Everybody, hope the lunch is good. So it's 12.30, so let's get started. My name is Tushar Gohad. I'm part of Intel Corporation's data center group. My team focuses on storage acceleration. And specifically with the SpectreDisk topic, this storage acceleration for solid state disks. So let's jump right in. So to begin with some hyper words, right? Hyperscale cloud, that's what OpenStack and the other clouds are about. The other upcoming theme is hyper convergence. That's the other hyper word. And at the center of it all, at least from the way we see it, it's non-volatile memory. So yeah, I just wanted to quickly get a show of hands. How many of you guys are using solid state media in some shape form? How many of you are actually using it with the newer interfaces, like NVM Express? Oh, that's great. So all right, so that kind of familiarity will make this talk go very smoothly. So I don't need to jump into NVM Express introduction. So let's talk about what's going on in the industry, right? So if you look at the trends, you guys may have already seen this picture last few years, where what we see is the traditional enterprise storage is shrinking and in favor of hyperscale storage, which is cloud. And the likes of EMC and other analysts out there basically think that accompanying this transition, we also have the media transition happening. So you're basically going from your tapes to spinning disks. Now the transition is basically spinning disks to flash media or solid state media. As we reach the cost parity in terms of $1 per gigabyte by around 2020. So solid state media has been around for a while. It's just that the software stacks haven't been thought out because of the penetration. So whenever you look at architecture options for your cloud, there are a couple of matrix that folks need to focus on, which are $1 per gigabyte and $1 per IOPS. Each of these translates into two matrix, right? One for what you're spending, in terms of $1 per gigabyte, which kind of dictates your storage efficiency, how much CPU do you need to drive the storage that you have in the box, which always ends up being a trade-off between CPU cycles that you have available versus latency. That kind of dictates the system cost and the density. And then $1 per IOPS, which basically always depends on the storage stack of choice and data path simplicity, as we call it. And again, I'm going to go into details of this, but this is kind of the broad theme of things, right? So we are trying to basically optimize around these matrix for the upcoming transition in solid state media. So if you guys look at the transition over, let's say, 30 years, basically, we look at spinning media, which have been around forever, which we're talking about less than 500 IOPS per second. Your IO latencies tend to be in milliseconds to Satan and NAND SSDs, which are most prevalent solid state media from your client systems to server systems, right? Where you're actually talking about multiples of 100 times as many IOPS and much lower latency, right? Still, the interface, when you change from, let's say, SATA to NVMe, things become even more interesting, right? So if you look at the state-of-the-art media today that are based on the NAND family, you'll see that you can actually generate close to half million IOs per second. These are 4 kilobyte IOs per second with a less than 100 microsecond latency, which is a big leap from your traditional hard drive base media. And if you look at, let's say, any traditional storage stacks that have been designed with storage as the slowest component as the basis, you can probably imagine that the design going from, let's say, the aspect going from hard drives to NVMe's need to change drastically. And again, when we intellectually recently released an Optane Flavor of SSD, which makes it even more interesting, you can actually get a similar number of IOs per second at much lower application parallelism or multi-threading with a sub-10 microsecond latency. So things are moving quite a bit faster. So how do we rethink or optimize today's storage stacks to take the best advantage of the NVMe class media or the upcoming Intel Optane SSDs? So let's look at it a level deeper. So if you look at any storage stack, so let's say this is basically a picture of the Linux kernel and underneath all the way down at the driver level. So let's say you have your hard drive controller driver and the other component is basically the driver. So let's say your driver latency, for discussion's sake, let's say stays constant, which is your software latency. Compared that to your media latency, you will see that the shift is that with hard drives, your software latency is negligible. Most of your latency is actually coming from the media itself, the media access latency. But as you progress towards the more and more faster media, it actually, the driver latency itself becomes a much bigger part of your software latency or the storage latency as a whole. So as you can see, when we approach the 3D crosspoint or even the NAND storage media, there is between 20% to 90% contribution actually comes from your existing storage stack. So what this says is if you're not optimizing your storage stack or your vendor is not optimizing your storage stack, you are not getting what you paid for, because the cost also goes up as you go across on the horizontal axis here. So again, this is kind of a summary. So basically, this is the key point. What used to be efficient on hard drives is no more efficient on SSDs. And that's why we need to rethink software. And so what we have been working on is basically a few primitives. You can think about these Lego building blocks for bringing a storage stack for these faster media. So welcome to SPDK. So we actually started a project called Storage Performance Development Kit, which sounds just like a DPDK for those who are familiar with the DPDK for networking and what it did to the routing workloads, bringing those from traditional merchant silicon onto x86 base standard servers. We're kind of doing the same thing for storage here. So again, continuing the discussion. So your traditional storage stacks, which are prevalent Linux kernel-based stacks, here is a kind of deep dive on where we see the latency being added. So here's a simple list of things which those who are familiar with the operating system layer would easily recognize. The overhead typically comes from inter-paneling context which is synchronization. Synchronization is locking. So waiting on locks, which can be even weights for memory allocations, DMM mappings on the device layer system calls, which is part of the context switch, and also the generic block layer, which tends to be monolithic, which means all of your applications, although you have many cores available on the system, your application requests are funneled through a single monolithic block layer in the kernel. So if you have an NVME SSD today, let's say the state of the art NVME media, as a local disk, you're basically, let's say, you're looking at the latency breakdown. So these are some details around NVME driver, which you don't have to pay too much attention to. But what's important here is that we can actually, by rethinking all these primitives on how you actually build your storage stack, you can bring the latency down quite a bit. Now, how do we do this? So you can actually reduce a lot of jitter and that, what do you say, non-determinism by actually, believe it or not, asynchronous pole mode. So you can actually write your applications or your storage stack using pole mode drivers instead of interdriven drivers. I mean, you may ask, how can I use pole mode for latency? But traditionally, interrupts have been considered the preferred way to actually get the base latency possible. But if you actually look at how many IOs you're doing here per second, you most likely cannot really sustain those IOs. And that's going to generate jitter. And pole mode, what we have found out, and has DPDK proved for networking, tends to be the way to go. We tend to be locked light. So we try to basically create as many parallel contexts of execution as possible, which are independent. So you have less hotspots, less contention points. So you can be locked less or locked light, at least. User space hardware access, so there are actually many frameworks out there today, which let you basically move your kernel-based storage drivers, or essentially your device drivers, into user space. So the device driver can be part of your application image in user space. This is a big win, because that saves you from the context which overhead. One more, and a pretty significant memory tends to be DMM mappings and memory allocations. As the system ages, you need to try harder to get memory, which basically leads you to block. So we use the huge pages feature, which basically reserves a large area of memory, which is basically managed by SPDK. So you don't have to go to the kernel asking for more pages at runtime. And then we also developed a generic, instead of having a generic block layer that works for all sorts of media, we have a block layer that we basically created specifically for flash media. So just in this example, we actually have an SPDK NVMe driver upstream, which I'll go into details with. But I just wanted to kind of give an example as to what kind of gains you can expect using a user space pull mode model is just with local NVMe media, you can do 10x better per core or 10x better overall. Again, this picture kind of shows you the scale, which basically shows you that you can actually do your NVMe SSD access a lot more efficiently, which results in CPU savings and saves you a lot more CPU cycles to do more important work. And I mean, if you think about it with hyperconvert systems, where you have your compute workloads and storage workloads running on the same system, you cannot afford to let storage steal all your CPU. And as the media gets faster, the number of ISP per second that you need to handle kind of translates into a lot more CPU being used. And that's why this per core efficiency tends to be very important. This is the same example with a 3D cross-point media. How many of you are familiar with the 3D cross-point media? Yes? All right, thanks. So this is actually a next generation solid state media that Intel released last month, which gives you sub 10 microsecond latency with the NVMe interfaces. The same media can be configured as a block device or a memory mode. And the best thing about these devices is that even at Q depth 1, which is basically a single thread access, you can actually you can expect more than 100,000 IOPS. And just comparing the, let's say, your traditional kernel-based stack versus SPDK stack, you can see that you basically get 200 times the efficiency in terms of IOPS and latency. So we talked about some proof points, OK, yeah, SPDK gives you great performance, but what is it? So it's an open source project at this point. We open sourced it last year. It's BST licensed. So you're free to download it, integrate with your stack, contribute your changes back, and so on. We have composable building