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People may be attracted to it but that does not mean they enjoy it. What matters is thier actions/re-actions to the events not that they notice the events. As a matter of fact it is better that they notice it to develop a sense of empathy rather than ignore it. If they enjoyed it, you would see partying in the streets and no outpouring of money or volunteer time to fix the place/situation. When I think of the types of folks you are describing, it reminds of Nazis/Communists who liked to see others suffer which in my mind represents neither the majority of Dems or Repubs. Packer

Thanks for the post. It sounds like situation is similar to US pre-Lehman. Packer

I think part of it will come from overseas as those producers are looking for stores and ways to grow thier wealth. The only impediment I see is capital controls from central gov'ts. Packer

You are correct and Damodaran has a good concept that I have applied. I believe if you go to his site you can see the details under valuation of highly levered or distressed firms. The concept for common stock is to make an adjustment to value by including a default scenario where the value is zero and the probabilty is based upon the credit rating of the debt. Packer

Another advantage is taxes. The 100% equity financed firm gives up the gov't tax shield so it should sell at a premium if it is in a stable indsutry. Packer

I agree but what I see eventually happening is when the baby boomers in the US hit thier peak selling years that will be offset by few buyers in the US but more in developing countries. However, the key assumption is an open and free market for those developing country investors to purchase US securities. That in my mind is the biggest risk. Packer

I totally disagree. I see very few people rejoice at the suffering of others. Just look at the generosity of folks of every persuation after natural disasters. I think there may be an honest disagreement about who should provide the generosity (private individuals/charities or the gov't) and the effectiveness of gov't versus private charity/individuals. To be honest, value investors take advantage of the misfortune of others but is there a problem with that if the others knew the risks they were taking when the entered the investment. If they were mislead or fraud has occured then the gov't needs to take action. I would like to see some evidence that conservative Republicans show this more the Wall Street Hedge Fund liberals. As far as I know either political persuation is willing to make a mis-risked bet. Just my 2c. Packer

The only concern I have with the someone else buying my stock thesis is the gov't controls and restrictions which can prevent purchases in more centrally controlled economies like China. If these controls become relaxed the thesis would be supported better but I think it is at risk due to these restrictions. Packer

Another way to do is to look at the ratings of issued bonds and apply the historcial defalut of bonds of that rating. I have adjusted my fair value targets when I buy a leveraged firm's equity in this way. Packer

How does this fix anything but short-term problems? I think they need to build a fund to support thier banks when the PIGS leave the euro. All the buying of bonds does is kicks the can further down the road and will lead to a shortage of funds when they need it (when the PIGS leave the Euro). At this point the German's don't want to fund the Greek/Soutern European lifetstyle and the Greeks/Southern Europeans don't want to live like Germans and I can understand that so I don't see how this fund is something other that a waste of time/money that will end up in failure. Packer

I agree some of the cats may be unheardable but you need to at least try and if that fails try again. Some of out greatest Presidents did not quit despite continued failure. I think that is what makes them great. The Tea Party does deserve some of the blame (everyone knows that) and the President saying that just belittles his poistion but he has to act as the adult of everyone and continue to reach out. He appears to have given-up and is starting his campaign. I think a novel idea would be to hold a summit with the Republicans and get to know each of them personally versus campaigning for a few months. Think about Lincoln reaching out to the Confederates that he knew hated him and providing citizenship by just an allegence oath. That is the type of longsuffering we need. Packer

The evidence I have is how treats his oppostion as enemies and not with respect. His McCain comment and never ending blaming of Republicans for the problems of the country. Has he talked and hung out with a group of Republican legislators? Did he spend any time trying in private trying to work with moderate Repubs before submitting his jobs plan? Not to my knowledge. As to the extention of the tax cuts, he did that without involving the House Dems (again missing the relational aspect of the Presidency). I would say this is the only true compromise he has made that both sides agreed was a compromise. One is not very many given how evenly split the electorate is. I guess my point is he did not build up or realize the importance of relational capital until it was too late. If he had developed good relations with moderate Repubs from the start, the Tea Party would not have the power it had in the negotiations. The neglect of the moderates of the opposition when you held all the cards (1st 2 years) has come home to roost. The only way out I now see is for Obama to start to develop the relationships with moderate Repubs. The pandering to the left wont help as these folks will vote for Obama anyway. I think many of the situations Obama finds himself in are not his fault but that what the Presidency is about - fixing problems that were not of your making. I don't blame him for his inexperienced mistakes. But once he sees things are not going as expected, he needs to examine the reason why. If he put out an honest effort to reach moderate Repubs, I would consider voting for him and he may actually turn his fortunes around because I think alot more folks still want him to succeed versus fail. I do. Thanks for the discussion. Packer

