Thursday, January 05, 2006
4 The (Near) Future - 2006
Hello! (To BOTH of you! *wink and smile*)
For various reasons, this blog has been inactive for about a year. However, a new year is upon us, and in the spirit of New Year's, I am inspired to add to this blog.
When I started this blog, my plan was to do one new post per week. I now consider that to be an over-ambitious goal, given all of the other demands upon my time. For 2006, my goal is to do approximately one post per month. So, without further fanfare, here is my January post:
Some of the trends that helped wise investors to profit during 2005 will continue during 2006. The main three are: 1 Buy energy (oil, natural gas, and even coal) 2 Invest overseas, to take advantage of a falling dollar 3 Buy gold - If the global economy grows quickly, then demand for gold will rise along with the demand for many other commodities, and if the global economy develops problems, then investors will seek gold as a safe haven. The big change from 2005 is: Do NOT buy real estate. When interest rates were low and falling, real estate was a great investment; now that rates are higher and still rising, real estate offers a lot less upside. (And in many markets, housing prices have become irrationally high, when one looks at the historical ratio between the montly cost of rent vs. the monthly cost of a mortgage.) Disclosure: I own shares of Chevron and also (woe is me!) of Annaly Mortgage Management.
This year, the Democrats have a chance to either gain or lose seats in congress. Although each district is different, one general word of advice that I would offer to the Democrats is this: do not criticize the war in Iraq, unless you can say, very clearly: "I have a plan, to help create a stable democracy in Iraq, and to do so faster than the Republicans. My plan is..."
Yes, president Bush presented a biased sample of evidence in order to justify an invasion of Iraq. Yes, he said again and again that Saddam had WMD's, when we now know that he did not. Yes, it was both an optional war and a pre-emptive war, and it has led to the deaths of thousands of American troops and tens of thousands of Iraqi's and it has given us an enormous deficit and debt. So, with all of that, why don't we just all condemn Bush in public on a daily basis? Well, for one, it is not constructive. We had a chance to replace Bush's trigger-happy foreign policy with the wisdom and foreign policy experience of John Kerry, and we narrowly lost. At this point, most Bush-bashing is counterproductive. (After all, he is the commander-in-chief. For now.)
The Republican claims that Democrats only have a strategy for "retreat and defeat" are both insulting and untrue. But elections are about perceptions, and if we are not careful, the "retreat and defeat" sound bite may bite us in the ass in 2006. I therefore would urge each Democrat in a congressional race to carefully script a sound bite, which conveys to the American people some positive message. You can focus on domestic issues, and not argue about Iraq, or else you can claim to have a better plan for Iraq. But if you call for retreat, you will face defeat. (If the average American voter wants a paranoid and trigger-happy Middle East policy, then that is what we must offer, in order to win in 2006.)
BACKWARD and FORWARD
*2005, in review - a review*
One of the best films I saw in 2005 was Syriana. If you have not seen it yet, I urge you to do so.
I did not see North Country, but at some point I would like to. (Charlize Theron was AWESOME in Monster. I have been favorably impressed by her willingness to star in movies that are deep and serious. Of course, her decision to star in Aeon Flux [or is that "Aeon Fluff?"] both surprised and disappointed me.)
I also have not yet seen Good Night and Good Luck, but I plan to do so.
By the way... Tom Cruise: psycho, or moron? (you decide). Tom, a word of advice: if you ever decide that you MUST join a pseudoscientific superstitious cult, at least do yourself a favor and do NOT try to claim that your superstitions are superior to an entire branch of science. Seriously. (And yes, I know, Tom is laughing all the way to the bank. And, he got to bang Nicole Kidman. Not just once, but for several years. So, Tom's life is going much better than mine in many ways. But his beliefs are still nonsense.) Anyway, I have decided to boycott his movies for the forseeable future. I will not watch any more of his movies, until either A) he publicly recants his anti-antidepressant attitude or B) he stars in something that I actually want to watch.
*2006 - Schlock II, Return of the Sequel*
I have heard pundits comment that, since movies are lumbering obsolete dinosaurs, whose eggs are going to be eaten by the smaller, faster, more highly evolved options of DVD rentals, cable TV, Internet surfing, video games, etc. etc. etc. ad nauseum... movies will die a slow and lingering death. On their way to the graveyard (a somewhat self-inflicted death, like a smoker who dies of lung cancer, caused in the case of movies by gougingly high ticket prices which are then dwarfed by the even more horrendously gouging concession stand prices), movies will begin to stutter and repeat themselves... a kind of cultural Parkinson's or Alzheimer's, I suppose.
