Sailing: July 2021

 On June 28, our Beneteau dealer, Ultra, replaced the motherboard circuit for the salon table, reinstalled the ice maker they had taken out for repair, and solved a minor sink drain problem in the galley. We spent one more night in our marina, all of us having dinner in Šibenik’s old town at Pelegrini, on their wonderful terrace. The food was flawless, but the highlight of the meal was a 2015 Bire Grk Defora, arguably the best white made in Croatia. Only 1,000 bottles per vintage are produced in Lumbarda on Korčula Island, the grk bijeli grapes transformed into a delightful potion of citrus made more complex by its sur lie fermentation. Magnificent!

So, we were set for our next voyage, this time heading north for the Istria Peninsula. We dropped our lines on June 30 and motored out through St. Anthony’s Channel for a lunch stop at nearby Tijat Island, had a swim and some sun before a light meal at Spirito Summer Place – tempura shrimp with a pleasant chilli sauce. It was then three and a half hours northwest to Žut Island, where we took a buoy. Dinner at Restoran Fešta fell well short of the mark. We had some thunder and lightning overnight, but no rain.

In the morning we motored southeast to Ugljan Island and Uvala Lamljana Mala and took a buoy. On the following day we proceeded to a bay on Molet Island off the small village of Brgulje. It was surrounded by unspoiled hills covered in evergreens with the sea fading into turquoise along the shoreline. Other than the quaint town, it was a panorama of pure nature. The overcast sky cleared in late afternoon, Judith and I got in some swimming and sun. Aboard in the salon, we had steak from an area near Tilen’s home in Slovenia, accompanied by roast potato and vegetables, and a magnum of 2009 Korta Katarina Ruben’s Private Reserve Plavac Mali (bottle 205 of 486). 

Our Magnum

The only negative aspect to this very pleasant day was that I banged one of my right toes into a deck fitting, most likely broken. Another injury to add to the list, a bit of medical wrap is all one can really do for toes.

The next day MISSI motored north to the island of Losinj, entering the Northern Adriatic. We took a berth on the public docks of Mali Losinj, the harbormaster and his crew not the most professional we have encountered. Dinner was at the Hotel Alhambra’s Alfred Keller Restaurant and marvelous; one of Judith and my best meals of all time. Our wine selection, a 2015 Santa Elisabetta was a limited production Istrian knock out; a debut wine from the Benvenuti family, one hundred percent Teran. Aged in oak, it was an explosion of savory spice, nuts and dark fruit. Amazing!

Judith, Tilen, Ivana and Me - Alfred Keller Restaurant

We spent another two nights here. Judith and I had pleasant walks along the outer shores of the island and Čikat Bay in particular, where the Alhambra Hotel is located. The well-maintained walkways meander along the water, interspersed with swimming platforms and lined with impressive villas behind walls overflowing with bougainvillea. We were shaded by old growth stone pines laden with rust-colored pinecones and serenaded by a chorus of cicadas. While here, we stopped for a simple lunch at Lanterna Grille on the point of Cape Madona with views to the open Adriatic, and a lunch and another dinner at Alfred Keller Restaurant. In all, Losinj is deserving of a future visit.

Walkway - Čikat Bay

On July 6 we left this lovely island and motored northwest to the Istria Peninsula and  the shallow bay of Soline, sheltered by the small island of Veruda. The water was silted, and we spotted some unwelcome jellyfish, so decided not to take our swim. We had stuffed peppers for dinner onboard, and afterward I was also stuffed.

In the morning we continued motoring up Istria’s western coast, about 20 nautical miles, to the ACI marina in Rovinj. The marina, with its adjacent low slung and modern Grand Park Hotel, was just opened in 2021 and had gotten some excellent reviews. Rovinj is a UNESCO protected city with a rich history, first settled in pre-Roman times. Originally an island, it was connected to the mainland in 1763. Rosinj was under the control of the Republic of Venice for more than 500 years, ending just before the 18th century.

 

Rovinj - St. Euphemia Bell Tower

A warren of cobbled streets seemingly paved to facilitate the breaking of ankles leads to the hilltop church of St. Euphemia, dominating the skyline. This Baroque treasure, completed in 1736, has a bell tower modelled after St. Mark’s Basilica in Venice, ostensibly oversized for the scale of its host city. Perhaps a Trump Tower in its day. We spent the afternoon exploring, stopping before returning to MISSI at a local spot, Maestral, for a glass of wine for me. Judith had a cold beer – unusual! Dinner was at one of the hotel’s restaurants, Laurel & Berry, and I am being kind in saying it was disappointing.

