Investment grade debt

Most actual investment (as opposed to places to park your money) involves buying debt. Or to put it another way, you loan money with the hope of making more later on. Bonds are the most common way to do direct investment, you have a time frame and a specific rate of interest. Stock IPO’s are another way of investing in a company. 

When you buy a bond from a company, you look at how likely it is that you’ll be repaid based on the business involved. If its a good company with good products, they will create profits and be able to pay you your interest. But what about municipal and sovereign debt? There are no profits to be had, just ongoing tax collection. On the face of it, that seems pretty safe, that’s what governments do after all. But all isn’t well in tax land. Europe continues to crumble, their very currency may go away. When that happens, there is an excellent chance that the folks that loaned them those Euros will be left holding the bag. We’re also hearing about more and more municipalities declaring bankruptcy. A casual glance at states like California make you wonder how safe those bonds are as well. 
My (perhaps not so humble) suggestion is to invest in productive, profitable businesses instead relying on tax collection for your investment. It’s common sense really, invest in things that have upside! Or think of it this way, how much do you trust politicians? How much do you trust that they’ll do the smart thing with your money? More and more we’re seeing what that trust will get you, a lot less money.

Well dog my cats!

In my mind there have been three important, long lasting comic strips that have defined the genre. Peanuts, Doonsbury, and Pogo. What? You haven’t heard of Pogo? Walt Kelly, the creator, died in the mid 70’s so those of you in my generation or later can be forgiven for not being familiar with it. Kelly was able to use swampland animals to make pithy comments on culture and skewer politicians that went too far. His most famous series involved making fun of Joe Mcarthy and the House Unamerican activities committee. It was pretty bold back then. Not only that, Kelly was a master illustrator. His panels are masterpieces, his drawing and lettering are still unsurpassed. He was able to do slapstick very well because of the artistry of his drawings. His lettering did an amazing job of differentiating between characters and their personalities. The strip ran for 30 years or so and had a tremendous influence.

So where the reprints? It’s a fair question. I don’t have a good answer for it. There seems to have been a sort of curse when it came to Pogo reprints. There were a bunch of them done in the 60’s or 70’s I think but they weren’t particularly comprehensive. My father has a handful of these and this is where I discovered Pogo. I once brought some up and let my roommate in college read some of them and he got hooked too. Eclipse comics tried to reprint some of the old Pogo comic books and they went out of business after publishing only 5 of them. Fantagraphics started a reprint series and got about 10 thin soft cover books out. That petered out too, and I never did find out why.

Fantagraphics announced that they were going to do a proper reprint of all of the Pogo books, starting from the very first ones going all the way through to the end of the series. Things stalled for years, most people assumed that it just wasn’t going to happen. Fantagraphics finally had a ship date, and I got really excited, so I ordered the book. That was in June 2010. I just got the book today.

It did take a while to get here, but it is a beautiful book. It’s bigger than the Peanuts books Fantagraphics is doing, and it’s a good thing. Kelly wrote for the larger panels that were available in papers back then. His artwork is filled with amazing details and you really do need to have larger panels to take advantage of it. It took a long time, but the wait has been worth it. I’m going to keep my fingers crossed and hope that they are able to release the entire series, Walt Kelly’s legacy has been waiting too long!

Italy is taking on water

Italy has now officially gone over the “Oh Shit!” threshold for financing its debt. It can’t roll over its debt obligations when the interest is north of 7%. There are talks of the IMF getting involved which means that the US taxpayers may end up footing some of this before its over. Germany is supposedly looking at drafting language to allow countries to leave the Euro zone. They have gone from wanting to do anything to keep the Euro going to this in the span of a few weeks. Greece was manageable, but Italy is not. If they are able to scramble and eek out some sort of something or other to keep Italy from defaulting, it will totally tap out Europe. What about the other countries teetering on the brink? Spain, Portugal, Ireland. Hell, even France isn’t looking so hot.

It’s looking bad. I hate sounding like a broken record, but it is painful to watch this unfold. There’s no question that Europe’s issues are going to depress everything even if they manage not to drag anyone else down with them. I really worry that the Obama administration, or even the Fed on its own (can they do that?) will jump in and try to bail out Italy. The IMF is a back door way of doing it, but there may need to be much more cash needed than is in the coffers of the IMF. It’s not as though we have any money to send them of course, any aid we send would be in the form of printing vast sums of money, again. At some point, worthless currency will be chasing bad debt. It would have to come to a crashing halt at some point, right?

What needs to happen is what econo-wonks call “deleveraging”. In regular speak, that means writing off and clearing away debt. Clearly, there is far more debt than there is funds to pay for it, so a lot of people that bought those bonds will have lost all that money that they “invested.” Treasury bonds have microscopic yields right now. As James Grant has pointed out, you earn interest in exchange for debt. Right now, treasuries will pay you less than the inflation rate, so you’d be losing money. Money market funds are currently paying a single basis point in interest. That is one one hundredth of a percentage point. As Mr. Grant says, it is “the profitless assumption of risk.” Every place you put your money has risk, if you put it in something that pays you nothing, all you have is risk…

It looks like everything is bound to go down in value during this mess, everyone is going to lose something. Gold is looking like a good way to store your value… probably. I still like my idea, wait for stocks to take a big hit and then get my money out of the money market fund. I’m hoping to jump in at a point where most of the losses have already occurred, but trying to call the bottom of a market is always a fool’s errand. I don’t have a good idea when the best time will be for buying stuff, but I hope I know it when I see it!

 

Hold on folks, it’s going to get ugly!

Saw the doc

When I went to the doc last, I wasn’t really having one of my good days, and it sounds like that clouded my perception of what happened and the advice I was given. They still haven’t gotten back the results of the JC virus antibodies test, but regardless of what it comes back as, I will continue to take tysabri. My doc explained that he doesn’t consider me to be a high risk patient for PML since I have never had any other MS drugs or anything else that could mess up my immune system. He also came as close as I think he could to saying that it would be a really bad idea to stop this particular treatment because of the outlook otherwise.

That’s a relief really. This drug has a really good record of reducing new lesions and slowing the progression of the disease. As a bonus, the side effect I have been getting from it has been me feeling better for the couple weeks after. There are now other, oral, treatments on the market now that seem to have the same effectiveness against MS, but also have more common nasty side effects like heart problems, etc. There are also some drugs that need to be injected either every other day or once a week that don’t work as well, and they have the predictable side effect of making you feel like you have the flu…

So, like I said, I’m glad I’ll be staying on this. They’ll keep monitoring me for signs of PML, but it’s still a rather rare thing. 200 people out of 50,000 have gotten it, and a significant number of them had immune suppressing treatments too. I like my chances…

I’m also going to start going to physical therapy. Not really sure what’s involved with that, but I think it’s a good idea. My muscle mass has gone down considerably in general, and in my legs especially. Thought it would be a good idea to get an actual workout plan targeting what I’ve got going on instead of me just killing myself on the bike or something. I don’t know what impact this will have with work, but it’s something I’ll have to work out.

So that’s the news, mostly more of the same, and that’s a good thing as far as I’m concerned.