Most of the time God,Pratt & Whitney or General Electric, will give you another turn in the Barrel.

These are my opinions and my opinions only they do not reflect the opinions of any of my family members or their employer. Note we NOW have NO employers.

Back from a 5.5 Year PCS from the confines of the far Southwest corner of Bundesrepublik Deutschland. The Federal Republic of Germany and Retired.

Sunday, November 3, 2013

DOD and the National Guard

The show down continues between the several states in particular Texas and the Department of Defense.

So what is the SECDEF suppose to do?  Well the first thing he might do is revoke or remove the ability of the affected National Guard’s from enrolling, modifying, or issuing any DOD ID cards.

If Guard members from the affected states have issues with their existing ID cards as they apply to or for access to Federal Facilities or programs they and or their dependents will have to go to a DOD facility, not a state facility to have these actions performed.

For example in Texas if a Guardsman or his family member needs a new ID card they would have to go to their nearest Federal Military Reservation.  That could be Fort Sam Houston, Randolph AFB, Lackland AFB all now known as Joint Base San Antonio, or Fort Hood, or Fort Bliss, or Dyess AFB, or Goodfellow AFB, or Laughlin AFB, or Sheppard AFB.  They might even be allowed to receive this service at Cannon AFB, or Holloman AFB (both in New Mexico), or even Altus AFB (Oklahoma) or Barksdale AFB (Louisiana).  That would be up to the SECDEF.

Depending on the state there should be at least one site in which a Guardsman and or their family member could go to for their credentialing matters.  They might have to drive a few hundred miles, but nothing is too much for these individuals when it comes to defending states rights.

But this is just the tip of the iceberg and I am sure that the various states would or could  find other issues to drive a wedge between the state and federal government.  Politians are a very creative lot, although for many members they appear rather shortsighted group.

But this does raise a deeper question concerning the various National Guards, and in particular Texas.  For many officers in the guard they hold dual commissions, one federal and one state.  There are officers of the Texas National Guard that only hold state commissions.  For all officers their oath of commissioning for Texas states as follows

“I ______________________. Do solemnly swear that I will bear true faith and allegiance to the State of Texas and to the United States of America; that I will serve them honestly and faithfully against all their enemies whomsoever, and that I will obey the orders of the governor of Texas, and the orders of the officers appointed over me, according to the laws, rules and articles for the government of the military forces of the State of Texas”

Title 4 Subtitle C. Chapter 432, Subchapter A, Sec. 431.007 Texas Statues.

The officers in the New York National Guard and most other states, their commissioning oath is as follows

I, ______________________ do solemnly swear (or affirm) that I will support and defend the Constitution of the United States and the Constitution of State of New York against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I will obey the orders of the President of the United States and the Governor of the State New York, that I make this obligation freely, without an mental reservations or purpose of evasion, and that I will well and faithfully discharge the duties of the Office of  _________________ in the Army/Air National Guard of the State New York upon which I am about to enter so help me God.

NGB 337 20060801/

State of Oklahoma requirements

§4445. Oath of commissioned officers. 
Oath for National Guard Officers. Each commissioned officer, before entering upon the duties of his office, shall take and subscribe to the following oath, or such other oath as may be required by National Guard Regulations:

"I .........., do solemnly swear that I will support and defend the Constitution of the United States and the Constitution of the State of Oklahoma against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I will obey the orders of the President of the United States and the Governor of the State of Oklahoma; that I make this obligation freely, without any mental reservation or purpose of evasion, and that I will well and faithfully discharge the duties of the office of ......., in the National Guard of the United States and the State of Oklahoma upon which I am about to enter, so help me God." 

Laws 1951, p. 116, art. 3, § 5, eff. May 16, 1951. 

But for those who hold dual commissions, and typically their federal commission was their first commission the first oath that they recited was

“I _______________________, having been appointed an officer in the Army of the United States, as indicated above in the grade of __________ do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic, that I will bear true faith and allegiance to the same; that I this obligation freely, without any mental reservations or purpose of evasion; and that I will well and faithfully discharge the duties of the office upon which I am about to enter; So help me God.”

DA Form 71, 1 August 1959.

There are two aspect of the Texas National Guard Officers oath that just does not sit right with me and those passages are
“ I will bear true faith and allegiance to the State of Texas and to the United States of America”

“I will obey the orders of the Governor of Texas”

The first passage the order of precedence is important the individual is swearing allegiance to the State of Texas and almost as an after thought to the United States of America.  In the law, the order of objects is everything.  When there are two possible conflicting demands required by a contract typically the first one cited takes precedence over the latter.

