Friday, February 29, 2008

David Brooks on William F. Buckley, Jr.

One more:

What a gentle, good man, Buckley. Brooks too.

Thursday, February 28, 2008

Whose the Next Carl Rove?``

Ok, those of you -- Genny for sure -- may be critical of me for basically cutting and pasting New York Times articles, and nothing more.

Here's my Original Piece No. 1.:


More Later (I've had too many gins to continue).

Blog on William F. Buckley, Jr.

Worth reading. A loveable man...

Click on Title above, or:

I'm creating a new Label for him. He's that important.

Closing a Few Doors

Excellent article in today's New York Times.

Vallejo, California Faces Bankruptcy

And this is just the beginning. Every municipality in the country faces the same factors.

Click on Title above or:



Another rogue trader. Yeah. Click on Title or:

Cunningham "Pantsed"

I'll always remember that Bill Cunningham was "pantsed" by John McCain virtually on the day that William F. Buckley, Jr. died.

McCain, as with most, didn't realize that he was speaking in "Nazi" country, i.e. Cincinnati talk-radio country.

My big disappointment was that the star up-comer-Republican Rob Portman who will be the next Vice President if McCain wins, did not have the guts to stand up against Cunningham as well. He gave as his excuse that he was backstage and didn't hear all of what Cunningham said. Then he went on to say "boys will be boys," in effect.

But still -- the whole incident showed that the next leader of the Republican Party is decent, but had no idea of what filth is going out over the airways of Clear Channel Communications.

Charlie Rose Last Night on Wm F. Buckley, Jr.

It brought tears to my eyes. Torward the end of Buckley's life he was a defeated man. The whole hour was devoted to clips over the years on the Charlie Rose show. In one of the later interviews Charlie gently but firmly flat-out contradicted him over his rationale for the Bush War in Iraq, without Buckley putting up a fight.

The tears come at the end. You could tell that Charlie loved Bill. Bill had been an early booster of Charlie when the latter was an unknown, new to New York.

At Bill's wife's funeral Charlie was the last to file by Bill in the first row of the church. Bill looked up and saw him. And Bill then began to cry.

Listen to the last eulogy by Charlie. It will bring tears.

This Week's New Yorker -- The Bishop's Daughter

"A father, a faith, and a secret."

by Honor Moore, the daughter.

I liked this well-written biography. Not as well as the Auchincloss one, from the prior week.

Paul Moore was diocesan bishop of New York. Also a secret homosexual.

Wednesday, February 27, 2008

William F. Buckley is Dead

Bill was one of my early heroes when I was at Yale. I came to believe he was one of the most dangerous men of our time. His demeanor in interviews the last couple of years indicated to me that he himself shuddered at what his ideas led to the last 7 years.

He toyed with words, concepts, and us.

The NYT prepared obituary is on line immediately.

Click on the Title above, or...

Tuesday, February 26, 2008

Massive Power Outage in Florida

Oh oh.

Problems With Funding Infrastructure

Our local school bond issue will cost $500 to each home. ($300,000 range home) Bet it's based on the OLD figures of costs two years ago. So the cost is now prohibitive. But the argument goes (as the utilities said in the 1970's) "build now before it gets even worse!"

I wrote:

Sunday, November 18, 2007
Cost Per Megawatt Just Tripled

I am updating my June 16, 2007 blog. Based on recent testimony before the Ohio Publis Utilities Commission, the cost per megawatt for a coal-fired plant is $2.6 Billion, not the easy-to-remember $1 Billion.

Posted by f bruce abel at 11:16 AM 0 comments Links to this post
Labels: Cost Per Megawatt

My old blog said:

Saturday, June 16, 2007
1000 Megawats of Power Costs $1 Billion-- New Coal-Fired Base Load Plant
Increase in MW Load Per Degree-Fahrenheit Increase, By System:

Duke Energy, Cinergy Division (Cincinnati) 300
DP&L (Dayton) 44

(a) (b) (c)

MW Cost Per MW
1300 1300000000 $ 1,000,000
1300 1000000 $ 1,300,000,000

Highs Normally 47 Degrees Today, February 26th

Today's high will be 15-20 degrees below normal. Tomorrow too. Cincinnati. But that means the entire northeast will be the same.

How to heat your home with oil in the northeast???

It will be worth watching.

Bonds Unbound by James Surowiecki in New Yorker

Monoline Lewinsky? Leaves a stain on the dress, don't you think?

The Financial Page
Bonds Unbound
by James Surowiecki
February 11, 2008 Text Size:
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Monoline Insurers; Securities; Collapses; M.B.I.A.; Ambac; Federal Reserve Cuts; Municipal Bonds If the ongoing turmoil in the world’s financial markets has made anything clear, it’s that the list of things that can go wrong in those markets is a very long one. Month after month, it seems, another potentially disastrous problem rises to the surface. The latest looming crisis is the possible implosion of a group of companies called monoline insurers. If you haven’t heard of monoline insurers, don’t worry: until recently, few people, even on Wall Street, were all that interested in them. Yet their problems have become a serious threat to global markets. Rumors that monoline insurers, like M.B.I.A. and Ambac, were in serious trouble helped spark the vast market sell-off that prompted the Federal Reserve’s interest-rate cut two weeks ago, and, only a few days later, rumors of a government-orchestrated bailout of these companies set off a six-hundred-point rally in the Dow.

Monoline insurers do a straightforward job: they insure securities—guaranteeing, for instance, that if a bond defaults they’ll cover the interest and the principal. Historically, this was a fairly sleepy business; these companies got their start by insuring municipal bonds, which rarely default, and initially they confined themselves to bonds with relatively predictable risks, which were easy to put a price on. Unfortunately, a sleepy, straightforward business wasn’t good enough for the insurers. Like everyone else in recent years, they wanted to cash in on the housing and lending boom. In order to expand, they started insuring the complex securities that Wall Street created by packaging mortgages, including subprime ones, for investors. This was a lucrative business—M.B.I.A.’s revenues rose nearly a hundred and forty per cent between 2001 and 2006—but it rested on a false assumption: that the insurers knew how risky these securities really were. They didn’t. Instead, they gravely underestimated how likely the loans were to go bad, which meant that they didn’t charge enough for the insurance they were offering, and didn’t put away enough to cover the claims. They’re now on the hook for tens of billions of dollars in potential losses, and some estimates suggest that they’ll need more than a hundred billion to restore themselves to health.

Obviously, this is bad news for the insurers—at one point, M.B.I.A.’s and Ambac’s stock prices were down more than ninety per cent from their all-time highs—but it’s also very dangerous for credit markets as a whole. This is because of a peculiar feature of bond insurance: insurers’ credit ratings get automatically applied to any bond they insure. M.B.I.A. and Ambac have enjoyed the highest rating possible, AAA. As a result, any bond they insured, no matter how junky, became an AAA security, which meant access to more investors and a generally lower interest rate. The problem is that this process works in reverse, too. If the insurers lose their AAA ratings—credit agencies have made clear that both companies are at risk of this, and one agency has already downgraded Ambac to AA—then the bonds they’ve insured will lose their ratings as well, which will leave investors holding billions upon billions in assets worth a lot less than they thought. That’s why so many people on Wall Street are pushing for a bailout for the insurers. It may be an abandonment of free-market principles, but no one has ever accused the Street of putting principle above profit.

from the issuecartoon banke-mail thisNormally when companies make bad decisions and fail to deliver value, it’s just their workers and investors who suffer. But monoline insurers’ desire to grab as much new business as they could, risks be damned, quickly radiated across global markets and will have huge consequences for millions of people who have never heard of M.B.I.A. or Ambac. The situation illustrates a fundamental paradox of today’s financial system: it’s bigger than ever, but terrible decisions by just a few companies—not even very big companies, at that—can make the entire edifice totter.

In that sense, the potential collapse of monoline insurers looks like a classic example of what the sociologist Charles Perrow called a “normal accident.” In examining disasters like the Challenger explosion and the near-meltdown at Three Mile Island, Perrow argued that while the events were unforeseeable they were also, in some sense, inevitable, because of the complexity and the interconnectedness of the systems involved. When you have systems with lots of moving parts, he said, some of them are bound to fail. And if they are tightly linked to one another—as in our current financial system—then the failure of just a few parts cascades through the system. In essence, the more complicated and intertwined the system is, the smaller the margin of safety.

Today, as financial markets become ever more complex, these kinds of unanticipated ripple effects are more common—think of the havoc wrought a couple of weeks ago when the activities of one rogue French trader came to light. In the past thirty years, thanks to the combination of globalization, deregulation, and the increase in computing power, we have seen an explosion in financial innovation. This innovation has had all kinds of benefits—making cheap capital available to companies and individuals who previously couldn’t get it, allowing risk to be more efficiently allocated, and widening the range of potential investments. On a day-to-day level, it may even have lowered volatility in the markets and helped make the real economy more stable. The problem is that these improvements have been accompanied by more frequent systemic breakdowns. It may be that investors accept periodic disasters as a price worth paying for the innovations of modern finance, but now is probably not the best time to ask them about it. ♦

Rioting Over Food & Energy

Recent article in the New York Times (Sunday I think) about rioting in Egypt by the formerly middle class, over inflation on the basics. This is very troubling. Deregulation of the basics has gone on big time around the world, including the U.S.

