Joined Oct 26, 2011
34 Blog Posts


Apologies for the prolonged silence. Coincidentally, your correspondent is stationed on the Isle at the moment. Some observations: a hovel, roughly a stone’s throw from Kensington Palace will run you about 15,000 quid a month. The “hottest” joint in town is a dump 705 feet in the sky known as Duck and Waffle. There you will be served the finest liquor in the most uncouth manner, for about 10x. And don’t worry, the Congestion Charge is a bargain. The Congestion Charge is an £11.50 daily charge for driving a vehicle within the charging zone (downtown) between 07:00 and 18:00, Monday to Friday.

Listen to me very quietly, there is no shortage of (albeit, credit-fueled) demand for this fucking nonsense. Aspirants abound, in droves. I don’t have much more to say on the topic other than this bustling town is not going away, nor is demand for its physically incongruent notes. The sun will not set on this motherfucker, ever. It is THE cultural capital of the world. Period.

The quid RARELY dips below 1.40USD, and I advise you to take note. Brexit is a reindeer game. Another episode in the immigration drama. Of course, immigration is what keeps this shithole the cultural capital of the world (no ISIS).

Gun to my head, I’d rather hoard pounds than dollars. That is all.


Last week’s EU-shaped clobbering for the currency is showing no signs of reversing yet, with sterling still nestling under $1.39 against the dollar early on Monday.

Writes Kit Juckes at Société Générale:

The move last week reflected the relatively light positioning and had somewhat run out of steam by the end of the week. However, what is now very clear indeed, is that the EU referendum campaign will be bloody and very negative. The more the ‘in’ camp stress the dangers of leaving (as opposed to the advantages of staying), the more the market has to take into account how bad a decision to leave would be. As long as polls remain evenly split, the maths for sterling is bad.

Putting the decline in context, US bank BBH writes:

Sterling lost nearly 3.7% over the course of the week, and the selling does not appear to have exhausted itself. Since the end of Q1 1986, sterling has experienced only 3-4 periods below $1.40. However, this time is likely to be extended as the significance of the June referendum overwhelms whatever other supportive fundamentals may emerge. And if anything, the economic data is expected to show some moderation in economic activity.



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Are you all familar with the term milquetoast? A wonderful descriptor. Less timid soul and more wimp. Still inaccurate. Pussy is not quite the right term either (no offense to G. Steinem & Co). The best way to comprehend this term would be to actually hear a milquetoast in action. So, I present to you dear friends, excerpts from the LNCE preliminary 2015 results originally broadcast on January 27, 2016 from Charlotte, North Carolina. Mind you, who we have on the mic is Carl Lee, CEO of America’s second largest “salty-snack” company known as the illustrious Snyder’s Lance.

Before you listen to said excerpts, a few things to know:

This here heap of meconium was created by merging a pretzel-maker and a purveyor of crackers and cracker sandwiches. Soon they are adding a nut-processor -cum- chip purveyor, known as Diamond Foods. Yes, the same Diamond Foods that bungled the deal to buy Pringles and had a Director off himself in 2011.

One will also hear the company use “three” excuses for the revenue miss. A key customer. Plant shutdown. Industry trends.

No surprise, that one of the outfit’s main distribution channels happens to be America’s General Store, with its “fanatical insistence on low prices.”

When management avoided calling the entity by name during the entire call, and used the honorific phrase “very large customer” instead, my ears perked up. Just for the record, said honorific reference was made no less than 8 times during the obligatory call.

At some juncture, a rogue gent from BMO Capital Markets unabashedly said it :

Hi, good evening, everyone. A couple of questions here. So just to continue to on the Walmart issue, it looks like you’re doing what you can to improve but expectations are that it wouldn’t impact 4Q or certainly not 2016 but it looks like it’s going to.

Let it be known that both DMND and LNCE have 15-20% “Walmart Exposure” — and shit is fucked up over there.

Quoting Lanchester:

“. . . when Wal-Mart decides something, it has real effects. In the early 1990s (this example is from Fishman) Wal-Mart decided to do away with cardboard cartons for containers of anti-perspirant, and behold, they are no more – with the result that a billion cardboard packets no longer go into landfill every year. As Hegel used to say after his fourth stein of lager, quantity changes quality. If Wal-Mart instituted, say, a zero-tolerance policy against developing-world factories abusing their workforces, and simultaneously brought in a regime of unannounced factory inspections combined with anonymous, off-site interviews with workers, it would probably do more to change the working conditions in Third World sweatshops than any government on the planet.”

On a contradictory note. Listen to the call, and you will hear several mentions of the stellar top line. While at the same time, blatant admission that Walmart was a huge “drag” on the topline in 4Q15 and will continue to weigh on the company for the duration of 2016.

Quoting the eloquent Carl Lee, CEO of LNCE:

Then we continue to face something that most all of our peers are facing. We’ve had some strategic changes at a very large customer that continues to impact our overall revenue. Our customers impacted both their space and display support. They’ve also been watching store level inventories very carefully and that’s impacted our branded business. We’re working with that very diligently and very carefully with that customer in particular. We’re also working with other customers to begin to try to make up that revenue, but we do foresee that this will continue into 2016.

He continues . . .

It is primarily just the volume headwind. It’s the — as I mentioned earlier it’s the space, displays and inventory challenges so it’s harder to get the right volume in and get it on display like you normally would and then get it to sell through. So it’s not so much pricing, it’s more strictly volume-related and the merchandising that drives the volume.

Next we have the plant shutdown. 8 days for a laughable “$6 to 8 million” in lost revenues. For more milquetoastery, fast-forward to the Q+A (audio below).

Brett Hundley, BB&T Capital Markets – Analyst [4] ——————————————————————————–
Thank you. Rick, I had a couple questions for you to start. Could you quantify the bakery shut down at all in the quarter, whether that’s in absolute EPS terms or just percentage of negative impact relative to your original expectations?

Rick Puckett, Snyder’s-Lance Inc. – EVP, CFO, & Chief Administrative Officer [5] ——————————————————————————–
Yes. We were actually shut down for about eight days, I think, Brett, so it was pretty significant impact. We have — it impacted the branded and the contract manufacturing business, more the contract than the branded business. And it’s — I don’t have the percentage off the top of my head, but it’s $8 million or so, $6 million to $8 million of impact.

That is really all, dear readers. Do not look for a bargain here in this here dung-heap. There’s probably more bad news to come. Errr, I mean, errr, challenges with a large customer.

Carl and Rick, please do us all a favor and join your local Rotary Club. Get some public speaking on, would ya? Please also spare us from the notion that converting your shitty products to “non-GMO” changes the demand landscape. Puhhlease. Lastly, on an administrative note: number your fucking slides correctly. Advise the stooges in your investor relations department to do so, stat. When dealing in matters financial, the investment community is automatically suspicious of inaccuracies regarding seemingly trivial matters. The devil is in the details, so to speak.

