Free, But Not Really

I can’t resist promotions that offer free stuff---and I mean really free, not “buy one, get one free” or “two weeks free membership, then we’ll charge your credit card each month”—and I’ve been showing up at Starbucks on Wednesdays to get a free cup of coffee. It really is a no-strings-attached deal; just flash your card and get a regular cup of their Pike Place blend on Wednesdays during the month of May.

At the end of April Starbucks passed out hundreds of the cards near the BART station on the corner. Down-and-outers as well as businessmen in suits took advantage of the promotion, and many went back for free refills throughout the day.


Less grabby in my middle age, I think merchants should receive positive reinforcement for their good behavior, so I’ve purchased an item when getting my free cuppa joe. Last week I bought a sandwich, and today I picked up some dipped Madeleines to accompany the cup with the new logo on my train ride home. At 90 cents each the cookies were overpriced, but giving positive reinforcement sometimes isn’t free.

Not Superwoman

I don’t for a moment think that Hillary Clinton’s RFK reference meant that she hoped something bad would befall Senator Obama. I do think she meant that Robert F. Kennedy’s triumph in the California primary 40 years ago—and his awful assassination—showed that anything can happen. To be sure, her words were very poorly chosen.

But it’s not surprising that Robert F. Kennedy was at the forefront of her thoughts. We will never be rid of 1968 until the baby boomers pass from the scene. From Newsweek’s cover story last November:

the '60s are impossible to escape. They will define the 2008 presidential election, just as they have defined American politics, and American culture, for the past 40 years.

In 1968 the deaths of Robert Kennedy and Martin Luther King, the riots in Chicago, and the war in Vietnam rent the culture. It seemed everyone was angry; whichever side one took, the other side didn’t listen, didn’t comprehend, and in fact was evil and hypocritical, using violence to further its ends. To those of us who were teenagers then, 1968 provoked some of the strongest emotions we have ever felt. Hillary Clinton isn’t the controlled super-woman that her supporters believe that she is, so after the requisite mea culpa she should be given a pass on this one.

Take My Wife.....Please

According to the New York Times

friends of the [Clintons] say that former President Bill Clinton, for one, has begun privately contemplating a different outcome for [Hillary]: As Senator Barack Obama’s running mate.

Instant analysis on CBS 5 this morning:

Political correspondent Bill Matier: "Rumor has it that Bill Clinton is now pushing for Hillary to be in the Number Two slot. Why would he do that?"

Former San Francisco Mayor Willie Brown: "So that she stays on the road to funerals all over the world."

Virtuous Circle

My old high school wins another award, Sports Illustrated’s designation as the nation's No. 1 high school athletic program. Although it is a well-known institution in the Islands and to college admissions departments, Punahou’s fame ramped up to another level as the high school of a promising young golfer and the alma mater of a Presidential candidate. The school has finally become the virtuously reinforcing circle that every educational establishment aspires to be but very few achieve: the best students go there, become successes in life [well, many of them anyway :)], and encourage future generations of the best students to attend. Congratulations to Jim for his leadership.

Talking and Doing

Observation by Thomas Sowell:

If Barack Obama had given a speech on bowling, it might well have been brilliant and inspiring. But instead he actually tried bowling and threw a gutter ball. The contrast between talking and doing could not have been better illustrated.

Monday Meander

A cool breeze brought relief from last week's heat. Sports-jacketed, I no longer envied the tourists for their tee-shirts and ambled along Market Street. Pedestrian and street traffic appeared light. Memorial Day is next weekend; perhaps some were getting a very early start. The day passed quickly as I wrestled with financial arcana that few care about. I watched the ferry leave for Marin County at six. Time to pack it in; the task will be there tomorrow.

Victor's Tires and Restaurant, Logan, UT

When Victor opened his tire business in Logan, his wife supplemented revenue (and kept her husband company) by selling home-cooked especialidades in the back of the store. Tires-and-tamales proved to be a winning combination. Victor’s Restaurant soon occupied a wing next to the warehouse.

