Archive for May, 2016

Free Stuff

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Nancy and I are generally fascinated by offerings for free stuff that come in, usually real estate or timeshare sales.  They promise a free gift in exchange for 90 minutes of your time.  We’ve gotten golf clubs, bargain overnights in Williamsburg and New York City.

Recently an oversize post card came in with a scratch-off number, as well as an electronic device. When we turned on the device, a number glowed in blue, which matched the scratch-off number that we found on the postcard. We’d won a) $25,000, b) a new car, c) an Android tablet computer.  All we had to do was call up and make an appointment.  It turned out to be associated with Split Rock in the Poconos. We’d heard of it, but never visited. It could be a nice outing, so we called and made arrangements.  The drive was easy, 1 ½ hours from home.  We gave our name to the receptionist, and Barry, a 70 ish man introduced himself. He disclosed that the program was for sale of timeshares.  Next, we went on a tour around the community. It is quite nice with a combination of upscale and ordinary houses, and some condominium timeshares. There were restaurants and several beautiful lakes.

After the tour, we went to the closing room, with a dozen or so round tables. The room was busy with other prospects.  Split Rock is associated with Interval International, a large timeshare company. As Barry explained it, we would buy the share at Split Rock, and pay the split rock maintenance fee, which is a lot less than the maintenance fee in New York City, for example, and would get points which could be used at any of the Interval properties. He showed us a book which had some nice Hyatt and other facilities around the world.  Next he showed us the price of a timeshare, which was about $12,000 and could be mostly financed.

Nancy and I thought that our children might like to use a condo at Split Rock. The place was nice and convenient to Philadelphia.  When I asked about documentation, he said that was available only if we agreed to buy, and that the price was good for today only.  Generally my thought about timeshares is that they buy ground by the shovel and sell it by the teaspoonful, and that there was no real reason to get yourself obligated, when you can stay overnight at a hotel, with no long term commitments.  While we could probably get what we wanted at Split Rock, I imagine that it would not be so easy to get reservations at one of the other Interval properties. Looking online later, that was confirmed.

By that time, our 90 minutes were up, and we indicated that we’d like our prize. Barry directed us downstairs. A sign asked us to have a seat, and someone would be with us shortly.  In a few minutes, a 50ish year–old man motioned for us to follow. Apparently this man was the Closer – Barry wasn’t successful, so this guy would try again.  We stated the same objections that we had before. This time, the price came down to about $10,000.

When he wasn’t making headway, he did give us the prize- an Amiko tablet computer. We haven’t gotten it set up yet, but it sounded more impressive in the marketing material.  I guess if you want people to think that what you are doing is top quality, you would give a top quality item. It sort of reinforced our feeling that we made the right decision not to participate.

Puerto Rico Takes a Hit to the Head

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Spring 2016

Nancy and I own Puerto Rico bonds, which have been in the news a lot recently. Some bonds are in default, and other payments are due which Puerto Rico says it will not be able to make. For a reason that no one seems to be able to determine, Puerto Rico is not eligible for bankruptcy restructuring, as other government subdivisions are. The territory has gone to the Supreme Court to ask for relief.  Hedge funds own the bonds, as well as many ordinary investors who want to recover as much as possible. Because Puerto Rico is a US territory, not a state, the bonds featured, triple tax free (US, State, and Municipal) income, making them quite attractive before now.  We have some of the better ones, still rated investment grade and insured.

Nancy and I planned a trip to Puerto Rico to get a feel for the economy and the people while hoping to enjoy ourselves as well. There is reasonable and plentiful air travel, and one does not need a passport.  Puerto Rico dangles outdoor activities, shopping, sightseeing and history as attractions.  The island was discovered by Columbus in 1493 and served as a key port in the Spanish new world.  San Juan, the capital, is a charming pastel colored city which dates from the 1500’s.  We walked all over the quaint streets; there were plenty of police, and we felt quite safe going anywhere.

Almost uniformly, anyone coming in contact with tourists was super nice.  I had hoped to practice my marginal Spanish, but everyone we met spoke excellent English. Puerto Ricans get the message- keep the tourists happy and they will keep coming.  The bad news is that other Caribbean islands also have nice weather, and try hard to attract tourists.

There were quite a few empty buildings throughout Puerto Rico. I picked up the local publication “Caribbean Business” for additional insight.  Puerto Ricans are rightly concerned about legislation coming out of Congress to resolve their debt. What’s proposed is an oversight board dominated by non- Puerto Ricans who would supervise the island’s finances.

The US obtained Puerto Rico after the Spanish American war in 1898.  At that time, it was seen as a strategic island holding in the Caribbean.  Puerto Ricans are free to travel or move to the US at any time.  The weak economy spurs that- supposedly one doctor a day moves to the mainland for a better opportunity.

Taxes are different than elsewhere.  Most individual Puerto Ricans don’t pay US Taxes, but do pay Puerto Rican taxes. There is an 11% sales tax, soon to increase in response to the financial situation.

During the 20th century there were tax incentive programs which brought Pharmaceutical firms, and others, to Puerto Rico.  When we were there, we saw several large container ships full of Asian autos unloading in San Juan harbor.  It seems that Puerto Rico could be a possible location for auto parts manufacturing.  Whether the Mexican work force is better or not, I don’t know.

One thing I do know is that the Puerto Ricans have less political capital than Cuban-Americans.  After arriving as immigrants with little, now South Florida is practically run by Cuban-Americans. They have clout.  To that point, they kept the US from establishing relations with Cuba for over 50 years. Two of the presidential candidates were of Cuban heritage.  There are some famous and successful Puerto Ricans, but they don’t seem able to muster much political power. Lin Manuel Miranda who wrote, directs, and stars in “Hamilton”, the hottest Broadway musical, and J Lo are two.

When we were there, we rented bikes and rode from the OldTown to Condado, a strip of land with nice hotels which is popular with tourists. It was a very windy day.  While waiting for a traffic light to change, a large, poorly secured, “Construction Ahead” sign on the sidewalk blew over and hit me in the head. Thank God I was wearing a bike helmet. Save a cut on my hand, I was unharmed.  Hopefully the territory of Puerto Rico will be shielded from the most harmful fallout from the financial crisis, and allow this beautiful island, with its wonderful people, to regain its footing.

Lee and Sign in Puerto Rico 2 Mar 1 16 Visiting my sign


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