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Roughly 400 days ago, your dear correspondent JG was trapped in a faux “resort” on the Big Island. It was conference time and boy were the participants mesmerized by the fire-throwing “natives” that blew the conch shell at sunset. Not too different from the bagpipers that carry out the same task at The Inn at Spanish Bay, come to think of it. Unsurprisingly, nary a proper dining establishment was to be found on premise, despite “five-star” accomodations.

There are few hotels that that offer a truly differentiated experience. Business travellers really don’t need anything but a clean commode and some speedy internet during these jaunts, increasingly opting for ALOFT (Starwood), Hyatt Centric, Moxy (Marriot), Canopy (Hilton). Pretty much all the same product. The leisure set, sip on $14 Coronas in every corner of the world, thumping on the butt of a stubby bottle of Heinz Catsup. The high end bars are Diageo vendors. The food Sysco central. Homogeneity pervades. Homogeneity pervades. Is there really that much of a difference between the Lotte Seoul and the St. Regis in Aspen? Aside from the TOTO toilet that splashes your bum in Asiatic lands? I think not.

Anyhoo, thanks to The Grande Ol’ Internet, we’ve been blessed with the ability to sort through said homegeneity with a few clicks, opting for whatever suits our fancy. The burning question is — why the fuck would anyone use this shit to book?

Having pondered this question for hours on end, I suddenly realized it was much more simple that I had imagined. These bogus sites are a centralized location to look at pictures!

Who the hell wants to leap from site to site comparing the lifeless stock images from big chain hotels. The websites are just about as bland as the contienntal breakfast under Jeeves’s steel dome.

That said, the world of Online Travel Agencies [PCLN, EXPE, HRS, TRIP] is a vertiable rat’s nest. Trying to wrap your head around the dynamics at play is akin to threading a serpentine belt in your brain.

Back in the stone ages, hotels published rates 12-15 months in advance. Pricing was fixed. Overestimating or underestimating demand was the implicit risk. In effect, prices in the hotel world have always been “fixed” to some degree. The rationale: simplification of revenue management and distribution channels.

With the advent of The Grande Ol’ Internet, a veritable transmorgifier for forecasting demand and discounting in real-time, pricing became a bit more dynamic, with suppliers and OTAs haggling behind the scenes.

But, front-facing pricing is still theoretically standardized with hotels unable to undercut OTAs (by mandate). A concept known as “rate-parity” — some blowhards still call it olde fashioned price-fixing.

Quoting industry pundit/apologist @rockcheetah:

This is where uninformed accusations of “price fixing” fall apart. Hotels independently set prices based on market conditions, not under the collusion-inspired duress wrought by competitive hotels and/or intermediaries, as imagined by delusional conspiracy theorists. Rate parity is used to effectively manage the frequent price variations across multiple business models and distribution channels for a perishable product.

Public discourse has been hovering around the issue of “rate parity” for years, both in Europe and the US. And of course the rules are different in the US and Europe, so bear with me.

Since 2012, many European authorities—including the UK, Germany, Austria, Belgium, Denmark, Switzerland, France, Sweden, Italy, Ireland, the Czech Republic, and Hungary—have launched investigations concerning parity provisions in contracts between OTAs and hotels. OTAs, such as Expedia, enable customers to search for and reserve hotel rooms, flights, and other travel-relat- ed services through their online platforms. A common model for their agreements with hotels gives the hotel responsibility for setting and listing room prices on OTA platforms, and the OTAs collect commissions upon booking. The parity provisions at issue require that hotel room prices offered through the OTA are the same (or better) than prices offered through the hotel’s other sales chan- nels, including competing OTAs and the hotel’s own website. Typically, this parity requirement also covers other conditions, such as cancellation terms or inclusion of breakfast in the room price. Expedia, Booking.com, and HRS, three of the largest OTAs for hotels in Europe, have all come under scrutiny for requiring such provisions.

European regulators have been concerned that these parity provisions have an adverse impact on competition among OTAs. Because each of the major OTAs requires parity, in practice, the provisions guarantee that the price of a particular hotel room is the same across all online platforms. Knowing that room rates will remain in line with their competitors, regulators believe that OTAs have little (if any) incentive to compete against one another on commission rates charged to hotels. That is, OTAs could raise commission rates to hotels without losing business to one another because the room rate would remain unchanged (at the expense of the hotel’s margins). Alternatively, if the hotel did increase room rates, this increase would apply to their competitors as well. According to national competition authorities, this arrangement eliminates price competition between OTAs and “risks leading to higher commission rates, which in turn risks leading to higher hotel room prices.”

European regulators also have expressed concern that pricing parity reinforces the position of incumbents at the expense of new entrants because pricing parity impedes their ability to increase share by discounting commissions or room rates. As a result, these provisions arguably preserve the concentrated structure of the OTA market, and impede entry from innovative new players. OTA pricing parity thus is at odds with the European Union’s desire to facilitate growth and innovation in e-commerce.

The hucksters at Expedia and Priceline control an inordinate portion of the market. By some counts, Expedia runs about 75% of the market in the US and Priceline is in the mid 60% range in Europe. Together they’re at about 95% in the US. Line extention is their game. Meanwhile, commision levels are 15-30% and the hotels don’t seem to give a fuck. Especially if the extra bps paid out bolster search rankings. Why? Pretty much because they are a bunch of lazy buggers who haven’t prioritized investing in digital assets. Inertia is a bitch when you’re sitting at the buffet. And with little incentive (can’t undercut on price) why the hell would they bother? The power dynamics at play in terms of search are also of import. With one flip of an algo, your stupid little hotel can be relegated to the far reaches of search results. Might as well play ball with the OTAs.

Of course the Europeans are all over the monolith that is Priceline.

In April 2015, Booking.com (PCLN) announced its support of recent decisions by the National Competition Authorities in France, Italy and Sweden to accept amendments to Booking.com's parity commitments with respect to hotels located in those countries. A bit hokey as hotels still had to offer the same rates and booking conditions on Booking.com as they do through their own direct website. The only real change was that competeing OTAs could have different prices, theoretically promoting competition. Note: HRS and Expedia are small fries in Europe.

What a crock of shit. Did those concessions do jackshit for consumer (lower prices), new entrants, or even hoteliers?

The bottom line is that these fuckers are (sort of) in the drivers seat. And guess what? Hotel owners on the whole do not give shit about dismantling parity. Partly because its a lazy-man’s distribution channel and partly because competing on price with distribution partners simply puts them in the line of fire in terms of search rank. Hoteliers need OTAs. Just as OTAs need hotels. According to one prominent Palo Alto hotelier, “All hotels rely on Expedia. Period.”

On one other hand, industry data (PhocusWright) suggests that hotel bookings from OTAs are flat between 2011 and 2014. See chart below. No one wants to go to stale hotel websites. But guess what? They still do! Reservations coming directly are growing, per this industry mouthpiece while OTAs are flat. Could that really be so?

One the other hand, quoting some boss-huckster:

“We are entering a new era of online distribution and digital marketing in which just having a website, a few paid search campaigns and occasional email marketing initiatives no longer allows hoteliers to achieve any level of real success and only deepens their dependence on the OTAs, with or without rate parity provisions.”