On the day after our nephew’s graduation, we had a hankering for Mexican food. Most of the group ordered conventionally—burritos, tacos, and tamales--but I couldn’t resist menudos, the weekend special. The tripe was tender and tasty, and the gaminess had been simmered away. A squeeze of lime, a little onion and cilantro, and warm flour tortillas rounded out this deliciously simple meal. © 2008 Stephen Yuen

No Experience Necessary

Kate Zernicke surveys political insiders on the traits that a woman must have to be elected President. Besides the obvious candidate, other names are mentioned and for the most part discarded. However, the boldest assertion in the Sunday Times article is the following:

“No woman with Obama’s résumé could run,” said Dee Dee Myers, the first woman to be White House press secretary, under Bill Clinton, and the author of “Why Women Should Rule the World.” “No woman could have gotten out of the gate.”

Women are still held to a double-standard, and they tend to buy into it themselves.

They do not have what Debbie Walsh, the director of the Rutgers center, says she used to call the John Edwards phenomenon and now calls the Barack Obama phenomenon: having never held elective office, they run for Senate, then before finishing a first term decide they should be president.

The four L's on how to get to the top of the heap in the Democratic party: liberal, loquacity, looks, lawyer. No experience necessary. [Afterthought - May 21: forgot to add fifth L, LOTSA LOOT!] © 2008 Stephen Yuen

Hotbed of Activity

The California Supreme Court decided 4-3 that gays and lesbians have a constitutional right to marry. I am troubled by this result, not by the same-sex marriages that will soon receive state sanction (and which, if I were dictator of California, I would allow) but by the court’s over-riding of the other branches of government. The initiative and/or legislative process by which the people debate and craft laws concerning the important matter of marriage has been bypassed.

Just as abortion was decided by the U.S. Supreme Court over a generation ago, a handful of justices discovered a constitutional right to decide a controversial matter. Their ruling will change an institution that affects all of our lives. And the people don’t get to vote, either now or in the future, because the constitution trumps any law that reverses this decision.

[Update and correction - May 16th: "The state's voters may have the last word. A ballot initiative that amends the state's constitution to prohibit same-sex marriages is likely to be certified soon. If voters subsequently approve it, such an amendment would trump the court's decision."]

The issue of judicial over-reach has been ignored in this campaign, but watch for it to resurface.

Meanwhile, look for San Francisco City Hall to become a hotbed of activity, as it was four years ago. © 2008 Stephen Yuen

That's Gotta Hurt

We had decent experiences with our medical insurance provider, United Healthcare, until it acquired PacifiCare over two years ago. Whether it was due to UHC’s turning over administration of California patients to PacifiCare is unclear, but claims that had been paid the previous year for the same service under the same policy were inexplicably stonewalled and denied.

One item rankles in particular. My doctor and I have been communicating with UHC over payment of $830 for allergy skin tests conducted in 2006. The phone call became a ritual: the UHC customer service representative would say everything appeared to be in order; the CSR would even submit it for “special handling”. A few weeks later we would get a form letter denial with the helpful explanation, “This claim was processed according to the patient’s benefit plan.”

Last month my doctor’s bookkeeper called us about the 18-month-old receivable. Legally, we were responsible for the charges, so I settled it with her at 80% of the amount. I thought about a small claims action against United Healthcare, but the cost of organizing the documents and notes of my phone calls, plus taking time off, just wasn’t worth the benefit of having my day in court.

Nevertheless, I did get emotional satisfaction when my employer moved most of its 2,000 employees from UHC at the end of last year and from this item:

In January, California regulators said they planned to seek fines potentially exceeding $1 billion against UnitedHealth for alleged mishandling of claims and data at PacifiCare, including "unfair" pre-existing condition denials and a "meltdown in its claims paying process."

