The Wine Commonsewer™

The Bear Stearns Catastrophe: Not Your Father's Free Market

Gentle Readers,

As a recent investor in Bear Stearns, whose foray into leveraged bond funds backed by subprime mortgages has turned into disaster, you'd think I'd be delighted with the US government's 30 billion dollar bail out that took the form of a credit line to entice JP Morgan to pick up the pieces. The pieces came at two bucks a share.

You, Gentle Reader, might wonder why TWC made such an idiotic decision. After all, investing in Bear Stearns seems sheer folly. Here's the strategy: Your government made my investment decision for me without asking. We taxpayers are on the hook and there will be absolutely no return on investment for any of us.

The Fed also essentially made the takeover risk-free by saying it would guarantee up to $30 billion of the troubled mortgage and other assets that got the nation's fifth-largest investment bank into trouble.

Smells like corporate welfare to me.

And here's your Econ 101 lesson for the day:

In a free market economy those who make bad economic decisions fail. They go broke, they go out of business, they lose their money, they lose their retirement, they don't get to go to Jamaica on vacay and the MBZ goes back to the bank. Failure and correction is what keeps a market economy on a relatively even keel.

A THIRTY BILLION DOLLAR bail out is NOT capitalism. It is NOT the free market. It is government intervention in the market place that benefits a proportionally few investors and stockholders who voluntarily took a huge financial risk because the promised return was tantalizing. To be charitable, they bet against the come and lost.

As the Old Man used to say, Tough Bounce.

As Ever,

TWC

2006 Panarroz Jumilla

Good Morning Gentle Readers,

Just to be fair, I gave the 2006 Panarroz Jumilla another shot. Okay, I gave it another shot because the fair Mrs TWC brought me another bottle not realizing that I had recently panned it.

Second bottle? No Help.

It might work if it was chilled on a warm summer evening out of doors with friends. Maybe. I keep trying to get past my prejudice against that cloying taste that some call cherries. That and the medicinal nose capped off with the aroma of an overheated electric drill motor. Not working.

Although the wine has a little bit of a fizzy sort of feel on the tongue that is appealing, it just doesn't work for me.

This is what TWC said in December:

TWC picked up a bottle of 2006 Panarroz Jumilla for one reason. Wine Advocate popped for a 90 and the sign said so. Here's what Robert Parker had to say.....

An amazing bargain from Spain, this blend of mourvdre, grenache, and syrah bursts with plum, blackberry, and licorice. There is a bit of pepper as well, and the wine is silky, soft, and opulent.

AuuuuuuuuOOOOOOOOOOGAAAAAAHHHHHHHHHHHHHHHH!

Wrong, wrong, wrong. It is not a great bargain, although it is from Spain.

Just to be fair, I let it sit for 24 hours. No help.

Now, there is a possibility that TWC got a corked bottle or some other story, but that is not likely. Reality says that this wine is boring, bland, and exhibits little of the plum, blackberry, or licorice in the aforementioned WA review. It is an odd and relatively unpleasant wine. Parker can have my share.

Maybe I just don't like the wine. Fair enough. But it ain't a 90 and I ain't buying it again.

Nothing much has changed except that I might retract the bland part. The wine isn't really bland. You feel as though it ought to be better than it is. Maybe that's what fooled Parker.

Update: After this wine, this one seems hot. Funny how that works out. 

The wine is six to ten bucks anywhere.

As Always,

TWC

California LLC Fee Ruled Unconstitutional

Good Morning Gentle Readers,

Don't EVEN get excited because this ruling is not going to help you unless you are an out of state LLC qualified and doing business in Californicate AND you have business income from other states.

Briefly, unlike most other civilized states and even the IRS, LLC's are taxed on their gross income whenever it exceeds $250,000.00. The state calls this a fee, but it isn't and the courts have made that determination as well. Worse, the LLC remains a pass-through entity and ALL of the net income is taxed at the partner/member/individual level.

What has been found to be unconstitutional is that the LLC fee isn't apportioned and doesn't apply just to Californicate income. It is applied on worldwide income to any LLC registered and qualified to do business in California irrespective of whether the LLC is actually generating any California source income. Meaning, even if the LLC does zero business in California it is subject to the fee based on income from doing business in other states.

Like a two year old, screaming MINE, California has a long history of attaching its tentacles to wallets that are far from its borders.  It typically takes a court case to make them stop.

In two recent decisions--Northwest Energetic Services, LLC (NES) v. Franchise Tax Board (FTB), Case No. CGC-05-437721 (4/13/06), and Ventas Finance I, LLC (Ventas) v. FTB, Case No. CGC-05-440001 (11/7/06)--the San Francisco County Superior Court held that the limited liability company (LLC) "fee" imposed by California Revenue and Taxation Code (CRTC) Section 17942 is unconstitutional. Although California law requires the FTB to continue imposing the fee until a final decision has been rendered by an appellate court, LLCs registered or doing business in California should consider filing protective refund claims, particularly if the statute of limitations for any year is about to close.

Whole tale of woe is here.

As Ever,

TWC

May the Blessings of Saint Patrick Behold You

Gentle Readers,

American St Patrick’s Day celebrations date back at least three hundred years and like so much else that makes this America, we have embraced this Irish festivity in a style that is uniquely ours.

Shamrocks, leprechauns, and a lot of racket (old-country Irish slang for an old fashioned welcome-to-the-neighborhood party) fill our celebrations as we gulp green beer. Sometimes we even dye our hair green to match that river in Chicago.

