Auctions work best when you sell something: You don't need an auctioneer with a gavel. You can do what MCI is doing -- employ an investment banker who pits the bidders off against each other while quietly extolling your company's many virtues and its scarcity. His pitch is simple: "It's your last chance to get into this hot industry." The idea is to create a "feeding frenzy" where the bidders check their intelligence out at the door and bid against each other in a frenzy where their egos are now at stake. Each has to win. I used this technique to sell my company and got more than twice what I thought in my wildest dreams. The key is a good investment banker, who understands how to make a feeding frenzy. Verizon and Qwest are in a feeding frenzy to buy MCI, a disaster neither needs to buy and both would be better off without. But, this morning Verizon lifted its bid to $26 a share. And Qwest's board, I'm sure, is now meeting to figure how much more it should bid. Insanity predictably reigns.

AIG remains the classic Cockroach Stock: By now everybody should know my definition. You see one cockroach. You kill it. Three days later you see another. You kill it. Then a week goes by and another appears. You can never get rid of cockroaches. Ditto with some companies known as Cockroach Companies and their problems. The key to qualifying as a Cockroach Company is a string of unusual problems. Every company has problems. There's a recession. Raw materials prices rise, etc. Those are normal problems. Cockroach companies have unique unusual, scratch-your-head problems -- often involving lying, cheating and stealing.

American International Group fits right in. Last night AIG reported that an "in-depth" examination of its operations had turned up additional accounting improprieties (today's favorite euphemism) going back to 2000 that would reduce its net worth by $2.7 billion, or $1 billion more than it had previously estimated. The company also said that the improper transactions or accounting entries, which appeared to have been designed to achieve results "that would enhance measures important to the financial community," in certain cases involved misrepresentations to A.I.G.'s regulators and independent auditors as well as some of its own management. In addition, A.I.G. said that its internal controls were deficient and that, as a result, its auditor, PricewaterhouseCoopers, would issue an adverse opinion on its internal controls over financial reporting.

A.I.G. has been a Cockroach Stock since mid-February, when it disclosed that Eliot Spitzer, New York's ambitious attorney general, had subpoenaed documents relating to AIG's use of a complex type of insurance that can artificially burnish insurers' financial results. In March, Maurice ("Hank") R. Greenberg, the company's former chief executive, resigned under pressure from its board shortly before he was scheduled to testify under oath to regulators. He never did testify. He took the fifth.

Is AIG going to zero? A whole bunch of my friends on Wall Street are convinced that AIG's business is "fundamentally sound" and these problems are blips on AIG's road to Nirvana. But they also believed that about WorldCom and Enron. AIG remains an excellent short.

This administration continues to act weird about energy. There are so many reasons. Two obvious ones: First, the world is running out of oil. Second, by giving the Saudis all that money, we help them finance radical Islam which ultimately comes back to bite us, viz. all those Saudis that killed 3000 of us in the World Trade Center disaster. OK put Harry's biases to one side and read this fascinating piece from a recent New York Times:

OSLO, April 23 - Car owners in the United States may grumble as the price of gasoline hovers around $2.25 a gallon. Here in Norway, home to perhaps the world's most expensive gasoline, drivers greeted higher pump prices of $6.66 a gallon with little more than a shrug.

Yes, there was a protest from the Norwegian Automobile Association, which said, "Enough is enough."

And a right-wing party in Parliament, the Progress Party, once again called for a cut in gasoline taxes, which account for about 67 percent of the price.

But "those critics are but voices in the wilderness," said Torgald Sorli, a radio announcer with the Norwegian Broadcasting Corporation who often discusses transportation issues. "We Norwegians are resigned to expensive gasoline. There is no political will to change the system."

Norway, the world's third-largest oil exporter, behind Saudi Arabia and Russia, has been made wealthy by oil. Last year alone, oil export revenue surged 19 percent, to $38 billion.

But no other major oil exporter has tried to reel in its own fuel consumption with as much zeal as Norway. These policies have resulted in Norwegians consuming much less oil per capita than Americans -- 1.9 gallons a day versus almost 3 gallons a day in the United States- and low car ownership rates. On city streets and rural roads, fuel-efficient Volkswagens and Peugeots far outnumber big sport utility vehicles.

[Norway's gasoline policies stand in contrast to those in the United States, where President Bush made cheaper gasoline a priority during his discussion of energy policy at his news conference on Thursday.]

