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

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, were published online November 1.  

Illustration by Jaime Hernandez
The excerpts also appear in today's print edition of the New York Times Magazine.

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 -- he's also quite funny at the stump.  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 code.  What's wrong with that?

The problem for Obama's supporters is that remaining revenue neutral might help curb federal spending.  Fomenting class warfare is often an effective way to divert the conversation away from 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 admonishes readers with one word -- "Resist!"

I like it.  I liked another article in this issue about prospering in difficult days, by Ms. Mina Kimes who wrote about a manager for the MFS International Value Fund -- Mr. Barnaby Wiener. 

I'm not an investment adviser and I'm wary of many (most?) of them.  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.  Impressive, but what surprised me was his bias toward risk aversion. 

Mr. Wiener believes "It's much more important to avoid losing money than it is to make money."  I agree.  He adds, "If you avoid the big losses, you make money almost by default."

It seems consistent with Warren Buffet's view, "The first rule of investing is don't lose money; the second rule is don't forget Rule No. 1."  Anyway, please read on...


Election year stakes and all I care to say today 
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
5. Thanks!

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 readers with this post.  Many of my posts center on fiscal responsibility.  I care more about it than most other cause célèbre (the French theme won't last, so keep reading) that others hold dear.
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.  The depth of the government's propensity to spend money it doesn't have, is staggering.

Mr. Malanga focuses on at least one part of a multi-faceted 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 choose where to invest their money.  If a majority of shareholders wish to tolerate over-the-top retirement and health care benefits -- 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 -- 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

Thank you, Phil Gramm

Why don't more TV journalists address the ways that federal government actions and the GSEs impacted our housing markets?

While watching Bloomberg TV last month, I witnessed former U.S. Senator Phil Gramm discuss the housing meltdown, as well as, his own work to deregulate the banks.  The interview lasts about eight and a half minutes, with the point behind this post examined in the last two and half minutes. 

Phil Gramm, Wikipedia
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 (predictably) insinuates that there were as many predatory lenders as borrowers. 

Gramm then asserted that for every sub prime borrower who truly got swindled, there were "one hundred" that exploited the system, i.e. predatory borrowers.  There's the debate, Mate.

I thought I coined the term, "predatory borrower" but I discovered that Mr. Gramm was using it before me, perhaps in response to others blaming him for the housing meltdown.  Millions of borrowers bought properties they couldn't afford.  How much scrutiny did the Barney Frank types that perpetuated irresponsible lending requirements on the banking industry have to endure? 

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.”  So am I and I believe he means it.  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 "Blame America First."  It's dangerously naive to brand virtually all American foreign intervention as "nation building" and as Commander-in-Chief, Dr. Paul could become Dr. Disaster.  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 people like me (Republicans that want to vote for him, but struggle to do so), when he highlighted the fact he had voted to use force after 9/11.  Hallelujah!  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. 

All said, people like me have significantly more in common with Paul supporters than with Democrats -- and probably always will.  I respect the ideological purity of most Libertarians -- their loyalty and unswerving respect for the Constitution.  My problem with many of them is three-fold: a) their all-hands-off judgement about containing evil and preserving national security, b) they fail to embrace political reality by running hopeless candidates which siphon GOP votes and c) too many spout the nonsense that there is no difference between Republicans and Democrats.

Newt Gingrich, Wikipedia
Newt Gingrich -- If you never took the opportunity to see Newt Gingrich speak in public, you really must make the time.  He's a rare breed of public speaker -- poised, colorful and he has an enviable command of American history and politics.  I've never seen him use notes.  He doesn't need them.  Speaker Gingrich also says dumb things at the worst possible moments.  His recent attacks on Romney's private equity group were reprehensible, desperate attempts to harm Romney which utterly failed.

Mr. Gingrich will not be the nominee of his party.            

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 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 lead.  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.