Cruising to Re-Election

The former mayors of SF and Oakland in August

California Senator Dianne Feinstein is cruising to re-election and doesn't see any need to debate her Republican opponent:

she's heard nothing from her challenger, Elizabeth Emken, that she needed to debate. "There's just nothing constructive coming out of their campaign," said the four-term Democratic senator.

That's a hilarious construction--"nothing constructive", when the real reason is that there are many downsides and no upside in debating a little-known opponent. However, there are not many Republicans who are incensed about her pending victory. Dianne Feinstein is a Democrat whom they can work with.

Senator Feinstein has been known to break with the more extreme elements of her party, especially when it comes to national security. She chairs the Senate Select Committee on Intelligence, one of the least partisan committees in Congress. Whether her role is that of chairman or of ranking minority member, her continued presence should help Senators reach agreement on future issues that will arise in this sensitive area. She has my vote.

[Update: Note how Dianne Feinstein carefully chose her words on October 17th about the Obama Administration's changing story re Benghazi:

"I can tell you this, I think we do know what happened now. There’s no question but that it was a terrorist attack, there is no question but that the security was inadequate and I think that there is no question that we need to work on our intelligence."

“I think what happened was the director of intelligence, who is a very good individual, put out some speaking points on the initial intelligence assessment. I think that was possibly a mistake.”

She didn't give some Republicans the red meat they were looking for--particularly regarding Administration decision-makers' motivations--but she didn't excuse the Administration for the disastrous outcome either. A good politician or someone who's looking out for the national interest? Both, maybe, but if I had to pick one it would be the latter.] © 2012 Stephen Yuen

de Tocqueville It's Not

Below is Taiwanese Next Media's take on the Giants' sweep of the Tigers. Fox Sports, are you watching?

Cloud Cover

The Friday night dump is a time-honored tradition for releasing bad or awkward news that one doesn't want to discuss. Once again Apple has shown how it even does obfuscation better than everyone else: send out the press release in the midst of a hurricane that has closed the markets for a couple of days.

The announcement this morning:

Scott Forstall, the man in charge of its iOS mobile software efforts and a major and longtime executive at the tech giant, is leaving next year and will remain an adviser to CEO Tim Cook until then. [snip]

More to come on what happened, but Forstall’s departure is very big news and a drastic move for such an important player in the tech space. He had big fans and also many detractors for his sharp-edged personality, as well as what some described as exhibiting “growing open challenges” to Cook himself. Forstall had previously been called “CEO-in-waiting” in one media account in Fortune.

In addition, numerous sources noted persistent tension between Forstall and several other key execs, especially the powerful design chief [Jony] Ive.

Veiled internal politics at Apple aside, Forstall has been a key part of Apple’s success over the last decade, especially in the development [of the] iPad and the iPhone.

The departure of Scott Forstall, who was in charge of the operating system that runs Apple's most successful products, is "very big news" indeed. Apple could have disclosed the management shake-up at the same time as last Thursday's earnings release, but talking about strategy and people is a lot tougher than talking about numbers, even disappointing ones.

Let's hope Apple's spokespeople have their stories straight when the market re-opens Wednesday.

(Disclosure: I am long Apple.) © 2012 Stephen Yuen

Under Sunnier Skies

Sergio Romo and Buster Posey (Chron photo)

The San Francisco Giants completed a sweep of the Detroit Tigers and won the 2012 World Series tonight, 4-3,in a hard-fought ten-inning contest. This was the Giants' second title in three years.

The TV ratings for the entire 2012 Series were low, probably due to the Giants' domination and no teams playing from New York, LA, or Chicago, but look at it this way: the Giants' sweep kept the ratings from being even worse by cutting the Series short.

If Detroit had won tonight, Game Five on Monday would have been problematic as a side effect of Hurricane Sandy:

Severe weather bearing down on the Eastern Seaboard could lead to waves as high as 33 feet on parts of Lake Michigan and dangerous conditions on other Great Lakes.

The National Weather Service has issued Great Lakes gale and storm warnings in effect through Wednesday. It says waves on Lake Michigan could be 10 to 18 feet by Monday afternoon, then build to 20 to 33 feet on Tuesday before subsiding. Waves on parts of Lake Superior and Lake Huron could top 20 feet.

A weather delay for a World Series whose conclusion was foregone (all 23 teams leading three games to none have gone on to win the Series in four or five games) would have been ratings death. When would the weather allow Game Five to be played? No one outside California or Michigan would care, especially with political and hurricane news capturing the headlines.

Given their comparative youth--the average age of Sunday's starting lineup was 29--the Giants' success should begin to attract a national following. Then future TV ratings as well as World Series games will occur under sunnier skies. © 2012 Stephen Yuen

Bad MacBook Drive: Not So Bad

Original 250GB hard drive (bottom left) gave out.

