Wednesday, September 24, 2008

Automakers Receiving Government Money?!

Rather than write my own article, I'll direct you to an already-written one on

Click to read Article

The most noteworthy thing about this is how the government and media have allowed this to happen silently. Though, as the author states, $25 billion isn't much compared to other recent events, I think that the terms are what's most interesting. These loans are low-interest and don't even require repayment for the next five years, while AIG is paying 11% on all of their $85 billion line of credit (even monies not used) while forfeiting 80% ownership of the company.

I guess the auto lobby is better than the insurance lobby.

Monday, September 22, 2008

CIT Added to "Do Not Short"

Along with GE, GM, American Express, and more, CIT was added to the unshortable list this morning. The SEC also gave the NYSE and Nasdaq further authority to continue to add companies as necessary.

Friday, September 19, 2008

It's a Wonderful Day

...When you're almost irresponsibly long AIG, ETFC, and energy.

I've never listed my full portfolio here and I don't plan to, but here are some things that I have been doing lately:

  • I sold more of my once-huge BWLD position today as the stock notched a new 52-week high. I still hold some BWLD, but the stock is definitely fairly valued here, so there are better opportunities for this money elsewhere.
  • I sold COP $75 calls this morning that I had purchased during the oil panic of last week. I bought the contracts for $.40 and sold for $1.70 - having a nice win after losing on my TTWO position definitely helped.
  • Speaking of TTWO, I bought equity earlier this week at $15.50, but my big options position will expire worthless this afternoon. Long-term prospects are great and share valuation is ridiculously low, but I don't expect a near-term catalyst (or at least I'm not willing to bet on one via options after getting burned).
  • I progressively backed up the truck with AIG this week, buying different lots at different times. My first purchase was at $7.50 - ouch. But thanks to averaging down, my average cost is now $3.25/share. In addition to the temporary end of short selling and general euphoria, shares are rallying today as some investors are attempting to block the government's dilution of the company. I see it as a win-win; even if the company is diluted and liquidates, the sum of parts is much greater than the current valuation (I have seen $10 cited as a reasonable estimate). If the government agrees to less or no dilution (considering that the 11% interest on the $80 billion loan should provide them with some nice income anyway), shares will obviously be worth even more.
  • I added to my CIT position today (increased it by 75%, it's still a small portion of my portfolio) when the stock was down earlier in the day. Wells Fargo provided CIT with a $500 million line of credit yesterday; I see that as a sign of confidence and relatively-clean books. Also, CIT has asket to be added to the list of companies that can't be shorted (I don't understand why it was left off in the first place). If their request is granted, the near-term floor should be right here at 10.
  • I added to my ETFC position earlier this week; my average cost is now just above $3. Like CIT, ETFC has done a better-than-average job of selling assets to create a capital cushion, and their retail business is thriving. Continued writedowns on mortgage-based assets they still hold may be a short-term issue, but I see no bankruptcy risk anymore, which the market still seems to imply.
  • Other energy: At the end of last week, I held COP, MRO, and CEO shares. I sold the COP earlier this week to avoid a margin call, but still hold MRO and CEO, with costs of about $40 and $118. $100 oil seems to be the sweet spot for integrated companies (MRO), and CEO (CNOOC, a Chinese oil company) doesn't have to deal with as many government controls as PetroChina does. It also pays a nice 5% dividend.

I have a few other positions, but that covers my major actions of the past two weeks. With all of the aforementioned purchases, I have fairly long-term timeframe; with a predator-free trading environment for the next few weeks and ample government-provided liquidity, financials may finally get their act together.

Tuesday, September 16, 2008

Lehman Sells a Limb; AIG Sells Out

Lehman sold part of itself this evening to Barclay's for $1.75 billion.

"Barclays' purchase includes Lehman's North American sales, trading, and research and investment banking businesses, as well as its midtown Manhattan headquarters and two New Jersey data centers." Source

Lehman still has other assets, including international units and its famed asset-management firm.

