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John Moore

I plan to resurrect this blog by increasing postings to about one per day, and opening up comments to an easier format.

So far, I have not had the time, and at the moment still do not.

Please accept my apologies, and check in here periodically.

This lesson addresses property valuation in the context of nationalization, and specifically the Allende attempts to nationalize copper mines. It is a simplified approach to give the ideas behind property evaluation, and is not meant to be complete. I am not an accountant.

In the case of Chile and copper mines, compensation for nationalization was proposed by the government with a formula that did not attempt to estimate the value, but was instead apparently based on some odd socialist idea of value - a “social justice” formula. The copper companies appropriately rejected this, but then (according to Marc Cooper) joined the coup against Allende, which was very wrong - companies should not get involved in violence.

So how do you value a property? The value is affected by the following major factors:

1. The net present value of the future cash flow. This just means the current value, where the cash flow is discounted by the cost of money.
2. The risk - the likelihood of achieving that cash flow. This includes how volatile the market is, the probability that taxes will rise, the stability of the government, the nature of the labor force, and all sorts of other variables. Hence risk estimation is quite tricky and not precise.
3. The value of salvagable assets and outstanding debt - if you stopped operating the company, how much money could you get out of it by selling its capital assets and paying off its debts

A simple way to look at it is to add the salvage value to the net present value, and then adjust the result for the risk. A simple formula for the net present value (given typical non-insane cost of money) is 7 years of profit. This is sort of a quick rule of thumb, if the assumptions are correct and the risk is relatively low.

The only accurate way to set a value is to sell on the open market, and see how much it brings. That amount, whatever it is, is the precise value of the company at that time, by definition. Note that past profit and investment are irrelevant (except as they created a cash excess - a salvageable asset, or debt).

In the case of nationalization, another factor comes into play: did the company acquire the assets dishonestly? In other words, did it use government coercion or bribery to not pay full value? This is a social justice issue that can be demagoged but must be considered.

This is similar to the concept of “odious debt,” where an illegitimate government runs up a large debt, and then leaves the following government to pay it. The best example is Iraq, where Saddam ran up huge debts, mostly to France and Russia. These are odious debts because they were not used for legitimate purposes. Furthermore, France and Russia knew that and hence acquired that debt through immoral means. In such a case, it is sometimes appropriate to renege on the debts.

For Zonies only…

Zonitics has a list of primary recommendations. I haven’t even looked (as you may have noticed, things have been busy), but Edward generally has good political taste.

Primaries? I didn’t even know we had any coming. Too busy goin’ after Kerry.

Elizabeth Nickson has written a fine article in Canada’s National Post. Normally I don’t pay much attention to Canada, as it turned itself into an irrelevancy in almost every way… a pleasant one to visit… but about as important as Luxembourg.

But this was a fun piece of writing… and I recommend it.

A few quotes:

The Americans can have a war of ideas and we can’t discuss anything. Because anything not out of the Bigger Government playbook is called right-wing extremism, and worse Christian, and thus demonized. Meanwhile, the sleepiest country in the world, which lives next door to the most vibrant country in the world, continues to tumble into the wormhole of complete irrelevance.

and this gem:

And on Tuesday, the State of the Union. You’d have to go back to the Greeks to find theatre like that. There was the scarlet-faced Ted Kennedy stuffed into his $2,500 suit, and the harridan Hillary, her selfish little ferret face looking punched and puffy, like the schoolyard bully she is. As every policy initiative slipped from their grasp, the Democratic side of the aisle, visibly shrank. It was bliss, bliss, bliss.

and this:

Meanwhile, in the States, everyone is talking ideas. What’s working, what is not. Yes, it sounds vulgar and loud. And some of it is egregious. There are flagrant lies on the left and the right. A lot of it is bonkers. Most people in the entertainment left, for instance, firmly believe that Bush is part of some infernal conspiracy that aims to strip the planet of oil, and control its price forever. With the next breath, they charge he’s so stupid, he can’t find his feet. Some think the CIA planned 9/11 so that we would support Israel. The rhetoric is astonishing, even from the so-called sane. George Soros announced that “America under Bush is a danger to the world.” Excuse me? Does he need lithium? Columbia professor Nicholas de Genova called for “a million Mogadishus.” A Berkeley professor claims that the U.S. planned the Bali bombing. The entertainment elites specialize in using their soft power to insult their government whenever they get a microphone in their hands and don’t have a script.

