Investor Strategy: The Basics

Let’s start with a disclaimer: I am invested in capital markets and especially in my own ventures. But I never discuss investments beyond my family and an occasional paid professional (a tax adviser, accountant or estate planner). I am not a broker or investment adviser. Although A Wild Duck occasionally discusses economics in the “macro” sense (as in the previous post about Bitcoin), personal finance is definitely not within our purview. In general, our banner states the venue faithfully: Politics, Economics, Technology, Law and Social Phenomena.

Most proclamations have an exception. Today is no exception, but it comes close...

No. I am not about offer personal financial advice. But I will share with Wild Duck readers an off-the-cuff investment primer that I sent to a close family friend — let’s call her “Beth”. Beth is middle-age, alone, and has a substantial estate. Yet, she has never played an active role in directing her investments. In the past, her husband handled these affairs. Once on her own, she parked her assets in a low yield savings account. (Currently, these yield barely 1%).

Beth posed a very simple question. In fact the email had only one line:

Subj: Market Investing
How does one learn to play?

I write quickly, especially when the topic relates to things that I have pondered for years. So, I outlined a duck's-eye view of basic investor concepts, investment vehicles and trip wires. These are things that every novice should know. Of course, they are not simple text book facts. They are sprinkled with Ellery's bill-nosed, Wild Duck opinions. Again, don't mistake this for advice! It is my personal view of basic markets and investment vehicles and only as it might apply to a particular friend. Her age, net worth, family & career status, risk tolerance and financial objectives may differ substantially from yours.

If you want to skip the primer and jump directly to the method I use to value a company, then scroll down to [ 8C ], below. But if you are a novice, consider learning the basics.

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Dear Beth,

“How does one learn to play?” This is a question that can be discussed for hours and hours...Months and months! The “experts” talk about investing with buzzwords:

• Financial objectives (for example, growth, security, tax savings, etc)


• Time Horizon: Long term, short term, cash conservation, College savings, etc


• Trade & Fund details: Load, commission, index tracking


• Fundamentals -vs- Technicals (I am very opinionated about this one!)
  Learn about the P/E ratios. Understand that markets are futures oriented.


• Strategy: Straddles, Saddles, Insurance


• Investment vehicles: Puts & Calls, Tigres, Spiders, Zero Coupon, Munis, etc


• Life Stage: Saving for retirement, already retired, planning to sell a house, divorced, putting kids through school? etc

These are just details. They don't influence strategy as much as paid professionals would lead you to believe. But let's begin with comments about 2 items on that list:

[caption id="attachment_235" align="alignleft" width="169"] Cramer likes a technical approach. Poppycock![/caption]

♦ The question of objectives, is hogwash! Asking if you want “growth” is like asking if the Pope is Catholic. We all want the same thing: “Make a lot of money and minimize risk”.

♦ If someone suggests investing on the Technicals (as opposed to researching Fundamentals), run away as fast as possible. They are soused with Jagermeister. They believe in snake oil and the Magic Fairy. Harken to them and ye' shall be a pauper. ¹

My personal advice...
_ _ _ _ _ _ _ _ _ _

1. You Will Lose Before You Will Gain
Don't put all your eggs in one basket and definitely don't bet the house! Start with small nibbles. Stay the course. Don't "double up" (See #4: Strategy).

First, you will lose a little money (so keep earning it at your regular job). Then you will lose some more! You will discover that the market never meets with expectations. You will see the folly of short term strategies and you will learn the tough way – from personal experience and your own risk. It is a way that you will never forget!

2. Find a 'Personal Groove' That Overcomes Emotion & Fits Your Risk Tolerance
Eventually, you figure out a pattern that works for you. This is not because your objectives are unique. (Everyone has the same investment objective: Put savings to use to make money). The reason that you need to discover a personal pattern, is because your style fits with your understanding of economics, your constitution for risk, and your patience to stay the course.

3. Sectors
Stay with stocks or funds that deal in markets that you know something about and that relate to your interests. Never get involved with a sector that is far flung from your personal education or experience, especially when purchasing or shorting individual stocks. (More about this in #5: Diversification). Even if you get very trusted and good advice about something that is not related to your field (uranium mines, for example), the market will someday change (perhaps far in the future), and you will be caught without any industry knowledge, because you don't read about that sector every day.

4. Strategy
You will hear about an investment strategy called "Dollar cost averaging". It is excellent advice for anyone. It helps you to weather the short term and midterm bumps while continuing to grow your investment. It takes patience and it forces you to resist getting caught up in fads beyond your means. Again, it is very good advice. I wish that I had followed this advice throughout my investment career.

5. Diversification
It is difficult to remain diversified if you invest only in markets with which you have intimate familiarity. (On the other hand, your career history is quite eclectic—so perhaps you can!!) So, I apply this conventional wisdom only to mutual funds. My individual stocks are clearly not diversified. The real issue here is that a lack of diversification dramatically increases risk. I wouldn't say it is a bad thing, but you need to be aware of this.

6. Management, Loads, Personal Service
I don't like any of these things. There will always be equal amounts of contradicting advice. Why? Because, for every investor that buys stock in a winning company, another investor loses on the other side of the transaction. You don't need advice, you need an understanding and tools.

7. Margin Investing
Definitely not for everyone. Big risk. Gives you leverage, but so does writing puts and covered calls – and with far less risk.

8. Understand How to Value Equity
...Don't Confuse a Great Company w/Great Value
Suppose you just bought a high-value product that everyone is talking about from a company with a hot reputation. (Let's call the manufacturer "Q", but think of the Apple iPad or the Tesla Roadster, or whatever works for you.) You learn to use it quickly and find that it performs better than you thought possible, and at a fair price. Should you invest in Q?

Next, you study the competitive landscape. You determine that products from other vendors don't provide a satisfying experience and the pundits agree. You also learn that competing products costs more to build – but sell for less, because everyone wants to own the product that you have. Would you invest in Q now?

It gets better: Q is growing fast, entering new markets, and has a great reputation. It's supply lines are solid and the founders health is much better than originally reported. There are no scandals concerning officers or directors. Now will you buy stock in this great company? Why not? Wait! There's more...

You research things that directly influence revenue & profit. You discover that competitors must pay Q a high licensing fee because they have solid patents. Their orders are growing fast and you want to get in during their best growth ever. Call your broker now! Right?

Not necessarily. I don't want this section, Basic Investor Strategy #8, to get too long, so I am going to cut to the chase. A company has at least 3 different values:

• Book Value: The value of its factories, tools, inventory, cash and other assets


• Market Cap: The cost per share times the number of shares outstanding


• Earnings Growth vs. Expectation: The hard part and the only part that matters!

