The World & Beyond

The writings of a global transient.

Author: world (page 1 of 3)

UK Election Investment Implications

Like most countries, if you are resident in the UK, you will be subject to the UK on your worldwide income.

However, if you are resident in the UK but you are not domiciled in the UK, you can claim the ‘remittance’ basis of taxation.  This means the UK will tax you only on money you bring into the UK.  The remittance basis is essentially free for a certain number of years, then you have to start paying for the privilege, like GBP 30,000 per year or GBP 70,000 per year or something like that

So if you are am American and you are resident in the UK but not domiciled there because you are there temporarily then on the portion of your income paid from the US side of your firm to you US checking account you are not paying UK tax.

So you can be a Russian billionaire, buy a huge home in London, live in London and not pay any UK tax on all your assets which are in Switzerland or the Channel Islands or Russia or wherever.

Many people think that this is part of the reason that London property prices are so high and a lot of people are resentful that foreigners come in and drive up property prices.  So the Labour party is saying it wants to do away with the non-dom regime so that if you are resident in the UK, then regardless of your domicile status you must pay UK tax on your worldwide income. But, basically, with the non-dom regime, the UK is one of the world’s greatest tax havens.

If labour wins then potentially this should be negative for London real estate pries and the pound as well.

Senegal Enters War In Yemen, Will Pay The Price

I have written before of the tragedy of my beloved Kenya’s entry into the world of endless U.S. sponsored warfare.  Now Senegal is about to do the same thing.

Recent news states that Senegal has pledge 2,100 soldiers as part of the Saudi led coalition against the “Houthi” rebels In Yemen.   The Saudi war in Yemen is US planned and coordinated.

So what’s the issue?

Like most of the world, you probably never heard of the  Houthis until recently.

The propaganda states that the Houthis are an Iranian armed and financed Shia rebel movement and that their impending victory in Yemen is part of an Iranian proxy war being waged for supremacy in the middle east.
houthisFirst of all, it is not clear why that would be such a bad thing and why the U.S. or Senegal should care.  After all, it is hard to argue that increased Iranian influence in the world is somehow worse than an increase Saudi influence in the world.  After all, it is not the Iranians funding Wahhabism all over the world or funding the 9/11 hijackers.  While Iran is not exactly a free country, women have considerably more freedom in Iran than they do in Saudi Arabia as well.

More importantly, however, the argument is largely untrue to begin with.

Here are some excerpts from a  cable from the US Embassy in Sana’a from 2009 about the Houthis:

Little is clear about the Houthi leadership, aside from the fact that Abdulmalik al-Houthi is the rebel group’s current leader. Houthi field commanders do not seem to agree on key ideological and religious principles. The Houthis’ numbers range from the hundreds to the thousands, though it is difficult to determine how many of these adhere to Houthi ideology and how many are tribesmen who have joined the Houthis’ fight for other reasons.

So, for starters, it’s not even clear who the Houthis are or what they want.  Let’s go on:

(S/NF) Contrary to ROYG claims that Iran is arming the Houthis, most local political analysts report that the Houthis obtain their weapons from the Yemeni black market and even from the ROYG military itself. According to a British diplomat, there are numerous credible reports that ROYG military commanders were selling weapons to the Houthis in the run-up to the Sixth War. An ICG report on the Sa’ada conflict from May 2009 quoted NSB director Ali Mohammed al-Ansi saying, “Iranians are not arming the Houthis. The weapons they use are Yemeni. Most actually come from fighters who fought against the socialists during the 1994 war and then sold them.” Mohammed Azzan, presidential advisor for Sa’ada affairs, told PolOff on August 16 that the Houthis easily obtain weapons inside Yemen, either from battlefield captures or by buying them from corrupt military commanders and soldiers. Azzan said that the military “covers up its failure” by saying the weapons come from Iran. According to Jamal Abdullah al-Shami of the Democracy School, there is little external oversight of the military’s large and increasing budget, so it is easy for members of the military to illegally sell weapons.

And there you have it.  At least as of 2009 Iran was likely not arming the Houthis, and instead the Houthis were probably getting some of their arms from the corrupt Yemeni government, that was itself getting its arms from the US and it’s allies.