It was last spring, I believe, that I realized that a dinner on Fountain Square, Cincinnati, was exorbitant. Reds or Bengals tickets the same.

A subtle thing this February: the temperature is 15 - 20 degrees colder than normal and projects this way for the next week. This means huge problems for the northeast residents, and huge profits for the local distribution companies.

Saturday, February 23, 2008

Dillon Radigan's PG&E Goof on CNBC Yesterday Morning on Trader's Edge

Went on and on. Interviewed two utility experts on and on for five minutes or so.
Not corrected until 3:30 pm.

More later.

Thursday, February 21, 2008

Just Read This Wonderful Sentence in The New Yorker

From the New Yorker article I mentioned yesterday:

"She loved paintings, a taste that they shared (somewhat -- asked what sort of art she was interested in, he says, 'Oh, very good art'), and the outdoors, one that they didn't."

The New Yorker, Feb. 25, 2008 at 57

Cramer v. Yale's Swensen

From the article on Swensen I blogged yesterday.

He is obviously correct, but so is Cramer in his own way.

“Most people do not have the resources and time to pick market-beating managers” of hedge funds, private equity funds or funds of funds, he said. And he said that the techniques used by hedge funds often result in higher taxes than those of index funds.

So he advocates another approach, which he outlined in the book “Unconventional Success: A Fundamental Approach to Personal Investment” (Free Press, 2005). He proposes a portfolio of 30 percent domestic stocks, 15 percent foreign stocks, and 5 percent emerging-market stocks, as well as 20 percent in real estate and 15 percent each in Treasury bonds and Treasury inflation-protected securities, or TIPS.

The real estate investment can be made through real estate index funds. Though the real estate market has declined and your portfolio is below its target allocation to it, he said, don’t try to time the market. Go ahead and rebalance because no one really knows where the market’s bottom is.

Diversification will buffer a portfolio from declines in specific asset classes. For example, he said: “If the dollar declines dramatically, you have foreign and emerging-market equities. And a declining dollar may well be associated with inflation, but a diversified portfolio would include TIPS,” to provide a hedge. “That means if any of these scenarios play out, an investor has sizable chunks of his portfolio that protect against them,” Mr. Swensen said.

When possible, he said, rebalancing should be done in a tax-sheltered account, like an I.R.A. or a 401(k), to avoid tax liabilities. “When you are putting fresh money to work,” he said, “you put it in an asset class where you are underweight and take money out of a class that is overweight.”

He says it is fruitless for individual investors to pick stocks. “There is no way that an individual can go out there and compete with all these highly qualified and compensated professionals,” Mr. Swensen said.

HE criticized the approach of Jim Cramer, the CNBC host, who encourages investors to trade stocks in strategies that Mr. Swensen says cost heavily in commissions and taxes.

“There is nothing that Cramer says that can help people make intelligent decisions,” Mr. Swensen said. “He takes something that is very serious and turns it into a game. If you want to have fun, go to Disney World.”

Brian Steel, a spokesman for CNBC, responding on behalf of Mr. Cramer, said Mr. Cramer “had a long history of success as a trader and fund manager.” He added that Mr. Cramer is a proponent of long-term investing and thorough research.

Mr. Swensen says investors should forget market timing entirely. Once an individual sets up a program, it should be rebalanced quarterly or semiannually, he said, “but it should be disciplined.”

When the markets decline, try not to pay attention, he said. “Let yourself off the hook,” he said. “If you pursue the sensible long-term policy, look at it over a 5- to 10-year period. Don’t look at five months.”

Mark Godsey at Lyceum Tonight

Yesterday Google Analytics said my blog got record high hits. Bear with us non-Cincinnatians, while I alert my readers of a nationally-known Cincinnatian coming to speak in Leafy, snowy Glendale, Ohio, tonight.

Mark Godsey.

Trifecta -- You Must Read Today's Gail Collins

in today's New York Times. She's good, and today very funny.

or click Title above.

Golf Declining

I know. Put this in my category of "Hot Air" as it's somewhat fluff, although the economic implications are interesting.

People don't want to be away from their families four hours necessary to play a round of golf. Or their computer in the FAMILY-ROOM perhaps.

Nicholas D. Kristof Has Credibility -- Kenya

From his years of writing about the horrors going on in Africa. Nicholas Krostof, in today's article on Kenya, shows the importance, every day, of having an experienced and well-thought-out diplomacy, as we apparantly readily accepted the villain in the story, Mwai Kibaki, as properly-elected President. And no, the man's head was not cut off, as implied in the brilliantly-written first sentence. Just his penis.

Excerpt from above:

Published: February 21, 2008

Skip to next paragraph

Fred R. Conrad/The New York Times
Nicholas D. Kristof.

Until he was circumcised with a machete in front of a jeering mob and then dragged off to be beheaded, Robert Ochieng had been a symbol of modern, post-tribal harmony in Kenya.

A member of the Luo ethnic group, 16-year-old Robert had played and studied with members of another ethnic group, the Kikuyu. They were friends. And then Kenya erupted in rioting after a rigged election, and suddenly Luos were chasing and killing Kikuyus, and a mob of Kikuyus was running down Robert.

He claimed that he was Kikuyu as well, but the suspicious mob stripped him naked and noted that he was not circumcised, meaning that he could not be Kikuyu. That’s when his attackers held him down — smashing his arm when he tried to protect himself — and performed the grotesque surgery in the street to loud cheers from a huge throng.

The crowd shouted war cries and was preparing to decapitate Robert with a machete when the police arrived and rescued him. Doctors did some repair work and say he will recover physically, but as he sat in a church shelter for the displaced here in Kisumu in western Kenya, he seethed with hostility that may never heal.

“When I see Kikuyu shops that have been burned down,” he told me, “I feel good inside.” Never again will Robert be friendly with Kikuyu or have anything to do with them; he is now a symbol of the primeval tribal tensions that threaten Kenya’s future.

The prime villain is President Mwai Kibaki, who would have been hailed as a hero if he had obeyed the will of the people in the December election. Instead, he — and a cast of thugs around him — appear to have stolen the election, starting a spiral of tribal violence that has killed more than 1,000 people and displaced 300,000. Mr. Kibaki’s intransigence risks the collapse of his country, possibly even civil war.

The man who probably had the election stolen from him, Raila Odinga, is a Luo, as was Barack Obama’s Kenyan father. Many Kenyans grimly note that a Luo may become president of the United States before being permitted to become president of Kenya.

Wednesday, February 20, 2008

Yale Guy

Good, solid advice from the man who runs Yale's money.

Today's New Yorker

I have a rule: When the New Yorker arrives I will read one article without putting it down. Otherwise I will never read anything in it.

Today I just read a beautiful article on 90-year old Louis Auchincloss. The writer is Larissa MacFarquhar.

I'll check to see whether it's on the web. If so, I will put in on my blog.

I always was "bored" by Louis Auchincloss. I still am. But not by Larissa MacFarquhar.

The depiction of the upper eastside and attitude, and the '50's, brings back memories of my years at Yale.

Wonderful reading on a snowy afternoon in Cincinnati.

Other Failing Auctions

Reported today in the New York Times. Click on Title above, etc.


Tuesday, February 19, 2008

Steroids and Joe Dimaggio

Go to my "Hot Air" category and scroll down to the New York Times article on how Joe Dimaggio kept a boring daily log -- which I've somewhat altered to fit today's baseball climate!

Or simply type in Dimaggio as a key word above.

Clarence Thomas-ish

Also from the Yale Daily News of today. Underrepresented Minorities feel marginalized by their appearance. Read it.

Not For the Faint of Heart

Speaking of What to Give Up for Lent! Give up cheese? Or oral sex!!

Click on Title above from the Yale Daily News, or not!

I Get it -- It's Lent

Give up celebacy for Lent! Great idea.

Church Urges Hanky-Panky Among Members

The CBS headline is somewhat misleading. But every day for a month???

Click on Title above, or cut and paste the following:

Annual Heating Costs

As readers of this blog are aware, we have two houses located two blocks apart, and can compare costs for heating. One house is Victorian and about 3300 sq. ft. for heating. The other brick Ranch-style, with about 2900 sq.ft.

We have done a multiple-year comparison for the Victorian house, where we lived for 35 years.

Cost for heating only ranges from $1300/yr to $1800/yr at today's prices, for the Victorian. It's about the same for the Ranch it seems, although the square footage is less.

Both homes are very well insulated, but old is old.

In this wonderful, leafy neighborhood of Glendale, Ohio, some of the monthly heating bills can be horrendous for the larger Victorian homes which may not have a lot of interior preparation for the weather. I've heard of $1200 single-month bills (scuttlebutt at Bluebird Bakery).

Duke Energy eschews hedging (after a disaster in the electric field a few years ago) and is higher than it should be this year.

Monday, February 18, 2008

Duke Annual Laurel Reading Today

Gas 7388 as of 1:55 pm February 18, 2008.
So this means Laurel used 117 ccf since the actual reading I took January 31st.


That appears to be quite good. Perhaps the extra insulation that the Mexicans put in is kicking in. And we had the service call on the furnaces in the attick at a cost of $280 or so.

Took Greenville down to 45 two days ago; took it back up to 50 yesterday. (Front thermometer; rest remain at 45)

Civil Society and Susan Jacoby

Click on Title for this story in the New York Times.

