Thursday, September 26, 2013

Bill de Blasio Was Also a Fan of Robert Mugabe, the Genocidal Dictator of Zimbabwe

Bill de Blasio's support for the Sandinistas has been described as a "youthful indescretion" (despite the fact that he was in his late 20's and definitely an adult at the time).  But how do you explain the latest revelation that he honored Robert Mugabe at an event that had been boycotted by 36 of 51 City Council members?  This was in 2002, when de Blasio was 41 years old.  

Seriously, this guy, who seems to have a murderous left-wing dictator fetish, is likely to be New York's next mayor?  Disgusting.  

What if Ted Cruz Wins?

No, I don't think Obamacare as a whole will be defunded but I think any delay for any major segment of Obamacare will be a very clear victory for Ted Cruz who almost nobody thought had a chance of achieving anything.  The White House's position was made weaker today by the fact that a Democratic Senator said that the individual mandate should be delayed a year using pretty simple logic:

"Don't put the mandate on the American public right now," Manchin said. "Give them at least a year. If you know you couldn't bring the corporate sector, you gave them a year, don't you think it'd be fair?"

That coupled with the fact that there is another glitch in the exchange software, you really can't argue that Obamacare is ready for primetime.  So why shut down the government in order to implement something on time that can't be implemented on time anyway?  Launching Obamacare now would be the equivalent of Apple launching an Iphone where you can only get data access by using a PC already connected to the Internet.  I'm sure there are other red state Democrats, besides Manchin, who don't want to risk their political careers to Obama's vanity.

The more Democrats that come around, the more Obama will look like a complete schmuck for refusing to negotiate and the more he will be blamed for any shutdown.  

I know the GOP is scared that people will blame them for a shutdown but I don't think it will be as bad as they say.  The GOP lost a handful of House seats and gained a couple of Senate seats after the last shutdown and that was before Fox News was around to give the conservative perspective to people.  It was also when the Internet was still just a niche and before blogs.  People were hammered day and night how this was the Republican's fault by the mainstream media and yet the GOP still suffered few ill-effects.  

Anyway, I am keeping my fingers crossed that the Republican caucus in the House keeps Boehner's backbone stiff and sees this thing through.  There is a decent chance that the Democrats will offer a delay to the mandate or other aspects of Obamacare before this thing is over.

Wednesday, September 25, 2013

The Complete Video of Ted Cruz's 21 Hour Filibuster on Obamacare

Gotta say I'm impressed.  I saw the very beginning and the very end and he was amazingly lucid after speaking for 21 hours straight.  He also made some great points:

 It was also nice to see him read Green Eggs and Ham on the Senate Floor (at his daughters' bedtime):

Monday, September 23, 2013

New York's Next Mayor Supported the Sandinista's and Honeymooned in Cuba

Just in case you didn't think New York was completed f*cked with the passing of the Giuliani/Bloomberg years (not that I was always a fan but they did leave NYC better off than how they received it, in shambles after the administration of de Blasio's old boss, David Dinkins), read this:

"My work was based on trying to create a more fair and inclusive world," he said in a recent interview. "I have an activist's desire to improve people's lives."

Mr. de Blasio became an ardent supporter of the Nicaraguan revolutionaries. He helped raise funds for the Sandinistas in New York and subscribed to the party's newspaper, Barricada, or Barricade. When he was asked at a meeting in 1990 about his goals for society, he said he was an advocate of "democratic socialism."


In 1987, Mr. de Blasio was hired as a political organizer, soon after he finished graduate school at Columbia, earning $12,000 a year. He worked inside the Quixote Center's Maryland office, converted apartments filled with homegrown squash and peace posters. Hunched over his desk with a phone to his ear — his colleagues likened him to "Big Bird with a beard" — he oversaw efforts to solicit and ship millions of dollars in food, clothing and supplies to Nicaragua. He also proved to be a skilled provocateur, twice being arrested during rallies against United States foreign policy that were held in the Washington area.


In the cramped Lower Manhattan headquarters of the Nicaragua Solidarity Network of Greater New York, where he volunteered, Mr. de Blasio learned to cause a stir. He and a ragtag team of peace activists, Democrats, Marxists and anarchists attempted to bring attention to a Central American cause that, after the Sandinistas lost power in a 1990 election, was fading from public view. "The Nicaraguan struggle is our struggle," said a poster designed by the group.

The activists tried everything: brandishing George H. W. Bush masks on subway cars, advertising parties to celebrate the Cuban revolution and hawking subscriptions to the international edition of Barricada. (Mr. de Blasio, who was living in a basement apartment in Astoria, Queens, was one of the first to sign up.)

