Shucked Husk Biofractionators Yankee Ingenuity! August 17, 2010March 18, 2017 ENERGY INDEPENDENCE Cal Hullihen: “As a follow-up to your video on Solar Panels in Pavement, I was really impressed by this video clip of what Cool Planet Biofuels is doing. Additionally, the work that Shai Agassi is doing with battery powered vehicles.” ☞ This is all so hopeful. We really can get to energy independence and sustainability. Cool Planet Biofuels plans to put container-size “biofractionator” near the corncobs that would otherwise be plowed under and convert them, instead, to gasoline and carbon fertilizer. The cost, they say, would be well below today’s gasoline price; and the process actually takes carbon out of the air, “sequestering” it in the soil. So it’s a matter of (a) funding/deploying new technologies like this, and their successors (which the Department of Energy is encouraging); (b) getting from here to there; (c) learning to live with each other, as a species, to share the prosperity. EMIS – TSURIS Yesterday’s press release highlighted the riskiness of this speculation. (“EMIS may absolutely lose every penny you invest,” I wrote last week, “but Guru thinks the risk/reward at $1.25 is good. If you have profits in some of his other suggestions, maybe take a little for a small gamble here?”) Guru notes: “Yes, EMIS is about out of money. They’ve been this way for a year. Supposed to be just on the verge of a B12 partnership – but not yet as you see in the press release. Data on Phase III calcitonin for osteoporosis is out next year. Meanwhile, the stock is likely to remain under pressure. A sad tale of misused resources. The published data suggest the osteoporosis trial should show good results – with all the usual caveats. We know calcitonin is an effective product for osteoporosis. Their data indicate that they are giving doses orally that are at or above the injected doses that work [and most people would prefer a pill to a shot]. Owning the stock here is like owning an out-of-the-money option. Most expire worthless, but some don’t.”
Pavement To Charge Up My Volt (And Move Forward) August 16, 2010March 18, 2017 VOTE FOR SOLAR ROADWAYS I’m telling you, this is so cool: Pave not with petroleum based asphalt but with sand-based photovoltaic panels – one giant electric grid. If you haven’t already, watch last week’s video. Then consider voting for the three game-changing ideas here. You have to register with GE’s Ecomagination Challenge but it takes just a minute; and right now, the ideas are so close to snagging GE’s seed money – with just a few hundred votes for each idea, your vote could actually make a difference. Not to say I’ve evaluated all the other ideas competing for GE’s dough (or have the competence to do so). But some of you are awfully good at this stuff. Take a look! You can vote for all the ideas you like. VOTE FOR MOVING FORWARD I know politics is tacky and simplistic. But the broad themes are clear and real: The Republicans really have tried to block everything the President has done. The President really is leading the country forward – on education, on energy, on health, on financial reform. Here he asks us to choose DRIVE over REVERSE this November. Spread the word. Make the choice. DETROIT To those who lambasted the Obama Administration for throwing Detroit a lifeline (aka “bailout” aka “nationalization”), this may be worth a read – “Jobs are growing. Factory workers are anticipating their first healthy profit-sharing checks in years. Sales are rebounding . . .” Uncle Sam’s 61% stake in GM may turn out to have been a good investment for the taxpayer. . . . Detroit has vowed to change before, slimming down when sales slumped or pouring resources into vehicle quality to catch up to foreign competitors. Those efforts stalled or failed. But many auto analysts say the current makeover has a more permanent feel, largely because of the presence of the outsiders at the top and the lessons learned from the near-death experience of last year’s bankruptcies at G.M. and Chrysler. Ford’s chief executive, Alan R. Mulally, broke the mold four years ago when he came from Boeing and set out to streamline Ford’s bureaucracy and integrate its worldwide operations. At G.M., Edward E. Whitacre Jr., a former AT&T chief, has replaced dozens of top officials with outsiders and younger executives, and driven the company to make decisions faster. Those efforts are likely to be accelerated under Daniel F. Akerson, who was named on Thursday to succeed Mr. Whitacre as chief executive in September. And at Chrysler, Mr. Marchionne, an Italian raised in Canada who is both a lawyer and an accountant, is systematically upgrading the carmaker’s aged product lineup and revamping its plants in Fiat’s image. “Fundamentally this thing has been reshaped, resized and rethought,” Mr. Marchionne said of Detroit. . . . ☞ I want a Chevy Volt. I just need a place to plug it in, and a reason to drive it.
Wing Nuts August 13, 2010March 18, 2017 THANKS, LESS Re yesterday’s ETF comments from Less Antman . . . Kirk Elliot: “I think Less Antman offers great advice. I go to the ‘Ask Less’ link [at left] all the time and also subscribe to his free newsletter ‘Simply Rich.’ I have a Target Date Fund in my 401(k) account that includes a slice of a commodities fund, which is a good inflation hedge I think (one of the ‘four prongs’ as you say). Please tell Less thanks for his free advice, it is much appreciated by us commoners.” IMPEACH! Joe Devney: “I saw the interviews you linked to in Tuesday’s column, and I’m not surprised that someone is calling for Judge Walker’s impeachment. Tony Perkins seemed to believe that a judge had no right to strike down Prop 8 because millions of people voted for it. How can he have so little understanding of how things work? A couple of months ago I read an article on a conservative website about President Obama being a criminal because he is using a Social Security number issued in Connecticut. (No indication of how the people making the accusation know the president’s SSN.) Some of the commenters thought he should be impeached, but didn’t seem to know a thing about the process. ‘Maybe I’ll write to Hillary and see if she will start the process.’ Doesn’t he know that Hillary Clinton is no longer in Congress, and Barack Obama is now her boss? ‘Let’s write to the Supreme Court and tell them to impeach him.’ What? Impeachment is done by Congress, and the Supreme Court doesn’t initiate the cases that come before it. ‘He should have been impeached on day one.’ How could he be impeached within hours of being sworn in? He wouldn’t have had time to commit any high crimes or misdemeanors in office, so there could be no grounds for impeachment.” WHEN THE CONSERVATIVES MEET THE WING NUTS How I miss William F. Buckley, Jr. Even Ronald Reagan, I think, would be horrified by what’s happened to “conservatism.” Here, in Mother Jones, is the totally absorbing story of a Congressman with a 93% lifetime approval rating from the American Conservative Union who was massacred 71% to 29% in his primary by a Tea Party candidate for, basically, being too honest and thoughtful. Too responsible. Most of the more colorful socialist / racist / conspiracy stuff is near the beginning of the piece. It would be funny if it weren’t so scary. This more substantive part comes near the end: . . . As an example of both the GOP pandering to right-wing voters and conservative talk show hosts undercutting sensible policymaking, Inglis points to climate change. Fossil fuels, he notes, get a free ride because they’re “negative externalities”—that is, pollution and the effects of climate change—”are not recognized” in the market. Sitting in front of a wall-sized poster touting clean technology centers in South Carolina, Inglis says that conservatives “should be the ones screaming. This is a conservative concept: accountability. This is biblical law: you cannot do on your property what harms your neighbor’s property.” Which is why he supports placing a price on carbon—and forcing polluters to cover it. Asked why conservatives and Republicans have demonized the issue of climate change and clean energy, Inglis replies, “I wish I knew; then