Furthermore, a hawker of digital media services, chiming in:

“The continuing OTA consolidation created, de facto, a market duopoly, thus further eroding hoteliers’ negotiating and marketing power. With many hoteliers underfunding their direct online channel presence, the OTAs continue to win the “first and last touch” travel consumer engagement battle. Contrary to what some industry “experts” claim, the looming threat of removal of rate parity coming from Europe provides serious competitive advantage to the well-funded, digitally-savvy OTAs, who control the conversation with the online travel consumers. Many hoteliers, who have plainly ignored or underfunded the direct online channel for years and have not acquired digital technology, marketing skills, and know-how, are already “feeling the pain” from these new highly negative developments, whose real impact the industry will feel in 2016 and beyond.”

Who to believe?

Meanwhile on the regulatory front — Zee Germans are coming! Zee Germans are coming!

A December 23, 2015 ruling from the Federal Competition Authorities ordered the platform Booking.com to halt its strategy and remove all rate parity clauses from its contracts before January 31, 2016. The company still has the right to appeal to the Higher Regional Court of Düsseldorf, just like its competitor HRS unsuccessfully did a year ago after a similar decision from the Bundeskartellamt.

Don’t worry, HRS got nowhere with that.

Guess what else? The European Commision is coming too. They will be handing down a pan-european decision on the matter (no date), and I’d venture to guess it’s gonna be a big fuck you to “price-fixing”. But friends, at this juncture, I could give two shits about “price-fixing”, “resale price maintenance”, or “rate parity”. This here inane industry has invaded my dreamscape and I do not appreciate that one bit.

What does this all mean for EXPE, PCLN and its ilk?

Are we’re looking at a race to the bottom in terms of pricing? Will margins get squeezed at OTAs? Will volumes drop on OTAs if regulation comes down in the US/Europe? Will regulation ever come down in the US? Is the hotel industry in for a massive repricing? Or are hotels so dependent on this teat, that it will take at least a decade to make a dent in the prowess of these click farms-cum-merchandisers?

Frankly, independents may not even have the budget or inclination to bother with a digital strategy.

In the US, where EXPE is dominant — this spectre of rate-parity abolition is not as imminent as in Europe. But, you have to wonder if its coming down the pipe.

In a post-parity world, I suspect the situation will be choppy at best.

All in all, PCLN has some headline risk in the near term, Expedia is a shitty rollup that just bought a four billion dollar melting ice-cube in HomeAway, and I don’t really give a fuck about either. There is no spicing it up. Fuck that little mini-Tabasco bottle. Know’msayin?


ps: TRIP is also sashaying its way into the fray, undercutting commissions by 50% per some sources . . . yawn

pps: take a gander at core bookings growth. organic.

ppps: market soaking up the supply

pppps: final thought – middling opportunity either way at pixel time


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A metric ton of lobsters per week. 1600 “cheesecake lollipops” per diem. 600 lbs of french fries per evening. 6000 lbs of broccoli for a cross-atlantic sojourn. No less than 30,000 bottles of beer and 25,000 of plain old water on board. All you can swill for a paltry sum of 65 US Dollars per day.

I sincerely thank David Owen for giving us access to one window into these vessels. When I first read this scribble, I was fascinated. Who doesn’t love a story on the intricate operations of these elephantine flotillas? The scale is simply mind-boggling. Coke dispensers that wirelessly comuunicate with Atlanta. A two-lane employee highway, dubbed the 1-95. Infrared sensors that monitor the body heat radiated by the people currently eating, which then inform the community how much space is in each of the dining venues. And don’t forget “VOOM – the fastest interenet at sea”. By golly, its Silicon Valley afloat!

Fascination continued. For who isn’t curious how these dung-generators optimize? “Selling tickets for a cruise ship is an ongoing math problem,” via some wonk at McKinsey. In a recent development, Royal Carribean (RCL), leading “leisure” purveyor is not late-discounting in North America and Canada and recently extended the policy to Ireland and Britain. You can’t wait until the last minute and find a hot deal anymore. You commit and you will not be undercut. Pricing, ever the puzzle.

Musings continued. How much of the business is repeat? What is the average length of a jaunt? What is the avereage cost of a jaunt? How many bloody ships in the “fleet”? What are their assets? Do they own the boats? Or effectively bank-owned with borrowed capital? How much of revenues come from ticket sales versus onbard? (87% v 33% in the most recent Q, 73% v 27% at end of 2014 fiscal year) What is the average weight of an adult traveller? Any correlation with obesity? Is that just an impression picked up by watching some Pixar flick full of tubby cartoons sitting on deck chairs? The list goes on, dear readers. But I am not here to continue with this line of questioning at this time. For my interest in this here industry has been overshadowed by my abject disgust for these floating rape centers. If you have a small child, do note that the sexual abuse rates are nearly double what they are on land. And don’t worry, since you’re generally treading international waters, no one will be charged for said crimes. Your chances of norovirus are slimmer (not really). Roughly 172,810 passengers and crew members met VSP’s case definition for acute gastroenteritis, accounting for 0.18% of passengers and 0.15% of crew members (outbreak and nonoutbreak illnesses combined) out of ~ 73.5 million passengers sailing the seas between 2008 and 2014. Per the CDC, among cruise ship outbreaks with clinical specimens tested, 92% were caused by norovirus, with enterotoxigenic E. coli the second most common etiologic agent. All aboard motherfuckers!

I can go on and on. Black sludge. Gray sludge. Crew on crew abuse. 77 hour work weeks for staff that needs to be alert in case of emergencies. Food and utensils hidden in the galleys during health inspections. Disregard for culinary standards. Blah blah blah, no surprises here. However, I for one find their shenanigans highly offensive to the ocean, a magnificent natural wonder of mind-blowing dimension. Thus, I firmly support the demolition of every last one of these disgusting beasts.

For that I will have to picket in front of 20,000,000 willing and able “cruisers” who participate in such tomfoolery regularly. And increasingly my one-man-protest will have to go on tour. Hong Kong, Shanghai, Tianjin, Qingdao. China will represent 9% of total 2016 capacity versus 6% in 2015 for stupid Royal Caribbean. Eventually the tour will reach Latin America as well. But thanks to a 22% devaluation in the Real and uncooperative regional economic climate, the firm has nimbly shut down the lauded Pullmantur boat. After “an extensive dry-dock” —— as though it needs a rest, the piece of shit will be redelopyed in Spain under the moniker Empress of the Seas. A $400 million writedown in tow, no pun intended.

All in all, the dialectic of “progress” is keeping these fuckers alive, with the geograpic shift in revenues (see chart below). In 2005 the split was 79% domestic and 21% international. Now its closer to 50% 50%.