Despite some debate over whether it should support only humanitarian causes, the Nicaragua Solidarity Network held dances to benefit the Sandinista party. "They gave a new definition to democracy," Mr. de Blasio told The New York Times in 1990 in an article about the wistful reaction of American activists to the defeat of the Sandinistas. "They built a democracy that was striving to be economic and political, that pervaded all levels in society."

At a retreat later that year, members of the network were asked to articulate their visions for society. One suggested a "real peace movement," according to minutes of the meeting. "Rewards for altruism," another said. Mr. de Blasio suggested "democratic socialism."


Mr. de Blasio remained supportive of the Sandinistas, often referred to by their acronym, F.S.L.N., even after they lost power. "People who had shallow party sympathies with the F.S.L.N. pretty much dropped everything when they lost," said Jane Guskin, a fellow activist in the solidarity group. "Bill wasn't like that."

He has remained interested in Latin America — he even honeymooned in Cuba (in violation of a United States travel ban). To this day, he speaks admiringly of the Sandinistas' campaign, noting advances in literacy and health care. "They had a youthful energy and idealism mixed with a human ability and practicality that was really inspirational," he said.

Friday, September 20, 2013

Israeli Minister of Strategic Affairs: Iran is 6 Months from Nuclear Capability

Yuval Steinitz, the Israeli Minister of Intelligence, International Relations & Strategic Affairs, gave a candid, no-nonsense interview with Israel Hayom.  While I suggest reading the whole thing, check out this section on the subject of Iran:

"There is no more time for negotiations. The Iranians have been negotiating for four years. Over the last 18 months, there has been some progress in imposing sanctions that have pressured the Iranian leadership. The sanctions are estimated to have cost the Iranian economy about $100 billion just over the last 18 months. Since the entire scope of the Iranian economy is about $450 billion, this signifies a massive blow. Their economy is on the verge of collapse, but they still keep advancing their nuclear program."

"[Iranian President Hasan] Rouhani has launched a charm offensive on the West, but he plans to charm his way to a nuclear weapon. While he sends letters to [U.S. President Barack] Obama and wishes the Jews a happy new year, the centrifuges continue to spin. Not only has the [nuclear] project not stopped, it is galloping forward."

"If the Iranians continue to advance, they will have nuclear capability within six months. Time has run out and the West, chiefly the U.S., must clarify to the Iranians that they have two options: either abandon their nuclear aspirations and save their economy or continue with the nuclear project and risk a real military attack that will destroy the nuclear project and humiliate them. There is no middle ground."

Steinitz suggests that the solution may ultimately emerge from the Iranian people themselves, who crave a better economic situation. "There is an internal debate within Iran and it should be intensified. The people in Iran have said their piece: If they have to choose between a bomb and saving the economy, they prefer to save the economy. Now an ultimatum must be set, accompanied by a timetable: If you don't honor the Security Council resolution by a certain time, we will attack."

Over the last two months, Steinitz has met with the foreign ministers of three key European countries: Germany, France and Britain. "All the meetings focused on the Iranian issue," he recounts. "If the world fails to maintain a clear, unified front in the face of Iran, they will try to disintegrate the sanctions."

The minister notes that at this point the Iranians have yet to cross the red line set by Netanyahu, but they are constantly trying to erase it. "They have turned the question of how much material they have enriched to 20% irrelevant. They have added so many centrifuges, and even installed second and third generation centrifuges, which are several times more efficient than the old ones. In the past they had to enrich the material from 3.5% to 20%, and that is a process that takes time, and only then from 20% to 90%. Today they can jump directly from 3.5% to 90%, which is fissile, weapons-grade material. The timetable today is much shorter."

Wednesday, September 11, 2013

Looks Like the Organizers of the "Million Muslim March" Were a Tad Optimistic in Their Original Projection

Maybe they meant the Dozen Muslim March? (h/t Washington Times):

Why is Syria OUR responsibility again?

It really boggles the mind why almost every humanitarian disaster is the responsibility of the US to stop.  Yes we have a large military and therefore have the capacity to do something about Syria but it seems that there are other countries in the area that have a greater interest in what is going on in Syria as well as the military wherewithal. Why should we borrow money from China to send our people into harms way in a country where we have few, if any, interests?

Look at Turkey.  They are right next door to Syria and therefore should be the most concerned with the use of chemical weapons.  They also have an Army with 391,000 soldiers and over 3,000 main battle tanks.  Their Air Force has over 200 F-16's.  Why can't they handle Syria's decrepit military that is mired in a Civil War?

