Finally! Back to politics. But first . . .
Correction: Those who read yesterday’s column early saw a longer version where I carried on about how 33 other drugs were named in the report, but not BiDil. Turns out, no brand-name drugs were named – those 33 other drugs are generics as well. Proving that I am not a doctor and shouldn’t even try to play one on TV. But also that these august medical authorities seem awfully comfortable touting generics rather than far more expensive alternatives.
Gray Chang: ‘I bought a single NTMD put option, which has doubled in value during the past week. But I’m not counting my chickens before they hatch. Sure, there’s a generic alternative to BiDil at one-sixth the cost. But doctors, as a general rule, are not very concerned about costs. They tend to prescribe the best medicine, irrespective of cost. It’s happened to me before with other medicines, so now I always do a little research before I fill a prescription. If I find a less expensive alternative, I ask my doctor about it. BiDil is one pill per dose, and the cheaper alternative is two pills. So they might prescribe the more convenient single pill.’
☞ They might – and they have! According to IMS, several hundred prescriptions for BiDil have been written in its first several weeks of introduction. The questions are: will they get to the many tens of thousands of prescriptions they need to cover their $100 million marketing budget and then make a profit? And how many of those prescriptions will be switched to the generic by insurers loath to pay $2,000 a year instead of $300? Remember, it’s not some expensive antibiotic for a week and then you’re cured. It’s an extra $1,700 per year forever.
DON’T SELL YOUR OIL STOCKS II
‘I sold half of my oil stocks several weeks ago, before the peak. I thought that at the current high prices, OPEC would ultimately increase production to cash in on the demand, and oil prices were bound to drop. What would you recommend now? Buy some back, hold on, or sell some more?’
☞ Not knowing your situation, my gut would be – enjoy your gains, hold the rest, and if oil stocks continue to climb, be glad you held half. If they plunge, be glad you sold half. (And maybe then buy back the first half.)
My old pal Matt Simmons has a new book out on this topic, and you can read a terrific interview with him here. I’ll post this again Monday – if you read it now, you may never get to the Smelly Cheese. But my guess is that it will strengthen your resolve not to sell more shares. OPEC may not be able to increase production.
BOREF AND FUNNY HATS
Mike Myler: ‘Write about Borealis all you want; I find it very interesting. I am thinking of buying more and putting it in my Roth IRA. I think this is a good idea since if it does go up I won’t be taxed on profits and if it doesn’t go up I won’t be able to ever retire anyway. I get the daily and weekly updates from Borealis and in a spare few minutes I decided, ‘OK, I will order a hat since they have plenty left.’ I sent an email and requested one. A few hours later I got an e-mail back from Rodney Cox saying, ‘done.’ I have a picture in my mind of the CEO of the company in which I have invested my hopes and dreams and money, sitting in his office with boxes of hats piled up all around him and personally boxing up and addressing one to me. I both like and dislike this thought. I don’t understand why these motors aren’t flying off the shelves. I wish he would hire a businessman. I have a feeling these companies will come through but that real businesses will then steal the patents or some such thing. If you see a picture in the paper of a guy in Chicago on the ledge of a building with a Wheel Tug hat on his head, that would be me.’
☞ I don’t know which makes me more nervous, the CEO responding to requests for hats or one of my readers putting some of his retirement money into a risky stock. (Normally, you want risky investments outside your retirement funds, so losses can be used to reduce income tax, while long-term gains, if they materialize, would be lightly taxed anyway.) But you can be sure of this much: I’ll be rooting for you.
And now . . .
POLITICS AND SMELLY CHEESE
Mike W: ‘While I greatly prefer your writings of stocks in companies I never heard of to your misguided political ramblings, can you get back to writing financial things that affect the lives of real people, not just your brie-eating limo-riding liberal friends? ☺’
☞ I appreciate the smile and the good-natured tone of your ribbing. But really what we’re talking about, when we talk politics in this space, are things that affect the lives of, for example, millions of real people with real kids living below the poverty line . . . and your aversion to thinking about that. Republicans think – ‘not my problem.’ Democrats think – ‘we all have a responsibility to each other to try to make a better world.’
