Sign The Petition: Let Fred Debate! August 9, 2011March 24, 2017 But first a word about stocks. The sun will come out tomorrow. (If not literally tomorrow.) Long-term, our little gaggle of mostly biotech speculations will be hurt only if people stop getting sick . . . or stop wanting to get well . . . or the government sharply cuts health care costs. The latter might happen if it decides to negotiate drug prices. And I hope it does. But I doubt it will negotiate so hard as to kill the incentive to develop important new drugs. If you have money you can truly afford to lose, and have not yet dipped your toe in these waters, you’ll be pleased to know these stocks are now on sale. (Stocks like DVAX, CBRX, SIGA, TTNP, YMI, KERX, ALXA, and FCSC – maybe even DCTH – among others.) And there are loads of non-biotechs to consider, too. I don’t think we will stop dredging our ports, so GLDD at $4.25 seems cheap. I own a few shares of ALN, which purports to be in the food business in China selling at 3 times earnings (warning: this one did not come from anyone smart, and I don’t do my homework). And a few shares of ALU (which does come from someone smart), half the price of two weeks ago and thus back to where I bought it. In any event, I would not be selling here, even though the market could certainly fall further. THE S&P IDIOCY – II S&P has now downgraded Fannie and Freddie from AAA to AA+ status, also. As my wise young friend Zac Bissonnette noted yesterday, that meant that for a few days Fannie and Freddie’s debt was rated higher than that of the U.S. government. This, despite the fact that their AAA rating rested entirely on the expectation that the government – though not legally obligated to do so – will not let them fail. Perhaps, just as a nod to logic, S&P should have downgraded Fannie and Freddie a few days before downgrading their hoped-for guarantor? The ironies just keep coming. For example: “In reaction to the downgrade,” a CBS radio newscaster told America yesterday, “a lot of investors are taking their money out of stocks and putting their money into U.S. Treasuries, which some see as safer.” Got that? S&P’s downgrade of Treasuries has stock market investors fleeing into . . . Treasuries for safety. Now that S&P has officially decided they are not completely safe, investors are paying even higher prices to buy them. (Safe though Treasuries are, I would not rush into them myself, as they pay almost no interest. My reluctant hedge has been GLD – the exchange-traded gold fund – suggested most recently here. Unfortunately, it’s done quite well. It would make me very happy if it stopped doing well. But I’m not willing to bet all my assets on the triumph of common sense.) And one more note of irony (not to mention the big one, of course, covered yesterday: that for years S&P rated worthless mortgage-backed securities triple-A and caused the financial meltdown that led to the mess we’re in now), compliments of Janet Tavakoli, whose compelling call to decertify the rating agencies I linked to yesterday. Janet writes: “Thank you for the mention. You may have noticed that among other things, S&P said that it downgraded the US even though the economy is ‘strong’ (you can’t make this stuff up) but they are worried about our fiscal trajectory. If this is how they really felt, then they should have downgraded us in September 2008 post bailouts when we didn’t look as ‘strong’ and people were ready to jump out of windows over our fiscal trajectory.” KRUGMAN Paul Krugman did his usual brilliant job in his New York Times column yesterday – and made a point that was new to me: . . . in those rare cases where rating agencies have downgraded countries that, like America now, still had the confidence of investors, they have consistently been wrong. Consider, in particular, the case of Japan, which S.& P. downgraded back in 2002. Well, nine years later Japan is still able to borrow freely and cheaply. As of Friday, in fact, the interest rate on Japanese 10-year bonds was just 1 percent. So there is no reason to take Friday’s downgrade of America seriously. [S&P] are the last people whose judgment we should trust. ☞ He went on to say: . . . The U.S. government is having no trouble borrowing to cover its current deficit. It’s true that we’re building up debt, on which we’ll eventually have to pay interest. But if you actually do the math, instead of intoning big numbers in your best Dr. Evil voice, you discover that even very large deficits over the next few years will have remarkably little impact on U.S. fiscal sustainability. No, what makes America look unreliable isn’t budget math, it’s politics. And please, let’s not have the usual declarations that both sides are at fault. Our problems are almost entirely one-sided — specifically, they’re caused by the rise of an extremist right that is prepared to create repeated crises rather than give an inch on its demands. The truth is that as far as the straight economics goes, America’s long-run fiscal problems shouldn’t be all that hard to fix. It’s true that an aging population and rising health care costs will, under current policies, push spending up faster than tax receipts. But the United States has far higher health costs than any other advanced country, and very low taxes by international standards. If we could move even part way toward international norms on both these fronts, our budget problems would be solved. So why can’t we do that? Because we have a powerful political movement in this country that screamed “death panels” in the face of modest efforts to use Medicare funds more effectively, and preferred to risk financial catastrophe rather than agree to even a penny in additional revenues. The real question facing America, even in purely fiscal terms, isn’t whether we’ll trim a trillion here or a trillion there from deficits. It