover properly?

There's plenty of blame to go round -- Hoover's policies were in many respects even more misguided and deflationary than Roosevelt's, while, as famously documented by Milton Friedman and Anna Schwartz in their 1963 classic "Monetary history of the United States" the Federal Reserve played a major though largely unwitting part both in the initial downturn and in the sharp relapse of 1937-38.

Some of Hoover's and Roosevelt's policies were conventional political wisdom, that flew in the face of economic theory; others were experimental both politically and economically. Almost none of the political and economic experiments worked properly, creating huge disillusion with the system.

Hoover believed in the free market, but he believed even more strongly in his own "Great Engineer" capacity to manage the market to correct its defects. In this respect he was quite close to the ideas that John Maynard Keynes was contemporaneously working out, and would publish in his 1936 "General Theory of Employment, Interest and Money." Roosevelt's economic mistakes were only tangentially Keynesian; even the dirigiste social democrat Keynes caviled on a number of occasions at some of his more eccentric inventions. It's fair to claim that Roosevelt and those who surrounded him had neither a clear understanding of how the free market works, nor any coherent plan for how to replace it.

As we sit in the aftermath of a stock market bubble even greater than that of 1929, it must be worth asking: what are the chances of the mistakes of the 1930s being repeated, and if we don't repeat them, are we fully secure from a repetition of that dreadful decade?

To take the most notorious policy first, there is very little chance, thank goodness, of a modern U.S. President signing a huge across-the-board tariff increase like Smoot-Hawley. The intellectual argument for free trade is much better understood in the United States than it was in 1930 (it was well understood even back then in the free-trading Britain) and the World Trade Organization mechanism, battered though it is, would make such a broad based tariff diplomatically extremely perilous. Of course, the real damage caused by Smoot-Hawley was exacerbated by the U.S. position as a major creditor nation, and Europe's continuing need for dollar recycling from Wall Street; Smoot-Hawley increased the imbalances in world trade that already existed, and triggered a further sharp recession in Central Europe, and the Creditanstalt bankruptcy.

Today the United States runs a huge trade deficit, not a surplus, so the potential destabilizing damage from U.S. protectionism is less. Protectionism from trade surplus countries such as Japan and China would be more of a threat, but a move to further protectionism from those countries is unlikely. Europe, in particular the euro zone, is the most likely protectionist danger -- if the euro reaches $1.50 by mid-2005, as many are forecasting, you can expect a huge move in that direction from the EU, as much of the U.S. recession is exported to Europe.

The other notorious blunder of the Hoover years, the Fed's tight money policy, is also unlikely; indeed, the continued buoyancy in the U.S. economy has been largely due to an exceptionally loose Fed monetary stance. Inflation is likely to resurge in the years ahead, but it is unlikely that the Fed will act strongly against it, instead attempting to slow it by tight money. Indeed, it is likely that the Fed will repeat the mistake of the early 1970s, being too accommodatory in face of a surge in inflation, thus cementing in place an inflationary trend that is in the long run as damaging as the much vaunted 1930s deflation. The long term damage to U.S. growth prospects from higher inflation, and the higher interest rates that will be necessary to cure it, may be very substantial indeed, but we are probably some years yet from facing this problem.

Hoover's third mistake, less celebrated than the first two, was in attempting to cure the depression by public spending and then, as the depression grew worse, panicking and instituting a massive tax rise in the depths of 1932. The increase in public spending was pure Keynesianism (interestingly, Keynes may well have evolved his "spend money in recessions" theory simply in order to increase the size of government, which he regarded as in any case desirable. He knew perfectly well that the converse advice, of cutting back public spending in booms, would never in practice be followed.) It thus produced a short term stimulus, in the event swamped by the deflationary effects of Smoot-Hawley and Fed policy. In the long term, the public spending increase would have been a drag on the economy, but not a very important one, since the Federal government was still so small. However, increasing taxes was entirely unnecessary; there was no evidence in the capital markets or elsewhere that the Federal deficit was becoming unfinanceable -- its 1931-32 peak was less than 1.5 percent of gross domestic product, a third of the level in 2004. Hence the tax increases both deepened the depression and, by their adoption of steeply progressive marginal rates on high incomes that had been seen only in wartime, severely damaged business confidence.

