We're all familiar with the bridge to nowhere and it's symbolism as to government waste and incompetence. But even when there is a useful road to somewhere, the government is equally capable of showing its ineptitude.
When I started working in downtown Los Angeles, I noticed that while crawling in the evening rush hour traffic home north on the Hollywood Freeway, I would for a short stretch drive parallel to a usually empty connector ramp going in the opposite direction. I often wondered about such a lightly traveled road at rush hour in the midst of the downtown freeway interchange, but didn't bother to pursue it until recently. I ultimately discovered that it was effectively the direct connector road from the southbound Pasadena Freeway to the eastbound San Bernardino Freeway. Now you would figure that this connector road would be packed with traffic as surely a lot of people want to travel from this portion of the southbound 110 freeway to the eastbound 10 freeway. But it isn't, and the reason is that there's nothing at all to indicate that you can get to the eastbound San Bernardino Freeway using that road. The only signage indicates that the connector ramp will take you to the southbound Hollywood Freeway, which ends just a short distance ahead, and the southbound Santa Ana Freeway, which along with the eastbound San Bernardino Freeway, picks up where the Hollywood Freeway leaves off. However, if you're going south on the Pasadena Freeway, there are better ways to get to the Santa Ana Freeway which most drivers know about.
Actually, there is a technical explanation of why this road is not identified as connecting to the San Bernardino Freeway. Interstate 10, as it makes its way from Santa Monica, California to Jacksonville, Florida (I actually once sought out the eastern start to I-10 in Jacksonville), does not run continuously on a straight line through Los Angeles. Rather, it consists of the Santa Monica Freeway, running from Santa Monica to downtown, and the San Bernardino Freeway, which starts east of downtown and goes on to Florida. These two freeways are about a mile apart in latitude, with the freeways connected by a mile long north south portion of the Golden State Freeway east of downtown. Consequently, if you were driving on the Pasadena Freeway the governmentally correct way to connect from the Pasadena Freeway to the eastbound Interstate 10 would be to continue southbound (on the Harbor Freeway, which like the Pasadena Freeway carries the "110" designation) to the eastbound Santa Monica Freeway, up the Golden State Freeway and then to the San Bernardino Freeway. This way you have connected directly onto the 10 Freeway, as opposed to using the Hollywood Freeway as a one mile transition road. Of course, doing this probably entails driving an extra two miles, which doesn't sound like much. But during rush hour this officially mandated detour could well mean an extra 10 or 15 minute drive.
So the answer is that the government won't tell you the most direct way to get to the San Bernardino freeway because it has placed numerical correctness over logic and driver convenience. And isn't this how government usually works?
Monday, September 26, 2011
Monday, September 12, 2011
Chinese Restaurant Mysteries
Well we're not talking mysteries in the sense of those you see in movies or books, or the allegedly haunted restrooms at the old Hing Lung in the Park on 18th Ave. in San Francisco or the former Golden Palace location in Los Angeles Chinatown. Rather these are just head scratchers that I can't figure out.
Most notable and longest running is the case of Kai's Restaurant on San Gabriel Blvd. in San Gabriel. I remember stopping by there maybe 15 years ago, picking up a dim sum menu, with the intent of going back to eat there shortly thereafter. But when I went back, the restaurant was closed. And every time I went back it was always closed. But it's not like they went out of business. Over the years, there was a Los Angeles County Health Department grading placard in the window, and the restaurant's grade was changed from time to time. Once I went by and saw a worker inside. I tapped on the window, but he just shook his head. I thought perhaps they opened only late at night when I was seldom in that part of the world, so on the rare occasion when I was around there at night I would drive by, but it was still closed. I posted on the Chowhound board, but there were no responses. The first and only Yelp review merely asks if the restaurant ever opens. It now looks like it truly closed, so I guess I'll never solve the mystery.
More recently I have encountered a strange situation at George's House, a longstanding restaurant on Century Blvd. in Inglewood, just east of LAX. A few years ago they moved into a new location in front of a motel, just east of the 405 freeway, in a neighborhood I would describe as sketchy. There was nothing particularly unusual about this arrangement, and the motel was not unlike a number of low rise motels serving the LAX area. George's House makes terrific fried chicken dumplings, fried nice and crispy on the bottom, and fried almost in a single clump. There are four Yelp reviews of George's House, each one giving one star, but none commenting on the dumplings. But it's a little out of the way, so I don't go there regularly. However, having a hankering for their dumplings I decided to drop by last week. I didn't bother to check the address, just keeping a lookout for the motel and the sign that said George's House. However, as I approached what I thought might be the location I saw an abandoned boarded up motel, no restaurant signage, though there were hand drawn Chinese characters written on the building. Since I was coming from the other side of the street I turned at the corner so I could come back and drive right by the front. Turning my car around on this side street, I saw the abandoned George's House signage lying on the ground. Driving by the restaurant I also saw that the front entrance was gated off. Goodbye George, I thought.