Now, that was 2009.  How about now?  Well, as the Houthis bear down on the Capital, the Huffington Post reports that Iran Warned the Houthis Against A Yemen Takeover.

Am I the only one saying this?  Not quite:

Saudi Arabian film maker Safa al-Ahmad has spent a lot of time in Yemen and said the following recently in The Atlantic:

The one that drives me insane is the one when they say “Houthi Shia militia” or simply “Shia militia.” That line just makes me cringe, because the Houthis are first and foremost a political group. Their sect is Zaidi. And when you say “Shia militia,” it’s actually misinformative. They are traditionally part and parcel of the Shia sect, but they hold very different beliefs than, say, Shia in Iran. When you say “Shia militia,” automatically you have a connection with Iran, right? In fact, that misleads you to thinking that they have religious motivations in their control over Sanaa and their spread across Yemen. That is political. They’re very pragmatic. They have alliances and affiliations with a whole bunch of other groups that don’t believe in their core beliefs as Zaidi.

And are they fighting a proxy war for Iran?

If we’re talking about a proxy war, Saudi Arabia has played a much bigger role when it comes to Yemen than Iran ever [did]. The control, the money, the influence that Saudi Arabia has had for decades over the Yemeni government and the tribes inside Yemen do not compare at all to the impact that is alleged of Iran. Iran does have a relationship with the Houthis, but [it’s] not that strong. They can’t pick up the phone and tell the Houthis, “Go do this, go do that.” It’s not that type at all. The Houthis are very much a local group that was borne from local conflict inside Yemen. The outside regional conflict has exacerbated something that was local. But predominantly the Houthis are very much a local group with local grievances.

So now as the Houthis have captured Sana’a and are moving on Aden, what is the U.S. and  its Saudi Allies doing?

The answer:  Horrific things.  According to the U.N.:

Also on Thursday, the U.N.’s World Food Program warned that a blockade of the country’s ports had created “a severe fuel shortage” that “is threatening the delivery of lifesaving assistance to Yemeni civilians.” It said its delivery of emergency food rations to 700,000 people in seven of Yemen’s governorates was in danger of halting completely.

In case you didn’t know:  The Houthis don’t have a Navy.

Meanwhile, the Saudis bombed the runway in Sana’a in order to prevent Iranian planes from bringing vital aid to Yemen’s beleaguered citizens.
All of this is helping our enemies Al Qaeda and ISIS, who the Houthis are actively fighting.

So what is the point of all this?  We are we complicit in worsening the situation on the ground for civilians and bombing those who are fighting ISIS and Al Qaeda?

The answer is the same as the answer to the question “Why are we just hearing about the Houthis now?”.

The answer is:  The Saudi’s, Israelis, and our own neocons are desperately want war with Iran.  They thought they were going to get it but were shocked when Obama announced the nuclear deal with Iran.  Suddenly, (literally within 2 or 3 days) we started to hear about the Houthis and Iran’s proxy war in Yemen, which as I have already pointed out is basically a lie.

The Saudi’s have always wanted ware with Iran since 1979 and pushed Saddam into the Iran-Iraq war and helped to finance it.  The Israeli’s always want the US to attack anyone they perceive as a possible threat, and the neocon’s, too, have had their eyes on war with Iran for decades.  The military contractors want it, and the military itself wants it for fear that our military budget (greater than all other military budgets combined) might be cut if we can’t find another poor country to attack.

If you don’t know, however, the Iran deal is a good deal.  Don’t listen to the propagandists, listen to the actual experts:

So now, back to the original title:  Why is Senegal getting involved?  What possible interest to the people of Senegal have in the outcome of the war in Yemen?  The answer:  absolutely none whatsoever.

So why are they going?  Direct cash payments:

“The most obvious potential benefit of a Senegalese military engagement alongside Saudi Arabia would be in the form of closer political and economic ties between the two, and almost certainly direct cash payments from Saudi Arabia to Senegal,” says Andrew Lebovich, a security and political analyst focused on West Africa

The Government of Senegal has sold its people out for cash, and if you know anything about government in Africa, most of it will end up in the pockets of the politicians.

The people of Senegal will regret the day that they became involved in the killing  of people thousands of miles away.  Doing such has sucked the United States into endless war and the loss of liberties at home.  Even serving US interests in neighboring countries has cost Kenya dearly.  It will only end poorly for Senegal.