Tuesday I will consider in part 2 the economic blunders of the New Deal itself, and the extent to which their repetition remains a threat.

WASHINGTON, Dec. 8 (UPI) -- Monday I looked at president Herbert Hoover's mistakes leading into the Great Depression, and asked whether they could be perpetrated again; today I look at the New Deal itself, and at which of its economic follies are liable to recur.

"FDR's folly" (Jim Powell, Crown Forum, $27.50) demonstrates, by use of economic rather than political analysis, that the majority of New Deal policies were counterproductive, and prolonged the Great Depression. One can differ with Powell in detail but the overall thrust of the book appears soundly based.

President Franklin Roosevelt continued Hoover's policy of increasing public spending, with federal spending, a remarkable 1.7 percent of gross domestic product in 1929 and 3.1 percent of GDP in 1932, increasing to 6.6 percent of GDP in 1936 and 6.4 percent of GDP in 1940, the last peacetime year. This produced short term stimulus to the economy, but over a decade, as Powell points out, was deflationary. However, the restraint in government spending from 1938 produced a considerable improvement in economic growth; as I set out in an article in August, Gross Private Product, the output of the private sector, increased by 8 percent in each of the three years 1939-1941.

Currently, public spending in the 2000-2003 downturn has risen much faster than GDP, from a much higher base than in the 1930s; it is likely to continue doing so whoever wins next November. The danger of a public-spending driven recession, with low-productivity government services eating up the growth produced by the private sector, must accordingly be even greater than in the 1930s. GPP, in particular, is very likely to grow very slowly or even decline, as it did in Japan in the 1990s, as government expands its take. As Powell documents in detail, the Public Works Administration expansion of infrastructure spending, and such uneconomic boondoggles as the Tennessee Valley Authority hydroelectric scheme, were about as successful in stimulating economic recovery in the 1930s as their Japanese equivalents were in the 1990s. Homeland Security "investment" may be their U.S. 2000s equivalent.

The other accusation Powell makes against New Deal federal spending is that it was channeled away from the poorest sectors of the United States, in particular the South and the African American community, whose votes Roosevelt didn't need (the south was locked up and African Americans mostly couldn't vote) and towards wealthier areas in the Western states which could provide Roosevelt with electoral votes and supportive Senators. If anyone thinks increased Federal spending in the 2000s wouldn't have similar political characteristics, I have a bridge to sell him!

The other half of Roosevelt's fiscal policy, continually raising taxes with an emphasis on the higher income earners, is more or less inevitable going forward. With the Federal deficit close to $500 billion, not only is there no room for further tax cuts, but any additional increase in Federal spending will need to be balanced by tax raises. Such raises are likely to be skewed to the upper income earners, by failing to implement (or allowing to expire) some of president George W. Bush's 2001 and 2003 tax cuts, by explicit tax increases, and by measures such as the increased taxation of stock options. This will be damaging to growth; the one saving grace is that it is very unlikely that the exorbitant 80-90 percent marginal tax rates, seen between Roosevelt and president John F. Kennedy, will return. That lesson, like the lesson from the failure of the 1930 Smoot-Hawley tariff, we may have truly learned.

The National Recovery Act, Roosevelt's attempt to legislate high prices, high wages and recovery, is pretty well unanimously admitted to have been a disaster. It increased unemployment, reduced living standards, and produced a huge and inept bureaucracy to tell business how to run itself. Only when it was declared unconstitutional by a unanimous decision of the Supreme Court, led by its gallant Four Horsemen (conservative judges Pierce Butler, George Sutherland, James McReynolds and Willis van Devanter) did the U.S. economy begin to recover, posting quite a nice 1935 and 1936. We are probably, thank goodness, safe from a revival of the NRA.

Then in 1937 the follies of the Second New Deal, the Supreme Court's abdication of responsibility after the court-packing scheme and a sharp rise in bank reserve requirements by the Fed produced a renewed and very sharp recession. Most notable of the Second New Deal activities was a sharp tilt in legislation and political support towards labor unions, primarily through the Wagner Act of 1935 and government support of the subsequent labor organizing campaigns. It is likely that this, too, will not be repeated this time

Agricultural subsidies were more or less invented by the New Deal, which pioneered the policy of paying farmers to destroy food to keep up prices. As president Bush showed in 2002, this policy has not gone away and indeed in a severe recession, when farmers were genuinely suffering hardship, it would probably be intensified.