But as I drove by, I did notice a car parked in the driveway near the entrance to the motel, so I turned into the driveway and the parking lot. There was a hand drawn sign pointing to the "4687 W. Century Blvd. mail room" so there were additional signs of life. Driving to the corner of the parking lot, while every motel room was heavily boarded up, what appeared to be the back door of the restaurant was open. Walking in, the restaurant indeed was open, though there were no customers inside. The man at the counter started speaking to me in Chinese, but I told him I didn't understand. I asked for two orders of fried chicken dumplings, and within a few minutes my food was ready.
My curiosity was really raised. How can this restaurant stay in business being attached to an empty motel (a sign on the motel's night window says "we cannot legally rent rooms"), with no exterior signage, and a blocked off front entrance? And why did the guy start speaking to me in Chinese, since in this part of town any Asian walking off the street (which would seemingly be an infrequent event) could just as well be Japanese or Korean or Vietnamese? Since the proprietor didn't appear to speak much English I really couldn't chat him up. I did notice Chinese writing on the blackboard on the wall, rather odd for a Chinese restaurant not in someplace like Chinatown or the San Gabriel Valley. I did ask him if they were open every day, and he said yes, which only added to the mystery.
Now I do have a plausible explanation of what might be going on. There are Chinese restaurants whose primary source of business is visiting Chinese tour groups. While we've all seen tour groups dining at established Chinese restaurants, I'm talking about Chinese restaurants that have few customers aside from Chinese tourists. We saw this ourselves in the remote town of Golden, British Columbia, which served authentic Chinese food in the middle of nowhere, and which actually closes down once tourist season is over. There was a Chinese restaurant of this ilk near LAX, Capri Garden in what was the Howard Johnson Hotel on Airport Blvd. and Manchester. From what I could tell the Howard Johnson was a full service operation for Taiwanese tourists--most of the hotel guests were Taiwanese tourists and the restaurant served authentic Chinese food. However the hotel was recently sold and remodeled, and no longer has a restaurant. Perhaps George's House has filled this void.
Most notable and longest running is the case of Kai's Restaurant on San Gabriel Blvd. in San Gabriel. I remember stopping by there maybe 15 years ago, picking up a dim sum menu, with the intent of going back to eat there shortly thereafter. But when I went back, the restaurant was closed. And every time I went back it was always closed. But it's not like they went out of business. Over the years, there was a Los Angeles County Health Department grading placard in the window, and the restaurant's grade was changed from time to time. Once I went by and saw a worker inside. I tapped on the window, but he just shook his head. I thought perhaps they opened only late at night when I was seldom in that part of the world, so on the rare occasion when I was around there at night I would drive by, but it was still closed. I posted on the Chowhound board, but there were no responses. The first and only Yelp review merely asks if the restaurant ever opens. It now looks like it truly closed, so I guess I'll never solve the mystery.
More recently I have encountered a strange situation at George's House, a longstanding restaurant on Century Blvd. in Inglewood, just east of LAX. A few years ago they moved into a new location in front of a motel, just east of the 405 freeway, in a neighborhood I would describe as sketchy. There was nothing particularly unusual about this arrangement, and the motel was not unlike a number of low rise motels serving the LAX area. George's House makes terrific fried chicken dumplings, fried nice and crispy on the bottom, and fried almost in a single clump. There are four Yelp reviews of George's House, each one giving one star, but none commenting on the dumplings. But it's a little out of the way, so I don't go there regularly. However, having a hankering for their dumplings I decided to drop by last week. I didn't bother to check the address, just keeping a lookout for the motel and the sign that said George's House. However, as I approached what I thought might be the location I saw an abandoned boarded up motel, no restaurant signage, though there were hand drawn Chinese characters written on the building. Since I was coming from the other side of the street I turned at the corner so I could come back and drive right by the front. Turning my car around on this side street, I saw the abandoned George's House signage lying on the ground. Driving by the restaurant I also saw that the front entrance was gated off. Goodbye George, I thought.
But as I drove by, I did notice a car parked in the driveway near the entrance to the motel, so I turned into the driveway and the parking lot. There was a hand drawn sign pointing to the "4687 W. Century Blvd. mail room" so there were additional signs of life. Driving to the corner of the parking lot, while every motel room was heavily boarded up, what appeared to be the back door of the restaurant was open. Walking in, the restaurant indeed was open, though there were no customers inside. The man at the counter started speaking to me in Chinese, but I told him I didn't understand. I asked for two orders of fried chicken dumplings, and within a few minutes my food was ready.