The 2009 MacBook Pro was taking progressively longer to boot up. The screen froze at least once a day, and the Mac had to be turned off by pressing the power button. Disk Utility said that the file structure was corrupted, and the suggested course of action was to erase the hard disk and reinstall everything.

The original OSX (Macintosh operating system) CDs were duly inserted into the optical drive, but the reinstallation came to a halt after a few screens. The hard disk had gone bad.

The hard disk had gone bad are words that fill most computer users with dread, but not those who own Macs and who use the built-in Time Machine program.

Replacing the 250GB hard disk was a simple matter of running down to Fry's and picking up a 500GB replacement drive for about $70. I asked for a solid-state drive but Fry's didn't have any in stock. Sometimes the universe restrains our impulsivity for our own good. The SSD would have cost close to $200, and I really should save the shekels for the new-computer fund.

The physical replacement of the hard drive took only 15 minutes, but the reinstallation and updating of the software, even with Time Machine, took most of the evening. But in the end the whole episode was worth it; the MacBook is operating better than it has in years.

Thoughts:

1) Old (but not old-old) equipment can be easy and cheap to fix, greatly aided by free guides and instructional videos on the Internet.

2) The newest equipment--go ahead and blame Steve Jobs--because of its complexity and compactness is impossible to fix by the do-it-yourselfer. Another reason to go after medium-old stuff, if you can live with not having the most advanced and coolest items to show off in public.

3) It helps to cultivate an attitude of gratitude and a good memory. A 2009 MacBook is an amazing piece of technology compared to the bricks that I used to haul around on business trips ten years earlier.  I'm using only a small portion of its capability and would use even less of the 2012 model with retinal display.  Buy what you need and not what you want, and your chances of obtaining financial freedom are much brighter.
© 2012 Stephen Yuen

An Expensive Math Lesson

It's been eleven years since stock prices were quoted in fractions, e.g, $ 6 ⅞, and were fine-tuned to hundredths, e.g., $6.87 and $6.88.  The economic argument for the switch was clear:  a minimum tick-size of one-sixteenth, for example, often allowed a broker to capture a spread of 6.25 cents between the bid and the asked prices, while a one-penny increment meant that investors paid much less in commissions. It's no surprise that Wall Street wants the fractions to return, at least for low-cap securities. The ostensible reason is that higher profits will motivate brokers to use the equity markets to push the stocks of smaller companies, and these days it's all about helping the little guy.

If you move away from penny pricing, "investment banks will be able to make enough money trading…to write research and re-create the spark in the engine," said Jeffrey Solomon, chief executive of Cowen Group Inc., an investment bank focused on smaller companies.

Your humble observer has a jaundiced view about pay-me-more-so-I-can-help-you-more promises.  Such arguments are extremely self-serving, and the benefits rarely materialize.

Oh, well, in the old days of eighths we became pretty quick at converting fractions in our head, and sixteenths and even thirty-seconds made us expend mental energy.  A fractional revival should raise the math skills of the public, but it will be an expensive lesson.

Cheap But Not Stupid

The car wouldn't start because the battery was drained. (I was in the City, 30 miles from home, so solutions were limited.) I called AAA, and the tow truck came in less than an hour. The driver took less than a minute to jump-start the engine and five more minutes to fill out the paperwork. I was soon on my way.

For most of the 38 years that I've been with triple-A I mainly used the membership to get free street maps. Now that paper maps are obsolete, I had briefly considered canceling the membership, but common sense prevailed. A person whose cars average 15 years of age needs to have a roadside assistance plan. It's okay to be cheap (see reference to 15-year-old cars in previous sentence) but not stupidly so.

Raising the hood not only signals the tow truck but invites birds to perch.

Forecasting is Uncertain, Especially About the Future

The Election
Monday night's debate was the least disputatious of the three debates between President Obama and Governor Romney. The consensus seems to be that the President won the debate but not enough to change the minds of Romney supporters.

For what it's worth, your humble observer thinks that Mr. Obama may still eke out a win, but the likelihood is that Mitt Romney will be the next President, and a good chance that he will win by a significant margin. There is no possibility that President Obama will get even 300 electoral votes (he won 365 in 2008, and 270 are needed to win).

iPad Mini
Tuesday's announcement of the iPad Mini initially triggered disappointment because of its high price relative to the competition:

The iPad Mini tablet, which starts at $329, is a cousin to the original iPad, whose screen is about a third larger. But Apple's smaller tablet is priced well above Amazon.com Inc.'s Kindle Fire HD and Google Inc.'s Nexus 7—two tablets which are similar in size and some specs. Those devices cost $199 or $249 depending on the amount of memory.

Apple also announced upgrades to existing products that were understandably overlooked in the hoopla over the Mini. Macintoshes (Mac-minis, iMacs, and MacBooks) and the regular iPad all have become faster under the hood without a price increase. Our household already has ordered a couple of the new Mac offerings.