Not to put too fine of a point on the subject but this second passage from the Texas Oath is even more disturbing in that reminds me of a line from the Reischwehreid.  This was the oath sworn by Wehrmacht officers and soldiers and German civil servants for the years 1934 to 1945.   Which was an oath of loyalty to the

“Leader of the German empire and people,”

Granted the Texas Oath unlike the Reischwehreid actually stops at requiring the applicant from reciting or naming the current governor by name when they take the oath, but in the end that is not really a fine distinction.  The Texas Oath could only have been better if had the applicant renounce any and all previous oaths of allegiance, but I suspect that would have resulted in bad Juju coming down on the State of Texas by the federal government.

The Federal Oath of Allegiance states that the candidate is to “support and defend the Constitution of the United States”.  It is not an Oath of Allegiance to a particular state, or branch of government, and especially not to particular office or officer of the government.  It is accepted that the document (Constitution of the United States) is lawful, and that any orders to defend of the document are lawful.

For majority of the states their required Oath for Officers in their respective National Guards is first an allegiance to the Constitution of the United States, then to the Constitution of their respective state, and if so stated to orders of the President of the United States and then to the orders of their respective Governor.

So as I read the Texas Oath, an officer in the Texas National Guard first allegiance is the State of Texas, and then to the United States of America, and that they are to obey the orders of the Governor of Texas and those officers appointed over them.  The oath is silent as to order from the President of the United States.

There is no requirement in the oath for Texas to determine whether the orders are lawful either under the State of Texas Constitution or even the United States Constitution since the candidate has not explicitly sworn any allegiance by this Oath to support or defend the Constitution of the United Stares or for that matter the Constitution of the State of Texas, they have only sworn an oath to defend Texas, and then the United States of America, and explicitly accept orders from the Governor, and his appointed officers.

This is very disturbing, given this Officers Oath for the National Guard in Texas.  The next question should be whether United States Government via the Department of Defense actually providing funds to this organization?

Tuesday, June 4, 2013


One of my past employment function I was a Quality Assurance Engineer, and one of the critical aspect of my function was benchmarking our processes to our competitors, because I know that I am not one of the smartest guy’s in the room, and that plagiarism is the most since form of flattery, and this is especially true for my investments.
So when I come across an article in the various publications that provide data on how well programs administered by professional managers have performed, I add it to my list of benchmarks for comparison to my investment performance.
Such an article was this one recently posted on the by Martin Z. Braun and Henry Goldman, 2013-05-31, concerning the New York City Pension, Larry Schloss the Chief Investment Officer and the search for in-house investment managers.
In the article some performance numbers for 5 pension/retirement funds were cited.   The New York City Pension, Ontario Teacher Pension Fund, California Public Employees’ Retirement System, Pennsylvania Public School Employees’ Retirement System, and New Jersey’s Pension Fund.
The article reported that the New York City Pension since 2003 has averaged 8.0 percent annual return.  Ontario Teacher has averaged 9.6 percent annual return since 2003.  No end date for this 10-year performance figure was cited in the article. California Public Employees 10 year annual return cited was as of 30 June 2012, and it was reported as 6.1 percent.  Pennsylvania Public 10 year annual return as of 30 June 2012 was cited as 7.2 percent.  Finally the New Jersey Pension 10 year annual return as of 30 June 2012 was reported as 6.4 percent.
These funds are either managed internally, some split between internal and external managers and in one case entirely externally managed.  My portfolio is managed internally.
Well how did I do compared to the professional money manager?  For the period 1/1/2003 to 5/30/2013 my portfolio IRR as calculated by Quicken, was 10.35 percent, for the period 1/1/2003 to 1/1/2013 my portfolio IRR was calculated to be 9.80 percent.  My portfolio performance 7/1/2002 to 6/30/2012 calculated to be 8.90 percent.
Compare that the to reported 8.0 percent for New York City either number is not bad.
Compared to Ontario Teacher Pension reported 9.6 percent, again either number is on par with the professionals.
When I compare my portfolio performance for 10 year period ending 6/30/2012 to reported 10 year annual returns of 7.2 percent for Pennsylvania, 6.4 percent for New Jersey, and 6.1 percent for California pension plans I gain some confidence and validation in the investing strategy that I have chosen for these past 40 years.
By way of another comparison according to calculations provided by following web site the SP 500 annualized return including dividends reinvested for the various periods are as follows.  For the Period July 2002 to June 2012 inclusive the site reported an annualized return of 5.984 percent.  For the period January 2003 to January 2013 the annualized return calculated was 7.256 percent.  For the period January 2003 to May 2013 the annualized return calculated was 7.971 percent.  For easy of comparison I decided to put it into a table

Jul 2002-Jun 2012
Jan 2003-Jan 2013
Jan 2003-May 2013

New Jersey



New York


So how did the professional do against the just the SP500. Pennsylvania, New Jersey, and California did provide more of a return than the SP500.  In the case of Pennsylvania significant majority of their return was just from the SP500.  In the case of New Jersey and California almost all of their return was just from the SP500.
The Ontario Teacher Pension did out perform the SP500 but again I would suspect that a majority of their return was just from the SP500.
In the case of the New York City Pension which slightly out perform the SP500.  I would say just like New Jersey and California almost all of their return was from the SP500, note this fund was managed externally by professionals.
Not a single one of these pension to any degree out perform the market as represented by the SP-500 to any exceptional degree including mine, and why should they, it is one of the basic benchmarks that I know I use and I suspect that the respective management of the various funds use to compare their performance with.