blocks for building storage stacks for Flash Media. And the central theme is that it is all user space and pole mode, so it's a kernel bypass model for storage. SPDK.io is basically the website where you can find more about it. So let's go into a little bit more detail as to what does SPDK contain today other than just the NVMe driver that I talked about. So NVMe driver was an easy starting point because that's the lowest level, closest to the device, storage element that we wanted to bring to user space. So that's where we started. But then where else can we apply? So if you look at what's going on in the cloud, one place where we saw an extension of the NVMe concept was the disaggregation that's happening. So where in order to scale compute and storage separately from each other, you're basically creating storage pools that are separate from your compute pools. And an emerging protocol under that RDMA theme tends to be the NVMe over fabrics. So we actually worked on an NVMe over fabrics target and an initiator, which for those that are familiar and use iSCSI, this is kind of the NVMe and RDMA version, a low latency fabric that lets you access remote NVMe storage from your compute. So that's one area where we worked on. The other area is this is not just about your storage side and your storage stack. It's also the access from your virtual machines to storage. That needs to be accelerated as well. So on the virtualization side, we actually did some work for those who are familiar with Vhost. So Vhost is a method of accessing your host devices from a KVM, QMU kind of instance in the pole mode fashion. So actually, Kernel also has an implementation for networking and storage. We did a user space implementation for SPDK there. So again, all of that discussion kind of leads to what do we have today available as part of this SPDK stack. So I'll start at the bottom real quick. So we basically have user mode drivers for NVMe, PCI-based NVMe devices, as well as NVMe or Fiberix initiators. So these drivers can be used for NVMe local storage on your compute nodes, let's say your open stack compute nodes for LVM-like storage. And for LVM-like layer, we actually have something called BlobStore and BlobFS, which is an append-only file system, which lets you use SPDK as a software-defined storage with Cinder. And the Cinder and NOVA integration is still in progress, but you'll see it happen pretty soon. And then we have an application framework. So the SDK gives you the kernel-like features where you get your driver, bare bits of your storage stack, but you still do need an application API to talk to it. So we actually have an application framework, which is also upstream. We have a few integration points, like RocksDB and Ceph. So we actually have some examples upstream, which you can look at on how to integrate SPDK with your application or with your storage stack. Let's jump into the virtual machine efficiency. So when you talk about open stack, the question would be, where does SPDK fit in? So this is actually the most natural place where we thought it would. So NOVA and Cinder manage virtual machines based on KBM and QMU. So let's say you actually had a compute node. This is your traditional model of deploying a QMU KBM-based virtual machine that has access to, let's say, some NVMe storage on your host. So the default would put you with a word-dial SCSI driver. And if anybody has measured the efficiency of accessing NVMe storage, local NVMe storage from a virtual machine, it is pretty poor today. I mean, you're not getting worth your money, essentially. So then came VHOS SCSI, which makes it a little bit better. So there was a VHOS framework created in the kernel, which gave you some faster parallelization in the host. And what makes it even better is if you go to an all-SPDK model where you're basically polling instead of doing your context which is in waiting for being interrupted, it actually does a lot better. So this is kind of the deployment model where you have basically a virtual machine accessing NVMe's local storage via a SPDK-based storage stack. These components shown in here, most of them are actually available upstream. This blob store is an SDS kind of component, software-different storage kind of component that we are soon upstreaming on the SPDK.io. But today, you can put this all together by simply pulling the bits down from SPDK.io to accelerate access from your virtual machines to local NVMe media. Some statistics, so basically with this model, we were able to get 8x better efficiency as compared to your traditional kernel-based models. And if you look at your QMU WorldTio, so let me go back to the picture here. So basically going from your WorldTio to Vhost, you basically get about 5 to 6x benefit. When going from your kernel to SPDK model, we have seen 8 to 17x benefit over your traditional VM access model. And this part is actually very important because no matter how fast your storage stack is, let's say your remote storages, or your local storages in this case, if your virtual machine cannot access all the available IOPS, then you are throwing away money, basically. This is another way to look at the same thing. So if you look at the comparison of the three approaches that I showed, QMU, WorldTio, Vhost, SCSI, based on kernel, and Vhost SCSI based on SPDK, this, the bottom chart shows you how many IOPS can I handle per core. And as you can see, we're able to handle almost a million IOPS per core easily, which kind of translates to, if I have a state of the art NVMe device today, that gets me close to a million IOPS, I only need one core on my host or one virtual core to get all of that bandwidth as opposed to you can basically compare yourself. And again, I'll basically leave this as a homework to read for you guys. So again, that's a summary right there. So this is actually a public study on folks using this framework to accelerate their workloads. This is obviously a non-open-stack cloud example, but this is actually was publicly shared. So it actually shows pretty promising random write IOPS and latency improvements, which serves as a pretty good proof point for how you can actually better your virtualization infrastructure in preparation for this NVMe media transition. So yeah, so they basically saw about 300% improvement in IOPS and latency when using SPDK from their virtualization infrastructure. This is another example that they had published. So one of the big workloads that's moving onto open stack and prior clouds is databases, so database of the service. So the same cloud, Alibaba ACS, they actually have published a MySQL based on SPDK kind of study. So as you can see, they saw a huge, I mean, about 10x improvement, rather 4.66 queries per second for both reads and write transactions. So this is all talking about local storage with NVMe's. What about remote storage? Because with open stack, the most prevalent block storage is Ceph. And then you have other disaggregated storage options coming out. Like the one I talked about, NVMe or fabrics, what about those options? So let's talk about those quickly here. So as part of the SPDK stack that we have upstream, we have an NVMe or fabrics target. And all of the pieces that you see here, which basically include a block device layer, which let you access remote RDMA storage using an NVMe or fabrics initiator. So this is all available and usable today, where you can basically consume from your KVM instance NVMe or fabrics storage. And as I mentioned earlier, we actually have an effort, in fact, NOVA and Cinder blueprints that are in progress to get NVMe or fabrics support into Cinder and NOVA. We are going to support both the kernel as well as the SPDK options. But the SPDK option will be available is the point. So in terms of performance of the NVMe or fabrics target, so what we show here in those blank squares is basically the number of cores that we're used to get the line rate. So we actually had about 150 gig worth of networking on the test back end. To get to that performance level, SPDK basically used just three cores on the target side. So you basically have, let's say, a 2U enclosure that has, let's say, 24 NVMe devices with a fast back end, with a fast networking back end. To saturate that, most of the IOPS, SPDK just took three Z on E5 cores. Whereas with kernel, we basically took about 30. So again, this summarizes why we were able to, what were the changes from your traditional NVMe or fabrics targets available in the kernel that got us to this result? So I want to pause and see if there are any questions so far. Would you mind using the mic, please? When you said NVMe over February, do you mean FiberChannel or Ethernet? Right, so FiberChannel, Ethernet, those have been the traditional iSCSI fabrics. So NVMe or fabrics can be any of those fabrics. So the fabric is kind of a neutral term. But the most popular one that's being talked about is the RDMA fabric with Rocky V2 or iWARP, which is, so basically, you can do NVMe or fabrics over TCP2. I mean, it's a standard under development. But the value in having RDMA as your fabric is that you then don't lose the latency. So if you remember the first slide where I was trying to describe the problem, like where software is the bottleneck, right? The device actually gives you, let's say, a sub-10 microsecond latency for argument sake. If your network adds, like for TCP or FiberChannel, if your network adds hundreds of microseconds to it, you lose the benefit of actually paying for the NVMe media. So you need a low latency fabric. So most of this discussion is actually around RDMA. But to your question, you can use any of the traditional fabrics or RDMA to do NVMe or fabrics. The standard that, as it exists today, has been written mostly with RDMA in mind, though. Now, let's come to the other popular option for remote storage, for accessing self-storage from an SPDK-backed compute side stack. We actually have a block device which supports self-RBD. So you could create virtual machine images on your CEP cluster and access those volumes underneath an SPDK stack from a virtual machine. So again, the layering actually works with the Vhost SCSI target. So you get the benefit of Vhost SCSI and it can talk to CEP. So it's basically created for a drop-in compatibility with your existing setup if you want to switch to this model. And again, basically all of this development actually has been done with KVM and KMU in mind as the first integration point. So it actually is very suitable for open stack kind of deployments. So this is basically the store SPDK.io screenshot. We recently had a developer summit, which was our first developer conference where we had about 80 to 90 companies participate in the project. We, you guys are welcome to go to SPDK.io where you can find all the talks. So all of the components that I just talked about as part of the architecture diagram.  