Long or Short Capital

Whether you are a Sangalese warlord, the head of Hydra or a Bond villain, the base of your operation is your henchmen, the nameless legion who are willing to die in order to execute your bold plans for a new world order, global destruction or real ultimate power. Despite being integral as an aggregate, on an individual level, henchmen are completely fungible. They can expect to be beaten to a pulp, or thoughtlessly killed by either their boss’s heroic enemies or, as is often the case, their employer himself. Note that the latter situation is in violation of labor laws in most jurisdictions, which is only the beginning of what looks like a raw deal for henchmen. What economic rationale do these henchmen have to seek this line of work?

Based on their number, and the low income generated by most criminal enterprises for anyone but those at the top, henchmen can’t be compensated monetarily in a way that is commensurate with their shortened expected lifespan and overall reduced quality of life. Generous healthcare plans would at best allow them to offset the debilitating injuries they receive. Other fringe benefits such as company flying cars and teleportation belts sound great…until you realize that those are really just expensive high-tech tethers used to guarantee that the hench are available to their masters at all times and from all places. Maybe really great daycare and good local schools? Probably not.

And the trim is not impressive. The average arch-villain is swimming in spectacular exotic strange, but that is due to their ample riches and their alpha male status. Henchmen are a dime a dozen commodity. They are indisguishable and unexceptional to such an extent that they often sport garb which is identical to their colleagues and rarely ever even have actual names. Attraction issues aside, there is also an female asset supply shortage. Our research indicates that super-hotties list mountain lairs, sewer bases, and submarines lower than Miami, Los Angeles and London as desirable places to live.

Doing something you love only goes so far, and it’s unlike they actually love what they do that much. It’s hard work, if frequently mindless. Go here. Engage Batman in hand to hand combat (Good luck with that btw). Steal this mystical ruby crystal. Test this unstable mutagenic growth formula I’m developing. Delay Jack Bauer while I try and break into the White House’s panic room. Kidnap Sally-Sue. Invest in this pool of 2007 vintage MBS and see what happens to our investors’ money. Et cetera, et cetera.

Even if you are wiling to assume that they do it for the love of the hench, consider that there are a lot of passionate employees out there in other professions, but none willing to risk death, imprisonment or debilitation at anywhere near the rates that the typical henchmen face. Per this 2006 survey from CNN, the mortality rates are the highest for fisherman at 118 out of 100,000, or about 0.1%. Henchmen die or are seriously wounded at a rate 500 times as high as that. It’s tenuous at best to think they love being bad enough not only to die for it but also to be dramatically undercompensated as well.

A fair amount of henchmen were at one point incarcerated, and find gainful employment at unavailable to them. But surely there are alternatives that don’t involve a 50% mortality rate??? Venture Criminalism (VC) has a lack of ethical prerequisites, similar financial upside, but lower risk to life and limb. Practically anyone can sell stuff on eBay, even those with no helpful skills; I know this because I have seen a wealthy baby boomer perform a successful eBay auction sale. And Piratery is still open to highly-motivated nautically inclined go-getters.

Recommendation: There seems to be no economic rationale for the typical henchmen volunteer, and this will correct itself over time. But markets, especially ones involving evil organizations seeking world destruction, may be able to stay irrational longer than you can stay solvent, so shorting typical henchmen assets is an untenable risk. We do see an opportunity to start nibbling at brainwashing assets, mystical loyalty curse assets, and zombie making assets. All beneft from solid fundamentals, and stand to gain long term from henchmen markets becoming more rational, as the labor supply dries up and evil firms seek to find ways to effect impressment.

But here’s my advice to the rest of you: Take dead aim on the rich boys. Get them in the crosshairs and take them down. Just remember, they can buy anything but they can’t buy backbone. Don’t let them forget it. Thank you.
–Herman Blume in Rushmore

Obama’s total budget is $3.6 trillion, which works out at $34,000 per household; median household income is about $50,000. Which basically means that for every dollar that a US household earns, the US government plans to spend 68 cents next year. And the ten-year T-bond still yields less than 3%. Extraordinary.
-Excerpt from Market Movers

So far, Obama has taken aim at the rich boys. He has taken them to task for their profligate greed. His party has introduced their corporate masters to the Frankonian Inquisition, flailing on them until they have confessed their sins and repented their evil ways. His budget punished their success, reined in their charity, all while giving each of their serfs their very own kingdom. More or less.

While this seems to indicate the rise of a new age of internecine class warfare in America, we’d argue instead that these moves will lead to a new age of productive age warfare in America. What the second quote demonstrates is that this country is not going to be Rich vs Poor. No, the war being fought is Now vs the Future, or more aptly, Baby Boomers vs Everyone Younger.

The effective tax rate for a Baby Boomer is still likely ~30-35%, so say $17,000 out of the $50,000 median income figure. But for younger tax-payers? If there is a deficit, or if what you pay directly in taxes as a national aggregate is lower than what the government plans to spend on whatever the hell they plan to spend it on, rest assured, they are taxing you further in some way. It’s just that instead of current year taxes, the other 30-35% of income that we owe is going to come in the form of debt, and currency depreciation (at some point in the future), and it won’t be a pro-rata distribution based on who benefits from the spending now…it will be based on who happens to be alive when the bill comes due. More or less. That point in the future will likely be well after the Baby Boomers have ensured that their generation has soaked up a higher quality of living — at the expense of younger generations — than any other generation in world history. All the while, they’ll continue assailing the younger generations about how much harder they worked and how kids today blah blah blah…

You know what kids today aren’t responsible for? This mess. This is all you, Baby Boomer Bob and Baby Boomer Betty. You put US here with your wanton spending on cars, houses and erections, with your hubristic manipulation of interest rates and free markets, your sense of entitlement, the way in which you transformed politics and Government into a galvanized arena of Us vs Them. Your cohort’s giant ego has consumed the future.

Rich and poor have more in common than young and old, because in 40 years, rich and poor will still be on this Earth, in this country, having to work together to fix everything the Baby Boomers did. This could mean the inability of the US to get financing because the debt burden has become too onerous, a crashing dollar, entitlement spending that requires more than taxes generate, a change in climate change change (sometimes known as Second Derivative Climate Change Panic Syndrome, or SDCCPC) or any number of structural disasters that lurk in the future and have been put off so that we, the young, are stuck with the buck.

Recommendation: Here’s my advice for the rest of my cohort. Take dead aim on the boomers. Get them in the crosshairs and take them down. Just remember, they may be buying everything with your money, but they can’t buy backbone. The sooner we, rich, poor and everyone in-between, come together and shake the Baby Boom death grip off both power and purse, the better.

Just asking but will Exxon Mobil (NYSE: XOM) receive windloss (windrise?) tax rebates? It’s absurd that any company should be allowed to lose so drastically simply because they have exposure to commodities. Oil is not the property of any company, it is our shared inheritance from Mother Gaia. Exxon is simply responsible for taking care of this precious resource and getting it into both our tank (it handles like a dream off-road, has room for my family of four, has 6 cupholders and 2 dozen 120mm anti-tank round holders) and our tanks. They and their shareholders shouldn’t be forced to bear the brunt of such a terrible decline in prices!

I’m just asking….

If I had six hours to chop down a tree, I’d spend the first four hours sharpening the axe.
-Abraham Lincoln

Past Quotes Entirely Relevant to Investing