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Monday, June 29, 2009


Socialism in retreat, except in the USA

The coup in Honduras, following a venerable Latin American tradition, has been portrayed by various leaders around the world (Obama, Chavez) and organizations such as the UN and the OAS as an undemocratic military takeover, when in reality, the military was obeying the country's Supreme Court in defending its constitution against President Zelaya's using the Chavez "referendum" formula to evade term limits. Since the President was a leftist buddy of Chavez, we can understand the latter's high dudgeon, but what excuses Hillary Clinton and Obama for demanding Zelaya's return to power?

This is in line with the Obama administration's warm greeting of Chavez at the OAS, their inexcusable tardiness in lending vocal support to the Iranian resistance, and any number of other foreign policy gaffes, all of which continue to feed the suspicions of Obama's opponents that he has true socialist tendencies. As for Hillary Clinton, while her supporters were already touting her enshrinement, I am starting to wonder if she will be in this job very long.

If your news sources are limited to the NY Times, the major networks, CNN, and Yahoo, you need to read the column in today's WSJ by Americas expert Mary Anastasia O'Grady. (Honduras Defends Its Democracy)


Meanwhile, the Social Democrats in Congress frantically try to get as much of the Obama program passed as they can before the honeymoon ends. They'd better hurry. Already, everyone seems to be running away from socialized health insurance, and the environmental/energy/cap and trade fiasco bill barely passed the House (thanks to 8 GOP votes) and faces a thrill ride in the Senate. By the way, the rest of the world is finally starting to catch on to the global warming fraud just as we fall for it. Reports are that Australia is giving up on it and they won't be the last. Europe signed onto Kyoto but didn't come close to its targets. Most importantly, China and India have indicated explicitly that economic concerns will outweigh the environmental. And there is no greater environmental catastrophe in the world than China.

You've also got the Administration re-regulatory scheme for financial services to deal with. All of these ideas represent an economic and tax burden when we can least afford it. Add to them the very heavy tax increases in many of the states (which will ultimately leave them with LESS revenue) and we have a formula for prolonged recession.

In New York, where the income tax system will be more progressive and burdensome, people I know are openly talking about establishing full time residency elsewhere. But the liberals will never get it. They don't really care about overall prosperity but are much more concerned about their perception of fairness. Better we should all underachieve than any of us overachieve.


The question is being raised about whether Ben Bernanke should be appointed for another term next January. I have mixed emotions. Mr. Bernanke is openly hostile to using raw materials prices (like gold) as leading indicators for inflation to guide monetary policy, instead relying on lagging indicators like employment numbers. This is a little like trying to drive while looking out the back window. So I don't think he is a good Chairman. I am especially concerned that on his present course, he will monetize the Federal deficits. On the other hand, if Obama appoints someone else, we are likely to get someone even less competent.

I am an optimistic person, but this gang of idiots is really testing my usually sunny disposition.


I don't have much to say about Michael Jackson. He was a great talent, and broke out of the Motown strait jacket with that famous TV special where he sprung the Moonwalk and brilliantly performed Billy Jean. He had two really great albums, especially Off The Wall, but in reality, became a caricature after Thriller.
I am sure he was a good friend to those who knew and liked him, but those referring to him as a humanitarian were a little over the top in my opinion. I think that being almost certainly a practicing pedophile should disqualify you from that ranking.

At least stocks are looking the other way and doing OK. Last Wednesday, it was time for a "zero buy" and the choice was Fortune Brands (FO), maker of Titleist Golf equipment and various adult beverages, for 100 shares at 32.85. One should always invest in your passions. Today, we bought 400 shares of Gencor (GENC) at 6.65, a value buy. We may be on the sell side Wednesday, but either way, the next buy will be a preferred in honor of the new quarter. We've got several stocks under takeover bids including CTX, AXYS, and LIMC. So it is as if we are carrying a higher cash percentage for a while, not really a bad thing.

Tuesday, June 23, 2009


Democracy Backlash

Probably no one will ever know who actually won the Iranian election, but what everyone does know is that the count was fraudulent in at least two respects: first, there were districts where the count just has to be wrong because the home candidate was "swamped" and second, there was no way that all those hand ballots could have been counted almost instantaneously. The clerics in actual charge have made a big mistake by immediately confirming the count and thereby tying their revolution to Ahmadinejad. Ironically, Mousavi was not really a reformist candidate to begin with, but he became the vehicle for the long smoldering middle class and student discontent with the governing theocracy.