Apple Watch Will Fail Because Nobody Want Another Device In Their Lives

I haven’t posted for a month and a half and thus didn’t have time to make my Apple Watch prediction before it’s release.  Since the jury is still out, however, I predict it will be an overall failure.

Simply put:

The great success of the smart phone owes to it’s eliminating the number of devices that one needs to carry, keep track of, and/or charge.

Whereas once upon a time one needed a phone, a watch, a calculator, a notepad, and perhaps a street map in one’s life, now all one needs is a smartphone.

Take a look around at the kids today… they don’t wear watches.  I myself stopped wearing my watches last year.  I’ve never been a fancy watch guy.  However I have  a number of great watches from Mistura.  I love my Mistura watches.  However, prior to my six month trip to Panama that started last September all of the batteries were dead.  I had “get new watch batteries” on my to-do list as I was preparing for the long journey, but finally decided “screw it, what do I need a watch for”?


We can see the desire of people to eliminate the number of devices in their lives by the evolution of the I-Phone as well as the successful introduction of the smart-looking Galaxy 6 Edge.

After the introduction of the I-Pad, people started to realize that with a large enough screen and enough capabilities in their phone  they didn’t have to carry their laptops around with them as much.  Still, however, the I-Pad itself was an additional device to be gotten rid of it possible.

The desire by consumers to carry as few devices as possible is so great that after literally decades of phone sizes shrinking they are now actually getting larger so that consumer can cut I-Pads and similar devices out of their lives.

Now comes along the Apple telling us that we need a new device for, well, no apparent reason.  Yes there is some cool functionality for some specific applications, but remember:  cell phones got relentlessly smaller year after year after year until consumers realized that by making them bigger they could eliminate another device from their lives.

Apple Watch is now telling them to add another device to their lives.

It’s not going to fly.

Getting Things Done: The Importance of a System

Most of us suffer at one point or other with procrastination and putting things off.  It is a terrible trap to fall into, as a days worth of hard work allows for a week of mental relaxation while a day of slacking leads to a week of mental anguish.

The proper response to that is to have a system.  You can’t trust your gut.  Pilots and Surgeons use check lists for a good reason, and so should you.

A good place to start with this way of thinking is David Allen’s Getting Things Done:

When it comes to personal hygiene I seriously doubt that many of us have problems, even if we suffer occasional procrastination problems in other areas.

Why? Because we have a system.  We wake up, shower, brush teeth, put on deodorant, brush hair, (in my case apply Rogaine), etc.

We don’t even think about it.

Well here at the surf camp I broke the system.  I arrived at the camp last Saturday afternoon.  Sunday morning I woke up about to start my “system”.  I balked at the shower because I was about to go surfing anyway,and continued with the rest of my system.  As I was in and out of the ocean my whole stay I didn’t actually shower until the night before the 7 hour bus trip back to Panama City.

Playa Venao

As I was in and out of the ocean I don’t think I smelled bad.  To the extent that I did smell bad nobody would notice because everyone was doing the same thing,

Here is what is interesting:

You know when you are procrastinating surfing the web or whatever? You know what you have to do… but it’s just a chore to do it?

Well once I broke my daily hygiene system I suddenly would realize that I didn’t brush my teeth this morning or didn’t apply Rogaine, etc.

Once I realized that I didn’t do something, I went and did it, but it felt like a chore.  It was something I needed to do but I had to think about it and then get up and actually do it, and the whole time it felt like a burden.

Those of you who know me know I don’t have personal hygiene problems.

I don’t even think about it.  I have a system. Normally I wake up, brush teeth, shower, etc.

This idea of a system where you simply do what you need to do every day can also be applied to work.  To be productive you need a method of operating where you do what you have to do without even really thinking about it.

Then it won’t seem like a chore.

On a side note, my skin has never been better. (I occasionally suffer from mild eczema) though that could be a result of the relaxation instead of the multiple days of not showering.

NY Fed Chief William Dudley: Guilty as Charged

Last week I wrote about how you can tell who is correct in an argument simply by the response to an allegation.  Specifically I wrote:

“Any time one side of the debate says: “This proposal  has X effect”, and the response by supporters of the proposal  is to say “What we are trying to do is to Y” you always know invariably that the person alleging X is correct”

You also get a strong sense that someone is in the wrong when they are indignant about their motives being called into question.

