I don’t often feature guest bloggers or writers, but I figure some of you might enjoy this piece from a friend (I’ll call him “Lawyer A”)  I’ve known since my early adolescence in Noo Yawk.  He’s now a Midwest country lawyer with an ironic eye for the quirky situation.  I know a number of my readers are attorneys, so I’m hoping you’ll enjoy this story…

THE SETUP

My practice of law, as you know, is litigation and trials.   All litigation involves investigation.   Investigation of documents, the law, background, etc.   Investigation runs the gamut.  It can be dry and full of dead ends; it can be revelatory and bright—filling you with joy when you discover something that helps your case–especially when you’re excited about your case.   (Which is not always the case).

In my experience, the best and most rewarding part of investigation is witness interviews–whether by telephone or in person.

However, in many of my commercial cases, there is not too much to the witness interview.  This is because commercial cases are mostly document driven.  Either this document was signed or it was not.  Either this document means this or it does not (a question of law that has nothing to do with witness testimony).   Occasionally there are “oral” contracts or agreements, which sometimes bring arguments about the parol evidence rule or if that rule does not apply, bring he-said/she-said type dynamics to the case.  But that investigation is quickly concluded when one finds out the story that “he” is sticking to and what “she” is sticking to.

Recently, I was blessed, in a sort of way, with a personal injury case from a good client–we’ll call them XYZ Bank.   I do commercial work normally for them, but we have a good rapport, and they thought they’d ask me to do a PI defense case for them– at a “competitive” rate.  I booked it at $175/hr–which is actually a premium rate in any market in the Midwest (most PI defense runs in the $115-$160 rate in these parts).

THE CASE and “Rashomon”

So, on May 21, 2009, Ms. JH decided to go to her local XYZ Branch in town.  It was a clear bright sunny day and at about midday she parked her car in the bank parking lot and walked up the sidewalk to the set of four stairs that led to the entrance of the bank.  In the course of going up those stairs, Ms. JH fell down.   Within a minute, XYZ employees attended to her and helped her up and she then went into the bank.   When asked if “she was alright” she answered, “yes.”   She did her banking and left.

Within the month, she entered into the hospital complaining of all sorts of serious injuries.   She was treated for those injuries and the cost of treatments at that time, and then subsequently went well into six figures.

Then she engaged an attorney.  The attorney notifed XYZ that Ms. JH sought reimbursement for her treatments and sought compensation for pain and suffering.

Since XYZ is self insured, they have a contract with a Third Party Administrator “TPA,” which is basically an insurance adjuster company that administers and settles claims.   For 2 years this case percolated through the TPA with give and take and back and forth–but the parties did not see eye to eye.

Then Ms. JH’s attorney filed a lawsuit.  That’s when the TPA engaged counsel to defend the lawsuit.   And that’s where I came in.

Once a dispute goes to the lawsuit phase–everything changes.  You see the adjustment phase focuses on the “bottom line:”   Damages.   If Ms. JH had said “Gimme $11k,” this case would have ended at the adjustment phase.  But once Ms. JH demanded in excess of 6 figures—-things changed.   Even big companies like XYZ don’t simply accept and payoff 6-figure demands…if they did it would be like the proverbial mistake of feeding a stray cat.

No, big companies must always watch the soft underbelly of liability.  And they must fix and focus a consistent policy in addressing claims.

So, the policy is basically that if we can settle for nominal nuisance value–then skip the expense of investigating liability…and pay the parking ticket.  However, if the demand is too high, then focus on exploiting the Plaintiff’s weaknesses on liability.

LIABILITY AND HOW TO HANDICAP A CASE

Every PI case is like a triangle.  There are three vertices.

Vertex 1= Liability

Vertex 2= Damages

Vertex 3= Collectability.

Those three vertices are the essence of every garden variety negligence lawsuit.   Attorneys that don’t understand the dynamic of those vertices will fail miserably.

(As an aside–you can always tell a young attorney from a seasoned attorney simply by which vertex that attorney focuses on.  A young attorney focuses on vertex 1….liability.     For instance….A homeless man steals a car, negligently runs a red light and kills a pedestrian.    The young attorney gets the case from the decedent’s family and promptly pours money into suing the homeless man.   It’s a slam dunk case….a default judgment!!!!    For $800,000…..      You know what you do with that judgment?   You frame it.  B/c it’s worthless.  This is because the defendant was not  COLLECTIBLE  (see Vertex 3)).

