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Tuesday, February 13, 2007


Stuff in the News

Item: North Korea Deal - So the 6 way talks actually produce a deal, though there seems to be quite a bit of confusion over what exactly the deal is. The administration needed a deal to begin restoring its image, the Chinese wanted a deal because they can't handle all the Korean escapees coming over the border, and the Koreans need a deal because they're broke, freezing, and starving. What the deal actually is is less important than whether the Bush administration and its successor can actually enforce it and incentivize the Koreans to keep their end of whatever it is they've agreed to. That was the failure of the Clinton deal with them, not the terms themselves. No matter what, it puts the lie to the need for two-way talks - just another anti-Bush sound bite. Frankly, there is no meaningful deal unless the Chinese are involved anyway.


Item: New York politics never stops being New York politics - Just when you thought that the arrogant Tom Suozzi deservedly got his comeuppance from the crusading Elliot Spitzer in the Dems primary, the new Governor comes out of the box setting new vistas in arrogance. He has actually managed to make Speaker Silver seem humble, and may yet turn Joe Bruno, Dean Skelos and their republican senate colleagues into sympathetic figures. If the case against Mr. Grasso collapses, as it well might, the Spitzer juggernaut may also go into reverse. On the other hand, it is not too late for the new governor to receive and take some very good advice and stop undermining his own party's assembly majority. Sure the legislator has been run as Silver and Bruno's private fiefdom for too long, but that doesn't mean that it can't be fixed in a respectful and collegial manner.

As for Tom DeNapoli, the former assemblyman whose election (by the legislature) as Comptroller precipitated the latest flak, let's see how he performs in the job before determining that he can't do it. We'll stipulate that he lacks the accounting and investment background that people seeking the job generally bring to it, but that's why he'll have a staff of folks expert in those disciplines. Mr. DeNapoli brings to the job a precious commodity in politics - integrity. He also has class and intelligence. I don't see why he can't succeed.


The Bush budget, of course, is dead on arrival, certainly nothing unusual for a 7th year Presidency. That doesn't change the fact that the administration and Congress have some important issues to deal with that really shouldn't be allowed to sit on the back burner for two more years. Here's a partial list:

The AMT and other Income Tax Issues
Permanent Estate Tax legislation
Unfunded entitlements
Cost of Health Insurance (and health care)
Energy Policy
Defense and Weapons Strategy
Rethink Campaign Financing (Junk McCain Feingold)
Rethink Corporate Ethics (Junk Sarbanes Oxley)

If none of these issues have been advanced by the end of 2008, they will simply be that much more difficult for the next administration to deal with.


On 2/5, I sold 700 SFE at 2.86 (purchased on 11/5/01 for 2.11). On 2/7, I sold 300 HAUP at 8.95 (200 purchased on 8/6/01 for 1.66 and 100 purchased on 8/27/01 for 1.54). And on 2/12, I sold 400 CNRD for 6.10 (purchased on 10/4/04 for 1.95). All of these transactions were out of the taxable account, I'm sorry to say. Remember, these sales don't indicate that I am bearish, only that my cash allocation fell quite a bit below my target in the recent run-up, particularly after the rally in WLVT (which has paused, if not ended).

Regarding today's "news," I can't really conceive that AA will be taken out, and I think the regulators might be concerned about a foreign purchase of our leading aluminum producer. Nevertheless, it's nice to get a little pop in an otherwise pretty boring market.

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