CORPORATE STOCK BUYBACKS HAVE PHONEY RESULTS

Ultimately for the professional investors, what matters is whether corporations are growing their earnings, and increasing revenues is more important that increasing earnings through increased efficiency.

To say that buying back stocks return value to the stockholders is a fraud.  If the company does not want to raise their dividends, they could issue a special dividend for the amount of the buybacks.  This would not commit the corporation to continue such a dividend but be a one-time thing.

The fad of corporations buying back their stock has two phony effects.  One is that it increases the price/earnings index (P/E) without showing increased earnings, i.e. buying a lot of stock at the market price tends to move the price of the stock upward without increased earnings.  It also shows the company does not know how to invest its money to grow the company, i.e. it wastes corporate money.  Companies are actually borrowing money to pay for these stock buybacks since interest rates are so low, but they are still paying some interest charges.

I know of no case where increasing the P/E of a stock where the company has declining or flat earnings results in a stock increase, though there may be a short pulse upward after the buyback because of amateur investors.  This is because the pros are not fooled.

Oh, in a few cases some stock buyback might be necessary to get stock for stock options of its employees, but that is not the reason most stock buybacks are done.

REMARKABLE WILMA RUDOLPH - A TRIBUTE

Wilma Rudolph

I always think of running champion Wilma Rudolph (June 23, 1940-November 12, 1994) as the most graceful sprint runner of all time.  Once she hit her stride, she would seem to just glide and not the short choppy steps of most sprinters (see picture below: Madison Square Garden).

She was the first American woman to get three gold medals in one Olympics - the Rome Olympics of 1960.  She was an unlikely running champion to say the least.  She was born prematurely at 4-1/2 lbs and had to survive two bouts of polio and Scarlett fever by the time she was 12.*  She also won a bronze star running in the 1956 Melbourne Olympics at the age of 16.  You wonder how her deformed leg ever got straightened out (see picture).  She was the fastest women sprinter of her day and won all sorts of medals at various track meets.  She set an Olympic record in the 100 m dash

Wilma Rudolph during a 50 m dash at Madison
Square Garden in 1961

at the Rome Olympics only to be called wind enhanced and discredited, but later she set another world record in the 200 m dash that was confirmed.  And this was after she had a child in 1958.  She retired from track at the age of 22 after giving birth to three more children.  Her early death was due to a brain tumor and throat cancer.

Wilma Rudolph wins the 100 m dash in the
Rome Olympics, 1960

She was named the top athlete for the 20th century by Sports Illustrated in the year 2000.  She even had a high school  --- in  GERMANY --- named for her (Wilma Rudolph Oberschule).  For other honors see the reference.

* http://en.wikipedia.org/wiki/Wilma_Rudolph

TWENTY YEARS OLDER (Poem)

She gave a tap on my shoulder,
And we are now twenty years older.

But then we danced and danced all over the floor.
When the music stopped, we begged for more.

We had talked and danced and had such a ball
That I told her I would like to give her a call.

She said that if I wanted, her name’s in the book.
All I had to do was give it a look.

This I did and much to my surprise
She said she couldn’t meet me, I should realize

That her mother was visiting, and she couldn’t go
Out with me which left me so low.

But in the end we did get together
And lived ever after like birds of a feather.

                                               1986

RECALL ELECTIONS PROPER FOR ELECTED OFFICIALS

Travis County District Attorney Rosemary Lehmberg is an elected two-term official who also oversees the Texas public integrity unit.  She was convicted of a DWI charge and was quite belligerent.  She served a 45 day jail term.  Gov. Rick Perry ordered her to resign, and, when she wouldn't, the Governor vetoed $7.5 of funding for the state's public integrity unit.  While it looks bad to close the state's public integrity unit, I presume that governors can veto a bill for any reason they want to.  So I suspect the the charge of abuse of power will be overturned.

I don't like the courts getting more and more involved in our politics.  It seems to me though that the proper action for Perry against an elected official would be to promote a recall election.  If the voters of county feel that a DWI warrants a recall of one of their elected officials, then she would be out.  Or they could have waited for the next election and vote her out.  Actually, Lehmberg has said she would not run for a third term.

If voters don't like Perry's veto, they too could pursue a recall election.  In view of Perry's popularity in Texas, I presume he would prevail in a recall election, but that is beside the point.  I believe recall elections are the way to go with elected officials, not the courts.  The alternative is to wait for the next election and vote the bum out.

A famous recall election of a governor was that of "Gray" Davis in California who was elected to a second tern, only to be recalled less than a year later.  An unsuccessful recall was Wisconsin governor Scott Walker.

MILITARIZATION OF POLICE FORCES

HOLY COW! Did you see that?  All those police in military looking uniforms with full gear to boot and an ARMORED vehicle in Ferguson, MO.  Where did these guys come from?  There numbers seemed to rival the number of demonstrators.  What ever happened to the men in blue?  How big a suburb is Ferguson anyway - a million residents?  Answer: 21,203.  Oh, these weren't Ferguson police, they were police from St. Louis County that has does have a population of a million.