Like any good Machiavellian dictatorship, the Mullahs have decided the best course is a stern crackdown, to try to stifle the uprising. The reality is that once the genie is out of the bottle, you can't put the toothpaste back into the tube very easily (clinching the mixed metaphor of the year title with the year less than half over).

Iran is not the only place where democracy is on the march. In Lebanon, South Korea, Georgia and many other places, the friends of George W. Bush are back on the rise. It looks like a Conservative government is coming in in the UK, and in fact, much of Europe looks to be becoming less enchanted with socialism.

Everywhere but here, of course, where the Social Democrats and the Obama Administration push their incredibly ambitious and expensive agenda to the limit. Yet even here, there are signs that Obama's popularity, or at least the popularity of his positions, is more closely tracking David Paterson's than anyone else's. The young President is learning what every other recent President has had to learn - that proposing is not quite the same as disposing. So national health insurance, financial regulation, environmental reform, and redistributionist tax changes all have significant obstacles on the way to passage. Imagine if there was a halfway effective Republican opposition.

On international affairs, Mr. Obama is getting an education on why the Bush Administration policies were what they were, as the axis of evil shows itself to be ...the axis of evil. It is only a question of time before the Israeli's are given the green light to take out the nuclear facilities in Iran and before much harsher, more effective measures are put in place to deal with the North Koreans.


Lucas Glover may be the winner of the US Open, but Bethpage Black golf course overcame the most horrible weather to prove itself again as one of the best venues to stage the championship the real winner. It showed the great players' skills to their best advantage. Anyone who has ever played there must surely be astounded at the fantastic level of play the last five days, culminating in a thrilling final round that put maximum burden on corporate server systems around the country Monday morning. It was almost impossible to resist tuning in to NBCSPORTS.com wherever it was not blocked.

It was really fun to watch and hear the enthusiasm of the Long Island fans, rain drenched as they were for much of the week, as they cheered their favorites. Some of those favorites were newly discovered, like Andrew Weaver or rediscovered like David Duval. What a bonanza for golf writers.


And congratulations are due to author Tom Coyne, whose excellent golf/travel digest "A Course Called Ireland" was listed #5 in today's WSJ best seller list for Nonfiction Sports Titles. If you like golf, or loved Ireland, or just love the idea of Ireland, go find and read this terrific book.


Last night, many of the jazz greats who played at the Jazz Forum 30 years ago came to Lincoln Center to commemorate it, and yours truly was one of the lucky ones to attend. Among the stars playing were Kenny Baron, Joe Lovano, Lou Donaldson, Louis Hayes, Paquito D'Rivera, Jimmy Cobb, John Scofield, just to name a few.

And coming to Dizzy's Cola Club the first week of July, the great Latin Pianist, Eddie Palmieri. His show is reliably among the most exciting you will ever see.


After a solid month of profit taking, the market has corrected and that has triggered a round of buying for the musings portfolio. We started on June 10 buying 400 shares Of Harleysville National Bank (HNBC) at 5.51, despite the regulators breathing down its neck insisting it raise more capital. Kids, please don't be trying this at home. On June 17, we bought 300 shares of Presidential Life Corp., (PLFE) at 8.84. Then yesterday, it was 800 shares of Newpark Resources (NR) at
2.85. Today, after an abortive limit order Friday at a higher price, we bought 1900 shares of Hauppauge Digital (HAUP) at 1.10, a really speculative adventure. Believe it or not, these were all value buys, except for HNBC. Meanwhile, what we don't know is how far down this slump is going to take us. Some think we will test the March lows. UGH. Of course, we don't try to predict such things. We'll let the market tell us what to do, following the formula, which relies mainly on our asset allocation approach.

Sunday, June 14, 2009


Special Flag Day Post

This special Flag Day post is coming to you from Minneapolis, MN, where it has been sunny all weekend and right now, a warm 84 degrees. Downtown Minneapolis is quite beautiful,with its many fine stores, restuarants, bars, etc. Famous Dave's has held its barbecue and blues festival which concluded yesterday on Nicolette and featured many fine local bands. Unfortunately, several of the downtown streets are pretty torn up as shovel ready projects proceed, and constitute a hazard for anyone wearing dress shoes. In fact, the entrance to the Hilton, which is serving as the host hotel for the insurance regulators conference (the NAIC) is fairly well blocked by one of the projects. Other than that, Minneapolis has been the perfect host city.