As for the iPad Mini, critics would do well to remember how the iPhone 4S took off after an underwhelming reception. It could become the hot new gaming platform or be just the right size for the distaff set--the iPhone screen is too small for many applications, yet the regular iPad is too big to fit in a handbag. Besides, Apple still has room to drop the price later to push sales.

World Series
Please, not another post about the Giants, you say, but after tonight's game how can we not comment? The Giants were heavy underdogs in Game 1 to Detroit and its otherworldly pitcher Justin Verlander.

Three home runs in one World Series game by third baseman Pablo Sandoval---a feat matched by only three other players (Babe Ruth, Reggie Jackson, and Albert Pujols) in history---and a superb performance by supposedly washed-up pitcher Barry Zito added compelling drama to a game that an 8-3 final score would normally belie. Some over-the-top sports reporters are completely reversing their original predictions and calling the Series "over" because the Giants beat the Tigers' ace in one game.

Whoa, the ball takes funny bounces, political sentiments can shift overnight, and tech dross can turn into gold and vice versa. Forecasting is uncertain, especially about the future. © 2012 Stephen Yuen

Seriously?

Waiting for the last out (Chron photo)

The Giants won the National League pennant by defeating the St. Louis Cardinals, 9-0, in the rain at AT&T Park. They blew the game open in the third inning on an odd broken-bat hit by rightfielder Hunter Pence [bold added]:

The ball broke Pence's bat as he made contact. Replays showed that as the barrel busted, the bat hit the ball two more times, imparting wicked spin and forcing the ball to change course.

That explains why shortstop Pete Kozma initially broke to his right, then had to do a 180 and go left. His diving attempt was futile. The ball rolled into center field and two runs scored on the hit. Buster Posey then rumbled home from first for a 5-0 lead when Jon Jay bobbled the ball.

The downpour intensified during the ninth inning, making the odds of a Cardinal comeback even more remote. Perhaps realizing the inevitability of the outcome, the umpires refused to postpone the game, which ended in a driving rainstorm.

Satellite photos showed the center of the storm to be over AT&T Park while the rest of the Bay Area only had a few sprinkles. The Pence hit and the sudden squall provide more evidence that strange forces are at work during this postseason: the Giants have won six straight "elimination" games in which the opponent--first Cincinnati and then St. Louis--could have ended the series by winning just once. The Giants heroes were players whose skills had been on the decline for years but who were now hitting (and pitching) like Babe Ruth.

The World Series starts Wednesday against the Detroit Tigers, who are favored by most experts because of their superior line-up. I'm betting on the baseball gods, however. Giants in 7.

2012 May Came Close

He's happier now.

When we got his autograph in September he was struggling. Now he very well may be the hero of the National League Championship Series.

Pitcher Ryan Vogelsong helped the Giants catch up with the Cardinals at one game apiece last week in a 7-1 pitching gem. On Sunday night he struck out nine batters in a must-win 6-1 victory for the Giants. Tonight the Giants and Cardinals face off in Game 7 to decide who will go to the World Series.

The national media is taking note of "one of baseball’s best comeback stories."

After spending parts of six seasons in the majors from 2000 to 2006, Vogelsong languished in the minors and in Japan until 2011, when he got a second chance with the team that drafted him. Now, at age 35, he’s been the Giants’ best pitcher of this postseason.

The Giants won't top the swell of emotion and joyful surprise of their 2010 Championship season. But if Ryan Vogelsong, Barry Zito, and some of their other given-up-for-dead teammates do go all the way, 2012 will come close.

George McGovern, R.I.P.

George McGovern and Sargent Shriver, 1972 (Chron photo)

George McGovern, who died this morning at the age of 90, was the first Presidential candidate I voted for.

Unlike most of my college classmates, my political leanings in 1972 were actually closer to those of his opponent.

But I couldn't stand Richard Nixon.

In my youthful idealism--some might call it naivete--I believed strongly that character trumped ideology. Senator McGovern, a war hero turned peace advocate, was far more principled and honorable than the small man who occupied the White House, the man who ordered the bombing of Cambodia, the mining of Haiphong Harbor, and, probably, even the "third-rate burglary" at the Watergate Hotel.

The American public was horrified that George McGovern declared that the war was hopelessly lost. He said that he would unilaterally pull out of Vietnam, which is what happened anyway three years later under President Ford. George McGovern lost 49 states in a 520-17 Electoral College blowout.

After leaving office George McGovern fought against hunger and for human rights, dignity, and peace. He always spoke his mind, not dissembling as most politicians do. And he wasn't afraid to admit when he had changed his views:

For several years Mr. McGovern was proprietor of the Stratford Inn in Stratford, Conn. After the inn went belly-up, he wrote an opinion piece in The Wall Street Journal in 1992 urging legislators to reduce red tape and frivolous lawsuits.

"I…wish that I had had this firsthand experience about the difficulties that businesspeople face every day," he wrote.

