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Sunday, February 04, 2007

 

Super Bowl Sunday

I don't have much to say about this game except that I think Indianapolis will win. I don't know if they will cover and am not betting the game so I don't really care. I am an AFC fan so I hope Indie does win. Mainly I am looking forward to the commercials.

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Since every senator, governor, and former governor believes they are Presidential timber, it is not surprising to see everyone in the pool already. It's also not surprising to see perennials like Senator Biden immediately self destruct. Unfortunately, the current system, in which almost all of the delegates are chosen in primaries, forces candidates to raise a lot of early money and fight for those delegate slates.

This seemed a much more democratic approach than that of the old days when the few primaries that existed were considered mainly beauty contests and most of the delegates were party regulars, designated and chosen by the local and state party bosses. After the disastrous Democratic convention of 1964 which the party regulars secured for Hubert Humphrey, a candidate sadly guilty by association with the hacks, primaries supplanted the smoke filled convention back room. The result was the disastrous McGovern candidacy of 1968, but since that resulted in a left wing candidate, the media blessed the new primary system and it remains in place.

Since then, with a few exceptions, both parties have nominated less than their best. Usually, this has resulted in a candidate too extreme, or one too inscrutable, but in either case, a poor performer in the general election, and a worse President when elected (Reagan, of course, being the exception).

All of this is a run-up to a discussion of whether Governor Bill Richardson of New Mexico can actually win the Democratic nomination. I would say that if the old pre-primary system was in place, he would have a very good chance to come out of a brokered convention, since the bosses would probably consider him more electable than Hillary, Obama and all the rest. Whether he can get to the convention with a reasonable number of delegates won in primaries, and whether the leading candidates can split the others up in such a way that no one has a near-majority, is a very fair question. That is the only scenario that leads to a brokered convention currently. If so, the dems might well consider him their safest bet in a year they should win easily, as opposed to a more polarizing candidate.

This is a very unlikely scenario on the republican side, where I expect Senator McCain to take charge fairly early in the process, and if not him, Rudy Guiliani.

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Is it possible that WSJ editorial page editor Paul Gigot has become a redwavemusings reader? Reviewing the December 6 lead editorial (The AMT Reckoning) one reads the following:

"The AMT is gradually evolving into the de facto U.S. tax system and the regular tax code with its Byzantine rules and carve-outs is becoming less relevant each year...For a growing number of Americans, the first page of the IRS 1040 instruction manual might as well read: Go directly to the AMT...So here's a possible deal between the Bush Administration and the Pelosi Democrats: Junk the IRS code and use the AMT as the basis for tax reform...The AMT provides at least the crude framework for a much simpler tax code, because it eliminates almost all deductions and special carve-outs...It has a broad tax base and only two tax rates, 26% and 28%."

Sound familiar? In my October 31, 2004 post, I noted that everyone earning 200,000 or more was likely to be paying taxes at AMT rates. Also, in my "predictions" post of January 11, 2005, August predictions included the expectation that Congress would require everyone to file on the AMT basis in lieu of the standard tax basis. In fact, my flat tax proposals have been exactly in accord with the WSJ's new suggestion - scrap the code and use the AMT as a proxy for a flat tax without the deductions. Of course, I would also lower the rates. But this would take most lower and lower middle income people off the roles for everything but payroll and local taxes. (All prior posts can be easily accessed by clicking on the archives of this blog.)

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No, I had no information concerning WLVT. And my position is still under water even after the doubling of the stock price last week. Much less water, but still under it. Actually, it was my standard average down, and I did not have a good feeling about it. That's because I expected a prepackaged bankruptcy, with the usual watering down of current holders' equity via a reverse split, not a pure private equity investment in which the current holders actually get treated fairly. This surprising but welcome development, coupled with retreating copper prices caused the double + on Thursday, with only a slight retreat on Friday (when one might have expected a more significant pull back). So last Monday's purchase at 0.81 wasn't genius and it wasn't cheating. Just the good luck you can have when the money folks amazingly do the right thing.

On 1/31, I bought another 200 shares of PWI for my IRA at 19.21.

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