Eating Like An Aphid March 4, 2015March 4, 2015 But first . . . WHAT WE’RE UP AGAINST Seventy percent of the folks who voted to reelect George W. Bush believed Iraq was complicit in the 9/11 attack — even though it was not. Some large percentage believed that “by far the vast majority” of Bush’s proposed tax cuts would go to “people at the bottom of the ladder” — a multi-trillion-dollar lie — yet disbelieved Al Gore’s warning about climate change, even though virutally the entire scientific community shared his concern. And some percentage believe today that — in the words of Mitch McConnell — “by any standard, Barack Obama has been a disaster for our country” even though, by almost any standard — the strength of the dollar, the deficit, the housing market, gas prices, the stock market, unemployment, the availability of affordable health insurance, the number of troops dying each month — things have improved dramatically on his watch. And so I suppose I should not be surprised that Monday’s post — “Worst Forecasters Ever” — was simply dismissed by some readers. Like Jared Day, whose Facebook page identifies him as having “studied at Central New Mexico Community College,” who writes: “What a worthless article. Just more ignorance and blind belief in made up numbers, sad.” That’s it. End of analysis. How can you argue with that? EATING LIKE AN APHID I was already a fan of beets and radishes but now find you can also eat the leaves! Seriously! I just ate a few radish leaves. No need to cook or prepare them in any way: just ate ’em. Yum. (Well, yum-ish.) Which got me to wondering what other kinds of leaves are okay to eat. Should we start drinking pine-needle tea? One leaf to avoid, I’m guessing: hemlock. But poinsettia? Those poisonous Christmas plants? A myth, apparently. Eat up. (Well, don’t; but at least you won’t die.) And the poison flora that killed poor Chris McCandless when he trekked Into the Wild? A myth as well, though a compelling mystery. My point is: if you buy bunches of raw beets or radishes, don;t waste the leaves.
Of Bonds and Apple March 3, 2015 NEW HAMPSHIRE ZEROES Ed Keeling: “I picked up a copy of Money Angles at a charity white elephant table and like the zero coupon story of bonds maturing in the unimaginably distant future of 2014 when, you wrote, ‘I will be sixty-six (not a pretty thought): the New Hampshire State Housing Authority may or may not be solvent; and a box of Jujyfruits may cost $48.’ Well — what happened? Did you hold the bonds till maturity? Were they called? Are Jujyfruits $48 a box? Don’t leave us in suspense.” ☞ JujyFruits are $12.80 for a pack of three; the bonds were noncallable, which was part of their exceptional allure; and I just spoke with the New Hampshire Deputy Treasurer: Yes, the $200,000 in face-value “zero-coupon” bonds that I bought for $5,300 in 1984 had indeed faithfully paid zero interest every year until maturity, and then — more impressively — were redeemed at par. You seriously think The Granite State would default on a bond issue? That $200,000 par value didn’t go to me, however. As inflation and thus the general level of interests declined (thank you, Fed Chair Paul Volcker, for saving the world), the value of tax-free municipal bonds that had initially been priced to yield 12% a year compounded to maturity soared. I think I sold mine for around $36,000 two or three years later — leaving the remaining $164,000 on the table for someone willing to wait anohter 27 years, but happy nonetheless. For the record: I’ve never bought a box of JujyFruits. I just think they’re funny. PUERTO RICAN ZEROES Ryan N: “I was curious to get your updated thoughts on purchasing Puerto Rican municipal bonds. I toyed with the idea of picking some up back when you first mentioned it but never got around to it. Alas, here I am thinking about it again and was wondering if any developments since then have swayed your thought process in one direction or another as to whether it’s a still good idea? I appreciate any input. Thanks in advance.” ☞ Well, in the first place, since I mentioned them September 10 (along with Home Depot), the bonds have gotten cheaper (and HD is up 30%). Ordinarily, that would make them even more enticing. But one very smart, very connected guy I know sees “no way out” for Puerto Rico and says that if it were he, he would consider selling — even the 8% “general obligation” bonds I bought at less than 90 cents on the dollar (now 83 cents), free of state, city, or federal income tax. But I’m not selling, for three reasons. The first (and only good one) is that I just don’t see Uncle Sam failing to find some way to prevent a complete default. A moratorium on interest payments as it’s all being sorted out, perhaps; some kind of restructuring, perhaps. But I don’t see the downside for bonds backed by the full faith and credit — and taxing authority — of the Commonwealth of Puerto Rico ever being worthless. We’ll see. The second is that I’m stubborn, don’t like being wrong, and don’t like taking losses. That may be three reasons, not one, but all are dumb: a rational investor would not be swayed by any of that. The third is that another supersmart guy I know came by to visit this summer when Apple was $99 a share and told me he was short (betting it would go down). I was long (I owned it) and had been for quite some time. I mocked his arguments — but quietly sold after he left, figuring I probably shouldn’t be greedy with my gain; and, after all, this guy is really really smart. Apple closed at $129 last night, meaning I could have made a further 30% on my money in barely seven months had I not listened to him. Of course, this has nothing to do with Puerto Rico — rationally speaking. Just because one really smart guy proved wrong doesn’t mean all really smart guys will be wrong. But there you go again expecting me to be rational. For that, you need to buy the platinum subscription. (I also own some Puerto Rico zero-coupon bonds, backed by sales-tax revenues, promising to pay $1,000 at maturity in 2054, when I’m 107, but costing just $74 each today. Odd little investments like this keep me young.)
