Ed’s Daily Notes for September 5th   7 comments

Time: Senator Rand Paul: Why I’m Voting No on Syria

Senator Rand Paul makes a perfect argument why the U.S. should not be involved in Syria, but I especially liked this part:

If American interests are at stake, then it is incumbent upon those advocating for military action to convince Congress and the American people of that threat. Too often, the debate begins and ends with an assertion that our national interest is at stake without any evidence of that assertion. The burden of proof lies with those who wish to engage in war.

Bashar Assad is clearly not an American ally. But does his ouster encourage stability in the Middle East, or would his ouster actually encourage instability?

Are the Islamic rebels our allies? Will they defend American interests? Will they acknowledge Israel’s right to exist? Will they impose Shari‘a? Will they tolerate Christians, or will they pillage and destroy ancient Christian churches and people?

The President and his Administration have not provided good answers to any of these questions. Those who seek military action have an obligation to publicly address these concerns before dragging our soldiers into another Middle Eastern war. Shooting first and aiming later has not worked for us in the past, and it should not be our game plan now.

For an even more in-depth argument against U.S. action in Syria:

The Big Picture: Point-By-Point Rebuttal of U.S. Case for War In Syria

I don’t always agree with Barry Ritholtz, but his blog post above completely tears apart the Obama administration’s case for war. Outstanding work.

Washington Examiner: Union orchestrating Walmart walkout for Thursday

Walmart associates in 15 cities will walk off the job Thursday in the latest in a series of actions against the nonunion retail giant organized by the United Food and Commercial Workers union through the activist group it backs, OUR Walmart.

The group claimed that “thousands” would walk out.

“Walmart workers and their supporters today announced the largest mobilization since Black Friday, set for Thursday, September 5. The announcement comes as Walmart has failed to meet a Labor Day deadline to reinstate illegally fired and disciplined workers, publicly commit to improve jobs and end the company’s aggressive violations of workers’ rights,” OUR Walmart said.

According to the news release, walkouts are planned by employees at stores in Baton Rogue, Boston, Chicago, Cincinnati, Dallas, Denver, Los Angeles, Miami, Minneapolis, New York City, Orlando, Sacramento, Seattle and San Francisco.

Walmart has enough problems already. A unionized workforce would be the death of the company. Their profit margin is only 3.6%, so there is very little financial wiggle room. Considering Walmart has 2 million employees, their business model walks a fine line. If you add just $1/hour/employee in costs, you could cut their levered free cash flow nearly in half (over $4 billion versus $9 billion LFCF). If they try to pass those costs along, customers could easily go elsewhere. Considering customers are already getting fed up with Walmart’s poor customer service, a cost increase would empty the stores.

Mind you, I expect Walmart will be facing the same fate as companies like Sears eventually, although Walmart’s low prices will keep them going a lot longer than most of the failed retailers. Unfortunately, Walmart’s poor management has created this mess with employees (among other messes). Don’t be surprised if this employee revolt ends up in a unionized Walmart.

DISCLAIMER: My wife used to work for Walmart up until a few weeks ago.

Digital Trends: First official photos of BMW i8 leaked and the interior is, well, busy

I have been following the BMW i8 since it was a concept car:

BMW-i8

The production car has managed to retain most of the concept’s stylishness:

bmw-i8-side-970x0

Even though it is a hybrid, it will do 0 to 60 in 4.5 seconds. I would say Tesla should be worried, but the i8 comes with a $100,000 price tag. Unless I hit the lottery, there’s no i8 in my future…

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Posted September 5, 2013 by edmcgon in Editorial/opinion, News, Politics, Stocks

7 responses to “Ed’s Daily Notes for September 5th

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  1. Ed, you still believe USA is going to Syria because some president drew a red line, after reading the big picture? I’ve read an interesting article on the big picture some days ago about Syria:
    http://www.ritholtz.com/blog/2013/09/u-s-backed-syrian-opposition-years-before-uprising-started/
    This is years in the making!
    You still believe this is not about oil? Or to be correct; natural gas? You still believe the Saudi’s wanting to export their natural gas to Europe is not a part of this? Also if you know they almost have to go to Syria? Russia is backing up Syria this much, because Russian gas is véry important this moment for Eastern-Europe. If they loose the almost-monopoly there to Saudi’s, it would be a blow to Russia.
    Who wins most from this situation? Very important to ask every time. To me this still is Saudi-Arabia – other options always welcome.
    If you haven’t seen the docu’s about the seven sisters, please do, they’ve learned me a lot about what energy does to this world.

    • plas,
      I posted Ritholtz’s rebuttal because it was a perfect piece. If anything, the fact the Obama administration’s reasoning is so lame is just further proof that their true motives haven’t been revealed, lending creedence to your argument.

      Personally, I wouldn’t have an issue with a war over natural resources, assuming we needed them for either defensive or economic purposes. But a war over natural gas, when the U.S. could easily export natural gas to Europe, makes no sense.