We were staying in Rovinj because our service batteries (eight in all) were showing signs of deterioration and Tilen had arranged for them to be replaced here on Thursday, the 8th. During the day of the repair, we walked in the opposite direction of the old town, along Mulini Beach. After dinner at Maestral we all returned for drinks at Mulini Beach Bar to celebrate our final night.

Mulini Beach Bar - Rovinj

While in Rovinj, we had strong northwest winds and we experienced their aftermath with heavy following seas as we left the shelter of the coastal islands. Waves of one and a half to two meters on our starboard quarter made for an uncomfortable ride and a troublesome helm. We had a long day ahead, 51 nautical miles, heading southeast back to Lovinj. Thankfully, the seas calmed a bit as we rounded Cape Kamenjk, but it was still a tiresome seven hours of motoring. Judith and I decided to check into the Alhambra Hotel and take a day off the boat. We availed ourselves of their wonderful sea deck for a full and peaceful day of sun and swimming. Both lunch and dinner were at Alfred Keller – excellent.

We had a final breakfast at on the hotel’s terrace and came back to the boat. MISSI was shortly underway heading for Molat Island, but before reaching this destination we changed course to Duji Island and Uvala Skarum. We took a buoy in a strong westerly breeze and settled in about three, it was too windy and cool to swim. Dinner was onboard and good, shrimp coquettes with vegetables and a pleasant parmesan sauce.

A potentially strong storm was approaching from the southeast, so we opted to motor to Biograd’s Kornati Marina, a long motoring trip of 38 nautical miles. Before arriving, we stopped for a quick swim break off Galesnjak Island. It was a hot and humid evening; we had an alfresco dinner at a simple local eatery, Konoba Kaciol. The next morning, the Jugo (southeast wind) continued to intensify as the day progressed; it remained sweltering and muggy. Dinner was at a uncomplicated spot in town, Restoran Peperino. 

The wind and rain overnight were less severe than forecast and veered to the northwest. We departed the marina around 11:00 to an overcast sky, motoring and then sailing downwind with only our jib in a 15-knot breeze as we rounded the north-western tip of Tijat. MISSI was on a buoy by early afternoon, and we had some swimming and sun, even Tilen got in the water. For dinner the four of us were back to Spirito; I had shrimp tempura, a nice steak, and cheesecake! In the morning we were up early and underway, arriving to Šibenik by 09:30, ahead of the forecasted strong west wind for later in the day. 

Quiet Moment on S/Y MISSI

We had been out of port for 15 days. Tilen and Ivana took off for a long weekend, and Judith and I once again had MISSI to ourselves.

Here's a link to our trip and ports of call:

https://web.sentinelmarine.net/shared/route/d99480d8c7244e81a67ff1043bf79912

 

Sailing: June 2021

Like last year, Covid-19 was in control of our lives as we attempted to finalize our trip back to Croatia. We hadn’t been out of the UK since our return from sailing last August. During this time, London was a shell of itself, no theatre, museums, ballet, restaurants; nothing but grocery and pharmacy open. I cooked more in that time than I had in the past decade. We had not been back to the States since May 2020, Budapest since January 2020. So, getting to Šibenik and aboard MISSI was a long-anticipated dream. Tilen was waiting for us as we landed at Zadar Airport.

Boarding MISSI, we met our new hostess, Ivana, a Croatian native, whose home base is near Zagreb. Cornelia, our hostess for our first two years, was not able to do this season. We had a small snack, learned a bit more about Ivana and eventually all of us had dinner at Art Restaurant at the D-Resort Hotel. I went to bed happy to be back.

Our Initial Outing

The following morning, we motored to nearby Tijat Island and it’s lively but tranquil Tijašćica Bay and took a buoy. Shortly after, a catamaran came into the bay without much control. The group of Polish men aboard apparently hadn’t much experience getting to and picking up the buoy. We watched their haphazard maneuvering with the helmsman yelling out “gdzie jest boja,” or “where is the buoy?” Luckily, they left after about an hour. We launched our Williams tender to Spirito Summer Place, Grega welcoming us with his usual bubbly humor and always good food. In the morning we motored back to the marina, and I brought MISSI into her berth. Ultra, our dealer, was scheduled to do some work replacing the electronic anemometer, the radar reflector, and removing our ice maker for repair. Dinner was in Šibenik, alfresco, at Restoran Scala, the evening weather still a smouldering 28°C.

