Month: July 2004

Do I at least keep the right to party?

The Bill of Rights is a wonderful thing. It gives me the right to say what I like, and it gives you the right to say you disagree. It gives Ann Coulter the right to write what she wishes, and USA Today the right to say they won’t print it. And Americans have a fine heritage of disagreeing in word and deed. The history of protest in America goes back at least to the Boston Tea Party — which of course predates the Bill of Rights. Perhaps this incident is why the First Amendment specifically protects the right to assemble “peaceably.”

In my lifetime, protest has not always been peaceable. In fact, sometimes protest becomes very much like civil unrest. It is my personal opinion that many protests-turned-violent have a great deal to do with police “preacting” to problems: because protest is expected, police show in force; protesters feel oppressed, cops feel threatened; a small incident occurs somewhere and is met with overreaction; tear gas, beat-downs, and property destruction ensues. Scenes like this are undoubtedly the inspiration for segregated protest areas, sometimes called “demonstration areas” or “free speech zones.” This last euphemism disturbs me, as the First Amendment makes it clear that our entire nation is a free speech zone. Nevertheless, such zones have become all the rage in crowd control, and the issue of mind control must be left to the reader.

This week’s Democratic Convention in Boston has been marred by the existence of a free speech zone that is little more than a cage for protesters. This travesty, not the first of it’s kind, will likely be emulated at the Republican convention next month. There will be clear controls on where dissenting opinions may be voiced en masse. You have the right to say what you want, and you have the right to peaceably assemble, but apparently you don’t have the right to do both at once.

My fellow Americans, protest as we know it is dead.

Your views cannot be heard from inside a cage, whether that cage is in back of the convention center or in the county jail. Do not think that your views are so exalted that, like Nelson Mandela, Amnesty International will take up your cause. There is no point in getting thrown into the pokey for protesting in the wrong spot. There is no point in making a police office want to use tear gas or something worse on you. There are better ways of being heard.

Luckily, America has another fine tradition of dissent, policital prose. For examples, browse this list of documents. You can write down your thoughts. You can send a letter to the editor of any newspaper you like. You can sell bumper stickers and t-shirts with your message on them. You can send a mass mailer. You can ask to put up a poster at the local grocery store. You can rent space on a billboard. You can blog. Heck, you can send your opinion as spam and more people will hear it than if you were in a cage.

Remember, the Bill of Rights was written by people who overthrew the government.

$1.6 Billion

Today, Google announced some important figures regarding their upcoming IPO. They will be offering a total of 24.6 million shares, 14.1 million from the company and 10.5 million from current stockholders, for something between $108 and $135 per share in a Dutch Auction Process that is intended to maximize money the company gets should the stock price rise substantially during the IPO process. These shares represent 9% of the outstanding shares — meaning insiders and the company itself will still control over 90% of the shares. The company expects to pocket $1.66 Billion and have a $36 Billion market capitalization, making it an instant large cap stock, bigger than Dow component McDonalds. Nevertheless, this is not the biggest IPO ever. And at least now we have some income and revenue figures for the company: revenue of $1.4 Billion for the first half of the 2004 ($560 Million for first half of 2003); income of $143 Million for those 6 months ($58 million last year). That works out to 54 cents per share. If we say, for the sake of argument, that they might have earned a dollar per share over the last year (just short of 2 times 54), that still makes a rather rich triple digit multiple. Ticker symbol will be GOOG (4 letters because it’s listing on the NASDAQ).

You know what’s missing from this impressive mass of information? We still don’t know what Google needs with an IPO! Google is able to give us SEC documents with single sentences 594 words long, but all they are willing to say about where the money is going is it’s for “for general corporate purposes.”

If the proposed offering price is not sufficient to discourage you from calling your broker and learning more about how Dutch Auctions work, let me offer some more information. Despite Google’s publicly stated goal of making this an IPO that average people can participate in, the odds of you getting any of those shares at the initial distribution is low. Chances are you will not be able to buy any shares until they are available in the open market, and that means you won’t be paying $108 or $135 per share, but whatever the market says — it might be less, it will probably be more. The next important thing to remember is that the purpose of the Dutch Auction process is to insure that any insane bid-up process benefits the company, not some speculative institutional investor. In short, the company doesn’t want to make investors wealthy, they want to make the company wealthy. And finally, you need to be aware of something called a lock-up period. About 6 months after the IPO, not only will insiders be free to dump massive amounts of stock for incredible profit, it will become possible for short-selling to occur. Both these things have the potential to bring down the stock price.