Jan 2002-Jun 2012
Percent SP-500
Jan 2003-Jan2013
Percent SP-500
Jan 2003-May 2013
Percent SP-500

New Jersey



New York


In all fairness these various pension funds, they have a great deal more monies to invest compared to what I have to invest, and that any major movement of capital by them will typically affect the market in observable way.  Any major movement of capital by me would be very insignificant to the market, I just do not have that much, and additionally I take great pains to keep any movements small.
The Pension funds have to content with monthly retirement payments to make, but this should be offset by monthly retirement contributions being made, and at the end of the day I would suspect that this aspect of their management activities is pretty much of a wash.
Finally they have to content with numerous individual account holder making allocation changes, but many if not all have instituted rules that limit how many such events an account holder can perform in attempt to reduce this source of volatility.
My investment strategy has been for the most part very simple, one to be invested, and two to be invested in various low cost/fee broad index funds.  Allocated between Stocks and Bonds on average with roughly 77 percent allocated to Stocks, and 23 percent Bonds.  The Stocks are further allocated between Large Cap Indexes, International Stocks Indexes, and Small Cap Indexes.  The Bonds are allocated between Total Bond Indexes, Long Term Treasuries, Inflation Protected Treasuries, and High Yield Commercial.
Nothing fancy, nothing exotic, and nothing that really requires a great deal of tinkering on my part.
During the course of generating this post I decided that I would be an excellent candidate to manage the City of New York Pension Fund.  So with that thought in mind, here goes.
Dear Mr. Schloss;
With all due respect I am submit my name for consideration to manage the City of New York’s Pension Fund.  I have presented data in this post to indicate that my performance is just as good if not better than what you have received to date.
The salary discussed in the Bloomberg article is quite acceptable.  We would have to hold discussions on other aspects of an employment contract, but nothing that I would suspect that we couldn’t come to some mutual beneficial agreement.  Mr. Schoss my investment method is not rocket science, even though at one time I was a rocket scientist.  My investment method is Open Source, can be found on the Internet with a little searching, and completely transparent.  If you are not so inclined to research my method please E-Mail me and I will provide you with a copy, electrons are free.
Thank you for allowing me this opportunity applying for this position.

Saturday, March 30, 2013

Target Luxembourg

It will first start as trickle, and then it will grow to the size of a brook, then as other brooks join it will grow to the size of a creek, and then as other creek join it then a small river, and as the small rivers join together a large continent draining river.
The trickles are just starting in Luxembourg, a country known for it’s banking, but not much else.  Luxembourg is a country with banks deposits in significant excess of its gross domestic product, just like Cyprus.  But just like Cyprus, Luxembourg cannot print enough physical currency to cover the entire electronic Euro currently held/deposited within the various disk drives of its banks.
Cyprus banks had deposits greater 10.8 times the GDP of the country.  Luxembourg banks according to IMF in 2011 held deposits greater than 20 times the countries GDP.  I suspect that deposit growth has been greater than Luxembourg GDP growth, meaning that deposit to GDP is even greater today.  If you think Cyprus is bad, just wait.  The “ChubbChubbs” are coming.  It will sweep over the continent, each of the weak sisters being picked off one by one, as they succumb to monetary forces at work.
It was a good wave to ride while it lasted by the shore is close at hand the wave is starting to break lose form, it is really had to keep on your board in the spray and foam of a crashing wave.  The smart surfers would have already pitched out, looking for the next wave.
So the really smart money is starting to slowly move those electronic Euro’s out of Luxembourg.  I suspect a significant percentage of those electronic Euros’ that are being moved are also being converted to electronic Dollars.  Given that of all the various world currencies that are convertible and not illiquid, and that have enough GDP to cover deposits being held within the confines of their banking system, the United States is it.  At this time the exchange rate is rather favorable for jumping out of the Euro, not as good as it was a few weeks ago, but it is only going to get worse in the coming months.
Some of electronic Euro’s are staying in Europe.  These electronic Euro’s are just going to other location in Europe, which for the moment appear to be safer.  The reason for this is that individuals and companies need to cover operating expenses within Europe.  But where to put those funds is the solvency question?  As I look upon the GDP landscape the only European country with enough GDP to cover this flood of electronic Euro’s is Germany.
Another possible location is Switzerland, but even the Swiss have limits how many Euro’s they are willing to accept at the current exchange rates.  A big large flow of Euro will destabilize their currency something the Swiss National Bank is battling everyday, but even their reserves are limited.
As stated in the CNBC article "The Insanity of the Cyprus Crisis".  The ECB is not the FED.  The ECB on its own has no ability to print money to rescue failing banks.  The ability to print money falls to the various member National Country Banks that are members of the ECB who issue money in the name of the ECB.  The ECB is responsible for just 8 percent of the notes issued the various National Country Banks.  The National Country Banks are responsible for the remaining 92 percent, and the bad news it that their responsibility is limited to only those notes that they physically issued.  The majority of the printing of Bank notes his handled by each member country.  There is a country code printed on each note.  For those who are interested “G” is the code for Cyprus.
The European Banking Authority, which has some limit responsibility in regulation bank the majority of the authority rest with the respective nations and their respective agencies, does not have the authority to borrow money (issue bonds) to rescue these failed banks, since it does not have any taxing capacity to back up any bonds.
What individual/corporation would put their electronic Euro’s in Italian Banks, Spanish Banks, Portuguese Bank, French Bank, Belgium Bank, or Dutch Bank?  If I were a citizen of any one of the afore mentioned countries, I would be giving serious consideration to a minimum the amount of funds held in a bank.
The next question is when is a Euro note not a Euro note.  Some would say that it is any such note with a Country Code of “G”, after all 92 percent of that note is backed by the full faith and credit of the Government of Cyprus.
We have gone from “one for all and all for one”, to “one for some of us and some for some of us”, the finally step will be “one for me and nothing for the rest”.  It will be a very interesting summer, as another one bites the dust.

