Monday, August 21, 2006

Rex Hammock's Weblog From New Orleans Rex Hammock's Weblog

This is one of the most compelling, rational, and totally
level headed introspective overviews of post Katrina New Orleans that I have ever read. My hat is off to Rex Hammock. This post could easily be picked up by any national "op-ed" page. Kudos to Rex and his son for this most special post.

"Lamenting and celebrating in New Orleans: I'm in New Orleans with my son today. On Sunday, we spent several hours with a life-long resident of New Orleans visiting the areas of this city that were devastated by the floods of Katrina one year ago. Nothing will capture what we saw. No words. No pictures. No video. No documentaries. Nothing can communicate what has happened to New Orleans. I'll post a few photos and some video and write a few paragraphs, but, frankly, there's little I can do to add to the comprehension of what Katrina did one year ago -- and what has taken place since.

Like I wrote in March after my son and I spent a couple of days doing volunteer construction work on the Mississippi gulf coast, the scale of the devastation is incomprehensible. The statistics of relief efforts and volunteer support are enormous -- perhaps unprecedented -- but when viewed in the context of the devastation and need, all that has been done seems like a spit in the ocean compared to all that remaining to be done.

In New Orleans, lamenting and celebrating have always been paired. Even in the Where magazine sitting in my Hotel Room, New Orleans native Wynton Marsalis, who is leading a part of the recovery efforts, has this quote about why the ironic word 'celebration' is being used to describe many of the one-year anniversary events taking place over the comng days: "In New Orleans, lamenting is a form of celebrating. With our funerals we lament, and then celebrate. Many times when you get stripped down, you get a chance to see just who you really are. And in the most painful times, that's when it's time to celebrate and rise up even stronger.

I'm in New Orleans as a guest of a magazine publisher, Romney Richard, who I did not know this time last year. But, for several months throughout the fall and winter, my colleagues and I at Hammock Publishing pitched in to help Romney and her small staff publish their magazine, Louisiana Cookin'. Romney and her staff lived close to one another, but after the flood, they found themselves in five states. Their homes were flooded and their lives turned upside down. I couldn't begin to imagine what they were going through, but I knew that the folks who work with me at Hammock Publishing could help them coordinate putting out a magazine -- it's what we do. When I talked with Romney the first time, it was a couple of weeks after Katrina and she and her husband were living in an RV at a relative's home in Baton Rouge. She was in shock and dealing with so many issues, her magazine seemed the least of her problems. But I could only think of was another small publisher (like us) with a few employees who needed a little back-up -- frankly, they were all eager to do their jobs: writing, designing, holding together a means for their advertisers -- the great restaurants in this region of great restaurants -- to continue reaching readers who love the various cuisines of Louisiana. We enjoyed helping them out on some technical, administrative and marketing ideas.

Tonight (Monday), my son and I -- along with Hammock Publishing's John Lavey and his wife -- are Romney's guests at an annual benefit dinner Louisiana Cookin' sponsors to honor five up-and-coming regional chefs and to benefit a wonderful restaurant and training program for future New Orleans chefs, Cafe Reconcile. It is a celebration of the chefs who have returned to New Orleans, as well. For the local, chef-owned restaurants have been the first to display their commitment to rebuilding their businesses and their lives and the life of this community.

Yesterday, Romney drove us around New Orleans -- through all of those communities and neighborhoods we've heard about this past year. There is no way one can drive around this city without being angry. Or stunned. Or inspired. Or confused. In the end, it's overwhelming to drive the breadth of the area flooded and to see the extreme nature of the destruction.

A lot of the debris has been cleared -- the one thing FEMA gets praised for -- so in some ways, the scene is moving away from one appearing like the aftermath of a nuclear bomb and more like one from the aftermath of neutron bomb, where all the buildings are left standing (or leaning) and the people are gone. And while I have gotten the impression from TV coverage that the devastation was mainly concentrated in inner-city low-lying areas, a three-hour drive around town convinced me that "poverty" and "low-lying" may be synonymous but in New Orleans, "middle-class" and "low-lying" are also synonymous and "upper-class" and "low-lying" are also synonymous. Katrina was a an equal-opportunity disaster that wiped out massive neighborhoods of all races and economic stratas.