Issues with the stock offering itself aside, you also need to know about some looming legal issues. There’s a big age discrimination suit filed against the company, with millions of dollars in real damages. And based on information revealed so far, this case isn’t going away cheaply.

But if you have $13,500 — what 100 shares of GOOG at the IPO price is likely to cost — burning a hole in your pocket, why not consider 150 shares of IBM, which will also pay you a $0.72 per share quarterly dividend. You could buy 145 shares of United Technologies, and get $1.40 per share each quarter. That money would also buy 465 shares of Microsoft, which announced a $3 per share special dividend last week. Or 425 shares of Apple, which doesn’t get you a dividend, but is in an up-trend (disclaimer, I own shares). Or if you’d prefer something more diversified, there’s iShares, sort of like mutual funds that trade like stocks (disclaimer, I own shares in one of them).

If you prefer to put your money in the karmic bank, there are lots of ways to spend $13,500 towards the good of others. Around your community there are probably charities that could use some money. Look around you.

Enough Pie for Everyone

The 9-11 Commission has released their report. Here’s information on how to get your own copy and come to your own conclusions.

So how did 9-11 happen? From what I have read, the Commission feels there is plenty of blame for everyone. It isn’t all Bush’s fault; it isn’t all Clinton’s fault; it isn’t all Ashcroft’s or American Airlines’s or the guy manning the metal detector that morning or anybody else’s fault that 9-11 happened. It’s everyone’s fault. Like a thousand fictional tragedies, little mistakes happened, snowballing, allowing if not causing big mistakes. Here’s CNN, the BBC, Reuters twice, Bloomberg (one of my favorite news sources, even before Mr. Bloomberg became Mayor), MSNBC, even MTV is reporting on this.

Yeah, it’s the Modern Day Warren Commission.

The more important question is how we can say “never again” and mean it. The official stance of “More Homeland Security” and “One Information Czar to Rule Them All” seems weak. After all, the DHS was mired in bureaucracy from its very inception. From the standpoint of Joe Average, they have said little more than Look Out and have emergency supplies of canned food and plastic sheeting. Don’t get me wrong, having emergency food is a good idea for any disaster, from terrorism to storms to unemployment. But I think everyone was hoping for more.

As for a Cabinet Level Spook Supervisor, I remind everyone that the biggest reason the CIA has never been under the same auspices as the FBI for a reason. Officials at the time didn’t think it was a good idea for one man to control that much intelligence information. Heck, the CIA was created because of the “intelligence failures” leading up to Pearl Harbor. We already have one cabinet level agency set up because of 9-11, the DHS. How many bureaucrats does it take to make us feel safe?

It’s just as well that pretty much nothing will happen with these recommendations until after the elections.

In the meantime, lets remember that the ticket-holding men of middle eastern decent may be less of a risk than some nut being able to steal a baggage tractor and drive it onto a runway at a big, hub airport. I bet they didn’t re-screen any luggage that might have been aboard, either.

Shocking Stock Action!

Or, How Not To Pick Stocks

Imagine a world where police don’t have to kill bad guys. More importantly, imagine a world where police never kill an innocent person. No, instead of shooting a gun, police would shoot an immobilizing blast of electricity, allowing the police several minutes to secure a potentially dangerous individual and figure out what to do next almost at leisure. Taser International would like you to imagine this world. In fact, they’d like you to live in it. Oh, and they would like you to buy their stock.

Before you call your broker, there’s a lot of things you should know. First of all, the stock has been highly volatile, having traded in the last year as low as $2.02 and as high as $64.15. Just today, they lost $5 per share after a negative article in the New York Times regarding the safety of their products and today’s earnings announcements. Taser executives have spent much of the day telling any media outlet that would listen that their products are safe and their balance sheet is fine.

The safety of the product is the subject of intense debate. Taser says they have research showing the device is safe. Critics call this research flawed and anecdotal. In any event, The Sharper Image has decided not to sell the consumer grade Taser product on the basis of the NYT story.