I was reminded of this from an article in today’s NY Post.   It is about Carmen Segarra, who recorded over 46 hours of conversations with her fellow regulators which showed how the NY Fed has too cozy of a relationship with the banks it was supposed to regulate.

This quote in the article from NY Fed Chief William Dudley (a former Goldman man, of course) is pure gold:

“I don’t think anyone should question our motives or what we’re trying to accomplish,”

That’s really all you need to know that the accusations are spot-on.

Musings on Arguments, Global Warming, Aubrey McClendon, and Harold Hamm

Weighing arguments without knowing the underlying facts is a useful skill. I first learned it many years ago when I was on the Greenwich Representative Town Meeting.

Although I was very active in town politics and hand strong opinions on many issues I quickly learned how to judge arguments where I didn’t have a strong grasp of the underlying facts.

Case in point:

Any time one side of the debate says: “This proposal  has X effect”, and the response by supporters of the proposal  is to say “What we are trying to do is to Y” you always know invariably that the person alleging X is correct.

This approach to issues has a strong impact on my views on Global Warming, Climate Change, or whatever it is called these days. There is a public campaign against global warming “skeptics”. Apparently I am one of them.

One way I know that I am one of them is that what exactly it means to be a global warming skeptic is never defined. So, for example, someone who believes the absurd proposition that no warming has occurred at all over the last 100 years is lumped into the same group as a scientist who believes that there has been warming, that, human activity is likely the cause, but that given that the models have been totally wrong for the last 20 years perhaps we don’t fully understand what is going on and should tread carefully with policy proposals.

Thus, we end up in a situation where serious scientists or other academics who question the more alarmist global warming pronouncements are the subject of repeated assaults on their reputation while ego-maniacs like Michael Mann who conspire to hide data, keep his opponents from being published, lie about his credentials, and then later blatantly lie in court filings is feted.

Before anyone writes in to tell me that the vast majority of scientists believe in “Global Warming”: don’t bother. I know. They are probably right. But the tone of the argument and the behavior of the participants on both sides leads me to label myself a “skeptic”.

Oklahoma City’s famous Aubrey McClendon recently gave a strong tell in a public spat that he is having with Chesapeake Energy.

There is an article last week about CHK founder Aubrey McClendon with his new company American Energy Partners being sued by and countersuing Chesapeake.

Here is the article:

Major point:

Chesapeake says that after McClendon found out he was leaving Chesapeake, McClendon took over 20 terabytes of data including information about the Utica shale that he has since used to grow American Energy Partners.

McClendon countersues on the basis that he has not been provided info on the existing wells that he still has an interest in with Chesapeake.

The two key points, however, are as follows:

1. McClendon is indignant!. From the article:

“It is beyond belief that the company that I co-founded 25 years ago and where I worked tirelessly to build it into one of America’s largest and most successful oil and gas producers has now decided to add insult to injury almost two years to the day after my resignation by wrongly accusing me of misappropriating information,” McClendon said in a statement.”

I’m pretty good at reading people’s responses to accusations. The second I read this I figured McClendon was in the wrong. People who are right about an argument typically point that out rather than complaining about how they are being treated.

McClendon adds “Under my agreements with Chesapeake, I am entitled to possess and use the 20 terabytes of information I own,”

Let’s see: McClendon put up a site where he posts all the relevant documents (he claims) to the case:

Let’s look at the separation terms documents:

“Continued Services: In addition to the continued accounting support provided in 4.7, the company will provide the data, licenses, and services, including administrative, engineering, IT, and software, necessary to facilitate the efficient exchange of land, well, title and other information kept in the Company’s well files, previously provided to Mr. McClendon in written form on a routine basis or requested by Mr McClendon and development of reserve reports in connection with oil and gas interests acquired under the FWPP, or jointly owned by any affiliate of Mr. McClendon’s and the Company.”

