Month: October 2008

VOTE YOUR WALLET

It’s well known the economy and stock market do better under Dems than Reps. But how foolish do I feel for never having made it this clear? The text (below) makes the case, but the graphic will drop that sculpted jaw of yours straight down to your thorax. Thank you, New York Times:

Bulls, Bears, Donkeys and Elephants
By TOMMY McCALL

Since 1929, Republicans and Democrats have each controlled the presidency for nearly 40 years. So which party has been better for American pocketbooks and capitalism as a whole? Well, here’s an experiment: imagine that during these years you had to invest exclusively under either Democratic or Republican administrations. How would you have fared?

As of Friday, a $10,000 investment in the S. & P. stock market index would have grown to $11,733 if invested under Republican presidents only, although that would be $51,211 if we exclude Herbert Hoover’s presidency during the Great Depression. Invested under Democratic presidents only, $10,000 would have grown to $300,671 at a compound rate of 8.9 percent over nearly 40 years.

OH, THANK GOD

In February, I sang the praises of Bolthouse beverages. In June, I had to put principle above pomegranate and un-sing – and stop drinking the stuff – because the Bolthouse family patriarch was funding efforts to thwart equal rights. (Call me sappy, but I’m a big believer in equal rights.) Now comes word in the L.A. Times that ‘The food fight is over.’ The company has made peace with Californians Against Hate. It’s made clear, in word and deed, that it no longer has any connection to William Bolthouse, who sold out three years ago. Bring on the mangosteen!

ANOTHER CONSERVATIVE FOR OBAMA

Chris Buckley – Wm. F. Buckley, Jr.’s son, no less. A former McCain speechwriter, no less. Known the senator personally for a quarter century, no less. A conservative who writes: ‘for the first time in my life, I’ll be pulling the Democratic lever in November.’

SENATOR McCAIN AND GORDON LIDDY

Carl Bernstein writes of G. Gordon Liddy, who threw a John McCain fundraiser in his home:

During the same period that Bill Ayers was a member of the Weather Underground, Gordon Liddy was making plans to firebomb a Washington think tank, assassinate a prominent journalist, undertake the Watergate burglary, break into the office of Daniel Ellsberg’s psychiatrist, and kidnap anti-war protesters at the 1972 Republican convention. . . .

A BETTER DAY ON WALL STREET

If you sold ‘a third to half’ your RSW Friday, you got around $189 a share, about a double, and are thinking two things: (1) Yeah, but I got killed in WM and FMD and all those idiot warrants; and (2) Why didn’t I sell all my RSW?

To which I respond: (1) See? I can read your mind; and (2) Because we still have a lot to work through.

PREPARE FOR HUGE DEFICITS – WE NEED THEM

We’re in a bind because Reagan, Bush, and Bush ran our National Debt up from 30% of GDP to what will be nearly 75% of GDP when Bush leaves.

And it was borrowed for nothing. Or pretty close to nothing. We got a war we’d have been better off not fighting. We got families with 7 homes and 13 cars who, if we had stuck with, say, the Clinton/Gore tax rates, would have had to manage with just 6 homes and 12 cars. We got this lousy T-Shirt.

It matters what you borrow for.

By the time we won World War II, our National Debt was 121% of GDP – up from about 40% when it started (and 16% in 1929). But winning World War II was something we had to borrow for. And when the war was won we got about the business of paying it down – to the aforementioned 30% just 35 years later.

Well, now we have another crisis. It requires, among other things, that we make a massive effort to become energy independent. What an investment in our prosperity, our planet, and our national security that will be. We also have to keep the financial system from collapsing. And it wouldn’t hurt to keep people employed when we have so much infrastructure to renew. So now is not the time to go all Herbert Hoover and try to balance the budget. Now is the time to set big, clear goals . . . engage the nation in a mission bigger than ‘shopping’ . . . and involve the government to the extent (albeit only to the extent) it can help fulfill the mission. We won World War II. We went to the moon. We can do this.

It would have been easier if we were starting from a base of 30% Debt-to-GDP. Easier still if so many of us were not so deeply indebted ourselves.

