by T. Doom Pickens
So, what has happened in the ten months since last March to change my outlook for economic recovery? Nothing at all, in fact it has only been reinforced by subsequent actions of our lawless, irresponsible representatives and the administration in Washington. In all the current, secret proposed legislation, whether it be health care, stimulus, carbon tax or other "reforms" at every turn the small business employers and entrepreneurs can only see taxation, punishment, debt, regulation and corruption, so they will continue preserving their assets in "bunker mode" until people who actually know something about what it takes to generate jobs and economic revival gain control of the government and stop waging war on the private sector and American prosperity.
We see how the so-called "stimulus" packages have had zero effect except to put our grandchildren in debt and are nothing more than Democrat slush funds to be used to political advantage at taxpayer expense. We see how politically connected companies like Goldman Sachs can recover 100% on the dollar at taxpayer expense through government laundering operations like AIG, they see the government actually sanctioning false SEC filings to cover it up, and now that the so-called bankers have apparently decided they deserve gigantic paychecks for simply borrowing money from the Fed for free and loaning it risk-free to the government instead of the private sector, intelligent businessmen have already taken their haircuts and decided they will not participate in the corrupt financial sector even if the banks DO decide to become real bankers again.
We know the gaming table is rigged and we refuse to play. We will not borrow, we will not invest, we will not spend and we will not hire... thus there will be no recovery and my prediction is for another retraction this Spring and core unemployment, even by the government's padded numbers that do not include those who have given up looking for work, will be north of 12% by year's end.
See you this Fall...
Tuesday, January 12, 2010
Thursday, March 26, 2009
Why There Will Be No Recovery
by T. Doom Pickens
The childish and irresponsible behavior of Congress and the Administration last week has disintegrated what little remaining trust any prudent, ambitious business owner or entrepreneur might have in the relationship between the government and the private sector. Within a matter of weeks a feckless House of Representatives first enacted a law specifically permitting bonus payments and subsequently, in response to torch-bearing mobs sanctioned by our President passed a measure to target and punish the recipients of the very same bonuses they themselves authorized. Regardless the form this legislation may take if ever enacted into law, the fact that it could have even been put to the floor for a vote is chilling to any who value their liberty or the free market.
While I join most others in questioning the competence of those at AIG who had a hand in its demise, I have even more serious doubts about the judgment of any who would choose to remain under the de facto directorship of 435 members of Congress who have little if any experience at managing any enterprise or even reading and comprehending their own legislation. The American people are now major, if not majority stakeholders in these gigantic failing institutions and no employees with the competence to rescue a return on our investment would submit to the indignity of rule under such an abusive, capricious employer. We should take no comfort in having our investment in the hold of a conservatorship crewed by those with “no place else to go”.
If I were a patriot like Mr. Liddy who came from retirement to toil at this endeavor for no pay and I was subjected to the same self righteous, opprobrious, prosecutorial examination at the feet of one of the principle architects of this financial disaster I would have considered it even more effective and patriotic on my part to have submitted my resignation to him personally and publicly on the spot. “Mr. Frank, with all due respect, take this job and shove it.” I suspect that many who remain after having the bulk or all of their incentive pay removed, confiscated or extorted from them under threat of personal exposure to public wrath by Mr. Cuomo will put most of their energy into tweaking their resumes, making sure the desk blotter is properly aligned and sharpening their pencils down to the eraser.
This unprecedented assault, this bill of attainder, an imperious government targeting it’s wrath upon a select group of law-abiding citizens, has doused the fire of ambition and is in danger of extinguishing what little glow remains in the coals of this entrepreneur and businessman, and it will have the same chilling effect upon countless thousands of others upon who the citizens at large and their economy will depend for 80% of employment opportunity and economic growth.
Once the government decides that individual compensation or wealth, whether deemed to be justifiably earned or not, is somehow the property of the state, there can be no distinction between employees of enterprises that receive more than a certain amount of TARP money and individuals of any description who merely reside or conduct business within its jurisdiction and who are unfortunate enough to enjoy success worth confiscating.
Where does it stop? Today’s tax break to stimulate growth is tomorrow’s raison d’être to punish any success that might inure to those who take advantage of it. In the insatiable appetite for what little taxable income or assets will remain after trillions in deficit spending, rampant inflation, lower taxable incomes and higher unemployment, almost any who are successful under such irresponsible governance will be deemed to have somehow unjustly benefitted at public expense and the fruits of their success will be returned to the people in a compulsory act of Mr. Biden’s “patriotic duty”.
For example the entrepreneur who raises the capital to develop a wind energy farm, the tenuous economics of which are affected to some degree by the Production Tax Credit and whatever other benefits archeologists may some day unearth from the stimulus package, could very well be targeted for retribution if the project is “unreasonably” successful and profitable in a few years. We already have a situation where it actually costs money for one to donate their entire income to charity, so how much further are we from a special 90% tax on capital gains from any investment that outperforms inflation over the next few years? And why should 90% or 100% taxation be considered the upper limit when there is so much more undeserved reward out there to be taxed? In light of current government rationale a 200% tax on the income of anybody with a net worth of more than, say five million dollars might seem perfectly reasonable, however people like me will always find it unreasonable because we have learned first hand what works and what doesn’t.
I have not been educated in the ivory towers of staid institutions; mine was obtained in the finest two American institutions, the workplace and the marketplace. When my financial statements bleed red ink it is not merely a theoretical or hypothetical result projected on a screen in the classroom, but rather it is a result that causes my banker or the spouse of a dismissed employee to pick up the telephone and project into my ear. After high school I worked for the son of Polish immigrants whose father died in a mining accident, and Frank quit school in seventh grade to work as a mechanic to support his mother and younger siblings. He was an under-educated genius who built a medical equipment sales and service enterprise employing over fifty people and with revenues in excess of $50 million. Every new challenge and evolution in the marketplace, some of his own invention, was ably mastered by his ingenuity, industry, uncanny vision and resolve.
In the seventies this icon of the American experience was under assault… newly formed OSHA inspectors unleashed upon him by striking union organizers attempting to disrupt the familial workplace and having the good fortune to be in the top marginal tax rate, 70% at the time, were enough. But wage and price controls and the rapid increase in federal intrusion, spending and stagflation were the tipping point for him and further industry or risk taking on his part was pointless in light of the meager marginal and emotional returns. After all, he already had everything a person of modest origins could need or want; the homes, the boat, the RV, grown and educated children… and now being an entrepreneur just wasn’t fun any more. He felt that society both needed and despised him.
So, at the vigorous age of fifty-three he sold his business to his largest competitor for what cash they could afford, purchased multiple RV lots around the country near his children and spent his remaining years roving about for months at a time and wintering in Florida. In other words, he “checked out” decades ahead of schedule while he was firing on all cylinders and had so much more to offer, and within a few short years the business he founded no longer existed, but the lesson I learned about the qualities and motivations of the entrepreneur remains.
