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Tuesday, September 28, 2010


Popping Stinky Bubbles

When William F. Buckley started his conservative publication The National Review, he famously wrote that its mission would be "to stand atwhart history yelling 'stop.'" Today, Dems deride Republican conservatives as "the party of no." My response would be that given the breakneck speed of progressives' agenda, and its far reaching and precedent shattering impact, "No" is today more appropriate than "Stop."

In the 1950's, the progressive agenda included Medicare and Medicaid, Head Start, revisionism in education, the "War on Poverty," (largely a welfare expansion program), and Civil Rights. The divide was not strictly speaking between parties. In fact, Republicans like Everett Dirksen led the fight for Civil Rights, and routinely supported some of the other agenda. However, the GOP had serious doubts about Medicare's financial underpinnings and were concerned about the War on Poverty's impact on incentives to work. In retrospect, those concerns were well taken.

However, there was an understanding that the social safety net, initiated during the FDR years, would continue to grow for a time, and the only debates were about which initiatives and at what cost. Buckley's "stop" command was just that - let's consider carefully before we add to the entitlement commitments. It implied an eventual resumption, not a permanent halt and certainly not a reversal.

The situation is very different now. There is a palpable feeling in the country that the commitments made to entitlements already in place before the Dems re-took Congress in 2006 were already beyond the resources of the country to support. This blog showed in a series of posts some years ago that the demographics had already doomed the financial viability of both social security and medicare. There would have to be significant cutbacks in promised benefits and increases in contributions to make those programs work for the baby boom and succeeding generations.

The public knows intuitively that the Obama Health Reform bill amounts to nothing less than pouring gasoline on a fiscal fire. This is the essence of the Tea Party movement - that the current progressive agenda is about a lot more than incremental reform. It's about a country that is moving off its moorings - financial, constitutional, even cultural. It is not enough to draw a line in the sand this time. Health reform needs to be defunded, repealed, replaced. It's enough of politicians telling us that one thing is happening when the truth is that quite another is going on. Don't tell us you are going to cut taxes for the middle class when at best, you are going to continue the current rates while raising the rates for higher earners. Don't tell us we can keep the insurance we have when the new law makes it unlikely in the extreme that our plan will be grandfathered. Don't swear to defend the constitution and then undermine it relentlessly.

And do all this while lying to us with a straight face.

How about Andy Cuomo yesterday accusing his opponent of racism and extremism - while sucking up to Charlie Rangel who should be under indictment! No scenario seems too nauseating for this crowd.

Tea Partiers have learned, as was famously advised, to ignore what they say, just watch what they do. Progressives will not be deterred from the opportunity to implement their socialist vision until they are put out of power. We know that. We know that Obama's base is actually disappointed that he didn't achieve more! A public option, cap and trade, much higher taxes on corporations and the wealthy, higher estate taxes, etc. Conservatives know what's at stake a mere five weeks from today, and we are all showing up to vote. Many independents are joining us. Defeated establishment Republicans are quietly leaving the field. Lazio in New York already gave up the Conservative line. Hopefully, Murkowski will follow in Alaska (no matter, that race looks to be over anyway).

Dems can hardly believe the polls. They are hoping that it can't be nearly that bad for them, that their turnout efforts will change the math. This week they began an effort to e-mail the young first time voters from 2008 to remind them to vote this year. Can anyone imagine a more useless exercise? If there is one way NOT to communicate with the college age generation, it's e-mail. They don't check it and when they do, what would you think the average college student is going to do with a message from the Democratic Campaign Committee, click on it or delete it? Do you know anyone that age? If so, you know the answer too.

In fact, I think the polls may actually understate the coming turnout dynamic. So even where races are tightening (I knew John Kasich could not really be 17 points ahead), there is no cause for panic. And the Chavez defeat in Venezuela can only be a good omen for lovers of capitalism, here.

