THE WORLD AS I SEE IT...

QPB published a book containing two works penned by the late, great physicist Albert Einstein entitled "The World as I See It," and "Out of my Later Years." These were written, respectively, over a period of years first from directly after WWI and into the Depression era (1930s); then during WWII and into the Cold War era.

Einstein's central focus in this collection of letters, essays, and speeches was a philosophical attempt to grapple with the specter of global destruction enabled by nuclear power and the conditions of poverty, racism, hate, terrorism, and inequity within the human continuum. It is a terrific read, and one wades through this material with a great sense of awe and respect for Einstein's singularly great achievements, most especially his formulation of the General and Special Theories of Relativity (explained cogently herein, as well), which took us beyond Classical Mechanics in a way that has now been thoroughly tested and verified over decades.

As a young boy, Albert admittedly was not especially a "good student." (Latent genius notwithstanding...) However, from his teen years, he developed a serious aptitude for philosophy, and this explains his thoughtful writings on many of the political and economic subjects of his day, especially vis a vis the revolution of 20th century physics in which he was such a key figure.

I am often struck when I consider the contexts of various writers and how this affects their worldview, whether they are conscious of it or not. I can understand some of Einstein's pronouncements re: politics, religion, and economics in this regard, but I cannot agree with some of his conclusions. Most notable among his conclusions (a constant theme throughout this work) is the advocacy of world government to avoid nuclear catastrophe (and to take the human race to a higher level of consciousness in this most dangerous era) - a "supra-national" government and court of appeals, which would have sole power to use military force and arbitrate among national disputes. To quote Einstein, a world government "would solve conflicts between nations by judicial decision." It would be "the only path to peace and security."

Before I critique this horrible idea, let me point out that Einstein has very positive things to say about the liberty and potential of the individual and democracy. He states early on that the "State exists for man, not man for the State." Yes! This is something that Ayn Rand would be proud to hear him say. One of her major themes was that nobody - and especially no state - has any moral right whatsoever to hold a "mortgage" on the life of any individual. Moreover, she upheld the contribution of great individuals in creating progress, prosperity, and virtually all advancements in the human condition from time immemorial.

However, I find Dr. Einstein's opinions and conclusions (in regards to the "solutions" to our problems) to be very contradictory in some key aspects. Consider the above quote re: the primacy of the individual. In no State with a command economy, for instance (communists, e.g.) would the rights and dignity of the individual be held in high regard. (cf. Ayn Rand's great work "We the Living"). They are subordinated to the collective; their talents and abilities are stunted in worthless social experiments and "redistributions" of employment opportunities, etc. Wealth is confiscated, initiative and incentive quashed. If countries were to surrender their sovereignty to some type of global governance, would not the same scenario follow? All for the collective... ("From those according to their ability; to those according to their need," as the immoral Marxist credo goes.) Who among us is qualified to judge and arbitrate disputes among nations (some going back centuries and caused by insoluble religious, intellectual, and cultural differences)? How could we possibly choose non-biased parties to do this arbitration (i.e., someone with no "axe to grind")?

Take a look at our modern United Nations and what a farce it is; an insult to all critically thinking people. Ayn Rand (in her work "The Voice of Reason") rightly gave a stinging critique of the U.N. as a body of "criminals." How can a group of criminal states and their representatives decide what is in the best interest of law, reason, and ethics? Why would we want people who are already intellectual criminals having any kind of say in such issues as world poverty, economic development, etc.? Are we out of our minds?

Unfortunately, Einstein became enamored of Emmanuel Kant in his early years, and Kant colors much of his moral reasoning. The fact that humans do not often act in a reasonable capacity to be "moral" (observing Kant's categorical imperative) by treating others such that they would not be injured in any way by our own actions is lost on Kant (and Einstein). It puts too much faith in reason, and reasonable people are in the minority on this planet; ditto cultures based upon or informed by reason and science.