So we did deep dive talks at the SPDK summit on going into the NVMe or Fabrics target, the Vhost SCSI or the Vhost Block target for accelerating your virtual machines, as well as the file system that we're building. And there was also a performance-oriented deep dive as to how we do our performance measurements and how to tune SPDK-based apps, how to profile them, and so on. You can actually find all of those details in the talk, like in the SPDK summit website, which soon going to have all the videos as well. So that's kind of all I had for SPDK for an overview. I'm going to pause for any questions before I jump on to the next topic for storage actually. So those are independent projects. So as part of the storage acceleration software umbrella, so SPDK tends to basically solve some real software stack design issues. ISIL is basically a vectorizing your storage workloads, which is more of a middleware or application layer library, which is a separate project. So I'll go into the details. But the numbers that we have coded, those don't include any compression or encryption or hashing, those type of workloads. So that's where ISIL plugs in. But because you asked, actually, let me see if I can show you a picture real quick. So we basically have a layering that's possible where you could actually plug in your own storage service right here in the SPDK stack. And this could be layered with something like the ISIL library that I'm going to talk about. So all of the performance benchmarks were essentially mostly at the block layer, did not involve any of these workloads. Any other questions? OK, that brings us to the next topic, which is intelligence storage acceleration library. So SPDK is a project we started about three years ago. ISIL actually dates back a little bit further. And in fact, it actually has a lot of industry penetration already. A lot of folks in the OpenStack would also know it because the major storage components of OpenStack already integrate this project. But at the basis of this library are a few things. So when you look at any modern x86-based processor, we have certain instruction sets for vector applications, like basically, which started with the MMX instruction set, was replaced with SSE. And now the instruction set is called AVX. This family of instructions is known as the single instruction multiple data operations, which basically lets you paralyze a lot of workloads, which tends to be very useful for your graphics and video kind of workloads. Now, on a standard x86 server, those set of primitives are pretty much unused. So you've already paid for the processor, but the AVX, you have AVX 512 or 256 instructions, but you're not using them. So one researcher on my team basically decided to put those to use. So ISIL is a way to literally hand-optimize some of the storage primitives, like compression, encryption, hashing, erasure coding. By most of the cases, these primitives tend to be like, they lend themselves very well to vectorizing or paralyzing. So what we do is we basically use the SIMD instruction sets to basically optimize these functions. So again, hand-optimized libraries for compression and encryption, which are for data integrities, security, and data protection. We have it supported on Linux VST windows. The library is compatible with most of the standard APIs, like for instance, compression is compatible with the GZIP library. It's very similar to the GZIP interface, I would say. Encryption, a lot of those primitives have been actually integrated and are compatible with OpenSSL. Let's talk about some more details. So it is a pure assembly library. It's hand-tuned. Although it's open source, it's written in assembly. It has C, C++ bindings. So application, in many cases, you can simply replace your GZIP-based compression, calls in your storage stacks, or even applications to I-cell-based compression. The same applies to encryption. The other primitives might take some work, but if you can paralyze your workload, I-cell can help a lot. So again, this is free and open source. It's hosted on our GitHub, GitHub.com portal. This website, sorry, this slide basically does a good job summarizing what are the functions that are available. So we do support your traditional XOR, PQ, or Erasure code, Reed Solomon Erasure codes. We also have a Reed Solomon Koshy Erasure code. These actually have been integrated into OpenStack Swift and Ceph. So for those of you that use the Erasure codes with Swift or Ceph might have used I-cell as a, because in many of the distros, I-cell tends to be the default policy for Erasure coding. We have CRC support, which actually we have been looking to integrate into Ceph for some of the crush announcements. We have cryptographic hashes, which are MD5 and SHA. Now this is a family of hashes, which are multi-buffer, called multi-buffer hashes, which give you big performance boost or your single thread hashes. And we have the whole family support, including the SHA1 plus murmur. We have GZIP compression and decompression support, as well as a number of flavors of AES, supported under I-cell. So let's start talking about compression. Comparing it to the open source, the software on the options that are basically your drop-in GZIP kind of libraries. So if you actually look at the table to the right, the rightmost column basically gives you the compression ratio, and the middle column is throughput in megabytes per second. Now this was actually a head-to-head cache-cold test that was run on GZIP and I-cell. So it's always a trade-off between your compression ratio, i.e. your compression level being one to nine, or basically getting a good compression ratio along with that level, and also optimizing throughput. So I-cell compared to the LZ4 and the very, very fast ones, it basically comes very close and gives you much better compression ratio. So LZ4 is a family, is actually considered to be the fastest right now, with compression ratios that are acceptable, just acceptable. i-cell gets you the similar throughput with a much better ratio. So how many of you actually have used i-cell or read about it? Because I think I need to ask that question before I go further. Not used it, OK. But use cases, like, has it been compression? Like, what have you used it or thought about using it for? OK, so read controller.  Yeah, so that's actually a good point, where you do have the option of going to a discrete PCIe-based hardware accelerator for your storage workloads, like primitives. But then it basically isn't just additional cost to your platform, but it costs you cycles to go over PCIe bus and your ping-ponging between the main memory and the device memory, and so on. i-cell basically does all these functions in memory, right? So in the same thread. So that's the best part. So you don't have to leave the CPU. You don't have to bounce your caches or lose your caching benefits to lower your CPU utilization. So we like to say that the cost is, the cost to i-cell is basically zero other than the CPU core. So that's kind of what's true here. So here is actually a study that we recently published, which is using i-cell-based compression to accelerate genomics workloads. So this was actually a lot of data for the cancer clouds where we were able to show with the i-cell-based compression, which is compared to their default Java-based compression, which is GZ-based. We were able to basically reduce the time. We were able to improve the compression ratio and reduce the time by a half. This is the next set of functions or next set of primitives that are very useful in storage, particularly when it comes to solid state media, right? Given the high dollar per gigabyte properties of this media, compression and deduplication tend to be the most prominent workloads, I mean, which most important workloads, right? So multi-buffer hash routines in i-cell basically give you support for MD5 and all the SHA family. Again, you can basically use it as a data integrity checker or deduplication to basically show you how this kind of shows you how the data chunking and vectorization happens among the SIMD registers on the Xeon processor. So your incoming stream is basically undergoes this process of variable length chunking. It's basically a rolling hash, where those chunks are actually processed in parallel in these vector registers. And you can see up to 15x performance for your SHA family of algorithms over open SSL. So again, basically this slide is to not just show you the performance data, but it's also to show you that as we go from Xeon generations, if you guys are familiar with the Intel, the traditional TikTok model, right? Whenever we come out with a new architecture, typically the SIMD instructions improve. So what this is trying to show is that in the previous generations, the change from, it used to be IV Sandy Bridge to IV Bridge, which was a big architecture change, where we basically doubled the size of the AVX registers and we got almost double the performance. So in the upcoming Xeon, when it comes out, you will most likely get double the performance of this because you're going to get as many as double the AVX registers. So talking about encryption, right? So we actually have some benefits of ISL over even the AESNI instruction that's found in the x86 processes today. So this is actually a case study that we published with Netflix, where they were trying to basically exit their open necessary termination. They had tried other alternatives such as Boring SSL. But with ISL, they were able to actually hit. So they actually have a 100 gig pipe. And they started with about 26. And with some ISL and some other tunings related to ISL, we were able to basically push their encryption performance by three-fourths. So ISL is basically tweakable. It's open source. This case study basically shows you that you can actually tune your system with ISL to get the best throughput. It is recording. So just coming to the last topic here. So how many of you guys actually use Erasure Coding for your storage? And what would be the backing store? What would be the primary storage? Is it Cep? Is it OK? So with Cep, ISL is actually the default Erasure Coding engine. We have integrated it about two years ago. We have a new update, which provides a big boost in the EC performance for the newer Xeons, which we have. It's actually ISL version 2.18, which we are going to soon release. But basically, Erasure Coding is fast with even, like we have integration into even HTFS for those HTFS users. And there are several proprietary stacks that are using ISL as well. So again, this is kind of a summary. We have ISL integrated into many scale out storage stacks, open source, proprietary. The primary use cases, the biggest use cases tend to be Erasure Coding, a multi-buffer hash, encryption, and compression in that order. So here is a slide where you can find all of those integration points and also some links to the original ISL pages where you can learn about how to integrate it into your applications. So any questions so far? I know a lot of folks just got in, so I just wanted to. All right, well, thanks so much for attending. So again, spdk.io is the SPDK portal. And we have, at the end of this material, we actually have a GitHub page for ISL where you can check out all the details. Everything is open source and available for you guys to try out. Thank you so much.


