It is 4:30am in the morning on Sunday. Still waking up from my midnight prayer to God. Just the thought of the incredible amount of pain and suffering that these infants and cancer-sick people need to suffer bring tears immediately to my eyes. LOOK AT THE PICTURES!

We, as the nation of the most mighty military on Earth (at this moment), have dropped tons of depleted Uranium bombs in Iraq and Afghanistan along with Britain, and helping Israel to drop the same bombs in Gaza, causing not only birth defects in Iraqi infants above, but also serious health hazards in Iraqi civilians and US soldiers. After all, depleted Uranium has a radioactive half-life of 4.47 billion years, just about the age of Earth which is 4.54 billion years, and will continue to be radioactive for billions of years to come. USA manages to kill people who are yet to be born for the next 4.5 billion years. That is a WAR CRIME against humanity.

USA fights Iraq to find Weapon of Mass Destruction (WMD), but instead we are the ones who used these WMD. We are requesting Iran to comply not to develop any nuclear weapons, but instead continue to allow Israel’s refusal to sign on anti-nuclear treaty, and secretly develops nuclear weapons. Those are hypocrites at their best.

The world and this country needs to come to the recognition of truth. The real terrorists are USA and Israel. How does the third building World Trade Center #7 free-fall without a plane nor any debris hitting it, while in human history NO steel-made high-rise buildings collapsed due to extended fire? Why were steel structures melted (at above 1200 Celsius) when the open air burning temperatures of Jet Fuel is only 288 °C.

Forget about any evidences, and just think logically. How can 3 WTC buildings collapsed in a free fall fashion without the bottoms being knocked out of it? Just try that with toy blocks, and it will be quite obviously to you. For it to free fall, the only possible way is that you start by knocking out the most bottom block, and then the next one, and then the next one. Any other ways of falling will cause the toy “building” to fall to the side, instead of vertically free-falling to the ground.

All these guys should be all fired, sued for paying back all past bonuses and compensation, and jailed for financial frauds. Why do US politicians continue to allow such ludicrous events to occur? If there is any plausible explanation, I can only think of two:
1. Either the politicians are totally incompetent,
2. or they are totally “in bed” with these financial executives.

All these hundred of billions of dollars are paying out of our pockets of common people. If we don’t stand up and voice our concerns, one day all these financial executives will simply take all of the bonus money and flee away a bankrupt USA without getting any punishment.

Who are these “daring” outside counsel that “advised the company that it must go through with” the bonus arrangement? Even if it’s somewhat “legally binding”, let these guys sue US government. I really want to see who are so daring and shameless to want to come forward and sue for these totally undeserved bonus.

99 out of 100 workers don’t get ever any bonuses. But we are all working our butts off to pay some ridiculuous bonus to these executives.

Something is seriously wrong at the top decision makers. We need a revolution!

I asked his opinions on how he thinks about the recent surge in food prices. He told me that it’s the first time that he is seeing everything in food going up at all fronts for an extended period of time. And he thinks that these trends are going to last and will be sustainable because of the following factors:

1. Government-mandated fuel additives of ethanol taking away lots of corn supplies.
2. Increased corn acreage is at the expense of decreased acreages for other agricultural products.
3. People in China and India are increasing their living standards.
4. World inventory of grains is at the lowest level in 60 years.

More specifically, I asked what the agricultural producers are doing in response to this problem. He told me that the existing big players are investing the profits into bio-tech to enhance their edges and profit potentials, and they are not expanding the planting acreages dramatically (since it will be to their disadvantage of increasing the supply). I obviously knew about all the above factors last year, but I was more concerned about the future going forward. Unfortunately, the answer that I got was not what I wanted to hear. I told my friend that without increasing food supplies, there may be famine. And his response was that famine will only be in the third world countries.

Well, yes, I know. I didn’t go further on my comments. But that was just what’s on my mind.

Back in 1985, when I was in my early teens, there was a music song that touched me deeply. It was “We are the world”. It made me feel very sad to know that there are people dying of hunger, and going to bed with an empty stomach. And I still remember that it was the first time that I learned about this African country Ethiopia from the song. And that there were some 100 singers who tried to raise money for the hungry people. “We are the world, we are the children….” That was the lyrics from the song. And I couldn’t agree more.

I only hope that we don’t see that happen. But we are indeed crawling towards it, if not happening already. Look at the headlines:
Rice Jumps to Record, Corn Near High as Demand Outpaces Supply.
Fear of unrest mounts as hunger spreads.

(US-exported) Inflation is hitting many foreign countries much harder. One day however the inflation may comes back to US soil with revenge (through currency exchange rate).

The most effective way to solve these problems is not really raising lots of money which will simply cause a different way of food distribution, but rather raising lots of food supply. Food inflation is the harbinger of all inflation. The future does not bode well for paper money. I only hope that farmers will be doing an excellent job for everyone else.

And you know whom I’m going to vote for, Ron Paul obviously.

Just this weekend, I drove by a bunch of Ron Paul supporters rallying around a shopping mall. I was so excited that I decided to join them on spot. Ron Paul probably has the most number of unpaid volunteers campaigning for him, and count me in too. All of my time support plus $500+ more in donation are only for one reason: I love America, and I’m going to vote for him so that US dollar will not crash under exponetially increasing fiscal deficits. A crashing US dollar will bring so much inflation to USA that it will literally destroy all the middle class people.

Yeah, I know. Ron Paul doesn’t have much chance (this time around). But it is even more important for all the Ron Paul supporters to come out and make their views be known.

Who is my second choice? Not sure yet. Maybe Obama? But I only hope that all of those political energy that Ron Paul has revived will continue well after the conclusion of 2008 Republican primary.

It’s time for America to change.

The patriotic supporters of Ron Paul have joined hands and broke a new record in US history for the biggest donation day online. Today is the tea party day.

Ron Paul is certainly the most knowledgeable candidate on economics, and have debated with Bernanke several times. He is probably the best candidate that you can vote for, for a long term bullish US stock market.

Alright, I will be going back to my regular personal finance/stock market blogging.

