Sheriff's Deputy Killed in Hawaiian Gardens
"A Los Angeles County sheriff's deputy was shot and killed this afternoon after he knocked on the door in an apartment complex in Hawaiian Gardens, authorities said.
Deputy Jerry Ortiz, 35, a 15-year veteran of the department, was shot in the head as he was speaking to a woman in the apartment, said Undersheriff Larry Waldie.
Deputies believe they know who the suspect is and are searching for him."
When are we going to recognize that gangs -- often affiliated with international crime organizations of various types -- are nothing but domestic terrorists that need to be dealt with accordingly? Not recommending violating their civil rights or anything (I oppose that when it comes to Al Quaeda suspect too), but perhaps it deserves at least as much federal attention as medical marijuana busts, inevestigations of the porn business and other pointless efforts? Maybe we could even divert some of the dollars spent on that crap?

Africa Needs Aid for Security
"Development aid and sometimes even emergency relief cannot be delivered when the security environment is chaotic. Whatever the size of the aid budget, development cannot and will not happen where the civilian population lives in constant fear. If development assistance is offered by donors without thought to its impact on conflict prevention and resolution, it is likely to be unproductive at best and counterproductive at worst."
As I've pointed out recently, and as PJ O'Rourke noted long ago, charity isn't going to help Africa, but taking out some of the brutal, kleptocratic and self-serving African "leaders" might just do the trick. Actually, I think "Darth Vader's" bedtime story has a lot to teach us about what the problem is and how to deal with said "leaders."

Tom Cruise really needs to shut up. So do the Kabbalah freaks and all the others who think their talents as performers make them any more qualified than anybody else to run the world. Am I the only one who thinks that a Hollywood Civil War would be a good thing? (Think of Kabbalists and Scientologists fighting to the death along the length of Sunset Blvd.)

There was an interesting piece today in the LA Times about websites being increasingly forced to monitor content in order to attract advertisers. Yahoo has shut down its user-started chatrooms after several advertisers pulled their stuff. It seems that some legitimate companies were disturbed that their advertising was placed in user-started chatrooms dealing with pedophilia and other highly objectionable topics.

This occurs at the same time as my man Cody has recently noted that advertising is rapidly moving to the internet.

It should come as no surprise that increased advertising dollars will bring changes to the way the major internet sites have to operate, and this will impact the nature of the internet. The ultimate impact is difficult to predict, but we can make some guesses and suggest some ideas.

As Cody notes, traditional media companies including Viacom ( NYSE:VIA ) and Clear Channel ( NYSE:CCU ) are going to feel the pain as advertising drains out of TV, radio and outdoor formats where they dominate. These may represent shorts or at least "avoids" in the market. The same is largely true of most newspapers and many other paper publications that are dependent on advertising for their survival. Some of these will find new homes on the web, as many magazine publishers are already discovering, and others just won't figure out how to survive. Various credible web advertisers will gain, but one might argue that much of this potential gain is already recognized in the stocks of such companies as Google ( NasdaqNM:GOOG ) and Yahoo ( NasdaqNM:YHOO ).

But there are implications beyond this.

The nature of internet advertising is that it can be far more accurately directed than any other medium. Advertisers looking for maximum effectiveness will learn to tailor their messages to individual constituencies far more than they ever have had to in the past. The "general purpose" network TV or magazine ad will be replaced by dozens of smaller-circulation ads pitching each individual product.

There are two significant implications to this. The first is that the business of managing such advertising is going to get far more complex. Existing agencies are obviously in the best position to exploit this, but there are probably new opportunities as well. The entire business of crafting individual "narrow" messages and placing them effectively is going to balloon.

At the same time, total money that is spent through to the advertising media will probably decrease. The ability to more accurately target likely buyers is going to mean less spending and more efficiency overall. I think this is one of the reasons Yahoo and Google might be overstating the future reality. They won't get all the money that's coming out of other mass media, they'll get a portion of it, after allowing for the greater cut in advertising administration described above.

While the money spent on internet advertising will grow, the number of sites on which it is spent will continue to shrink. Just as advertisers have historically had a lot to say about the TV shows they placed their ads on, so will they have a lot to say about the content and nature of the websites they advertise on. Many segments of the internet will remain free-for-alls, but they will not be supported by large advertisers. Google's Adsense and Phil Kaplan's new service AdBrite will continue to offer a mechanism for smaller advertisers to target less credible and less well-monitored sites. Smaller blogs (like this one) will go without advertising.