Those who have read The Millionaire Next Door by Tom Stanley and Bill Danko will understand the value of citizens like Frank, and we need these people now more than ever, many who are boomers dangerously close to retirement and for who “checking out” is even more compelling. We are in grave danger of squandering this huge but seldom noticed or appreciated national resource, and there are far more of them providing a greater proportion of our collective prosperity today than there were in Frank’s time. I now find myself at the same age and facing remarkably similar times as Frank did back then, and like he I now ask myself, “Why should I risk my assets and energy if success is certain to be punished and not rewarded?”
The sensible strategy is to take a break, do some interesting or enlightening consulting for pocket money, sit on a board or two and perhaps write an editorial. I know many pondering the same; other seasoned empty-nesters actually finding the prospect of their businesses being pared back to their earlier romantic roots somewhat attractive… the “mom” half of a mom and pop dry-cleaner or restaurant, her wardrobe and decorating now timeless and complete, deciding to eliminate the bookkeeper or cashier and going back to keeping an eye on things… and him.
The bottom line is, little in the way of stimulus to economic activity or employment at the grass roots, where it is most needed and most permanent, is going to occur no matter how much paper the government throws at the problem, because countless family businesses will “keep it in the family” and others of all sizes as well as serial entrepreneurs like me will hold off financial or sweat equity investments until we see that a majority of our fellow citizens have returned to their senses and decided to be governed by rational people.
It’s not that banks won’t loan us all that fresh money the government is printing, we just don’t need it. This whole problem is very familiar to us and we understand that the solution to a crisis brought on by too much debt can never be even more debt. Many of us have tried that earlier in our own careers and know it doesn’t work, therefore when we see our government proclaim, “Drinks are on me!” we don’t want to be around at the end of the night when the bill comes due and party-goers discover who “me” is.
Am I predicting a doom and gloom scenario? Absolutely not. Unlike those in the political arena who assure us recovery is inevitable based upon history, hope and a professed optimism in America, I do so with much greater certainty thanks to confidence in myself and my brethren, the engine of America. What many seem to overlook is that the starters and producers are, after all, the starters and producers. We have never paid much attention to analysis and predictions based upon complex monetary or economic theory but rather our own nose for good or bad opportunity and when we decide to recover, America will recover. Sure we may be at a numerical disadvantage politically from time to time, but we will always have the upper hand in this game of chicken because it is within our power to live within our means and modulate our success, thus the degree to which we allow ourselves to be punished.
We won’t lose our $30 million homes in the Hamptons because our hedge fund collapsed, nor do we have resumes to polish as few of us have ever needed one. We have paid for our homes, autos and toys, have not forgotten how to do our own laundry and can find our way around the supermarket aisles. We’ll even look out for each other by patronizing our own establishments instead of chains and big box stores, doubling the frequency of our hair cuts, etc., and we can stay in this form of hibernation indefinitely. We’ll be just fine. Eventually, after our fellow citizens endure the “educational moment” they deserve over the next two to eight years and learn that government cannot save them at everybody else’s expense, they will restore an environment of trust within which we feel we can do business and those of us who have not “checked out” permanently will be back in the game, rested, reinvigorated and more successful than ever.
The childish and irresponsible behavior of Congress and the Administration last week has disintegrated what little remaining trust any prudent, ambitious business owner or entrepreneur might have in the relationship between the government and the private sector. Within a matter of weeks a feckless House of Representatives first enacted a law specifically permitting bonus payments and subsequently, in response to torch-bearing mobs sanctioned by our President passed a measure to target and punish the recipients of the very same bonuses they themselves authorized. Regardless the form this legislation may take if ever enacted into law, the fact that it could have even been put to the floor for a vote is chilling to any who value their liberty or the free market.
While I join most others in questioning the competence of those at AIG who had a hand in its demise, I have even more serious doubts about the judgment of any who would choose to remain under the de facto directorship of 435 members of Congress who have little if any experience at managing any enterprise or even reading and comprehending their own legislation. The American people are now major, if not majority stakeholders in these gigantic failing institutions and no employees with the competence to rescue a return on our investment would submit to the indignity of rule under such an abusive, capricious employer. We should take no comfort in having our investment in the hold of a conservatorship crewed by those with “no place else to go”.
If I were a patriot like Mr. Liddy who came from retirement to toil at this endeavor for no pay and I was subjected to the same self righteous, opprobrious, prosecutorial examination at the feet of one of the principle architects of this financial disaster I would have considered it even more effective and patriotic on my part to have submitted my resignation to him personally and publicly on the spot. “Mr. Frank, with all due respect, take this job and shove it.” I suspect that many who remain after having the bulk or all of their incentive pay removed, confiscated or extorted from them under threat of personal exposure to public wrath by Mr. Cuomo will put most of their energy into tweaking their resumes, making sure the desk blotter is properly aligned and sharpening their pencils down to the eraser.
This unprecedented assault, this bill of attainder, an imperious government targeting it’s wrath upon a select group of law-abiding citizens, has doused the fire of ambition and is in danger of extinguishing what little glow remains in the coals of this entrepreneur and businessman, and it will have the same chilling effect upon countless thousands of others upon who the citizens at large and their economy will depend for 80% of employment opportunity and economic growth.
Once the government decides that individual compensation or wealth, whether deemed to be justifiably earned or not, is somehow the property of the state, there can be no distinction between employees of enterprises that receive more than a certain amount of TARP money and individuals of any description who merely reside or conduct business within its jurisdiction and who are unfortunate enough to enjoy success worth confiscating.
Where does it stop? Today’s tax break to stimulate growth is tomorrow’s raison d’être to punish any success that might inure to those who take advantage of it. In the insatiable appetite for what little taxable income or assets will remain after trillions in deficit spending, rampant inflation, lower taxable incomes and higher unemployment, almost any who are successful under such irresponsible governance will be deemed to have somehow unjustly benefitted at public expense and the fruits of their success will be returned to the people in a compulsory act of Mr. Biden’s “patriotic duty”.
For example the entrepreneur who raises the capital to develop a wind energy farm, the tenuous economics of which are affected to some degree by the Production Tax Credit and whatever other benefits archeologists may some day unearth from the stimulus package, could very well be targeted for retribution if the project is “unreasonably” successful and profitable in a few years. We already have a situation where it actually costs money for one to donate their entire income to charity, so how much further are we from a special 90% tax on capital gains from any investment that outperforms inflation over the next few years? And why should 90% or 100% taxation be considered the upper limit when there is so much more undeserved reward out there to be taxed? In light of current government rationale a 200% tax on the income of anybody with a net worth of more than, say five million dollars might seem perfectly reasonable, however people like me will always find it unreasonable because we have learned first hand what works and what doesn’t.
I have not been educated in the ivory towers of staid institutions; mine was obtained in the finest two American institutions, the workplace and the marketplace. When my financial statements bleed red ink it is not merely a theoretical or hypothetical result projected on a screen in the classroom, but rather it is a result that causes my banker or the spouse of a dismissed employee to pick up the telephone and project into my ear. After high school I worked for the son of Polish immigrants whose father died in a mining accident, and Frank quit school in seventh grade to work as a mechanic to support his mother and younger siblings. He was an under-educated genius who built a medical equipment sales and service enterprise employing over fifty people and with revenues in excess of $50 million. Every new challenge and evolution in the marketplace, some of his own invention, was ably mastered by his ingenuity, industry, uncanny vision and resolve.