A) Book Value
Book value has little to do with anything, unless the company is performing so poorly that it is at risk of being taken over and dismantled (i.e. so that the individual assets can be sold). Why doesn't book value matter for to an investor? Let’s say that a computer programmer working from home designs and sells software that everyone wants. He sells 1000 copies each day for $10,000. His total daily cost of running the business is a cup of coffee and an internet connection. The low value of his production environment does not detract from the value of his income. In fact, with the exception of adding a marketing budget (to acquire even more customers), his low costs add to the high overall return.

B) Market Cap
Market Cap refers simply the (share price) times (the total number of shares). It reflects the current value that existing investors place on the company, or more precisely, what they believe to be its prospects for future success. If you agree with them (and if you are primarily a speculator – as we assume), then you wouldn't be investing in the company. Get it?! Your goal is to find an undervalued company and then prove the other investors wrong.

Market Cap is based on short term sentiment that often has a great disconnect with the fundamentals of a company. Or in the case of Q, the market cap may already be pumped up very high because everyone believes it to be a great company and expects the share price to keep growing faster and faster. In this case, we say that good news has already been factored into a high valuation.

What if the share price multiplies out to a market cap that is in the stratosphere? To make a long term gain, the company would have to own the earth within a few years. With overvalued shares, even a great company may have nowhere to go but down!

C) Earnings Growth vs. Expectation
This brings us to the only factor that matters when choosing to invest in an individual company. ² I don't really have term for this one, but it is essentially this:

Anticipated growth in future earning
—vs—
the expectations of other investors

Translation: Do you believe that the current share price is undervalued? By “value”, I mean, do you believe that during the period you expect to hold the stock, other investors will increase their opinion of the company's future prospects?

To answer this question, you must really do some research. Lots! And it must be your own personal research; Not the opinion of others. If an influential opinion or popular consensus is already surfacing, then you have lost your edge. You can no longer win at proving the market wrong. So how do you begin your research?

You will need to know the market cap, the P/E ratio (look it up), the competitive landscape, the safety of supply lines, future product plans, and current product fads. Even during the very high growth period for Crocs or for Cabbage Patch Kids, shrewd investors realized that these were product fads. It is very unlikely that the companies behind these products could diversify and conquer new markets with the rapid penetration they recently enjoyed. So, the likelihood of sustaining the growth is low. Finally, you must add up all of this data and weigh it against an educated guess as to whether the company will keep growing without excessively watering down that growth with simultaneous growth in the number of shares.

That was the end of my letter to Beth. Of course, the last paragraph contains a lot to ponder. I suspect that it will prompt a lot of questions and comments from Wild Ducks, and it is as far as I wish to take this primer. I intended only to spark contemplation and move you toward an entrance.

¹ If TV financial advisor Jim Cramer is reading this Blog, forgive me. as with Bill O'Reilly, the blather (or your technical approach) makes for entertaining television. It is not a viable investment strategy. Not even for the short term.

² The bold claim that "This is the only valuation that matters" is based on some assumptions. In this primer, I am focusing on growth medium term, growth investing and ignoring very legitimate investment strategies, such as dividend investing, mutual funds, bonds, or applying a disciplined approach such as dollar cost averaging. I believe that all of these are effective approaches to market investing. But in my discussion of picking stocks, I am talking about growth stocks and market timing.

Bitcoin: Can cash have value if it isn't real?

It's likely that early man had no widely accepted currency. They dealt in the food they hunted or gathered, and the clothes they fashioned from whatever materials were available. Perhaps some individuals offered services, such as labor, transportation or healing. But without currency, they weren't buying and selling these things. Instead, each transaction was a gift or a trade.

Trading is good, but it is difficult for a trade to involve more than 2 parties. Also, It's difficult to save for a rainy day. Food spoils quickly when there is no refrigeration.

Economies built on private trades

• Limited to private transactions.


• No exchange/settlement: An Inefficient market


• Difficult to accumulate wealth


• Doesn't facilitate governments or public works projects

Eventually various forms of cash began to emerge. According to the comic strip, B.C., caveman traded clams for goods and services. That's not far from what historians tell us. Beginning at around 1200 BCE, the Chinese exchanged the shiny shells from a Pacific sea snail for goods and services. For centuries Cowry shells were accepted as a portable “coin” because they were both rare and impossible to counterfeit. Historians think that it may have been the first medium of exchange.

"Medium" is a good word for money, because it is an intermediate layer between things of value — the thing that you sold today and the thing that you will buy tomorrow.

Was the Cowry shell really the first form of currency? It’s difficult to look further into the past, especially into events that may have occurred before written language. But we can be certain that with the rise of central governments, currencies were coined by banks and by nations. But this gives rise to two classes of currency. Things of inherent value, like gold, and things that are valuable because someone says that it is valuable (dollars).

Cowry shells are like gold. They are portable and honored everywhere, just like a coin. And yet they are not minted by a central authority. Instead, they have value, as long as the new supply is limited by natural law, and as long as individual traders believe that their suppliers will continue to desire them. With all monies – clams, gold or government-issued cash – when a majority of productive individuals agree that coins have value, it becomes possible to save and to time shift assets. For example, if you produce clothes – but you aren’t immediately hungry – you can sell your clothes and accumulate wealth. Unlike asparagus or shoes, currency is fungible and it doesn’t spoil. Of course, it is also easier to tax.

Let’s jump forward several millennia. Today, people buy and sell with dollars, euros, pounds, shekels, Zlotys and Yuan. Each currency is minted by a government and backed by either a precious asset (typically Gold) or by the promise of a central bank or government. But wait! Few currencies in circulation today are backed by anything more than the promise of a transient government. And most of these governments are saddled in debt. They have no ability to make good on their promise. The only reason that money in your pocket or bank has value today, is because you feel reasonably certain that vendors will treat it with value tomorrow. Given the dearth of underlying assets, the value of money is about as far from "real" as one can imagine.

Putting your faith in money is terribly risky especially in the 21st century. It is rapidly eroded by inflation and debt. It is easily taxed. It is manipulated by day traders and emerging nations, and it's value is dramatically influenced by energy, and political/social policy.

Before we move on to virtual currency, let me point out that the "virtual" part is nothing new. We already trust computers to keep track of our savings and we prefer bank statements over folded paper in our wallet or mattress. Very little of the money you spend is traded in the form of paper or coins handed from one individual to another. Credit cards, checks and automatic debits bypass the cash stage. Few people use cash to pay taxes, purchase a home or car, or even to buy groceries. Instead, credit cards and mobile payments are accepted everywhere, even at McDonald's and at the post office.