My curiosity was really raised. How can this restaurant stay in business being attached to an empty motel (a sign on the motel's night window says "we cannot legally rent rooms"), with no exterior signage, and a blocked off front entrance? And why did the guy start speaking to me in Chinese, since in this part of town any Asian walking off the street (which would seemingly be an infrequent event) could just as well be Japanese or Korean or Vietnamese? Since the proprietor didn't appear to speak much English I really couldn't chat him up. I did notice Chinese writing on the blackboard on the wall, rather odd for a Chinese restaurant not in someplace like Chinatown or the San Gabriel Valley. I did ask him if they were open every day, and he said yes, which only added to the mystery.
Now I do have a plausible explanation of what might be going on. There are Chinese restaurants whose primary source of business is visiting Chinese tour groups. While we've all seen tour groups dining at established Chinese restaurants, I'm talking about Chinese restaurants that have few customers aside from Chinese tourists. We saw this ourselves in the remote town of Golden, British Columbia, which served authentic Chinese food in the middle of nowhere, and which actually closes down once tourist season is over. There was a Chinese restaurant of this ilk near LAX, Capri Garden in what was the Howard Johnson Hotel on Airport Blvd. and Manchester. From what I could tell the Howard Johnson was a full service operation for Taiwanese tourists--most of the hotel guests were Taiwanese tourists and the restaurant served authentic Chinese food. However the hotel was recently sold and remodeled, and no longer has a restaurant. Perhaps George's House has filled this void.
Sunday, September 4, 2011
Boron, Edwards and Jetliners in Mothballs
As travellers between the two cities know, there is only one practical driving route between Los Angeles and Las Vegas, Interstate 15 through the Cajon Pass. Under good conditions, which usually prevail, the ride is a little under four hours. However, at the start and end of holiday weekends like this, it can take twice that amount of time or longer as Angelenos queue to or from Vegas. Indeed last night we heard about somebody who took 11 hours to drive back from Las Vegas last month due to a combination of bad traffic and bad weather. We avoid Las Vegas if it is at all crowded, so when it once took a mere six hours due to highway construction I was rather upset at that extra travel time.
Before we headed back from Vegas to Los Angeles this past Friday afternoon I fortuitously noted a large smoke cloud in the distance to the north of Las Vegas. Grabbing my blackberry and searching "Las Vegas fire" I found out that it was a fire in the remote Sheep Valley, well out of the Las Vegas area. However, Google also picked up another item about a fire in the Cajon Pass that had closed I-15. Now since we were three hours away from the fire we pressed on, hoping that the highway would be open by the time we got there, but thinking about plans if it wasn't. Unfortunately I did not bring a California map with me so I had to visualize possible alternate routes. However, we were able to catch radio reports that described the best alternate routes. The reports also indicated that I-15 southbound would probably be closed overnight because the pavement had burned.
Arriving in Barstow after 5pm I headed straight for the California Welcome Center in the Tanger Outlet Mall. I was hoping they were still open so I could get a look at a highway map and see what our options were. The helpful clerk suggested a long route, Highway 58 to Mojave to Highway 14 through the Antelope Valley, or the shorter route of staying on I-15 and getting off at Pearblossom Highway, just before the closure point. Mrs. Chandavkl seemed dubious about the long way around, thinking that it would take us six hours to get home that way. (She doesn't have a very good sense of geography.) Also, southbound traffic on I-15 had been light through Barstow so while there would be a bottleneck approaching the closure point at I-395 the delay might not be longer than the extra time it took to detour on Highway 58, so I tentatively decided we would stick it out on I-15. However, before we left we stopped at the Van Heusen store. As we were leaving a woman comes in and starts talking to the clerk (who had advised us not to even try driving back to Los Angeles) that it had taken her hours to reach Barstow on northbound I-15, which had not been closed and that the southbound side was backed up for miles from the closure point. That made it easy to decide to take Highway 58. Mrs. Chandavkl freaked out, fretting we wouldn't get home until midnight because this route would also be clogged by drivers avoiding I-15. I assured her we'd get home at 9pm as most drivers wouldn't be aware of any problem until they got to Victorville, at which point Highway 58 would not be an option.
From my point of view, any time lost taking Highway 58 would be worth it as I had never travelled this portion of the highway before. While Highway 58 was generally flat and boring, we did pass Twenty Mule Team Highway, and drove by the town of Boron, where the raw material for Borax and boric acid was mined. We drove along the north edge of Edwards Air Force base, marveling at how many people would drive this far to see Space Shuttle landings in the middle of nowhere. And as we headed down Highway 14 we saw what looked like a large commercial airport, but which was really a parking spot for commercial airliners that have been removed from service.