"Barclays said it intends to immediately begin discussions with international authorities to acquire similar operations of Lehman outside of North America. Barclays also has agreed to provide $500 million of debtor-in-possession financing to Lehman.

Meanwhile, Lehman said it's in advanced talks to sell its investment management division, which includes money manager Neuberger Berman, to a third party.

The division was once valued by as much as $10 billion, but now could fetch much less considering Lehman's bankruptcy, the Associated Press reported. Source

Lehman has about 700 million outstanding shares, so the assets sold today represent about $2.5 per share. (I'm not stating that the shares will trade at that level tomorrow - that's just the asset prices divided by shares.)

Considering Lehman still has other valuable assets to sell off, it seems like shares should continue upward from the $.30 closing price today. Barclay's bought Lehman's North American business for just $250 million - roughly the closing price - implying that a lot of the troubled assets were packaged in that deal. The relatively clean parts - buildings, investment management firms - should fetch nice premiums.

I also added to my original AIG position, but that may not turn out so well. AIG agreed to accept $85 billion in government financing in exchange for warrants representing 79.9% of shares. The $85b isn't payment for the shares - rather, it's a loan, which accrues interest at Libor + 850 basis points (currently totaling over 11%).

So the good news is, AIG will definitely survive, and they have plenty of assets to sell to repay the loans. The bad news is that current shareholders - myself included - will be substantially diluted.

However, the credit rating agencies should upgrade AIG's ratings tomorrow morning after this capital infusion, and AIG will have time to sell assets in a orderly fashion. I don't expect a FRE/FNM-like 90% haircut to $.30 tomorrow morning, but the reaction will probably be negative. However, the government did imply that their goal was to maximize shareholder value, in contrast to the explicitly statement that common holders came last with the FRE/FNM situation.

Considering AIG's after-hours closing price under $3 represents a 95% decline from the top, the dilution may be pared with the survival of the company.

All I can do at this point is dream for good opening prices tomorrow. Both of these purchases represent timing and speculation more than Buffett-like investing. I couldn't keep my hand out of the cookie jar. Tomorrow, and continuing onward, we'll see if I enjoy sweet rewards or endure stomachaches.

Tripling Down on AIG

Quick update between classes:

I tripled my original (small, speculative) AIG stake this morning at $1.82/share.

I wish I could have purchased more, at a lower price, but Ameritrade's software was acting funny.

I'll have a longer writeup some other time on why I'm plowing capital into AIG at this level, but my general, one-sentence thesis is that it's a company whose core business is not affected by the "mortgage meltdown."

I believe (correct me if i'm wrong) that AIG doesn't even have to mark their positions to market, since they intend to hold to maturity, but when another company, like LEH, updates the values of their positions, S&P, Moodys, and other ratings agencies apply those valuations to AIG's books and draw their own conclusions.

So my average cost for AIG is $3.7 now, and I may continue to add below that. I'm hoping shares recover quickly enough that I don't get to see prices below that level again, but, I'm at the mercy of the markets.

Monday, September 15, 2008

A REALLY, REALLY Terrible Morning

The red ink is stunning, almost breathtaking.

As of 9:05 A.M.(Thanks Marketwatch):

Pre-market indications:
• Dow industrials: -353
• S&P: -46.2
• Nasdaq: -52

Crude oil: -$5.15
Gold: +$14.50
Dollar vs. yen, -2.4%
Euro vs. dollar: -0.4%

The destruction of paper wealth this morning is incredible. The indexes are off 3%. Oil is down 5%, the first business day after a major hurricane continues to shut down 20% of the nation's production and even more of our refining output. The Yen has spiked due to "safe-haven" buying.

At this point, it seems like we're all in this together. Wall Street leaders put in a 40-hour weekend trying to open their doors this morning. Lehman Brothers has filed for a form of bankruptcy. Merrill Lynch has agreed to be consumed by Bank of America for $29/share; the street doesn't believe it, based on the MER quote of $22 that I'm getting right now.

