Wednesday, March 31, 2010

Farm Livin'

Click any photo for larger.

We bought a hobby farm a little over a year ago. It has been nothing but interesting.

As a side note, we bought this place from former NFL pro bowler Al Toon. He is a local legend here in Madison as this is where he played his college ball. He also has several successful business here in the area. We met Al on the farm and he showed us around and gave us a few tips on the property such as where the power switches were and other things. I can't say enough good about him - a very nice guy.

When Al bought the property about a half decade ago he was faced with an immense amount of cleanup work to do and did a lot of it. The property was much better off when he left it to us, but there was still a mammoth amount of work to do to make it our own.

The logic behind buying this place had a couple of angles. For one, we bought it just as the real estate market bottomed out so we got the place for a very good price. Al was moving on to other projects and decided that although he liked to dink around at the farm he had bigger fish to fry. We had thought about a lake cottage of some sort, but it just wasn't for us and we found the prices to be completely off the charts ridiculous for even the crappiest dump on the lake. Not to mention the insane taxes you pay up here for lakefront property. And we aren't water people that much anyway.

So we started the search for farmland and something of the appropriate size and price range. This parcel sort of fell into place.

All last year (and I do mean ALL of last year) was dedicated to rehabbing the barn and it looks spectacular. On top of this we gave a lot of love to some of the other structures at the property. Al did a good job of cleaning up the place, but there was still an immense amount of garbage everywhere. There still is. We have a large dumpster coming out to haul a lot of it away next week. Why the original farmer saved all that sh1t is beyond me.

We have cleared brush, put up fencing, and hired out a lot of things we simply couldn't do such as taking care of the electrical and structural challenges that faced us. None of this is cheap, but we are far ahead of where we would have been if we had purchased some lake front dump that would be a teardown. And much, much more happy. With a teeny tiny tax bill since we are zoned ag.

Last summer we had bonfires, fireworks, and other parties out there and we will have more this year.

On top of that, the paddocks are now ready to accept a couple of horses. We already owned a pony that we got for free and may get one or two more. What is really nice is that we have a decent amount of hayfield - wonderful, top notch alfalfa hay that is worth something. A local farmer harvests it and we have an agreement where he keeps a bunch for his beef cattle and we keep a bunch for our cattle and horses. Did I say cattle?

Last Sunday we took delivery of four Scottish Highland cattle.

This is Annabelle. She is 6 years old and is preggos. We will have a calf from her within the month. This cow is very tame. You can go right up to her and pet or brush her. She likes it. You do have to mind the rack though - if she gets bit by a fly or has an itch, you don't want to be in the way.
From left to right we have Emma, Ed and Earl.
Emma will breed for us within a year or two. Ed and Earl are beef. Ed is a bit of a pr1ck right now as he is making runs at the other little ones to try to establish himself on top of their pecking order. Annabelle is having none of that, of course.

Emma is already very friendly and will be with us for the rest of her natural life. I figure it is a reward of sorts to keep the females after they are done breeding rather than putting them down right away. Later this summer, when Annabelle is ready, we will either "rent a bull" or have a vet artificially inseminate. Time will tell.

Annabelle doesn't seem to care either way.
Emma just doesn't know right now.
We also are now proud owners of two chickens.

This is all very rewarding to turn a dump into a functioning farm. It has been fascinating to watch the tranformation of my wife from cocktail dress and heel wearing city girl into farm wife. The fresh air and responsibility are good for the kids too. This is all good for me as well. Nothing gets my mind off of everything like a good afternoon of spreading wood chips or clearing brush.

The wildlife out there is wonderful. We have red tailed hawks and great herons, and many other beautiful birds. I could watch them all day. Also deer, pheasant, coyote, fox, and all the other critters you would expect to see on a farm.

One other unexpected thing I have found is that everyone that we ask help from almost without exception is very helpful. We have made a lot of contacts within the farming community and they always answer your questions, give advice and want to help you out.

We have also made the neighbors very happy by keeping the barn up and sprucing up the joint. They are all starting to come over and introduce themselves now that we have the cattle out there to ask what they are, and almost every one thanks us for cleaning up the mess. That is pretty rewarding. Of course it also helps their property values, but most of the people are long time residents so I don't think that is behind most of the compliments.

The cattle have created a minor stir on our little farm road. Cars slam on their brakes and constantly ask us what they are. People have guessed everything from yaks to buffalo (?) to wildebeasts to pretty much every large animal with hoofs. Or is it hooves? Meh, more learnin' to do I reckon.

Tuesday, March 30, 2010

Taxes and the Rich



On the opinion page at the Wall Street Journal Alan Reynolds of the Cato Institute wrote an excellent article titled "The Rich Can't Pay for ObamaCare".

The key concept is what he describes as "the elasticity of taxable income" or ETI. ETI measures how taxable income is impacted as tax rates increase; if you use a rate of 0.5 you assume that an increase in tax rates that would yield $1 if prior behavior held stead would yield 50 cents after the impact of behavioral changes is taken into account. However, instead of an ETI of 0.5, per the article:
For incomes above $500,000, Treasury Department economist Bradley Heim recently estimated the ETI at 1.2 - which means that higher tax rates on the super-rich yield less revenue than lower tax rates.

