From Ulysses, Alfred Lord Tennyson
Come my friends,
‘Tis not too late to seek a newer world.
Push off, and sitting well in order smite
The sounding furrows; for my purpose holds
To sail, beyond the sunset, and the baths
Of all the Western stars, until I die.
It may be that the gulfs will wash us down:
It may be we shall touch the Happy Isles,
And see the great Achilles, whom we knew.
Though much is taken, much abides; and though
We are not now that strength which in old days
Moved earth and heaven, that which we are, we are; –
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.
Public Research Note
VIX up ~28% so far today! Clearly some sophisticated people are getting damn nervous and pre-buying some very bad news. IMO, the VIX is only a low risk buy at this level if you believe we’re about to get bad news on the order of Oct 2008 or Sep 2011. Unless we get that news, I believe the VIX will drift back down into the mid-teens when the dust settles over the next few days. I don’t suggest buying into a one day explosive movement like this…without the corresponding explosive news. The only thing that will generate a reasonable risk-adjusted gain on the VIX from this level is exceptionally bad, almost black swan news…rarely a good strategy to forecast and bet on near term black swan events.
RE: China market: Let’s not forget that despite the major losses of the past few months, the Chinese markets were up ~135% TTM just a few months ago, and these losses have cut the massive gain to ~60%…the retail Chinese punters who drive their market have still had a great year, and would have to still feel some degree of a wealth effect (albeit shaken and cautious) that would find its way into their economy to some extent in the near future. I don’t believe the central planners in Beijing will allow the small Chinese punters and their wealth effect on the economy to get wiped out this year. In the centrally-planned Chinese economy, the gov’t can and will intervene aggressively in the markets to make sure of it. No need to freak out on slowing Chinese growth today…as it seems the markets are doing.
If you want to reduce exposure to equities, fine, but I wouldn’t play this by an extremely speculative roll of the dice on further near term VIX upside. My suggestion is to short the VIX today, take profits next week, then perhaps…perhaps go long VIX when it’s back in the teens and you believe moderately bad news is imminent…that hasn’t already been priced into the market.
NY, NY 21 Aug 2015
My somewhat rambling story below does have purpose relevant to today’s immigration debate, so please bear with me, suffer my meandering recollections charitably, and hopefully this bit of Texas history provides some background that is helpful today.
I was born in Eagle Pass, Texas on 22 November 1961, about 3 solid golf strokes from the Mexican border, literally…apparently in the old stone clinic at Fort Duncan, one of the Texas forts of the Old West…about mid-way between Laredo and Del Rio. Texas Legends: Fort Duncan http://www.legendsofamerica.com/tx-fortduncan.html . A rich participant in Texas, American, and Confederate history as a first line of border defense against Apache and Comanche Indians, and a trading post about 30 miles north of the legendary Camino Real / Old San Antonio Road passage from San Antonio to Mexico City…linking the Texas frontier to Colonial Mexico (New Spain)…used since the 1600’s by Spain, and built on Indian trails from time immemorial. A book was written about the old place…which I confess to have not read, “Fort Duncan: Rock of the Rio Grande Line of Defense”…but I don’t really need to…literally born on the premises and spent so much time as a young person in Eagle Pass, and at the Fort Duncan Club specifically. For me and my family, life in Eagle Pass revolved around the place. Most of my early childhood birthday parties organized by my grandmother Bibb were celebrated with hosts of kids at the Fort Duncan Club. Our family dined at the Fort Duncan Club. My dad and grandpa Bibb golfed at the Fort Duncan Club…then had post-round drinks at the Fort Duncan Club bar, served by a friendly character named “Polo” in old-style bartender fashion. To this day, one of my favourite summer drinks, and what I make for my kids, is a “Fort Duncan Club pink lemonade”, which Polo made for me while my dad and grandpa Bibb imbibed the adult stuff.
The place and local topography I remember looked like something right out of a John Wayne movie, most characterized by the brasada of dense thornbrush and mesquite where apparently in the old days massive herds of wild horses and cattle used to graze in the searing heat near the Chihuahuan desert. It was a tough place to visit the grandparents in the summer! Everything was parched, brown, and well-baked…outside of crows, horned toads seemed the dominant not-so-wildlife. I remember spending ALOT of time swimming at the Fort Duncan Club pool and drinking pink lemonades! I still remember the distinctive, thirst-quenching taste of that highly mineralized Texas brush country water. I remember my grandpa Bibb always watching televised bullfights from Mexico…seemed to be stuck on that channel…with the crows cackling / whistling their approval / taunting us in the background…with his prized set of bullhorns and hooves (a loser) mounted behind the couch in his version of today’s “man cave”. I remember eating scrambled egg and deer sausage tortillas cooked over a mesquite campfire at the crack of dawn in deer camp. My first deer rifle was “the gun that won the West”, a lever action Winchester model 94 .30-.30 given to me by my grandpa Bibb. I learned to drive and got my first driver’s license in Eagle Pass. I learned to shoot rifles, wingshoot with shotguns, and ride horses in Eagle Pass…where I also rode my only “bull” when my “cousin” whipped a cow while I was on its back. I remember the 780,000 acre ranch in Coahuila from my great grandmother Bibb’s side of the family…a real blowback to another era…strong political and economic ties on both sides of the border. My grandpa Bibb took me to my first bar and I had my first beer in Eagle Pass…usually Falstaff, and Bohemia or Negra Modelo in Mexico. I remember ritual Sunday formal dining and ballroom dancing to an orchestra at the Restaurante Moderno across the border in Piedras Negras…and incidentally, where our regular waiter Nacho Anaya invented nachos. I can remember Nacho’s friendly face, slicked-back / jet-black hair and formal attire. It was a very different era…I remember everyone there elegantly dressed to the nines and my dad or grandpa twisting my arm to ballroom dance with my mother…I preferred hanging out in the front of the restaurant, outside the dining area, in the hallway to the right of the bandstand, where they had a bear cage and some loud parrots…and where the local boys would hang out waiting to be sent on an errand to buy liquor and cacahuates (peanuts) for one of the diners and always for my grandpa. It was a venerable old bar and bastion of civility in a harsh place…google it…where John Wayne and other stars would hang out when filming in the area. One of my favourite entrée’s is still duck a l’orange…a specialty of the Moderno. We spent so much time at the Moderno that I could draw a physical layout of it today. There weren’t that many places to go in Eagle Pass / Piedras Negras! When we went out as a family, which we did a lot, it was to the Fort Duncan Club or Moderno.