maybe I wouldn’t have lost my election.” He points out that some conservatives believe that any issue affecting the Earth is “the province of God and will not be affected by human activity. If you talk about the challenge of sustainability of the Earth’s systems, it’s an affront to that theological view.” Inglis voted against the cap-and-trade climate legislation, believing it would create a new tax, lead to a “hopelessly complicated” trading scheme for carbon, and harm American manufacturing by handing China and India a competitive edge on energy costs. Instead, he proposed a revenue-neutral tax swap: Payroll taxes would be reduced, and the amount of that reduction would be applied as a tax on carbon dioxide emissions—mainly hitting coal plants and natural gas facilities. (This tax would be removed from exported goods and imposed on imported products—thus neutralizing any competitive advantage for China, India, and other manufacturing nations.) Here was a conservative market-based plan. Did it receive any interest from House GOP leaders? Inglis shakes his head: “It’s the t-word.” Tax. He adds, “It’s so contrary to the rhetoric we’ve got out there, to what Beck, Limbaugh, and others are saying.” For Inglis, this is the crux of the dilemma: Republican members of Congress know “deep down” that they need to deliver conservative solutions like his tax swap. Yet, he adds, “We’re being driven as herd by these hot microphones—which are like flame throwers—that are causing people to run with fear and panic, and Republican members of Congress are afraid of being run over by that stampeding crowd.” Inglis says that it’s hard for Republicans in Congress to “summon the courage” to say no to Beck, Limbaugh, and the tea party wing. “When we start just delivering rhetoric and more misinformation…we’re failing the conservative movement,” he says. “We’re failing the country.” Yet, he notes, Boehner and House minority whip Eric Cantor have one primary strategic calculation: Play to the tea party crowd. “It’s a dangerous strategy,” he contends, “to build conservatism on information and policies that are not credible.” ☞ I’ve written about Bob Inglis before – you can watch him on C-SPAN. But this profile in the current Mother Jones is worth the read. (Thanks, Kevin.)
ETFs And Onions August 12, 2010March 18, 2017 PAVEMENT II Yesterday I offered this exciting video about paving roads with solar panels. Meanwhile, Rachel Maddow was running her own decidedly less upbeat paved-roads segment. Under the heading, “Unpaved: Out-Of-Cash America Undoing Its Infrastructure,” Dave Johnson blogs: In case you missed Rachel Maddow Monday night, she had a segment on American cities and counties actually undoing their infrastructure because they are out of money. She listed city after city across the country that is shutting off its streetlights, turning paved roads into gravel, shutting down bus systems, shutting down schools, firing police, and other steps to save money. To me, the most striking comment was, “Somewhere in China it is entirely possible that a businessperson sat down for a ride on a 200mph state-of-the-art levitating bullet train, and cracked open the Wall Street Journal, and read about how in American we’ve decided we can’t afford paved roads anymore.” JPMORGAN – WHAT ARE YOU DOING? According to my friend Janet Tavakoli, here, JP Morgan Chase is a giant commodities speculator (losing, most recently, hundreds of millions of dollars on coal). And this is appropriate for a bank . . . how? CHEAP +AND+ GAY? Zac Bissonnette: “OK, so there are two things about this that you wouldn’t normally see: A piece about a gay couple in a magazine for senior citizens; a pair of frugal gay men. It’s written by my friend Jeff Yeager, whose new book The Cheapskate Next Door is quite good.” ☞ Can I just say what a nice thing this is? A long time ago, I wrote about the “hohumization” of the whole gay thing. (Like: who cares?) We’re not there yet, to be sure. But when “the world’s largest-circulation magazine” runs a piece like this (why not? who cares?), it’s one more sign of progress. ETFs Greg Stroud: “I double checked the archives and can’t find a recent ETF article. I thought ETFs would be ideal ways to get into certain areas (like gold) but with the ease of just buying a stock. But recently I heard ETFs can have surprising tax bills based on how they are structured and surprising problems (like contango).” ☞ Two things you definitely need not know about are contango and backwardation, which is why I never remember what they are – and turn in such matters to Less Antman, who knows everything: ETFs are just closed-end mutual funds whose issuers minimize discounts and premiums by the judicious issuance and redemption of large units of the underlying securities: there are no special tax issues related to them. [This much I knew.] However, some ETFs invest in exotic instruments that have special tax issues related to them, and the ETFs have the same treatment as those underlying investments. Plain vanilla ETFs that invest in stocks and bonds are no more complicated than any other mutual fund. For a discussion of the tax complications associated with commodity, leveraged, and inverse ETFs, I recommend this fine article by Paul Justice of Morningstar. Justice, not being a tax professional, does as good a job as can be done in translating the applicable tax rules into English. Contango is a word that many people are learning for the first time from a recent Business Week article trashing commodity funds (unfairly, in my view, but that’s another subject entirely). It refers to the very natural tendency of most commodity futures contracts to trade at values higher than the underlying commodity, because the owner of the futures contract doesn’t have the storage costs associated with holding the commodity itself. I assure you that it is far less expensive and far more pleasant to have a six month pork belly futures contract in your possession than to have the pork bellies themselves for half a year. On the other hand, there is also a reason for commodity futures contracts to sell for less than the underlying commodity, because these contracts are typically sold by the producers of the commodities in order to protect themselves against the devastating consequences of a drop in the price of the product they sell, and the buyers of insurance are willing to pay something for the value of that insurance. If the insurance value to the producer is high enough, the net effect can even be for the futures contract to sell for less than the spot commodity, and this is called backwardation (I have no idea why it isn’t called protango). Complicating all this is the fact that virtually all commodities are expected to fluctuate in value on a seasonal basis, or for other reasons, and the futures contract has no reason whatsoever to sell for the same price as the commodity itself today. Indeed, the very point of futures speculation is to anticipate fluctuations in prices and thereby avoid future surpluses and shortages and reduce price volatility. There is plenty of evidence that speculation does, in fact, reduce volatility: the one commodity on which commodities trading is prohibited, onions, suffers from larger fluctuations and supply/demand imbalances than other commodities. (If you’re wondering why onion futures are banned, it was because of special interest legislation pushed in 1958 by a farm state Congressman named Gerald Ford. The history of the legislation would bring tears to your eyes). The reason to include commodity-based investments in a portfolio is that radical changes in commodity prices have a tendency to destabilize the business environment and hurt stocks; so commodities have tended to do well when stocks have been doing poorly, and vice versa. Indeed, 2008 was the first year in which both the S&P 500 and the Reuters Continuous Commodity Index suffered double-digit losses, and those indexes go back more than a half century. The losses and gains from contango and backwardation are dwarfed by the diversification benefit of commodity futures, in my opinion. The bottom line is that ETFs are nothing special, but some investments held in them are.