Hello, Yukon 208209. Yes, this is Candy Mattson. How's the one-woman Scotland yard? Okay, Inspector.  Is Mallard at his office? Oh, sure. I just left him there. He's working on a deal, but it's all right. A deal? Oh, I won't bother him then. That's all right. When last observed, he was perch neatly on the horns of a dilemma. Ouch. Well, in that case, I'd better go in, Inspector. Right, oh, drop around any time. High heel sounds so much nicer than flat feet. Thank you, sir. Good morning, Lieutenant Mallard. Candy. For Pete's sake, I wish you'd knock when you'd come in here. Why? Well, I might have been, uh... What, Mallard, dear? A sleep or something.  I heard you were busy. You heard I was busy, so you barge right in? I can always barge right out again, you know. No, no, no. Stick around. I've done all I can for now. What have you got, a murder? In homicide, I'd be working on a purse snatching. Here, take a look. Ever see anything like that before? Nope. Looks like a small medallion of some kind. I don't think so. Here's what I can figure. It's the symbol of an order or a cult. Do you recognize the characters on it? They seem to have an Egyptian flavor. That was my thinking, too. However, I'm not an Egyptologist. You can always take it over to the University of California. University of California? What's wrong with that? It'd be like cutting off my own nose. I've got Stanford and six points in the big game. After what you CLA did to them? Oh, no, sir. From now on, I will knock before I come in here. And if I get an answer, I'm going to leave. You've got a point there. I know I have. I mean, about taking this over to the University. Hey, wait a minute. Why didn't I think of it before? What? Rembrandt. He has a brushing acquaintance with the Egyptian language and writing. Rembrandt? Rembrandt Watson? Oh, you're kidding. No, I'm not. He spent quite a bit of time in Egypt before the war. Come on, get in the car and we'll drive over to his place. I've got to see him anyway. I'm sorry, Canny. No can do. I've got to be in Judge Wallach's court in 10 minutes. Well, let me have it and I'll take it over to him. If Rembrandt comes up with anything, I'll report right back. OK, just don't lose it. That's all. Why? Can't you get another one? Well, not this particular one. We can't. We took it off the body of a woman they found floating last night in the Stowe Lake. Stowe Lake in Golden Gate Park? Mm-hmm.  Oh, I almost forgot what I came here for to begin with. Here's the book I borrowed from you, Mallard, dear. Book? Which book is that? Latest facts and figures on the rise and fall of crime throughout the Western Hemisphere, plus a comprehensive digest on criminal trends in the United States as compiled by police departments of major cities throughout the country. Oh, thanks. Did you get anything out of it? The book? Heck, no. I just barely managed to get through the title. The National Broadcasting Company presents Candy Matson, Yukon 2-8209. I slipped the medallion into my coin purse, slipped the coin purse into my handbag, slipped Mallard a peck on the cheek, and slipped out of the Hall of Justice. I climbed into my car and drove over to California Street opposite old St. Mary's Cathedral, almost bordering Little Alley facing St. Mary's Square. It is there that a very old friend of mine lives, Rembrandt Watson, the eminent Pacifico's photographer.  Today of all days I need the firm stanchion of your friendship upon which to brace myself. Rembrandt, what on earth are you talking about? Never. As the weight of gloom rested so heavily on me shoulders, never has the mantle of depression hung on my head as it does now. Oh, put the hand back in the icebox. What gives here, Ducky?  You mean you're being evicted? Not yet. One must face eventualities. Can't you pay your rent? Is that it? Oh, no, be silly, Candy. I have plenty of money. Well, then in Heaven's name, why the Hamlet Routine? What do you mean you're going to be evicted? Well, simply this, girl. A bunch of uncoothed violets are going to build an underground garage in the square next door. Oh. May I ask, what is so funny? Well, you probably won't have to move. Chances are they'll never touch this building. Well, think, Candy, the dirt, the noise. Well, I've never known either one to affect you before, Rembrandt. It's not me self I'm thinking about. It's Henry, my great Dane. All those steam shovels and riveting machines that have to give Henry a nervous stomach. And on a great Dane, that's something. Yes, isn't it? And here's something that'll prove I'll be evicted. Look, this morning's paper. Right down here. A preliminary tooth instruction of a garage beneath St. Mary's Square was approved yesterday by the Board of Supervisors Finance Committee. The project, recommended by the San Francisco Authority, involves use of St. Mary's Park subsurface area and seven adjacent parcels of privately-owned property in the area bounded by Carney, Pine, California, and St. Anne's Street. There. Do you see what I mean? Well, I hardly call this hovel of a parcel, but yes, I do see what you mean. Well, what are you going to do about it? What can I do about it? Look for a new place to live, that's all. Gladdy, boy. I'm glad you said that. I've been meaning to have a word with you for quite some time. Now, you're doing a whale of a good business. More and more, you're catering to an extremely fashionable clientele. That's true. It's about time you lived the part. Your photographs are becoming known throughout the country. You couldn't have stayed here much longer anyway. But it has such atmosphere, Candy. That it does, especially when the wind's from the east. Tell you what, you help me on a little deal right now, and I'll spend the rest of the day looking at places with you. Oh, Candy, will you? I was hoping you'd say that.  In the spring, I am. Oh, I get it. Spring lamb. Yes. Spring lamb. I feel ever so much better already. Attaboy. But before you bound completely out of your skin, ducky, take a look at this. Wait a minute. There. Hmm. Fascinating. What is it? An amulet of some kind? I don't know. That's why I came to see you. What does it say on there? It's in Arabic. Hopefully, fine print. What did I do with my glasses? On your forehead. Oh. El mani. El hada. El mastakbal. Hmm. It's one I can't seem to translate. Wait a minute. Oh, of course. Milky. What does it mean, Rembrandt? Well, I'm not exactly sure of my translation, but I take it to read the past, the present, the future, our mind. That sounds good enough to me. Let me make a phone call, dear, and I'll be right with you. Tell me, ducky, does that expression mean anything to you? Have you ever heard it before? No. There are literally thousands of such sayings in Arabic. You could refer to almost anything. That's what I was wondering about. Headquarter is Daluchi speaking. Oh, hello, Daluchi. This is Candy Mattson. Is Lieutenant Mallard there? Lieutenant Mallard, no, Miss Mattson. He left with Judge Wallach and the jury on that happy dance supermarket killing. How did Lake Merced? Probably be there the rest of the afternoon. Oh. Okay. Would you write this down for me? El Magi, El Haider, El Mostakval, who milky. Miss Mattson, this is a phone conversation. It's legit. Well, in that case, get some tight. Thank you. Now, have you got that? I guess so. Good. Just sign my name to it and put it on Mallard's desk, will you? Sure, you say so. Thanks, Daluchi. Goodbye. Candy, are you crazy? Mallard won't understand that. Crazy? Just the other way around. This is one night I know I'm going to get Mallard to call me.  Just having you assure me that moving from here is the right thing to do has removed all me trouble thoughts. Transform me into a blight spirit. A blight spirit? Well, come on, blight spirit. Let's go haunt for houses. Knowing Rembrandt as I do, he's the sort of a man who would open a doll factory across the street from a boy's school. But in this case I was going to make sure he'd get the locale to the business and vice versa. But what was the locale to be? Suddenly I had it. There was a barn type of building out on Octavia Street just off Pacific. It used to be a dance studio, but somehow or other I seemed to recall a for rent sign on the place. And that's where we went. What is it, Candy? Looks like the place might have been stable. Oh, I imagine it was at one time. I do know it was a dance studio for a while. It's for rent, all right. There's the sign. I hope we can get in. You'll like it, I'm sure. It's just ideal for a photography studio. And it has plenty of room upstairs for living quarters and a fine big backyard out and back for Henry. Sounds ideal. If I could only see it. Let's walk around on that little wooden bridge at the side. Maybe there's a window we can peek through. If not, we'll run down to the real estate office. You see. The outside needs fixing up, but not too much. No, as a matter of fact, if the place is any kind of shape at all and the owner is willing to call the business, I might be interested in buying the place. What? Why not? Now that I'm in mood and I've saved a fair amount of money the past year or two. Oh, here's a window. Pretty dirty. Wait a minute. Can you see anything, Candy? Well, a little. Enough to give you an idea of how much space you have in the studio itself. Here, take a look. Oh, it's wonderful. Just perfect. I could do all the portrait work up in front there and put all the equipment back in the... Ducky, what is it? I saw a man in there. Let's see. He's motioning to us. I don't understand, but... is there a door down that way, Rembrandt? Wait, let's take a look. Yes, I'll see one. Oh, that's what he wants. Come on. I suppose he is, dear. A caretaker, maybe. We'll find out. Was there something you wanted? We're just looking around. We saw the sign out in front. Are you the caretaker? No, no. I am the owner. Oh, then you live here? Again, no.  I came over to investigate. A fire? Yes. There wasn't much damage done. One of the neighbors saw it and the fire department arrived almost immediately. Lucky for you. How much rent are you asking? I'm afraid you'll have to take that up with the real estate people. I let them handle all my transactions. Would you be willing to sell? I might, but that's something you have to discuss with them, too. That sounds odd, does it not? But much better off if I don't transact my own business. Sure. Would you mind if we looked around? Mr. Watson here is rather interested. I'm afraid that is out of the question.  