And investing has become even more virtual than buying. When you purchase stocks or bonds, the entire transaction is virtual. You digital cash (computer bits) is converted into a new row on a spreadsheet. This row of characters and numbers reassures you that you own a tiny sliver of a mutual fund in Omaha. This fund, in turn, owns a fraction of 1400 companies or is the beneficiary of municipal debt (more computer bits). It can’t get more virtual than that. Can it? Well, yes. In fact, it can!

Even though money you spend today is virtual, it is still minted by a government (or in the case of Hong Kong, by a bank). You have no idea how much of the stuff they print and how it is distributed from the printer. The value you perceive in your pockets and all of your accounts is based on trust. So who are you trusting? Is it your own banker or business partner. Not on your life. You are placing your trust in the same entity that taxes you and the entity that can't balance its own checkbook.

Bitcoin is different. First, it is totally decentralized. No bank or government is required to validate the coin, record a transfer, or to determine if a virtual coin was spent twice by the same party. And get this: New coins can be "minted" by any user, but the process is inherently limited and trustworthy. Moreover the more that is minted, the more difficult it becomes to mint additional currency. Eventually, the total amount in circulation will level off to a known and verifiable number of coins.

Confused? Of course, you are confused. But, believe it or not, there are already currency exchanges for Bitcoins. They are even bought and sold on eBay. Why? Because Bitcoin circumvents government manipulation. It also deters taxation, tracking, inflation and... Well, you get it. Bitcoin comes pretty close to a perfect currency.

Bitcoin: A virtual, decentralized, trustworthy currency

In my dreams, I fancy myself as a futurist. I like to think that I could hold my own with Ray Kurzweil, Esther Dyson, Bill Joy or Alvin Toffler. Putting myself into that mold right now, I would speculate that Bitcoin or something built much the same way will quickly subsume the world's economies—perhaps even in the next 15 years. The fallout will be seismic, because governments will need to base taxes on real estate and transaction fees rather than income, property or savings. After all, it's difficult to hide land or a home, and it's pretty easy to issue a speeding ticket or charge for a marriage license.

Worried about kids & social networks like Facebook?

Elllery's response to:
10 things you don't know about teens and social networking

Finally! An author who understands that secretly monitoring kids' online activities doesn't work. More importantly, it has unintended effects. Spying on your kids is not the answer. It is neither a substitute for active engagement (aka, parenting) nor does it buttress the effective approach: Leading by example and open discussion. In short, as with any issue, there is no substitute for parental involvement along with a growing bond of trust.

The online culture will not go away. In fact, it will become more pervasive as new gadgets and unexpected venues are attached to the internet. Culture will continue to evolve along with the medium, such as the spawning of social networks.

One teenager stated that the online world is more relevant to her than the "real" world. As scary as this sounds to parents, it isn't necessary a bad thing. The online world is real. With nurturing and a little guidance, it may even help her to overcome obstacles in her immediate vicinity (health, bullies, career opportunity, etc).

Another child says that she feels safer online than offline, and she does things online that I she would not do in real life. Considered one way, this might be cause for alarm. Does this mean that she is likely to engage in risky behavior? Perhaps. But, it could simply mean that she is a "risk taker" in the vein of exploring her alternate personas and even confronting her inner demons. For her, the virtual world might allow her to develop as an individual in all venues.

The rise of a new social medium – one with a value that eludes many parents – is not bad. In general, it needn't be cause for concern (Exception: the girl who lies to her Mom about spending time online while avoiding homework! Addiction to anything, not just the internet, is a weakness that is countered by parenting and strength.

Ellery Davies is chief editor of AWildDuck.com. He clarifies law and public policy.
He is also a parent of a preteen who is uses social networks.
Feedback is always welcome.

After years of buying from China, time to pay the bill

I wrote this in April 2011 as feedback to this article in PC World.
__________________________________________________________

After decades of buying from China, it’s time we paid the bill.

Step back from rhetoric & ideology. What, exactly, do we expect the Chinese to buy with all the dollars that they’ve amassed? What happens if we try to dictate their options? –Making available just a few items at the bazaar?

Most Americans want balanced trade. Trade is balanced by encouraging foreigners to return dollars to America. That means purchasing goods & services or investing (purchasing equity or debt). But purchasing debt isn’t real balance. It postpones and magnifies a trade imbalance.

The Chinese have built vast quantities of products that we consumed for more than 30 years. For whatever reasons, they have built them cheaper and responded quickly to consumer demand, and with sufficient quality and style that we loved acquiring them.

Now China has pockets stuffed with dollars. There are so few places that want those dollars, the logical recourse it to spend before it depreciates. That’s logical. Getting them to use those dollars is what we want.

The US exports movies, airplanes, weapons & software, and we charge foreigners to attend our Universities. On the international stage, that about sums our brag sheet. But when we consume trillions from foreigners, do the promissory notes that we issue (“dollars”) limit them to these few commodities? What else can the Chinese purchase that isn’t manufactured closer to home, better, and in larger quantities? They export the really big ticket items themselves--like skyscraper contracting, oil drilling, nuclear technology!

When a foreign corporation or government wants to purchase something significant from the US, suddenly we stop yelling “Buy American” and we start yelling “Security Threat!”. Poppycock! If we create such enormous red tape that international telecom players cannot acquire or invest in one another, we reduce liquidity and further weaken our dollar. Face it: Our start up companies are commodities as certainly as a retail copy of Windows, a Boeing jet or a patent portfolio. When we turn up our nose at healthy interest in intellectual trade or infrastructure acquisition, we are not protecting our interests. We are simply informing trading partners that they were fools to trust us, and that the dollars they stockpiled can be redeemed only in Hollywood films.

It’s natural to be skeptical. China is controlled by an authoritarian dictatorship. Citizens lack social & political freedom. But don’t be misguided about their economy – both within and abroad. It is lubricated by capitalism and is more adaptive and free-wheeling than our own. Whatever their shortcomings, we accepted these when they were selling. We must also allow them to buy. Our technology plays are the only thing on our menu.

Conclusions:

• A) If we refuse to allow the Chinese to repatriate dollars or offer them only the local goods of our choosing – typical of a Banana Republic – then they will dump our dollars and also stop buying our debt. It would crush our economy in a heartbeat.


• B) If we allow those with large stockpiles of our dollars to use them as they see fit, the dollars will return to build factories, create jobs, and produce good, old fashioned innovation. But this won’t happen with newly printed dollars. It doesn’t work that way, because that weakens both parties and makes our factories unattractive. It must be the dollars that we willingly handed over for TVs, computers, shoes, toys and even building materials. We must accept that we owe China—big time! For decades, we passed off pictures of George & Ben in exchange for tangible goods. We knew the Chinese crafted high tech goods for less and that the political system was repressive. But we looked the other way. We really wanted those things! Whether you like their government or not, we promised to expend future time and resources supplying their children with commensurate goods.