But, what of the financial health of these “ecologists” (more on the lobster-poop-cycle later) at RCL. What of it, what of it. Oil is cutting them some slack, no doubt. Fuel costs as a % of revenue sit at around 11.7% and troughed at 9.6% in 2010. I am sure that these fools will be locking in some choice rates for years to come. Absloute fleet size is up ~25% in 10 years to 43 vessels. The number of passengers carried has gone from ~3,480,000 to 5,149,952 at the end of FY2014. The “APDs” or avaialble passenger cruise days up from 21,733,724 to 34,773,915 during the same period. But what niggles at me, is that the rate of passenger the fact that the # of passengers carried as a % of APDs has gone from 0.160 in 2005 to 0.148. Now this could be both irrelevant and/or statistically insignificant. However, it seems to me that capacity is outpacing occupancy. Must verify.

On a side note, I can’t help but log a retort to the CEO’s declaration:

“The millennials are an enormous market for us,” Royal Caribbean Cruises chairman and CEO Richard Fain said during an earnings call last month.

What the fuck is he talking about. No, really. No motherfucking millenial I know is dying to bask in the sun on a cruise ship. Are you fucking kidding me? I don’t give a shit about your “Weezer” cruises and what not. Millenials are simply not philosophically aligned with cruising. They do not want to “experience” life in a hermetically sealed environment. And if they don’t reproduce at the same rates as their elders, they will never be tempted by this garbagio.

That is all motherfuckers. I will leave you now with a wonderful quote from Mr. Owen: “The food was mostly stuff that not even a boarding school could get away with now: a sad-looking salad with a single cherry tomato in the center, a fish fillet as rigid as tree bark. Even so, eating and drinking were the main activities onboard.”

So offensive. In so many ways. I proudly display my bias. And have no intention of removing it EVER. For the damage done by these fuckers is unacceptable. Period.




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Dear Maggie,

Thank you so very much for leaving Britain with a raging class war. From Brick Lane to #SW19 to Brixton to Notting Hill. The hoi-polloi would like to bestow 1000 gaping vaginas upon your grave in honor of your great success.

Meanwhile, across the pond, the shareholders of Coach would also like to partake in the ebullient celebration of your legacy. 1000 additional vaginas will festoon the site, on behalf of CUSIP # 189754104. Pageantry of magnificent order!

Margo, you might be nonplussed at this very moment. Why pray tell, would Gerald Tsai’s foot soldiers feel beholden to you? It may take a little bit of thought. But you were always a bluestocking, weren’t you, ol’ scallawag.

Alas, I am not here to cavil about your policies, your institutional attacks on the working class, nor your general cuntery. For that is a widely known narrative. I am here to tell you that thanks to your insidious shenanigans, we might here have a turnaround opportunity in Coach. Let me explain.

You see, while you were tea-bagging Ronald Reagan, his dumb-ass forgot how to think, and decided to mimic your dumb-ass. Long story short, a working class job was no longer a safe haven, a source of pride. Rather it was something to escape. The aspirational instict of mankind may be intrinsic to his nature, but you sure egged it on smarty-pants.

Net net, we here consider Burberry and Coach as playing analagous roles on the Island and Stateside, respectively. A bit of class warfare through the lens of leathergoods, if you will.

Over time “chavs” across the land appropriated the tartan costume of pugs and waifs alike, much to the chagrin of upper management of said pond-side purveyor. All the while, a similar situation developed at the design house known as Coach. The ever-so-gauche CCCCCC logo, quintessentially kitschy no less, has been the unequivocal status symbol for “trailer trash” and the “250K middle class” alike. Cacophpny, if you’re Coach management.

On the one hand, peak outlet sales, reached XX% (outsized). On the other hand, penis-addled money managers can’t lean on the old uxorial hypothesis that “wifey likes it” — because wifey doesn’t want to be confused with lower rungs of the economic ladder! A quandary no doubt.

Quoting rabble from the fashion blogs: “JILL TURNER DELIN JULY 3, 2014 AT 5:47 AM – Now that Coach bags are held by 50% of all Wal Mart shoppers they have lost their appeal and place as a “status” item. Why would I pay big bucks for a brand that can be found in most mobile parks?”

What we have here ol’ chum, is garden variety “brand dilution” – a inexorably vile concept, at its core.

Coach’s management, a sagacious bunch, knows full well that the psychological house of cards is crumbling, explicitly culling logo-riddled product. Or as they say in industry parlance, “we’re designing into the trend of no-logo”. With 30% of outlet sales coming from logo as of 1Q16, sloughing this line off is going to be a glacial task. However, looking at the big picture logo represents less than 5% of total North American retail sales [~28 million in most recent quarter]. I do wonder if they’d be willing to scratch the gaudy logo altogether to forgo 5% of sales in North America and revive the brand in earnest. Probably not. According to management it “will decline slowly” and its “an integral part of the business” — all in the same breath. Confusion.

Come to think of it, confusion is a theme, as I ponder this name. “We are the original house of American leather,” claims management. Yet product is churned out in China and labor inflation in that market has forced manangement to find alternatives. With gross margins under pressure, rest assured that reclaiming the brand’s heritage does not mean bringing production back to the US of A.

Meanwhile, Englishman Stuart Vevers, the new creative director, is a paradox himself. Coach has a democratic ideal, he claims. His inspiration/customer is a “a magpie girl who goes on road trips, picking up Western things, but also might steal from her granny’s closet on the Upper East Side.” He continues, “I like shearling because to me it’s quite honest, it’s a raw material with very simple construction, and something about that to me feels like a Coach approach to luxury, even an American approach to luxury — not too precious,” he said. Roughly $2000 for any shearling coat. Not too precious. Democratic, too!

Vevers (ex-Mulberry of UK) knows the ephermeral tricks “shearling, glitter, metallic” — differentiation, innovation. Not averse to Snoopy and Gary Baseman gimmickery, he also knows Europe, after stints at Mulberry and Loewe. Given that 90% of Coach’s business has historically come from Japan and North America, Europe is clearly a greenfield opportunity. A new flagship store in Paris and a clean slate, where the scourge of logo hasn’t stained the collective psyche, awaits. Burberry’s Haymarket Check ticks that box across the pond.

As I perused an airport “door” recently, what jumped out at me was the fact that a 95% of the men’s product wasn’t heinous per se. Most of it was muted and elegant. The aesthetic has been neutralized to some degree. And one can see that they are favoring embossing the horse and cart over tacky logos and gauche trimmings. In fact, a sucker to my own biases against “Hermes for Housekeepers” — I thought to myself, if these were XYZ brand, I might be interested in a simple backpack. I think that Coach will be hard-pressed to overcome its image in the US in the near term. Quoting a one-percenter stay-at-home mom, “Coach is for grandmas. But I did buy something for my nanny there for Christmas.” It fancy enough to give away, but not for oneself! In Europe and Asia, it doesn’t have to overcome brand-association as an incumbent issue. That said, the company has got the tourniquet on domestically, shuttering almost 100 doors in the past 9 quarters. The only thing that will change perception domestically, is time. Hearts and thoughts they fade away . . . as do brand associations.

