8/29/11
The big sub-story on the Greek bailout (at least until this morning’s announcement of the merger of Alpha Bank SA and EFG Eurobank Egrasias SA) was the insistence on the part of Finland that the Greek government put up cash collateral for Finland’s portion of the new debt being extended as part of the latest iteration of the Greek bailout.
This call for collateral by the Finns is causing consternation among the countries contributing to the financial package that is supposed to save Greece, though no one really believes that end will be achieved. If Finland gets cash collateral, the thinking goes, why shouldn’t everyone get collateral? And if everyone gets cash collateral, so much more financing will be needed that the overall deal will fall apart.
So how will this issue be resolved? Some are speculating that physical, as opposed to cash, collateral will be offered for the bailout lending; real estate, gold, state owned industries, etc. would be put up to secure the loans Greece will receive from its EU brethren. But the problems involved in offering physical collateral are myriad. Will the Greeks be amenable to such a deal? Aren’t some of those assets to be put up to secure the loan supposed to be sold as part of the overall restructuring of the Greek fisc? (I don’t think the latter objection is a worthy one for reasons that could be grist for another post.) What exactly will the lenders do to seize collateral should the Greek government default? What consequences would ensue from such efforts? And on and on and on.
I can’t get inside the heads of the Finns who are asking for collateral. But if I were to guess, what the Finns are really after is to be excused from the whole deal. One of the lessons one can derive from restructuring negotiations is that creditors can get more than they are legally entitled to if they make themselves a sufficiently large nuisance. While the analogy is not perfect, it looks to me like the Finns are making themselves a nuisance in order to get out of the Greek bailout deal. While Finland is among the most financially responsible countries in the Eurozone, the EU, and the world, for that matter (See my 4/14/11 post, “…’CAUSE I DON’T HAVE A WOODEN HEART…”), it is a small country that, due to its diminutive size, is expected to contribute only a miniscule portion of the lending facilities necessary, supposedly, to keep Greece afloat. Finland’s portion could easily be covered by, say, Germany or France. So the big countries in Europe may see it in their interest to just excuse Finland from any obligation to help bail out Greece rather than accommodate Finnish demands for cash collateral. Such an excusal, if that is a word, I am guessing, is exactly what Finland is seeking.
Sure, a move by Germany or France to pick up Finland’s tab for the Greek bailout would set a very bad precedent, but what action that the European Union has taken in response to the problems in Ireland, Greece, Portugal, et. al. hasn’t set a very bad precedent?
Monday, August 29, 2011
BETTING ON BEN?
8/29/11
Today’s (i.e., Monday, 8/29’s, page C1) Wall Street Journal contained an article that, while not living up to the billing of its headline, “Fed Faces Old Foe As Hazard Returns,” nonetheless contained some compelling observations and a few piquant facts.
One of those observations was made by Richard Weiss, senior portfolio manager for asset allocation at American Century Investments in Kansas City. Mr. Weiss, according to the article, is continuing to invest in growth stocks because, in his words
“One of the Fed’s mandates is to avoid a recession at all cost, and we fully expect them to use all their tools to do so.”
Mr. Weiss is largely right in his observation on the Fed’s mandates. Before 1978, the Fed’s sole mandate, at least concerning its management of monetary policy, was to rein in inflation. But in 1978, with the passage of Full Employment and Balanced Growth Act, better known as Humphrey-Hawkins, after its chief sponsors and presumed authors, the Fed’s mandate changed to a dual role of both containing inflation and assuring full employment. Unfortunately, neither Congress nor President Carter handed the Fed a magic wand along with this mandate, but I digress. So, indeed, as Mr. Weiss said, one of the Fed’s mandates is to avoid recession. I probably would not have used the words “at all cost,” but Mr. Weiss is largely right in that contention.
Mr. Weiss may also be right in the conclusion he draws from his observation; i.e., to buy growth stocks that, as the Journal puts it, “benefit from stable economic growth.” (I wonder whether Mr. Weiss’s, and American Century’s, decision to buy growth stocks has more to do with the nature of American Century as a growth shop than with any notions about the market at any given time, but, again, I digress. At least I do so parenthetically in this instance.) But I doubt it.
If the Fed uses all the tools at its disposal to avoid recession, and it certainly has so far, there are three possible outcomes:
--The Fed succeeds in avoiding recession and does so with such a degree of aplomb that it also avoids igniting inflation and debasing the currency.
--The Fed succeeds in avoiding recession but, in the process, ignites inflation and debases the currency, making its “victory” largely an ephemeral one.
--The Fed fails miserably at avoiding recession and ignites inflation and debases the currency as a result of those ill-fated efforts, leading us into a dystopic bout of stagflation.
In order to buy growth stocks based on the Fed’s efforts, one would obviously have to assign a higher degree of probability to the first possible outcome than to the other two put together, though one could see how growth stocks could do well, at least in the short run, under the second above scenario. As loyal readers might guess, I would assign the highest degree of probability to the third scenario, followed by the second scenario, and trailed at an eyesight challenging distance by the first scenario. Therefore, I won’t be buying growth stocks any time in the near future. But one does not have to have as bleak a view of the current Fed, or of life in general, as yours truly to avoid growth stocks at this juncture. One only has to assign equal probabilities to the above three scenarios; two out of three would thus carry and dissuade an investor from investing heavily in growth stocks.
Fighting the Fed is rarely advisable; doubting the ability of the Fed is often advisable, especially when we are dealing with Obsequious Ben Bernanke’s Fed.
Today’s (i.e., Monday, 8/29’s, page C1) Wall Street Journal contained an article that, while not living up to the billing of its headline, “Fed Faces Old Foe As Hazard Returns,” nonetheless contained some compelling observations and a few piquant facts.
One of those observations was made by Richard Weiss, senior portfolio manager for asset allocation at American Century Investments in Kansas City. Mr. Weiss, according to the article, is continuing to invest in growth stocks because, in his words
“One of the Fed’s mandates is to avoid a recession at all cost, and we fully expect them to use all their tools to do so.”
Mr. Weiss is largely right in his observation on the Fed’s mandates. Before 1978, the Fed’s sole mandate, at least concerning its management of monetary policy, was to rein in inflation. But in 1978, with the passage of Full Employment and Balanced Growth Act, better known as Humphrey-Hawkins, after its chief sponsors and presumed authors, the Fed’s mandate changed to a dual role of both containing inflation and assuring full employment. Unfortunately, neither Congress nor President Carter handed the Fed a magic wand along with this mandate, but I digress. So, indeed, as Mr. Weiss said, one of the Fed’s mandates is to avoid recession. I probably would not have used the words “at all cost,” but Mr. Weiss is largely right in that contention.
Mr. Weiss may also be right in the conclusion he draws from his observation; i.e., to buy growth stocks that, as the Journal puts it, “benefit from stable economic growth.” (I wonder whether Mr. Weiss’s, and American Century’s, decision to buy growth stocks has more to do with the nature of American Century as a growth shop than with any notions about the market at any given time, but, again, I digress. At least I do so parenthetically in this instance.) But I doubt it.
If the Fed uses all the tools at its disposal to avoid recession, and it certainly has so far, there are three possible outcomes:
--The Fed succeeds in avoiding recession and does so with such a degree of aplomb that it also avoids igniting inflation and debasing the currency.
--The Fed succeeds in avoiding recession but, in the process, ignites inflation and debases the currency, making its “victory” largely an ephemeral one.
--The Fed fails miserably at avoiding recession and ignites inflation and debases the currency as a result of those ill-fated efforts, leading us into a dystopic bout of stagflation.
In order to buy growth stocks based on the Fed’s efforts, one would obviously have to assign a higher degree of probability to the first possible outcome than to the other two put together, though one could see how growth stocks could do well, at least in the short run, under the second above scenario. As loyal readers might guess, I would assign the highest degree of probability to the third scenario, followed by the second scenario, and trailed at an eyesight challenging distance by the first scenario. Therefore, I won’t be buying growth stocks any time in the near future. But one does not have to have as bleak a view of the current Fed, or of life in general, as yours truly to avoid growth stocks at this juncture. One only has to assign equal probabilities to the above three scenarios; two out of three would thus carry and dissuade an investor from investing heavily in growth stocks.
Fighting the Fed is rarely advisable; doubting the ability of the Fed is often advisable, especially when we are dealing with Obsequious Ben Bernanke’s Fed.
Saturday, August 27, 2011
I OWE, I OWE, SO OFF TO WORK I GO…
8/27/11
An article in this morning’s (Saturday/Sunday, 8/27-8/28/11, page A5) Wall Street Journal entitled “Tug of War on Timing for Belt-Tightening” prompted me to write a post (this one) that I have been contemplating for a long time.
The article outlines the now long running argument between what the Journal refers to as liberals and conservatives, though that breakdown is not as clear cut for this issue as it might be for others, regarding the advisability of what passes for fiscal austerity at this time. The “liberals” (Keynesians, really, and despite the largely undeserved derision that Lord Keynes and his acolytes have received from the right for the last 35 or so years, the two terms are not necessarily interchangeable) argue that, with the economy still shaky, this is not the time to cut spending and raise taxes. The “conservatives” argue that fiscal austerity is needed because what is holding back the economy is uncertainty about what Washington is up to and fear that the pols will spend us into oblivion, necessitating a future tax increase that is subtly entering into the calculations of businesses and individuals. Some in the latter camp are also arguing for “real” tax cuts, i.e., cuts in marginal tax rates as opposed to what they consider tinkering with the tax code, such as payroll tax holidays and the like. Mostly, however, what the Journal refers to as the conservative camp is pushing for Washington to get is spending under control.
While, as you might guess, yours truly is far more sympathetic with the latter argument than the former, neither fiscal austerity nor what passes for fiscal prudence nowadays will have much impact on our miserable economy. Why? In times of heavy indebtedness, such as those we are experiencing today, the traditional tools of fiscal, and even monetary policy, do not work well, if at all. Any money received from stimulative policy is either used to pay down gargantuan debt levels (individuals) or horded because of lack of overall confidence (individuals and businesses). Any confidence engendered by a demonstration of a determination by our public servants to follow a path of fiscal virtue (as if such a thing could ever happen, but I digress) will be more than offset by fear for one’s personal finances when one is confronted by the realities of a mountain of debt built up due to a sense of entitlement to a lifestyle that was clearly unsustainable.
You have heard the arguments outlined in the last paragraph; they are neither insightful nor fresh. But I would take it a step further into the realm of the real economy. Not only will the fruits of fiscal stimulus, or the engenderment (if that’s a word) of new confidence be blunted by a mountain of debt, but any actual increase in output, rather than funny money created by our ever wise “policymakers,” will have to be dedicated to the reduction of debt. We simply lived way over our heads for the last twenty or so years and now have to face the music. We can’t enjoy the fruits of our labor; instead, our creditors will, of necessity, enjoy those fruits. Despite the earnest efforts of Obsequious Ben Bernanke and the Washingtonians to punish savers by keeping interest rates as low as possible, this ultimate transfer of wealth is a fact of life that cannot be avoided, nor should it be.
Not only did we go through the seed corn over the last twenty or so years, we borrowed even more to finance a lifestyle to which we thought we were somehow entitled. Now we have to pay back the debt and, if we are to survive as a society, begin rebuilding the seed corn. Though these efforts probably, the latter almost certainly, will prove ineffectual, even the feint at such efforts we will make will render the traditional tools of economic management largely ineffectual. Recovery, if it ever comes, will be a long, hard slog. More importantly, what will prove to be the ultimate futility of our efforts to get our personal and public fiscal houses in order will demonstrate that we are doomed as an economic going concern and probably as a society.
Market watchers, some very smart and some not so smart, have long argued, with some historical justification, that the time to buy stocks is when things look bleakest. If I really believed that, I would be backing up the truck on stocks and would borrow money to buy more. But I’m not going to do that. This time, I fear, things really are different, though those are very dangerous words.
An article in this morning’s (Saturday/Sunday, 8/27-8/28/11, page A5) Wall Street Journal entitled “Tug of War on Timing for Belt-Tightening” prompted me to write a post (this one) that I have been contemplating for a long time.
The article outlines the now long running argument between what the Journal refers to as liberals and conservatives, though that breakdown is not as clear cut for this issue as it might be for others, regarding the advisability of what passes for fiscal austerity at this time. The “liberals” (Keynesians, really, and despite the largely undeserved derision that Lord Keynes and his acolytes have received from the right for the last 35 or so years, the two terms are not necessarily interchangeable) argue that, with the economy still shaky, this is not the time to cut spending and raise taxes. The “conservatives” argue that fiscal austerity is needed because what is holding back the economy is uncertainty about what Washington is up to and fear that the pols will spend us into oblivion, necessitating a future tax increase that is subtly entering into the calculations of businesses and individuals. Some in the latter camp are also arguing for “real” tax cuts, i.e., cuts in marginal tax rates as opposed to what they consider tinkering with the tax code, such as payroll tax holidays and the like. Mostly, however, what the Journal refers to as the conservative camp is pushing for Washington to get is spending under control.
