August 31, 2005

Further Katrina Update

Federation of Nashville is trying to arrange home hospitality for Jewish evacuees/refugees. Contact Naomi Limor Sedek if you're in Nashville, and you've got a place.

These folks are going to be out of house and home for a while. My guess is that sooner or later (hopefully sooner), Nashville Federation will start coordinating donations of money & stuff to help support the families supporting the refugees. I'll let you know when that happens.

Also, Federation of Houston, which is the new headquarters for Jewish-Federation-of-New-Orleans-in-exile, has posted a list of contacts for evacuees/refugees to get in touch with.

Posted by joshuasharf at 10:04 PM | TrackBack

New Orleans Jewish Federation

The following email has been posted by the Allied Jewish Federation of New Orleans, temporarily relocated to Houston:

Dear Friends/Colleagues,

Earlier today, I sent the following message to the Jewish community
e-mail listserve for any evacuees from my community with e-mail access:

We hope you are out of harm's way when you read this message from the
Jewish Federation of Greater New Orleans. This message is being sent
to you from our temporary headquarters located in the offices of the
Jewish Federation of Greater Houston where they have shown us
tremendous warmth and hospitality.

During the unspeakable destruction of Hurricane Katrina and the long
aftermath of rescue, clean-up, and recovery that will follow, we want
to offer you the opportunity to stay in touch with your community
even though we all evacuated in different directions.

E-mail through the Jewish Federation of Greater New Orleans can serve
as a clearinghouse for information. Additionally, when we set-up a
bulletin board system on our web site, we will notify you by e-mail
so that community members can post messages for each other and reply
to those posted messages.

Until the time when we are allowed back into the greater New Orleans
area to assess the damage to our homes, schools, agencies,
synagogues, and businesses, we will wait and continue to share
information with you through e-mail. My temporary Houston cell phone
number is 832-545-2128.

The outpouring of love, concern, and support that has been expressed
for the Jewish community of Greater New Orleans is
overwhelming. From cities throughout the United States, other Jewish
Federations, the Jewish Agency for Israel, the Government of the
State of Israel, and the synagogue movements, we have received
messages and offers of help. Disaster relief mailboxes have been
established for us through United Jewish Communities and the
Federations of North America, as well as the Union of Reform Judaism
(URJ) and the United Synagogue of America.

On behalf of me, Roselle Ungar, and Adam Bronstone, our thoughts and
prayers are with you wherever you are.

I just spoke with Eric by phone, and as soon as I know anything about the Orthodox organizations, I'll post that contact information, as well.

At the same time, the OU reports that:

Attention members of the New Orleans Jewish Community displaced by Hurricane Katrina:

Adam Bronstone from the New Orleans Jewish Federation is trying to locate all members of the N.O. Jewish Community. He can be reached at

UPDATE: The Orthodox Union and Chabad Lubavitch of New Orleans have set up a donations page, as well.

Posted by joshuasharf at 06:27 PM | TrackBack

August 30, 2005

Supreme Command

New review up, of Eliot A. Cohen's Supreme Command.

The book isn't just for military leaders. Cohen makes it clear that while military leaders have enjoyed business success, and vice-versa, there's no secret to military command that works magic in the business world. Asking questions - asking the right - questions, and then following through, is what works.

Posted by joshuasharf at 02:17 PM | TrackBack

August 29, 2005

Blue Lake

It's entries like this that earn the blog its name.

These are from a recent hike up to Blue Lake, just outside of Nederland, CO. The striking bell-shaped mountain in the background is named Mt. Toll (yes, I know, "ask not for whom the Mount Tolls...").

The picture of the the side of Arapahoe Peak is supposed to show a rock glacier. As the rocks get broken off, then grind their way down the side of the mountain, further eroding it. Call it geological assisted suicide.


As always, click to enlarge.

Posted by joshuasharf at 08:41 AM | TrackBack

August 25, 2005

Grover Norquist Visits

I had the pleasure of meeting Grover Norquist Monday night at a fundraiser for Save Our State, Rep. Joe Stengel's 527 devoted to defeating Referenda C&D, and restoring Republican majorities in the state legislature, in that chronological order. Of course, the only way we could get him to come was by temporarily renaming all Arapahoe County exits from I-25 for Ronald Reagan, but in spite of that, traffic didn't seem any worse than normal.

He came off as a someone who's extremely bright, extremely focused, and almost monomaniacally interested in poilitics. (Not megalomanically. Please, use a dictionary.) Privately, he spoke of the power of blogs, and the usefulness of conservative blogs coordinating with each other, as opposed to going it alone. Publicly, he raised a number of familiar points, such as the money from C&D going to fund Democratic precinct captains. But he also discussed some unfamiliar points that clearly come from a history of thinking strategically.

In the first place, he noted that certain political tendencies in the country continue to date from the post-Civil War period, but that they're breaking down, presenting both opportunities and risks for Republicans. The opportunities are still in the South, at the state level where Democratic machines continue to operate state legislatures.

The risks are in the Purple Band, running from Illinois to New York, where the party has put patronage ahead of ideas. The Illinois party has already collapsed from this nonsense, having to import a failed candidate from Maryland for last year's Senate race. New Jersey is in serious trouble, although the governorship may provide some opportunities. Pennsylvania is at risk, and Ohio and Long Island are playing mice to Illinois's Pied Piper. The Republican Party used to compete effectively or even win reliably in all these places. Even states that are trending Red, such as the upper midwest, aren't seeing the outright collapse of the Democrats. I'll note that it's also probably no coincidence that in many of these states, Republican governors have abandoned the national branding of the Party That Won't Raise Your Taxes. Because they have to fund their patronages.

He also noted the long-term trend of Red states gaining population relative to Blue states. When I brought up the idea that maybe the red states were gaining Blue population, he did note that this had happened in Vermont, but I'd also like to suggest that it could be happening in the Southwest as well. The good news, which we didn't have time to discuss, was a study I wish I could find that showed that the youth vote in red states tended to be more red than the state as a whole. Which means that those red states are likely to stay that way for the forseeable future.

He also discussed the West, happily noting the historical gerrymander (that's a joke, leftists) which gave us a series of rectangular states with populations of 3: two Republican senators and a Republican representative. There are gains to be made, especially still in South Dakota, where Tim Johnson now stands out as more liberal against John Thune's background than he did compared to Tom Daschle. Still, there are states like Montana that seem to be trending a little Blue, and that the upper Great Plains has a long history of populism that can be unpredictable at times.

From a business point of view, and the intersection of business with politics, Norquist noted that the rise in Republican voting among the middle class paralleled the rise in individual stock ownership. Don't think the Democrats fighting Social Security reform haven't noticed this.

He also noted insightfully that while in the past, people tended to own individual stocks, now they tend to own mutual funds. This aligns their interests with the economy as a whole, as opposed to with one company or one industry, and thus also with the nation's interests. He didn't take the next logical step and examine the uncomfortable effect that globalization has on those investors' interests.

Joe Stengel also spoke briefly about his efforts to create a Republican alternative to C & D, realizing that 2004 wasn't just about dumping money into four House seats, but also about a perception that the party had no ideas save obstruction. Chief among these is First Class Education, which would put a minimum 65% of education dollars into the classroom. The plan is broader than that, though, and indicates an understanding that for ideas, like candidates, you can't be something (however flawed and mischievous) with nothing.

Finally, one of the gubernatorial candidates was there. Holtzman has been vocally opposed to C&D from their ill-conception, but it remains to be seen how much that will help him next year around this time. The fact is, we need to learn from 2004's Senate race that being right doesn't always matter as much as connecting with people. And that's going to hurt him next year, not help.

On that score, Holtzman badly needs to hire a speech coach now. He motion is still unsure, stiff, and robotic. All of his hand gestures are either cramped or up-and-down, rather than out towards the audience. As a result, he doesn't project, he insists.

On the whole, I was pleased to see the party doing some thinking and planning, rather than just campaigning and running. Just over 2 months to go...

Posted by joshuasharf at 04:18 PM | TrackBack

August 24, 2005

Excuse me, How Do You Get To the Madison Building?

Woke up to this email this morning, which is either real, or the result of a phisher completely uninterested in personal information:

The United States Library of Congress has selected your Web site for inclusion in the historic collection of Internet materials related to the Supreme Court, and we request your permission to collect and display your Web site.

The Library of Congress preserves the Nation's cultural artifacts and provides enduring access to them. The Library's traditional functions, acquiring, cataloging, preserving and serving collection materials of historical importance to the Congress and the American people to foster education and scholarship, extend to digital materials, including Web sites.

The following URL has been selected:

The Library of Congress or its agent will engage in the collection of content from your Web site at regular intervals. The Library will make this collection available to researchers onsite at Library facilities.