The article describes, in practical terms, how rich individuals can take action that illustrates this ETI:

- dump dividend paying stocks (you will probably want to do this anyways because they are likely to fall in price because part of their value is tied to the reduced tax rate) when the 15% rate is raised
- avoid selling stocks with capital gains when the rate rises, or sell stocks with unrealized losses at the same time to "net out" any gains owed to the government
- reducing income near the $250k range when "phase outs" raise the MARGINAL tax rate to a very high rate through tax deferral strategies such as 401(k) contributions and the like
- consider becoming a one-earner couple instead of a DINK if the penalty on incremental income becomes too great to make up for the cost of child care and the general decremented quality of life

I really like this paragraph that should be an epitaph for tax policy:
Punitive tax rates on high-income individuals do not increase revenue. Successful people are not docile sheep just waiting to be shorn.

A sound tax policy has two main elements 1) it raises the amount of revenue that it is supposed to raise 2) it provides the minimal distortion of productive economic activity.

Super high tax rates on the rich accomplish neither of these two attributes. They don't raise the money as planned (in fact you could likely end up with LESS money overall) and they distort the economy by having our most valuable members of the economy step back from working at a time when their entrepreneurial drive is needed most to jump-start the economy.

Cross posted at Chicago Boyz

The Pacific


I don't know how many of you are watching the miniseries "The Pacific" on HBO. If you aren't I can recommend it based on the first two episodes.

To prepare for this, I re-read one of my favorite all-time military books, "Touched with Fire" subtitled "The Land War in the South Pacific" by Eric Bergerud. Dan and I have been sending books back and forth and he sent this to me; I can't seem to find my original copy, so it worked out well.

The book covers the South Pacific battles between the US, Australia and Japan in the late 1942 through early 1944 time period, with most of the focus on Guadalcanal (Marines and US Army) and New Guinea (Australian Army & Australian Militia). Topics include the individual battles, as well as the effects of disease on the forces and the early, pitched battles when Japanese forces were at their apex in terms of capabilities.

My knowledge of the Australian Army in the Pacific was sadly incomplete; I always knew about their work in the desert but this book really helped cement their story. The author views the Australian forces as the finest military force in the Pacific, which is quite a statement when compared against the US Marines and Army, as well as the very competent Japanese opponent (at their height).

Another great book by Bergerud is "Fire In the Sky" which covered the air war in the South Pacific over that time frame; I loaned my copy to someone else and am cursing myself. Will likely end up buying it used in softcover after watching the series. To complete recommendations, on the front of "Touched with Fire" is a blurb for "Six Armies in Normandy" by Keegan which also is a great book because it covers armed forces other than the US, Britain and Germany such as Canada and the Free French which made significant contributions to the war effort.

My New Laptop - A Lot for a Little



After four years of use my old Toshiba laptop running XP is finally on its last legs. Like an old dog that you take "to the country", I gave it to my brother, who has a gift for keeping old technologies alive. He has a couple of my old shuttles in various states of disrepair.

Best Buy was running an ad for a Toshiba Satellite L455 running Windows 7 for $349. I reviewed the advertisement and it seemed to have what I was looking for - a built in DVD, a decent sized screen, and maybe it wouldn't take 5 minutes to boot up like my old machine.

I tried to order it for pick up but then it turned out that the store didn't have it so I canceled the order and picked up the newer version of the laptop, the L455 S5008 with a newer Intel processor and more memory for $429. Turns out that was a good idea; the older Toshiba kind of got savaged over at CNET for being too slow and crappy (but damn cheap).

This was my first time working with Windows 7 - it worked great. I was trying not to buy the same damn software over and over so I installed another copy of MS Office (you can install up to 3 copies) and pretty much everything else other than Norton Anti-virus is free. If you have been holding off on buying a new (Windows) computer because of the horror stories about Microsoft's operating system (Vista), I'd recommend just biting the bullet and taking advantage of a cheap computer offer and purchasing one on sale now.

It is amazing how cheap technology has gotten - I remember when a "base" machine was over $2000 (in the 1990's), and then $1500, and then $1000. Now, out the door for $429, you have a fast, powerful (enough) machine with what you need to run most basic tasks, watch movies, and most everything else.

If you have been holding off buying a new laptop, I'd finally get one with Windows 7 loaded onto it and this Toshiba isn't bad if you want one I'd consider "expendable". You can get a lot of use out of it and in a year or so pass it onto a kid or relative or even take the software off it and just buy a new laptop outright. At this type of price there isn't much point in waiting much longer.

Southern Comfort – Part Five

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Part four is over by dare.

Now this is the Louisiana party I was looking for. Didn't find it. Came close....



Our day three plan while in Louisiana was to travel into the swamps and experience that Cajun culture and absorb as much of it as possible during our short stay.

Heading out from our N.O. home base we traveled west and crossed the big river at the Huey P. Long bridge. We hopped on SR90 and continued west through scrubby looking sugar cane farmland. There were truckstops and mini-marts at each intersection. Our destination was to tour a triangle bounded by Raceland, Houma and Thibodaux, LA in LaFourche Parrish.

Along the way cars and pickups were parked along the divided highway where it neared a swamp and people were walking around nearby with long poles and nets. I assumed they were catching crawfish, which were in season.