At least they’re alive. Up here, with the exception of the Post, most of our press is so conciliatory and so boring, no one bothers to read or watch it.

[UPDATE: There have been so many comments that the page has gotten too large. I have moved a copy of this page with all comments through 3/02/04 to here.

[UPDATE: Since many commenters (including vets) seem to be attacking George Bush’s service, you are also slandering my dead comrades and many current service members. Check out the link and be ashamed.]

A Vietnam Veteran’s organization has sprung up to oppose John Kerry, because Kerry used his Vietnam credentials to the benefit of the enemy in that war, which is hard to reconcile with his constant bragging about his service today. If you don’t think Kerry helped the communists, go to the site of the VVAK, and also read the history of the conflict (on this blog), and read on here. Kerry helped our enemy, it’s that simple! His actions are those of one who cared for his comrades but not for his nation!

If you are a Veteran who supports Kerry, you might want to know who financed some of his anti-American activities after he returned to the US, activities which slandered American servicemen before the US Senate. Here is her picture:

If you are a Vietnam Vet, you know who this is. Jane Fonda sits at the controls of an anti-aircraft gun in Hanoi, between American bombing raids. For those who are not familiar with Fonda’s treasonous acts, read this.

This is the same Jane Fonda to whom today’s Vietnamese dictatorship remains grateful, fondly labeling her “Hanoi Jane”. From their news agency, January 2003:

The 30th anniversary of Ha Noi’s Dien Bien Phu of the Air seems an appropriate moment to remember that in the midst of violent US intervention, our country enjoyed the support of Jane Fonda and millions of Americans who never came here but who shared her sentiments.

Her presence in North Viet Nam that grim winter, when the sky burnt red with explosions and anti-aircraft fire, was crucial in awakening the American peace movement.

Here is John Kerry with Jane Fonda. Contrary to claims that this was coincidental, Kerry was the lead speaker at the event where this picture was taken. Other speakers included Jane Fonda.

Here is the cover of the Kerry’s book which he tried to suppress (fairly successfully, they are very hard to find) after he decided to run for Congress, the congress which later betrayed South Vietnam, handing the communists a victory they were unable to achieve on the battlefield:

This is a disrespectful parody of the Marines raising the flag on Iwo Jima. The flag is upside down,

Here is a picture showing John Kerry sailing with the Kennedy clan, his source of what soldiers call “PI” - Political Influence. Don’t let anyone tell you that John Forbes Kerry comes from a modest background with no contacts.
.
And here is an excerpt from his Senate testimony. He claimed that our soldiers

raped, cut off ears, cut off heads, taped wires from portable telephones to human genitals and turned up the power, cut off limbs, blown up bodies, randomly shot at civilians, razed villages in fashion reminiscent of Genghis Khan, shot cattle and dogs for fun, poisoned food stocks, and generally ravaged the countryside of South Vietnam in addition to the normal ravage of war, and the normal and very particular ravaging which is done by the applied bombing power of this country.

He showed his lack of understanding of the war with this:

we watched while men charged up hills because a general said that hill has to be taken, and after losing one platoon or two platoons they marched away to leave the high for the reoccupation by the North Vietnamese because we watched pride allow the most unimportant of battles to be blown into extravaganzas, because we couldn’t lose, and we couldn’t retreat, and because it didn’t matter how many American bodies were lost to prove that point.

Of course, since the purpose of the battles was to kill the enemy, not occupy worthless hills, so naturally the US didn’t keep every hill it took!

But Jane Fonda’s hero also seemed to know all about the global geopolitical scene as a result of his time down in the trenches:

we cannot fight communism all over the world, and I think we should have learned that lesson by now….

As you may have noticed, this blog hasn’t been to active lately.

Two reasons:

1) I’ve been tied up with a project at work which I grossly underestimated, so instead of writing English I have been coding Java.

2) There really isn’t much going on. Sure, the Democratic Primary season is making lots of noise, little of which I find worth commenting on. But the world situation is relatively stable.

But I’ll be back!

The latest weekly Carnival of the Vanities is here. Check it out.

Steven Den Beste, in a long article on voting patterns, comes up with the brilliant analogy of the Democratic primary race as the card game Hearts. It’s a great match… which is not a surprise given the source.

For once… not about political affairs.

As a professional in the computer industry, I subscribe to Wired Magazine. I was amazed to discover that I could not renew via a web page! This magazine purports to be the voice of the ultra-modern web world.

Pathetic!