It seems that the basis of the disagreement comes down to how exactly this is being interpreted. Let’s look at it two different ways (bold added by me):

It seems Mr. McClendon is reading it this way:

“…the company will provide the data, licenses, and services, including administrative, engineering, IT, and software, necessary to facilitate the efficient exchange of land, well, title and other information kept in the Company’s well files, previously provided to Mr. McClendon in written form on a routine basis or requested by Mr McClendon and development of reserve reports in connection with oil and gas interests acquired under the FWPP, or jointly owned by any affiliate of Mr. McClendon’s and the Company.

While CHK is reading it this way:

“Continued Services: In addition to the continued accounting support provided in 4.7, the company will provide the data, licenses, and services, including administrative, engineering, IT, and software, necessary to facilitate the efficient exchange of land, well, title and other information kept in the Company’s well files, previously provided to Mr. McClendon in written form on a routine basis or requested by Mr McClendon and development of reserve reports in connection with oil and gas interests acquired under the FWPP, or jointly owned by any affiliate of Mr. McClendon’s and the Company.”

I emailed the media contact person at McClendon’s litigation website if that was the basis of the disagreement but so far have received no response.

Perhaps McClendon’s argument is that as long as he was still at CHK on his last day he had a right to the data.

Given McClendon’s long-standing treatment of CHK as his own personal company the main issue is most likely that deep down he was entitled to whatever he wanted from the company that he built.

His outrage to a factual accusation probably means he is wrong.

Either way, this is a good lesson in how expensive lawyers can still botch things up. While it’s easy to make the argument that CHK would never have agreed to give McClendon information in perpetuity, the fact is that this clause in the separation agreement could have easily been more clear by simply starting it with “In connection with oil and gas interests acquired under the FWPP, or jointly owned by any affiliate of Mr. McClendon’s and the Company” instead of ending it with that clause.

I was prompted to write this essay because of this item on seeking alpha: “Russians financed U.S. anti-fracking movement, Continental’s Hamm says”

My friends all know that I am very bearish on the drilling stocks, Continental included. In short, while production and inventories rise, many investors still believe that an oil rebound is near. It could be, nobody can really tell you or I what the price of oil will be one month from now, but there are a lot of reasons to believe oil will stay down for a long time. If so, the leveraged Exploration and Production companies are in big trouble. Already most of them are living on their credit lines, and I don’t believe that those lines are as secure as oil bulls think.

I think these companies are in big trouble. When the CEO of one of the largest starts complaining about the Russians (whether it is true or not) that is a sign of desperation and I am taking it as a sign that I am right.

No reason to assume oil prices will rise any time soon.

The masses of oil bulls continue to value companies such as Oklahoma’s Continental Resources using models that assume $50 dollars per barrel of oil this year, and up to $75 next year.  There is no reason to bet on this.  Not only might oil prices go significantly lower, there is no reason to believe that low prices won’t last for a long time.

What exactly this means for Oklahoma’s oil companies is the subject of another post, but in short it will be a massacre for most, with only Devon emerging in a decent position.

Reason 1:

The first argument against oil prices staying low is that the reduced price will cause rigs to shut down and therefore the supply to decrease. That is true at some level, but:

As pointed out recently by Bloomberg “The CHART OF THE DAY shows how West Texas Intermediate, the U.S. oil benchmark, tumbled 69 percent from $31.82 a barrel in November 1985 to $9.75 in April 1986 when Saudi Arabia, tiring of cutting output to support prices, flooded the market. Prices didn’t claw back the losses until 1990. ”


If the current decline in prices did not result in a quick rebound in 1986, why is everyone so sure it will now?

More importantly, as the price declines oil companies might slow drilling, but they actually have every incentive to pump as much oil as possible in the short-term – and that is exactly what is happening:

As pointed out by The Daily Oklahoman

The U.S. Energy Information Administration this week said domestic production is likely to increase throughout this year and into next, and will approach record production levels in 2016.

Analysts like to point out that the price of oil is below the per-barrel production costs in many areas. However, suggesting that this means there will be a decrease in production ignores basic economics. Sunk costs are not factored into current production. The money spent to drill a well has already been spent. Oil will be pumped until the price falls below marginal production costs, not total production costs. With prices down and balance sheets under pressure, oil companies will make sure that existing wells maximize production rather than minimize it.

This same analysis applies to countries such as Russia and Venezuela which will also pump as much as possible for the time being.

