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Saturday, August 27, 2011

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BookDaily Update
Sunday August 28, 2011

Eat to Live: The Amazing Nutrient-Rich Program for Fast and Sustained Weight Loss, Revised Edition

By Joel Fuhrman
ISBN: 9780316120913
 

Digging Our Graves with Forks and Knives

THE EFFECTS OF THE AMERICAN DIET, PART I

Case Study: Robert lost over sixty pounds and saved his life!

I was generally thin until about thirty-two years of age. I gained about thirty pounds seemingly overnight. At thirty-four, I began having labored breathing and was diagnosed with sarcoidosis, which caused significant scarring over a large area of my lungs. I began the standard treatment of a biopsy and steroids.

At age thirty-seven, I was fifty pounds overweight. My life changed one afternoon at an ...

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Corinthia Falls

By Kim Hutson
ISBN: 9781432771676
 

Timber’s Story

August

It was eleven o’clock on Sunday morning in 1981. The bell tower on Corinthia Fall’s old church welcomed our local faithful and spiritual, the traditional and established, the dutiful as well as other self-comprised souls. The late morning sun hovering over the small northeastern Oklahoma town was piercing and oppressive. The congregation greeted one another upon entrance with simulated enthusiasm as each proceeded to the simple security of their customary and long recognized seating arrangement. The pianist and organist struggled mightily to play the prelude hymn in unison.

By the way, Timothy Oaks is my Christian...

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Today's Business & Economics Chapter

 
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Business & Investing
Sunday August 28, 2011
Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage
by Daniel C. Esty
 

Eco-Advantage

Washington, D.C.: General Electric CEO Jeff Immelt announces a new initiative, "ecomagination," committing the mega-manufacturer to double its investment in environmental products-everything from energy-saving lightbulbs to industrial-sized water purification systems and more efficient jet engines. Backed by a multimillion-dollar ad campaign, Immelt positions GE as the cure for many of the world's environmental ills.

Bentonville, Arkansas: In a speech to shareholders, Wal-Mart CEO Lee Scott lays out his definition of "Twenty First Century Leader-ship." At the core of his new manifesto are commitments to improve the company's environmental performance. Wal-Mart will cut energy use by 30 percent, aim to use 100 percent renewable energy (from sources like wind farms and solar panels), and double the fuel efficiency of its massive shipping fleet. In total, the company will invest $500 million annually in these energy programs. Moreover, in a move with potentially seismic ripples, Wal-Mart will "ask" suppliers to create more environmentally friendly products: A growing share of the fish Wal-Mart sells will come from sustainable fisheries, and the clothing suppliers will use materials like organic cotton. The retail giant has also developed a packaging scorecard to rate suppliers' efforts to reduce waste and encourage reduced fossil fuel consumption. All of these initiatives, Scott emphasizes, "will make us a more competitive and innovative company."

By either market cap or sales, GE and Wal-Mart are two of the biggest companies in history. Neither company springs readily to mind when you say the word "green." But these are not isolated stories. Companies as diverse as Goldman Sachs and Tiffany have also announced environmental initiatives. As the Washington Post observed, GE's move was "the most dramatic example yet of a green revolution that is quietly transforming global business."

What's going on? Why are the world's biggest, toughest, most profit-seeking companies talking about the environment now? Simply put, because they have to. The forces coming to bear on companies are real and growing. Almost without exception, industry groups are facing an unavoidable new array of environmentally driven issues. Like any revolution, this new "Green Wave" presents an unprecedented challenge to business as usual.

NEW PRESSURES

Behind the Green Wave lie two interlocking sources of pressure. First, the limits of the natural world could constrain business operations, realign markets, and threaten the planet's well-being. Second, companies face a growing spectrum of stakeholders who are concerned about the environment.

Global warming, resource constraints, water scarcity, extinction of species (or loss of "biodiversity"), growing signs of toxic chemicals in humans and animals-these issues and many others increasingly affect how companies and society function. Those who best meet and find solutions to these challenges will lead the competitive pack.

The science, we stress, is not black and white on all these issues. Some problems, like ozone layer depletion or water shortages, are fairly straightforward. The trends are plainly visible. On other issues-climate change most notably-some uncertainties about the precise speed and nature of global impacts persist. But the evidence and scientific consensus are more than strong enough to warrant immediate action. Indeed, former U.S. vice president Al Gore and the Intergovernmental Panel on Climate Change (IPCC) received the 2007 Nobel Peace Prize for clarifying both the importance of this issue and the need for urgent response.

A broad-based set of players now insists on attention to these issues. Government, the traditional superpower of influence on corporate behavior, has not gone away. Far from it. Regulators worldwide no longer turn a blind eye to pollution. Citizens simply won't allow it. Across all societies, we see serious efforts to control emissions and make polluters pay for the harm they cause.