is whether the extremists now blocking any kind of responsible policy can be defeated and marginalized. ☞ And, for all its ineptitude, that seems to be what S&P was trying to say. PLEDGE NOT TO VOTE FOR CANDIDATES WHO TAKE PLEDGES Bill Merkel: “I’m with Elliott. Pledges take away the flexibility that our representatives have to compromise and, if necessary, select the lesser of two evils. A special interest group (Norquist’s among them) who gets an elected official to sign a pledge is essentially getting a guarantee that that official will vote the way they would like. That sounds a lot like buying votes to me. The only pledge I’d want my elected representatives to sign would be that they’d NOT sign any pledges, otherwise they could simply be replaced by if/then statements.” LET FRED DEBATE I don’t want him to win the White House, but Fred Karger – the first openly gay candidate for President – met all the requirements to participate in Thursday’s Fox News Iowa Republican Party Presidential debate. He polled higher than Santorum and tied Pawlenty and Gingrich. But Fox changed its criteria to keep him out. Federal Election Law requires news organizations that sponsor Presidential debates to select participants based on “pre-established, objective criteria.” Sign the petition to let him debate? Tomorrow (or soon): Our Infrastructure Deficit
The Good War August 8, 2011March 24, 2017 S&P ARE IDIOTS Seriously – why would anyone take the rating agencies seriously, after they consistently gave junk mortgage securities triple-A ratings? After failing the world so egregiously – which gave us the mortgage derivatives fiasco that caused so much of this mess – they are now going to show how responsible they are by warning the world that U.S. debt obligations are not triple-A? Really? Oh, and by the way, they acknowledge making a $2 trillion error in their calculation, as explained here, but decided to go ahead with the downgrade anyway. The idea of giving special NRSRO (Nationally Recognized Statistical Rating Organization) status to the rating agencies was not for them to opine on stuff the whole world has been watching on the nightly news for six months. That’s not why we need rating agencies. Rather, the idea was for them to analyze the arcane stuff almost no one could bear to pay attention to – like collateralized debt obligations – to make assessments investors could rely on. They failed so miserably that Janet Tavakoli last month made a serious recommendation to strip them of their special status: “Tavakoli Structured Finance Revokes the Credit Rating Agencies’ NRSRO Designation: Issues and Solutions for Restoring Credibility to the Credit Rating Agencies and Rehabilitating the Alternative Banking System.” Of course, Janet has no authority to revoke their NRSRO designation. But after perusing her report, you will wish she did. The U.S. is clearly not going to default on its debt, if only because our debt is denominated in dollars, and we can print dollars. (That makes for inflation risk, but no risk of default.) The whole world seems to agree, or would not be piling into Treasuries at essentially no interest. Does the world really need the wisdom of S&P to form its judgment on this? S&P whose dereliction in rating the mortgage securities led to our financial crisis in the first place? THE SILVER LINING The first stimulus package, which the Republicans required be largely about tax cuts, was way too small. Why do we have so many construction workers idle when there is so much work to be done? Especially when – despite it all – Uncle Sam can borrow to fund these long-term investments at under 4% for 30 years? The bottom line is that we need to raise taxes, especially on the wealthy, to help finance the added debt we need to assume in order to put millions to work revitalizing our infrastructure and achieving energy independence. This is a war we can win, a war that set us back on the path to prosperity, and a war that doesn’t blow things up. And this bottom line is almost the exact opposite of the “unimaginably stupid” Republican priorities: (a) cutting back on government spending at exactly the time it is most needed; (b) keeping tax rates on the wealthy at historic lows at a time when we are running massive deficits. Talking heads please note: Raising taxes in a weak economy does not kill jobs. Bill Clinton did it, and in the ensuing years of his presidency we created 23 million new jobs. Keeping taxes on the wealthy low does not create jobs. Sure the last 10 years have proved that. The tax on dividends and capital gains when Ronald Reagan left office was 28% – and he is the second greatest man who ever lived. So what is so sacred about today’s 15%? The only way to get back on track, it seems, will be to vote the passionately misguided Tea Party folks out of office. What we do in the meantime is harder to know. The silver lining is that last Thursday’s 512-point drop in the Dow and S&P’s downgrade just might put enough pressure on the Republicans to support actions that are not unimaginably stupid. IF YOU SKIP THE ADS Every so often, they’re worth watching. Like these, from Rachel Maddow at the Hoover dam and in a diner. SIGN THE PLEDGE Elliot Raphaelson: “I have written to the White House today, with the following suggestion. Perhaps you can ask your readers if they agree. I recommend the following: As part of the upcoming election campaign, the White House ads should ask the voters to ‘pledge’ not to vote for any politician willing to sign the Norquist pledge, since the only result is to destroy the middle class.” ☞ Leaving aside the unfortunate fact that most voters don’t know who Norquist is – maybe there’s a way this could work? Maybe leave Norquist out of it and just say we pledge not to vote for any candidate who pledges not to raise taxes on the wealthy? “Discuss.”