Studio executives, facing shrinking revenues, will become ever more greedy and spineless, and will thus conclude that if Blockbuster Megahit was a license to print ten dollar bills, then surely Blockbuster Megahit, part II will be a license to print twenty dollar bills - and WITHOUT having to hire a scriptwriter this time! (Any resemblance between these comments and Mission: Impossible III is, coincidentally enough, entirely intentional.) (I have heard that a rough draft of the script of Mission: Impossible IV features the mission of convincing Tom Cruise to actually become scientifically literate, and then to apply this newfound knowledge to his daily life. But, maybe that is just a rumor that I started five minutes ago.)
Once upon a time, in a galaxy far, far away... a science fiction writer said that the best way to become wealthy in America is to create your own new religion. Everyone laughed. And then... he did it! And thus, pseudoscientologyism was born. And the science fiction writer lived happily ever after. The end.
(Coming soon, to a theater near you...)
Thursday, January 20, 2005
The End of the World
There are different ideas of what constitutes "the end of the world". Some of the most extreme such scenarios include: a full-scale nuclear war, a runaway greenhouse effect that changes the Earth into Venus Part II, or a giant meteorite impact that makes the previous dinosaur-killing impact look like a spitball. In all of these scenarios, the Earth loses humanity forever, along with most other species. At the other end of the spectrum, some categorize much more trivial events as "the end of the world". (One example of this was the Red Sox victory over the Yankees. There was much wailing and gnashing of teeth, much wearing of sackcloth and ashes, in the Bronx that day...) For the purposes of this post, I will use the more strict (human extinction) definition of "the end of the world".
Typically, the Left and the Right in America have very different proposals for making the world safe from Nuclear/Biological/Chemical/Etc. war. The Right's view is usually "peace through strength", and they often favor the development of "Star Wars" missile defense systems. This approach has it strengths. For one, it arguably won the Cold War for America, under Reagan. However, most of what I have seen lately of "Star Wars" style missile defense systems indicates a system of high cost and low effectiveness. (If I feared being shot, I might go shopping for bullet-proof vests. If I then saw that the best available vest would cost half my net worth, and would work less than half the time, I might reconsider. But then, if someone began to shoot at me, the overpriced and inefficient vest might start to look good after all...)
The Left's approach revolves around peace talks, treaties, and disarmament. This approach has its merits as well: if there were no more nukes in the world, then the chance of nuclear war would be zero. This logic is so appealing that for many years, America's enemies have been highly in favor of disarmament... (of America first, and of themselves later... or perhaps never.)
My view is that, of course, America needs a nuclear deterrant. It is equally obvious to me that both America and Russia are massively OVER armed at this point. (According to www.cdi.org , as of 2002, America had over 8,000 strategic nuclear weapons, Russia had over 6,000, and no other nation had over 350. [France had exactly 350, and every other nuclear power had fewer nukes than that. The total number of strategic nuclear weapons in the world, other than the American and Russian arsenals, was less than 1,000.])
To me, every option is worth examining. I do not mind some level of research on a "Star Wars" strategic defense system. And one objection to such a system (that it would not prevent a terrorist smuggling a briefcase nuke into a city) completely misses the point. A missile defense shield cannot prevent such an attack from taking out one city and killing a million people or more. But it could potentially ensure that some Americans, somewhere, survive. I live in the Bronx, and if the entire state of New York were turned into a radioactive wasteland tomorrow, it would be a tragedy. But by the definition that I gave earlier, it would not be "the end of the world". To me, the best way to prevent a nucler war from causing human extinction is to reduce the American and Russian nuclear arsenals below 1,000 strategic nuclear weapons each. Really, the ability to turn a rival nation's ten largest cities into radioactive slag should be a sufficient deterrant, don't you think? And so, if you assume that only half of any nuclear weapons would get past an enemy's defenses, you would only need 20 nukes as a deterrant. If you wanted to take out the top ten military targets as well, then you would need 40 nukes for any one opponent. If you wanted to be able to launch 40 nukes at one nation, and have enough left to make credible simultaneous threats against another 9 enemies, then you would need a total of 400 strategic nuclear weapons, at most.
