Stocks, Fall, and the Huskers

A friend called this morning. He can’t believe I’m not writing about the stock market disaster and the circus inside the Beltway. “This is right up your alley, Jim, you should be writing about this in your blog.”

Ah, but I have been writing about it for the last couple of years. This is old news for anyone paying attention to the news and carefully ignoring the blather that passes for news on t.v. and radio. I get no satisfaction from saying, “I told you so.”

So for now the colors of the changing leaves, the soybean and corn harvest, and the width of the middle stripe on the wooly bear caterpillars is far more interesting. Even the hapless Cornhusker football team holds more drama than a nearly perfect 38% Fibonacci retracement in the Dow Jones industrial Average.

From here the stock market will almost certainly bounce for a while. Every indicator that matters has been saying that it would retrace down to around the 11,000 mark and now those same indicators say it should bounce back up for a year or so before taking another plunge.

Unfortunately the prospects don’t look so good for the Huskers.


Remembering the Death of St. John the Theologian

Today is the Feast of the Falling Asleep of St. John the Apostle and Theologian. He was tortured in Ephesus and later in Rome and was finally banished to Patmos Island in Greece, a place that, at the time, was not nearly as developed and comfortable as it is today (wink). After the death of Domitian his exile expired and he returned to his beloved Ephesus from where he is traditionally believed to have written the epistles that bear his name.

The epistle reading for today is 1 John 4:12-19. It is a reading beloved by many Christians, and especially by those who think we should just quit fighting and get along with each other. (Which isn’t necessarily a bad sentiment, by the way.) I am particularly reminded of John Fischer’s simple and lovely little melody Rest in Him and the music of Matthews, Taylor, and Johnson and later Randy Matthews, when he went solo. (Whoo boy, those two references are going to date me – 70’s Jesus music!)

But when read in the context of St. John the Theologian’s life, his sublime words take on a rather different context. For instance, “Whoever confesses that Jesus is the Son of God, God abides in him, and he in God. So we know and believe the love God has for us.”

This isn’t just “inviting Jesus into your heart” or telling your neighbor that you love Jesus, for John, confessing Christ meant things like boiling oil and exile. And even in the midst of such experience, he could say from experience that God still abides in us.

A similar profundity shimmers just below the surface when he says a couple of sentences later, “There is no fear in love, but perfect love casts out fear.”

Since I’m on the topic of Jesus music, maybe one of the most popular songs of that whole genre is in truth a far better commentary on 1 John 4 than anything else from the era. That would be Larry Norman’s homage to the Apocalypse or Book of Revelation: “Life was filled with guns and war / and all of us got trampled on the floor / I wish we’d all been ready. / Children died / the days grew cold / A piece of bread could buy a bag of gold / I wish we’d all been ready.”

The words are certainly a bit trite in their own way, but far closer to the truth of the matter when St. John says that God abides in us when we confess his name. May God, in his great mercy, give us strength to confess his name.


Two weeks ago I noticed a spider sitting on a web outside the bathroom window. I know it was two weeks because I first noticed it the weekend before the Sunday of the Elevation of the Cross, which would have put my first notice on Sep 12 or 13.  (Why I remember this little detail is a mystery.) For two weeks he sat exactly like this and did not move in a manner that I could detect.

Spider on web in window

Spider on web in window

I decided the spider was dead and wondered how long the web would last before being destroyed in the wind.

Today the web was being buffeted by the wind and then, almost imperceptibly, the spider put his right foot in and then he put his right foot out … I waited with baited breath. Would he shake it all about? …

Nope. I guess he wasn’t doing the Hokey Pokey, just getting comfortable.

I wonder if spiders ever starve to death patiently waiting for their next victim? Maybe I should call FEMA to bring the big guy rations.

The Body of Christ

I’m not going to dump on the Orthodox Church in America, but it is the context of my thoughts, so a word is in order. The OCA has had a financial scandal brewing and occasionally bubbling over for the last few years. It seems that things may have finally come to a head. I suspect that for most OCA folks life goes on as usual but with a great deal of sadness now. But for others the emotions surrounding the scandal have trickled into the local parish where things have turned decidedly unpleasant.

An acquaintance recently told me he didn’t dare go to church last Sunday. Things are simply too unpleasant in his parish and when he goes he is driven away from God rather than drawn toward him. Instead he spends the ten o’clock hour before his icon corner, prays portions of the liturgy at home, and mourns his alienation from the church.

Such a note from an acquaintance would not be noteworthy except for a similar comment I overheard by a Meals on Wheels driver this week. She is very spiritual and vaguely Christian and attends a conservative Evangelical church that suits those sensibilities. But she took her kids camping this weekend instead of attending church. “Oh, church is good, but if I want to be with God, it’s a lot easier and more peaceful by the creek and beside the stream than it is at church. I think Jesus likes it out there.”