“Unimaginably Stupid” August 5, 2011March 24, 2017 DNDN Chris McMahon: “Guru was right again, it just took a little longer than anticipated.” ☞ Well, we’ll see what happens. Dendreon dropped 67% yesterday, from $35.84 to $11.69, on news that the company’s treatment is not selling as well as projected. But Guru’s point has been that the treatment does no good. That will take much longer to come clear. THE MARKET Stocks went on sale yesterday – which, for the record, is a better time to buy than to sell. All our little biotechs got hit, though not as badly as Dendreon. THE ECONOMY By focusing on the deficit when we should be running a massive deficit – at wonderfully low interest rates – to put our people to work rebuilding our crumbling infrastructure, we are doing something, in the words of Professor Robert Frank, “unimaginably stupid.” Watch. It’s simple – if only the Republicans would not keep blocking the smart things that need doing. (And could they please not now shut down the FAA?) THE DEBT CEILING DEAL There are a lot of myths about it – dispelled here. The President did not cave; the safety net is secure; revenues from the wealthy will be forthcoming. It’s worth three minutes to become informed, the better to buck up others who, with best of intentions, are easily demoralized and quick to assume the worst. NOT SINCE FDR . . . If you’ve been touched by some of that demoralization, this assessment of the President’s accomplishments may bolster your spirits. A DNC MEMO From: Patrick Gaspard, DNC Executive Director To: The DNC Family and Interested Parties Date: August 4, 2011 Subj: Shocker: Washington Pundits Got the Debt Fight Fallout Wrong _______________________________________________________ The subject line of this memo aside, anyone who has followed Washington in recent years won’t be a bit surprised to find out that it is a town which rushes to judgment, has a pack mentality and makes declarations of winners and losers without regard to the facts. There is no better recent example of this than this past Sunday when supposed details of the debt and deficit deal reached between Congressional Democrats and Republicans and President Obama began to leak from “anonymous” sources. Then one or two supposedly wired journalists tweet their reaction and begin making declarations of which side won and which side lost and which party’s supporters will be pleased and which will be enraged. In this case – certainly, the conventional wisdom was that the Republicans won and the Democrats lost and Republican partisans would be euphoric while Democratic partisans would be in the dumps. Fortunately, we don’t have to depend only on the rush to judgment of a small cadre of Washington-based pundits and activists making their assessments off of one-sided leaks and spin – there is a thing called public opinion that we can look to for a more accurate portrayal. The fact is, since President Obama reached a debt and deficit compromise with Republicans over the weekend, CNN and Gallup polls show that a hefty majority of Democrats and Liberals support the deal while a hefty majority of Republicans, and particularly the all-important Tea Party Republicans, oppose it. If you’re waiting for the rush of stories, columns and blogs with the inside the beltway intelligentsia admitting they missed the mark on this – don’t hold your breath. The very folks who rush to judgment on these things are rarely in a rush to admit they were wrong. So, despite the conventional wisdom on Sunday about how this plan would be perceived, actual public opinion shows a very different story. Gallup: Nearly Two-Thirds Of Republicans And Conservatives Oppose The Deal. “The results are reversed on the other side, with large majorities of Republicans (64 percent) and conservatives (64 percent) expressing disapproval.” [Huffington Post, 8/3/11] Gallup: Majority Of Democrats And Liberals Approve Of The Deal. “According to the Gallup poll, a majority of Democrats (58 percent) and liberals (51 percent) approve of the deal, although significant minorities of both groups express disapproval (28 and 35 percent respectively).” [Huffington Post, 8/3/11] CNN Poll: 58 Percent Of Republicans Disapprove Of The Deal. According to a recent CNN/ORC poll, 58 percent of Republicans disapprove of the deal compared to 35 percent who support it. [CNN, 8/2/11] CNN: 63 Percent Of Democrats Approve Deal. According to a recent CNN/ORC poll, 63 percent of Democrats approve of the deal compared to 32 percent who disapprove it. [CNN, 8/2/11] The numbers show that while Democrats and liberals supported the President’s commitment to reaching a fair compromise, Republicans and Conservatives overwhelmingly opposed compromise. Of course this should be of little surprise. Poll after poll during the course of this discussion showed that Democrats by large margins favored compromise while the vast majority of Republicans opposed any compromise with Democrats whatsoever. Of course, the post agreement reaction to the deal from Democrats isn’t just a function of their willingness to compromise, but is also a function of the agreement itself. The fact is, there is a lot about this agreement for Democrats to like. First, the agreement prevented the nation from defaulting on our debt for the first time in our nation’s history and it guarantees that Republicans cannot hold our economy hostage again over the next 18 months with the threat of a catastrophic default hanging over our heads. Importantly, the agreement also protected important investments in America’s future, including aid for college students, and it guaranteed that Social Security, Medicare benefits, and Medicaid would not be gutted to pay for deficit reduction. Finally, the agreement set out a process by which America can get its fiscal house in order – not by balancing the budget on the backs of the middle class, but by coming to a balanced agreement that includes revenue-increasing tax reforms. But even beyond what the agreement included, Democrats are undoubtedly buoyed by what it didn’t. The agreement moved the needle very far from where this debate started with the House GOP just a few short months ago – ending Medicare and slashing critical programs for education, job creation and the poor. In essence, this agreement was a stinging defeat for the Ryan/House Republican Budget approach and was also a thorough rejection of the GOP’s so called “Cut, Cap and Balance” plan which was simply the Tea Party version of the Ryan plan on steroids. This is not to suggest that this agreement was perfect or that Democrats view it that way. But in a world where GOP Presidential candidates are failing the leadership test by following the extreme wing of the GOP and the Senate Minority Leader Sen. Mitch McConnell says our nation’s debt ceiling is, “a hostage that’s worth ransoming”, a compromise that protected Medicare and Social Security and averted a debt crisis was a win. And according to CNN and Gallup, a majority of Democrats and Liberals agree. RUBBING A SHARK’S NOSE I am not advising this.