Although he was defeated, George McGovern shaped his party's politics for a generation. His formerly "radical" positions are now in the mainstream of Democratic Party thought. Per former Senate Majority Leader Tom Daschle: "I believe America would be a better nation today if George McGovern had become president." Amen.

163rd Diocesan Convention

As Bay Area residents frolicked in the sunshine, 300 Episcopalians chose to spend their Saturday indoors at Grace Cathedral in San Francisco. It was the 163rd Convention of the Diocese of California.

(Historical footnote: the Diocese encompasses only seven Bay Area counties but has appropriated the "California" designation due to primogeniture. There are now other, larger Episcopal Dioceses in California, e.g., Los Angeles and San Diego.)

Bishop Marc Andrus led by example on his 56th birthday and presided over an uncontroversial agenda. Three resolutions passed by large margins:

1) Every meeting of every committee, no matter what its purpose, shall begin by asking the question, "How will what we are doing here affect or involve people living in poverty?"

2) Martin Luther King, Jr. Day will be a Day of Service for all members of the congregation and particularly for children and youth.

3) The Diocese declares its support of California Proposition 34, also known as the Anti-Death Penalty Initiative.

Fortunately this year, there were no discussions or proposals that upset Episcopalians who do not call themselves progressives. (Bishop Andrus has declared that he is in "the progressive wing of The Episcopal Church"; his advocacy of same-sex marriage--the official position of the church is that it will perform blessings over same-sex relationships--has resulted in a spat with the local Catholic archbishop.)

Two months ago this humble observer half-jokingly commented about church leadership:

Why don't they just say what they really believe? From each according to his ability, to each according to his needs.

Well, the Bishop did use Karl Marx's famous dictum in response to a question about wealth redistribution among the parishes and missions, and he said it as if he meant it. No wonder we're a dying denomination.

© 2012 Stephen Yuen

Numbers The President Can Brag About

During President Obama's term all indices are much higher - Dow +68%, S&P +78%, NASDAQ +113%

The Republicans have been barraging the airwaves with numbers, e.g., $16 trillion national debt, $5 gasoline, and 8% unemployment, and it appears from the latest poll numbers that the Obama campaign is withering under the onslaught.

But there's one set of numbers that the President can brag about. The stock market has moved substantially higher during his term.

It's surprising that Democrats haven't publicized this more. Perhaps the omission is because of the mistaken belief that only fat cats in the top 1% care about equities (vilifying the 1% is part of the Democratic strategy). But the majority of American households now holds stock market assets through 401(k) plans, IRAs, and regular brokerage accounts and has benefited from the Obama market.

If, for example, a household had $100,000 in stocks and mutual funds when President Obama entered office, that amount now is likely to be worth at least $200,000, assuming reinvestment of dividends and no withdrawals. This appreciation would have gone a long way toward mitigating the effects of the recession and fall in home prices.

Under most measures we wouldn't want the next four years to look like the last four....unless we're talking about the stock market.

If President Obama would give us a plausible reason that the Dow Jones Industrial Average would be another 68% higher when he leaves office in 2016, many disillusioned investors-voters would give him another look. © 2012 Stephen Yuen

Google: Unexpected and Disappointing

Google's third quarter results disappointed investors [bold added]:

Google posted a third-quarter profit of $2.18 billion, or $6.53 a share, down from $2.73 billion, or $8.33 a share, a year earlier. Excluding stock-based compensation and other items, profit fell to $9.03 from $9.72 a share. Revenue, excluding traffic acquisition costs, improved to $11.33 billion.

Analysts surveyed by Thomson Reuters expected earnings of $10.65 a share and net revenue of $11.86 billion.

Total costs jumped 71%.

Google had been on a roll. It continues to dominate Internet search and Internet advertising. Smartphones that use the Android operating system outnumber everyone else's. Well-publicized missteps by its rivals made it seem like we were in the age of Google, not Apple or Facebook.

Until today.

Net income per share, excluding stock-based compensation and other items, fell 7.2% versus the same quarter last year, instead of rising 9.6% as the analysts expected. The disappointing results sparked reassessment, and the stock fell 8%.

Sidebar: a big "oops" moment occurred when financial printer R.R. Donnelley & Sons disclosed the results three hours before the market closed:

The premature posting rattled markets, and led to a 2½-hour halt in trading of Google shares from 12:50 p.m. to 3:20 p.m. ET.

Believers in the semi-strong form of efficient capital markets may be cheered by this example of how quickly Google shares adjusted to the "right" price. Trading was halted for 2½ hours to allow market participants to digest the new information, yet the price remained about the same after trading resumed.

Flashback: nine months ago Google had a negative earnings surprise, and the stock fell $53.58 (8.3%) to $585.99. That would have been an excellent time to buy: GOOG is 19% higher, even after today's drop. I still have no idea whether it's a good investment.

Disclosure: I have positions in Apple but not in Google or Facebook.

Shaky Anniversary

Today is the 23rd anniversary of the Loma Prieta earthquake. To my personal recollection there's not much to add to the post of three years ago.