As we headed through the Antelope Valley, where we hadn't been in probably a dozen years, we turned on the radio to hear that I-15 southbound had just been reopened. "See," Mrs. Chandavkl said. "We should have stayed on I-15." I told her we could have been delayed just as long by being stuck in traffic there, since the I-15 would still have been closed when we arrived there, though I don't think she bought that. The rest of the ride back was also interesting, too. Lancaster and Palmdale were modern communities with all of the amenities of urban living. We could not imagine how our neighbor's daughter would drive daily at 5am from the Antelope Valley to her mom's house to drop off her kids before she went to work in Shadow Hills. We arrived home a little after 8:45 pm, which I figured was an extra 45 mile drive taking an extra 40 minutes over normal traffic conditions. Certainly it paid for itself in an interesting ride and not having the uncertainty of being trapped in traffic.
As a post script I turned on the TV news at 10pm. There, standing on the freeway entrance to the southbound I-15 was a news reporter, showing that while traffic to Las Vegas on the northbound I-15 was flowing smoothly, the southbound I-15 was at a standstill, as the backup from the earlier closure had yet to clear out. I read in the newspaper the next morning about the traffic chaos at the I-15 southbound closure as there were no signs or directions of where to go. One driver said it took 2 hours to travel 20 miles. So if we stayed on I-15, we might not have gotten home until midnight.
Before we headed back from Vegas to Los Angeles this past Friday afternoon I fortuitously noted a large smoke cloud in the distance to the north of Las Vegas. Grabbing my blackberry and searching "Las Vegas fire" I found out that it was a fire in the remote Sheep Valley, well out of the Las Vegas area. However, Google also picked up another item about a fire in the Cajon Pass that had closed I-15. Now since we were three hours away from the fire we pressed on, hoping that the highway would be open by the time we got there, but thinking about plans if it wasn't. Unfortunately I did not bring a California map with me so I had to visualize possible alternate routes. However, we were able to catch radio reports that described the best alternate routes. The reports also indicated that I-15 southbound would probably be closed overnight because the pavement had burned.
Arriving in Barstow after 5pm I headed straight for the California Welcome Center in the Tanger Outlet Mall. I was hoping they were still open so I could get a look at a highway map and see what our options were. The helpful clerk suggested a long route, Highway 58 to Mojave to Highway 14 through the Antelope Valley, or the shorter route of staying on I-15 and getting off at Pearblossom Highway, just before the closure point. Mrs. Chandavkl seemed dubious about the long way around, thinking that it would take us six hours to get home that way. (She doesn't have a very good sense of geography.) Also, southbound traffic on I-15 had been light through Barstow so while there would be a bottleneck approaching the closure point at I-395 the delay might not be longer than the extra time it took to detour on Highway 58, so I tentatively decided we would stick it out on I-15. However, before we left we stopped at the Van Heusen store. As we were leaving a woman comes in and starts talking to the clerk (who had advised us not to even try driving back to Los Angeles) that it had taken her hours to reach Barstow on northbound I-15, which had not been closed and that the southbound side was backed up for miles from the closure point. That made it easy to decide to take Highway 58. Mrs. Chandavkl freaked out, fretting we wouldn't get home until midnight because this route would also be clogged by drivers avoiding I-15. I assured her we'd get home at 9pm as most drivers wouldn't be aware of any problem until they got to Victorville, at which point Highway 58 would not be an option.
From my point of view, any time lost taking Highway 58 would be worth it as I had never travelled this portion of the highway before. While Highway 58 was generally flat and boring, we did pass Twenty Mule Team Highway, and drove by the town of Boron, where the raw material for Borax and boric acid was mined. We drove along the north edge of Edwards Air Force base, marveling at how many people would drive this far to see Space Shuttle landings in the middle of nowhere. And as we headed down Highway 14 we saw what looked like a large commercial airport, but which was really a parking spot for commercial airliners that have been removed from service.
As we headed through the Antelope Valley, where we hadn't been in probably a dozen years, we turned on the radio to hear that I-15 southbound had just been reopened. "See," Mrs. Chandavkl said. "We should have stayed on I-15." I told her we could have been delayed just as long by being stuck in traffic there, since the I-15 would still have been closed when we arrived there, though I don't think she bought that. The rest of the ride back was also interesting, too. Lancaster and Palmdale were modern communities with all of the amenities of urban living. We could not imagine how our neighbor's daughter would drive daily at 5am from the Antelope Valley to her mom's house to drop off her kids before she went to work in Shadow Hills. We arrived home a little after 8:45 pm, which I figured was an extra 45 mile drive taking an extra 40 minutes over normal traffic conditions. Certainly it paid for itself in an interesting ride and not having the uncertainty of being trapped in traffic.
As a post script I turned on the TV news at 10pm. There, standing on the freeway entrance to the southbound I-15 was a news reporter, showing that while traffic to Las Vegas on the northbound I-15 was flowing smoothly, the southbound I-15 was at a standstill, as the backup from the earlier closure had yet to clear out. I read in the newspaper the next morning about the traffic chaos at the I-15 southbound closure as there were no signs or directions of where to go. One driver said it took 2 hours to travel 20 miles. So if we stayed on I-15, we might not have gotten home until midnight.
