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Sunday, May 24, 2009


Does Prez Obama really "get it?"

Lately, when I talk to the current crop of Democratic politicians and appointed regulators, one of their really annoying responses to any argument they don't really agree with is "I get it." This reinforces their absolute certainty that they are the smartest people in the room and is, I guess, supposed to make you feel better that they spent enough time and effort listening to your pitch that they "get" the drift. Invariably, the comment's real purpose is to close off discussion, with the unspoken conclusion being that they have listened to your pitch, understand your rationale, but intend to proceed according to their own notions regardless.

All well and good, except later on, you come to understand that they didn't "get it" at all. They can sort of read back to you the theme of your argument but they really don't have the nuances and the warnings about unintended consequences, etc. that really make your argument convincing. This is partly by design since their goal is to appear to be giving you a fair hearing without being convinced.

So when Obama met with incoming Israeli leader Netanyahu, and they discussed Iran, which is anywhere from 12 to 30 months away from having a deliverable nuke, depending on whom you listen to, he "got" that this is a big problem for everyone, especially Israel. But is that the essential message that Netanyahu was bringing him? I don't think so. The idea is not to convince Iran to back away from nukes before that 12 month period is over. Where Iran represents an avowed existential threat to Israel, "I get that" is not particularly encouraging. The question, pure and simple, is whether the US will countenance Israel's preemptive strike to remove the nuclear threat before it becomes operational. And if not, what will the US position be when Israel goes ahead anyway, as indeed it will almost certainly have to. This is a discussion and thought process that needs to be worked through, not curtailed. When Obama, Hillary, the idiot Biden, and the rest of this crowd "gets that," then we will be getting somewhere.


Speaking of "getting it," I guess the leaders of government at all levels were sound asleep during high school economics class the day they had the discussion about the inanity of raising taxes during a recession. Whether your text book was Samuelson, Hazlett, or any other professional economist, that little axiom would have been in their somewhere. In New York, every imaginable tax is being raised, and the so-called millionaire's tax is chasing the few that are left out of the state, including the windbag Tom Golisano, who brilliantly deployed his political contributions to enable the Dems to take over the State Senate, and now cries the blues about their inept budget and tax policies. So Tom took his money, what was left of it, and went to Florida where there are no income or estate taxes (yet). He has left his friends David Paterson and the de facto Governor, Speaker Sheldon Silver, to complete the job of running this poor old state into the ground.

Whether Florida will prove much of a haven is an open question by the way. With Governor Crist heading (he hopes) for the US Senate, the Dems are already licking their chops about their chances for taking over the Mansion in Tallahassee. Already, hapless Dem State CFO Alex Sink has thrown her bonnet into the ring. The question is which inept pol will be in the Governor's chair when the next big hurricane hits the state and proves what a fraud the current Governor's public homeowners insurance association is. Lacking adequate reserves and charging inadequate premiums, this is a fiasco (and state bankruptcy) waiting to happen.

The big problem all localities face on the state and local levels is that public employment has been unionized, all of the public pension plans are far too rich and underfunded, and the politicians lack the courage to cut any program or any significant expense. Note, the public suffers from no such lack of courage. Look at the results in California where the voters perpetrated a landslide against the tax increases passed by the legislature and trumpeted by the "Governator." They'll leave it to the pols to figure out the necessary cuts. But it's not happening, as those pols pull out every stop and loophole to avoid defunding anything. It will be interesting to see where this ends up. Schwarzenegger can't get term limited soon enough to minimize his embarrassment.

My prediction is that tax revolt fever will spread around the country, pitting the private sector against the public sector unions. It won't be pretty, but it is necessary to reduce the cost of government at all levels.


On that subject, the Obama Administration gets another "F" grade for picking now to press the issue regarding national health insurance and universal coverage. In Musings series on this subject we did a while ago, we made the point that we have by far the best health system in the world, though its cost is out of control. Using a single payer approach to rein in costs, as the Administration would like to do, trades one problem for another. Instead of a cost problem, we will have a system of care rationing, as in Britain, Canada, and everywhere else where health care has been socialized.

I wish everyone could read insurance veteran lobbyist Jack Bobo's column called No Free Lunch in the April 20 National Underwriter. He has a simple, direct writing style that is so effective in showing how weak the arguments really are for nationalizing roughly 15% of the economy. Here are a few selected quotes.

"...some of the key players in this issue favor the creation of an optional federal program similar to Medicare that would operate parallel to the current private system. This is just a step away from an all-federal system, as the two cannot co-exist.

"Much of the discussion and wishful thinking centers around cost control...Some of the ideas regarding better use of available technology may well be beneficial, but the greatest cost-saving opportunity is being totally ignored. I refer to the relentless assault on all aspects of the health care delivery system by aggressive law firms...Tort reform is essential and, like it or not, Congress needs to face up to it rather than just railing against drug firms and providers.

"...as the debate continues there will be some who point to systems in other countries as the better model to follow. This is...ironic as the British and a few other countries are trying to reverse their systems into a more private type...The CEO of a large Canadian company said to me, 'Our system would not work if we did not have the US system as a back up.'

"When our son was in high school we hosted a German exchange student for a year. When he arrived his teeth were in terrible shape so we sent him to our dentist to correct the problem. When the treatments were over, he expressed shock at the bill we paid, exclaiming that in Germany it would have been "free." I asked him why he had not taken care of his teeth before he left home. He replied that it took months to get an appointment and only a little could be done each time. He also did not factor in the taxes his parents paid for this not so available "free" service."


A great thing about our system is that when politicians here lose elections, they don't get exiled or put in jail, but hang around in some official capacity to regale us with their often humorous slants on life. So we still have John Kerry in the Senate to amuse us with his special perspective. Discussing the sad state of failing newspapers in the country, many of them Democratic supporters, Mr. Kerry said in a PREPARED STATEMENT that "If we take seriously this notion that the press is the fourth estate, or the fourth branch of government, it's time we consider its importance to democracy." Mr. Kerry said this in conjunction with a hearing he held on the future of newspapers.

The fourth branch of government? Who elected them? I guess Mr. Kerry slept through Civics class as well as Economics.


Negative dividend actions have certainly cut into investors' cash flow, including this investor. However, we are also getting a few dividend increases. Among those announcing increases last week, we own KNX, ABC, XEL, AAON, and RAVN. For reasons I don't quite understand, ABC also announced a 2 for 1 stock split even though the stock price is only in the 30's. There is no reason to split a stock where the resulting price will be less than 20.

Last Monday, I bought 200 shares of Standex (SXI) at 10.30, a value buy. On Wednesday, we sold 100 shares of Roper Industries (ROP) on the opening at 45.30. The shares were purchased on 9/19/01 at the split adjusted price of 18.22. We still have 300 shares left.

By the way, there were a couple of stock related comments provided by readers of our last post, and my response is also in the comments. You can peruse the dialogue by scrolling down to the end of the last post.

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