I saw Susan Jacoby on Bill Moyers Friday night and she bowled me over. Second half of the show if you TIVO'd it. She has analyzed the weaknesses of my own thinking which tended to blame everything on the Bush Administration. Don't get me wrong, she sees everything wrong with the Bush administration, just not everything wrong with society.

Sunday, February 17, 2008

Fairly Good Analysis on Kerviel

I like this analysis. And the recalling of Tom Friedman's article on Superempowered individuals who can muck up the world.

Judge Cudahy

Readers of my blog know that I admire this judge, although I have never met him and will never have a case before him. I was looking at some of my old savings from 2005, and came across this article from, I think, Depaul Law Review, which full article gave a profile on each Seventh Circuit judge (circa 1995 or so). I had a Seventh Circuit case pending at the time.

C. Richard D. Cudahy
Richard D. Cudahy, 67, is a 1955 graduate of Yale Law School. After serving as a law clerk for the Second Circuit and a lawyer at the State Department, he was an associate at Isham, Lincoln & Beale in Chicago from 1957-60, and he was managing partner of the Washington, D.C., office of Isham, Lincoln & Beale from 1976 to 1979. During the intervening years, he served as Chief Executive Officer of Patrick Cudahy Inc., an 800-employee firm, and he practiced law with Godfrey & Kahn in Milwaukee. He was also a commissioner and chairman of the Wisconsin Public Service Commission. He has taught law at several law schools and was active in politics for the Wisconsin Democratic party, serving as party chairman and as a candidate for Attorney General. Judge Cudahy was appointed to the Seventh Circuit by President Carter in 1979.
Judge Cudahy has been one of the court's most prolific writers. He files separate concurring or dissenting opinions far more often than the court's other members, and he writes the court's opinions more frequently than many of the other judges. n213 Judge Cudahy writes opinions for the court in a direct and pointed style, characterized by most lawyers as scholarly. His writing is uncomplicated
[*737] without being simplistic and it is notable for its clarity. Judge Cudahy usually begins by stating the issue before the court, summarizing the treatment given the issue in the court below, and announcing the disposition of the case. He then presents the facts as developed in the record, with appropriate deference to the fact-finding province of the district court. Next, Judge Cudahy almost invariably turns to a practical exposition of the controlling law, liberally salting the text with citation of precedent and other authority. He makes ample use of explanatory footnotes but he is rarely given to lengthy discourse on the law's history or its underlying philosophy unless the point is essential to the court's decision.
His opinions' treatment of the applicable law generally leads to a straightforward application of the law to the facts of the case. Before concluding, he often -- but not always -- will give attention to the most important arguments of the losing side, further explaining the basis of the decision. n214 Judge Cudahy's writing is evenhanded and temperate, neither displaying nor evoking passion or notoriety. This basic sturdiness of style is considerably easier to appreciate than it is to achieve. Posing few obstacles to the reader, Judge Cudahy's opinions usually accomplish what they set out to do -decide the case before the court -- and incrementally advance the law without regard to generalized theories or activist agendas. In contrast to Judge Cudahy's established reputation as a frequent dissenter, other judges of the court dissent from Judge Cudahy's majority opinions at no more than an average rate. n215
Although almost any of Judge Cudahy's published opinions would provide a good example of his style and care, some cases illustrate particularly well his skill for resolving difficult issues. In FMC Corp. v. Capital Cities/ABC, Inc., n216 the court reversed the district court's ruling that the plaintiff defense contractor could not state a claim against a television network for conversion of the contractor's confidential documents. n217 Judge Cudahy's opinion for the panel carefully sorted through a choice of law issue and deftly harmonized the defendant's important First Amendment concerns with the plain [*738] tiff's need for the information allegedly pilfered from its files. n218
In Merk v. Jewel Food Stores, n219 Judge Cudahy wrote the majority opinion, withstanding a lengthy and caustic dissent by Judge Easterbrook. n220 The court reversed a judgment entered in the defendant's favor by Judge Posner, who had presided over a jury trial in the district court. n221 Judge Cudahy's opinion held that oral agreements secretly negotiated between the company and the union did not override a collective bargaining contract, noting "the grave dangers posed by a back room deal that is secretly negotiated between union officials and company management without the knowledge or consent of the union rank and file." n222 This decision permitted approximately 15,000 former food store employees to sue the company for back pay and benefits under the collective bargaining agreement. n223 Both the opinion and the dissent appeared thoroughly researched.
Judge Cudahy does not necessarily jump at the chance to resolve an important question if the case can be decided without doing so. Judge Posner criticized Judge Cudahy's majority opinion in a separate concurrence in Martin v. Consultants & Administrators, Inc., n224 writing that the court should have used the case "as a vehicle for clarifying issues that have been a recurrent source of uncertainty and confusion;" n225 that is, the distinctions between self-concealing fraud and active concealment of an underlying fraud, and equitable estoppel and equitable tolling. The two scholarly opinions reached the same result for the case before the court, but Judge Cudahy's principal opinion was content to decide the case on narrow grounds and not to resolve the other issues.
Quite recently, Judge Cudahy wrote for a unanimous panel in Great Lakes Dredge & Dock Co. v. City of Chicago, n226 one of the many cases arising out of the Chicago flood of April of 1992. The city's contractor, Great Lakes, was sued in state court by thousands
[*739] of plaintiffs, including individuals, businesses, and the city, who alleged that the contractor had negligently installed pile clusters in the Chicago River, causing a break in a subterranean freight tunnel that sent millions of gallons of river water into basements of many Loop buildings. n227 The contractor filed a complaint in district court, claiming the existence of federal admiralty jurisdiction and seeking the benefit of a statutory limitation of liability for vessel owners. n228 The city successfully moved to dismiss the action in the district court but the court of appeals reversed, concluding that the contractor's alleged negligence was within admiralty jurisdiction. n229 The scholarly opinion traces the origins and development of the somewhat arcane field of admiralty, carefully grounding the court's holding in the statutes and cases, and methodically applying a threestaged inquiry to the specific facts of the case. The court remanded the case to the district court for further proceedings relative to the limitation of liability, which Judge Cudahy wryly noted was "the substantive law upon which Great Lakes anchored its claim." n230
While Judge Cudahy is to be commended for his ability to produce opinions of this quality with reasonable speed, he can also be criticized for contributing to the court's backlog. Because Judge Cudahy is more apt than anyone else on the court to voice objections to opinions circulated from other chambers, he has been known to delay other judges in issuing their final opinions. Judge Cudahy's own opinions tend to be longer and more academic in style, and it often takes him longer to issue opinions than his colleagues. n231 Most of the opinions written by Judge Cudahy and reviewed by the Council were issued within six months after oral argument. On occasion, however, Judge Cudahy takes an inordinate amount of time to produce a decision. n232 In recent years, his opinions have revealed a tendency to request supplemental briefing of particular issues, especially jurisdiction. In all, however, Judge Cudahy's contribution to the court's backlog is small. The Council views the delay attributa [*740] ble to Judge Cudahy's separate opinions as worthwhile.
Judge Cudahy prepares intensely for oral argument, requiring detailed bench memos from his law clerks. He often discusses a case at length with his clerks before argument, and his opinions reveal independent research of the issues briefed (or not briefed) by the parties. During oral argument he is consistently engaged but shows an affable, calm style. Appellate advocates report that he is courteous from the bench, raising questions when they are important to him but not otherwise speaking. His questions reflect thorough preparation and an understanding of the issues. As he does when he writes opinions, Judge Cudahy's performance at oral argument also shows self-confidence and an independence from the rest of the court.
As is probably true of many appellate courts, there are a number of judges on the Seventh Circuit bench who disdain dissent, seeking consensus, believing it is important for the court to speak with one voice. Judge Cudahy is not among them. Unlike many of his colleagues, Judge Cudahy will refuse to join in an opinion with which he has serious reservations, whether he differs with the majority's result or its reasoning; hence his prodigious total of separate opinions, both concurrences and dissents.
Judge Cudahy also has come to be perceived by the bar as somewhat ideologically distanced from his colleagues on the court. To some, this perception raises a question as to the extent of Judge Cudahy's influence on the court when he must compete for a colleague's deciding vote. His dissents have grown shorter and pithier, though usually not biting. n233 But Judge Cudahy can be biting when Chief Judge Posner or Judge Easterbrook is on the other side, as in Original Great American Chocolate Chip Cookie Co. v. River Valley Cookies, Ltd. n234
The Council believes that published dissents and separate concurrences are useful instruments in the explication and advancement of the law. Judge Cudahy has issued numerous important and effective
[*741] separate opinions, n235 and he has also played an important role in the court by writing majority opinions that narrow overly-broad opinions issued by other judges. n236 Judge Cudahy's record -- whether speaking for the court, concurring, or dissenting -- reflects a substantial contribution to the law and the court. He continues to be an excellent judge.

Certainly Not Hot Air

An excellent article on Dusty Baker, new manager of the Cincinnati Reds.

Credit Default Insurance in Today's NYT

Oh no.

Click on Title, or cut and paste the following:

Friday, February 15, 2008

SEC Complaint

Click on the Title to see the pdf of the SEC complaint, for you purists.