I also appeal to Darwin here, and I think that even Dr. Einstein had not come to grips fully with Darwin's work (the same is sadly the case today, especially with the Neo-Conservative world view of global crusades for democracy, etc.). It is an irrefutable fact of the evolution of species (including humans, of course) that they act in their own, best self interest, as they perceive it. Hence, conflict is inevitable. War is inevitable, as the Greeks knew. Push will always come to shove in one way or another. We have the highly-evolved rule of law as our highest ethical form of public arbitration, and despite all the billions poured into education and social programs, we still have full prisons, a need for more and more police (and tax revenues to fund them) to enforce the rule of law. Why? This is the fundamental question - why? This question is lost on the dreamers of "one world socialist bliss." They are not asking it seriously and couldn't give a coherent answer if they tried. The same is true, I'm afraid, of Dr. Einstein's political and philosophical views.

Disarmament by the US and Britain would be among the stupidest things that could ever be done. It's akin to taking away the guns and police cars from our police. Either the forces of good prevail, or the forces of evil prevail - it's as simple as that. One need only look to the frightening nuclear proliferation of today to see that disarmament is a pipe dream. (By the way, do you lock your doors at night? Your car doors? Why?)


Dr. Einstein says that the "Jewish-Christian religious tradition" offers humanity the "highest principles for our aspirations and judgments." With this statement I wholeheartedly agree. In his works, he always has high praise for the accomplishments of the "Prophets," Moses, and Jesus. Furthermore, in one passage, he admits the limits of reason, the device which he in many other places extols as being the tool that humanity can use to solve its war and poverty problems: "By painful experience we have learned that rational thinking doesn't always suffice to solve the problems of our social life." (Cf. Plato's "Republic," and all States - like the USSR - which were artificial constructs based upon faulty human reason.) If this is true (and of course it is), why in the world would we want to entrust our freedom and sovereingty to a "supra-national" authority comprised of very flawed human beings? It is right principles and premises which must prevail in the search for human progress, truth, and peace - either these prevail or life is not worth living.

For Einstein, then, the threat of war (and nuclear annihilation) trumped the risk of what he even admitted could be the "tyranny of world government" (contradicting himself again). Rather than a Pax-Americana (tenuous, of course, but better than the alternatives), Einstein would have us surrender our sovereignty, which represents centuries - even millennia - of human progress, freedom, and potential, purchased with blood and suffering on an unimaginable scale. The problem is, all too many of today's intellectuals think the same as Einstein did all those decades ago - that socialism, "wealth redistribution," and more global government is the solution, when, in fact, they are precisely the problem.

Today, we face the same problem that Einstein faced in his day, only the players have changed. (In his day, the Nazis threatened world civilization; in our day, fascist Islamic fundamentalists.) In his essay "The Goal of Human Existence," Einstein correctly posits the "goal of Judeo-Christianity" as "a community of free and happy human beings... liberated from destructive instincts." Would that we could all come to this realization. However, it's the fatal flaw of those who put too much faith in human reason that we'll all be able to somehow internalize this - to train our minds to overcome our base passions.

It will take more for men and women to realize Einstein's wonderful dream of peace and security. It will take a supernatural (not "supra-national") transformation from without - as Moses experienced at the burning bush, or the Apostle Paul experienced on the Damascus road. With all due respect to Albert Einstein, one of humanity's greatest scientific minds, there is no other way...

TTC

ANYONE CAN MAKE A MILLION...

Another little classic for personal finance/investing is Dr. Morton Shulman's "Anyone Can Make a Million." This dates from 1966 and is interesting both for the fact that it is a period piece, with analogues pertinent to today's financial scene, and for the fact that Dr. Shulman is Canadian, giving us his unique and different perspective on investment issues.

It is fascinating reading investment classics of bygone eras. One can see direct parallels to today; moreover, one can get an idea of the cyclical nature of the stock market and investment fads (and also ones that are archaic or no longer relevant) and for the underscoring of the fact that "there is nothing new under the sun."

