Monday, November 28, 2011
Meet Grover
Yesterday, moving toward winter mode, I watched the Sunday morning news shows, an admittedly unsatisfactory alternative to golf, but one that's informing if not always entertaining. I can't take ABC's This Week anymore, George Will notwithstanding, so instead I watched Fox's effort with Chris Wallace providing a very fair interview with a representative from each side of the failed Super Committee. He gave Senator Durbin a chance to sound off, and he obliged unfailingly to use every possible soundbite to make the Dems' class warfare argument. Do they really believe this is resonating? Can I be that oblivious to its attractiveness? Whatever, even when Wallace gave Durbin the chance to repeat his support for Simpson Bowles (he voted for it as a member of that commission, which for some reason Obama disavowed), he found it necessary to qualify his support with the requirement that the Bush tax cut for those over $250,000 in income be repealed. I'm sure he didn't forget that the commission did NOT recommend that. The Dems have revived the "party line" in much the way it was applied to the Soviet ability to look straight in your eyes and say the most absurd things.
Durbin also rehashed the overstated party canard that Republicans on the Super Committee were dictated to on taxes by Grover Norquist, and were forced to adhere to the infamous signed pledge. Somehow, Dems ignored the very substantial revenue offer made by Republicans to eliminate deductions, especially at the upper income levels. That's because they didn't really want a deal, since they believe the sequester will represent another tool in their class warfare campaign next year.
The fact is, either the Supercommittee or Simpson Bowles could have been a done deal as fat as Republicans were concerned, with significant new revenues but without increasing (and possibly even decreasing) tax rates. As it was, no one wants a deal on the other side's terms. I certainly prefer the sequester to any decoupling of the Bush tax cuts based on income levels. As for the Dems' demand that extension of the payroll tax holiday be tied to an upper income tax surcharge, no thanks. If that's the offer, let the payroll tax holiday expire, as it was supposed to. After all, the payroll tax funds those beloved entitlements, social security and medicare. Isn't it a bit reckless to be reducing those particular funds given the unspeakable entitlement liabilities we face? What happened to Al Gore's social security lockbox anyway?
From there it was on to Meet The Press, whose guests were Senator Schumer, the tireless Dem motormouth, and, of all people to represent the GOP side, Grover Norquist. When I heard that, I wondered what kind of setup this might be. It started badly as NBC's usually insightful interviewer, David Gregory, lobbed softball after softball Schumer's way for him to swat with his class warfare bat. Obviously, such treatment was not afforded Mr. Norquist, but he surprised by answering every antagonistic question straight forwardly, responsively, and with strong economic reasoning. It was a most impressive performance and one that did the cause good. I especially loved his line that Democrats seem to believe that "the peasants aren't sending enough cash in for the king to spend." In fact, it may ultimately be that rather than a Dem talking point, Norquist's pledge may prove to be a GOP asset in the coming campaign.
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You would think that watching the debacle in Europe, we could learn that what we were doing in the good old days was the straight and narrow, and that we had better stop parroting socialist Euroland before it's too late. Obamacare, 99 week unemployment benefits, growing entitlements without payroll tax funding, green projects of questionable environmental value that devastate growth and jobs, these are all actions that could lead us down the road to financial collapse. The regulatory nightmares the Obama administration, through the EPA, the FCC, the Justice Department, and the new Dodd Frank apparatus, is pinning on business is killing whatever recovery might have taken place.
It would be one thing if consumers actually benefitted from any of this regulatory activity. Actually, consumers are being hurt. If you don't believe me, ask anyone who has cell service from AT&T, forced to divest important capability and still won't be allowed to complete its proposed takeover of T Mobile. Ask the hundreds, even thousands of oil riggers put out of work in the Gulf by the administration's delays in allowing drilling to be resumed. Ask the 20,000 who won't be employed on the Keystone pipeline, or consider the layoffs that will surely occur in Detroit (again) when consumers reject auto manufacturers attempts to comply with new unrealistic EPA fleet mileage requirements and their attendant costs.