I'm sure this email is completely untouched by human hands, and the website has been completely unseen by Congressional Librarians' eyes, but it's still pretty nifty.

Posted by joshuasharf at 07:36 AM | TrackBack

August 23, 2005

Light Blogging Today

Lots of work and catching up to do. I have reports from Friday and Grover Norquist's fundraising visit last night.

Satiate your blog-reading Jones with this week's Carnival of the Capitalists, for the moment.

Posted by joshuasharf at 11:23 AM | TrackBack

August 22, 2005

Denver Post Air America "not a story"

The Denver Post has finally broken its silence about the developing Air America story. Only, as with the New York Times and the Swift Boat Veterans, the first mention of it is a dismissal followed by a rebuttal. Dick Kreck addresses the scandal in his radio column in today's Entertainment section:

Bloggers and others are buzzing about another "story" - whether Air America benefited from loans made to its former director, Evan Cohen, by the Gloria Wise Boys & Girls Club in New York. Conservative media, led by the shrill Michelle Malkin, are all over this story, touting it with headlines like, 'AIR AMERICA: STEALING FROM POOR KIDS?!' and wondering why the "mainstream" press isn't.

Ah yes, Michelle Malkin is "shrill". The story is a "'story'". And what's with the scare quotes around "mainstream?" The term has been around for more than a few years, shortened to "MSM" last year around this time during the campaign, when the MSM turned its back, put its fingers in its ears, and started whistling during that other non-story-story.

Maybe it's not a story because it's not a story. Piquant, the parent of Air America, responded in several statements that the disagreement over some $800,000 in loans is between Cohen and the boys and girls club, not AA. Despite its non-involvement, Piquant says it will make good on the missing

Piquant would say that.

In the meantime, Air America seems to be developing another reputation that the Post ignores, one of not paying its bills, either to its former business partners or to its former employees.

The sequence of events appears to have been as follows. Progress Media acquired a boatload of debt, allegedly to Multicultural and allegedly in the form of "loans" from Gloria Wise. Then, Progress Media sold its assets to Piquant, but not its liabilities. Piquant, of course, is owned by some of the same people who owned Progress Media. This may constitute a fraudulent transfer.

All this is covered in a hopefully-not-too-shrill oped in this morning's New York Post.

A good summation - albeit left-handed - of the investigation by the New York state attorney general's office, where the story started and how it has spread may be found at

At first glance, this piece looks like a good bit of digging to find the original source. One quote. No story, right? Except, look at that date. July 30. The first New York Sun piece, with corroborating quotes from the Club's president, is two days later, and the story has had almost a month to develop and widen since this posting and its update.

So, the Denver Post refuses to cover a story about a leftist radio network's financial shennanigans, leaving it to a columnist in the Entertainment section to give readers their first exposure. After deriding those who've actually been doing the gruntwork on the story, the only rebuttal they come up with is a three-week old blog posting, which, in the blogosphere, means they had to blow the dust off of it to read it.

Yes, this story is about a radio network. But if the Post is going to cover it, they need to get people who know something about business law, business, and blogging to write the stories.

Way to be ahead of the curve.

Posted by joshuasharf at 11:23 AM | TrackBack

August 21, 2005

Summer Sunday in Denver

Posted by joshuasharf at 04:57 PM | TrackBack

Morningstar's Style Boxes- II

One of the claims that Morningstar makes is that its style boxes have a lower correlation that their competitors'. That's true, but it depends strongly on what time period you use.

Using Morningstar's own numbers for annual returns, years 2000-2004, the average correlation among the style boxes is 0.927. However, if you include the years 1997-1999 in the calculation, the correlation drops to 0.606. Holding Size constant, the average correlation drops from 0.927 to 0.677. Holding VG constant, it drops from 0.955 to 0.756..


Well, for one reason, the years 1998 and 1999 provided a huge differentiation between value and growth (mostly Internet) stocks, and between small (mostly Internet) and large stocks.

But I think the more important reason is that Morningstar introduced their new style boxes in 2002. That meant that they were researching the algorithm as far back as 2000, and all they had to use was restrospective data. So it's no surprise that any formula would, like an Italian tank, work better in reverse.

I don't believe Morningstar is guilty of anything here other than marketing. But the fact is, the correlations among their style boxes are probably a lot higher than they would lead you to believe.

Here's the data, for those who want to check.

Posted by joshuasharf at 04:45 PM | TrackBack

The AP, the LA Times, and Who's Your Chaplain II

One of the more worrying ongoing stories is the arrest of several men for involvement in a conspiracy, hatched in California's Folsom prison to attack Jewish sites and synagogues around the state. What's worrying is that one of the men apparently converted to a radical form of Islam while in prison. For obvious reasons, some attention has been focused on the California Penal system's system for vetting clergy.

The LA Times carried two stories on the subject yesterday, and as usual, the story is the dog that didn't bark. In this case, the dog that didn't ask questions about who was speaking to it.

The first story is about the general threat of radical Islamic recruiting in American prisons, and the tenor of the story is that there's really nothing to worry about:

Recent arrests have focused attention on a potential terrorism danger that federal officials have been warning about -- that inmates in state prison systems are particularly susceptible to radical Islamist ideology.

But prison officials across the nation say they so far have seen more potential for recruitment than real threats.

Then, the last three paragraphs:

The California prison system has 30 full- and part-time Muslim chaplains, civil service employees who undergo background checks and must adhere to mainstream Islam, said Terry Thornton, spokeswoman for the state Department of Corrections and Rehabilitation.

Shakeel Syed, a contract chaplain for the U.S. Bureau of Prisons, disagreed that prisons are turning out Islamic radicals. He joined representatives of Muslim groups Friday at a news conference in Los Angeles to say that chaplains can be part of the solution by steering inmates away from radical ideology.

"Those of us who are on the front lines battling extremism are not being utilized by law enforcement," said Salam Al-Marayati, executive director of the Muslim Public Affairs Council.

We've already seen about Mr. Syed. I'm sorry he's not being further utilized by law enforcement.

As for Mr. Al-Marayati, here's what Daniel Pipes has to say about him:

Trouble is, Mr. Al-Marayati, like so many other American Muslim leaders, purveys an extremist political agenda that few people seem to notice or care about.

Mr. Pipes goes on to provide some disturbing examples of Mr. Al-Marayati's rhetoric. CAMERA provides further examples.

The other LA Times article focuses on activities in the California prison system, and the checks (or lack thereof) on who gets to be the voice of Islam on the Inside:

The federal study also found that an aggressive brand of Islam often took root in prisons that lacked professional Muslim clerics, where inmate believers took on leadership roles despite having little training or knowledge of Islam's tenets.

"Sometimes the Muslims within the prisons lead prayers," said Imam Abdul Karim Hasan, a member of the committee that recommends Muslim clerics to the state prison system. "But we don't recommend inmate leadership of Muslim groups inside these institutions."


As the wider American Muslim community has grown and diversified along ethnic and national lines, competition for Muslim chaplaincies has increased as well. Hasan said he was less familiar with the views of these newcomers.

"We don't ascribe to Wahhabism or any other ism," Hasan said, referring to the Saudi-based, ultra-orthodox version of Islam, "but the state does use other endorsing agencies. We can't vouch for them. We don't believe they teach extremism, but we don't know."

Joel Mowbray has done a little spadework on Imam Hasan, who runs the mosque attended by the US soldier convicted of a fragging attack on the eve of the Iraqi invasion.

Now, I want to be very careful here. It's likely that Imam Hasan is one of the good guys. He doesn't try to vouch for anyone else, and I aboslutely do not want to claim that he in any way encouraged the fragging attack, or encouraged the soldier who did it to enter the military. I happen to be a good personal friend of a former camp counseler of Baruch Goldstein, and his connection with that mindset or that attack was less than nothing.

But Imam Hasan takes money from Saudis, and has close ties with a Saudi-funded King Fahd Center in LA. He may well not approve of Saudi extremism. But how likely is he to go out of his way to help ferret it out? Maybe he's one of few who would.

But in his case, and in the case of Mr. Al-Marayati and Mr. Syed, the Times and the AP are extremely negligent in how they indentify the players in these stories.

Posted by joshuasharf at 03:37 PM | TrackBack

August 20, 2005

Adopt a Box of Docs

Here's my contribution to the Adopt a Box of Doc Project. I was lucky. Not only did my box contain stuff actually written by Roberts, but the stuff itself is pretty illuminating. Hopefully the Washington Post will find it helpful.

On February 6, 1983, Chief Justice Warren Burger used his State of the Judiciary address in New Orleans to discuss the Court's belief that it was overworked, and to float two proposals. Four days later, John Roberts wrote a two-pager which leads one to believe (although Roberts never even hints) that maybe the Chief had been down in the French Quarter a little too late the night before:

I suspect that there has been enough study of judicial problems and possible remedies, but certainly would not want to oppose a modest proposal for more study emanating from Chief Justice.

