Dividends & Blog Hits

Do you know the only thing to give me pleasure? It's to see my dividends coming in.

--John D. Rockefeller

Trust me, I have very little in common with John D. Rockefeller, starting with my balance sheet.

And blog hits don't pay the bills -- commission checks do.

But I confess, substitute "blog hits" for "dividends" and I relate -- just a little -- to Rockefeller's quote (above).

That's especially true for overnight hits (Central Standard Time) from literally around the world, in every time zone.

I don't necessarily agree with Thomas Friedman's line about the "world being flat" (again) . . . but it sure is wired.

"We Bailed OURSELVES Out??"

"We" Minus the "Us"; or,
More Pronoun Confusion

The bailout and stimulus that we have administered to ourselves have left us without much cushion. There may be room, and even necessity, for a little more stimulus. But we have to get this moment right."

--Thomas Friedman, "Got to Get This Right"; The New York Times (11/27/2010)

I suppose if you're in London or Berlin or Beijing or wherever Thomas Friedman writes most of his dispatches, it looks like the United States bailed itself out.

However, here in Friedman's hometown of Minneapolis (actually, next-door St. Louis Park), the "we" he refers to looks decidedly more like a "them."

"Them," of course, being the same Wall Street actors whose reckless bets and insane leverage caused the mess in the first place.

It's hard to see how "we can get this moment right" if "we" can't even get our pronouns right.

25 Minutes to Rochester, 50 to Duluth??

Bullet Trains . . . in Minnesota

How can you compete with a country that is run like a company?

--Thomas L. Friedman, "Too Many Hamburgers?"; The New York Times (9/22/2010)

I suppose that depends on whether the country in question is run like Costco -- or Citigroup.

In fact, Friedman makes a number of trenchant juxtapositions between China's state-of-the-art infrastructure and the U.S.'s decaying one, starting with those bullet trains.

So, how long would it take to get from the Twin Cities to Rochester and Duluth if we had a couple of those babies?

Try, 25 minutes and 50 minutes, respectively.

A bullet train to Rochester would cement Minnesota's world reputation for all things medical, and turn the Twin Cities' airport into a gateway to the Mayo Clinic.

A bullet train to Duluth would make the North Shore a major tourist destination, and do wonders for that city's economy.

Funding

But wouldn't that cost billions?

And where would it come from?

Why not the same place Boston got $25 billion to bury 2 miles of waterfront freeway? (in a just-completed project called "The Big Dig").

And what convenient timing, given that we're supposedly looking for worthwhile infrastructure projects to stimulate the economy.

P.S.: Given the politics, a Twin Cities-Chicago bullet train is probably more realistic, because two more states' political delegations could help do the heavy lifting.

"Microchips vs. Poker Chips"

Engineers, Financial & Otherwise

OK, so I'm not coming down on the side of buying more Intel stock (vs. selling what I did buy, way back in 1995; see, "To Buy Intel (or not) . . . that is the question").

But I still like what Intel does a whole lot better than what Wall Street does:

For a decade we sent our best minds not to make computer chips in Silicon Valley but to make poker chips on Wall Street, while telling ourselves we could have the American dream — a home — without saving and investing, for nothing down and nothing to pay for two years. Our leadership message to the world (except for our brave soldiers): “After you.”

--Thomas Friedman, "We're No. 1(1)!"; The New York Times (9/12/2010)

Brain Drain

My only quibbles with the above?

First, Friedman's casting his lot with the "we're all to blame" camp ("Wall Street may have been dealing the dope, but our lawmakers encouraged it").

I take strong exception to that analysis, for reasons discussed in "No (Financial) Cure Without Proper Diagnosis."

Second, Friedman's timeline.

I'd substitute "a generation" for "a decade" to describe how long Wall Street has been vacuuming up our "best and brightest" (albeit most morally bankrupt).

One of the more dismaying things about Wall Street continuing "business as usual" -- notwithstanding the economic carnage it's wrought on the rest of the economy -- is that it leaves that "brain drain" dynamic intact.

As Dan Quayle might put it, "what a waste it is to lose one's mind . . "

Wall Street & "The Pottery Barn Rule"

Earthquake on Wall Street

You break it, you own it.

--Thomas L. Friedman, "The Pottery Barn Rule"

Supposedly coined by Friedman in a 2003 Op-Ed piece, the "it" he was referring to at the time was Iraq.

His warning: if the U.S. goes into Iraq and bungles it -- it will bear responsibility for the consequences.

Watching stocks gyrate crazily yesterday as world markets wrestle with the growing sovereign debt crisis, it seems that The Pottery Barn Rule lives on.

This time, however, there's a new "it": the financial system.

"It": The Financial System

The system may indeed be on the verge of reform, however superficial or substantive that may be.

But what's clear is that up until this moment, the current financial system reflects the considerable best efforts and (self) interest of the folks on Wall Street.

Wall Street got the financial regulations it wanted.

It blocked the financial regulations it didn't.

And as a result we ended up with a crazily leveraged, unaccountable juggernaut that, not surprisingly, splattered -- but somehow left those most responsible fabulously wealthy (while impoverishing millions who had nothing to do with it).

Fine, Wall Street.

You break it . . . you're responsible.

Friedman Endorses "Ranked Choice" Voting

Taking Away the "Spoiler Factor"

"Ranked Choice" voting, which I strongly support ("Ranked Choice Voice: Cure for What Ails Us?"), picked up a big endorsement today: from NYT columnist Thomas Friedman.