What evidence do you have that he can get along with foks who have differences of opinion? He may be able to but he hasn't shown it. His I won the election line to McCain is more typical. He hasn't been forced to compromise on someone else's terms before the mid-terms. Before he was President, he was a Dem in a very blue state. When he has had to negotiate, he has had no relational capital as none was ever built. Why didn't he invite the moderate Repubs to the White House or better yet go and see them about his budget proposal? Instead he goes around the country blaming everything on the Republicans. Does this show he understands that relationships with the opposition are important? The Tea Party may be stubborn but they do not have the numbers 60 to 80 to run things. If Obama had developed good relations with moderate Repubs, this would not have occured. He had his chance but instead tried to something for history that a minority asked him to do (expand coverage versus control costs). He thinks if he wins the policy debate (which he is usually on the side of public opinion) that is it. Contrast him to Clinton. Clinton was a relationship builder and a policy guy. From a policy prespective you are right about Obama but I think the relational side is lacking and he didn't and as far as I can tell still doesn't realize the importance of it. Unless he starts to build relationships with Repubs, I think his time is limited because the argument that situation is unsolvable will not fly with most of America. Packer

I read the articles and I agree with some of it but the outside references I saw were the Brookings Institute, the Center for American Progress and a ploy sci professof from Rutgers. Not what I would call fair and balanced. Even if that is the case, the reason why Obama is having a hard time is he has never built a coalition via relationships. He doesn't even realize that is how governing works. Policy is only part of the job but he thinks it is the whole job. The American people expect the President to build to the coalition. If he had, the Tea Party would be not as relevant. Why else would people agree with his policies but not of his performance? I look at the partisan tone as an excuse. If someone worked for your firm and was very talented, could communicate well but not work well with others in your firm, what would you do? I would sit down with them and show them the working with others is part of what the job is. If they still didn't get it, then I would let them go. I think Obama is still in the don't get it stage and unless he gets it he will be a one-termer. Sanjeev - I disagree. Maybe I am niave but in the case of our great Presidents, they all have had the ability to work with the opposition to build a coalition to make the extremes irrelevant. Romney has at least the experience of being a successful Rep governor in a blue state - an example of what can happen. Just because Obama says he can't doesn't mean it can't be done just that it can't be done by him. Very similar to Jimmy Carter. Packer

I agree that the final positions are a compromise and he may appear to have reached out (by his position) but I have not found evidence he has personally reached out like a leader should. And him saying he tried has does not count. You have a relationship by both sides agreeing it is a relationship. He has not developed personal relationships with the opposition. He has not even approached moderates to try to get cooperation on his initiatives. If he approached the Maine senators for example and Scott Brown, they probably could have gotten the jobs bill through or at least made the case of obstruction more creadibly. But instead, he tries to ram through what he thinks is best. This is much like Carter. If you read the WSJ article and others you will see he has relied upon proxies (as opposed to getting personally involved) to negotiate with the opposition. Other leaders got personally involved (Reagan & LBJ). I think the major issue is he does not seem to know that he is missing the relationship aspect of the job. Do you think this partisan bickering is new? It has been around for a long time and smart pols have tried to develop personal relatoinships with the opposition. As Harry Truman said the best pols are those who can make you feel good about doing something you don't want to do but need to do. I would be interested in evidence that he has reached out and that I am all wet. Packer

I agree but how do you see Obama being a sensible pragmatist? He appears to pandering to his left to hold onto them and using rhetoric to slam the Republicans. There is a good editorial in the WSJ about Mort Zuckerman about this issue. What we need is the leader of which ever party gets elected is to reach out his opposition and develop a relationship with them. I don't see that in Obama. His best attempt was a deal with Beohner versus reaching out to others and developing support. And what is this leaving the House Dems out of the year-end compromise to extend the current tax rates? Reagan develop relationships this LBJ already had the relationships. That is why they were great leaders. It is one thing if the guy realizes that he has made mistakes and tries something new but he has not done this. At some point, folks will give another guy a shot at doing this if the current guy doesn't get the idea of developing relationships with the opposition. Jsut my 2c. Packer