And about that armored car, did you know that it is easy for a police department to get an armored vehicle (even one with tracks instead of wheels) from the Federal government for FREE by filling out a one-page form?*  (Someone has pointed out you have to fill out a four page form for a college loan.)  This is courtesy of winding down the wars in Iraq and Afghanistan.  You see they have all this excess equipment from Iraq and Afghanistan wars.  What better than to militarize the police forces.  See the following:

"One of the ways police departments have armed themselves in recent years is through the Defense Department's excess property program, known as the 1033 Program. It "permits the Secretary of Defense to transfer, without charge, excess U.S. Department of Defense (DoD) personal property (supplies and equipment) to state and local law enforcement agencies (LEAs)," according to the National Law Enforcement and Corrections Technology Center. 

The 1033 program has transferred more than $4.3 billion in equipment since its inception in 1997. In 2013 alone it gave nearly half a billion dollars worth of military equipment to local law enforcement agencies, according to the program's website "

* http://www.washingtonpost.com/blogs/wonkblog/wp/2014/08/14/want-an-armored-personnel-carrier-for-your-police-force-just-fill-out-this-one-page-form/?wpisrc=nl-wnkpm&wpmm=1
** http://www.washingtonpost.com/blogs/wonkblog/wp/2014/08/14/the-pentagon-gave-nearly-half-a-billion-dollars-of-military-gear-to-local-law-enforcement-last-year/?wpisrc=nl-wnkpm&wpmm=1

LOTS OF NEW JOBS BUT AT LOWER PAY

Post #456600 on Macro Economic Trends and Risks Board of Motley Fool (August 14, 2014)

It is announced that the number of new jobs in June was the highest since 2001.* Good news, why are people so depressed about the economy?

New jobs pay 23% less than the jobs lost in the Great Recession may be a reason?**

Meanwhile, the number of jobless claims is decreasing.***

I think that a big thing may be that working people feel insecure and that is going to be hard to remedy quickly.

* http://www.reuters.com/article/2014/08/12/usa-economy-employment-idUSL2N0QI0W220140812?wpisrc=nl-wonkbk&wpmm=1
** http://www.latimes.com/business/la-fi-income-inequality-20140812-story.html
*** http://www.latimes.com/business/la-fi-jobless-claims-20140807-story.html

THE TEA CUP SEISMOGRAPH (Biographical)

I've written about my first trip to Japan before in 1965 (You Are So Lucky).*  Near the end of that 10 week stay, a Japanese scientific colleague, Dr. Hajimi Kurasawa, and I were in the city of Shimabara in the southern island of Kyushu to sample the active volcano Aso.  While there, we visited the White Castle of Shimabrra restored in 1964.**  This area was a hot bed of Christianity in the 17 century.  The Shogan decided he didn't like this "foreign" religion in his domain so he went after the Christians and they holed up in the White Castle.  The Shogan couldn't take the castle in a five month siege so he bought the cooperation of

White Castle of Shimabara

the Dutch fleet nearby, and they shelled the castle, breaking the resistance.  Then the Shogan put a cross in the ground and had the captives stomp on it.  If they refused, off with their heads.  If they stomped on it, he felt they weren't good enough Christians to worry about so he let them go.  You could buy souvenirs of the "cross on the ground" in the trinket store.

We moved on to Kumabara and stayed in a Japanese inn in the huge caldera of Aso Volcano, which contains the active volcano Naka-Dake where we were to collect samples.  In the morning, there was an earthquake.  If the epicenter of an earthquake is off to the side , the surface movement is back and forth such as we experienced in Tokyo.  If you are over the epicenter, however, the movement is up and down.  Our earthquake at Aso was up and down!  I sat there Japanese style and watched the window and wondered when it was going to pop out.  I also worried a bit that we were on the second floor and what if it collapsed?  It was that severe.

(picture courtesy of National Geographic)

It seemed, of course, that the shaking went on forever, however, it must have been much less  than a minute.  Well, when the shaking stopped I looked at my Japanese colleague and his Yukata (sleeping robe) was wet in an embarrassing place.  Tea had spilled out of his cup, wetting the groin area.  So I laughed and said that you
were scared, eh, pointing at his crotch?  Then he laughed and pointed at mine and said that he guessed I was scared too.  Sure enough, the crotch area of my Yukata was wetted also.  I said that we could make a tea cup seismograph rating the strength of an earthquake by how much tea was spilled from a tea cup.  Actually, the Chinese had invented a directional seismograph about 132 AD *** though ours would measure magnitude as well.

Incidentally, Kumamoto has its own castle, the Black Castle of Kumamoto.****  Though it is a fine castle, it does not have a history like the White Castle of Shimabara.