From a 2011 Article: You might find a chic, understated python clutch; or you might find a pink-and-purple purse with sequins, faux graffiti, and a plastic tag full of floating glitter, which looks as if it were designed by an eleven-year-old girl with a penchant for unicorns. “Frankly, I go into one of the stores now and I don’t see one bag that I like,” Miles Cahn (original Coach founder) said.

They heard you Miles.

All in all, what moves the dial for Coach? I certainly don’t think its the runway collections, or Snoopy or Gary Baseman. Nor being the official luxury accesory purveyor for the New York Yankees. Revamping the design aesthetic is setting the tone for the brand to be “cool again” in the upper echelons of the fashion world. And the psychology naturally trickles down at some point. Aspirations abound. Factory stores lead growth once again. The cycle repeats.

I think the previous creative director, Reed Krakoff said it best:

“It’s not that I have the best answer, but I have the right answer,” Krakoff explained on a bitterly cold morning in February. He was sitting at a long white lacquer conference table in the Coach building, on Thirty-fourth Street, near the West Side Highway. The team that devises Coach’s prints was showing Krakoff a selection of fabrics to consider for spring bags. One of the prints was based on a cheery Bonnie Cashin design from the archives: thick stripes of orange, fuchsia, brown, and light blue. Another was a gruesome mixture of pink, salmon, magenta, and coral, rendered in matte satin with “C” logos all over it. Krakoff looked at a long line of boards tacked with swatches and made quick decisions about which would work for the brand. “I bang it out,” he said. “I know what came before, I know what’s coming next, I know how it will work in the context of the store and the ads. It’s like a code.”

Indeed. It is like a code. Today the code requires a less garish stance. In my opinion, management knows. Cutting domestic doors. Filling gaps in assortment. Tripling investment in sub-$100 product (popular among holiday-gifters). Moving the concept to virgin territories. Penetrating pinnacle specialty retailers abroad and at home. The fact of the matter is, these people have it down to a science at some level. The hard-resetting of the design-vision is certainly necessary, but nothing new. They did it in the 90s and they are doing it again now. Rinse, repeat.

Do note that Goldman Ball Sachs has adorned the design house with a clairvoyant SELL.

Personally, I want it cheaper. I always do.

Toodle Pip Bitch,


Bags. Muted.



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At one juncture, circa 2011, my hatred for this cabal of grifters and indirect-purveyors carpal tunnel syndrome had peaked. Not least, because I had overheard a young lass request that one of her chums tend to her “garden” while she was “away”. What an inane sprig of society, I thought. What an ungodly request. It was the “illusion of choice” in full effect. Stretched to the point of transferring responsibility to another unsuspecting netizen. To paraphrase one Dr. Ian Bogost of The Georgia Institute of Technology, these nefariously arranged pixels are a means of “offering players incentive to instrumentalize their friendships, obsess over arbitrary, timed events, buy their way out of challenge and effort, and incrementally blight their online lives through worry and dread.”

Admittedly, I was (and am) snooty with regards to the lunacy of such endeavors, despite the fact that Pincus managed to engage the hoi-polloi for a brief moment in time, en masse. What a thug.

A full five years later, I find myself trawling the deep seas for a bargain. Let us ponder the following: 0 debt, one billion in cash, and a free and clear 670,000 sq foot design-district property in a majestic city. Given that, the rest of the business is selling at somewhere between seven hudnred million and one billion dollars. The coterie of Board Members now includes not one but two big-swinging-dicks from Kleiner Perkins, as of 2013. Are you bear-shitters trying to tell ol’ JG that this here heap of dung isn’t worthy of unicorn status? Let us discuss over some Armangac and Amphora in a dimly lit parlour.

But let us first pause, and take a moment to thank the Good Lord for the departure of the dimwitted CFO David Lee (no Barclays). CFO departures can indeed be red flags. But in this here situation, we celebrate. This bufoon not only speaks in the most revolting tone, but also promotes himself to the point of telling young David Lee (Barclays) that he has a “great name” on the 3q15 call. A clever little dervish, isn’t he? I will say that Lee’s tone was a bit more subdued than usual on the 3q15 call, but the boilerplate-bullshit remianed vintage. Pincus may be be a crafty bugger, but a half-wit not. I am sure he smelled Lee’s feces from miles away. In any case, good riddance Mr. Lee.

Pincus on the other hand came to the table with candor. One got the sense that he is a steward in a difficult situation. In fact, he was actually thinking as he responsded to questions, which came from randos online as well as the street’s finest. How novel. I was pleasantly surprised that management ditched the proverbial dog and pony show of regurgitating the release in mellifluous intonations for a relatively democratic Q and A session. Thank you Lord, once again.

In listening to Pincus’s comments, I was reminded of King Digital’s presentation delivered by its ever so articulate CFO — she “speaks so well”. KING’s success has been in part a function of steely quality control. Quoting myself here from the hallowed halls of Exodus with regards to KING:

“these fckers seem different than znga, in that they don’t throw shit out and see what sticks. testbed is intricate. first they have a tournament, then given to a studio (~60 people) to develop into a sag(?), then tested in different markets under different titles with different languages, then hard launch. trades at 7x earnings, comps trade at 15x, flush with cash. i scorn the addiction model in general, but liking this slut.”

Pincus and Co. claim to be catching on, hence the delays in the two widely anticipated releases (Dawn of Titans and CSR2). Pincus explicitly states the importance of “getting it right at launch”. Will he deliver? We shall see.

I’ve had nothing but derision for this disease factory since the days of yore. Today, what I see is an operation that has battened down the hatches. It has culled titles and staff, relocated operations to mother india, made a timely prime real estate purchase (not market to market), stated it will buy back up to $200 million worth of stock, and might very well have a higher cash position at the end of 2015 as compared to 2014. Bleeding may have ceased.

Note to self: remove your bias. Stay tuned for part deux.

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This man is an impudent little dervish, Nicholas Howley. Or at least that is how he presents himself whilst responding to Noah Poponak of Goldman Ball Sachs on the 3Q15 call. Giddy at the top, I say. Puahahahahahha! Kekekekekekekeke! You’re asking me what ol’ Noah? Don’t you know? Two plus two equals fish!

Lordy lord. This here is a shit-show waiting to happen. Instead of combing through the mundane filings, which for this here company are 99% the same exact filing as the last filing (they haven’t even updated acquisitions in the latest K), just take a listen to some excerpts from the calls.

The glut in 777s is coming down the pipe.

Do you really think the Delta CEO doesn’t know how to bargain shop?

Of course Boeing denies the claim.

“We continue to see a very healthy overall marketplace both for narrow bodies and wide bodies,” CEO Dennis Muilenburg told reporters on Oct. 21. “Traffic growth is sustained. Replacement demand is sustained.”

Don’t worry, only 11% of revenues are exposed to Boeing per Transdigm.

Per the 10K –

Our business is directly affected by, among other factors, changes in revenue passenger miles (RPMs), the size and age of the worldwide aircraft fleet and, to a lesser extent, changes in the profitability of the commercial airline industry. RPMs and airline profitability have historically been correlated with the general economic environment, although national and international events also play a key role.