Must-See Pavement TV And Charlie Rangel's Defense August 11, 2010March 18, 2017 SOLAR ROADWAYS According to this video, 25,000 square miles of U.S. roads and highways absorb the sun’s rays. If we paved a third of that with solar-panels, we’d meet all our electricity needs without burning a single lump of coal. And this guy has a plan. It’s the most exciting video – or certainly the most exciting road-surface video – you will see all year. (Thanks, Ed!) HIS BAR WILL HAVE BETTER MUSIC Thanks to The Daily Beast for pointing me to this story: the Fox News guy planning to open a gay bar next to the Ground Zero mosque. EMIS Want another truly, truly speculative little drug stock? EMIS may absolutely lose every penny you invest; but guru thinks the risk/reward at $1.25 is good. If you have profits in some of his other suggestions, maybe take a little for a small gamble here? RANGEL Last week, I posted this New York Sun piece to the effect that Charlie Rangel is being railroaded. Herewith the Washington Post: Charlie Rangel is No Crook By Eugene Robinson Washington Post August, 5, 2010 p. A17 Charlie Rangel is no crook. He’s right to insist on the opportunity to clear his name, because the charges against him range from the technical all the way to the trivial. All right, there’s one exception: On his federal tax returns, Rangel failed to declare rental income from a vacation property he owns in the Dominican Republic — a mortifying embarrassment for the one-time chairman of the House Ways and Means Committee, which writes the tax code. But certain facts about this transgression rarely get mentioned. For one thing, Rangel’s so-called “villa” can’t be very palatial, since it cost only $82,750 when he bought it in 1987. For another, Rangel has already filed amended tax returns and paid everything he owed, plus penalties and interest. The remaining charges are yawn-inducing. Even assuming that the allegations, as presented to the House Ethics Committee, are wholly true, the case against Rangel has a Gertrude Stein problem: There’s no there there. ☞ In much more detail, but actually quite fascinating, Congressman Rangel’s own response to the Ethics Committee: here. (As someone who follows the ins and outs of rent-stabilized versus rent-controlled apartments, I found the stuff on Apartment 10U particularly interesting and, at least as presented, exculpatory.) One snip: Congressman Rangel helped a public college in his Congressional district to establish and fund an academic program in public service for disadvantaged students [horrors!]. To support that effort, he agreed to donate his official papers, allowed the school to name the program in his honor and introduced college officials to potential donors [none of whom had pending matters before his committee] [horrors!]. Congressman Rangel is hardly the only member of the Congressional leadership to engage in such activity. Senate Minority Leader McConnell, for example, has donated his official papers, lent his name and raised millions of dollars from corporate donors to launch the McConnell Center for Political Leadership at the University of Louisville . . . ☞ No one is saying Rangel made no errors. All of us make errors – or, if we’re hugely busy, have staffs that make errors on our behalf. We need to apologise for them and make them good – as Charlie Rangel has. And then move on. Tomorrow: ETFs (sorry, got bumped by that not-to-be-missed Solar Roadway video)
Cheez Doodles (And More) August 10, 2010March 18, 2017 MARRIAGE Some on the right believe that if 50.1% of the people vote for something – like California’s marriage ban – it must be Constitutional. And that the Courts should have no role in deciding whether or not that’s so. So if, for example, 50.1% of the people voted to prevent Catholics from receiving Social Security benefits – or marrying – that would be okay. And if a judge said, “Whoa! Hang on! We have a Constitution meant to protect the 49.9% – or even the 4.9% or the 0.00049% – from the ‘tyranny of the majority,’” then that judge should be impeached. Never mind that in this case the judge was agreeing with noted conservative attorney Ted Olson and noted Republican Governor Arnold Schwarzenegger and noted former First Lady Laura Bush. Get a grip, people! You can still consider your own marriage superior to ours! You can still disown your child for being gay! You can still hope he or she never forms a stable, loving relationship! Or that – if God forbid he or she does – he or she will be discriminated against in subtler ways (like being kicked out of your church). The only thing you can’t hope, if Judge Walker’s ruling is upheld, is that your child and his or her family will be denied Social Security benefits (along with the other Federal benefits and responsibilities of civil marriage). Sorry, but that’s the downside of living in a country where everyone is guaranteed equal treatment under the law. See David Boies on CBS here. Ted Olson on Fox, here. And a straight San Franciscan’s take on gay marriage here. DODD-FRANK Sam Kahn: I’ve had dozens of conversations with people over the years who blame Frank and Dodd for the financial meltdown. All concede that that the problems occurred starting in the late 1990s going through 2007 when the bad stuff really started happening. In every conversation, I asked people to name the chairmen of the committees from 1994 through the end of 2006. [Frank was in the minority all those years, Dodd was in the minority most of those years – they can’t possibly be blamed for the inactions of the “regulation is bad” Republicans.] I’ve yet to find one person who could name any of the Republican chairs. They are, in my opinion, the ultimate Teflon people. They ran the committees, but no one even knows who they are. Instead, Republicans want to blame Dodd and Frank.” CHEEZ DOODLES Jim Leff: “Cheez Doodles weren’t invented. They were ripped off.” THUMBNAILS From the Campaign for America’s Future NYT’s Paul Krugman sounds the alarm that there’s not enough state aid to prevent a collapse in infrastructure and education: “…for all the talk of a failed stimulus, if you look at government spending as a whole you see hardly any stimulus at all. And with federal spending now trailing off, while big state and local cutbacks continue, we’re going into reverse … Everything we know about economic growth says that a well-educated population and high-quality infrastructure are crucial.” NYT edit board tries shaming Congress to do more on jobs: “… the response from Washington has been inadequate, at best, with Democratic initiatives too timid and Republicans bent on obstruction … the [$26B state aid] measure started out as a $50 billion effort … it was a reasonable response to anticipated budget shortfalls estimated at well over $100 billion this year. Now, deep spending cuts and tax increases will still be needed to balance budgets, undermining the recovery. … There is no one way to foster job growth. There are many ways, and they should all be deployed. Maybe after Congress gets back from vacation.” Robert Reich rebuts Robert Rubin and Alan Greenspan’s no-more-stimulus stance: “Both Greenspan and Rubin are deficit hawks. So was Herbert Hoover and so was Hoover’s Treasury Secretary Andrew Mellon. And look what Hoover and Mellon got us into. When we least need him, Hoover is being exhumed.” Tomorrow: ETFs – and More Reason to Think Charlie Rangel Shouldn’t Quit