Why does China say "America works for us"
Click image to learn why (video = 1min)

This video was commissioned in an effort to defeat Obama’s 2010 universal health care bill. It has terrific shock value. It depicts what China believes to be our economic weakness. I won't comment here about health care or stimulus economics. It’s unrelated to my point. But the video also depicts what Chinese believe to be their imminent destiny, perhaps at America’s expense.

They deserve all of the positive things they have earned. Although it’s natural to whine and complain about an uneven playing field, and our past glory (Automobile assembly, television, the moon landing and the Internet), China is winning in the global economy and any trade in which we engage is, by definition, fair. In fact, the only uneveness in the playing field of international trade is just the opposite of popular perception: It has been tipped in our favor for the entire 20th century!

We must get it through our heads that capitalism is not a contest! This simple truth is often overlooked. The emergence of China as an economic superpower is a good thing. Not just for the Chinese, but for every American. If we keep our own ship in order, the result will be an abundance of goods and services from both sides because we will have affluent trading partners, broader access to labor and markets, and eventually, democratic trading partners.

- Ellery Davies|
Ellery clarifies law and public policy. He is a frequent columnist and TV commentator.

Reverse Distributed Cloud: New way to backup & access data

In the past, you had several options for data backup—all quite boring, because they did nothing to make your data more accessible as you moved about your life (on those private jets, yachts and islands that we all own). And they certainly did nothing for cross-platform interoperability. That didn’t even factor into your purchasing decision, right? You simply backed up to a locally attached drive, a network server, or even to a remote service. When you lost data, you restored from the same device or server. What more do you need?

In the past year, a new data backup model has evolved: Backing up ‘to the cloud’. For most of us, this phrase simply means moving data or accessing apps that are stored remotely and managed by a service provider rather than accessed from a local drive or attached device. A key benefit, of course, is discipline. If a professional organization stores our data, it may not be as secure, but (we assume that) it darn well better be backed up continuously. Sooner or later–depending upon how much Wild Duck blood runs your veins–you will probably try it. But I submit to you that it can be improved significantly. The improvements will be achieved by the first party to reverse the model! (Are we Intrigued yet?!)

But consider this: What exactly are you backing up? I don’t mean What as in “What content”: Work documents, photos, tax returns, or movies of Aunt Betsy removing her first bunion. Rather, I mean From What. I suspect the question seems silly. You’re backing up local data–The stuff that is stored on your notebook, desktop PC, or handheld device. ¹

Of course, the market is already gravitating toward cloud backup solutions like Carbonite, Mozy, virtual drives like DropBox, and access anywhere solutions like SugarSync. (Hint: These services are adept at slightly different user benefits. More about this later). Let’s take Carbonite for example. The Boston based company had an IPO just this past week. For a very modest cost, Carbonite continuously backs up your PC data over the Internet, even as you work and surf. Cool! If you accidentally delete a file, lose your PC, or even if you are simply far from your PC, you can recover whatever files you need.

With a little creativity, there are clever things you can do with cloud storage. In 2007, Katherine Boehret ² was fascinated by a tiny startup called TubesNow. During the very brief time that the company existed (they closed during the same year), It worked like this: For each friend in your personal TubesNow community, you configured a desktop icon that looks like the end of a pneumatic tube. ³ Then, simply drag and drop files & photos onto any of your Tubes. A weird sucking sound told you that the photo was being whisked through a “tube” onto your friends desktop or into the folder shared with selected friends. Pretty cool. But even so, the company that offered TubesNow closed up during the same year. So did Xdrive, another drive-in-the-sky provider.

Coolness aside, the problem with all these cloud storage and sync solutions, is that they can only do one major task with fluid transparency. Either backing up your data, syncing data, sharing data, or accessing data from different devices. With a few tweaks, we can describe a simple architectural modification that inherently yields all four  benefits. Most importantly, it vastly increases security and privacy, and especially, redundancy.

Intrigued? I hope so. It’s unlikely that I will receive a patent on this idea (I am at the provisional stage). But I certainly hope to be known as the pundit who first described it in sufficient detail to spark widespread development by entrepreneurs.

October 2011 Update: Several start ups (or service reincarnations) are beginning to do what I will describe in Part 2. Symform & SpaceMonkey definitely get it! Symform is perhaps closest to the ideal model described here.

I call this model, Ellery’s Reverse Distributed Data Cloud (RDDC). Stay tuned. In the next few weeks, I will cover the “reverse” idea and then the “distributed” part. For nerds who just can’t wait (I should be so luckily), review my personal crib sheet. It’s a tiny bookmark-size strip of notes from which I will craft the next installments on this topic.

- Ellery Davies
Feedback is always welcome.
_____________

¹ Let’s please agree to stop calling portable, connected devices “handheld devices”. Just call it a phone. After all, Palm is dead, Blackberry is a phone, and both have been usurped by Android and iPhone. For all intents and purposes, when considering the universe of portable and connected mobile devices, Android and Apple are the only two left standing!

² Walt Mossberg is an editor at both The Wall Street Journal and All Things Digital. In Oct 2007, his colleague, Katherine Boehret featured TubesNow in the Personal Technology column of The Wall Street Journal and at All Things Digital.

³ A pneumatic tube is the suction device used in the drive-thru lane of some banks and pharmacies to move paper and pills between your car and the window clerk. In the 20th century, it was widely used in businesses, stores and warehouses to move all sorts of things, but mostly to move written information. That’s why you don’t see them anymore. Today, information travels electronically and very often, it needs to move beyond a big building.

U.S. Police Snoop Email, IMs, Phone Records

I originally wrote this in April 2011 as feedback to this article in PC World.
__________________________________________________________

The article linked above begins with these words:

Law enforcement organizations are making tens of thousands of requests for private electronic information from companies such as Sprint, Facebook and AOL.

Police and other agencies have “enthusiastically embraced” asking for e-mail, instant messages and mobile-phone location data.

PC Wiretapping with a court order is one thing. But this amounts to preemptive forensics. It reeks of unreasonable search…

Intercepting and reading private communica- tions has no ethical leg to stand on, especially when initiated by a police force. It suggests that personal email (or data written to a disk) should have less protection than private thought. Personal communications must be rendered off limits to interlopers. I say “rendered” rather than legislated, because technology exits to foil overzealous acts of law enforcement. In security consulting, I rarely help courts to glean information that the author believed to be private. Applying forensic skills in this way puts blood on the hands of good technicians. (Quite literally, it had better involve a murder or bomb threat). Instead, I am more likely to help individuals and organizations confound any attempt to reconstruct, trace or decode information, including content, history, ownership, origin, transfer (including asset transfer) or digital fingerprints.