Arriving in Thibodaux what we saw was not what we expected. The long stretch of road heading north into town followed a canal northward. Residences along the canals had boats and boat docks. The canal led to southern brackish waters and eventually to the Gulf of Mexico. Upon arrival Thibodaux looked like a western suburb of Chicago. Large, newly built custom homes in gated communities circled the town. Strip malls with Subways, Arby’s, Taco Bells and the like were closer to town.


Then I found what I was looking for. It was a small store south of Thibodaux named The Bourgeois Meat Market. The sign out front said all I needed to know. Their slogan “Miracles In Meat” will forever be etched in my mind. Without a planned route to explore the back country we needed local advice and the butchers of Bourgeois were more than willing to help. First I purchased some fresh Cajun beef jerky at $20. per lb to break the ice, the jerky was the real deal too unlike that bagged tasteless leather sold in mini-marts. Then we asked the fellow where we could find a back road to photograph rustic Cajun cyprus tree swampland. While describing directions in the thickest of Cajun accents he drew a map on a piece of butcher paper with a grease pencil.

After mentioning to him that we saw a lot of folks on the roadside who appeared to be catching crawfish he smiled and said it was “a way of life down here”. We thanked him and headed west.


That delicious pound of jerky didn’t last ten minutes in the car as we followed his unmarked map. This is what we were looking for, a lonely two-laner with swamp on either side. The water level was noticeably low. It was a desolate span with gated oil pipeline dirt access roads heading off into the swamp on either side. Up ahead was a parked car on the side of the road. As we neared the car it became obvious this was a lone craw-fisherman. As I slowed down I swear she turned and said to me, “Don’t stop, he could kill us”. I laughed out loud and stopped anyway.


When this gentleman approached our groovy tourist rent-a-car I asked out the window what he was catching and he said, “crawfish, what else?” I got out with the camera and he gave me a lesson in catching crawfish, no questions asked.


He used over thirty small 2’x2’ nets held together on each corner by spring steel wires joined at the top. Tied to the top loop was a day-glo ribbon for easy identification in the reflective swampy earth tones. The center of the net contained a clamp that held a piece of fresh cow spleen, for bait. My new buddy (we’ll call him Boudreaux) walked me along the road with a long pole he used to grab the net loop and pulled one net up. Sure enough it had crawfish chomping on fresh cow spleen. These little buggers would not let go of that cow spleen bait, Boudreaux had to pull them off. The swamp water was quite low, 12” deep near the road where all his nets were placed. There was no need for waders or knee-boots, the nets were within easy reach of his pole.


Crawdadding, or whatever it’s called, takes only a fishing license and minimum equipment and effort. There is no limit on size or amount of crawfish taken. Boudreaux told me that they’re just fine after freezing and he uses a vacuum sealer to bag them. Smart. He claimed he has a large freezer in his garage that he uses only to store crawfish, crab, redfish and other game. Good eats. Cheap eats.

Boudreaux told me these dads were on the small side but that in a few weeks their size would double. He had his large Igloo cooler half-filled within an hour before we arrived on the scene.


Oh, and Boudreaux was no ordinary Cajun. He happened to be an off-duty Terrebonne Parrish deputy sheriff and on the swat team. He was the friendliest person one would expect to meet in a dense and remote Louisiana swamp. We talked a while about fishing and hunting. We bonded. He told me that in a month or so he would be traveling south of Houma on weekends where freshwater meets saltwater from the gulf. There he would be catching coolers full of blue crabs.

Crawfish IS a way of life in south Louisiana. Even the local potato chip company sells crawfish flavored chips.


They tasted like gumbo to me. Not that it is a bad thing.


The Louisiana license plate contains the slogan ‘Sportsman’s Paradise’.
It’s definitely that and so much more.
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Monday, March 29, 2010

Around Chicago



Recently I took a few photos around Chicago of things that caught my eye.

Upper left - someone started an impromptu art project by putting orange string on the bridges across the Chicago River.

Upper middle - a car escapes the impound lot on Halsted avenue near the projects

Upper right - a strange bell that shows the weather; unfortunately it seems to be stuck on "colder". Maybe this is the "misery bell" because this spring has been lousy...

Lower middle - I recently saw a guy trying to steam the junky, dirty snow off the street. This was new to me. Unfortunately he just gave up and started chipping away with a shovel and put it into the street, old school-style

Lower center - there is a big "Palm" advertisement with Trump Tower in the background. I remember when I bought my first palm pilot, probably a decade ago, and Palm was "cool". Recently a stock analyst put a price target of ZERO on Palm's common equity for their stock price... um that's not good. But at least they can afford an expensive billboard

Lower right - another new billboard appeared in the neighborhood - this one is for "Cats Against Clay". Apparently kitty litter is bad for cats. Or the price of a billboard is now so low that anyone can rent one. Perhaps one for LITGM, or Chicago Boyz?

Waking Up That Wind Isn't The Solution

Wind power, like nuclear power, has incorrectly been described as a key part of the solution to electric generation in the USA. T Boone Pickens, the famous wildcatter, had a plan to develop large wind generating plans across the central US. Back in mid-2009 he folded his tent, noting that there wasn't any prospect of building transmission lines to bring wind power from where the wind is best to the cities where the demand resides, as I noted here. Anyone remotely familiar with the actual capabilities of financing transmission nowadays knew it was a fools errand, since routing a transmission line literally takes over a decade of permitting and routing is often very inefficient, such as in this case.