Matt Miller’s Great Idea NBIX and DEPO August 9, 2010March 18, 2017 CLIMATE CHANGE The eminent meteorologist staying with us this past weekend notes that average Moscow mid-summer highs are 73 degrees and that prior to this summer Moscow’s highest recorded temperature ever (one freakish day in 1920) was 98.2 degrees. Yet lately, it’s been routinely over 95 degrees and several days over 100 degrees – which would be like New York City (average mid-summer highs 84) having weeks of heat above 106, occasionally spiking to 113 or Phoenix (average mid-summer highs 101) having weeks of 123-degree heat occasionally spiking to 130. A good chunk of Russia is burning and the smoke – which my meteorologist says they are wrongly calling “smog” – is choking folks in Red Square (photos here). Muscovites are advised to stay indoors, shower more often, and – rueful smile – “refrain from smoking.” My meteorologist has been reading James Hansen’s Storms of My Grandchildren: The Truth about the Coming Climate Catastrophe and Our Last Chance to Save Humanity. (“Hansen, director of the NASA Goddard Institute for Space Studies, lays all the cards on the table in this thorough, detailed analysis . . . a Silent Spring-style warning cry that predicts ‘a rough ride’ for our grandchildren.” – Publishers Weekly.) My meteorologist’s own view is that it’s probably too late to reverse/prevent the climate change to come. We’ve already thrown the system out of whack, and a “positive feedback loop” that could cause (among much else) the western ice shelf of Antarctica to break off and melt sometime in this century – once things get moving, it could happen relatively fast – and raise sea level three to six feet. (Bye-bye, Florida and population centers around the world; hello, famine, drought, pestilence, mass migration, and war.) Did you notice that a chunk of ice four times the size of Manhattan broke off from Greenland Thursday? None of this is certain of course, and many – largely scoffed at by Republicans who blocked the latest energy bill – still believe we can act to prevent or mitigate the damage. (One small, imperfect, but specific and practical thing you can do? Vote Democrat.) Which leads me directly – this notion of “cut taxes, let our children pay; mock Al Gore, let our children pay” – to Matt Miller’s Great Idea: LOWER THE VOTING AGE TO 10 . . . . . . Says Matt Miller, here – brilliantly – in the Washington Post: What this country needs is a movement to lower the voting age to 10. Hear me out. Wherever you look, from debt to schools to climate to pensions, the distinctive feature of American public life today is a shocking disregard for the future. Yes, politicians blather on about “our children and grandchildren” all the time — but when it comes to what they actually do, the future doesn’t have a vote. If you want to change people’s behavior, you need to change their incentives. It’s time to give politicians a reason not simply to praise children, but also to pander to them. About 125 million Americans voted in the 2008 presidential election. There are about 35 million Americans ages 10 to 17. Giving them the vote would transform our political conversation. It would introduce the voice we’re sorely missing — a call to stewardship, of governing for the long run, via the kind of simple, “childlike” questions that never get asked today. Imagine a phalanx of fresh-faced yet fierce 13-year-olds (like those on my daughter’s middle school debate team) shaming the adults with the following, for starters: — Is it really a national priority to borrow billions more from us to keep taxes for the best-off 2 percent of Americans lower than they were during the Clinton boom, when we’re in the midst of two wars and already piling up trillions in fresh debt? — Why are you handing off to us a system of decaying bridges, roads, sewers and airports? Doesn’t it embarrass you that you’ve decided you prefer to devote the resources for such investments to your own current consumption? — Even if you’re not sure whether global warming is man-made or potentially fatal, wouldn’t it be prudent to put a high price on carbon to force us toward a green energy economy, just in case the worst turns out to be true? What will you tell us if you leave behind a scorched planet? “Sorry, kids, you had to be there — the interest-group politics were really tough”? — Why are we the only advanced nation that requires kids to go deep into debt to get a college degree? — How can you keep assigning the least qualified teachers in the country to the millions of poor children who need great teachers the most? — Is the quarterly earnings craze in a stock market that operates like a casino really the way to fund and build enterprises that will be globally competitive when we grow up? — Why do you say Social Security can’t be touched, even though you’re planning real benefit increases for future retirees now in their 40s despite trillions in existing unfunded promises? Why rule out questioning these built-in increases when there’s no similar “trust fund” for great teachers or for universal pre-school? — Are you really going to keep letting senators who represent less than 15 percent of the population stop any legislation they want? What about majority rule? Isn’t a children’s movement that sounds like this overdue? Still, I know what you’re thinking. This is a joke, right? Miller can’t seriously be proposing we give fifth-graders an equal say with mature, responsible adults. Let that objection linger in view of the questions above and decide for yourself if the grown-ups really occupy the high ground here. We’re in a topsy-turvy world best captured by my favorite political cartoon from the debt-soaked 1980s: “Your generation will just have to spend a third of your income to support my generation when you grow up,” says a stern father. “Why us?” his scared daughter asks. “Because of your failure as children to teach your parents to be responsible.” “I’m sorry, Daddy!” “So am I.” The fascinating thing would be to get a movement going in six or seven states to enact this lower voting age. The crusade would provide the news hook the media needs to focus on long-term challenges that are routinely ignored amid the breathless daily panting over trivia. I’m not saying “10” is the only answer. I want creative litigation brought on behalf of minor future taxpayers, suing states and public-sector unions that have recklessly saddled kids with zillions in unfunded pensions. Or anti-debt street protests by 10th-graders eager to redefine community service for their college résumés. It would be nice if the kids didn’t have to take up this burden, but we are where we are. To those who say this is all unseemly if not insane, I have four words: Got a better idea? Matt Miller, a senior fellow at the Center for American Progress and co-host of public radio’s “Left, Right & Center,” writes a weekly column for The Post. He can be reached at mattino2@gmail.com. NBIX / DEPO So maybe we’re now, above $6, out of half the NBIX we bought at $2.60. (Upon further reflection, birds feeling good in hands, I sold some more from my tax-deferred account Friday.) So from now on we’re playing with house money.* But guru suggests we not sell DEPO, which jumped nicely to $3.75, whether we bought it originally at $4.50, and/or more recently at $2.36. He sees it going to $6 in the year ahead. Tomorrow, or soon: marriage, Rangel, and more