I don’t know what final RPMs will look like for 2015.

Follow them here:



Until the hairline fractures develop, enjoy clips from 3q15 and 4q15 Transdigm calls:

Oh, lastly — Nick “Perma-Grin” Howley is dumping stock. Just do a little search on insidercow.com for updated stats.


The cycle is long in the tooth. Indeed.

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. . . they just want less shitty beer, and the perception that they are swilling “premium” product. Because let me tell you something, Blue Motherfucking Moon is god damned disgusting beer, yet it attracts “connoisseurs” of all shapes, colors and sizes. Crispin is also a vile substance, but seems to entrance dilettantes far and wide. And for fucks sake don’t get me started on Leffe. I’d rather drink my own piss. For that shit is unequivocally putrid whilst passed off as “premium”. The knaves heading these “brewers” should be taken out to the woodshed. Speaking of which, who gives a fuck if SAB MILLER and AB INBEV merge. Let’s be real. The argument that these mega-mergers are throttling competition is inane (not really). In fact, let them all merge. Let there be a monopoly in purveying “premium piss” — may you enjoy your “premium piss” out of a german dirnking horn!

Tenth and Blake. Chirst almighty. This is the “premium” shit from our friends at Molson Coors. That is, less shitty than shit but still shit.

Tenth and Blake Beer Company (“Tenth and Blake”), MillerCoors’ also sells Batch 19, Blue Moon brands, Coors Banquet, Coors Non-Alcoholic, Grolsch, Hamm’s, Henry Weinhard’s brands, Icehouse, Keystone, Leinenkugel’s brands, Mickey’s, Miller Fortune, Miller Genuine Draft, Miller High Life, Milwaukee’s Best, Olde English 800, Peroni Nastro Azzurro, Pilsner Urquell, Sharp’s non-alcoholic, Smith & Forge, St. Stefanus, Steel Reserve, Third Shift, Worthington’s and hard cider brands from the Crispin Cider Company.

Just a quick perusal of Molson Coors’s 10K will left me throuroughly disgusted with the state of the state. Reflect upon the following – Molson Coors: 1) distributes Sol, Dos Equis, Sol, Tecate, Amstel Light, Heineken, Murphy’s, Newcastle Brown Ale and Strongbow (all Heineken) and MGD (SAB Miller) in Canada; 2) contracts Asahi and Asahi Super Dry in the US; 3) brews, packages and ships PBR through 2020; 4) brews, packages and ship Labatt’s.

My point here is: these motherfuckers are in bed with each other in every corner of this here bogus blue dot called earth. Peddling urine of every shade, sometimes, fermented with apples (hot trend). If you reside in a country outside of the US, then you will gladly pay a 20% premium over shitty beer, for the perceived pleasure of drinking less shitty beer. Go fucking figure – this “pricing power” gets management all hot and sweaty. And don’t forget Afrique! The Frontierland for Pringles and Piss!

What a clownshow. It’s no wonder small crafter brewers are taking share, only to sell out and have their wares “pissified” by the big boys. According to the Brewers Association, craft beer rose from 3.8 percent of the market in 2007 to 11 percent in 2014 and is expected to reach 20 percent by 2020. Bart Watson, chief economist for the Brewers Association, estimates that on average two new breweries open every day in the U.S. Will conglomerates ever realize that they are merely spinning their wheels, buying out “artisan” brands, adulterating qualtity, losing a fan base, and sloughing off brands that “aren’t working anymore” — for fucks sake! This is the chakra of capitalism I suppose, but it annoys me so, as one is resigned to the “Heineken Lounge” in Dubai Airport. A fucking Heinekien Lounge. Yes, in the land of jewel encrusted butt-holes, the best beer you’ll find at the airport is an ice col’ heiny.

Meanwhile, hippie hop-growers are concerned of short supply. Per Watson, “The current growth trends in the craft beer market – more brewers, more market share, and more hoppy beers – have led some in the industry to worry about the hop supply in the future. Even with thousands of new acres going in and the now widespread usage of hop contracts by craft brewers, there is a fear that growing demand will outstrip supply, particularly in the markets for niche varieties (craft brewers are using dozens of them). Based on the size of the domestic crop in 2014, usage of American hops is northward of 70 million pounds at the moment. If we assume a linear increase to 2020, that’s 504 million pounds of hops from 2015 through 2020.”

Do not mistake my rant for shorting the sector. The craft phenomenon is simply another version of ultimate “line extension” and these buggers will surely buyout every last “less shitty” piss purveyor from here to Tuscaloosa (Brooklyn Brewery, Coronado Brewing, Troegs, SixPoints, VonTrapp) and surely they will tinker with the concoctions to make them less shitty than shit but shittier than less shitty. Follow me?

Your best bet in this idiotic space is to brew some shit (better than shitty) in your garage and put a for sale sign up.

PS: If you are interested in drinking proper beer listen here for a few suggestions: Maine Beer Company – Peeper Ale and Mo Pale Ale, Evil Twin Geyser Gose, Off Color Brewing Scurry, Firestone Opal, Lagunitas Hop Stoopid, BFM Root 225, Cuvée Des Jacobins Rouge – Brouwerij Bockor N.V., and any other West Flanders shit you can get your hands on. Lambic is where it’s at homies.

PPS: If you do decide to home-brew, forget about packaging in aluminum cans. More on this later.



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Just take a gander at how deep-rooted the drama is here. Apologies for the length. But this is some good shit. References are below.

‘Marijuana has no therapeutic value, and its use is therefore always an abuse and a vice,’ trumpeted Harry Anslinger, the implacable Commissioner of the US Bureau of Narcotics in 1953:

While opium can be a blessing or a curse, depending on its use, marijuana is only and always a scourge which undermines its victims and degrades them mentally, morally and physically . . . In the earliest stages of intoxication, the will power is destroyed and inhibitions and restraints are released; the moral barricades are broken down and often debauchery and sexuality result. Where mental instability is inherent, the behaviour is generally violent. An egotist will enjoy delusions of grandeur, the timid individual will suffer anxiety, and the aggressive one often will resort to acts of violence and crime. Dormant tendencies are released . . . Constant use produces an incapacity for work and a disorientation . . . often leading to insanity after prolonged use.

Anslinger’s claims have been endorsed by high officials ever since. ‘There is not a shred of scientific evidence that shows that smoked marijuana is useful or needed,’ declared the former US drugs czar General Barry McCaffrey in 1996. ‘This is not a medicine. This is a cruel hoax.’ Our own Home Secretary endorsed this line after his son’s arrest for a drug offence in 1997. Ann ‘zero-tolerance’ Widdecombe is even more opposed to it (except, it seems, when used by Shadow Cabinet colleagues and other supposedly ‘educated, articulate people’)

Early in the 1970s the US Drugs Enforcement Agency was petitioned to reclassify marijuana as a Schedule II drug which could be prescribed by physicians. Finally, in 1986, after prolonged legal tussles, the DEA agreed to public hearings on the petition. The hearings lasted for more than two years. Despite the DEA’s legal expert recommending the rescheduling, and his conclusion that cannabis is ‘one of the safest therapeutically active substances known to man’, the DEA denied the petition. Iversen refers to a 1990 finding that 44 per cent of US oncologists had suggested that a patient smoke marijuana for relief of the nausea induced by chemotherapy. If the drug were really unsafe for use even under medical supervision, as its Schedule I status affirms, this recommendation would have been unthinkable.