Lamenting and celebrating are part of the same in New Orleans. I was in a restaurant last night with my son, one of my favorite restaurants in this city of world-class restaurants. The restaurant is one of those favored by characters out of Faulkner wearing seersucker suits and discussing how many cigars in a box one should expect to draw well (that actual conversation was taking place at the table next to me). It was a Sunday night at six p.m. but the restaurant was filled with different groups of celebrants. I say celebrants, because they were celebrating birthdays and anniversaries and reunions of one sort or another.

I overhead enough of the conversations around me, however, to realize that a lot of lamenting was going on, as well, as people were discussing their living in temporary quarters, or they had traveled back to New Orleans from some place they had been for months. But for this evening, they were smiling in this one-hundred-year-old restaurant with waiters they recognized and food that is familiar.

I am but a visitor to New Orleans. It is a foreign land to me, so I do not know enough to comprehend whether the pervasive celebratory nature of the place -- the charm and aura of the place -- has always been based on denial or innocence: Denial that one day it would all be under water; or the innocence that comes from believing some power, divine or governmental, would keep the water out.

It's hard to be here for more than a few minutes and not feel like some individual or divinity needs to be blamed. The locals I’ve talked with most universally blame the Army Corps of Engineers and the Federal Government. I'm happy to join in with the chorus of those who blame the ineptitude of leaders at all levels of government, from George Bush down. Or the mayor or dogcatcher, for that matter. However, at the end of the day, when all guilty parties are blamed, all punishment has been parceled out, what will be left? Innocence? The belief that a city built below sea level will not flood again? Denial? Acceptance? In the end, everything related to Katrina will be up for debate by historians centuries from now.

I can't begin to comprehend what I see now.

I do know this: I will look for any opportunity to travel to New Orleans and to do business or to have fun here and in the gulf-coast area. I love the people, the culture, the food, the spirit. I want to support the economy. I want to do my very little part by sticking one little finger in the dike.

But this is a place where lamenting will continue for a long, long time.

I bought a Hybrid Car

Those few of you who check this blog from time to time know that I post fairly often about the energy crisis and my long held belief belief that high oil prices are here to stay (nothing too far fetched now that August 2006 is here), and that our country is in a transition when it comes to efficient transportation of people, goods, and services.

There are hundreds of start up ventures raising millions of dollars in "grain-fed" states that are convinced that corn, grain, and grass are the next big thing when it comes to powering our need for motorized vehicles. Personally, I believe they are correct, but I don't have any idea which entity will succeed. President Bush is content on letting the private markets figure it out, but it sure would be nice if the federal government dumped billions of dollars into alternative energy development instead of billions of dollars into regime changes. But that is another topic altogether since the headline for this post is "I bought a Hybrid".

So, I bought a Hybrid. Why? Because, it is going to take 10-25 years for whatever the capitalists (whom I applaud) are working on now--to get their products to market. The best technology now is to buy a Hybrid car from the foreigners, not the domestic auto makers. The domestic hybrids are a joke. They are first generation hybrid cars, they are slow, and they are based upon 20 year old technology.

My new 2007 Lexus GS 450 H is a 4th generation hybrid and combines the efficiency of a 4 cylinder engine with the power of an 8 cylinder engine. It is awesomely cool. Completely the coolest car I have ever had in my life. Plus, it's on the cutting edge. Usually, I wait for cutting edge stuff to wean itself into being more mainstream, but this time, I couldn't wait. Not meaning to sound overly pompous, but this car gets 30 MPGs, and can go from 0-60 in about 5 seconds. Plus, it surpasses the California standards for minimal air pollution, and as the brochure says, my car gives more to the driver, and takes less from the world.

And forget about plugging in the electric motors into receptacles to "recharge". It recharges itself through recycling the energy created from braking, along with a 3rd electric motor that continually recycles energy from the hybrid motors and the gas engine. This car completely blows me away.