In the seventies this icon of the American experience was under assault… newly formed OSHA inspectors unleashed upon him by striking union organizers attempting to disrupt the familial workplace and having the good fortune to be in the top marginal tax rate, 70% at the time, were enough. But wage and price controls and the rapid increase in federal intrusion, spending and stagflation were the tipping point for him and further industry or risk taking on his part was pointless in light of the meager marginal and emotional returns. After all, he already had everything a person of modest origins could need or want; the homes, the boat, the RV, grown and educated children… and now being an entrepreneur just wasn’t fun any more. He felt that society both needed and despised him.
So, at the vigorous age of fifty-three he sold his business to his largest competitor for what cash they could afford, purchased multiple RV lots around the country near his children and spent his remaining years roving about for months at a time and wintering in Florida. In other words, he “checked out” decades ahead of schedule while he was firing on all cylinders and had so much more to offer, and within a few short years the business he founded no longer existed, but the lesson I learned about the qualities and motivations of the entrepreneur remains.
Those who have read The Millionaire Next Door by Tom Stanley and Bill Danko will understand the value of citizens like Frank, and we need these people now more than ever, many who are boomers dangerously close to retirement and for who “checking out” is even more compelling. We are in grave danger of squandering this huge but seldom noticed or appreciated national resource, and there are far more of them providing a greater proportion of our collective prosperity today than there were in Frank’s time. I now find myself at the same age and facing remarkably similar times as Frank did back then, and like he I now ask myself, “Why should I risk my assets and energy if success is certain to be punished and not rewarded?”
The sensible strategy is to take a break, do some interesting or enlightening consulting for pocket money, sit on a board or two and perhaps write an editorial. I know many pondering the same; other seasoned empty-nesters actually finding the prospect of their businesses being pared back to their earlier romantic roots somewhat attractive… the “mom” half of a mom and pop dry-cleaner or restaurant, her wardrobe and decorating now timeless and complete, deciding to eliminate the bookkeeper or cashier and going back to keeping an eye on things… and him.
The bottom line is, little in the way of stimulus to economic activity or employment at the grass roots, where it is most needed and most permanent, is going to occur no matter how much paper the government throws at the problem, because countless family businesses will “keep it in the family” and others of all sizes as well as serial entrepreneurs like me will hold off financial or sweat equity investments until we see that a majority of our fellow citizens have returned to their senses and decided to be governed by rational people.
It’s not that banks won’t loan us all that fresh money the government is printing, we just don’t need it. This whole problem is very familiar to us and we understand that the solution to a crisis brought on by too much debt can never be even more debt. Many of us have tried that earlier in our own careers and know it doesn’t work, therefore when we see our government proclaim, “Drinks are on me!” we don’t want to be around at the end of the night when the bill comes due and party-goers discover who “me” is.
Am I predicting a doom and gloom scenario? Absolutely not. Unlike those in the political arena who assure us recovery is inevitable based upon history, hope and a professed optimism in America, I do so with much greater certainty thanks to confidence in myself and my brethren, the engine of America. What many seem to overlook is that the starters and producers are, after all, the starters and producers. We have never paid much attention to analysis and predictions based upon complex monetary or economic theory but rather our own nose for good or bad opportunity and when we decide to recover, America will recover. Sure we may be at a numerical disadvantage politically from time to time, but we will always have the upper hand in this game of chicken because it is within our power to live within our means and modulate our success, thus the degree to which we allow ourselves to be punished.
We won’t lose our $30 million homes in the Hamptons because our hedge fund collapsed, nor do we have resumes to polish as few of us have ever needed one. We have paid for our homes, autos and toys, have not forgotten how to do our own laundry and can find our way around the supermarket aisles. We’ll even look out for each other by patronizing our own establishments instead of chains and big box stores, doubling the frequency of our hair cuts, etc., and we can stay in this form of hibernation indefinitely. We’ll be just fine. Eventually, after our fellow citizens endure the “educational moment” they deserve over the next two to eight years and learn that government cannot save them at everybody else’s expense, they will restore an environment of trust within which we feel we can do business and those of us who have not “checked out” permanently will be back in the game, rested, reinvigorated and more successful than ever.
Saturday, September 27, 2008
A letter to Speaker Nancy Pelosi
Dear Madam Speaker,
I think the effort to sneak in funding for ACORN and other groups by siphoning future revenues (if any) from the taxpayer purchase of all this toxic debt was underhanded and despicable. I guess there is never a crisis within which you can't try to pack in a little pork, huh? Even if that provision is dumped as it should be, I suspect that "plan B" will be the American taxpayer buying up all those junk mortgages so you can campaign on and pass legislation to forgive all those mortgages in exchange for votes down the line... mortgage amnesty should be a big vote-getter, huh?
But what I really find disgusting is the pathetic excuse that somehow House Republicans "blew up" a deal that they had no part in, and for which your colleagues in the house would not need a single Republican vote to pass if the "deal" you supposedly had with the Senate was such a great idea. After all, when up until now have you ever given a hoot what the Republicans in your House have had to say in the past... even going so far as to kill the lights and C-Span cameras during the August recess so as to prevent the American people from getting their message as well. So, if you guys really had a deal that was so good why didn't you just pass it in the House on a party-line vote? Wasn't the whole financial system supposed to collapse if we didn't get a bill by yesterday? Apparently a little CYA for your party is even more important than timely passage of the legislation, huh? The right thing to do is the right thing to do, so why do you need to hide behind minority coattails?
With all due respect, I think you and the rest of your House and Senate majority leadership are a bunch of pathetic, feckless cowards, and I'm tired of your lies and excuses. If I were the Republican leader, especially after the way you treated my members to this point, I wouldn't agree to anything and force you into a party-line vote no matter what. You want to blow a trillion bucks and raise taxes on the middles class, which you and I both know is the only place you can get real money, go ahead and get started without us.
T. Doom Pickens
I think the effort to sneak in funding for ACORN and other groups by siphoning future revenues (if any) from the taxpayer purchase of all this toxic debt was underhanded and despicable. I guess there is never a crisis within which you can't try to pack in a little pork, huh? Even if that provision is dumped as it should be, I suspect that "plan B" will be the American taxpayer buying up all those junk mortgages so you can campaign on and pass legislation to forgive all those mortgages in exchange for votes down the line... mortgage amnesty should be a big vote-getter, huh?
But what I really find disgusting is the pathetic excuse that somehow House Republicans "blew up" a deal that they had no part in, and for which your colleagues in the house would not need a single Republican vote to pass if the "deal" you supposedly had with the Senate was such a great idea. After all, when up until now have you ever given a hoot what the Republicans in your House have had to say in the past... even going so far as to kill the lights and C-Span cameras during the August recess so as to prevent the American people from getting their message as well. So, if you guys really had a deal that was so good why didn't you just pass it in the House on a party-line vote? Wasn't the whole financial system supposed to collapse if we didn't get a bill by yesterday? Apparently a little CYA for your party is even more important than timely passage of the legislation, huh? The right thing to do is the right thing to do, so why do you need to hide behind minority coattails?