But yesterday’s market rebound, even if it does not ultimately prove to have marked ‘the bottom,’ is encouraging. And the tide of technological progress, predicted by Ray Kurzweil to be 32 times faster and more astonishing these next 50 years than the last, is ultimately our ace in the hole.*

The sharp drop in the price of long-term Treasury Inflation Protected Securities (TIPS) seems to be telling us that investors expect deflation rather than, or at least to precede, inflation. But yielding more than 3% above inflation for the next 24 years, they once again appear to be an attractive holding for retirement plans. Yes, the price of oil is falling; and, yes, global recession are deflationary (or at least not inflationary). For now, the huge increase in the money supply is more than countered by the decrease in its ‘velocity.’ Dollars aren’t whizzing around as fast as they were (and last week were all but frozen), so each dollar does less work. But in the long run, I would think inflation is in the cards. Then again, my major was Slavic Languages and Literatures, so all I really know is that Anna Karenina did not end well (for her).

*Or, as predicted by the Unabomber, our undoing. (Oops.) Nothing’s easy. More than ever, we need the best and brightest in government doing their best to navigate ever more rapid rapids.

Five hundred sixteen years ago yesterday, Christopho Columbo discovered Japan (or thought he did; actually it was the Bahamas), claimed it for Spain, and the rest is history.

Which brings us to . . .

THE DEBT

President Bush continues to exceed all expectations. Our 232 years of accumulated National Debt, I have been writing in this space for some years, ‘will have reached $10 trillion or so by the time President Bush leaves office – up from under one trillion when Ronald Reagan took office.’*

Well, he hasn’t left office yet, and he’s already there – and with a quarter trillion to spare!

You go, Mr. President.

*Consider: 75% of all the debt our 43 presidents have racked up since 1776 was racked up by just three of them: Reagan, Bush, and Bush.

THE TRAGEDY

It didn’t have to be this way.

It wasn’t necessary to slash taxes on the rich – even a previous version of John McCain opposed doing that.

Nor was it necessary to oppose the kinds of regulation that could have kept unqualified buyers from getting loans (the less pumped the bubble, the less painful the bust).

And it surely wasn’t necessary to invade Iraq. (Even though it’s rarely said, or listened to, I’ll say it again: Most of the Democratic Senators who ‘voted for the war,’ and perhaps many of the Republicans, were not in fact voting for war; they were voting to give the President the authority, to give his negotiations teeth, foolishly taking him at his word that he would use the authority only as a last resort. Only later did we learn Iraq was the agenda long before 9/11.)

Here’s what a 41-year-old Barack Obama told a crowd of Chicago protestors in October, 2002, five months before we attacked:

I know that even a successful war against Iraq will require a U.S. occupation of undetermined length, at undetermined cost, with undetermined consequences. I know that an invasion of Iraq without a clear rationale and without strong international support will only fan the flames of the Middle East, and encourage the worst, rather than best, impulses of the Arab world, and strengthen the recruitment arm of Al Qaeda. I am not opposed to all wars. I’m opposed to dumb wars.

Clear thinking. A steady temperament. Don’t forget to vote.

Who the heck knows. But I would guess, first, that the powers-that-be around the world will succeed in resuscitating the patient. I have high confidence in Hank Paulson, Ben Bernanke, Barney Frank and others who are talking to each other – Warren Buffett, Bob Rubin, Larry Summers, European Central Bankers . . . and of course our I-hope next President and the people he will have working the problem.

(It will not surprise you to know that Senator McCain does not inspire the same confidence in me. His top advisor, Phil Gramm, helped get us into this mess; his 2000 top advisor wrote that the Dow should be 36,000. He seems to jump from one ill-considered ad hoc position to the next: let’s waive the federal gasoline tax for the summer; let’s cut taxes for the oil companies and CEOs while rooting out greed and excess (you know, CEOs with seven homes and 13 cars); let’s acknowledge that the fundamentals of the economy are strong; let’s acknowledge we are in the worst economic crisis since the Depression; and . . . Tuesday night . . . let’s buy up $300 billion of mortgages at face value, wildly overpaying for them, which everyone agrees is a completely bad idea.)