The Chicago Tribune finally awoke to this situation in a decent article in the Sunday paper, titled "Putting Wind Generated Power Where It Is Needed".
In the near term, companies are opting to harness wind power closer to existing transmission lines, usually near urban areas, to avoid the lengthy and costly process of building new lines. Aside from pockets of strong winds in the midsection of Illinois, however, some of the most powerful wind in the U.S. stretches from the upper Midwest, south, into Texas.

In order to integrate and move that alternative power east through Illinois, the grid would have to be expanded and upgraded, say transmission experts and utility companies.

The estimated cost to move that wind power east could range from $64 billion to $93 billion in 2009 dollars and would require 17,000 to 22,000 miles of transmission lines to be built in the eastern half of the country alone, according to the Eastern Wind Integration and Transmission Study (EWITS) published in January and prepared for the National Renewable Energy Laboratory.

The Chicago Tribune even included a nice graphic that is in the post above; it clearly shows where the prime wind territory resides (west of the population centers in the Midwest) and the lack of transmission to bring this power to market.
"In many instances, interconnection studies indicate that adding a new power plant would overload transformers and transmission lines hundreds of miles away," the American Wind Energy Association and the Solar Energy Industries Association concluded in a white paper published last year. "…Its owners must pay to upgrade all of the transmission equipment, often at a cost approaching or exceeding the cost of the power plant itself."


While the journalist at the Chicago Tribune has finally stumbled upon the truth, which is that the best territory for wind generation is not located near population centers AND the cost and time of setting up the transmission grid far surpasses any reasonable possibility that this would reasonably occur, the writer fails to reach the logical conclusion of the situation, which is:

WIND GENERATION IS NOT A VIABLE SOLUTION IN THE MIDWEST BECAUSE THERE IS NO TRANSMISSION GRID TO DELIVER THE POWER, AND THERE IS NO REASONABLE POSSIBILITY THAT WE WILL DEVELOP THE GRID OVER THE NEXT FEW DECADES.

Thus, the reasonable conclusion is, we ought to stop talking about wind power in the Midwest and move on to more practical options.

Too bad that isn't going to happen and journalists are going to keep talking about wind power like it is viable, because they don't know any better, and most readers will keep reading it as if it's true.

Cross posted at Chicago Boyz

Monday Morning Blues

Sunday, March 28, 2010

Southern Comfort – Part Four

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After covering miles of the FQ streets in brand-new Nikes on the morning of day two my feet had enough. Walking ten miles was obviously unanticipated.

Before we jumped into our groovy rent-a-car for an afternoon trip into the garden district, a short hotel rest was a must. She had a walking tour planned. Just what my sore feet needed.

We found a parking spot on a garden district street adjacent to a traditional New Orleans cemetery complete with centuries-old crypts. Across the street, on the corner was a world famous restaurant. Down the block was the home residence of NFL great and quarterback baby-maker stud, Archie Manning.

The garden district attracts wealthy celebrities anxious to invest in historic properties as well. It’s a splendid area to live in for a few months out of the year. Maybe. Some celebrity owners mentioned by a local resident were John Goodman, Dan Akroyd, and recent homeowner Sandra Bullock.

I first became aware of the New Orleans above ground crypt cemeteries while watching Easy Rider in the late 60’s.



There was a hallucinogenic sequence filmed at St. Louis Cemetery #1, directly west of the FQ. Behavior like that is what probably made those historic places off limits to casual tourists. These places give me the creeps even while sober on a bright blue weekday afternoon.


Across the street from our parking spot was Commander’s Palace, the restaurant where Emeril Lagasse made his name. He went on to bigger things they tell me.

What was quite interesting was Archie Manning’s main residence. It appeared that a garden party was happening on his front porch. A few doors down a resident on his balcony holding what appeared to be an icy glass of brown spirits spoke to us. I asked this fellow if that house was where Arch actually lived. He confirmed it. When I inquired about the tour bus and folks on the porch with name tags he explained that they were NCAA big shots on tour, the men’s first and second round basketball tournament was being hosted at Tulane. Arch was providing some hospitality.


While a dinner at Commander’s Palace would have been nice I had my eyes set on a return trip to Pascal’s Manale, the place said to have invented New Orleans style BBQ Shrimp located south of the garden district on Napoleon St. just west of St. Charles.

The shrimp are from 6-8” long (head, whiskers and legs attached) and cooked in a butter and spice mixture but never grilled or BBQ’d as we know it. The description is a mystery but their trophy-sized gulf shrimp are legendary. After the bib was placed around my neck to protect my $10. polo shirt I dug into a platter of huge shrimp. The fingertip evisceration was simple but messy. Knife and fork were worthless. Clean hands had to do. They serve crusty bread loaves to break open and sop up the spicy and buttery gravy left in the bowl. Hot damn that was good.


While we could have dined at traditional NOLA haunts such as K-Paul’s New Orleans Kitchen, any one of Emeril’s places (the locals give them poor reviews), Commander’s or the original Brennan’s we prefer to find the out-of-the-way spots where locals dine. We went to Pascal’s because of a previous experience.

In a future post I will tell you of the best serving of BBQ Shrimp ever in N.O., at a place we never expected.

To be continued...
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Friday, March 26, 2010

Southern Comfort - Part Three

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Part two is here. And now for something completely different, a few rather naughty bits courtesy of a Bourbon St. storefront.