Monday, February 4, 2013

The Lion Roars!

The Right Honorable George Gideon Oliver Osborne, Chancellor Exchequer, Second Lord of the Treasury of the United Kingdom, and a member of the Conservative Party has called for the separation of banking function in Britain.  Retail banking will be retail banking, and investment banking will be investment banking.
It appears that the Right Honorable gentleman is invoking the UK equivalent of the United States Glass-Steagall Act.  Which we the people of the United States so foolishly and cavalierly allowed our elected representatives to throw on the mantle of profit and gain for the few, at the cost of the pain and suffering for so many.   Someone does have to pay piper.
According to the Right Honorable gentlemen “No more rewards for failure … no more taxpayers forking out for the mistakes of others,”
Stand up George and take a bow and your next step on your path to being the Prime Minister.
What about the United States?
Now if we can just find such an individual here in the United States, come on ladies and gentlemen for surely there is one amongst all of the individuals in elected office who is willing to come forward and carry this banner?
What say you Barrack?  You are a fine strong strapping lad; you have risen to highest position in the land.  What say you?  You who has been given the bully pulpit.  You who can set the agenda.  You who can bring pressing matters to the forefront of the people.  Your idol was not timid.  Now is the time to build the legend that is Barrack Hussein Obama.  What will be that legend be?   What story will be passed down from one generation to the following generations?  Now is the time to confirm your legacy, now is the time to be audacious.
If not Barrack.  Is there any one else among you who will accept the challenge?  What say you Mr. Reid?  What say you Ms. Pelosi?  What say you Mr. Johnson?  What say you Ms. Warren?
We do know of one that it will not be, that would be the Right Honorable Gentlemen Jeb Hensarling, after all his mentor Phil Gramm was one of the ring leaders in the repeal of Glass-Steagall.

Thursday, January 31, 2013

Unwind Royal Bank of Scotland part 2 (Or the hits just keep on coming)?

First there was everything stated in the first post now there is the report that RBS will need to come up with another 1 Billion Pounds to pay for their improper derivatives sales to various and numerous small businesses.
So on top of the 500 million pound fine associated with Libor, and 250 million pound of bonus, now we have the 1000 million pound to cover the cost of this transgression.
Does it take a bus or lorry to fall on the government to act?  If this is not enough would the right honorable gentlemen please enlighten us what it will take.
The money pit just double in size, and the question is what else is out there.
In the mean time just to give the rest of a fighting chance pleas change the name to Criminal Royal Bank of Scotland (CRBS).