$1 billion isn’t what it used to be, but that’s gotta hurt. © 2008 Stephen Yuen

Saturday in Shoreline Park

The information revolution has made volunteering much easier. Needs are publicized, skills, money, and time are matched to tasks, and coordination between and within organizations is much improved. But traditional methods can be effective, too. Last weekend the Volunteer Center of Silicon Valley (VCSV) held its fundraising walkathon, the 15th annual Human Race in Mountain View.

I normally don’t do more for charity than open my checkbook, but no one else was available to represent our Foster City church. Besides, the doctor said that I should walk every day, and this year’s miracle nutrient—Vitamin D—is produced by exposure to sunlight.

The ladies in the booth for the Interfaith Hospitality Network gave me a yellow shirt and fortified me with a blueberry muffin.

Pushing aside thoughts of skin cancer and cardiac arrest, I embarked on a pace of 15 minutes to a mile (which sounds better than 4 miles per hour) and eased past an eight-year-old on roller skates and a women with a spaniel. An 80-year-old man with a cane ate my dust.

National Semiconductor, one of the fixtures in the valley, was one of the principal sponsors and sent a team of over 100 blue-shirted volunteers. Their enthusiasm was an indication perhaps that the harsh working atmosphere of the seventies and eighties had been banished. Somehow, National Semi has survived into the 21st century while larger, sexier companies are long gone.

I finished the five kilometer walk at 9:30 and helped myself to another muffin. It doesn’t count if it’s for a worthy cause. © 2008 Stephen Yuen

Blinders

Social science has gone off the rails if the conclusion of this study is taken seriously:

Individuals with conservative ideologies are happier than liberal-leaners, and new research pinpoints the reason: Conservatives rationalize social and economic inequalities.

I’m sure that very few happy conservatives or liberals would count their ability to “rationalize social and economic inequalities” as the key to their happiness. How narrowly Marxist is this view of the world! What about having family and friends to love and be loved in return? What about the joy of learning? What about having worthwhile work which makes one want to get up in the morning?

I know an otherwise smart woman who holds thinness to be the be-all and end-all of individual worth. Just as much as these researchers, her eyes are enclosed by blinders. © 2008 Stephen Yuen

That Ain't Chicken Feed

The cash-strapped State of Massachusetts proposes to tax the wealth of its educational institutions.

Massachusetts legislators, demonstrating a growing resentment against the wealth of elite universities in tight economic times, are studying a plan to levy a 2.5% annual tax on the portion of college endowments that exceed $1 billion.

The effort takes aim at one of the primary economic engines of the state, which is home to nine universities with endowments that surpass the $1 billion level, led by Harvard University's $35 billion cache, the nation's largest. [snip]

Supporters said the proposal would raise $1.4 billion a year. Based on the most recent size of Harvard's endowment, the university would have to shell out more than $840 million annually.

Elite universities have no one but themselves to blame. Too many academics preach a philosophy that extreme private wealth is evil and that it should be transferred to a government that will re-distribute it in the name of societal justice. At $840 million per year even Harvard will feel pain. As someone once said, the chickens have come home to roost. © 2008 Stephen Yuen

Quacks Like a Top

The Dow Jones Industrial Average closed at 12,867 today, 3.3% below the level of one year ago. The performance of various components, however, varied significantly. If we take three companies in the Dow as representative of their sectors—Exxon-Mobil (energy), Bank of America (financials), and Intel(technology)—we see that the major divergence began last fall when the magnitude of the subprime crisis began to be apparent. The deterioration in the assets of financial companies soon leaked out to the wider economy and pulled down tech, energy, consumer products, autos, durable goods, and other sectors.

Blue--Exxon, Green--Intel, Yellow--Dow, Red--Bank of America.