In 1989 the third game of the World Series at Candlestick Park was about to start when the quake hit at 5:04 p.m. In 2012 the Giants are playing in the third game of the National League Championship Series, indicative of the increase in the number of playoff rounds. This year's World Series could extend into November.

The quake demolished the double-decker freeway that blocked the view of the buildings.

Let's Vote Already

I watched parts of the second Presidential debate, read the transcript, and listened to some of the post-debate spin by supporters of each who said their candidate won. Both men got their points across, and neither said anything that would hurt their candidacy.

I wish we could vote already--yes, we can cast an absentee ballot by mail, but going to the polling place is part of the American civic experience--since I find it hard to believe that there are many Americans who truly haven't made up their minds. Let's get on with it.

Further thoughts:

The instant-polls seem to be saying that President Obama won, but not overwhelmingly. That result is okay, I suspect, even to his detractors. As President he represents everyone, and another embarrassingly bad performance wouldn't help the national self-esteem.

Debating is a specialized skill that doesn't have much to do with good decision-making, the leadership of the armed forces, the selection of competent people (especially judges), or getting legislation passed. Neither, for that matter, is fund-raising.

Political junkies can recite the history of changes to Governor Romney's health care positions or to the Obama Administration's statements on Libya, but the rest of us, probably sensibly, don't choose to spend our lives that way. It's probably unfair that our votes count just as much as those who spend their lives studying issues, but that's the system we've got.

Two quotes from Winston Churchill:

The best argument against democracy is a five-minute conversation with the average voter.

It has been said that democracy is the worst form of government except all the others that have been tried.

Rarer Than Halley's Comet

The Giants beat the Cardinals today, 7-1, to even the National League Championship Series at one game apiece. Ryan Vogelsong had the best outing for a Giants pitcher this postseason by handcuffing the Cards for seven innings before turning over the ball to the bullpen.

An event that could have future repercussions was the first inning hard slide into second base by outfielder Matt Holliday, injuring (but x-rays showed not severely) Giants second baseman Marco Scutaro. Possibly inspired by the blow to their teammate, the Giants' bats erupted and had the game in hand, 5-1, by the fourth inning.

To this humble observer the most remarkable event was a statistical rarity [bold added]:

Vogelsong doubled in the sixth to become the first Giants pitcher to get a postseason extra-base hit since Jack Bentley homered in the 1924 World Series.

After 1924 the New York Giants played in five World Series. Since moving to San Francisco, the Giants have played postseason baseball ten times, making it to the World Series on four occasions. Through those 88 years of playoffs, not one Giants pitcher had a double, triple, or home run until tonight.

One of the reasons that we love baseball: it has an unrivaled library of statistics that can tell us that what we're looking at hasn't been seen or done for nearly a century (or, in the Cubs' case, for over a century). Perhaps we'll see more such moments in the weeks ahead.

Costco Confusion

Similar packaging, especially in the dark.

Dear Costco:

We use and like many of your house-branded Kirkland products.

We use the Surface Wipes throughout the house. They're handy in the bathroom, especially for wiping the seat and top of toilets.  The Moist Flushable Wipes are a marvelous hygienic innovation--great for cleaning sensitive areas.  Both products, of course, are kept near the commode.

But we must register a complaint. The rectangular packaging and plastic dispensing top are so similar that in the dark of night it's possible to reach for, say, a Surface Wipe when one means to obtain a Moist Flushable.  The surface that ends up (in a manner of speaking) being wiped may be a bit more delicate than the marble or tile for which the Surface Wipe was designed.  When the mistake is discovered, it may be too late.

I would very much appreciate it if you could change the packaging on one or both of your products..

Sincerely yours,

A Long-time Customer

Childhood Trauma

Shocking to mothers in 1962

Some of my childhood friends bought baseball cards, but I collected Topps' gory treatments of the Civil War and Mars Attacks. I carefully set aside nickels to buy the cards as they were issued each week, and one of my happiest moments was when I completed the Mars collection (I couldn't get all 88 cards in the Civil War set). One of the saddest was when my mother threw them out a few years later, but that's another story.

This year is the 50th anniversary of the release of Mars Attacks, and I'm going to pick up the commemorative book:

The new book "Mars Attacks" (Abrams ComicArts, $19.95) reprints the original cards, as well as sketches, concept art and the 1994 sequel cards. A full set in mint condition is now valued at $25,000, writes Len Brown, co-creator of the series, in the book's introduction.

$25,000? Mom, I hope you're satisfied!

Making the Deadline

We mailed the 2011 tax returns to the Internal Revenue Service and Franchise Tax Board a few days before the final extension deadline of October 15th. (Some 2011 K-1 forms weren't received until August, and yes, we could have pushed ourselves to finish the task in September.)

