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Monday, February 08, 2010

 

Post #200

When we began this blog, in the midst of a vitriolic election campaign (is there any other kind lately?), we had no idea that we were beginning a substantial volume of written essays or any other continuing enterprise. And, in fact, enthusiasm waned early on, and there are always other priorities. But the blog returned, there were more elections, matters political, economic and athletic to write about, and motivated by the urge writers feel to build a written record and some very loyal readers, here we are creating a 200th redwavemusings post. The journey has also been a satisfying learning experience. Even working in a mode that is basically second derivative commentary, you do some research to get your facts straight, and lots of reading to inform a post. Readers have also informed this blog using many constructive modes of communication, including comments, e-mails, mailing of articles, etc.

Also, there are few better ways to try to organize one's own thinking about difficult subjects than to write about them and try to do so with a little quality and pizazz. So the blog continues, with basically weekly posts, since I just can't seem to squeeze them in any more often (though there is no lack of subject matter, that's for sure). I hope readers will continue to enjoy, comment, critique, and spread the word.

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Here are a couple of interesting quotes from my favorite paper, WSJ. This one from a Letter to the editor:

"As Wall Street counsel for Freddie Mac at its creation, I am bemused by the enveloping ironies besetting that organization as it wanders far from the 1970-71 vision of its creators...And now the intoxicating quality of debt for a government sponsored enterprise has led to a viper's bite. The press still refers, repeatedly, to the 'implicit' guarantee of the United States in spite of the explicit disclaimer by Congress of any such guarantee. Mirabile dictu...So now Freddie has tripped over its own reliance of so - called government debt by selling securities it guarantees, and then buying them back with a different form of Freddie debt to skim the spread, this time with on-balance sheet leveraging. Now the same home loan has been leveraged twice. And, as a corollary, banks rely on their holdings of GSE debt to lower their risk-based capital requirements, and this additional leveraging resonates throughout the system..."

The writer was Stuart D. Root, and the interesting thing about this perceptive description of the inflating housing bubble is that it was published on June 25, 2003!

Bret Stephens is one of many sharp columnists gracing the op ed pages of the Journal these days, and I especially loved this quote from his Jan. 26 column, Obama and the Copenhagen Syndrome:

"The president from Oprah nation, says Newsweek, suffers from an 'inspiration gap;' the prevailing wisdom is that he's too cool and detached for his own political good. Are they kidding? Should the president now take squealing lessons from Howard Dean?"

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Well, I hope you all caught some of the Tea Party Convention last weekend. It did remind me of certain libertarian conventions I had seen in years past, with an equal amount of silliness, perhaps more intensity about their objectives, certainly a group that takes themselves seriously. The guy interviewed in 18th century costume, expounding on the Constitution, was definitely a trip. C-Span does a nice job, always reporting, never commenting.

The speeches at these minor conventions are usually more interesting and on point then the campaign style boredom that passes for platform speeches at the major party conventions. This was no exception. Even Sarah Palin did well, and as if to demonstrate her improved confidence and policy chops, she took questions at the end (OK, they were prepared questions, not spontaneous from the audience). Still an improved Sarah versus the 2008 campaign's repetitious stump speech.

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What a good Super Bowl! The game was a corker, and halftime was even better, with the Grandpa rockers from The Who tearing it up on a spectacular stage. Even the pre-game was OK with Queen Latifa and Carrie Underwood. All in all, a great time was had by all, especially at "Dr. Dick's" house where I attended his annual Super Bowl party.

It's not hard to identify the good Doc's house, since it is the only one in the neighborhood that still is decorated for Christmas. Rich still had his tree up too (don't worry, it's an artificial one). Not everyone has a detached garage with a real juke box, a heater, and a hot water tub. One of the attendees even took a soak at halftime! With everyone bringing something, though not necessarily coordinated, we had a delicious surplus of sausage based dishes and chips with various dips. Thankfully, someone came through with chili and rice too.

It was a great way to spend America's most informal holiday. Dr. Dick enjoyed hosting the party so much, he's thinking of having us all back for a Fat Tuesday celebration. We'll see. That would conflict with my Bebop class at Lincoln Center, I'm afraid. Busy, busy, busy.

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In case you were wondering what Iran has to do to finally earn any wrath from this Administration in the form of stronger sanctions, so am I. We have passed repeated deadlines, and now Iran flaunts its uranium enrichment plans right in everyone's face. Mr. Obama, hear this, you need to get serious or the Israeli's will take matters into their own hands. Sooner rather than later.

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We are enduring one of the truly crummy markets, what we hope is a mere correction in this bull run (within a greater bear market, presumably, that started in 2000). The market can't figure out whether to worry about inflation or deflation, so it has decided just to worry. In fact, the short term problem is likely to be deflation, which has been staved off by the most aggressively undisciplined fiscal and monetary policies in our history. The longer term problem is inflation, and probably hyperinflation. We stayed busy last week though. On Monday, we bought 200 more shares of Quanta Services (PWR) for the IRA at 18.41. On Wednesday, we sold 700 more shares of FSI International (FSII) at 3.05. We had paid 3.16 for 600 and 3.10 for 100 in July of 2007. On Friday, we bought 100 shares of Enersis S.A. (ENI) at 21.37. This is a new name and another attempt to diversify away from the dollar.
We also enjoyed hearing the news of the takeover of Home Diagnostics (HDIX) proposed at 11.50, cash. This deal will be closing quickly.

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