Five hours left on the celebration of Tea Party 2007. Ron Paul and the supporters have raised over 4 million dollars in the last 17 hours. It’s really not too late to join this Ron Paul movement. And it is never too late to be part of the American History. We are making history today, and will surpass previous record of 4.3 million dollar.

If you don’t know who Ron Paul is, you’d better find out now. The Ron Paul supporters will have close to 100% voter turnout, while all the rest of candidates will be as apathetic towards politics as before. Why are Ron Paul’s supporters so enthusiatic about him? There must be some good reasons. Don’t be agnostic and apathetic anymore. Stand up, and save the country together. Even if Ron Paul does not make it all the way, collectively we stand together and make our voices heard TODAY.

I have made my third campaign contribution today, and ‘m going to make my fourth campaign contribution once more today. The average contribution size by Ron Paul supporters ranges from $80 to $150. And obviously I myself have not exceeded the cap of $2300 for a single candidate yet. The small amount of money from the mass of people have spoken. No one can raise 4 million dollar plus alone. We must all stand up and fight.

Last call to donate at Ron Paul’s site to be part of today’s American History. No, we the Ron Paul supporters, are not crazy. We are so patriotic and so in love with USA. We care so deeply about the fellow citizens that we are willing to spare our money for an idealistic purpose that may seem to be impossible, but yet becoming more real as days go by.

P.S. You can see the donation curve here. Click to see the latest update:

There is a silent revolution going out there. In less than 8 hours today, from midnight till about now, 1.2 million dollars have been donated already. I hope that collectively we can break 4.3 million, which was the previous record set on November 5th.

Be part of the history in the making. Buy a cap, or some campaign material. If Ron Paul makes it all the way through, you bet that you can sell your precious good on Ebay for a lot more.

I have never felt so strongly about a particular presidential candidate. There is simply no other candidate that will come close in intellectual power and integrity than Ron Paul’s.

Let us all be part of the great American History in the making.

A money bomb for Ron Paul is a way to garner media attention to create the most donation per calendar day. This is to combat the deliberate disregards from the traditional media. On the previous successful money bomb in November, Ron Paul raised about 4 million dollar in a single day, breaking the records for all presidential candidates. I didn’t know about the November money bomb, and didn’t participate in it. But I expect that this December money bomb will make new history. Be part of the this history in making by donating just $5 or $10 here.

The biggest reason that I stand behind Ron Paul is because of his fiscal and foreign policies. This country has gone too far and too long in the wrong direction, and it’s time to down-size the big government and streamline the operations without wasting even more taxpayers’ money. Ron Paul’s understanding and his actions behind the fiscal and foreign policies are unparalleled and unmatched by ANY presidential candidates. I have registered myself as a Republican (converting from a Democrat) so that I can vote in Republican Primaries next year in California. I hope you will also join me because the future of this country is at stake.

If you are a citizen, you should love this country. If you love this country, you should support your presidential candidate. Be PATRIOTIC. Don’t be apathetic. Donate what you can, and take a stand, and vote. A democracy without participation is the same as having no freedom of voices. The big money and corrupted political power fosters and grows from the apathy of every voter. Ron Paul is one of the very few candidates that garner all grassroot supporters from all walks of lives. Be part of it.

In any case, let’s look at some details of the plan from the available news from Bloomberg:

1. The covering period is origination from Jan 1st 2005 to July of 2007, and resets in Jan 2008 to July 2010. This will cover majority of the mortgages, except the early adopters in 2004. It even covers the people who have already reset, for example with a 2-year ARM reset between Jan/Jul 2007.
2. To be eligible, borrowers must be less than 60 days behind the payment, and have LESS than 3 percent equity in their property. Also, the borrower must have a FICO score of 660 or below. Now everyone is going to go out and start defaulting on every credit card to lower their FICO score. And take out a home equity loan to go below 3% LTV, putting that cash elsewhere. How smart the plan is! Talk about moral hazards.
3. The result of the bailout is a freeze on rates (I’m still not clear on whether it’s payment or interest rate or both), or refinancing into another mortgage, possibly (or I should say most likely) back by Federal Housing Administration loans. Certainly FHA will pick up many of the junks from big banks and write them off through taxpayer’s money.

Now the biggest issues with the bailout as I see it is best put forth by Scott Simon, head of mortgage and asset-backed bond investing at Pacific Investment Management:

“The things that make the U.S. mortgage market the capital-market success that it is are property rights and the sanctity of contracts, so they have to be careful to not damage either one of those.”

And Republican Mike Castle of Delaware was daring enough to propse to offer a safe harbor clause from legal liability to mortgage servicers.

Based on the details that I gather, it appears that the bailout will be done by mortgage servicers probably through brute force, without even gaining consents from the mortgage bond investors. That is just NOT good. That is violating property rights and contract laws. The US government (especially the head of FDIC) is debasing the very foundation of this country (not to mention a debasing US dollar). How can government intervene into a private contract, and decide who is going to be benefited, and who (all the renters, conservative home buyers, and mortgage bond investors) will be hurt, or have their rights/properties taken away?

Certainly, this bailout plan is really intended for banks and financial institutions, so that they can keep valuing their mortgage holdings at a higher artificial unreal price. In the meantime, all the $US dollar holders and majority of the citizens will get screwed by even higher inflation to come, so that the housing prices can be stabilized at a nominal inflation-non-adjusted prices. Basically, US government is trying to prevent a normal deflationary cycle after an abnormal inflationary housing cycle (created by Greenspan’s ultra-low interest rates). Of course, such inflationary actions will simply exhibit itself later in more inflation later in whatever hot money decides to chase afterwards.

The whole bailout plan and most of Greenspan’s past actions are MORAL HAZARD. That is the reason that our capitalistic society is getting more and more speculative year after year, and that the speculation fireworks are rising to ever higher height, and also dropping to ever deeper abyss. Capitalism with moral hazards created by government bailouts is no longer a free enterprise market. When a risky bet no longer has the risks because of government bailouts, everyone becomes (and wants to become) a speculator. This is the society that we lives in. And the caution from fiscal conservatives is always penalized by the lost gain (due to inflation).