Income was down a little, but the main reason each return has shrunk to about 40 pages each (from last year's 46 pp) is that simplification of our financial affairs has proceeded apace. We've consolidated accounts to a handful of financial institutions and have gotten rid of some small investments and ventures that were costly--more in time than money--to maintain. Cleaning up physical clutter can be a happiness booster; clearing financial clutter, less outwardly visible in the digital age, reduces stress.

With hardly a break we must needs turn our attention to 2012. The high probability that certain tax deductions will be eliminated has caused tax planners to recommend accelerating deductions, if possible, to 2012:

Some possible moves: accelerating state income- and property-tax payments; paying medical-insurance premiums or other deductible costs, if they are large enough to surmount the 7.5% hurdle; and making large purchases if you will be deducting state sales tax from your federal return, assuming Congress renews this break for 2012.

Adding to the confusion, tax planners are also advocating accelerating income to 2012 before rates rise. For most of us this means selling appreciated stock in 2012 (if we were planning on doing so anyway in the next few years and if we're lucky enough to own such stock).

Tax cuts enacted during the George W. Bush Administration are due to expire at the end of 2012. The current 15% tariff on capital gains could rise to 20% in 2013, barring an extension from Congress. Depending on who controls the White House and Congress after the election in November, rates could go even higher.

Another reason to sell stock now is that next year there will be an additional 3.8% "Medicare contribution" tax imposed on investment income--which includes capital gains--for high income taxpayers.

the maximum federal rate on long-term gains for 2013 and beyond will actually be 23.8% (versus the current 15%)....The additional 3.8% Medicare tax will not apply unless your adjusted gross income (AGI) exceeds: (1) $200,000 if you're unmarried, (2) $250,000 if you're a married joint-filer, or (3) $125,000 if you use married filing separate status.

The experts seem to be saying that we should accelerate income and deductions to this year, which is a little like stepping on the gas and brake pedals at the same time. Those simultaneous actions would wear out a car, and it's not surprising that confused suffering taxpayers feel worn out, too. © 2012 Stephen Yuen

Bay Baseball Good and Bad News

First, the bad news. After storming back from a two-game deficit, the amazing Oakland A's fell 6-0 to the Detroit Tigers in the deciding game of the divisional playoffs. They had no answer to the superior pitching of last year's Cy Young award winner and league MVP Justin Verlander, who handcuffed them twice during the five-game series. Nevertheless, what they accomplished with one of the lowest payrolls in baseball against resource-rich teams is one of the top baseball stories of 2012.

The good news is that the San Francisco Giants will continue to the next round of the National League playoffs. They faced even more daunting odds than the A's, because the Giants, after playing terribly in two losses at AT&T Park, had to win all three games in Cincinnati (the A's were trying to win three at home), and the Reds had not lost three consecutive games in the Great American ballpark during the regular season.

The Giants scored six runs in the fifth inning of Game 5, then held on through tension-filled later innings to prevail, 6-4, over a strong Reds lineup. The decisive blow was a grand-slam home run by All Star catcher Buster Posey. Go Giants!

Posey talks to Matt Cain's hand (SFGate)

Historical footnote: Buster Posey's homer was the first grand slam by a Giant in a playoff game in 23 years. Will Clark's grand slam in 1989 beat the Cubs but is also notable in that it gave rise to the practice of pitchers and catchers speaking through their gloves.

From Will Clark's Wikipedia bio:

Cubs' catcher Joe Girardi went to the mound to discuss with Greg Maddux how to pitch to Clark. From the on-deck circle, Clark watched the conversation and read Greg Maddux's lips saying "fastball high, inside." The first pitch was a fastball high and inside which Clark sent into the street beyond right field for a grand slam. Following this, pitchers began to cover their mouths with their gloves when having conversations on the pitchers mound.

The Chairman Speaks

Interesting quotes from a recent interview with Google Chairman Eric Schmidt:

“The Android-Apple platform fight is the defining fight in the industry today."

“These patent wars are death."

“Apple should have kept with our maps.”

On Microsoft: “It’s a well-run company, but they don’t make state-of-the-art products.”

In the interview Eric Schmidt repeated an earlier opinion that the four leading companies in tech are Amazon, Apple, Facebook, and Google.

Question: If you had to be a CEO again, would you choose Apple, Amazon or Facebook?

Schmidt: Which one has the most cash? That would be Apple.

Twelve years ago the top-company list might have included Yahoo, America Online, Microsoft, Cisco, Dell, and Intel, but not any of Eric Schmidt's current "Gang of Four." Google and Facebook weren't even public companies back then, and Apple could have been bought with Microsoft's petty cash. How times have changed.

State of Contradiction

Long-suffering California native Victor Davis Hanson captures its state of contradiction:

Open borders, redistributionist socialism, therapeutic and politicized public schools, and public-employee unions finally are proving a match even for Apple, Google, Facebook, the Napa Valley wine industry, Central Valley agribusiness, Hollywood, Cal Tech, Stanford, and Berkeley. In California, it is a day-by-day war between what nature and past generations have so generously bequeathed and what our bunch has so voraciously consumed.