Friday, August 26, 2011
Amazon and the Sales Tax--It's The Constitution, Stupid
Most residents of California, as well as selected other states are aware of the struggle involving Amazon.com and other online retailers over the collection of sales tax. This has resulted in a strange set of bedfellows and combatants, as businesses and consumers take different sides of the issue depending on whose ox is being gored. But despite what you might hear from the media and politicians about fairness, tax loopholes and what's right, this is first and foremost a question of constitutional law and federal power over interstate commerce.
To narrow the legal issue, instead of focusing on Amazon.com or Overstock or whomever, just say you're a California resident who likes to keep your closet clean, so you regularly dispose of clothing you no longer wear. Perhaps in the old days you gave them away to Goodwill, but more recently, you've been going on EBay and selling these items to people around the country. So let's look at that pair of shoes you sold to a buyer on Kodiak Island. Do you have to collect Alaskan sales tax on that transaction and remit it to the Alaskan government, or for that matter, pay income tax to Alaska on any profit you made? Of course not. The reason is that you're here in California and Alaska has no jurisdiction over you, and under the U.S. Constitution they cannot make you collect or pay tax. Of course, this transaction is not tax free. Alaska, like any other state, requires the buyer to remit an equivalent "use tax" on the retail purchase of goods where the seller is beyond the state's jurisdiction. But for some reason, people just aren't as diligent in paying their state use tax liability as they are in paying state income taxes. (Fortunately I make few online retail purchases, so I don't need to confront that dilemma.)
So for the same reason you don't pay taxes to Alaska, neither does Amazon.com. Now you might think that Amazon.com is bigger than you are, so they should be required to collect sales or use tax on sales to Alaskan residents where you aren't. But don't forget we are talking Constitutional principles here, and under the Constitution size doesn't matter. Under the most recent constitutional interpretation by the Supreme Court, unless a seller is physically present in a state, it is not liable to collect sales and use tax.
Of course the states know this, so how can they try to make Amazon.com collect their taxes? Well, by redefining physical presence in their state. The most common attack is the click-through referral. If a California resident is an Amazon affiliate and has a website that links to Amazon's, and if Amazon pays the Californian a fee for each click through, California says Amazon is present in California in the person of the affiliate. Now this isn't entirely far fetched, as a taxpayer may be present in a state by employing independent contractors, e.g., using a warehouse in the state owned by a third party to deliver local sales. However, using a California affiliate click through does seem to stretch the concept of presence pretty far. (California has set a minimum $500,000 sales threshold so most of you Ebay sellers are safe.) In any event, Amazon merely avoids this potential presence by getting rid of all of its California affiliates, so in the end it may be that these associates suffer the most. California also says that because an Amazon subsidiary is located in California, which is charged with Kindle research, that there is attributional presence in California. This is a more interesting approach that could possibly be upheld by a court, as are other activities which Amazon may engage in under an economic presence concept applied by a target state.
Now there are any number of ways this dilemma will play out. Amazon is trying to have California voters approve a ballot initiative to repeal the new California law. California is proposing a new version of the law that would forbid contrary ballot initiatives. Congress does have the power to pass legislation that would require the Amazons of the world to collect the tax with some minimal level of economic presence. Or the Supreme Court may or may not reinterpret the constitution to align with computer age business practices (certainly Justice Scalia wouldn't go for this) and discard the physical presence test for an economic presence test. Only time will tell who wins this Amazon battle.
To narrow the legal issue, instead of focusing on Amazon.com or Overstock or whomever, just say you're a California resident who likes to keep your closet clean, so you regularly dispose of clothing you no longer wear. Perhaps in the old days you gave them away to Goodwill, but more recently, you've been going on EBay and selling these items to people around the country. So let's look at that pair of shoes you sold to a buyer on Kodiak Island. Do you have to collect Alaskan sales tax on that transaction and remit it to the Alaskan government, or for that matter, pay income tax to Alaska on any profit you made? Of course not. The reason is that you're here in California and Alaska has no jurisdiction over you, and under the U.S. Constitution they cannot make you collect or pay tax. Of course, this transaction is not tax free. Alaska, like any other state, requires the buyer to remit an equivalent "use tax" on the retail purchase of goods where the seller is beyond the state's jurisdiction. But for some reason, people just aren't as diligent in paying their state use tax liability as they are in paying state income taxes. (Fortunately I make few online retail purchases, so I don't need to confront that dilemma.)