As I have said earlier, the real loser when the housing bubble bursts is really everyone. And our losses are not just financial due to loss of purchasing power because of higher inflation, or reduced benefits or credit interest rates in our pension or bank accounts. Our biggest loss for a society as a whole throughout the bubble process is that we have all become speculators in the long term. And when everyone becomes a speculator, nobody can gain from speculation.

P.S. Thanks to Keith at HousingPanic, I vicariously release all of my resentment through reading his blog. I wouldn’t want to go that far like in his blog at least verbally here on my blog. But I certainly agree with him on many of his well-made points.

Initially, when I tried to make my first donation, and found out that it is not tax-deductible, I really hesitated, especially knowing that Ron Paul may simply not make it to the final race. But then, I still went ahead.

Then I made my second donation doubling my amount of financial support. Then I spent about $27 for this hat (including shipping), expensive by my frugal nature. Then at the morning assembly of my kid’s school, I finally understood why I’m doing what I’m doing. It’s the pledge to the flag:

I pledge Allegiance to the flag
of the United States of America
and to the Republic for which it stands,
one nation under God, indivisible,
with Liberty and Justice for all.

Yes, I truly believe that Ron Paul will bring a better future for this country. And I love this country where I was not born, but lived for the last 15 years with all of my heart. And I am going to show it, not just by money, but also by voting in Republican primary, and in the daily actions of my life.

So even if Ron Paul will not make it to the 2008 presidential ballot, so be it. But I’m not going to be apathetic about the whole thing.

Rather, I’m going to stand up and fight for a better future for USA. Fight for the soldiers to come back home. Fight for the middle class people who may suffer from the yet-to-come inflation. FIGHT.

Yes, Ron Paul (and I) may lose with great possibility. But at least, deep down in my heart, I know I’ve tried my best in my own way to help this country go back to the right track.

Will you join me to love this country, even if you don’t agree to support the same candidate?

Here is some latest YouTube video on Ron Paul if you’re interested.

Two officials at leading Communist Party bodies have given interviews in recent days warning – for the first time – that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress. Shifts in Chinese policy are often announced through key think tanks and academies.

click here for full text from telegraph.co.uk.

For the best interests of global economy, I think a gradual devaluation of $US is the best. However, US keeps wanting to revalue Reminbi at a much faster rate. I don’t know how much these Congress man think, but revaluation of Reminbi is equivalent to increase inflation in the US. Increasing inflation means US needs to keep higher interest rate. And higher interest rates mean less economic growth and lower stock prices.

I personally think that what China is doing with Reminbi is smart. Although most likely the policy is more beneficial to Chinese, the fate of Chinese and American are really tied together in this global economy. Making your creditors mad most likely won’t do you any good.

Again the spectre of heightened inflation is there again from the threat of China, adding onto a long list of reasons of why inflation in the US will go higher for the forseeable future. So whatever you invest in, make sure it can be inflation-proof somewhat. Otherwise, whether it’s an energy-driven inflation (due to peak oil or emerging world demands), or monetizing the heavy US debt and all the social programs, or an inflation driven by US dollar devaluation, or the need for higher inflation to reduce the absolute magnitude of collapsing housing price from Shiller’s housing price curve, or inflation caused by decreasing agricultural labor or any other minimum wage jobs due to increased immigration enforcement, etc. I think you get the picture.

Inflation does nothing to the people without savings, since they don’t have any savings to be depreciated. Inflation usually makes the rich even richer because they are always positioned at the front of inflation curve, whether it’s their assets or their salary. But for the people in the middle class as a whole, they tend to get poorer because the wealth is transfered to the rich people or foreign countries. Make sure you are not one of them.

Coining the term WMD to cheat the legislative branch of Congress into going into Iraq war, overriding the decision from judicial branch on the prison term, stripped away the basic human right for detainee on habeas corpus, and with the help of legislative branch of Congress, passing a law to grant himself all immunity from war crimes (see the video below):

The president of USA is becoming like almost an emperor now. The three branches of the government: executive, legislative, and judicial are supposed to have a proper check and balance. It looks like our country is nowhere close to where the founding fathers have envisioned.

I put up a small banner of his campaign on the right column linking to his website to show my support without too much distraction from this blog. I hope at least I’ve brought you some attention to this potential presidential candidate, a medical doctor (gynecologist) by profession, a conservative republican, who is daring and knowledgeable enough to challenge Greenspan and Bernanke for so many times. He is a true believer in the free markets, and wants to reverse the trend of a bigger and bigger government that gets into the private affair of free markets, taking away a bigger share of tax revenue each time for providing some inefficient services. If he is elected as the US president, I think for the first time, USA can cut tax and still close the budget deficit. This will be very very bullish for the stock market and USA in the long term. Less tax burden is always better.

I’ve watched many of his YouTube videos. If you have some time, you could watch a couple. I don’t know about you, but I’m so excited and feel so refreshing to hear some unconventional political views. And you bet that he will bring our troop home for certain.

Here is a recent video of Ron Paul in CNN debate on June 5th:

I obtain most of my information from this link. Please feel free to add any informative links to the comment section. Thanks.

I just don’t know how many lives of American soldiers it will take to wake up the public. Often, everyone of us is too busy taking care of our own affairs, be it job or family or just party fun. We don’t read and learn from our past history. We don’t think far enough into the future either. Frankly speaking, I know little about Vietnam War, and I was surprised to learn these things about Ellsberg.

Stories like “Enemy of the State” movie has happened to Ellsberg. Maybe one day my website will be a target too. But whatever government power that tries to erase its trace cannot stand up to Truth. Any country that pre-emptively attacks cannot justify its cause. Have you seen the movie or DVD on Minority Report? Who is to say that because murders may happen or could happen, and then you should jail the person? What if it’s all made up, like the non-existent WMD in Iraq? Bush was so sure of its existence, and now blame it all on faulty intelligence. Who is going to be responsible for all the innocent deaths?

And it’s also under this administration that Habeas Corpus has ended. Under this bill, if you’re called the enemy combatant by the Executive Branch, you have no legal rights to challenge such claims, and can be jailed without proper cause. This is the “free” America.