Ironic Quotes from 1933, 1934, and 1963 What's In the Financial Reform Bill August 6, 2010March 18, 2017 MARRIAGE MSNBC’s Karen Finney posting in U.S. News yesterday (in part): Arguments have also been made that same-sex marriage dilutes the institution of marriage, just as similar arguments suggested that interracial marriage diluted the white race. My personal favorite absurd justification says that (despite the idea that we are all God’s children and loved equally) gay marriage is against the laws of God and nature. That argument was used [in 1963] by Leon M. Bazile, the judge in the initial case against the Lovings, who said: “Almighty God created the races white, black, yellow, malay and red, and he placed them on separate continents. And but for the interference with his arrangement there would be no cause for such marriages. The fact that he separated the races shows that he did not intend for the races to mix.” ☞ Prompting a reader named Marcus to post: I read the judge’s 136 page ruling from start to end last night. When I read the parts quoted from the brochures used to inform voters about proposition 8 I was shell shocked. I could not believe the state of california (intentionally not capitalized) allowed such hate-filled misinformative junk to be circulated around as proper guiding information to the voters. It’s now perfectly clear to me why proposition 8 passed. WHAT’S IN THE FINANCIAL REFORM BILL Yesterday I cited a very bright, hugely self-confident right-winger who declared to the world that the 2,300-page financial reform bill was a disaster, based on his certainty that no one, least of all he, knew what was in it. Here’s what’s in it, as laid out yesterday in Boston by Treasury Deputy Secretary Neal Wolin. He recounts the financial disaster the President inherited (you already know that part) . . . . . . lays the blame at a lot of feet . . . Legislative loopholes allowed large parts of the financial industry to operate without oversight, transparency, or restraint. Policy makers were too slow to fix a broken system. And there is no doubt that, across the country, many Americans took on more debt than they could afford; and that many firms encouraged them to do just that. So we all share responsibility for the crisis. And we all share responsibility for reform. . . . and then explains what’s been done and where we go from here: Last month, when President Obama signed into law a comprehensive financial reform bill – the most significant financial reforms since the 1930s – we took a tremendous step forward in meeting that responsibility. The reforms that are now the law of the land will help us rebuild a stronger, safer financial system; a system that is pro-growth and pro-investment; a system that does what it ought to do – help businesses finance growth, help Americans save for retirement and borrow to finance an education or a home, without fear of deception or abuse; a system that does these things without letting risks build up unseen and unmanaged; a system that is far less prone to panic and collapse. A lot has been said about the financial reform law, so I want first to step back and look – in broad strokes – at what the new law accomplishes. > First, these reforms give us the tools to look beyond the safety of individual firms or markets to the health of the broader financial system. Through the Financial Stability Oversight Council, supported by the Office of Financial Research, regulators will have the ability and the responsibility to identify and manage systemic risk. And the Federal Reserve will have examination and enforcement authority over all bank holding companies, as well as any non-bank financial companies designated by the Council – so that the largest, most complex financial institutions will be subject to consolidated oversight, regardless of their corporate form. > Second, these reforms require regulators to impose stronger prudential standards – robust, risk-based capital, leverage, and liquidity standards to guard against both firm-specific failures and systemic shocks. > Third, the reforms establish a comprehensive regulatory framework for the derivatives markets – the source of so much risk and uncertainty in the recent crisis. And at the same time, through a narrowly tailored end-user exemption, the reforms ensure that commercial firms will be able to hedge their risks effectively and efficiently. > Fourth, the reforms put an end to the problem of “Too Big to Fail.” They give the federal government the authority to shut down and break apart large non-bank financial firms whose failure threatens the broader system. No firm can be insulated from the consequences of its actions. No firm can be protected from failure. No firm will benefit from the perception that taxpayers will be there to break their fall. The new law makes absolutely clear that taxpayers will never be asked bear the costs of a financial firm’s failure. > Finally, the reforms address the fundamental failure of consumer protection that plagued our system in the years leading up to the crisis. The Bureau of Consumer Financial Protection, an independent entity within the Federal Reserve, will have one mission: to promote transparency and consumer choice, and to prevent abusive and deceptive practices. Now, the law does much more. But these are the core elements: a focus on systemic risk; heightened prudential standards; comprehensive regulation of derivatives; an end to “too big to fail;” robust consumer protection. Flaws in each of these areas helped precipitate or prolong the crisis. This bill targets those flaws – and fixes them. Enactment of the legislation is, of course, not the end of the financial reform effort. Now we must turn to the important work of implementation. Those of us in government – policy-makers, regulators, and supervisors – must make sure that these reforms meet the promise of the law; that these reforms provide both the necessary protections against financial excess and the benefits of financial innovation. We have already begun a rigorous implementation process. The work cannot be done overnight. It will take time. Each of the agencies involved in implementing financial reform – Treasury, the Federal Reserve, the SEC, the CFTC, the OCC, the FDIC and others – are in the process of outlining how they propose to prioritize the rules they now have to write and setting initial dates for when the public will be able to comment on draft rules. Our work involves writing new rules in some of the most complex areas of modern finance. It involves consolidating authority now spread across multiple agencies. It involves setting up new institutions for coordination, crisis management, consumer protection, and for indentifying systemic risks. It involves negotiations with countries around the world. Now, without getting ahead of that process, let me provide you with a brief introduction to the steps we expect to take in four of the most important areas over the next several months. First, consumer protection. Strengthening consumer protection doesn’t mean more regulation, it means better regulation – to help consumers get the information they need to make the choices that are right for them. We will move quickly to give consumers simpler disclosures for credit cards, auto loans and mortgages, so that they can make better choices, borrow more responsibly, and compare costs. For example, in place of the two separate, inconsistent and overly-complicated federal mortgage disclosure forms that borrowers receive today, there should be one clear, simple, user-friendly form. We intend to move quickly to make that happen – and we will seek and test the best ideas from consumers, mortgage companies, and experts alike. In addition, we will be inviting public comment on new national underwriting standards for mortgages, so that we can begin to shape the reforms of the mortgage market. And we are working quickly to get the CFPB up and running, to consolidate rule-making and enforcement responsibilities that today are split, inefficiently and ineffectively, among seven different regulatory agencies. Second, we are moving forward on reforming the GSEs and our broader housing finance system. In a few weeks, the Treasury Department will host leading academics, consumer and community organizations, industry participants and other stakeholders for a