As for the balance sheet, it may seem odd to say that the profits were too good. When a product can cost upwards of $800, there is a limited market for it. No company, no matter how well it is managed and how good its products are, can triple their revenues and multiply their actual profits by 13 every year. That’s just not possible. For the matter of simplicity, we are assuming the figures they released are actually true — after Enron and Worldcom, that needs to be said. As The Motley Fool points out, the stock is up 1600% in the last year — also a clearly unsustainable trend — and a competitor may come along sooner or later. Assuming everyone who needs one doesn’t already have one by then.

Finally, I’d like to address the fact that upper management spends a lot of time with the media, “aggressively defending” the company and it’s stock. I don’t like seeing this situation. After all, if the CEO is out there refuting news stories, appearing on television, blaming short-sellers, and threatening people who say bad things about the company, who exactly is getting the work done? My attitude is “don’t tell me, show me.” Get some bigger, unquestionably independent research that shows the product is safe and effective. Make the analysts and short-sellers rethink their positions by delivering good, solid, sustainable growth every quarter.

A world where police never accidentally kill anyone is too good to be true. Never buy a stock based solely on company hype.

Why Your Health Insurance Premiums Went Up

The Washington Insurance Commissioner has officially done the right thing: he has denied Premera Blue Cross’s bid to become a for-profit insurer.

It took 56 pages to say “that’s a really lousy idea that will cost people money.” Basic logic says that if the company wants to be profitable at the end of the year instead of just “even,” rates must go up or expenses must go down. Perhaps both. Either way, policyholders lose.

To me, what is more interesting are the figures in the local news coverage: they insure 1.2 million people; they are the sole coverage for 850,000. In contrast, they spent $35 Million trying to become for profit. That’s $29 per person they insure that did not help a single person get medical care. To me it represents $29 too high a premium paid. They also spent $125 Million on the rollout of a new insurance plan. That’s another $104 that didn’t pay for a single office visit, medication, or treatment.

A total of $133 in wasted premiums. And they wonder why the Insurance Commissioner won’t let them become a for-profit company.

Quick Reality Check

The Osaka, Japan school district is apparently going to start using RFID chips to track children. Here’s the story. Here’s another version. In short, tags will be in students coats or book bags. The tags will be monitored by devices at the school gates or doors.

Before you go running to buy raw materials for tin-foil hats, and before you call your broker to buy a bunch of RFID company stock, here’s what I think you need to know.

What this technology will do: It will track the tagged item as it enters and leaves the school. It may also note the time that the tagged item was scanned.

What this technology will not do: It will not tell “bad guys” where a child is; It will not tell parents or school officials where a child is; It will not prevent kidnappings; It will not locate missing children.

The shortcomings of this technology are: It depends on the child remembering to take the tagged item to school and remembering to take it home again; It assumes that the tagged item and the child are in the same place; It is an expensive alternative to a class roll call. Anyone expecting this initiative to reduce truancy or keep kids safe will be disappointed.

In other news, the headquarters of the National Enquirer and several other tabloids is now free of anthrax. I always felt that targeting this facility was a sign that the anthrax mailer must not be American born. Think about it. Most people do not take these “newspapers” seriously. However, if your native language was not English, you might look at the fact that there are several papers on every supermarket checkout produced by the same publisher and think to yourself “Aha! I have found the American propaganda engine!”

Just my personal opinion.

Hatred and Extremists

“A moderate facade is necessary to win elections in a generally tolerant nation.”
— Paul Krugman

We do live in a “generally tolerant nation.” Even so, we keep hearing about how Hate Fuels The Terrorist Agenda and The Terrorists Hate Us and The Terrorists Hate What We Stand For. This philosophy is patently silly. To say that terrorism is nothing more than a large scale hate-crime is disingenuous.

However, because “they hate” our freedoms and our democracy, to say nothing of “credible information” that the Department of Homeland Security has but we do not, we are told the Fall elections are at risk. No, I’m not saying the DHS should spill everything they know, but they do rather seem to be The Boy That Cried Wolf. We are told there should be a contingency plan. This has even made the international headlines.

So we “know” roughly when and where an attack will be, but we are unable to stop it? And the terror alert level isn’t red? Don’t get me wrong, even Congress is tired of warnings that say nothing more than LOOK OUT! but doesn’t this warrant upgrading the terror risk level? For that matter, this situation is supposed to make us trust President Bush to keep on task with the War on Terror? Many good things have been said by many smart people about this situation, and I encourage you to read and come to your own conclusion.