I agree with the arguments made by antiwar.com. If any country attacks another, such aggression is always seen bad by other countries. Why is it that when USA or Israel does it (such as owning nuclear weapons), it can be called just, but not any other countries? Even if US doesn’t occupy the invaded country, it still doesn’t give US any rights to attack. By the way, US has been in Iraq several years now and counting. Quite a bad image. And of course, Israel occupied West Bank and Gaza for years if not decades. Their land grab is coined as “settlements” as if there are still no man’s land (not to mention all of bulldozing of Palestine houses without recompense). Once you stay long enough, a decade, and two, and then a hundred years after several generations have passed, it will become yours. Quite clever? Israel might as well change the history books like what Japan did for their WWII aggression against China, calling the attacks as “entries”.

Maybe you don’t like it, but my “anti-governments” stance comes from my deepest love for humanity of all races and all walks in life. I wish Truth & Justice & Love prevails on Earth, and Prosperity for everyone. Jesus’s teaching is very clear: no one is innocent enough to throw the first stone on the sinned woman (John 8:7). No one can judge another person, but God. Likewise, no country alone can claim to be the world cop, and attack without being under attack. I don’t personally judge Bush as a person, but rather I’m afraid of the results from his actions as the US president (Iranian president is far worse though). In fact, if Iran attacks first, I will be the first one to speak out against Iran. What kind of crazy @#$% BS is that, “wiping Israel out of the map”?(Please check out the link in Pascal’s comment. I was surprised to learn more details about this “quote”.)

I would like to conclude this post with a simple prayer:

May there is no war with Iran. May no innocents are hurt. May all countries live in peace, and all peoples live in prosperity. In Jesus’ name. Amen.

Of course, one ought not be surprised, since Russia and China (for that matter the whole international community) has been trying to get US to sign a ban on space-based weapons for some time. It is also common knowledge that US is the undisputed leader in this area even after this latest Chinese advance. Some might characterize this move by China as a ploy to get US back to the negotiation table, but any realist could see that a space arms race, which has long been going on behind the scenes, is inevitable. Space, as they say, is the final frontier.

This is not to assign blame to anyone, for we are squarely in the realm of “real politik”. It’s a classic prisoner’s dilemma situation where nothing good will ensue. A new international agreement, even if signed, will only slow down the arms race in the best case, just as the nuclear test ban treaty simply moved testing to a digital platform. At any rate, we have to realize that satellites directly above someone else’s territory are indefensible. More fundamentally, US’s hegemonic power is predicated upon a monumental overspending which cannot be maintained when the object of subjugation is a rising industrial power with 1 trillion in reserves.

Alright, enough of being fatalistic. I accept the reality of the world we’re living in, and it behooves to position myself the best way I can. So I’ll make the case for investing in the defense industry here. A space arms race, however irrational and unwinnable, is sure to booster the aerospace and defense industry into the “low earth orbit”.

From Jeffery Saut
The basic premise was already strong prior to this latest incident. Following is from a Jeffery Saut missive dated December 26, 2006. It’s no longer available at the Raymond James site but here’s the Google cache page.

This is the interesting bit:

Having lived around “The Beltway,” we have a pretty decent sense for how the political winds blow. Last week’s visit to “The Hill,” however, surprised us. Indeed, we arrived thinking that political gridlock was likely to be the course over the next few years, but that sense changed after a few conversations. Surprisingly, we found many of our Republican and Democratic leaders pretty much in agreement on numerous things. Of particular note was a near unanimous agreement between the Congressional folks from states devastated by companies moving jobs offshore. While said Congressmen can’t force companies to keep jobs in their states, one thing they can do is vote for an increase in the defense budget and mandate that those attendant high-paying jobs be kept in the United States. The last time such a defense build-up occurred was during the Reagan years and it led to a BOOM in economic activity punctuated by near 8% GDP growth. And maybe, just maybe, that is what the stock market is “seeing.” The quid pro quo is that such a boom would obviously be accompanied by more rate ratchets from the Fed . . . aka, “the fooler.”

I think the message was crystal clear. He went on to suggest two ETFs for this sector: iShares Aerospace & Defense Index (ITA) and the PowerShares Aerospace & Defense Portfolio (PPA).

ITA vs. PPA
ITA tracks the Dow Jones aerospace and defense index (components) whereas PPA tracks PowerShares’ proprietary SPADE™ defense index. The main difference seems to be that PPA contains some consumer discretionary names like DirectTV and EchoStar, as well as some IT names related to biometrics and homeland security. ITA was just introduced last May. Over its short life, PPA has outperformed slightly. ITA has an expense ratio of 0.48% vs. 0.60% for PPA. I personally gravitated towards the former but both capture the desired exposure well. Daily dollar volume is equally low at $1.5-2 million. ITA trades only about 30k shares; however, I have noticed persistent 30 lot orders with a bid/ask spread of 4 cents. I’m not sure if there is a market maker providing liquidity. Perhaps a more knowledgeable reader can shed some light here.

Technical Picture
On the daily chart ITA just completed a breakout and a retest of the $54 level. One may ask whether this is a late stage breakout, but the benefit of the doubt resides with the trend until proven otherwise. As long as it stays above $53, I’m not going to fret much.

The long term DJUSAE vs. S&P chart makes a very convincing case for this sector. In fact, it can be argued that we’re at the brink of a new leg up and this latest incident could very well be the catalyst.

Disclosure: I’m long ITA and all the usual disclaimers apply.

The leaders in Iran seem to be way-over their heads, while Israel is always aggressive in pre-emptively defending herself. This looks like an almost perfect “recipe” for conflicts. Iran however would be very different from Iraq or Lebanon. Iran not only is quite strong, but also can potentially shut down the Humus(?) strait that controls flowthrough of about 20% of global oil production.

I can’t nor want to imagine what kinds of social havoc may be caused due to a outbreak of war between Israel/Iran. Oil/gold will most likely go up big time. And I actually believe that US Fed would take this chance to lower short-term interest rate and try to duplicate their success campaign after 911. But it wouldn’t be the same everytime. For one, commodity prices will go up big time. I’m guessing that they may use the core rate that excludes both energy & food, and telegraph that the rise in commodity would be just temporary due to a temporary war.

