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Monday, March 14, 2011


Pre-birthday post

The Japan events were horrific. Who will ever forget waking up Friday morning to those incredible replays of the tsunami carrying cars, houses, boats, everything inland. The power of nature is not something man has any ability to withstand.

We live on an amazing planet, a hardy balance of forces that makes life sustainable as nowhere else (yet) to our knowledge. Yet, even its minor squirms and stresses are enough to dislodge our foundations. With the effort it takes to carve out a comfortable existence and cope with the earth's belches and groans, one would think that man would realize he profits not from warring over scarce resources but from cooperating in our efforts to thrive and overcome. Clearly, in the short span of human history, this has never been the case.

But there are hopeful signs, and one of them is in the genuine outpouring and identification with the Japanese people. Though civilized, modern, and today peaceful, the history of the Japanese people has often been one of trying chapters for its neighbors and enemies. It is well that even former enemies today have a strong urgency to help them through their catastrophe.

One thing that helps no one is the urgency with which the environmental left seeks to exploit this episode to castigate nuclear technology and overstate the dangers posed by overheated reactors. An understandable explanation of what is going on in those reactors is provided today in the WSJ by William Tucker in "Japan Does Not Face Another Chernobyl." His message is not to say there is nothing to worry about. Surely, there has been a need to emit a minor amount of radioactive steam, and the reactors can never be restarted once they have been doused with seawater. But Mr. Tucker simply explains the difference between Japan and Chernobyl.

"The Chernobyl reactor had two crucial design flaws. First, it used graphite instead of water to 'moderate the neutrons...' The graphite caught fire in 1986 and burned for four days. Water does not catch fire.

"Second, Chernobyl had no containment structure. When the graphite caught fire, it sputed a plume of radioactive smoke that spread across the globe. A containment structure would have both smothered the fire and contained the radioactivity.

"If a meltdown does occur in Japan, it will be a disaster for the Tokyo Electric Power Company but not for the general public." The fuel rods will simply melt to the steel and concrete floor but no further.

Let's hope he's right. One thing is for sure - the people calling for panic don't know any better.

Radiation aside, the Japanese and their friends around the world will be challenged enough.

Another calamity of a much lighter variety is in the making and that involves the negotiations around a new agreement between the NFL and its players. I don't often takes the union's side in such disputes, but this is one time I would award them the lion's share of the $9 billion at stake.

Frankly, the owners have been looking to pick this fight since before last season even started. They are making lots of money, but are concerned that they will have to settle for these levels. They have no growth engine. TV seems maxed out, they can't raise ticket prices anymore, the merchandise is all selling out, etc. So to raise revenues and profits, the owners hit on the idea of replacing two of the four meaningless preseason games with regular season games. This would make the regular season 18 games long. I am old enough to remember when it was 12 (like when Jim Brown set a lot of his rushing records).

Trouble is, regulars don't play play much of the preseason anymore, since a few quarters of work is really all they ever needed to be ready. Preseason is mostly for looking at rookies and free agents, and gouging some money from the season holders who have to buy exhibition tickets too. By turning two more games into regular season games, the starters will have to play them. From the players' viewpoint, that means more injuries and even shorter careers and there is not enough money in the game to make that deal attractive.

The players have come up with a creative tactic - decertify their union so that they can successfully make the case that the owners' action will be a lockout (which is what it is). This will allow them to sue in court for failure to act in good faith. If only the Wisconsin public employee unions would switch to a decertification strategy!

So the owners have a rattlesnake by the tail. As usual the fans are the ones who stand to get hurt, since they have bought into the game emotionally if not financially. If there is no football this season, the owners say they will be fine, but that is just clear proof they are looking at this the wrong way. Yes, sports is a big business, but if owners expect fans to care about their teams, they owe it to them to put the teams on the field if its reasonable financially to do so. Believe me, it's way more than reasonable.


In the meantime, we've got the NCAA's to deal with. i was going to give you my brackets, but forget it, they are even less reliable than my stock selections. Instead, I'll give you Redwave's rules of the NCAA's, which hold up more often than they don't (no scientific evidence for that statement).

Rule #1 is that Conferences tell. It used to be that some of the better conferences, like the ACC, had tournaments and were spent when they got to the Big Dance. Now almost every conference has a tournament, so they're all equally spent. This means the top conferences should outperform the overrated ones. Top conferences always seem to include the ACC and the Big East. In some years, the Southeast Conference is a decent conference. Of course, a top team can come from anywhere, but the Big Ten, Big Twelve and Pac 10 are consistently overrated in basketball.

Rule #2, is that coaches tell, especially those with Tournament experience. You know who they are.

Rule #3 is speed tells. In what sport this side of chess doesn't it?

Rule #4 is that the premium these days is on good rebounding and three point shooting. Shooting 33% from outside the arc is arithmetically as good as 50% inside the arc. In college ball, the arc is not that far out, and you can do even better.

Rebounding is like Casey used to say about catching in baseball (without it you have a lot of passed balls). If you've ever coached a team that couldn't reliably clear its defensive board, you know what I mean.

The academic left is in an uproar because not only do they believe (apparently without any supporting evidence) that Bradley Manning, the wiki leaks source, is being tortured in his army prison brig, but worse, the media seems to be all but ignoring the "situation." The left has a hard enough time when rights, real or imagined, are abridged, but they could live with that if only the perpetrators were being appropriately ridiculed. The one thing they can't abide is when their howling protestations are being ignored.

In today's WSJ, their reporter quoted the unspecified concerns of those good old reliable reformers at Amnesty International before faithfully reporting that guards were checking on Mr. Manning's welfare as often as every five minutes and that he was forced to sleep in his shorts. On the Reality Based Community's left wing blog today, I asked if anyone had any information contrary or in addition to those reported in the Journal, which did not really sound torturous to me, and none did including my friend the blogkeeper. I said it seemed to me that Mr. Manning was being treated no differently than he would be in a hospital, where some nurses have perfected the art of waking you for medication or fluid drainage just as you finally fall asleep. For that wisecrack I was widely castigated but somehow not disputed. To his credit, Mr. Manning, like any good soldier has not actually complained about his condition himself. Perhaps he well understands that after his Court Martial, he is likely to look back fondly on his now current arrangement.


Pat Martino, the great jazz guitarist from Philly comes to Birdland this week with his organ group. The other personnel has changed, but no matter, you have to see and hear Pat to believe it. And there's no better venue to do that.


Friday, I bought 1000 shares of Hauppauge Digital (HAUP) at 2.03. Allegedly, this is a value buy since the company has no debt and trades at a little over two times book. However, this is a microcap and "book value" may or may not be an imaginary number. The company has been causing an on again, off again sensation in day trading circles by periodically announcing products that somehow hook up to your Apple equipment to allow you to watch TV from anywhere, as if that's such a blessing. Daydreamers like me envision Apple taking the company over, if for no other reason than to curtail those annoying product PR pieces.

Speaking of takeover dreams, one came true today when Buffet announced Berkshire was buying Lubrizoil (LZ), one of our long time holdings, which we reduced according to formula not so long ago, only to buy some of it back later. Since we like to sleep, we don't worry about profitable sales that cause us to fail to maximize profits. For every LZ sale that comes a little too soon, there are those we make by formula that come in time, thank you. So, there was happiness today for all of us LZ holders rewarded for our long interest in the company.

I kind of knew Buffet was likely to be targeting one of our holdings when he recently indicated interest in acquisitions, but frankly I expected it to be ITW rather than LZ.

Today, we bought 200 shares of ENI at 19.49, a zero buy.

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