One of the beauties of Roberts's writing is that it requires virtually no interpretation, aside from what is now historical context. You have no idea how old typing that last sentence makes me feel.

The more significant afflatus from the Chief Justice is his proposal for immediate creation of a temporary court between the Courts of Appeals and the Supreme Court, to decide cases involving inter-circuit conflicts referred to it by the Supreme Court.

I had to go to by OED for "afflatus." It wasn't there. It did track it down in another dictionary, and it means 1) wind or breeze, and 2) inspiration. 2) is not altogether unrelated to 1), but there's just about no way this is complementary. You can almost see Roberts's eyes rolling and hear him sighing. "The Old Man has given air to another one of his brainstorms, and we're going to have to talk him down from it."

Roberts points out a few problems with the idea. First, the certiori process now becomes three-headed and thus more complicated, not less. Secondly, the National Court of Appeals, itself subject to review, risks becoming just another voice in the cacophany of conflicting opinions. Third, it may encourage more filings for appeal. Fourth, it may further depress morale on the Appellate bench. Fifth, having the Chief Justice appoint the members seems to violate traditional executive prerogatives.

He saves the best for last, and it provides some key insights into how the young Mr. Roberts saw a Court run amok and awry:

My own view is that the creation of a new tier of judicial review is a terrible idea. The Supreme Court to a large extent (and, if mandatory jurisdiction is abolished, as proposed by the Chief and the Administration, completely) controls its own workload, in terms of arguments and opinions. The fault lies with the Justices themselves, who unnecessarily take too many cases and issue opinions so confusing that they often do not even resolve the question presented. If the Justices truly think they are overworked, the cure lies close at hand. For example, giving coherence to Fourth Amendment jurisprudence by adopting the "good faith" standard, and abdicating the role of fouth or fifth guesser in death penalty cases, would eliminate about a half-dozen argued cases from the Court's docket each term.

So long as the Court views itself as ultimately responsible for governing all aspects of our society, it will, understandably, be overworked. A new court will not solve this problem.

This reads so much like a blog posting itself that virtually no comment is necessary. It is neither judicially restraining nor activist, it just states that the Court is completely out of control. For those of you wishing to follow up on the Exclusionary Rule, SCSU Scholars and Joe Carter are working that box. Roberts's concern about muddy thinking and muddy writing is now very evident in the Court's handling of church-state questions, exemplified by the reasoning in the Texas and Kentucky cases of the very woman he's been nominated to succeed. One might also refer to the various and varied opinions in Bush v. Gore.

Box #2 is a memo to Roberts, dated 2/9/83, with prior testimony and study by the Administration that apparently informed his own two-pager. Interestingly, the second-to-last item is a January 1977 (pre-Carter) report by a special committee chaired by Robert Bork, but which also included Antonin Scalia, Bruce Fein, and Richard Thornburgh before he lost his critical faculties.

It's worth noting, though, that Roberts's opinion of the Chief's afflatus was not universally shared within the Administration. Treasury didn't seem to have any problem with it,for instance, and the DOJ came out with a report approving of the idea.

The second half of Box #2, and Box #3 were related to removing mandatory jurisdiction from the Court in certain cases. Except for a perfuctory note, there's nothing in Roberts's own writing from those boxes.

Posted by joshuasharf at 11:11 PM | TrackBack

August 19, 2005

RMA Meets with Roberts Barnstorming Tour

This afternoon, the RMA, represented by Clay Calhoun and myself, met with Benjamin Ginsberg and Robert Knauss of the Progress for America Barnstorming tour, dedicated to reminding the country of how the judicial confirmation process is supposed to work.

I'll have comments and a transcript up tomorrow night, but for the moment, suffice it to say that the Colorado for Judge Roberts and PFA folks were very hospitable and enthusiastic, and that Messrs. Ginsberg and Knauss were informative and gracious. If this is representative of the kind of help the judge is getting, he's in good hands.

Posted by joshuasharf at 07:03 PM | TrackBack

Who's Your Chaplain?

As Frank Gaffney discussed today on Hugh's show, Folsom prison seems to have become a major organizing center for a radical Islamist gang, who seem to have mastered the notion of the revolving door fairly successfully. With three arrests having been made, CAIR held a press conference today to discuss the matter. At this writing, there's no report of how it went, but consider one participant:

Shakeel Syed, Contractor Chaplain with Federal Bureau of Prisons

I'm sure Mr. Syed says all the right things in English, and to interviewers when looking for contract work. Here's what he says to Al-Jazeera:

Nine Eleven "changed everything" has become a popular saying among some. In fact, nothing has changed since 1775. The imperialist mindset remains unchanged. The then founders killed the Native American Indians and believed that they are giving themselves a free America. The current (hopefully outgoing) President apologized to a powerless King, instead to the victims. Their pain is only compounded when the President distances himself from the rhetoric that that behavior was merely the "wrongdoing of a few". Defense Secretary Donald Rumsfeld, however, indicates that the torture was cleared with lawyers. Al-Jazeera, May 30, 2004

Sooner than we think the old footage of blind folded American hostages and the Islamic government of Iran (more democratically elected than the US President) will overwhelm the airwaves. And the global dissent of good people will be ignored to yet another preemptive invasion of Iran and they will be made to forget the bigger monster, Israel from the very discourse of “axis of evil.” Al-Jazeera, November 27, 2004

The United States of America tends to glorify, simplify and sanitize more than two and a quarter centuries of its horrid past. The Declaration of Independence states "all men are created equal," but that was not the case in 1776. Two hundred twenty eight years later, the Declaration still could not home itself in the hearts of all Americans. The 228th year of freedom must see beyond the mundane rituals of afternoon barbecues and evening fireworks.

The lonely Native American female warrior as the statue of freedom atop the Capitol Dome was casted in bronze by a Foundry that housed enslaved labor. Slaves who were paid only in the coins of pain in fact built the house that claims to now home the lady liberty. The Milli Gazette, July 31, 2004

Mr. Syed also holds another official position within the LA Muslim community. He represents that community in discussions with the FBI.

Aren't you glad he's giving spiritual guidance to our hardened criminals.

Posted by joshuasharf at 06:26 PM | TrackBack


Parvez Ahmen, board chairman of the execrable CAIR, takes the CAIR party line today in the Powerline Guys' favorite newspaper, the Strib. For the moment, it's not worth fisking the whole article, except to note that the tune is pretty much the same one we're used to: no matter how noble the cause, no matter how deep the grievances, you can't kill civilians. (Are there Israeli civilians? Who knows?)

Most importantly, he claims that the fatwa, and a massive Islamic education program from "moderates" is the best way to combat terrorist impulses.

Allow me to suggest another.

The Islamic community that neither teaches radical Islam, nor sympathizes or identifies with it, needs to ostracize and isolate those who do within their community. Being an Orthodox Jew, I know a little something about how religious communities enforce their norms without benefit of police powers. Sharia operates in much the same way, aside from burying women up to their necks in sand and stoning them.

So here are concrete steps the Mullahs need to take, need to call for others to take, and need to stick to, in the longer-term interests of their own faith.

They need to ban, or ostracize Muslims who teach these things.

They need to tell businessmen in their congregations, the ones who run the groceries and newsstands, not to sell video games where the heroes are looking to blow themselves up, or where the player gets to blow away Jews and Americans like insects in Galaga.

They need to tell their congregations not to patronize shops who sell video games like that, or the Protocols.

They need to refuse money from these people, no matter where they come from, no matter what holy sites their countries contain.

They need to refuse Halal certification to eateries where this drek is distributed.

In short, they need to make it completely impossible for radicals to function in communities other than those completely dominated by their own kind, thus limiting them to an ever-shrinking circle of operation.

This is how religions function, and enforce their own standards.

Don't hold your breath.

Posted by joshuasharf at 06:15 PM | TrackBack

Plug-In Car Runs for Minutes

So you've been waiting for your electric car? The car that's better than a Prius? The car you can just plug in at night and drive all day? The car that doesn't even use oil or even any fossil fuels?

Wait on.

AP and Denver Post salivating aside, energy independence at a reasonable price is not just around the corner.

Politicians and automakers say a car that can reduce greenhouse gases and free America from its reliance on foreign oil is years or even decades away.

Ron Gremban says such a car is parked in his garage.

It looks like a typical Toyota Prius hybrid, but in the trunk sits an 80- miles-per-gallon secret: a stack of 18 brick-sized batteries that boosts the car's high mileage with an extra electrical charge so it can burn even less fuel.

Gremban, an electrical engineer and committed environmentalist, spent several months and $3,000 tinkering with his car.

Like all hybrids, his Prius increases fuel efficiency by harnessing small amounts of electricity generated during braking and coasting. The extra batteries let him store extra power by plugging the car into a wall outlet at his home in this San Francisco suburb, all for about a quarter.