So Help August 4, 2011March 24, 2017 Mark P.: “I will continue to contribute to Pres. Obama’s re-election and will vote for him, but only because the alternative would be so much worse – not because I am enthused. He extended Bush tax cuts last December and now agrees to a debt deal with no revenues, only cuts. While I previously liked the fact that he was so reasonable, it now seems to be such a liability.” ☞ Let’s start with last December. The President could have let unemployment benefits expire – they were being held hostage by the Republicans. You would have had the spine and the balls and the cojones to take that chance; he seems to have had too much empathy for the unemployed and what it would have been like for them to miss even a few checks. Smart, strong people like you and the President can disagree on what risks to take, and with whose lives. (Not making the deal to extend the tax cuts would also likely have meant not getting repeal of Don’t Ask/Don’t Tell or renewal of the Nuclear START Treaty; and not getting the payroll tax cut that has helped so many struggling families. Again, you would have ditched all that to see taxes go up, especially for the wealthy. I respect that. He made a different choice.) My frustration is not with him for making this deal, but with the Republicans for their insistence on a deal in the first place – for putting the interests of the wealthy, yet again, above those of everyone else. Likewise, the debt ceiling deal. As I said Tuesday, the debt ceiling deal does NOT slash spending in the next year or two, while the economy is so fragile; PROTECTS the social safety net; and does NOT close the door on increased revenues from the rich (or Exxon). To my friends who are quick to assume the President has unaccountably become a different person (uncaring? slothful? dim-witted?) when we don’t get what we want on our timetable, I’d say, first, that you may not have looked at this deal, and its implications for the future, closely enough. And second, that I totally share your frustration – as I’m quite sure the President does – but direct most of it at the opposition, whose first priority is to see him fail and whose second priority is to protect billionaires from paying anywhere close to the 28% rate on investment income they paid under Ronald Reagan (second greatest man who ever lived). Even so, the long view may be that he is winning the war. Most Americans – albeit not House Republicans – now clearly agree we need to raise revenues, especially from the wealthy. Yes, it would have been better to get that done now. But in the 20-year scheme of things, whether those increased revenues began flowing in 2012 or 2013, as I think they will, it won’t matter much. The broad solution, it seems to me, is to revitalize our economy and infrastructure by investing for the future with funds we raise in taxes rather than borrow from the Chinese. Our job – yours and mine and everyone else’s who agrees with that broad solution – is to cheerfully spread the word as we work to achieve massive turn-out 461 days from now. Massive registration and turn-out are how we’ll hold the White House, take back the House, hold the Senate, and flip state legislative chambers back from red to blue.* It’s a challenge, because the other side are doing all they can to prevent the poor, the young, and the disabled from voting. And because they are masters at misdirection (“death panels,” “death taxes,” “job creators”) and misinformation (Iraq attacked us on 9/11; a Muslim not born in America; “by far the vast majority” of the Bush tax cuts would go to people at “the bottom of the economic ladder”). And because we are so quick to attack our own rather than direct our anger at the Republican senators and representatives whose priorities are so misguided. But with your help, we’ll get there. (So help.**) *Which won’t get us everything we want, anymore than President Clinton was able to get us everything we wanted. (Did he get universal health care? gays in the military? Lily Ledbetter? Did he close the gun show loophole? Kill Bin Laden?) But we’ll continue to move forward, as we did under Clinton, rather than back, as under Bush. **And don’t dismiss all the amazing things he has accomplished, against blistering opposition, in these first 30 months. Volunteer to help him do more! SIGA I bought a bunch yesterday at $6.30 with money I can truly afford to lose. Here’s why.
Porpoise Towels August 3, 2011March 28, 2017 HOW APPLE WOULD SOLVE THE DEBT PROBLEM John Leeds: ‘This Marketwatch commentary analyzes how a good business, versus a bad business, would approach the US deficit.’ The top line: If U.S. were run like business, it wouldn’t cut spending Spending is good. Borrowing is better. Washington is doing neither. It’s liquidating. ☞ Exactly. We need a huge, decades long renewal of our infrastructure that would, among other things, kick our economy back into gear, end our dependence on foreign oil, and assure our long-term prosperity. One cries at the ignorance that has led us to Sarah Palin’s Republican Party. At the avarice that has led us to the Koch brothers’ Republican Party. At the irony that fervent Christians, who should be all about aiding the poor and turning the other cheek, would become the party of tearing down the social safety net and launching wars of choice. So what are liberals, progressives, and Eisenhower Republicans (who are now, for all intents and purposes, moderate Democrats) to do? Do we give up? (Bad.) Do we take out our frustration on ourselves? (Worse.) Or do we throw our energy and resources into the effort to register and turn out millions of like-minded voters to take back the House, hold the Senate and White House, and flip state legislative chambers back from red to blue, so we can get America back on track to win the future? Let me hand the microphone back to David Weidner, author of that piece: I’ve been covering Wall Street and corporate America for going on two decades, and if there’s anything I’ve learned it’s that there are really only two kinds of companies: those growing and those shrinking. The U.S. government today has officially become the latter. The difference between a growing business like Apple (AAPL) and a shrinking one such as Eastman Kodak (EK) has less to do with spending and revenue and than with psychology. Growing companies go through tough times. They adapt, and they’re poised to strike when conditions are right. They don’t stop innovating. Defeated companies may be producing steady profits. But they lose their entrepreneurial spirit. They stop looking at the future. They get intimidated. They quit fighting. They look for a sale. They try to buy growth. They play not to lose – and end up losing