Crazy World of Stealing Information and Profiting

Click on this article by Floyd Norris, whom I like and respect,

Kerviel II

Test. I'm working with the new "enclosure link" feature.


More on Kerviel. No one discusses the simple fact that bets of such magnitude have to be "settled" within one-day, or is it the dirty little secret that if your name is big enough, no one calls for the money???

Click on Title for today's New York Times article.

Thursday, February 14, 2008

Blooper on CNBC re Ackman

For 10 minutes thay flashed that Ackman had invested in Ambac. Later they said: he invested in PUTS in Ambac.

This during the extended interview with the CEO of Ambac!

He was about to go into hearings. He was smart not to comment on Ackman in this regard, although he slammed him later.

Wednesday, February 13, 2008

Excellent CNBC and Cramer Yesterday


Excellent long interviews with the top short sellers Chanos, etc. and Cramer's discussion of them. And his interview with the YUM ceo.

This is where CNBC is so much better than in the old times. On the other hand we now have classes of investors that did not "exist" in past crises. Private equity, huge and more numerous hedge funds; colleges and pension funds devoting a large portion to the short/counter or random side.

William Ackman

Made 22% return in 2007. Up 6.4% in January.

Runs Pershing Square Capital Management hedge fund.

Has shorted -- is still short -- the holding companies of the bond insurers. (not sure)

Discusses Buffett's proposal of today.

MBIA, (MBI), Ambac Financial (ABK)

We think the regulators will stop insurance subsidiary dividends from going up to the holding companies, by the end of the year. (Implied -- bankruptcy)

MBIA -- has or has not triggered covenants. Ackman said this, but concedes that this may not have happened.

Next 10-15 years (the longs say) $1 billion of "revenues" to be earned by MBIA IS NON-CASH. "Doesn't do you any good." Not helpful. Vast majority is not cash.

$5.75 billion under management.

Ackman is quite informative. Aaron Bernett's questions excellent. Melissa's too.

Arbing overstated revenues for the bond insurers to keep banks from taking write-downs is bad. People taking money out one one pocket and putting where there are lower standards, not good for the investors.


He goes way back -- before any of the questioners know. Baldwin, I believe.

Short Moody's since last year. Kynikos Associates Managing Partner.

I put forth at "the pane" today (Hudson Institute) -- safe harbor where all the banks do not have to sell at the same time as is now the case under the Basil Accords, etc.

Make the regulators disclose all the information they get under Regulation FD.

Those who were short the banks and long emerging markets "paid the price" in January.

What crack the private equity

MBIA Bonds @ 20% -- a good buy.


Treasuries were the best performing assets over the last 6 months.

Does not like Muni Bonds because of credit risk, emerging markets, anything with credit risk.

Other recessions, Orange County; Big Mac in New York.

Probably no risk in U.S. Treasuries.

Bank of England will lower rates.

Likes Eurodollar Futures, Eurobor Futures, Sterling LIBOR Futures.


Past recessions are ancient history.

Don't want to be the last guy sitting in the chair holding Treasuries.


MBIA bonds yielding 20%. With Chanos's short the common, a great hedge.

Chanos -- a rigorous thinker.

Ackman -- likes him as well. Discussion on his retail longs (which are not the story with him). Luke warm.

Eddie Lee -- mentions.



Tuesday, February 12, 2008


Cramer, Age 64???

He opened Mad Money by saying he just turned 64. What goes??? See my recent blogs on "Cramer Yesterday."

Monday, February 11, 2008



Click on Title for full story.

Sunday, February 10, 2008

Where We Live Our Lives

Take the time to click on "Civil Society" and scroll down to read the blog "David Muth."

I like it. Of course I wrote it.

But the part I am most interested in is that both David and Merlene lived their lives where they worked. Same building. I do too. It's lovely.

Cramer Post 44

Click on Title and scroll down to post 44, for a discussion of Cramer under stress (summer of 2006, on Imus)implying that he did indeed get a divorce, or was about to rather.

Or cut and paste the following.

Cramer Changes Without Saying So?

It seems that Jim Cramer's "L," "U," "V" program Friday night was a change from his "V"-like advice the day of the last rate cut.

Or I could have missed something.

This demonstrates the impossibility of following the zigs and zags of a daily prognosticator, even if one has the time to catch him on both Stop Trading and Mad Money.

None of the above is meant to diminish this uniquely honest Wall Street pro.

Saturday, February 9, 2008

Like Japan's Economic Downturn 1991 ff?

Click on the Title above for this New York Times article that is quite useful.

Friday, February 8, 2008

Reveling in Las Vegas

At the Securitization Conference:

Or just click on the Title above.

More Pretty Good Writing

Love Letters


I'm writing because when I telephoned, you just hung up on me. One thing about letters: you can't hang up on them.


You can tear up letters, though. Enclosed are the pieces. Send them to Angela Atkinson at Sarah Lawrence.


What the hell is the matter?


I hear you're now writing long letters twice a week to Angela Atkinson, that's what's the matter.


O.K. Here goes. The reason I'm writing Angie Atkinson is because I just don't think I can stop writing letters, particularly to girls. As I told you before, in some ways I feel most alive when I'm holed up in some corner, writing things down. I pick up a pen, and almost immediately everything seems to take shape around me. I love to write. I love writing my parents. because then I become the ideal son. I love writing essays for English, because then I am for a short while a true scholar. I love writing letters to the newspaper, notes to my friends, Christmas cards, anything where I have to put down words. I love writing you. You most of all. I always have. I feel like a true lover when I'm writing you. This letter, which I'm writing with my own hand, with my own pen, in my own penmanship; comes from me and no one else, and is a present of myself to you. It's not typewritten, though I've learned how to type. There's no copy of it, though I suppose I could use a carbon. And it's not a telephone call, which is dead as soon as it is over. No, this is just me, me the way I write, the way my writing is, the way I want to be to you, giving myself to you across a distance, not keeping or retaining any part of it for myself, giving this piece of myself to you totally, and you can tear me up and throw me out, or keep me, and read me today, tomorrow, any time you want until you die.


Oh boy, Andy! Love, Melissa.


No, I meant what 1 wrote in my last letter. I've thought about it. I've thought about all those dumb things which were done to us when we were young. We had absent parents, slapping nurses, stupid rules, obsolete schooling, empty rituals, hopelessly confusing sexual cus­toms --?. oh my God, when I think about it now, it's almost unbelieva­ble, it's a fantasy, it's like back in the Oz books, the way we grew up. But they gave us an out in the Land of Oz. They made us write. They didn?t make us write particularly well. And they didn't always give us impor­tant things to write about. But they did make us sit down, and organize our thoughts, and convey those thoughts on paper as clearly as we could to another person. Thank God for that. That saved us. Or at least saved me. So I have to keep writing letters. If I can't write them to you, I have to write them to someone else. I don't think I could ever stop writing completely. Now can I come up and see you next weekend, or better yet won't you please escape from that suburban Sing-Sing and come down here and see me? I wrote my way into this problem, and goddamn it, I'm writing my way out. I'll make another reservation at the Hotel Duncan and I promise I'll put down my pen and give you a better time.


Dear Andy: Guess what? Right while I was in the middle of reading your letter, Jack Duffield telephoned from Amherst and asked me for a weekend up there. So I said yes before I got to where you asked me. Sorry, sweetie, but it looks like the telephone wins in the end.


Somehow I don't think this is the end. It could be, but I don't really think it is. At least I hope it isn't. Love, Andy. -


(The event works best if everyone takes a short break at this point.)


Love Letters, by A. R. Gurney, performed by Bruce Abel March 30, 31, April 1, 2006 at Glendale Lyceum, Cincinnati, Ohio.

Pretty Good Writing

From a NYT blog this morning on what did in Romney:

"Of course, there are many other reasons why the well-funded ex-governor with the to-die-for resume never got any traction. Many voters found him unctuous, weasely, fake. He didn’t wear well. His voice was grating and snappish. He was too perfect, on the surface, for the human race, let alone America on the cusp of a recession and an uncertain war. He changed positions so dramatically on gays and abortion that Senator John McCain could call him the true “change” candidate in a debate, and the audience laughed at the obvious joke."

More on Cramer and Others

I know, I'm going a little afield, but it's 4:56 am on a Friday and I'm realizing my granddaughter is going to look like Grace Kelly (featured on PBS "Think TV" which I am playing back in the background on TIVO, and my son-in-law has the ability and temprament to run for President, and my daughters are...fantastic!

It's called Prozak (to quote Hugh Laurie on Saturday Night Live).

Click on Title above to see the latest clip.

Harvard Alumni Bulletin -- On Cramer

This article was written in 2001, so do your own computation of the correct age of Jim Cramer.

In the Money
Alumni financiers take stock of the market and careers spent trying to beat it

By Margie Kelley
[Summer 2001]

Charlie Munger gave up law to pursue his fortunes as an investor. Jim Cramer never even tried to be a lawyer, and went straight to Wall Street. Jim Donovan and Todd Buchholz saw law school as an imperative step on the road to a successful business career. Sean Healey, who once dreamed of teaching law, discovered his place was in the investment world instead.

But these five HLS alumni would never say they abandoned their legal training. They just redirected it toward the place they each found more alluring: the world of high finance.