Ah, the greedy automakers and the lazy politicians in their hip pockets. Or maybe it's the other way around.

They have support not only from environmentalists but also from conservative foreign-policy hawks who insist that Americans fuel terrorism through their gas-guzzling.

See? If even conservative foreign-policy hawks are in favor of it, there can't be any arguments against it, can there? Never mind that "energy independence" is a bipartisan chimera that politicians have been chasing for decades. Never mind that we never pay the Saudis directly for oil, anyway. Never mind that lowering demand lowers the price, and since Saudi Arabia can produce oil by looking at the sand, the first oil wells to go out of business will be domestic ones. Or that oil gets used for a million things other than driving your Prius around town. Like diesel for hauling the Prius to the dealership. Doesn't matter.

But the problems with this report are even more fundamental.

The extra batteries let Gremban drive for 20 miles with a 50- 50 mix of gas and electricity. Even after the car runs out of power from the batteries and switches to the standard hybrid mode, it gets the typical Prius fuel efficiency of around 60 mpg. As long as Gremban doesn't drive too far in a day, he says, he gets 80 mpg.

So, how much does Gremban save every day? Let's do the numbers (cue "Stormy Weather.")

Since a Prius running on 100% gas gets 60 mpg, that means that first 20 miles normally costs about a third of a gallon. Since he's only using half the gas, he saves about 1/6 of a gallon of gas. Being generous, at $3.00 a gallon, that's about 50 cents a day. Minus the 25 cents he spends charging up. So for his work, Gremban is saving about 25 cents a day. But that's all. He doesn't save more by driving farther, because the extra batteries are run down. He extends his car's range by about 10 miles above a manufacturer's spec of about 650 miles.

At that rate, given that he's already put $3000 into the car, he'd better plan on its being his last if he wants to earn back his investment. And that's without using present value on the savings.

There are other people at work on this, though. People who want to turn this into a business:

Southern California-based Energy CS has converted two Priuses to get up to 230 mpg by using powerful lithium ion batteries. It is forming a new company, EDrive Systems, that will convert hybrids to plug-ins for about $12,000 starting next year.

The AP is making claims for EDrive that even EDrive doesn't make. Look at their FAQ:

Q3: ...The result is EV driving and electrically boosted gasoline driving for the first 50 to 60 miles with a gasoline efficiency of 100 to 150mpg. After the 50-60 mile 'boosted' range, the vehicle performs just like a standard Prius until it is plugged in again.

Q7: Can I really get over 200mpg with EDrive on my Prius?
A: Yes, but it requires low speeds (55mph freeway) and mild acceleration in city driving. Most Prius EDrive users will likely get closer to 100mpg.

So EDrive is being more honest that the AP or the Post that ran this turkey. For 60 miles, barely enough to get you from your home in Warrenton to your desk job for the EPA in Washington, DC, you can get about 120 mpg. That saves you about half a gallon a day, or about $1.25. Minus the $.25 for charging. At a $12K conversion cost, you, too had better be hoping for a VRE extension.

It's no good saying you can also charge the car at work or at the mall, and save going home, too. EDrive admits that the appeal is that electricity is cheaper at night. There's a reason for that, too. The last thing the electric companies want is more stress on the grid during peak hours. And like most arbitrage opportunities, this one will close at least a little if half the country has its cars plugged in at night.

The article closes with a dig at actual creative thinking:

University of California-Davis engineering professor Andy Frank, who has built a plug-in hybrid that gets 250 mpg, said that although automakers' promise of hydrogen-powered vehicles has been hailed by President Bush, hydrogen's backers admit the cars won't be widely available for years and would require new fueling stations.

Right now, batteries don't provide enough range to actually buy you anything. When and it the billions of dollars we've poured into battery technology over the last couple of decades pays off, you'll still need new stations, either to charge up or to exchange batteries.

Defenders will point to these two paragraphs in the middle of the article:

But Toyota officials who initially frowned on people altering their cars now say they may be able to learn from them.

"They're like the hot-rodders of yesterday who did everything to soup up their cars," said Cindy Knight, a Toyota spokeswoman. "Maybe the hot-rodders of tomorrow are the people who want to get in there and see what they can do about increasing fuel economy."

Personally, I think Toyota is being polite. It's not like anyone's actually throwing real money at this problem. But right now, there's a limit as to how much electricity you can pack into a given volume. And throwing extra car batteries into the trunk next to the spare tire isn't going to solve it.

The AP and the Post are guilty of raising unrealistic expectations, creating false bogeymen, at the price of ignoring honest efforts by people who have the most to gain by finding an answer.

Posted by joshuasharf at 09:33 AM | TrackBack

August 17, 2005

Backbone America from America's Backbone

We welcome former State Senate President John Andrews to the blogosphere with his new project, Backbone America. It's a new blog, an addition to John's radio show (scroll down), and a project of the esteemed Claremont Institute.

Andrews was previously a conservative reformer in the Colorado Senate, a pioneer of the state think tank movement, and a presidential speechwriter. Jessica Peck Corry is the operations director and policy analyst. Businessman William Armstrong III chairs the advisory board.

The name derives from the Rocky Mountains, known as the Backbone of America. Still, John wouldn't want to be confused with these guys, I don't think.

Posted by joshuasharf at 09:58 PM | TrackBack

August 16, 2005

Astaire & Rogers

One of the worst mistakes I've made while trying to do work. TCM had a Fred Astaire marathon yesterday, and I spent the evening and wee hours trying to write code in front of the TV. If they were singers, this might have worked. Dancers, though, you have to watch. Perfect if you're an attorney or a guest host. Not so good for a programmer extracting himself from the business.

He and Ginger made 10 movies together, 9 of them before she went off and decided to become a Serious Actress. All 9 in black and white. You could make an entire highlight reel of the best dancing scenes in Hollywood history just from this pair. As it was, I got to see three of them: the dance on the staircase from Swing Time, the roller-skating dance from Shall We Dance, and that little impromptu dance on the boat from that movie, too.

That last one is just so much fun to watch. You see her looking at his feet, trying to figure out what he's doing so she can follow. Now that's acting. In fact, all the dances tell a story, and you can see her expression change during course of it.

Their dancing was less fluid, though, more staged in a way. Compare any one of their numbers with Astair & Cyd Charisse in Bandwagon. She's practically liquid as she drapes herself over his arm.

Of course, it wasn't so much 9 different films as it was the same film 9 times. Like the first 50 Haydn symphonies or all the Vivaldi quartets. "Let's just set it in London this time instead of Venice! We'll have Porter or Berlin or Gershwin whip up some new songs. They even used the same supporting cast for most of the films, including this guy:

Who's not this guy:

You keep waiting for Edward Everett Horton to ask, "Do you expect me to talk?" And for this meek butler to reply, "No, Mr. Horton, I expect you to die!" as he turns to walk up the staircase.

But of course, he never does.

Posted by joshuasharf at 11:49 AM | TrackBack

August 15, 2005

Bonds, Future Bonds

Great. Just when you thought it was safe to go back in the bond market. The Wall Street Journal has covered this story for the last couple of days, but there's kind of a technical component here, so hold on. (Hugh, I'll try to explain it so even you can understand. Stop laughing, Duane.)

It turns out that there's an ongoing, periodic liquidity crisis in the 10-year Treasury Bond Market. Why does this matter? We'll get to that in a moment, but first, let's explain how this could possible happen in someplace where the word "republic" isn't preceded by the name of a fruit.

The problem is a shortage of actual bonds available to deliver when futures contracts close. It came to light in June, when a huge bond fund, PIMCO, found itself with very, very large position in 10-year futures contracts. Normally, it has no interest in taking delivery of these bonds, so it would just sell the contracts to close, and buy September contracts to replace them. But the September contracts were expensive, so PIMCO decided to hold onto the June positions, and go ahead and take delivery of the bonds. (They informed the Chicago Board of Trade of this, in order to avoid the appearance of manipulating the market.)

Here's the problem: there aren't enough bonds to fill the deals. Bond futures holders normally only take delivery about 10% of the time. (In fact, the CBOT, when it discovered the problem, implemented a rule that futures holders couldn't ask for more than 10% of bond in delivery, immediately driving down the price of those September futures and costing traders even more money.) So when PIMCO signaled that it reallly was going to expect those bonds at the end of June, it set off a scramble to find bonds to deliver.

There's another bond market that doesn't get as much play in the press - the repurchase, or repo market. That market is basically a short-term lending house for bonds, much like your credit card is, or should be. Naturally, with all these 10-year bonds out on loan, PIMCO's sudden need for bonds created a shortage, or squeeze, in the repo market, too.