Incidentally, an interesting business would be to qualify and quantify website content for advertisers. A company that gets a handle on doing this could have a huge impact on the ability of smaller and lesser known websites to "certify" their credibility or the nature of their content in a manner that would make them more appealing to larger advertisers who are unwilling to take the risk of their ads accidentally ending up on an objectionable site. I don't believe anybody is doing this for smaller sites right now, but feel free to let me know if I'm wrong.

Finally, I do believe that advertising as we know it is going to look for new ways to get products in front of people. More and more, people are using a variety of technologies to block any any all advertising from even being shown. I know I do it, for no better reason than that some of those more complex animated and java-based ads tend to slow things down and chew up bandwidth that I would rather dedicate to something else. Sponsorships and product placements in everything from videogames to movies are obviously things people have discussed, but I suspect there are some other great new ideas out there that haven't been pursued yet. Any ideas? Let me know.

-btc

There's been a piece circulating through the blogosphere suggesting that Julian Robertson, formerly one of the world's great hedge fund managers, was interviewed on CNBC and forecasted an unprecedented economic and political collapse, dictatorship, mass detention, civil war, etc.

This was news to me, as I had seen the interview with Ron Insana on May 24th and noted no such comments. I found the interview interesting and largely in tune with my own beliefs, but hardly revolutionary and hardly anything that others haven't been saying for a while.

The bit appears to have originated on the website of of an economic conspiracy theorist. I won't be bothered to name it, since that's probably exactly what the owner wants, but feel free to use Google. The item has since been repeated on all manner of websites, mostly those of gold bugs, peak oil obsessives, and various other "sky is falling" types. I have only seen one guy step up and post a link to the actual interview or a criticism of the outright lie that's being spread.

And yeah, I'll confess, I've met Robertson once and found him to be a very nice, smart guy. One of his former associates lived next door to my parents and my father met him a couple of time at holiday parties and such. He always described him as a true Southern Gentleman. So I'm biased. And I'm pissed that somebody is out there spreading lies about him, and even more pissed at the morons in the blogosphere who are willing to repeat anything that suits their agendas without even a bit of fact checking.

So, here are the links to the interveiw. The comments in question are in the second part.

Julian Robertson May 24 Interview with Ron Insana, part 1

Julian Robertson May 24 Interview with Ron Insana, part 2

For those who don't want to watch, Robertson says in a nutshell that:

• The current environment is the most disturbing he's seen
• The American consumer has been the engine of growth, and the American consumer is out of gas
• The real estate bubble is a significant risk that puts people's very homes and lives at risk, in addition to their saved capital.
• There is probably no easy way out
• The government (aka the Fed) are likely to try to inflate their way out of the problem and are to some degree already doing so, which explains the reason for the weakness of the dollar in the past couple of years
• That a soft landing is nonetheless possible

So, while he's hardly a raging bull, he's also not the "teary eyed old man" described in the conspiracy theorist's blog. And he's not forecast a collapse, hasn't moved into a fortress community to protect himself, and didn't cause the market to drop 50 points while he was speaking. (It was down about 33 when the interview started, down about 45 when the interview ended, and closed up a bit for the day.) And he spends the bulk of the interview discussing the business he's running today, suggesting that whatever else he's doing, he probably isn't burying gold in his backyard.

-btc

Lots of my friends on both sides of the political spectrum are incensed about the decision in Kelo v City of New London a bit anticlimactic. In my view, this stuff has been going on forever, and all the SCOTUS has done -- for now -- is continue to validate the current state of affairs, in which state and local rules are used to determine what constitutes the "public good" as required by the Fifth Amendment.

As the link I cited above notes, different states have approached this differently. Some allow condemnation for econcomic development, other's don't. Many haven't spoke on the issue at all.

But realistically, this stuff has been going on under one excuse or another for some time. More often than not, cities avoid troubles by characterizing development as a "public-private partnership" or some other BS term that essentially means "the city will nominally own the land, but we're pretty much going to hand it over to a private user for his or her own purposes. Most stadiums and sports arenas are built this way, and usually include a huge public subsidy for the builder.

