Sunday, January 24, 2010
AfterMass - The Continuing Reign of Error
In the aftermath of Scott Brown's victory in the Mass Senate race, the predicted Democratic confusion and recriminations are not so offsetting as is the populist reflex by the President. Obama's verbal bludgeoning of bankers, and his promise to fight, fight, and fight some more for his program, even as his strategists scale it back, reveal the immaturity and intellectual shallowness that has marked this first disappointing year of his presidency.
The same inability to evaluate one's own performance objectively and confront error that was criticised by GWB's harshest detractors is also a hallmark of the current administration. So the instant post mortem delivered by the administration after the Coakley defeat was that she was a poor candidate who didn't work hard enough to get elected. Certainly, that was true but it was also true when she won the Dems' primary and emerged with a 30 point lead over Brown. Then came the transparent deal making and cynically dishonest cost evaluations associated with the Senate Health Care bill, followed by the secret negotiations to derive the compromise bill (in lieu of the promised open conference committee). That allowed the Brown campaign to unify the Tea Party types and traditional Republicans, but most of all, co opt the fiscally minded independents.
The other Mass dynamic at play concerned Romneycare. Many independents think it's working well and feared the disruption the federal proposal would have. Others think it's busting the Mass budget, and simply don't want to repeat that experience federally. Either way, Obamacare was viewed negatively.
Rather than deal with these actual elements impacting the Coakley defeat, Obama's handlers still refuse to admit that the program they're selling is dog food people won't eat (neither would dogs). Their main concern seemed to be that, after campaigning in Mass, Obama's electoral chops not be tarnished.
Seen through that prism, the decision to go populist fits well. Go back on the offensive, run against the "just say no" party and hit all the typical class warfare buttons. But this message is not being received well either. It is a total misread of Americans' angst. Taxing and otherwise penalizing banks and bankers is one thing, though why banks, insurers, and other financial service companies who did NOT take TARP money are also lined up for TARP taxes is a bit harder to justify on any basis. In fact, what Americans are saying is, yes, we don't want bailouts again, but assure that result by fixing the financial system, not by hamstringing it, and not by removing tax money from it (which actually weakens the system). Let's stabilize the system, resolve the levels of taxation so that businesses feel secure about hiring again, and let's not raise taxes when the economic situation is still precarious.
By the way, there are elements in the administration's regulatory proposal (i.e. the Volcker proposal) that make sense. Deposit taking institutions where accounts are guaranteed by the government should not be investment bankers. However, the proposal is not fully baked and there was no reason other than political to come out like an attack dog.
In short, the people are not quiet as dumb as this administration seems to think. They are not going to bite on oversimplified populist themes about villainy. If the health care experience should have taught the administration anything, it's that Americans will turn to multiple sources for clarification about what is proposed and make up it's own mind.
Don't you wish someone in the administration would tell Mr. Obama that the election is really over, he IS the president and he can stop campaigning for the job and start to do it?
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There are multiple lessons to be learned from the Haiti catastrophe, and as certain right wing pundits have learned, the public is not quite ready to be poked in the eye about them. Of course, that never stopped the musings blog, so here goes.
Earthquake warnings by themselves rarely drive action since geological time is meaningless in poor countries where people have a short life expectancy anyway. So even though it was well known in the scientific community that Haiti was prone to quakes, preparation for an event, and certainly one on this scale, was utterly lacking.
In developed countries, building codes can be enforced and earthquake damage is not as great as in poor countries, or at least is less than it would be without proper construction. In China, it is well known that quakes will come and can be devastating, so things are built accordingly. In Haiti, where corruption is a way of life, it should be no surprise that everything came down.
Foreign aid is always provided in good spirit, but often serves only to legitimize corrupt governments. Haiti is the poster child for this scenario, where one corrupt leader after another stole all the money.
That said, for all the deriding we and other developed countries take from the UN and the Third World, such as at the goofy climate change conference recently, the US is still the most generous place on earth, and not only with other peoples' money. The giving by individuals and corporations for Haitian relief is just the latest in an endless series of efforts by Americans to reduce suffering in the world. It proves once again that wealth is not something to be critical of or ashamed of. Capital drives a better life for us and enables us to provide help where needed. It provides employment, technology, and a better environment. Government does not, and ultimately can not, do any of those things. It's role is to provide ground rules and organization (regulation) where needed. When the Obama people learn that lesson, they will have some inkling about how unemployment will be reduced.
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Well, now that all that's off my chest, it's getting close to kickoff time. Go Jets!!
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On Tuesday, we bought 40 shares in GLD, an ETF that basically represents a tenth of an ounce of gold per share. I just can't get into the logistics of selecting and storing bars or coins. We paid 110.95, and along with the President, instantly triggered a three day slump in the price of gold. On Wednesday, we sold 700 shares of FSI International (FSII), an average down that has been working very well for us of late - we are all but back to even. We got 3.14, not bad considering we were buying at less than two bucks a few months ago. These were older shares though, 600 purchased on 4/4/2005 at 4.08 and 100 on 7/2/2007 for 3.16. Then on Friday we bought an Australian company, Alumina LTD (AWC), a new name. We paid 5.99 for 400 shares. This was a recommendation by Forbes' columnist Ken Fisher.