A Short Trip

Repairs complete, on June 5 we set off west for the Kornati Chain, these 147 islands form the densest archipelago in the Mediterranean, a palette of pale beige and gray desiccated limestone karst covered sparingly with low-lying shrubs, wild herbs, and pines. Of these islands George Bernard Shaw, in an uncharacteristic outbreak of lyricism, wrote, “The gods wanted to crown their work and on the last day they created the Kornati Islands out of tears, stars, and breath.” 

Kornati Islands

Our destination was Ravni Zakan. Dinner was good on the terrace of Restoran Zakan, the four of us shared a Dentex with grilled vegetables, and all had deserts. After getting back to MISSI, Tilen and I stored the Williams and set up the side curtains for possible rain tomorrow. After another glass of wine, all were off to sleep.

The forecast improved so we motored north northwest 15 nautical miles to Žut Island’s Luka Žut and took a buoy. While Tilen and I were getting out the Williams from its garage I lost my footing on the wet teak decking and took a hard fall. I proceeded rather gracelessly to bounce into the water and lose my glasses to the seabed. I hauled myself out of the water and went below to change, Judith inspected the damage, some minor cuts. I left unsaid that the most hurtful bruising was to my ego.  We did, however, have an excellent dinner ashore at Fešta Restoran. 

Early Evening - Žut

In the morning, the forecast did not look good, so we decided to motor back to Šibenik, a four-and-a-half-hour trip to the southeast. After a light lunch, Tilen cleaned up the boat and Ivana was off for provisions while Judith and I settled for a glass of wine on the hotel’s terrace. After cleaning up, Judith and I had dinner alone at the D-Resort’s Art Restaurant. It was a terrible night, my back and ribs aching due to the fall, only able to sleep on my back. Adding to this misery, we experienced a 4.8 magnitude earthquake at 05:59 that morning, centered about 8-miles southeast of Šibenik. From our cabin, there seemed to have been a massive explosion, MISSI forcefully shaken for several seconds by the tremor. After a quick check of social media, the cause was confirmed.

South To Montenegro

It was my plan to work our way south to Montenegro’s Bay of Kotor, an estimated round trip of about two-weeks. After a morning walk, we cast off our lines and set sail to Maslinica on Šolta Island, about 30-nautical miles, and took a berth at the upscale Martinis Marchi Marina. It was thrilling to be under sail, a light lunch was underway. MISSI was secure in the marina by 16:30 and dinner was at the hilltop Restoran Sampjer, with charming views of the sunset settling over the nearby islets, floating peacefully in the pale blue water of the Adriatic.

We had been on MISSI one week. We left Maslinica on a south-easterly course to the Paklinski Islands and had a good sail on a broad reach for 20-nautical miles. We dropped anchor for lunch in the tranquil Luka Soline and then continued to Uvala Vinogradišće where we took a buoy and set out a stern line to another. We had a nice dinner at Restoran Zori, the professional staff remembering us – always pleasant.

We left Paklinski and continued southeast, spending one overnight in Vela Luka, on Korcula Island’s north-eastern side, at Marina Korkya; and another in the beautiful and tranquil bay of Polace on Mljet Island, surrounded by the national park. Here we took our first swim of the season, a type of baptism for us.

Mending a Fender Cover after Marina Korkya

We originally planned to stay the following night off Sipan Island in the quiet Uvala Maslinova, but the anchorage wasn’t perfect, and bay was quite shallow for us. After lunch there, we decided to motor to our last destination in Croatia, Cavtat. We dropped anchor since there are no bow mooring lines and Tilen reversed to the concrete quay and we secured our stern lines. After MISSI was settled, Judith and I took a quick walk, had a glass of prosecco, and went back to MISSI to shower. The four of us had dinner at Restaurant Bugenvila but it was not as good as I remembered.

The ensuing morning, Sunday June 13, we were up early, our local agent sorted out our customs paperwork to leave Croatia; this customs process was more complicated than usual because of the Corona virus. By 10:00 we were motoring southeast toward Montenegro. Leaving Croatian waters, we did not encounter any coastal islands so typical in the Croatian Adriatic, just a rugged, rocky coast.  After about 36 nautical miles we rounded Rt Ostra and entered the calmer waters of the Bay of Kotor, Montenegro. We had a quick bite aboard before entering the just opened Porto Novi Marina, a sister marina to Mandalina in Šibenik. Customs check in went smoothly.