The actions of these two people are very similar, but their reasons are radically different. And those reasons reflect a radically different attitude toward the Body of Christ. The former did not go to church because it was simply too painful at this moment, although he mourned his separation from the Body. The latter did not go to church simply because it was a pain. Furthermore, her conception of the Body of Christ was utterly disembodied. She assumed that Jesus was glad to trot along beside her to the woods like a friendly puppy on a morning walk.

The former attitude, while maybe not correct, is at least profoundly Christian. The latter, while not even vaguely Christian, is “correct,” because the woman is her own measure and authority, and by that standard, she had a marvelously spiritual morning.

A Sign of Autumn

Sunday night I was burning the last of the brush pile from this summer’s storm. As I sat watching the flames, the air filled with the sound of geese. Maybe a dozen flew over; a couple minutes later, another dozen, then twenty, then six. It went on for a half hour or forty five minutes: a migration in fits and starts. The geese were headed southwest. No doubt it’s time to terrorize golfers and golf courses far to the south of Nebraska.

Road Kill

This summer we’ve seen a lot of buzzards sitting on the side of the road eating road kill. But the other day, I saw a dead buzzard, wings all splayed out, just a few feet beyond another bit of road kill. Seems the poor buzzard got hit by a vehicle.

Alas, no buzzards had gathered to clean up the mess. It seems even they have epicurean standards.

I’ve Been Bailed Out!

I got a call yesterday from the guy who manages our retirement account. A portion of our retirement is in a money market fund and money market funds – historically, bastions of strength and safety – have been under pressure as of late. (Go figure.) “The underlying fund had dropped in value,” our retirement manager told us, “I didn’t think that was even possible, but these are weird times.” He told me he was going to liquidate our holdings and put it into something that was insured. (Oh yeah, and note to self. If our retirement fund manager didn’t even know it was possible for a money market fund to lose value – even though it says that quite clearly in the prospectus – maybe it’s time to find out what else he doesn’t know about his profession and find a new manager.)

First thing this morning he called me back. Turns out that overnight Hank Paulson, our beneficent Secretary of the Treasury, announced that he was going to bail out money market funds to the tune of $50 billion of your dollars (at least they’re yours if you’re an American reader.) For the next year everything is hunky-dory in the money market business because they’re backed by the full faith and credit of the wallets of the American taxpayer.

So, thank you, dear reader, for helping us out in our time of desperate need. We (along with AIG, Silver State Bank, Integrity Bank, The Columbian Bank and Trust, First Priority Bank, ad nauseum) thank you for your generosity. If you need a buck seventy five for a cup of coffee, I might be able to spare it now.

Oh yeah, and one more thing. At least John McCain would have the sense to fire Mr. Paulson if he were President of the United States. But it seems the fox has already decimated the hen house.

The Beastly Truth about Grocery Carts

When Brenda and I were first married and living in Kansas City, one of the grocery stores came out with a loyalty program. Back then it was new, high tech, and pretty darn cool. All you had to do was give the cashier your card before she scanned your groceries and the register would automatically give you the coupon discount for every coupon that was currently active in the system.

Of course in the intervening quarter century, such loyalty programs are ubiquitous. But somewhere along the line I dropped out of grocer loyalty programs. The real point of such programs is that all your buying habits go into a data base and that information can be sold to advertisers, etc. I didn’t want the world to know my grocery buying habits, that was a bit more privacy than I wanted to give away.

I’m not fanatically opposed to loyalty programs. I’m signed up for a few motel programs, for instance. I figure that since I use a credit card, the motel chains are going to have all the information anyway. It’s the same with airlines, so I have a frequent flyer card.

But I draw the line at the grocery store and bookstore. Having a detailed history of my grocery buying habits and book buying habits is just a bit too personal. It’s as if the marketers are poking around my underwear drawer, and I’d rather not make it too easy for companies to keep track of all my stuff.

(The other solution is to get rid of all my stuff. But I’ve managed to avoid reading Luke 18:22 for quite a while and don’t feel compelled to do that either.)

But now there’s a new twist at the grocery store. In the good ol’ days, you could count on paying less for your groceries if you used your loyalty card. That’s not necessarily the case anymore. Fujitsu has come out with a high tech grocery cart that Jewel-Osco stores are using. The radio receiver in the cart interacts with RFID chips around the store and your buying history, which it uploads from the store data base when you swipe your loyalty card through the shopping cart. Based on these three factors, the cart then offers you discounts as you drive through the store.