Ten banks set up a $70 billion fund that they can draw from during times of stress. Some of those banks will be using it this morning.

"Big" companies have fallen. Bigger companies have lost almost everything; AIG's market cap is $20 billion this morning, compared to nearly $200 billion less than one year ago. LEH's $200 million morning market cap is laughable. (I have to believe that there's more value in the company than that, but I chose to buy AIG this morning instead of LEH.)

I'll drown in the sea of red ink this morning along with most investors. My FSLR short and DUG shares will hedge losses, but not offset them. As I mentioned, I bought a little AIG pre-market at $7.50 and TTWO at $15.50 (as they are reeling from ERTS' walkaway, not this general weakness).

Hopefully the VIX will spike, and at the very least, this trauma will create a bottom. With quotes for nearly every company I can think of down 5% before the bell, maybe this is capitulation. Then again, this is probably the third or fourth time that I've hoped for a bottom.

Sunday, September 14, 2008

TTWO's Response

Below is the response that TTWO released after ERTS announced that they are done with merger talks.

Strauss Zelnick, Chairman of the Board of Take-Two, commented, "We remain focused on creating value for our stockholders and our consumers. This has been our goal since EA launched its conditional and unsolicited bid six months ago, a bid which was repeatedly rejected by our stockholders. As part of that commitment, we remain actively engaged in discussions with other parties in the context of our formal process to consider strategic alternatives. We're especially proud of the success we've enjoyed over the past eighteen months and we remain confident in our ability to generate value for stockholders."

"Take-Two's business has continued to strengthen since the time EA first made its offer. We have delivered terrific products to our consumers and we've been rewarded with very strong financial performance. We have an exciting future ahead of us, powered by our profitability, a significant cash position, the absence of debt, an undrawn credit facility and a terrific lineup of games. We are confident in the unique value of our business given our strong position in what is a growing and dynamic industry," said Ben Feder, Chief Executive Officer of Take-Two.

Electronic Arts Walks from TTWO Talks

"Electronic Arts Inc today announced that while EA continues to have a high regard for Take-Two's creative teams and products, after careful consideration, including a management presentation and review of other due diligence materials provided by Take-Two Interactive Software Inc., EA has decided not to make a proposal to acquire Take-Two and has terminated discussions with Take-Two.

John Riccitiello, Chief Executive Officer of EA, said: "EA is tracking toward a record breaking year. We're launching 15 new games including award-winners like SPORE, Dead Space and Mirror's Edge, great new titles from the Sims, new family titles with Hasbro, and the highest quality slate of EA SPORTS titles on this generation of consoles. We're also expanding beyond our core business with a series of direct-to-consumer launches including Warhammer Online."

(Taken from

First, I think that the tone that ERTS used is noteworthy. Though the reaction tomorrow may still be negative for TTWO shares, ERTS said nothing to that effect in their statement. In fact, from my point of view, it was mildly positive - ERTS seemed to say, "We're more focused on turning around our money-losing business right now than spending the appropriately-large amount of money on TTWO's successful one."

It will be interesting to see TTWO's reaction tomorrow. Though I have a long bias, I must admit that an initial drop will likely occur. I'll be buying if it does. TTWO is on track to make $2/share this year; no other company in the video game industry (and really very few companies besides integrated oil industry) trade at a 10 p/e. TTWO has a steady stream of releases for the rest of the year, the holiday season, and beyond.

Though I initially and continually touted a possible merger, I recognized that value may be better maximized when ERTS stopps capping TTWO shares with the $25 merger ceiling. Therefore, I think that going forward - whether at 3:30 tomorrow, this friday, or next April - TTWO share should be trading at a higher price than they were at Friday's close.

It looks like my calls may expire worthless, but it was a gamble that I don't regret taking. The earnings TTWO reported about ten days ago were unbelievable, and the street could have, under other circumstances, applauded loudly. Observing the ERTS' Take-2 tango was certainly a good experience for this young, often-speculative investor to experience.

