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Sunday, June 13, 2010


As Summer Nears...

Tomorrow is Flag Day, a designation unknown to many, unless you happen to work for the government of certain states (e.g. PA) where it has always been a paid holiday, if you can believe that. Nothing against Flag Day, but its purpose is to encourage folks to display the Stars and Stripes (dress rehearsal for July 4, of course), not to provide yet another day off for unionized workers already bankrupting the feckless provinces. Here, we will make the best of it by leaving the office early to play in the golf outing sponsored by my favorite pub, Gallagher's, and raising a substantial sum for a very worthy local civic cause. I would not be surprised, given the predilections of the "golfers" attending this particular outing, if a few cocktails were hoisted along the way, perhaps starting as early as the front nine (or maybe the first tee). Here's hoping for good weather, safe driving (on and off the course), and generous raffle buyers.

After a 5-1 home stand, the Mets (aka, Jerry's Kids) took to the road once again, and lo and behold, actually won three straight, an accomplishment even if it was against the hapless Orioles. Following today's finale, the Mets will visit Cleveland and the Bronx on this trip, so we are hoping for at least 5-4, which would make up for some of the sins on the prior trips. Interestingly, we are finally seeing some sensible moves in Flushing. One of them was to recall young Tejada and give him some playing time at second base, where he represents a significant defensive improvement over the injured Castillo. Eventually he will hit too. Another was to realize that young Murphy will not be displacing Ike Davis at first base (ever) and to try him at second and presumably third at triple A. Unfortunately his knee was injured in his second game there and his season is over before it really began. Otherwise, everything is hitting on pretty much all cylinders for now, and it looks like the Mets will still be playing meaningful games at least into July.

If the few actual supporters of Health Care reform haven't figured out yet that they were sold a bill of goods, they should start getting it soon as their doctors explain how badly they are being screwed by the Medicare and Medicaid systems, etc. Dems are frustrated they can't get the Medicare rate fix through, separate from Health Reform, after using the reduction in rates to score the big bill and claim it was "paid for." While historically, low balling the intelligence of the electorate has been a formula for success, it seems folks are just getting tired of the Dems going for the easy shots (in the face of the truth), whether the subject is health insurance, energy and oil spills, toothless sanctions for Iran, or financial reform.

Most legal experts and political pundits have been very skeptical about state led efforts to overturn the health reform law in the Courts, pointing out that the Supreme Court has, for a long time, taken an expansive view of federal powers under the commerce clause. However, if you read the argument in the Amicus brief at this URL (http://www.aclj.org/media/PDF/Virginia_Amicus_Brief_20100607.pdf), I think you might agree that it might be persuasive and the cases should be taken seriously.

In the meantime, the "repeal and replace" strategy is clicking as of the recent primaries. Organization Dems may think their chances improved with Sen. Lincoln's primary survival in Arkansas and with the emergence of a more extreme GOP candidate in Nevada, but they are whistling by the graveyard. Lincoln trails her general election opponent by more than 20 points, and Reid is doomed. The centrist Republican , defeated in the Nevada primary, was actually the weaker candidate, no matter what the Dems think. With Tea Party activism showing no signs of burnout and less than five months until the elections, the setting for a rout similar or worse than 1994's, is in place.

Great article in this week's WSJ by James Grant about the imminent collapse of fiat money, as Richard Nixon's disastrous decision to remove the last vestige connecting the dollar and gold convertibility in 1971 comes home to roost. The amazing thing is how long the dollar has persisted as a reliable currency, based only on faith and credit. However, we are now at a point where there is little to prevent hyperinflation of the major currencies (the Euro as well), although as Bob Prechter forecast, we may go through a deflationary period first.

This plus inane Fed policy and our totally incompetent administration in Washington has me believing that we are heading for a double dip recession, regardless of the soothing words you heard this week from economists. By the way, the financial reforms making their way now through Congress will be of no help since they don't really address any of the economic problems we have, and not even the failures of the banking system either. You just wonder how we can have achieved this incredible confluence of incompetence. This is not to say that we don't have people around who know better. Economists Steve Forbes, John Rutledge and Art Laffer, politicians like John Kasich, John Thune, and Paul Ryan can lead the way, but will they overcome the prevailing liberal majorities in time? In case they don't, it's time to scout out where you might retire to to live in capitalist freedom and peace. Lately, New Zealand looks more like an attractive alternative.

Since we haven't quite given up on US capitalism yet, we have been buying this correction. On Monday, we bought 20 shares of the inflation protected Treasuries (TIP) for the IRA at 105.84. Wednesday, we bought 100 shares of Archer Daniels Midland (ADM), a value buy at 25.05. Friday, we bought 2000 shares of Sirius XM (SIRI), a zero buy if ever there was one, at 1.01. Just a reminder - redwave musings is not an investment advisor, and this high wire act (especially the "zero buys") does not constitute a recommendation for anyone else.

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