A particular feature of the New Deal that had not previously been present in American business was the uncertainty it brought to contracts. Notoriously, Roosevelt invalidated all past gold clauses, by which the value of bonds had been linked to the value of a specific amount of gold -- post facto expropriation at its worst. He also through antitrust actions attacked business (for example oil companies, in the Socony-Vacuum case) for pursuing the very policies, of cartelizing and maintaining stable prices, that he had enjoined on them through the NRA. This, as much as any other policy, tended to depress the "animal spirits," in John Maynard Keynes' phrase, of American businesses and restrict them from expansion.

This tendency has not gone away, although in Republican and moderate Democrat administrations (such as that of Bill Clinton) it lies dormant. However, governments now through the Environmental Protection Agency, the Occupational Safety and Health Administration, and modern anti-discrimination legislation have far more tools to harass business than in the 1930s. More important, the rise of the tort bar has introduced a new and troubling element of uncertainty into business decisions; asbestos companies have been driven into bankruptcy, tobacco companies into funding an enormous settlement, and food companies are now under attack.

This is the one area where the November 2004 election makes a difference. If Bush wins, the powers of government to harass business will remain dormant. If a committedly liberal Democrat wins, and if the Democrats also recapture control of Congress, then both government and the trial bar may declare open season on business, particularly if the country is once again in recession. At that point property rights will be largely moot until the storm passes, and business activity will be commensurately depressed.

The final significant area where the New Deal messed up the U.S. economy was that of securities regulation. The disclosure regulations in the Securities Act of 1933 put only a moderate chill on the markets, but the aggressive attitude of the new Securities and Exchange Commission made the legal risks to underwriters appear severe. Even more important, the split between commercial and investment banking decapitalised the major underwriters in the bond and stock primary markets, making them extremely hesitant to assume any kind of risk, and woefully understaffed to handle any upturn in issue volume. The total volume of stock issues in 1933-1941, except for a brief and modest upward blip in 1937, averaged little more than $100 million per annum, around a quarter of the average volume in the trough of the 1921-23 recession, and less than a twentieth of the volume in 1927-29. The inability of business to get new financing was a severe constraint on expansion, let alone entrepreneurship; this alone was responsible for much of the economic lassitude of the era.

Thankfully, this is also a problem that appears unlikely to face us. The Sarbanes-Oxley Act of 2002, passed after very considerable provocation from Enron and WorldCom, was at worst a harmless piece of legislation, adding some bureaucracy but having little effect on the willingness of business to expand. The one danger is the mutual fund scandal; were it to expand and deepen to the extent that the major "no-load" funds such as Vanguard, T. Rowe Price and Fidelity were seen by the investing public as tainted, then retail investor money might move out of equities altogether -- causing the same problem at the investor end of the capital markets that New Deal meddling caused at the underwriter end, with the same chilling result. Fortunately, that is unlikely.

Adding it all up, you have three counterproductive Hoover/New Deal polices that appear likely to be repeated (increased taxes, higher public spending and agriculture subsidies) four that don't (Smoot-Hawley, the NRA, the Wagner Act and market-killing securities regulation) one (excessively tight Fed monetary policy) where we may run into trouble in the opposite direction and one (increased insecurity of property) that may depend on the result of the November 2004 election.

On balance, we are unlikely to suffer a repeat of the 1930s. If the multiple imbalances currently visible in the U.S. economy result in a substantial downturn, then an inflationary repeat of the 1970s, albeit with somewhat worse growth performance, appears the most likely scenario.

-- posted by Normxxx

Top 112. Apr 27, 2004 1:26 PM

» Normxxx - 'A Century of Prices' and the U.S. economy

'A Century of Prices' and the U.S. economy

By Clif Droke

I’m a big fan of classic stock market literature. I think it’s fascinating to read how the old-timers operated in the market and what they thought of the market situation of their day. I recently finished one such insightful volume entitled "A Century of Prices" (by Theodore Burton and G.C. Selden, first published in 1919 and available from Fraser Publishing Co, Burlington, VT). I came away from this incisive work with some idea that can be applied to our current stock market/commodities/economic situation, which I’d like to share.

