Soft landing or hard landing, it's an achievable mark

This week at a financial conference, I listened to featured speaker, Austan Goolsbee, who is President of the Federal Reserve Bank of Chicago, a noted Economist and frequent contributor to the financial press.  He's also likeable. 

Official Portrait

One day I'll post on entertaining economists because there are several on both sides of the aisle and Dr. Goolsbee, an Obama cabinet appointee and acolyte, will definately be part of that post.

An amusing story Mr. Goolsbee told about a pleasant sense of wonder he experienced while attending a meeting in the Oval Office with President Obama and Larry Summers (the pleasant part ended abruptly) made the audience roar.  

Afterward, during the Q and A period, I anxiously awaited my turn with the microphone.  When prompted, I found the "on" switch with only minor assistance.  My question to Mr. Goolsbee, which I'll paraphrase, was...

We hear much debate from economists and financial journalists about the likelihood of a so-called soft landing.  Some say the pace of rate hikes was too slow, others say the risk will come from cutting rates too slowly.  Whether the outcome will be soft or hard, what exactly constitutes "a landing".  In other words, how will we know who was correct? 

I watched Dr. Goolsbee as I asked my question and witnessed his nodding head.  Then he gave a relatively lengthy answer.  His central points were:

• yes, nailing down the definition of a landing is a fuzzy area but...
• given where we've been, if you consider the Fed's dual mandate and see employment levels at desired level X and you also see inflation levels at desired level Y, then you've pretty much landed softly.

Again, I'm paraphrasing his response, but those were my key takeaways.  I guess there's no final buzzer to signal the end of the game; so if one waits long enough for conditions to change, most any economic seer can claim to be at least partially vindicated.

Vive la France!

I sympathize with the great nation and people of America's oldest ally FRANCE.  May God soothe their anguish at this difficult time following the deaths of 130 French citizens at the hands of jihadist murderers.  Our President is mistaken about the national security challenges we face.  Unfortunately, he proclaims that evil abroad is "contained".  All the while, the national debt has grown more under his tenure than it has under all previous US presidents combined.  Perhaps that's why a former Chairman of the Joint Chiefs of Staff famously quipped that the biggest "...threat to our national security is our debt."

The yoke of two Americas

It became clearer after President Obama’s re-election that we're two Americas.  Has our country been this divided since the Vietnam War, or perhaps the Civil War?  Mr. Obama captured just fifty-one percent of the popular vote.  

Last November, I anticipated more reaction from voters in the Center, due in part to the now infamous, “You didn’t build that” quip.  I believed it validated deep concerns held by many Americans that President Obama remains anti-business and anti-free market.  I also believed there was no way to take such a gaffe out of context (as claimed by the President and his defenders) and that the ripple effect would devastate the President's campaign.  I was obviously wrong about the fallout as far fewer swing voters in the Center cared about the issue than I'd imagined.  Setting aside the unpredictable American Center, the two Americas of Blue and Red remain far apart in their belief systems.

Icon by Flat-icons-com at freepik

Much of Blue America believes that since car tires rolled on public pavement while building businesses, or since career success came after attending public universities --- government funding enabled positive economic outcomes.   

Red America concedes that of course, some large scale public works projects and excellent public universities influenced America's growth and as our population grew, a corresponding increase in the size of federal government was necessary.  

However, Red America doesn't believe our nation flourished exclusively, or even principally, for these reasons.  Red America believes, it was limited government, free markets and personal freedom that enabled growth and prosperity in the first place coupled with initiative, smart risk-taking and hard work. Red America points to history that suggests the inevitable outcome of unchecked deficit-spending and taxation courts disaster and that we're already witnessing our decline.

Red America remains convinced that one of the most perilous problems faced by our nation today is federal spending and that added taxation, by any other name or game, is more of an enabler to the fiscal problem, than a cure.  For this view, Red America is often labeled by Blue as extremists.

Leaders of Blue America welcome new tax increases like the 2% payroll hike on all taxable wages up to $113,700 (which Blue dismisses as end of a tax "holiday") and the new Medicare adder of 0.9%.  

Class warfare and the politics of envy are often used to justify tax increases.  This historically has been Blue America's mantra to increase taxes.  Paying one's "fair share" is whatever they want it to mean.

And on the spending side, a reduction in the rate of increase to any budget item, is still decried as a spending cut by Blue America.  By contrast, Red America welcomes the prospect of a nominal $85 billion spending reduction from a government that spent over $3.5 trillion last year. 

Sadly, the yoke of two Americas remains firmly in place.