This means a couple of things. First of all, look at the 10-year interest rate.
There's a noticeable, half-point drop bottoming out at the end of June. But there's still plenty of downward pressure on 10-year rates, because everyone knows the same thing is going to happen in September. People are holding onto those bonds, because 1) they want to be sure they have enough to deliver, and 2) they expect the price to rise, and thus the yield to fall. It also means that for the time being, the repo market is likely to be less liquid, putting downward pressure on short-term rates.

It's likely that this will work itself out to some degree, but it also means that the massive foreign appetite for our Treasuries is responsible for that flattening yield curve everyone's worried about. This time, though, it may not presage a recession.

Posted by joshuasharf at 04:58 PM | TrackBack

Markets That Aren't Always so Wise

People who've read my review know I'm a big fan of James Surowiecki's The Wisdom of Crowds. That said, I think his faith in the market's pricing mechanism may be a little overstated. And not just because it seems prone to frequent, er, corrections. Surowiekci himself notes the difficulty of pricing in long-term company performance. What he doesn't note is the way that analysts get around that problem, and how it violates of one his conditions for collective wisdom - independence.

If you're like most people, you probably think that analysts - even Janus-type "smartest-guy-in-the-world" analysts who dive into tunnels and count heads at restaurants come up with their estimates in sort of an isolated, cloistered, ivory-tower-with-oak-paneled-walls sort of way.


Most fundamdental analysts (and most analysts are fundamentalists) use one of two methods to value a stock: ratios or discounted cash flows. I won't get into a long discussion here, but basically discounted cash flows estimate the expected free cash flow - how much money the firm actually makes - and tells you what that's worth to you now.

So far, so good. Except that nobody acutally relies solely on those numbers. Ratios are things like Price-to-Earnings, Price-to-Sales, Price-to-Free Cash Flow; that sort of thing. Many people who use a discounted cash flow analysis also use a ratio analysis to estimate the value of the "out" years, the years past their 5-year model. And even those who don't, usually use some sort of comparison to industry ratios to make sure they're still in the same ball park, even if it is a little hard to see home plate from here.

Do you see the problem? Ratio analysis already includes the price of the stock. There's no independence here. Analysts - fundamental analysts, anyway - are alway all looking around at each other to make sure they're going in the same direction, which may still be right over a cliff. The technical term for this is "herding," an analysts do it all the time.

Now, you may say that analysts don't set the market price, the market does. And you'd be right. To a point. But analysts are extremely influential in making markets, especially when they act in groups. Why else do Schwab and other public sources of research report analysts estimates? And remember, this sort of modeling is exactly what M&A and investment bankers do to set purchase prices and IPO levels.

There's really no way out of it. Trying to forecast earnings past five years in advance is truly folly, and most analysts, given enough sodium pentathol, with readily admit to that. Still, the company does have expected earnings, and thus value, past that point, and they must be taken into account. The only way to do this is to assume that the market is basically right, and tweak the numbers until they look realistic.

But this may also help account for sudden changes in individual stocks on seemingly minor news, missing earnings by a penny out of 60 cents, or what-not. Not only is everyone re-evaluating their estimates on their own terms, they're also re-evaluating them on everyone else's terms, too.

Which means that a market's wisdom may not be so collective, after all.

Posted by joshuasharf at 04:40 PM | TrackBack

August 11, 2005

Gush Katif Rally

On Monday, August 15, just as the forced withdrawal from Gaza is scheduled to start, Denver will host a prayer gathering and rally to protest.

My own opinions on the withdrawal have varied, but I think the two major issues are strategic and religious.

From the religious side, I have never felt that Gaza was an integral part of the land of Israel. Certainly the participants in the 1967 war had a much stronger emotional attachment to the West Bank than to Gaza. Even if one does believe that Gaza is part of Israel, there are serious halachic opinions that hold that part can be surrendered to buy peace. In any event, the mere holding of Gaza never struck me as religiously critical.

That said, the forced withdrawal is scheduled to start just after Tisha B'Av (the 9th of Av) on the Jewish calendar, which is the anniversary of the destruction of both Temples, and the Jewish day of commemoration of a whole host of national disasters - start of WWI, expulsion from Spain, that sort of thing. To the extent that Jews believe in Karma (uh, they don't), this just seems like asking for it. It's the kind of thing that, 60 years from now, we add to the list as the beginning of the end of the Third Commonwealth.

Strategically, I think Dan Diker, Hillel Halkin, and Yossi Klein Halevi have laid out the case for leaving as well as anyone. Mark Gerson had an fine, eyes-wide-open piece in the Weekly Standard a couple of weeks back.

The basic idea behind disengagement-as-I-supported it was that, as Gerson put it, "...we are not giving in to the Palestinians; we are giving up on the Palestinians." Draw a line, take the border decision-making away from the Palestinians, and let them sort out their own misery. When they're ready to be responsible, we'll talk. Since we'll have a defensible line of defense, we can decide when to believe them.

Sharon first proposed this in 2003, remember, when the memory of Jenin and the re-occupation of the Weat Bank and Gaza were still fresh. Arafat was living in what was still standing of his Ramallah villa, and the Palestinians were at a low point. To retreat - even strategically - at that point, looked like it could be pulled off. It wouldn't be a retreat under fire, it wouldn't be a repeat of Lebanon. For Israel, it looked as though it made some strategic sense.

The problem is that what's strategic for Israel is only theater-level for the US and the Global Warriors Against Terror. Al-Qaeda sees Israel as a front, not the final ends, and it's already establishing its tentacles in Gaza. If you look at it from their point of view, they're getting a foothold on the Mediterranean, with a lightly-guarded - to say the least - crossing point into Egypt.

The point is that there's simply no reason to believe at this point that Israel can contain the inevitable violence within Gaza. Moreover, Condi Rice and the State Department seem stuck in the same 1990s time warp of bad models. To put it mildly, they're playing Go Fish while the Arabs have already moved onto contract bridge. They have no idea of the structures, motivations, goals, or attitudes of the Palestinians. The State Department seems on the verge of accepting Hamas, if they can only win enough elections. Hamas doesn't want to govern - it wants to wage war.

Given that, this pullout is a grave mistake. It doesn't have to be a catastrophe or a disaster, but you can bet that the EU and whatever part of our diplomatic corps is assigned to the Middle East will be pushing it in that direction.

Posted by joshuasharf at 11:21 PM | TrackBack

August 10, 2005

The AP (and the Denver Post) Do Layoffs

Well, those of who work at Janus (although not for Janus) knew it was coming. In the wake of disappointing quarterlies, the company cut 40 jobs yesterday, mostly in administration and operations. While the Rocky found plenty of space to describe what happened at one of Denver's major employers, the Post could only manage a couple of hundred words from the AP.

Tucked into the report was this somewhat snarky paragraph:

[COO] Miller is the only executive among those whose jobs are being cut, according to Peterson. The others are being drawn mostly from the ranks of the company's back office in Denver and include employees in administrative and operations roles.

Ah, the bigwigs protecting their own while the little guy gets the shaft.

Except that the Rocky reports that:

In another change, Janus said that Beery had volunteered to waive the renewal of her employment contract, which would have given her a payment of three times her base salary and bonus, plus accelerated vesting of restricted stock and options, if she lost her job or had her duties changed.

I also happen to know from personal discussions that at least two directors lost their jobs, as well.

It's miserable to get fired, especially when you've just been doing your job. But the Rocky found the space to give a full picture, while the Post left the impression that the 7th floor was taking it all out on the little guy.

Posted by joshuasharf at 02:07 PM | TrackBack

The Post Persists

I hate to keep doing this, but as long as the Denver Post persists in peddling speculation and outright falsehood as the basis for its editorials, its editorials will continue to read like an 18th-century handbill.

Their current position is that they can dictate to Robert Novak the content of his columns. I should say up front that I've never been a big fan of Novak's. I remember when he used to appear - 30 years ago - on one of those local weekly political journalists' roundtables - Agronsky & Company (who?), Washington Week in Review, McLaughin Group, something like that. He was a paleocon's paleocon, frequently critical of Israel. Not for nothing was he the "Prince of Darkness."

So the Post thinks that Novak should go ahead and write a tell-all column about l'affair Plame:

It's time for Robert Novak to give a public accounting of what led up to his 2003 newspaper column in which he revealed the identity of a heretofore clandestine CIA operative, Valerie Plame.

Novak was the columnist who first published Plame's identity, quoting unnamed administration officials in what is now thought to have been retaliation for her husband's opposition to Iraq war policy.

The Post may think this was "retaliation," for something. Anyone who's actually been following the story knows better. To recap: Wilson's wife helped get him the gig - he lied about that. Wilson's half-hearted site visit supported the Administration's position - he lied about that. Plame's life or career have hardly been endangered by the leak, if it was a leak. Wilson himself is the one who first floated himself and his wife as victims.