I think all this authority the Treasury has been granted (but only begun to use), and that the Fed and central banks around the world already have, may begin to kick in soon . . . and that one day, a panic of greed (however short-lived) may overcome the panic of fear.

‘Omigod – American Express down from $63 to $24? What if the world doesn’t end? Omigod – General Motors $25 preferred at $5.55? What if GM gets the kind of help Chrysler did ages ago and GM survives? Omigod – GLDD down 50%? What if we try to resuscitate the economy in part by renewing our infrastructure, like keeping our waterways navigable? Omigod – Anadarko down from $81 to $30? What if oil drops to $70, or even $40 before eventually going back to $70? Is there no money to be made at $70 a barrel?

(Omigod – did you see on the nightly news this week where some beautiful new $275,000 four-bedroom Florida homes have been marked down to more like $60,000 or $80,000? How can you go wrong with that?)

And those are just some semi-random Omigods, not meant to represent a shopping list or the most enticing opportunities.

But you can see how overwhelming fear could suddenly become panic at possibly missing the boat.

So with our ‘double-inverse S&P exchange-trade-fund,’ RSW, at $169 – double where it was when first suggested six months ago – I’d sell a third to half of it, especially if you bought it in a tax-deferred retirement fund where selling exposes you to no income tax.

But don’t sell it all, or sell it thinking the bottom was reached yesterday afternoon. It’s possible the resuscitation will fail. And even assuming it succeeds – as I think it will – will that success really mark the end of this bear market?

I’d guess not. It seems to me we are headed for a rough recession, no matter what (but, hey, we’ve had them before), followed by a rough inflation (we’re printing money like crazy, as we should be, but that devalues the currency), followed by rising interest rates to tamp down the inflation, followed by another recession . . . this is not going to be an easy decade, any more than the post-Vietnam decade was in any sense easy.

Recessions depress earnings, which depress stock prices. Higher interest rates depress price-earnings ratios (not to mention home values, as mortgages become less affordable), which also depress stock prices.

Then again, through hard work . . . more prudent personal, corporate, and national behavior . . . the increases technology will bring in productivity and opportunity . . . and just the passage of time, like the time it takes to digest a gigantic meal and finally feel fit again . . . we will one day return to better times. At which point, because of the inflation, the companies that have survived may see their stock prices significantly higher than they are today because the price of everything is by then significantly higher . . . except the price of fixed income securities, like long-term bonds, which, by not gaining a dime in face value, will in fact have lost value adjusted for inflation.

In the long run, if you had bought stocks every month starting in 1929, or any other time in our history, you would eventually have made out far, far, far better than keeping your money someplace safe.

With both Vietnam and Iraq, we attempted to have both ‘guns and butter.’ In the Vietnam era, it was to fight the war and simultaneously wipe out poverty – a well-intentioned but significantly flawed and hugely expensive effort. During the latest tragically misguided war, we have attempted simultaneously to slash taxes on hedge fund managers and oil company CEOs. Not as noble a goal as eradicating poverty, perhaps, but uniquely Republican (Senator McCain is fully on board) and similarly expensive.

The world will probably not end. The basics, as always, apply. Spend less than you earn, live light on the land, enjoy the simpler things, get plenty of exercise, floss, and look for ways to brighten the lives of those around you – it will brighten your own as well.

Have a great weekend.

FEAR

Senator McCain and Governor Palin want to make us afraid that Senator Obama is dangerously liberal – a charge made laughable by the support of, among so many others, Susan Eisenhower, Warren Buffett, and Wick Allison (the former publisher of William F. Buckley, Jr.’s National Review, who maxed out to McCain in the primary but has switched to Obama).

The thing to be afraid of is Senator McCain’s dangerous temperament. He is an angry man. Click here for a short video that makes the case.

WHY ALL THE BASHING?

It’s distasteful – but we just can’t suffer four more years of unsuccessful leadership. It’s not clear to me we can survive four more years of this. I want ‘elite’ leadership from people whose intelligence and judgment are superb. Any man who would impulsively choose to entrust our future, if something happened to him, to a woman who got a D in macroeconomics and whose foreign policy credentials consists of being able to see Russia from her house is simply not a man of good judgment.