conference on the future of housing finance. We’ll use that conference to seek input from across the political and ideological spectrum. And early next year, we will put forward our plan for reform. Third, we are going to move quickly to implement the reforms of the derivatives market. We will work with the Fed, the SEC and the CFTC to outline specific quantitative targets for moving standardized derivatives trades onto central clearing houses. And we will accelerate the international effort internationally to put in place consistent global standards for these critical markets. Fourth and finally, we are working quickly to establish new rules on capital to constrain excessive risk taking and leverage in the largest global financial institutions. This is a global effort. Financial firms will have to hold more, higher-quality capital than they did before the crisis. Firms will be required to hold more capital against the types of risky trading-related assets and obligations that caused so much financial damage during the crisis. Bigger firms and more complex, interconnected firms will have to hold relatively more capital than smaller firms. New capital requirements will be supplemented with new global standards for liquidity management, so that firms can withstand a severe shock in liquidity without deepening the crisis by selling assets in a panic or cutting credit lines indiscriminately. Getting this right is essential. We know that capital requirements must be raised. But we also know that if we set them too high too fast, we could hurt economic recovery or simply end up pushing risk outside of the regulated financial system. So we will move quickly, but we will move carefully. There will be a reasonable transition period, with three years to meet the new minimum requirements and an additional period to build up buffers beyond those minimums. And it is important to note that, because of the rigorous bank stress tests we conducted in 2009, the U.S. financial system is in a very strong position internationally to adapt to the new rules. Those are the areas where we – the Treasury, the regulators – will be focused in the coming months. We are committed to moving with speed, with transparency, and with a commitment to ensuring that our financial system remains the most competitive financial system in the world. But as I said at the start, reform is a shared responsibility. And so to those in the financial industry, I encourage you not to wait on Washington before embracing change. As we work together to rebuild our financial system, responsible private sector leadership is every bit as important as responsible regulation and supervision. Now, before I close, let me just say this: As with any issue of public policy as significant and consequential as financial reform, there are bound to be differences of opinion. But I think no one who witnessed the events of the past two years can deny that the these reforms are necessary and long, long overdue. No doubt, some people will continue to claim – as they have over the past year – that these reforms will bring about the end of American enterprise. So let me offer some perspective. Four years after the great crash of 1929, still in the depths of a Great Depression, another generation rose to meet the great challenge of their day by establishing bold new bank protections and new securities laws. At the time, just as now, the opponents of reform predicted grave danger. In 1933, Time Magazine wrote, in reference to the bill that created the FDIC, “through the great banking houses of Manhattan last week ran wild-eyed alarm. Big bankers stared at one another in anger and astonishment. A bill just passed… would rivet upon their institutions what they considered a monstrous system. Such a system, they felt, would not only rob them of their pride of profession but would reduce all U.S. banking to its lowest level.” A year later, in 1934, the President of the Chamber of Commerce, speaking of the Securities Exchange Act said, “it is the opinion not only of Stock Exchange brokers, but of thoughtful business men that its sweeping and drastic provisions would seriously affect the legitimate business of all members of Stock Exchanges and investment banks, with resultant disastrous consequences to the stock market; would greatly prejudice the interest of all investors; would tend to destroy the liquidity of banks and would impose on corporations of the country serious handicaps in the practical operation of their business.” We all know how wrong those warnings were. Far from weakening American firms, destroying the liquidity of American banks, and handicapping the operation of business, the creation of the FDIC and the ’34 Act – along with the ’33 Act – helped lay the foundations for the most stable, most competitive, most innovative, most transparent and most trusted financial system in the world. Like the banking and securities laws of the 1930s, the Dodd-Frank Act lays the foundation for a stronger, safer financial system – innovative, creative, competitive, globally leading, and far more stable than the one we have today. These reforms will benefit American business and the American people, by providing a more stable source of financing for the investments and innovations that will drive economic growth in the years ahead. Across America, millions of Americans still feel the pain of the economic downturn. But we are on the road to recovery. We are repairing the damage caused by the crisis. And by implementing financial reform, we are taking the hard but necessary steps to ensure that our financial system leads the world in this century, just as it did in the last. Thank you very much. OK, sorry: Monday, Matt Miller’s Great Idea (Unless You Want to Read It Today)
Liberty and Justice And 148% Gain in Five Months August 5, 2010March 18, 2017 AMEN Dan Nachbar: “I have my gripes with Mayor Bloomberg, but one must give him credit for his clear-eyed and courageous stand on the so-called ‘ground-zero mosque’ question. One paragraph of his speech this week caught my eye: The attack was an act of war, and our first responders defended not only our city, but our country and our constitution. We do not honor their lives by denying the very constitutional rights they died protecting. We honor their lives by defending those rights and the freedoms that the terrorists attacked. ☞ Well said, Mike. WITH LIBERTY AND JUSTICE FOR ALL Five years ago, the California legislature passed same-sex marriage but Governor Schwarzenneger vetoed it. Yesterday, a U.S. District Court ruled the ban unconstitutional – and Governor Schwarzenegger issued this laudable statement: For the hundreds of thousands of Californians in gay and lesbian households who are managing their day-to-day lives, this decision affirms the full legal protections and safeguards I believe everyone deserves. At the same time, it provides an opportunity for all Californians to consider our history of leading the way to the future, and our growing reputation of treating all people and their relationships with equal respect and dignity. Today’s decision is by no means California’s first milestone, nor our last, on America’s road to equality and freedom for all people. ☞ Well said, Ahhhnold. NBIX Guru expects positive data this month or next on a depression trial. If the data are good, he sees the stock at $8 (and higher down the road); if not good, at $4. I prefer $8, but sold a chunk in my non-taxable account yesterday at $6.45, up from $2.60, on the theory that you can’t go broke taking 148% five-month tax-deferred profits. I’m holding most of it for the longer term (even if this set of data don’t pan out and it does go to $4). ASSUMING THE BEST OF EACH OTHER We are so