I call this practice “Antiforensics”. More like-minded privacy advocates are heading in this direction. In almost every case that forensics is employed without consent of the creator or archivist (i.e. the person being investigated), the practice is unethical. I would never claim that the field lacks all legitimate purpose, but it is too often used by courts concerned with porn, drugs, your marriage, disputes between corporations, or the money in your mattress. At the drop of a hat, a forensic specialist will roll over and sing like a jay bird for any court in the land. Must we sell out? Where does basic privacy fit into the picture?

Cryptography and stenography not only belong in the hands of every human (Thank you, Philip Zimmerman), they should be inherent in every email, fax and phone conversation. They should be part of private communication and every save-to-disk. If “The Man” has a compelling reason to catch you with your pants down, he should have both a court order and a good gumshoe. One who resorts to conventional means at either end of the communication, rather than mining for data at a nexus in New Jersey (AT&T) or Virginia (NSA).

As a security specialist for almost 30 years, I have seen “forensics” destroy families, lives and laudable civil movements. The art of a 3rd party using forensics for the improvement of society is far less prevalent than forensic activities that interfere with personal or political freedoms.

The spirit of prophylactic and preemptive antiforensics is embodied at Fungible.net, a data recovery lab in New England.* Mouse over the red words “Forensics” and “Security”. The lab uses the most sophisticated forensic tools, but they won’t sell out to a court unless someone has targeted the president.

Are they I in the minority, practicing “anti-forensics” with zeal and passion? My concern for privacy (before and during an investigation) exceeds my allegiance to political jurisdiction.

How about you? Give us your opinion about antiforensics.   —Ellery Davies

Ellery Davies clarifies law and public policy. He is a privacy champion, antiforensics expert, columnist to tech publications and inventor or Blind Signaling and Response. Here at A Wild Duck, Ellery dabbles in economics and law.

* Fungible.net is a data recovery service. But they also host Ellery’s Wild Duck blog.

Don't Force Verizon to Allow Free Tethering

I originally wrote this piece in June 2011 as feedback to this article at CNet.
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A Dissenting Opinion — This one should go to the carriers
But first, in classic Wild Duck style, some background...

Smart phones can act as an internet modem, even without a paid plan for off-device data.

Tethering refers to the use of a mobile phone as a modem for either a directly attached PC (using a USB cable or Bluetooth connection) – or even better – by broadcasting a Wi-Fi signal to several nearby devices. They each access the Internet as if they were accessing a router in a home or restaurant.

As of Summer 2011, Verizon charges smart phone users $30 for a use of the Internet on the phone itself (the most popular mid-tier plan).* But they charge an additional $60 for the most popular Hot Spot plan, enabling the Smart Phone to broadcast Wi-Fi Internet connectivity to nearby devices. Verizon expressly forbids subscribers to use technical tricks to obtain this added functionality without paying for added feature, even if the user stays within their monthly data allowance and even though the phone has the native ability to do so.

Hackers have methods to use PCs and gaming devices through the mobile phone network, while making it appear that the data is used on phone itself. Most of these tricks require rooting the phone, a complex process that may "brick" the phone or void the warranty. (At least one Android tethering app doesn't require rooting the phone).

A new complaint to the FCC pushes Verizon to allow free 4G tethering without added cost for the use of other devices on the carrier's networks. The plaintiffs argue that they are paying for a fixed data allowance and that the phone they purchased from the carrier clearly includes the tethering feature. In theory, they are asking "Why should Verizon care on which device we access the Internet. Either way, we are paying for the connectivity and the overall amount of data."

Carriers charge more for off-phone data use (a PC, camera or gaming device).

But Verizon does care! They realize that a single, palm-size device with a 4 inch screen pulls less data through overloaded towers than 5 or 10 PCs, digital cameras and even home theaters – all using the Internet at once. (Yes! Using the wireless carrier as a backhaul, a single smart phone acting as a WiFi router can provide internet connectivity for an entire home! My Droid Charge can service 10 wi-fi devices!)

Will plaintiffs succeed in a class action against Verizon? Can users force the carrier to allow tethering without a cost premium? If they do, I think that we all lose...

I can hardly be called an advocate for the carrier. Jonathan Zdziarski once led a class action against Verizon to stop them from crippling Bluetooth on the Motorola v710 phone. I was a plaintiff in that suit. We won on the basis that the phone and the packaging displayed a Bluetooth logo which conveys a certain meaning. I also played a role in persuading carriers to unlock the power of user equipment, to allow a native handset GUI, and – eventually – to allow rooting, at least with indifference.

I am a heavy data user. Although I love what Android has done to my smart phone, I prefer to use a PC with a PC OS, instead of the tiny screen on my phone. And as an acknowledged hypocrite, I will admit to occasionally using a tethering application, so that I can get Internet access on the go.

But, I am lobbying for the carriers on this one. It ain’t easy to stick a needle in my own wallet, but let's play Devil's Advocate for a moment. Let's look at this from Verizon's point of view...

Verizon smart phones are bundled with unlimited data for use on the phone itself (you could add a Bluetooth keyboard and even an HDMI monitor, but not, according to Verizon, serve up Wi-Fi to a other gadgets. That option is available for an additional fee of $60/month.

Given the wording of the license covenant, it is still possible that a judge may side with Verizon. Although the phone is designed to support tethering and Wi-Fi, it could easily be argued that these were incorporated to facilitate carrier options. After all, a tethering "app" is not an application as envisioned by the law. It isn't a game, an email client, or a restaurant finder. It is a hack -- a work around!

But let's say that the judge interprets the restriction literally and awards the claim to the plaintiffs (presumably to all Verizon customers). If I were the carrier, this could only result in one action. Good for some phone users, but bad for most: I would change the pricing model. No longer could I offer unlimited data for phone users, because each phone can act as a mini ISP and router. It could effectively pump an entire building and all the splitters and switches within. It could service an auditorium or a trade show.

You get the point? Carriers would bill all smart phones for data by the gulp instead of the pipe. No law can prevent this. If you ship 1 FedEx package a month, you pay ‘X’. If you ship 30 packages, you pay more. In effect, we return to metered use. If you use 2GB, you get price A. If you use 8GB, price B, and more than 10G, price C. To those who use just the phone, this fight makes you the loser. You will occasionally hit the limit.

I can think of only one other alternative. Perhaps, Verizon will simply raise the price for all you can eat. But the judge may allow a discount or rebate to users who never tether their phones. This scheme could effectively bring back unlimited use in the palm of your hand, while forcing those of us who tether to pay our dues. As we should!

Can Apple Offer Music Pirates Amnesty for $24.99?

I originally wrote this piece in June 2011 as feedback to this article in Forbes Magazine.
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Now, wait a cotton-picken second! The title of this article, perhaps added by a CNN editor, says:

"Apple offers music pirates permanent amnesty for $24.95".

