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Thursday, April 23, 2009


Nationalization musings

I hope everyone is getting an inkling into what nationalization of businesses is really about. So when the administration tells banks they can't repay TARP money (which some didn't want in the first place) and when they start mapping bankruptcy strategy for Chrysler, you start to get the idea that maybe somebody is using the economic downturn as the excuse for implementing Dems' longstanding agenda. So the hapless Treasury Secretary Tim Geithner explains how this is the worst economy ever, etc. Now we have Obama, after first vowing not to prosecute those who followed the last administration's directives regarding questioning of AL Queda prisoners, caving in to the Move.on.Org crowd and threatening to hold "show trials" and prosecute Bush officials.

I commented about how embarrassing and insulting it was for Obama to be grinning and hugging Chavez and Castro last week, but the people who should really be insulted are the Venezuelans and Cubans, since it is we who are acting like the banana republic.

Meanwhile, how stupid can you be to let the country's defenses against terrorists down. Can you imagine the poll numbers for Obama if there is a successful terrorist attack? You couldn't elect another Democrat for 20 years.

Someone should tell Geithner that, the lagging indicators notwithstanding, we are already emerging from the recession, business activity is perking up, and the only thing that can short circuit the recovery is for the administration to keep talking the economy down, and to pass its moronic budget, with the cap and trade, the rest of the global warming nonsense, and the takeover of the health care system.

Really, I wanted to give this administration a fair chance, but only three months in, their bumbling, fumbling and socialistic agenda is just too much. My prediction is that, similar to Bill Clinton, this President is probably looking at an impeachment before he is done. It may be during a second term, as it was with Clinton, but I can see it happening. This time it won't be about sex. It will be about the constitution and the national defense.

Of course, the Republican opposition is performing about as well as the administration. If the Dems in congress and the administration are operating without brains, it seems the GOP is trying to perform without backbone. Thank goodness for the few effective media voices such as the WSJ editorial page or there would be no meaningful opposition at all.

Though I admit to neo-con tendencies, I am really a libertarian at heart, and there is an issue where I part company with the WSJ. One of the really weird things to watch is the quadrennial Libertarian Party National Convention, where hard line, right wing, anti - tax, anti government types somehow coexist peacefully with leftist refugees from the SDS, pot smokers, and various sexual deviants. Needless to say, on certain policy issues (especially abortion), these folks have some trouble getting together. The one reliable, sure fire line that is guaranteed to get them all cheering is to "stop the insane war on drugs." The insanity of it must be clear by now to anyone watching what is going on in Mexico, with all its ramifications for the southwestern U.S.

Why we insist on trying to eradicate recreational drugs (which are admittedly harmful) when every other analogous effort at prohibition has failed is beyond me. Look, I was never stupid enough to get involved with drugs, and I feel sorry for those who get hooked, but if the cokeheads insist on ruining their health, losing their sense of smell, etc., well it's ok with me as long as they refrain from operating motor vehicles, heavy machinery, or doing their tax returns while under the influence. People who insist on self-destruction should be left to their own devices, whether it be nicotine, alcohol, or hallucinogens. What must be illegal is any forced distribution, such as to minors.

Actually, drugs are one area where nationalization might be a good idea. Publicly controlled distribution might be a good middle ground between prohibition and wide open distribution complete with profit orientation.

Another recent thought I have concerns elections, especially of the inordinately close variety, such as Coleman vs Franken, the currently contested NY congressional race upstate, and the still hard fought, disputed Bush vs Gore (2000) in Florida. It seems to me that the problem is the insistence on an exact count. The fact is that there will always be subjectivity when it comes to absentee ballots, and even over the question of voter eligibility. How about let's agree that if the winning margin is within a certain parameter, say .2%, we declare a statistical tie and have an immediate revote.

What does this mean? In Florida, if you have, say 9 million votes, you've got to win by 18,000. Not really very much. But if you are 18,0001 ahead, I think we might agree that's enough to assure a majority even after exhaustive recount.

In a Congressional special election, you might only get 100,000 votes. So you have to win by 200 or it's a tie. Isn't that reasonable? Let's end this nonsense of having every close election decided in court.