Speaking of which . . .

DO YOU REALLY KNOW ANYTHING ABOUT THIS GUY?

For example, do you know he crashed two Navy planes in the United States (where enemy fire was minimal) – and caused a black-out in Spain when he sliced through a power wire – before he ever got shot down in Vietnam?

Rolling Stone offers this cover story:

Make-Believe Maverick
A closer look at the life and career of John McCain reveals a disturbing record of recklessness and dishonesty
By TIM DICKINSON

At Fort McNair, an army base located along the Potomac River in the nation’s capital, a chance reunion takes place one day between two former POWs. It’s the spring of 1974, and Navy commander John Sidney McCain III has returned home from the experience in Hanoi that, according to legend, transformed him from a callow and reckless youth into a serious man of patriotism and purpose.

Walking along the grounds at Fort McNair, McCain runs into John Dramesi, an Air Force lieutenant colonel who was also imprisoned and tortured in Vietnam.

McCain is studying at the National War College, a prestigious graduate program he had to pull strings with the Secretary of the Navy to get into. Dramesi is enrolled, on his own merit, at the Industrial College of the Armed Forces in the building next door.

There’s a distance between the two men that belies their shared experience in North Vietnam – call it an honor gap. Like many American POWs, McCain broke down under torture and offered a “confession” to his North Vietnamese captors. Dramesi, in contrast, attempted two daring escapes. For the second he was brutalized for a month with daily torture sessions that nearly killed him. His partner in the escape, Lt. Col. Ed Atterberry, didn’t survive the mistreatment. But Dramesi never said a disloyal word, and for his heroism was awarded two Air Force Crosses, one of the service’s highest distinctions. McCain would later hail him as “one of the toughest guys I’ve ever met.”

On the grounds between the two brick colleges, the chitchat between the scion of four-star admirals and the son of a prizefighter turns to their academic travels; both colleges sponsor a trip abroad for young officers to network with military and political leaders in a distant corner of the globe.

“I’m going to the Middle East,” Dramesi says. “Turkey, Kuwait, Lebanon, Iran.”

“Why are you going to the Middle East?” McCain asks, dismissively.

“It’s a place we’re probably going to have some problems,” Dramesi says.

“Why? Where are you going to, John?”

“Oh, I’m going to Rio.”

“What the hell are you going to Rio for?”

McCain, a married father of three, shrugs.

“I got a better chance of getting laid.”

Dramesi, who went on to serve as chief war planner for U.S. Air Forces in Europe and commander of a wing of the Strategic Air Command, was not surprised. “McCain says his life changed while he was in Vietnam, and he is now a different man,” Dramesi says today. “But he’s still the undisciplined, spoiled brat that he was when he went in.”

. . . This is the story of the real John McCain, the one who has been hiding in plain sight. It is the story of a man who has consistently put his own advancement above all else, a man willing to say and do anything to achieve his ultimate ambition: to become commander in chief, ascending to the one position that would finally enable him to outrank his four-star father and grandfather.

In its broad strokes, McCain’s life story is oddly similar to that of the current occupant of the White House. John Sidney McCain III and George Walker Bush both represent the third generation of American dynasties. Both were born into positions of privilege against which they rebelled into mediocrity. Both developed an uncanny social intelligence that allowed them to skate by with a minimum of mental exertion. Both struggled with booze and loutish behavior. At each step, with the aid of their fathers’ powerful friends, both failed upward. . . .

. . . McCain has become the kind of politician he ran against in 2000. He has embraced those he once denounced as “agents of intolerance,” promised more drilling and deeper tax cuts, even compromised his vaunted opposition to torture. Intent on winning the presidency at all costs, he has reassembled the very team that so viciously smeared him and his family eight years ago, selecting as his running mate a born-again moose hunter whose only qualification for office is her ability to electrify Rove’s base. And he has engaged in a “practice of politics” so deceptive that even Rove himself has denounced it, saying that the outright lies in McCain’s campaign ads go “too far” and fail the “truth test.” . . .