Today, they have nearly 100 years of combined experience in investing and business, and have been responsible for billions of dollars in assets. Each is wealthy in his own right and has, directly or indirectly, helped others to become quite comfortable too. And while each is at a different place in his career--one is more than half a century out of HLS, another not even ten years--all share an appetite for taking big risks for big gains. Yet, they also possess the coolheaded confidence that is essential when millions are at stake on a regular basis and market fluctuations send shivers down Wall Street.

Investment Values

The cultish devotion of Berkshire Hathaway shareholders is legendary in the financial world. After all, more than a few people have become independently wealthy as a result of the investing genius of CEO Warren Buffett.

But while Buffett's name alone has long been synonymous with Berkshire Hathaway, there is one person in the company even he looks up to: his partner and old friend from Omaha, Charlie Munger '48.

"I call myself the assistant cult leader," joked Munger.

The pair has had a prosperous partnership--spanning four decades--and they've done more together than just build a holding company worth billions. They have been stalwarts of ethical business practices, have rooted out fraud, and have even championed abortion rights and the establishment of Planned Parenthood.

Primarily involved in property and casualty insurance, Berkshire Hathaway has smaller holdings in publishing, candy, footwear, and furniture. By the end of 2000, its revenues had ncreased to $34 billion, its profits to almost $3 billion. Shares in Berkshire, just $12 each in 1965, hit $71,000 by year's end.

Munger, who is Berkshire's vice chairman, now finds himself a very wealthy man. A voracious reader and devotee of great thinkers like Ben Franklin and Samuel Johnson, he credits their wisdom for his success. "They were both utterly brilliant men. And powerful communicators. Both have helped me all the way through life. Their lessons are easy to assimilate."

Berkshire has its own interesting lessons for the world, he says, and they come from the company's high standard of ethics and its bottom-line achievements.

"I'm proud to be associated with the value system at Berkshire Hathaway," Munger said. "I think you'll make more money in the end with good ethics than bad. Even though there are some people who do very well, like Marc Rich--who plainly has never had any decent ethics, or seldom anyway. But in the end, Warren Buffett has done better than Marc Rich--in money--not just in reputation."

Even so, Munger does not pretend that what he and Buffett have accomplished is just a matter of being good guys. It also takes sharp wits, strategy, and a lot of discipline. Still, Munger contends that more people could do well in investing than actually do, if they'd employ some of the basic "mental methods" he and Buffett have used.

"The number one idea," he said, "is to view a stock as an ownership of the business [and] to judge the staying quality of the business in terms of its competitive advantage. Look for more value in terms of discounted future cash flow than you're paying for. Move only when you have an advantage. It's very basic. You have to understand the odds and have the discipline to bet only when the odds are in your favor."

And Berkshire, he says, is not in the business of making money by calling macroeconomic swings. "We just keep our heads down and handle the headwinds and tailwinds as best we can, and take the result after a period of years."

At 77, Munger is busier than ever. Aside from his work with Buffett, he is chairman of the L.A.-based legal publisher the Daily Journal Corporation and CEO of Wesco Financial Co., a subsidiary of Berkshire Hathaway. He has a large family and spends a great deal of time with his wife, children, and grandchildren. He's also a long-standing philanthropist who has bolstered education and health care causes in Los Angeles, where he has lived for five decades.

Munger quit practicing law in 1965 after 17 years, because "sometimes you're on the wrong side. Often you're dealing with unreasonable people where you can't fix things fast. It's inefficient. I like the discipline of backing my own judgments with my own money. It suits my temperament better. Of course, I also realized that the upper potentialities were better outside of law."

Now a billionaire, Munger seems somewhat surprised by just how successful he has been in his life. When he graduated from HLS, Munger said, "Practically nobody expected to be rich, or had any examples that would lead him to expect to be rich. That has totally changed. We've had the most massive creation of wealth for people a lot younger than those who formerly got wealth in the history of the world. The world is full of young people who really want to get rich, and in those days nobody thought it was a reasonable possibility."

Balance Sheet

It's a Monday in March, the day the NASDAQ slipped under 2,000 for the first time in almost two years. Jim Cramer '84 is filing one down-on-tech commentary after another for, the investing site he launched in 1995 with former HLS lecturer Martin Peretz. He usually files six or seven columns a day on the investing how-to site, but this day, he'll post ten missives, most of them skewering investors and individual companies for placing far too much faith in the technology sector.

The famously bombastic former Wall Street trader--he gave it up in late 2000--had been criticized for being bearish on tech. But, as the NASDAQ withered and the business press called for his opinion, Cramer felt vindicated.

"I think tech is awful," he said. "People don't listen. Technology--the industry--is a growth industry. But tech stocks may be overvalued. I'm a huge bull in the stock market, but I can't be a bull in that sector."

Many people do listen to Cramer. He made millions for investors over the nearly 20 years he spent trading, first from his dorm at HLS and later from his own hedge fund, Cramer, Berkowitz & Co.

Cramer loves the stock market. And it has suited him well. His acumen for numbers is legendary; he can recall every trade he made in a day or even in a year. At HLS, he followed the market's every move from his room, and made enough from trading to cover tuition. He even recorded his weekly stock picks on his telephone answering machine and got his first investment client when Peretz--who made money from those picks--enlisted Cramer to manage his money for him. When Cramer tripled his earnings, the two formed a partnership that remains strong today.

Cramer says once he got the fever for the stock market, he couldn't see himself working as an attorney but worried that he might disappoint his family. He credits Dean Robert Clark '72, a professor at the time, with encouraging him to take his chances in the business world.

"I went to him and said, 'I really love the stock market and I have a chance to work at Goldman Sachs,' and he said, 'I think you should do it. Follow your heart.' I don't think I would have done it if he had said not to," Cramer recalled. "I met these unbelievable professors who just helped me a tremendous amount in making important decisions. I couldn't have made it without them. If I got that out of my tuition, I did pretty well."

Now 46, Cramer writes columns for and New York magazine. His retirement from the hedge fund, he said, has been "a godsend."

"I love my new life," he said. "Now I just think. I'm having a great time."

Until last December, Cramer was widely known as the manic millionaire trader who routinely got to the office by 5 a.m. He'd read five newspapers before trading opened and spend the rest of the day in a frenzy of high-stakes buying and selling. "I was really good at it," he said. "Like a professional baseball player who had a really good batting average."

He also garnered more than his share of controversy by writing about the stock market while actively investing and trading. He's been accused of crossing the line into conflict of interest. But Cramer never pretended he wasn't an interested party and has always disclosed his own stake in anything he has reported.

Cramer says he made piles of money for himself and his clients. But it took a toll on his family life. "I lived and breathed it. But I still came to work every day nervous about how I'd do. It's one reason I wanted to give it up. It was just a very nerve-wracking job. I wanted more time with my family and for my writing. I didn't want that pressure anymore. I had made enough money."

The last straw, he says, came one day in November, when a trade didn't go well. "At the end of the day, I did a trade and lost $13,000 in a few minutes," he said. "I broke my terminal and my keyboards. I was just furious and throwing things, and my head trader and my partner said, 'You can't keep doing this.' My wife was saying it, my dad, my kids. Everybody wanted me out of the business except me. I was just making everybody's life miserable."

In his new life, Cramer is still addicted to the morning papers, but he does sleep more. He's at offices by a healthy 7:15 a.m. and works out an hour a day. He has planned a rather leisurely summer. He manages nobody's money except his own in what he calls "very low-impact, long-term investing stuff."

Cramer is writing a book, expected in bookstores in September, called Confessions of The Street Addict about his Wall Street exploits and his experience running a dot-com and a hedge fund. Also in the works are a radio program called "Real Money Talk" and a regular commentary on CNBC. "I want to tell people how I made money in the market and try to keep them in the game," he said.

Through his columns and commentary, Cramer challenges investors to understand what is happening in the markets and take responsibility for their own outcomes. Regardless of whether people have the help of investment professionals, vigilance is necessary. "You should always worry about your own money," he said.

As the stock market dipped this winter, Cramer stayed bullish. "Stocks ran up because we felt that the Fed would come to our rescue. But the Fed didn't put us in these stocks that are bad. There are two stock markets--the NASDAQ, which people have way too much faith in, and the rest of the market, which, I think, people have way too little faith in. I believe the system will hold."

Economics 101

Todd Buchholz '86 runs a multimillion-dollar hedge fund and writes regularly on the economy for the Wall Street Journal, two outstanding credentials for a man who loves to teach people about economics and investing.

"I spend my day trying to figure out the links--connecting the dots," said Buchholz, a former White House economic adviser and now president of Victoria Capital, a hedge fund based in Bethesda, Md.

When George W. Bush got elected, for example, Buchholz had to consider how a new president would impact world markets. "What does that mean for defense spending? For defense stocks? Does it mean Greenspan is more likely to cut interest rates--or to cut interest rates sooner? And, if Greenspan cuts interest rates, will the Bank of England follow? If the Bank of England cuts interest rates, will that help the British pound against the dollar? Will it help Airbus sell more airplanes than Boeing?"

Such reasoning is at the core of Buchholz's everyday work with Victoria, and also a way of thinking he wants readers of his columns and three books to adopt.

"It's a big Rubik's cube that's constantly changing," he said. "When you think you've got it solved, suddenly, the colors switch. There's never a final game. To my mind, it's always interesting, always challenging, and not simply about numbers."