…Lest I forget the Kickapoo Indian tribe that lived by the Rio Grande river in their traditional wickiups under the international bridge…citizens of no country…living quirkily removed from, if not stubbornly resisting, the steady encroachment of the modern world…perhaps those people were one of the last “wild” / untamed / truly free native Indian tribes in America (or groups of people in the OECD world for that matter)??…citizens only of planet Earth…still maintaining the unbroken chain lifestyle of their ancestors for millennia…resisting us…resisting us…resisting us. We’ve all heard of Custer’s Last Stand…I think this might have been one of native humanity’s last stands, certainly in the OECD world. This was the real deal…no tourist mock-up village…these people were destitute and barely hanging on. I just feel privileged to have seen it while it still existed, and know my kids never will.
My mother’s family, the Bibb’s, were the long-time political bosses / patrons, of Eagle Pass, Maverick County, and lifelong friends and political allies of LBJ. Politically, they represented the “Yellow Dog Democrat” old-line Anglo settlers on the Texas-Mexico border. Practically, the Bibb’s controlled most every aspect of community life, politically, economically, and socially, in the county. I remember unpublishable “boys will be boys” stories, told to me by my dad, other relatives, and a media group about my grandpa William, his brother Robert, their father Tom Bibb, and various high profile political figures in Washington and Mexico City. Crazy stuff…heady days. For various reasons, their influence extended far beyond the county. There were several old patron families like the Bibbs along the Texas-Mexico border that somehow, for a time, were able to create order out of chaos in the old Judge Roy Bean iron-fisted mold. The University of Texas – Arlington library recorded and preserves a history of the old border patron / political boss system created and run by the Bibb’s in Maverick County. To me, it’s a fascinating history of an American / Mexican power struggle that seems to be exploding today.
According to that man’s recollection of history, as border demographics began to change with an influx of Mexican immigrants, County Judge Robert Bibb embraced certain talented Mexican Americans into the Bibb inner circle, setting off a firestorm among the Anglo population, quickly moving to minority status, who feared the inevitable loss of political and economic power…leading to long-term decline. Anyone who currently lives there or knows anything about the US-Mexico border is aware of the dramatic, negative changes that have taken place on the US side over the past 30-40 years. It is both sad and troubling for anyone who has seen for themselves what it used to be. Albeit highly imperfect with deeply imbedded cultural racism (not much different from most of America at that time), it was a civilized and economically prosperous typical small town American community with a low crime rate. There has been a dramatic 180 degree reversal. Today, it remains deeply imbedded with reverse cultural racism, is a hotbed of narcotic trafficking and crime, and is economically destitute like few other places in America. Sadly, I could never risk taking my family back to visit any of these places today.
It is a literal disaster, from almost any viewpoint. It is inconceivable that any American would want or accept this outcome willingly. This is not the American Dream that the Mexican immigrants who came to these border communities were looking for. There are very good, tangible, and replicable reasons why the American experiment and the American Dream were so successful for so many immigrants from so many different countries since the early 1600’s. For some reason, despite their political power, the border immigrants have not been able to replicate most of the key success factors that provide the American Dream. They obviously want more for themselves and their children. Political power does not directly equate with economic prosperity or the American Dream. You must know what to do when you get the power…and they’ve either got earplugs in, or nobody has tried to transfer that knowledge…which I highly doubt. I believe that if they knew what was possible, what America could provide, along with the formula for getting there, Mexican immigrants would never prefer to languish in a Mexican version of America-lite and long term decline. Historically, no willing immigrants have ever come here for this outcome…they could not have wanted this, and the socialist politics they seem to prefer are a relic from Colonial Mexico designed to, or having the practical effect of, keeping the masses in need and the rich in power.
You’re in America now. You don’t have to accept this outcome or colonial politics anymore. There is more to be had…much, much more.
Donald Trump, lead these people. Show them how to become economically prosperous Americans, and how to build safe, attractive communities where people rise from humble beginnings to lives of middle-class comfort and security through hard work, determination, and courage. Tell them your personal story Donald. Tell them the classic American Horatio Alger rags-to-riches stories. Tell them how this country was built, and who did it. Many immigrants are obviously missing a key piece of the American experience / formula for success, and having done it yourself, you sir are one of our most credible public figures to tell those stories and get people on the path to economic liberation and the pursuit of happiness in the fullest American sense.
By allowing illegal immigration, we deeply harm the economic prosperity of legal immigrants. Close the border to all illegal immigration and make it an extraordinary privilege, with tangible economic benefits, to be American again.
NY, NY 18 Aug 2015