With all due respect, I think you and the rest of your House and Senate majority leadership are a bunch of pathetic, feckless cowards, and I'm tired of your lies and excuses. If I were the Republican leader, especially after the way you treated my members to this point, I wouldn't agree to anything and force you into a party-line vote no matter what. You want to blow a trillion bucks and raise taxes on the middles class, which you and I both know is the only place you can get real money, go ahead and get started without us.
T. Doom Pickens
Saturday, April 21, 2007
On valuation, dilution and market capitalization
[Poster wanted to know what effect market cap and dilution had on CPTC, and claimed he needed to be "unedumicated"]
Inquiring poster - Better to be "unedumicated" than to be "misundereducated". What it means is that the market capitalization, that is the total value of the company based upon the share price, is very high, for example CTC would have a fully diluted market cap of a half billion bucks at $2 per share. What does that mean?
Let's first look at return on investment of a company's stock without regard to market pricing. If I decided I was going to invest in an ongoing privately held corporation or enterprise, I would probably expect to get two or three times conservative investment (mutual funds,time deposits, etc.) market returns on my money for the added but still minimal risk. So, if I expected the company to earn me dividends or profit distributions of 10% on my investment, and the company had a net profit after taxes of 10% of sales, I would expect every dollar I invested to be represented by a dollar or more in sales of product. Assuming the company becomes increasingly successful and doubles sales and/or profits after my investment, the valuation of the investment becomes greater in proportion because it is earning a higher return, so subsequent investments can command a higher price.
But that depends upon whether subsequent investments are in the marketplace or to raise capital. As to market activity, if the company was now paying out twice the dividends and I were to sell my appreciated stake to you, I could get double what I paid, yet your investment would still give you the 10% return I was originally getting, and down the road you could possibly do the same to another as I did to you, and everybody does fine as long as the company does... or as long as the market THINKS it is doing well, or the shareholders think they are doing well regardless the fortunes of the company, for that matter.
On the other hand, if you were to buy newly issued or treasury stock from the company instead of my stock from me, the proceeds from the sale would become working capital and the total outstanding shares upon which dividends are paid would increase, meaning that my percentage of the total profit distributions would be reduced, which reduces the rate of return on my investment and thus it's market value. But it's not that simple because if the company sold you the stock so it could put the capital to work expanding sales or developing new products for future sales, I may simply be getting a smaller percentage of a much bigger pie and I am not going to care, in fact I would likely encourage it.
So, it is important that when a company dilutes it's shareholders to raise capital or pay for "services rendered" that it does so in a manner that keeps the earnings rising faster than the rate of dilution so the shareholders enjoy either a favorable dilution-adjusted return or increased market (resale) valuation of their stake. The relative balance between the two, both combined representing the overall return on investment over time, will appeal to different classes of investor according to their investment goals, the most common two being retirees looking for dividend returns and youngsters in the work force looking for growth.
Now, how does this all relate to your investment in CTC? Well, CTC over the past year has roughly diluted a long stake-holder's interest by about a third, from 160 million shares to 240+ million shares, which means that if the company HAD been earning a profit your share of the distributions would have dropped by a third, meaning the return on your investment in the earlier example would now be 6.6% instead of 10% if all things were stagnant, and a buyer looking for a 10% ROI would only be willing to pay you 66% of your original price for your stock.
Of that dilution, roughly a quarter was for financing to keep the lights on last year and another quarter is keeping them on this year, BUT half of that dilution is represented by the EU merger deal which is capitalization toward increasing sales and hopefully profits as well. Capitalizing to sustain continuing losses in a going concern is a vicious downward spiral... the more you dilute to raise money the lower the valuation and the more you have to dilute to raise even less money. That's a toilet in operation.
But diluting for the EU merger, that's a different matter altogether. Now, if I were heading an investment group or VP business development for a large company and I were looking at EU last year as the wind market was picking up steam, I would probably have valued that package right around the forty million bucks CTC did, perhaps half that in a cash deal; They had an installed base of users, they had existing products and know-how, and they had operating losses of a couple million that could be sustained for a couple years if necessary, and a need for another fifty to hundred million or so to execute a two or three year business plan to get to several hundred million in sales. So, for a hundred to hundred-fifty million total investment, I could have a company that was spitting out ten or twenty million in profit in a couple years in an exponentially increasing market, and perhaps have a half billion to couple billion dollar company in five to ten years with a well executed plan.
But when you value a venture like that, you need to look at a reasonable snapshot of what you expect the company to be doing five or ten years down the road and work backwards to obtain a present-day market value, and then "discount" for risk. So if the company is doing a billion annually in sales in five years (a reasonable goal) and earning a hundred million, your initial investment of a hundred million would be paid off in that year alone and in multiples thereafter. But your hundred million if conservatively invested elsewhere (opportunity cost) would have probably been able to earn thirty-five million at 6%, so the true cost of your investment is greater than you at first think and as many CTC longs have painfully realized. Further, due to the risk of the investment, you have to expect a much higher rate of return than current market rates, like ten, twenty or even thirty times normal. Why? Because venture capitalization is a very risky business, with fewer than one in twenty ever paying off, so you have to make it really big on the seeds that sprout to cover all the duds, and though EU was not the type of start-up that would normally command a thirty to one return, a ten to one overall return (valuation plus earnings) after five years would be a conservative expectation on the part of those risking so much capital. And though it could be a bust, it also gives a chance of a twenty to one as well and, as they say, nothing ventured, nothing gained.
So, if the market valuation of the company with a billion dollars in sales five years from now is, say two billion on earnings of a hundred million (a P/E of 20) and the company is acquired or goes IPO, you would in fact get that twenty to one return on your hundred million invested, and if the company did half as well you might get your conservative ten to one return. There are further factors that are used to "discount" the net present day value of an opportunity (competitors, technology trends, politics, projected costs of working capital, inflation and interest rates, etc.) that would probably cut those numbers in half again in favor of the investor, but that's not important to the discussion. What IS important is how that "stand alone" evaluation of the EU opportunity differs from the real world post-acquisition opportunity presented to the investor by CTC.
We now have a situation where, by all accounts on this board and as a reasonable business assessment, the wind side of the company presents at least half, and probably significantly more, of the opportunity for CTC over the next five years, but even assuming half, that would place the expected valuation at two to four billion if I were wearing my green eye-shade and pulling the adding machine lever for GE, KKR or Toshiba, which would place the net present day valuation for the total investment (buying CTC AND dumping in a hundred to two-hundred million) at two to three hundred million, and if you strip out the hundred to hundred-fifty million in capital commitment I would have to make to finance the opportunity, that only leaves fifty to two hundred million left for acquiring CTC. [ed. That is the maximum "spread" possible under various combinations of total project costs and capital requirements] Because I am looking at this in the "stand alone" model without regard to the market price of the stock (because I want to buy the company to build the opportunity to increase earnings and not trade in the stock as a holding company), if I were to recommend a tender offer for all CTC shares it would fall in that range. If that offer were translated to a price per share for the fully diluted 240+ million in shares, it would be a maximum of $.82 per share and a minimum of $.20 per share... and that's for the whole company. In a spin-off of the wind division I might consider the present day valuation of that component to be a hundred million due to recent developments and be willing to offer the CTC shareholders $.40 per share in cash or maybe even $.80 per share in GE stock to get just the wind business. That's where "Mr. Valentine" gets his $.75 number.