After wiping leftover Café DuMonde powdered sugar from my beard we strolled northeast to the old French Market. As I remembered it, this historic covered outdoor flea market offered some junk, a lot of grocery items, fresh produce and vendors selling things like gator-on-a-stick and cups of gumbo along with thousands of different bottles of liquid pepper and Cajun seasoned garlic concoctions. Last time we were there I bought locally produced sauces, andouille sausage and tasso ham at the French Market to take home. No longer. It is now mostly Asians serving Chinese knock-off-crap-on-a-table. We bolted and headed into the FQ without snapping one photograph at the market. Sad to see what it has become.

The FQ is the most target-rich environment a shutterbug like me hopes to find. I took five hundred images in the FQ alone. Every corner offered a series of directionally-lit subjects of opportunity providing texture, contrast and rich vibrant colors. There were four great photo ops on every corner.

Bourbon St. is a place like to walk down once at night and once in the early morning hours during a stay, but it’s not a place for me to dwell during the trip. That’s not rain on the street. This is what Bourbon St. looks like at 7 AM after the power washers spray off all the residual vomit and urine from the night before.


On the north end of Bourbon St. you enter the gay area. The gay bar establishments are easily identified by a rainbow flag hanging on the facade. I just looooove what they did with the violet shutters.


Some folks make the FQ their residence.


Dogs live there as well.


I avoided taking photos of the omnipresent Saints SuperBowl congratulatory billboards and “officially licensed” banners but I could not resist the handmade variety.


The aged and weathered look is everywhere. It soon became obvious most buildings were authentic while others were rehabbed by decorators to look old. We saw quite a few “Disneyworld” fake distressed look structures such as this one.


Imagine the expense of snapping over 700 images with the old 35 mm film. The cost of film, processing and prints could have cost hundreds of dollars with many wasted shots in the mix. Even with two big-ass memory cards I took my Apple laptop along to dump images in the hotel room each night.


Digital photography is nothing less than (and I avoid using this term loosely) awesome.

To Be Continued…
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Thursday, March 25, 2010

Southern Comfort - Part Two

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Part One is here.

Having a luxurious place to crash helps make road trips so much more enjoyable. Even better was the Canal St. location making access to the French Quarter (FQ) a snap and all street-cars stops within two blocks.

Day two was a designated photo safari into the FQ. This was our base camp.


The courtyard within the complex was well done. The building was once a department store and converted into a four star hotel. Overall they did an outstanding job.


I was spoiled during my full-time business career having made many extended trips to Manhattan, San Francisco, Los Angeles and Newport Beach, CA. For a ten year period my trips were twice a month. We always stayed in the finest establishments and experienced fine dining at the very best restaurants. In my experience I can safely say that what the city of New Orleans has to offer is second to none.


After sleeping in a bed that was smaller but just as comfortable as my own we headed out to The Café DuMonde early. It’s a must-do stop on a morning in the FQ. As to be expected, it is a category five tourist trap. But it’s a damn nice tourist trap on a clear, sunny and warm New Orleans morning.


Chicory flavored coffee and a heavily-charged warm powdered square doughnut known as a beginet are an original item made famous here just a few blocks from the French Market. Jefferson Square is across the street to the west.

At the Café DuMonde…


…I took a time out to catch up on the latest capitalist news, what's left of it.

The coffee is mild, no bitterness at all. The beignets were crispy, light and ultra sweet. The entire covered outdoor patio had a stickiness on every surface. A jazz trumpet player strolled the perimeter blowing notes for cash donations. Getting there before 7:30 am will avoid lines waiting to be seated. I hate waiting in any line for anything.


Fortified with caffeine and sweet fried carbohydrate goodness we charged into the FQ for sightseeing and photos.


To Be Continued…
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Wednesday, March 24, 2010

Southern Comfort - Part One

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As we've grown older real vacations have been fewer and farther between. That’s going to change as I slip into full retirement, hopefully soon. Over a month ago an incredible opportunity dropped into my lap for a four-star, four-day stay in New Orleans. It’s been over ten years since we have been there and we jumped at the chance to go again. I just love that city. This is the kind of place where mature adults who don't golf or care to hear Jimmy Buffet music at the pool go to for a spring break good time.


With four days to explore we did our best to cover as much territory as possible. The plan was to balance the best of two worlds by taking a few short day excursions into swampy and rustic Cajun country as well as experiencing the best the city of New Orleans had to offer.

My cheap-ass airfare deal placed us on the tarmac of the Louis Armstrong International Airport six hours prior to our hotel check-in time. Southwest Airlines provided us with the usual, affordable and flawless flight out of Midway/Chicago that delivered us to the gate ten minutes early. So what to do with the spare time, get drunk at a Bourbon St. bar? A massage at the hotel spa? Nope, we headed west along the Mississippi River in our groovy, black Chevy Impala Hertz rent-a-car with a full tank of fuel.

She wanted to see some historic plantations and I wanted to head off into Cajun swampland. This was a nice compromise. We begin a scenic drive with the south bank of the big river and tall reinforcement levee to our right most of the way. I absorbed as much scenery as possible for an attentive driver on route. Tiny crossroad towns, small pockets of poverty along with chemical plants coexisted with sugar cane fields. It was a twisty narrow sliver of a two-laner with ruts and ditches where road shoulders should have been. Oncoming traffic alternated between Bigfoot-style pickup trucks and chemical tanker semi’s going twice my speed in the opposite direction. There were other plantation tours on the way but most were more recent structures in very poor shape.