It can be a little embarrassing sitting on the train, reading the WSJ, laughing out loud in an otherwise quiet car of dozing passengers. Here are excerpts from an article headlined "Manure Raises New Stink" from the March 25 (don't ask) edition:
By Lauren Etter

Winchester, Ind. - Like many of his neighbors, farmer Tony Goltstein has to deal with the aftermath of the dairy bubble.
But besides his mounting financial troubles, Mr. Goltstein also must contend with bubbles the size of small houses that have sprouted from the sludge pool at this Union Go Dairy farm. Some are 20 feet tall, inflated with the gas released by 21 million gallons of decomposing cow manure.
But he has a plan. It requires a gas mask, a small boat and a Swiss Army knife.
The saga of Mr. Goltstein's bubbles, which are big enough to be seen in satellite photos, began about seven years ago and traces the recent boom and bust of U.S. dairy farmers.
Mr. Goltstein, 43 years old, had moved his wife and their three children from the Netherlands to Winchester, population 4,600, about 90 miles east of Indianapolis. They planned to build a dairy farm of 1,650 cows on 180 acres.
He had installed a black plastic liner to keep the manure from seeping into the ground during the flush days of the dairy business when prices and demand were growing.
The plastic liner has since detached from the floor of the stinky, open-air pool and Mr. Goltstein says he can't afford to repair the liner properly. But he says he's game to pop the bubbles before the manure pool overflows and causes an even bigger stink.
His neighbors aren't happy with the plan.
"If that thing back there blows, God help us all for miles," said Allen Hutchinson, whose corn and soybean farm is next door. He and other neighbors worry that puncturing the bubbles could cause an explosion of manure and toxic gases...

The first small bubbles began poking up in the fall of 2006. "I thought, 'this doesn't look right,'" (Goltstein) said.
In July 2008, about the time milk prices plummeted amid weak global demand, one of the bubbles ripped open and revealed solid matter inside. A state environmental inspector visited and the state fined Mr. Goltstein $2,125 for failing to properly maintain the lagoon.
The Goltsteins filed for Chapter 11 bankruptcy protection last month; their bank began foreclosure proceedings. Mr. Goltstein said repairing or replacing the lagoon liner could cost him more than $200,000 - money, he said, he doesn't have...

This month, Mr. Goltstein asked state regulators to let him pop the bubbles. He said he and his 19 year old son would slice them open with a knife from a paddleboat.
Bruce Palin, assistant commissioner for the office of land quality at the state environmental agency, said officials were considering the idea. But he added, "not knowing how much volume of gas there is and how much pressure is on it, we're concerned with just cutting a hole."
Last year, a hog farmer in Hayfield, Minn. was launched 40 feet into the air in an explosion caused by methane gas from a manure pit on his farm. He sustained burns and singed hair.
Mr. Goltstein's attorney, Glenn D. Bowman, acknowledged that the potential existed for an explosion: "We're aware of that sort of physics issue," he said.
If and when the bubbles are deflated, state officials said, they will be there to keep watch.
"If they don't do it right,.." Mr. Hutchison said, shaking his head as his voice trailed off...


On Sept. 20, we sold 100 shares of Newmont Gold (NEM) at 63.18 that were purchased in January, 2007 for 45.37. This was simply a matter of following our formula and does not mean I have changed my attitude toward gold. We are still accumulating GLD. On Sept. 22nd we bought 200 shares of Alcoa (AA), a zero buy, at 11.20. We also threw in the towel on Blockbuster, assuming the reports that bankruptcy would be filed and stockholders left with nothing were correct. They were. We sold 2100 for five and a half cents and 3800 for 5.9 cents. At least we got about $330 in net proceeds, versus the zero that stubborn holders will get in bankruptcy. In the meantime, we will wait for the inevitable shareholder lawsuit mailing. We spent $36,000 plus to buy all these shares, and in addition to the $330 we got last week, we received a $3,200 return of capital and $2500 in dividends along the way. So we lost about $30,000 and should have realized this was a bad situation when the company was loaded with debt by Viacom, and things only got worse when Carl Icahn got involved. Lesson learned.