While, as you might guess, yours truly is far more sympathetic with the latter argument than the former, neither fiscal austerity nor what passes for fiscal prudence nowadays will have much impact on our miserable economy. Why? In times of heavy indebtedness, such as those we are experiencing today, the traditional tools of fiscal, and even monetary policy, do not work well, if at all. Any money received from stimulative policy is either used to pay down gargantuan debt levels (individuals) or horded because of lack of overall confidence (individuals and businesses). Any confidence engendered by a demonstration of a determination by our public servants to follow a path of fiscal virtue (as if such a thing could ever happen, but I digress) will be more than offset by fear for one’s personal finances when one is confronted by the realities of a mountain of debt built up due to a sense of entitlement to a lifestyle that was clearly unsustainable.
You have heard the arguments outlined in the last paragraph; they are neither insightful nor fresh. But I would take it a step further into the realm of the real economy. Not only will the fruits of fiscal stimulus, or the engenderment (if that’s a word) of new confidence be blunted by a mountain of debt, but any actual increase in output, rather than funny money created by our ever wise “policymakers,” will have to be dedicated to the reduction of debt. We simply lived way over our heads for the last twenty or so years and now have to face the music. We can’t enjoy the fruits of our labor; instead, our creditors will, of necessity, enjoy those fruits. Despite the earnest efforts of Obsequious Ben Bernanke and the Washingtonians to punish savers by keeping interest rates as low as possible, this ultimate transfer of wealth is a fact of life that cannot be avoided, nor should it be.
Not only did we go through the seed corn over the last twenty or so years, we borrowed even more to finance a lifestyle to which we thought we were somehow entitled. Now we have to pay back the debt and, if we are to survive as a society, begin rebuilding the seed corn. Though these efforts probably, the latter almost certainly, will prove ineffectual, even the feint at such efforts we will make will render the traditional tools of economic management largely ineffectual. Recovery, if it ever comes, will be a long, hard slog. More importantly, what will prove to be the ultimate futility of our efforts to get our personal and public fiscal houses in order will demonstrate that we are doomed as an economic going concern and probably as a society.
Market watchers, some very smart and some not so smart, have long argued, with some historical justification, that the time to buy stocks is when things look bleakest. If I really believed that, I would be backing up the truck on stocks and would borrow money to buy more. But I’m not going to do that. This time, I fear, things really are different, though those are very dangerous words.
Thursday, August 25, 2011
“…JUST ENOUGH TO WET MY BEAK…”
8/25/11
One of the justifications the Illinois Tollway board used for its 87.5% (!) increase in tolls is that, even after the increase, tolls in Illinois will be in the bottom third in the nation on a per mile basis.
One would think that having among the lowest tolls in the nation would be a point of pride and a useful, albeit limited, tool for attracting and retaining business and would be especially salient given our position as one of the nation’s key transportation hubs. Apparently, though, only the average voter or the typical businessman, the people who pay the bills, sees low tolls as an advantage and a selling point. The politicians see our being one of the most lightly tolled states as an opportunity to further wet their already drenched beaks; after all, the relatively low costs of traversing our area’s tollways is one of the few areas in which our politicians are not keeping up with their out of state brethren in reaching deeper into the citizenry’s pockets.
One of the justifications the Illinois Tollway board used for its 87.5% (!) increase in tolls is that, even after the increase, tolls in Illinois will be in the bottom third in the nation on a per mile basis.
One would think that having among the lowest tolls in the nation would be a point of pride and a useful, albeit limited, tool for attracting and retaining business and would be especially salient given our position as one of the nation’s key transportation hubs. Apparently, though, only the average voter or the typical businessman, the people who pay the bills, sees low tolls as an advantage and a selling point. The politicians see our being one of the most lightly tolled states as an opportunity to further wet their already drenched beaks; after all, the relatively low costs of traversing our area’s tollways is one of the few areas in which our politicians are not keeping up with their out of state brethren in reaching deeper into the citizenry’s pockets.
Wednesday, August 24, 2011
ME AND THE GODFATHER OF SOUL, HARDEST WORKING MAN IN SHOW BUSINESS, SOUL BROTHER #1, MR. DYNAMITE…
8/24/11
Knowing that I am a long time bull on gold, several people have asked how I feel about that ancient object of kingly desire now that the December future has fallen $113.30, or 7% from its $1898.40 high of just two days ago.
I still like gold for the reasons I’ve liked it since June, 2006: it is a bet against the political and monetary leadership of this country, the world, and the world economy. Gold is also a bet that the only way we can get ourselves out of the debt hole into which we have dug ourselves, all the while reassuring each other that what we had (have) was (is) a “housing problem” or a “sub-prime mortgage problem,” is to inflate, inflate, inflate. The more than tripling of the price of gold since I took my position has done nothing to remove the bullish rationale for holding it; in fact, developments since mid-2006 have only reinforced the notion that our country, and the world economy, is in the hands of poseurs and pompous, poltroonish popinjays.
But doesn’t a drop in gold, like the hair-raising plummet we have just witnessed, make me nervous? Maybe a little, but not enough to make me want to sell. Why?
First, I’m not smart enough to know what a commodity or a market will do over the course of a few days, weeks, or months. (Twenty years ago, of course, I was smart enough to know what a market would do over such short time periods, but, like most people, I seem to have gotten dumber with age. But I digress.) But I do know that nothing goes up in a straight line, so something like what we have seen was to be expected after the sharp run-up in gold over the last few weeks. I wouldn’t be surprised to see it fall further over the short run, and would be at least equally unamazed were gold to turn up again in the next few days.
Second, every time something like this has happened since I took my position in gold, I have been delighted when I resisted the temptation to get out. Yes, I could have gotten out and gotten back in again, but, again, I’m not that smart and maybe I’m a little lazy; it’s easier just to stay put.
Third, commentators were quick to proclaim that today’s drop was the largest since March, 2008. Suppose you were a gold holder in March, 2008, as was yours truly, and you panicked in the wake of a drop in gold similar to the one we saw today and got out. Or suppose that you were contemplating getting into gold during March, 2008 and decided, in the wake of its defenestration that month, that the rally had run its course and the best course was to stay out of gold and buy good old common stocks. How would you feel? On 3/31/08, gold was at $921.30. At its peak on St. Patrick’s Day of 2008, gold was at $1004. It closed after today’s debacle at $1,765.10. You tell me how you’d feel if you sold or postponed plans to get in, perhaps waiting for gold to fall a little more.
For my part, I feel good for having stayed long gold these last few years and am confident that I will feel equally good being equally long the next few years.
Knowing that I am a long time bull on gold, several people have asked how I feel about that ancient object of kingly desire now that the December future has fallen $113.30, or 7% from its $1898.40 high of just two days ago.
I still like gold for the reasons I’ve liked it since June, 2006: it is a bet against the political and monetary leadership of this country, the world, and the world economy. Gold is also a bet that the only way we can get ourselves out of the debt hole into which we have dug ourselves, all the while reassuring each other that what we had (have) was (is) a “housing problem” or a “sub-prime mortgage problem,” is to inflate, inflate, inflate. The more than tripling of the price of gold since I took my position has done nothing to remove the bullish rationale for holding it; in fact, developments since mid-2006 have only reinforced the notion that our country, and the world economy, is in the hands of poseurs and pompous, poltroonish popinjays.
But doesn’t a drop in gold, like the hair-raising plummet we have just witnessed, make me nervous? Maybe a little, but not enough to make me want to sell. Why?
First, I’m not smart enough to know what a commodity or a market will do over the course of a few days, weeks, or months. (Twenty years ago, of course, I was smart enough to know what a market would do over such short time periods, but, like most people, I seem to have gotten dumber with age. But I digress.) But I do know that nothing goes up in a straight line, so something like what we have seen was to be expected after the sharp run-up in gold over the last few weeks. I wouldn’t be surprised to see it fall further over the short run, and would be at least equally unamazed were gold to turn up again in the next few days.
Second, every time something like this has happened since I took my position in gold, I have been delighted when I resisted the temptation to get out. Yes, I could have gotten out and gotten back in again, but, again, I’m not that smart and maybe I’m a little lazy; it’s easier just to stay put.
Third, commentators were quick to proclaim that today’s drop was the largest since March, 2008. Suppose you were a gold holder in March, 2008, as was yours truly, and you panicked in the wake of a drop in gold similar to the one we saw today and got out. Or suppose that you were contemplating getting into gold during March, 2008 and decided, in the wake of its defenestration that month, that the rally had run its course and the best course was to stay out of gold and buy good old common stocks. How would you feel? On 3/31/08, gold was at $921.30. At its peak on St. Patrick’s Day of 2008, gold was at $1004. It closed after today’s debacle at $1,765.10. You tell me how you’d feel if you sold or postponed plans to get in, perhaps waiting for gold to fall a little more.
For my part, I feel good for having stayed long gold these last few years and am confident that I will feel equally good being equally long the next few years.
AS LONG AS YOU’RE PAYING, I’LL HAVE THE LOBSTER!
8/24/11
While mowing my lawn this morning and listening to WBBM Newsradio 78, I was treated to a seemingly mournful report from the Commonwealth Foundation that some people had (Horrors!) skipped an appointment with a doctor or stopped using a prescription drug because they had lost their jobs, and the health insurance that, under our goofy system, goes with it and couldn’t afford the insurance afforded them by the COBRA law. The Commonwealth Foundation’s preferred, indeed, demanded, response to these travails was to continue the subsidy for COBRA that was formerly provided as part of the Bush/Obama administration’s stimulus package.
We are, of course, supposed to wail and gnash our teeth that people are missing doctor’s appointments and/or not taking medication and call our congresspersons demand that subsidization of COBRA be immediately reinstated, perhaps when we are taking a break from demanding that “entitlements be reigned in.” (See one of today’s other posts, I’M ENTITLED TO MY ENTITLEMENTS.) But clear thinking people with even a rudimentary understanding of economics (I know, I know…only about 300 or so people in this country.) are applauding most of the instances in which people are finally missing doctor’s appointments and not taking their medication. Perhaps we are starting to dispense with the billions upon billions of dollars of unnecessary “health care” spending that takes place in this country every year.
How dare I say that so much of our “health care” spending is unnecessary when I have NO medical background? Simply because I understand economics and human nature, which are, after all, the same thing. So much health care spending is unnecessary because people feel free to dispense with it when they have to pay for it themselves. They will take it, or even “demand” it as “vital” when someone else (the insurance company, their employer, the government) is paying for it, but suddenly can do without that doctor visit or that prescription when they must pay for it, and give up, say a meal at a fancy restaurant, yet another flat screen TV, or a few weeks of Starbuck’s, in order to go for this all-important examination or some “life saving” or “life enhancing” drug.
The reason that health care is so expensive is not because doctors or hospitals or nurses are overpaid, which seems to be the underlying assumption behind the Bush/Obama administration’s all purpose solution to every budget/health care spending problem: stiff the health care providers. Health care is so expensive because those who consume it are not the same people as those who pay for it. When anything is free, or near free, demand is infinite, or near infinite. It is, therefore, heartening to see people who use “health care” services have a little skin in the game. They, and we, will doubtless spend our “health care” dollars more wisely when more of them are indeed our dollars.
While mowing my lawn this morning and listening to WBBM Newsradio 78, I was treated to a seemingly mournful report from the Commonwealth Foundation that some people had (Horrors!) skipped an appointment with a doctor or stopped using a prescription drug because they had lost their jobs, and the health insurance that, under our goofy system, goes with it and couldn’t afford the insurance afforded them by the COBRA law. The Commonwealth Foundation’s preferred, indeed, demanded, response to these travails was to continue the subsidy for COBRA that was formerly provided as part of the Bush/Obama administration’s stimulus package.
We are, of course, supposed to wail and gnash our teeth that people are missing doctor’s appointments and/or not taking medication and call our congresspersons demand that subsidization of COBRA be immediately reinstated, perhaps when we are taking a break from demanding that “entitlements be reigned in.” (See one of today’s other posts, I’M ENTITLED TO MY ENTITLEMENTS.) But clear thinking people with even a rudimentary understanding of economics (I know, I know…only about 300 or so people in this country.) are applauding most of the instances in which people are finally missing doctor’s appointments and not taking their medication. Perhaps we are starting to dispense with the billions upon billions of dollars of unnecessary “health care” spending that takes place in this country every year.
How dare I say that so much of our “health care” spending is unnecessary when I have NO medical background? Simply because I understand economics and human nature, which are, after all, the same thing. So much health care spending is unnecessary because people feel free to dispense with it when they have to pay for it themselves. They will take it, or even “demand” it as “vital” when someone else (the insurance company, their employer, the government) is paying for it, but suddenly can do without that doctor visit or that prescription when they must pay for it, and give up, say a meal at a fancy restaurant, yet another flat screen TV, or a few weeks of Starbuck’s, in order to go for this all-important examination or some “life saving” or “life enhancing” drug.
The reason that health care is so expensive is not because doctors or hospitals or nurses are overpaid, which seems to be the underlying assumption behind the Bush/Obama administration’s all purpose solution to every budget/health care spending problem: stiff the health care providers. Health care is so expensive because those who consume it are not the same people as those who pay for it. When anything is free, or near free, demand is infinite, or near infinite. It is, therefore, heartening to see people who use “health care” services have a little skin in the game. They, and we, will doubtless spend our “health care” dollars more wisely when more of them are indeed our dollars.
“EGAD…IT’S LON CHANEY, JR.!”