☞ There’s much more. Inasmuch as we may be entrusting our prosperity to this man for the next four years, you may wish to read the whole thing.

What now?

The very top line is that worse is likely to come – but then better.

As no one knows the timing or order of events – deflation, inflation, stagflation, prosperity – the best asset-deployment strategy, for those who have the luxury of assets to deploy (but also the burden and angst of trying to figure out how to deploy them), is the simple-minded ‘four prong’ strategy I have been suggesting since long before there was an Internet.

I’ll get to that.

The other top line I think is that less than a month from now we will have a President-elect, I hope, who can restore confidence around a simple but powerful vision to renew America.

I’ll get to that, too.

But first, a little perspective.

1987 – I remember being in Detroit on a book tour when the market fell 22.6% on October 19, 1987. The world didn’t end, and in the intervening 21 years life, for most, in many ways, has gotten better. (We’ve also done some colossally dumb stuff and squandered trillions of dollars, which is much of the reason we are where we are.) In that time, the Dow has risen from that day’s close of 1739 to last night’s 9955.

1996 – Eight years after the 1987 crash, in December of 1996, with the Dow in the 6,500 range, Alan Greenspan warned obliquely of ‘irrational exuberance,’ but failed to do anything about it. (What he could have done, as I’ve argued here and elsewhere, is gradually deflate a little of that exuberance by raising the margin requirement from 50% to 55%, and then perhaps 57.5%, and just keep gradually inching, winching, and Grinching it up, thereby to temper market psychology until the fever broke – with the added benefit it could then temper the collapse a bit by unwinding those hikes.)

What seemed irrationally high in 1996 might ironically wind up being our bottom this go-around. ‘We’ve all worked very hard and smart these last few years,’ I wrote a few years ago, reprised last week . . . ‘we’ve built the Internet and laid a zillion miles of fiber optic cable and made astonishing breakthroughs in medicine – we’re richer than we were – so maybe 6500 on the Dow is no longer irrational at all.’

So maybe we bottom at 6500 or maybe yesterday was the bottom or maybe the bottom won’t come for a long time.

But there will be a bottom at some point, and then – with further ups and downs along the way that fake us all out (or at least me) so we wind up knowing for sure it was the bottom only long after that knowledge can do us any good – there will be gains.

John McCain’s chief economic advisor from his 2000 run for President, the previously referenced co-author of Dow 36,000, will eventually be proven right, as sure as you can see Russia from Alaska. It just may take a while.

1998 – Ten years ago, on October 19, 1998, the 11th anniversary of the 1987 crash, I posted this response to a reader query:

From cheery old Lubenovic: ‘What kind of financial strategies/tactics would you recommend for a worldwide recession or …. depression?’

☞ This would be so easy if you knew for sure recession/depression were coming. It’s a possibility, of course, but by no means something you can ‘count on.’

If you could, you would sell all your stocks and real estate and buy puts. (Puts leverage your pessimism much more than selling stocks short directly-and have the virtue of limiting your loss to 100% rather than leave it open-ended if you are wrong.) And/or you would put a good chunk of your money into U.S. Treasury securities. And you might put a few bucks into silver dimes, just to have some walking around money if the value of paper currency were ever called into question.

And then, when things seemed worst and most hopeless . . . when stocks were being given away at prices that would look good unless the world ended altogether . . . you would trade most of your profits in those puts and Treasuries and buy like a bandit. Because I can say with the confidence of a man who knows you will not be around to rebuke me if I am wrong: the world will not end.

But here’s the catch with a disaster strategy: We may already be a good deal of the way into that disaster. Just ask that sliver of the globe that lives East of Prague all the way on out to the Pacific and Hawaii. So it may be that the world is poised to reinflate and grow, that interest rates will rise, puts expire worthless and Treasury bonds (at least those of the long-term variety), sink like a stone.

My guess is that the true path lies someplace in between those two scenarios. We will not have a worldwide depression; but the easy years are behind us for a while. A quarter-point drop in the fed funds rate-swell surprise though it was-may not be enough to turn the world economy around.