This probably one of the best books I have read on how to outperform the market and others. His focus is being different and correct. He also stress the importance of value and provides some tips on how to deal with market psychology and what creates underpriced assets. Packer

You are right. However it is ironic that what he wants folks to keep there wealth in has little or no economic benefit (it is the equivalent of taking money and burying it in the ground). So maybe a better solution is to have a high "thing" tax to keep the money moving. Packer

This movement reminds of the Obama campaign in 2008. People could find what they want in the 99% (or "change") slogan and something they can agree on amongst what the group of people are saying. Heck, I agree that the bankers should have suffered more. However, people ignore what they don't want to hear. The take stuff from the rich, we wont move from the park to let you clean it, etc., (Obama's lack of experience especially with working with folks he does not agree with) Folks are frustrated and want something to be done and are willing to give someone a chance without understanding what these folks stand for. This is truly the equivalent to the 21st century mob mentality. Mobs usually have a legitimate gripe but the resulting actions dont always end well. Given the similarities to Obama 2008, I can see why the press is spending so much time on protests in the hundreds or maybe low thousands of folks. Packer

It is a residential building near Central Park. Packer

I just ran across a NYC real estate apprasial with a 4% cap rate. That appeared to be a low rate given 7% was applicable only a few years ago. Has anyone ran into 4% cap rate valuations in NYC? TIA. Packer

I am tired of folks blaming others for the large income disparities. If you look at history, the keys can be found. What has increased income equality is a scarcity of labor (historically from either war, famine or others following regressive labor policies (communism)) or the country nationalizing a valuable commodity asset and more equally distributing the wealth. Since WW II we have reduced what has primarily created income equality (wars, famine and large portions of the world following communism) in general. These are good things we just need to realize the effects these actions will have versus the past. Scarcity of labor in particular fields where demand is higher than supply (science and engineering), which will cut down on income inequality, has not been addressed by our education and government leaders. If you look at these fields it is populated by many foreign students. Why is that? In part, due to the lack of incentives provided to US students to pursue those fields. The education "subsidy" (grants and low interest rate loans) the US gov't supplies to all citizens should somehow be related the types of field studied. The engineering and science sudents should pay less to incentivize them to study these fields until the % of US students in these majors is increased to levels of other majors. Another misallocation of resources is subsidized "green" technology as it is focusing the science and technology labor we have on uneconomic research and causing a further labor shortage in this area. As an aside, what I find incredible is that the major benefactor of "green" technology subsidies and spending are the rich and college educated not the poor and middle class. If they are rich and college educated do they really need more gov't money? I think the focus of income inequality efforts should be on training folks where the labor shortages are. As this is the most direct way to address this issues. Packer

I understand there frustration (similar to Tea Party) but taking $ from those who have will not solve the issues everyone is frustrated about. Using anti-trust measures I think is the best solution. Breaking up to big to fail institutions so they are not to big to fail is a great start. If you look at the solutions the US has used in the past the most effective in my mind has been to enforce competition rules in markets and let the markets do the rest. Once the gov't gets involved in market beyond enforcing rules is where the corruption begins. A negative I saw in some of the interviews was when asked if he would take a $7/hour job, the protester said no it is not enough. If the movement wants traction beyond the preofessional protester crowd, they are going to have to have more realistic demands. Just my 2c. Packer

At the 3rd Ave Value conference, Sam Zell questioned the investment in European real estate given its lack of growth and heavy handed regulation. It will be interesting to see if Europe will follow Japan Packer

I think for Lodgenet not all of it however EBITDA coverage is over 3x. For TVL however, the bond market is saying it will get paid back and the EBITDA coverage is about 2.7x. If they can maintain these coverage ratios and rates stay low they may actually may be able to refinance at lower rates. Cumulus was able to re-finance at 6.2% with there combination of Citadel with lower coverage and a higher debt/EBITDA ratio. Both firms are currently paying 8 to 8.5% interest. If they can re-finance at Cumulus' rate, this would add even more FCF. The major risk is an advertising collapse but with the economy chugging along and the elections next year, I think the outlook for advertising is good but these firms don't need to grow just not collapse to provide good returns. Packer