I'll be sure to disclose any new position I take if conditions are ripe enough tomorrow morning.

Monday, September 8, 2008

Interesting Week for Oil...This Time, I'm Playing for Real

Oil prices snuck higher today, but the real action should be forthcoming.

OPEC begins meeting tomorrow, and the usual troublemakers (Venezuela, Iran) are looking to milk some more money from their barrels. The cool, calm, and in-control Saudis will be expected to propose holding production steady. As oil rose exponentially earlier this summer, Saudi economists and oil ministers affirmed that they believed that $80-100 was a good price for oil, but as barrels begin to approach that range, they too may step up the rhetoric a little bit. Countries like Venezuela and Iran have called oil too cheap, but the Saudis control enough of OPEC production to really be the deciding party.

Though any big change in production is unlikely to occur, the degree of rhetoric may have some influence on market movements going forward starting tomorrow.

And as news outlets have informed you, there's another hurricane brewing in the Atlantic - Ike. Ike just crossed Cuba and weakened, and it will cross again, but at some point it will enter the gulf and (supposedly) begin to strengthen. Right now, the track takes Ike into the middle of Texas, a little south of Houston. If this forecast proves accurate, then oil and gas production will be disrupted.

Wednesday is the weekly inventory report, and the numbers will be a little funny due to our ol' pal Gustav. However, Gustav didn't affect production or refining to the extent that was originally expected (hence the big drop in energy prices after my post about it), so the numbers may be bearish.

With my funds, I took a long position via my favorite vehicle - Conoco Calls. Unfortunately for me, Conoco announced a big, expensive parternership dealing with Liquified Natural Gas in Australia last night, so COP shares fell while those of other oil companies rose today.

Last time I was dead wrong; Gustav was a dud (relatively speaking - unfortunately, peoples in ocean countries beared the brunt of the once-powerful storm). This time, multiple events will be in play. I'm taking the contrarian stance - it's in my nature, for better or worse - after energy prices and related shares have fallen dramatically over the past two months. A quick pop tomorrow, Wednesday, or anytime soon, and I'm out - I'm still not convinced that oil's true value is $108/barrel.

To follow up:

As oil shares crashed on Tuesday, I bought shares of COP around $70 and Marathon Oil (MRO) Around $41 as long-term purchases. It looks like crude and oil equities will open lower today, but oil companies are looking dirty cheap.

Thursday, September 4, 2008

Results? Check. Reaction? Nope.

TTWO blew out the quarter, reporting earnings of 67 cents per share compared to an analyst consensus of about 54 cents.

TTWO raised guidance for the year, and released their pipeline, which should provide strong sales during the next quarter and through the Christmas season.

Investors were unimpressed, however, and shares are flat.

The withdrawn-bid of $26 continues to cap the stock price. Hopefully analyst upgrades or commentary (which I expect to be forthcoming) will inspire investor interest; otherwise, ERTS needs to bid reasonably ($35+, now that TTWO is set to make $2/share this year), or admit that TTWO is too expensive for them so that the stock price can rise organically.

Wednesday, September 3, 2008

Almost D-Day, and TTWO is Jumpy

Today's session featured some strange exchanging of TTWO shares, just one day before the company is set to release earnings.

There was no news released (though Barron's later said that the price decline was due to rumors about ERTS walking way from merger talks), though ERTS had an executive speak at a conference right around noon.

Below is a graph of TTWO's trades between about 11:15 and 12:05, when shares declined sharply, rebounded sharply, and then settled roughly 5% lower than where they opened.

Note: Right-click and open this picture in a new tab or window. Damned blogger margins!

As the stock crossed $24 about 8 minutes into the graph, the first pickup in volume can be seen, possibly by stop-limit orders being triggered. The price continued to slide on light volume until shares broke through $23, when volume accelerated to over 50,000 shares per minute.

As the shares dropped below $22, volume topped 150,000 shares per minute, which is impressive, considering only 500,000 shares traded during all of Friday and only 1.3 million exchanged hands yesterday.