Shulman is especially praiseworthy of convertible and convertible-preferred bonds. The idea of convertibles, of course, is that you get a set rate of interest paid on your capital with the potential added "kicker" of being able to convert your investment vehicle into shares of common stock beyond a certain price if it becomes advantageous for you to do so. I know of a couple of successful mutual fund families that offer funds which have put this plan to good effect over the years: Fidelity and Calamos. These companies have convertible funds that allow one to sleep more soundly at night. Especially in a sideways to down market, this type of vehicle might prove more rewarding. There is something to be said for collecting dependable dividends in a rotten market such as we have today.


Shulman predictably underscores the dangers of things like penny stock scams (bulletin board stocks are always to be avoided; most are frauds pitched by criminals), options (puts and calls), and whole life insurance. He does, however, pitch term life insurance (if bought intelligently) for young couples in need of income replacement (think paying off the mortgage) in the event of the untimely death of the principal breadwinner.

It is most interesting to get a non-American perspective on investing from someone who has done well in a prosperous country like Canada. He talks about things such as "free riding" (the ability to avoid putting up your own capital on short term trades) which I've never heard of here in the US (the "if, as, and when" market). I wonder if this is even yet done in Canada? (Surely this delightful loophole has been closed by now?) He highlights some advantages for American citizens to open up a brokerage account through a Canadian broker (easier to invest in Canadian shares, for one, which have doing great the past few years; Canada is booming).

What Americans don't realize is that there are plenty of areas in the world that are quite prosperous, as much or more so, than the US in the past 5-10-15 years: Hong Kong, Singapore, Australia, Canada, Ireland, and the UK, for starters (I've been to most all of these places and have seen it with own eyes). All of their real estate is just as expensive (or more so) than ours, and has appreciated quite smartly during the recent global bull market in property. Moreover, all of these places are wonderful places to live, with great infrastructures, booming economies, and an equal or better standard of living than the US. Therefore, getting a non-US perspective on the investment market is quite helpful, and can lead us to more opportunities.

I never tire of reading about the "Glamour Stocks" of the booming 1960s/'70s American stock market: Polaroid, Xerox, IBM, and the like. As I read his chapter on the wacky 60s/70s bull market (replete with stocks that sported ridiculously high PEs - just as absurd as 1999/2000) that collapsed with a mighty, disastrous "thud" in 1974 (remember the big OPEC shock of the time? War in the Middle East, Vietnam, Watergate, etc.), I am reminded of another master work that should be on everyone's reading list: Mackay's Extraordinary Popular Delusions and the Madness of Crowds. Read and heed... (And don't forget to cash out when your "glamour stocks" go vertical, as in 1999!)

Shulman closes his book with a few chapters on the collectibles market: art, antiques, antiquities, coins, and the like. It is fascinating that this book (and books such as Adam Smith's "Paper Money") mirror today's scene in an uncanny way. Collectibles have been in a monster bull market since 2001 here in the US (and globally). Over the centuries people have striven to preserve their wealth in tangible ways, especially when the economy is shaky and stock markets are particularly unrewarding (as today in the US). The long term market return of collectibles is very competitive with stocks.

Have you noticed how popular the PBS show "Antiques Roadshow" is? (They even have franchises of this program for the UK and other countries now.) My jaw drops when I see the market prices some pieces are fetching. Moreover, many of these show outstanding craftsmanship (especially the furniture and clocks) of unmatched quality. And they give the owners a certain joy of ownership - they are pleasant to look at and have aesthetic appeal. Now try comparing that with the heartburn you get by owning such awful stocks as MSFT, INTC, LU, NT, EBAY, or CSCO today!! No wonder the collectibles market is booming and is likely to continue in that direction (do the people at Sotheby's care about the Fed and Al-Qaeda?!).

Give this little book a close read if you can find it. At least it will remind you that all investment trends and fads are cyclical (and have been played before - by global Capitalists from time immemorial), that macroeconomic concerns have direct bearing on these cycles, that the "imminent demise" of the US dollar is a decades-old canard, that it pays to have historical perspective, and that there is plenty of money to be made outside the US. (If you believe the hype about the Albertan old sands, there will be plenty of petroleum for decades and Alberta will be filthy rich! Who needs Saudi Arabia?)