Gasoline, of course, is not the only expensive commodity in Norway, a traditionally frugal and highly taxed nation. At a pub in Oslo, for instance, a pint of beer might cost the equivalent of $12 and an individual frozen pizza $16. But expensive gasoline is rare among large oil-producing countries that often subsidize fuel for their citizens. Gasoline prices in Norway -- with a currency, the krone, strong in comparison with the dollar -- have climbed 30 percent since 1998, outpacing a 15 percent increase in the consumer price index in that period, the national statistics bureau said.

Having the world's highest gasoline prices is just one strategy to combat greenhouse gases in this redoubt of welfare capitalism and strict environmental laws. Overall energy consumption, especially of electricity, is quite high, however, with Norway blessed with not just oil but ample hydropower resources.

Norway not only taxes its gasoline. Norwegians also pay automobile taxes as high as $395 a year for each vehicle, and in Oslo there is even a "studded-tire" fee of about $160 for vehicles with all-terrain tires that tear up asphalt more quickly in the winter.

Then there are the taxes on new passenger vehicles that can increase the price of imported automobiles. Norway has no auto manufacturing industry aside from an experiment to produce electric cars, and economists have suggested that that has made it easier to limit automobile use in Norway because there is no domestic industry to lobby against such decisions as in neighboring Sweden, home of Saab and Volvo.

Norway designed the duties to make large-engine sport utility vehicles much costlier than compact cars. For instance, a high-end Toyota Land Cruiser that costs $60,000 in the United States might run as much as $100,000 in Norway.

Economists argue that gasoline prices and other auto taxes in Norway are not so expensive when measured against the annual incomes of Norwegians, among the world's highest at about $51,700 a person, or the shorter workweek of about 37.5 hours that is the norm here. (Norwegians also get five weeks of vacation a year.) ...

In Oslo, as in other European capitals, there is ample public transportation, including an express airport train that whisks travelers to the international airport from downtown in 20 minutes. ...

Perhaps as a result of such policies, Norway has lower levels of car ownership than other European countries, with 427 cars per 1,000 people in 2003 compared with more than 500 cars per 1,000 people in both France and Germany, according to the Economist Intelligence Unit. The United States has more than 700 cars per 1,000 people....

Caution about oil's risks is common in Norway. The government created the Petroleum Fund more than a decade ago as a repository for most of the royalties it receives from oil production. The $165 billion fund, overseen by the central bank, is intended for the day when oil resources in the North Sea start to dry up. Sverre Lodgaard, director of the Norwegian Institute of International Affairs, said Norway had a responsibility to manage its oil resources soberly because of its support of worldwide limitations on greenhouse-gas emissions. ...

"We are engaged on this front," Mr. Lodgaard said. "It is difficult for us to view the example of the United States, which is overconsuming to an incredible extent."

The United States, which uses about a quarter of the world's daily oil consumption, had the cheapest gasoline prices of the 27 industrial countries measured by the International Energy Agency in its most recent analysis of fuel prices. Taxes accounted on average for just 20 percent of the price of gasoline in the United States, the agency said.

The Hitchhikers Guide to the Galaxy is not a very interesting movie. You can happily skip it. We saw it on Saturday night.

What does your bank pay on interest? The Bank of America pays 0.60% a year on its savings accounts. My local bank, Independence Community Bank, pays 2.25%. It's worth checking. Even at these miserable rates, interest can add up. New York City floaters are yielding almost 3% triple tax-free. If your broker hasn't told you about these, you need to call mine.

The benefits of being rich.
Now that Jake and Irma were rich, they decided to add a little culture to their lives. So they went to New York's Metropolitan Museum of Art.

"This is a fine bust of Michelangelo," said Jake.
"That's not Michelangelo," said their guide. "That's Leonard da Vinci."
Irma, embarrassed by her husband's ignorance, tugged at his sleeve.
"Jake," she hissed, "why do you have to open your big mouth when you don't know a single thing about the New Testament."


Harry Newton

This column is about my personal search for the perfect investment. I don't give investment advice. For that you have to be registered with regulatory authorities, which I am not. I am a reporter and an investor. I make my daily column -- Monday through Friday -- freely available for three reasons: Writing is good for sorting things out in my brain. Second, the column is research for a book I'm writing called "In Search of the Perfect Investment." Third, I encourage my readers to send me their ideas, concerns and experiences. That way we can all learn together. My email address is . You can't click on my email address. You have to re-type it . This protects me from software scanning the Internet for email addresses to spam. I have no role in choosing the Google ads. Thus I cannot endorse any, though some look mighty interesting. If you click on a link, Google may send me money. That money will help pay Claire's law school tuition. Read more about Google AdSense, click here and here.
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