Here's Friedman's case for what he calls "alternative voting" (also referred to as "instant run-off voting"):

One reason independent, third-party, centrist candidates can’t get elected is because if, in a three-person race, a Democrat votes for an independent, and the independent loses, the Democrat fears his vote will have actually helped the Republican win, or vice versa. Alternative voting allows you to rank the independent candidate your No. 1 choice, and the Democrat or Republican No. 2. Therefore, if the independent does not win, your vote is immediately transferred to your second choice.

--Thomas Friedman, "A Tea Party Without Nuts"; The New York Times (3/24/10)

In other words, ranked choice voting takes away the "spoiler factor" that has always dogged third-party candidates.

As such, it has tremendous potential to open up our sclerotic, dysfunctional two-party political system.

Why is that important?

Friedman again, quoting Stanford University's Larry Diamond: 'If you don’t get governance right, it is very hard to get anything else right that government needs to deal with.'

Lots of things have changed in the several (?) centuries since the paper ballot was introduced.

Maybe it's time that we use modern technology to start to fix our broken political system.

Intel Science Winners & Real Estate

Good Schools = Buyer Demand (What's New?)

Local San Jose Realtors are running ads in newspapers in China and India telling potential immigrants to “buy a home” in [San Jose's] Lynbrook school district because it produced “two Intel science winners."

--Thomas Friedman, "America's Real Dream Team"; The New York Times (3/21/2010)

Nice piece by Tom Friedman in today's Times, with a real estate angle to boot: immigrant home buyers so value education that San Jose Realtors are promoting a local school district as home to not one but two Intel Science Talent Search finalists.

So, can any Minnesota school districts make that boast?

Not any time recently.

None of the 40 Intel finalists were from Minnesota this year. In 2009, one finalist was from Edina; another finalist last year was from Chaska, and attended Breck, a private school.

Today's Guest Goldman Basher: Thomas L. Friedman

Friedman on Goldman Sachs

Tired of me (deservedly) bashing Goldman Sachs?

Here's what the eminently fair-minded Thomas L. Friedman has to say about them:

The behavior of some leading Wall Street banks, particularly Goldman Sachs, has been utterly selfish. U.S. taxpayers saved Goldman by saving one of its big counterparties, A.I.G. By any fair calculation, the U.S. Treasury should own a slice of Goldman today. Goldman has been the poster boy for banks behaving by “situational values” — exploiting whatever the situation, or rules that it helped to write, allowed.

--Thomas L. Friedman, "Adults Only, Please"; The New York Times (1/27/2010)

Unfortunately, at least on this issue, I put Friedman in the camp that "just doesn't get it."

Unplugging the Monster

Why?

Because he still thinks carrots -- rather than sticks --are the way to get bankers to start making loans, and start reviving the economy.

Dear Tom, I have a news flash: we're just about out of carrots.

Which is not to say that I'm endorsing sticks.

What we really need is an altogether different banking system: one that's less centralized, less politically powerful, and most importantly of all -- less capable of wreaking havoc on the general economy.

The monster that today's Wall Street has become doesn't need to be tamed or placated -- it needs to be unplugged.

Part II: 'It's the Internet, Stupid'

Real Estate's Most Overused Word

"[Fill in the Blank] Opportunity!"

To overuse something is to devalue it.

So, what is arguably the most overused word in real estate today?

"Opportunity" (followed by the obligatory exclamation mark).

As in:

--Rare opportunity!
--Wonderful opportunity!
--Great opportunity!
--Investment opportunity!
--Don't miss your opportunity!
--What an opportunity!
--Opportunity knocks!
--Seize the opportunity!
--Renovation opportunity!
--Rental opportunity!
--Perfect opportunity!
--Once-in-a-lifetime opportunity!
--Fantastic opportunity!
--Excellent opportunity!
--Turnkey opportunity!
--This is your opportunity!
--Nice opportunity!
--Equity opportunity!

Plus, of course, that old Realtor-to-Realtor staple: 'open house opportunity.'

You get the idea.

Jeez, guys, how about some non-cliche sales verbiage??

To paraphrase Thomas Friedman, Realtors never miss an opportunity to use the word "opportunity."

P.S.: how about this one: 'not-so-rare opportunity?'

Jim Cramer's RE Rx

Cramer: 'Home Buyers Need a Bigger Carrot'

In the financial community, Mad Money's Jim Cramer is known for being a showman first, and for prescient market calls a very distant second (his manic, shotgun approach to stock picking seems to be if you throw enough darts, sooner or later a couple are bound to hit the bull's eye).

That said, no one ever called him dumb (he's actually a Harvard Law grad, worked for Goldman Sachs, and is an idea machine). And once you strip out his individual stock picks, his market analyses are often insightful.

So what's his prescription for fixing the housing market?

First, making it the number one economic priority. Here's Cramer's logic:

Everything comes down to housing. The wealth effect, a function of house values and portfolio values, is being gutted by both. You can't fix stocks -- they are reflective of earnings -- but if you stabilized home values, you could get some confidence, particularly given the collapse in oil. Stabilize housing, and you get a positive trend in consumer spending.

--Jim Cramer, "Housing Needs a Tax Credit"

The centerpiece of his proposal is a massive ($25,000) tax credit for home buyers. Cramer also calls for dramatically lowering interest rates, and for a shakeout amongst the national builders.

In fact, all of the foregoing proposals have already been floated in one guise or another (a $7,500 tax credit is already law, though few Buyers seem to have noticed). What's notable about Cramer's approach is the scale and urgency.

In that respect, Cramer joins a growing list of (calmer) pundits, including Thomas Friedman, calling for some variant of "shock therapy" to address the ongoing housing and credit debacle.

As big banks absorb ever-greater mortgage losses, their arguments are gaining traction.