In Search of the Perfect Investment

This morning:  Japan stockmarket is down 2.4%. The Saudi stockmarket closed down 6.8% and is now down 11.6% over the past 3 trading days (they are open on Sunday). But our futures are up, slightly. More people are being employed. And Warren Buffett is, as ever, bullish on America.

Yesterday we were down heavily (except for gold and silver). One big concern for the markets is that oil is over $100.

Don’t forget: it was only three years ago that oil went to $147 a barrel, then promptly fell  to $32 a barrel.

If stocks do fall today, it may be time to bring out the flag, “Stocks on Sale.”

Never fight a land war in Asia. Could we cure our deficit by bringing the troops home from Iraq and Afghanistan? Not completely. But it sure would make a difference.

U.S. Secretary of Defense Robert Gates, speaking at West Point, said last week that “Any future defense secretary who advises the president to again send a big American land army into Asia or into the Middle East or Africa should have his head examined.” In saying this, Gates was repeating a dictum laid down by Douglas MacArthur after the Korean War, who urged the United States to avoid land wars in Asia. Given that the United States has fought four major land wars in Asia since World War II — Korea, Vietnam, Afghanistan and Iraq — none of which had ideal outcomes, it is useful to ask three questions: First, why is fighting a land war in Asia a bad idea? Second, why does the United States seem compelled to fight these wars? And third, what is the alternative that protects U.S. interests in Asia without large-scale military land wars?

For the full Stratfor report read here.

I get about 100 spam emails each day. Norton Internet Security actually impresses me with the job it does sorting them and protecting me from the nasties out there.  About $70 a year. Worth every penny. Click here.

Why isn’t Wall Street in Jail? Matt Taibbi’s latest Rolling Stone piece. Click here.

New thinking on aches and pains. Rest is not good. Read on.

For Tendon Pain, Think Beyond the Needle
By JANE E. BRODY of the New York Times

Two time-honored remedies for injured tendons seem to be falling on their faces in well-designed clinical trials.

The first, corticosteroid injections into the injured tendon, has been shown to provide only short-term relief, sometimes with poorer long-term results than doing nothing at all.

The second, resting the injured joint, is supposed to prevent matters from getting worse. But it may also fail to make them any better.

Rather, working the joint in a way that doesn’t aggravate the injury but strengthens supporting tissues and stimulates blood flow to the painful area may promote healing faster than “a tincture of time.”

And researchers (supported by my own experience with an injured tendon, as well as that of a friend) suggest that some counterintuitive remedies may work just as well or better.

A review of 41 “high-quality” studies involving 2,672 patients, published in November in The Lancet, revealed only short-lived benefit from corticosteroid injections. For the very common problem of tennis elbow, injections of platelet-rich plasma derived from patients’ own blood had better long-term results.

Still, the authors, from the University of Queensland and Griffith University in Australia, emphasized the need for more and better clinical research to determine which among the many suggested remedies works best for treating different tendons.

My own problem was precipitated one autumn by eight days of pulling a heavy suitcase through six airports. My shoulder hurt nearly all the time (not a happy circumstance for a daily swimmer), and trying to retrieve something even slightly behind me produced a stabbing pain. Diagnosis: tendinitis and arthritis. Treatment: rest and physical therapy.

Two months of physical therapy did help somewhat, as did avoiding motions that caused acute pain. The therapist had some useful tips on adjusting my swimming stroke to minimize stress on the tendon while the injury gradually began to heal.

The following spring, although I still had some pain and feared a relapse, I attacked my garden with a vengeance. Much to my surprise, I was able to do heavy-duty digging and lugging without shoulder pain.

Could the intense workout and perhaps the increased blood flow to my shoulder have enhanced my recovery? A friend, Richard Erde, had an instructive experience.

An avid tennis player at 70, he began having twinges in his right shoulder while playing. Soon, simple motions like slipping out of a shirt sleeve caused serious pain. The diagnosis, based on a physical exam, was injury of the tendon that attaches the biceps muscle of his upper arm to the bones of the shoulder’s rotator cuff.

He was advised to see a rheumatologist, who declined to do a corticosteroid injection and instead recommended physical therapy and rest.

“I stopped playing tennis for a month, and it didn’t help at all,” Mr. Erde told me. “The physical therapist found I had very poor range of motion and had me do a variety of exercises, which improved my flexibility and reduced the pain somewhat.” After two months, he stopped the therapy.