I think that the present shareholders would not like any of those deals, and that's why I think a buy-out, or big capital investment at favorable dilution rates (as opposed to big players buying stock in the marketplace) is unlikely unless BW and the other controlling parties with zero-basis holdings decide to take their few millions and run. Further, since the going rate for financing dilution has been roughly double the market price of the stock (meaning that for every dollar in PIPE cash they get in, they issue shares and warrants amounting to around twice that in market value) it is not unreasonable to expect that by the time CTC does achieve that goal five years down the road and draws in another hundred to two hundred million in PIPE financing, the dilution would be two to three times what it already is today, and unless the company is at that time earning two to three times the dividends to offset that dilution, if in fact it is paying any at all, the net present day valuation of your investment will have been cut in half again.
That's why I posed the question several days ago about just what people expect from this company. If it is simply a playing field for the stock, where "intrinsic value" as perceived by somebody who wanted to acquire the company is not important and only the market valuation of the stock, and depending upon market perception, your stock could be worth five or ten times today's value in the marketplace or nothing at all. The company could execute the growth plan flawlessly and be pumping out all those dividends while the "market" has dumped wind holdings and jumped into a re-born nuclear industry or some new high-tech emergence like bionics, the "Outernet" or something, and in that case retirees like Saltator will scoop it all up for the dividend payout. On the other hand the company could still be sustaining losses and diluting away to cover them as true believers who don't need any income keep the the stock propped up by averaging down and refusing to sell at any price, ever hoping for that day that more of the same somehow leads to a different result.
That's the market. There are many stocks, like that spam dropped in here the other day and others that come in your email from "John says" or Sharpeyed, that have never produced or earned anything in their entire existence, and that people make and lose money with on the playing field every day. And then there are others (my favorite hunting expedition targets) that trade below their intrinsic or even their liquidation values with solid earnings that nobody cares about because there isn't any "action".
Right now, CTC is getting a lot of "action", but without big sustained capital commitments instead of just replacing the empty bag on the PIPE IV pole every six months, CTC will not achieve those intrinsic value goals, and that kind of big capital will have a real hard time investing without a huge amount of dilution in their favor. You're seeing some big players in the market for sure and that is always exciting for little players who know how to surf that type of action, but you're not seeing any big capital investment in the company that will lead to the fundamental valuation down the road that many of the longs who bought in on the vision are all about, and you won't see it because those types of investors would insist upon the type of real controls and transparency that BW won't give them, and the higher the current "playing field" price goes the less likely you are going to see it as well.
Being the old stick-in-the-mud guy that I am who remembers this stock at $4 and $6, I don't pay any attention to the playing field and I'm just looking for that $6 million down payment on the wind order, and then the "go ahead" $4 million payment in May.
Inquiring poster - Better to be "unedumicated" than to be "misundereducated". What it means is that the market capitalization, that is the total value of the company based upon the share price, is very high, for example CTC would have a fully diluted market cap of a half billion bucks at $2 per share. What does that mean?
Let's first look at return on investment of a company's stock without regard to market pricing. If I decided I was going to invest in an ongoing privately held corporation or enterprise, I would probably expect to get two or three times conservative investment (mutual funds,time deposits, etc.) market returns on my money for the added but still minimal risk. So, if I expected the company to earn me dividends or profit distributions of 10% on my investment, and the company had a net profit after taxes of 10% of sales, I would expect every dollar I invested to be represented by a dollar or more in sales of product. Assuming the company becomes increasingly successful and doubles sales and/or profits after my investment, the valuation of the investment becomes greater in proportion because it is earning a higher return, so subsequent investments can command a higher price.
But that depends upon whether subsequent investments are in the marketplace or to raise capital. As to market activity, if the company was now paying out twice the dividends and I were to sell my appreciated stake to you, I could get double what I paid, yet your investment would still give you the 10% return I was originally getting, and down the road you could possibly do the same to another as I did to you, and everybody does fine as long as the company does... or as long as the market THINKS it is doing well, or the shareholders think they are doing well regardless the fortunes of the company, for that matter.
On the other hand, if you were to buy newly issued or treasury stock from the company instead of my stock from me, the proceeds from the sale would become working capital and the total outstanding shares upon which dividends are paid would increase, meaning that my percentage of the total profit distributions would be reduced, which reduces the rate of return on my investment and thus it's market value. But it's not that simple because if the company sold you the stock so it could put the capital to work expanding sales or developing new products for future sales, I may simply be getting a smaller percentage of a much bigger pie and I am not going to care, in fact I would likely encourage it.
So, it is important that when a company dilutes it's shareholders to raise capital or pay for "services rendered" that it does so in a manner that keeps the earnings rising faster than the rate of dilution so the shareholders enjoy either a favorable dilution-adjusted return or increased market (resale) valuation of their stake. The relative balance between the two, both combined representing the overall return on investment over time, will appeal to different classes of investor according to their investment goals, the most common two being retirees looking for dividend returns and youngsters in the work force looking for growth.
Now, how does this all relate to your investment in CTC? Well, CTC over the past year has roughly diluted a long stake-holder's interest by about a third, from 160 million shares to 240+ million shares, which means that if the company HAD been earning a profit your share of the distributions would have dropped by a third, meaning the return on your investment in the earlier example would now be 6.6% instead of 10% if all things were stagnant, and a buyer looking for a 10% ROI would only be willing to pay you 66% of your original price for your stock.
Of that dilution, roughly a quarter was for financing to keep the lights on last year and another quarter is keeping them on this year, BUT half of that dilution is represented by the EU merger deal which is capitalization toward increasing sales and hopefully profits as well. Capitalizing to sustain continuing losses in a going concern is a vicious downward spiral... the more you dilute to raise money the lower the valuation and the more you have to dilute to raise even less money. That's a toilet in operation.
But diluting for the EU merger, that's a different matter altogether. Now, if I were heading an investment group or VP business development for a large company and I were looking at EU last year as the wind market was picking up steam, I would probably have valued that package right around the forty million bucks CTC did, perhaps half that in a cash deal; They had an installed base of users, they had existing products and know-how, and they had operating losses of a couple million that could be sustained for a couple years if necessary, and a need for another fifty to hundred million or so to execute a two or three year business plan to get to several hundred million in sales. So, for a hundred to hundred-fifty million total investment, I could have a company that was spitting out ten or twenty million in profit in a couple years in an exponentially increasing market, and perhaps have a half billion to couple billion dollar company in five to ten years with a well executed plan.