<img Align="Left" src="http://images.amazon.com/images/P/087034...">
There are several lessons to be learned from this little book. One is the relationship of interest rates to the stock market and how the one can be used to discover major turning points in the other. But the main lesson to be learned from this work, which covers U.S. price history all the way back to the late 1700s, is the influence of major wars on the stock and commodity markets.

What specifically is this lesson? The lesson is that major wars (defined as any military conflict lasting at least 3-4 years or longer) almost without exception bring about rises in the general price levels of stocks and commodities -- and by extension the general economy -- lasting from 5-7 years. Minor wars (skirmishes lasting only 1-2 years or less) do not typically have much lasting impact on price levels or the economy.

Moreover, the level of financial commitment in the first year or so of the war will usually determine in advance whether the conflict will be of a long-term (i.e., major) or a temporary (i.e., minor) nature. This level of commitment can be seen in the relative levels of government spending in the first 12 months of the war, including the months immediately preceding the declaration of war. This principle has obviously application to our current situation as the war on Iraq wages on past the one-year anniversary. More importantly, the price tag for 2003 of the war has been announced at $87 billion, and the Fed as injected $1 trillion in liquidity in the banking system in the past year. This strongly suggests that the war will likely be long-term as opposed to a merely temporary one.

What then can be expected of stock and commodity prices in the 1-2 years ahead? Based on the history uncovered in "A Century of Prices" they can be expected to continue rising overall. This means the U.S. economy will likely be "sustained" over the next few years despite the loudest grumblings of the bears to the contrary. Let’s take a closer look at the market internals, as well as past history, to try and gain a better perspective on this.

The first things to usually bottom among commodities ahead of a major war effort are steel and copper prices. For obvious reasons, steel, copper and other base metals are in tremendous demand during wars and rising prices for these commodities are normal in time of war. In turn, strength for steel and copper prices precedes general economic strength. For instance, after the depths of the Great Depression in 1933, steel and copper prices rallied into the end of the decade along with most other commodities. This was obviously a precursor to World War II, as well as a reaction to the enormous re-liquification of the markets in an attempt to rescue the economy from the Depression. Are we witnessing a repeat of the 1930s today (replete with re-liquification and war-related spending)? You bet!

A recent edition of the London Financial Times discussed the revival of the worldwide iron and steel industry, including right here in the U.S. That’s right, the long-defunct U.S. steel industry is making a comeback! International Steel Group (ISG) has been leading this "Rebirth of American Steel" by picking up nearly 40 bankrupt steel companies in the past five years. According to a recent special report by metal consultancy group World Steel Dynamics, ISG has taken an "uncompetitive array of steel plants" in bankruptcy and transformed them into "one of the world’s best-positioned steelmakers." This after many pundits had long since pronounced the U.S. steel industry "dead." According to the message of "A Century of Prices," no major economic revival can begin without a revival in steel and other industrial metals. Neither can a major war be fought without it. Lo and behold, we are witnessing this revival in the metals, which bodes well for the U.S. economy in the years immediately ahead.

"A Century of Prices" also shows us that the middle part of a decade where a major war is fought is bullish without exception. We also know that the "fifth" year of every decade is always bullish, too. So might we expect a continuation of the stock/commodities bull market in 2005? Those market forecasters calling for a market crash and economic recession in 2005 had better re-think their positions based on the assumption that history repeats.

"A Century of Prices" shows us that we can definitely take a page right out of the past and learn from generations gone by. History really does repeat, and this basic lesson comes alive in the pages of this book.

-- posted by Normxxx

Top 113. Apr 30, 2004 8:21 AM

» Kirk - Beating the Business Cycle

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Here is a new book by one of our regular contributors, Lakshman Achuthan, who has his own forum ECRI Leading Indicator Forecast where he has been answering our questions and posting the weekly data from his work for a long time.

Order the book and discuss it with Lakshman right here at Suite101.com!

<img src=http://images.amazon.com/images/P/0385509537.01._PE32_PI_SCMZZZZZZZ_.jpg align=left width=112 height=169>Beating the Business Cycle: How to Predict and Profit from Turning Points in the Economy

by Lakshman Achuthan and Anirvan Banerji,

Please order with this link to support our efforts here at Suite101.com!