You sure would not guess that we are in the middle of a severe recession walking around the downtown here, as all of the folks seem to be out and spending. There do seem to be more homeless types than I recall from the days back in the 1990's when i visited here frequently. That seems to be the case in every US city.

The state insurance regulators are having their usual paranoia that the Feds are going to take over regulation of the business, but in fact, my own view is that that prospect becomes less likely each day as the industry recovers from the battering its investment portfolios took. Still there is lots of concern here about how residential and commercial mortgage securitizations will fare over the next year or two.

Another topic of conversation here, as you might guess, is what form any new health insurance "solution" might take. Yesterday, the funded consumerists (representing who? They don't represent this consumer!) were making the case for a public insurer option that somehow is going to be cheaper and provide even better access than what we have now. Everyone will be able to get in the plan regardless of any pre-existing conditions, and, of course, doctors will save on paperwork, etc. etc.

It's just amazing that we haven't already gone down this road where nirvana is so easily achieved. And of course, nary a word about tort reform in any of this. Magically, our cost problem will just go away. Medicare is basically the model. All we have to do is extend the medicare program, or one like it, to everyone.

Never mind that medicare is going broke. I wonder, by the way, whether any of these consumer health advocates have ever really looked at a medicare billing statement from the provider's viewpoint, or are they just too busy cheering because their parents' surgeries and hospital stays cost next to nothing after medicare "negotiates" and reprices.

If doctors got compensated for their entire practice the way they get paid for medicare patients, they would all quit since they couldn't afford to pay their malpractice insurance premiums. That's why increasingly, you see them posting signs in their office warning that they don't go through medicare or medicaid and that they don't have malpractice insurance.


The Mets lost another game on a dropped popup Friday night. It's going to keep happening as long as there are no consequences for shoddy, careless play. This is not second guessing - we've blogged about this before. Sure enough, the perpetrator was right back in the lineup the next day.

We'll catch up on the stock transactions when I return to the East Coast. We don't give investment advice on the blog, but I will say that this is a particularly dicey period for investors, and a good time to maintain their asset allocation disciplines. A Wall St. Journal column recently related how so many investors sold at the bottom and are now wondering whether it's too late to get back in. Wrong question. Wrong approach. That's why most Americans are not competent to manage their 401(k)'s, I'm afraid. If you allow your emotions to dictate your timing, you are almost sure to underperform.

Time for my next meeting. Sorry if there are more typos than usual.

Monday, June 08, 2009


You Can't Make This Stuff Up

You may have thought that NY could never top the hi-jinx that resulted in the dramatic downfall of Governor Spitzer, but today's events in the State Senate came pretty close. In a surprising coup, two Hispanic Dems left the caucus to join with Republicans and demand a new vote on leadership, since they shifted the 32-30 majority to the GOP.

To review the bidding, last November's election shifted just enough Senate seats into the Democratic column to give them their first majority in over 40 years. This gave the Dems all three levers of political power in the state, since they have long held a dominant majority in the Assembly and have the accidental Governor Paterson. However, immediately after the election, a gang of four Dems, three Hispanics (Espada, Diaz and Monserrat) and Senator Kreuger, decided that they should use their leverage to extract concessions from new Majority Leader Malcolm Smith. He came through with the needed Chairmanships and leadership posts, however grudgingly, to finally assure election as Majority Leader. The deal was always on shaky ground, since the gang of four was never warmly welcomed back in to the caucus.

Meanwhile, the Dems November victory came with considerable help from billionaire businessman Tom Golisano, a Republican who had made a couple of futile attempts to run for Governor as an independent. He targeted incumbents he felt had contributed to Senate disfunctionality, giving large amounts of campaign funds to their opponents. Most of those targeted turned out to be Republicans, so Golisano had as much to do with the Dems winning the majority as anyone. So when Dems passed the "millionaires tax" as part of the budget process, it was ironic to hear Golisano moaning about how NY's high taxes had driven him to make Florida his official residence.

