Friday, February 27, 2009

I hate to say it

No, not really: I told you so. As the ink was drying on Obama's historic signature on the historic $800 billion Spendulus Bill, Congress began work on a $410 billion spending bill to cover, well, everything that wasn't in the Spendulus Bill. That's a lot of kitchen sinks.

If we give the Big 3 a bail-out, the refrain goes, they'll be back soon for more. And, considering our aversion to admitting failure, we'll give them more money, and then more. But did this idea not occur to those telling us to let Obama, Pelosi, and Reid have as much money as they wanted? After all, the Spendulus Bill was designed to spread pork and influence to Democrat constituencies for years to come; it has nothing to do with the actual functioning of the country.

It reminds me of the old repair estimate joke, that says "Well, parts and labor aren't included in that, of course."

Sunday, February 22, 2009

One Step Forward, Two Steps Back

We can now summarize a few pronouncements of the new Democrat majority in Washington.

  • A surge of troops into Afghanistan will be forthcoming. Watch for the media to studiously avoid using the term "surge."
  • Absent a major public outcry, there will be legislation and regulation proposed to re-introduce, by stealth, the Fairness (Censorship) doctrine. It was unconstitutional before, and as the First Amendment remains in effect, will continue to be unconstitutional.
  • After whining that he "inherited" a budget deficit, Obama quickly signed legislation to double that deficit, and continue the larger deficit for years to come. He also claims that he will see the deficit "cut in half" by the end of his term. In other words, he'll bring the deficit back down to the one he "inherited," and it will only take four years and cost three trillion dollars. What a magician!
Obama and Madame Clinton's new "soft power" foreign policy initiative continues to bear rotting fruit. Iran crowed that, under the new administration, America is now toothless. Now, in response to Clinton's warning not to launch any missiles, North Korea announces it will conduct test-launches "within days." This is indeed "soft," but I don't see the "power" part of the equation.

Sunday, February 15, 2009

Zimbabwe on $65,000,000 Zimbabwe Dollars a day

The London Times reports that Robert Mugabe, ruling thug of Zimbabwe, has used an associate and a shell corporation to buy a $6 million luxury home in Hong Kong. That's a lot of money, but since Zimbabwe under his rule currently boasts an annual inflation rate in the millions of percent, he's used to seeing figures with a lot of zeroes on them.

There's been neglect in Zimbabwe, but also a great deal of vicious political fighting, cronyism, ridiculous spending initiatives, and confiscatory taxes. Then, run the printing presses night and day, and you'll see your currency worth far less than the paper on which it's printed. Nobody would buy the country's sovereign debt, no matter how heavily discounted.

With its sources of borrowing cut off, no real economy, a government firmly entrenched with single-party rule (And glorification and worship of that party's leader), and continued ruinous spending it's no surprise that Zimbabwe's only option has been hyper-inflation. The average citizen lives on about $200 million a year in the local currency, which is approximately $200 U.S. In short, it is the very definition of a failed state, and Mugabe is readying his exit strategy.

With this hyper-partisan, cult of personality thug preparing to bolt after borrowing and inflating his country's economy to ruin, it brings a question to mind. Where will Obama's secret hide away be located?

Thursday, February 12, 2009

Penny for your thoughts

Ford Theater in D.C. re-opened last night, and Barack Obama was present as the keynote speaker at the (star-studded, gala) event. Teleprompters were in evidence, so he presented a lengthy speech. Obama spoke under the box where Lincoln was shot, and spoke of Lincoln's legacy, and its applicability today. It's almost like he's comparing himself, isn't it?

In a related story, I heard that the penny is being redesigned. A moment of horror passed when I learned that Lincoln will remain the president whose image graces the penny. But as long as we're speculating, what U.S. currency should bear Obama's image? Well, a couple of possibilities come to mind. With the federal printing presses and inflation cranking up, a re-introduction of the $10,000 bill will probably be required in the next few years. So that's one possibility, although I can think of another note more appropriate to Obama's visage.