But when you value a venture like that, you need to look at a reasonable snapshot of what you expect the company to be doing five or ten years down the road and work backwards to obtain a present-day market value, and then "discount" for risk. So if the company is doing a billion annually in sales in five years (a reasonable goal) and earning a hundred million, your initial investment of a hundred million would be paid off in that year alone and in multiples thereafter. But your hundred million if conservatively invested elsewhere (opportunity cost) would have probably been able to earn thirty-five million at 6%, so the true cost of your investment is greater than you at first think and as many CTC longs have painfully realized. Further, due to the risk of the investment, you have to expect a much higher rate of return than current market rates, like ten, twenty or even thirty times normal. Why? Because venture capitalization is a very risky business, with fewer than one in twenty ever paying off, so you have to make it really big on the seeds that sprout to cover all the duds, and though EU was not the type of start-up that would normally command a thirty to one return, a ten to one overall return (valuation plus earnings) after five years would be a conservative expectation on the part of those risking so much capital. And though it could be a bust, it also gives a chance of a twenty to one as well and, as they say, nothing ventured, nothing gained.
So, if the market valuation of the company with a billion dollars in sales five years from now is, say two billion on earnings of a hundred million (a P/E of 20) and the company is acquired or goes IPO, you would in fact get that twenty to one return on your hundred million invested, and if the company did half as well you might get your conservative ten to one return. There are further factors that are used to "discount" the net present day value of an opportunity (competitors, technology trends, politics, projected costs of working capital, inflation and interest rates, etc.) that would probably cut those numbers in half again in favor of the investor, but that's not important to the discussion. What IS important is how that "stand alone" evaluation of the EU opportunity differs from the real world post-acquisition opportunity presented to the investor by CTC.
We now have a situation where, by all accounts on this board and as a reasonable business assessment, the wind side of the company presents at least half, and probably significantly more, of the opportunity for CTC over the next five years, but even assuming half, that would place the expected valuation at two to four billion if I were wearing my green eye-shade and pulling the adding machine lever for GE, KKR or Toshiba, which would place the net present day valuation for the total investment (buying CTC AND dumping in a hundred to two-hundred million) at two to three hundred million, and if you strip out the hundred to hundred-fifty million in capital commitment I would have to make to finance the opportunity, that only leaves fifty to two hundred million left for acquiring CTC. [ed. That is the maximum "spread" possible under various combinations of total project costs and capital requirements] Because I am looking at this in the "stand alone" model without regard to the market price of the stock (because I want to buy the company to build the opportunity to increase earnings and not trade in the stock as a holding company), if I were to recommend a tender offer for all CTC shares it would fall in that range. If that offer were translated to a price per share for the fully diluted 240+ million in shares, it would be a maximum of $.82 per share and a minimum of $.20 per share... and that's for the whole company. In a spin-off of the wind division I might consider the present day valuation of that component to be a hundred million due to recent developments and be willing to offer the CTC shareholders $.40 per share in cash or maybe even $.80 per share in GE stock to get just the wind business. That's where "Mr. Valentine" gets his $.75 number.
I think that the present shareholders would not like any of those deals, and that's why I think a buy-out, or big capital investment at favorable dilution rates (as opposed to big players buying stock in the marketplace) is unlikely unless BW and the other controlling parties with zero-basis holdings decide to take their few millions and run. Further, since the going rate for financing dilution has been roughly double the market price of the stock (meaning that for every dollar in PIPE cash they get in, they issue shares and warrants amounting to around twice that in market value) it is not unreasonable to expect that by the time CTC does achieve that goal five years down the road and draws in another hundred to two hundred million in PIPE financing, the dilution would be two to three times what it already is today, and unless the company is at that time earning two to three times the dividends to offset that dilution, if in fact it is paying any at all, the net present day valuation of your investment will have been cut in half again.
That's why I posed the question several days ago about just what people expect from this company. If it is simply a playing field for the stock, where "intrinsic value" as perceived by somebody who wanted to acquire the company is not important and only the market valuation of the stock, and depending upon market perception, your stock could be worth five or ten times today's value in the marketplace or nothing at all. The company could execute the growth plan flawlessly and be pumping out all those dividends while the "market" has dumped wind holdings and jumped into a re-born nuclear industry or some new high-tech emergence like bionics, the "Outernet" or something, and in that case retirees like Saltator will scoop it all up for the dividend payout. On the other hand the company could still be sustaining losses and diluting away to cover them as true believers who don't need any income keep the the stock propped up by averaging down and refusing to sell at any price, ever hoping for that day that more of the same somehow leads to a different result.
That's the market. There are many stocks, like that spam dropped in here the other day and others that come in your email from "John says" or Sharpeyed, that have never produced or earned anything in their entire existence, and that people make and lose money with on the playing field every day. And then there are others (my favorite hunting expedition targets) that trade below their intrinsic or even their liquidation values with solid earnings that nobody cares about because there isn't any "action".
Right now, CTC is getting a lot of "action", but without big sustained capital commitments instead of just replacing the empty bag on the PIPE IV pole every six months, CTC will not achieve those intrinsic value goals, and that kind of big capital will have a real hard time investing without a huge amount of dilution in their favor. You're seeing some big players in the market for sure and that is always exciting for little players who know how to surf that type of action, but you're not seeing any big capital investment in the company that will lead to the fundamental valuation down the road that many of the longs who bought in on the vision are all about, and you won't see it because those types of investors would insist upon the type of real controls and transparency that BW won't give them, and the higher the current "playing field" price goes the less likely you are going to see it as well.
Being the old stick-in-the-mud guy that I am who remembers this stock at $4 and $6, I don't pay any attention to the playing field and I'm just looking for that $6 million down payment on the wind order, and then the "go ahead" $4 million payment in May.
Thursday, March 29, 2007
Prospects for alternative energy
...After all, back in '79 everybody and their brothers thought wind power was here to stay, and countless doctors and lawyers invested in pinwheel farms all over Collie-fornia, mainly as a tax loss, and a lot of them ain't spinning anymore. The bottom line is that total energy costs, as a percentage of US household income, are lower now than at any time in history while at the same time consumption rises unabated... all with scant contribution by wind, solar, manure or cow farts combined.
It could easily be another two decades before fossil energy costs remain consistently high enough to draw massive alternative investment, and there again it could be just two years. Who knows? New micro-power and CHP (combined heat and power) technologies that burn fossil fuels, the increased use of the virtual workplace over commuting and other macro trends in behavior and choice could make both wind power and grid congestion non-issues for many, many decades, and don't think that "big oil" is going to just sit back and let a bunch of spinning lawn ornaments put them out of business. As just a modest example of the differences between the two energy storage and delivery systems, just look at the wide disparity of the costs of "batteries" for the storage of intermittent demand supply or surplus energy between an electric car and a fossil fuel vehicle, the former requiring exotic design and materials with unknown long term disposal issues, and the latter needed little more than a simple tank.