Other actors, however, now play prominent environmental roles on the business stage. NGOs, customers, and employees increasingly ask pointed questions and call for action on a spectrum of issues. To give just one example, Hewlett-Packard (HP) says that in 2007, over $12 billion of new business depended in part on HP's answers to customer questions about the company's environmental and social performance. According to Pat Tiernan, HP's VP of Environment and Sustainability, these new elements can be a critical part of the procurement decision and, in some cases, on par with traditional criteria such as price, delivery, and quality. These customer demands reshape markets, create new business risks, and generate opportunities for those prepared to respond.

The breaking news is the arrival of a new set of stakeholders on the environmental scene, including banks and insurance companies. When the financial services industry-which focuses like a laser on return on investment-starts worrying about the environment, you know something big is happening. Wall Street stalwart Goldman Sachs announced that it would "promote activities that protect forests and guard against climate change" and pledged $1 billion for investments in alternative energy, having already bought a company that builds wind farms-which it has since sold for a large profit. Upping the ante further, Bank of America (working with Andrew's guidance) announced a $20 billion commitment to environmental initiatives and Citigroup committed $50 billion soon thereafter. Acting as a group, many of the world's biggest banks have signed on to the "Equator Principles," and now the "Carbon Principles," which require environmental assessments of major loans. And Wall Street analysts have become focused on the "carbon exposure" of companies, believing that those who manage their emissions better than competitors will be advantaged in the looming carbon-constrained world.

For a painful example of how this one-two punch of natural forces and new stakeholders can slam a company, just ask Coca-Cola's two most recent ex-CEOs, Doug Ivestor and Doug Daft. Within the past decade, the world's largest soft-drink manufacturer faced angry protests in India over its water consumption, came under pressure to stop using refrigerants that hurt the ozone layer, and withdrew its flagship bottled water Dasani from the British market after the supposedly purified drink failed European Union quality tests. Today, the company has a vice president, Jeff Seabright, dedicated to water and environment issues and a chairman, Neville Isdell, as well as a new CEO, Muhtar Kent, who work closely with the company's Environmental Advisory Board (on which Dan serves).

THE BUSINESS CASE FOR ENVIRONMENTAL THINKING

We see three basic reasons for adding the environmental lens to core strategy: the potential for upside benefits, the management of downside costs and risks, and a values-based concern for environmental stewardship.

The Upside Benefits

Nobody, not even market-savvy Toyota, could have predicted the success of its hybrid gas-electric Prius. Given the poor track record of electric vehicles, this leap of faith was anything but a clear path to profit. Yet Toyota executives saw potential value down the road, and they could not have been more correct. After a decade-long research push, the Prius was named Motor Trend's Car of the Year in 2004, by which time customers were waiting six months to get their hybrid cars. While Detroit was nearing bankruptcy, laying off tens of thousands of workers, and offering "employee discounts" to everybody, Toyota was raising prices, expanding production, collecting record profits of $13 billion in 2007, and taking the spot of world's largest automaker.

Toyota's green focus is no accident. In the early 1990s, when Toyota wanted to design the twenty-first-century car, it made the environment a major theme, ahead of all the selling points that automakers traditionally used: size, speed, performance, or even ability to attract beautiful girls or hunky guys. Smart move.

Similarly, BP has rebranded itself as an energy company, preparing to move "beyond petroleum" and investing in renewable energy. These companies have figured out that it's better to remake your marketplace and eat your own lunch before someone else does.

Our research suggests that companies that bring an environmental lens to their business strategy are generally more innovative and entrepreneurial than their competitors. They see emerging issues ahead of the pack. They are better prepared to handle the unpredictable forces that buffet markets. And they are better at finding new opportunities to help customers lower their costs and environmental burden. By remaking their products and services to respond to customer needs, they drive revenue growth and increase customer loyalty.

The "gold" that smart companies mine from being green includes higher revenues, lower operational costs, and even lower lending rates from banks that see reduced risk in companies with carefully constructed environmental management systems. They also reap soft benefits, from a more innovative culture to enhanced "intangible" value, employee dedication, and brand trust.

Scholars and pundits have noted that businesses now face a world where traditional elements of competitive advantage, such as access to cheaper raw materials and lower cost of capital, have been commoditized and whittled away. On this altered playing field, going green offers a vital new path to innovation and to creating enduring value and competitive advantage. Nike executive Phil Berry puts it simply: "We have two maxims. Number 1: It is our nature to innovate. Number 2: Do the right thing. But everything we do around sustainability is really about number one-it's about innovation."

The Downside Risks

Inside oil giant Shell, executives use the acronym TINA-There Is No Alternative-to explain why they do some things. To them, thinking about how climate change affects their business or caring how stake- holders feel about the company is no longer optional. It's just a fact of life. Even through well-publicized problems with local communities and governments in places like Nigeria, Shell has continued to hone its stakeholder relations skills. The company spends millions of dollars working with the people living around key oil and gas projects such as the massive Athabasca Oil Sands in Alberta, Canada.

As head of Shell's famed scenarios group, Albert Bressand helped the executive team think about what could hurt the company in the long term. As he told us, "We are a prisoner of the market ... there are people who can remove our license to operate."