Let's put his face on U.S. Treasury debt. His idolizers want his face ever-present, and what better way to make that possible than to plaster it on trillions of dollars' worth of T-Bills?

Monday, February 9, 2009

This is Change, all right

The party currently occupying the White House has created a new position that reports to the White House Counsel's Office. They call the position White House Counsel Research Director, and filled the new position with Shauna Daly. As she works for the White House's official legal office, I feel it's important to summarize Ms. Daly's legal credentials and experience:

  • None

What did she do to snag a newly-created White House job or, more to the point, what will she do in this job? Interestingly, her entire career appears to have been dedicated to opposition research for political campaigns. In other words, she finds dirt, real or otherwise, for political use. Apparently Craig Livingstone was not available.

Now our tax dollars will support this part of the perpetual Obama campaign, and we can revel in the thought of this prowler in skeleton-filled closets sitting next to legal professionals in the White House who have daily access to sensitive legal and political information. But here's the main question I have: What will her business card say? I'm expecting something like "Anonymous highly-placed source within the administration." She can hand those out before she leaks the results of political dumpster-diving to salivating reporters.

Friday, February 6, 2009

Can we stop panicking yet?

Hmm, maybe a little too soon. The hysterical cries of President Obama notwithstanding, absent the passage of a trillion dollar pork bill the United States will not sink into permanent recession. If the bloated spend-fest is passed in its current form, however, we can look forward to permanent indebtedness. So, we have that going for us.

We just need China and Japan to buy an additional one or two trillion dollars of Treasury bills over the next 18 months. Of course, Americans who have been encouraged to tighten their belts have seriously cut back on their purchases of Japanese and Chinese products (Note Panasonic's recent layoff of 15,000 employees.) Which means--still with me?--the Japanese and Chinese have less money to spend to buy our debt. Can this circle be squared? Or does it more and more begin to resemble perpetual-motion machines and cold fusion, the attempts at which run smack into immutable natural laws?

Gold is a bit pricey now, at well over $900 an ounce. So while I agree inflation is around the corner, a significant amount of inflation appears already priced into gold, considering that it's moved opposed to oil, the Euro, and the Pound in recent months, all of which have sunk against the Dollar. Money-making companies (There are still some around making profits) look good for equities, as long as they're cheap enough. Remember; you want to price them based on future earnings, which will almost certainly be lower for a year or two than the previous couple of years' earnings. Corporate debt is as cheap as it's been in a generation, making bonds look really appealing. But some junk is, well, junk. So buy carefully, and choose bond funds that are well diversified. Look at their track records in previous downturns and, if the fund hasn't been around a couple of decades to experience previous downturns, skip it.

Most financial equities are toxic, given Washington's desire to seize the industry in its large, crude fist for the forseeable future. You could look to industries that appear in favor with the Hope and Change administration, but if "green" industries and others don't have a real profit-making ability absent large subsidies, that's quite a gamble. Financing could dry up tomorrow, given the speed with which the current administration seems to be going off the rails.

More sensible is a look to quality sectors that don't rely on large subsidies or lend themselves to onerous regulation for political purposes. Consumer staples, retail at the top and bottom of the economic scale, utilities that don't have an outsize reliance on coal-generated power, and telecommunications firms with growing worldwide customer bases (African and Asian cell phone markets continue to expand) are possible bets. Any other ideas? Feel free to share.

Tuesday, February 3, 2009

This is very taxing

Well, blow me down. A Democrat who "forgets" $100,000 in income tax liability actually doesn't get the job. Tom "Puff" Daschle, D. Lobbyist, is heading back to Unregistered-Lobbyist-Land. After spending a quarter century on Capitol Hill you'd think basic concepts like cash and in-kind income would be pretty simple for a guy to grasp. But he failed, so Obama will have to find another Democrat politician in line for a taxpayer-funded reward to fill the Health and Human Services Secretary slot.

I hear the former governor of Illinois is available.