The land surrounding the Mississippi River west of New Orleans through Louisiana and up into the state of Mississippi was divided into narrow frontage land parcels in the 1700’s. The average plots were deep, covering 1200 acres on average but the feature that drew investors and wealthy settlers was easy access to river transportation and commerce.

Our destination on day one was Oak Alley, a Plantation west of the small town junction of Vacherie in St. James Parrish about 50 miles west of New Orleans. This plantation is a tourist destination due to it’s location and also being one of very few established pre-civil war plantations still standing and in good shape.

We were not disappointed. The price of admission gets you access to the grounds and a tour of the house. I was suspicious at first because I am not one to snoop around in other folk’s homes but most women relish the opportunity (convince me I am wrong, I dare you). The weather was outstanding with low humidity, temps in the upper 60’s under bright blue partly cloudy skies.

Once on the plantation the first photo I snapped was of this little lizard on the edge of a sign at the entrance. Not a bad start.


Approaching the home on a brick sidewalk flanked by a grove of living 300 year old oak trees in full spring bloom was as breathtaking as the aroma was intoxicating.


Nearing the home, locals dressed in period outfits smacked of tourist-y schmaltz but WTF. A lady in a hoop skirt informed us that a group tour was just beginning. Lucky me, I hate waiting in line. Her undeniable Cajun accent added a nice touch. No photos were permitted in the home but it was faithfully restored right on down to the fabric fan over the dining room table attached to an overhead pulley and rope that a young slave child sitting in a corner would pull on to activate a breeze while the French Creole owner and guests would dine. The long table seated 20 or so.


The notion of slavery suddenly hit me as it never has before. Human beings were bought and sold for cheap labor. It is a pox on our nation's past that we continue to suffer from collectively to this day and possibly forever. One sign listed the slaves who once toiled on this sugar cane plantation and the price that was paid to purchase them.

The sign identified individuals along with families both male and female. The list described their origin along with their value. One who held the title of mason was worth $1500, the most valued, It seemed. They were divided into both house and field slave categories. It made my skin crawl knowing I was standing on the same soil. Click to enlarge, see for yourself.


During the tour little was mentioned about the quality of life for slaves and concentrated on the lavish lifestyle of the French Creole plantation owners. Not much of the scripted information spoke to the treatment of slaves by these specific owners but even if these were kind and benevolent plantation owners being a slave had to be a life of nothing but sh!t.

There was an outbuilding that was said to be the kitchen but the structure was not original. In the late 1700’s a kitchen was not part of the main building due to fire hazard. In the structure that day was a gentleman who was very knowledgeable in civil war history. He was a re-enactor type wearing a confederate uniform, weapons and was made available for questions and conversation. I asked him what happened at this plantation during the war. His answer was that all plantation owners either kept a low profile or evacuated since strategic control of the river was a priority for both sides in a fierce fight. Most plantations of the day were burned, making Oak Alley rare to be standing today. It was a valuable landmark used for riverboat navigation by both sides due the grove of oak trees visible from the river.

It was well worth the time. To me, learning something new, absorbing historic and current local culture along with the ability to come and go wherever and whenever I please is my formula for a great getaway. That’s why I avoid cruise ships and Caribbean resorts.


SIDEBAR: On the way to the plantation that day we stopped at a Louisiana-rustic restaurant and market east of the small town junction of Vacherie. Simple curiosity and a mention in one travel guide claimed it was a local treasure so we were looking for it. The travel guide made note of their deep-fried boudin sausage balls and how they made great car-snacks. That alone tipped it in for me. With a name like deep-fried bodin-balls they HAD to be good. They were delicious and would have been perfect if not for being cold in the center. But we lived.

This was the beginning of what would be a very enriching trip.

To be continued….
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Tuesday, March 23, 2010

Realism Required On Stock Returns



Gail Marks Jarvis is a columnist for the Chicago Tribune on financial matters. The Tribune recently combined their personal finance and real estate sections into one section, which seems to make sense.

Ms Marks Jarvis provides financial advice. In a column titled "Options About for IRA investors" she wrote the following:

Financial planners have not strayed from their usual advice for people in their 20s, 30s and 40s, despite the more than 50 percent decline in stocks and the subsequent 70 percent upturn.

If you have years to go before you retire, you are likely to make more money in stock funds than in CDs, said financial planner Gary Bowyer. On average, bonds gain 5.5 percent a year, while stocks return 9.4 percent. Although some years are awful, Bowyer said, gains close to the average are likely over 20 or 30 years.


The first and most crucial mis-characterization comes in the first paragraph; she mentions that stocks declined 50% with a subsequent 70% upturn. While this may technically be true, it will lead many people astray; it would SEEM that if you went down 50% and then up 70% you'd be "net" up 20% (70% - 50%) if you weren't very good at math or didn't pay attention to the subtleties of the market. However, it isn't like that at all; if you have $100 and then it goes down 50% it goes to $50; a subsequent 70% rise means that now it is at $85, so you are still DOWN $15 (or 15% on your investment, ignoring the fact that you lost a year towards retirement that you can't make up, which means that it is an even bigger loss than it appears).