The idea behind license to operate is simple: Society at large allows companies to exist and gives them a certain leeway. If your company oversteps the bounds, societal reactions can be harsh and, in severe cases, destroy the company. Former partners of Arthur Andersen learned that lesson at great cost when the accounting giant vanished in the wake of the Enron scandal. Or remember the case of chemical industry leader Union Carbide? After the company's 1984 disaster in Bhopal, India, which killed over 3,000 people, Union Carbide's future fell apart until finally it was swallowed by Dow.

More pointedly, society's expectations about company behavior are changing. A company that abuses the local environment can find it impossible to get permits to expand operations. Regulators, politicians, and local communities raise fewer barriers for good neighbors.

Heavy industries are especially aware of this social license issue, but others feel the heat as well. After years of unfettered expansion, Wal-Mart has come under fire from protestors who contend that the company's stores increase sprawl, destroy wetlands, and threaten water supplies. In some communities, regulators have joined the chorus and begun to impinge on the retail giant's expansion plans. In internal meetings, Lee Scott told Wal-Mart executives that their sustainability efforts would help protect the company's "license to grow."

Environmental challenges can seem like a series of small holes in a water main, slowly draining value from the enterprise. Or they can appear suddenly as major cracks in a dam and threaten the entire business. Maybe the problem is unexpected costs for pollution control or a cleanup for which nobody budgeted. Maybe it's a very public disaster like the Exxon Valdez. Sometimes, too, the downside of mismanaging these issues can get very personal. Executives who preside over the mishandling of toxic waste, for example, can face jail time.

Efforts to cut waste and reduce resource use, often called "ecoefficiency," can save money that drops almost immediately to the bottom line. Redesign a process to use less energy, and you'll lower your exposure to volatile oil and gas prices. Redesign your product so it doesn't have toxic substances, and you'll cut regulatory burdens-and perhaps avoid a value-destroying incident down the road. These efforts lower business risk while protecting the gold-reliable cash flows, brand value, and customer loyalty, for example-that companies have painstakingly collected over time.

The Right Thing to Do

Repeatedly during our research we asked executives why their companies launched environmental initiatives, some of which cost significant money up front and had uncertain paybacks. More often than you might imagine-and far more often than we first expected-they said that it was the right thing to do.

Is the case for thinking and acting environmentally based on values? Not primarily. At least that's not what we heard from the executives we interviewed. For most of them, the moral argument was not a separate imperative. It was deeply intertwined with business needs. Building a company with recognized values has become a point of competitive advantage, whether you have 2 employees or 200,000. Doing the right thing attracts the best people, enhances brand value, and builds trust with customers and other stakeholders. In fact, it's hard to conceive of a business asset more central to long-term success than trust among stakeholders-or one that is more easily lost. As investing legend Warren Buffett once said, "It takes twenty years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently."

Even those who agree with the late Nobel Prize-winning economist Milton Friedman that the main "social responsibility of business is to increase its profits" can't ignore the growing ranks who believe that companies have an obligation to do more. The logic of corporate environmental stewardship need not stem from a personal belief that caring for the natural world is the right thing to do. If critical stakeholders believe the environment matters, then it's the right thing to do for your business.

MAGNIFYING FORCES

The Green Wave, with its threats and opportunities, rises within a business landscape already in the throes of radical change. Companies face a number of mega-trends that interact with the effects of the Green Wave, accelerating change and magnifying its impact and scope.

Globalization and Localization

As author Thomas Friedman describes it, outsourcing is just the tip of the iceberg. The "flattening" of the global markets for goods and services will disrupt nearly all industries. The continued rise of both China and India seems likely to have a profound effect on businesses across the world, especially in North America and Europe.

Economic integration and trade liberalization intensify competition. Globalization creates opportunities for many, but fundamentally rewards scale. Size, however, creates suspicion of excess power. Large enterprises come under extra scrutiny for their business practices, including environmental impacts.

(Continues...)

 
 
 
 
 
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Today's Chapter: The Eighty-Dollar Champion: Snowman, the Horse That ...

 
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The Eighty-Dollar Champion: Snowman, the Horse That Inspired a Nation
by Elizabeth Letts
 

The Kills

New Holland, Pennsylvania, 1956

The largest horse auction east of the Mississippi was held every Monday deep in Pennsylvania Amish Country. Anyone with the time to drive out to Lancaster County, Pennsylvania, and a good eye for a horse could find a decent mount at a reasonable price, especially if he arrived early.

The New Holland auction was founded in 1900 and hadn't changed much since. Farmers and their families drove to the auction in their buggies. Wives gossiped while children played and enjoyed the festive atmosphere. Vendors sold hot pretzels and sugared fasnacht doughnuts. Farmers gathered on benches around the sides of the big covered arena while the auctioneer called out the merits of the horses. Each prospective purchase trotted across the ring just once. The auctioneer had a habit of saying, "Yessiree, this horse is sound."

Horses arrived at the auction from near and far-the racetracks at Pimlico and Delaware Park unloaded thoroughbreds that were too slow to race. Trainers with sharp eyes and generous budgets scouted them out as show prospects. Farmers brought plow horses that could no longer plow; riding stable owners sold decent horses to raise quick cash. Sadly, many of the horses for sale arrived here only after having exchanged hands one too many times: they were good enough, but past their prime-tired hunters, outgrown ponies, shopworn show horses. Among these sturdy, well-trained hacks, Harry hoped to find a quiet lesson horse for his riding pupils at the Knox School.