Judith and I decided to take some time off the boat and checked into the property’s One & Only Hotel. Later, Tilen and Ivana joined us for dinner at Sabia, a creation of London restaurateur Giorgio Locatelli – the food excellent. After dinner just the two of us stopped by Perla Bistro and Bar for a last glass of wine and to listen to a lively quartet of Montenegrin musicians, Groupe Castel Nuovo.

 The next day we hired a hotel car and took a trip to the Ostrog Monastery, 2-hours to the northeast. A monastery of the Serbian Orthodox Church, it is situated against an almost vertical background, high in the large rock of Ostroška Greda. First founded in the 17th century, there is an older upper church with wonderful frescos and a lower monastery, built in 1824, that makes up most of the monks’ residences. Driving the winding and narrow road, the gleaming white structure is a sight to behold. 

Ostrog Monastery

Dinner was just Judith and me at the hotel’s Japanese themed Tapasake Restaurant. The food was interesting but service quirky, dishes coming out as they were ready producing a confused and rushed meal for us. We had a nice conversation with the young sommelier, Rafaela Pons, originally from Ecuador, the epitome of her profession. Best of all, Judith finally had her bath!

We had an early breakfast and again hired a hotel car for the day. Stopping in the town of Perast, we rented a skiff to visit of Our Lady of the Rocks and St. George Island, two islets in Kotor’s inner bay. Our Lady of the Rocks’ islet is man-made. Over the centuries local seamen returning from the sea laid rocks at the location until the small island was formed. A church was built to honor the Madonna and Child, completed in 1630. The adjacent St. George Island contains a 12th century Benedictine monastery. Both were charming jewels floating in the water. 

Our Lady of the Rocks

Judith - St. George Island (background)

Returning, we walked the delightful town of Perast, dating to 1336. 

Perast

Continuing, we reached the fortified old town of Kotor, nestled against the cliffs of Mt. Lovćen, and visited it’s many churches, the highlight was the Cathedral of Saint Tryphon, originally consecrated in 1166. Lunch was at Restoran Galion, a modern glassed-in spot looking out to the old city. Our food was excellent. We got back to the hotel, cleaned up after a long day and had a final dinner at Sabia.

St. Tryphon - Kotor

On June 16 we checked out of the One & Only and were back to the boat by nine. With Montenegrin customs cleared, we were off to Cavtat for our Croatian border check in. This finished, we motored for Mjlet Island and Luka Saplunara on its south-eastern side, taking a buoy in this nice bay and having dinner at Ante’s Place. We shared a wonderful 1.8-kilo Dentex with roasted vegetables. The young owner was a gracious host, a natural in the world of hospitality.

Our Dentex

 

Over the succeeding days we slowly worked our way north, stopping in Mljet’s tranquil Polace Bay, spending two nights in Vinogradišće Bay, with good dinners at Zori’s, and a night in Rogoznica’s well protected Uvala Soline. 

Swimming - Vinogradišće Bay

Tilen and Ivana were taking a well-earned weekend off starting June 25, but we still had a few days more to be out. So, leaving Rogoznica, we overshot Šibenik and took a buoy on Kakan Island’s Uvala Podkucina, this anchorage between Kakan and the twin Borovnjak Islands packed with boats. The next morning, we motored to Murter Bay where we anchored off the Marina Hramina. Tilen took Judith and I into shore for a walk on a hot, humid afternoon while he and Ivana shopped for some needed provisions. Dinner was at Murter Fine Food and good as usual. We sat on their terrace; I had the shrimp tempura – excellent.

We left Murter Bay after breakfast and motored around the northern end of the island heading southeast, then raising the sails for perhaps an hour of sailing. MISSI motored the final miles to Luka Zlarin, Tilen dropped the anchor, and all had lunch in a now a fresh breeze out of the southwest. Raising the anchor was a bit tricky in the wind, but we were soon underway again, reaching Šibenik’s St. Anthony’s Channel about three. Before docking, we stopped at the fuel station to refill MISSI’s three tanks. MISSI was back to her home base on June 23.

Tilen and Ivana were off for the weekend, Judith and I spent the time on MISSI, alone overnight on our boat for the first time since purchasing her. It was a pleasant time, I cooked a few meals, made my own cappuccinos, we organized a bit and had evenings in the cockpit, wine glasses raised, listening to Melody Gardot and other such soft jazz music piped though MISSI’s sound system. Almost heaven, I mused.