In March we faced more than a mere dip in the business cycle; there was a full-blown crisis of confidence in which large international institutions refused to take each others’ IOUs. The Federal Reserve ladled out liquidity by lending on and guaranteeing assets that the private sector refused to accept, and the immediate crisis was averted. The world was awash in dollars (although it doesn’t seem that way to individuals with foreclosed homes) that chased a fixed amount of goods, and the price of oil and other commodities exploded. Of the three stocks (none of which I own or short) on the chart, Exxon is the top performer, Intel is slightly higher than one year ago, and Bank of America is 25% lower. All well and good with the history, but where do we go from here?

Now that oil has doubled in price in one year to $124 per barrel, there’s talk from reputable sources that we could see $150 - $200 oil by the end of 2008, a so-called “super-spike”. To those of us who bought real estate three years ago, joined in the Dow-30,000 and Internet hype of the late 1990’s, or who were gold bugs in the late 1970’s, the oil markets look, feel, and quack like a classic top. So I’m staying away from energy. [Update - May 9: Trying to pick a “top” to this market is the surest way to the unemployment line,” writes Steven Schork, who writes an oil-and-gas newsletter out of Villanova, Pa.]

You may be tempted to nibble at the beaten-down financials, but I think you really have to be careful. The worst of the writedowns may be behind them, but some banks have to issue capital---and dilute existing shareholders—in order to shore up their balance sheets. Layoffs are coming, and it’s hard to expand the business when the organization is in turmoil. Also, leverage won’t be as powerful a tool to grow earnings because their own lenders haven’t quieted their nerves.

Storing euros over 1 year would have exceeded the return on Exxon.

If oil prices come down, the rest of the economy will benefit. A strengthening economy and higher U.S. interest rates should also reverse the fortunes of the dollar, although no one expects 1:1 parity with the euro any time soon. So I would direct investment monies into non-energy, non-financial U.S. stocks, especially those with an export book. Bonne chance!

Unpopular

President Bush is not only the most unpopular president in modern history, he’s the most polarizing. Only 1% of the population is neutral or undecided about him.

A CNN/Opinion Research Corp. survey released Thursday indicates that 71 percent of the American public disapprove of how Bush is handling his job as president…

"Bush's approval rating, which stands at 28 percent in our new poll, remains better than the all-time lows set by Harry Truman and Richard Nixon [22 percent and 24 percent, respectively], but even those two presidents never got a disapproval rating in the 70s," [CNN polling director Keating] Holland said.

One person who views President Bush favorably is historian Paul Johnson.

After September 11th, he buckled down quickly to this unprecedented attack on America, determined that such a treacherous outrage should never occur again. Nor has it. It is worth inquiring why. There is no doubt that attacking the American homeland remains the prime objective of Muslim fundamentalist leaders. Yet they have not done so. One reason for this is the success of Mr. Bush's team in learning the lessons of Sept. 11 and building a security system of impressive strength and sensitivity.

Equally, if not more important, is the way in which Mr. Bush--partly by accident but mainly by design--has switched the war's theater of operations to the death-dealers' territory. The number of Muslim fanatics who have been killed by the Allies in their operations or who have killed each other in Sunni-Shia clashes must be reckoned in the hundreds of thousands. We must remember that every extremist killed in the suburbs of Basra or Baghdad or in the hills around Kabul or Kandahar means scores, perhaps hundreds, of Western civilian lives saved.

Future Paul Johnsons will assess whether this president’s unpopularity was deserved. But, as we wrote over two years ago , we don't have to wait to make this declaration: Mr. Bush is the most consequential president since Ronald Reagan. © 2008 Stephen Yuen

A Good Cause

Whether Bay Area longshoremen walked off the job because (1) it’s May Day, the traditional holiday of the international labor movement, (2) they wanted to express solidarity with protests against the war, or (3) it’s a sunny spring day better spent not working, it’s hard to meet anyone in Say Francisco who is concerned. The economy is slowing if it’s not in recession, and a day’s delay in receiving a container won’t make much difference.

Inventories are building and no one’s running out of supplies--- unless you count the hungry people overseas who’ll be getting their American food shipments a day late. But hey, let them starve; it's for a good cause. © 2008 Stephen Yuen