Then there is France, which used to occupy Syria and has expressed interest in intervening. Their military is smaller than Turkey's (122,000 soldiers, 270 main battle tanks and 250 modern fighters) but they could definitely do more than the "unbelievably small" attack we apparently are planning.

And finally there are the Saudi's who are actively funding the rebels.  They have 288 very modern aircraft in their Air Force (half of which are F-15's) and so could really help out countries like Turkey or France if they decided to intervene.

So why America?  Why do we have to expend our treasure all the time?  People like to point out how much more we spend than everyone else on the military.  Part of the reason is that so many countries, especially those in Europe, have become so accustomed to our protection that they have invested only nominal amounts to their own defense.  I was shocked when I noticed that Turkey has a 10 to 1 advantage over France in terms of tanks.

In 2012, the US spent about 4.7% of GDP on the military.  Turkey and France spent less than half that, about 2.3%.  The UK is at 2.5%, Italy is at 1.7% and Germany is at a paltry 1.4%.  It seems that we could save billions upon billions of dollars if we just made our allies bear the burden of dealing with these local flare ups that they seem to care so much about.  It's time for us to stop subsidizing their defense.

Tuesday, September 10, 2013

The Federal Government is Just 3 weeks Away from a Possible Government Shutdown and 5-8 Weeks Away From Completely Running Out of Cash

While the news cycle has been dominated by Syria and the full-court press by the White House to get people to sign on to his unbelievably small operation in Syria meant to make Assad eat his Cheerios with a fork (no word on whether Assad knows how to tip the bowl into his mouth), people have forgotten that we may have a government shutdown October 1 and we might run out of cash in late-October early November.

Congress needs to pass another continuing resolution to fund the government (God forbid they actually pass a budget) and then they need to vote again to raise the debt ceiling.  Check out this chart from the Bipartisan Policy Center which shows when the Federal Government will completely run out of cash:

Hopefully the GOP leadership keeps its spine and is able to squeeze out further discretionary spending cuts.

Lawrence O'Donnell to Anthony Weiner: What is Wrong With You?

You have to watch this train wreck of an interview.  I love seeing Anthony Weiner crash and burn.  Though he did get a zinger out at O'Donnell at the end when O'Donnell asks him to stay so they can continue the argument online.  Weiner said "nobody watches this show, who do you think is online?"  Ouch:

Visit for breaking news, world news, and news about the economy

Monday, September 9, 2013

Syria Fails Reagan's 4 Conditions for Military Intervention

According to Reagan's 4 conditions for military intervention that he listed in his autobiography, he would be on Rand Paul's side in the fight against intervention. Obama's plan for an "unbelievably small" attack that makes Assad eat his Cheerios with a fork doesn't meet any of the conditions. All Presidents should refer to these often when they contemplate military action (h/t Newt):

1. The United States should not commit its forces to military action overseas unless the cause is vital to our national interest.

2. If the decision is made to commit our forces to combat abroad, it must be done with the clear intent and support needed to win. It should not be a halfway or tentative commitment, and there must be clearly defined and realistic objectives.

3. Before we commit our troops to combat, there must be reasonable assurance that the cause we are fighting for and the actions we take will have the support of the American people and Congress. (We all felt that the Vietnam War had turned into such a tragedy because military action had been undertaken without sufficient assurances that the American people were behind it.)

4. Even after all these other combat tests are met, our troops should be committed to combat abroad only as a last resort, when no other choice is available. (Ronald Reagan: An American Life, 466)

Senior Obama Administration Official: We are going to make Assad eat his Cheerios with a fork

USA Today had this nugget this morning:

A second senior official, who has seen the most recent planning, offered this metaphor to describe such a strike: If Assad is eating Cheerios, we're going to take away his spoon and give him a fork. Will that degrade his ability to eat Cheerios? Yes. Will it deter him? Maybe. But he'll still be able to eat Cheerios.

The two officers with current and recent service in the Middle East say the term "degrade" is so vague that it could be used to describe the effect of a single cruise missile strike.

Between this and Kerry's comment that the strike will be "unbelievably small" the only thing to conclude is that these people are really just not serious.  I just don't see how this is going to deter anyone.  "Don't do that or you will face unbelievably small consequences"!  Oh yeah that works in a tough neighborhood like the Middle East.  It seems that all those pro-strike folks who claim that a No vote from Congress would degrade American prestige, I have to argue that an "unbelievably small" strike would degrade our prestige even more.  You never want to look like a paper tiger.