Hence it makes sense, I think, to spread your money-if you’re fortunate enough to have enough to spread-over the ‘four prongs’ I have written about from time to time: some cash/liquid money first (money-market funds, T-bills, whatever); an inflation hedge in case the world reflates (your home, stocks over the long run, though inflation would kill most stocks at first); a deflation hedge (long-term Treasuries); and a ‘prosperity hedge’ in case we really have already hit bottom (stocks). How you best weight these prongs depends on your own circumstances (80-year-old widows and 29-year-old eye surgeons are not the same) and your own view of what might happen (or at least your own view of how unhappy you would be if certain things happened, so you can try to stay within your tolerance for pain).

What will happen?

All I know for sure is that no one knows. If things get bad enough, prudence could even come back into fashion. That, no doubt, will be the bottom.

2008 – So here we are 10 years after that, back at one of those times when people are worrying about bad times. And the truth is, we’re in a much weaker position than we were in 1998. The Dow is 1500 points higher today (before adjustment for inflation) – yet we are far more deeply in debt, bogged down in two wars, poorly led, less well respected around the world, and – by the reckoning of almost everyone the pollsters ask – seriously on the ‘wrong track.’

The four prongs continue to make sense – though for most Americans, even just covering the first one, a substantial liquid emergency fund – cash – is beyond their reach.

A few comments to update the prongs:

Cash – for most people, the bank or money market fund or T-bills are fine. If you have a lot of cash, you might consider, as has been discussed here a few times, whether all of it should be in U.S. dollars. It seems to me we will have a few years of gargantuan deficits – and should, to get out of this mess – and that in the short run, at least, this could weaken the dollar relative to some other currencies.

An Inflation Hedge – to the general categories of real estate (which has mostly not yet hit bottom) and stocks (which probably haven’t either) you might add timber (however bad earnings may prove to be in the short run, PCL’s trees do keep growing) and oil (APC is off by more than half from its 52-week high) and long-term TIPS, yielding about 2.5% over inflation (at least as uncle Sam chooses to define inflation).

A Deflation Hedge – Long-term Treasury bonds would get killed in an inflationary environment, yet do well in a flight to safety and when the cost of living falls. I doubt we will have any sort of sustained deflation. We’ve learned a lot since the 1930s and have mechanisms in place like FDIC insurance and the various social safety nets that we didn’t have then. We’ve also gone off the gold standard and are printing massive amounts of new money to fund what will continue to be massive deficits for several years to come. None of that spells prolonged deflation to me.

A Prosperity Hedge – things just might work out. Indeed, I think they will. So if you’re 26 and have begun putting $300 a month into an index fund or two – rejoice! You’re getting the shares at a serious markdown, and they bargains may become better still. If you’re 50 and just inherited $5 million in cash, hoping to put $3 million of it into stocks once it’s fully deployed, you might consider investing $100,000 a month over the next 30 months. But if you’ve got money in the stock market you may genuinely need in the next few years – like, to pay rent or to eat – then you have to ask yourself what it was doing there (don’t you listen? The stock market is never a place for money you might need in the next few years) and, probably, take it out. I would also note that stocks are not likely to do well if we have either deflation or serious inflation, or even just some continuing turmoil. So I, for one, have not sold my RSW.

#

However hard it is to know how to navigate these waters, one thing is simple and applies to everyone: live frugally, light on the land, saving for the future, and recognizing that many of the best things in life are free, or nearly so.

Tomorrow (or soon): Less than a month from now we will have a President-elect, I hope, who can restore confidence around a simple but powerful vision to renew America.

JOHN McCAIN AT HIS BEST

This clip is only 38 seconds long, so suffer the first half (the McCain campaign goes negative this week) . . . because the second half is John McCain at his best.*

*That John McCain deplored the despicable negative campaign Bush ran to beat him in South Carolina in 2000. This John McCain has hired the same firm to try to beat Obama.

HIS CHARITABLE GIVING – I

According to the Chronicle of Philanthropy, last year the McCains gave $211,000 to the John and Cindy McCain Family Foundation (the vehicle through which they do their charitable giving).

Although it’s impossible to know for sure, it’s a pretty fair guess that they’ve spent substantially more operating their private jet each year than they’ve contributed to charity.