Book Description

While so many have failed at predicting recessions and recoveries in the economy in the past, what makes the predictions of the ECRI so different in their uncanny accuracy. Among many other turns in the economy, the institute successfully predicted the U.S. recession of 2001 six months before the economists did; the U.S. recession of 1991 five months in advance, and most recently, the weak U.S. recovery in 2002. In constant demand in the media, the ECRI has been called the “secret weapon” of companies both large and small, from the major fund managers and the central banks to Alan Greenspan himself.

CYCLES OF CERTAINTY is the first book to reveal how managers, small business owners, and individuals can peer into the economy’s future in making key decisions. By knowing whether the economy will contract or expand, a large company can better know whether to search out new clients and build new factories if the economy is growing, or consider cost cutting and layoffs in a looming recession.

But CYCLES OF CERTAINTY isn’t aimed just at Fortune 500 managers. The advice it offers applies just as strongly to small businesses and individuals, as well. Should the owners of a small laundromat open a second shop or sit tight? Is now a good time to consider changing careers, or going back to school? What about that new house you were considering—is it the right time to buy, or should you hold off?

Written in an easy-to-understand, accessible style, CYCLES OF CERTAINTY shows how anyone can adopt a “business-cycle” mind-set, providing readers with the specific advice they need to check the key leading indicators, and apply that to their business, job, or major life decision.

-- posted by Kirk

Top 114. May 15, 2004 8:39 PM

» Kirk - Bernardo's Recommended Book List

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The Successful Investor Today
By Larry E. Swedroe / Hardcover / August 2003

What Wall Street Doesn't Want You to Know : How You Can Build Real Wealth Investing in Index Funds
By Larry E. Swedroe / Hardcover / December 2000

Rational Investing in Irrational Times : How to Avoid the Costly Mistakes Even Smart People Make Today
By Larry E. Swedroe / Hardcover / May 2002

The Only Guide to a Winning Investment Strategy You'll Ever Need: Index Mutual Funds and Beyond - The Way Smart Money Invests Today
By Larry E. Swedroe / Hardcover / April 1998

The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk
By William Bernstein / Hardcover / September 2000

The Four Pillars of Investing : Lessons for Building a Winning Portfoliod Minimize Risk
By William Bernstein / Hardcover / May 2002

The Informed Investor: A Hype-Free Guide to Constructing a Sound Financial Portfolio
By Frank Armstrong / Paperback / March 2003 / 0814472508

All about Index Funds
By Richard A. Ferri / Paperback / July 2002

Protecting Your Wealth in Good Times and Bad
By Richard A. Ferri / Paperback / May 2003

Serious Money, Straight Talk About Investing for Retirement
By Richard A. Ferri / Hardcover / March 2000

Each one of these is worth a review if anyone is up to the task! smile

-- posted by Kirk

Top 115. May 27, 2004 12:41 PM

» Normxxx - The Best Democracy Money Can Buy

'TWISTED AND MANIACAL'
Hanging out at a Hillcrest taco shack with Greg Palast

by Shane Liddick |28 April 2004

<img align="Left" src="http://images.amazon.com/images/P/0452283914.01._PE20_PI_SCMZZZZZZZ_.jpg">It was quarter-past-seven on Mother’s Day at the Universalist Unitarian Church in Hillcrest and Greg Palast—hailed by some as the most important investigative journalist in the world today—was still outside signing copies of his re-released best seller, The Best Democracy Money Can Buy.

San Diego poet Theresa F gyrated on stage. A heavy bass line reverberated through the hall, informing a sequence of arresting African dance moves. A buzz of anticipation swept through the packed house.

After a thunderous applause for the poet, church provost Tanya Winter introduced Palast by way of the words ascribed to him by comrades and detractors.

Leftist philosopher Noam Chomsky says “he upsets all the right people.” The former Secretary of State of Florida, Katherine Harris, summed him up in three words: “twisted and maniacal.” A Cleveland newspaper has called him “the most important investigative reporter of our time,” and a Baltimore writer said that “no one has uncovered more about the Bush dynasty than Greg Palast and lived to write about it.”