Ever since he was an undergraduate economics major at Bucknell University, Buchholz has been honing his finance skills and finding new ways to teach basic economics. He enrolled at HLS, unsure of what he wanted to do. All he did know, he says, was that law school would benefit him.

"I felt that society was supported, and in some ways controlled, by an underground structure," he said. "I thought that in order to be a successful participant in either the private sector or the public sector, it made sense to go down into the basement and figure out what that structure was--that being the legal structure. I wanted to learn to think like a lawyer and to make decisions weighing precedents against the black letter of the law and common sense. Plus, I had always enjoyed public speaking and felt legal training would be helpful with that."

During his HLS days, Buchholz was an economics teaching fellow at Harvard College, work that earned him the Allyn Young Teaching Prize. He later studied economics at Cambridge University and wrote his first book, New Ideas from Dead Economists: An Introduction to Modern Economic Thought. In the book, Buchholz applies long-standing economic theories to modern issues, making the thoughts and writings of the great economists of the past relevant to the economic and social matters we face today.

The book led him to the White House. He had worked closely with Martin Feldstein, President Reagan's chief economic adviser and head of the major introductory economics course at Harvard. Feldstein encouraged Buchholz to get involved in the 1988 presidential campaign. That work yielded him a job as a director of economic policy at the White House.

Working in the White House was, Buchholz said, both "exhilarating and frustrating" because George H. W. Bush had begun his term as a very popular president but was unable to sustain that popularity through the end of his term.

In addition to running Victoria Capital and contributing regularly to the Wall Street Journal, Buchholz is a contributing editor for Worth Magazine and a frequent guest on ABC's World News Tonight. He provides monthly commentary on PBS's Nightly Business Report and speaks to companies about the economy and corporate strategy.

Buchholz's third book, Market Shock: Nine Economic and Social Upheavals That Will Shake Your Financial Future--and What You Can Do About Them, which describes various modern trends and how they affect financial markets, is aimed at the average investor.

"We now are a country of capitalists," Buchholz said. "Most families own stock. Most people these days turn to the financial pages before the sports pages. We now seem to have a much greater interest in understanding the financial markets, as well as the economy. We are all now responsible for ourselves and our financial futures."

Writing on the economy lets Buchholz continue his teaching, as he helps people understand the forces that impact their financial well-being.

"I've tried to figure out fresh and witty ways to explain economic, financial, and political events," he said. "These subjects don't have to be dull. They don't have to be rote. I try to draw on popular culture to make these ideas more fun and accessible. There's still a bit of a teacher in me, and I get satisfaction from being able to express ideas in ways that open people's eyes."

Cash Flow

When Sean Healey '87 walked into Goldman, Sachs & Co. in New York as a summer associate before his final year at HLS, he had no idea what he was getting into.

"They didn't have extra training for lawyers, so it was quite an eye-opening experience," he said. "While I didn't actually look for tellers when I first got there, it wouldn't have shocked me if there had been some."

But Healey, who started law school with hopes of becoming a law professor, soon found the world of finance far more fascinating than the prospects of teaching. Now he heads one of the country's ten largest publicly traded fund companies, Affiliated Managers Group (AMG).

As president and chief operating officer at the Boston-based investment management holding company, Healey has worked alongside CEO William Nutt to take the firm from IPO to a $77.5 billion enterprise at the end of 2000, with holdings in 15 investment management firms and its own line of mutual funds.

Healey cut his financial teeth at Goldman Sachs, where he stayed for eight years after graduating from HLS. He was a vice president in mergers and acquisitions when a chance meeting with Nutt during a merger deal led to his move to AMG in 1995. The still-young AMG is growing rapidly, Healey says.

"Investment management is quite attractive as a business because it generates substantial cash flow without substantial capital expenditures--compared to law or investment banking, where you start the year at zero and have to go find your cases and find your deals. With investment management, you start with all those assets, and while clients can take them away or the market can go down, it's still a much more stable business."

AMG does not buy companies outright but rather buys equity stakes in them. Current holdings include Frontier Capital Management, Essex Investment Management, and Tweedy, Browne, a New York- and London-based firm that was named International Fund Manager of the Year for 2000 by Morningstar, the investment rating service.

According to Healey, AMG has done well because the investment management industry as a whole has been growing rapidly and shows no signs of slowing down.

"People who once had their money in a CD at a bank are now investing it directly in the stock market," he said. "And it's broadly agreed that professional investment management can add value--that investing is not something that people necessarily have the time or expertise to do on their own."

Healey says about one-quarter of AMG's earnings comes from investments in global securities and 92 percent of earnings comes from investments in equity securities. The company also has hedge fund assets totaling $3 billion and is looking to invest in firms that are exclusively focused on hedge funds.

Healey spends much of his time meeting prospective new affiliates, meeting with shareholders, and dealing with financing sources. "Our particular approach to the business is interesting because I'm regularly interacting with entrepreneurs who have built their own firm in their own way and who have achieved a lot of success. It's quite a fascinating group."

While sharp movements in the markets are always a concern, Healey says AMG's diversified collection of firms helps keep it fairly stable.

"Last year, the market went down and our earnings continued to rise," he said.

Indeed, even as the economy began to flag early this year, Healey was not terribly concerned.

"I don't have an informed opinion on whether there will be a recession," he said. "I think what it means for investors is that a long-term orientation is required. Inevitably, people who try to time the market in the short term are disappointed. Think long term and diversify. Don't pick too many advisers. Pick someone or some entity that you're comfortable with. What's right for one investor won't work well for someone else."

Liquid Assets

Not only can Jim Donovan '93 help you decide how best to fund your child's education, he can even help you select the school. If you want to start a company or buy a house, go ahead and call him. Just make sure you've got at least $25 million in liquid assets before you pick up the phone.

"When you have that much money, you're in a league where you really should have access to the best performance and service," said Donovan, a partner at Goldman Sachs and managing director of its Private Wealth Management Group in Boston. It's Donovan's job to take care of every financial whim of New England's wealthiest families, from identifying philanthropic opportunities, to buying and selling companies, and everything in between. And he is busier than ever.

Wealth management, he said, "has been growing dramatically over the last ten years or so." The fact that multimillionaires rely on him to manage their huge assets doesn't seem to faze the 34-year-old Donovan. While he is a direct adviser, he knows he's not alone.

"I'm not directly responsible; Goldman Sachs is responsible," he said. "I'm really just a liaison. I find out what is most important to the client and then bring to bear the resources of Goldman Sachs. We have roughly 20,000 people worldwide who are experts in commodities, foreign currencies, private/public investing, fixed-income equities. It's comforting to know you have the firm behind you like that."

Still, a good deal of confidence, along with a good head for numbers, is essential in this burgeoning business, and Donovan has both in abundance.

A native of Danvers, Mass., Donovan says his high aptitude for math and science led him to MIT to study chemical engineering. He became a star athlete as a rower on MIT's Division I crew team. Always pushing himself to excel, he applied and was accepted in his junior year to an exclusive program that allowed him to pursue his MBA at the Sloan School of Management while working on his bachelor's degree. He finished both in five years.

Donovan had always intended to pursue a business career and felt a law degree as well as a business degree would be invaluable. Mentors he met during summers spent working at an investment bank, at a law firm, and as a White House Fellow only confirmed that belief.

When he finished law school, Donovan knew he'd go into business, either as an entrepreneur or as an investment banker. So when the offer came in from Goldman Sachs, he couldn't turn it down.

Now he advises a "very diverse group of people" on what to do with their millions. That variety--in his clients' personalities, circumstances, and attitudes--is what makes his job fun.

"They're very interesting people," he said. "They're entrepreneurs, scientists, academics, politicians, people who have inherited wealth, widows, widowers, celebrities. The common theme is they're all wealthy and want terrific service and results."

Those clients are also sophisticated about the foibles of the market. "Our approach is very long term," said Donovan. "We do not panic and tend not to have clients that panic."

Now a recruiter for Goldman Sachs, Donovan returns to HLS each year to urge students to consider a career in finance. It is not a digression from the rigorous training they've received, he says.

"First, [a law degree] is a great credential," he said. "Second, you learn a lot about tax and trusts and estates, and third is the approach. The logical approach that you learn in law school for solving problems is very helpful."

The statistics bear this out, as a steady flow of HLS graduates each year goes straight to Goldman Sachs and other finance and management firms. "But I still worry that too many [students] at law schools, including Harvard, don't look at all their options. They're just assuming they have to practice law and they don't look at finance."

Margie Kelley is a freelance writer from Quincy, Mass.

Contact: - - 617.495.3118
© 2001 The President and Fellows of Harvard College. All rights reserved.



Douglas M. Holmes Forum Index -> Douglas M. Holmes, Attorney, C.P.A. Bulletin Board

Jim Cramer

Author Thread


Joined: 22 Nov 2002
Posts: 12427
Location: chapel hill, n.c. Jim Cramer
Jim Cramer
From Wikipedia, the free encyclopedia

James J. Cramer

Born February 10, 1955 (1955-02-10) (age 52)[1]
Wyndmoor, Pennsylvania, U.S.
Occupation Television personality
James J. "Jim" Cramer (born February 10, 1955[2] in Wyndmoor, Pennsylvania) is an American television personality, former hedge fund manager, and best-selling author. In 2007, named him one of the 100 most influential business journalists in the United States.