The numbers are fully in for 2009, and our gain for the year was 24.9%, not bad on a risk adjusted basis since we keep 20% in cash. We finished the year only about 8 per cent or so below our peak level. After last week's ugliness, we are even for the month of January so far.
The same inability to evaluate one's own performance objectively and confront error that was criticised by GWB's harshest detractors is also a hallmark of the current administration. So the instant post mortem delivered by the administration after the Coakley defeat was that she was a poor candidate who didn't work hard enough to get elected. Certainly, that was true but it was also true when she won the Dems' primary and emerged with a 30 point lead over Brown. Then came the transparent deal making and cynically dishonest cost evaluations associated with the Senate Health Care bill, followed by the secret negotiations to derive the compromise bill (in lieu of the promised open conference committee). That allowed the Brown campaign to unify the Tea Party types and traditional Republicans, but most of all, co opt the fiscally minded independents.
The other Mass dynamic at play concerned Romneycare. Many independents think it's working well and feared the disruption the federal proposal would have. Others think it's busting the Mass budget, and simply don't want to repeat that experience federally. Either way, Obamacare was viewed negatively.
Rather than deal with these actual elements impacting the Coakley defeat, Obama's handlers still refuse to admit that the program they're selling is dog food people won't eat (neither would dogs). Their main concern seemed to be that, after campaigning in Mass, Obama's electoral chops not be tarnished.
Seen through that prism, the decision to go populist fits well. Go back on the offensive, run against the "just say no" party and hit all the typical class warfare buttons. But this message is not being received well either. It is a total misread of Americans' angst. Taxing and otherwise penalizing banks and bankers is one thing, though why banks, insurers, and other financial service companies who did NOT take TARP money are also lined up for TARP taxes is a bit harder to justify on any basis. In fact, what Americans are saying is, yes, we don't want bailouts again, but assure that result by fixing the financial system, not by hamstringing it, and not by removing tax money from it (which actually weakens the system). Let's stabilize the system, resolve the levels of taxation so that businesses feel secure about hiring again, and let's not raise taxes when the economic situation is still precarious.
By the way, there are elements in the administration's regulatory proposal (i.e. the Volcker proposal) that make sense. Deposit taking institutions where accounts are guaranteed by the government should not be investment bankers. However, the proposal is not fully baked and there was no reason other than political to come out like an attack dog.
In short, the people are not quiet as dumb as this administration seems to think. They are not going to bite on oversimplified populist themes about villainy. If the health care experience should have taught the administration anything, it's that Americans will turn to multiple sources for clarification about what is proposed and make up it's own mind.
Don't you wish someone in the administration would tell Mr. Obama that the election is really over, he IS the president and he can stop campaigning for the job and start to do it?
-----------------------------------------------------------------------------------
There are multiple lessons to be learned from the Haiti catastrophe, and as certain right wing pundits have learned, the public is not quite ready to be poked in the eye about them. Of course, that never stopped the musings blog, so here goes.
Earthquake warnings by themselves rarely drive action since geological time is meaningless in poor countries where people have a short life expectancy anyway. So even though it was well known in the scientific community that Haiti was prone to quakes, preparation for an event, and certainly one on this scale, was utterly lacking.
In developed countries, building codes can be enforced and earthquake damage is not as great as in poor countries, or at least is less than it would be without proper construction. In China, it is well known that quakes will come and can be devastating, so things are built accordingly. In Haiti, where corruption is a way of life, it should be no surprise that everything came down.
Foreign aid is always provided in good spirit, but often serves only to legitimize corrupt governments. Haiti is the poster child for this scenario, where one corrupt leader after another stole all the money.
That said, for all the deriding we and other developed countries take from the UN and the Third World, such as at the goofy climate change conference recently, the US is still the most generous place on earth, and not only with other peoples' money. The giving by individuals and corporations for Haitian relief is just the latest in an endless series of efforts by Americans to reduce suffering in the world. It proves once again that wealth is not something to be critical of or ashamed of. Capital drives a better life for us and enables us to provide help where needed. It provides employment, technology, and a better environment. Government does not, and ultimately can not, do any of those things. It's role is to provide ground rules and organization (regulation) where needed. When the Obama people learn that lesson, they will have some inkling about how unemployment will be reduced.
-------------------------------------------------------------------------------
Well, now that all that's off my chest, it's getting close to kickoff time. Go Jets!!
-----------------------------------------------------------------------
On Tuesday, we bought 40 shares in GLD, an ETF that basically represents a tenth of an ounce of gold per share. I just can't get into the logistics of selecting and storing bars or coins. We paid 110.95, and along with the President, instantly triggered a three day slump in the price of gold. On Wednesday, we sold 700 shares of FSI International (FSII), an average down that has been working very well for us of late - we are all but back to even. We got 3.14, not bad considering we were buying at less than two bucks a few months ago. These were older shares though, 600 purchased on 4/4/2005 at 4.08 and 100 on 7/2/2007 for 3.16. Then on Friday we bought an Australian company, Alumina LTD (AWC), a new name. We paid 5.99 for 400 shares. This was a recommendation by Forbes' columnist Ken Fisher.
The numbers are fully in for 2009, and our gain for the year was 24.9%, not bad on a risk adjusted basis since we keep 20% in cash. We finished the year only about 8 per cent or so below our peak level. After last week's ugliness, we are even for the month of January so far.
