Saturday, November 17, 2012

The historical cycle that rings true today

A friend* trying to console me after Mr. Obama's re-election, shared a timeless quote:
"Again and again after freedom has brought opportunity and some degree of plenty, the competent become selfish, luxury-loving and complacent, the incompetent and the unfortunate grow envious and covetous, and all three groups turn aside from the hard road of freedom to worship the Golden Calf of economic security.  The historical cycle seems to be: from bondage to spiritual faith; from spiritual faith to courage; from courage to liberty; from liberty to abundance; from abundance to selfishness; from selfishness to apathy; from apathy to dependency; and from dependency back to bondage once more."
These prophetic words came from the leader of a Pennsylvania cork company during a speech he delivered on March 18, 1943.  The speech was delivered by Henning Prentis.  Mr. Prentis also wrote this:

"At the stage between apathy and dependency, men always turn in fear to economic and political panaceas." (Industrial Management in a Republic, p. 22.).  

The concept rings true today.  

*Thanks, Kevin.

Sunday, November 04, 2012

Defending Paul Ryan in the NY Times

Excerpts from my letter to the editors at the New York Times Magazine concerning a cover story on Paul Ryan in the October 21 issue which were published online November 1.  

Illustration by Jaime Hernandez
The excerpts also appear in today's print edition of the New York Times Magazine.  My apologies for the blurry, tiny font.


Friday, October 05, 2012

Ben Stein speaks about hypocrisy

I saw Mr. Stein speak in San Diego last June.  An interesting figure: part lawyer, part economist, part actor -- and he's also quite funny at the stump.  Some of his latest wisdom follows...

Ben Stein - SodaHead image
"Fathom the hypocrisy of a government
that requires every citizen to prove they
are insured. . . but not everyone must
prove they are a citizen."
Now add this, "Many of those who refuse,
or are unable, to prove they are citizens
will receive free insurance paid for by
those who are forced to buy insurance
because they are citizens."

Saturday, September 29, 2012

The Romney tax policy

Conceptually, it's not more regressive than what we have but it's being labeled as such by Obama supporters who conflate marginal tax rates with effective tax rates.

Lower marginal rates on a broader base of income is a step toward real tax reform.  Reduce the mountain of deductions, credits and incentives -- apply lower marginal rates to a greater aggregate of taxable income and in the process remain revenue neutral while simplifying the tax code.  What's wrong with that?

Perhaps the problem for Mr. Obama's supporters is that remaining revenue neutral might help curb run away government spending.

(This is a CEO, not a Community Organizer)

Sunday, September 16, 2012

FORTUNE-ATE? Don't sulk, resist!

In his piece from the current issue of Fortune magazine, Geoff Colvin says the current environment is a "...nasty, insidious force that's undermining the native optimism that buoys up business people everywhere" and then he admonishes readers with one word -- "Resist!"

I appreciated another article in this issue by Ms. Mina Kimes who wrote about a manager for the MFS International Value Fund -- Mr. Barnaby Wiener.  Like a lot of people; I largely stick to index funds, but Mr. Wiener's actively-managed fund according to Fortune, is one of the best in its class having outperformed 99% of its peers since 2002. 

Mr. Wiener says "It's much more important to avoid losing money than it is to make money" and he adds, "If you avoid the big losses, you make money almost by default."  Those statements seem consistent with Warren Buffet's well-known view, "The first rule of investing is don't lose money; the second rule is don't forget Rule No. 1."  OK, but what's the third rule?  Anyway, on to the election...

1. The presidential election is only 50 days away.
2.  It's the most important election of my conscious lifetime (in other words, since I was 26).
3.  We desperately need a CEO more than a Community Organizer with velvety speeches.
4.  Encourage everyone still on the fence to get out and vote for Mitt & Paul.

Wiki image by Gage Skidmore

Wikipedia, Ryan official portrait

Saturday, June 09, 2012 raison d'être

Raison d'être -- is French for "reason for existence" -- which is a heady concept.  I'll define this blog's raison d'être for my five six readers, with this post.  Many of my posts center on fiscal responsibility. 
Fotosearch Image

So when I see a column I agree with as I did today in WSJ by Steven Malanga ("State Politicians and the Public Pension Cookie Jar") -- I share it and talk about it.  I hope in a small way, I'll add attention to the generational burden-shifting and recklessness taking place (and it feels good to get gripes out of my system and into a post).

Mr. Malanga focuses on at least one part of a multi-faceted national spending problem -- defined benefit programs for public employees -- better known as public pensions.  I didn't understand how costly they are until some six years ago, when a retired pediatric dentist of all people, began to educate me.

I also have misgivings about pension plans in the private sector, but shareholders of those pension-granting organizations choose where to invest their money.  Put differently, if a majority of company shareholders wish to tolerate expensive employee retirement and health care plans -- that's their business.  Investors can and do vote with their feet.  But taxpayers can't sell their shares, or wage a proxy fight. So, public pension reform is my topic du jour (OK, that's it for the French phrases -- I promise). 

Fortunately, voters are beginning to wake up and support leaders like Governor Scott Walker and the fiscal reforms they sponsor to curb these budget busters in the public domain.

Someone asked me why I haven't been posting much lately.  The answer is I've been busy working and like most working Americans -- trying to add to my defined contribution plan.

Governor Scott Walker / Wikipedia Image
Finally, I'll share another column also found in today's WSJ  by Peggy Noonan about Governor Scott Walker's resounding win this week, called "What's Changed After Wisconsin". 