Wednesday, January 30, 2013

April Fools

How appropriate that Aubrey McClendon, will step down/retire from his position of Chief Executive Officer and board member of Chesapeake Energy on of all days One April 2013.
Now that Carl Icahn is the largest shareholder in the company, and Carl has already starting to put his mark (Some would say the mark of Cain) on the company will individual who are either an employee of his holding company or close associates.
The question will be when will the employee’s, the stockholders, and the rest of the market start to actually see Carl’s thumb on the scale, to actually see Carl as the man behind the Curtin, when will Carl come out of the shadows?  I will bet that it will be pretty soon.
Carl is only interested in “Shareholder Value”, as long as that shareholder is Carl, a few crumbs may fall off the table for the rest of us, but no more than actually have to.  This feat of Financial Engineering will be accomplished either through increased dividends (highly unlikely, even with QDI the tax is still too high for him), more likely through stock price appreciation (I smell company buy back) (Tax treatment for long term Capital Gains much nicer).  Carl has a whole entourage to pay.
In the period 19 April 2012 to 24 May 2012, Carl spent 785.3 Million Dollars (a little over 3 quarters of a Billion Dollars to purchase some 50.08 Million shares of Chesapeake Energy (According to SEC filings as of 30 Sept 2012 Carl still reported that he own the shares) (Carl’s reported average cost per share is  $15.68).
Carl will just have to wait until after 25 May 2012 to start his selling spree, buy that time I bet that Carl is at least on the board or a consultant, and he is getting and exercising $0 dollar stock options, with no vesting requirements (Is this a great country or what?).
Chesapeake Energy closed at $18.97 per share 29 January 2013, and its after hour trading price jumped to $20.69 per share.  Based on the closing price Carl is up 20.98 percent.  Based on the after hour price Carl is up 31.95 percent (He shoots He scores).
So far Carl rate of return to date is somewhere between 30 and 46 percent on every dollar that he borrowed to purchase the stock.  All of that gain has to come from somewhere, and the employee’s of Chesapeake Energy and their various suppliers and contractors are about to find out where that where is.
The current board of directors in their press release stated several that the Company was not for Sale (of course not it had just been bought by Carl, he will sell it later) and that many of the employee benefits are going remain intact (in an effort not to spook the employee’s), but folks we all know that it is a pile of horse manure at the very least.  Things will have to change, Chesapeake Energy is being mined and company costs will have to be reduced, and profit’s increased as they will be pulled out the company as fast as Carl’s minions can run the spreadsheets.  Expect a whole series of unnatural sex acts.
The employee’s may be at risk, but the employee has always been at risk (whether they knew it or not).  The herd will be thinned, the weak, and the old (typically they are one in the same) will be offered up to altar of profit.   As far as the board of directors is concerned, all that matters for now is that the board members are safe and secure.
Carl could not have not done this with out the very special help of a very special individual, that individual is none other than Aubrey McClendon.  Aubrey McClendon actions over the past few years were key to this situation.
As one of my favorite television show character would say, “Sherman turn the Way Back Machine to fall of 2008, location Headquarter Chesapeake Energy”.  Here we will find Aubrey McClendon having to sell 33.4 Million shares of Chesapeake Energy because of margin calls.
Aubrey had been for at least the previous year purchasing Chesapeake Energy stock with borrowed money, and with the stock market in free fall, and it repercussion in the economy Aubrey got creamed (I know it is a very technical term).  Chesapeake Energy stock price suffered a 54 percent reversal between August 29 2008 and October 30 2008.  Chesapeake Energy stock had closed as high as $69.40 in the preceding 12 months.  Chesapeake Energy closing prices in October of 2008 were the lowest for the preceding 12 months.
Aubrey McClendon, that captain of industry had been caught in two of the most basic errors that an “Investors” can make.  First borrowing money to purchase stocks (Leverage, great going up but a real bitch coming down.)  Second and fundamentally much worse buying high and sell low (granted Aubrey was forced to sell low, but a sale is a sale, think of the capital loss that he gets to carry forward on his tax return, will he ever be able to use it all to offset any capital gain, and at $3000 dollars per year of dividends offset it will take a long time to reap the rewards of the loss).
A few questions for Aubrey McClendon, since you were the CEO, why oh why did you not get more $0 stock options with zero vesting?  Why were you in your capacity as CEO not raping or at least slightly pillaging the company?  I think Aubrey that you actually have feeling for the company and it employees.  Aubrey you may be comforted by the fact as Carl Icahn has demonstrated on numerous occasions in the past that he will have no such compulsions against performing any of these actions.  Carl is only concerned about and for Carl.

Tuesday, January 29, 2013

Is it time to unwind Royal Bank of Scotland?

With the latest round of scandal (Libor rigging) and it fines for misbehaving and or lack of adult supervision (500 Million Pounds to date more fines are expected), and now the specter of bonus (250 Million Pounds) being paid to the employees some of whom are in real need adult supervision.  It should be apparent and well past the time for someone in the Government of Prime Minister Cameron to end this mess.  Perhaps the Right Honorable George Osborne should lead this endeavor, after all this mess is in his portfolio, come to think about he might already have been dusted up by this situation.
I would have hoped that somewhere someone in the ministry would have developed a plan to take the beast out into the field and put it down, or was it the Prime Minister, the Chancellor, the members of their staff and the Bank of England’s plan just to pour money down the hole until it filled up?
From the outside it appears that most if not all of the issues with the Bank lie on the commercial/investment side of the house.  If that is the case, then this operation should be removed from the rest of the group.
The commercial/investment banking part could be sold to some other unsuspecting buyer with the condition that any and all future liabilities (Criminal or Civil) for past actions are the responsibility of the buyer.  The other condition is that the buyer cannot be on life support from the crown.  That just moves it from the pocket on your right to your pocket on the left, you still have the stinking mess in your pocket (Mother would not approve).
Maybe the problem can be exported to either the Germans (they have lots of money) or possibly the American (they did not learn the first time around), who knows after all a sucker is born at least once every minute, even a stop clock is correct at least once a day.
If the commercial/investment entity cannot sold off whole, or possibly sold off piece by piece.  If is not possible to sell off the old sod then it certainly can and should be scrapped.