The San Fernando Valley native spoke for nearly two hours, covering the gamut of modern-day conspiracies and high-level corruption. Though the systematic fraud of the 2000 presidential election was the glue that held the presentation together, Palast started in another direction.

His tour into the heart of American darkness began with the regime’s most pressing current debacle: Iraq. Holding a copy of a thick document pinched from the U.S. State Department (he’s a magician at appropriating important papers), Palast detailed the U.S. plan for the post-conflict re-building of Iraq—one that was written “about a year before we were told there was going to be a conflict.” The plan—privatization of six of the top state banks, zero tariffs, flat taxes and 100-percent foreign ownership of industry—amounts to a democratic nightmare, he said.

“Not only a free-fire zone, but a free-trade zone as well,” Palast quipped.

In Europe his reports are often top of the nightly news, but they rarely see print in major media outlets on this side of the Atlantic. He says he’s been blacklisted in the press here. Stories he’s broken in London’s Guardian and Observer newspapers, and on the BBC, seem to stop short of U.S. borders.

Here in San Diego, he seemed at home—perhaps that’s his way. He’s certainly at ease behind the podium. His humor is bitingly sarcastic at times and often underplayed. It’s the same light and wily tone that pervades his book and much of his writing.

In an era that finds the American media cowing to the country’s war machine, he’s a journalist with the balls to not only expose a growing oligarchy that’s snatching up an alarming amount of the world’s globalized wealth, but to call them out by name.

In no small way, he is David in a world of politico and gas company Goliaths.

His book-tour manager granted me some time with him after the presentation—precious time. It was nearly 10 p.m. and they still had to drive back to L.A. The modern-day Mencken had a 6 a.m. meeting. With coffee shops closed, we were forced to take the interview to the Los Panchos taco shack on Washington Street.

I expected him to be erudite and stuffy, but the truth is Palast is as pedestrian as crossing the street. There’s a proletarian sensibility about him. Direct and straightforward, his stories are funny and his sentences are sprinkled with colorful expletives.

“I grew up in the Valley, L.A., in a real shit-hole neighborhood,” he said over an order of Spanish rice. “It was dull, it was poor. I was going to be cannon fodder for Vietnam. With my sister, we kind of fought our way out; the only way we really had was street smarts. So I got some degrees and spent my time hunting corporate bad guys.”

In an ironic way, this poor Jewish kid from the Valley—who’s directly assaulting some of the most established families in the country—is the embodiment of the American dream. He pulled himself up by the bootstraps, and made an international name for himself, without compromising his values.

After making his bones as an investigator, taking companies like Exxon and Long Island Lighting to task for environmental disasters and nuclear irresponsibility—to the tune of billions of dollars—he realized the power of the media.

“I got to the point I couldn’t get the stories of my investigations into the press, so I said, ‘Fuck it, I’ll write them myself.’”

In 1997 he wrote a letter to London’s Guardian—a paper that doesn’t accept submissions. They wrote him back, calling his revelations “explosive,” and one thing led to another. Palast was soon investigating scandal in the Tony Blair government.

We talked about the conservative climate of post 9/11 America—of the pendulum that’s swung to the right with nationalistic fervor. Despite the chilled climate of censorship in the country and all the dishonesty and sleaze he’s uncovered, Palast remains upbeat. “It swings back,” he says. “You can only land on the aircraft carrier so many times. You can only go ‘Boo’ so many times [and] ‘they’re coming to get you,’ so many times, before you say, ‘How come they’re still coming to get us, asshole, I thought you’re supposed to prevent that instead of foment it.’”

He points to 1950s McCarthyism and the high body count of Vietnam as evidence that things have been much worse in America.

“That’s a sign of my age,” he says. “I’ve seen worse. But there’s more media control [now] than there’s ever been. The mainstream media outlets are far more locked up, controlled and brain-dead than they’ve ever been…. That’s therefore creating the alternative press… [about] which they’re saying, ‘Oh, don’t look at the Internet, you can’t trust what’s out there.’ As opposed to what I just read from the Associate Press—a complete piece-of-shit propaganda pack of lies? And then I’m supposed to worry about what I read on the Internet? Give me a break.”

-- posted by Normxxx