Frantic selling and buying took place over the following ten minutes, as about 1.3 million shares were traded. It seems as though stop-limit orders first were triggered, panic selling insued, and finally, as the stock sat at $22, buyers came in to snap up shares.

Normally I wouldn't analyse the intraday trading of a stock so deeply, but the trading pattern certainly seemed odd. TTWO consolidated at $25 during the previous week, with Thursday's trading featuring a $.15 range.

If there was a news leak, or some sort of manipulation, I'd expect to see it in the options, as premiums are still low enough that a trader with information could make a killing. However, volume and pricing on the options seemed normal. The options with the greatest volume were the $25 and $27.5 September calls; premiums did decline, but the $25 call, which went from being nearly at-the-money to almost 10% out of it, only lost about 25% of its value, and ended the day with a trade at $1.10. Volume was a little high (relative to open interest) in some deep OTM Sept, Oct, and Dec puts (with trades at the $15 strike), but I can't see the shares falling that low.

So I backed up the truck a little further and bought a few more $27.5 calls at a cheaper price, adding to my unwisely-large position going into tomorrow. (Thankfully recent good trades with FSLR puts, AIG, AEO, and DDM calls have helped to offset any potential losses from TTWO.)

Once again, in my humble, bullish opinion, all signs (besides today's trading) point to good events tomorrow. I don't know why TTWO would have bothered setting up these secret meetings with ERTS if they weren't showing them something good, and I don't know why ERTS wouldn't have walked away already if they were wholly unimpressed. TTWO has historically beaten earnings, and they are still riding the success of GTA IV, with a decent slate of titles that will be released for the holidays this year.

Who knows, maybe TTWO will report a loss, and these talks were about some firesale price at $14/share, and some speculator (or inside-information-haver) will be chuckling as they rake in the bucks. However, TTWO's management has insisted on the strength of TTWO's business, and empiracle evidence doesn't contracdict their statements.

Considering that ERTS lost over $400 million last year while TTWO is expected to book about $140 million in profit this year, barring a disaster, I don't get how TTWO shares would move lower. An independant TTWO (without this takeover hangover) would be trading much higher than it is today, and TTWO should demand a price somewhere in the $30's if they are to be bought.

Prior to the after-the-bell announcement tomorrow, I'd expect that TTWO trades around $22.5 or $25, as those option strikes have been heavily traded. When they report at the close, a beat-and-raise (without any mention of a takeover) should send shares skyward; ultimately, there could be some announcement concerning the deal during the call tomorrow. Though there is the non-disclosure agreement, I can't believe that TTWO will be completely silent about a deal during the call tomorrow.

If I had a reputation, I'd be putting it on the line. Thankfully, if I'm wrong, no one really reads this anyway, and I'm young enough to lose some money. If I'm right, the profits, and vindication, shall be lovely.

Text of Palin's Speech at the RNC

It's time to get political with the election only two months away...

Mr. Chairman, delegates, and fellow citizens: I am honored to be considered for the nomination for Vice President of the United States...

I accept the call to help our nominee for president to serve and defend America.

I accept the challenge of a tough fight in this election... against confident opponents ... at a crucial hour for our country.

And I accept the privilege of serving with a man who has come through much harder missions ... and met far graver challenges ... and knows how tough fights are won - the next president of the United States, John S. McCain.

It was just a year ago when all the experts in Washington counted out our nominee because he refused to hedge his commitment to the security of the country he loves.

With their usual certitude, they told us that all was lost - there was no hope for this candidate who said that he would rather lose an election than see his country lose a war.

But the pollsters and pundits overlooked just one thing when they wrote him off.

They overlooked the caliber of the man himself - the determination, resolve, and sheer guts of Senator John McCain. The voters knew better.

And maybe that's because they realize there is a time for politics and a time for leadership ... a time to campaign and a time to put our country first.

Our nominee for president is a true profile in courage, and people like that are hard to come by.