quick to assume the worst. Not that it isn’t sometimes justified ($90,000 in a freezer?). And not that I am myself guiltless in this. But I try hard to avoid it because, in my experience, assuming the best of each other often proves to be a pretty good assumption. One example, just because it’s top of mind, before I get to the main event. A very bright guy – who assumes the worst of anyone and anything not right-wing – sent his list a scathing email about the financial reform bill that had just passed. The bill, he assured us without qualification, was a nightmare, not least because neither he “nor anyone else,” he said, had read the 2,300-page monstrosity or knew what was in it. Based on his not knowing what was in it, he was certain it was terrible. When I challenged him, he wrote back that House Financial Services Chair Barney Frank had taken $7 million in sweetheart loans from Countrywide Financial in return for enabling the lax mortgage regulation that all but brought down the financial system. I pointed out that Barney was in the minority at the time – it was the “regulation is bad” Republicans and Bush who ran the show – and asked him to supply a source for the $7 million allegation. He said he had “read it” and I should Google it. I said he should Google it, because it was an incredibly serious allegation – about a friend of mine – and I was calling him on it. He couldn’t find the source and suggested we “agree to disagree.” Bull—-, I replied, noting that he of all people, an Orthodox Jew, should remember that “bearing false witness” was one of the Top Ten things we’re not supposed to do. (For the record: Barney has never taken a Countrywide mortgage. He currently rents. The property he most recently owned cost $170,000. And the 2,300 pages of legislation are, in the main, very positive for investors, consumers, and the stability of the financial system as a whole.) And now! I am no insider in the Charlie Rangel camp, and don’t propose to say that in 80 years he has never made a mistake. But doesn’t this, from the New York Sun, give you pause? It did me: Railroading Rangel Editorial of the New York Sun August 1, 2010 A wise labor lawyer, Judith Vladeck, once offered us her explanation of why honest labor leaders rarely step down from their jobs voluntarily. In contradistinction to the captains of industry and finance, she said, they rarely have vast estates to which to retire. They depend on their offices to carry them into old age. Mrs. Vladeck is gone, alas, but we’ve been thinking of her words during the railroading of an honest stalwart of the left, Congressman Charles Rangel. He is set to go on trial at the age of 80, in the closing years of a long career of service that began in the frozen ditches and darkest days of fight for a free Korea. The charges center on his use of congressional letterhead to try to raise private, voluntary contributions for a public college. On its face, the alleged infraction strikes us as not only petty but also illogical. No one carped when Mr. Rangel used earmarks to steer something like $1.9 million in taxpayer funding to the Charles B. Rangel Center for Public Affairs at City College. But his use of congressional stationary to approach people like David Rockefeller and ask them to contribute to City College to educate minority students in public service is somehow taken as scandalous. The statement of alleged violations issued by a House investigative subcommittee reckons the charitable contributions to the Rangel Center “constituted indirect gifts” that were “attributable” to Mr. Rangel. He, incidentally, is described as “respondent,” though, since he himself requested the investigation, the “respondent” could just as easily be the Ethics Committee. The reason these contributions are “gifts” and “attributable” to Mr. Rangel seems to be that he would have an office in the Rangel Center and the center would allow him to store and archive his papers and “to perpetuate his legacy.” But the papers themselves would no longer be Mr. Rangel’s, because he is giving them to a university that is owned by the public. The logical move is to send Mr. Rangel not a subpoena but a thank you note. One of the contributors to the Rangel Center, Eugene Isenberg, chairs a company, Nabors Industries, that had an interest in a matter before Ways and Means. It got decided in a way that benefited Nabors. No quid pro quo is in evidence, or even, so far as we can tell, alleged. The Isenberg check was a gift to Mr. Rangel only by the logic of the Ethics Committee. What really happened is that Messrs Rangel, by his papers and name and time, and Isenberg, by his $100,000 check, each gave to the same charity, a center to help uplift minority students to careers in public service. The approach to Mr. Isenberg, moreover, was made not by Mr. Rangel, though the two talked on September 19, 2006, in the presence of the president of City College, Gregory Williams. The meeting had been arranged by a paragon of political probity, Robert Morgenthau, the district attorney of New York County, whose grandfather had gone to City College. The commitment by Mr. Isenberg to make a contribution to the Rangel Center was made in a meeting between Mr. Isenberg and Mr. Williams, at which Mr. Rangel was not even present. The meeting took place on November 9, 2006, before Mr. Rangel acceded to the chairmanship of Ways and Means, and at a time when Nabors had no matters pending before the committee. It turns out that when Mr. Morgenthau was United States attorney for the Southern District, he gave Mr. Rangel his start. And over the years Mr. Morgenthau made, separately, the acquaintance of Mr. Isenberg and learned of his interest in minority education. For that reason he sought to bring him together with the Rangel Center. Mr. Morgenthau has been defending Mr. Rangel throughout this drama. Illogic also infects the controversy over the alleged abuses of the rent-controlled apartment that Mr. Rangel’s political committee used as an office. Mr. Rangel’s defense filing pointed out that it was an un-renovated, vacant space in a building in which there was a 20% vacancy rate. It was allegedly rented in Mr. Rangel’s name, but the landlord accepted its use by a political committee. The Ethics Committee seems to reckon this added up to a benefit to Mr. Rangel. But how so? It might be a benefit to his political committee, but not even that is clear. There’s a lot of office space in Manhattan. The benefit, if there is one, seems to be that Mr. Rangel’s political committee is conveniently located near his modest residence. Call out the National Guard, we say. The squabble over Mr. Rangel’s errors on his tax return strikes us as indicating nothing so much as the need for tax reform. Mr. Rangel’s tax error was not nearly as serious, in our view, as, say, Secretary Geithner’s. But if the chairman of Ways and Means can’t figure out his taxes, how can the rest of us long-suffering Americans? Here the Ethics Committee could order Mr. Rangel to have lunch with Steve Forbes, who is the leading advocate of a flat tax that would be easy to understand and hard to dodge. Mr. Rangel, as Ira Stoll pointed out over the weekend in a defense of Mr. Rangel at futureofcapitalism.com, has shown a certain a savvy in respect of capital gains. Mr. Rangel doesn’t deserve the bum’s rush he is getting from President Obama. Let the president remember his haste in respect of Shirley Sherrod. When Mr. Rangel was 20, he was lying in a ditch in Korea, while the corpses of many of his fellow GIs lay nearby, either slain in combat or frozen to death. Private Rangel rallied his comrades and led 40 of them out from behind enemy lines. Instantly recognized as a hero, he was decorated for