You would have to use matches. We'll be very careful, sir. I've got matches right here in my purse. No, no, no. It is impossible. After what happened last night, I'm afraid things might be misunderstood. I should be accused of... Accused? Accused of what, Mr.... And what did you say your name was? I didn't, and neither did you. We have a quaint custom here in the United States. I am not interested in custom. I'm only interested in keeping my appointment. You'll keep your appointment, I assure you. Do you remember High, Low, Rembrandt? Oh, yes. A quaint little device used with a great deal of success on the gridiron. Yes. Would you like to take High, and I'll take Low? The pleasure, really, now. Get his arms, if you can, Rembrandt. I'm trying to fake this like an e-hole. I think he needs a little persuasion on the head like so. Oh, dear. I hope you didn't tap him too hard. No, he just went seepe-by for a little while. May I ask the reason for this unwomanly outburst on your part, Dow? You certainly may, slugger. Look, up there on that beam above us. Oh, dear, where are my glasses? Back up on your foot. Oh, now, what did you want me to see? Up there, a sign on that beam. Just barely visible, but you can make it out. I mean, no. El Madi, El Hada, El Mastafal, Hume, Milky. Sure. I saw it when we first came in. When the boy on the floor mentioned matches, it gave me a perfectly natural chance to open my purse and flash the medallion. He saw it all right. He stopped like he'd been sapped. He was? Twice, yes. Once by the medallion, once by me. I think we've got something, Rembrandt. Come on, let's get to a phone call, Mallard, quick. And may I say something, Duckie? You certainly do. Well, I shouldn't say it, but that was the prettiest high-low I've ever seen. From San Francisco, the National Broadcasting Company is presenting Candy Mattson, Yukon 2-8209. I left my gun with Rembrandt, who by this time was sitting on our little friend. I took off, found a grocery store about three blocks down and placed a call to Mallard. Fortunately, he was in, and after I told him what was happening, he was out again, this time headed for the former dance studio. I ran back to the place, and Sleeping Beauty was showing signs of coming too, with Rembrandt still riding a choppy sea on the guy's twisting chest.  My stage is beginning to buck a bit, and I did so want to avoid smacking him on the noggin again. Yeah, I don't blame you after a while it begins to hurt. Here, give me the gun, Rembrandt. Thanks. I'll be back. If the Joker tries anything, there's going to be badminton with bullets for birds. You get Mallard? Yes, he'll be here in a moment or two. In the Hall of Justice, that'll be forever. You don't know Mallard when he has a chance to play with that siren. Yeah, Testament snapping out of it. I think, Miss, you will regret exceedingly what you have done. Maybe so, maybe no. Now, uh, care to tell us about this past, present, and future, our mind stuff? I'm not saying a word. Does it surprise you I know the translation? You might as well tell us. You'll have to in the long run. I have nothing to say. And I mean that. I'll bet you do. Wait a minute. See who it is, Rembrandt. It's Mallard in his platoon system. Good. Open the door for them. This is cozy. All you need is a fourth for bridge. And I kibbit. He's all yours, foot flat. Okay, get him, boys, let's go. Hey, wait a minute. You haven't seen the building. The building can wait. This cookie's hot, and I want to keep it that way. Like I said, boys, take him away. Give him that big hall of justice. One, two, three, O'Leary, and we were at the jail house on Washington Street. Four, five, six, O'Leary, and our lad was whisked away into the inner sanctums for a pleasant little game called Information, please. Seven, eight, nine, O'Leary, and Mallard was back in his office, snorting fire at me. And when he snorts fire, Sister Susie, it's frightening. What are you trying to do? Have the whole city administration down on my neck? What Mallard, what do you mean? I'll tell you what I mean. We've arrested a man who's completely in the clear. He can shoot the works at us. Sue is for false arrest. Wait a minute. Something's off the beam here. What's his name? Testament, Al Testament. How do you know he's in the clear? Because we checked just now.  I don't know what to say. I do. Go home and stay there. I have a hunch the guy's going to press an assault and battery charge against you and Rembrandt. And he's got a real legal right to do it, too. Yipes. I wonder how I'll look in stripes. Mallard was just plain out and out sore. Judging the mess on its face value, he was entitled to be sore. But I'm not the gal to take things on face value. That sign on the beam out of the old studio definitely had a link with the inscription on the amulet. I was sure of it. And I was sure that Testman was a link, too. So I fell back on the private eye's first lesson, how to shadow a suspect. The use of doorways, trees, buildings, shrubs, fences, and et cetera. So hiding behind an et cetera, I waited outside the Hall of Justice until I saw Testman leave the building. All he did was snag a cab and disappear into an apartment house on the top of Clay Street. I checked the ground floor and found there were only three outlets, the main entrance, the service entrance alongside and the garage around the corner. I parked across the street where I could see all three and waited. And waited. About 2 a.m. I figured Testman had holed up for the night, so I went home and got myself a nice little jolt. My penthouse was a mess. It looked like a senior grade monsoon had ripped through the place. It stacked up that Testman couldn't have done it, so there must be somebody else who wanted in on the act. As far as I could tell, nothing was missing, so I straightened up as best I could and hit the sack. The alarm went off at 5 o'clock the next morning, and I struggled into my clothes, drove over to Rembrandt's place, rustled him into my car, and we took off. Your man can be positively mad. What's the idea of waking me up in the middle of the night? It's not the middle of the night, Ducky. It's morning. Remember the early birds get the worms. For the change, I'd like to see the early worm get the bird. What are we doing gallivanting about like this? We're putting the shadow on Testman. Is he the worm? One of them. In spite of the fact that Mallard White washed him. Here we are. How lush. The Blake Essex. We'll just park here. Hunch down in your seat, Ducky. I hardly imagine our worm has departed yet. A half hour passed by. Just as the sun peeked over the East Bay Hills and scattered its own bright rays on the water of the bay, a car backed out of the Blake Essex garage. It was Testman all right. He wheeled the car down Clay Street, and we followed. He turned left on Taylor, and again when he reached Pacific. I had a hunch where he was going. He crossed Van Ness Avenue when we did likewise. That was when Rembrandt spoke up. I hate to mention it, dear, but I think the shadowers are being shadowed. But how do you mean? I look behind several times. There seems to be a car following us. Just a coincidence. I wouldn't worry about it. Look, our boy's turning off under Octavia. Just as I thought he's returning to the studio. What do we do now? Go as slowly as we can. Give him time to park the car, get inside the building, and then go in after him. Are you sure you know what you're doing, Gandhi? Nope. Oh, well, then it's all right. We'll go past Octavia to Laguna and down to Broadway and come back in that direction. That should do it. Now to double back along Broadway. I dislike being repetitious, girl, but the car's still following us. Well, there's nothing like a showdown. Here we are at Octavia. Let's find out. Look, we crossed the street at the studio. Out in front there. Bags of cement, sand, and a pile of bricks. That wasn't there when we left yesterday. No. There's our friend, Gandhi, if he is. Well, I'm going to find out about this right now. Please, Miss Mattson, remain seated in your car. Is it gone, Candy? That's a naive observation, Rembrandt. Looks more to me like a cannon. I assure you, I won't hesitate using it. Now, if you and Mr. Watson will get out in an orderly manner and walk across the street into the studio, there will be no trouble. Looks like we have no choice. Come on, Ducky, this should be great sport. When you have a gun that size poking into your nose, it's easy to be convinced. We walked across the street and into the studio. Even with a brilliant morning sunshine outside, the place was dark and grim. And Tessman Ladd was waiting to meet us, wearing the very latest in smirks. Just as you planned, master. It was so easy. They fell into our trap beautifully. And now they shall feel no pain. To work, Tessman, there can be no further delay. Yes, master. He calls me master. And that is as it should be. Now, Miss Mattson, now that you've so conveniently returned to our shrine, the amulet, please. I haven't got it. I left it at home in another purse. It wasn't in your place last night. So you're the character who wrecked my apartment. That is right. And now, if you will be so kind as to empty your purse on the table there. You better do it, Candy. Yes. There seems to be no alternative. Now the coin purse, please. Ah, yes, the amulet. Thank you. You're welcome too. You can have that if you want. The past, the present, the future are mine. Mine, Miss Mattson. An old saying of one of the ancient pharaohs. I adopted it for myself. Rather brilliant, wouldn't you say? I'd say you need a new scriptwriter. Now I shall tell you about your future. This building, being on a hill, was built on solid rock foundations. My faithful servant, Tessman, is an expert stone mason. You see that chamber like a fair hewn into the rock? Tessman is going to build a brick wall across it.  Only it will take more than a Howard Carter or a Lord Carnivan to discover you. The guy was a madman, and a madman usually keeps his word. Tessman went to work. Little by little, the sealing wall of bricks took shape. Once I pressed my hand against the bricks, they must have been using a fast-hardening mortar mix of some kind. The wall was as firm as the edges. Zoma smiled. Finally, there was an opening just large enough to crawl through. That's when Zoma spoke up. Enough, Tessman. I will complete the work. As you will, master. My mission here is finished. You three are the only ones who know about me. And so I shall destroy all evidence and move on to newer fields. Tessman, in you go. What? Master, no. No. I have served you festively. I said get in. No.  I won't. Not even for you.  The future belongs to me. You two, get him. What? shove him into the tomb. I trust you won't be quite so idiotic. Suffocation isn't too unbearable. I think I shall call this the tomb of the wayward three. Yes. That will be good. Is he in? Yes. Very well. You may follow.  