8/24/11
In the wake of yesterday’s temblor on the east coast, the news media went about their seemingly appointed task of making everyone think the apocalypse was nigh when what New Yorkers, Philadelphians, and Washingtonians were experiencing would not even be noticed, say, on the west coast or in Japan. But I am digressing before even making a point.
Many of the people who had microphones thrust into their faces yesterday had the same comment, something like
“I thought it was terrorists!”
My first thought, after hearing these panicked reactions, was that the government has indeed done its job well.
Ever growing, ever demanding government is in search of food and fuel to sustain its growth. Given that today’s citizenry has at the very best a passing familiarity with the Constitution but a well honed sense of fear and dread, the government needs a bogeyman, always, to break down resistance to or, increasingly, elicit full-throated support for, assaults on liberty and an ever expanding “defense” budget in the interest of “keeping us safe." As I said in my instantly seminal 5/4/11 piece, MY (SO FAR) TWO CENTS ON BIN LADEN’S LONG DELAYED DEMISE, if Osama bin Laden never existed, the government would have had to invent him. “Terrorists” have served this government purpose well since the Soviet Union was crushed under the weight of the inherent stupidity of its philosophical basis; now the government has us crying “terrorism” every time anything bad happens. Thank you, Department of Homeland Security.
One more note…
Judging from the Wall Street Journal’s editorial page of late and the e-mails I have been getting over the last few months (I, like many of you, am on the mailing list of legions of true believers on both sides of the political spectrum, but mostly from the side composed of those who consider Rush Limbaugh to be the result of an illicit union between George Washington and Margaret Thatcher, or perhaps Joan of Arc, were she not French. Time periods, and other complications of history, are of little consequence to such types.), the next time we get another earthquake, tornado, tidal wave, tsunami, sink hole, or bout of road construction, those in whose faces the media types will thrust microphones will blurt out
“I thought it was the Chinese!”
Mark my words.
In the wake of yesterday’s temblor on the east coast, the news media went about their seemingly appointed task of making everyone think the apocalypse was nigh when what New Yorkers, Philadelphians, and Washingtonians were experiencing would not even be noticed, say, on the west coast or in Japan. But I am digressing before even making a point.
Many of the people who had microphones thrust into their faces yesterday had the same comment, something like
“I thought it was terrorists!”
My first thought, after hearing these panicked reactions, was that the government has indeed done its job well.
Ever growing, ever demanding government is in search of food and fuel to sustain its growth. Given that today’s citizenry has at the very best a passing familiarity with the Constitution but a well honed sense of fear and dread, the government needs a bogeyman, always, to break down resistance to or, increasingly, elicit full-throated support for, assaults on liberty and an ever expanding “defense” budget in the interest of “keeping us safe." As I said in my instantly seminal 5/4/11 piece, MY (SO FAR) TWO CENTS ON BIN LADEN’S LONG DELAYED DEMISE, if Osama bin Laden never existed, the government would have had to invent him. “Terrorists” have served this government purpose well since the Soviet Union was crushed under the weight of the inherent stupidity of its philosophical basis; now the government has us crying “terrorism” every time anything bad happens. Thank you, Department of Homeland Security.
One more note…
Judging from the Wall Street Journal’s editorial page of late and the e-mails I have been getting over the last few months (I, like many of you, am on the mailing list of legions of true believers on both sides of the political spectrum, but mostly from the side composed of those who consider Rush Limbaugh to be the result of an illicit union between George Washington and Margaret Thatcher, or perhaps Joan of Arc, were she not French. Time periods, and other complications of history, are of little consequence to such types.), the next time we get another earthquake, tornado, tidal wave, tsunami, sink hole, or bout of road construction, those in whose faces the media types will thrust microphones will blurt out
“I thought it was the Chinese!”
Mark my words.
I’M ENTITLED TO MY ENTITLEMENTS
8/24/10
As we drove our oldest daughter to Hawkeyeland for her freshman year of college last week, we listened for part of the trip to Mike McConnell on WGN 720 Chicago. Mike has a pretty good show a good part of the time, though his topics have an increasing tendency to wander into the banality and outright silliness that plagues talk radio when it tries to transcend its traditional political junky audience. For example, one of today’s topics, as I cut the lawn, was “What really makes you shiver?” The conversation centered around such things as scraping a blackboard with one’s nails, taking the cotton out of aspirin bottles, and biting into the surface of a peach. Who has time for such nonsense? I quickly went back to WBBM Newsradio 78 rather than numb my brain with such idiocy. But, having said that, Mike McConnell, when he stays on serious, or even quasi-serious, topics has a good program. But I digress.
Last week, the discussion on Mike’s program centered on entitlements and attacking the federal deficit. One of the callers opined that she felt very strongly about cutting entitlements, that, indeed, we had to cut entitlements if we were ever to get spending under control. She said that she had gone so far as to call Senator Durbin to express her earnest desire that he do something about entitlements. (Talk about a useless exercise, but I digress again.) With the next sentence, this caller expressed her dismay that her mother, who was in her ‘80s, had to pay a co-pay for her prescription medication. Why, she lamented, couldn’t Medicare pick up the entire cost of the prescription?
McConnell said nothing; he is too nice a guy, I suspect. But one got the distinct impression that he was as dumbfounded by this caller’s comments as was I.
This caller’s comments encapsulate two of the reasons that any effort to get our spending and our budget under control no matter who sits in Congress or in the White House. First, even, or perhaps especially, the most ardent foes of “entitlements” have little idea of what an entitlement is. The words “entitlement” and “welfare” are not synonyms.
Second, the only consensus we have achieved, or ever will achieve, on entitlements is that it is a fine idea to cut the OTHER guy’s entitlements. We have, after all, earned OUR entitlements (There might, by the way, be something to that argument in many cases.), which are somehow never called “entitlements,” and OUR entitlements are completely meritorious and beneficial to society while the OTHER guy’s entitlements just make him a lazy lout and tear at the very fabric of society.
We are, ladies and gentlemen, doomed.
As we drove our oldest daughter to Hawkeyeland for her freshman year of college last week, we listened for part of the trip to Mike McConnell on WGN 720 Chicago. Mike has a pretty good show a good part of the time, though his topics have an increasing tendency to wander into the banality and outright silliness that plagues talk radio when it tries to transcend its traditional political junky audience. For example, one of today’s topics, as I cut the lawn, was “What really makes you shiver?” The conversation centered around such things as scraping a blackboard with one’s nails, taking the cotton out of aspirin bottles, and biting into the surface of a peach. Who has time for such nonsense? I quickly went back to WBBM Newsradio 78 rather than numb my brain with such idiocy. But, having said that, Mike McConnell, when he stays on serious, or even quasi-serious, topics has a good program. But I digress.
Last week, the discussion on Mike’s program centered on entitlements and attacking the federal deficit. One of the callers opined that she felt very strongly about cutting entitlements, that, indeed, we had to cut entitlements if we were ever to get spending under control. She said that she had gone so far as to call Senator Durbin to express her earnest desire that he do something about entitlements. (Talk about a useless exercise, but I digress again.) With the next sentence, this caller expressed her dismay that her mother, who was in her ‘80s, had to pay a co-pay for her prescription medication. Why, she lamented, couldn’t Medicare pick up the entire cost of the prescription?
McConnell said nothing; he is too nice a guy, I suspect. But one got the distinct impression that he was as dumbfounded by this caller’s comments as was I.
This caller’s comments encapsulate two of the reasons that any effort to get our spending and our budget under control no matter who sits in Congress or in the White House. First, even, or perhaps especially, the most ardent foes of “entitlements” have little idea of what an entitlement is. The words “entitlement” and “welfare” are not synonyms.
Second, the only consensus we have achieved, or ever will achieve, on entitlements is that it is a fine idea to cut the OTHER guy’s entitlements. We have, after all, earned OUR entitlements (There might, by the way, be something to that argument in many cases.), which are somehow never called “entitlements,” and OUR entitlements are completely meritorious and beneficial to society while the OTHER guy’s entitlements just make him a lazy lout and tear at the very fabric of society.
We are, ladies and gentlemen, doomed.
Monday, August 22, 2011
MORE LIKE THE WHOLE ICEBERG FOR YOURS TRULY
8/22/11
One must always take Wharton Finance Professor Jeremy Siegel with a grain of salt, and not only because he teaches at an Ivy League institution; while Dr. Siegel is doubtless an insightful and attentive observer of the markets, he often lets his enthusiasm supersede his good judgment, even more often than yours truly lets his natural pessimism supersede his good judgment. Having established that caveat, I quickly add that I read Dr. Siegel’s work whenever I happen upon it in some business publication and turn on the volume when Dr. Siegel appears on CNBC; he always has something interesting to say and I always learn something when he opines.
This morning’s Wall Street Journal (Monday, 8/22, page A13) op-ed piece that Dr. Siegel co-authored with Jeremy Schwartz of Wisdom Tree is no exception. In it, the authors make a compelling case for stocks that pay relatively big and growing dividends, a case into which I am starting to buy into…sort of. To the extent I want to be in stocks (limited over the last ten or so years), I would like to be in the stocks of companies that consistently pay large and growing dividends. Right now, my hesitancy to be in stocks, and my long time preference for index funds, which don’t fit all that nicely into such a strategy, are superseding my preference for a dividend growth strategy. But I am reorienting the few stocks in my portfolios toward dividend payers and, should the day ever come when I have enough confidence in the world economy to be in stocks in a larger way, I will earnestly explore a major commitment to a dividend growth strategy. This may have something to do with my rapidly advancing age, but it has more to do with something I tell my Finance and Investments students, to wit, while, as a guy with something of an accounting background, I can show you myriad ways to fake net income, you can’t fake dividends, or certainly cannot fake dividends for long; you simply have to generate cash to pay dividends, and have to increase cash flow consistently to regularly increase those dividends. Further, cash dividends are innately quite satisfying; who doesn’t like cash?
So while I liked the overall thrust of Dr. Siegel’s latest Journal article, I take issue with the large section of that article in which he also gets in line to bash Treasury Inflation Protected Securities (“TIPS”). In it, he says that
“…recent (TIPS) should be enshrined in Ripley’s “Believe it or Not!”
citing the fact that the yield on 10 year TIPS turned negative (by one basis point) last Friday. Dr. Siegel marvels that people are willing to lend the government money for 10 years with no real yield for ten years. Why should this be so curious when TIPS are perhaps the safest investment out there (other than T-bills, with a 0% nominal yield and therefore a negative CPI real yield) that provides any inflation protection at all? Further, if the increase in the CPI averages more than 2.10% over the next ten years, the real yield on the conventional 10 year will be negative as well, and people are figuratively tearing conventional 10 years out of other people’s hands.
These arguments for TIPS, however, are probably not a good counter to Dr. Siegel’s objections to TIPS, however, simply because Dr. Siegel would not advise buying conventional treasuries, either; after all, he is perhaps the stock market’s most enthusiastic, or at least its most articulate, disciple. But the basis of Dr. Siegel’s, and countless others’, latest harangue against TIPS is the aforementioned negative real yield on the 10 year TIPS. Surely, however, Dr. Siegel knows, and others who so eagerly cite the negative one bp yield on the ten year TIP know, that the real yield on the 5 year TIP has been negative since last Fall; on 9/30/10, the 10 year TIP was yielding negative 14 basis points. That did not stop the yield on the 10 year TIP from falling from 69 basis points on that day to its negative 1 bp yield today, and not in a straight line. The yield on the five year TIP is currently at an all time low of negative 89 basis points. If people are willing to lend their money to the government at a negative real yield for five years in exchange for inflation protection, why should it be so strange, and such an inflection point for the market, if they suddenly are willing to lend the government money for ten years at a (barely) negative real yield?
Yes, the 5 year TIP market is not as large or as liquid as the 10 year TIP market, but the 10 year TIP market is no bastion of liquidity itself. And to admit that the 5 year TIP market is not a paragon of liquidity is not to deny that it has any revelatory value. The yield on the 10 year TIP, judging from the performance of the 5 year TIP, could get substantially negative as investors find few really good inflation hedges and gold’s levels make people increasingly nervous.
One must always take Wharton Finance Professor Jeremy Siegel with a grain of salt, and not only because he teaches at an Ivy League institution; while Dr. Siegel is doubtless an insightful and attentive observer of the markets, he often lets his enthusiasm supersede his good judgment, even more often than yours truly lets his natural pessimism supersede his good judgment. Having established that caveat, I quickly add that I read Dr. Siegel’s work whenever I happen upon it in some business publication and turn on the volume when Dr. Siegel appears on CNBC; he always has something interesting to say and I always learn something when he opines.
This morning’s Wall Street Journal (Monday, 8/22, page A13) op-ed piece that Dr. Siegel co-authored with Jeremy Schwartz of Wisdom Tree is no exception. In it, the authors make a compelling case for stocks that pay relatively big and growing dividends, a case into which I am starting to buy into…sort of. To the extent I want to be in stocks (limited over the last ten or so years), I would like to be in the stocks of companies that consistently pay large and growing dividends. Right now, my hesitancy to be in stocks, and my long time preference for index funds, which don’t fit all that nicely into such a strategy, are superseding my preference for a dividend growth strategy. But I am reorienting the few stocks in my portfolios toward dividend payers and, should the day ever come when I have enough confidence in the world economy to be in stocks in a larger way, I will earnestly explore a major commitment to a dividend growth strategy. This may have something to do with my rapidly advancing age, but it has more to do with something I tell my Finance and Investments students, to wit, while, as a guy with something of an accounting background, I can show you myriad ways to fake net income, you can’t fake dividends, or certainly cannot fake dividends for long; you simply have to generate cash to pay dividends, and have to increase cash flow consistently to regularly increase those dividends. Further, cash dividends are innately quite satisfying; who doesn’t like cash?