TTC

THE ONLY INVESTMENT GUIDE YOU'LL EVER NEED

Another little investment classic that is worth reading is Andrew Tobias' "The Only Invesment Guide You'll Ever Need." First published in 1978, this book keeps showing up in book stores in updated versions. Worth a read...

Tobias used to be a syndicated columnist and free lance financial journalist whose work showed up everywhere. I have no idea whatever happened to him.

He structures his book first around concepts and investment strategies involving "Minimal Risk" and then proceeds to devote a large section to various investment strategies involving the stock market. Moreover, he includes several targeted appendices: taxes, life insurance, mutual funds, etc.

It is remarkable how much of the same subjects of his book (plus the afore-mentioned "Paper Money" by Adam Smith) are relevant still today. Some of the concepts, such as buying in bulk (think CostCo, Sam's Club, etc.), avoiding life insurance scams, and investing conservatively for the long haul are timeless. One only need to observe the nice cars pulling into CostCo (also gassing up there to save about 5-10 cents per gallon) to get a clue that there's something worthwhile going on inside! (Think of the stocks of such companies over the past twenty years as well: WMT, etc.)

Moreover, he spends much time trumpeting the glories of the Keough plan accounts and IRA accounts (tax-deferred saving and investing vehicles that all of us should utilize if we can). IRA accounts were brand new at the time.

I enjoy reading about the "Nifty 50" stocks of this era (big cap "can't lose" stocks that were all the rage of the late 1970s) and comparing it to my own experience with the massive Tech/Nasdaq bubble of the late '90s. The ridiculously high PE ratios that people were paying for such clunkers as Xerox, Polaroid, et.al. were seen again in the late '90s. Of course, in the 1970s, people did not view Xerox as a "clunker" - it was a serious wealth builder in that era - IF you got out in time! Regardless, they - just as we in the late '90s - were dancing around the golden calf of "can't miss" nifty stocks that were bid into the stratosphere.

Ah yes - it all seems so obvious and logical in retropect (hindsight - it's always 20/20). Will today's housing market be the next "tech wreck"? We'd all better say our prayers and hope not...

TTC

"PAPER MONEY"

Summer is a good time to catch up on one's reading. If you're anything like me, my list of books "to be read" stretches from here to Jupiter. So many great books, so little time...

I am currently on vacation, so I have a bit more time to devote to such a pleasurable pursuit. Recently, I've devoured a few classics from the world of Finance and Investing. "Paper Money," by Adam Smith (a nom de plume - his real name is George Goodman) is a classic. Everyone desiring a better understanding of the global financial system post-Bretton Woods would greatly enhance their understanding of our precarious "global economy."

By the way, Adam Smith used to have a great show in the 1980s on PBS - a stock market show that came on weekly, somewhat like Louis Rukeyser's classic show "Wall Street Week," except I cannot remember the name of Smith's show. I miss both of those superb shows and the incisive commentary of their guests. (I especially miss Louis Rukeyser - his monologue at the beginning of each show was one of the best things ever on television, and many of his guests were superb and quite helpful.)

Anyway, "Paper Money" was published in 1981, right near the apex of the 1980s high interest rate mania; the tail end of the inflationary 1970s, and just before the great bull market of 1982-2000 kicked off (Aug. '82). In it, Smith chronicles the unlikely rise of the global oil cartel OPEC. Chapter 7 - "How OPEC Started, and Grew, and Engineered the Greatest Transfer of Wealth in World History" should be required reading for anyone wishing to understand a little better our current predicament, the dependence of the US on foreign oil (mostly from hostile sources), and the general state of the world today. OPEC, modeled on the Texas Railroad Commission (which had much to do with the rules and regulations of Texas oil production, transport, conservation, etc.), was the brainchild of Juan Pablo Perez Alfonso, a Venezuelan lawyer and government official, and an American-educated Saudi named Abdullah Tariki, who in 1959 was the director of the Office of Petroleum Affairs for Saudi Arabia. They were initially brought together by American Wanda Jablonski, who was then publisher and editor of Petroleum Intelligence Weekly.