In less egregious schemes, the government takes property, develops it, then hands it over to a private leaseholder or manager who reaps most of the benefits. The World Trade Center was built that way. The Port Authority of New York and New Jersey was the nominal owner with the power to claim "public use," but realistically it was anything but a public use facility.

And I've watched various universities do the same thing, often to create research labs and industrial facilities that primarily benefit others. The city condemns the land for use by the nonproift educational institution, the educational institution sets up a research facility of some sort, and the primary beneficiaries end up being the private companies who fund and own much of the work going on there. Oh yeah, since the space is owned by the nonprofit educational institution, nobody gets any property taxes.

Personally, I think that "public use" should be defined as narrowly as possible. It should refer to projects that will be open, available and useful to the general public. Roads, parks, fire stations and other true public use facilities. Sadly, that hasn't been the definition in use for many decades and the SCOTUS hasn't really changed much by acknowledging the reality.

It's too bad they didn't give the issue further review, but there are hints that at some point they will. Only four of the five member majority who decided the case backed the view that any project desired by government was "public use." Kennedy made clear in his concuring opinion that while he agreed that this case was in the public interest, that there was serious potention for abuse and that governments should not see this as a "carte blanche."

Likewise, Rehnquist's dissent in San Remo v. San Francisco suggests that further scrutiny of such issues may be in our future.

I also find it interesting that many of my liberal friends are the most incensed about this, as they see it as a win for big developers over "little people." I have been pointing out to them that the primary reason many democrats objected to Janice Rogers Brown's nomination to the Court of Appeals is that she had been fairly outspoken (by California standards anyway) on property rights, most notably in the San Remo case. Had somebody of her mindset been on the SCOTUS, both these decisions might very well have gone the other way.

Sadly, what I take away from all this is that both sides of the political spectrum are complete hypocrites on such issues. We all want the government to have no right to butt into our lives, except when they're doing it in order to favor projects or policies we like. Few people want their house taken for an office complex, but lots of people are quite happy to have other people's houses taken for a new stadium. Or to provide low income housing. Or a facility for the aging, or people with AIDS, or for victims of domestic violence.

Sadly, few are willing to grapple with the fact that a government that can take stuff for the projects we like will also be able to take it when we don't like it. And even fewer are willing to stand up and suggest that maybe, just maybe, a line should be drawn that limits government activity.

-btc

My man Cody, likes to look at things backwards. Or "flipped" as he says. I thought two of the articles on the Commentary page of the LA Times yesterday were worthy of consideration:

The Real Problem Facing Latin America Isn't Instability -- It's Rigidity
The World Bank and other international organizations have long recognized that most Latin American countries, including Bolivia, have the deepest wealth inequalities of any region on Earth. And the situation has not improved significantly with time. As the late Mexican Nobel laureate Octavio Paz correctly noted, the institutions established centuries ago by the Iberian colonial powers "were built to last and not to change."

Wow, imagine that. The root problem of all the instability in Latin America is that the institutions and the economies they control are too stable? While at the same time, the most stable economies have "out of control" markets.

And then there's this diatribe about similar tendencies in the City of L.A.:

Don't Let L.A. Be the GM of Cities
Voters have given Villaraigosa an opportunity to prove Los Angeles can work. He brings charisma, political savvy and a broad-based mandate. These certainly help. Mexico City's Manuel Lopez Obrador, London's Ken Livingstone and Paris' Bertrand Delanoe have all shown the positive effect that energetic and visionary mayors can make in mega-cities. But as we've seen time and again, the scale of mega-city challenges can dwarf even the most outsized personality.

Which is missing the point. Anybody who's managed an institution of any size knows that the secret to making it work is splitting it up into smaller pieces that can be managed relatively independently by decision-makers who have local authority to make local desicions. It's not about the guy at the top, it's about re-organizing to give real power to real elected officials at the neighborhood level and allowing the guys at the top to focus exclusively on those critical services and infrastructures that cannot be delivered at the neighborhood level.

Yet the supposed savior was a member of the same city council that rejected a reasonable and mild "borough" proposal a few years back, and continues to claim that there is no need to break up the worst school system in the country or to provide parents with real input and authority over their local schools.

Time to flip it. Break up LA. It's the only way to save it.

-btc

I generally don't want to use this space to vent, so if you don't want to hear it, feel free to skip this posting. But things in the neighborhood have me pissed off right now.