For all of their size and strength, horses are surprisingly fragile creatures. Bearing tremendous weight on their slender legs, they are subject to all manner of lameness-bone spavins, pricked feet, broken knees, corns. Some have faults of confirmation that put unnecessary strain on their legs. Some have been ill used-jumped too much or ridden too hard.

A smart salesman knows how to camouflage some of these faults; he can hold a lead rope tight to hide the bobbing head of a lame horse. He can bandage to reduce swelling or mix a painkiller into the horse's bran mash. Most common of all, he can hope that in the blur of a fast trot across an auction ring, a potential buyer will be swayed by flashy coloring or a nicely set head, and overlook any flaws.

But Harry knew horses. He had confidence in his judgment. With a budget of only eighty dollars, he knew the thoroughbreds would be out of his reach. Even the slow ones sold in the hundreds, if not the thousands. But with his keen eye, Harry believed he could spot an older horse who was well trained and reasonably priced.

On a typical day outside the auction grounds, teams of horses still hitched to their buggies would be tied up alongside cars with out-of- state license plates. Big racetrack vans flanked two-horse trailers owned by hopeful backyard buyers.

By the end of the auction, two to three hundred horses would have been trotted through the arena, looked over, bid upon, and sold. For some horses, the transaction would be their salvation-a dud on the racetrack snatched up to be groomed as a horse show star. For others, it was a step down-a retired show horse might be sold as a lesson horse. At the end of every auction, there were always a few that found no buyers: the ones whose lameness couldn't be masked, the sour- tempered ones who lashed out with hooves and teeth, the broken-down ones who stumbled their way into the ring.

But no horse left New Holland unsold.

The same man always made the final bid: the kill buyer. He purchased horses for the slaughterhouse so that their carcasses could be ground up for dog food and their hooves boiled down into glue.

The auction lasted only three or four hours, a testament to how quickly the horseflesh would move through the arena. At the end of the morning the Amish farmers would clamber back into their buggies, the race vans would head back to the track, and the new horse owners would coax their horses into trailers and go home.

No one would be left on the grounds but the kill buyer, loading up the last of the horses to take to the slaughterhouse.

That Monday, in February 1956, Harry de Leyer was running late. The headlights didn't work on his beat-up old station wagon-not surprising, since he'd paid only twenty-five dollars for it. A new car, for close to fifteen hundred dollars, would have been far beyond the Dutch immigrant's modest budget. Although he had arisen long before dawn on this wintry morning, the snow and a flat tire had set him back.

By the time Harry finally arrived at the auction, the grounds were deserted and there were no horses to be seen. After the long drive down from New York, now he'd have nothing to show for it.

Only one vehicle remained, a battered old truck with slatted sides, more cattle car than horse van. A bunch of horses, fifteen or so, were crowded in its back. A rough man dressed in a barn jacket and dungarees was just closing up the ramp.

Unwilling to give up after his long drive, Harry leaned out his car window and called to him.

The man seemed as though he didn't want to be bothered. "Nothing left but the kills," he said.

Harry got out of his car, walked over, and peered through the vehicle's slatted sides. It was a cold day, and the horses' breath made steam rise up in the air. Anyone who has ever had the misfortune of seeing a horse bound for slaughter will attest that the animals seem to sense when they are hitting the end of the road. Sometimes, horses react with fear, feet scrambling for purchase on bare wooden floors, metal shoes clanging against the van's sides. Other times, they just look haunted, as if they know where they are headed.

A pit formed in Harry's stomach. He would never be able to think of a horse as a collection of body parts to be turned into horsehide, dog food, and glue. Back in Holland, old horses past their prime were put out to pasture. His father had taught him that a horse who had served man deserved to live out his days in peace.

Could none of these horses still serve some useful purpose? He peered into the truck's gloomy interior. In a proper horse van, horses travel in padded stalls, their legs bandaged in thick cotton batting, with fresh hay suspended within reach. But this van offered nothing like that. More than a dozen horses were packed together on the bare metal floor, fenced in by rough slats that did nothing to protect them from the elements or from one another. Harry could smell the fear rising up from them; the sound of hooves striking metal was almost deafening, and in the shadowy interior he saw flashes of white in their eyes.

But one of the horses stood quietly, crammed up against the bars, seeming to pay no mind to the chaos around him. Through the truck's side, Harry saw large brown eyes. When he reached out his palm, the horse stuck his nose up to the slats. Harry saw one eye looking at him. Asking.

"What about that one?" Harry asked.

The man was already loaded up and ready to drive away. "You don't want that one. He's missing a shoe and his front is all cut up from pulling a harness."

"I just want to take a look," Harry said.

Knackers generally paid sixty dollars a head. Was Harry prepared to pay more than that?

Harry hesitated, then nodded. The horse was still watching him.