valor. We are not indifferent to serious ethical questions when they crop up. But it happens that we have spent a long career arguing against the use of small bore ethics attacks like those being used against Mr. Rangel. Instead we’ve long favored substantive debate on policy. If Mr. Rangel goes to trial, let us hope it will be an open and public proceeding, so that the American people can hear all the testimony and the measure of Mr. Rangel can be taken in full. Mr. Rangel, Mr. Morgenthau told us the other day, never knew father. His mother abandoned him when he was two weeks old. He was brought up by his grandfather, who was elevator operator in the office of the district attorney, Frank Hogan. He went into the Army, got himself decorated, came back, went to St. John’s Law School, got on the law review, and came to work for the U.S. attorney. “It’s a pretty amazing career,” Mr. Morgenthau said. He says he sees nothing to suggest that Mr. Rangel took any money at all. In Mr. Morgenthau’s vast prosecutorial judgment, any mistakes, if there are any, are anomalous in a career that is long and distinguished. “I can’t think of a better person to name a school for public service for than Charlie Rangel.” Finally, there is that rarely mentioned party to all this, Mr. Rangel’s constituents in Harlem, who have returned him to office for so many terms, including after these matters surfaced. They are in no rush to see him leave, and neither are we. Neither do we see any scandal in him landing, whenever it is that he does retire, in an office at the Charles B. Rangel Center for Public Service at City College. We suspect Judith Vladeck would have understood, and his students will be lucky to be able to study at the feet of a political master. Tomorrow: Matt Miller’s Great Idea
We’re Coming Back August 4, 2010March 18, 2017 CORRECTION I jumped the gun last week. “Thanks to Dodd-Frank, the Financial Reform bill,” I wrote, “your broker now has – for the first time in history – a personal fiduciary responsibility to act in your best interest.” Don Culp: “Brokers DO NOT currently have fiduciary responsibility under Dodd-Frank. The issue has been pushed off to the SEC to study and receive comment on over the next six months.” ☞ Don’s right. But this is a high priority for S.E.C. Chair Mary Shapiro, so – despite the delay – it is highly likely to get done. Likewise, the second piece of this – that brokerage firms will no longer be able to force aggrieved customers into binding arbitration (in which, as I suggested, the firms have an inherent advantage). That, too, goes to the S.E.C., which Dodd-Frank gives the authority but not the mandate to fix. CHEESE DOODLES Jim Busek: “Morrie’s passing reminds me of one of my all-time favorite Esquire cartoons: An obvious American tourist – Hawaiian shirt, pot belly, camera around his neck – is in some sort of Mideast bazaar. The illustration shows him leaned into a kiosk, clutching the native vendor by the neck shouting: ‘Cheese Doodles! Cheese Doodles! For God’s sake man, don’t you know what Cheese Doodles are?’ ” MUD GLDD, our dredging company, issued a strong earnings report yesterday but was cautious looking forward (“we think it is prudent to moderate expectations for the second half versus the first six months”) and the stock dropped more than 10% at one point, largely recovering in after-hours trading. There is very little flash in dredging, but something kind of inexorable about sedimentation. SECRETARY GEITHNER ON THE ECONOMY It’s a sober assessment, but upbeat. In part: Welcome to the Recovery New York Times August 3, 2010 By Timothy F. Geithner The devastation wrought by the great recession is still all too real for millions of Americans who lost their jobs, businesses and homes. The scars of the crisis are fresh, and every new economic report brings another wave of anxiety. That uncertainty is understandable, but a review of recent data on the American economy shows that we are on a path back to growth. . . . last week’s data on economic growth show that large parts of the private sector continue to strengthen. Business investment and consumption — the two keys to private demand — are getting stronger, better than last year and better than last quarter. Uncertainty is still inhibiting investment, but business capital spending increased at a solid annual rate of about 17 percent. . . . As the economists Ken Rogoff and Carmen Reinhart have written, recoveries that follow financial crises are typically a hard climb. That is reality. The process of repair means economic growth will come slower than we would like. But despite these challenges, there is good news to report: • Exports are booming because American companies are very competitive and lead the world in many high-tech industries. • Private job growth has returned — not as fast as we would like, but at an earlier stage of this recovery than in the last two recoveries. Manufacturing has generated 136,000 new jobs in the past six months. • Businesses have repaired their balance sheets and are now in a strong financial position to reinvest and grow. • American families are saving more, paying down their debt and borrowing more responsibly. This has been a necessary adjustment because the borrow-and-spend path we were on wasn’t sustainable. • The auto industry is coming back, and the Big Three — Chrysler, Ford and General Motors — are now leaner, generating profits despite lower annual sales. • Major banks, forced by the stress tests to raise capital and open their books, are stronger and more competitive. Now, as businesses expand again, our banks are better positioned to finance growth. • The government’s investment in banks has already earned more than $20 billion in profits for taxpayers, and the TARP program will be out of business earlier than expected — and costing nearly a quarter of a trillion dollars less than projected last year. We all understand and appreciate that these signs of strength in parts of the economy are cold comfort to those Americans still looking for work and to those industries, like construction, hit hardest by the crisis. But these economic measures, nonetheless, do represent an encouraging turnaround from the frightening future we faced just 18 months ago. . . . According to a report released last week by Alan Blinder and Mark Zandi, advisers to President Bill Clinton and Senator John McCain, respectively, the combined actions since the fall of 2007 of the Federal Reserve, the White House and Congress helped save 8.5 million jobs and increased gross domestic product by 6.5 percent relative to what would have happened had we done nothing. The study showed that government action delivered a powerful bang for the buck, and that the bank rescue on its own will turn a profit for taxpayers. . . . There are urgent tasks to be undertaken to reinforce the recovery, and Congress should move now to help small business, to assist states in keeping teachers in the classroom, to increase investments in public infrastructure, to promote clean energy and to increase exports. And while making smart, targeted investments in our future, we must also cut the deficit over the next few years and make sure that America once again lives within its means. These are considerable challenges, but we are in a much stronger position to face them today than when President Obama took office. By taking aggressive action to fix the financial system, reduce growth in health care costs and improve education, we have put the American economy on a firmer foundation for future growth. And as the president said last week, no one should bet against the American worker, American business and American ingenuity. We suffered a terrible blow, but we are coming back.