So for the same reason you don't pay taxes to Alaska, neither does Amazon.com. Now you might think that Amazon.com is bigger than you are, so they should be required to collect sales or use tax on sales to Alaskan residents where you aren't. But don't forget we are talking Constitutional principles here, and under the Constitution size doesn't matter. Under the most recent constitutional interpretation by the Supreme Court, unless a seller is physically present in a state, it is not liable to collect sales and use tax.
Of course the states know this, so how can they try to make Amazon.com collect their taxes? Well, by redefining physical presence in their state. The most common attack is the click-through referral. If a California resident is an Amazon affiliate and has a website that links to Amazon's, and if Amazon pays the Californian a fee for each click through, California says Amazon is present in California in the person of the affiliate. Now this isn't entirely far fetched, as a taxpayer may be present in a state by employing independent contractors, e.g., using a warehouse in the state owned by a third party to deliver local sales. However, using a California affiliate click through does seem to stretch the concept of presence pretty far. (California has set a minimum $500,000 sales threshold so most of you Ebay sellers are safe.) In any event, Amazon merely avoids this potential presence by getting rid of all of its California affiliates, so in the end it may be that these associates suffer the most. California also says that because an Amazon subsidiary is located in California, which is charged with Kindle research, that there is attributional presence in California. This is a more interesting approach that could possibly be upheld by a court, as are other activities which Amazon may engage in under an economic presence concept applied by a target state.
Now there are any number of ways this dilemma will play out. Amazon is trying to have California voters approve a ballot initiative to repeal the new California law. California is proposing a new version of the law that would forbid contrary ballot initiatives. Congress does have the power to pass legislation that would require the Amazons of the world to collect the tax with some minimal level of economic presence. Or the Supreme Court may or may not reinterpret the constitution to align with computer age business practices (certainly Justice Scalia wouldn't go for this) and discard the physical presence test for an economic presence test. Only time will tell who wins this Amazon battle.
Friday, August 12, 2011
The Fallacy of Citibank's Reverse Stock Split
Stock splits may be one of the more misunderstood subjects when it comes to the stock market. Announcement of a stock split is usually hailed as good news, supposedly because it lowers the price of the stock, making it more "affordable" to future potential investors. However, most informed observers understand that this is silly, particularly when viewing the ownership of a corporation as a pie, and the shares of stock as slices of the pie. No matter if the pie is divided into ten million pieces, or after a two-for-one split, twenty million pieces, the value of the pie is the same, and the relative value of shares is unaffected by the split (or lack of split). The fact that Berkshire Hathaway doesn't split and trades for $100,000 a share belies the argument that it's bad for a stock's share price to get too high.
There is, however, one situation where a stock split does affect the total valuation of a company, and the surprising thing it's the corporation itself that seems to be oblivious to this fact. This is the case of the reverse split, where multiple shares of stock are surrendered for a single share. In the stock market there is a stigma for companies whose shares are priced too low. As such, there may be a temptation for a company to try to eliminate this stigma via a reverse split. However, in many cases the reverse split is detrimental to the shareholder of the company. The reason is that while the value of a share of stock is generally based on the allocable fractional value of the entire corporation, there is also some residual value to a share of stock as a trading vehicle. This is demonstrated by the shares of ghost companies, companies that have gone through bankruptcy, with liabilities well in excess of assets and shareholder equity clearly being wiped out. Yet shares of these companies can trade at 20, 50, or even 75 cents per share. Obviously, there is no corporate value to these shares, merely the value as a trading vehicle. In most cases this trading value is negligible compared to the corporate value, but in the case of a lower priced share of stock it could have some significance.
It is with this background that I laughed when Citibank announced a 1-for-10 reverse split to enhance its share price. At $4.50 per share, the stock price for this corporate giant was embarrassingly low, and cutting the outstanding shares by 90 percent would price the stock at a more prestigious $45. However, I knew that part of the $4.50 was the trading value, which would be lost after the reverse split. Sure enough, Citibank dropped over $1.50 per share on its first post-reverse split day of trading. And today? Citibank is trading at $30, briefly trading around $28 earlier this week. Obviously the stock would have fallen in any event. But the fact is that Citibank stock has never exceeded its opening post-reverse split price, and while they may now have the prestige of being a $30 stock, they also cost their shareholders quite a bit of money.
There is, however, one situation where a stock split does affect the total valuation of a company, and the surprising thing it's the corporation itself that seems to be oblivious to this fact. This is the case of the reverse split, where multiple shares of stock are surrendered for a single share. In the stock market there is a stigma for companies whose shares are priced too low. As such, there may be a temptation for a company to try to eliminate this stigma via a reverse split. However, in many cases the reverse split is detrimental to the shareholder of the company. The reason is that while the value of a share of stock is generally based on the allocable fractional value of the entire corporation, there is also some residual value to a share of stock as a trading vehicle. This is demonstrated by the shares of ghost companies, companies that have gone through bankruptcy, with liabilities well in excess of assets and shareholder equity clearly being wiped out. Yet shares of these companies can trade at 20, 50, or even 75 cents per share. Obviously, there is no corporate value to these shares, merely the value as a trading vehicle. In most cases this trading value is negligible compared to the corporate value, but in the case of a lower priced share of stock it could have some significance.