Despite the DEA’s obstruction, the discovery of the cannabinoid control system in the body has revitalised scientific research. Two synthetic cannabinoids have become available on prescription to patients in Europe and the US. The annual sales of dronabil (sold under the trade name of Marinol) in the US are estimated to be worth about $20 million: some 80 per cent of prescriptions are as an appetite stimulant for people with Aids or HIV, 10 per cent to counteract the nausea associated with chemotherapy and 10 per cent for other purposes. The Eli Lilly Company has developed nabilone: under the trade name of Cesamet it, too, is used to treat nausea in patients undergoing chemotherapy, although it also gave promising results in clinical trials in the treatment of anxiety. In addition, many patients with multiple sclerosis have reported benefiting from smoking cannabis. The possibility of its use in the treatment of glaucoma and epilepsy is being looked into.

During 1997, the American Medical Association recommended controlled clinical trials on the medical uses of smoked marijuana, and the BMA recommended trials of synthetic cannabinoids. The House of Lords Science and Technology Committee reported in 1998 that more clinical research was needed, but recommended the drug’s rescheduling to permit its medical use. A year later, the National Academy of Sciences, Institute of Medicine urged that its therapeutic use in pain relief, control of nausea and appetite stimulation be further investigated. New clinical trials will probably soon be underway in Europe and the US, and I don’t doubt from the evidence laid out by Iversen that they will yield positive data. It will then be hard for governments to refuse approval for the medical use of cannabis or cannabinoids. ‘The argument that approval of the medical use of cannabis would be tantamount to encouraging the legalisation of the drug for all purposes is clearly specious,’ Iversen concludes, ‘and is no justification for withholding an effective medicine from patients who need it.’ Such ideas were anathema to the egregious McCaffrey. ‘There could be no worse message to young people,’ he insisted. ‘Just when the nation is trying its hardest to educate teenagers not to use psychoactive drugs . . . they are being told that marijuana is a medicine.’

Many other psychoactive drugs have a recognised place in European medicine notwithstanding the dangers of misuse. Heroin is the foremost example. Despite Congressman Stephen Porter’s disastrous Act of 1924 prohibiting its medical use in the US, European countries resisted postwar American pressure (directed through the United Nations) to impose this ban globally. An attempt under the Eden Government in 1955 to prohibit its medical use in Britain was defeated by a House of Lords rebellion led by the former Lord Chancellor, Lord Jowitt, supported by a number of medical peers.

McAllister’s is an international history, drawing on diplomatic archives: he does not go into detail on the (UK) Home Office’s troubled relations with cannabis. The Home Office first took notice of what was then known as Indian hemp in 1922, when it was sent a substance found in the coalshed of an Egyptian coffee-house keeper in South Shields. The Home Office confirmed to the Chief Constable that on analysis the substance proved to be ‘hasheesh’, which was not covered by the Dangerous Drugs Act (DDA) of 1920. Next, in 1923, ten tons of cannabis resin en route from Bombay to Djibouti were detained: the shipper was Henri de Monfreid, whose memoir La Croisière du Hachich (1935) – in English translation, Hashish: A Traveller’s Tale (1994) – is a splendid introduction to the subject of trafficking and drugs regulations. The Home Office was consulted before Monfreid’s shipment was allowed to proceed. Shortly afterwards, two waiters, one Italian and the other Sudanese, were arrested in Old Compton Street and accused of offering to supply raw opium. In fact, the brown substance in their possession was hashish, which it was then legal to possess, and the case was abandoned.

But it provided the excuse for an alarmist series of cheap newspaper articles in the silly season – including a supposed interview in the Daily Mail with a Home Office official – in the relevant file in the Public Record Office the official in question has written the word ‘Liar!’ in the margin. On the strength of the hoo-ha Metropolitan Police recommended the incorporation of cannabis in the Dangerous Drugs Act, one CID officer advising that cannabis ‘has practically the same effect as cocaine and morphine upon its victims’. Even the Met was not optimistic about the success of prohibition: the ‘only result’ of prohibiting the drug in Egypt had been ‘an increase of price to its consumers’.

The Home Office did not want to legislate, but foresaw that ‘the prevalence of the vice in Egypt’ – despite prohibition there – might result in ‘international regulation of the drug’. This was prescient. A month later, the Egyptian Ministry of the Interior concluded that as it was ‘practically impossible to keep hashish out of Egypt . . . the League of Nations should consider hashish as an international affair and should try to persuade its members to make dealing in or consuming the drug a crime punishable by severe penalties.’

Consequently, at the Geneva Conference on Opium of 1924-25, Egypt’s delegate proposed bringing hashish within the Hague Convention of 1912. His memorandum, circulated to support this proposal, represented it as ‘a dangerous narcotic . . . more harmful than opium’, and stated that ‘about 70 per cent of insane people in lunatic asylums in Egypt are haschiche eaters or smokers.’ Congressman Porter, the monomaniacal leader of the US delegation, was keen on this initiative. ‘We are asking them to help us to destroy the vice of opium, coca leaves and their derivatives,’ he declared of the Egyptians. ‘This is a good time to practise a little reciprocity. They have their troubles and we have ours.’

The contracting powers at the Geneva Conference accordingly agreed in 1925 to prohibit the import and export of Indian hemp except for certified medical or scientific purposes. In Britain, cannabis was immediately rescheduled as a poison, with effect from April 1925. A few months later, a new DDA brought Britain into line for the ratification of the Geneva Convention. The House of Commons debate on the Bill lasted less than five minutes: Indian hemp, or cannabis, was not mentioned once. The House of Lords debate was slightly longer. Peers followed the advice of Lord Haldane that, as it was ‘impossible to form any judgment on the details of the Bill’, it should ‘be taken by the House to a large extent on trust’. It was on this slipshod basis that cannabis was criminalised.

This might not have mattered much had it not been for the enduring effects of Prohibition in the US. Cannabis was listed in the US Pharmacopoeia as a recognised medicine from 1850 until 1942. It was sold cheaply by drugstores in the form of fluid extracts, and was smoked in cigarette form by asthmatics. Between 1900 and 1920 it began to be used on a limited scale as a recreational drug by immigrant labourers from Mexico and the Caribbean. Its consumption was enormously increased after the 18th Amendment – prohibiting alcohol – came into force in 1920. Alcohol became more difficult to obtain, more expensive and often of poor quality. In urban centres ‘tea pads’ operating like speakeasies provided cheap marijuana. In 1944, Mayor La Guardia’s Committee on Marijuana estimated that there had been five hundred ‘tea pads’ in New York City by the 1930s.