I've got a relatively new neighbor across the way. A European guy of some sort. He apparently isn't happy with things. Am I nuts here? Is he? Did I just live in New York and other congested/compact cities too long? Is this guy exhibiting some odd European sensibility that I find difficult to comprehend? Let me know.

I didn't respond to his note, though at some point I might have to. Below are excerpts from the long winded letter he wrote, and the response I'd like to send, but probably won't:

As we all seem to have discovered, the level of privacy in regards to the design of this compound is quite bad.

Well, it's a pretty compact townhome/loft development where all the units face inwards towards a common drive/courtyard as well as outward towards the street/parking lot. It's not the kind of place that was designed with a high degree of privacy in mind. This was obvious in the first 10 seconds of my checking the place out. It took you several months to realize this?

That is why I have great trouble understanding the fact that you obviously have no problem not using your so conveniently installed curtain at night, when the lack of sunlight makes the interiors of our space very visible.

Perhaps because the things I'm doing in my living room at night -- including such exciting things as reading, eating, watching TV and playing with BTCat -- aren't anything I need to hide, and as such I don't put any effort into hiding them? Besides, the reason I'm paying upwards of $2000 to live near the beach is because I enjoy the nonstop sea breezes blowing through a wide-open and nicely cross-ventilated space. This is why I don't even care that these units don't have installed A/C, something that I have always insisted on elsewhere.

What I can't understand is why anybody would move down here, pay these rents, then choose to live with the windows and shades perpetually closed. You can rent a dark, stuffy, cave-like apartment with equal amenities a few miles away for half the price.

Jeff Matthews and Herb Greenberg have both been commenting on Autozone (AZO) recently, but the emphasis has been comparing them to others in the same business.

I've been to a few auto parts stores in the past couple of days and my view is different. I think the whole business sucks. I've been to Pep Boys (NYSE:PBY), Kragen/Advance Auto Parts (NYSE:AAP) and Autozone (NYSE:AZO). All I needed was a new set of wiper blades. Not even the full blade -- though I would have bought them if there was no alternative -- just the rubber insert that keeps things clean. My Acura is almost a year old, they've never been changed and things are getting a bit scratchy.

Before I continue, let me point out that my Acura TSX is, in most respects, quite similar to a Honda Accord. Yes, the body style is a bit more "sporty" rather than "family" and the bulletproof Honda 2.4l 4-cylinder engine is more performance tuned than the version that sits in most Accords and several other Honda vehicles. But other than that, the parts are mostly similar. There are few maintenace-related items that fit an Accord that won't do just fine on my car.

Given that my vehicle shares driver-side wiper-blade specs with one of the most popular vehicles made, I didn't think that I'd have the slightest problem locating one. I should have known better.

Passed the WFR certification exam this afternoon. Spent much of the rest of the afternoon in a San Diego Starbucks, catching up on email and other things before driving home after the afternoon rush.

I should be back tomorrow with more regular commentary.

As I've explained to many of my east coast friends on a regular basis, doing any kind of trading from the west coast tends to be a bit different. The market opens at 6:30am, to say nothing of the pre-market. At 1pm you're done, and even if you stay for the after hours session, you're finished by 3:00. You have to either be an insomniac or do things in a fairly structured way in order to make it work.

For me it means doing all my "homework" the night before. I can read the Journal, FT and IBD online before bed. I have info from Asia after dinner and depending on when I get to bed I might also be able to check out the early European markets. I get to sleep on it and in the morning all I need to catch up on is the past six hours, mostly it's a "negative" process. I'm basically trying to quickly figure out if anything has changed since going to bed. I only re-evaluate things if something important has changed.

Being in class all day for a week has meant even less time to dedicate to anything market-related. Yet I've made money every single day, and actually have had one of my best recent weeks. Even today's downturn was an up day for me, albeit a small one.

The lesson I'm drawing from all this is that I have most certainly been overthinking things and probably overtrading recently.

A good lesson to remember when I get home.

-BTC

Simple lesson. In an emergency situation, most people will tend to provide the most attention to the people who are screaming the loudest.

Bad move. People who have the energy to run around screaming in hysterics are probably doing fine. The people who really need the attention are the ones who don't have the energy or ability to call for help.

The same, of course, tends to be true in the markets. Self-promotional companies whose names are always in the news will rarely represent great value. Value is found by looking for companies that are spending their time working on the business, not hysterically calling attention to themselves.

-btc