Worst Forecasters Ever March 2, 2015March 1, 2015 Let’s review: Not a single Republican voted for Clinton’s first budget. They forecast terrible job losses. “Suicidal,” one called it. (Read the quotes!) Yet the economy boomed and 23 million jobs were created. Same with Obama: They hated his stimulus package — not a single Republican vote in the House, just three* in the Senate — hated his tax hikes on the best off — hated Obamacare — hated financial regulation — all forecast to kill jobs and strangle small business. Yet we’ve had 59-straight months of private-sector job growth, added 12 million new jobs, tripled the stock market and cut the deficit by two-thirds. And small business? This Bloomberg chart is headlined: Small Businesses Beat Big Counterparts in Jobs Gains: Drive Jobs Growth. > So why would anyone listen to Republicans when it comes to the economy? They are the Party of National Debt (Reagan/Bush quadrupled it in 12 years), the Party of Holding Down Wages (not least by freezing the minimum wage), the Party of Health Care Inflation (fighting Obama’s successful efforts to curb it), the Party of the Rich (and Growing Inequality) . . . and the Party of Terrible Predictions. Reelect Obama, Gingrich told us, and we’d have $10 gasoline. Reelect Obama, Romney told us, and we’d have four more years of chronic unemployment. Reelect Obama, Limbaugh told us, and the economy would collapse. (Elect him, Texas Governor George W. Bush had told an electorate in 2000 eager to believe, and “by far the vast majority” of his proposed tax cuts would go to people “at the bottom of the economic ladder” — a multi-trillion-dollar lie that nonetheless won him almost as many votes as Gore.) Republican forecasters are so bad they can’t even predict the present! . . . “By any standard,” Republican leader Mitch McConnell tells us, “President Obama has been a disaster for our country.” Except that everything is dramatically better than it was when he took office. . . . “Today our nation is on the road to decline,” Marco Rubio told CPAC last week. Yet the dollar is exceptionally strong; our ongoing economic recovery, the envy of the world. Ironically, the two ways Senator Rubio’s “road to decline” does comport with reality — our broken Congress and our crumbling infrastructure — are squarely his party’s fault. Because his is the Party of No, a considerable faction of which believe in “no compromise” and who have no problem shutting down the government.** Mitch McConnell’s first priority as Republican leader of the Senate was was not to help rescue a collapsing economy or end wars or fix health care but — in his own words — to make sure Obama would serve just one term. To see him fail. Even though that would mean missed opportunities and impeded progress for the American people. (How else to hold him to one term?) There’s no starker example of this — the Republican-broken Congress and the Republican-crumbling infrastructure — than the American Jobs Act, designed to jump-start our economy by revitalizing infrastructure. As President Obama told a joint session of Congress in 2011 specifically convened to urge passage: . . . We all remember Abraham Lincoln as the leader who saved our Union. Founder of the Republican Party. But in the middle of a civil war, he was also a leader who looked to the future — a Republican President who mobilized government to build the Transcontinental Railroad — launch the National Academy of Sciences, set up the first land grant colleges. And leaders of both parties have followed the example he set. Ask yourselves — where would we be right now if the people who sat here before us decided not to build our highways, not to build our bridges, our dams, our airports? What would this country be like if we had chosen not to spend money on public high schools, or research universities, or community colleges? Millions of returning heroes, including my grandfather, had the opportunity to go to school because of the G.I. Bill. Where would we be if they hadn’t had that chance? How many jobs would it have cost us if past Congresses decided not to support the basic research that led to the Internet and the computer chip? What kind of country would this be if this chamber had voted down Social Security or Medicare just because it violated some rigid idea about what government could or could not do? How many Americans would have suffered as a result? No single individual built America on their own. We built it together. We have been, and always will be, one nation, under God, indivisible, with liberty and justice for all; a nation with responsibilities to ourselves and with responsibilities to one another. And members of Congress, it is time for us to meet our responsibilities. Every proposal [in this bill that] I’ve laid out tonight is the kind that’s been supported by Democrats and Republicans in the past. Every proposal I’ve laid out tonight will be paid for. And every proposal is designed to meet the urgent needs of our people and our communities. . . . Regardless of the arguments we’ve had in the past, regardless of the arguments we will have in the future, this plan is the right thing to do right now. You should pass it. And I intend to take that message to every corner of this country. And I ask — I ask every American who agrees to lift your voice: Tell the people who are gathered here tonight that you want action now. Tell Washington that doing nothing is not an option. Remind us that if we act as one nation and one people, we have it within our power to meet this challenge. . . . A wide majority of economists — and voters — and Congresspersons — wanted to pass the American Jobs Act. But the Republican Congress forbade a vote. They’ve broken Congress; they’re letting our infrastructure crumble; and the Koch brothers have rounded up $889 million in hopes of taking the one remaining branch of government they do not yet control. *Two of those three moderate Senators, now gone. **And, no, both parties are not equally to blame, as I’ve argued before: Moderate Republicans have lost their seats to uncompromising far-right primary challengers. Name one moderate Democrat who’s lost his seat to a far-left challenger. Similarly, whatever moderate Republicans remain fear — rightly — that if they compromise, they, too, will face a Koch-financed challenge. So they don’t compromise. Name one moderate Democrat who fears a similar fate from the left. The lack of compromise is not symmetrical.