So if this administration is taking the country to hell in a hand basket, why am i bullish? Americans still have a pretty good work ethic (maybe not as good as it once was) and we all want to succeed economically to the extent we can. Cal Coolidge was right when he said the business of America is business. We have overcome administrations before that pursued lousy economics. For example, see Nixon (wage and price controls), Carter (stagflation), Ford (whip inflation now), and Clinton (tax increases). Obama is a smart politician if nothing else, and he will know his political limits. Once he sees the left wingers taking him down, he will move to the center.

More important, major change happens slowly in this country, and it does not happen without the acquiescence of the important economic players. As long as we remain a capitalist system, government will not repeal the business cycle. But the qualifier clause in that last sentence is important. Socialism would lead us down the sclerotic path of Euroland and other underachieving corners of the world. If that happens, all bets are off.

Speaking of lousy bets, Met fans must be wondering why their team stinks. It's early, but this team is playing fundamentally bad baseball with terrible starting pitching to boot. Their young leftfielder can hit, but he has already lost two games with defensive blunders, and that's a position that is supposed to be an afterthought. If I were Jerry Manuel I would be worried about keeping my job until the All Star break.

Right now, this team looks like it blew it when it failed to sign Manny Ramirez, who currently has the Dodgers comfortably on top of their division. Rumor has it that Mets' ownership lost too much money in the Madoff scandal and could not afford Manny. So instead we wound up with Gary Sheffield, a 40 year old future hall of famer who can no longer hit, field, throw or run. Now that Gary hit his 500th dinger, he should hang 'em up, like Kevin Costner's character in Bull Durham.

Hopefully, this team will emerge from its funk before it's too late, and it is helpful that its main rival, the Phillies, are also playing awful. But so far, no good - that's my assessment.


On Monday, I bought 400 shares of Home Diagnostics (HDIX) at 6.16. Yesterday, I bought 700 more shares of Petroquest (PQ), a zero buy, for my IRA. The price was 2.91.

Monday, April 20, 2009


Back From the Beach (Myrtle, that is)

The golf was great, but the Beach, while busy, was not the crowded hot spot we had seen in Aprils of yore, though it hasn't been for some years. Global warming notwithstanding, later in April is better there, as the weather is still cool and damp until then. We had some good days and luckily didn't lose any holes. Good food, especially at Joe's, Barron's and Bonefish. All in all, a good break for musings and a couple of its devoted readers.


While we were away, the Obama shenanigans continued, this time at the summit in Latin America where Barrack and a few of his left wing pals (Chavez, Castro, et al)engaged in a group hug. Maybe there is something to improving our image with our enemies, but I wonder how freedom loving Venezuelans and Cubans feel about our new President cozying up to their dictators. Frankly, it makes me a little queasy.

It might be wise for us to end the Cuban embargo, which provides the Castro brothers a convenient excuse for their unrelenting dismal economic performance over the last 51 years, but that's no reason not to make better relations contingent upon the freeing of political prisoners and other concessions to democracy.

One would think that Obama might learn a lesson from the fruits of his overtures to Iran, where the leadership has responded by making such warlike and anti-Semitic comments that even their European friends had to walk out in the middle of the Holocaust denier's speech at the UN Conference today.

When will liberal leaders and their naive supporters learn that in foreign relations, you don't simply turn bad guys into good guys with a little sweet talk. When national interests conflict, you negotiate from strength and confront threats and intimidation with firmness and brinkmanship. FDR, Truman, JFK and LBJ understood this and did their part, along with contemporary GOP leaders to advance US interests during hot and cold wars. On the other hand, Jimmy Carter and Bill Clinton were hopeless appeasers, and from all indications, Obama may be as bad or worse. Of course Carter yielded Reagan and as this blog has noted before, sometimes you have to let the other side have their way for a while to remind everyone just how bad they are.


Of course, we also have domestic concerns with the new administration, which seems determined to impose their ideas about health care and climate control on a divided republic. Not only are these "solutions" prohibitively expensive, they are also off the wall. With respect to climate, the natural order of things is for the earth to undergo periodic warming and cooling, not to mention regional climate variation. The idea that man is the main cause, or has within his capability the "solution," is the height of arrogance.


After taking last week off, I was back on the buy side this morning, adding 400 shares of Home Diagnostics (HDIX) for 6.16 per share. Today was a real Blue Monday, typical of bull runs, by the way. I think there is a good chance the rest of the week may recoup some or all of what we lost today. At least that is what we can hope for. The shorts were at it big time today, but that could leave them exposed for a "pivotal Tuesday" rally toward the close tomorrow.