But Vernon Slack, who helped develop the new Fujitsu cart, candidly admits that this doesn’t necessarily guarantee the lowest price for the consumer. If your buying history indicates that you always buy Coke, no matter how deep the discount on Pepsi, you will never get a Coke coupon. There’s no incentive for Coca-Cola Corp to give you a discount because you’ll pay whatever is required for your brand. On the other hand, if your buying history indicates you’ll buy whatever’s cheaper, Coke will know not only how much Coke costs, but what the current price of Pepsi and RC is, and offer you a price on the Coke that is just a little bit cheaper than the competitors.

In other words the very idea of “loyalty” in the loyalty card promotion has been turned on its head. If they are sure you’re a loyal customer, you’ll get very little price incentive. If, on the other hand, you have no product loyalty whatsoever and will purchase whatever’s cheapest, you’ll get the best coupons.

I really admire the nefarious brilliance of these new grocery carts. That is a really cool bit of technology. But it proves the old axiom, just because your paranoid, it doesn’t mean they’re not out to get you. I think I’ll stay paranoid and continue to avoid grocery loyalty programs.

Derek and the Bad Men, pt 2

Over the last many months the United States has been putting a great deal of pressure on offshore financial centers—what the politicians prefer to call tax havens. Supposedly, the point of all this pressure is primarily to stop the flow of money to terrorists and secondarily to find Americans who are not paying their taxes.

But stopping money laundering and tax avoidance isn’t as easy as that. The problem with money laundering is not that certain jurisdictions allow it, but rather that every jurisdiction has loopholes which can be used if the terrorist is smart enough to figure out how to do it. The more complicated a jurisdiction’s tax code, the easier it becomes to launder money.

This means that, in spite of the politicians’ rhetoric, shutting down a supposed tax haven has little effect on money laundering or tax avoidance and almost everything to do with publicity in an election cycle. In fact, the draconian pressures brought against some of the famous “tax havens” in the Caribbean have had the effect of putting islanders out of work and sometimes into situations of dire poverty without having any meaningful effect on either money laundering or tax avoidance. When one cuts through the rhetoric and double speak and shines the light of day on what’s really going on, what we find is that American politicians are playing a shell game with ordinary people’s lives while the real problem lies elsewhere.

To illustrate, Nancy Pelosi brought a list of around a hundred corporations with American owners whose headquarters were located in Bermuda. “None of these corporations had paid any U.S. income tax in 2007!” she stormed from the microphone. What she conveniently failed to say is that 85 of those companies lost money in 2007 and that’s why they paid no taxes. (Even American corporations like General Motors lost money in 2007 and didn’t pay any taxes.) Another percentage had invested in tax reduction programs such as natural gas exploration, which receives a huge tax credit that Pelosi strongly supports because so much natural gas drilling occurs in California. In other words, all those corporations didn’t file taxes because of the American tax code. It had nothing to do with their location in Bermuda.

And this brings me back to Derek Sambrook, who I mentioned in yesterday’s post. His firm, Trust Services, S.A., has an investment newsletter called The Offshore Pilot Quarterly. As Bob Bauman brought to my attention (a link to his blog can be found on the right side panel), in the current issue he writes the following about the jurisdiction that is the king of the world when it comes to money laundering and tax avoidance practices:

I had read about one financial services jurisdiction whose companies had been involved in the laundering of some $36 billion from the former Soviet Union; that is an amount that could finance the present Panama canal expansion project at least six times over. In this same jurisdiction, Russian officials had used companies to unlawfully divert $15 million in international aid meant to fund a safety upgrade of former Soviet nuclear power plants and in another case an individual had set up more than 2000 companies, established bank accounts for them without disclosing identities, and then passed some $1.4 billion through the accounts. It turned out, in fact, that one of those companies had received over 3,700 suspicious wire transfers which, during a two-year period, added up to just over $81 million. But the authorities could not pursue this case because they were unable to discover who owned the company due to the lax laws of the jurisdiction.

Don’t we wish Congress would go after this jurisdiction and stop their illegal activities instead of trying to shut down the tiny players in the financial services game such as Caribbean nations like Bahamas, Turks and Caicos, etc?

The problem is, the financial services jurisdiction Mr. Sambrook is talking about is the United States.

And this gets to the heart of the lie that is being foisted on the American people during this election cycle. Money laundering and tax avoidance is not rooted in the jurisdictions that promote this sort of thing. Every country tied into the international financial system is very careful to not knowingly allow illegal practices. (Well, there may be a couple of exceptions, such as Cyprus and the Marshall Islands, but even those historically loose jurisdictions have been busy kicking out the bad guys in the last several years.) But it’s a cat-and-mouse game. The crooks come up with a new scheme and the various countries come up with a new way to block the scheme, so the crooks come up with another scheme, etc.