Friday, January 25, 2013

580 Million Dollar oh crap moment at Caterpillar

580 Million Dollars, that was the total right down this last reporting quarter that Caterpillar Corp, of Peoria Ill announced.
This was after they had already purchased for 690 Million Dollars (475 Million of Cash) ERA Mining Machinery Ltd of Hong Kong, and more particularly their Zhengzhou Siwei Mechanical and Electrical Manufacturing Co subsidiary in China.  This was after allegedly performing their pre acquisition due diligence.
By my count there are at least 31 individual who to some extent on the Caterpillar Corp. side could have failed.  Since we really do not know which individual are to blame.  We must blame them all, and we should blame them equally.  Except for the Chairman and CEO, everyone of these individual owes the corporation $18,125,000.00 Dollars.  The Chairman and CEO is special he hold two title and therefore he should pay the corporation $36,250,000.00 Dollars (Twice what everyone else), it only fair, he fail twice, once as the CEO and once as the Chairman, rank has it privileges.
As a shareholder I for one am willing to vote for the corporation to accept from each and everyone either a certified check the amount or their resignations as settlement of the debt that they owe the corporations.  I will not name names you can go to the Caterpillar Corp web site for the Officers and and Board Members see for your self, but I will name positions.
Chairman and CEO, CFO, Group President Caterpillar, Group President Construction, Group President Resource, VP Earth Moving, VP Excavation, VP Manufacturing, VP China Operations, VP Mining Sales, VP Procurement, VP Asia Pacific, Chief Accounting Officer, Corporate Controller, Treasurer, Chief Audit Officer, Corporate Secretary, Board Member 1, Board Member 2, Board Member 3, Board Member 4, Board Member 5, Board Member 6, Board Member 7, Board Member 8, Board Member 9, Board Member 10, Board Member 11, Board Member 12, Board Member 13, Board Member 14, Board Member 15 (In order as shown on the corporate web site).
I know that when you have annual net revenue of approximately 5.0 Billion Dollars of net income a screw up of .5 Billion Dollars appears to be rather small, its only 10 percent of annual net revenue.  Some how after Caterpillar had purchased the puppy they were able in a rather short amount of time to figure out that not only did it have heart worms, but it had pin worms, or just about everything else short of schistosomiasis, but not for the lack of trying.
So when does the other shoe drop and the shareholders here from the board that not only did they agree to the purchase of sick puppy, but that the puppy was so sick that it did not survive.  Right now 84 percent of the purchase price has been written off, when do we hear about the other 16 percent.
A few more of these maneuvers and a company that prides it self on building equipment for moving dirt can it self be turned into dirt.
This certainly calls into question the competency of the Senior Management, and the Board of Directors.