Sunday, April 12, 2009


Masters Sunday Musings

What a shootout on tap today in Augusta. There have to be 10-15 players who think they have a shot if they just catch magic in a bottle and fire a 64 or 65. In reality, neither Kenny Perry nor Angel Cabrera figure to back up much so they're really going to have to go low to get there from behind them, but Jim Furyk looked really solid yesterday. The leaders go off in a few minutes, so by the time this is posted and read, you'll have some idea of the kind of day it's going to be.

The Masters is golf's best telecast because not only is the golf course beautiful and a professional thrill ride complete with eagles and double bogies, the Masters hierarchy limits the commercial interruptions more than any other sporting event. This gives the tournament a rare feeling of active continuity you almost never get on any other golf telecast.

Happy viewing, fellow golf nuts!


Baseball, my favorite spectator game, has started for real, so I am kind of in my glory. My beloved Mets (as have the hated Yank-a-pups) won 3 of their first 5 on the road, and that's OK. Both local teams look to be contenders, albeit with some flaws. The Mets can score runs, have a pretty good defense, and fixed the key late inning relief weakness (although K-Rod reminds me of the Orioles' Dave "Full Pack" Stanhouse - no save comes easily). However, it looks like they may have regressed in the long relief area. Also, the offense seems to hit a wall with two outs and runners in scoring position too often.

As for the Yanks, they will score lots of runs, still have the best closer in baseball, and have presumably fixed their starting rotation to the point where it is among baseball's best (barring injury). They do look a bit suspect defensively up the middle, since Jorge can't throw people out anymore, and Jeter can't get to as much and has lost some arm strength. Cano is only so-so at second too, and spring training tryouts continue in center field.

In the era of free agency, rosters in baseball change quickly and a team can rise or fall quickly (see last year's Rays and Tigers for an example of each). So we'll refrain from predictions and just enjoy the action. Hopefully, I can get a first in - person look at Citifield this spring.


I wonder if people understand the magnitude of what the U-Conn women achieved for coach Auriemma this year. In winning all 39 of their games, the Huskies could have spotted every team they played 9 points - and still gone undefeated!

By the way, it's fashionable to consider Pat Summitt the best women's coach and to disrespect men who coach the women's game. However, Gene is certainly as good as any coach in the women's game, and wins when he has the horses, as he often does. So does Pat. Look when you have a Candace Parker as Tennessee did last year, you're going to win if you're a good coach. Same for some of the players Gene has had.


Then there are the pro hockey and pro basketball playoffs.


I am off to Myrtle Beach for a golf vacation tomorrow, though we may be dodging raindrops the first two days. It should be interesting to see how those Centex houses are moving down there. By the way, Pulte made an all stock offer for Centex last week, and that moved CTX a couple of points. We need quite a bit more to avoid a loss on that one though.


Last Monday, I bought 300 shares of Aegon Preferred (AEH) at 7.52. With respect to the comment on the last post submitted by Mr. Rufus T. Firefly, I agree that Petroquest exceeds my target debt to equity ratio since they increased their bank debt last year while shareholder equity diminished. This was a "zero buy" however, and we don't really worry about the normal ratio targets on those. These are just shots we are taking on low priced shares on my buy/hold list. By the way, our record with PQ has been pretty good. We sold some shares when the price was quite a lot higher. So maybe we can catch lighting in a bottle again. However, this should be considered a high risk transaction and it is likely to be too early to get in on this or any other energy stock. However, I really want to be exposed to energy when oil and gas prices recover.

Sunday, April 05, 2009


South Florida Musings

South Florida, like most of the places I have visited this recession (San Diego, Dallas, Washington, San Francisco), seemed no different, though people did talk about homes in foreclosure/bankruptcy proceedings. Stores and restaurants were suitably busy though, and the airports were bustling (and the line for the rent-a-car was torturous). So my conclusion continues to be, in spite of the gruesome unemployment numbers and housing statistics, that the recession is spotty and, I think, very close to bottoming out.

My guess is that the recovery is not going to be a boomer, though. I think people have gotten a good lesson in balance sheet discipline, and that goes for businesses too. So I am not looking for a big-time credit expansion. Also, I think everyone is terrified about looming inflation and tax increases, and that is going to keep a lid on optimism.

These things may be healthy - we could use some more economic discipline both in the public and private sectors. That bodes better for conservative Republicans a couple of years hence. As they say, things are always darkest before the dawn.