Yesterday, we sold 800 shares of Hauppauge Digital from the IRA at 2.70. We bought 200 in June of 2008 for 2.06 and 600 in July of 2008 for 1.26. Combining taxable and IRA capital gains and losses, we are out about $18,000 year-to date in realized transactions, but more are coming with the Tomkins and ADCT takeovers still to execute. Not all that bad considering how many dogs have been ejected from our kennel.

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Monday, September 20, 2010


Football bounces our way

If you are among the foolhardy who bet pro football games, you must be wondering how to figure out what's going on. The Jets are terrible one week, very good the next, the Ravens the opposite, and the same can be said in one direction or the other for a lot of teams. Matchups always have something to do with it but the reality is that form is not a constant anymore, if it ever was, and you really have too take injuries, psychology, and the other soft factors into account to understand what is going on out there.

As bad as the Jets looked for their first 6 quarters of this young season, that's how good they looked for the second half yesterday. And that was after their all-world cornerback went down! For the first time, it really looked like Mark Sanchez will be a winning QB in this league. Let's remember, he is not blessed with the greatest receivers. Edwards can pull them down in traffic because of his height, but his patterns are only so-so; he rarely seems to be actually open. And he is their best receiver.

Anyway, that was a game they had to have, with a division rival. Besides, you can't start off 0-2 at home.

As for Big Blue, the overhyped Manning brother rivalry showed what even a casual fan knows - that the big brother is still much better than Manning the younger. Also, we should keep in mind that the Colts lost their opener to a very good team, and the Giants beat a weak team at home in their opener. I don't think the Giants are as bad as they looked last night, but they may find wins in their own division a bit hard to come by.

When Dems get desperate, and believe me, they have been pressing the panic button, they typically turn out the ad hominem attacks and go blisteringly negative. Most obviously we have seen them go after O'Donnell in Delaware and Angle in Nevada, but this is really MoveOn.org strategy, so no one should be surprised. Keeping to the issues is not what they're about, it's strictly win at any cost, ends justify the means politics. And it's disconcerting when people who should know better, like Karl Rove, pile on to somehow boost their own credibility with the "intelligentsia."

No matter, I expect these attacks to backfire. Yes, I know negative campaigning usually works, but this is not a usual election year. The public has had it with politics as usual, and the purge of traditional GOP candidates shows that voters are willing to risk defeat to get an issue message across. In Delaware, most experts thought Mike Castle was a lock to flip the Senate seat, but GOP voters said in effect, "what's the point of putting a RINO in the Senate who won't come through for us on big votes, or can be bought off with an earmark or two?" I don't think anyone is for strict party discipline to fall in line on every vote, but if you don't stand up on health care or cap and tax, what's the point? So they went with a clearly flawed candidate who at least is a real conservative.

The pundits are all now conceding that the seat won't flip but I'm not so sure. Ms. O'Donnell trails by only 11 points according to the latest Rasmussen poll, and this is before the GOP has had a chance to show how badly flawed her opponent is too. I have a feeling this race will only tighten up, though there may not be enough time left to fully close the gap.

But if there isn't enough time for her, there really isn't enough time for all the Dems that are losing and losing badly. Momentum is still on the GOP's side. The latest Cook projection is for the GOP to flip at least 40 House seats giving them the majority. In the Senate Cook is looking for a 6-8 seat gain (it was 7-9 before the Delaware primary), not enough for a majority but enough to sustain filibusters. Now you know why the Obama people moved so quickly and carelessly to implement their left wing agenda. They are not getting any more of it through. Look for a lot of executive orders and recess appointments.

The appointment of Elizabeth Warren to an advisor position was an example. Since she could not get confirmed to the actual job she will do (creating the new Consumer Protection Agency), Obama found a way to employ her as such without giving her the title or enduring a confirmation hearing. Ugh. What happened to upholding the Constitution? Oh, I guess I shouldn't really worry my little head about such trivialities.

In a race that's really going well, John Kasich is on his way to implementing a form of term limits with respect to Ohio's Governor Strickland. Quinnipac has Kasich ahead by 17, which is more than I can believe, but if it's close to being accurate, they can call in the dogs and piss on the fire, because that hunt's over. I met Mr. Kasich last spring and he is really ready for prime time. This was the wrong year for Strickland to attract an opponent of that caliber.