Anyway. I truly hope nothing terrible will happen.

P.S. I wrote this about 2 weeks ago. Just this past weekend, I saw another more concrete report on Israel’s plan in attacking Iran. And Israel’s plan includes the option of using “low-yield” nuclear bunker busters. I can’t believe it is even considered, my dear God.

What do I mean exactly? It’s the two classes of shares that have different amount of voting power (class A and class B for that matter). With the exception of Berkshire Hathaway (Warren Buffett’s company), Class B shares are not available to public, but insiders and management, while having more voting power, often 10X. Class A shares are the ordinary shares that trade in the stock market for ordinary folks like us, and only has 1X voting power. In Google’s case,

With Class B shares having 10 times the voting power of Class A shares, the three executives together control more than one-third of Google’s voting power. Combined with the shares held by directors and management, the group controls nearly two-thirds of the voting power.

As argued in the MarketWatch article, there may be some few examples like media where this kind of structure makes some sense for maintaining media independence. But power always finds its way to money. And I am afraid that IPO to the stock market is becoming increasingly like an ATM machine for all the founders in these new companies. How does the whole scheme work?

1. Create a great company like Google, and then IPO. Through stock market valuation, your wealth immediately expands by at least 10X since annual profits of the company if valued at P/E ratio of 10 will get a market cap of 10X times the annual earning.
2. But you want to IPO and sell shares, and don’t want to give up controls. So you create two classes of shares with 1X and 10X voting power before or at the time of IPO. For example, if you only own 30% of the company, you can have 3% in class B, and 27% in class A. Selling off 27% of the company makes you immediately rich. And yet you still retain about 30% voting power.
3. Why not 50% or more voting power? You don’t want to be too controversial or too obvious to be appearing as greedy. You can partner with another founder, and/or people close to the top. With voting power over 50% or close to 50%, now you can make an ATM machine out of the stock market.
4. Since you are either the CEO, CTO, chairman, or essentially an employee of the “public” company, you will be granting stock options or restricted stock shares to yourself. How much stock option? Well, as much as you want to, since you plus all the people who have B shares can pretty much override any shareholders’ votes.
5. Since you have an unlimited supply of stock options of your own company (through step #4), you never need to hold your stock options for more gains. Just sell them whenever volatility of the stock offers you some gain.
6. Selling your stock options are also a great source of positive cashflow into your own company. For every share of stock option, the company gets the price paid for the strike price, and you get the rest. And of course, one invisible shareholder pays for those with his or her hard-earned cash.
7. If there are problems with share dilution through such process, your company can buyback the shares you sold. Essentially earnings of the company can be recycled through buyback programs into your own pocket. Suppose for every share of stock option that you sold, your company buys it back to create zero dilution, you will pocket all the option gain, while the earning of the company is effectively funneled into your pocket. Totally legal money laundering.

Now, if you are truly aggressive, you can grant or authorize large amount of additional shares of your company at a single time. For example, if you start with owning 12% of the company, with 2% class A, and 10% class B shares (10X voting power), with the rest of 88% sold to public and trading as class A share, your voting power is 100% + 2% divided by (88% + 100%+2%) = 53.7%, enough to always vote the things in the way you wanted. Now, if you just continually grants yourself options of some 10% additional of the company. After 10 years if you haven’t sold anything, you will have 10 years * 10% + 2% class A share + 10% class B shares out of a total of 200%, basically taking back 50% of your own company again after you IPO and sold off 88% of your own company.

How do I know this? Because I’ve seen at least one of those 200 companies (not Google, yet?) in action that did something similar to what I just described, except with different percentage numbers and number of years.

There is a saying: power tends to corrupt, and absolute power corrupts absolutely. I don’t know about you, but if I have an ATM machine that I can constantly withdraw cash without any deposit, I will almost definitely take good advantage of it. Won’t you? Certainly, I would appear to have some stake in my own company, but I don’t need it to be more than 50% to raise eyebrows, since I would have already more than 50% of the voting power.

I think this is the most pure form of greed if it is all acted out. Sadly our stock market system allows it. How can there be two classes of shareholders is really beyond me.

On the other hand, California has passed the measure for issuing transportatioin bonds on expanding freeways/etc. If you are a stauch peak oil believer, you probably would say that majority of those money is going to be wasted on the freeways. I don’t know for sure whether peak oil is real or not, but I do believe that the country desperately needs to build up the alternative energy sources. If prop 87 was better written and had the full accountability, I would have supported it.

On the peak oil, I really hope that it’s not like the story about crying wolf. You cry once, and then twice, and then no one believes in you anymore. But then, the real wolf comes. Back in 70s oil crisis, it was quite real, but once it’s over, people quickly forgot about it.

I think a good preparation is always better than nothing, and that’s also true for peak oil production.

P.S. I’m “back” from my vacation just for 1 day for a quick post, in case you wonder, .

1. The Hurricane Season: A war in the Middle East will cause oil market to spike. To have a war in the Middle East together with a devastating hurricane is an economic suicide. The crude oil price may spike to above $100 easily due to the combination of the two factors. Therefore, I will not consider any war in the hurricane season which starts officially on June 1st, and finishes in the end November. In fact, I will make sure that the war or the most intensive part of the war finishes before the start of the hurricane season.
2. Christmas shopping seasons: About 70% of the GDP in the USA is due to consumer spending. And 20% or more of the retail sales are done in this period, starting the Black Friday right after Thanksgiving. A terrorist would choose to attack during this season, while a US war planner would never choose to start a war near the start of the holiday shopping seasons. Definitely after Christmas and New Year. US economy is very dependent on consumers to carry the load.
3. The weather factor: I am not so sure how the weather is in Iran, but at Iraq, it was pretty tough to fight a war in hot summer for US soldiers on the ground, wearing gas mask, and/or carrying heavy equipment. This is probably one of the reasons that war with Iraq started in March. Even though I am fairly certain that US will not deploy ground force into Iran, I suppose that staying away from the start of hurricane season and hot weather in the summer (April to June) is simply a good idea.