...but the article doesn't suggest amnesty at all! It only points to a loophole in Apple's technology that may allow pirates to upgrade their music collections without even paying for ongoing streaming from the new iCloud.

I bet the copyright holders of all the non-purchased music in the collection of Mr. Elmer-DeWitt, his kids, and (perhaps) my own collection would disagree. While Apple may be garnishing a few bucks for streaming -- and converting your pirated music to high quality DRM-free copies, I don't think that the content creators and owners are getting a cut. And they certainly aren't agreeing to amnesty for 25,000 songs previously ripped and now upgraded and "stripped" by Apple.

I don't like DRM any more than the next guy. But c'mon folks. Let's call an "Apple an Apple" (and a Pirate a thief!). This is not amnesty, it is  clever stealing with a wink and a nod from a major vendor. Shame on Apple!  If the facts are accurately reported by Forbes and CNN, then an American icon has been tarnished.

Ellery Davies clarifies law and public policy.
His music & media is streamed from NAS in his home.
Feedback is always welcome.

Beijing to Impose Encryption Disclosure Rules

I originally wrote this piece in April 2010 as feedback to this article in The Wall Street Journal.
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Another reader, Felix Wyss, correctly points out that this WSJ article is unclear on the information demanded by Chinese authorities. Every open or public key encryption standard is based on a disclosed algorithm. That's the whole point. It is the complexity of reversing that algorithm that makes the encryption secure...

If the Chinese government wants more information about the algorithm used to encode data for transmission or archival – For example, to ensure that it is secure – then I say, "Absolutely! Get all the information you like". But if they want a key escrow or back door, they are barking up a dead tree stump. Been there. Done that. Our own government tried this. In the words of Dana Carvy: "Not Gonna Happen".

Even under communist rule, that wouldn't be encryption at all. And with the growing clout of economic success, Chinese companies won't stand for it. The Party would do better by demanding that routers or firewalls force users to create two keys: One for the end user and one for the network admin. That would promote good business practice. Of course, turning over the 2nd key to anyone outside of the immediate work group  or family would require active user consent and compliance.

Hey China! Let's face it: The days of suppressing free speech or forcing products to snitch on their users is coming to an ignoble end. The secret police of Romania, East Germany, the Soviet Union and Iraq have all disbanded - or at least redirected to classic gum shoe detective work and intelligence gathering. Terrorism is the new enemy and not the private business and political activities of your own citizens. You have shown a remarkable ability to emerge as an economic superpower, making things that people like, exporting quality products, all while raising the standard of living for your population. Ultimately, this helps all countries. But now you have some very ugly skeletons to sweep out of your closet. Modern 1st world countries cannot forever suppress political and religious freedom.

Grow up. We really do want you to enter the community of nations some day.

- Ellery Davies
Ellery Davies clarifies law and public policy. Feedback is always welcome.

Ellery to ICANN: Just toss out TLDs altogether

Several Wild Ducks have asked me to comment about gTLDs and the numerous articles about the imminent availability of these Generic Top Level Domains. Under a new plan, recently approved by ICANN, domain registrars will begin selling Top Level domains that allow individuals and organizations to end their Internet address in any way they like. For example, you could become the arbiter of coca-cola, and then dole out domains that end in this way, such as corp.coca-cola or drink.coca-cola. (There is no .com, because in this example, the top level is the phrase "coca-cola".

First, some background (or skip directly to my opinion)...

In the beginning, there were just a few TLDs. Most web surfers still think of the group as the legitimate core, because they represent an established cadre of online companies and organizations: .com, net, .org, .gov and the individual country endings, such as .co.uk, .il, .tv, .cc, etc.

Then, some wise guy got it into his head that we needed .info, .museum, .movie, and most recently, .xxx. (The thinking behind is bizarre: If you can't eliminate porn, rope it off into a red-light district. Yeah, sure! This will surely deter my teenage nephew from checking out the hoochie-coochie). Today, there are 22 gTLDs and 250 country codes.

Now, they're at it again! In their infinite wisdom, the governors at ICANN have decided to dole out arbitrary TLDs. (Thankfully, this does not include founding ICANN governor and chairperson, Esther Dyson. Like me, she understands that unleashing gTLDs will lead to waste, litigation and folly). In June 2011, the ICANN board approved of a plan to offer arbitrary top level domains. The plan goes into effect in December 2012. Want your domain to end with .IveGotAStupidIdea? Be my guest! Just pony up an application fee of US $185,000 and soon, you too will be signing up anyone who wants their domain to end in this way.
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Time for a Wild Duck rebuttal

Concerning the ICANN decision to open the TLD floodgates, some have suggested that it is a "cash grab". Perhaps that's one motive. After all, ICANN wants USD $185,000 from each applicant. (Why?!). And one ICANN officer already has quietly set up a venture to capitalize on the forthcoming milieu. But considering the nearly unanimous vote, I suspect that at least a few ICANN members think that the idea has merit, even without the allure of personal gain.

Unfortunately, the idea has no merit! Implementing choose-your-own TLD will create market chaos. It makes TLDs irrelevant. Domain and trademark owners can't possibly chase after every combination of letters in the universe. Under this scheme, we will all simply own domains with dot somewhere in the name.

More likely, it will have a "regressive" effect by making .com the only relevant TLD. In the end, that may be the silver lining. But it is still an asinine idea, because there is an easier way to achieve simplicity. In fact, .com is already akin to not requiring a TLD at all! In effect, you own the real-estate that comes before it. All other TLDs are irrelevant. (.gov is a possible exception, because it is controlled within a clearly defined venue).

Why is .com so relevant and important?

• It's the domain browsers add automatically (press "Ctrl-Enter")
  (there is even a key for it on the Android text-entry keyboard)


• Domains that end with .us resolve to .com, even without .us


• Search engines are biased to present them first

To illustrate, consider this: The CEO of Coca-Cola is Muhtar Kent. Once ICANN doles out generic and arbitrary gTLDs, which address below do you suppose Mr. Kent will use? Which would you choose?

• mkent@coca-cola.com


• mkent@coca-cola.{something else}


• mkent@{something}.coca-cola

In the last two examples, the {something} is required! Without it, the address is illegal (it fails). Why would anyone want the address mkent@ceo.coca-cola? It is preposterous!

I am in favor of throwing away TLDs altogether! Let's just agree that if you own the .com property, then you are a fortunate puppy. In effect, you own the words that precede it—the naked term. If you don't own the .com property, then you are playing 2nd fiddle. You will forever be losing mail, because many senders accidentally address the "real" McCoy and not a "wannabe" (that's you, of course!).