He's a man who wore the uniform of this country for 22 years, and refused to break faith with those troops in Iraq who have now brought victory within sight.

And as the mother of one of those troops, that is exactly the kind of man I want as commander in chief. I'm just one of many moms who'll say an extra prayer each night for our sons and daughters going into harm's way.

Our son Track is 19.

And one week from tomorrow - September 11th - he'll deploy to Iraq with the Army infantry in the service of his country.

My nephew Kasey also enlisted, and serves on a carrier in the Persian Gulf.

My family is proud of both of them and of all the fine men and women serving the country in uniform. Track is the eldest of our five children.

In our family, it's two boys and three girls in between - my strong and kind-hearted daughters Bristol, Willow, and Piper.

And in April, my husband Todd and I welcomed our littlest one into the world, a perfectly beautiful baby boy named Trig. From the inside, no family ever seems typical.

That's how it is with us.

Our family has the same ups and downs as any other ... the same challenges and the same joys.

Sometimes even the greatest joys bring challenge.

And children with special needs inspire a special love.

To the families of special-needs children all across this country, I have a message: For years, you sought to make America a more welcoming place for your sons and daughters.

I pledge to you that if we are elected, you will have a friend and advocate in the White House. Todd is a story all by himself.

He's a lifelong commercial fisherman ... a production operator in the oil fields of Alaska's North Slope ... a proud member of the United Steel Workers' Union ... and world champion snow machine racer.

Throw in his Yup'ik Eskimo ancestry, and it all makes for quite a package.

We met in high school, and two decades and five children later he's still my guy. My Mom and Dad both worked at the elementary school in our small town.

And among the many things I owe them is one simple lesson: that this is America, and every woman can walk through every door of opportunity.

My parents are here tonight, and I am so proud to be the daughter of Chuck and Sally Heath. Long ago, a young farmer and habber-dasher from Missouri followed an unlikely path to the vice presidency.

A writer observed: "We grow good people in our small towns, with honesty, sincerity, and dignity." I know just the kind of people that writer had in mind when he praised Harry Truman.

I grew up with those people.

They are the ones who do some of the hardest work in America ... who grow our food, run our factories, and fight our wars.

They love their country, in good times and bad, and they're always proud of America. I had the privilege of living most of my life in a small town.

I was just your average hockey mom, and signed up for the PTA because I wanted to make my kids' public education better.

When I ran for city council, I didn't need focus groups and voter profiles because I knew those voters, and knew their families, too.

Before I became governor of the great state of Alaska, I was mayor of my hometown.

And since our opponents in this presidential election seem to look down on that experience, let me explain to them what the job involves.

I guess a small-town mayor is sort of like a "community organizer," except that you have actual responsibilities. I might add that in small towns, we don't quite know what to make of a candidate who lavishes praise on working people when they are listening, and then talks about how bitterly they cling to their religion and guns when those people aren't listening.

We tend to prefer candidates who don't talk about us one way in Scranton and another way in San Francisco.

As for my running mate, you can be certain that wherever he goes, and whoever is listening, John McCain is the same man. I'm not a member of the permanent political establishment.
And I've learned quickly, these past few days, that if you're not a member in good standing of the Washington elite, then some in the media consider a candidate unqualified for that reason alone.

But here's a little news flash for all those reporters and commentators: I'm not going to Washington to seek their good opinion - I'm going to Washington to serve the people of this country. Americans expect us to go to Washington for the right reasons, and not just to mingle with the right people.

Politics isn't just a game of clashing parties and competing interests.

The right reason is to challenge the status quo, to serve the common good, and to leave this nation better than we found it.

No one expects us to agree on everything.

But we are expected to govern with integrity, good will, clear convictions, and ... a servant's heart.

I pledge to all Americans that I will carry myself in this spirit as vice president of the United States. This was the spirit that brought me to the governor's office, when I took on the old politics as usual in Juneau ... when I stood up to the special interests, the lobbyists, big oil companies, and the good-ol' boys network.