Grudgingly, the man backed him out of the trailer. Scrambling down the steep ramp, the horse almost fell, but then righted himself.

Once the animal was off the trailer, Harry got a better picture, and it wasn't a pretty one.

The big horse was male, a gelding, as Harry had expected. His coat, the dull white color that horsemen call gray, was matted and caked with mud. Open wounds marred both knees. His hooves were grown out and cracked, and a shoe was missing. The horse was thin, but not completely undernourished-not as bad off as the horses normally seen on a killer van. The marks across his chest showed that he'd pulled a heavy harness. He had a deep chest; Harry noticed the strong gaskins and well-muscled shoulders, probably developed by pulling a plow. The man dropped the rope on the ground, but the horse made no move to run.

His teeth showed that he was "aged"-not younger than eight years old, and quite possibly older. Harry scanned his legs-pasterns, fetlocks, cannons, hocks-and found no obvious flaws. The auction roster sometimes read like an illustrated veterinary primer: bowed tendons, bone spavins, strangles, laminitis, swaybacks, broken wind-a compendium of ways that a horse can be lame, contagious, or otherwise unfit. But this horse had no such ailments: he was just undernourished, beat up, and broken down, an ordinary horse who had hit hard times.

The unfamiliar setting of an auction made most horses jittery, but this one seemed calm. He followed Harry with his eyes, and when Harry spoke a few words to him, he pricked his ears forward: they were small and well formed, curving inward at the tips.

Purebred horses are bred for looks and certain characteristics- thoroughbreds for speed, Arabians for their dished faces and high-set tails, Tennessee walking horses for a gait so smooth that a rider can carry a wine glass without spilling a drop. A horse's ears are an indicator of refinement. Harry took a harder look at the horse underneath the caked-up dirt.

This gelding, even cleaned up and well fed, would never be beautiful. He was as plain-faced and friendly as a favorite mutt-wide-eyed and eager to please, a man's-best-friend kind of horse.

The horse stretched out his neck and blew a soft greeting.

Harry reached out, sorry that he had nothing to offer but the palm of his hand.

Despite his sorry condition, a spark of life lit up the gray's eyes. He had a strong body that would fill out with proper care. Any horseman can recognize an animal whose spirit has been broken, from the listless head and dull eyes, the slack lips and shuffling gait. But this horse was not broken-he had an air of self-possession. All he needed was someone to care for him. Harry was sure that if he was given affection, this horse would return it in abundance.

But Harry knew he couldn't be that person. The de Leyers counted every penny. There was no room in his life for whims.

"You want him or not?"

Making it in the equestrian business meant being hard-hearted. For every prospect that might become a riding horse, a dozen nags were too old, too lame, or too ornery to stand a chance. Common sense told Harry he should cut his losses, keep his cash in his pocket, and head home.

The slaughter truck yawned open behind them. The horses were scrambling against each other; a few more minutes and a fight might break out. One sign from Harry and the truck driver would lead the big gray back up that ramp. The story would end quickly. First, a cold, crowded, terrifying ride. Then the short, brutal end: a captive bolt through his head. The thought made Harry flinch.

Back in Harry's village in Holland, the day when the Nazi soldiers had led the horses away, the villagers had stood with their hands clenched at their sides, trying to hide the tears in their eyes.

Harry knew what it felt like to be powerless.

Beat up or not, this horse seemed brave: Harry noted the quiet way he stood there, the gaze that said he was ready to trust. Horses are herd animals. They smell fear, and sense danger. But this horse held out hope; he seemed to put his trust in a strange man, even though it was clear that, thus far, men had treated him poorly.

The horse stood motionless, square on all four, looking straight at Harry.

"How much you want for him?" Harry asked.

The man said again that he would bring sixty dollars for dog food. Harry felt his resolve melting under the horse's steady gaze.

He repeated his question. "How much you want for him?"

The man grinned broadly, probably thinking he stood a chance to make a buck on this guy. "You can have him for eighty."

Harry averted his eyes, fingering the rolled-up bills in his pocket. He could buy a lot of meals for his family for eighty dollars, a lot of bales of hay and sacks of grain for the horses. It was hard to imagine facing his wife with his money spent and nothing but this broken-down ex-plow horse to show for it.

Hadn't Harry gotten over being a sucker for horses?

But there was something about this horse. Harry turned back and the horse was still watching him intently: he was wise, an old soul, a horse whose steady demeanor seemed to cover hidden depths.

Man or beast, Harry did not like to see a proud soul held in captivity.

"Might make a lesson horse, if we can fatten him up," Harry said.

He handed over the eighty dollars and never looked back.

2

On the Way Home

St. James, Long Island, 1956

Eighty dollars poorer, Harry had made a deal. Now it was time to hit the long road home. The truck driver was heading back to New York anyway-to the rendering plant up in Northport, not far from St. James. The eighty-dollar price tag included ten dollars to drop the horse at Harry's barn. Ten dollars in the pocket for the butcher's driver was enough incentive to spare the horse's life. Nothing left for Harry but the long drive back through the snow in his beat-up Ford. On the front seat of the car lay the flashlight he used when the headlights went on the blink. Maybe he could make good time and get home to his family before nightfall.