Then several weeks ago, after watching the Australian Open, he thought he should do more to strengthen his arm and shoulder muscles and decided to try playing tennis more vigorously. “The pain started to drop off dramatically,” he said, “and in just 10 days the pain had eased more than 90 percent.”

Tendinopathies, as these injuries are called, are particularly vexing orthopedic problems that remain poorly understood despite their frequency. “Tendinitis” is a misnomer: rarely are there signs of inflammation, which no doubt accounts for the lack of lasting improvement with steroid shots and anti-inflammatory drugs. They may relieve pain temporarily, but don’t cure the problem.

The underlying pathology of tendinopathies is still a mystery. Even when patients recover, their tendons may continue to look awful, say therapists who do imaging studies. Without a better understanding of the actual causes of tendon pain, it’s hard to develop rational treatments, and even the best specialists may be reduced to trial and error. What works best for one tendon – or one patient – may do little or nothing for another.

Most tendinopathies are precipitated by overuse and commonly afflict overzealous athletes, amateur and professional alike. With or without treatment, they usually take a long time to heal – many months, even a year or more. They can be frustrating and often costly, especially for professional athletes and physically active people like me and Mr. Erde.

In a commentary accompanying the Lancet report, Alexander Scott and Karim M. Khan of the University of British Columbia noted that although “corticosteroid injection does not impair recovery of shoulder tendinopathy, patients should be advised that evidence for even short-term benefits at the shoulder is limited.” Like the Australian reviewers, the commentators concluded that “specific exercise therapy might produce more cures at 6 and 12 months than one or more corticosteroid injections.”

Now the question is: What kind of physical therapy gives the best results? Most therapists prescribe eccentric exercises, which involve muscle contractions as the muscle fibers lengthen (for example, when a hand-held weight is lowered from the waist to the thigh). Eccentric exercises must be performed in a controlled manner; uncontrolled eccentric contractions are a common cause of injuries like groin pulls or hamstring strains.

Marilyn Moffat, professor of physical therapy at New York University and president of the World Confederation for Physical Therapy, prefers “very protective” isometric exercises, at least at the outset of treatment until the tendon injury begins to heal. These exercises involve no movement at all, allowing muscles to contract without producing pain. For example, in treating shoulder tendinopathy, she said in an interview, the patient would push the fists against a wall with upper arms against the body and elbows bent at 90 degrees.

In another exercise, the patient sits holding one end of a dense elastic Thera-Band in each hand and, with thumbs up, upper arms at the sides and elbows bent at 90 degrees, tries to pull the hands apart.

“The stronger the shoulder muscles are when the tendinopathy calms down, the better shape the shoulder is in to take over movement without further injury,” Dr. Moffat said. “You don’t want the muscles to weaken, which is what happens when you rest and do nothing. That leaves you vulnerable to further injury.”

How much are they worth? Gadaffi is worth at least $30 billion. That was just what was in one Swiss bank. Mubarak is worth at least $70 billion. Why steal all this money when yo could do such wonders for your people?

The Tyrant Tax
by James Surowiecki of the New Yorker

The protesters who are transforming the Middle East have a long list of grievances. At the top, of course, is the suppression of democratic aspirations by authoritarian regimes. But also important is the dangerous state of the region’s economies. Income growth and business productivity are low. Economic growth and job creation have been too slow to keep up with an expanding workforce, and this has led to high unemployment, particularly among the young. In Egypt, at least twenty-five per cent of young workers are jobless. Inflation, even before the recent spike in food and fuel prices, has been a persistent problem throughout the region, and corruption is endemic. The autocracies of the Arab world have been as economically destructive as they’ve been politically repressive.

That’s no coincidence. Healthy economies need a thriving and independent private sector, where resources are allocated by markets and competition, and where small and medium-sized businesses can flourish. But in most of the Middle East the state and big business are so tightly intertwined as to be indistinguishable, and competition has been discouraged in favor of central planning and private monopolies. It’s hard for entrepreneurs to start and run a business. Minimum capital requirements tend to be high, so you can’t get started without lots of cash, and getting business licenses and registering property are frequently arduous. Political favoritism is rampant, and byzantine regulations are difficult for outsiders to navigate. It’s instructive that the young man whose self-immolation helped set off the protests in Tunisia had had his fruit cart confiscated for violating some government rule.