By this reasoning, Russia has FIFTEEN TIMES more nukes than it really needs, and America has TWENTY TIMES the amount that we need. France, with 350 nukes, has about the maximum number of nukes that any nation should need. China, as the 4th strongest nuclear power, only has 250 strategic nuclear weapons. China could learn a lot from America, about human rights and democracy and so on... but we could learn from them when it comes to an appropriately-sized nuclear arsenal.
So, that is my view. Reduce the arsenals of America and Russia down to sane and relevant levels, and do some research on "Star Wars", but keep the research budget under control until we actually find someting worth buying.
The preceding has been my comment on POLITICS. And now, the question: How attainable is the goal of reducing American and Russian arsenals down to sane and relevant levels? And what steps should be taken next to get there?
During the 2004 campaign, Kerry said that Bush's middle initial (W) stood for "Wrong". But Kerry was mistaken. "W" really stands for "Warmonger". Any money that one has not already invested overseas to take advantage of the falling dollar, or invested in oil companies to benefit from rising oil prices, may be profitably invested in companies that sell to the Pentagon. It is hard to see how defense contractors will fail to make a killing with four more years of W.
One principle of investing that has relevance to thoughts about the end of the world is the value of diversification. The Earth is only one planet, and one day it will not be able to sustain human life. Whether that day will arrive billions of years from now, when our sun burns out, or some time during 2005, when America and Russsia launch thousands of warheads at each other, remains to be seen. But some time during the 21st century, it would be wise to establish a colony somewhere beyond Earth, so that in case the home planet goes, there is still some chance for the human species to survive.
Around the time of the Cuban Missile Crisis, building backyard bomb shelters became a fad in America. Since that time, most people seem to have concluded that either a nuclear war will happen, or it will not, and that there is nothing worthwhile that the average person can do about it.
I do agree that trying to plan for a way to personally survive a nuclear war is a waste of time. Some places, such as New York City, are likely to be targeted multiple times in any nuclear exchange, and anyone who lives there has little hope for survival if a nuclear war takes place. Other, more obscure places (like small towns in Alaska) have little chance of being directly affected by the first wave of nuclear missile strikes. But, the aftermath of a nuclear war, including radioactive fallout, nuclear winter, and the anarchy that would follow the collapse of civilization, would spread across the globe, and few people if any would survive.
I think that while there is nothing that I can do to directly protect myself from nuclear war, I should still be a good global citizen and work for the conditions that will offer the best hope for long-term human survival (such as a reduction of the nuclear arsenals of America and Russia). And as a patriotic American, I can work for the continued worldwide hegemony of America over the rest of the world... including a strategy of maintaining a vast nuclear arsenal that can intimidate every other nation on Earth. (Hmm... do those goals conflict?) And while I as an American citizen am unhappy that a pre-emptive war was launched against Iraq to protect us from non-existent WMD's, I am happy as an American consumer that the oilfields of Iraq are no longer in the hands of a foreign dictator, but are instead under the control of all those nice guys at Halliburton.
In the past, films such as "Dr. Strangelove" and "On the Beach" dealt with our feelings about the threat of nuclear war. More recently, films such as "Deep Impact" and "Armageddon" have expressed the fear of a world-ending catastrophe that is NOT the work of human hands. The question is: "Does this signal that the zeitgeist of America has abandoned a sense of responsibility for our national and global politics? Have we as Americans just decided that working for peace and stability in the world is a quaint and leftover idea from the 60's, that only hippie burnout-types would cling to?"
Another question: The doctrine of M.A.D. (Mutual Assured Destruction) is like a global Sword of Damocles. Have we all just gotten used to it? (The situation reminds me of a joke that I once heard, in which a man falls from the top of the Empire State Building. A news crew watches him fall, and zooms in on his face. The man seems calm, and appears to be talking to himself. One of the news reporters can read lips, and tells his co-workers what the man is saying. The man is repeating to himself, as he plummets floor after floor, "So far, so good... so far, so good.") (I sometimes wonder if we have all become as complacent as that falling man.)
It is late, and I must soon go back to bed. At a later date, I may post some information on how science fiction books, films, and other media have covered the topic of the end of the world. For now, I will simply ask readers, "What are some of the best recent examples of science fiction covering the topic of the end of the world?"
Sunday, December 26, 2004
Oil = Money and Power
My topic tonight is one that touches upon all 4 of the areas of concern for this blog: politics, investing, culture, and science fiction. The topic tonight is: fossil fuels. (Yes, "oil" is the title of this post, but most of what is said about petroleum will also apply to natural gas, coal, and any other fuel source that takes thousands of years to be created by nature.)