Though not identified with the Tea Party, Kasich has advanced arguments calling for reduced spending and job creation in Ohio since the beginning. In fact, the Tea Party to me is the not so crazy party. They are, in fact, the inheritors of the Ross Perot brand of independent budgetary and economic common sense. The difference is that this group is fighting mad, and not vacillating about their candidacies, the character flaw that killed the Perot candidacy.

As they say about tough playoff opponents, Angle, O Donnell, Rubio, and the other fiscal conservative Tea Partiers are going to be hard outs. It's time for the Murkowski's, Rove's and other establishment Republicans to either climb on board or just go away. But even if they don't, it's America, the First Amendment is still in place, (as are the others) and we'll find a way to make it right, the right way.

By the way, for the latest poll results, a great site is Real Clear Politics. I'll put the URL in the links.

I saw Nicholas Peyton's Sextet at Birdland last week. Same personnel as last year and some of the same tunes (after the set, I asked Mr. Peyton who had written one of the tunes and as soon as he answered, James Black from New Orleans, I remembered that I had asked him that last year and laughed at myself for not remembering). However, the group is much tighter now, and really have become SO OUTSTANDING. If you get a chance to see them at another club, don't miss it.


Last Monday, I bought 100 shares of Hartford Financial Preferred (HIG.PR.A) at
24.04. Then on Wednesday, we bought 200 shares of Peoples United (PBCT) at 13.11.

Sunday, September 12, 2010


Debacle for Dems Coming - Here's How We Know

R.T. Firefly's comment at the end of our last post is recommended for your reading. I would say that I have two areas of disagreement with both Ms. Dowd and Mr. Firefly. The first is that actual conservatives/Republicans would surely cringe at the very thought of our current Vice President, not smile, and they sure weren't anxious to see health care legislation pass. Second is that in fact, the victory I expect for the Republicans this fall, I believe is virtually assured, and it may be getting more one-sided each week. The reason is that in off-year elections, enthusiasm matters more than in Presidential years when it also matters, but not as much.

This might surprise regular readers of this blog because as I have occasionally pointed out, no matter how hard you press the lever, or how dark you fill in the circle, your vote only counts once (at most). But the point is turnout. In Presidential years, reasonable turnout is always assured. Yes, enthusiasm matters, and in 2008, some conservatives did choose to sit it out, and some of those who are RINO's, such as the subject of Ms. Dowd's column actually crossed over. But mainly, people who vote voted, and Obama won fairly easily because new young voters were motivated to turn out and because he won the independent vote.

In off-year elections, lots of people sit it out. What drives people to the polls usually would be a hot race for Governor, Senator, or some local contest. Otherwise, it is rare that people go to the polls to change the leaders in Congress. However, in 1994, and 2006, there was enthusiasm for one party or the other, the GOP in 94 and the Dems in 06.

What is shaping up for this November is that wild horses won't keep true Republicans and conservatives from the polls this time and they are on a mission. If you don't believe me, just listen to the callers on Rush's program or to Mark Lavin some night. Some people say that the GOP hasn't raised enough money to get people to the polls, or that their positive poll ratings are even lower than Dems. Don't worry. The money differential is getting tighter (see below). The conservative talk show hosts will get their listeners to the polls, and when turnout is under 50%, low positives don't mean much. The number to watch is the likely voter generic preference for which party controls Congress. Republicans have never led by the margin the polls show now, not even in 94. And think about this. Where Dems win, places like NY, New England, Maryland, Southern California, Michigan, they win huge. Those races skew the overall generic poll. If the GOP is even, it means they are winning the close races. When the GOP is ahead, school's out.

Surely, local races and candidates will play some factor in the overall result. In places like Florida, where a three way race has developed for senate, and perhaps Alaska if Murkowski stubbornly fights on, the applecart can be upset when GOP votes get split. There won't be many races like that. Net net, the Tea Party will help, not hurt GOP prospects.

