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Monday, July 06, 2015

 

Greasing Greece's Fall

In several of our past posts (for example, June 13, 2011 - see the archives indexed alongside) , we have made the case that the way to both simplify and increase the fairness of our tax system would be to eliminate the entire calculation you do on 1040 and just have everyone fill out form 6251, the Alternative Minimum Tax (of course you would still have to do exhibit D if you have capital gains).  This would eliminate lower earning folks from the rolls and provide a flat tax with virtually no deductions for everyone else.  Since a growing number of Americans wind up paying the AMT anyway, the main effect of this change would be to eliminate the mind numbing calculations associated with having to compute your tax twice, before determining that the AMT is higher, therefore applicable.  The other positive effect is that it would increase taxpayers' understanding that their cherished deductions are mostly worth either little or nothing in the end, thereby ending the excruciating political ramifications of preserving them.

My voice had seemed to be a lone one in the wilderness concerning this simple and elegant solution until the WSJ on June 24 printed a letter from one Ed Kemmerling of Brighton, Michigan who made the same case.  It would be fun to contact him if I can, but in the meantime, thanks Ed, and yes, great minds do think alike.
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 The Greece 60+ percent majority for "no," meaning opposition to the EU's bailout conditions almost undoubtedly will lead to that country defaulting on its debt and ultimately the failure of its banks and the likely return of the drachma.  If the situation for Greeks is depressing now, it is soon to get much worse.  Following his victorious "No campaign," the leader of the government reached out to Vladimir Putin to see if he had a friend there.  Ever the opportunist, Mr. Putin's solution was that Greece should privatize its prime state properties for sale to Russia's state favored oligarchs.  But no loans.  And you thought Angela Merkel was a tough cookie.

Look, it's sad, but none of these phoney baloney statesmen learn from past sovereign defaults that it is really not the easy way out.  It's much worse to be unable to get any credit than to have to work out a payment plan that entails some sacrifice (or a little work ethic).  And it's not just Greece of course.  We've got several other deadbeats teed up for bankruptcy, including Argentina (again!), Puerto Rico, Venezuela, Illinois, and so on.  And don't think Uncle Sam is immune.  The mountain of debt amassed by the Obama Administration is only manageable because of the artificially low interest rates engineered by the Federal Reserve.  Once those rates move up, the line item of the budget called "interest on the national debt" will be a terrible burden.  For now, the Fed has the unenviable problem of figuring out how to unwind its balance sheet without driving interest rates or inflation (or both) through the roof and causing stagflation or recession similar to the Carter years.

The Euro's will do well not to let Greece off the hook.  Let them go under if they won't accept the austerity plan, and let that serve as a warning to Spain, Italy and Portugal.
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For your reading pleasure, I commend you to the thoughts of former Texas Governor Perry as printed in today's WSJ.  In an articulate piece we didn't think him capable of, he made a strong case for the GOP to pitch hard for the Afro-American vote, pointing out as we have that progressive policies had only hurt their cause and that Texas of all places had a better high school graduation rate and lower poverty rate among blacks than any of the progressive blue states.  As for fellow Republicans, Perry urged them to rediscover the 14th Amendment and not be quite so obsessed with the 10th Amendment. In short, reclaim its heritage as the Party of Lincoln.  Very good advice for the party and for the country.
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We keep getting mixed signals about whether this nuclear deal with Iran is going to happen, with most parties saying its close while Secretary Kerry tries gamely to rein in expectations.  Given the goofiness of the Cuban deal, it looks to me like the Administration will again be more about making a deal than getting a good one, or even an acceptable one.  For any semblance of an accurate assessment, depend on Israel.  Their government's take is that the proposed deal gets worse every day, as the U.S. agrees to make concession after concession.  It's going to take a long time to undue the damage done by this administration.
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The recently concluded Supreme Court term was a major disappointment to conservatives, who had let their hopes exceed realism.  Fortunately, many of the key decisions are irrelevant; some of the cases had already been decided in the court of public opinion and in the states (gay marriage) and others will in the end be superseded by economic realities (PPACA).  The Affordable Care Act is falling apart on its own, as premiums increase but fail to keep pace with worsening claim experience.  What would you expect when its main thrust was to expand an already failing program (Medicaid)?  As for choice, forget it.  The big health care companies are all merging, and why not? They are not really insurers, since there is no underwriting and no risk taking.  They are simply administrators acting as utilities and taking a share of the action as profit.  And utilities only work as monopolies.Trouble is, as the rest of the world is also experiencing, there is not enough money around to pay for the care everyone feels entitled to.  So that means care is rationed, quality is reduced, everyone pays more and gets less.  It is always this with socialism.