INVESTING: My short comment on oil as an investor is: BUY. Buy a lot of it. I do not follow the commodities markets, but every major U.S. oil company looks like a good investment right now. I own shares of ChevronTexaco (CVX), and two of my favorite mutual funds right now are RS Global Natural Resources (RSNRX) and Icon Energy (ICENX). Even if all of the violence in Iraq ended tomorrow, even if OPEC pledged tomorrow that it would produce and sell every possible drop of oil, the 10-year future of oil would STILL be one of demand exceeding supply, and of the price of oil rising faster than the overall rate of inflation. Even if the U.S.A. cut its per capita petroleum consumption IN HALF between now and 2014, the increase in petroleum consumption in China and India would still cause oil demand to outpace oil supply. Eventually, the world will have more petroleum... but that will be thousands of years from now.
CULTURE: I expect that the next car I buy will be a hybrid electric. Part of the reason for that is that I care about the environment, and part is that I am a cheapskate. (When gas prices go over $10 per gallon, I still want to spend less than $200 a week on gas.) What I wonder is: why in the world are people still buying SUV's? I think that there are two reasons. One is that some people live in rocky badlands and really need a car that can handle landslides, floods, earthquakes, quicksand, and other nuisances. There are approximately 5 such people across the USA. The other one million SUV owners want a status symbol that proclaims "I am rich enough to pay more for gas every month than I pay for my mortgage and my groceries combined. And I want to see as much global warming as possible."
SCIENCE FICTION: Frank Herbert's Dune series is one of the most popular and widely-known science fiction series of the past 40 years. Despite its science-fiction trappings, the story is more fantasy than science fiction, for most of what the author portrays is not a realistic projection of current technologies or scientific theories. But despite its huge deviations from reality, the novel Dune expresses a truth that is as valid today as it was in the 1970's: the world's energy supply is a priceless prize, and every faction will fight tooth-and-nail to possess it. Between now and the year 2100, one of three things will occur. ONE, a huge chasm may open between the world demand for oil and the world supply of it, which may cause the collapse of civilization as we know it. TWO, cost-effective renewable energy sources may be discovered and used by developed nations, so that the fate of the Persian Gulf becomes no more relevant to world leaders than the fate of Greenland, Upper Volta, or the South Pole. THREE, oil prices will continue to rise faster than the rate of inflation in general, and the Persian Gulf will remain permanently fixed among the top 5 most important regions upon the face of the Earth, with the 3 major powers (USA, China, and Europe) fighting a never-ending battle to control the region. This fight for the control of the Persian Gulf will be the new Cold War... and we can only hope that, like the first Cold War, every player is sane and no one goes ballistic. Of these three scenarios, only number 2 looks pleasant... and only number 3 looks likely.
POLITICS: There are a number of things that the government should do to cope with an increasing shortage of oil. We should increase funding for research into alternative energy sources, and the 2 priorities of that research must be finding energy sources that are renewable and non-polluting. We should also increase the required CAFE (corporate average fuel economy) standards for U.S. automakers. We should give large tax breaks to individuals and corporations that reduce fuel consumption in any of several ways (telecommuting, buying more fuel-efficient cars and home heating systems, etc.). We will, eventually, drill for oil in ANWR (the Arctic National Wildlife Refuge), and I am not opposed to doing that... eventually. However, high oil prices are now just a nuisance and not a crisis. Once the price of gas goes over $10 per gallon (in 2004 dollars), then even environmentalist fanatics like Ralph Nader will call for drilling in ANWR. But if we start to pump oil out of ANWR when gas is at less than $5 per gallon, then we will only be coddling all the idiots that drive SUV's.
So, to sum up... oil is power. That was true when Dune was written in the 1970's, and it is equally true today. It will be even more true in the future.
Sunday, November 21, 2004
Republicans: The Voodoo Economics party
Even though Republicans like to use the phrase"tax-and-spend liberal" as an insulting stereotype, it seems that Democrats have been slow to use the obvious counterattack: that Republicans follow the far-worse "borrow-and-spend" technique. True, their "you can keep all your spending and have lower taxes, too" pandering has won them elections. But isn't it a grossly irresponsible policy? And, isn't it an OBVIOUS case of pandering to greedy and short-sighted voters? Well, apparently not.
