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."

Icon by Arfianta at freepik

Those prophetic words came from the leader of a Pennsylvania company during a speech on March 18, 1943.  The speech was delivered by Mr. Henning Prentis and his words ring true today. 
 *Thanks, Kevin.

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 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.

 



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 on health care and immigration policy 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."

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)

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



Maddente.com 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 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.
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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 Maddente MVP Award for public adherence to fiscal responsibility.

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

On Bloomberg TV last month, former 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.