Some "retaliation."

Speculation regarding Novak ran rampant as Fitzgerald threatened to jail Judy Miller and Matthew Cooper, two journalists who reported on Plame and refused to identify their sources. Miller never even wrote a story with Plame's name in it, yet she sits in jail at this moment.

Miller's not in jail for writing a story. She's also not in jail for murder, larceny, attempted arson, running up thousands of dollars in parking tickets, or any number of other crimes that would earn your average UN diplomat a first-class plane ticket, that she didn't commit. She's in jail for not cooperating with a federal prosecutor. It's entirely possible that her sources came from inside the Agency itself, and while that, too is speculation, it's no worse that the Post bases its, um, recommendation on.

In fact, this investigation is one that the NY Times actively campaigned for, before their own reporter became involved and they decided there was no crime, no crime at all, nothing to see here, please move along. In fact, Fitzgerald has some experience with Miller's irresponsibility. Apparently, she tipped off the terrorist-front Holy Land Foundation that Fitzgerald was on their case, on the eve of a federal raid on their offices. This prompted the Foundation to call over to Arthur Andersen and ask if the shredders were still under warranty, and could they please borrow them for the evening?

Novak finally broke his silence last week, defending his work after a CIA official suggested that Novak had acted improperly....

In writing his Aug. 1 column, Novak ignored his lawyers' advice to maintain his silence. It was a reasonable decision - his end of the Plame story has been bottled up for too long and Novak has wanted to speak his piece. But it's not reasonable for the columnist to discuss the Plame matter when it suits him but continue his silence when it doesn't.

Novak was essentially accused (not "suggested") of if not committing a crime, then tap-dancing on the borders of one - of knowlingly outing an undercover officer - by a CIA spokesman. His attorneys were understandably jittery, but Novak was protecting himself in public from public accusations, and probably letting potential sources know that he wouldn't abuse their trust. The CIA officer in question was likely protecting himself and his organization, and if he needed to throw Novak under the bus to do it, so be it. Novak limited his response to the question of how he responded to the Agency's supposed warnings, because that's the only time he's been accused of impropriety. He doesn't need to either defend or attack Rove or Libby. There's a federal investigation, after all.

Finally, the Post more than implies that Novak's, er, performance in walking off a CNN set was directly related to his silence concerning the Plame affair, and that unburdening himself in a column might be cathartic for him:

It's clear the 74-year-old Novak is tied up in knots. Last week he was put on leave by CNN after uttering a barnyard epithet during an exchange on an unrelated political matter. He stalked off the program just before host Ed Henry was to question him about the Plame leak.

Novak reportedly told Henry beforehand, "My lawyer said I cannot answer any specific questions about this case until it is resolved, which I hope is very soon."

Novak has been avoiding talking about this matter for years. One more on-camera "no comment", or even a refusal to go on air, wouldn't have killed him.

Apparently, the Post's position is that Novak should tell all in order to satisfy their curiosity, while Miller should be able to run free while defying a federal prosecutor. For a crime that didn't happen. Or did. As usual, though, their reasoning is compromised by their speculation and incoherence.

Posted by joshuasharf at 12:44 PM | TrackBack

The Compleat Electronic Subversive

As any Neal Stephenson fan knows, it's an arms race between the encryptors and the decryptors. Still, this looks like the kind of thing that any aspiring terrorist operative - or Chinese protest organizer - would want to have.

Stealthsurfer II is a little USB device that looks like one of those Jumpdrives, but acts as a shunt for all your Internet traffic. Even browsers with very small caches still write to disk, and those files are more or less permanent. Arthur Anderson should also have taken hammer to all of their Enron hard drives. The Stealthsurfer intercepts email, web browsing, and FTP traffic, and encrypts it using ES3. It's apparently versatile and easy to use.

Why would this be useful? Well, think of the number of intelligence coups we've had when we caught al-Qaeda guys parading around with their laptops. Using the Stealthsurfer, much of this content would never have hit the hard drive. Captured, they could either impersonate drug mule or just toss the little capsule away. Someone could use the Net for operational traffic, and if they weren't under surveillance, searching their laptop wouldn't do intelligence agents or federal prosecutors any good.

Another feature lets you spoof your IP address, making it seem as though your traffic is originating from a computer thousands of miles away. Handy little tool for the terrorist on the go.

It appears that the service reroutes your traffic through their servers, 128-bit encrypted, so the host website your accessing thinks that Anonymizer is the client. Anonymizer claims to cooperate with law enforcement, but if the transmitted information is already encrypted or hidden, they might never know their service was being used this way. And since they also claim they don't keep any of the traffic, the trail might well stop at their servers.

Now the tool does have limitations. Chinese dissidents or protest organizers wouldn't exactly be able to parade into an Internet cafe and cover their tracks. There's a login screen, a popup window, and some other give-aways. Also, the ChiComs are in the nasty little habit of blocking internet sites and monitoring traffic, so this kind of thing is likely to attract the attention of that little white van parked across the street.

So, take an electronic one-time pad that tell me where to look for my next instructions, a host site that has nothing but an innocuous-looking JPEG with the instructions embedded in it, a hand-held GPS for setting up remote drops and meetings. Add plausible deniability to my laptop and even my physical location, and I'd say we've got a little problem here, 99.

Posted by joshuasharf at 08:01 AM | TrackBack

August 09, 2005

Today sees the premiere of a new site devoted to covering liberal media bias, and hopefully shaming it into submission., a project of the Media Research Center, is up and running and open for business. I'm lucky enough to have been asked to contribute, so in addition to Stephen Sharkansky's venerable Oh That Liberal Media, the Denver Post has another site to worry about.

The lineup, present company excepted, looks impressive, including Tim Graham from National Review, and a couple of other heavy hitters.

Posted by joshuasharf at 11:56 AM | TrackBack

Hedging's Limits

The Wall Stree Journal reports this morning that airlines are getting hit extra-hard by rising oil prices:

With crude-oil prices soaring, refiners are taking advantage of tight supplies to fatten the margins that they earn from turning oil into jet fuel. And cash-strapped airlines are picking up the mounting tab.

The widening gaps between the price of crude oil and various types of fuel -- known in the industry as crack spreads -- are dealing a one-two punch to an industry that can ill afford it, where fuel is the second-biggest expense after labor. The average crack spread for jet fuel topped $11 per barrel in the first half of this year. That is up from an average $2.59 per barrel in 2002...

The bottom line: About one-fifth of the increase in jet fuel prices is coming from a widening crack spread, while the other four-fifths reflect higher oil prices.


Blame diesel cars in part for the widening crack spread. Jet fuel and diesel fuel have similar components, and soaring demand for diesel-powered vehicles, particularly in Europe, is pushing up prices for both fuels. Greater industrial demand for diesel in China also has played a role. Airline executives complain that refiners, which in the past decade came off a long period of weak profit margins, have been slow to add new refining capacity, which is contributing to the high prices.


A few carriers, including Southwest Airlines and America West Holdings' America West, have partially insulated themselves from higher prices with fuel hedges. The hedges, executed before prices surged, effectively locked in lower prices. But most airlines have little or no hedges in place, and now it is too late and costly to find attractive prices.

A couple of points. First, as I've mentioned before, when your second-largest operating expense is one of the most volatile, politically-sensitive commodities available for sale, you might think a little about hedging your risk.

I don't have much sympathy for airlines who let unions in on the Great Barbecue of their own finances, create long-term obligations that their highly-cyclical business model can't possibly meet, and then fail to consider that maybe, just maybe, the world isn't fated to have $10-a-barrel oil for the rest of our lives.

Apparently there's no liquid market (so to speak) directly in diesel, so the airline probably hedge with oil futures. MarkWest did a similar thing with natural gas, modeling the change in gas prices as oil moved. But if jet fuel moves more than the model predicts, the hedge won't give as much cover as anticipated. So even those airlines that hedged may have some problems.

That said, while it's too late for United and American to avoid $60-a-barrel oil, it's never too late to hedge. "Attractive prices" are always relative. Even if China's thirst really is slowing down (and the commodities section of the latest ISM report suggests that it is), and oil prices may not be headed up anytime soon, the risk to the airlines is on the upside.

The airlines need to hedge their risk anyway, possibly through futures options. If the options expire unused, they'll have to add that as a cost of doing business. But you'd think they'd have learned the lesson of not having them around when they need them.

Posted by joshuasharf at 08:36 AM | TrackBack

August 07, 2005

Carnival of the Capitalists

Welcome to this week's Carnival, sponsored by MarketingLinx, the best marketing site on the web, as determined by you. Contribute a link today to get your reward!

This week's contributions were fantastic. Hosting really is a different experience from reading, and I'd highly recommend it to regular readers. I haven't included any of my own postings this week, but feel free to look around.