The desire was for the petroleum-rich countries to form a cartel in order to better control the price and rate of consumption of oil. They needed collective bargaining power to counter the enormous influences (then hegemonic) of the so-called "seven sisters" American and European oil giants (Exxon, Mobil, Royal Dutch-Shell, BP, et.al.) And the rest is history... Unfortunately, the prediction by Milton Friedman, one of my favorite economists, that the cartel "would not last long," has failed. OPEC is as strong and wealthy as ever, funneling much of their profits into the funding of terror enterprises worldwide, all at our expense (think Iran).

Enough about OPEC. Bottom line is, Adam Smith is an excellent, engaging writer, and this book reads just like today. All the concerns - a "housing bubble," "inflation," the "dollar crisis" (hint - it's been in a "crisis" for several decades now), "high oil prices," concern about the stock market and the onset of stagflation - all read like they were taken out of today's headlines or from the jabbering nabobs on CNBC. Everything old is new again, and the current America/global economy looks like a repeat of the 1970s/80s era. Only the prices have changed...

What's ironic is that the so many of our most vociferous enemies have been educated right here in the US; most at Ivy League schools. Smith refers to those involved in the oil trade as "technocrats." Nuts about American college sports (and "their" alma mater teams), yet downright hateful of the American government (no matter what their incarnation) and disrespectful of the American people, whose taxes and consumption habits fuel the entire global economy and maintain its freedom. Everyone has a tale of woe and/or "oppression," and, of course, somehow, Uncle Sam is to blame. You'd think the events of the past 3 decades would spur American ingenuity to the point of some real energy breakthroughs, new technologies on the fast track, new investment opportunities with some staying power, etc. Would that that were the case. Will we ever learn our lesson when it comes to energy?

If you want a much more informed understanding of the current political and economic malaise, pick up a copy of Smith's excellent book "Paper Money" and educate yourself, and see that nothing at all has changed in 25 years - only some of the names and faces.

TTC

SOUTH KOREA, THE ARAB LEAGUE, AND CAPITALISM

Here is a very pertinent question for today: Why does the Republic of South Korea, a small country (formed in the aftermath of the 1950-1953 Korean War stalemate) of nearly 50 million people, have a GDP of nearly $1 Trillion (within the top 15 of the world) that is larger than the combined 22-member Arab League (formed in 1945 to foster greater "economic, social, political, and military cooperation" among its overwhelmingly Islamic states)?

South Korea owes its freedom and prosperity, of course, to the sacrifices of the predominately American military forces (though it was an allied effort, I admit) that fought a really tough war under atrocious conditions to enable that. Moreover, the prosperity comes largely from American aid, industry, and consumers buying what are now world-class products (in virtually every class) emanating from Korea. This is, of course, totally lost on the world today, especially the left wing, who enjoy overlooking obvious, "inconvenient truths."

However, what they have accomplished in 50+ years is miraculous. It is a tribute to their industrious society and the simple truths of Capitalism unleashed in the aftermath of that destructive war. (Hint - take a look at their northern neighbor.)

It is a shame that the Islamic states are still stuck with mostly autocratic, theocratic, and often Socialistic governments that hold their people back. Little progress toward world peace will ever be made so long as this is the case. Islam is in desperate need of an "Enlightenment," as Christianity went through in the 18th century (with roots in the 16th and 17th centuries). Fundamentalist theocracies will only continue to stifle all of the human potential within these states.

TTC

HOORAY FOR THE UK!!!

Hooray for the UK!!!

I was very impressed by and proud of all the great work done in the UK in regards to the recent foiled terrorist plots. Notwithstanding the fact that the plots underscored the vile, murderous, and hate-filled ideology of the Islamic terrorists involved, it was conversely most impressive work on the part of the Police, Airline, and Intelligence officials - UK, US, and Pakistani (so we hear) - to save us from the these wretches.