White House Fiscal Adviser?
Wikimedia Commons

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 24).

3.  We need a CEO more than a Community Organizer with velvety speeches.

4.  Please encourage anyone still on the fence to get out and vote for Mitt & Paul.

Image by storyset on Freepik



Of nuts and acorns

Contrast two recent cases that received national media focus: the arrest of Harvard professor Henry Louis Gates Jr. and video tape of ACORN employees giving advice to individuals posing as operators of an under-aged prostitution business.

In the first case, the President declares that law enforcement officers in the Gates case, "acted stupidly" then he hosts an awkward reconciliation meeting over beers on the White House lawn. 

In the second case, the President demurs when asked to share his opinion about the ACORN workers and Congressional action to stop federal funding for their organization. President Obama did say that actions he viewed on the ACORN videotape were "inappropriate" and deserved to be investigated, but then he added...

"This is not the biggest issue facing the country. It is not something I'm paying a lot of attention to."

Nor should he have paid much attention to a civil disturbance involving one man in Cambridge, Massachusetts...but he did.  Mr. Gates, for his part, could have had the last laugh and made buffoons of the Cambridge police, by maintaining his cool. Instead while being questioned, he ranted as though he had been robbed of his human dignity and got himself arrested.  That was the whole "news" story.

Back to the President.  At the time he uttered the "acted stupidly" remark, I had the feeling he was reacting as a man who had felt the sting of racism himself, possibly conjured by painful episodes from his past.

Let's say hypothetically that 25 years ago, citizen Barack Obama attracted the suspicions of some dim-witted person for no other reason than he was black and in the wrong place at the wrong time. Arousing suspicion for these reasons alone is completely unfair, but it happens and I bet it hurts like hell and leaves one justifiably angry.  

I get it, but candidate Obama ran his campaign as the "post-racial" choice.  Some people who've grown weary of bitter and endless racial debates are also attracted to a person of color that espouses a color-blind agenda. However, acting with complete indifference to race is much easier said than done.  

The President would have been well-advised to say as little about the Gates matter as he said about ACORN.  To be fair, Mr. Obama wisely distanced himself from the race mongering recently exhibited by former President Jimmy Carter.  Sometimes, even racism -- or reverse racism -- is colorblind.

Saved or created? That is the question.

It hit me while driving someplace and listening to the radio, maybe a month ago.  The President was talking about the outcome of his stimulus package while using the now oft-repeated phrase about three and half million jobs being, "saved or created."

(Freepik image)

I'm hearing it again as I watch one of President Obama's acolytes on "Meet The Press" and so I'll ask you dear reader...

How does one measure a job saved?  How can one record a job loss that didn't occur, but might have occurred under the circumstances?

Data on new jobs created are obviously available and broadly examined -- but jobs saved?  It seems like a clever mechanism to avoid any rigorous assessment of the relative success or failure of the stimulus plan.

What's actually been created, is a new rhetorical device called "jobs saved".  That phrase is designed to portray an anemic employment picture as something more robust, even if the 'metric' can't be measured. 

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Obama travel files is breaking news?

Apparently, Senator Obama's passport file has been reviewed. 

OK, logical questions are by whom and why?  Also, how did the story breakers learn about it?  But I'm also trying to understand -- where is the story?

Keith Olbermann, Wikipedia

Is there some profound secret associated with Mr. Obama's public travels? What is the conspiracy they are tripping over themselves to report upon?  Moreover, why is a presidential candidate's foreign travel history somehow more privileged than a review of his tax returns?

The media is reacting as though someone has broken into the office of Daniel Ellsberg's psychiatrist again. Keith Olbermann at MSNBC has actually referred to this story as "jaw dropping." 

Please. We need much more. For the moment, my jaw is motionless.

I'm sure he gets better advice than mine...

but I do not understand why Senator Obama highlights relatively innocuous aspects of Hillary Clinton's history like service on Walmart's board (is that a crime?) when there is so much else to choose from.

Ms. Clinton burst on to the national scene in 1992 when she insulted American women who choose to stay home and raise their children (remember her "bake cookies" comment?).  Then we learned about her involvement in FileGate and TravelGate.

Ms. Clinton later made preposterous statements to the press about a "vast right wing conspiracy" when asked about her husband's peccadilloes which were already well chronicled.  One could go on and on.

Now she criticizes Senator Obama for the quality of clients he represented while in private practice.  I bet Ms. Clinton would much prefer to discuss her board memberships than many other issues that stained her political dossier.  Why does Senator Obama choose Walmart?