As he drove, Harry pondered his purchase. A horse for sale is more than a flesh-and-blood animal; he is also an embodiment of a promise. Along with his physical attributes-coat color, four legs, a strong back, a facial expression-he also carries hope: that he will be strong and brave, faithful and true. For a man in the horse business, a horse is a financial transaction as well. A good buy made a safe lesson horse; a better one made a profitable resale. Harry fell in love from time to time along the way-an occupational hazard. He considered himself sensible, though he also had to admit that he seldom met a horse he did not like.

(Continues...)

 
 
 
 
 
 
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Excerpted from "The Eighty-Dollar Champion" by Elizabeth Letts. Copyright (C) by Elizabeth Letts. Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher. Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
 

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The Eyes of the World on One Economist?

D.R. U.S. versionThe Daily Reckoning U.S. Edition Home . Archives . Unsubscribe
More Sense In One Issue Than A Month of CNBC
The Daily Reckoning | Saturday, August 27, 2011

  • With "expert" thinking like this, who needs idiots?
  • The world tunes in to listen to one man and his money-printing machine,
  • Plus, all the past week's reckonings, neatly archived for you and your sons to enjoy...
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URGENT Crisis Alert: Where's the Bottom of this Market Correction?

Trillions in wealth has vanished from the stock market in the past month. Europe's on the brink of economic collapse. China's growth is slowing down.

Making matters worse, banks around the world scramble to avoid complete failure (again!) And the US public has finally stood up to years of reckless federal spending...

How do you beat it all? Watch this right now for the answer. Hurry — time is short.

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The Eyes of the World on One Economist?
Joel Bowman
Joel Bowman
Checking in from Buenos Aires, Argentina...

Yesterday the world heard from a man. More important, perhaps, than what the man said — or even what he didn’t — was surely the fact that we were listening at all. The whole world, listening to one man, one...economist.

Our peculiar orb, third from the sun, is indeed a crowded place. Billions of humans roam the planet, their individual decisions, and the resulting transactions, are, right now, crossing wires and changing hands in every known reach, from mountaintop to desert floor. The whim of one...the folly of another...the desire and yearning of those we will never meet, never know. One will spend the morning fetching water for the family...another the afternoon under an old oak with a dog-eared novel. Another cries on bended knee, pleading to his Lord...while his neighbor heads to the mall...or seduces his pretty wife.

We are many, and our decisions and desires still more. A lot of people. A lot of decisions. A lot of eyes and ears on one man, one...economist.

How did it come to this? How can this one man possibly know what is best for the water gatherer, the reader, the helplessly sincere and the sincerely wretched? How does he know which button to press, which lever to pull? How does he know his machine even works at all? And, more importantly, how can we take any of it seriously?

“The weight of the whole world’s illusions on those weasely shoulders,” wrote Bill in yesterday’s reckoning. “An honest man would shrug.”

In this week’s feature column, Chris Mayer provides some light- hearted relief from the circus of self-absorbed fixers outside. So switch off the television...turn down the radio...sit back and have a laugh at it all...

[This week’s feature column, a version of a speech Chris made in Vancouver last month, originally appeared in these pages on Thursday, August 25th.]

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The Daily Reckoning Presents
You Can't Make This Stuff Up
Chris Mayer
Chris Mayer
In today’s column, I’d like to share with you a few ideas I presented at the recent Agora Financial Investment Symposium in a speech titled You Can’t Make This Stuff Up. I called it that because it’s hard to fathom serious people writing lines like this:

The renewed willingness and confidence to spend money we don’t have is vital to the continuing recovery.
That gem comes from The New York Times. Unfortunately, it reflects a common opinion. When I read stuff like that, I think we are truly doomed. I mean, is this really that hard? Spending money we don’t have is what got us into this mess in the first place!

The US debt ceiling fiasco makes that clear. The US is bleeding money. Every month requires huge amounts of financing just to keep the lights on. So far, creditors have been generous in extending ever-greater loans to the US — by buying its debt — at very low interest rates. It clearly can’t go on forever.

When the game stops, you can say goodbye to whatever fragile recovery we’ve enjoyed since 2008 and expect rates to rise. Rising interest rates are death to equities, simply because as rates rise, investors demand a greater incentive to own stocks. Remember, everything in the market competes with everything else for the affection of investors.

To see how this works, look back to 1982. Then you could earn 15% on a Treasury bond. No wonder the price-to-earnings ratio of the entire Dow Jones industrial average fell to just 7 times in 1982. (The current ratio is about 14 times.) That was a bleak time, too, with a deep recession, bank troubles and raging inflation rates.

Our time is troubled too, and the value of the US dollar has taken a beating. Yet we have this from BCA Research, a highbrow firm for which people pay tens of thousands of dollars to receive analysis like this:

A weakening US dollar has served the economy extremely well: It has helped trigger an export boom, inflate corporate earnings, lift stock prices and avoid deflation — all without costing anything.
Yes, a free lunch! All we have to do is destroy our currency and we’ll be rich. It’s worked for Argentina and Zimbabwe, too, right? Of course not. Yet this idea persists, like a rash that won’t go away.

