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Tuesday, July 19, 2011

 

Politics rules the debt limit debate

The debt limit kabuki dance goes on, with the dramatic collapse of the "Big Deal" Friday night and the expectation of both House and Senate proposals tomorrow. A good indication of the bankruptcy of the incumbent administration was Obama's embrace of the new Gang of Six (almost) proposal before he had even seen it. This was followed by the incompetent performance of Treasury Secretary Geithner on this morning's news shows. I saw his interview with Chris Wallace (you can say whatever you want about Fox News but Mr. Wallace compares favorably with all three of the other Sunday morning hosts) and it was a real knee slapper.

Wallace was as tough with Speaker Boehner who came off as much more serious and less politically driven than the Secretary. I still think Boehner will wind up passing a shorter term fix, which ostensibly no one wants, but everyone will take, to buy time. This blog predicted the $2.4 trillion deal would happen, and it could, but even less is possible with a shorter time until the debt limit comes on the table again.

It seems clear that everyone's major concern is the 2012 election, but it is almost an obsession with Obama. Geithner raised the specter that the markets would react badly to anything less than the Big Deal, but what the markets really want is for debt to start to reverse and for the dollar to start to move up. Of course the markets also want jobs, but that means the Administration would actually have to pass the three pending trade agreements (especially with Columbia and South Korea), instead of pretending to support them, and for the administration to back off some of its regulatory initiatives. One idea that seems to have bi-partisan support is to repeal the CLASS act as part of the debt limit increase legislation. Might as well since it will never be implemented anyway. What people forget is that CLASS was scored by CBO as a budget positive in PPACA (when it should actually be a negative) and that PPACA would have been negative without it and probably could not have been passed. So repealing CLASS makes sense, but somehow the corollary, that PPACA should also be repealed is not happening. The deal I would support would be a clean debt limit increase in exchange for repeal of all of PPACA and all of Dodd Frank. Believe me, that would provide for a lower deficit and a boost for the economy - but Democrats would view it as a violation of their cannon so it won't happen. Too bad.

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It's also too bad that the Progressive doctrine is so extreme and so uncompromising because just like Conservatives, there is good and bad in what they believe. Here's an example. I'm not much for the environmentalists - I believe they are more anti-industrialist than anything else. But I am convinced that one of their major areas of concern is legitimate. That is, what we are doing to the ocean environment is disastrous. Man is clearly overfishing. We are also dumping shit - literally - into the water, as well as chemicals, acid rain, etc. and this is having fatal impact upon coral reefs and many other essential elements of the food chain. I think this is something all of us should be concerned about - it is a much more serious problem than the occasional oil spill. I think this is a more urgent problem than global warming or any other non-problem keeping environmentalists up at night.
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The unfairly maligned GWB administration (which I will admit was not God's gift to freedom) got another indirect boost from 60 Minutes tonight when it re-ran the astonishing episode concerning Saddam Hussein's diversion of the Tigris and Euphrates Rivers in his effort to eradicate the "Marsh Arabs." Somehow, the environmental lobby does not get so exorcised when GOP enemies commit environmental sins in the cause of their murderous political goals. It does not reflect well on the Left that it opposed Bush on everything. even when he took on and removed one of history's worst mass killers. If anything, it seems we all underestimated the horrors of the Hussein reign of terror, and since our CIA put him in power in the first place, it seems it was also our obligation to remove him.

Look, GWB failed in many ways, most notably doing too little to restrain the free spending Congress of his era, but it is increasingly a bankrupt judgment to say that the removal of Saddam Hussein was anything but a humanitarian impulse.

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Last weekend was certainly a feel good sports weekend. Darren Clarke finally won the British Open, his first major, following a miserable five years that included the death of his first wife due to breast cancer. He is now engaged to what will be wife number two. Also, the Japanese girls comeback win against the US in World Cup soccer was a nice outcome for that beleaguered country. It took nothing away from our girls who also performed brilliantly throughout.
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On July 13, we bought 1200 shares of Hauppauge Digital (HAUP), another $2,000 flyer on this HIGHLY speculative stock. Not for the faint of heart or those inexperienced with dynamite. But it's a value buy due to no debt and the low valuation it probably deserves. On 7/15, we bought 100 shares of Shaw Group (SHAW) following the brutal beating the stock has taken because of its involvement with nuclear power projects and its always questionable management team, perhaps light on the compliance side. On 7/18, we bought 100 shares of ING Preferred (ISP) at 21.20, completing a series of high risk purchases, at least for now. On 7/20, we sold 300 shares of Newpark Resources (NR) at 9.30, purchased 6/22/09 for 2.85.

Comments:
Well said in your blog, a political "kabuki dance."

Here's my suggestion. If you like it, please pass it on.

If Congress doesn't raise the debt ceiling and the U.S. cannot pay all its bills, then the members of Congress shouldn't receive their U.S. paychecks.

Dave
http://rewardandconsent.blogspot.com
 
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