Somehow, the final four was a bit of a letdown Saturday night. For 30 minutes, MSU - Connecticut was an exciting if not an artistic game, but then it became obvious that Michigan State was better that night. I thought they would be a very dangerous team. Frankly though, U-Conn lost the game on the foul line, shooting horribly from the stripe.

The other game, I feared, might be a mismatch, since the overachieving Villanova Wildcats didn't figure to be able to handle the bigger, more disciplined Tarheels. And that's what happened. It's not the first time that the highest achieving conference (the Big East this year) came up empty at the big dance. It used to happen to the ACC all the time.

On the girls' side, Louisville overcame a miserable first half to win a squeaker, and I expect Gene's U-Conn machine to do what the boys did not and make it to the final game by beating Stanford for an all Big East final. If that happens, I think U-Conn can win the final and achieve that rare undefeated season.


Maybe we should thank the North Koreans for firing their missile, putting to rest the steady stream of demagoguery in Congress about CEO pay and other side issues that camouflage Congress' own culpability for the financial mess we are in. Of course, that doesn't stop the nonsense by the leftist media in blaming President Bush for everything that happened in "the last eight years." I had to laugh out loud at the ignoramus (ignoramae?) Adriana Huffington this morning on "This Week" when she said that it was a shame we had lost so much time getting to the 6 party negotiating table with the North Koreans during the Bush Administration. Funny thing is, my recollection is that it was the North Koreans who insisted on direct talks with us while the Bush administration held out for 6 party talks, which the NK's did not want. But Orwellian historical rewrites are the stock and trade of the partisan media. Maybe George should have gone to the table without the NK's for 5 party talks (about what, I don't know). Another knee slapper was George Stephanopolous disclaiming a possible conflict of interest by one of his producers, assuring us that the person in question did not participate in the conflicted segment. Meanwhile, where is the disclaimer concerning his daily dialogue with Rahm Emanuel? It's tough that ABC continues with the charade that Stephanopolous was ever a suitable replacement for the brilliant and unquestionably ethical and non-partisan David Brinkley.


Well it was not only good law but very reasonable resource allocation for Eric Holder to drop the charges against former Senator Stevens of Alaska. The Justice Department had messed this up from the beginning, treating the Senator and his defense team with utter contempt by withholding documentation from them. This even occurred during the Bush Administration, but one wonders about the career justice officials in that supposedly non-politicized department. The result is the octogenarian is free to walk, but he lost his seat and the Dems now can build on an incumbent in what was once a pretty safe GOP seat. Damage done.


Sirius has been one of my steadily losing stocks, having had a near-death (via bankruptcy) experience recently. Somehow, though, I don't think it is disappearing anytime soon. In Florida, I heard Sirius XM stations in restaurants, at the airport, etc. They are a mainstay in bars. One way or another, there will be satellite radio.

Naturally, the pop in Sun Microsystems stock was a finger in my eye, since I had sold the last of my shares in January. Weekly reductions in the price IBM might be willing to pay don't really ease the insult that much. I'm not sure this deal is really coming off. If I still owned any shares of Sun, I'd be selling them tomorrow.

I'm also getting a takeover of Limco Piedmont, but at a low price and in a stock for stock transaction. When it was announced last week, the market ignored the premium based on the acquirer's price, and actually took LIMC down some more. This is just sour grapes I think. Smart arbs will be buying LIMC and I will be happy to see the deal go through.


April will be a good month for jazz in NYC so if you are in or near town, get a hold of Hot House and plan your visits accordingly. Among those appearing are the all star Blue Note 7, Eric Alexander, Joe Lovano, trumpeter Nicholas Peyton, legendary Hank Jones, John Pizzarelli, Tom Harrell, Arturo Sandoval, pianist Don Friedman, Grand Dame Marian McPartland, and Don Byron to name only a few. No recession in jazz, that's for sure.


Last Monday, I bought 800 shares of Petroquest (PQ) at 2.68. Does anyone really believe we won't see energy prices higher somewhere along the line? On Thursday, I bought 300 shares of Bolt (BOLT) at 7.70. The recent rally has taken us about 60% of the way to my predicted target. We are only down about 6.8% now year-to-date.

Speaking of disclaimers, here's mine: neither redwavemusings nor its author are investment advisors and the stocks and securities mentioned here are not to be considered recommendations for readers or anyone else, since they may not be suitable (or even reasonable!).

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