Thursday, January 24, 2013


POT, not the controlled substance, but Plain Old Transportation, but it did get your attention.  Another post containing unsolicited advice for my son.  What is the best car to own?  That is the question, and the answer is easy.  One that is paid for.
Automobile manufacturers and automobile dealerships are not going to like what I write after this point (for that matter neither are the banks, credit unions, or finance companies), for they are in the business of producing and selling automobiles that return them the highest unit profit for their unit cost (For that matter the Bank, Credit Union or Finance Company wants you to purchase a high end vehicle, you borrow more money, the collateral with worth more, if you default they have a better shot of getting rid of it for more than you owe).  High end/up scale automobiles are the vehicles that fit this criterion.  The low end/down scale vehicles are usually the vehicles that have the lowest profit for their unit cost (it has been reported that a few manufacturers sell some vehicles for less than it cost to build them). 
For the massed produced automobiles, the production costs for a low-end vehicle compared to a high-end vehicle are not that significant, say on the order of maybe 10 to 20 percent higher.  Yet the price differential between a low-end mass-produced vehicles to a high-end mass produced vehicle typically are on the order of 200 to 400 percent, some can be as high as 800 percent higher (Mercedes A Class to S Class).
That is quite a difference for something that has an engine, a body, some seats, doors, windows, headlight, tail lights, and four wheels in contact with the ground, whose real requirement is to move you and yours, and possibly some limited amount of materials from point A to point B in a safe, reliable manner, with a modicum of comfort (not too hot, not too cool, and dry).  About as a utilitarian mission as one can define.
It is important to remember that an automobile is a tool.  The purpose of this tool is stated in the preceding paragraph.  An automobile is not a fashion statement; it is not a net worth statement (whether real or imaginary).
The automobile dealer wants and needs you to fall in love with beast.  He wants and needs you to be emotionally and irrationally tied to that vehicle.  That vehicle being the one that he has in his show room, not the one back at the factory.  Yes it has just a few items on it that you do not want, and he will sacrifice just a little profit so that you will not have to wait for the one that the factory has not yet built that will have only the features that you require.  You can move off your requirements just a little and he will move off the price just a little, it is a win/win situation (at worse it is a lose/WIN situation, more times than not it is (win/WIN situation), and you can drive it home today (With Approved Credit).
An automobile should be looked at with no emotions, you do not look longingly on an open-end wrench, or a blade tip screwdriver, or a belt sander, or a nail gun (if you do then serious professional help is indicated and rather quickly I might add), why should you do the same for this tool.
The most salient fact for you to remember about an automobile is as follows: At the end of the day it is sum of all of the money that you have spent on the bloody thing (total cost) to drive all of the miles that you have driven that is important.  For many of us, those not so fortunate to be in the upper 3 percent of income or net worth, how much it cost to operate a vehicle is fundamentally important.  For many it will be the second largest purchase that we will make in our life, our house being are largest, so it is a big deal.
Like many things in life the basic equation is simple how much have you spent to date on the car divided by the total number of miles driven on the car.  But we all know that the devil is in the details.
The picture gets even scarier if you do not limit the calculation to just one vehicle at time but accumulate all of the costs and miles driven over each vehicle that you have owned.  Every time you replace an existing vehicle you add another significant step increase to the cumulative cost term of the equation.

Obliviously one wants to keep the numerator (Did not know it was going to be a test, remember that term from math class? Ok it is the top number) as small as practical.  One wants to keep the denominator (it’s the bottom number as large as possible).  If you can do this for a long time you get the lowest cost per mile driven.  It sounds so simple, yes?
Things that go into the numerator are Purchase price, Interest, insurance, maintenance and repairs, cost of fuel, and disposal cost.
Things that go into the denominator, well that is pretty simple miles driven.
From this basic equation four facts should jump out at you.  First you must control the initial purchase price.  Second is that one must keep the car you have for a long time.  Third is that the vehicle needs to extremely reliable or really cheap to fix.  Finally fourth is that the vehicle should be as fuel efficient as possible.  The order that they were stated is important.
One of the first things that I do when I (Your Mother) start to think that I need a new car is I build a little spreadsheet, yes I know I am so predictable, but it is a world of cold cruel hard numbers, and sometimes it is easier to let you mother argue with the spreadsheet.
I pick a likely candidate, perform some research on various items, list price, interest rates, bank terms (although you and I know from your mother that I have not finance a car in for quite a while, most of the time we just paid cash (the cars were that cheap, and the interests rates were high). This is typically the least cost effective path, although sometime it has not been the case (I miss those zero finance days), stated fuel economy, what grade of fuel does the vehicle require, what are the current cost per unit volume of the fuel, insurance costs, cost of replacement tires, cost of scheduled maintenance, and that is just the first pass.
I also pick at least 3 other likely candidates, remember I am not in love with the car it is just a tool.  I gather the same data for these vehicles.  I put all of this into a spreadsheet and let the numbers fall where they fall.
There is a short cut, and that is if the reported (EPA) mileage numbers are close, within 5 percent, and the fuel grade is identical, and the tire sizes are the same, insurance cost are within 5 percent, and cost of schedule maintenance are with 5 percent, then the only real driver for the study is the initial purchase price, since all of the other variables are not really variables between the candidate vehicles.
If they are not close then a little more work will be required, but not that much more.
I typically base this on the assumptions that I will own the vehicle for at least 60 months (5 years, people will actually allow terms on an automobile for that long), and that I will drive 20,000 miles per year, or 100,000 miles total.  That I will have at least two complete tire replacements, that I will have replaced the battery once, that I will have the scheduled maintenance perform at the recommend interval, for at least as long as the vehicle is cover under the manufacturers warranty.
One of the candidate vehicles will win.  If it is a tie, then I will let Doctor Nickel decide. The win may not be by much, but it is like Golf, the vehicle with the lowest cost per mile driven is selected, as I said earlier it is a world driven by cold cruel hard numbers, and that is why I do not drive a Mercedes-Benz SL500, although you mom would look great in one.
And now you know why I drive a car that is 11 years old, that is very reliable, with a better than average gas mileage (The Honda Civic HX), and when it does need something replaced I go ahead and have the work done.  Your mom also looks great in the civic also.
Every now and then you will hear a discussion between your mother an I about getting a new car, especially when mine needs to have a repair performed, and in the end I just end up spending a few hundred dollars to repair the car versus ten thousand plus dollars to purchase a new one, and the ride down the cost per mile curve, why add any most costs to the system then you absolutely need to, besides your mother has lost the argument with the spreadsheet.
Here is the part that makes it all better, for every dollar in cost that you do not incur is a dollar that you can invest into something that will return your capital to you, granted at first it is a little, but you are starting to harness the most powerful force in the Universe, and before you know it the ripple is brook, the brook a stream, the stream a creek, the creek a river.  It just takes times and patients.  By the way at the end of 30 year and 300,000 miles the difference between owning just one car and owning 3 cars is on the order $100,000.00 Dollars with out any compounding interest.
So build your river, not some other guy’s.

