A Potential Solution to Somali Piracy

I cannot believe that the piracy off the Somali coast has continued to flourish. I saw a news report today that some officials in Kenya estimate that the pirates have taken in about $150,000,000 in ransom this year.

Why don't the ships form up and travel in convoys past the Somali coast? We did it in WWII across the Atlantic, with the peril of Nazi submarines as opposed to guys in inflatable boats. It seems to me that a convoy, protected by a single warship, would be a potential solution. The warships are in the region anyway, attempting to patrol a vast stretch, ineffectively. Surely some of the cost could be borne by the ship owners, insurance companies or the cargo owners. Let's get organized and shut this menace down!

Risk vs. Reward – Lessons from our Financial Mess

As I’ve invested money over the years the concept of risk vs. reward has been drilled into me. The larger the risk I choose to take, the larger my potential reward, or potential loss. I choose to invest fairly conservatively. I have some stock mutual funds, the majority of which are in large capitalization or blue chip companies. I do have some riskier small-cap choices too. But, that’s as far as I’ve gone.

Other investors chose to put money into far riskier ventures: mortgage backed securities, credit default swaps, or hedge funds that invested in these kinds of things. They earned hefty rewards while times were good. I saw none of that money. When those investments soured recently, I’m sure many of those investors took a substantial loss. Here’s the rub: so did everyone else.

If there are lessons to be learned in the latest financial mess it is that all of us are vulnerable to loss at the hands of relatively few very large, very wealthy investors. We don’t share in their rewards, but we do share in their losses. I, and most of my acquaintances, did not knowingly choose to take on the risk inherent in these derivative investments, but we certainly paid a large price for their devaluation.

That is what is so unfair about this latest setback. If there were some regulatory method that would confine the losses to the people that actually, knowingly signed up for the risk, I would be 100% for that. I’m not smart enough to know how to do that. I do think many people are angry. They are angry because a relatively small number of people prospered hugely when these investment vehicles were producing returns. When those same investments tanked, it took the rest of us down with them.

Choose Success

Every day we have an opportunity to choose between knowledge and achievement or ignorance and defeat. If we choose the former, every day, we will be successful. It's not complicated.

Obama is a Socialist?

I wish the Republicans would stop using name-calling as a consistent campaign tactic. Calling Obama a socialist, because he favors the progressive income tax, just shows their ignorance. Simply look in the dictionary. From my Webster's : "Socialism: any of various social systems based on shared or government ownership and administration of the means of production of goods". The progressive income tax concept may be considered a "redistribution of wealth" IF we were to return to previous welfare programs that were eliminated in the 90s (which is not in anyone's platform), but it certainly is NOT socialism - not even close. In fact, the Bush administration plan of buying into troubled (and not troubled) banks is much closer to the actual definition of socialism than Obama's tax plan.