So while I liked the overall thrust of Dr. Siegel’s latest Journal article, I take issue with the large section of that article in which he also gets in line to bash Treasury Inflation Protected Securities (“TIPS”). In it, he says that
“…recent (TIPS) should be enshrined in Ripley’s “Believe it or Not!”
citing the fact that the yield on 10 year TIPS turned negative (by one basis point) last Friday. Dr. Siegel marvels that people are willing to lend the government money for 10 years with no real yield for ten years. Why should this be so curious when TIPS are perhaps the safest investment out there (other than T-bills, with a 0% nominal yield and therefore a negative CPI real yield) that provides any inflation protection at all? Further, if the increase in the CPI averages more than 2.10% over the next ten years, the real yield on the conventional 10 year will be negative as well, and people are figuratively tearing conventional 10 years out of other people’s hands.
These arguments for TIPS, however, are probably not a good counter to Dr. Siegel’s objections to TIPS, however, simply because Dr. Siegel would not advise buying conventional treasuries, either; after all, he is perhaps the stock market’s most enthusiastic, or at least its most articulate, disciple. But the basis of Dr. Siegel’s, and countless others’, latest harangue against TIPS is the aforementioned negative real yield on the 10 year TIPS. Surely, however, Dr. Siegel knows, and others who so eagerly cite the negative one bp yield on the ten year TIP know, that the real yield on the 5 year TIP has been negative since last Fall; on 9/30/10, the 10 year TIP was yielding negative 14 basis points. That did not stop the yield on the 10 year TIP from falling from 69 basis points on that day to its negative 1 bp yield today, and not in a straight line. The yield on the five year TIP is currently at an all time low of negative 89 basis points. If people are willing to lend their money to the government at a negative real yield for five years in exchange for inflation protection, why should it be so strange, and such an inflection point for the market, if they suddenly are willing to lend the government money for ten years at a (barely) negative real yield?
Yes, the 5 year TIP market is not as large or as liquid as the 10 year TIP market, but the 10 year TIP market is no bastion of liquidity itself. And to admit that the 5 year TIP market is not a paragon of liquidity is not to deny that it has any revelatory value. The yield on the 10 year TIP, judging from the performance of the 5 year TIP, could get substantially negative as investors find few really good inflation hedges and gold’s levels make people increasingly nervous.
I HOPE MICHELE BACHMANN WASN’T COUNTING ON LIBYA TO GET OIL TO $2
8/22/11
News this morning of the seemingly imminent fall of Tripoli to the Libyan rebels brought predictions of falling oil prices and, at least as of this morning, declines in oil futures. (See, inter alia, “Oil Prices Set to Slip if Rebels Win Libya,” Wall Street Journal, Monday, 8/22/11, page A6) Fortunately, there are more sober observers out there, cautioning that the victory has to be won, damage has to be fixed, and order has to be restored before Libya becomes the major factor in world oil markets it was only a few years ago; the aforementioned article reports that, as recently as 2009, Libya was exporting 1.5 million barrels a day and that it has the largest proven reserves in Africa. The latter surprised me; I would have guessed Nigeria had the largest proven reserves in Africa, but I digress. Optimists predict that Libyan oil production could reach 500,000 barrels per day in two months if everything goes right, and that would be consumed domestically. Given that the oil market is a global and, to an extent, fungible one, whether the oil is consumed domestically or exported should make little difference, but I digress again.
I, of course, am no optimist on either Libya or on its widely sought after oil. I predict chaos in Libya in the wake of Mr. Gadhafi’s overthrow and consequent long delays in bringing oil production back on. As loyal readers know, I predicted chaos in Egypt and that is precisely what we are seeing in the wake of Hosni Mubarak’s defenestration. Given that the struggle in Libya was exponentially greater than that in Egypt, and Mr. Gadhafi’s repression was greater, though perhaps not proportionally greater, than Mr. Mubarak’s, the chaos that should ensue in Libya should be more like that we are witnessing in Iraq and Afghanistan than that we are seeing in Egypt. Libya will become, to use the slightly modified vernacular, a defecatory product show.
These reports and predictions juxtapose nicely with a conversation I had at a family party yesterday with two very politically attuned (at least as much as yours truly) nephews and a similarly aware brother-in-law. I asked when American troops would show up on the ground in Libya. My conversation partners quickly picked up on my drift; American troops will soon find their way to Libya not to assure the overthrow of Gadhafi, which looked like a foregone conclusion by yesterday, but to “assure order” in the wake of his overthrow. Why do I think this will be the case? Because of the simple “You break it, you bought it principle.” Compound that with a European (only partially justifiable) attitude that they had the major role in the air campaign that aided Mr. Gadhafi’s overthrow and so now it’s our turn to restore order on the ground, the Europeans’ already having exhausted much of their military capacity and/or enthusiasm on the campaign (according to yesterday’s Chicago Tribune, the Danes and Norwegians were withdrawing fighter planes and the French and Italians were withdrawing their carriers DeGaulle and Garibaldi, respectively) even before these latest developments, and President Obama’s near Bushian enthusiasm for placating the defense industry by committing American blood and treasure in places in which our interests are at best tangential, and it’s hard to see how U.S. troops will not soon be patrolling the streets of Tripoli. Bear in mind that our military, even when stretched to the insane lengths our political leadership demands, is quite good at what militaries are designed to do: kill enemy troops and break their stuff. But our military is not at all good in doing what militaries are not designed to do: enforce our political leaderships’ vision of what a society ought to be.
And then there will be Syria…but that’s another post for another day.
News this morning of the seemingly imminent fall of Tripoli to the Libyan rebels brought predictions of falling oil prices and, at least as of this morning, declines in oil futures. (See, inter alia, “Oil Prices Set to Slip if Rebels Win Libya,” Wall Street Journal, Monday, 8/22/11, page A6) Fortunately, there are more sober observers out there, cautioning that the victory has to be won, damage has to be fixed, and order has to be restored before Libya becomes the major factor in world oil markets it was only a few years ago; the aforementioned article reports that, as recently as 2009, Libya was exporting 1.5 million barrels a day and that it has the largest proven reserves in Africa. The latter surprised me; I would have guessed Nigeria had the largest proven reserves in Africa, but I digress. Optimists predict that Libyan oil production could reach 500,000 barrels per day in two months if everything goes right, and that would be consumed domestically. Given that the oil market is a global and, to an extent, fungible one, whether the oil is consumed domestically or exported should make little difference, but I digress again.
I, of course, am no optimist on either Libya or on its widely sought after oil. I predict chaos in Libya in the wake of Mr. Gadhafi’s overthrow and consequent long delays in bringing oil production back on. As loyal readers know, I predicted chaos in Egypt and that is precisely what we are seeing in the wake of Hosni Mubarak’s defenestration. Given that the struggle in Libya was exponentially greater than that in Egypt, and Mr. Gadhafi’s repression was greater, though perhaps not proportionally greater, than Mr. Mubarak’s, the chaos that should ensue in Libya should be more like that we are witnessing in Iraq and Afghanistan than that we are seeing in Egypt. Libya will become, to use the slightly modified vernacular, a defecatory product show.
These reports and predictions juxtapose nicely with a conversation I had at a family party yesterday with two very politically attuned (at least as much as yours truly) nephews and a similarly aware brother-in-law. I asked when American troops would show up on the ground in Libya. My conversation partners quickly picked up on my drift; American troops will soon find their way to Libya not to assure the overthrow of Gadhafi, which looked like a foregone conclusion by yesterday, but to “assure order” in the wake of his overthrow. Why do I think this will be the case? Because of the simple “You break it, you bought it principle.” Compound that with a European (only partially justifiable) attitude that they had the major role in the air campaign that aided Mr. Gadhafi’s overthrow and so now it’s our turn to restore order on the ground, the Europeans’ already having exhausted much of their military capacity and/or enthusiasm on the campaign (according to yesterday’s Chicago Tribune, the Danes and Norwegians were withdrawing fighter planes and the French and Italians were withdrawing their carriers DeGaulle and Garibaldi, respectively) even before these latest developments, and President Obama’s near Bushian enthusiasm for placating the defense industry by committing American blood and treasure in places in which our interests are at best tangential, and it’s hard to see how U.S. troops will not soon be patrolling the streets of Tripoli. Bear in mind that our military, even when stretched to the insane lengths our political leadership demands, is quite good at what militaries are designed to do: kill enemy troops and break their stuff. But our military is not at all good in doing what militaries are not designed to do: enforce our political leaderships’ vision of what a society ought to be.
And then there will be Syria…but that’s another post for another day.
Thursday, August 18, 2011
I DON’T WORK FOR A LIVING, BUT I PRETEND THAT I DO WHEN I’M CAMPAIGNING FOR A LIVING, PART II
8/18/11
So why am I not nearly as enthusiastic about Texas Governor Rick Perry as are people who think a lot like I do? For the same reason I’m not working up much of a sweat over Representative Paul Ryan. While both these gentleman, for the most part and when we get away from what is laughingly called “defense,” mouth ideas that should appeal to me, they don’t appeal to me because they are both representative of a type that has become so prevalent in the Republican Party, to wit, the champion of the private sector who, despite his never ending pledges of fealty to that sector has never seen fit to participate in it.
Oh, yes, these guys argue, the private sector and free enterprise are the answer to all our problems, the private sector built this country, the private sector can lead us out of our difficulties if the big, bad public sector would just get out of the way. But the actions of these types speak far more loudly than their words. A frequently used barb in the politics of the past, back when grownups ran this country, was that one’s opponent “had never met a payroll.” But the modern acolyte of free enterprise and the private sector has never even been on a private sector payroll; indeed, he or she has never even held a public sector job which involved providing services for which the taxpayers paid. Rather, he or she has been, to put it more nicely than I would have preferred but for the understandable sensitivities of my readership, slopping at the public trough his or her whole “adult” life, gratifying his or her outsized ego at the taxpayers’ considerable expense. Governor Perry went right from the Air Force (an admirable place to spend part of one’s life, admittedly) to public office. Representative Ryan has been a politician or working for a politician his whole life. He may have done a stint at “consulting,” but, really, what type of “consultation” can a lifelong public payroller provide that would be worth anything? For a “between offices” or “post office” pol, “consulting” amounts to “influence selling.” Some might, with a straight face, argue that such influence peddling is a legitimate endeavor, but no one who is even remotely honest would equate such meretriciousness to honest work in the private sector providing a good or service that someone would pay for were it not for the gargantuan size of the government these plastic people piously purport to oppose.
If these free market types are so enamored of the private sector, one would think they would have garnered some experience in it. Among the GOPers running for office, Ron Paul and Herman Cain started out in the private sector. For all his faults, even Mitt Romney has some private sector experience, though, one suspects, that given his background and his family’s background, much of that “private sector” experience came dangerously close to little more than door opening. The others, like many, if not most politicians, even GOP politicians, have either spent their lives on the public payroll or have entered the “private sector” to cash in on their public sector experience while waiting for the next opportunity to belly up to the public trough to become available.
Those who have spent their lives working in the private sector do not need to be lectured on its wonders by those who have at the very best only a passing familiarity with it.
So why am I not nearly as enthusiastic about Texas Governor Rick Perry as are people who think a lot like I do? For the same reason I’m not working up much of a sweat over Representative Paul Ryan. While both these gentleman, for the most part and when we get away from what is laughingly called “defense,” mouth ideas that should appeal to me, they don’t appeal to me because they are both representative of a type that has become so prevalent in the Republican Party, to wit, the champion of the private sector who, despite his never ending pledges of fealty to that sector has never seen fit to participate in it.
Oh, yes, these guys argue, the private sector and free enterprise are the answer to all our problems, the private sector built this country, the private sector can lead us out of our difficulties if the big, bad public sector would just get out of the way. But the actions of these types speak far more loudly than their words. A frequently used barb in the politics of the past, back when grownups ran this country, was that one’s opponent “had never met a payroll.” But the modern acolyte of free enterprise and the private sector has never even been on a private sector payroll; indeed, he or she has never even held a public sector job which involved providing services for which the taxpayers paid. Rather, he or she has been, to put it more nicely than I would have preferred but for the understandable sensitivities of my readership, slopping at the public trough his or her whole “adult” life, gratifying his or her outsized ego at the taxpayers’ considerable expense. Governor Perry went right from the Air Force (an admirable place to spend part of one’s life, admittedly) to public office. Representative Ryan has been a politician or working for a politician his whole life. He may have done a stint at “consulting,” but, really, what type of “consultation” can a lifelong public payroller provide that would be worth anything? For a “between offices” or “post office” pol, “consulting” amounts to “influence selling.” Some might, with a straight face, argue that such influence peddling is a legitimate endeavor, but no one who is even remotely honest would equate such meretriciousness to honest work in the private sector providing a good or service that someone would pay for were it not for the gargantuan size of the government these plastic people piously purport to oppose.