On any given day, beautiful weather, the Pacific Coast, and the majestic Sierra Nevada are trumped by released felons, $5-a-gallon gas, and a 1970 infrastructure crumbling beneath a crowded 2012 state.

Decades of worsening conditions are apt to make anyone discouraged, especially those who, like Dr. Hanson, live in the Central Valley. However, we remain hopeful that what man can break, man can fix.

California's vast natural (e.g., the Monterey shale's energy reserves "could equal Saudi Arabia’s output for more than a decade") and human resources cannot be hamstrung forever by poor self-governance. As a former California governor said, we'll be back.

Bright and Beautiful

On a bright and beautiful Sunday we gathered at the Foster City Dog Park to celebrate the Feast of St. Francis. In keeping with the Catholic and Anglican tradition of honoring the patron saint of animals, creatures great and small lined up to receive a blessing from priests.

Attendance was sparse because of an unusual confluence of events. An estimated one million tourists were expected to converge on San Francisco because of Giants playoff baseball, 49ers football, the Blue Angels exhibition, the America's Cup, and the Hardly Strictly Bluegrass Festival (that annually draws hundreds of thousands).

Though we live in its shadow, most of us count ourselves blessed to be living close to the City that was named after the great Saint himself, the saint who penned the second most-recognized prayer in Christendom:

Lord, make me an instrument of your peace. Where there is hatred, let me sow love; where there is injury,pardon; where there is doubt, faith; where there is despair, hope; where there is darkness, light; and where there is sadness, joy.

O Divine Master, grant that I may not so much seek to be consoled as to console; to be understood as to understand; to be loved as to love. For it is in giving that we receive; it is in pardoning that we are pardoned; and it is in dying that we are born to eternal life. Amen

The Roots of Quantitative Easing

Fed Chairman Ben Bernanke says that government leaders can learn a lot from how Davey Johnson manages the Washington Nationals baseball team [bold added]:

Davey fully appreciates the importance of making decisions based on factual evidence and rigorous analysis. He strikes the right balance between relying on the tangible (data) and the intangible (confidence and motivation) and shows the rare ability of being able to make the right trade-off between winning the day's game and motivating a player who will help the team win in the long run.

Davey Johnson is a lot like Ben Bernanke, n'est-ce-pas?

At the Coronet in 1977

Occasional late night Star Trek reruns weren't enough to sate our science-fiction appetite in the1970's.

[Digression: kids, in that distant decade there was no way to record Star Trek or any other TV program for later viewing; there were no shows or movies on DVDs, "VHS" or "Betamax" tapes, or "laserdiscs" that you could rent from neighborhood stores; and there was certainly no cable TV or satellite TV with a science-fiction channel.]

We had seen a 1976 futuristic movie called Logan's Run that had pretty decent special effects, much better than Star Trek. Then I heard about a movie called "Star Wars" that was supposed to be even better.

Star Wars opened at San Francisco's Coronet theater on May 25, 1977, and we went to see it on the second day. Though we were an hour early, the line went around the block. The 1,350-seat theater was sold out, and we were lucky to get seats in the back. At least they were not in the front row.

The Coronet had a giant curtain that parted as the movie was about to start. Curtains were a feature found only in the old, classy theaters; they hardly exist anywhere today.

The 20th Century Fox logo appeared, the familiar trumpet fanfare sounded, then surprisingly continued a few extra bars, the notes rising in anticipation of the entrance of something grand. Text ("It is a period of civil war...") started scrolling through space, and we were transported to a long time ago, in a galaxy far, far away.

From its opening scene I knew that we were watching something special. The Imperial star destroyer filled the screen. In close-up it didn't look cheesy, like 1950's flying saucers or, dare one say it, some of Star Trek's hastily put together vessels, weapons, and fake-looking aliens.

The special effects, John Williams' score, the distinctive characters, the rapid pacing, humor, and, most of all, the vivid details of George Lucas' world(s) all came together in a way that science fiction fans had never seen before.

It was only the second day of the movie, but I could hear people behind me reciting the lines before they were spoken. We were witnessing the birth of a phenomenon.

(This week the Chronicle ran some pictures of people standing in line at the Coronet and is hoping some would come forward for where-are-they-now stories.)

Star Wars, Day 4 (May 28, 1977) - Chron photo

One Year Later

One year after Steve Jobs' death, Apple's value is $257 billion (72.5%) higher.

Its rising (until recently) stock price may not reflect it, but Apple, its investors, and customers increasingly miss Steve Jobs. They believe with almost religious fervor that Steve would not have jeopardized quality and rushed the conversion from Google Maps. Or, at minimum, Steve would have figured out a way to fix the mistake, just as he did with the iPhone 4 antenna.