I'm sorry I got you into this. It's all right. And now for the fine act. The complete obliteration. Ah, yes. People all over the world have lost their way. They struggle in darkness. It is up to me to bring them the truth. For after all, El Hadi, El Harder, El Mostakbal Humildi, all mine. What about that woman you dumped into stone late, Jomar? A very generous lady. She contributed over $15,000 to the cause. But then the poor thing began to doubt me. Said something about going to the authorities. Most unfortunate. It was then that even I, Zoma, made a mistake. I forgot about the amulet I had given her. She was still wearing it about her neck. I will not make that error again. Now, like the final toast to life. The last brick. Sleep well, foolish ones. Forever. Get your hands straight up in the air, Mac. You desecrator.  Yes, I will, like this. Where are you? Over here, Mallard. Behind this brick wall. Fine thing. That's all I've got to say. Running around and messing things up. Boy, he's really got you tucked away, hasn't he? Come on, Mallard. Get us out of here. We can hardly breathe. We? Rembrandt and I. Oh, no. You're Pal Tessmon, who's past breathing. Boy, you can sure do it, can't you, Catty? I think I ought to leave you in there. You almost messed this whole thing up. I did? How? Why did you think we released Tessmon? Tessmon. Yeah, I know. Ali Tessmon. I'll call him Tessmon. Because it was the first lead we got on this Joker Zoma. We've been after him for months. Why? Playing on the superstitious people with a yen for the occult. We had nothing to go on until we fished that woman out of Stowe Lake with the amulet around her neck. And you have to go and stick your pretty nose into the picture. What about Tessmon? Up until he met Zoma, he was okay. Doing quite well in real estate. Then along came the master. Tessmon turned over the studio for Zoma to use as a temple. But after he dumped the tomato into Stowe Lake, Zoma realized he'd have to liquidate his affairs and get the bejavers to other parts of the country. With you and Rembrandt making like cops and robbers, he knew he had three people to get out of the way. He almost got away with it. But how did you get here when you did? Sheer luck, Cupcake. I was only returning to make a routine checkup on this joint. Sister, are you lucky? You can say that again. Alright, sister, are you? On second thought, maybe you aren't. What do you mean, my dear? If there's one thing I can't stand, it's an interfering woman. I think I'll just leave you in there. No, no. Irene, good night. Irene, good night. Not if you can't do this. Irene, get us out of here. Okay, on one condition. Sure, sure, what is it? Promise you'll go to a Roy A'Cuff movie with me tonight. Roy A'Cuff movie? What do you think, Rembrandt? A fate worse than death. That's what I thought, too. So long, Mallard. On your way out just sealing that last brick, will you? Listen again next week at this same time. For excitement and adventure, just dial. Candy Matson, Yukon 2-8-2-0-9. The part of Tasman was played by John Grober. Zoma was Lou Tobin. Henry Leff is heard as Lieutenant Ray Mallard and Jack Thomas is Rembrandt Watson. The program stars Natalie Masters and is written and directed by Mottie Masters. Bill Brownell creates the sound effects and Eloise Rowan is heard at the organ. Our engineer was Frank Barron. Any resemblance to actual people is purely coincidental. The characters in the story were entirely fictitious. The program came to you from San Francisco. Dudley Manlove speaking. This is NBC, the national broadcasting company.


The Director of Human Resources of the National Examinations Council, NECO. Abdul Mustafa has debunked the news that NECO-Boss National Examinations Council was assassinated by some unknown gunmen. Mustafa shared a message from the late professor's family that clarified that the former NECO registrar died in his sleep as a result of heart failure. Online reports had stated that gunmen suspected to be assassins killed the registrar on Monday night in Mina, the Niger State Capitol. The reports quoted the deceased widow, Mrs. Elizabeth Ubyoma, are saying that the assassins came in, killed him and left without taking anything.


The side effects of an acquisition deal can be considered in terms of earnings growth and diversification So far as earning growth is concerned an acquisition may fool investors on affirms EPS growth more than what it really is Let's take an example of two firms to understand this earning magic One firm we have is the global resources. Whereas the other firm is the regional enterprises if we see on the screen both the firms have an EPS of $1 whereas the price per share for global is 25 dollars and regional is 10 dollars per share Number of shares of our both of the companies are 100 as to the outstanding shares Whereas the total earnings of global is 100 dollars and same is true for the regional enterprises the total value of global is therefore comes to $2,500 dollars whereas it is $1,000 for regional enterprises using this data if we see the price earning ratio of a Global resources it is 25 times whereas it is 10 times for regional enterprises Now the question arises that do the investors are getting a better deal with regional enterprises? the answer is that not necessarily because Global's earning are expected to grow faster than the regional's earnings and This is the fact that market Expectation of growth rate in earnings of a firm determines its are a price earning ratio Now assume that in this acquisition there is a zero synergy effect between the two firms Then if the market thinks smartly, then what will happen? We know that in this particular situation the combined value of the firm after acquisition is equal to the individual sum of individual values of global and the individual value of the resources enterprises and That sum is equal to 3,500 US dollars at this if the global acquires regional at a ratio of 4,200 shares then the situation appears if we see on the screen that the earnings per share will be 1.43 dollars for the global and Price per share is same at 25 US dollars number of shares will go from 100 to 140 outstanding by the global the total earnings will go up global become Equal to $200 whereas the total value will be equal to $3,500 and at this level of data the price earning ratio will be 17.5 Times for the global Now the question again arises that why the global earning a price earning ratio has dropped from $25 to 25 times to 17.5 times The answer is that the EPS of the combined firms is equal to the average of the EPS of the global firm which is a high growth firm and the EPS of the original firm which is which is basically the low growth firm So we can draw a conclusion that the global price earning ratio should drop taking our new division That has a low growth rate in its earnings What will happen if the market is pulled then? The market might take the global's 43% earning Increase in its EPS for a true growth and that 43% is from EPS of $1 to $1.43 per share at in this case There will be no fall in the global's price earning ratio as if we see the after Acquisition situation the earnings per share is $1.43 a price per share is now $5.71 for the global number of shares are 140 these are the outstanding shares total earnings after acquisition are $200 and the total value is now equal to $5,000 and at this data the price earning ratio of global after acquisition is same at 25 times so we see that at the price earning ratio of 25 times the value of combined firm is now equal to $5,000 and the global's new stock price is now $35.71 and this is how earnings magic can work This appears that the market is too smart to be fooled by this this magic very much easily The second effect that can be seen as an outcome of an acquisition deal is the diversification Diversification is regarded as a benefit for the acquirer But there is an argument against the diversification that it does not increase in any value However merger are meant Sometimes for diversifying thus unsystematic risk, but investors individually does not need companies that are widely diversified for this particular risk elimination Because individually investors can do more easily this work by purchasing common shares in different companies So diversification through conglomerate Mergers may not benefit the shareholders But diversification can benefit the acquirer subject to certain conditions like If diversification reduces unsystematic risk at a lower cost then the individual's judgment on his personal portfolio The second if the diversification reduces the risk and increases the post acquisition debt capacity


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Welcome back to Think Tank. I'm Jay Fidel. This is Talking Tax with Tom Yamachika, who joins us today to discuss getting the kids to school in Ieya. And I would like to open the show with a resounding aloha, because this is the study of the new aloha in Hawaii. Welcome to the show, Tom. Aloha. What's going on in Ieya? Well, we are focusing our attention this week on Ieya because a new high school is going to be open there. It's called Kulani Hakoi High School. I hope I got the pronunciation right. And it cost $245 billion. Problem is, for a long time, it couldn't open. And we're going to talk about why. Let's talk about schools in general for a minute. Ieya must be a fast-growing place, or they had another school that was not up to snuff, but they had to build a new one for $245 million. That's a lot of bread. And I just wonder what the track these days is on building new schools. There's just a lot of schools that are underpopulated. I'm not sure why in Ieya they had to build a school for $245 million. Would you comment on that? Well, previous to this new school being built, the students who lived in Ieya were being serviced by other high schools and other parts of the island. And they had to be bused there. So the kids had to endure long bus rides going both directions for a very long time. And ultimately, lawmakers had enough of that. And they said, all right, I'll go on it. So DOE, please build a new school there. And it's now built. Is it built up to standard? And we had a show a week or two ago about air conditioning in the schools. Oh, yeah, that's no problem. It's brand new, lives up to all those standards, but there is one issue. And let me kind of show you what it is. Can you put up that map there? Okay, see, the red pin on the right is the location of the high school. I'm not sure how much it's built up since this photo was taken. But as you can see, the high school's on the right, all the houses are on the left. And there