One thoughtful Democrat recently suggested in a letter to the WSJ that we're thinking about the deficit all wrong, that we should have a separate capital expenditures budget, and if we did, we could spend on these projects without incurring additional current deficit. I agree, I would like to see the government produce a GAAP accounting statement alongside its cash accounting budget. It would be a revealing exercise. But you need to do these things for the liability side as well as the asset side of the balance sheet. If you did, that means valuing the excess of the present value of future entitlement liabilities over the funds invested to support them. Believe me, our GAAP statement, which used to be pretty good since the value of Federal lands, parks and buildings is tremendous, would now be horrible because of our entitlement overpromising. Yes, by all means, let's do that. We could hire a Big Four accounting firm to put it together.
Of course, what's the point when the Senate has failed to produce a budget of any kind in the last three cycles?
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We've been busy on the buy side while enduring the stock market's worst Thanksgiving week in 69 years. On Nov. 21, we bought 400 shares of Alumina (AWC), a value buy at 5.47. The same day, we also bought a zero buy, 300 shares of Genie (GNE) at 7.27. Last Wednesday, we bought 50 shares of AES Preferred (AES.PR.C) at 48.96. Friday, we bought Alcoa (AA), the American aluminum company at 8.90. Here's hoping the airline industry doesn't switch to plastic. Today, we bought 50 shares of NVEC, a zero buy at 54.69.
For new readers and old, it is important to remember that our investment system and transactions are not suitable for everyone, and may not in fact be suitable for anyone. We record them here for fun and for whatever benefit it is to know that one's investment decisions will be exposed to public view and even ridicule. Our system is explained in long ago posts that can be found in the archives. It is designed to implement a tendency to buy lower and sell higher. Following it tends to remove emotion from the decision process, and for some investors, that is necessary. Emotion is especially debilitating for the sell decision, and through a low commission discount broker, we are able to sell in increments that encourages some profit taking.
We do also employ a very good full service broker, and honor his recommendations by buying them first in his account and giving him credit when they pan out. We certainly discourage any reader from considering this section of the blog to be investment advice.
If you follow the financial sites, you are sure to see articles these days by Elliot Wave adherents warning about third wave devastation culminating in a 2012 retest of the 2008-9 lows. This could happen, bu keep in mind that I think Elliot Wave theory is more useful in trying to understand past market moves in context than it is as a predictive device. I would want to be aware of these ideas without being panicked by them.
Durbin also rehashed the overstated party canard that Republicans on the Super Committee were dictated to on taxes by Grover Norquist, and were forced to adhere to the infamous signed pledge. Somehow, Dems ignored the very substantial revenue offer made by Republicans to eliminate deductions, especially at the upper income levels. That's because they didn't really want a deal, since they believe the sequester will represent another tool in their class warfare campaign next year.
The fact is, either the Supercommittee or Simpson Bowles could have been a done deal as fat as Republicans were concerned, with significant new revenues but without increasing (and possibly even decreasing) tax rates. As it was, no one wants a deal on the other side's terms. I certainly prefer the sequester to any decoupling of the Bush tax cuts based on income levels. As for the Dems' demand that extension of the payroll tax holiday be tied to an upper income tax surcharge, no thanks. If that's the offer, let the payroll tax holiday expire, as it was supposed to. After all, the payroll tax funds those beloved entitlements, social security and medicare. Isn't it a bit reckless to be reducing those particular funds given the unspeakable entitlement liabilities we face? What happened to Al Gore's social security lockbox anyway?
From there it was on to Meet The Press, whose guests were Senator Schumer, the tireless Dem motormouth, and, of all people to represent the GOP side, Grover Norquist. When I heard that, I wondered what kind of setup this might be. It started badly as NBC's usually insightful interviewer, David Gregory, lobbed softball after softball Schumer's way for him to swat with his class warfare bat. Obviously, such treatment was not afforded Mr. Norquist, but he surprised by answering every antagonistic question straight forwardly, responsively, and with strong economic reasoning. It was a most impressive performance and one that did the cause good. I especially loved his line that Democrats seem to believe that "the peasants aren't sending enough cash in for the king to spend." In fact, it may ultimately be that rather than a Dem talking point, Norquist's pledge may prove to be a GOP asset in the coming campaign.