Tuesday, January 22, 2013

May the Circle be Unbroken

Maj. Gen. James T. Ruebeor was one of my first posts on this site, and from time to time I go back and see just what has happened to these plucky few individual that I have written about.
Maj. Gen. James T. Ruebeor (Ret) must be a cat.  James just keeps landing on his feet, even though the Letter of Reprimand he received in January 2011 did end his active duty career it just took 9 months.  Maj. Gen James T. Ruebeor retired rather quietly no formal announcements, one day here, the next day gone.
I guess that James was just not that promotable with that letter in his 201, and the very limited number of Flag Rank position available, how would CSAF, SECAF and SECDEF explain his promotion, well at least he did not shoot down one our own (like some Navy admiral want a be), granted it would have been extremely difficult if not impossible doing it with a C-5.  No all he did was ruin another officer career, in such a capricious and wanton manner that even the Inspector General of the Air Force was shocked.
Maj. Gen. James T Ruebeor was allowed to retired (rather quietly mind you) with 33 years of service (1978 to 2011) at the rank of Major General, with a before tax retirement salary of 103K$ per year, another year and he could have been bring home 108K$.
He then just dropped off the face of the earth, but not for long.
But rejoice just like Lazareth he has risen, courtesy of SKAB (Sky King Academy Brotherhood), in August 2012 he assumed the position of Deputy Chief of Safety, U.S. Air Force, and Executive Director, Air Force Safety Center, Kirkland AFB, N.M.  I wonder who signed off that.  Good thing this position does require congressional oversight, or maybe it should?
Maybe James could not get a position with a defense contractor?
Guess it was tough living on that retirement pay.  Please do not worry about James, for in addition to his retirement pay, he now draws another salary for the People of the United States some where between 119K$ and 179K$
James T. Ruebeor is now bring home before taxes somewhere between 222K$ and 282K$, he has made it back into the 1 percent club.
That is just amazing.  Only in America, you just have to love this place.  Truth is stranger than Fiction, cannot make the crap up other people just actual do this for real in their every day lives for us.

Monday, January 21, 2013

Phil Mickelson plans “drastic changes” over taxes

The last time I checked becoming a profession golfer was a personal choice, provided one had the talent and you could play well enough to earn a PGA Tour card, by one of three methods.  Which Phillip did back in 1992.  Atta-boy Phillip.
But at the end of the day no one forced Phillip Alfred Mickelson to become a Professional Golfer.  No forced Phillip Alfred Mickelson to continue to be a Professional Golfer.  No one forced Phillip Alfred Mickelson to make San Diego California his home (he could have stated in Arizona).  Nor did any one force Phillip Alfred Mickelson to continue to call San Diego California his home, or for that matter to call any city in California to be called his home.  No one has forced Phillip Alfred Mickelson to continue to be an American Citizen.
Phillip Alfred Mickelson had no choice in the beginning of being an American Citizen, which was just an accident of where he was born (San Diego, California).  But after is 18th birthday Phillip Alfred Mickelson did have the choice to determine what country he wanted to be a citizen of, and as of this writing 21 Jan 2013, Phillip Alfred Mickelson is still a citizen of the United States of America, just how lucky can America be?
Phillip Alfred Mickelson life to this point has been hard, difficult, exhausting, excruciating, and an exercise in sheer mental terror earning as of the 2012 season $67,644,698.00 Dollars.  This ranks him as number 2 among professional golfers for earnings.  Phillip could you have made this kind of money lets say in the Afghanistan Professional Golf Association?
Phillip Alfred Mickelson made all of those choices by his own free will.
Now Phillip Alfred Mickelson quoted as because of the high taxes he is going to make some “drastic” changes.  Now Phillip could also be that at 42 year of age you are on the backside of your golfing career?  Since January 2010, you have only had three tournament victories.
Phillip Alfred Mickelson if is all too much for you then by all means quit, quit the PGA, quit San Diego, quit California, quit the United States of America, by all means just quit.  But most importantly quit whining.
To paraphrase Nike, “Just Quit”