Now if you assume that the most intensive part of the war will last for one month or in the worst case two months, and give sufficient time for the financial markets to stablize, you will probably want to move the start of the war earlier to account the the duration of its effects. Given all the above factors, I would say that the start of the war should be from mid-January to May 1st, the latest.

Furthermore, we have an election this year in November. It would look very bad to the party in power if they start a war to right after the election is over. Since you will need a couple of months to engineer and direct the media coverage to focus on the Iran issues (which cannot start after Christmas shopping is all done), you are probably looking at end of February the earliest. You definitely want the public opinions to be on your side with any wars, so that you don’t incur further political cost to the party in power.

The final strategic timeframe therefore would be about from the end of February to end of April, only two months. In fact, I’m sure the war with Iraq went through similar reasoning. The timing of a war with Iran should have similar timing as Iraq. Within this timeframe, as a war planner, I am fairly certain that it should be always earlier the better. There are many uncertainties in a war, and with an earlier start, you give yourself a better margin away from the hurrican season, and to deal with anything that could happen.

Since Mr. Bush will finish his second term in 2008, will you choose to start something that you may not be able to finish cleaning up in 2008? Or will you rather choose to clean up by your own ways while you are still in power from 2007 to 2008?

IF there is a war with Iran, end of February to March in 2007 should have the highest probability as the starting date. We will NOT see any signs right now. In January 2007, if we start to see media coverage on stirring Iran issues on nuclear arms, then we should be really careful on watch for such potential unfolding event. With stock markets going higher and higher this time around, next February would be the “ideal” time technically speaking for a big fall if a war occurs.

I hate to see any wars, and I hope that a war does not happen. In fact, if we go through the end of May without a war happening in 2007, I think a war with Iran will probably no chance of happening until 2010 or later (if conflicts persist and worsen). Of course, that is also assuming that Mr. Bush is not crazy or stubborn enough to try again in 2008. Let us hope that peace prevails.

P.S. I’ve turned off the comment section. I probably look very stupid, talking about Iran wars now. In any case, I will prefer to be looking stupid, rather than any occurrence of wars. Me stupid is fine. Wars are not fine, not humane, and simply the most TERRIBLE action humans can engage in. If you have any comments, you can email them to me. I will selectively re-post your comments later.

The CEOs and the board directors have long forgotten who are the true owners of the companies. Not only that, they have gone at length to shut out shareholders’ voice. Often you need to have at least 5% to propose any shareholder resolution to be voted at the shareholder meetings. Very often, you see dilutive actions by the management requesting for additional stock option grants and/or share grants for the purpose of enriching their and partially lower level employee’s pockets. And most share buybacks are simply recyling of cash from corporate cash pile into management’s pocket through which share dilution due to selling by management becomes less pronounced.

Do you vote when you receive your proxy statements? Do let your vote count. The only way we can make ourselves heard is through voting. If you don’t vote, the management of these big corporations will continue to disrespect shareholders as the true owners of the companies, and either embezzle your money via elaborate schemes or by outright extravagant compensation.

The same is true for politics. November election is coming up. VOTE! Apathy in democracy dramatically reduces the effectiveness of a democratic system. Exercize your basic rights as a citizen. Exercize your rights as the shareholder.

If you own GG Goldcorp shares, I hope you will support Rob McEwen in his legal fights against the management in Goldcorp. You can sign up your shares by faxing in your information to them. I have already done so.

Yes, I’m the owner, don’t I get to vote at least? Who is to deprive my right as the owner telling me that they are smarter than I am, and that I should not get any say on this acquisition matter?

At www.billcara.com, you can follow the latest details of this legal fight. After Enron, it is simply outrageous for such disrepecting CEO and management at GG to exist. But they got their hands in the honey pot, and they just won’t let go.

If US ever goes into a hyper-inflationary depression, one of the root causes will be due to actions and inactions from Greenspan and Bernanke. The game and fruits of inflation are very sweet while the bitter ones has not come yet. A revered Fed chairman? We will see how history judges Greenspan. If he lives long enough (20 to 30 more years?), maybe he will just see how things unfold for himself.

With current interest rates well below 5.0%, I suspect that Fed has probably bought enough 10-year and 30-year treasury bonds (by printing money) to drive down the interest rates for ARM resets and propel the stock markets higher. More money, more inflation. Since all of these money won’t manifest its inflationary power for quite a while, it’s just the right medicine for the right time. And better yet, the more US inflates, the better it is for all the debts. As long as US can keep its image of a strong (military) country with vast resources, all the Asian and Middle East people who don’t live in the US will not have any ideas about why music CDs costing $10.99 several years ago are now costing $15.99, or why a $10 haircut is now $15. Hey, they don’t live here. How would they know? As long as they are willing to fund the US spending style, we get to spend the money and send them more IOU papers. It’s a happily consuming nation. Remember Bush always said, we will defend our democracy and lifestyle? Don’t mean to take his words out-of-context, but a war if for oil will be indeed a war for the lifestyle.

Yeah, a lower interest rate definitely helps the housing market without a doubt. I even saw two houses that were on the market for 100+ days recently sold after long term interest rate plunges under 4.75%.

If you’re on my site for the first time, I welcome you to take a look at my SiteMap or look through my categories and popular posts at the left column.

Onto the Carnival of the Capitalists, posts are listed roughly in the order of submission. For most posts, I’ve added a short summary or my own commentary. Please DO NOT SUBMIT posts that are too off-topic in the future. I have highlighted the posts that I like by RED color. Please do note that what I like better may not appeal to you.