Some of you may have received multiple pings while I was building the posting, and I apologize for any inconvenience. And so, without further ado, on to the Fair:
Editor's Choice
  • Sportsbiz thinks that Nike may be hearing footsteps, as Adidas buys Reebok.
  • Kathy Hutchins at the Reform Club comments on the economics of Pfizer, er, Willy Wonka and his Chocolate Factory.
  • Soccer Dad notes another failed attempt to repeal the laws of supply and demand.
  • Political Calculations has some eye-popping historical charts for the S&P 500, and links to more like it.
  • Photon Courier has a great customer service story, and some ideas on how more companies can encourage this sort of thing.
  • Will Pate offers a reminder to keep an open mind about new experiences,
  • while Big Picture, Small Office warns against creeping, or in this case, stampeding complacency.
  • The Big Picture looks back on last year's holiday tech purchases, and draws some conclusions.
  • Crossroad Dispatches doesn't read blogs for news, but for ideas. That right there is a pretty good idea.
  • Roth & Company has some very useful news about some SEC rules changes regarding insider options.
Corporate Strategy
  • Techtrader doesn't like the way Macrovision's going, and thinks maybe it's time for two divisions to go their separate ways.
  • BusinessWorks has some critical questions for would-be entrepreneurs. We've all forgotten about them at some point.
Personal Finance
  • Monty Loree wants people to make up their minds about how rich they really want to be.
  • Free Money Finance suggests that maybe having the latest designer pet won't help you get rich.
  • Multiple Mentality considers spending - even inconspicuous consumption - as the SOMA of our age.
  • In Cash Flow We Trust explains that frugal doesn't mean cheap, and it may keep you out of purgatory.
  • Sound Money Tips shows that money management isn't just for adults.
  • All Things Financial shows you how much you'll need for college - assuming that Soccer Dad is right.
  • Smart Money Daily examines the application of retail markets to help solve environmental problems,
  • and Half Sigma has related thoughts on conservation and recycling.
  • Interim Thoughts welcomes medical tourists to India. You don't see so much of that in China, yet...
  • Econbrowser has some critical words for the way the Conference Board is handling the yield curve.
  • Speaking of economies, WILLisms has a bar graph that should send Euro-boosters scurrying for the bar.
Finance & Investing
  • Consumerism Commentary thinks that the Golden Ratio may be a useful technical analysis tool.
  • Real Returns claims that large companies are sufficiently diversified so that top-heavy large-cap indices don't bother him.
  • This could also go under economics, but the Scrivener thinks that now may be the time to bet against oil.
  • Steve Pavlina finds that motivational tapes really do help manage your own emotional state, and make you more productive, too.
  • Gautam Ghosh offers some pointers on how to make training last beyond the post-classroom drinks.
  • Ales Rarus finds himself reluctantly defending WalMart from unfair accusations.
  • Chief Skipper lets leaders know that it's ok to be a little lonely, but they have to know how to handle it.
  • Talking Story has some very sound advice for leaders on how to grow more leaders. Maybe you'll be less lonely that way.
  • Interested-Participant is unconvinced by a Tulane study showing that women who flirt at work are only hurting themselves.
  • Wordlab tells you what Maybach is and why they named their new product the Fulda Maybach Exelero.
  • Strategic Marketing Montreal tells a story of harnessing the Internet to help debug his blog.
  • Drakeview tells marketers and retailers to brace for the Gen-Y onslaught.
  • The Egoist notes that video games are starting to branch out from Grand Theft Auto. I personally thought the
  • ad for that game in the Chassidic section of Brooklyn wasn't the best-targeted placement.
  • The Skwib lampoons some ads that were more than just poorly-placed.
  • Marketing eYe, whose blog includes a fine subscription form, instructs on how best to market through newsletters.
  • Worker Bees Blog has some post-Blogher ideas, and warns that networking and connections build traffic as much as good writing does. (Hey, why do you think I'm hosting this thing?)
  • Lip-Sticking offers some post-Blogher inspiration as well, valuable for all bloggers.
  • Blog Business World has a terrific FAQ about business blogging for non-bloggers, and those who want to get started.
  • Ripples... discusses how his traffic has benefitted from placing Blogads.
  • Gongol looks at Federal Government ROI, and thinks maybe we could be putting our money someplace better.
  • Warren Meyer of Coyote Blog wants to know why privacy rights seem contained to abortion, and wants them expanded.
  • Elie Rosenfeld would like a little more honesty from PBS (and who among us wouldn't?), this time concerning their fundraising.
  • Chocolate and Gold Coins wants to cut to the chase and allow local phone competition, already.
  • The Enterprise System Speculator follows more cases of SOX compliance run completely amok, and makes a plea for common sense.
  • Mover Mike names a few companies that could be hurt if the mainline churches continue to divest from Israel.
  • Health Business Blog's blood pressure is up over conflicts of interest in both the Journal and Sociey of Hypertension.
  • Catallarchy explores polygamy. Not personally, mind you, just theoretically.
Thanks to everyone who participated, and tune in next week at Weekend Pundit. (Elitch Gardens pictures courtesy of Elitch Gardens History.)
Posted by joshuasharf at 11:59 PM | TrackBack

August 05, 2005

Estate Sale

The neighbors next door were an older couple. He had had cancer, and when he went a few months ago, it wasn't surprising that she followed quickly. Good people, from my few interactions, and good neighbors.

Their kids, who have had the house for sale for a while now, finally organized an estate sale for all the stuff they didn't want, and since books tend to go cheaply, I wandered over to see what they had. Almost bought the old IBM Selectric for $5.00, but figured the cost of shipping it to Dan Rather or Mary Mapes would be prohibitive.

They were also newspaper-savers, like me. A bunch of Kennedy assassination papers, from both of them. And then, this (click to enlarge):

Nice. The moon landing, and appropriately enough for this weekend, a visit to Los Alamos. But what's missing? This (also click to enlarge):

And here's Page 6, in case you want to read the whole thing.

The paper also carried a little story about Miss Kopchne's time here in Colorado, campaigning for Gov. McNichols, so it probably gave her more ink than the Boston papers did.

Posted by joshuasharf at 01:23 PM | TrackBack

Oil: Canary in a Coal Mine?

I'm now trying to get out of the web development biz, and into equity analysis, and interviewers are going to want to see work product. I don't actually have much work product, but one of the analyst positions I've applied for is an oil equity analyst. I'm sure once I'm finished writing them up, I'll post them over here, but for the moments, I'm following the industry news pretty closely.

Then, I noticed the Washington Post had an article about the creeping takeover of oil reserves by governments:

Peter J. Robertson, vice chairman of Chevron, worries about the increasing dominance of national oil firms. Given that they already control more than three-quarters of the world's oil reserves, "if governments can come along and gobble up the rest of it at a percent or 2 percent at a time, pretty soon the commercial business looks pretty thin," Robertson said.

You'll notice, by the way, that every country with nationalized oil companies and oil reserves is a prosperous, peaceful example of the democratic rule of law.

I can't see any way this is good - for the countries, where it will just perpetuate corruption; for the independent companies, who will have to pay higher prices and will likely face a future of endless technology transfer; for the world economy, which will pay to subsidize Hugo Chavez's not-so-excellent adventures.

International oil companies and national companies, while sometimes rivals, often work together. In many cases, national oil companies lack the money, technology or managerial skill needed to develop big projects and seek to work with the bigger firms.

But some national oil companies have gained enough know-how to begin closing that gap. According to PFC data, more deals are being made between national oil companies, allowing one to operate in another's home country -- leaving the international firms out altogether.

Time to go back and re-check those growth estimates...

Posted by joshuasharf at 12:55 PM | TrackBack

China Subsidizing Its Enemies

Larry Kudlow details the budding Pacific Anglospheric Alliance (PacAngloPac?) between the US and India, especially the business aspects. I think he's ignoring a possible stock market bubble there, but leave that aside.

He points out that India may be on the verge of relaxing foreign direct investment restrictions, and that the US would probably be the main beneficiary of that.

Now, for all of you who don't like economic globalization so much, consider this. US corporations, flush with cash, need places to invest. Much of their cash is coming from low interest rates, subsidized by Chinese investors. Or by Chinese FDI.

If we turn around and invest heavily in India, that means that, essentially, Chinese money is going into India.

How long will it be before we start seeing articles asking why, oh why, the Chinese are subsidizing the development of their enemies?


Posted by joshuasharf at 11:00 AM | TrackBack

Can We Please Get Through One Week...

...without someone bringing up Nazi Germany in a political debate? I realize this is the gold standard for the corruption of a free society by unmixed evil, but good grief. George Will is fond of saying that American politics is played between the 40-yard-lines. If so, Nazi Germany and Stalin's USSR leave about enough room for you to slip a credit card between the goal line and the nose of the ball. Right now, the country's probably on the right hash mark of the 45-yard-line.