There has been a lot written and discussed about money and politics, with McCain Feingold rules a subject of Conservative ire, and the courts stepping in to rule out some of those rules. One fact of political life that I find somewhat concerning is Political Action Committees, even though PAC money funds some of my lobbying activity (that's full disclosure) and even though I contribute to a PAC.

In a corporate PAC, employees of a certain rank or higher contribute a limited amount voluntarily, and the Corporation normally sets up a Committee to determine to whom the contributions will be made. PAC's became necessary when McCain Feingold all but eliminated direct corporate funding of campaigns. There are limits that prevent much money from going to any single candidate from any single PAC . The stories that you hear about PAC abuse are grossly exaggerated, since no one PAC can make the slightest difference in any race. But a lot of PAC'S taken together do make a difference.

It is commonly stated that PAC money helps provide access, but does not change minds or positions about issues. There is a tendency for PAC's to flock to the same candidates even without discussing it. They want to support incumbents and people who will be re-elected. It is very rare for a PAC to contribute to a challenger, (and that has some employee PAC contributors annoyed this cycle). So one should not be surprised that until 2006, Republicans received the lion's share of PAC money and since then, Dems do. That has something to do with the perceived and real campaign financing gap that Republicans have suffered from.

However, now that the perception is that Republicans will take one or both houses, PAC money is coming back to their side and the gap is closing rapidly. The other factor is the recent court decision allowing corporations to spend money on politics again in a limited way. The playing field is not yet leveled with the unions, but again the gap is closing.

So the stars are aligning. Early voting begins in a matter of weeks in some states, and west of the Appalachians, early voting has become an important factor. Once it starts, it will really be too late for Dems to do much about what is likely to be a miserable election night for them. Quite a few races where Republicans had no prospects at all 6 months ago are now considered toss-ups. People are learning about the higher taxes they will be paying on income, dividends, capital gains, medicaid contributions,the restored haircuts to their deductions, and the restored 55% estate tax. They are learning how much their health care premium costs will be going up because pre-existing condition underwriting is ending. They are learning that the health insurance they have now will be changed and not grandfathered. They ain't happy. If they are conservatives or libertarians, or even just independents worried about the economy and the deficit, they understand they have to take action this fall.

So after, what happens? Whether the GOP wins the House and/or the Senate or not, the Dems' ability to blast controversial legislation through will be over. The 60 vote Senate majority will be long gone, and while Pelosi may continue to set the House agenda (doubtful, in my opinion), she will not be able to offer passes to Blue Dog Dems and still pass anything. The Dems are likely to try to get some things done on the tax side during a lame duck session but these will be things that just have to be done, like the AMT fix, restoration of some or all of the Bush era tax cuts, and so on. The next Congress will likely to be very contentious, with the parties looking ahead to 2012 and posturing from the very beginning. Whether part of that posturing might include some actual compromise so we can start toward fiscal responsibility is doubtful, maybe a 15% chance. If the GOP is in charge, they will be trying to find a way to "fix" the health bill, and there is really a lot that everyone now agrees needs fixing (though they probably don't agree on what the fixes are).

There should be lots to blog, argue, and debate about. People think this continuous battling is new. Students of American history know that it began in 1787 and it has been ever thus.

Alert readers of this blog may have noticed that our "hit meter" now registers over 4,000, for which I thank all of you and continue to be amazed that people are interested enough to make a weekly visit. Of course, it has occurred to me that we may have a few visitors who don't actually read the posts but just enjoy watching the hit meter go up. In fact, some have theorized that I might be visiting my own blog for that reason. Not true. I have plenty of other blogs to visit where I can impact their hit meter.

I am really looking forward to getting to the jazz clubs this month, and I might post a schedule of some of the better gigs later this week. But in the meantime, we've got the Jets tomorrow night, and the NY primary results Tuesday night. It's all about priorities.

On Sept. 7, we bought 400 shares of Books a Million (BAMM) at 5.66, a value buy. Hopefully, this company is not going the way of Barnes and Noble. Those who know BAMM though realize its business model depends on more specialty books, especially religious ones, and that they have concentrated in the southeast. Kindle technology should not have quite the same impact on this chain. On Friday, we bought 50 shares of Ecolab (ECL), a long time favorite, at 40.30. This is a "zero buy" because of its high price to book ratio.