That’s totally their choice. But it speaks to their priorities.

The John and Cindy McCain Family Foundation gave out $78,000 last year and $188,000 in 2006 – $93,000 of it to the private prep school his sons attended and the private prep school his daughter attends.

These are huge amounts to give to charity (or to prep schools) if your household income is a few hundred thousand dollars . . . but theirs tops $6 million.

We should honor their wealth (this is America). And it is absolutely theirs to with as they please. But that is the point. You can learn a lot about a family’s priorities from how it spends its money.

HIS CHARITABLE GIVING – II

Ah, some will say, but it’s not his money.

Fair enough. But while it is fine to imagine that the Senator would be more charitable if it were his money, what does it say about his ability to lead others that he has not been able to inspire his wife, whose net worth is estimated at $100 million, to do more?

Has he no say over the number of houses they have, how many cars they have, how much he spends on a pair of shoes?

Are there no pressing world problems the McCain’s have been exposed to that so alarm or concern them or tug at their heartstrings that they would like to use more that $78,000 of their $100 million wealth to address them?

The Bible calls many to tithe – but those are ordinary people, who might even have to sacrifice to do it. I’m not sure what the Bible says about people with 13-bedroom houses (in case you missed the video). But I know lots of people who, because their incomes are extraordinary, give half or more to worthy causes – and still have twenty times as much to spend on themselves as a normal upper-middle-class family. (In the McCains’ case, 20 incomes of more than $150,000.)

You can’t say they don’t give because they expect the government to step in and help. If there’s one thing on which John Sydney McCain III has neither flipped nor flopped, it’s his adamancy that government not help, that government be cut back (except for military expenditures). Like many good Republicans, he expects private charity to be primary in helping those in need.

The problem with that is that – even with centimillionaires giving $78,000 to charity – it’s not enough.

We should respect McCain’s right to want to eliminate the estate tax on $100 million estates and to make permanent – even increase – the Bush tax cuts for the very wealthy.

But it’s not good social or economic policy – especially when we are running enormous deficits.

We should respect his right to oppose benefits for returning Iraq vets and to fight relentlessly, time after time, year after year, to prevent a hike in the minimum wage (that at $5.15 an hour worked out to $25,000 a year if you worked 100-hour weeks).

But why would we vote for him?

It’s not that John McCain doesn’t care – he just doesn’t get it.*

*And you know what? – and I can say this because I’m not the candidate – maybe it is, at least a little, that he doesn’t care. How else does one explain $78,000 in giving on an income that tops $6 million a year? Living so lavishly when there’s so much suffering and so much that needs doing in the world?

LOSERS

John Lemon: ‘I am down 95% in BZ+ Boise, 93% in FMD, and 73% in HAPNW (now INHIW). I think I bought most of them over a year ago, so they will be long term losses if I sell. Should I go ahead and dump them?”

☞ Ouch. It’s certainly worth locking in the tax loss, if you can use it. I have tons of this stuff. I even bought more last week at next to nothing. I’ll wait 31 days and sell my initial stakes for the tax loss. (You have to wait 31 days to avoid the ‘wash sale’ rule under which the losses would be disallowed. The other way would have been to sell now, wait 31 days, and then buy, quite possibly even cheaper.) The new shares and warrants may certainly end up worthless. Probably will. But three years, until the warrants expire, is a long time.

We have a rough road ahead, to say the least. But I think Obama is going to win and that there is a decent chance he will be able to inspire the country and markets around the world to see that we have a long-term plan to become strong again (most importantly: energy efficient and independent) and to gradually work our way out of this mess. So while you would be nuts to buy any of this stuff now with money you couldn’t truly afford to lose – which is why almost no one is buying this stuff – there’s always the chance that three years from now you will be the envy of the homeless shelter. And while you would be nuts to bet on, say, these General Motors convertible debentures, because GM really could go broke – really, and maybe even soon – if it makes it through to the other side, you’d do very well.

The rich get richer because they can afford to take really risky bets. But they get poorer or go broke not uncommonly, too. And it may become less uncommon still.

Don’t sell your RSW.