If the oil and gas companies can find the technology for you to save money and increase reliability by going off grid, they will, and frankly I think the odds of success in such developments are about equal to those of wind power garnering as much as even 15% of our electric utility generating capacity. But what do I know that we didn't all know two decades ago? Like Shultz, I know nothing, I see nothing, I hear nothing. Come to think of it, I've got an old Beckett oil burner I should graft into my wall oven so I can get those kilowatts off-grid. Then, in addition to "bake" and "broil", I'll be able to "cremate".
It could easily be another two decades before fossil energy costs remain consistently high enough to draw massive alternative investment, and there again it could be just two years. Who knows? New micro-power and CHP (combined heat and power) technologies that burn fossil fuels, the increased use of the virtual workplace over commuting and other macro trends in behavior and choice could make both wind power and grid congestion non-issues for many, many decades, and don't think that "big oil" is going to just sit back and let a bunch of spinning lawn ornaments put them out of business. As just a modest example of the differences between the two energy storage and delivery systems, just look at the wide disparity of the costs of "batteries" for the storage of intermittent demand supply or surplus energy between an electric car and a fossil fuel vehicle, the former requiring exotic design and materials with unknown long term disposal issues, and the latter needed little more than a simple tank.
If the oil and gas companies can find the technology for you to save money and increase reliability by going off grid, they will, and frankly I think the odds of success in such developments are about equal to those of wind power garnering as much as even 15% of our electric utility generating capacity. But what do I know that we didn't all know two decades ago? Like Shultz, I know nothing, I see nothing, I hear nothing. Come to think of it, I've got an old Beckett oil burner I should graft into my wall oven so I can get those kilowatts off-grid. Then, in addition to "bake" and "broil", I'll be able to "cremate".
Tuesday, March 27, 2007
On Iraq war and terrorism
[Left-wing nutcase attacks Bush, Cheyney and Rumsfeld for invading Iraq]
You're right. It is much better to just sit back and wait for the enemy to invade over here than to ever try to do anything about it over there.
[Left wing nutcase cites death toll, cost and the fact that now the Muslim world hates us as high prices to pay for "keeping Bush's cronies happy"]
I said you're right, Left-wing nutcase, what more do you want? I think we should just ignore the problems of the rest of the world, let the Jews be annihilated and wait until they take out a couple more buildings, a stadium or shopping mall full of Americans right here. Then we can set up the Nazi state that you really want anyway... having storm-troopers checking zee papers every time you cross between PA and NJ, etc. Or maybe we just pledge our lives to Allah and change our wicked ways so they won't want to kill us any more.
It's always so easy to say what you would not have done, the question is, if you were the President and charged with first and foremost protecting the American people, what would you do? Simply saying that you would make them like us is naive, saying we deserved it is cruel, and blaming it on "Bush" is illogical because your Slickmeister hero and Madeline Unbright tried making nice for eight years and they blew us up over and over again anyway. How do you deal with maniacs who believe you should either convert or die? You either kill them first, give up your liberty or just pass the buck to your children, it's that simple.
[Left-wing nutcase replies that he is neither left nor right, and that Pat Robertson is as much a bloodthirsty killer as any Arab terrorist. Further replies to another poster that 700 million Arabs were not mad at us before 911, maybe 20,000, but now that we invaded a weak, isolated soverign country that had not attacked us on "trumped up lies" may lead to our own downfall. Rome fell because it spent itself poor paying for foreign adventures it could not afford.]
That's not exactly true about Rome. The great Roman Empire and culture fell because of the unfettered hiring of barbarian mercenaries into the Legion and importation of immigrants, slave labor and bounty to artificially raise the standard of living in the short term and degrade the culture in the long term. All the same, the impact upon the advancement of human-kind was and has been, like the British Empire centuries later, felt to this day.
If the President's big play... trying to establish the first state in the Arab world where the people have liberty and self determination so that 21st century values can take root in a 7th century world, the impact on many future generations of our children will be enormous, just as it will be if we allow such a strategy to fail or simply decide that losing a few thousand, or tens or hundreds of thousands of American citizens every decade or so in a major terrorist attack is a price worth paying for minding our own business. I know the latter sounds sick, but I know many who actually feel that way, especially if they feel that they are not likely to be the victims of such attacks anyway.
[Another Left-wing nutcase chimes in that thousands a day are being killed and Daddy Bush gave Saddam the WMD he used against the Kurds, etc.]
First of all, we are not losing "1000's a day" in Iraq, and America never "gave" Hussein WMD to use on Iran, only stood by as he developed and deployed them in his ten year war with Iran, which was the greater threat to the west back then just as they are today. Are you saying we "gave" Hussein weapons that are banned by the Geneva Convention? Anyway, WMD aside, what WOULD (not wouldn't) you do to prevent another 911? What would you do about Iran? They WILL get their nukes because nobody has the stones to stop them, and what will you do then, surrender? Talk? Personally, I would tell them they have 24 hours to release those British hostages they are holding and hope they didn't, then take out every possible nuke site on the precedent of their act of war. But all we're going to get is a bunch of talk, and our children will have to deal with the fallout... literally.
As to the early '80s, I remember the late '70s, 444 days of American hostages in Iran and only the fear of the incoming Ronald Reagan leading to their release within hours of him taking the oath of office. To listen to the left, everything is always and only the Republican's fault, for example some tell us that it was Nixon who got us into Viet Nam, too. Oh well, that's enough on this out of me. The left will have to come forth with realistic plans for dealing with those who saw peoples' heads off and blow up innocents and children around the globe; they never have, and that's why they cannot, and never can be trusted to protect American lives and liberty. They just hate Bush, and some day he'll have been gone for a few decades and they'll have to find some other Republican to hate and blame for everything.
[Another poster brings up the topic of Ron Paul running for President]
Fascinating, he is definitely an equal-opportunity iconoclast, and the moniker "Dr. No" is richly deserved. But I fail to see how he proposes to stop the terrorists from carving living victim's heads off and blowing Westerners to atoms whenever they get the chance, or how he will change the world such that our children and grandchildren do not have to live with this threat until CTC reaches $18, in other words, forever.
We are members of the 21st century human race, not a herd of wildebeest on the Serengeti Plain, and I reject the idea that it is somehow a beneficial force of nature for a 7th century terrorist lion to periodically leap from hiding in the brush and drag off the weak or the slow in order to strengthen the species. If that were the case, I could argue that we should simply let the homeless die in the streets as well, and I am sure all the anti-war crowd would be opposed to that... they believe you should only kill them in the womb or let them be killed by serial murders on parole.
[A conservative suggests that democratization in the Arab world is impossible and only nuking one of them to make an example of them will stop terrorism]
Your's IS my plan "B", and ultimately that WILL occur if plan "A" fails and that nuke inevitably goes off in an American city... green glass parking lots being stamped one by one across the entire Arab world, and killing on a scale that would make the liberals most prized accomplishment, the millions who had pink plastic bags pulled over their heads in Cambodia, seem insignificant by comparison.