It is with this background that I laughed when Citibank announced a 1-for-10 reverse split to enhance its share price. At $4.50 per share, the stock price for this corporate giant was embarrassingly low, and cutting the outstanding shares by 90 percent would price the stock at a more prestigious $45. However, I knew that part of the $4.50 was the trading value, which would be lost after the reverse split. Sure enough, Citibank dropped over $1.50 per share on its first post-reverse split day of trading. And today? Citibank is trading at $30, briefly trading around $28 earlier this week. Obviously the stock would have fallen in any event. But the fact is that Citibank stock has never exceeded its opening post-reverse split price, and while they may now have the prestige of being a $30 stock, they also cost their shareholders quite a bit of money.
Friday, August 5, 2011
Apologies To Los Angeles--Vancouver Chinese Food Is Not So Superior Any More
For many years my dream vacation has been to go to Vancouver (specifically, the suburb of Richmond, B.C.) to partake of the wonderful Chinese food there. From our visits to Vancouver in 1993 and 2004, we learned that Vancouver Chinese food was far superior to that in Los Angeles. The fast food at any random food court stall in Richmond was head and shoulders better than what we were used to here at the best sit-down Chinese restaurants in Los Angeles. After our 2004 trip, my daughter expressed the sentiment that when she got married she wanted it to be in Vancouver, so she could throw her wedding banquet at a Vancouver Chinese restaurant. Consequently I have always been the first to extoll the virtues of Vancouver Chinese food and the comparative weakness of Los Angeles Chinese food.
I really thought I'd would have returned to Vancouver sooner than this year, but things never fell into place. So when this year's visit was finalized I was very happy to return to the land of milk and honey. However, there was one nagging thought in the back of my mind. Chinese food in Los Angeles had clearly improved since our 2004 visit to Vancouver. Was that improvement, obviously gradual over the years, so much that Vancouver wouldn't be the knock your socks off experience that it had been the last time?
In fact there were little clues that perhaps the gap had closed. My daughter visited Vancouver last year and reported that she wasn't blown away like in 2004. However, perhaps that was attributable to the fact that she did not have the guidance from Mrs. Chandavkl's third cousin who had shown us around 2004 and knew all the best dishes at all the best Vancouver Chinese restaurants. Also, one of my foodie friends who used to visit Vancouver frequently for Chinese food (but hadn't been there recently) indicated that there was no longer the influx of Hong Kong Chinese to Vancouver, which was the event that fueled the development of Vancouver's superior Chinese cuisine. In addition in my visit last year to Toronto, which some observers indicate had caught up to Vancouver for quality of Chinese cuisine, I found Chinese food that was better than Los Angeles, but not by a wide margin. And, I had read commentary on a restaurant message board that the Chinese food in San Francisco had almost caught up to Vancouver. Given that Los Angeles Chinese food is clearly better than San Francisco, this was more evidence that the clear dominance of Vancouver was over. On the other hand, my pre-trip survey of what appeared to be the best Chinese restaurants today in Vancouver contained only one repeat from the listing from our last visit, Sun Sui Wah, so perhaps new contenders had raised the Vancouver bar higher.
Once again, Mrs. Chandavkl's third cousin took us to the best of the best and we had many outstanding meals that exceeded what we can get in Los Angeles. Most notable was our meal at Landmark Hot Pot House on Cambie St. in Vancouver, where we had a meal to remember. I always considered shabu shabu/hot pot to be "meh", but this meal was indescribably delicious. The meal started with oil being squirted on a live lobster and live crab each in its own pot, the oil being lit, and then the addition of stock to the pot after an initial cooking period. I don't know what it was--the stock, the dipping sauces, or the fresh ingredients such as fresh fish, marbled beef, thin sliced Japanese pork, bean curd sheets, oysters, clams, fish balls, etc., but it truly was a magnificent meal.
However, my conclusion is that while Vancouver is still better when it comes to Chinese food, and I'm not going to turn down future opportunities to go there and eat, but the difference between there and Los Angeles is only incremental now. Indeed, for "ordinary food," meaning most dishes that are available in both cities, while the Vancouver average is above the Los Angeles average, not every good restaurant in Vancouver is necessarily better than any good Chinese restaurant in Los Angeles.
Now where there is still a big gap is for food items in Vancouver that are not available in Los Angeles. Besides the Vancouver style hot pot we had items such as honeydew tapioca, three mushroom bean curd rolls, fried egg white balls, Cajun beef, fried bread with sweet cream, and other innovative dishes which were heavenly. And the prospect of these kinds of dishes alone continues to make Vancouver enticing. But after our last visit to Vancouver in 2004 I literally did not eat Chinese food in L.A. for a month because it would be such a letdown. However, that's certainly not the case this year.