The hope exists that Saudi Arabia will cut production, but there is no reason why the lowest cost producer will cut production before the high cost producers do. This would be like expecting Dell to cut production in order to raise prices: The world just doesn’t work that way.

Production will continue at a high rate for a significant amount of time.

We see this today as production continues to rise

Reason 2:

Those focused on supply and demand tend not to talk about financial players in the oil industry. If you want to have a discussion about why oil prices are going down then at some point you need to have a discussion about why they went up to begin with. The “standard” analysis says that oil prices have gone up as “peak oil” combined with rising demand from China and other developing nations to push oil prices through the roof. However, that is not the entire story.

Once upon a time, for well over 50 years, non-physical participants were subject to position limits in commodities markets. Speculators are needed in commodities markets but the government limited their participation to assure that they didn’t dominate commodity markets. This worked well for a long time. In the 1990’s, however, these limits were done away with in a secret manner. In 1991, J. Aron (owned by Goldman Sachs) wrote a letter to the Commodities Futures Trading Commission asking that it’s speculative hedging be treated as a “physical hedge”, the theory being that just as a farmer is hedging a real risk, so were they hedging a real financial risk. The CFTC agreed, and this was the beginning of the end for position limits. These letters were quietly and without public comment issued to more and more speculators and by 2008 at least 80% of all commodities market activity was being done by neither producers nor suppliers. These letters were issues in secret and it was almost by accident that a congressional staffer overhead an offhand remark about them and then pressured the CFTC for their release.

What did these banks do with their secret letters? They created index speculation among other things. The most prominent of these were the Goldman Sachs Commodity Index (GSCI) and the Dow Jones-AIG commodity Index.

These served the basis of a huge influx of pension and trust money into the long only side of the commodities markets. Simple supply and demand suggests that a massive surge in demand of a commodity is going to increase the price of it. As opposed to the traditional speculator supplying liquidity to the market, the GSCI is essentially hoarding commodities, as it is a long only index.

As reported by Matt Taibbi in Griftopia from 2003 until July 2008, the amount of money invested in commodity indices rose from $13 billion to $317 billion. Not surprisingly the prices of all twenty-five commodities listed on the GSCI rose sharply.

In short, commodity prices in this day and age may, in the long run, depend on the supply and demand of the end suppliers and users, but in the middle Wall Street, with its free money from the Fed, drives price movements.

So, all of those citing the supply and demand are not really saying anything about the short and medium term if they are not accounting for financial flows into the oil business. And just what is going on at the moment?

Due to the Fed’s fear of deflation interest rates have been near zero for some time – this punishes savers, including pension funds. In a never-ending search for yield Special Purpose Vehicles have been created to conduct cash and carry trades in commodities in contango as oil normally is. In the cash and carry trade oil is bought and stored at spot, with the futures sold forward. As the trade nears its end the rise in the price of the spot covers the short futures obligation. If leveraged this trade can provide a nice return that a pension fund otherwise can’t get- and leverage has been easy in these days during the periods of Quantitative Easing. A friend who sees a lot more deal flow than I do tells me:

“Over the past few years oil production has been estimated to have exceeded demand by 2 mil bbls/day. Much of this excess supply was absorbed by governments adding to their strategic reserves and investor buying into these structured c/c trades. The structured c/c trades often involved baskets of commodities (e.g., oil, gold, copper). They were bundled into Special Purpose Vehicles The buyers were anyone looking for a bond-like rate of return notably pension funds or hedge funds who bought these packages for their pension investors.”

Now that the appetite is gone, US oil production has increased and OPEC has decided not to cut production oil prices have declined rapidly.

The really big questions are how were the SPV’s financed? Are they marked to market? Are the susceptible to margin calls? And then there is the question of why the banks wanted to revise Dodd Frank to let them hold on the Collateralized Loan Obligations for a few more years???”

Those are good questions. I don’t claim to know exactly what is going on, but I do know that the oil price collapse happened with the end of QE, suggesting that many of these trades have imploded and their spot oil is being dumped on the market. If one doesn’t understand how many of these deals are out there than one has no business predicting the end of the decline in prices.

Musings on Elton John, Zurich, and Hotel California

My daily workout routine is about 45 minutes. I usually watch a VH1 “Behind the Music” on youtube while I work out as they are typically about 45 minutes.