      I will take exception to your comment about Russia. Why would Syria have anything to do with whether the Russians can export nat gas to Europe? Just because Russia is backing Syria doesn’t mean that their trade with Europe will be affected in any way. Considering the French and Brits are against involvement in Syria, I’d say European trade with Russia is just fine.

      • French and Brits are West-Europe. East-Europe is very different. There have been a lot of tensions betwee Russia and East-Europe the past years. If you want to look up for it, google for “russia ukraine gas crisis 2006” as an example. At least once a year (mostly winter) something alike goes by in the news here. East-Europe wants to break free but it’s not easy if your people are freezing in the winter if they kick Russia too much.

        USA cannot export gas to Europe easily. There is a whole lot of water in the way. Gas is not easily transported by ship. Have you seen the price gap between gas in the USA and gas here in Europe? Gas here is very expensive compared to your gas. If it were so easily, you would have don’t it already, instead of dumping your shale gas below production price on your home market. If you know a way to easily transport your gas, I would love to cooperate and search some contacts for you here 🙂

        You once said: the most important question to ask when to vote for a politician, is “who owns him/her”. Who is owned by the oil in government? To look at your war-history, I would say: a lot of politicians. The war in Iraq was also about WMD’s, but now admitted, even by biggies, it was because of oil. “Fool me once, shame on you. Fool me twice, shame on me”.

      • LNG is how nat gas would be transported overseas, although that is still expensive.
        http://en.wikipedia.org/wiki/Liquefied_natural_gas

        By the way, it looks like Qatar is a major player (in addition to the Saudis) in this Syrian nat gas deal:
        http://www.infowars.com/is-the-united-states-going-to-go-to-war-with-syria-over-a-natural-gas-pipeline/

        Here’s a side thought: Which is more expensive, building an LNG pipeline across the Atlantic, or starting another full-scale war in Syria? I’m thinking the costs would be pretty close. On the other hand, if Russia decides to get involved, the Atlantic pipeline suddenly becomes much cheaper by comparison…

      • I see plenty of arguments that Russia and the EU might need the resources tied up with Syria, I see none for the US.
        Only if you consider it a “favor” to the EU do natural resources mean much to the US, and the EU is clearly not asking for this war.

        The “US’ interest” in this is nothing more then pure political wrangling of our president, and some extremists on both sides (right/left) that basically would go to war whenever they were given a chance.

        I can only hope there is enough sense in the Congress to say no, and hope that is enough to stop this stupid action like it was in the UK. But I’m not to confident in that. The argument of “limited” as in “we will only kill people on their side, while we are nice and safe over here” has a very strong pull for a lot of politicians/people because it is viewed as a good strategy that has no negative to them if they fail.

        It is a strange thing to think about, but an episode of Star Trek showed a similar thought years ago. The episode talked about two worlds that were at war for 1000 years, they could do this because they made their war a nice and neat operation where people just walked into incineration chambers. War is meant to be something to avoided, and when you make it so that you can carry it out without the “nastiness” people forget why you are suppose to avoid it.

      • According to the souce in the big picture, funding Syrian opposition started in 2006, that was still under Bush. Bush started it, Obama is continuing it, so ” this is nothing more then pure political wrangling of our president” seems highly unlikely to me.
        You have interest enough in Syria one way or the other – there are too many places where people may die without the USA intervening (Somalia, Soudan, North Korea, …) so why already funding your sworn enemy (Al Quaida in Syria) already for seven years if you have no interest there? You already did the same in Lybia.

        Does money really matter? Some just want power, money is not important – the ones in power have money enough and it’s other peoples money they are spending. Besides, you can’t pay back your debt any how – you “have to take the chance while it is still possible”, a little more or less unpayable debt, does that matter as long as the world or the fed keeps buying?
        And maybe Syria is not that important, but a step to the big one: Iran. If Iran fights back with Syria now, they’ll have an excuse to invade Iran.
        I don’t say everything I tell is true, but to me it makes a lot more sense than the official story.
        i’m afraid too many congressman in the US are owned by the oil/weapon-industry and we’ll have another war.

        Sometimes I think our leaders get their insipiration out of books … sometimes it looks so familiar.

        Ed, about that pipeline: I already thought about it, but I don’t think it is possible. Our flexible internet-cables are already have a really hard time at the bottom of the ocean – hard pipes will have even more stress, not to mention to repear a pipe …

      • Let me rephrase what I meant. The US has no interest in the country from a resource standpoint.
        That isn’t to say that there aren’t people that always believe that the US is the police for the world and it is our job to step in and “save them” or that you have to “prevent the spread of evil”. And yeah it can certainly be a strategy what they feel is needed to support/attack other countries in the area.

        If looking at it only from “we need their oil” kind of viewpoint, the US doesn’t get any of is oil from there.

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