And the dirty little secret is that the more complex the tax code, the easier it becomes to find a loophole and use that jurisdiction to do illegal things. Guess who has the most complex tax code in the world, and thus, the easiest to scam? (It’s a rhetorical question, but in case you don’t know, it’s not Turks and Caicos, it’s the U.S.) So it is that on a comparative scale, very little illegal financial activity goes on in places like Turks and Caicos, or Switzerland, Bermuda, or even Panama. It is simply too difficult to get away with it in the modern world. No, the crooks and terrorists go to the places where they can hide in the many cracks, folds, and dark places the tax code allows, such as the U.S. and Britain.

But the legacy of the post 9/11 world is that the United States is only making its own tax code more complex while it goes about trying to destroy every tiny financial services jurisdiction it can bully in the name of fighting terrorism.

If those who were killed so tragically seven years ago knew this was the legacy of their tragic story, I suspect they would be ashamed and upset at how those events have been used to take away American freedoms and frighten hard working people around the world. I know I would be.

Derek and the Bad Men, pt 1

One of the more memorable evenings of my life was spent with Derek Sambrook and his family in a downtown motel ballroom on a steamy hot night in Panama City, Panama. Derek is Managing Director of Trust Services, S.A., in Panama City. He is English but has spent most of his adult life in “the colonies” (various African countries, and now Panama). Granted the Brits never had a significant colonial presence in Panama, but Geoffrey Rush, who played the tailor in The Tailor of Panama (the movie adaptation of John LeCarré’s novel of the same name) was so very colonial British in that role, and an evening with the Sambrooks felt like it came right out of the movie.

The LeCarré book is a spy novel, full of government intrigue where individual lives are held in the balance by arbitrary and faceless governments halfway around the globe. My conversation with Derek had some of the same feel. For the last seven years companies like Trust Services, S.A. have been under a great deal of pressure by the United States to do illegal things. (Specifically, to turn over information about clients that is specifically forbidden by law in their various jurisdictions. Often the punishment is loss of license and prison sentences that are counted not in months, but years.) But in order to understand the full irony of the U.S. demanding that foreigners become felons in their own countries, a bit of history is in order.

Modern international privacy and banking law (as epitomized by Switzerland, Panama, etc.) grew directly out of the two World Wars. Switzerland had a history of banking privacy long before the mid-twentieth century, but during this period the United States and United Nations promoted this body of law as a fundamental human rights issue. During WWII, for instance, both Germany and Italy were freezing all the assets of people (especially Jews) who didn’t agree with government policies. Even when they allowed dissidents to leave the country, they charged them huge “exit taxes,” which were in reality legalized thefts of these people’s life savings. In this way these countries were able to control their wealthy citizens who had the means to speak out against the atrocities that were going on.

After WWII, under pressure from the United States, these practices—huge exit taxes, not allowing citizens free access to foreign bank accounts, etc.—were, if not formally declared violations of human rights, certainly classified as such by the United Nations. It was in this environment that Derek Sambrook entered the international financial business. He was one of the good guys, going to some of the hot spots in the world (first Africa, and then Latin America) helping people protect their lives from the bad guys—those that would blackmail them to gain international support or notoriety.

But all that changed with a stroke of the pen some time after September 2001. In one of the great acts of Orwellian double speak, the United States government declared this whole area of human rights advocacy a shady business primarily interested in supporting terrorism. Sambrook, his company, and companies like it—some of the brave good guys of the world who were carrying out the will of the post-World War human rights agenda of the United Nations—had suddenly become suspects and targets in the U.S. war against terror.

Over the next seven years these very things that the United States had pushed as basic human rights in their fifty year old fight against Fascism and Communism—huge exit taxes and free access to foreign bank accounts, for instance—were made virtually illegal in “the land of ‘the free’ and home of the brave.” Pretty soon IRS and SEC officers (the Secret Service of the modern economic state) were poking around Sambrook’s office and harassing anyone who walked through the front door at Trust Services, S.A.

But Mr. Sambrook is British, and with a stiff upper lip, a cup of tea in the morning and a shot of whiskey at night even these terrors foisted upon him from American officials could be faced. His work must go on! (I kept glancing at the door, waiting for the debonair but creepy Pierce Brosnan (Andy Osnard the MI-5 agent from The Tailor of Panama) to come walking in. But he never did.

Sambrook was a great storyteller. Even if only half his story was true, it was a frightening tale. The next day I visited briefly with former Congressman Bob Bauman (who is a good friend of Sambrook’s) and he assured me that while Derek has been known to embellish a bit for the sake of a good story, what he told me in the ballroom was more true than I could know.

I have a point to this story, and I’ll make that point tomorrow.