anyway. Which of those does Washington sound like? So, what would happen if Apple had to tackle the debt crisis? First, it would eliminate spending that’s not working. Then it would make a commitment to spend if necessary. Third, it would look for ideas to spend on. Finally, it would call customers’ bluff. How much are you willing to pay for what the government gives you? . . . . . . [E]ven with all the mistakes the government makes, it still doesn’t make sense for it to be run as if the country has been defeated. It’s interesting to note that our deficit of $14 trillion is the biggest since World War II. In 1945 the deficit was 120% of gross domestic product, compared with about 97% today. So how did the nation respond? By spending on infrastructure and raising taxes. We built housing and roads, and we invested. Unemployment fell from 3.9% in 1946 to 2.9% in 1953. By the time Harry Truman left office in 1953, the deficit was 71% of GDP. When Dwight Eisenhower left office, it was 55%. Bill Clinton raised taxes in 1993, and the U.S. saw the biggest peace-time expansion since the 1950s. . . . THE FLAG Nate Black: ‘You wrote: ‘Someone gave me 10 terrific big, bright American flag beach towels. But . . . can I use them? Is it disrespectful to use the flag in this way?’ For you, as a pinko liberal, yes. For a true patriotic Tea Party type it would be just fine.’ ☞ Nate included one of those little winky emoticons, to be sure I knew he was smiling. But the truth is, I think he nailed it. I’m returning them for rainbow flag towels. Or maybe big money or porpoise towels. Dick Theriault: ‘Can you keep these towels? I say, no you can’t. The Code says the image of the flag is not to be used in any disrespectful manner. Like painting it on the ground in a Largo, FL, park. Or on the bottom of a swimming pool. Or on a beach towel. It’s not an actual flag on the ground, but it is the image of the flag that it being disrespected. This is a distinction without a difference: The piece of fabric is not the respected object – it is the IMAGE ON that fabric that is ‘the flag.’ Your towels could be displayed as flags. Their ‘towelness’ doesn’t count; their ‘flagness’ does. . . . You cite the Code. Section 176 of it makes all this pretty damn clear. To me, the absolute worst disrespect I’ve ever seen was Ralph Lauren’s flag boxer shorts, with the Union to the right of the fly and the stripes wrapping from the left of the fly around the back. First, the wearer would be sitting on the flag and second, the act of urinating between the Union and the stripes is about as gross disrespect as can be imagined. . . . Our military violate the code often by carrying the flag horizontally or furling it against the staff. The Chairman of the Joint Chiefs wore a flag shirt at an Independence day parade. President G.W. Bush AUTOGRAPHED the flag! [§176(g)] Others may have also, but this was televised. . . . The Flag Code lives more in violations than observations, and we see it daily. Nobody really gives a damn – or knows enough to realize it. How about some Flag Code education?” ☞ Thanks, Dick! I think you just provided us with some. And then Dick wrote back: “The code states, ‘The flag should never be used for . . . anything that is designed for temporary use and discard.’ Then consider the USPS flag stamp. What more perfectly fits ‘designed for temporary use and discard’? Plus the defacement of cancellation. I just get furiouser and furiouser.” Chris Hurley: “Whether sewn from pieces of silk, cotton, or polyester; whether stars are embroidered by hand or stitched on by machine; whether woven on a loom or imprinted on terrycloth, it’s the American flag. (That said, I have little beef with protesters ‘desecrating’ the flag, for the flag is not holy. If anything, our right to protest is closer to being a sacred thing.)” Bill Spencer: “The US Flag Code you referenced says that if you were in the District of Columbia you would be in violation of the law and subject to a fine or $100 or 30 days in jail for possession of those towels. Ten towels? Maybe $1000 or 300 days? At least that’s how I read it. Go up to your [fancy-ass] roof deck and burn them.* May I take this opportunity to express a pet peeve of mine? It is common practice to lower and remove the US flag in inclement weather, and that in my opinion includes severe wind storms, lest the flag be damaged. So why are there so many idiots who, as a sign of their patriotism, drive their cars at highway speeds with US flags, some of them in shreds, flapping in the 65+ mph winds generated by their car? (Thank you. I’ll reserve all my other opinions for the moment.)” *Bill did not say “fancy-ass,” but another reader did.
Frustration – But At Whom? August 2, 2011March 24, 2017 The debt ceiling deal does NOT slash spending in the next year or two, while the economy is so fragile; PROTECTS the social safety net; and does NOT close the door on increased revenues from the rich (or Exxon). To my friends who are quick to assume the President has unaccountably become a different person (uncaring? slothful? dim-witted?) when we don’t get what we want on our timetable, I’d say I totally share the frustration – as I’m quite sure the President does. But I direct most of it at the opposition, whose first priority is to see him fail and whose second priority is to protect billionaires from paying anywhere close to the 28% rate on investment income they paid under Ronald Reagan (second greatest man who ever lived). More on this in the coming days, I assume. IF YOU DON’T LIKE TAXES Peter Snow suggests Republicans read this list of things not to do. It’s a little simple-minded – but so is the argument that smaller government and lower taxes are always best. DVAX Jeff Cash: “Thanks for the DVAX tip. I bought on July 26th and have enjoyed the 20% pop! But I’m confused by something, and suspect that other readers might be, as well. On July 26, you wrote: ‘Guru says he agrees with this report from William Blair that puts the fair market value at $8.’ . . . but then Friday: ‘Target for the stock over the next 6 to 12 months is 6 or higher.’ I’m baffled as to why guru went, in 3 days, from a current fair market value of $8 to a hope for $6+, when the only thing happening in the interim was GOOD news….???” ☞ Good question. Stock valuation is, in the first place, in no way an exact science. (And I guess I should point out that “6 or higher” would include 8.) But if something DOES have a fair market value of 8, that doesn’t mean it will SELL for 8 – especially in a bad market when people need to be tempted with great bargains to take any risk. Sometimes, specific stocks or market sectors – and often the market as a whole – tend to be undervalued. Other times, overvalued.