Black Castle of Kumamoto

* http://stopcontinentaldrift.blogspot.com/2009/11/you-are-so-lucky.html
** http://en.wikipedia.org/wiki/Shimabara_Castle
*** http://www.historyforkids.org/learn/china/science/seismograph.htm
**** http://en.wikipedia.org/wiki/Kumamoto_Castle

IRAQ AND AFGHANISTAN

There are those who feel that if we had left a residual force in Iraq that the Iraqi army and the Iraqi politics would have been much better.  Well, I am far from convinced even disregarding the fact that Milaki wanted us to leave.  After we beat Al Qaeda, and the Taliban, in Afghanistan we did leave a residual force that varied between 10,000 and 20,000 troops, and the Taliban came back stronger than ever, although Al Qaeda remained subdued in Afghanistan but grew elsewhere.  I suspect that President Obama is closer to the truth in saying that if we had left 20,000 troops there, there would just have been that many more Americans at risk.

It was really depressing that, after 8 years of training, that the first time the Iraqi army was tested, it just disbanded and turned over all the equipment to ISIS.  A woman reporter who interviewed a number of the troops that took tail said that all the deserters said they woke up in the morning and all the leaders were gone.  They feel that the officers and non-coms were bribed to disappear.  Some speculated that some of the leaders actually were given positions in ISIS.  Somehow this sort of corruption sounds realistic.  I also suspect that with time the Sunnis of Iraq will get tired of the ruthless Islamic religious right and start to rebel against them.

One hopes that the Iraqi army and militias can keep ISIS out of southern Iraq where most of the oil is.

As I have said elsewhere, I think we are trying to push something in Iraq that isn't there short of there being a ruthless dictator.*  Opinion seems to be gravitating towards supporting the Kurds to become independent of Iraq.  I presume this makes Turkey a bit nervous because there is a Kurdish part of Turkey contiguous with the Iraqi Kurds that might like to join them in a Kurdistan.

*http://stopcontinentaldrift.blogspot.com/2014/07/syria-vs-libya.html

UKRAINE AND KOREA

Somehow I get the feeling that the Ukraine situation is rather similar to that in Korea back around 1950.  In Korea, MacArthur forces seemed ready to push the Communist insurgents out of Korea when tens of thousands of Chinese troops poured across the border and an extend war resulted with 128,650 Americans killed (36,516) or wounded,* eventually stopped by Eisenhower.

It looks like Ukraine forces are having considerable success against the separatists supported by some Russian forces.  If it looks like the separatists are going to be forced out of Ukraine, I wouldn't be surprised if tens of thousands of Russian troops pour across the border.  What do we do then?

Vladimir Putin has stopped all imports of Western agricultural products into Russia.  This move, of course, will also hurt the Russian people, but Russian leaders have never spared their own people from suffering.  I wouldn't be surprised if Putin does not hesitate from taking further actions that result in increased suffering of his people in the event of increased sanctions.

* http://en.wikipedia.org/wiki/United_States_military_casualties_of_war

CONGRESS TAKING CARE OF ESSENTIALS?

Well, the House of Representatives finally roused itself from its torpor and passed a bill (H.R. 5230) dealing with the illegal immigrant children and the border crisis (but the Senate had already disbanded for the month).  I won't go into details but you can read the whole thing at: https://www.govtrack.us/congress/bills/113/hr5230/text.  I had trouble Googling the bill number so you might like to know it.

All news reports on the bill mention it makes it easier to deport the illegal children, but none give any details so far as I know.  The relevant part of the bill in this regard starts at Section 101.  I have rooted out the following paragraph:       (B)

in clause (i), by inserting before the semicolon at the end the following: , which shall include a hearing before an immigration judge not later than 14 days after being screened under paragraph (4) and the unaccompanied alien child shall be detained until such hearing.  

In view of the 10s of thousands of illegal children, I wonder if we have enough judges to do this job in 14 days.   But this may be taken care of in the following item:     102.

Last in, first out

In any removal proceedings under section 240 of the Immigration and Nationality Act (8 U.S.C. 1229a) with respect to an unaccompanied alien child (as defined in section 462(g)(2) of the Homeland Security Act of 2002 (6 U.S.C. 279(g)(2))), priority shall be accorded to the alien who has most recently arrived in the United States.

Whether this increase is enough judges to handle the situation, I have no idea.  The bill retains and even adds language against placing children with known sex traffickers and drug offenders.  Presumable this bill has no hope of passing the Senate when it returns.

But when congress is really concerned about a problem, there is no such delays.  For example, a bill to make medical care quicker for veterans was passed by both houses.  The Senate bill was S. 2450 and the House bill was H.R. 3230.  It was presented to the President for signature on August 1, 2014. (https://beta.congress.gov/bill/113th-congress/senate-bill/2450/related-bills)