The mass marketing of marijuana for recreational use was the result of bad lawmaking. Congressman Porter’s response to the Egyptians at Geneva showed that cannabis was not then regarded as a problem by anti-drugs propagandists in the US. It first received public attention in a series of sensationalised and false reports in the New Orleans press in 1926 involving drug-crazed black marijuana users and corrupted schoolchildren. By 1931, all but two states west of the Mississippi and several others in the East had made a criminal offence of the possession or use of cannabis. By 1937, every state had outlawed the drug under legislation allowing no distinction between physiologically addictive narcotics such as heroin, habit-forming stimulants like cocaine, and hallucinogens. Anslinger felt that his agents at the Bureau of Narcotics were overstretched coping with opiates without having to suppress a drug that could be easily grown in many states of the Union. He accepted then that ‘the marijuana addict’ did not ‘graduate into a heroin, an opium or a cocaine user’.

Once he’d decided that he would have to submit to political pressure for a Federal law to be passed against marijuana, he did so in a manner calculated, not untypically, to strengthen his own position and that of the Bureau. He strenuously supported the Marijuana Tax Bill. ‘How many murders, suicides, robberies, criminal assaults, hold-ups, burglaries and deeds of maniacal insanity it causes each year, especially among the young, can only be conjectured,’ he said, assuring the House of Representatives that under the influence of the drug, ‘people will fly into a delirious rage and many will commit violent crimes.’ His corrupt rhetoric was contaminating. It produced such an atmosphere than when the official representative of the American Medical Association came to testify against the Bill, he was bullied and insulted. (An editorial in the Journal of the American Medical Association of 1 May 1937 advised that ‘the proposed Federal venture into the interstate control of cannabis hardly seems to be justified by experience . . . After more than twenty years of Federal effort and the expenditure of millions of dollars, the opium and cocaine habits are still widespread.’)

Like Lord Haldane 12 years earlier in the House of Lords, Congressman Sam Rayburn assured Congress that ‘this Bill has a unanimous report from the committee and there is no controversy about it.’ When asked what the Bill was about, he added, vaguely: ‘it has something to do with something that is called marijuana. I believe it is a narcotic of some kind.’ The Bill passed after less than half an hour’s debate. If a good law is one that reduces misconduct, while a bad law results in increased infractions, then the Marijuana Tax Act was calamitous. It raises the question that is too seldom addressed when considering policy on drugs: does social deviance lead to social controls, or do such controls result in deviance? In the five years after 1937, about sixty thousand tons of marijuana were destroyed in the US and about a thousand people arrested annually for violating the law. The number of arrests in California rose from 1156 in 1954 to 50,327 in 1968. By 1998, there were 695,000 arrests annually in the US: 86,086 was the comparable figure for Britain in 1997. The policing of cannabis accounted for nearly 80 per cent of police time spent on drug offences in both countries.

The DEA has grown into a second international intelligence agency, with a global network of agents rivalling that of the CIA. The total spent on the ‘War on Drugs’ rose from $537 million in 1980 to $1.2 billion in 1984. By 1991, the Government was spending $7.7 billion on action against illegal intoxicants. Despite the deployment of all these repressive instruments, the US has failed to disrupt the dynamics of prohibition and illegal supply. As the late Jan-Willem Gerritsen writes in his perceptive study of prohibition policies, ‘the high “business risks” keep prices high and guarantee good profit margins for successful entrepreneurs, so that the market continues to exercise tremendous magnetic appeal.’ Although ‘increasingly stiff sentences imposed under the criminal law aggravate the risks on the supply side, they also boost the market position of those able to evade prosecution. The harsher the repressive measures, the greater the reward for successful entrepreneurs, who have every reason to expand their market and increase the volume of their supply.’

Such reasonable observations are anathema to the prohibitionists. Anslinger moved ruthlessly and mendaciously to discredit the authoritative medical and scientific report commissioned by La Guardia. His agents would have been equally hostile to Iversen, who in his temperate and understated book regrets that cannabis ‘has rarely been regarded simply as a substance with effects and side effects’. Instead, it ‘has been equated with morality and the debate about its use portrayed as one of good versus evil. Marijuana has been linked with the pursuit of pleasure and with idleness rather than the work ethic.’ Most scientists believe that the grave short-term risks attributed to cannabis ‘were grossly exaggerated’, but neither scientists nor anyone else can prove the effect of a substance to be non-existent; it is therefore impossible to prove that any substance is harmless. Most mental effects of cannabis are potential rather than inherent; the potential physical effects cannot be assessed without much more data on long-term consumption. While it is less habit-forming than heroin, nicotine and cocaine, Iversen postulates that ‘as many as 10 per cent of regular users will become dependent on the drug.’ Current recreational use of cannabis has less adverse effect on public health than either tobacco or alcohol, but it is likely ‘that an increased use of cannabis would bring an increased public health impact’.

The profits from trafficking in illegal intoxicants are always ‘black’: they fall outside the supervision and authority of governments. As Gerritsen argues, ‘since a country’s sovereignty stands or falls with its monopoly on taxation and the obligation of its citizens to pay taxes, the illegal drugs trade forms a fundamental threat to the system of national states.’ Since 1985, under the insistent leadership of the US, there has been a concerted campaign to control the international laundering of black-market money derived from drugs. This aspect of the War on Drugs, he writes, is leading ‘to something that was never intended: a uniform global regulatory regime, which will be applicable to all types of financial service’.

Gerritsen’s sociological history charts the way 20th-century controls on drugs were used to defend social norms. Men like Anslinger, who was obsessed with Red China, and Richard Nixon, who revived the widespread use of cocaine by his maladroit War on Drugs, regarded their sale and use as a collective threat from outsiders. The ‘silent majority’ (a phrase Nixon borrowed from Homer, who was referring to the dead) refused to acknowledge that prohibitionist legislation and its enforcement are indispensable preconditions for the growth of illicit supply. ‘In a repressive climate of this kind, more informal modes of regulation – which certainly exist among users – are by definition confined to a twilight subculture that is a natural breeding ground for crime and other expressions of counter-culture,’ Gerritsen writes.

HAT TIP TO THE AUTHOR: Richard Davenport-Hines

Related Reading:

The Science of Marijuana by Leslie Iversen
Oxford, 278 pp, £18.99, April 2000, ISBN 0 19 513123 1

Drug Diplomacy in the 20th Century: An International History by William McAllister
Routledge, 344 pp, £16.99, September 1999, ISBN 0 415 17989 0

The Control of Fuddle and Flash: A Sociological History of the Regulation of Alcohol and Opiates by Jan-Willem Gerritsen
Brill, 278 pp, €52.00, April 2000, ISBN 90 04 11640 0

Drugs and the Law: Report of the Independent Inquiry into the Misuse of Drugs Act 1971 Police Foundation, 148 pp, £20.00, March 2000, ISBN 0 947692 47

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