Sudden and relentless reform never sits well with entrenched interests and power brokers. That's why true reform is so hard to achieve.

But with the support of the citizens of Alaska, we shook things up.

And in short order we put the government of our state back on the side of the people.

I came to office promising major ethics reform, to end the culture of self-dealing. And today, that ethics reform is the law.

While I was at it, I got rid of a few things in the governor's office that I didn't believe our citizens should have to pay for.

That luxury jet was over the top. I put it on eBay.

I also drive myself to work.

And I thought we could muddle through without the governor's personal chef - although I've got to admit that sometimes my kids sure miss her. I came to office promising to control spending - by request if possible and by veto if necessary.

Senator McCain also promises to use the power of veto in defense of the public interest - and as a chief executive, I can assure you it works.

Our state budget is under control.

We have a surplus.

And I have protected the taxpayers by vetoing wasteful spending: nearly half a billion dollars in vetoes.

I suspended the state fuel tax, and championed reform to end the abuses of earmark spending by Congress.

I told the Congress "thanks, but no thanks," for that Bridge to Nowhere.

If our state wanted a bridge, we'd build it ourselves. When oil and gas prices went up dramatically, and filled up the state treasury, I sent a large share of that revenue back where it belonged - directly to the people of Alaska.

And despite fierce opposition from oil company lobbyists, who kind of liked things the way they were, we broke their monopoly on power and resources.

As governor, I insisted on competition and basic fairness to end their control of our state and return it to the people.

I fought to bring about the largest private-sector infrastructure project in North American history.

And when that deal was struck, we began a nearly forty billion dollar natural gas pipeline to help lead America to energy independence.

That pipeline, when the last section is laid and its valves are opened, will lead America one step farther away from dependence on dangerous foreign powers that do not have our interests at heart.

The stakes for our nation could not be higher.

When a hurricane strikes in the Gulf of Mexico, this country should not be so dependent on imported oil that we are forced to draw from our Strategic Petroleum Reserve.

And families cannot throw away more and more of their paychecks on gas and heating oil.

With Russia wanting to control a vital pipeline in the Caucasus, and to divide and intimidate our European allies by using energy as a weapon, we cannot leave ourselves at the mercy of foreign suppliers.

To confront the threat that Iran might seek to cut off nearly a fifth of world energy supplies ... or that terrorists might strike again at the Abqaiq facility in Saudi Arabia ... or that Venezuela might shut off its oil deliveries ... we Americans need to produce more of our own oil and gas.

And take it from a gal who knows the North Slope of Alaska: we've got lots of both.

Our opponents say, again and again, that drilling will not solve all of America's energy problems - as if we all didn't know that already.

But the fact that drilling won't solve every problem is no excuse to do nothing at all.

Starting in January, in a McCain-Palin administration, we're going to lay more pipelines ... build more new-clear plants ... create jobs with clean coal ... and move forward on solar, wind, geothermal, and other alternative sources.

We need American energy resources, brought to you by American ingenuity, and produced by American workers. I've noticed a pattern with our opponent.

Maybe you have, too.

We've all heard his dramatic speeches before devoted followers.

And there is much to like and admire about our opponent.

But listening to him speak, it's easy to forget that this is a man who has authored two memoirs but not a single major law or reform - not even in the state senate.

This is a man who can give an entire speech about the wars America is fighting, and never use the word "victory" except when he's talking about his own campaign. But when the cloud of rhetoric has passed ... when the roar of the crowd fades away ... when the stadium lights go out, and those Styrofoam Greek columns are hauled back to some studio lot - what exactly is our opponent's plan? What does he actually seek to accomplish, after he's done turning back the waters and healing the planet? The answer is to make government bigger ... take more of your money ... give you more orders from Washington ... and to reduce the strength of America in a dangerous world. America needs more energy ... our opponent is against producing it.

Victory in Iraq is finally in sight ... he wants to forfeit.

Terrorist states are seeking new-clear weapons without delay ... he wants to meet them without preconditions.

