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Monday, January 14, 2013

 

Fiscal Cliff - Round 2

No sooner was the Fiscal Cliff resolved then we started down the next contentious path, the Sequester.  The sequester was supposed to be fixed in the "Cliff" deal but only taxes were dealt with in that one, not spending.  That left the GOP some leverage for the next round. Realizing his error, the President has tried to take the cuts the Dems don't like off the table while putting more taxes on.  His excuse is that Congress should honor the bills for what they have already appropriated.  This, of course is malarkey.  Without a budget, Congressional spending authority has derived from continuing resolutions, and who knows where they actually stand.  In any event, how is Congress to ever exercise leverage if the Administration can continue to spend at will and then claim it is with Congressional authorization?  Obama's catch 22 type reasoning will bankrupt the country, inevitably. 

Equally ludicrous are the ideas the Left has proposed concerning the issuance of the trillion dollar platinum coin or the use of the 14th amendment to bypass Congress on the debt limit.  In fact, even the Administration, to its credit, says the 14th amendment cannot be interpreted that way, and a phony coin is the same as printing phony dollars.  Just inflationery.

The GOP must use the next rounds of budget infighting (sequester, debt limit, spending authorizations) to try to reestablish spending discipline in a capitalist framework.  What we have now is socialism, with the attendent inflation on the horizon.  It will not be pretty.  Obama says he will not negotiate, but he will have to, if he wants to get anything through Congress.  Does he intend to rule by fiat, like his Venezuelan buddy Chavez?  Maybe so.  Can Dems really take over indefinitely with media support, in a socialist coup?  Anything is possible.  Freedom loving citizens need to stand for something, no matter how poorly they do in elections.  The sad part is it may already be too late.  Imagine if interest rates on federal debt returned to anything like normal (say 4%).  We are looking at something like a $650 billion dollar annual interest bill and counting.  That is on the order of the entire defense budget.  Really, how can Dems seriously argue that we don't have a spending problem? 
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The Obama second term cabinet is taking shape, and we are looking at folks who think like he does.  The argument is made that Presidents should get their way on cabinet choices, and I believe that, but Obama does himself a disservice when he picks second rate yes men.  John Kerry will be confirmed despite (or maybe because of) his foreign policy proclivities to negotiate from weakness.  The pick for Treasury will also be confirmed.  I don't think he is going to take us in a better direction (see above) but he can't possibly be worse than Gaithner.  The problem is Hegel at Defense, who is very weak on Iran, not a friend of Israel (forget what his apologists say), and whose mission it will be to cut defense spending to the bone, as we did during the Carter years.

I met then Senator Hegel at a 2007 fundraiser at the NY Yacht Club when he was trying to decide whether to run for re-election or to enter the Presidential sweepstakes.  In the end, he did neither; the success of the Iraq surge, which he vehemently opposed, made it impossible for him to ever win a Republican primary.  I never found out what he did with the money he raised. Standard operating procedure is that campaign funds are kept in a campaign account even if the candidate opts out.  They are saved for some future race or contributed to candidates the recipient wants to support.  This always struck me as ethically questionable, but that's how it goes. Regardless, there are enough reasons based on policy to oppose the Hegel appointment.

Republican opposition is unlikely to defeat Mr.Hegel, but if Senator Schumer doesn't support him, he is toast.  Right now Schumer is on the fence.  This might be interesting to watch.
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In football, none of the teams we identified as "hot" made it to the final four, though Seattle was certainly noble in defeat.  Instead, two clearly superior teams (Pats and Falcons) made it in and two teams we identified as also elite but playing inconsistently (Niners and Ravens) got through.  In the end, football is a sport, unlike baseball, where even in a short series, the superior team is likely to prevail.  I expect the Super Bowl to be Pats - Niners, though neither is a lock. 

One mortal lock we identified was Alabama over ND.  In college, you weigh conferences, not just teams.  The Southeastern Conference is an NFL feeder system.  Notre Dame plays a notoriously uneven schedule, several strong teams and lots of teams that are barely Division 1.  If there was much Notre Dame money out there, even with 10 points, that's what I would call dumb money.  If these teams played 100 times, Alabama would win 95 and cover 90 times.
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As for the Hall of Fame balloting, the writers are having a tough time voting for steroid users, or even those suspected.  They sent a message to current players, which is if you want your statistics to be ratified, you better not cheat.  That's a good thing.

Eventually, the players that were really good enough will get in.  Piazza certainly, since he likely never used, but also Bonds, Clemens, Sosa, etc.  Maybe even Palmeiro whose numbers are plenty good enough.  But not McGuire, who was one dimensional.  The writers did well to consider that getting in the first time eligible is special, and no one who used should get that honor.
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I am in Orlando (again) so we'll do the stocks next time.  The equity markets continue to bubble, reflecting the inevitable inflation (worldwide) that is certain to come. 

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