If Steve were still around, the iPhone 5 introduction would have been a knockout, the iTV would be on the shelves this year, and Tim Cook, with more focused responsibilities, would have been able to fix Apple's production problems in China.

More importantly, Apple would have continued to churn out amazing new products indefinitely. Instead, the magic will continue for only three to five more years, after which the pipeline will be empty.

One year later many are still stuck in denial, anger, bargaining, and depression. Getting to acceptance has been harder than anyone thought. © 2012 Stephen Yuen

Et Tu, Dave?

You know that Wednesday's debate must have gone really badly if one of your staunchest supporters makes jokes about it.

David Letterman's Top Ten list for Thursday, October 4th:

Top Ten President Obama Excuses 

10. "I haven't slept an hour since 2008"
  9. "Romney's hair is mesmerizing"
  8. "Didn't want to wake Jim Lehrer"
  7. "Haven't been the same since I quit smoking"
  6. "Honestly, I thought the debate was next week"
  5. "I live with my mother-in-law, what do you want from me?"
  4. "Kept blanking on what percentage of the country Mitt's written off"
  3. "Skipped rehearsal, just like Letterman"
  2. "Why don't you ask Bin Laden how I did?"
  1. "It's Bush's fault"

The Amazing A's

American League West Division Champions (Chron photo)

There are weightier issues that deserve our attention, but.....HOW ABOUT THOSE A's!!

Two different versions of the same column [bold added]:

Mark Purdy, Mercury News:

Why do we watch sports? We watch sports because every now and then, when you least expect it, you see something like this.

You see Billy Beane, the A's general manager who was portrayed by Brad Pitt in a movie, being doused with beer like John Belushi in the frat-house-like celebration of the Bay Area's most improbable championship ever. [snip]

"We've had some pretty amazing things here over the years," Beane said. "But as I was watching all of this, I was thinking, 'This is pretty unbelievable. How'd we do that?' "

Tom Verducci, Sports Illustrated:

You may not know it, but you are an Oakland Athletics fan. You are an Athletics fan because you are a baseball fan, and being a baseball fan means you believe desire is worth more than payroll. [snip]

And so because you believe in these truths you must believe in the A's. They are all the best reasons why we live and die with this great game, all wrapped up in green and gold.

The Oakland A's won a championship:

Despite a payroll which is less than half of rivals Texas Rangers and L.A. Angels.

With an all-rookie pitching staff after trading away three All-Star pitchers over the winter.

With rookies who were new to their positions as well as Major League baseball.

After falling 13 games behind the Rangers on June 30th.

While never holding sole possession of first place until the last (162nd) game of the year.

As the saying goes, they could make a movie about this, but no one would believe it.

We Believe What Billionaires Say

Hulopoe Beach, Lanai (McClatchy photo)

Three months after his purchase of Lanai from Castle & Cooke / Dole Food was revealed, Oracle billionaire Larry Ellison discloses a few of his plans:

Based on his remarks in a CNBC interview at Oracle OpenWorld, Ellison sees the 141-square-mile island as a “laboratory for experimenting with more environmentally sound ways of living,” per AP, and “hopes to convert sea water into fresh water” — a currently limited commodity. “He also wants more electric cars on the island” — where most roads require four-wheel-drive, visitors rent pricey Jeeps and locals tend to prefer big pickups — and “hopes to increase its fruit exports to Japan and other markets.”

If he wanted to do research on electric cars and desalination, Larry Ellison could have done it in the Bay Area (near Oracle headquarters) without spending a half a billion dollars for a Hawaiian island.

Building a large-scale environmental laboratory may be part of the plans for Lanai, but there has to be more to it than that. And he'll be able to do fruit exports better than Dole? Please.

Not An Affirmative Action Job

Conservative columnist George Will looks at the most intriguing conundrum of this political season: how can Barack Obama still be leading in the polls when the economy has been so bad for so long? (Mr. Will also recites other Administration troubles, such as the recent disastrous turn of events in the Middle East and failed alternative-energy investments, which only add to the puzzlement.)

He finally settles on an answer that is unsatisfying to your humble observer [bold added]:

Obama's administration is in shambles, yet he is prospering politically. This may not, however, entirely be evidence of the irrationality of the electorate. Something more benign may be at work. [snip]

...the nation, which is generally reluctant to declare a president a failure — thereby admitting that it made a mistake choosing him — seems especially reluctant to give up on the first African-American president. If so, the 2012 election speaks well of the nation's heart, if not its head.

Those who support President Obama because they hate to admit that they made a mistake in 2008 may be misguided but are acting understandably. But those who vote for Mr. Obama just because he is "the first African-American president" are doing themselves and the country no favors.

As George Will points out, the Cleveland Indians' firing of baseball's first African-American manager, Frank Robinson, in 1977 was a milestone of "colorblind equality".

35 years after that event, I hope that voters will cast their ballot for or against Mr. Obama uninfluenced by his race. The Presidency is not an Affirmative Action job. © 2012 Stephen Yuen