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Monday, December 19, 2011


A Little Pre-Holiday News

News and politics are breaking out all over. Let's get right to the action.

Item: Kim Jong II or whatever his name was suffered a fatal myocardial infarction which the North Korean propaganda machine attributed to "overwork." Well at least we don't have to worry that Obama will suffer ill health because of workaholism. Perhaps too much golf or too much campaigning, but not too much work. But anyway, getting back to Kim, he succeeded his evil father who led his country to a high position in the arms race but a very poor position in the food and beverage race. The younger Kim did the old man one better, increasing the country's nuclear capability while even more of his pitiful subjects sought refuge in places like China in search of something to put in their stomachs, anything in fact. It wasn't as if they were dying for Szechuan specialties or lobster Cantonese style. Now Kim's son is trying to consolidate power, which may be more difficult than we expect, since he is under 30, was perhaps civilized by some Scandinavian schooling, and he looks like Korea's answer to Jonah Hill.

All of this might be amusing, but then you have the Obama Administration pleading for stability. This administration, the latest in a long line of U.S. Presidencies that have made no progress at all in dealing with North Korean hostility, is more concerned with keeping the dictatorship in firm control of the country and its weapons than it is with having anything like a tilt to democracy in the North that might enable eventual reunification with the South. Reminiscent of the initial U.S. reaction to the Arab Spring right? And look how well that's working out in places like Egypt.
Item: The U.S. military evacuates Iraq, declaring victory, but leaving...a mess. How long do you give the current coalition government there, months, weeks? Obama was advised by military leaders to keep 20,000 military personnel there, but he decided 3-5 thousand would be enough. When Malicki determined that small a force would be worthless and merely provide a target for the country's nihilists, he told Obama to forget it and denied them immunity, whereupon Obama went with the total pullout.

It's nice to have the guys and gals back home, but why lose the peace after the noble sacrifice of over 4,000 U.S. lives and many more wounded? In the end, the war there will have been seen to have been a necessary strategic move, not the "war of choice" depicted by Democratic propaganda. Today's WSJ had an excellent op ed making just that point. Let's hope voters remember that Obama inherited a good situation in Iraq (unlike the economy) including a working surge and a successful occupation. He frittered it away trying to prove a political point and the ensuing mess will be his.

Item: the extension of the payroll tax cut for two months achieved a consensus in the Senate, but the GOP backbenchers seem determined to upset such a stupid deal. What the heck is a two month extension designed to do other than give Obama another bludgeon to use against Republicans for the State of the Union? For my money, I'm against both the payroll tax holiday and the extension of the 99 week unemployment deal. Though I am for the Keystone pipeline, I don't see what accelerating Obama's decision to scuttle it is going to do. Do people even notice the 2% payroll tax savings they have been getting and would they miss it when it's gone? Of all things to cut, why are we cutting social security funding, when the system is actuarily insolvent already?

The 2% is not going to create a single job. If you want to create jobs, give the 2% cut to the EMPLOYERS out of their share? But I guess that would make too much sense.
As for the unemployment extension, what that is giving us is lots more people out of work for so long, they can't get back into the work force. That is hurting people, not helping them.

Item: Countdown to the Iowa caucus: It's interesting how quickly the air went out of Newt's boomlet, like Perry and Cain before him. Suddenly Paul is in the lead, and Romney is second, in a state where he has paid little attention. In fact, my belief is that the Romney juggernaut is about to roll, and when it does, the nomination will be sewn up quickly. As Romney endorsements even from Tea Partiers like Nikki Haley come in, Republicans are getting on board, reveling in Romney's leadership qualities and holding their nose concerning some of his middle of the road policy prescriptions. But above all else, Republicans want to win, so Romney should be their choice. That's the way the nomination process should work. It was less awkward in the days when party regulars simply picked the candidate with the best chance, and before every state had a primary to pick the delegates.

One more thing - Michelle Bachmann was interviewed on Meet The Press yesterday. Like many politicians, she is a shameless promoter, but she is intelligent and much more informed than say, Sarah Palin. But I just can't listen to her anymore. She has the most irritating monotone. It's unfortunate but she really needs public speaking lessons. It's bad enough to be her constituent, but can you imagine what it must be like to be her husband?

By the way, a good role for Newt in a Romney Administration would be HHS Secretary. Whether ObamaCare gets repealed or not, the new Administration will have a pretty free hand in reshaping (i.e.fixing) it, and Newt has lots of good ideas along that line.
Item: Today's WSJ lead editorial had a field day poking holes in the premature rush to judgement on the impact of fracking on Wyoming well water. In fact, it appears that Wyoming water has always tasted and smelled like it does, at least for the last 50 years, and in any event, there does not appear to be any possible effect caused by fracking. The science behind the allegation turns out to be complete junk and is easily debunked, bringing back memories of global warming e-mailgate.

Environmentalism has become a secular religion among its adherents, and their absolutism is both repugnant and economically disastrous for those whose jobs they put at risk. I can understand how such zeal leads adherents to make claims that ultimately can't be supported. When you add to that the anti-corporate and anti-development agenda which is the true cause of too many in the environmental movement, you have a recipe for mischief.

Worst of all, none of us want to see the environment seriously damaged so when true environmental scientists lose credibility as a result of these specious or exaggerated claims, the environment does become truly at risk. That is the real tragedy.
The Cuomo tax solution in New York was a truly special example of political magic. Right now, Andrew is in "can do no wrong" mode. So when he resisted extending a temporary tax increase on upper income payors, only to put forth a smaller one that somehow reduced the budget deficit (which assumed expiration of the surcharge), he was hailed on all sides. So I will give him his props, but let's maintain perspective here. New York is still one of the country's most heavily taxed states, and the extension of a slightly smaller tax increase will do nothing to revitalize the economy here. Businesses will continue to flee, and so will high earners, senior citizens, and recent college graduates. Though Cuomo's administration talks a good game about job creation, its tax and regulatory policies do the opposite. Sounds like a certain incumbent President. The Governor's honeymoon will end too.

Following up our last post, I did see Roy Haynes at Birdland Thursday night (I know I had him penciled in for Friday night for our fictional vacationer), and the show was terrific. I did meet a young couple there on a brief vacation from Richmond, so they were "beneficiaries" of some of the research I had done for the post, since I was able to inform them about who else would be in town and about Bar on 5th.

December 15 was the 60th anniversary of the opening of the original Birdland (then on 52nd Street) so it was fitting that Mr. Haynes was headlining. The opening night headliner in 1951 was, of course, Charlie "Yardbird" Parker, for whom the club was named. His drummer that long ago evening? Roy Haynes.

We have had a busy ten days on the buy side, while the market has been in full scale retreat. On 12/9, we bought 100 shares of Hartford Financial Preferred (HIG.PR.A) at 19.87, for the IRA. On 12/12, we bought 200 shares of IDT at 12.82, just in time for lousy earnings to be released and for the price to tank even further. On 12/14, we bought 300 shares of Genie Energy (GNE) at 7.61. On Friday, we picked off 15 shares of the GLD ETF since gold has been tanking too. We paid 154.52 to put these shares in the IRA. Finally today, we bought 1600 shares of beleaguered Frozen Food Express (FFEX), a very risky purchase at 1.28. Don't try that one at home.

Time for the periodic disclaimer: Neither Redwavemusings, nor its author, is an investment advisor, and the securities and transactions mentioned here are for the record only and should not be considered recommendations as they are likely to be unsuitable for any other man, woman or child.

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