Saturday, July 23, 2011
Los Angteles Mayor Villaraigosa and Police Chef Beck Embarrass LAPD
It's easy to blame the LAPD for botching the Dodger beating case and erroneously fingering Giovanni Ramirez as the perpetrator. But really, the only blame belongs with Mayor Villaraigosa and Police Chef Beck for creating the hoopla that identified Ramirez as a suspect the time. Ramirez was never charged with the Dodger beating. Naming a person publicly as a suspect typically does not generate the fanfare of a civic press conference to declare that the case had been solved. However in what can only be described as shameless famewhoring, that's what the mayor and police chief did. If they hadn't stuck their noses in front of the cameras, the arrest of the real perpetrators would not given LAPD the black eye it has received.
In a city which probably has the highest percentage of resident famewhores in the world, Mayor Villaraigosa ranks at the very top. Yet, this isn't the mayor's most extreme case of forcing himself into the spotlight. That occurred when the Lakers won the 2009 NBA championship and during the team parade Villaraigosa sneaked onto the team bus to stand side by side with Kobe Bryant during the procession. Read the disgusting details at http://www.nbclosangeles.com/news/sports/Villaraigosa-Tried-To-Steal-Kobes-Spotlight.html
But actually the mayor's penchant for the spotlight is not the most disturbing thing since he is, after all, a politician. What particularly troubles me is that the mayor gives the image of a smart and knowledgeable individual, where within the city government it is known that he in fact is not terribly bright. I do admire Villaraigosa for transforming himself from a high school truant, making it to UCLA and after graduation, law school. But it bothers me that a person who is so articulate, glib, and seemingly well versed on many topics, can fool the public when in fact he is no Bill Clinton or Barack Obama on the intelligence scale.
Of course you could speculate that those who question his intelligence may have their own agenda. But the fact is that he did flunk the California Bar Exam four times. Now the California Bar is not exactly the toughest test in the world. Indeed when I took the bar review course before sitting for the bar, they taught us that the number one objective was to write an exam where the bar examiners did not laugh at you. Now anybody can flunk the bar exam once. Stuff happens. But when somebody goes zero for four on the bar exam, that's pretty much proof to me that the person is not a mental giant.
But really the fact that the mayor can portray the image of being more capable than he is doesn't bother me that much, if it were an isolated instance. However I know of another city politician with a similar profile. This longtime politician was frequently seen in the media, expounding intelligently on a number of different issues. Yet somebody who worked closely with this person described them as being as dense as a rock. So if I, who am generally unconnected to our public officials, know of two not-so-bright politicians who seem to know what they're talking about, how many more of them are there out there? Now that's something to be worried about.
In a city which probably has the highest percentage of resident famewhores in the world, Mayor Villaraigosa ranks at the very top. Yet, this isn't the mayor's most extreme case of forcing himself into the spotlight. That occurred when the Lakers won the 2009 NBA championship and during the team parade Villaraigosa sneaked onto the team bus to stand side by side with Kobe Bryant during the procession. Read the disgusting details at http://www.nbclosangeles.com/news/sports/Villaraigosa-Tried-To-Steal-Kobes-Spotlight.html
But actually the mayor's penchant for the spotlight is not the most disturbing thing since he is, after all, a politician. What particularly troubles me is that the mayor gives the image of a smart and knowledgeable individual, where within the city government it is known that he in fact is not terribly bright. I do admire Villaraigosa for transforming himself from a high school truant, making it to UCLA and after graduation, law school. But it bothers me that a person who is so articulate, glib, and seemingly well versed on many topics, can fool the public when in fact he is no Bill Clinton or Barack Obama on the intelligence scale.
Of course you could speculate that those who question his intelligence may have their own agenda. But the fact is that he did flunk the California Bar Exam four times. Now the California Bar is not exactly the toughest test in the world. Indeed when I took the bar review course before sitting for the bar, they taught us that the number one objective was to write an exam where the bar examiners did not laugh at you. Now anybody can flunk the bar exam once. Stuff happens. But when somebody goes zero for four on the bar exam, that's pretty much proof to me that the person is not a mental giant.
But really the fact that the mayor can portray the image of being more capable than he is doesn't bother me that much, if it were an isolated instance. However I know of another city politician with a similar profile. This longtime politician was frequently seen in the media, expounding intelligently on a number of different issues. Yet somebody who worked closely with this person described them as being as dense as a rock. So if I, who am generally unconnected to our public officials, know of two not-so-bright politicians who seem to know what they're talking about, how many more of them are there out there? Now that's something to be worried about.
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