I’ve been through a lot of them. It’s sort of interesting when you realize that in almost every case bands fail because of ego battles and in the end most of the members probably wish they had just gotten along and continued to churn out the bucks.

One exception to that is Sting who is a lot happier and better off now.

Of all the ones I have watched the only band where the major players are both sane and normal people are Hall & Oates, although I am not really a fan of the music with the exception of “You Make My Dreams Come True”

(Both my brother and my friend Andy always complain that I like my songs live. Well, too bad for you guys.)

In any event, like everyone else my age of course I know who Elton John is and I know all his big songs, but I can’t say I ever bought any of his albums except perhaps a greatest hits tape in high school. Like most people I think Rocket Man is a great song. In fact, it’s one of the few songs everyone likes that I have never really gotten sick of as opposed to, for example, Hotel California which was a great song the first three or four thousand times I ever heard it but not any more.

The best version of Hotel California I ever heard was in Zurich at a place called restaurant Sonne. I wasn’t important enough to get a nice corporate apartment so I had a studio apartment (paid for by Kerr Mcgee) right by the red light district. To be fair it was pretty close to city center and I could walk to work, etc.

Zurich (and Switzerland in general) is a great place. The Kerr-McGee HR guy (a German guy, who got fired a few weeks later) told me: “Look, you can do whatever you want here, nobody cares, just don’t steal or hurt anybody and you are good. If you do steal or hurt someone they will lock you up and you don’t have the rights you Americans seem to think you have everywhere you go”.

Don’t hurt anybody and don’t steal. That’s pretty much how it should be instead of the schools to prisons model that is prevalent in the US. In any event I went into this bar called restaurant Sonne one night that was a block or so away from my apartment. There was this very bizarre display of an asian woman in a hot pink skirt, heels, and lipstick backed by a band of asian guys with century 21 style yellow jackets, white shirts, black thin ties, and black pants. They had just started playing Hotel California.

I bought a beer and was shocked when it was like 8 francs. Then I kept getting “hit on” by a variety of women.

I thought “What the F**K is going on here?” This was my first ever (and only) experience in a prostitute bar (Although I suppose every bay in Nairobi is at some level) Meaning, it’s just a bar. It’s not a whore house but the customers are all men and prostitutes.

So I watched this amusing display of Hotel California followed by a just as amusing Achy Breaky heart while various prostitutes came up to me trying to get me to go back to their apartment with them for 100 francs, which of course I never did.

Just writing this now I googled restaurant Sonne and found this video.


This is exactly, precisely, the location with the singer and band in same place. The whole thing is utterly absurd. (The video should open at the two minute mark.)

Only, you can tell this one is filmed during the daytime. Imagine it at night with about 30 prostitutes roaming around.

(I just watched it again.. one of those two ladies might actually be the one I singing Hotel California).

Anyway, back to Elton John:

I was a metal guy until around 16-17 at which time I added in Neil Young, Hot Tuna, and Led Zeppelin. So, I was never really a follower of Elton‘s career while it was going on except I remember as a kid the video for “I’m still standing” which is ok.

My image of Elton John was early 70’s subdued stuff like “Rocket Man” and “Daniel”, and then the current slightly obese and mellow Elton John.

I learned form VH1 that in late 70’s and early 80’s he was this wild and crazy flamboyant guy who spent a number of cocaine fueled years churning out wild concerts. I’m sure this isn’t news to any of you but for some reason it is to me.

Anyway, I found this recording of him singing rocket man in a much more “flamboyant” way. There are higher notes in certain parts of the verses and especially the chorus. It is really great. It is sung with a great deal of energy.

It should open at 1:16:19.

To be clear though, his extended rambling after the end of the studio version I am not a fan of.

The many conflicts of interest between Continental Resources and Harold Hamm

I’m a bear on the E&P companies as I believe oil prices are likely to stay down for a long time.  However, as long as Hamm is in the picture there is no circumstance in which I would want to be a Continental shareholder regardless of oil prices . A major take-away from reading his divorce triaHarold Hamml documents is that despite Continental having gone public long ago, Hamm still runs it as his personal company and conflicts of interest abound.

An example would be Hamm’s activities with Wheatland Oil.