Mr. Walker, whom I hope you'll remember -- not recall -- is the first recipient of the MVP Award for public adherence to fiscal responsibility.

Saturday, March 17, 2012

A refreshing perspective from Phil Gramm. It's not just about the banks

OBloomberg TV last monthformer U.S. Senator Phil Gramm discussed the housing meltdown, as well as, his own work to deregulate the banks.  

Phil Gramm, Wikipedia
During the course of the interview, Mr. Gramm highlights "concerted government action and pressure on banks" to make sub prime loans and destructive decisions in Washington "to force feed housing" ownership.

The Bloomberg interviewer insinuates that there were as many predatory lenders as predatory borrowers.  So, exactly, what is a predatory lender?  I believe many borrowers were unaware of the potential risks of their variable rate mortgages.  That's fair.  

However, were millions of people buying more home than they could afford, or sucking more equity out of their homes than they could afford to lose; all largely duped?  I never believed so and still don't believe so.

Gramm asserted that for every subprime borrower who actually got swindled by lenders, there were "one hundred" that exploited the system, i.e., predatory borrowers.  There's the debate, Mate. 

That millions of borrowers bought properties they couldn't afford, recklessly used cash out financing, or shouldn't have been in variable rate notes in the first place, is clear.  We will debate for years which players and policies enabled the whole sorry misuse of credit.  Laying the entire mess at the hands of bankers is conveniently populist, but incorrect. 

If you don't have time for the whole interview, consider moving the needle to the six-minute mark.

Saturday, February 04, 2012

My take on GOP presdential candidates

Ron Paul, Wikipedia
Ron Paul -- I remain conflicted about Ron Paul.  The reasons are simple and shared by a number of GOP voters.  Let's first look at the plus side.  I love the man on fiscal policy.  As he once described his zeal to cut federal spending, “I am absolutely convinced it is the only road to prosperity.”  On monetary policy -- Ron Paul is the gold standard (pun intended).

If not for the Tea Party, I'd have bolted from the Republican Party a few years ago because I wasn't seeing enough Republicans walk the fiscal talk that Rep. Paul walks every day.  Then I discovered Ron Paul.  When Ron Paul says he'd cut a trillion dollars in federal spending year one, he even tells you how he'd do it.  When he talks about The Fed's destructive, easy money policies -- he means it.  I admire his courage and consistency.  Unfortunately, Rep. Paul's foreign policy is often, "Blame America First."  It's unfair to brand virtually all American foreign intervention as "nation building".  He's more worried about domestic TSA agents, than foreign enemies of this country.  He's obsessed with "rights" of enemy combatants (non Americans) in Guantanamo and dismisses the record of domestic security our existing policies (maintained by leaders in both parties) have engendered.  I also question his views on Israel.

I recall an attempt Mr. Paul made to appeal to Pro-Defense Republicans when he highlighted the fact he had voted to use force after 9/11.  My fear is that a President Paul would wait for another 9/11 before acting.  Ignoring one's enemies has nothing to do with Liberty. 

Traditional Republicans have significantly more in common with hardcore Paul supporters than either group has in common with Democrats -- and probably always will.  I respect the ideological purity of most Libertarians -- their loyalty and unswerving respect for the Constitution.  My differences with some of them are: a) an all hands-off position about containing evil and preserving national security, b) a failure to embrace political reality by running hopeless candidates who siphon GOP votes and c) too many of them still spout the nonsense that there is no difference between Republicans and Democrats.

Newt Gingrich, Wikipedia
Newt Gingrich -- Mr. Gingrich will not be the nominee of his party, but if you ever have the opportunity to see Newt Gingrich speak in public, you must make the time.  He's a rare breed of public speaker -- poised and colorful with an enviable command of American history and domestic politics.  I've never seen him use notes at the stump.  Speaker Gingrich also says ineffective things at the worst possible moments like his recent attacks on Romney's private equity group.  .            

Rick Santorum --
Rick Santorum, Wikipedia
A lot of Americans are getting their first taste of Rick Santorum.  He's been a part of the Washington landscape for a long time while managing to keep his nose clean and win respect from people who agree with him and scorn from those who don't.  Mr. Santorum will not be the nominee of his party either.  His character, social values and deeply-held convictions are the stuff that lands one a spot on Mount Rushmore, but we need a CEO in the Oval Office more than a role model for at-risk youths.  I'm also troubled by his explanation for a vote against the Commonwealth of Pennsylvania when it tried to become a Right To Work (RTW) state.  Mr. Santorum now says he'd sign an executive order allowing all states to become RTW states. By the way, check out this site to learn more about RTW site.

Mitt Romney --
That brings us to Mr. Romney.  Words that come to mind are: urbane, wealthy, smart and energetic.  Of course, that's not enough to win.  I hope Governor Romney's commitment to balanced budgets will remain as pure as Governor Scott Walker's performance here in Wisconsin. 

By the way, I'm now awarding an annual MVP Award for public adherence to fiscal responsibility under adverse conditions.  Mr. Walker earns the inaugural award -- hands down -- for his 2011 performance.  Taking a $3.6 billion dollar deficit to a $300 million dollar surplus, without raising taxes, against a Tsunami of cheap legislative stunts and vicious public union attacks, has re-defined courage and leadership in this state.

But back to Mitt.  There's much more to learn and discuss about Mitt Romney, of course, but for now I'll close with this thought: Mr. Romney will be the GOP nominee facing Barack Obama in November and if elected, he'll become an infinitely better President than his predecessor.