[Left wing nutcase suggests that with such a policy he can't blame Iran for wanting their own nukes]
It's not my policy. It will be the unforgiving policy of the American people if the terrorists use a nuke here first, and they will use one if they can get their hands on one and sneak it in. And yes, it will make us insane and perfectly willing to send them all to Allah. And all of that needless death and destruction will be because callous leftists decided that the Arab people prefer dictatorship and terrorism to freedom, and are incapable of comprehending what liberty brings to the advancement of man. Thus, leftists are willing to simply observe from afar with the indifference of a cosmetic researcher injecting nail polish into a rabbit's eyes. It is simply amazing how little the folks on your side care about what slaughter and oppression occurs around the globe... as long as America isn't trying to stop it.
Polar bears swimming in the Arctic Ocean? Disaster! Get rid of your SUV immediately! Slaughter in Rwanda? Who cares? Saddam invading his neighbors, launching Scud missiles into Tel Aviv and killing a couple hundred thousand Kurds? None of our business. After all, since we supposedly created that monster, why would we ever have any obligation to the rest of the world to destroy it?
You're right. It is much better to just sit back and wait for the enemy to invade over here than to ever try to do anything about it over there.
[Left wing nutcase cites death toll, cost and the fact that now the Muslim world hates us as high prices to pay for "keeping Bush's cronies happy"]
I said you're right, Left-wing nutcase, what more do you want? I think we should just ignore the problems of the rest of the world, let the Jews be annihilated and wait until they take out a couple more buildings, a stadium or shopping mall full of Americans right here. Then we can set up the Nazi state that you really want anyway... having storm-troopers checking zee papers every time you cross between PA and NJ, etc. Or maybe we just pledge our lives to Allah and change our wicked ways so they won't want to kill us any more.
It's always so easy to say what you would not have done, the question is, if you were the President and charged with first and foremost protecting the American people, what would you do? Simply saying that you would make them like us is naive, saying we deserved it is cruel, and blaming it on "Bush" is illogical because your Slickmeister hero and Madeline Unbright tried making nice for eight years and they blew us up over and over again anyway. How do you deal with maniacs who believe you should either convert or die? You either kill them first, give up your liberty or just pass the buck to your children, it's that simple.
[Left-wing nutcase replies that he is neither left nor right, and that Pat Robertson is as much a bloodthirsty killer as any Arab terrorist. Further replies to another poster that 700 million Arabs were not mad at us before 911, maybe 20,000, but now that we invaded a weak, isolated soverign country that had not attacked us on "trumped up lies" may lead to our own downfall. Rome fell because it spent itself poor paying for foreign adventures it could not afford.]
That's not exactly true about Rome. The great Roman Empire and culture fell because of the unfettered hiring of barbarian mercenaries into the Legion and importation of immigrants, slave labor and bounty to artificially raise the standard of living in the short term and degrade the culture in the long term. All the same, the impact upon the advancement of human-kind was and has been, like the British Empire centuries later, felt to this day.
If the President's big play... trying to establish the first state in the Arab world where the people have liberty and self determination so that 21st century values can take root in a 7th century world, the impact on many future generations of our children will be enormous, just as it will be if we allow such a strategy to fail or simply decide that losing a few thousand, or tens or hundreds of thousands of American citizens every decade or so in a major terrorist attack is a price worth paying for minding our own business. I know the latter sounds sick, but I know many who actually feel that way, especially if they feel that they are not likely to be the victims of such attacks anyway.
[Another Left-wing nutcase chimes in that thousands a day are being killed and Daddy Bush gave Saddam the WMD he used against the Kurds, etc.]
First of all, we are not losing "1000's a day" in Iraq, and America never "gave" Hussein WMD to use on Iran, only stood by as he developed and deployed them in his ten year war with Iran, which was the greater threat to the west back then just as they are today. Are you saying we "gave" Hussein weapons that are banned by the Geneva Convention? Anyway, WMD aside, what WOULD (not wouldn't) you do to prevent another 911? What would you do about Iran? They WILL get their nukes because nobody has the stones to stop them, and what will you do then, surrender? Talk? Personally, I would tell them they have 24 hours to release those British hostages they are holding and hope they didn't, then take out every possible nuke site on the precedent of their act of war. But all we're going to get is a bunch of talk, and our children will have to deal with the fallout... literally.
As to the early '80s, I remember the late '70s, 444 days of American hostages in Iran and only the fear of the incoming Ronald Reagan leading to their release within hours of him taking the oath of office. To listen to the left, everything is always and only the Republican's fault, for example some tell us that it was Nixon who got us into Viet Nam, too. Oh well, that's enough on this out of me. The left will have to come forth with realistic plans for dealing with those who saw peoples' heads off and blow up innocents and children around the globe; they never have, and that's why they cannot, and never can be trusted to protect American lives and liberty. They just hate Bush, and some day he'll have been gone for a few decades and they'll have to find some other Republican to hate and blame for everything.
[Another poster brings up the topic of Ron Paul running for President]
Fascinating, he is definitely an equal-opportunity iconoclast, and the moniker "Dr. No" is richly deserved. But I fail to see how he proposes to stop the terrorists from carving living victim's heads off and blowing Westerners to atoms whenever they get the chance, or how he will change the world such that our children and grandchildren do not have to live with this threat until CTC reaches $18, in other words, forever.
We are members of the 21st century human race, not a herd of wildebeest on the Serengeti Plain, and I reject the idea that it is somehow a beneficial force of nature for a 7th century terrorist lion to periodically leap from hiding in the brush and drag off the weak or the slow in order to strengthen the species. If that were the case, I could argue that we should simply let the homeless die in the streets as well, and I am sure all the anti-war crowd would be opposed to that... they believe you should only kill them in the womb or let them be killed by serial murders on parole.
[A conservative suggests that democratization in the Arab world is impossible and only nuking one of them to make an example of them will stop terrorism]
Your's IS my plan "B", and ultimately that WILL occur if plan "A" fails and that nuke inevitably goes off in an American city... green glass parking lots being stamped one by one across the entire Arab world, and killing on a scale that would make the liberals most prized accomplishment, the millions who had pink plastic bags pulled over their heads in Cambodia, seem insignificant by comparison.
[Left wing nutcase suggests that with such a policy he can't blame Iran for wanting their own nukes]
It's not my policy. It will be the unforgiving policy of the American people if the terrorists use a nuke here first, and they will use one if they can get their hands on one and sneak it in. And yes, it will make us insane and perfectly willing to send them all to Allah. And all of that needless death and destruction will be because callous leftists decided that the Arab people prefer dictatorship and terrorism to freedom, and are incapable of comprehending what liberty brings to the advancement of man. Thus, leftists are willing to simply observe from afar with the indifference of a cosmetic researcher injecting nail polish into a rabbit's eyes. It is simply amazing how little the folks on your side care about what slaughter and oppression occurs around the globe... as long as America isn't trying to stop it.
Polar bears swimming in the Arctic Ocean? Disaster! Get rid of your SUV immediately! Slaughter in Rwanda? Who cares? Saddam invading his neighbors, launching Scud missiles into Tel Aviv and killing a couple hundred thousand Kurds? None of our business. After all, since we supposedly created that monster, why would we ever have any obligation to the rest of the world to destroy it?
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