Al Qaeda terrorists still plot to inflict catastrophic harm on America ... he's worried that someone won't read them their rights? Government is too big ... he wants to grow it.

Congress spends too much ... he promises more.

Taxes are too high ... he wants to raise them. His tax increases are the fine print in his economic plan, and let me be specific.

The Democratic nominee for president supports plans to raise income taxes ... raise payroll taxes ... raise investment income taxes ... raise the death tax ... raise business taxes ... and increase the tax burden on the American people by hundreds of billions of dollars. My sister Heather and her husband have just built a service station that's now opened for business - like millions of others who run small businesses.

How are they going to be any better off if taxes go up? Or maybe you're trying to keep your job at a plant in Michigan or Ohio ... or create jobs with clean coal from Pennsylvania or West Virginia ... or keep a small farm in the family right here in Minnesota.

How are you going to be better off if our opponent adds a massive tax burden to the American economy? Here's how I look at the choice Americans face in this election.

In politics, there are some candidates who use change to promote their careers.

And then there are those, like John McCain, who use their careers to promote change.

They're the ones whose names appear on laws and landmark reforms, not just on buttons and banners, or on self-designed presidential seals.

Among politicians, there is the idealism of high-flown speechmaking, in which crowds are stirringly summoned to support great things.

And then there is the idealism of those leaders, like John McCain, who actually do great things. They're the ones who are good for more than talk ... the ones we have always been able to count on to serve and defend America. Senator McCain's record of actual achievement and reform helps explain why so many special interests, lobbyists, and comfortable committee chairmen in Congress have fought the prospect of a McCain presidency - from the primary election of 2000 to this very day.

Our nominee doesn't run with the Washington herd.

He's a man who's there to serve his country, and not just his party.

A leader who's not looking for a fight, but is not afraid of one either. Harry Reid, the Majority Leader of the current do-nothing Senate, not long ago summed up his feelings about our nominee.

He said, quote, "I can't stand John McCain." Ladies and gentlemen, perhaps no accolade we hear this week is better proof that we've chosen the right man. Clearly what the Majority Leader was driving at is that he can't stand up to John McCain. That is only one more reason to take the maverick of the Senate and put him in the White House. My fellow citizens, the American presidency is not supposed to be a journey of "personal discovery." This world of threats and dangers is not just a community, and it doesn't just need an organizer.

And though both Senator Obama and Senator Biden have been going on lately about how they are always, quote, "fighting for you," let us face the matter squarely.

There is only one man in this election who has ever really fought for you ... in places where winning means survival and defeat means death ... and that man is John McCain. In our day, politicians have readily shared much lesser tales of adversity than the nightmare world in which this man, and others equally brave, served and suffered for their country.

It's a long way from the fear and pain and squalor of a six-by-four cell in Hanoi to the Oval Office.

But if Senator McCain is elected president, that is the journey he will have made.

It's the journey of an upright and honorable man - the kind of fellow whose name you will find on war memorials in small towns across this country, only he was among those who came home.

To the most powerful office on earth, he would bring the compassion that comes from having once been powerless ... the wisdom that comes even to the captives, by the grace of God ... the special confidence of those who have seen evil, and seen how evil is overcome. A fellow prisoner of war, a man named Tom Moe of Lancaster, Ohio, recalls looking through a pin-hole in his cell door as Lieutenant Commander John McCain was led down the hallway, by the guards, day after day.

As the story is told, "When McCain shuffled back from torturous interrogations, he would turn toward Moe's door and flash a grin and thumbs up" - as if to say, "We're going to pull through this." My fellow Americans, that is the kind of man America needs to see us through these next four years.

For a season, a gifted speaker can inspire with his words.

For a lifetime, John McCain has inspired with his deeds.

If character is the measure in this election ... and hope the theme ... and change the goal we share, then I ask you to join our cause. Join our cause and help America elect a great man as the next president of the United States.

Thank you all, and may God bless America.

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