If you already have a domain ending in .net or .org (the semi-credible alternatives) or even .info or .tv (positively ludicrous!), then use it in good health. But only in rare situations does using a non .com TLD make sense – and only if you own both .com and another TLD of the same word. For example, Verizon differentiates its staff and users by separating them into .com and .net communities. That's kind of nifty, but it still leads to confusion and misdirected mail! FWIW: .com rules the web.

Ellery Davies clarifies law and public policy
Feedback is always invited.
- Ellery Davies

Time to end standoff w/Somali Pirates

The US and anyone who abhors extortionists are past due for action. As Capfrank observed, The time for a decisive, overwhelming and permanent solution is certainly at hand. This would not require a very big cost or risk to innocent life. This is not Iraq, Afghanistan or even North Korea. There is no issue here of state sovereignty, politics or abusive economic policies. It's a bunch of thugs and murderers who say things like this:

"I lost the money I invested and I lost comrades. No forgiveness for Americans. Revenge! Our business will go on."  He adds that, so far, he spent  $110,000 in the business venture (the hijacking!), including weapons, food and salaries.

It's high time we stopped these criminals. A fairly straightforward plan:

1. The many countries affected send 15 or 20 warships to block all ports


2. Airplanes drop 5,000 paratroopers just outside the lawless zone controlled by Pirates.


3. A blitz of PR via every available channel including air drop. It informs citizens that two simple dictums will be ridgidly enforced by seafaring nations of the region:

a) The citizenry has 48 hours to turn over the Pirates, their commanders and all available information with gusto (that means with zealous cooperation). In return, the commerce consortium waives charges for anyone who does not have direct blood on their hands (for example, prostitutes and barkeeps who profited from the inflow of ransom booty. They will be forgiven).

b) During this same period, all captive vessels, hostages and cargo are to be released escorted by unarmed individuals to the Allied command at Port xxxxxxxx. If we fail to process the return of all published vessels and individuals, local citizens will be held responsible.

After 48 hours, we enter, eliminate the cancer, and clean up whatever we can. At this point, it is no longer our responsibility to secure public safety. We do what is necessary to protect innocent hostages and global commerce. We certainly don’t take prisoners. *That* just isn't necessary.

Sound like bullies? It needn't get to that. It is amazing what the locals will do when they weigh their options. My father saw this in WW2 in North Africa and during the liberation of Sicily. Locals aren't dumb. When presented with a better option, they will switch their allegiance in a heartbeat!

Ellery Davies comments on political affairs for both Yahoo and Google.

Obama authorizes unique internet ID for all Americans

I originally wrote this piece in January 2011 as feedback to this article at Engadget.
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This is certainly the most frightening story of the past decade. It is more threatening to personal liberties (and even to national security) than any  terrorist organization.

There will probably be a very short time between implementation of a national cyber ID infrastructure and implementation of an effective means to mix/proxy or otherwise obfuscate the digital trails of a casual web surfer.

It's likely that an eventual law would criminalize anyone who covers their tracks. But even if the use of an accredited-ID channel is optional, your liberty is threatened by the very existance of a national identity program. Think of Germany rounding up the Jews. Is the metaphor too extreme? Think of a prosecutor questioning a witness: "Mr. Smith, I see that you did not allow your identity to be tracked when you posted this message. What are you trying to hide? Only criminals hide their Internet ID!"

It is critical to a democracy and to our personal freedoms that we are not identified each time that we speak. Not even as a default option that we can easily override. When you walk into a bar, you may be "carded" so that you can purchase alcohol (just as you must present a credit card for an on-line purchase). But your ID is not recorded and then correlated with your statements to to other patrons or to the proprietor (in case you missed the metaphor, the proprietor is a government).

- Ellery Davies

Border Control & Immigration: A case for open borders

In May and December 2010, I wrote 3 pieces about border control and immigration.
Here they are combined into one posting.
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In May 2010, I wrote A Case for Open Borders, originally in response to
Los Angeles to boycott Arizona over immigration law.

Twice, during the past 12 years, I have tried – unsuccessfully – to host a married couple from China for a 3 month tourist visa. Both husband and wife are retired and their child and grandchildren are US citizens. Prior to this month, the US consulate office in Beijing refused to issue Visas, based on two presumptions about my prospective guests:

1. They were recently professionals (a medical doctor and a University science professor), and might be seeking to restart their careers in America.


2. They failed to demonstrate sufficient ties to China. That is, they did not have a large amount of money in the bank, a home that was paid off, or a business that would fail without them. (Home ownership is relatively new in China).

Yet, this month, they were issued Visas on their first visit to a US Consulate, and now they are in my home, making plans to see the Grand Canyon, Bay of Fundy (Nova Scotia) and Washington DC. So what has changed?

Of course, my family acted as sponsor and guarantor. Right on the Visa application, we commit that our guests will not require public funds and that they will return to their homeland. But this covenant was required with each failed application in the past. What has changed?

To learn more about the swift approval after years of effort, I contacted a US official in Beijing who was involved in the decision process. Of course, 911 played a role in the reduction of visas issued during the past decade. America needed to develop better mechanisms to detect and prevent terrorists and those who support terrorism from entering the country. But this was not the primary reason that they were denied for so long. The real reason was economic...

Until recently, the US tried hard to block visitors seeking economic opportunity. But in the past few years something has changed. Not only does China enjoy an enormous trade surplus, they have lower unemployment than many regions of the US and their new found wealth has trickled down to most urban areas. (It is no longer true that a professional earns $400/year. That was in 1996. Now, a white collar job that might pay $100,000 in USA is paying $42,500 and the gap is closing quickly. Factory workers in rural areas are still behind—but not as much as you might think, especially not if their employer has ties to the west.

So the real reason for the quick visa decision now, is that the US consulate office understands that America is no longer a land of opportunity (at least not a land of disparate, relative-economic opportunity!). Visitors from many countries have better opportunities at home: A stronger currency and lower unemployment.

I suspect that even if this were not a temporarily truth, the desire of Americans to block immigration is either racially motivated or based on misguided economics. Visitors who work (on the tax roles or even on the sly) do not “steal jobs” from Americans. Instead, they raise the living conditions of all Americans. Even during tough times, protecting borders from visitors and immigrants is counter productive. It serves absolutely no purpose. The issue isn't enforcement of immigration law. The quotas and restrictions shouldn’t exist at all!

At the risk of overwhelming detractors, I suggest a country with NO visa requirements and a very different border control: Let in everyone with a non-criminal past! (How’s that for heresy?!). Instead of spending resources trying to block economic and political immigration, focus only on terrorist threats. [Willingness-to-work = Good], [Desire-to-kill-neighbors = Bad]. Really very, very simple.