Bitterness and Sarcasm Oh, no! August 1, 2011March 24, 2017 Okay, it looks as though we will live to fight another day. We can hope that the bipartisan committee, over whose deficit-reduction proposal that fight will take place, will be rational and truly help to set the country on a more even economic keel. Which means back-loading the cuts in spending to take place after we make massive infrastructure commitments that will both yank us out of this awful unemployment (as World War II yanked us out of the Depression) and lead toward a more efficient, energy-independent, competitive country. And this proposal should include ‘revenues’ – both from closing loopholes and from higher tax rates on investment income. Am I the only one who sees a difference between ‘raising taxes in the midst of a recession’ and ‘raising taxes on income over $1 million a year?’ Actually, most of us see that difference. But the Tea Party doesn’t. The Tea Party thinks that if we lay off another couple of million teachers, cops, firefighters and government workers – and perhaps skip a few Social Security payments – that won’t hurt the economy. Smaller government is always better. Look at Somalia! But, they think, if we tax capital gains and dividends closer to the 28% that Ronald Reagan did instead of the 15% we currently do – or if we tax Exxon – it will tank the economy. Taxes are always bad . . . especially on the wealthy, because they are the job creators. This makes no sense in theory. Millionaires won’t stop going to the mall or installing new pool heaters. It’s the lower- and middle-income folks – especially those you throw out of work – who cut back when taxes are raised. No one is proposing to raise their taxes in such a fragile economy. And it makes no sense in fact. We have experience with this. When Clinton, inheriting a stagnant economy, raised taxes – without a single Republican vote – we went on to create 23 million new jobs. Is anyone in the Tea Party old enough to remember this? When Bush slashed taxes for the rich, we created no new jobs. We squeezed the middle class terribly, we turned the gap between rich and everyone-else into a chasm, and we piled up massive debt (with nary a peep from Republicans about a balanced budget amendment). Surely Tea Party congressmen are old enough to remember that. Does Speaker Boehner not know any of this? Does Minority Whip Jon Kyl really not know any of this? (In his radio address Saturday he described what Democrats want to do as ‘huge tax increases on American families.’) What is so sacrosanct about shielding hedge fund managers from paying the same tax rate as their secretaries? How does this affect American families? And doesn’t cutting Medicare and student aid affect American families? A wide majority of Americans favor a ‘balanced approach,’ where even billionaires have to chip in a little. But Sarah Palin, who got a D in economics, knows better. It’s enough to make one crazy. More to the point, it may be enough to even further damage the awful economy that Bush (and a Republican Congress for six of his eight years) handed us. At which point the Tea Party will blame the massive suffering and crime that result (with fewer cops to fight it) on lazy people who just aren’t trying hard enough to find work, and a government that’s too large – we should halt unemployment benefits, cut back on food stamps, stop lending kids money for college, let our infrastructure crumble – and, if possible, lower the estate tax on billionheirs to zero. That should do the trick. BITTERNESS Fred C: ‘Wow, what bitterness I’m detecting the last couple of weeks. Please look to your own party for part of the blame. The Dems had control of all three branches last year and could have let the tax cuts expire. THEY CHOSE NOT TO DO THIS.’ ☞ Listen: there’s a lot to be bitter about. Bullies stole the 2000 election. (And are working hard to keep the weakest among us from voting in the next one – see Friday’s comment.) A lot of people, including a lot of Americans, are dead or badly damaged as a result. We are in deep economic difficulty as a result. We have missed enormous opportunities as a result. So while I don’t generally think of myself as bitter, I do feel frustration – and sadness – at what might have been. As for Fred C.’s substantive point, I, too, would have liked to see us let the tax cuts expire . . . but only on income above some fairly high threshold, like $250,000. Hiking taxes on middle class income in the midst of our economic mess – that first $250,000 any of us makes, say – would have been a bad idea. And shutting off unemployment benefits would have been a worse idea. The Republicans were holding the country hostage: if we wanted continued help for the unemployed, and tax relief for the middle class until the economy recovered, we’d have to protect the wealthy. Now they’re holding us hostage again to protect the wealthy – many of whom don’t want this protection. BANANA REPUBLICANS Such a good piece by Paul Begala over at the Daily Beast. In part: . . . As the economy teeters on the precipice of a double-dip recession, as millions of Americans search in vain for a job, as tens of millions of homeowners are underwater, as poverty soars and the middle class is hammered, the Speaker of the House is pushing a proposal that-let me repeat Greenstein’s analysis-‘could well produce the greatest increase in poverty and hardship in modern U.S. history.’ Deep cuts in every domestic priority-from education for disabled children to food safety to homeland security to clean air and water. Followed by painful cuts in Social Security, Medicare, and Medicaid. But not a dollar in new revenue. Not one corporate loophole closed, not one billionaire asked to pay one penny in higher taxes. . . . . . . Seems to me the GOP seeks a banana republic: a toxic blend of right-wing populism, anti-intellectualism, debt defaults, and an end to the ladder of economic opportunity. They would divide us into a few Haves and a lot of Have-Nots. And they would slowly crush the heart of progressive America-the rising middle class created by Democratic economic policies of education and empowerment. All while preserving, protecting, and defending a tiny oligarchy of millionaires and billionaires. The right wing should ditch the tricorn hats and replace them with mirrored sunglasses. They truly are Banana Republicans. THE DRIVE FOR 54.5 In the midst of this mess, a step in the right direction. Check out the savings that will result from a more fuel efficient fleet of cars and light trucks. Needless to say, we should have been much further along in this process than we are. Does anyone think Gore’s energy and environmental policies would have been as retrograde as Bush’s for 8 years? (There’s that bitterness again.) But at least we’re now moving in the right direction. SARCASM One of you sent me this: Coburn Speaks Truth I am sitting here watching Senator Coburn on the floor of the Senate speaking the truth that I brought up yesterday with the Boehner bill (and Reid’s too) – that they’re scams. That there are no cuts. The claim of “cuts” is a lie. This path will lead to a credit downgrade and ultimately bankruptcy. He’s not pulling his punches – at all. And Kerry is trying to argue against fixing the problem and that “we need more time.” Well, no, we don’t. We’ve had four years since the crisis became emergent. Both House and Senate have refused to deal with the issues. Sorry Kerry, your side has had the gavel and yet your answer is simply to print up more hot checks and lard up the debt. It’s a scam and a fraud. I didn’t think I’d heard someone speak the truth in the Senate or House – that they were all liars. Thank you Senator Coburn. ☞ I missed his remarks, but I do think that just as we chose not to go further into debt to fight World War II – we just couldn’t afford it, with