The seasoned attorney on the other hand–concentrates on the defendant.   “Oh…it was Target that was involved in this…right?”      Target, indeed.   Once the seasoned attorney sees a collectible defendant (which Target Corp. is ) he/she looks into liability.    This is because the seasoned attorney knows that the bottom line is getting paid.

THE INVESTIGATION.

Once I’m involved it really is very simple.   The vertices to concentrate on are damages and liability.  But already damages have been alleged–we know they are not palatable.

So we have damages….and we don’t like them and to impugn them involves incessant and expensive document review.  Consequently the ertix to concentrate on is liability.   Liability…..Liability…..  Because most importanly about liability is this: If you defeat it—the issue of damages is moot.  (If someone is damaged that’s one thing they still must prove another party is liable to be compensated).

LIABILITY

In a slip and fall case–one of the hardest of all for any PI attorney, the Plaintiff basically has to prove that the premises where they fell were negligently maintained or designed.   In essence they must prove that a normal person would have slipped b/c of some kind of negligence on the part of the owner of the premises.

Like in all PI cases,  LIABILITY in slip and fall cases rise and fall on what eyewitnesses might say….

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Many have claimed that there’s no end is sight for this downturn, or recession or depression– until we see an uptick in the housing sector again.

Still others claim that until the banks are “fixed” and back on their feet, we cannot experience stable economic growth through strong credit support.

It appears each claimant is at least partially right, and moreover, that each of those sectors live and die together, wrapped in a form of symbiosis that is both mutually beneficial… and destructive.

This may all be “Master of the Obvious” stuff for you, but I figured I’d bring it to illustrative life for you anyway.  There’s not been much talk of the housing sector recently on these boards, and maybe that “out of favor” status is warranted.  Whatever the case, it’s clear that both housing and the bank index are again marching in lock step, and seemingly to their doom.

First I’ll show you $BKX –– no surprise for my readers, who’ve seen my starting to ring up purchases in the anti-bank index SKF because of this very weekly (sic) chart:

Note now that in comparison, I won’t use the Housing Index ETF– XBH— mostly because it’s made up of a lot of non-house building stocks.  Same with another housing index–  ITB — where some 70+%  of the stocks encompassed is not home builders but instead retail accessory places like Pier 1 and Home Depot.   No, I simply took the most popular name in the home building industry– Beazer Homes (BZH)– and ran the weekly chart.  The similarities are astounding:

And like $BKX, it seems BZH is readying for a rebound as well.  It makes no matter, I wouldn’t trust either as far as I could throw their Chief Investor Relations Officer.  These are sectors that are ripe for shorting at any major moving average (which on the weekly charts above would be the 13 and 34-week EMA’s).

Have fun and keep an eye on both for any profitable divergences.  Make no mistake, both sectors are hurting right now and should continue to do so into the near future.  That doesn’t mean a scalp won’t be available on the upside every now and again.

My best to you all.

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I knew you guys never really had to worry about Irene.  You see, “Irene” was my grandmother’s name, and she was a sweet and loving, and– most important– gentle soul.  Many members of my family are still inhabiting the areas of the Atlantic Coast where Irene was scheduled to visit, and I knew they enjoyed her protection.  By irenic transitive properties, you too were therefore to be spared.

Of course, we in Deep Flyover Country had nothing at all to be concerned about, save perhaps what quotient of sunscreen and chlorine would obviate a mild sunburn on what was perhaps the finest weekend of the entire summer.  Hardly a cloud in the sky — save for the occasional high cumulus drifter that might obscure a glaring sun for a blessed second — and the humidity at right around 15%.

What’s that you ask?  Yes.  Yes..  There was a slight breeze in the cooling air, but just enough to wick away the last of the late summer pool moisture.