1. Generative Transformation presents Freakonomics Book Review. An in-depth book review on a book about economics.
2. Phil for Humanity presents Phil for Humanity: How to Contact Elected Officials. A good list of links on how to contact various levels of government officials.
3. Green Rising presents For-Profit Social Ventures. A commentary on Google’s founders’ philanthropic adventure.
4. The Small Business Buzz presents 4 Ways to Keep Up on Industry Trends. I like his lists of suggestion.
6. Pacesetter Mortgage Blog presents Do I need a Land Survey when I buy real estate?, and Why do Mortgage Lenders/Brokers sell my Mortgage Loan?
7. The Time & Money Group presents The Trump Way. Good summary about Trump’s seminar. When everyone learns about exploiting other people’s stuffs, who will be these other people?
8. InsureBlog presents The $2.5M Bite. A simple bug bite could lead to catastrophic financial consequences.
9. StayGoLinks presents Mobile Standards and the Tower of Babel. There seems to be little progress in getting wide acceptance for, and involvement in, Mobile Standards.
10. Passion, People and Principles presents Us and Them. A great commentary on our group identification rather than expressing individualism.
11. Software Project Management presents Know the Process. When you know how things happen, know the process, it’s much easier to exploit your chances and achieve your goals.
12. SportsBiz presents The Mouse Rings Off. A commentary on ESPN Mobile.
13. Slow Leadership presents The Freedom to Choose . . . and the Time to Do It. Living your life in the best and most enjoyable way you believe you can is the purpose for which work is the means, not the other way around.
14. Searchlight Crusade presents Should Negative Amortization Loans Be Banned?. Clear disclosure is much better than out-right ban. May I add that regulation on loan quality is also needed.
15. Kicking Over My Traces presents Annoying Website Visitors. Websites are marketing tools. But they can work only if visitors stick around.
16. Free Money Finance presents What is a Job You Love Worth?
17. Worker Bees Blog presents Online over Print…Amen!. The value of submitting work to print-only publications is diminishing.
18. Ask Uncle Bill presents Your Own Business. Everybody wants one but few have one.
19. TamsPalm presents Everyday productivity thiefs. Did you ever think about how much 5 minutes a day are on a year view?
20. Sox First presents Theft and economic espionage. Economic espionage and theft of trade secrets have become big business opportunities and problems for many.
21. Queercents presents Straight Partnerships: Saying No to Marriage. A guest post from the blog “Tired but happy” about money and matrimony.
22. Et Tu Bloge presents The Korean Experiment. Communism does not work economically.
23. Aridni presents Are you the one to run the show? Characteristics that you need to be run a business.
24. Blog Business World presents What Sticks by Rex Briggs & Greg Stuart – Book review. Good commentary by Wayne.
25. CounselingBlog presents Get Motivated Now.
26. Photon Courier presents The Roboticization of Customer Service. The downside of the trend toward micromanaging all interactions between employees and customers.
27. Business & Technology Reinvention presents Be the Big Dog. Leadership is all about being the big dog.
28. Execupundit.com presents Critical Sphere of Sensitivity. How to avoid conflict by being more sensitive.
29. Econbrowser presents The great gasoline price conspiracy. Rebuttal to the gasoline price conspiracy theory.
30. The Boring Made Dull presents Union Dues and Politics. Opt-in or Opt-out for union due?

That concludes this edition.

I learned most of the things about the Palestine-Israel conflict directly from Jewish themselves.  The best summary critical of Israel by Jewish themselves is The Origin of the Palestine-Israel Conflict by Jews For Justice In the Middle East.  I highly recommend you to read thru all the details in that link.  By the way, if you decide to comment, I ask you to at least read through any 15 pages of the 37 pages document.  The document is in agreement with the same key resolutions signed by 3800 American Jewish in their open letter to US government.  I’m providing some excerpts from the views of these Jewish here (pg number refering to 8×11 edition).  There is no Zionism, no Anti-Semitism here.  Only a concerned and compassionate Asian third-party man who wants truth & justice to prevail for all fellow human beings.

1. Since 1967, Israel is the most extensive violator of UN Resolutions: 242, 238, 267, 271 and 298.
2. Canaanites were the earliest people in the region from 3000 to 1100 BC.  Jewish ruled the region until 586 BC, 414 years max.  And since 7th century, it is predominantly an Arab/Islamic place. (pg.2)
3. “By 1948, the Jew was not only able to ‘defend himself’ but to commit massive atrocities as well.  Indeed, according to the former director of the Israeli army archives, ‘in almost every village occupied by us during the War of Independence, acts were committed which are defined as war crimes, such as murders, massacres, and rapes’…Uri Milstein, the authoritative Israeli military historian of the 1948 war, goes one step further, maintaining that ‘every skirmish ended in a massacre of Arabs.’” (pg.8)
4. “The First UN General Assembly resolution — Number 194- affirming the right of Palestinians to return to their homes and property, was passed on December 11, 1948.  It has been repassed no less than 28 times since that first date.”  Till today, Israel still refuses this basic right of returning home for Palestinians.  (pg.10)
5. “In violation of international law, Israel has confiscated over 52 percent of the land in the West Bank, and 30 percent of the Gaza Strip for military use or for settlement by Jewish civilian….Over this period (1967 to 1982), more than 300,000 Palestinians were detained without trial for various periods by Israeli security forces.” (pg.13)
6. “Israel has split the West Bank by means of hundreds of trenches, dirt ramparts and concrete cubes which have been placed at the entrance to most of the towns and villages.  No one enters and no one leaves, not those who are pregnant and not those who are dying.” (pg.33)

I can go on and on.  It’s pretty much endless, and the injustice since 1948, after almost 60 years, is still happening daily to the poor Palestinians.  So why does Palestine-Israel conflict concern US or anyone at all?  And what does it have to do with 9/11?  As you may know, a major chunk of US foreign aid goes to Israel.  In fact, “Israel usually receives roughly one third of the entire foreign aid budget, despite the fact that Israel comprises less than .001 of the world’s population and already has one of the world’s higher per capita incomes. In other words, Israel, a country of approximately 6 million people, is currently receiving more U.S. aid than all of Africa, Latin America and the Caribbean combined when you take out Egypt and Colombia.”  “According to the American-Israeli Cooperative Enterprise (AICE), from 1949-2001 the U.S. has given Israel a total of $94,966,300,000. The direct and indirect aid from this year should put the total U.S. aid to Israel since 1949 at over one hundred billion dollars. What is not widely known, however, is that most of this aid violates American laws. The Arms Export Control Act stipulates that US-supplied weapons be used only for “legitimate self-defense.” (info taken from washington-report.org)  When Arabs look at Israeli military equipment, all the F-16 fighters and the best Apache helicopters, all made in USA, what would they think of USA?  When US presidents repeatedly sided with Israel, even after continuous UN violations and abuse of human rights, what would Islamic world think of us?  If America stands for the belief of its freedom and democracy, American tax dollar for foreign aids and foreign policy definitely do not reflect the belief.