Almost Heaven

Here's a link showing our trip and ports of call:

https://web.sentinelmarine.net/shared/route/b3224ce6115d4f6f9424d051ef3a7c6c

 

Thoughts on Biden's Tax Proposals

 As the Biden administration approaches its one-hundred days milestone, there is a lot to cheer about. Vaccine uptake has been better than expectation and presidential communication has become more normative relative to the chaos of President Trump. The $1.9 trillion American Rescue Plan was passed and the $1.5 - $2.0 trillion American Jobs Plan will most likely pass through the budget reconciliation process. A part of the spending within this latest plan will be offset with tax rises on high income taxpayers and on corporations. The rationale of increasing taxes on the most affluent and raising business taxes certainly seems equitable and fair. 

But I believe parts of this new tax strategy are not the smartest way to go. There are many pitfalls in raising the capital gains tax rate for those with AGI (adjusted gross income) of over $408,000 from 28.8% (25.0% capital gains rate plus 3.8% Medicare surcharge) to as high as 43.4% (39.6% capital gains rate plus 3.8% Medicare surcharge). 

Economists already recognize that there is a strong “lock-in effect” on the portfolios of the top quintile of US households, which represent about 90% of total capital gains income (the top 1% represent 69% of total capital gains income). The “lock-in effect” is because our tax system discourages otherwise financially rational selling of appreciated assets, principally financial assets (i.e., stocks and bonds). This is because the tax, in effect, offsets any potential future losses. 

Here is a simple example using Vanguard’s Total Stock Market Index Fund ETF (Symbol “VTI”). Suppose you purchased a share on March 31, 2011 and were contemplating selling it 10-years hence, on March 31, 2021. Here’s a chart of tax outcomes based on current tax policy and the proposed policy:

Under current law, the owner of this VTI share would pay in tax 28.5% of the total capital gains income, but this also equates to 19% of his total proceeds. In other words, the future share price of VTI would have to decline more than 19% for him to be better off selling it, on an after tax basis.  

Under the proposed increase, VTI would have to decline more than 29% for him to be better off selling it, on an after tax basis. That is quite a market drop!

This is the "lock-in effect" in action. An investor might want to sell a stock that he thinks is over priced, but on an after tax basis, it may not make any sense to do so. Compounding this tenancy are two other factors. First, if this investor holds onto this stock until he dies, and bequeaths it to his heir, there is no capital gains tax ever paid.  Second, the heir does not inherit the share's original basis, rather his new adjusted basis is "stepped up" to the current price of VTI. The result of these two policies, if the asset is not sold in the investor's lifetime, is complete and total capital gains tax avoidance for both investor and heir. And as of my writing, a couple's estate must be over $11 million for there to be any estate tax paid.

One can easily see that these tax policies muddy up an investor's rational economic decisions about buying and selling. In the market in aggregate, they unintentionally discourage efficient redeployment of capital and rational rebalancing of portfolios. The effect is to prop up inflated values and discourage capital movement to more productive assets. 

Unfortunately at certain times investors must sell. These are times of extreme fear, or out of a need for liquidity. I am describing a panic, a market meltdown, a crash. I believe this tax policy will magnify market sell offs. The analogy is with a landslide. If conditions somehow restrain the eventual collapse, when the landslide eventually comes, it will be more catastrophic. Our bubbles will be bigger!

There are better ways for the Biden administration to raise these funds and mitigate the "lock-in effect." They estimate that this capital gains tax change would generate, in the best case,  approximately $350 billion over the decade. There are other ways to accomplish this. If the "stepped up" basis were eliminated, it would raise $105 billion over the decade, and lowering the estate tax threshold to $3.5 million ($7.0 million for couples), where in was in 2009, would raise $281 billion. These in total, would be $386 billion. The added benefit is that "lock-in effect" would diminish.

There are many other sensible ways to raise revenues. If income tax rates on the top two income tiers were raised one-percent (35% to 36%, 37% - 38%), which would only effect households with AGI greater than $408,000, $125 billion would flow to the treasury over the decade. 

There are other wonderful ideas out there, like retrospective taxation of capital gains income, which would raise the tax rate over increased holding periods. But in this political climate, it is best to keep things simple. Ultimately, however, America needs a "clean sheet of paper" approach to taxation, perhaps including VAT and carbon pricing, among other progressive solutions. 

A well regulated and competitive capitalist system has proven to be a superior mechanism for the productive deployment of resources. Our government should avoid tax regimes that inhibit its process.