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But enough about all that as I have an incredible story to tell.   I had to come out tonight to the first reception of a regional conference to which I’d planned on attending for some time.  The subject and details of the conference are unimportant but the cocktail party story is the crux…

As soon as I had arrived at my designated hotel, I was ushered into a hotel reception room, perhaps best described as a high ceilinged “mini-ballroom.”  I met a colleague at the portable bar and immediately began scoping the room for clients of interest.   I noticed off in one corner stood a tall broad-shouldered man dressed in khaki pants a nice open collar Egyptian cotton dress shirt and a smart blue blazer. He was solitary, and attending to his Blackberry notes.   In my reckoning,  the man was not only distinguished by his size but by his decision to wear a jacket to a conference whose invitation had born the quizzical prescription “Business Casual” for dress attire.

Like him, I still considered such instruction to mean “sports jacket necessary” for all gentlemen.  Unfortunately, many rubes and charletons in attendance (including my own companion) did not agree.  Bourbon rocks in hand, I nodded at the large gentleman as I proceeded out to the veranda to discuss politics and finance with a past mayoral candidate.

I did not see the large gentleman again until much later, at the bar that evening as I was concluding a long conversation with an aging property and casualty cowboy and his rambunctious and large breasted third (trophy) wife.  I had excused myself to use the facilities, and upon my return, the very large man was sitting at my place at the hotel bar, chatting amiably with my erstwhile interlocutors.  Not wanting to interrupt him, I took the chair to his right and began a separate animated conversation with a pair of the loveliest “Sappho’s Isle” residents I’d ever encountered.  They wanted to talk horse racing and basketball.  Go figure.

My insurance industry friend must have decided my new companions were of  more interest than his trophy wife and the dapper mystery man so he decided to make his entree by shoehorning his party into my “menage a sports talk.”   He started by introducing me to his large friend.  I did not catch his name at first, allowing for my approaching near deafness and the blare of the MTV Music Awards (or whatever) over the saloon’s monitor.   He reached out and with a big grin accepted my name and my hand, enveloping the latter in his big catcher’s mitt paw.

I leaned in to him and smiling apologetically, mentioned that I had not quite caught his name… His eyes glistened and I noticed that his teeth were capped from canine to canine.  Their whiteness gave his grin a wolfish impression, and the voice that came again was deep and gravelly…

“Chuck,” he said.  Again, the gravel like an old stone road… “My name is Chuck Bennet.”

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I swear to you the above story is absolutely true and happened less than two hours ago.

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Put some sugar on it.  You want an easy-peasy trade you undeserving pikers?  I mean besides “Go long silver and gold miners.”  That’s a no-brainer at least in a measured sense.

No, I am talking about this crazy IPSU sugar shack stock which is no doubt driving some adherents crazy.  Keep in mind this is a trade.  If you hold this thing longer than the appointed hour, and do not adhere to a tight stop (below $7.00), you are no longer my children and I will disavow your very existence:

Remember — don’t get greedy!  God bless.

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I’m presenting you with an article tonight that was featured in the literary quarterly, The New Criterion this past February, but was only brought to my attention in the last couple of days.   After having read it, I believe I can state that it’s the best essay I’ve read this year, and perhaps in the last number of years.  Please click on the link below and decide for yourself…

Written by NC editor Roger Kimball, it’s called “Liberty vs. Benevolence,” and it addresses the essential human failing in the natural quest for benevolence, specifically how the ego-gratifying impetus to do good works often tends to be allayed through the easy escape of government largesse (seemingly “free to the giver”), leading to an eventual loss of liberty for the citizenry.  There are unbelievable quotes throughout this piece but this one captures the theme:

The sad truth is that theoretical benevolence is compatible with any amount of practical indifference or even cruelty. You feel kindly towards others. That is what matters: your feelings. The effects of your benevolent feelings in the real world are secondary. Rousseau was a philosopher of benevolence. So was Karl Marx. Yet everywhere that Marx’s ideas have been put into practice, the result has been universal immiseration. His intention was the benevolent one of forging a more equitable society by abolishing private property and, to adapt President Obama’s famous phrase, by “spreading the wealth around.” Every Marxist society has spread it wide and spread it thin. Hence Ronald Reagan’s observation that the nine most terrifying words in the English language are “I’m from the government, and I’m here to help.”