If these free market types are so enamored of the private sector, one would think they would have garnered some experience in it. Among the GOPers running for office, Ron Paul and Herman Cain started out in the private sector. For all his faults, even Mitt Romney has some private sector experience, though, one suspects, that given his background and his family’s background, much of that “private sector” experience came dangerously close to little more than door opening. The others, like many, if not most politicians, even GOP politicians, have either spent their lives on the public payroll or have entered the “private sector” to cash in on their public sector experience while waiting for the next opportunity to belly up to the public trough to become available.
Those who have spent their lives working in the private sector do not need to be lectured on its wonders by those who have at the very best only a passing familiarity with it.
I DON’T WORK FOR A LIVING, BUT I PRETEND THAT I DO WHEN I’M CAMPAIGNING FOR A LIVING, PART I
8/18/11
The other morning my wife, as she was reading about President Obama’s speaking or listening or lecturing or whatever tour he was on in Iowa and in northwestern Illinois, asked me a question that has been asked repeatedly by people all over the country: Why was Obama out campaigning when he should have been in Washington dealing with the budgetary and economic problems that seem to be so daunting?
Clearly, my wife asked the question before clearing thinking through the implications of directing such a query my way; she knew that she would be in for a tirade from a husband who had just been tossed enough read meat to get him worked up for the entire day, but it was too late. I got up on the old soapbox, which always seems to be close at hand, and answered that the reason that President Obama was out campaigning was that we don’t elect leaders, we elect campaigners. People go into politics not because they want to provide leadership or serve their countries, but, rather, because they have messianic complexes, they have schizophrenic egos (absolutely HUGE but in need of constant reinforcement), and their whole purpose in life is self-aggrandizement. Campaigning satisfies, or feeds into, really, these complexes. It is fun to fly around the country to have your hindquarters kissed and crowds of breathless sycophants hanging on your every word. Campaigning has gotten even more fun of late now that the audiences for these photo-ops are carefully selected to insure that only the most slobbering, obsequious cheerleaders are represented in order to maximize the good vibes transmitted on national news. The modern politician is treated like some sort of medieval tsar or ancient Roman governor, the modern equivalent of the “most excellent Felix.”
Leadership, on the other hand, is difficult. It involves work and skills that the modern politician, concentrating on his or her hair style and emoting abilities, never bothered to learn. It is boring, tedious, difficult, usually frustrating work, almost as bad as that experienced in the real jobs that these pols have worked their whole lives to avoid. So why bother to lead? Why not just campaign? Even after being elected, why bother working? Just keep the campaign permanent. There is almost always another office to run for, and even when there isn’t, there is always a gargantuan ego that requires brobdingnagian levels of psychic and emotional nourishment.
I think Susan’s next question concerned why Congress was on vacation when the President was out campaigning while the country seemed to be falling apart, but she clearly thought better of providing an opening for yet another tirade.
The other morning my wife, as she was reading about President Obama’s speaking or listening or lecturing or whatever tour he was on in Iowa and in northwestern Illinois, asked me a question that has been asked repeatedly by people all over the country: Why was Obama out campaigning when he should have been in Washington dealing with the budgetary and economic problems that seem to be so daunting?
Clearly, my wife asked the question before clearing thinking through the implications of directing such a query my way; she knew that she would be in for a tirade from a husband who had just been tossed enough read meat to get him worked up for the entire day, but it was too late. I got up on the old soapbox, which always seems to be close at hand, and answered that the reason that President Obama was out campaigning was that we don’t elect leaders, we elect campaigners. People go into politics not because they want to provide leadership or serve their countries, but, rather, because they have messianic complexes, they have schizophrenic egos (absolutely HUGE but in need of constant reinforcement), and their whole purpose in life is self-aggrandizement. Campaigning satisfies, or feeds into, really, these complexes. It is fun to fly around the country to have your hindquarters kissed and crowds of breathless sycophants hanging on your every word. Campaigning has gotten even more fun of late now that the audiences for these photo-ops are carefully selected to insure that only the most slobbering, obsequious cheerleaders are represented in order to maximize the good vibes transmitted on national news. The modern politician is treated like some sort of medieval tsar or ancient Roman governor, the modern equivalent of the “most excellent Felix.”
Leadership, on the other hand, is difficult. It involves work and skills that the modern politician, concentrating on his or her hair style and emoting abilities, never bothered to learn. It is boring, tedious, difficult, usually frustrating work, almost as bad as that experienced in the real jobs that these pols have worked their whole lives to avoid. So why bother to lead? Why not just campaign? Even after being elected, why bother working? Just keep the campaign permanent. There is almost always another office to run for, and even when there isn’t, there is always a gargantuan ego that requires brobdingnagian levels of psychic and emotional nourishment.
I think Susan’s next question concerned why Congress was on vacation when the President was out campaigning while the country seemed to be falling apart, but she clearly thought better of providing an opening for yet another tirade.
Monday, August 15, 2011
WATCHING THE RESULTS LIKE A HAWK
8/15/11
The Republican straw poll held this weekend at that other university in the Hawkeye state was interesting for those of us who follow this stuff but probably a bad omen of the beginning of a new presidential season for those who either don’t care a whit but still, unfortunately under our system, still get to vote or for those sensible types who care but are not obsessed. Several points deserve to be made regarding the weekend’s vote.
First, those who say that this poll doesn’t really matter because it is a poll of only about 16,800 people who paid (I think the fee was $30; not inconsiderable, especially when you consider what you can buy with $30 in Iowa.) to vote are right and they are wrong. They are wrong because the opinions of those who care enough to pay (or maybe not; see a comment I make below) to register those opinions are worth considering more than those who take a break from “Jersey Shore” to embark on the seemingly backbreaking chore of going to the polls or filling out a mail-in ballot and (How can we possibly ask our citizens to make such onerous sacrifices?) driving to the mailbox to deposit it. Further, this poll took place in a state that has a disproportionate voice in the selection of our president, and thank God it does; Iowa is a GREAT state that ought to have a disproportionate voice in public affairs. Finally, the straw poll has a profound impact on fundraising; ask Tim Pawlenty. But those who dismiss the poll’s importance do have a point in that the poll involves as many voters who live on some blocks in say, Chicago or New York. So the media probably were a bit overly winded in its coverage of this poll.
Second, Michelle Bachmann was the winner, but a little noticed story indicates that maybe she wasn’t the victor in anything but raw numbers. One of the news stations (It was either CNN or Fox News; I was listening to them both on satellite radio (What a wonderful inventions!) during yet another drive from New York to Chicago and don’t remember which station made this point, but it was probably Fox; its coverage of the poll was more extensive than that of CNN, which frequently broke away from coverage to keep its viewers abreast of such vital news as the latest developments in the quasi-romantic exploits of those who fill our “culture” with figurative bowel emanations.) reported that the Bachmann campaign paid 6,000 entrance fees for the poll. This report may not be right; both CNN and Fox are to be approached with wariness since both have problems with facts when those facts clash with their worldviews. But I digress. If that report is indeed accurate, however, Mrs. Bachmann paid 6,000 people to vote for her but got only 4,823 votes, meaning that 1,177 of her “supporters” stiffed her. Some victory.
Third, the big story was supposed to be Tim Pawlenty’s dropping out of the race in the face of his third place finish among Hawkeye State Republicans, but that result was about as predictable as the outcome of a Cub season. The real story was Ron Paul who, despite spending very little money, came in 152 votes behind the “winner,” Michelle Bachmann. This showing was accomplished in an Iowa Republican party that is supposedly dominated by social conservatives and, while Dr. Paul is a big abortion opponent, little else in his record or beliefs would appeal to social conservatives. This was a big victory for Dr. Paul. Yes, he remains a quixotic candidate, but perhaps a bit less LaManchian than he was before Sunday.
Fourth, the poll was somewhat overshadowed by the entry of Texas Governor Rick Perry into the race on the same weekend. The bigger story, however, should be the boost that Mr. Perry’s entry, when combined with Mrs. Bachmann’s overrated but still not to be ignored showing, gives to the guy I still think will be the nominee, Mitt Romney. See my seminal 7/19/11 post MICHELE AND SARAH, MAKE ROOM FOR THE FAT LADY. While Perry and Bachmann split the votes of the true believers, Mr. Romney will pick up the votes of those who perhaps do not share Mrs. Bachmann’s excitabilities or her ignorance of history or Mr. Perry’s similar enthusiasms and so are not won over by his substantial record, skill, and intellect. It’s still Mr. Romney’s race to lose, and even he, despite ongoing and at times herculean efforts, may not be able to tear defeat from the very mandibles of victory.
Fifth, did I miss something when the results were announced? From what I heard on the radio, somebody (Again, I was listening, not watching, so I didn’t have the benefit of the captions to which those who were watching were treated.) got up and said, paraphrasing
…and the winner of the straw poll is Representative Michelle Bachmann of Minnesota.
and that was it. No numbers, no second or third place finishers, nothing. Apparently, the numbers flashed on a screen behind the speaker, but the announcement only told us that Bachmann had won. I hope this was done according to some weird tradition because it left me, and doubtless thousands of others, flat.
Sixth, the poll was a lot of fun and raised a lot of money for the Iowa Republican Party. Yes, some candidates took it too seriously, as did some voters, including, as you are probably surmising from reading this, yours truly. But where was the harm? And anything that showcases Iowa is beneficial, as long as too many people don’t get the word and do to that great state what, say, Californians have done to Nevada, Oregon, or Washington.
The Republican straw poll held this weekend at that other university in the Hawkeye state was interesting for those of us who follow this stuff but probably a bad omen of the beginning of a new presidential season for those who either don’t care a whit but still, unfortunately under our system, still get to vote or for those sensible types who care but are not obsessed. Several points deserve to be made regarding the weekend’s vote.
First, those who say that this poll doesn’t really matter because it is a poll of only about 16,800 people who paid (I think the fee was $30; not inconsiderable, especially when you consider what you can buy with $30 in Iowa.) to vote are right and they are wrong. They are wrong because the opinions of those who care enough to pay (or maybe not; see a comment I make below) to register those opinions are worth considering more than those who take a break from “Jersey Shore” to embark on the seemingly backbreaking chore of going to the polls or filling out a mail-in ballot and (How can we possibly ask our citizens to make such onerous sacrifices?) driving to the mailbox to deposit it. Further, this poll took place in a state that has a disproportionate voice in the selection of our president, and thank God it does; Iowa is a GREAT state that ought to have a disproportionate voice in public affairs. Finally, the straw poll has a profound impact on fundraising; ask Tim Pawlenty. But those who dismiss the poll’s importance do have a point in that the poll involves as many voters who live on some blocks in say, Chicago or New York. So the media probably were a bit overly winded in its coverage of this poll.
Second, Michelle Bachmann was the winner, but a little noticed story indicates that maybe she wasn’t the victor in anything but raw numbers. One of the news stations (It was either CNN or Fox News; I was listening to them both on satellite radio (What a wonderful inventions!) during yet another drive from New York to Chicago and don’t remember which station made this point, but it was probably Fox; its coverage of the poll was more extensive than that of CNN, which frequently broke away from coverage to keep its viewers abreast of such vital news as the latest developments in the quasi-romantic exploits of those who fill our “culture” with figurative bowel emanations.) reported that the Bachmann campaign paid 6,000 entrance fees for the poll. This report may not be right; both CNN and Fox are to be approached with wariness since both have problems with facts when those facts clash with their worldviews. But I digress. If that report is indeed accurate, however, Mrs. Bachmann paid 6,000 people to vote for her but got only 4,823 votes, meaning that 1,177 of her “supporters” stiffed her. Some victory.
Third, the big story was supposed to be Tim Pawlenty’s dropping out of the race in the face of his third place finish among Hawkeye State Republicans, but that result was about as predictable as the outcome of a Cub season. The real story was Ron Paul who, despite spending very little money, came in 152 votes behind the “winner,” Michelle Bachmann. This showing was accomplished in an Iowa Republican party that is supposedly dominated by social conservatives and, while Dr. Paul is a big abortion opponent, little else in his record or beliefs would appeal to social conservatives. This was a big victory for Dr. Paul. Yes, he remains a quixotic candidate, but perhaps a bit less LaManchian than he was before Sunday.
Fourth, the poll was somewhat overshadowed by the entry of Texas Governor Rick Perry into the race on the same weekend. The bigger story, however, should be the boost that Mr. Perry’s entry, when combined with Mrs. Bachmann’s overrated but still not to be ignored showing, gives to the guy I still think will be the nominee, Mitt Romney. See my seminal 7/19/11 post MICHELE AND SARAH, MAKE ROOM FOR THE FAT LADY. While Perry and Bachmann split the votes of the true believers, Mr. Romney will pick up the votes of those who perhaps do not share Mrs. Bachmann’s excitabilities or her ignorance of history or Mr. Perry’s similar enthusiasms and so are not won over by his substantial record, skill, and intellect. It’s still Mr. Romney’s race to lose, and even he, despite ongoing and at times herculean efforts, may not be able to tear defeat from the very mandibles of victory.