But in Ireland today it’s a softer and more subdued festival that often begins with a morning church service. Despite Ireland’s hard drinking reputation, as recently as thirty years ago most pubs were closed on St Paddy's Day in honor of this religious holiday. Even today the pubs are open mainly to serve the tourist trade arriving to celebrate a real Irish St Patrick’s Day.

My kids are from a mongrel heritage that includes a healthy dose of Irish from all four sides as well as Dutch, Indian (feather not dot), English, Scottish, and Welsh.

Katie's necklace claims she's an Irish Princess.

As Ever,

TWC

The Apple Don't Fall Far From the Tree

Gentle Readers,

That Boy and I recently sat for a photo.

As Always,

TWC

tip of the glass to James Lord

2005 Beringer Knight's Valley Cabernet Sauvignon

Good Morning Gentle Readers,

After stumbling a couple of times here in the new millennium, Beringer is back on its game. The 2005 Knight's Valley Cab is a perfect embodiment of what we have come to expect from a big, bold California Cabernet.

It was an unexpected surprise, too. Delightful from the first pour, no fumes, no barnyard, no waiting for the oxygen to do some repair work. Swirl it in the glass just a bit, let the wafting aroma tantalize your senses, sip, enjoy the rich black fruits edged with a little oak and vanilla. From first sip to the dregs, this wine will leave you wishing there was a little bit more.   

Wine Enthusiast called it a well-deserved 91.....

An appealing wine showing likable softness and flashy flavors. The palate brings cassis, mocha, licorice, sweet tobacco, sage, Asian spice and smoky oak; finished long and rich. Notable for its superb structure.

Wine & Spirits tossed it a quite respectable 92.....

This deep, juicy Cabernet could define the Beringer style, a lot of fruit crafted with a lot of oak.....pure black currant, the oak age bringing out spice, a creamy richness to the texture, a solid structure. The flavor of those tiny round black berries is the flavor that lasts.

The Knights Valley also made the top 100 list at wine.com, where wines are rated according to how many bottles fly off the shelf. That'll skew the results because guys like us are going to buy everyday drinking wine ten times more often than the pretty good to really great wine we'd drink if money was no object.

You'll want to enjoy this wine with hearty fare, as it will enhance the experience. TWC suggests chateaubriand (or medium rare grilled filet mignon) served with bernaise sauce, the making of which requires a little white wine. Although the occurrences are quite rare, there are a few respectable uses for white wine.

Remember! Lips that touch white wine, shall never touch mine. Such a promise provides a sense of relief to most of my friends, and thereby ensures the consumption of an occasional glass of Chard (for insurance purposes only).

Life is a Cabernet my friends, and this is one to enjoy.

Salud!

As Always,

TWC

The Kings Of Trans Fat

Good Morning Gentle Readers,

Ever notice that as things change it turns out that all the old experts didn't know their collective backsides from breakfast. Remember how trans fats were going to save our arteries from the scourge of animal fat? Then it turns out that margarine is a lot worse than butter.

You notice that eggs are out of jail these days as well, full of Omega 3 fatty acids and all sorts of health benefits.

Essentially, the entire government and medical establishment campaign against eggs came about because eggs contain 210 mg of cholesterol and the RDA is 300 mg, the assumption being that cholesterol laden foods would contribute to high plasma cholesterol levels and, ultimately, heart disease and stroke.

OTOH, Trans fats and their substitutes are fake, which should be your first clue. Think: Twinkies with that filling that is pretty much Crisco and sugar. 

And for those of you with a lot of time on your hands, here's a list of the 246 trans-fattiest foods you can eat.

As Always,

TWC

Ben Franklin on Wine (& God)

We hear of the conversion of water into wine at the marriage in Cana as of a miracle. But this conversion is, through the goodness of God, made every day before our eyes. Behold the rain which descends from heaven upon our vineyards, and which incorporates itself with the grapes, to be changed into wine; a constant proof that God loves us, and loves to see us happy.

Mortgage Insurance Premiums = Mortgage Interest Paid

Good Morning Gentle Readers,

Mortgage insurance is a racket, we all know that. But sometimes, for some borrowers paying mortgage insurance premiums means the difference between owning your own place and spindling twelve rent receipts every year.

The CONgress has taken some pity on us mortals. Subject to limits that kick in for folks whose overall income is 100k plus, it may be possible to treat mortgage insurance premiums you paid during 2007 as home mortgage interest.

The mortgage insurance must be paid in connection with home acquisition debt, the mortgage insurance contract must have been issued after 2006, and you must have paid the premiums before 2008 for coverage in effect during 2007. You can deduct mortgage insurance premiums on Schedule A (Form 1040), line 13.

In English, acquisition debt means you borrowed money to buy the house. A refi to buy a boat, pay off Junior's college, or to pay off the maxed credit cards doesn't fly.

As Always,

TWC

Hard Days Night

Good Morning Gentle Readers,

It is Lennon & McCartney week on American Idol and it reminded me of a sweltering, smog-choked summer afternoon, the likes of which we don't ever see anymore, when Paige dragged me off to see this movie at a long ago defunct movie palace in rapidly decaying downtown La Puente. It was awesome.

We had just spent a glorious week floating the Colorado River in innertubes that were more patch than tube, so the temps didn't faze us much. But Dude, it was smoggy.

As Always,

TWC