Saturday, September 7, 2013

Valuation Guru: Tesla is Worth a Fraction of Its Stock Price

Aswath Damodaran, who literally wrote the book on stock valuation, took a close look at Tesla's value and came up with a fair value at a fraction of its current stock price.  It closed on Friday at $166.40 but according to Professor Damodaran, it's fair value is only $67.12, 60% lower.  Some might assume that he was using pessimistic assumptions to value TSLA and that is why he came up with such a low number.  Nope.  In fact, I would argue that he used optimistic assumptions.  

First, he assumes that by 2022, TSLA would be much bigger than more established companies like Kia, Porsche and Mazda and be about as big as Audi.  We'll see about that.  Tesla doesn't exactly have a wide range of cars, so it is unclear whether it can even be any bigger than a niche car brand.  It also doesn't have a track record outside of the US and all of those other brands get much of their sales internationally.  

Second, he assumes extremely high profitability for TSLA, much higher than the norm:

Note that the sector has low pre-tax operating margins, with the median value of less than 5%. Companies at the 75% percentile generate margins of between 7.5% and 8.5% and there are a few companies that generate double digit margins.  One of the outliers is Porsche which reported a pre-tax operating margin of close to 16% in 2013, though its ten-year aggregate margin is closer to 10%. You can download the dataset that includes the key numbers for all auto companies by clicking here
For Tesla, we will assume that its focus will continue to be on high-end automobiles and that is margins will converge towards the higher end of the spectrum. In fact, I am assuming that the technological and innovative component that sets Tesla apart will allow it to deliver a pre-tax operating margin of 12.50% in steady state, putting it in the 95th percentile of auto companies (and closer to the margin for technology companies).
Based on my estimates, Tesla will generate more than $8 billion in operating income by year 10, making it more profitable than all but three other automobile companies today (Toyota, Volkswagen and BMW).  

So TSLA is assumed to become one of the most profitable companies in the industry.  That seems pretty aggressive, no?  Especially considering that if it wasn't for using non-GAAP revenues (a sign that the company is really just manufacturing good news for their earnings press releases) they wouldn't be anywhere close to profitability. 

What this all means is that even if the stock price falls 60%, it still is not anywhere close to cheap as you would need historically optimistic assumptions just to justify that stock price, much less show any upside.

We have an equity bubble in this country thanks to Ben Bernanke and the Fed printing press.  Eventually it will pop and TSLA investors are going to get creamed.  Unless of course they find a greater fool to sell their paper to before then.

Friday, September 6, 2013

The Only Way the US Wins in Syria is if a Western Style Democracy Takes Hold and That Isn't Going to Happen

I've been on vacation the last couple of weeks, in Israel, and I've been really amazed how people have gone so crazy over Syria in the US while I was gone.  Look, I am not for chemical attacks on anyone but why is a chemical attack so much worse than the 100,000+ who have been murdered with good old fashioned guns and knives?  Are we saying that it's only wrong to kill your own people if you don't do it the old fashioned way?

Anyway, what's clear is that this is a no win situation for the US.  What does the US gain by attacking without changing the situation on the ground?  The US will simply look impotent.  And if they do change the situation on the ground, it brings Islamists into power, which is bad for the US and bad for Israel.  Seriously, do we really want to be al-Qaeda's air force?  And what is the probability that a western style democracy takes hold?  Pretty much close to zero.  The only thing that might make sense for us would be to help the Syrian Kurds carve out an autonomous area in Syria, as they are actually our allies.  I doubt this administration would actually do that however as that makes way too much sense for them to do it.  They only make boneheaded foreign policy moves (see the overthrow of Mubarak and their support of a Chavez-like dictator in Honduras among others).

One thing I will have to say about Obama though is that he has done something that few have been able to do, unite the right and left in Israel.  No, they are not united in supporting his move to attack Syria. They are united in thinking that Obama is just not a serious actor on the world stage and he has made a laughingstock of the US by waffling the way he did.  Attack or don't attack but make a decision and stick with it (though honestly I heard about as much support for intervention in Syria there as I do here, almost none).  

What really is the case to risk American lives in Syria?  John Kerry made it sound like this is all going to be like some video game where some soldiers push some buttons and some missiles are shot.  But this is serious business.  Some American child is going to lose their father because of a decision to go into Syria.  And for what?  What interest do we even have there?  You can just as easily argue that it is in our interest to keep Assad in power as it is to overthrow him.  

And as a Soviet immigrant to the US, I have to say I am deeply troubled by the fact that Putin is running rings around a US President.  How bad a President do you have to be to make the Russians look good?  To make Putin look like a reasonable and dependable ally?  Putin has no respect for Obama and it shows.