Fifth, did I miss something when the results were announced? From what I heard on the radio, somebody (Again, I was listening, not watching, so I didn’t have the benefit of the captions to which those who were watching were treated.) got up and said, paraphrasing
…and the winner of the straw poll is Representative Michelle Bachmann of Minnesota.
and that was it. No numbers, no second or third place finishers, nothing. Apparently, the numbers flashed on a screen behind the speaker, but the announcement only told us that Bachmann had won. I hope this was done according to some weird tradition because it left me, and doubtless thousands of others, flat.
Sixth, the poll was a lot of fun and raised a lot of money for the Iowa Republican Party. Yes, some candidates took it too seriously, as did some voters, including, as you are probably surmising from reading this, yours truly. But where was the harm? And anything that showcases Iowa is beneficial, as long as too many people don’t get the word and do to that great state what, say, Californians have done to Nevada, Oregon, or Washington.
“THEY’RE ALL SELLING? WELL, THEN, BUY!”
8/15/11
Maybe nothing here that is all this insightful, but at least it appears worth highlighting…
Bulls are pantingly telling us that stocks are cheap because, in the midst of last week’s frenetic trading, the dividend yield on the S&P surpassed that on the ten year treasury. But did those bulls stop to notice that the 10 year’s yield is 2.28% after I write this, up 4 basis points from its 2.24% yield of last Friday? While the 10 year yield is not at historic lows, it is close, so hurdling it, while perhaps more substantive than a victory of the Harlem Globetrotters over the Washington Generals, is no great shakes. If the S&P’s yield were to exceed an historic 10 year yield, whatever that might be for an appropriately long period of time, that would be something, but beating an artificially low (or at least beaten down by economic malaise, or worse) yield is no big deal.
Stocks may still be cheap. I don’t think so, but, as I’ve said before, I, like anyone else who opines on these matters, am as likely to be right as I am to be wrong. If stocks are cheap, however, the dividend yield is not among the weightiest pieces of evidence supporting that argument.
Maybe nothing here that is all this insightful, but at least it appears worth highlighting…
Bulls are pantingly telling us that stocks are cheap because, in the midst of last week’s frenetic trading, the dividend yield on the S&P surpassed that on the ten year treasury. But did those bulls stop to notice that the 10 year’s yield is 2.28% after I write this, up 4 basis points from its 2.24% yield of last Friday? While the 10 year yield is not at historic lows, it is close, so hurdling it, while perhaps more substantive than a victory of the Harlem Globetrotters over the Washington Generals, is no great shakes. If the S&P’s yield were to exceed an historic 10 year yield, whatever that might be for an appropriately long period of time, that would be something, but beating an artificially low (or at least beaten down by economic malaise, or worse) yield is no big deal.
Stocks may still be cheap. I don’t think so, but, as I’ve said before, I, like anyone else who opines on these matters, am as likely to be right as I am to be wrong. If stocks are cheap, however, the dividend yield is not among the weightiest pieces of evidence supporting that argument.
Monday, August 8, 2011
“I TELL YOU THE TRUTH, WHEN YOU DID IT TO ONE OF THE LEAST OF THESE MY BROTHERS AND SISTERS, YOU WERE DOING IT TO ME!”
8/8/10
Most of us remember the tragic story of Lizzy Seeberg. In the late summer of 2010, only a few weeks after the young woman from Chicago’s northern suburbs started as a freshman at St. Mary’s College, she reported being attacked on campus by a Notre Dame football player. Nine days later, she killed herself with prescription medication in her dorm room. Many, including her family, at least initially believed that Notre Dame, an institution to which her family had been connected, and deeply loyal, for generations, had stonewalled the investigation of the attack that led to Lizzy’s suicide. In response to the charges and subsequent legal actions and investigations, Notre Dame agreed to, as the Chicago Tribune put it, “make widespread changes in the way it responds to sex offense allegations.”
In today’s (Monday, 8/8/11, page 4) Tribune, we learn that Lizzy’s family, in the days after her death, had asked that, in lieu of flowers, donations be sent to Christ the King Jesuit College Prep on Chicago’s west side, another project of the Jesuits (point of clarification: The Jesuits do not run Notre Dame; the Holy Cross Fathers run Notre Dame. The Jesuits, ironically, run, among many others, Holy Cross College in Worcester, Massachusetts. Confusing, and probably of little or no import in this story, but a point maybe worth making.) that seeks to address the woeful education deficiencies in the low income black communities, deficiencies that have been called THE civil rights issue of this century. (Students at Christ the King are required to do volunteer work in the community and to earn most of their tuition by working part time at businesses, primarily in and around downtown Chicago. The school is relatively new, but it is already enjoying a measure of success in its mission. The school on which it is patterned, Cristo Rey, also run by the Jesuits and also on the west side, has a longer track record and has enjoyed what can only be called enormous success in the Hispanic community. Both schools are supported primarily by donations. It is efforts like these on the part of the Jebs that makes me especially proud that I went to a Jesuit high school. My wife and I are enthusiastic contributors to Chicago Jesuit Academy, the junior high school that is situated right next door to Christ the King and works on essentially the same model. Call 773 638 6103 and ask for my friend Matt Lynch, CJA’s president, if you want to join us. But I digress.) Lizzy had become enthusiastic about the school when she was a sophomore at Glenbrook North and started volunteering at Christ the King at what could be described as a frenetic pace, working at the school and holding fundraisers in her parents’ home, drawing donors to the school whose collective annual contributions have reached $50,000.
The school has collected $160,000 in donations in Lizzy’s name in response to her parents’ request. The school decided to use the funds to buy a three flat across the street from the school that will house members of the Jesuit Alumni Volunteer Group, who volunteer to work at the school in various capacities, including as teachers, for two years upon graduation from college. Over the last several weeks, members of Lizzy Seeberg’s family have been working on the house, which is badly in need of renovation, contributing sweat equity to make the house livable for the volunteers. They do so in honor of Lizzy, who they are sure would have been the most enthusiastic of the workers, and in service to their less fortunate brothers and sisters.
The Seeberg family has gone through unspeakable tragedy. They have seen a young daughter and sister driven to such despair by a pointless, senseless, selfish, and cruel attack that she killed herself. They have seen, at least in their eyes, an institution they dearly love, an institution closely identified with the Church they have so ardently served (Among her parents’ many other forms of service to the Catholic Church, her father became a member of the president’s advisory council at Christ the King.), obfuscate the search for justice in the senseless tragedy. It would have been easy, almost natural, and certainly understandable if they had become bitter and cynical about their Church and started to wonder if God had truly forsaken them. But they didn’t; they redoubled their efforts in service to God, to His Church, and to His people, despite all that had happened to them. Even the strongest of us has to wonder whether s/he would react in such a manner under such a horrific set of circumstances.
I don’t know the Seebergs, but I know they are remarkable and indescribably blessed and blessing people, true arms of God. They make us uncomfortable, to be sure, because they make us seem lukewarm in our faith and miserly in our service. But, partially through that discomfort, they inspire us to do more for others and for God. They are models of faith and service, true travelers on the road to Emmaus.
Most of us remember the tragic story of Lizzy Seeberg. In the late summer of 2010, only a few weeks after the young woman from Chicago’s northern suburbs started as a freshman at St. Mary’s College, she reported being attacked on campus by a Notre Dame football player. Nine days later, she killed herself with prescription medication in her dorm room. Many, including her family, at least initially believed that Notre Dame, an institution to which her family had been connected, and deeply loyal, for generations, had stonewalled the investigation of the attack that led to Lizzy’s suicide. In response to the charges and subsequent legal actions and investigations, Notre Dame agreed to, as the Chicago Tribune put it, “make widespread changes in the way it responds to sex offense allegations.”
In today’s (Monday, 8/8/11, page 4) Tribune, we learn that Lizzy’s family, in the days after her death, had asked that, in lieu of flowers, donations be sent to Christ the King Jesuit College Prep on Chicago’s west side, another project of the Jesuits (point of clarification: The Jesuits do not run Notre Dame; the Holy Cross Fathers run Notre Dame. The Jesuits, ironically, run, among many others, Holy Cross College in Worcester, Massachusetts. Confusing, and probably of little or no import in this story, but a point maybe worth making.) that seeks to address the woeful education deficiencies in the low income black communities, deficiencies that have been called THE civil rights issue of this century. (Students at Christ the King are required to do volunteer work in the community and to earn most of their tuition by working part time at businesses, primarily in and around downtown Chicago. The school is relatively new, but it is already enjoying a measure of success in its mission. The school on which it is patterned, Cristo Rey, also run by the Jesuits and also on the west side, has a longer track record and has enjoyed what can only be called enormous success in the Hispanic community. Both schools are supported primarily by donations. It is efforts like these on the part of the Jebs that makes me especially proud that I went to a Jesuit high school. My wife and I are enthusiastic contributors to Chicago Jesuit Academy, the junior high school that is situated right next door to Christ the King and works on essentially the same model. Call 773 638 6103 and ask for my friend Matt Lynch, CJA’s president, if you want to join us. But I digress.) Lizzy had become enthusiastic about the school when she was a sophomore at Glenbrook North and started volunteering at Christ the King at what could be described as a frenetic pace, working at the school and holding fundraisers in her parents’ home, drawing donors to the school whose collective annual contributions have reached $50,000.
The school has collected $160,000 in donations in Lizzy’s name in response to her parents’ request. The school decided to use the funds to buy a three flat across the street from the school that will house members of the Jesuit Alumni Volunteer Group, who volunteer to work at the school in various capacities, including as teachers, for two years upon graduation from college. Over the last several weeks, members of Lizzy Seeberg’s family have been working on the house, which is badly in need of renovation, contributing sweat equity to make the house livable for the volunteers. They do so in honor of Lizzy, who they are sure would have been the most enthusiastic of the workers, and in service to their less fortunate brothers and sisters.
The Seeberg family has gone through unspeakable tragedy. They have seen a young daughter and sister driven to such despair by a pointless, senseless, selfish, and cruel attack that she killed herself. They have seen, at least in their eyes, an institution they dearly love, an institution closely identified with the Church they have so ardently served (Among her parents’ many other forms of service to the Catholic Church, her father became a member of the president’s advisory council at Christ the King.), obfuscate the search for justice in the senseless tragedy. It would have been easy, almost natural, and certainly understandable if they had become bitter and cynical about their Church and started to wonder if God had truly forsaken them. But they didn’t; they redoubled their efforts in service to God, to His Church, and to His people, despite all that had happened to them. Even the strongest of us has to wonder whether s/he would react in such a manner under such a horrific set of circumstances.
I don’t know the Seebergs, but I know they are remarkable and indescribably blessed and blessing people, true arms of God. They make us uncomfortable, to be sure, because they make us seem lukewarm in our faith and miserly in our service. But, partially through that discomfort, they inspire us to do more for others and for God. They are models of faith and service, true travelers on the road to Emmaus.
AL CZERVIK’S POPCORN FARM
8/8/11
As loyal readers know, I wasn’t surprised by the Dow’s 600 + point drop today; well, maybe I was surprised by its magnitude, but not by the drop. See my 8/6/11 post MR. MARKET, THE RATING AGENCIES, AND MORE, in which, commenting on last week’s carnage, I said
Is it any wonder stocks took a tumble? Will they fall further? By the same measures, it seems logical to think they will, but predictions on directions of the market are foolish at best and dangerous at worst.
Naturally, after today, anyone who doesn’t let his emotions, or, in the case of yours truly, his permabear nature, get the better of him has to start asking whether the market is getting cheap, or at least reasonable, in the wake of the today’s conflagration. My mind started wandering to ways to play a rebound, perhaps through some stocks that, at least on the face of it, look attractive, like
--Apple (AAPL), the stock everyone seems to want to buy just a little bit lower, with a balance sheet bereft of debt and full of cash (about $30 per share in cash) and trading at 12-13 times earnings and just short of 10 times cash flow,
--GM, virtually debt free and way off its IPO price. I like GM more than F for two reasons: the strength of GM’s post-bankruptcy balance sheet and its superior position in China,
--some small caps that a very alert and diligent friend analyzes with rigor and sells effectively, or
--one of the leveraged ETFs that make acting on one’s notions dangerously easy or one of my usual flirtations with masochism in the options markets.
As I was musing away on these things, I thought to check something, a set of statistics that all of us sort of know but probably few of us reflect on their sheer magnitude: How much are the equity markets up since their 3/9/09 (closing) bottoms? The answers, even after today’s defenestration, are as follows:
Dow 65.1%
S&P 65.5%
NASDAQ 85.8%
Okay, I follow these things pretty closely, though not as closely as some of you. But I was surprised that the markets are still up so much from the bottoms. Maybe you, and everybody who follows the markets, know the size of the above numbers, but I’m not betting on at least the latter.
Are things really anywhere from 65% to 85% better than they were in March, 2009? Simply by looking at price/earnings ratios, one could conclude that the answer is “No,” since P/E’s have expanded, and not inconsiderably, since the bottom. But there is more to this than P/E ratios. Some might argue that things are a lot better since the bottom: Banks are better capitalized. The threat of massive industrial bankruptcies has been removed, or put behind us. Hmm…I’m starting to run out of elements of the bullish, or at least the not so bearish, arguments. But even if one can argue that, in general, the world’s economy and the financial system is in better shape than it was back in the Spring of 2009 (I, to a very limited extent, might even concede some elements of this argument.), is one prepared to argue that things are 65% to 85% better? I’m having a hard enough time admitting that things are better at all!