I would agree that most "financial planners", who make their living selling financial products, would tell you to keep on investing in stocks (mutual funds) and other types of products that earn them money; but it isn't true that this is the advice that you will find out there at large nowadays (just keep putting money in stocks and it will be all right).

As far as stocks returning 9.4%, that is completely fanciful. Stocks have been DOWN for the last decade, and for it to return 9.4% you'd have to make up all that lost time plus the time value of money. Many planners are urging a much more conservative rate assumption than that. About the only people that use such high rates as assumptions are pension plans that are trying to avoid future cash infusions and yet pay out high payments to retirees.

There are many instances where the stocks aren't regaining their past highs; look at the NASDAQ index which peaked at above 5,000 (5,132) but is now near 2400. The Japanese stock index (NIKKEI) peaked at 38,916 but is now near 10,800.

This is not to say that you shouldn't invest in the stock market; but nowadays very few people would view it as sensible to assume such a high rate of return on stocks unless you discount the last decade or so plus the experiences of NASDAQ and the NIKKEI, among others. I also think that the 50% / 70% comparison is misleading to most investors.

Cross posted at Trust Funds for Kids

Energy Futures Holdings (EFH) Revisited

Energy Futures Holdings (EFH) is a large utility based in Texas that used to be TXU. They were taken over by private equity in one of the largest buyouts during the "peak year" of 2007. I wrote about them here as they began to have problems repaying their monstrous pile of debt which mainly comes due in 2014. If you go to this file on EFH's web site and go to page 12 you can see the $20B in debt coming due on that date (EFH is privately held and thus does not have a stock ticker but since their debt is publicly held they do have analyst presentations).



The New York Times wrote an article on the EFH buy out titled "Power Players, Unplugged" on February 28, 2010. While we may take the NY Times to task from time to time on politics in general I find their business writing to be of high quality.

They sum up the deal as so:
The buyout was, in effect, a gargantuan bet that natural gas prices would keep climbing; instead, plunging prices coupled with a hobbled national economy have cut into the cash the company generates.

Investors who bought $40B of TXU's bonds and loands - including legendary wise men like Warren Buffett - have seen huge losses as most of the bonds trade between 70 and 80 cents on the dollars. The other $8B used to finance the buyout came from the private equity investors themselves... analysts say that this latter stake currently has little value.

This is fairly accurate. As I noted in many posts, the market clearing price for electricity is set by the price of natural gas. All of the nuclear plants run, and almost all of the coal plants run, but the price that they receive from the market depends on the marginal cost of power for the last plant turned on, which is typically a gas "peaking" plant. While the price for natural gas went as high as $14 / unit, it now trades around $4 / unit, due to the fact that huge volumes of new gas were found in the US and we also have the ability to import natural gas (LNG) from abroad. I write about the fall of natural gas prices here.



Gas prices typically spike up during the winter (it is a fuel primarily used for heating) and then fall during the summer, when utilities use this time to refill their storage with cheaper summer gas. If the winter is over and natural gas prices are around $4 / unit, this likely bodes for a further price cut this summer, when Texas gets hot again and EFH has to make up the bulk of their profits. If these prices stay low or go even lower, which seems likely, then EFH will see their margins cut significantly on their nuclear and coal generation, which will further compromise their ability to save money to pay off the huge pile of debt that comes due in 2014.

While the NY Times goes through the politics that EFH used to convince regulators and others in Texas to allow the utility to go private, they fail to hit on the most interesting part of the story - the fact that this is one of the few leveraged buy outs that I am aware of that didn't bring any significant ideas to try to run their new quarry more efficiently. Basically their plan was to drop new investment in coal generation(TXU was going to build 11 coal plants, but when EFH went private they agreed to drop 8 of these and just complete the 3 that were in progress, which threw a "bone" to the green crowd)and then apparently hedge the price of natural gas and try to cover the huge debt burden with increased cash flows, I guess.

Anything can happen and perhaps EFH will be able to "force" creditors to roll over their debt positions into new debt with longer maturities and then they can just continue running the utility and hope that demand re-surges and the price of natural gas, too. This is basically a strategy of not investing in incremental generation (unlike TXU, which was betting big on cheap Texas coal) and hoping that rising gas prices allow them to make a fortune off their paid-for-by-ratepayers nuclear and older coal plants.

The NY Times gets it right with this final quote, about what is likely to happen to those that lent money to EFH:
But recent history suggests that when it comes to troubled megadeals of the golden age of private equity, debt investors often come up short. TXU is not likely to be an exception. In these deals, says Mr. Blaydon of Dartmouth, "the debtholders are going to get hosed".

The equity holders have already been hosed, but since they are private equity kingpins, no need to shed a tear for them.

As far as the customers of EFH in Texas, it is hard to see what the value of this buy out was for them. Way back when this deal was first consummated in 2007 I wrote of an unholy alliance between the greens and the financiers which came to pass. If EFH stumbles and can't refinance their debt the state will have to do something to keep this major entity solvent; they can't allow it to just be seized by creditors and sold for parts. We will see how this story turns out.

Cross posted at Chicago Boyz

Sunday, March 21, 2010

The Ricky Gervais Show

Ricky Gervais is an English comedian most famous for the UK version of "The Office". He wrote that show with a Steven Merchant, another comedian.



He had a series of podcasts a few years back in 2001-5 (I didn't know about these back then) with Merchant and another guy named Karl Pilkington.