But this extends beyond the US. The fact is most of the world’s Western governments are broke. As governments reach to make ends meet, it will come out of the hide of the private sector.

For many of these governments, the situation is desperate. Another gem: The Russian finance minister told the Russian people they should drink and smoke more to help boost tax revenues. “People should understand,” he said. “Those who drink, those who smoke are doing more to help the state.” And the Irish finance minister said his ministry is considering selling T-shirts that read, “Ireland is not Greece.” As I say, you can’t make this stuff up. Maybe Italy will hold a bake sale to help raise money!

Seriously, though, the list of the negatives out there is very long, and I could write this whole issue about them. Of course, outside of these issues, things look great! Let’s let former Fed chief Alan Greenspan sum things up:

There is no question that the momentum of this economy, leaving out the oil price issue, leaving out Euro problems that have emerged and very specifically leaving out the budget problems, this economy is really beginning to pick up momentum.
Ha! Yes, if only we could leave those things out. Unfortunately, we can’t, because we live in the real world. But the list is longer than Greenspan knows.

As I warned in last month’s letter, all is not well in China. It’s starting to slow down. We just got the latest figures for Chinese manufacturers in July, which were lower than June. This marks four months in a row of slowing growth.

This is in keeping with the nature of things.

There are booms and busts. What is unnatural is how long China has gone without a serious crisis. People seem to take it for granted that China will always be growing, pulling the global economic sleigh through the muddy patches. (Much in the way that people thought housing prices would never go down.)

A China contraction is something no one expects. And it would devastate many emerging markets (and even a few developed ones). This is a big concern because the bright spots in the global economy post-crisis were the emerging markets. Many of our best performers were companies with direct exposure to these markets, which allowed them to overcome a sluggish recovery at home and report good earnings.

But now China — the biggest driver of these emerging markets and the biggest buyer of a long list of commodities — is having some problems. As it slows, you can already see the ripple effect in some of the other emerging markets.

For example, I’ve warned about Brazil and what I called the coming “Caipirinha Crisis.” Brazil’s Bovespa — sort of like a Brazilian Dow Jones industrial average — is 20% off its November high as I write. It’s the first of the world’s 10 largest markets to fall into bear market status since Japan’s nearly did after the tsunami disaster.

In fact, as I pen these words, only two of the largest 16 emerging markets are up — South Korea’s Kospi and the Russian MICEX. In developed markets, only Germany’s DAX is positive, excluding the US — which isn’t up by much. A bad week and US markets could easily slip into the red for the year.

It’s getting ugly...and could get much uglier.

So how we do invest? What do we do in an environment like this? These were the questions I heard most often at the conference.

I have some ideas and some strategies, which we’ll develop further in my newsletter, Capital & Crisis, over the next few months. Our analysis may force us to make some changes to our portfolio and our thinking as we adjust to the new realities. It may be hard to do, but the best moves usually are.

The good news is that in every market, there are pockets of opportunity. In every market in history (even bad markets), there have been stocks that, looking back, you wish you had bought. In other words, in every crisis there are opportunities waiting to be found. Given the length of this year’s “you can’t make this stuff up” list, a mere fraction of which I’ve shared in this column, I expect we’ll have more such opportunities this time around.

Regards,

Chris Mayer,
for The Daily Reckoning

P.S. If you’re not already receiving my Capital & Crisis newsletter, I’d like to invite you onto our email list. From the looks of things, the next few months are going to be tough going in the markets...which should present us with plenty of opportunities, provided we’re patient and know what to look for. If you’re interested in joining us, simply drop your details in here and we’ll see that you’re on the list. My next alert is due out around next Friday.

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ALSO THIS WEEK in The Daily Reckoning...
You’re Gonna Need MORE Than Gold...
By Simon Black


Everyday more and more people are waking up to the idea that they MUST own gold if they want to protect their assets from an out of control government. Owning gold is a great first step, but as history tells us, responsible people can and should do more before it’s too late...


The Greatest Trade of All Time
By Kevin Bambrough


We are of the view that the appetite for sovereign paper promises will continue to decline, and such promises will continue to lose their value relative to real assets, like gold. What needs to be understood is that paper promises (sovereign debt and fiat currencies) are ‘faith-based assets’. They have no inherent value. They have perceived value in that they have historically been convertible into real assets. With their value decreasing against real assets, however, we are of the view that holders of faith-based assets will be increasingly unwilling to store their wealth in them. This will drive up the prices of real assets versus faith-based assets, a process which we have already begun to see en masse.


First in Line for New Money
By Douglas French


The world of high finance was still in full flight in February 2007. The cracks in the mortgage market had not yet begun to show and Stephen Schwarzman’s Blackstone Group had just completed its $39 billion purchase of Equity Office Properties in what was the largest leveraged buyout ever.