the Depression and all – we should not go any further into debt now to win the war on our crumbling infrastructure / lack of competitiveness / energy dependence. Was it really so bad losing World War II? I’m with Coburn: now is the time to lay off millions of teachers and cops and fire fighters, cut off unemployment benefits and student loans, cut back on maintenance programs for our roads and dams and bridges, cut back funding for research. Some say that will bring on even worse economic times, falling tax revenues, more foreclosures, an even higher deficit and a downward economic spiral. They say we should make long-term cuts NOW, but not have those cuts kick in any time soon, until after we win the war. But they’re elitists. They don’t have Sarah Palin’s native common sense. She can see the economy from her porch. Who can’t! It’s all around us! I’m with Coburn: the way to avoid the downward spiral of depression as we slash employment and government spending is to keep taxes at historic lows for the very wealthy, lest we make the same mistake we made from 1941 to 1960, when they paid 90% on dividends and 36% on long-term capital gains and the economy didn’t grow at all. (And thank God we didn’t build the Interstate Highway system back then, either.) The truth of course is that, even with 90% and 36% tax rates the economy boomed from 1941 to 1960, and we DID win the war and DID build the Interstate Highway System. Kennedy was wise to lower the rates to 70% and 28% and Reagan was wise to lower them further. But that was AFTER we had shrunk the deficit from 121% of GDP to 30%. I’m not suggesting we go back to tax rates anything like those we had under Roosevelt, Truman, Eisenhower, Kennedy, Johnson, Nixon, Ford or Carter tax rates. But would it be so terrible if we taxed dividends and capital gains at closer to the 28% rate that Reagan signed into law? Or the Clinton/Gore rates, when we tamed the deficit and added 23 million new jobs? It’s all going to turn out fine in the end, because I just can’t believe ignorance and selfishness will carry the day. Tomorrow (or soon): Your Comments on the Flag
What Should I Do With These Towels? July 29, 2011March 24, 2017 SUMMER NOTES Do you have any idea how long a grapefruit stays good in the refrigerator? It’s amazing. The solar panels I installed last July have generated 4,066 kilowatt hours – nearly $900 worth. I can tap an app on my iPhone from anywhere in the world to see how much I’m generating right now (2880 watts). There being 8,766 hours in a year, I’ve averaged about 450 watts an hour – way more at noon than at midnight, obviously – which is enough to keep four-and-a-half 100-watt light bulbs burning 24/7 all year. Which I would never do. By way of reference, a ceiling fan might draw 88 watts, my light bulbs draw 23 watts or less, and I never use the dishwasher (about which I have written importantly before). Here’s an idea of the power stuff draws. I got so freaked out watching my electric meter spin when the dryer was on that now, when possible, I dry my towels and sheets on the roof deck. This inexpensive Lasko fan all but makes air conditioning unnecessary. Just put it near the bed and sleep in the quiet breeze. Changed my life. (The little remote control is handy when the wind chill gets too intense.) Someone gave me 10 terrific big, bright American flag beach towels. But . . . can I use them? Is it disrespectful to use the flag in this way? Officially, it may be. For example, “The flag should never touch anything beneath it, such as the ground, the floor, water, or merchandise.” But that’s for actual American flags. These are, unmistakably, towels. Discuss. CALL IT WHAT IT IS John Kasley: “Please remember never to say, ‘recession’ without saying, ‘Bush recession.’ You can remind Donna Brazile as well. She’s frequently on TV and there are many opportunities to simply add the word ‘Bush.’ When people complain about bringing up the Bush name, remind them that brand names live on after their creators retire, e.g. Ford. Eventually, some of the media will use it, if only in quoting people who have said it. It’s like the tax cuts for the wealthy are the Republican tax cuts for the wealthy. I’m sulking because I sent emails saying this a few years ago and they didn’t get picked up in the optimism that BHO would end the recession in six weeks. Had it become part of the normal lexicon, it might have changed the tenor of some conversations today.” Bob Diem: “Have you seen the documentary ‘Boogie Man’ about Lee Atwater? I came of age in the eighties, but I never had any idea how influential this man was, and how he has spawned so much of the bankrupt political culture we have today.” DVAX Guru: “The FDA today wrote to DVAX indicating that DVAX had met the lot consistency standard, as I expected they would. ‘Lot consistency’ was the primary endpoint that DVAX “missed” a week or so ago–except as I indicated, they didn’t truly miss it, though there was a technicality that required them to word the press release as they did. They can now proceed to file for approval on the recently completed trial that showed dramatic superiority to the standard Hep B vaccine by the end of the year. I expect the CDC to recommend universal Hep B vaccination for diabetics in October and I expect a positive study early in 2012 in kidney dialysis patients. Target for the stock over the next 6 to 12 months is 6 or higher.”
Rude! July 28, 2011March 24, 2017 It’s rude to call someone selfish. But how are rich people refusing to pay a cent more when the nation is in peril not selfish? Sure, they have eagerly lapped up the line that they are “job creators” – that it would presumably be better for America if they paid no tax at all, so they could create even more jobs. (What’s magic about a 15% rate on dividends and capital gains? If it’s better than the 28% rate Ronald Reagan had them pay, wouldn’t 7.5% be better still? Wouldn’t a 2% rate just swamp us with jobs and prosperity?) No more wanting to feel selfish than anyone else, rich Republicans have embraced this line. But could many of them actually believe it? We all know selfish people, or a least know of them. Intuitively, how many of them do you think typically vote Democrat? It’s rude to call someone a bully. But how is it not bullying to tell a poor 81-year-old in a wheelchair, who’s voted all her life, that to vote this time she’s going to have to get herself to the bus and down to the Department of Motor Vehicles – with her birth certificate – and stand in line for however long it takes to get a photo ID? How is it not bullying to send Republican staffers to pose as outraged locals and pound on the windows to shut down the Florida recount? How is it not bullying for the Wisconsin Republicans to ram through a bill that strips government workers of their collective-bargaining rights? How is Karl Rove not a bully? We all know bullies, or a least know of them. Intuitively, how many of them do you think typically vote Democrat? This not to say that all Republicans are selfish bullies. Obviously. But quite a few seem convinced that ours is a Christian nation, and that Jesus would never have stood for taxing the rich or aiding the poor, or for forging compromise. No bleeding-heart, other-cheek-turner, He. I rant. I drip with sarcasm. But do you know what? Given the damage that’s been done to our country over the past decade, and that’s being done now, a little ranting and sarcasm may not be entirely out of order. Peter Stolz: “This is a great article that very clearly explains that the Republican spending cuts will be the equivalent of the largest middle-class tax increase in history. I would only add that tax cuts for the rich should hereafter be referred to by every Democrat as ‘The Republican $700 Billion Dollar Stimulus Program for the Rich.’ Because that’s exactly what it is.”