As I, and legions of others who has spent so many trying to figure out the markets, have said ad nauseam, predicting the direction of markets is precarious at best. I’m probably as likely to be wrong on these matters as I am to be right. But I, for one, am comfortable remaining true to my permabear nature for what looks like quite a while.
As loyal readers know, I wasn’t surprised by the Dow’s 600 + point drop today; well, maybe I was surprised by its magnitude, but not by the drop. See my 8/6/11 post MR. MARKET, THE RATING AGENCIES, AND MORE, in which, commenting on last week’s carnage, I said
Is it any wonder stocks took a tumble? Will they fall further? By the same measures, it seems logical to think they will, but predictions on directions of the market are foolish at best and dangerous at worst.
Naturally, after today, anyone who doesn’t let his emotions, or, in the case of yours truly, his permabear nature, get the better of him has to start asking whether the market is getting cheap, or at least reasonable, in the wake of the today’s conflagration. My mind started wandering to ways to play a rebound, perhaps through some stocks that, at least on the face of it, look attractive, like
--Apple (AAPL), the stock everyone seems to want to buy just a little bit lower, with a balance sheet bereft of debt and full of cash (about $30 per share in cash) and trading at 12-13 times earnings and just short of 10 times cash flow,
--GM, virtually debt free and way off its IPO price. I like GM more than F for two reasons: the strength of GM’s post-bankruptcy balance sheet and its superior position in China,
--some small caps that a very alert and diligent friend analyzes with rigor and sells effectively, or
--one of the leveraged ETFs that make acting on one’s notions dangerously easy or one of my usual flirtations with masochism in the options markets.
As I was musing away on these things, I thought to check something, a set of statistics that all of us sort of know but probably few of us reflect on their sheer magnitude: How much are the equity markets up since their 3/9/09 (closing) bottoms? The answers, even after today’s defenestration, are as follows:
Dow 65.1%
S&P 65.5%
NASDAQ 85.8%
Okay, I follow these things pretty closely, though not as closely as some of you. But I was surprised that the markets are still up so much from the bottoms. Maybe you, and everybody who follows the markets, know the size of the above numbers, but I’m not betting on at least the latter.
Are things really anywhere from 65% to 85% better than they were in March, 2009? Simply by looking at price/earnings ratios, one could conclude that the answer is “No,” since P/E’s have expanded, and not inconsiderably, since the bottom. But there is more to this than P/E ratios. Some might argue that things are a lot better since the bottom: Banks are better capitalized. The threat of massive industrial bankruptcies has been removed, or put behind us. Hmm…I’m starting to run out of elements of the bullish, or at least the not so bearish, arguments. But even if one can argue that, in general, the world’s economy and the financial system is in better shape than it was back in the Spring of 2009 (I, to a very limited extent, might even concede some elements of this argument.), is one prepared to argue that things are 65% to 85% better? I’m having a hard enough time admitting that things are better at all!
As I, and legions of others who has spent so many trying to figure out the markets, have said ad nauseam, predicting the direction of markets is precarious at best. I’m probably as likely to be wrong on these matters as I am to be right. But I, for one, am comfortable remaining true to my permabear nature for what looks like quite a while.
Sunday, August 7, 2011
ROMPER ROOM ECONOMICS
8/7/11
WBBM Newsradio 78 (our local CBS affiliate) reported on its 3:30 news this afternoon that Tim Geithner has pledged to stay on as Treasury Secretary. According to the report, President Obama “put the arm” on Mr. Geithner and said “Hey, buddy, I need you” during these turbulent financial times.
In yesterday’s post (MR. MARKET, THE RATING AGENCIES, AND MORE, 8/6/11) I argued that one of the problems with which the markets must deal is “a dearth of grown-ups in positions of power.” Nothing could reinforce that point more effectively than Barack Obama's considering Tim Geithner to be the Indispensable Man.
O tempora, o mores!
WBBM Newsradio 78 (our local CBS affiliate) reported on its 3:30 news this afternoon that Tim Geithner has pledged to stay on as Treasury Secretary. According to the report, President Obama “put the arm” on Mr. Geithner and said “Hey, buddy, I need you” during these turbulent financial times.
In yesterday’s post (MR. MARKET, THE RATING AGENCIES, AND MORE, 8/6/11) I argued that one of the problems with which the markets must deal is “a dearth of grown-ups in positions of power.” Nothing could reinforce that point more effectively than Barack Obama's considering Tim Geithner to be the Indispensable Man.
O tempora, o mores!
Saturday, August 6, 2011
MR. MARKET, THE RATING AGENCIES, AND MORE
8/6/11
People have asked me my opinion of the stock market’s travails (the Dow was down 700 points) of the last week. What happened? Everyone seems to have an opinion, and I wish I had a more artful guess, but it all seems quite simple.
We have a lot of financial (and other, but that’s grist for another mill) problems in the world today: Europe’s difficulties, our inability to get our fiscal house in order, an economy in the U.S. that seems to be, at best, stuck in neutral, the perception that, this time, governments, whether in the U.S., Europe, or Asia may not have the wherewithal to save everyone’s bacon, etc. Of course, as I have been saying ad nauseam since the inception of this blog in February of 2007, and even before that in its predecessors, all these problems have their root in too much debt taken on by too many people and other entities who feel entitled to live well beyond their means. But again, that is another issue.
At the same time we are experiencing all these difficulties, the market is not trading cheap. In today’s (8/6/11, page B1) Wall Street Journal, Jason Zweig points out that, using Benjamin Graham’s concept, later refined by Robert Shiller of Yale, of “cyclically adjusted” price earnings ratios, the S&P is trading, after last week, at a multiple of 20.2 times, down from a peak at the end of July of 22.9. The fifty year average for this cyclically adjusted yield is 19.5. So, by this measure, the market is not trading excessively rich but certainly isn’t trading cheap.
The U.S. economy is, at best, treading water and the world economy is not doing much, if at all, better. The domestic and international financial system is fraught with peril and is suffering, at least in the eyes of this observer, from a dearth of grown-ups in positions of power. There is little confidence in the political system in this country, in Europe, and, to perhaps a lesser extent, most places in the world. It looks like no government anywhere is in a position to do its much heralded, and vastly overrated, deus ex machina routine and seemingly save the day at the last possible moment. And stocks weren’t trading cheap, using either the “cyclically adjusted” P/E of 23 or the conventional P/E of almost 16 at the peak before last week’s debacle. Is it any wonder stocks took a tumble? Will they fall further? By the same measures, it seems logical to think they will, but predictions on directions of the market are foolish at best and dangerous at worst.
And on that last note, another question has come up: What will S&P’s downgrade of long term treasuries from AAA to AA+ do to the market? Again, predictions are perilous, but probably not much will come of S&P’s actions for a number of reasons, including:
--Moody’s and Fitch maintained their Aaa and AAA ratings, respectively, on long term U.S. debt, at least for now.
--S&P maintained their AAA rating on short term U.S. debt.
--As someone put it, a downgrade from AAA to AA+ is like a downgrade from a Lamborghini to a Mercedes. Anyone who knows anything about cars wonders why such a move would be a downgrade, unless one is married to a mechanic who speaks Italian and has an endless supply of spondulicks for parts, but I digress.
--The rating agencies aren’t telling anybody anything he or she doesn’t know, as usual
Especially ludicrous, as I pointed out last week (MAYBE WASHINGTON ISN’T SO BYZANTINE AFTER ALL, 7/30/11) are predictions that the “government will have to pay higher rates of interest on its debt” and that “mortgage rates and other rates that key off treasury rates will skyrocket.” Some investors are being even, in a way, less modest by putting a number on such dire predictions, saying that treasury rates will go up 50 basis points. Yet, since this “crisis” started, treasuries have gone on one of their biggest rallies in their history, with the 10 year’s yield falling as low as 2.40%, its lowest yield for the year, before reversing course to 2.56% on Friday. (One could argue that the addition of 16 basis points to the ten year’s yield on Friday had to do with wind of the downgrade getting out, but even if one accepts that stretch, just consider how much the 10 year’s yield has fallen in the last month or so…it was at 3.11% at the end of June.)
So if the stock market does take a tumble in the coming weeks, or days, it shouldn’t have anything to do with the downgrade, but this, like so many guesses about where the market is going or why it went where it went, is an untestable proposition. And if the stock market tumbles, it’s a pretty good bet that treasuries will rally, at least in the short term; it’s hard to see how rates stay this low for the long term, but that particular guess has nothing to do with S&P, Fitch, or Moody’s.
People have asked me my opinion of the stock market’s travails (the Dow was down 700 points) of the last week. What happened? Everyone seems to have an opinion, and I wish I had a more artful guess, but it all seems quite simple.
We have a lot of financial (and other, but that’s grist for another mill) problems in the world today: Europe’s difficulties, our inability to get our fiscal house in order, an economy in the U.S. that seems to be, at best, stuck in neutral, the perception that, this time, governments, whether in the U.S., Europe, or Asia may not have the wherewithal to save everyone’s bacon, etc. Of course, as I have been saying ad nauseam since the inception of this blog in February of 2007, and even before that in its predecessors, all these problems have their root in too much debt taken on by too many people and other entities who feel entitled to live well beyond their means. But again, that is another issue.
At the same time we are experiencing all these difficulties, the market is not trading cheap. In today’s (8/6/11, page B1) Wall Street Journal, Jason Zweig points out that, using Benjamin Graham’s concept, later refined by Robert Shiller of Yale, of “cyclically adjusted” price earnings ratios, the S&P is trading, after last week, at a multiple of 20.2 times, down from a peak at the end of July of 22.9. The fifty year average for this cyclically adjusted yield is 19.5. So, by this measure, the market is not trading excessively rich but certainly isn’t trading cheap.
The U.S. economy is, at best, treading water and the world economy is not doing much, if at all, better. The domestic and international financial system is fraught with peril and is suffering, at least in the eyes of this observer, from a dearth of grown-ups in positions of power. There is little confidence in the political system in this country, in Europe, and, to perhaps a lesser extent, most places in the world. It looks like no government anywhere is in a position to do its much heralded, and vastly overrated, deus ex machina routine and seemingly save the day at the last possible moment. And stocks weren’t trading cheap, using either the “cyclically adjusted” P/E of 23 or the conventional P/E of almost 16 at the peak before last week’s debacle. Is it any wonder stocks took a tumble? Will they fall further? By the same measures, it seems logical to think they will, but predictions on directions of the market are foolish at best and dangerous at worst.
And on that last note, another question has come up: What will S&P’s downgrade of long term treasuries from AAA to AA+ do to the market? Again, predictions are perilous, but probably not much will come of S&P’s actions for a number of reasons, including:
--Moody’s and Fitch maintained their Aaa and AAA ratings, respectively, on long term U.S. debt, at least for now.
--S&P maintained their AAA rating on short term U.S. debt.
--As someone put it, a downgrade from AAA to AA+ is like a downgrade from a Lamborghini to a Mercedes. Anyone who knows anything about cars wonders why such a move would be a downgrade, unless one is married to a mechanic who speaks Italian and has an endless supply of spondulicks for parts, but I digress.
--The rating agencies aren’t telling anybody anything he or she doesn’t know, as usual
Especially ludicrous, as I pointed out last week (MAYBE WASHINGTON ISN’T SO BYZANTINE AFTER ALL, 7/30/11) are predictions that the “government will have to pay higher rates of interest on its debt” and that “mortgage rates and other rates that key off treasury rates will skyrocket.” Some investors are being even, in a way, less modest by putting a number on such dire predictions, saying that treasury rates will go up 50 basis points. Yet, since this “crisis” started, treasuries have gone on one of their biggest rallies in their history, with the 10 year’s yield falling as low as 2.40%, its lowest yield for the year, before reversing course to 2.56% on Friday. (One could argue that the addition of 16 basis points to the ten year’s yield on Friday had to do with wind of the downgrade getting out, but even if one accepts that stretch, just consider how much the 10 year’s yield has fallen in the last month or so…it was at 3.11% at the end of June.)
So if the stock market does take a tumble in the coming weeks, or days, it shouldn’t have anything to do with the downgrade, but this, like so many guesses about where the market is going or why it went where it went, is an untestable proposition. And if the stock market tumbles, it’s a pretty good bet that treasuries will rally, at least in the short term; it’s hard to see how rates stay this low for the long term, but that particular guess has nothing to do with S&P, Fitch, or Moody’s.
Tuesday, August 2, 2011
HAVE YOU NO SENSE OF SMELL, SIR?
8/2/11
The Republicans are doing a poor job of concealing their glee at the deal that seemingly averted the chaos that would ensue if the government defaulted on its debt if the debt ceiling weren’t raised. After all, they argue to those of us who are not so enamored with the deal (the “half-hindquartered scheme to increase the debt limit” to which I referred in my 7/30/11 post MAYBE WASHINGTON ISN’T SO BYZANTINE AFTER ALL), taxes were not raised and the discussion now centers around cutting, rather than increasing, spending.