Hamm and Jeff Hume formed Wheatland Oil in 1987 to pursue various drilling activities. Wheatland was owned 75% by Hamm and 25% by Hume. In March 2012 Hume negotiated the sale of Wheatland’s assets to Continental for $340 million worth of Continental stock. (Wheatland had no debt at this time).

The court records notes:

“Jeff Hume ultimately negotiated the sales price for Wheatland assets with Continental. Harold Hamm minimized his involvement in the negotiations at the time of the sale because the sale was a related party transaction with Continental”.

This is rather amusing. Just who exactly is Jeff Hume? According to Continental’s website Jeff Hume is Continental’s Vice Chairman of Strategic Growth initiatives and

“Previously, Mr. Hume was President from November 2009 and Chief Operating Officer from October 2008. He has also served as Continentals’ Senior Vice President of Operations, Senior Vice President of Resource and Business Development from October 2005, Senior Vice President of Resource Development from July 2002 and Vice President of Drilling Operations from 1996. Prior to joining Continental Resources in May 1983 as Vice President of Engineering and Operations, Jeff held various engineering positions with Sun Oil Company, Monsanto Company and FCD Oil Corporation. “

I’d like someone to find me the person who had the job of negotiating against the financial interests of Mr. Hume and Mr. Hamm at Continental. Somehow I doubt he tried very hard.

Mr. Hamm owns many businesses that enter into relationships with Continental. On the one hand it is perfectly reasonable for an E&P company to not want to be in the real estate, transportation, or pipeline businesses. A complete look of Hamm’s behavior, however, shows that Continental’s philosophy is more about “what benefits Harold Hamm”. A few examples stand out:

In March 2011 Continental fronted Hamm 23 million dollar to buy the building (owned by Hamm) that how houses Continental’s headquarters in Oklahoma City.

The most egregious example, however, has to do with an entity called Highland Partners.

Highland Partners was created in 2004 as a Continental Subsidiary to own pipeline assets. It was spun off in 2005. In 2009 it was taken private by Mr. Hamm. In 2012 Continental and Highland entered into an agreement whereby Continental agreed to pay over 95 million dollars over five years to Highland for the rights to use a proposed new pipeline, weather Continental ever used such rights or not. On the basis of this deal Hamm was ultimately able to raise the financing for the new pipeline. As of just this month, Kinder Morgan has agreed to pay 3 billion for Highland (Hamm clears 2 billion, as 1 billion was assumption of debt).

So, now, when Continental is reeling from oil price declines we see Hamm cashing out 2 billion dollars on a deal which could have and should have been Continental’s, but instead Continental was left in the role of simply propping up Hamm’s investment when needed in the initial stages.

Interestingly enough, the judge valued Highland in the sub-400 million range for the purposes of the divorce. One wonder what the judge will make of Hamm telling the him the asset was worth one thing while attempting to sell it for another.

The argument can and has been made that Continental has an independent board of directors with fiduciary duties which approves these deals, and that therefore they are in the interest of shareholders. We know from the court records, however, that Continental is operating on behalf of Hamm even though it has no real interest in who owns it’s shares theoretically. For example, court documents show that Continental relentlessly fought and stalled on discovery request made by Ms. Arnal for documents she needed to advance her case. The legal fees expended by Continental on this ultimately futile quest in no way benefitted Continental Shareholders.

The employees and directors of a billion dollar company wish to please its majority owner and act in his interests is not something that anyone should take as a surprise.

Given the evidence, I simply would not entrust my money with company that operates in the interest of some shareholders over others.

Things desperately needed in the U.S.

So as I travel around the world I sometimes encounter things that I have never seen in the U.S.

First, I give you the ability to “recall” a elevator button push by pushing the floor number again.  Ever get into and elevator and some jerk has pushed all the buttons?  Ever accidentally push the wrong button?

At this elevator in my old apartment building in Panama those things aren’t a problem.  Watch:


I would be curious to know if there is any reason why elevators in the US don’t have this.  Perhaps there is a fire code reason or some such thing.  I’ll tweet Otis Elevator and ThyssenKrupp and report back if I get an answer.

I suppose this next idea isn’t desperately needed, but when I went to Medellin for thanksgiving the fridge in the apartment that we rented on AirBnb had a built in beer holder:


fridge beer holder
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