And the real question is not whether benevolence is objectively good for the giver — it unquestionably is.  The question remains, however, whether the objects of benevolence are any better off in receipt:

Just so with the modern Welfare State: a sterling incarnation of the sort of abstract benevolence Stove anatomizes. It doesn’t matter that the welfare state actually creates more of the poverty and dependence it was instituted to abolish: the intentions behind it are benevolent. Which is one of the reasons it is so seductive. It flatters the vanity of those who espouse it even as it nourishes the egalitarian ambitions that have always been at the center of Enlightened thought. This is why Stove describes benevolence as “the heroin of the Enlightened.” It is intoxicating, addictive, expensive, and ultimately ruinous.

The intoxicating effects of benevolence help to explain the growing appeal of politically correct attitudes about everything from “the environment” to the fate of the Third World. Why does the consistent failure of statist policies not disabuse their advocates of the statist agenda? One reason is that statist polices have the sanction of benevolence. They are “against poverty,” “against war,” “against oppression,” “for the environment.” And why shouldn’t they be? Where else are the pleasures of smug self-righteousness to be had at so little cost?

But what’s important is that this piece is not your run of the mill satirical chuckle at liberal world view, but rather a call to the defense of liberty.  Only by shucking this lazy and egotistic form of “government benevolence” can we expect to stem the gradual erosion of freedom we’ve experienced since the Wilson Era:

Hayek said that one of the “main points” of his argument in The Road to Serfdom concerned “the psychological change,” the “alteration of the character of the people” that extensive government control brought in its wake. The alteration involves a process of softening, enervation, infantilization even: an exchange of the challenges of liberty and self-reliance for the coddling pleasures of dependence. Breaking with that drift becomes more and more difficult the more habituated to dependence a people becomes.

Seriously, folks, the piece is about five pages long, fully printed out.  I would implore you to do so and read it thoughtfully, and see if you too can see how  easily egoism — and pride — can drive our impulse for “universal and fundamental change” which often brings with it the worst of unintended consequences, not the least of these the harm coming to those upon whom benevolence is bestowed.

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As for the market, I’m seeing a lot of great setups.  AUY, my current top gold pick looks very overbought here, but also looking like it wants to form a nice handle on the cup (really a “saucer”) that we’ve built over the last 28+ months.  I want to exploit that handle if possible, by adding more at the $14.25 or so mark, where I expect we should get a pullback.

I also like EDC … a lot.  If we can get a pullback tomorrow to the low $24 area , I must just add on some more, Rabbit, I just might.

Pay attention to that solar activity, eh?

Best to you all.

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I was off all day doing God’s work, so I won’t go into any elaboration. I did take a swing low trade of  EDC and ERX, just for shitz and gigs.

As those developed I was up over 2%again today.   Still I am wary.  Gold is continuing to grind up and silver is somewhat lagging.  I can only takes so much, but I’ll be sure to let you know when that tipping point arrives.

In the meantime, this is an excellent time to join The PPT, if you haven’t already.  You will see my action a lot quicker there than you will here.  Don’t be pennywise and pound foolish… step up to The PPT.

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Just a brief word tonight my friends, as I am exhausted. I finally flew home this evening after braving multiple funnel clouds in the Mitten State, and what would you know…….?

We had a bit of a shaky landing with lots of crosswinds, and I just chalked that up to a stormy afternoon in the Big Lou, until we taxied to a stop and got an unusual send off from the stewardess.  Oddly, she urged us to,

“Please GTFO the plane as quickly and quietly as possible…”

Not being used to such (blatant) rude treatment from Delta, I grew suspicious.  Surely enough, when I stepped out of the gate doorway after deplaning, I heard the sirens.   What’s more, I saw a slowly rotating black cloud positioned right on top of our plane.   It continued to rotate for some ten minutes after our departure, before finally dissipating.

The community got some Tornado, however, and got it good.

In the PM market, we got some moves to resistance, which I was expecting.  What was positive, however, was the strong move of many golds, including my beloved ANV and AAU, respectively.

Tomorrow is more ‘wait and see’ like yesterday morning’s action was, so let’s not lose the farm reaching here. I am not ready to give the dollar any credit, like some.

Something’s coming.  I’m holding tight and eating sammitch.

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