Do you know any people who is willing to live under foreign occupation forever without revolting?  Do you know any people who will not be angry for having his home bull-dozed over without any financial compensation nor any legitimate reasons that are directly related to him?  Do you know any non-tyrannical government who would build a wall right through a Palestinian university campus?  Do you know anyone who is mentally sound, but will kill and blow himself up for no good reasons, unless battling as a soldier for self-defending their countrymen’s basic rights?  I just don’t.  Right after 9/11, I saw a TV program asking various people for reaction to 9/11.  None but a 5 year old girl had the intelligence of asking why.  She said, “what did we do wrong so that they will hate us this much to do such a terrible thing to us?”  A fresh mind, a refreshing inquiry indeed from a 5 year old.  Why?  Without knowing the answers, but simply exercising strong force is futile to resolving the root causes of the problem.  Like Bush said, there are people in the world who hate the way we live and enjoy our democracy?  I suggest Bush to read the book “Why do People Hate America?” to find out the reasons.

Understanding the Middle East conflict is the very first step to resolving the conflict.  Resolving the conflict by imposing injustice upon a people by force, lies, or any other ways will never work.  It may work for 10 years, 50 years, or even 100 years, but it just won’t work forever.  A government’s power may last a very long time, but the sense of justice and the will to overcome an foreign-controlled impoverished life lasts forever.  Palestinians (or any Arabs) don’t want to teach their children to hate Israeli.  Palestinians only want to reclaim what was properly belonged to them.  Because every man is created in the image of God, every man has the quintessential sense of justice from God.  Some of us are watching over Israeli government actions, blogging about it, doing everything that we can in our power.

For as long as US government continue to fund Israeli government and condone its military actions, 9/11 will not be the last horrific terrorist event.  We cannot put 9/11 behind us until we have resolved Palestine-Israel conflict in a peaceful and just way. 

Right now, Israel is again attacking Lebanon with reasons of self-defense.  If the small rockets by Hezbollah can only be launched from the south of Lebanon, why is Israel attacking all over the Lebanon, destroying the entire Lebanonese communication and transportation infrastructures which are the lifeblood of economic development?  How can anyone call that self-defense, when civilians in un-related locations are dying?  What is USA and Bush doing at this moment (refer to my comment on World War III post)?  Do the actions of USA stand for what we all believe in, freedom and democracy for all?

By the way, I just want to add that this article is in no way supporting terrorism.  I am a pacifist, and I think any violence is simply WRONG.  Please see my comments here and comments in my post of first sign of world war III.

P.S.#1. I am taking a real risk by writing this post.  As of now at 1:30am Friday, the national chapter of SUSTAIN (Stop US Tax Aid to Israel NOW) website has been HACKED.  Instead, I get re-directed to a search portal.  The Memphis chapter of SUSTAIN appears to have being hacked too.  I hope you can still access Bay Area chapter when you read this page.  And I hope my small site will not get hacked or go down because of this post.  If my site goes down, you will know why.  If you feel that you agree to my post, and that you have a blog or website, I hope you could propagate this message.  Or you can email the 37 pages documents written by Jewish to as many people as you know.  Unless more people know about the truth, and eventually take actions to change our foreign policy, USA will be mired in conflict along with Israel forever.

P.S.#2. I reserve the editorial right to any comments posted.  I respect any differences in opinions that you may have with me.  In a democracy, we are allowed to have differences in opinions, but still mutually respect each other.  However, please be factual and compassionate to human lives.  Do a little research before you post your comment.

I can’t begin to tell you how worried I am over the developments in the Middle East.  In fact, ten out of ten times, I would prefer that my precious metal & energy investments dropped like a rock, but have the world stay in peace & economic prosperity, than the other way around.  Warren Buffet recently said that he hates to bet against the value of US, which seems to be un-American, but he needs to do what needs to be done, properly allocating and betting the capital in Bershire Hathaway.  I can’t be compared to Warren Buffet obviously.  But my mentality in betting in gold & oil is similar.  Emotionally, I would rather that they don’t work out.  Objectively, I must do according to what my intellect concludes.

Why do I put the World War III in the title?  I cannot elaborate all the potential causes in this short post because of length.  There are many things, each requiring extended posts to explain (which will be posted later), such as Peak Oil, Root of the conflict between Israel & Palestine, US foreign policy and US/Israel relationship, and Huge US debt & deficit, Rise of China & India, all of which are pieces of puzzles that need to be put together for the partially complete picture.  Waking up today, another happy sunny day given by God, it’s simply hard to believe anything remotely close to World War III.  And yet, my reasoning on the all the potential ramifications on the current events and status around the world, paints a dark picture going forward.  I even told my wife, “I fear that our sons will be joining army and going to war”.

Hopefully, in 20 to 30 years down the road, all of you can come back to this very article and comment, and ridicule me however way you want (assuming this site still exists).  I truly hope that I will be ridiculed years later, because I will be stupidly ridiculed, but stupidly happy for the world.  But right now, by writing this post, I just want to get you to think, and think independently.  How everything happening around the globe is all inter-related, and how those events will dramatically re-shape all of our lives.  And just maybe, you want to do something differently about where to put your money.

P.S.  Please don’t waste your time in commenting on your or my political positions whether it’s pro-Israel or pro-Palestine, etc. on my site, because I will simply delete them.  Other non-political or politically neutral comments are welcomed.  This issue is far too controversial to be discussed here.  Any opinions expressed here are solely mine only, and should simply be taken as personal opinions, and nothing else.  I’m only expressing my opinions under the freedom of speech, and reserve all editorial rights for all comments on my personal site.  I will delete all politically related comments, even if you side with me.  I simply want to make my comment sections to be politically neutral.  The readers are encouraged to think independently and read on the issues comprehensively from other sources.

One thing is for sure, I’m totally against all kinds of violence, and my sympathy goes towards all those people who die and suffer unnecessarily.

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I’ve closed the comment for this article.  Just want to leave things there.  But you can always email me for any personal comments.