Not to say that all things are possible (or that all Republicans are as callous as the leadership they vote into office). But it’s worth thinking about what is possible, not just about cutting taxes for the rich and attacking Iraq, which were clearly this Administration’s top priorities from Day One, even before the 2001 Inauguration, let alone 9/11.
REPUBICAN QUOTES YOU MAY HAVE MISSED
If you missed these, from a Lyn Davis Lear column on the Huffington Post . . . meet me at the bottom:
“Victory means exit strategy, and it’s important for the President to explain to us what the exit strategy is.” — George W. Bush
“You can support the troops but not the president.” — Rep Tom Delay (R-TX)
“Well, I just think it’s a bad idea. What’s going to happen is they’re going to be over there for 10, 15, maybe 20 years.” – Rep Joe Scarborough (R-FL)
“Explain to the mothers and fathers of American servicemen that may come home in body bags why their son or daughter have to give up their life?” — Sean Hannity, Fox News
“[The] President . . . is once again releasing American military might on a foreign country with an ill-defined objective and no exit strategy. “ — Sen. Rick Santorum (R-PA)
“I had doubts about the bombing campaign from the beginning . . . I didn’t think we had done enough in the diplomatic area.” — Senator Trent Lott (R-MS)
“I cannot support a failed foreign policy. History teaches us that it is often easier to make war than peace. This administration is just learning that lesson right now.“ — Rep Tom Delay (R-TX)
OK? These are quotes she found about President Clinton’s committing U.S. troops to Bosnia. (Which – perhaps because it was well thought through and pursued with a reasonable level of buy-in from the rest of the world – worked out very well.)
And I don’t recall any bullying from our side to say these critics were unpatriotic or to mock their concerns.
These are quotes from the same Republican leadership that provided not one single vote for the 1993 Clinton budget that broke the Bush economic malaise and started a virtuous cycle that led us to unparalleled prosperity.
The same Republican leadership that has plunged us back into giant deficits by its ‘taxcuts-for-the-rich-no-matter-the-cost-or-the-circumstances’ core principle.
Speaking of which . . .
Did you hear the great news from all the media outlets earlier this week, that the federal budget is expected to be only $331 billion this year? As usual, I’ve heard no one challenge the White House spin on this.
The TRUE deficit is nearly $200 billion higher. That’s because the White House always forgets to include the money we are borrowing from the Social Security Trust Fund.
As discussed here previously, this borrowing is no fiction, it is starkly real.
It is as if you were spending the baby-sitting money that your daughter has been handing you each week to hold in safekeeping for her college tuition. Instead of putting it in the bank for her, you have been spending it on gifts for your wealthiest relatives, putting your IOU’s into a file you call, Daughter’s College Fund. Only here it is nearly $200 billion of IOU’s. Bad enough that we’re doing it – at least we should acknowledge it.
And, yes, the Clinton Administration issued its numbers the same way, but there are several points to make about that:
- The Social Security surplus was smaller and less significant in the Clinton years, and also a relatively new phenomenon. Until fairly recently, this didn’t make much difference.
- The Clinton mantra was to “Save Social Security First” – specifically NOT to squander the surplus on tax cuts for the wealthy.
- Under Clinton, the massive Republican budget deficits were finally turned around. The goal was to reduce deficits, not hide them.
- And anyway, are the Republicans suddenly saying that anything President Clinton did was OK? That would certainly be a new tune!
In short: It’s a half-trillion-dollar deficit. Not $331 billion. We are adding about $1.5 billion a day to our collective debt. And the news media should report it that way.
Have a great weekend.
Quote of the Day
There are two things you need for success in politics. Money . . . and I can't think of the other.~Senator Mark Hanna (R-OH), 1903
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