Invest To Win The Future July 27, 2011March 24, 2017 Robert Reich, from Salon, in part: . . . If consumers can’t and won’t buy, and employers won’t hire without customers, the spender of last resort must be government. We’ve understood this since [massive] government spending on World War II catapulted America out of the Great Depression — reversing the most vicious of vicious cycles. We’ve understood it in every economic downturn since then. Until now. The only way out of the vicious economic cycle is for government to adopt an expansionary fiscal policy — spending more in the short term in order to make up for the shortfall in consumer demand. This would create jobs, which will put money in people’s pockets, which they’d then spend, thereby persuading employers to do more hiring. The consequential job growth will also help reduce the long-term ratio of debt to GDP. It’s a win-win. This is not rocket science. And it’s not difficult for government to do this — through a new WPA or Civilian Conservation Corps, an infrastructure bank, tax incentives for employers to hire, a two-year payroll tax holiday on the first $20K of income, and partial unemployment benefits for those who have lost part-time jobs. . . . ☞ If it were me, I would go light on the payroll tax holiday (as grindingly tough as life is for low-income folks, at least they have jobs) and frame this more as a war: a war on our energy dependence and our decaying infrastructure. Mobilize the country to win that war, creating tremendous job opportunities – and a vision of a lean, mean, modern, competitive economy that would inspire investment. And I would pay for that wonderfully constructive war, at least in significant measure, the way wars had always been paid for until Bush and a Republican Congress took control: by taxing those best able to pay. After so many decades of having the pendulum swing in favor of the very richest, it’s not unreasonable that it would now swing back a bit for a while. CRME Suggested here at $4.60 in November, it closed at $5.59 last night. Guru: “Merck has purchased now all the rights (intravenous and oral) to CRME’s lead drug. That’s the reason for the pop. We’ve been expecting this. It could rally to 6 or more. Now awaiting restart of Phase III intravenous and Phase III oral trials later this year.” Who knows how low it could go in a bad market or with some nasty surprise. Not the worst thing to take a 20% gain in less than a year. But Guru thinks it might top 10 one day, so – assuming you bought this with money you can truly afford to lose – it might pay to hold on for a year or two. BOREF I know. I know. And yet . . . Palestine, Texas, 26 July 2011 WheelTug plc and ETA Global, Inc. announce that they have signed an agreement under which ETA Global will perform final assembly and delivery to customers (“kitting”) of the WheelTug aircraft electrical drive system for Boeing 737NG aircraft. ETA Global will also manage inventories and deliveries of spare parts for the WheelTug system within North America. This agreement adds a key supply chain piece for WheelTug systems for the 737NG model aircraft. All supplier companies in the chain are at least AS9100 compliant and have decades of experience in meeting demanding aerospace customer requirements. The patented and proprietary WheelTug(r) electric drive system uses high-performance electric motors, installed in the nose landing gear wheels of an aircraft, to provide full mobility while on the ground without the use of the aircraft’s jet engines or tugs for both pushback and taxi operations. WheelTug enables aircraft to be electrically driven from the terminal gate to the takeoff runway, and upon landing from runway exit to the gate. The resulting improvements in efficiency, flexibility, fuel savings, and reduced noise and engine foreign object damage (FOD) yield projected savings of more than $500,000 per aircraft per year, plus substantial reductions in CO2 and other greenhouse gas emissions. The WheelTug system is being developed initially for the Boeing 737NG, one of the world’s most widely-flown aircraft; systems for other commercial and military aircraft will follow. ETA Global, based in Palestine, Texas, is a leading distributor of aerospace, electronic, and mil-spec component hardware, and also supplies kitting and vendor-managed inventory services. Founded in 1978, ETA Global is certified to the AS9100 aerospace-system quality standard. “ETA Global is proud to be part of the Wheel Tug team,” said Ken Wendell, ETA Global’s, Marketing Manager. “Becoming a member of Wheel Tug’s supply chain allows ETA Global to once again demonstrate why we are the leading logistics solution provider in the industry. The benefits that are represented by Wheel Tug’s new pushback and taxi system make their product an obvious solution for an industry that is constantly looking for ways to save money, lengthen equipment service time, and reduce their environmental footprint. We expect Wheel Tug to be a household name in the aerospace industry for many years to come!” “We are delighted to welcome ETA Global as a key partner in the WheelTug supply chain,” said Isaiah W. Cox, WheelTug’s CEO. “We now have in place agreements with manufacturers and suppliers for almost every element of the WheelTug system. We may in future have additional distribution relationships to announce in Europe and Asia.” A full listing of WheelTug suppliers and risk-sharing development partner companies is on the company’s website at www.wheeltug.gi. ETA Global is largely employee-owned. WheelTug plc is a majority-owned subsidiary of Chorus Motors plc. [which is a majority-owned subsidiary of Borealis]. ☞ Will our patience ever pay off? I have to think the odds continue to improve, even if they’re now only – who knows? 50-50? At 50-50, it’s still an even bet you will lose all your money, which is why this is the kind of lottery ticket to buy only with money you can truly afford to lose. But at $2.50 a share and 5 million shares outstanding, the entire parent company, Borealis, is valued at $12.5 million. Nothing, in the scheme of things.