As it turns out, there is one argument that is semi-sophisticated and that actually supports W.'s borrow-and-spend-and-also-cut-taxes approach. This argument is based on the Laughable Curve. (Well, ok... Some economists take it seriously and call it the Laugher Curve.) The idea behind the Laugher Curve is that lower taxes stimulate the economy, so that even while the government collects a lower rate of taxes, the total amount of taxes collected will increase. (For instance, if New York were to lower the sales tax rate from 8% to 6%, I might decide to buy two $1 cheeseburgers at McDonald's instead of just one, and then New York would get a total of 12 cents in tax revenue.)
I believe that the Laugher Curve may have some truth to it. After all, if the government decided to raise the federal income tax rate to 100%, people would stop working and the government would collect less in taxes. However, the stimulative effect of low taxes is not infinitely powerful. Dropping the tax rate to zero would lead to the government collecting total tax revenue of... zero. So, when the government cuts taxes and yet spending remains constant or even increases, there are two forces at work. One is the stimulative effect of the tax cuts. The other is the interest that the government must pay out to finance its debt.
I am sure that there is a mathematical formula for this. Let's say that for every dollar that the government cuts in taxes, it only loses 95 cents... because the economic stimulus of the tax cut makes up for part of the loss of tax revenue. Then let's say that the government must pay out an extra 5 cents per dollar in interest on the debt. So, the net effect of each dollar of tax cuts is... that the government gets one dollar less in tax revenue.
But, this revenue shortfall is put off into the future... and is paid by the grandchildren of today's Republican voters. And meanwhile, W. and others are re-elected.
I am curious about the numbers in the formula that I describe above. How many cents out of each dollar of tax cuts are really made up for by the stimulus effect? And for each dollar of debt, how many cents extra are paid out in interest? Any economists out there in cyberspace (whether professional or amateur) are invited to comment on this.
Sunday, November 14, 2004
Questions and Comments
For this week, here are the questions and the comments:
Comment – If the Democrats do not have an electable candidate in 2008, they will lose again. To be electable, the candidate must be a white Christian male from a southern state. Over the past 30 years, Democrats have only won when they have followed that pattern. Carter won once and Clinton won twice. Gore won the popular vote, and missed the presidency by less than 600 Florida votes (or by one Supreme Court vote).
Question – Who is the best presidential candidate for the Democrats in 2008? (My short list of candidates is: John Edwards, Al Gore, Wesley Clark, and New Mexico governor Bill Richardson.)
Comment – Before the tech stock bubble peaked in 1999, several technology stocks were legitimately good investments. There are several ways to select good investments, and one approach is to identify the best industries and then choose the best companies within those industries.
Question – What are some significant, sustainable trends that investors can examine to identify the best industries of the next decade?
3. Pop culture
Comment – Cable TV and the Internet are allowing an explosion of new sources for news and entertainment. Now, every activity that more than a dozen Americans engage in seems to get its own magazine, web site, and cable TV show.
Question – Is America becoming Balkanized? Is the melting pot becoming a salad bowl? Rate America on a scale of 1 to 10, with a 1 being a single monolithic culture, and 10 being a mosaic of a thousand different subcultures. Then, comment on what America should be. Are we on the right track or the wrong track? What kind of changes (if any) should we make?
4. Science Fiction
Comment – In the 1980’s (was it really that long ago? I feel like an old man now…) the cyberpunk movement was born. Cyberpunk science fiction shared several traits: a near-future setting, a focus on the interface between man and machine, and a bleak tone.
Question – Is cyberpunk dead? Between 1980 and today, has there been any other subgenre of science fiction besides cyberpunk?
Sunday, November 07, 2004
The future "4" the Future
If you are reading this, you probably share one of my 4 passions: politics, investing, (pop) culture, and science fiction.
I just created this site a few minutes ago, in a fit of insomnia-inspired creativity.
I have no content for you... yet.
But I will have some for you soon.
My content will come from (appropriately enough) FOUR sources:
1. My own new thoughts, posted once per week (or more)
2. Streaming news content, courtesy of the fine folks at Google
3. YOUR thoughts, feelings, and other comments
4. My replies to YOUR comments
Please note that sources number 3 and 4 depend upon YOU to be an active participant. If you want to read my comments without contributing any of your own, you are free to do so. However, I eagerly welcome you to share your comments. This is not just MY cyberspace soapbox, it is OUR cyberspace soapbox. Welcome to digital democracy in action!
Join me, in reading, and writing... 4 The Future.