Okay, a little bit of negative stuff just to keep this post "balanced". Because of the 6 hybrid batteries (oh yeah, they have a 100K mile warranty top to bottom), they have to go somwhere. They go behind the back seat, which, accordingly, takes away from the trunk space fairly dramatically. I can barely get a set of golf clubs in my trunk. We won't be taking this car on any family vacations. Plus there is no "ski" pass through from the back seat, which is where I would normally stash my umbrella or related paraphalia so as not to junk up the back seat.

Minor inconveniences for such a fast, fuel efficient and cool car. Forgot to mention this--under 20 miles per hour, the engine never comes on--the car is powered by the hybrids and the electric motors--it's like driving a very cushy golf cart in traffic and down the road----you can't even hear the gasoline engine when it effortlessly turns on and off to support the hybrids and the electric motor, depending on the situation....all in an effort to be as efficient as possible and to use as LITTLE gasoline as possible.

I heartily recommend any hybrid car from Lexus OR Toyota. No wonder this company will soon be the biggest and best car manufacturer in the world. I'm all for American companies, but our Detroit guys have had their fingers in their ears way too long in the name of short term profits, pension plans, and union bull hockey.

Ten reasons we're past the tipping point on economic disaster - MarketWatch

Ten reasons we're past the tipping point on economic disaster - Paul Farrell on

I like this columnist a great deal (Paul Farrell), but he quotes a guy named Gary Shilling, who is a long term columnist for Forbes Magazine, a pub of which I've been a subscriber for over 20 years. Shilling is always a negative twerp, always cautioning, always signaling the latest pothole or the latest "threat" that he sees. On the other hand, Paul Farrell is usually pretty pragmatic, and has the ability of cutting through the crap and giving his opinion without a great deal of complexity. In any event, if Farrell is quoting Shilling, as he does in the referenced article (and I'll quote the 10 reasons below) Farrell must likewise be concerned about a major slowdown in the economy.

I particularly agree with number 10 below, in which, the Federal deficit is grossly understated. I don't know what has happened to Bush and Co, and why he is spending, spending, spending, but I can tell you this--the 2006 Congress is LIGHT YEARS away from the 1994 Congress that was elected on the concepts of spending control and balanced budgets. The Republicans have sold out to the politics of being re-elected and that is so sad.

"My filing cabinets are bulging with all kinds of early-warning signals screaming that we've passed the tipping point. A few are deafening: One by the CEO of Countrywide Mortgage. Another by the CEO of Toll Bros. Then hedge fund losses drove us to pull together a total of 10 warnings that signal the popping of the bubble and the start of a recession and a bear market.

1. Mortgage lender: 'Never seen a soft landing'
When a CEO like Countrywide's Angelo Mozilo speaks, his message is far more important than all the happy talk coming out of Washington and Wall Street: "I've never seen a soft-landing in 53 years, so we have a ways to go before this levels out. I have to prepare the company for the worst that can happen." Investors better prepare too.

2. Housing warns of sustained downturn
Robert Toll, CEO of luxury home builder Toll Brothers reports dramatically declining sales and revenue. Toll says the slowdown "will last for at least six months more, it may last for two years more. We don't know." Reminds us of the 2000-2002 recession.

3. Hedge fund losers the past two months
Hedge funds have been in the news a lot since topping the $1 trillion mark in assets. This unregulated industry is a loose cannon. They've become the new dot-coms now that most retail markets are so volatile and flat, forcing portfolio managers and investors to look for alternatives to the $9 trillion mutual fund market. As a result, hedge funds are chasing anything that hints of higher returns.
For example, the main data tracker, the Hennessey Group, just announced that hedge funds have underperformed the S&P 500 for the second straight month. Other warnings have all been reported in the news lately, screaming risk, risk, risk! Flashing like neon signs on the Vegas Strip:

