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Day 2: Newport, RI - Cuttyhunk Island, MA

On True North

Cuttyhunk, which is home to the town of Gosnold is the last in the chain of the Elizabethan Islands that lie about 8 miles off the south coast of Massachusetts. I started out about 7:30am for the 3 hour ride. There was no wind to be had, so on went the diesel. The new cylinder head I put on was holding up well, and the engine was running as well as she ever had. Buzzards Bay was flat and calm as I cruised by my hometown of Westport, MA and soon arrived at the breakwater entrance to Cuttyhunk Pond. The entrance stays almost fully concealed until you are on your final approach, and there isn't much room with boats coming and going!

I arrived to find a beautiful anchorage with crystal clear water and long elegant strands of eel grass gently moving with the current. I dropped the anchor and immediately prepared to go explore the island. I motored the dinghy under a brilliant blue sky to the town docks through a maze of boats. As I walked up the dock, past the fisherman shacks and onto one of the few small "roads" I noticed something strange- silence. There are maybe a handful of vehicles on the island that don't seem to get used all that often. The primary mode of transportation is either walking or golf cart. I made my way up a hill and stopped into the small general store for a snack, and some shade. As I continued on up the hill to an overlook of the south side of the island, I found stunning views of the sheer cliff faces on Martha's Vineyard and the Atlantic Ocean beyond. As I made my way back down the hill, exploring the many footpaths that wind all throughout the island I passed throngs of kids running amok with not a parent in site, it was easy to imagine what a thrill it must be to have this island as your playground, maybe this is what it was like all over in times past?

I continued on and wandered past the Cuttyhunk Historical Society and Museum of the Elizabeth Islands. They are only open a few hours a week, but I was in luck as they were set to open from 2-4pm today. I eagerly read about the fishing clubs that formed on the island in the early nineteen hundreds that attracted people like Theodore Roosevelt, William Howard Taft and John D. Archibald, president of Standard Oil. One particular photograph shows all the men standing on a lawn in front of an awning, laughing and cajoling. Only two years later Roosevelt's administration would begin bitter anti-trust proceedings against Standard Oil to break their monopoly on the oil market.

I retired back to the boat for a lazy nap, made some dinner and planned to go back to the island to hike to its highest point for sunset. After a beautiful walk, I was joined at the top by a dozen or so others with the same idea. Among them was David and his wife, who had anchored beside me in their exquisite Tayana 37, Isla Hope. They graciously invited me for a visit and tour of their boat. What a beauty she was indeed with tons of teak and spacious amounts of room below decks. We swapped stories and had some great conversation but before long it was time for bed- a 4:00am start awaited me to catch the flood tide through the Cape Cod Canal. This next leg would be a big test, 60nm through the canal and then up the coast to Scituate. Before I went to sleep I took a few minutes and stared at the sky, it's amazing to see it here with the absence of light.

Can the Bluff be Called?

On der Wille

There are many clichés which go around - chief among them is a game of two halves, a year of two halves and the like. Last year, was a year of two clear, distinct halves - the kind which would make a cliché happy.

Till the Bumblebee address by Mario Draghi, the year 2012 was a culmination of, not just the profligacy of the previous decade, but a failed system and a failed bailout. Spain couldn't borrow at a cost which they could afford to repay and the Greeks were perilously close to debt repudiation - an idea I put forth to a European Central Bank executive during my visit in February 2012 and it was never really answered. His answer, which I believe is the German answer, was that you have to pay back what you borrowed - a full 100 cents on the Euro to the E.C.B. if not to anyone else. When you can't control your own monetary policy, it is a tough ask - more on that later.

World equities and in particular European equities were facing a grim battle in H1'12. Companies, unlike countries, cannot spend their way out of trouble - they have accounts to maintain. China was all set for a hard landing - something which would not only put the skids on any hope of a recovery, but lead to a crash in the markets of most of its’ trading partners. China was the driving force behind the commodity boom of the previous decade and it had grown "too big to slow". The Chinese leadership made it clear that steering the world out of an economic slowdown wasn't something they were willing to do - so much for their world leading aspirations. USA, not even a year on from a downgrade by S&P, couldn't come to terms with a new debt ceiling and companies exposed to Government budgets couldn't decide whether the sectors they were exposed to would be sequestered - an automatic spending cut triggered in case of a budget impasse (happened yesterday,9/30/13). India showed itself to be an exemplar at policy inaction. A progressive Prime Minister couldn't rally the cabinet, the allies and the opposition behind some of the reforms he proposed. He wore the look of a defeated man. That an emerging economy can't accept limits of 50% FDI in, operationally and logistically, poorly run sectors like Airlines and Retail is ludicrous. The irony was that India was grappling with inflation - supply side inflation - something a Central Bank cannot control by cutting rates. Cutting rates inflames supply side inflation and ever the hawk, The Reserve Bank of India, could, at best, only hold interest rates.

Enter - Mario Draghi

"Whatever it takes" is not open to interpretation, it reads and speaks like it is written. The minutes of the meeting after which Mr. Draghi said this phrase aren't yet known, but the message was loud and clear - The Euro will live - along with all its constituent members. Period. Italian and Spanish borrowing costs came down heavily. A seemingly "Risk on" year morphed into a "Risk off" second half. Italian stocks rallied as the yields came down, the Spanish thought the best way to capture this rally would be to ban short selling. After all, it was the vulture like hedge funds which hammer down equities and it is those very same hedge funds who spike their borrowing costs and to top it all off - they never ever even own these assets, they either bought insurance against a credit event - a Credit Default Swap, or simply bought "puts" on the equities - situations wherein you profit when the underlying asset goes down in value.

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