is this highway. This is P'Ilani Highway in the middle, separating the two. So the concern has been, and has been for a very long time now, how you get the kids across the highway to the school. Back in 2013, which as you know, is 10 years ago, the state land use commission said, well, as a condition to building the school over here, what you've got to do is provide a grade separated crossing, which means either an overpass or an underpass. And those were the rules of the game since 2013. And over the years, DOE was, you know, planning along those lines when it approached Maui County for permits. This was in 2020. I mean, I don't know why it took seven years, but it took seven years. It said the design of the petition overpass was already started and projected for it to be built either in 2020 or 2023. But did that happen? No, not at all. What happened in 2021 was that DOE kind of had a change of heart. And they decided, hey, let's go back to the land use commission and try to get them change, get the change in their mind. About one about opening the school without a pedestrian crossing. So the kids would cross the highway without the without the cross? Without an overpass or an underpass? So you would have traffic lights or you have a crosswalk? And DOE said that, you know, these, the overpass or underpass really isn't necessary. And the attached to their request studies, guess who paid for those studies, presumably showing that the pedestrian crossing wasn't needed. The community, the folks in Kihei and that neighborhood that we showed you, they wouldn't stand for it. That attracted objections and demonstrations from the public. And ultimately what happened was that the land use commission denied DOE's request. Okay. So eight years have passed. DOE knew that it had to build an overpass or an underpass. They didn't do it. And they tried to get the land use commission to change their mind. And land use commission said no. So now we have a school built? There's more. There's more. At the same time, they were kind of talking to the department of transportation because they have a jurisdiction over the road. Peelani Highway. And the department of transportation spent $16 million on a four lane roundabout with flashing lights in front of the school to slow traffic down. And so in DOE's mind, that's how we need, you know, we don't need, we don't need to do overpass, we don't need the underpass. What is the cost of the underpass or overpass? Is it more or less than $16 million? We'll get to that. It's going to be more now. Now it's going to be more. Okay. So when they did this, the county officials were skeptical. And in late August 2022, they said, okay, let's have a meeting with the community. So they showed up. Council members showed up. Other community members showed up. And they invited the DOE. Nobody from the DOE showed up. Nobody. They said they weren't invited, which is kind of hard to believe. But nobody showed up. Fast forward to February of this year. DOE seemed to be reading the handwriting on the wall. And they presented some rough sketches to the community about what an overpass would look like. And DOE said that it would last the legislature for emergency funding. And at that point, Senator Agnes McKelvie, who was senatorial district encompasses that area, he did, in fact, ask the legislature for $15 million to cover the cost of the overpass. That's less than $16 million. $15 million. That's less than $16 million. It is. But it got reduced to zero in the budget negotiations. So apparently, the House didn't like it for some reason. And maybe the answer was, and we have to speculate about this, but maybe the answer was that the construction would cost more. Because at about the same time, the governor's office issued a release saying that the construction of the overpass would cost about $25 million plus. Okay. So this, of course, did not satisfy the county. I don't blame them. And they were asked to issue a permit allowing the school to open, at least conditionally, and they said no. We don't want to have the blood of roadkill students on their hands. Is this election of the county council or just some administrative body? I think it wasn't the building department side, but lots of people were involved in the county's decision because Mayor Bissen did come out and speak about that. What's his position? Well, he doesn't want dead kids. But man. Yeah. All right. So at that point, high-level negotiations started happening spearheaded, well, either spearheaded or participated in by Governor Green, and they were trying to reach a deal to allow the school to open. And in March of this year, they did in fact reach a deal. So under the terms of the deal, the U.E. is going to implement a temporary pedestrian safety plan, including shuttles for students who are walking to and from school. And they said that the state is going to hold the county harmless for anything, you know, bad that happens under the temporary pedestrian safety plan. And of course, then the county's obligation under the deal was to let the school open. So the school is going to open. It's going to open next month in August, under those conditions. But let's kind of look at where we are. We're 10 years down the pike, the overpass slash underpass will then build. We have a four-lane roundabout with flashing lights, which probably antagonizes everybody. Because, you know, the cars going on Peelani Highway, they're zippin' by, and they don't want to break to 25 or whatever to go through the overpass. The kids are still afraid, and they're worried about being road killed just like everybody else. Parents are anxious, and it's an inconvenience to go on the shuttle, especially if you've got to wait a long time for it, you know, with driver shortages and what have you. And it's kind of really a sad situation. I mean, the good news is that the school's opening. But the bad news is that you've had all this in-fighting between difference to agencies, DOE, Department of Transportation, the In-Use Commission, the Maui County, and guess who pays for all the fighting? We do. We taxpayers do.  What about that? You know, if you had like maybe a 25 or 30-mile-per-hour road, you know, you got to peel on the highway, it's probably not going to work. I mean, those road monitors would probably fear for their lives, too, and I wouldn't blame them.  This is really such a downer for the DOE, I mean, because they haven't been able to get to the school. And they won't come. But what kind of a school is that?   You expect government to solve problems, get things done. Instead, what happened here is everybody spent a lot of time and a lot of money fighting amongst themselves, and stuff didn't get done. Well, you think that some political official will emerge and say, damn it, we have to solve this problem. The school is opening, I want it to open, there has to be an overpass, I want it to be built, you guys work for, you know, the chief executive of the county over the state. I want this done. Is there anybody doing that? Sadly, nobody right now. I mean, we don't even know whether DOE is finally consenting to have that overpass built. So let's look to a sign-blame, I don't know if it's a sign-blame, but it's a sign-blame. And you can't say, oh, everyone's to blame, this is a systemic blame. Now, who's at the top of the list? To me, top of the list is DOE. They had their marching orders 10 years ago. Oh, I didn't think they'd build a dam overpass if they were told point blank, you got to do it. Well, that's an executive issue, isn't it? You can say, well, you can pop that off on some board of directors somewhere, but as the executive that has to stand and explain. Well, with the DOE, it's kind of a little bit different because the superintendent of education doesn't report to the governor, he reports to the board of education. And their elected officials. Yeah, that's kind of technical though, because at the end of the day, where's the media been on this?  But what about the last 10 years, you think the media would be shrieking about, has it? Well, not, I mean, there's been media coverage, I think, since 2020. When a lot of this was going on, but before then, not so much. I mean, what happened to the seven years between 2013 and 2020? I don't know, I guess they were going out getting RFPs or whatever, that they were building the school. I mean, things seem to be going okay. The school was being built, so probably wasn't viewed as new or worthy at the time. What about the legislature? You know, and the chairs of the committees on education, both the house and the Senate, going to say, we want it built, build it, here's some money. Anything like that happened? Well, again, that's what Senator McKelvie tried to do. And he got $25 million in the budget from the Senate side, the house took it out. Why they took it out? Well, that's what Senator McKelvie tried to do, and he got $25 million in the budget from the Senate side. Why they took it out? I don't know. And Yamashita's not saying. Embarrassing. It kind of falls on him to explain, but he doesn't explain. That's the way the ledge works, isn't it? So, okay, so there are a couple of things that have come out of this. One is deciding the blame. And it sounds like there's plenty to go around, but you know, you could focus on individuals and institutional ruptures here, like the DOE. But at the end of the day, this is bigger than that high school in T.A. This is the statement of how the government works, right? I think what we're seeing and what we have seen is a lot of systemic issues in DOE. DOE is very, very big. It's one of the biggest state agencies. It has one of the biggest budgets. But it's got all kinds of problems. It's got deferred maintenance issues. It's got the issues that we talked about last time. It's got the, you know, we can't get new schools open kind of issues, at least here.  One of the problems is and always has been that they keep their own records very, very close to the chest. So as to evade scrutiny by, you know, other watched out groups like us who have been trying to get behind the so-called iron curtain for decades. So it sounds to me like we need reform. And I'll take your point. We need reform at DOE. Where would you start? We don't know. The problem is that there's this, you know, iron veil that nobody seems to be able to pierce. So maybe we start by getting rid of that, making sure that the, you know, DOE's fiscal systems are more transparent and that can be scrutinized by, you know, watched out groups like us, the education associations, you know, there's other non-profits that profess to be able to analyze budgets and that kind of thing. One of the things that you always worry about, or at least I always worry about, is that the bigger the organization is, the easier it is to hide stuff. So that has to change. That has to change.  