* Congress is giving hedge funds more access to pension fund money.
* In spite of underfunding due to past errors, corporate and state pension funds are now betting more on riskier hedge-fund deals to increase returns.
* The success of Yale and Harvard has inspired small-college endowment funds to start betting on similar risky hedging games.
* The lure of huge, fast profits for hedge-fund managers has young inexperienced college grads jumping into the business and getting backers.
* Retail mutual funds are asking shareholders for permission to engage in more aggressive hedging strategies, like short-selling and derivative trading.
* Like hedge funds, private-equity funds are now signaling a top; too much new capital is forcing them to chases fewer, riskier deals.
* After a record year, IPOs, a hedge fund competitor for new capital, are also topping as many deals are falling below issue prices.

And get this, hedge funds have been making big bets on Hollywood movies, using sophisticated programs to pick winners. This sounds like a sequel to the 1998 LTCM disaster; call it "Déjà vu Dot-coms!
4. Rentals squeezing ARM borrowers
The cost of renting in Los Angeles is up 88% the past decade according to Realfacts. Santa Monica is up 279%. Potential buyers can't buy so they rent. And owners can't sell to recoup the high costs they paid in the recent bubble, so they're renting out. But they can't make enough to make their mortgage payments.
USA Today estimates that nationwide median mortgage payments are $1,687 while rents are only $868. So now all the cheap money that sucked buyers into ARMs is putting the big squeeze on everybody, owners, renters and lenders, further driving inflation.

5. Inflation hits pickup truck sales
As new construction falls and gas prices skyrocket, pickup truck sales have been falling dramatically. So now, as Americans buy fuel-efficient Asian imports, the Big Three is paying a heavy price for relying too much on profits from gas-guzzlers. No wonder Toyota is now bigger than Ford, may soon pass GM.

6. Corrosive domestic oil policies
Free market? Or surreal? Since 2000 America's energy policies have been made in secret. Last year oil executives didn't have to testify in Congress under oath. This year as gasoline prices skyrocket, so do oil company profits and their executives compensation. So when we recently saw the Alaskan oil fields shut down because pipelines are physically corroded, the symbolism was obvious; America's energy policy is as corroded and corrupt as the oil companies poorly maintained pipes and their executives thinking.

7. Markets 'unfazed' by terror threats
The day after the recent bomb threat against 10 commercial aircraft traveling from Britain to the U.S., headlines read: "Markets unfazed!" Read that "oblivious." Yes, we all know that historically markets are resilient after major crises. But this lack of response reminds me of the happy talk during the 2000-2002 period when delusional bulls grabbed any excuse to deny America's long and painful freefall into a bear recession.

8. Main Street investor sentiment dropping
The gap between the top and bottom of America's economic classes is rapidly widening. Our "ownership society," a small group of investors that control over two-thirds of the stock market may be "unfazed." But the truth is, the incomes of America's middle class have been level, while inflation has been eating away at the incomes of minimum-wage workers. Most Americans aren't party to the drama played at the Wall Street casino, while insiders, corporate CEOs and Congress have all enjoyed substantial increases in personal income the past decade.

9. War costs accelerating
In spite of all the hype about controlling the insurgency, violence is increasing. Iraq can't stand up, so we can't stand down. We're trapped in a no-win, no-exit conflict, policing a civil war. And unfortunately America's domestic partisan politics is creating inflexible strategies that are draining huge resources: The Iraq and Afghan wars are now estimated to top $1.27 trillion amid mounting Middle East tensions and rising domestic terror threats, while a depleted military is unprepared for another major war.
10. Federal deficits grossly understated

Our government spending is totally out of control, no fiscal restraint, no legislative oversight and Enron-style accounting that disguises how bad things are. USA Today says federal deficits reported as $318 billion would actually be $760 billion if standard corporate accounting rules were used. And if we were honest and accounted for Social Security and Medicare costs, the deficit would be $3.5 trillion, 10 times what we're led to believe. Lay and Skilling were rank amateurs.

Bottom line: All these signals tell us the tipping point was crossed, the bubble has popped and we are heading into another bear market and recession.