About 5 weeks ago, in a well guarded secret, Golisano, Republican leaders, Espada and Monserrat hatched today's plot. Apparently the trigger was that it became clear that Senator Smith intended to break the agreement with the Hispanic Senators by bringing the same sex marriage bill, which they oppose, to the floor. The execution of the plan was even more hilarious than it was dramatic. GOP Senator Libous took the floor and demanded that a leadership vote be taken. Apparently, Senator Breslin, filling in as Chair of the session, tried to reclaim the floor and then attempted to adjourn the meeting before a vote could be taken. Failing that, the Dems went so far as to have the chamber lights turned out, (the pictures of everyone suddenly sitting in the dark have to be seen to be believed), the Senate website taken down, etc. The Dems then left the chamber, while the GOP went ahead with their vote, swearing in Dean Skelos as the once again majority leader, and then even reassigning the Committee Chairs!

All this occurs with two weeks to go before adjournment and a full slate of bills, which means nothing will get done since staffers have to be completely without portfolio. The Dems claim the coup was illegal, the session was adjourned, and that Smith continues as majority leader, but I don't know how they can make that stand up where he only has 30 votes. Of course, he may get one back soon, since one of the two senators who crossed the aisle is under indictment for beating up his girl friend.

Only in NY, folks.


Republicans are having a very difficult time modulating their response to the proposed appointment of Sonia Sotomayor to the Supreme Court. President Obama put them in the difficult position of dealing with the first Hispanic nominee, and a female at that. Never mind that Dems trashed Bush 43's Hispanic pick to the DC Circuit, never actually giving him the courtesy of a vote. Dems get a pass from the media when trashing a conservative, but they could not abide the GOP achieving a first of that type, particularly when the DC circuit is considered a stepping stone to the Supreme Court. The GOP gets no such pass.

So it's a given that Sotomayor will be confirmed, after Republicans make a mild show of opposition to placate the anti-abortion crowd. The fact is that while Sotomayor's statements indicate that she is a lightweight with a hopelessly misguided approach to constitutional law, her decisions indicate that she is far from the worst Obama might have picked. She has a middle of the road record on business and criminal cases (those are sometimes two different categories). So I am not all exorcised about this pick.

However, there are reasons for questioning it, and I haven't seen anything nearly as intelligent on the subject as today's WSJ op ed by Stanford's Shelby Steele. Called "Sotomayor and the Politics of Race," it should be considered required reading. Steele effectively makes the point that this is anything but a post-racial pick, and that it fits a pattern of Obama actions and statements that contrast with his carefully cultivated post-racial image. Here is the link to this excellent piece.



Since we're warming up for those really entertaining confirmation hearings where Judiciary Committee members are able to pontificate while taking 10 minutes to ask a question (and frequently receive a 10 second response), we will have the dubious pleasure of again seeing Chairman Pat Leahy of Vermont in "action" baiting his Republican committee colleagues. The man considered to be the most partisan senator (even worse than Schumer?!) is sure to be in top form for this one.

Leahy's legendary GOP baiting ways were the subject of recent reminiscences in one of the papers, which recalled a floor session during the last administration when he so exasperated Vice - President Cheney that the latter lost his normal cool demeanor and closed the dialogue by inviting the Senator to "f___ yourself."

Counting Crows summer tour dates have been posted, now that they are back from Europe and Australia. This summer, Adam and the band will be touring with friends Michael Franti & Spearhead and Augustana. They will be at Central Park on September 3rd, and it did not take me very long to score a ticket from Live Nation.

Also worthy of consideration is one of those infrequent appearances by Steely Dan, appearing at the Beacon Theatre July 28-August 1. (Ticketmaster) This is the rock act that sounds the most like a jazz act.


The Dow may be struggling to get even for the year, but the musings' accounts are up 10% Y-T-D, a small claw back of what was lost last year, but you have to start somewhere. On June 1 we sold 100 shares of Stiefel (SF) at 44.30, originally purchased in March of 2007 for an average price of 28.66. On June 3, we sold 200 shares of Knight Transportation (KNX) at 18.06, purchased on 1/10/2000 for 3.33. Today, we were still selling, 100 shares of Lancaster Colony at 46.22. The purchase was on 3/7/03 for 36.54. So we have taken some profits, but the tax man's take will be deferred. These were all IRA transactions.

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