But apparently disrupting the election isn’t the only goal of terrorists. The political conventions are at risk too, mostly from domestic anarchists. However, New York City is determined not to allow any incidents. In fact, apartment dwellers near the convention are encouraged not to leave their homes during the convention. They should lay in extra food, carry a government approved photo ID card, use the servants’ entrance — er, I mean the back exit — and not schedule deliveries. I shudder to think what might happen should anyone from these 3000 families need to go to work or have a medical emergency. I’m sorry, this sounds more like a scheme to keep “undesirables” under wraps than a security measure.

Heaven knows apartment dwellers couldn’t possibly want to observe the political process in motion. Right? That doesn’t sound very moderate, let alone tolerant.

In unrelated news, this item at Forbes discusses the fact that over 99% of employers are small businesses, and they generate half our GDP. What is the official Bush Administration prescription for helping small business? Deregulation. Pardon me for pointing out that deregulation allowed mega-banks to form, allowed mega-mergers that left thousands of people unemployed, put multiple airlines out of business, and allowed Enron to happen. If you can figure out how any of these things benefitted small businesses, let me know.

Something Fishy Going On

Today, a handful of news outlets reported a strange story of a man and the big fish that got away. Unfortunately, this fish got away after having been caught, processed, put on ice, carefully wrapped, put in a cooler, secured with rope, and passed through airport security. Here it is in all it’s glory, coverage from the Seattle Post-Intelligencer, Seattle Times, and the Associated Press. Twice.

You might be tempted to write this off — as Continental Airlines did — as “Big deal. Luggage sometimes doesn’t make it to it’s destination, and sometimes luggage doesn’t contain what people thought it did when they left for the airport.” But it is a big deal. People don’t misplace 40 pounds of fish, they don’t leave it in their hotel rooms. And the cooler didn’t vanish, just it’s contents. The fisherman is right when he says this is a security problem.

If 40 pounds of fish can vanish from a cooler without somebody saying so much as “Hey, Buddy, where’d you get the fish?” then what is there to stop 40 pounds of [insert scary biological, chemical, or radioactive agent of choice here] from showing up in a cooler? Seriously. Most people can’t put 40 pounds of fish in their pocket and act like nothing’s wrong. Somebody had to notice this, and that someboedy chose to say nothing. We live in an era when scribbling possible dialog for your novel in the margin of your crossword can get you a stern talking to from the not-so-friendly folks at the TSA, and yet beyond the security line, dozens of pounds of who-knows-what moves in and out, unmonitored.

It is past time to consider security beyond the security checkpoint. Don’t make me spell it out.

Sit and Spin

Today, we learned that 112,000 jobs were created in June, a tenth straight month of job gains. Not only that, the work-week got shorter. There were no signs of “wage inflation,” meaning Greenspan can theoretically take it easy on the rate hikes everyone who pays attention has known were coming. The Unemployment rate was flat. Great news, huh?

No, not really.

First, the economists thought the number would be more like 250,000. Second, on average we needed 150,000-200,000 new jobs each month to stay “even.” Third, June is the month when the economy gets a huge influx of job seekers who just graduated High School or College. Those young people do not count as unemployed because they were never employed in the first place. Add to that the fact that things have gotten just good enough that some “discouraged workers” are starting to think about looking for work again. Depending on when these people were last employed, these people may or may not count in the unemployment rate.

As for the work week dropping to 33.6 hours on average, that means a lot of people are working part time — and therefore have no benefits. This notion is further supported by the fact that HMOs are concerned about growth going forward. This explains why one in five adults did not have health insurance last year. Or, if you prefer to think of it this way, 46.3 million people. Not to alarm any Baby Boomers, but a job that doesn’t provide health insurance probably doesn’t have a retirement plan either.

And finally, there is no “wage inflation” because jobs are being created fastest in low-wage categories. Furthermore, Greenspan would not be raising interest rates if there were not inflation — the normal kind of inflation that means milk, gas, and blue jeans cost more this year than they did last year. So wages are not going up, while the cost of everything else is. Oh, and there are some who make a credible argument that the Bush Administration is allowing inflation to occur so as to pump up future tax revenues and thereby reduce the deficit. I guess they think that’s easier than making Bill Clinton pay more taxes.

Happy Independence Day this Fourth of July. Remember, the FBI would like you to “stay vigilant.”