There's something wrong about invoking Nazis to condemn a practice permitted by Jewish law. I know we don't own every atrocity committed by Hitler - so many untermenschen, so little time. But you need to stop and think about what it is you're saying, what positions you're taking.

I personally think that if we can use adult stem cells instead - and right now, there's no reason to think we can't - then we should. But a long a venerable Western religious tradition says otherwise, and it doesn't make the Talmud a manual for baby-killing.

Posted by joshuasharf at 10:53 AM | TrackBack

August 04, 2005

New CFA Blog Posting

The CFA blog's actually getting a few hits, so it deserves a new posting. Or two.

Posted by joshuasharf at 11:07 PM | TrackBack

The (Mis)behavior of Markets

According to Modern Portfolio Theory, the basis for most of modern stock market analysis, the crash of October 1987 shouldn't have happened in our lifetimes. In fact, it shouldn't have happened in the lifetime of the country. It should have happened, perhaps, once in the lifetime of the universe. It was just our good fortune to have lived through it. Now we can relax.

In fact, even as Robert Merton and Myron Scholes were accepting the Nobel Prize for their contributions, the markets were preparing to given the Royal Swedish Academy second thoughts.

So what went wrong? Why did MPT fail so catastrophically? What assumptions failed? Why do academics and researchers continue to base their research on those assumptions? And is there anything out there that might be better?

Benoit Mandelbrot, Father of Fractals, Creator of Chaos Theory, Maker of the Mandelbrot Set, has some ideas, and The (Mis)Behavior of Markets tries to bring them to the public.

I fell in love with fractals and chaos theory in college, when both it and I were young. I didn't pursue a career in physics, and left them behind, I thought for good. Ah, but life is strange, and just a couple of years before I decided to turn towards finance, so did Mandelbrot and fractals, and there there are, my old friends, waving me over to the table for drinks.

Actually Mandelbrot started out as a market analyst, but got sidetracked for a couple of decades, and is now turning his attention back to the problem that got him started: why historical cotton prices don't look anything like a normal distribution.

Mandelbrot spends the first half of the book explaining the roots of Modern Portfolio Theory, and why the simplifying assumptions simplify it out of relevance to the real world. He doesn't suffer fools gladly, and while he doesn't actually come out and call anyone a fool, he does let the read draw his own conclusions.

I've covered the problems with MPT is previous reviews and comments, so I'll just touch on them here. MPT is based on the early 20th Century work by M. Bachelier, who took his cue from Brownian motion, the random motion of particles suspended in water. That motion is normally distributed. Well, if dust motes, why not stock prices? Bachelier posited that stock prices moved some small amount each day, that the movement was normally distributed, and that there was no memory from one day to the next.

Why normally distributed? Well, like the guy who loses his keys over there in the dark, but looks for them over here under the streetlamp because the light's better, it's the only distribution that we can really find closed-form solutions for.

Modern Portfolio Theorists follow Merton in assuming that time is continuous. On the way down, or on the way up, the stock price hits every tick, (this used to be 1/8 of a dollar, now it's a penny), so you can always get the share price when you put in your order,

These assumptions don't hold. They're made largely because they're the only way to get to a closed-form solution to the math. What's more, anyone with eyes in his head ought to be able to see that they're not even usually true.

Mandelbrot starts from his distribution of cotton prices, and works from there. First, prices are more likely to follow what's called a Cauchy distribution. More peaked in the middle, and with much, much fatter tails, the Cauchy distribution is very ill-behaved.

From there, readers familiar with fractals will find themselves skipping large sections. Mandelbrot reintroduces self-similarity, scaling, fractal dimension, and so on. But he also introduces the idea of time-warping, warping along the x-axis as well as the y-axis. Do this, the produces some very realistic-looking charts.

And that's pretty much where the argument ends. Mandelbrot has produced charts that look right, and returns distributions that mimic reality, but he admits that it's purely descriptive. There's no mechanism, only behavioral speculation, and there's no real way, yet, to make money other than by selling books about it.

What are the implications for finance? Well first, with those fat tails, the Cauchy distribution is much, much riskier than the normal distribution, with the likelihood of ruin much higher. Second, the thing about the realistic-looking charts, that are indistinguishable from real charts, is that they really are random. Technical analysts, beware! Mandelbrot has some sympathy for the illusory patterns you see in the charts, but illusory they are. If I can produce something randomly that looks like the real thing, and you think you see predictive patterns in it that aren't there, what does that say about the predictive power of the patterns you see in real charts?

Mandelbrot also reminds us that he started to come up with this stuff just before the advent of MPT, but that in the trendy world of finance, his uncertainly was overshadowed by MPT's promise of managing risk. He reminds us more than several times, and it does get a bit tiresome. There's nothing the matter with enjoying being right, but even the disinterested observer, who's only looking for something better, get weary of hearing "I told them so."

He make up for it, though, but devoting the last chapter of his book to an uncritical discussion of current research based on his work. He's boosting these guys, with no expectation of recompense, in the best academic tradition, and he deserves credit for that. If he can use his name and popularity to create a community pursuing these ideas, more power to him.

We are reminded that this is a field still in its infancy, not really allowed to grow by an industry that thought it had the magic key. Retrenching and pursuing this line of thought, which currently offers little if any profit path, is hard. But it's better than building on sand, on a coastline whose length you can't even measure.

Posted by joshuasharf at 10:27 PM | TrackBack

August 03, 2005

Another New Review

James Surowiecki's The Wisdom of Crowds is finally reviewed. I finished it weeks ago, but, you know how things are.

Posted by joshuasharf at 06:08 PM | TrackBack

August 01, 2005

LTCM Book Reviews

Finally! A two-fer on the book-review site.

Posted by joshuasharf at 10:34 PM | TrackBack

The Grey Men

Mark Steyn's Telegraph column this week focuses less on the terrorists than on their enablers:

It's not black (the bomber) and white (the rest of us); there's a lot of murky shades of grey in between: the terrorist bent on devastation and destruction prowls the streets, while around him are a significant number of people urging him on, and around them a larger group of cocksure young men gleefully celebrating mass murder, and around them a much larger group of people who stand silent at the acts committed in their name, and around them a mesh of religious and community leaders openly inciting mayhem, and around them a savvy network of professional identity-group grievance-mongers adamant that they're the real victims, and around them a vast mass of progressive elites too squeamish about ethno-cultural matters to confront reality, and around them a political establishment desperate to pretend this is just a managerial problem that can be finessed away with a new bureaucracy and a bit of community outreach.

And at the end of this chain of shades of grey is you.

Steyn's point is that it takes a village to raise a bomber, these guys are not the lone wolves that the CAIR-apologists would have you believe. There's a whole world of people looking the other way and making excuses, most prominently our own cult of multiculturalists.

Posted by joshuasharf at 10:03 PM | TrackBack


I had been waiting for this. Azure, house journal the Shalem Center in Jerusalem, should be every conservative religious Zionist's home. They've got their new website up, and for one of the least-intrusive registrations I've seen, you get the current site and the archives. Their links lists are exhaustive, except that they contain no blogs.

Shalem was founded by Yoram Hazony, and he's now a contributing editor to Azure. Hazony is the author of The Jewish State: The Struggle for Israel's Soul. It recounts the ideological, intellectual, and religious history of Zionism, and both Azure and Hazony are Zionists in the tradition of Herzl, Ahad Ha-Am, and ben Gurion. The state need not be religious, but the country must be Jewish.

The scholarship is impeccable, the thinking sharp, and the writing clear. Take a look.

Posted by joshuasharf at 01:43 PM | TrackBack

Buffalo Pass

One of the nice things about having graduated is having the occasional Sunday to myself instead of owing to an HR professor who wants a 30-page write-up of a field trip to a fish factory.

This Sunday, it was a ride up to one of the few 2WD-friendly (sort of) Continental Divide passes that I had't been to - Buffalo Pass. I tried to do this a few years ago, but in mid-June, the thing was still blocked by snow.

WARNING: The Wildflower pictures are over 200K. Don't try this at home, if you only have dial-up.


Why the picture of the main drag in Yampa? Look at it. It's got more streetlamps per foot than the 16th Street Mall, but the street is gravel.

This is why I want a 4WD someday. You get scenery, pictures, and views from the other side of the mountains that you can't get from pavement. Trust me. If it's west of I-25, paved, and doesn't have a street sign or a stop light, I've probably driven on it. There's stuff back there that's even worth the washboarding.

Posted by joshuasharf at 10:22 AM | TrackBack

It's Carnival Time!

This week's Carnival of the Capitalists is up, over at Small Business Marketing Systems.

After seeing the number of entries grow over the last few months, I've got that "you mean want me to land the plane?" feeling right now...

Posted by joshuasharf at 06:29 AM | TrackBack