HBO made portions of these podcasts into what looks like a Flinstone cartoon called "The Ricky Gervais Show" into a half hour series that broadcasts Friday nights. I highly recommend that you try watching one of two of them. In the show Merchant and Gervais constantly skewer Karl for his hare-brained ideas and beliefs that what Karl reads on the internet are true. The show moves very quickly and you will laugh a lot. You need to watch it at least a couple of times to get into the spirit of it.

A bad day



I was a little sleepy last weekend and we went out for lunch and I noticed something odd when I looked down at the restaurant.

Saturday, March 20, 2010

Compress the NBA

I am hardly an NBA expert. However, I do like to watch the Chicago Bulls from time to time and am excited that a #1 draft pick, Derrick Rose, somehow landed in their lap.

Due to salary cap issues and the fact that some marquee free agents are going to be available next year, teams have been making moves in order to free up space. Recently I was watching the Bulls and basically they got rid of half their team in order to prepare for next year; Salmons and Tyrus Thomas were sent packing, for not too much in return.

The real issue is that there are WAY too many teams in the league given the talent level. I was reading "The Book of Basketball" by Bill Simmons when he talks about the level of talent in the late 80's during the reign of Larry Bird with the Celtics. The Celtics had the following guys:

- Larry Bird (one of the top players of all time)
- Kevin McHale (hall of fame)
- Robert Parish (hall of fame)
- Dennis Johnson (should be in the hall of fame, called one of the most under-rated players of all time, and Larry Bird named him his favorite team mate)
- Danny Ainge (not a hall of famer, but certainly a high quality combative player)
- Bill Walton off the bench (another hall of famer)

And the Lakers had the following guys:

- Magic Johnson (hall of fame)
- Kareem Abdul-Jabbar (hall of fame)
- James Worthy (hall of fame)
- A.C. Green (another quality player, played in more consecutive games than any other player per Wikipedia, at least)
- Byron Scott (not a hall of famer, but a quality player)
- Mychal Thompson (also not in hall of fame, but a #1 draft pick and valuable player)

By these sorts of milestones, you might have 4 hall of fame players (or near hall of fame players) on the same team in the 1980's (the best teams, of course).

The NBA began to get more watered down in the 1990's, as far as spreading the stars across more teams. As a Chicago Bulls fan, I watched over the years as the Bulls struggled to find players to compliment Michael Jordan (in reality, just to take a bit of the load off him) until they found the soon-to-be hall of fame player Scottie Pippen (eligible in 2010). Horace Grant and Dennis Rodman (they didn't play together) weren't hall of fame players but not far off.

By these sorts of milestones, if you get 2 hall of fame players together in the 1990's you were on top, with a third player very near that caliber (either Grant or Rodman).

Today, however, if you get TWO top players on a team - well that's all she wrote, you are up for the championship. LeBron James is struggling to get one other player so that they can win it all; now he is trying with an aging Shaq (out injured for the season). When Shaq and Kobe were working well together, there's a championship in the bag, and when Shaq and Wade were doing well there's a championship for Miami.

So instead of having 30 teams, let's go down to around 6. The vast majority of these teams don't have a chance anyways, so let's put some top teams together rather than have Kevin Durant over at Oklahoma City by himself the same way Allen Iverson wasted his career with no support in Philly (before wasting all his money).

We can keep the Celtics, Lakers, and then a few other ones. Doesn't really matter which franchises - after that to each their own. I'd have to say that the Bulls should be out of the running since Jordan was obviously a fluke; they have gone back to their natural state of lousiness since he departed in a sea of acrimony over Krause's comment that it was the franchise, not Jordan, that won those championships (literally one of the stupidest things ever said in sports).

Why even follow these teams that are just empty shells waiting for the superstars to drop in? Look at the Bulls - they have a bona-fide star in Derrick Rose and a guy who could be a 3rd quality player in Noah if he keeps improving, and then if you drop in someone like LeBron you get your two top players and a bit of a cast and now you are a bona fide contender. But for all this you still have players making millions just to fill out your roster; let's look at the cost of the Bulls roster right now (salaries from this site):

Brad Miller - $12.2M
Loul Deng - $10.3M
Kirk Hinrich - $9.5M
Jerome James - $6.6M
Derrick Rose - $5.1M
Tim Thomas - $4.8M
Hakim Warrick - $3M
Joe Alexander - $2.5M
Joakim Noah - $2.5M
Acie Law - $2.2M

Really... is anyone going to pay to see Miller? Or Hinrich? Or JEROME James (we'd pay to see the other James). This is big money for mid-level talent. Why even bother? Just compress the teams and let's just stop with the idea that a team like the Bulls would ever even get out of the first or MAYBE second rounds of the playoffs with a roster like this.

St Patrick's Day 2010 River North

St. Patrick's Day in 2010 here in River North was cloudy and rainy, about like it is today on the following Saturday (except it is even colder now). It seemed a bit more subdued than usual, for whatever reason, but you had the usual long lines at the bars at 7am (or earlier). Here in River North ground zero would be the Irish bars, prominently featured by Fado (the one with the long line in the photo)but the Hard Rock was trying to get in the act with a big tent set up outside and a musical act and food (pretty smart considering the rain).



Maybe because I wasn't drinking during the day I didn't see as many funny drunks as usual, like the guy dressed as Larry Bird in this post.