The conventional fear of open borders is that those of us fortunate to be here first will suffer from a glut of “wannabe” Americans. Nonsense! When other countries see the drain of talent, of capital and of dedicated workers, they will have only one way to ‘retaliate’: To compete with an open, democratic, capitalist, and pluralistic society, they must adopt these traits. They must build up their own welcoming ‘melting pot’ and create a competitive and proud work force. Result: All boats float higher—even across the pond with trading partners.

A Wild Duck blog is not the place to argue the macro-economic mechanisms. I won't attempt defending my position here. But think it through. Get past your prejudice—And post your feedback.

-Ellery Davies
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Also in May 2010, I added this observation in a Guest Editorial for Yahoo in response to
Police chiefs voice concerns to AG about Ariz. law
          By Pete Yost, Associated Press. Yahoo News, 26-May-2010

WASHINGTON - Police chiefs from around the country have told Attorney General Eric Holder that Arizona's new immigration law will divert law enforcement resources away from fighting crime. In an hour long, closed-door meeting with Holder, the chiefs have said that being forced to determine whether a person is in the United States illegally will break down the trust that police have built with communities. One participant at the meeting, Los Angeles Police Chief Charlie Beck, said the Arizona law and similar legislation proposed in other states will actually increase, rather than decrease, crime. Arizona immigration law empowers police to question anyone they suspect of being in the country illegally.

Feedback from Ellery Davies:

Being in this country illegally isn't a violation of Arizona law nor local municipal laws. It is of interest only to the Federal government and demographic sociologists. Moreover, it is a technicality. Those who make it out to be more than a technicality are either under the false impression that aliens cause more crime than citizens or – more likely – they are xenophobic.

I would argue that enforcement of Federal immigration law and anti-alien statutes does not help Arizona at all. As the police chiefs point out, it may increase crime due to the breakdown of trust between individuals (including citizens) and the police.

Supporters of the Arizona statute claim that illegal aliens disproportionately murder, rape and siphon public resources. Yet a very significant and disproportionate contribution by immigrants - legal and illegal - is more accurate.

Border control should focus upon blocking access to criminals directly: terrorists, drug runners - and of course those who are likely to require free services.

It’s easy to discourage lechers. Stop giving them services. You don't need to frisk people in the street. Check their ID at the schools, hospitals and food stamp dispensaries. It’s that simple. Limiting any other demographic (even if “illegal”) is a holdover to racism or based on an unfounded fear that immigrants steal jobs...

Ahhh, yes. JOBS! The economics of this last issue is widely misunderstood. So let's lay out the fact, and we can debate it until the cows come home...

Immigrants take jobs that legacy residents refuse to perform. As they integrate into communities and raise capital, they create jobs that employ all of us. By welcoming immigrants, we benefit by attracting freedom-loving foreigners from all countries. Their homelands experience a brain drain (and, yes, the flight of common laborers too). To fight back, they gradually resort to free markets: Hey wait! That means capitalism and personal freedoms. Precisely! And this benefits us all.

G-d! I wish that everyone could see the big picture. It took me 50 years to understand the cause and effect of border control. I hope that society figures it out in less time.
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In December 2010, U.S. border patrol agent, Brian Terry, was shot and killed in Rio Rico Arizona. When USA Today distributed this article from The Arizona Republic, it got an unusually large amount of reader feedback. In response to readers blaming liberals or expressing racial hatred toward Mexicans and Africans, I contributed this reply:

It's easy to blame liberals, immigrants and weak borders. But how many among us is not an immigrant or born of immigrants? The crossing of “illegals” * is facilitated by a great incentive: disparate opportunity. Solve it by fixing incentives (a “carrot & stick”):

•  Increase opportunity in their lands through democracy & trade


•  Eliminate opportunity here: Health benefits, assistance & taxpayer subsidy. When word gets back that illegals have no opportunity & protection, they stay with family or work the system (a legal, taxpayer route). We must recognize racial & cultural prejudice. Hispanic, Asian, African, Jew or Native American—They are not the problem. They are a solution! It is what makes us great. The problem is chronic unemployment on both sides of the border (due to gov policy), excessive doles on our side, and artificial trade restrictions.

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*  Follow up:  On Oct 24 2011 . . .

The Daily Beast writer, Peter Beinart, observes that the term “illegals” is selectively applied as a noun to denote “illegal immigrants” and typically, those of Latino ancestry only.

As a noun, the term “illegals” is a racist euphemism and rallying cry. When is the last time anyone has called an Irish immigrant an “illegal”? How about a corporate officer who fails to file a tax return? What about Mitt Romney? He paid an undocumented landscaper. Is he an ‘illegal’ – or does the term apply only to the laborer that he hired? It’s something to ponder as we sit in glass houses, wrapped in a flag, eating apple pie and with passport in hand.

Should undocumented immigrants collect free services that burden U.S. taxpayers? No! Should we carefully screen for criminals and terrorists at our borders? Of course – even if the selection process stereotypes tourists & returning Americans! But for what reason do we fear border crossings by those seeking freedom and opportunity? What is the threat? Are we afraid of those who seek nothing more than pay taxes while serving as a gardener, nurse-assistant, laborer or child care worker? What is the threat?!
_____________

Ellery contributes political commentary to Yahoo, CNet, Google and other forums.
He welcomes feedback in his blog, A Wild Duck .

Who is Ellery? A Wild Duck

In the before time, man was differentiated primarily by physical prowess. In the middle time, we were differentiated by wealth or poverty. But in the age of information and intellect, individuals are defined by their ability to communicate effectively and by their opinions...

I write with verve and panache. I am also one very opinionated, idiosyncratic SOB.

To my colleagues, I am in need of Valium. To my superiors, I am a wild duck that needs to be controlled and channelled. To my subordinates, I am in need of patience. To my wife, I am a jerk. And to my offspring, a hero, but - at the same time - very, very weird.

When you reach the 1/2 century mark, you are entitled to opinions and habits. But those fortunate enough to leave a positive legacy in their wake have learned to revisit and reassess their opinions. They should never become so entrenched that the owner is inflexible in the light of new ideas and alternate assumptions.

Ellery is my Nom de Plume. I'm not ashamed of my Clark Kent reality, but here, in A Wild Duck, I more freely express opinions.

I have led high-tech startups, run support organizations, designed missiles, and taught fencing (not the fence that surrounds your yard...but rather the sport in which you don head gear and poke oponents in the heart with a foil).

I love Star Trek, Euclid and classical music, but also relish in Doo Wop and Calypso. I kvell over the combination of Stilton cheese with a dry Cab. It is one of my 5 Raison d'être (a fundamental purpose for existance). My taste in woman is utterly unconventional, yet I love my wife and children unconditionally.

I am Ellery Davies. The Blog starts here...
For a quick vitae, see Ellery's interests. —
Or for Dogbert's thoughts on the meaning of "Fungible", click here.