US Government Asset Seizures on the Rise
By Simon Black


In the United States, there are hundreds of regulations which authorize dozens federal agencies to confiscate private property — homes, cars, bank accounts, gold, company shares, and even personal effects. Ironically, most Americans still think that they live in a country where you're innocent until proven guilty. Nothing could be further from the truth, and it's just another clear example of how the US Constitution has become a worthless piece of toilet paper for the federal government.


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Who gives a damn about America’s credit rating?

I’m SICK of hearing about Keynesian vs. Austrian, fiat currency vs. Gold, US credit ratings and other BORING economic theories you have ZERO control over.

“WHO CARES!?”

Truth is, if you want to make money in the markets, none of that stuff even matters!

Let me prove it to you by showing you.

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The Weekly Endnote...
And now, a thoughtful email from a Fellow Reckoner to end the week...

As with all momentous events, we find ourselves in the ever-so- desperate situation as to explain it to the young, the foolhardy (which was us in yesteryear) and the testeronic armour of the indestructible youth...my son...your sons...my son’s friends and his friends. Some will listen. Some others will listen and learn. Some will think us fools...some will think us old fools...the greatest thorn of fatherhood...the moment when son and company do not see what we see.

Ah fatherhood. With all our mistakes and misgivings, our prejudices, our faults, our wrongs, our gargantuan mistakes, we take our hard fought lessons, with salt and despair, our heartfelt pain and yearnings and ask, how can we, who have been part of the Status Quo, say, “No, this is the way of things. You young man listen to me because I know the path,” and the young man responds with, “Well how come you are part of the way of things?”

Oh the lashings a father takes, time and time again. “Sons are put on this earth to trouble their fathers.” Never a truer quote...

The thing is, as I speak to my son and his friends, I am overwhelmed by their ability to execute conversation. I am intrigued, I am solaced by their acceptance of the exchange of conversation, not being know-all young men, but being effervescent young men, cheeky and full-spirited, which gives any thinking man such delight. After all, it is our souls’ reflection in the humor and sincerity of the wit to which our youngsters joust with us.

Tonight I had the urge to speak with the group of youth to which I have become so very fond of, young men of 21 to 30, all with their own rationale, their wonderful youthful wit and barbs and questions. Be it me to think I should tell them the path of uncertainty and remorse of the elders’ sins, their elders’ bad decisions, to be caught against the net of governance and meddling? How do I answer them? I try. I catch their eye for naught but a minute’s silence, endeavoring to enlighten, hearing my own hypocrisy, to reveal truths not revealed to myself at such an age, and expect those truths which I believe to be accepted by young and inexperienced minds. This is the never ending challenge, and with all such discourse, quite often the answer is revealed in all and simple truth after the event...when good looking and much loved young men have travailed through nights’ shadows I am presented with a classic example...

Home and reaching for a glass of wine, I watch, again, the classic, “The man who would be King.” Rudyard's brilliant story, with Sean Connery and the superb Michael Caine, Danny and Peachie.

All goes well for some time. The duo overachieves in the most unlikely circumstances, and when it appears that they have it made big, Danny has illusions of grandeur. Oh, how easy to be tempted and seduced by the maidens of power and corruption, to believe we are capable of silencing the gods, or corrupting the gods...but only corrupting ourselves as shadows whisper in the night. And so it is with all, governance and blight. Bernanke sharpens his pencil quick, fervors his Jackson spiel and speech of Kings. How is our reflection upon this man’s vision of the gods, via trumpet of Imperator.

Ah, as Christ was kissed the traitors speak...who will bite Bernanke’s cheek?

Regards,

Justin T.
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As always, we welcome your own thoughts, musings and tales from the frontline. Email them to the address below and...

..enjoy your weekend.

Cheers,

Joel Bowman
Managing Editor
The Daily Reckoning

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Here at The Daily Reckoning, we value your questions and comments. If you would like to send us a few thoughts of your own, please address them to your managing editor at joel@dailyreckoning.com
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The Bonner Diaries The Mogambo Guru The D.R. Extras!

What to Do in the Event of an Out of Control Money System

No Place for a Gold Bug

The Turns of the Century

China: Where Money Is Treated Best

Buying Gold on the Price Inflation Guarantee

Awaiting the Zero Hour of Available Credit

Gold Turns Around and Rallies


Currencies Are Mixed and In Tight Ranges

Currencies Take Their Turn Beating on the US Dollar

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The Daily Reckoning: Now in its 11th year, The Daily Reckoning is the flagship e-letter of Baltimore-based financial research firm and publishing group Agora Financial, a subsidiary of Agora Inc. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas. Published daily in six countries and three languages, each issue delivers a feature-length article by a senior member of our team and a guest essay from one of many leading thinkers and nationally acclaimed columnists.
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Editorial Director

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Agora Financial© 2010-2011 Agora Financial, LLC. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This newsletter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the World Wide Web), in whole or in part, is strictly prohibited without the express written permission of Agora Financial, LLC. 808 Saint Paul Street, Baltimore MD 21202. Nothing in this e-mail should be considered personalized investment advice. A lthough our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice.We expressly forbid our writers from having a financial interest in any security they personally recommend to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of a printed-only publication prior to following an initial recommendation.Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

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