Cramer is host of CNBC's Mad Money and co-founder of According to the January 27, 2007 episode of High Net Worth on CNBC, Cramer claimed to have a net worth of over $100 million. He currently resides in Summit, New Jersey. His estate includes a farm and considers himself a gentleman farmer.

1 Early years
2 Career
2.1 Journalist
2.2 Lawyer
2.3 Investor
2.5 Mad Money
2.6 Other television and radio shows
2.7 Cameos and Other Appearances
3 Controversy
3.1 Fox News Channel Lawsuit
3.2 Trading With The Enemy
3.3 SEC Subpoena
3.4 Market Manipulation: Interview
4 Criticism
5 Bibliography
6 References
7 External links

Early years
[3] He grew up in the town of Wyndmoor, Pennsylvania, outside Philadelphia. One of his first jobs was selling ice cream at Veterans Stadium during Philadelphia Phillies games. Cramer went to Springfield Township High School in Montgomery County.

Cramer graduated magna cum laude from Harvard College in 1977 where he was also president of the Harvard Crimson. At this point in his life, Cramer was a staunch leftist, naming his plan to revitalize the Crimson after Lenin's "What Is To Be Done?".[4]


After college, following a two-month tenure as the key operator at Congressional Quarterly, he worked as a journalist at the Tallahassee Democrat in Tallahassee, Florida. Living almost next door to the Chi Omega sorority house and Florida State University, he was one of the first on the scene after serial killer Ted Bundy attacked four women, killing two of them in 1978.[citation needed] After Tallahassee, he worked at the Los Angeles Herald Examiner as a spot news reporter, covering "basically anyone who died violently in California."[5] While he was covering a shooting in San Diego for the Examiner, a burglar cleaned out both his bungalow in L.A., and his checking account. For the next nine months, he lived mostly out of his car, with a pistol and hatchet for protection.[6]

Following this experience, Cramer moved in with his sister in Greenwich Village[citation needed]. His sister was studying to be a lawyer and encouraged Cramer to become a prosecutor. Cramer was one of the earliest reporters at American Lawyer magazine, where he worked for founder Steven Brill[7]. Cramer later earned a Juris Doctor degree from Harvard Law School.[8]). After graduating in 1984, Cramer's plans to become a prosecutor were dashed when he was denied employment with the Office of the United States Attorney for the Southern District of New York, headed at the time by Rudy Giuliani, because his law school grades were deemed not good enough.[9]

Cramer obtained employment in 1984 as a stock broker in Goldman Sachs' Sales & Trading department. Cramer's success in this position led him to found his own hedge fund, Cramer & Co. (later Cramer, Berkowitz, & Co.) in 1987. The fund operated out of the offices of hedge fund pioneer Michael Steinhardt's Steinhardt, Fine, Berkowitz & Co., and early investors included Eliot Spitzer (a Harvard classmate), Steven Brill, and Martin Peretz.[1] A year later, Cramer married Karen Backfisch-Olufsen, who was a trader with Steinhardt's firm. More recently, Cramer has been a contributor to New York magazine since 2000.[10] He is also an occasional contributor to Dime magazine.[11] Cramer retired from his hedge fund in 2001. It was taken over by his former partner Jeff Berkowitz.
In 1996 Cramer co-founded with The New Republic editor Martin Peretz, one of his hedge fund's original clients. Cramer later had a falling out with Peretz over business matters.[12] Cramer is currently a market commentator and adviser to the, as well as its largest shareholder. Cramer also manages a charitable trust stock portfolio which is tied to through a subscription service called the Action Alerts PLUS Portfolio.

Mad Money
Main article: Mad Money
Cramer now has his own television show on CNBC, Mad Money with Jim Cramer, which features his rapid-fire opinions on stocks suggested by callers. Mad Money is also well known for over-the-top antics such as Cramer throwing chairs, throwing his latest book whenever a caller mentions it, humorous sound effects, and for the catch-phrase "Booyah".

Cramer frequently takes the show on the road to various U.S. colleges. The name of the show is a play on Cramer's mental condition. Mad Money continues to be one of CNBC's most highly rated shows.[13]

Other television and radio shows
After being a frequent guest commentator on CNBC in the late 1990s, Cramer co-hosted CNBC shows America Now and Kudlow & Cramer with Lawrence Kudlow in the early 2000s. Kudlow and Cramer split when Kudlow called Cramer 'sweet potato bull macho' on the air on October 17, 2002.

Cramer hosted a one-hour radio show, "Jim Cramer's Real Money," until December 2006. The show was similar to his Mad Money TV show. He also guest hosted in the slot caused by the cancellation of Imus in the Morning (MSNBC and WFAN/Westwood One) in May 2007.

Cameos and Other Appearances
This article does not cite any references or sources. (June 2007)
Please help improve this article by adding citations to reliable sources. Unverifiable material may be challenged and removed.

60 Minutes interview
On November 13, 2005, Dan Rather did a sit-down interview with Cramer on 60 Minutes. Among the topics of discussion were Cramer's past at his fund (including footage of Cramer trading during the 90s at his New York offices), his violent temper while at the fund, and what finally led him to come to his senses and "calm down". Footage of Cramer at his family home with his daughters and wife was also included. On November 15, 2005, Jim mentioned on his program that he received hundreds and hundreds of e-mails after his 60 Minutes interview. This report was taped before Cramer's radio show, Smart Money with Jim Cramer moved to WOR and became syndicated under the CBS Radio banner.

Arrested Development
In 2005, Cramer appeared as himself in two episodes of the now-defunct FOX TV series Arrested Development. He appeared to first announce that he had upgraded Bluth Company stock to a "Don't Buy" from a "Triple Sell", and then to say that the stock was not a "Don't Buy" anymore, but a "Risky".

Cramer has also made appearances on NBC's Today, NBC Nightly News, Live with Regis and Kelly, ESPN Classic's Cheap Seats, NBC's Late Night With Conan O'Brien, Comedy Central's The Colbert Report, The Tonight Show with Jay Leno, and Jimmy Kimmel Live.


Fox News Channel Lawsuit
In 2000, Cramer settled a lawsuit with Fox News Channel in which Fox had claimed Cramer reneged on a deal to produce a show for them. Their conflict began when Fox complained that Cramer promoted's stock on the air.[14]

Trading With The Enemy
In 2002, Nicholas Maier, a former trader at Cramer's hedge fund, released the book, Trading With The Enemy, about his time at Cramer, Berkowitz & Co. In the book, Maier alleged that Cramer and the hedge fund engaged in illegal trading practices. Maier also stated that Cramer was the subject of an SEC investigation. Cramer denied the allegations and threatened to sue the publisher for libel. The publisher of the book quickly destroyed 4000 copies of the original release, and re-released it after editing out 4 pages that were possibly libelous.[15]

SEC Subpoena
In February 2006, an SEC investigation into allegations of collusion between short-sellers and a stock research firm led to the serving of subpoenas to and Cramer, as well as journalists for Dow Jones and Cramer disclosed the subpoena on his Mad Money television show, holding it up to the camera with the word "Bull" handwritten on it.[16] Both Cramer and refused to comply with the SEC's demands for communications between journalists and their sources, and First Amendment advocates publicly criticized the SEC move. Soon after, the SEC later stated it would not enforce the subpoena, and the investigation of the stock research firm was dropped a year later. In April 2006, the SEC announced a new policy on subpoenaing journalists, saying it would avoid issuing subpoenas "that might impair the news gathering and reporting functions." Any subpoena issued to a journalist must now be approved by the SEC's enforcement director.[17]

The allegations had been raised publicly and in a lawsuit against Gradient by chief executive Patrick M. Byrne. In May 2007, it was revealed that the SEC had subpoenaed Byrne in May 2006, in connection with an investigation of the company.[18]

Market Manipulation: Interview
In March 2007, a December 2006 interview from's "Wall Street Confidential" webcast stirred controversy after it appeared on In the video, Cramer described activities used by hedge fund managers to manipulate stock prices; some illegal and some debatably legal.[19] He described how he could push stocks higher or lower with as little as $5 million in capital when he was running his hedge fund. Cramer said, "A lot of times when I was short, I would create a level of activity beforehand that would drive the futures." He also encouraged hedge funds to engage in this type of activity because it is "a very quick way to make money." Cramer claimed that everything he did was legal, but that illegal activity is common in the hedge fund industry. He also stated that some hedge fund managers spread false rumors to drive a stock down: "'s important to create a new truth, to develop a fiction."[20] Cramer said one strategy to keep a stock price down is to spread negative rumors to reporters he described as "the Pisanis of the world". "You have to use these guys," said Cramer. He also discussed getting "the bozo reporter from The Wall Street Journal" to publish a negative article.[21] Cramer said this practice, although illegal, is easy to do "because the SEC doesn't understand it."[22] [23]

In January 2006, Joseph Nocera opined that the "people who are watching [Mad Money] and following [Cramer's] advice are fools." [2]
In February 2007, Henry Blodget -- himself indicted for civil securities fraud in 2002 and banned for life from the securities industry -- criticized Cramer for overstating his abilities as a market forecaster, noting that in 2006 Cramer's suggested portfolio lost money "despite nearly every major equity market on earth being up between about 15 percent and 30 percent." [24]
In March 2007, a review by CXO Advisory showed that Cramer's stock picks have done worse than the market averages.[25]
In March 2007, Joseph Parnes, a noted short seller featured in Barron's, refuted positions by Cramer on CNBC, and has shown to his audience in his publication, Shortex, that using positions contrary to Cramer's recommendations is actually more advantageous.
In April 2007, Credit Bubble Stocks criticized Cramer because of a speech he gave on February 29, 2000, at the height of the dot-com bubble, recommending a number of speculative stocks that ultimately fell in value substantially with some even becoming worthless. [26]
In August 2007, Cramer called for the Federal Reserve to support hedge funds that were losing money in the Subprime mortgage financial crisis, prompting Martin Wolf, the chief economics commentator for the Financial Times, to accuse Cramer of advocating an offensive and catastrophic "socialism for capitalists". [27] However, within weeks the Fed had lowered the short term interest discount rate by 0.5% as Cramer had requested on his Stop Trading segment. Please watch the video from 3:00 minute.

Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer) ISBN 978-1416558859
Jim Cramer's Mad Money: Watch TV, Get Rich ISBN 1-4165-3790-2
Jim Cramer's Real Money: Sane Investing in an Insane World ISBN 0-7432-2489-2
Confessions of a Street Addict ISBN 0-7432-2487-6
You Got Screwed! Why Wall Street Tanked and How You Can Prosper ISBN 0-7432-4690-X

^ Feinberg, Andrew. "Cover Boy Cramer", The Money Monster Web Log, The Kiplinger Washington Editors, Inc., 2005-10-24. Retrieved on [[2007-06-14]].
^ Tim Russert Show, July 14, 2007.
^ Tim Russert Show, July 14, 2007.
^ Cramer, James J. (2002). Confessions of a Street Addict. New York, NY: Simon & Schuster, pp. 4-6. ISBN 0-7432-2487-6.
^ Tim Russert Show, July 14, 2007.
^ Tim Russert Show, July 14, 2007.
^ "Archives: James J. Cramer". Retrieved on 2007-04-13.
^ "Archives: James J. Cramer". Retrieved on 2007-04-17.
^ The Fortune Tellers, p.146, Howard Kurtz, 2000, The Free Press books
^ Cramer, James J.. Cramer vs. Cramer. New York Magazine. New York Magazine Holdings LLC. Retrieved on 2007-08-03.
^ Associated Press/USA Today (December 4, 2000). Jim Cramer Quits Hedge Fund.
^ Joyce, Erin. "'s Cramer vs. Maier, Round II",, Jupitermedia Corporation, 2002-05-13. Retrieved on 2007-02-18.
^ Matthew Goldstein, (February 27, 2006)., Cramer Get Subpoenas in Gradient Probe.
^ Marcy Gordon, Associated Press (February 14, 2007). SEC Ends Probe of Gradient.
^ New York Post (May 11,2007). Company Byrne-d on Probe Report.
^ Henry Bloget, Slate (March 22, 2007). Cramer vs. Cramer: Will his crazy confession destroy his career?.
^ Thomas Kostigen, (March 23, 2007). Jim Cramer's big mouth: His revelations only confirm what dupes average investors are.
^ Roddy Boyd, The New York Post (March 21, 2007). Cramer's Big Mouth: Clip Could Run Afoul of CNBC.
^ Matt Krantz, USA Today (March 24,2007). CNBC's Cramer boasts of manipulating markets.
^ Hamilton, Dane (2007-03-20). Jim Cramer draws fire over manipulation comments. Retrieved on 2007-03-20.
^ Blodget, Henry (2007-01-29). Pay No Attention to That Crazy Man on TV. Slate. The Washington Post Company. Retrieved on 2007-02-18.
^ LeCompte, Steve (2007-03-17). Jim Cramer Deconstructed. Retrieved on 2007-03-17.
^ James J Cramer, Mad Money Indeed. Retrieved on 2007-10-04.
^ Wolf, Martin (2007-08-17). Fear makes a welcome return. Retrieved on 2007-8-17.
Kurtz, Howard [September 2000]. The Fortune Tellers: Inside Wall Street's Game of Money, Media, and Manipulation. New York NY: Simon & Schuster. ISBN 0684-86879-2.
Jim Cramer biography on
In the Money, continued, Balance Sheet, article about Cramer and other law alumni, from the online Harvard Law Bulletin
"Cramer Reveals a Bit Too Much", Roddy Boyd, New York Post, March 20, 2007

External links
Wikiquote has a collection of quotations related to:
James, Cramer's investment website.
Beat The Street, Cramer's stock market game site.
Jim Cramer at the Internet Movie Database
Track Mad Money Recommendations
Betting on the Market - PBS Frontline interview with Jim Cramer
The New Yorker New Yorker critic's article by Nancy Franklin
Mad Money TV Show site
To The Moon
Maxim: Ask Jim Cramer, Maxim's interview with Cramer, and Top 2 Chinese Stocks Right Now
Jim Cramer on The Colbert Report,

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Jim Cramer: Worth the boo-yah?
Ignore the on-air antics; the market maven's magazine columns offer authentic advice investors can take to the bank.

On CNBC, he is cable television's Mr. Hyde, a shrill, hyperactive tsunami of opinions about stocks. A June MarketWatch column critical of his shenanigans sparked a blizzard of responses, with reader e-mail fairly evenly divided, underscoring the notion that people, quite clearly, love or hate Cramer.

In his Jekyll incarnation, Cramer is the restrained, informative author of "The Bottom Line" column that runs in New York magazine. When you read one of his pieces on investing, the word that jumps out is "authentic." He sure knows his stuff.

The difference between him and a lot of the so-called media experts -- many of whom regularly chat on CNBC, by the way -- is that he offers a rare, practical perspective.

Any schnook can go on TV and crow about his occasional stock-market victories. What's more instructive for viewers is hearing the war stories of an investor who has rebounded after losing money. It's similar to a boxer who gets knocked down but comes back and heroically wins a bout. Cramer can take a punch.

Cramer, a Philadelphia native who graduated from Harvard in 1977, started his career as a newspaper journalist. He subsequently joined Goldman Sachs (GS, news, msgs) in 1984 and left three years later to launch a hedge fund.

"It was to be the beginning of a shrewd career on Wall Street where he compounded at (a) 24% return after all fees for the next 15 years," as Cramer's New York magazine biography points out.

His wealthy clients got their money's worth: Cramer said in a 2005 interview that he got to the office by 4 a.m. Further, he sometimes made as many as 250 trades a day.

Cramer went on to co-found (TSCM, news, msgs) and continues to write for the Web site. But likely because those stories are geared for an online audience, they tend not to have the same long-term view as his mostly monthly pieces in New York.

Among magazine business journalists, perhaps only Allan Sloan of Newsweek can rival Cramer. On that score, it's a mystery why Time, which has been fortifying its columnist ranks, hasn't poached Cramer already. (Or perhaps it's simply that Cramer's allegiance is an example of the loyalty that New York writers reserve for its editor, Adam Moss).

An advocate for individual investors
In his magazine writing, Cramer plays the role of an advocate for the individual investor and isn't reluctant to offer advice.

He predicts, for instance, in his Jan. 8 magazine piece that such companies as U.S. Steel (X, news, msgs), Alcoa (AA, news, msgs), Colgate-Palmolive (CL, news, msgs) and Yahoo (YHOO, news, msgs) could be taken over this year "by overseas entities taking advantage of a declining greenback."

In the same column, he urged his readers to "take the shotgun approach and buy your favorites among the above candidates for acquisition. But I think even better is the rifle approach. Pick, to extend the metaphor, the original arms merchants for all of these deals: the investment banks." The teams at Goldman Sachs, Morgan Stanley (MS, news, msgs) and other companies, he wrote, "will all get fat vigs from these deals."

Video on MSN: Cramer's CEOs who must go
The host of CNBC's "Mad Money" updates his Hall of Shame list of executives who he says could benefit their companies and shareholders by walking out the door. Watch the video.
He doesn't shy away from expressing strong opinions about powerful institutions.

Last April, he wrote of The New York Times (NYT, news, msgs): "One could be tempted to write off the whole New York Times as a similar dinosaur. If all we care about is what we want to customize, who needs all the other filler? Why not preselect everything we need from the Times via Google (GOOG, news, msgs) and be done with the paper entirely?"

Nobody is safe from Cramer's acidic perspective.

In February 2006, Cramer opined: "Some businesses are so reprehensible, so impossibly exploitative that they simply must be bought. Okay, that may not sound like sage investment advice, but given the Bush administration's wanton embrace of corporate interests, investing in a portfolio of companies you couldn't stand to work for without having a camp-guard mentality, a collection of stocks so motley in morals on the face of it, might be a solid bet right now. In a country where the top 1% of households controls 57.5% of corporate wealth, if you aren't thinking about ways to profit from our squeezed middle class, if you are still stuck in the mindless chasm of politically correct investing, you could be leaving fortunes on the table."

Yes, Cramer's "Mad Money" TV show is a monster hit. But he doesn't need the shows' bells and whistles to make a point as a magazine columnist. He's sharp enough when he sticks to using words alone.

That's the real bottom line about Jim Cramer.

This article was reported and written by Jon Friedman for MarketWatch.

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