--------------------------------------------------------------------------------
You would think that watching the debacle in Europe, we could learn that what we were doing in the good old days was the straight and narrow, and that we had better stop parroting socialist Euroland before it's too late. Obamacare, 99 week unemployment benefits, growing entitlements without payroll tax funding, green projects of questionable environmental value that devastate growth and jobs, these are all actions that could lead us down the road to financial collapse. The regulatory nightmares the Obama administration, through the EPA, the FCC, the Justice Department, and the new Dodd Frank apparatus, is pinning on business is killing whatever recovery might have taken place.
It would be one thing if consumers actually benefitted from any of this regulatory activity. Actually, consumers are being hurt. If you don't believe me, ask anyone who has cell service from AT&T, forced to divest important capability and still won't be allowed to complete its proposed takeover of T Mobile. Ask the hundreds, even thousands of oil riggers put out of work in the Gulf by the administration's delays in allowing drilling to be resumed. Ask the 20,000 who won't be employed on the Keystone pipeline, or consider the layoffs that will surely occur in Detroit (again) when consumers reject auto manufacturers attempts to comply with new unrealistic EPA fleet mileage requirements and their attendant costs.
One thoughtful Democrat recently suggested in a letter to the WSJ that we're thinking about the deficit all wrong, that we should have a separate capital expenditures budget, and if we did, we could spend on these projects without incurring additional current deficit. I agree, I would like to see the government produce a GAAP accounting statement alongside its cash accounting budget. It would be a revealing exercise. But you need to do these things for the liability side as well as the asset side of the balance sheet. If you did, that means valuing the excess of the present value of future entitlement liabilities over the funds invested to support them. Believe me, our GAAP statement, which used to be pretty good since the value of Federal lands, parks and buildings is tremendous, would now be horrible because of our entitlement overpromising. Yes, by all means, let's do that. We could hire a Big Four accounting firm to put it together.
Of course, what's the point when the Senate has failed to produce a budget of any kind in the last three cycles?
-------------------------------------------------------------------------------
We've been busy on the buy side while enduring the stock market's worst Thanksgiving week in 69 years. On Nov. 21, we bought 400 shares of Alumina (AWC), a value buy at 5.47. The same day, we also bought a zero buy, 300 shares of Genie (GNE) at 7.27. Last Wednesday, we bought 50 shares of AES Preferred (AES.PR.C) at 48.96. Friday, we bought Alcoa (AA), the American aluminum company at 8.90. Here's hoping the airline industry doesn't switch to plastic. Today, we bought 50 shares of NVEC, a zero buy at 54.69.
For new readers and old, it is important to remember that our investment system and transactions are not suitable for everyone, and may not in fact be suitable for anyone. We record them here for fun and for whatever benefit it is to know that one's investment decisions will be exposed to public view and even ridicule. Our system is explained in long ago posts that can be found in the archives. It is designed to implement a tendency to buy lower and sell higher. Following it tends to remove emotion from the decision process, and for some investors, that is necessary. Emotion is especially debilitating for the sell decision, and through a low commission discount broker, we are able to sell in increments that encourages some profit taking.
We do also employ a very good full service broker, and honor his recommendations by buying them first in his account and giving him credit when they pan out. We certainly discourage any reader from considering this section of the blog to be investment advice.
If you follow the financial sites, you are sure to see articles these days by Elliot Wave adherents warning about third wave devastation culminating in a 2012 retest of the 2008-9 lows. This could happen, bu keep in mind that I think Elliot Wave theory is more useful in trying to understand past market moves in context than it is as a predictive device. I would want to be aware of these ideas without being panicked by them.