Time for the periodic disclaimer. Redwavemusings is not an investment advisor and neither is its author. The securities mentioned here are not recommendations and may not be suitable for anyone, even for me.

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Monday, September 06, 2010


Thanks for nothing

It is fashionable for local weekly newspapers to invite their local incumbent politicians to write a weekly column, which is yet another advantage of incumbency on top of all the ones we routinely consider. Our local state assemblyman (guess which party) took the opportunity to "thank President Obama and Education Secretary Duncan for extending that helping hand to us at a time we New Yorkers so desperately need it."

Of course, he was talking about the little $1.3 billion gift that the Feds laid on NY to "keep teachers and other public employees" on the payroll. Before getting into the merits of this disbursement, I would point out to the Assemblyman that he is thanking the wrong folks. The people who supplied this largess are the taxpayers of the USA, who now constitute less than half the population I believe, and the lion's share of which is provided by the so-called rich who make six figures or more. As far as I know, the President and his cronies provide nothing (other than the taxes they themselves pay), only redistribute what the IRS collects. So on behalf of the public who actually provided the funds, I grudgingly respond "your welcome." Grudgingly because it's not as if this was our choice.

Let's understand that when we redistribute funds in this way, we are making a decision that it is OK to profit the NEA at the expense of others. These funds will do little or nothing to improve our kids' education, but they will keep a lot of marginal teachers on payroll. They will also discourage our state legislators from making the hard decisions they need to make (urgently) to reduce state expenditures and the state's payroll. So we have a legislator thanking the President for enabling him to avoid a tough decision, while the beneficiaries pocket the funds (without so much as a thanks) and the payors just get dissed entirely; in fact, they are threatened with increased taxes next year.

Is there any wonder why we are voting against incumbents like this in November?

Democrats are still in denial about the slaughter awaiting them this fall. They are having a little fun with their mantra that the GOP is the "party of No" and you do see letters and column to the effect that the GOP has not put forward a specific program that illustrates how they will do better, other than the Ryan Road map which Dems portray as privatization of social security, a gross oversimplification.

My view is that there is much to be said for the conservative view that there is a lot to say for a party that will "first do no harm," as they say in the medical profession. Repealing and replacing the huge legislative "achievements" of the Obama administration is a worthwhile goal, however difficult to achieve. Frankly, I would be happier with a Congress that took the approach of implementing fiscal discipline, without worrying about whether they were inclined to do anything positive from a legislative point of view.

Actually, this is where the majority of likely voters are. The Dems talking points are not gaining any traction for this reason. We are now at a point where early voting begins in about one month. Early voting is very popular west of the Appalachians, so that's about all the time the Dems have left to salvage this election. The rout is all but assured.

I rate the GOP a 60% favorite to take control of the House, and 40-50% to win the Senate. The Dems' filibuster proof Senate majority will be gone (actually it already would be if it weren't for the New England RINO's) and the GOP will fail to earn a veto proof majority. This means that either the parties will have to find a way to work together or nothing will get done. Either way, we will better off than we have been the last two years.

A lot of people don't realize we will be operating without a budget for the fiscal year beginning October 1. Congressional disfunction is already in place.


It's that time in sports when baseball is getting to crunch time, football begins for real, and tennis and golf hit their high points with the US Open and the Ryder Cup respectively. It's a great time for fans, but as the madness of NCAA football resumes, keep in mind how in what should be an amateur endeavor, money drives everything, the coaches make millions, the players are shamelessly exploited, and the NCAA, the most corrupt sports governing body this side of the Olympics, doles out the death penalty to college programs for the most trivial of "rules violations." Just sayin'.


I'm off to D.C. yet again tomorrow, so I'll wrap it up here. On Wednesday, we bought 200 shares of SEI Corp (SEIC) at 17.90, a zero buy. On Friday, we bought 20 shares of Treasury Inflation Protected ETF (TIPS) for the IRA at 107.30. We have enjoyed this nice rally and like being well ahead again for the year.

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