The stifling of entrepreneurship shrinks opportunity for the young. It has also, the Yale economists Ian Ayres and Jonathan R. Macey have argued, held down the region’s growth rate. The state’s intrusive presence forces much economic activity off the books-in Egypt, eighty-five per cent of small businesses are in the “informal” sector-and this reduces growth, since informal businesses have a hard time getting credit or expanding beyond a certain size. Thus the region’s economies are growing more slowly than they should, and the benefits of economic growth tend to be concentrated in the hands of those lucky enough to work for, or own, companies favored by the state.

Since weak economies eventually give rise to discontent, one might have thought that self-interest would impel autocrats to embrace reform. But, while clinging to the status quo can be dangerous for autocrats, real reform comes with its own risks. After all, in a system of state-controlled capitalism without a large, independent private sector, huge numbers of citizens are dependent on the state for their livelihood in one way or another. In the Arab world, an estimated thirty per cent of the workforce is employed by the state. Strict regulations enable the government to protect its friends in the private sector from competition, and bureaucrats line their own pockets, becoming further indebted to the system. The reliance in most of these countries on food and fuel subsidies likewise increases people’s dependence on the state. The big risk of reforming the system is that it weakens the state’s economic hold over its citizens.

Not surprisingly, when autocratic regimes in the region have tried to change their economies they’ve done so primarily with an eye toward maintaining power. In the past decade, countries like Egypt, Jordan, and Algeria have made vaunted public commitments to reform. But, as a recent study by the political scientist Oliver Schlumberger shows, reform did not, for the most part, aim at introducing genuine free-market competition, the most important feature of a healthy capitalist system. Instead, it strengthened what he calls “patrimonial capitalism”-a system in which the key determinant of success is how close you are to those in power. This helps explain the widespread resentment in Egypt at Gamal Mubarak’s reform program. The program did include real reforms, which made it easier to start new businesses and the like, but it also enriched Mubarak’s cronies, solidifying the hold of powerful insiders on the economy and confirming people’s sense that the system was rigged.

The rising democratic tide in the region might seem to make genuine economic reform more likely. That’s how it worked for much of Eastern Europe after 1989, after all. Yet, in the Middle East, translating political reform into economic progress may be easier said than done. Patrimonial capitalism’s legacy is that many people see reform as a euphemism for corruption and self-dealing. And the dependence on the state that the patrimonial system created has not vanished. Government employment is still the easiest route to a job, and subsidies have become more, not less, important. Indeed, nervous rulers have been less keen to offer real reform than simply to bribe the population into quiescence. Hosni Mubarak, before he left, promised to boost public-employee salaries, as Ali Abdullah Saleh has done in Yemen. In Libya, Muammar Qaddafi has promised to boost some public salaries by a hundred and fifty per cent, and has offered every family in the country four hundred dollars. King Abdullah of Jordan fired his cabinet and increased subsidies, and King Abdullah of Saudi Arabia is giving his people some thirty-five billion dollars in various benefits. What the region needs is less crony capitalism and more competition. What it may get is political reform accompanied by economic stasis. When it comes to solving people’s economic woes, toppling the tyrants could turn out to be the easy part.

The wisdom of Mother Superior. In a convent in Ireland the 98-year-old Mother Superior lay dying.

The nuns gathered around her bed trying to make her last journey comfortable. They tried giving her warm milk to drink, but she refused it.

One of the nuns took the milk back to the kitchen. Then, remembering a bottle of Irish Whiskey that had been received as a gift, she opened it and poured a generous amount into the warm milk.

Back at Mother Superior’s bed, they held the glass to her lips. The frail nun drank a little, then a little more and before they knew it, she had finished the whole glass down to the last drop. As her eyes brightened, the nuns thought it would be a good opportunity to have one last talk with their spiritual leader.

“Mother,” the nuns asked earnestly, “Please give us some of your wisdom before you leave us.”

The Mother Superior raised herself up in bed on one elbow, looked at them and said: “Don’t sell that cow.”

Harry Newton who consulted his friend a Moroccan, who’s spent eons over past years listening to Gadafi’s “speeches” in Arabic or what passes for Gadaffi Arabic. My friend says Gadaffi can’t complete an intelligent sentence. He says “he’s truly nuts.”

Apple’s press conference to announce a new iPad starts later today. I already want one, maybe.