Let it be known first and foremost: much like all of the recent terrorist strikes (9/11; 7/7; Madrid, etc.), these people do not care who they kill. The intended victims are of all races, ethnicities, religions, creeds, etc. This is indiscriminate murder - there were Muslims in the Twin Towers in NYC on 9/11/01.

These miserable people murder for the sake of murder and are trained, financed, and encouraged by lunatic "clerics" (and the global terror network) to do so. There is not, nor was there ever, nor will there ever be any "justification" for these acts and intended acts.

The global left wing always tries to trot out the same old tired saws about the "origin" or "causes" of these vile acts: "poverty," "racism," "unemployment," and the like. This is pure GARBAGE!! Osama bin Laden came from an incredibly wealthy family. Look how he has used his wealth... (I notice there is still a great deal of crime in every city on the planet, despite all of humanity's efforts to eliminate "racism," "poverty," the lack of education, etc. Why? Why is there crime?)

This Islamic hate movement is very well financed from a variety of sources. (We can start with our own addiction to oil, much of the profits of which go toward state terrorism and weapons.) Did you see Hezbollah recently giving out many thousands of dollars to the victims of the recent war?! No wonder the common people voice some sympathy with them, even if Lebanon is one third Christian.

It is incredible that we here in the US still debate nonsense about "profiling," "tolerance," etc. in the face of the most grave danger we have faced since WWII (perhaps even MORE dangerous and insidious, since we fight cowards who do not wear uniforms, refuse to come out and fight us in public, kill and maim innocent people with IEDs, etc.). OF COURSE we should be doing profiling of terrorist types - everywhere in our country. What is more important now to us than the safety of the homeland. I - and you - should fully support the President's position on wire-tapping (and a pox on that pathetic liberal judge who just ruled to the contrary). "If Al-Qaeda's calling, we want to know why..." Simple enough, isn't it?

I hate to see any encroachment on my civil liberties, as well. I also, in theory, support more limited government. However, these are extraordinary times and require extraordinary sacrifice. This is most likely a permanent conflict - we must be ever diligent.

Our freedoms, our great civilization, our great and sacred history with its foundations in philosophy and the Christian religion - these must be protected at all costs. The USA is a place of religious tolerance (where conversions are made by appealing to the heart and mind, rather than by forced conversions at the point of a scimitar), enlightened, objectivist philosophy, and Capitalism - all elements that make up the American character and "dream." We stand for human progress - and actually believe in it. We stand for the promotion of science, and in fact this is explicitly stated in our Constitution (Article 1, Section 8). We in the US know - we don't think - we KNOW - that theocracies do not work (and never have in any rational society - or within the hearts of rational people). On the other hand, explicitly atheistic societies, conversely, do not work - and never have. There must be a balance. The foundational documents of the USA make this clear and promulgate these values.

Islam was once the world's most advanced civilization (8-10th centuries AD; with some allowance for debate). Europe got an "assist" from great Islamic scholars by their preservation of the best of Greek philosophy, especially Aristotle, when they were long forgotten and suppressed in Europe. Many Islamic scholars valued the European tradition of rationalism very highly, and used it to great effect to advance their culture in art, mathematics, medicine, and architecture (have you ever visited Spain's Alhambra? I have - it's one of the most phenomenal structures on the planet).

Unfortunately, many of the greatest Islamic scholars - such as the great Avicenna and Averroes - ended up being either censured, exiled, or murdered by fundamentalist zealots of their own religion. The triumph of irrational and fundamentalist Islam over the elements of tolerant, rational, and science-loving Islam is one of history's great tragedies. The latter exist in Islamic society today, of course (many of them living in the West), and it's a great tragedy that we never hear from them. The noise from the ululating holy hatemongers drowns them out. The media are no help, since sensationalism, hate, violence, and the like seem to "sell" much better than rationality, science, and peace. The great Islamic scholars of the past must be rolling over in their graves these days...

TTC