Perhaps I am missing something here, and if I am, please point it out to me. But it seems to me that it is the Republicans who have painted themselves into a corner and have virtually assured the tax increase they claim to so vociferously oppose. Why? After the first $900 billion or so of spending cuts (most of which will occur after many members of the Congress are no longer happily toiling away at their taxpayer funded sinecures), a bi-partisan commission (A bi-partisan commission! What a unique idea! But I digress.) will decide on at least another $1.2 trillion of deficit reduction measures. If this commission can’t come up the $1.2 trillion, or pass a balanced budget amendment to the Constitution, cuts will be imposed, half on “defense” and half on domestic programs, to reach the $1.2 trillion. This doesn’t sound all that good to those of us who would really like to see government, even that government that seemingly benefits us, scaled back dramatically and thought we elected people to take, rather than pass on to a commission, responsibility for governance. But there seems to be another glaring flaw for those of us who would like to see tax increases limited to a minimum and accompanied by drastic simplification of the tax code.
The committee will be working off a baseline that assumes that the Bush tax cuts, all of them, not just the cuts for those in the top brackets, will expire. Given how these tax cuts are scored, their expiration results in an additional $3 to $3.5 trillion in revenue, depending on who is counting. So the committee assumes that revenue will increase by $3.3 trillion or so by virtue of the expiry of the Bush tax cuts and must therefore reduce the deficit by $1.2 trillion in addition to that $3.3 trillion. It will be tough enough for these pols, who make their livings spending other people’s money, to find $1.2 trillion in expenditures to cut. Finding $4.5 trillion in spending cuts, the amount necessary if the Bush tax cuts are allowed to continue (i.e., if taxes are not raised) will be well nigh impossible. Therefore, the Bush tax cuts will have to be allowed to expire, which is a somewhat more digestible way of saying that taxes will have to be raised. And the tax increase (other wording will be used, to be sure) will be done under cover of required deficit reductions. One can bet that it will not be only Democrats crying crocodile tears while protesting “I didn’t want to raise taxes, but, gee willikers, we had no choice given the restrictions of the deal made to avoid default.” Members of neither party will mention at that juncture that it will have been they who cut the deal that requires them to raise taxes.
This seems so obvious to me that I think I must be missing something. If I am wrong that the baseline from which the committee will be working assumes expiry of the Bush tax cuts, please let me know. I don’t think I am, but I’ve been wrong a few times in my life.
The Republicans are doing a poor job of concealing their glee at the deal that seemingly averted the chaos that would ensue if the government defaulted on its debt if the debt ceiling weren’t raised. After all, they argue to those of us who are not so enamored with the deal (the “half-hindquartered scheme to increase the debt limit” to which I referred in my 7/30/11 post MAYBE WASHINGTON ISN’T SO BYZANTINE AFTER ALL), taxes were not raised and the discussion now centers around cutting, rather than increasing, spending.
Perhaps I am missing something here, and if I am, please point it out to me. But it seems to me that it is the Republicans who have painted themselves into a corner and have virtually assured the tax increase they claim to so vociferously oppose. Why? After the first $900 billion or so of spending cuts (most of which will occur after many members of the Congress are no longer happily toiling away at their taxpayer funded sinecures), a bi-partisan commission (A bi-partisan commission! What a unique idea! But I digress.) will decide on at least another $1.2 trillion of deficit reduction measures. If this commission can’t come up the $1.2 trillion, or pass a balanced budget amendment to the Constitution, cuts will be imposed, half on “defense” and half on domestic programs, to reach the $1.2 trillion. This doesn’t sound all that good to those of us who would really like to see government, even that government that seemingly benefits us, scaled back dramatically and thought we elected people to take, rather than pass on to a commission, responsibility for governance. But there seems to be another glaring flaw for those of us who would like to see tax increases limited to a minimum and accompanied by drastic simplification of the tax code.
The committee will be working off a baseline that assumes that the Bush tax cuts, all of them, not just the cuts for those in the top brackets, will expire. Given how these tax cuts are scored, their expiration results in an additional $3 to $3.5 trillion in revenue, depending on who is counting. So the committee assumes that revenue will increase by $3.3 trillion or so by virtue of the expiry of the Bush tax cuts and must therefore reduce the deficit by $1.2 trillion in addition to that $3.3 trillion. It will be tough enough for these pols, who make their livings spending other people’s money, to find $1.2 trillion in expenditures to cut. Finding $4.5 trillion in spending cuts, the amount necessary if the Bush tax cuts are allowed to continue (i.e., if taxes are not raised) will be well nigh impossible. Therefore, the Bush tax cuts will have to be allowed to expire, which is a somewhat more digestible way of saying that taxes will have to be raised. And the tax increase (other wording will be used, to be sure) will be done under cover of required deficit reductions. One can bet that it will not be only Democrats crying crocodile tears while protesting “I didn’t want to raise taxes, but, gee willikers, we had no choice given the restrictions of the deal made to avoid default.” Members of neither party will mention at that juncture that it will have been they who cut the deal that requires them to raise taxes.
This seems so obvious to me that I think I must be missing something. If I am wrong that the baseline from which the committee will be working assumes expiry of the Bush tax cuts, please let me know. I don’t think I am, but I’ve been wrong a few times in my life.
PERHAPS ALL WE NEED IS A LITTLE RE-EDUCATION
8/2/11
The first paragraph of a page A1 story entitled “Egyptians Turn on Liberal Protesters” in today’s (i.e., Tuesday, 8/2’s) Wall Street Journal reads as follows:
Mobs of ordinary Egyptians joined with soldiers to drive pro-democracy (MQ—Pro democracy???!!!!, but I digress.) protesters from their encampment in Tahrir Square here Monday, showing how far the uprising’s early heroes have fallen in the eyes of the public.
The story goes on to say
Their (i.e., the “pro-democracy” protesters) continuing protests have also angered many Egyptians who want an end to unrest they say has frightened away foreign tourists, damaged the country’s economy, and increasingly undermined their livelihoods.
and to quote Mr. Tareq Shawky, a 42 year old toilet equipment vendor who took the time from his work (a concept with which the “pro-democracy” demonstrators have scant familiarity) to help dismantle the encampment of the “pro-democracy” yahoos. Mr. Shawky opined
“The Egyptian citizen wants only two things—security and low prices. The millions of Egyptians will do anything the army tells us to do.”
Where, oh where have you heard that the anti-Mubarak demonstrations (riots, really) had their origin in economic deprivation borne of a worldwide commodity inflation, not in a sudden awakening to the wisdom of the “pro-democracy” demonstrators who saw an opportunity to get on worldwide television and perhaps impose their vision of “democracy” on those who actually work for a living? Loyal readers, of course, remember, that such prescient sentiments were expressed in the following posts on this very website:
YOU BREAK IT YOU BOUGHT IT… 1/28/11
“…HE’S AN EGYPTIAN…” ??? 1/29/11, and
AFTER ALL THESE CENTURIES, THE EGYPTIANS STILL HAVE SOMETHING TO TEACH US, Parts I and II 2/3/11
What went on in Egypt and is going on now is a story as old as time: a group of overeducated, understimulated, extravagantly pampered yet remarkably doltish children of the very well off decide, with very little evidence other than being told their whole lives that they are just the most wonderful things ever to grace our universe, that they should be able to tell everyone else how to run their lives. Egged on by a consanguineous media, they act on their delusions of superior wisdom and insight by demonstrating, rioting, legislating, or otherwise seeking to impose their oddball visions of utopia on the those who actually work for a living, know better, and don’t need to be told how to conduct their lives by a bunch of kids whose most salient traits are a hyper-inflated self image that manifests itself by bad cases of diarrhea of the mouth and constipation of the mind.
We saw this phenomenon in the ‘60s and ‘70s in this country when the sons and daughters of the wealthy decided it would be fun to cure their boredom, demonstrate their manifest insight, avoid having to deal with the real world, and maybe even get lucky by burning down the nation’s campuses. Such miscreants have since gone on to positions of great authority in government, politics, education, and the non-profit sector, positions from which they finally realize their dreams by wreaking even greater and more enduring damage on the nation they so despise.
The “pro-democracy” demonstrators in Egypt are cut from the same cloth as the self-determined superiors who continue to tear at the fabric of our society. Despite what they call themselves, they seek not that the people govern themselves but that they, the demonstrators, govern the people. The evidence of this “I’m going to impose on you what you need whether you like it or not” attitude is provided in the words of Mr. Mahmoud Abdallah, a “pro-democracy” demonstrator thus quoted in the Journal article:
“The people don’t know what is good for them. They don’t have any awareness. They just want to make money.”
Bernadine Dohrn, Bill Ayers, and Abby Hoffman, who never had to worry about making money because their parents gave it to them, couldn’t have said it better. I am sure that Mr. Mahmoud, like his American predecessors of the ‘60s, would be glad to impose on average Egyptians what is good for them, by force if necessary, just as a similar band of young, ever so self-confident idealists did in Russia in 1917.
The Journal quotes Sahdi Hamid, director of research at the Brooking Institution’s Doha Center as saying
“The liberal and leftist groups that were at the forefront of the revolution have lost touch with the Egyptian people.”
Mr. Hamid is wrong in this particular contention; the liberal and leftist groups, over which the American media fawned so effusively a few months ago, never were in touch with the Egyptian people.
The first paragraph of a page A1 story entitled “Egyptians Turn on Liberal Protesters” in today’s (i.e., Tuesday, 8/2’s) Wall Street Journal reads as follows:
Mobs of ordinary Egyptians joined with soldiers to drive pro-democracy (MQ—Pro democracy???!!!!, but I digress.) protesters from their encampment in Tahrir Square here Monday, showing how far the uprising’s early heroes have fallen in the eyes of the public.
The story goes on to say
Their (i.e., the “pro-democracy” protesters) continuing protests have also angered many Egyptians who want an end to unrest they say has frightened away foreign tourists, damaged the country’s economy, and increasingly undermined their livelihoods.
and to quote Mr. Tareq Shawky, a 42 year old toilet equipment vendor who took the time from his work (a concept with which the “pro-democracy” demonstrators have scant familiarity) to help dismantle the encampment of the “pro-democracy” yahoos. Mr. Shawky opined
“The Egyptian citizen wants only two things—security and low prices. The millions of Egyptians will do anything the army tells us to do.”
Where, oh where have you heard that the anti-Mubarak demonstrations (riots, really) had their origin in economic deprivation borne of a worldwide commodity inflation, not in a sudden awakening to the wisdom of the “pro-democracy” demonstrators who saw an opportunity to get on worldwide television and perhaps impose their vision of “democracy” on those who actually work for a living? Loyal readers, of course, remember, that such prescient sentiments were expressed in the following posts on this very website:
YOU BREAK IT YOU BOUGHT IT… 1/28/11
“…HE’S AN EGYPTIAN…” ??? 1/29/11, and
AFTER ALL THESE CENTURIES, THE EGYPTIANS STILL HAVE SOMETHING TO TEACH US, Parts I and II 2/3/11
What went on in Egypt and is going on now is a story as old as time: a group of overeducated, understimulated, extravagantly pampered yet remarkably doltish children of the very well off decide, with very little evidence other than being told their whole lives that they are just the most wonderful things ever to grace our universe, that they should be able to tell everyone else how to run their lives. Egged on by a consanguineous media, they act on their delusions of superior wisdom and insight by demonstrating, rioting, legislating, or otherwise seeking to impose their oddball visions of utopia on the those who actually work for a living, know better, and don’t need to be told how to conduct their lives by a bunch of kids whose most salient traits are a hyper-inflated self image that manifests itself by bad cases of diarrhea of the mouth and constipation of the mind.
We saw this phenomenon in the ‘60s and ‘70s in this country when the sons and daughters of the wealthy decided it would be fun to cure their boredom, demonstrate their manifest insight, avoid having to deal with the real world, and maybe even get lucky by burning down the nation’s campuses. Such miscreants have since gone on to positions of great authority in government, politics, education, and the non-profit sector, positions from which they finally realize their dreams by wreaking even greater and more enduring damage on the nation they so despise.
The “pro-democracy” demonstrators in Egypt are cut from the same cloth as the self-determined superiors who continue to tear at the fabric of our society. Despite what they call themselves, they seek not that the people govern themselves but that they, the demonstrators, govern the people. The evidence of this “I’m going to impose on you what you need whether you like it or not” attitude is provided in the words of Mr. Mahmoud Abdallah, a “pro-democracy” demonstrator thus quoted in the Journal article:
“The people don’t know what is good for them. They don’t have any awareness. They just want to make money.”
Bernadine Dohrn, Bill Ayers, and Abby Hoffman, who never had to worry about making money because their parents gave it to them, couldn’t have said it better. I am sure that Mr. Mahmoud, like his American predecessors of the ‘60s, would be glad to impose on average Egyptians what is good for them, by force if necessary, just as a similar band of young, ever so self-confident idealists did in Russia in 1917.
The Journal quotes Sahdi Hamid, director of research at the Brooking Institution’s Doha Center as saying
“The liberal and leftist groups that were at the forefront of the revolution have lost touch with the Egyptian people.”
Mr. Hamid is wrong in this particular contention; the liberal and leftist groups, over which the American media fawned so effusively a few months ago, never were in touch with the Egyptian people.
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