Why is it so troublesome? Why can't you, the tax foundation of Hawaii, or other organizations or interested individuals, a parent, for example, make a FOIA request and expect to get it? One, and we were about this before, one education association, it was a non-profit headed by a gentleman named Ray LaRue. They asked for financial records from DOE, didn't get them, sued, and ultimately got some records for, you know, I think it was the 2016 year, but they got them in 2018 or 2019. So the information had limited value once it popped out. Why was it delayed? Because that's how long the litigation took. Well, that doesn't speak about a system where you can get things done. And we, as you have said, we as taxpayers pay to get things done. In this case, nothing was done. So it seems to me that some, you know, strong steps sort of take place. For example, if that board that the superintendent is responding to hasn't provided information, hasn't explained what happened, or failing that, you know, it can't explain what happened, then maybe some of them ought to go. Maybe the superintendent ought to go. You know, what about an impeachment? What about getting rid of them? And where is the governor on this? Well, it was an organization that's that big and that complex. It's unclear where to go to start. I mean, certainly you can get rid of the chief executive, but it may be beyond the chief executive's ability to handle anyway, because some of the subordinates there may be entrenched, and just not listen to what people above them are telling them. I mean, I've experienced this myself in large organizations. Well, maybe as an iconic maneuver, a token, where you say, look, we don't know what happened here, but you're the chief executive. This is on your watch as far as we're concerned. Don't give us excuses. You're gone. You're out of here. We are teaching you. Maybe the next guy will study what happened and not do the same thing. What about that? Well, you've got to find somebody who's willing to take that kind of abuse, who's the successor going to be, and there's always the worry that is the successor going to be worse than the predecessor. Can't worry about it. You've got to move on, so I think. And I don't know how do you identify entrenched members of the board so as to do something about it? Well, it may not be the board. It may be the civil servants that are kind of like one or two levels below it, like at the assistant superintendent at the deputy superintendent level. You really, there's no easy way to figure out where the problem, you know, where it's. The responsibility of the chief executive and you know that. Yeah. To make sure these people are not making mistakes like. Yeah, that's definitely true. I mean, it kind of brings to mind even a few weeks ago, there was news coverage around like federal funds that were being made available to the schools to to buy certain kinds of equipment. And the at that point, the facilities had kind of wrote a memo to all the schools and say, well, don't take this. It's got to go through us. And at that point, you know, the media was kind of wondering, and we're kind of wondering. All right. So, so what's going to happen? Are you are you just going to like have the schools with or on the fine here? Or are we going to have some, you know, centralized attention that's going to be you know, paid and resources given to the schools since it's coming in from the feds and you know, with with little or no impact to the state budget. You know, what's going to happen? We never really heard anything about the follow up, or at least Dr. Hamilton. Well, it sounds like the, you know, the whole education system in the state had to be reformed. It sounds like the house has to be cleaned. There are systems and levels of bureaucracy. Everybody talks about it that are really impossible. This will happen again. And it is probably happening right now and nobody's doing anything. Nobody can do anything. You know, they're all very comfortable in their layered bureaucracy. And so if I made you the legislature and I always wanted to do that, what kind of reform would you do? What would that bill say? That's a very, very good question. I mean, certainly you want transparency and accountability. Maybe you just get rid of the board of education. There's an idea, because that sounds like it's the rotten part. And they're only too happy to be there and do nothing. And then maybe other things will flow. For example, these layers of bureaucracy will go away. Is it a budget issue? I mean, I know they're spending more than any other state agency variance and variance. So the question is, can the legislature control this in some way by reforming their funding? Well, if they want to get you further into the weeds, which I think they should, yes. I mean, they exercise a lot of control over other agencies by putting in budget provisors, saying like, okay, you can spend this money only in this or you can spend this money if X, Y, and Z happens. So maybe there should be more of that going on. The intersection is with the rules about exempt and non-exempt management decisions. Hard to get rid of them. Hard to decommission a management position in an organization like this. They all say, I've been here forever. I know this more. I'm comfortable, comfortable in what I do. You can't touch me. And I find interesting that the union plays a role in this. I knew we'd have to get to that in this discussion, Tom. Where is the union? Which union? There's more than one. The state, I don't know, teachers, the state education union. What is it? How many are there? Well, there are at least three. There's HSC for the teachers. And I don't think they're a part of this. Actually, you think they'd be screaming about it, but never mind. Yeah.  Then there's HGEA, which is covering the principles and the administrators. So maybe that's closer to the root of the problem. And then, of course, there's the UPW, which is covering the custodians and such. There may be others. But maybe we'll look at HGEA and what they can or will do about it. Well, that was a state auditor. We've talked about him before. Well, the state auditor has their own problems. Well, in terms of being seriously taken by the legislature leadership. Yeah. Yeah, they're still running their competition with him. And the governor, I asked you about the governor. What can the governor do? I mean, this is a serious state problem. And we're never going to have decent government until this and things like this are cleared up. Yeah. Maybe what the governor's going to do is put another emergency proclamation in this to the one about housing to get the schools under control and cut through some of the bureaucracy and the red tape and get some money to the places where it's more urgently needed.  I mean, I think that's disgraceful. Yeah, I totally agree. Yeah. Well, I give you a scenario time. I'm in my gubernatorial office and I asked the superintendent to come and talk to me. And I say, look, you're the superintendent. You work for the people and government is a service to the people. And you can't distance yourself from that and you have no excuses here.  So I want that thing built and I want it built now. Give me a date by which you can get it built this summer. Good. Now, build it. And if you don't agree, if you can't manage this, you're useless. And I want your letter of resignation of my desk in the morning. What about that? Well, the first thing he's going to say is that they don't have funding for this. As you know, the legislature took up this matter in the last session and they deleted all funding. So I can't really go ahead without defying the legislature. And my line as governor is, I'm sorry, that perhaps you did not hear what I said. Yet it does. You know, we give you a trillion dollars a year to run the schools. Truly, you can find a way to find a way or find a door. Well, I hope that kind of conversation is being held somewhere because it needs to happen. Yeah, that's very interesting. And I think this is a systemic problem that's enormously important. And I think we are going to be tested. We're going to be tested in our fiscal policy. We're going to be tested in every area of public policy to see whether we can handle it. Why? Because I think there'll be stresses and challenges in the years to come. All the issues you and I have talked about, plus climate change, extreme weather, failure of community systems and services, they're all on the doorstep. And what I worry about is these things will fail at the worst possible time. For example, in the event of extreme weather. And the people who made the mistakes and failed to plan, failed to organize, failed to create systems and infrastructure, as they should have done, won't be in office anymore. And you can't call them on the phone, they're gone. And who are we going to blame then? Ourselves. So this is the time to act. This is the time to clean it up now. Absolutely. Yeah, again, what we can do is try to spotlight on problems and then hope that the powers that be can fight it into their hearts to fix this stuff. Yeah, and the media. The media has to focus on the important things that affect all our lives and the lives of our children, our communities, and they can't just go for raw meat news stories. They have to follow up on this. It's really critical that the flame of governmental activity and reform is kept earning for all of us. And it is the media that has to do that. Okay, we're about done, Tom. Sorry to tell you, but what message would you leave with the public? Well, what we need to do, like you mentioned, is we need to have a real hard look at some of these agencies, especially the bigger ones, who spend a lot of our money and do non-productive things like fight with each other. We need to have a realization that, you know, they all work for the people and they got to focus on getting things done.  Your hire I can hide from responsibility. Another approach. Let's get things done. I'm Yamashika, president of the tax foundation of Hawaii, taking a careful look at how our government works, how our various governmental policies work. Tom, there's only one word that I can say to you at this point in time at the end of our show. Are you ready? I'm ready. Hello. Thank you so much for watching Think Tech Hawaii. If you like what we do, please click the like and subscribe button on YouTube. You can also follow us on Facebook, Instagram, and LinkedIn. Check out our website, thinktechawaii.com. Mahalo.