One actually bad decision with real world consequences was on disparate impact and the Fair Housing Act.  To understand why, I urge you to go to the SCOTUS website and read Kennedy's majority decision and especially Thomas' dissent and then make up your own mind as to which makes more sense.  By the way, I read a fair amount of these decisions and my opinion is, despite what you read in the liberal press, that Thomas is the most consistently thoughtful Justice.  And for those who think he is a Scalia clone, statistics show they do not agree as often as the liberal gang of four. My vote for worst Justice is easy, its Ginsberg in a walk followed by Kagan.  Their reasoning is strictly political, rarely taking the Constitution into consideration as far as I can tell..   
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Some loyal readers have asked that more of the blog be devoted to a recount of my own activities.  For the life of me, I am not sure why anyone would find that interesting, since you all have your own activities that interest you or presumably you would be doing something else (which begs the question of how I have any readers.  We'll leave deep philosophical questions like that for another day).  But I am willing to try, although I'm not going back more than a week.  Last Monday was a work day, and after a Doctor's appointment to check on my electrical system, I did commute to NYC.  The Mets not being scheduled, I was able to concentrate on my reading Monday night though I did review Sunday's game (the Matz debut) on tape.  And of course, put in my stock order for Tuesday.  Tuesday was a routine work day with 6 conference calls scheduled.  I guess I needed to unwind after the Mets lost to the Cubs because I decided to have a nightcap at the local Irish Pub.After work Wednesday (4 more conference calls), I hustled over to Birdland for the 5:30 show featuring the Louis Armstrong Eternity Band.  Great fun as always, though a little abbreviated by the last of the conference calls, idiotically scheduled for 7PM.  I did get home in time to see the Mets lose again.

After work and dinner (at home) Thursday, I stopped at Sunset Park in Sea Cliff to see the last half hour of a cover band's performance there, and that of course led me back to the pub, where I was entertained by the local celebrities until bed time.Since the Mets had already lost that afternoon, the object of interest in the pub was the televised victory by the Long Island Lizards of major league lacrosse (I am not kidding).  And someone thought this would be fun!?  Friday was an off day, and I had planned to play golf in the morning, then meet some friends for a drive to Farmingville, Long Island's Pennysaver Amphitheater to see a festival of country music stars, including Phil Hoge, Casey James (who played all rock) and headliner Lee Brice ("I Drive His Truck").  But we decided to get a head start on the Hampton's traffic so golf went by the boards.  We beat the traffic but not the 2 hour jam at the entrance to the parking lot, which seriously cut into our tailgating experience.  That was really annoying since I had taken the precaution of filling a cooler with Razzano's hero sandwiches and some delicious Saranac Pale Ale.  Nonetheless, the show was fine, and we skipped a couple of unknown preliminary acts in favor of tailgating.  A wise decision.And I got home in time to see the Mets eke out a win over the Dodgers!

Saturday was the 4th, and I did play golf  - my first competent round of the year, by the way.  Then it was off to pub owner Eddie's traditional barbecue and I could spend the rest of the blog describing the food and drink served there.  I got home in time to see the Mets rally and--lose.  But we were dog sitting for my daughter and that's fun.  Sunday was bridge at noon and my partner and I did will - a 57% game for those few who might know what that means.  A quick trip to the golf course had me on the first tee by 4:15 or so, another decent day though not as successful as Saturday's round.  All the while, I was getting texts from my fellow Mets fanatic updating me on the romp over the Dodgers to win the series.  I was home for dinner by 7:15 and settled in for some more reading and watching True Detective, completely forgetting to watch or tape the women's World Cup final (I forgot to mention that I had seen Tuesday's semifinal vs Germany, which was the real final).  So just another normal week for me, albeit a holiday weekend.

Unless I hear otherwise, I will assume no one wants me to repeat this feature.
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Still catching up on stock transactions:

Purchases
Date       Symbol    Shares        Price                Comment
5/1          MU         100          28.31      Full service broker reco     
5/4         TIP            20          113.96
5/7         GIFI         200           13.21  Tulane portfolio under energy stress
5/7         MU          100           27.80    Getting cheaper
5/12       PRH         100           24.95    
5/15       AA           200           13.567
5/20       MU          100           26.47    Still getting cheaper
5/20 PFG.PR.B.CL 100          25.44
5/27      RAVN       200           19.28    Value at this price
5/27        MU          100          27.43   Still building the position
6/1         GLD           20          115.02
6/3         GIFI          200           11.20
6/5         ONCS      400             6.30    Follows a 1-20 reverse split

Sales                                                   Date            Price     Comment  
                                                           Purchased
5/1        GNE    200          14.23        5/8/12        6.96 
5/4        SEIC     50           46.43       9/9/11         16.06     Nice company, almost a triple
5/12      GNE    200          13.90        2012            6.93
5/15      NEM   100          27.08       2/28/11         54.60    Ugh
5/18      GNE    200          12.10       6/19/12          6.90
5/18      TFX     25           127.97      6/16/06        51.20 
5/26      BG       25            90.88       12/17/12      72.15
5/29      GNE    200          12.50        11/20/12       6.01 
6/2        SF        50            54.80       12/10/07      22.05

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