bangpath

Anecdotal Evidence of Economic Weakness

t0mmy berg — Thu, 25 Feb 2010 14:59:33 +0000

There is no number to convey what I have perceived in the last couple of months but the signal nevertheless seems too strong to ignore. I take my daughter to Tae Kwon Do near downtown Chicago two or three days a week from further north on the Interstate. I do this after school so it is about 4:30 or so. The height of rush hour. IDOT has helpfully placed signs that indicate how long it takes to get to the Loop from between Irving Park Rd and Addison. Back in 2007 and even in 2008, this sign at this time of day might say 26 minutes or even 30 minutes to the Circle as they call it.

These days I have seen it as low as 8 minutes and regularly under 20 minutes. Instead of bumping along at 5-15 MPH, I am hitting 70 and rarely under 20. This has been going on now for some months. Which indicates to me that there are very many fewer cars and trucks on the road into Downtown Chicago. This further implies then that there is less shipping being done and fewer people going to or going home from work. So when I see blow hards talking about a V-shaped recovery in the economy and how we will see 1300 in the S&P 500 this year, I have to scratch my head. I told my father in November 2007 he should go to cash. I also told him in November 2009 that he should go to cash because the S&P would stall somewhere between 1150 and 1200. It barely hit 1150, but it was around 1150 for about a week, ample opportunity to lighten a portfolio (I know something about this as I have traded more than 200 Million shares of stock in the last 2 years). I wrote him on Feb 18th to say that the recent bounce up from near 1040 to 1110 was another opportunity to get out. I expect that this year we will be testing lows from last year as there is a new wave of Mortgage resets and foreclosures to come over the next 2 years.

Look at the chart below from T2 Partners via Amherst Securities. Note how the market climbed as we were in the trough. We are now climbing the hill. The market is not going higher.

Why Republicans Should Fear Thursdays Health Care Summit

t0mmy berg — Sun, 21 Feb 2010 20:03:06 +0000

In watching the Sunday talking head shows today, I saw some footage of Mitt Romney saying something foolish at the recent CPAC dinner. He said that the Stimulus Package passed by Democrats in 2009 “added not one net new job to the American economy”. Hmm. I know what he was trying to say. But what he said was something else. What he was trying to say and should have said was something like “The Stimulus Bill may have produced some jobs, and we are happy for those families who are now employed. But the cost per job for each of those jobs, which will be paid for by American Taxpayers, was much more than what the employed people will benefit. And in the end, the economy as a whole will be less well off than if those jobs had been provided by the private economy because they did not have to pay the taxes it cost to create those government provided jobs. The economy would be better off, on the whole, if the money was left in the private economy rather than washed through the inefficient hands of government.” Of course with some more wordsmithing I am sure this could be made more pithy.

Instead he said that no jobs were created. Now the average American will look at a statement like that and say to themselves, “um, obviously it did create some jobs. This must be one of those nay-saying Republicans (like the media says) saying something demonstrably untrue that anyone can see at a glance is probably false. So I guess we cannot trust those guys either.” And of course the Left will run with such a statement to prove that Republicans are lying idiots.

Which brings us to Thursday’s trap setup. Obviously Obama is trying to lay a trap to make Republicans look bad on Health Care. If Republicans go into it with thoughtless language like Romney used at CPAC then they are going to get their hats handed to them and blunt the force they have going into the mid-terms in 8 months. Hopefully whoever winds up going will take a page from the recent editorial by Newt Gingrich, which laid out a number of ideas for handling health care reform, and be well-prepared enough on why the Left’s ideas are dangerous not to sink the party’s fortunes this fall.

Why Does America Ignore the Obvious Problem with Entitlements?

t0mmy berg — Wed, 17 Feb 2010 18:44:37 +0000

With all the wailing and gnashing of teeth over the Federal Budget our Dear Leader the Obamanator proposed recently, you occasionally hear the solution mentioned but it is rarely discussed and Congress turns it’s back (for example by voting unanimously to keep entitlements off the table when considering how not to bankrupt the country). It seems to me the solution is just plain obvious. When Social Security was conceived, the government was assuming the obligation to pay some piddling amount for what was an expectation of something like 2 years per person. This was because the average life expectancy at the time was about 2 years mor than the age at which the government would start paying benefits. A similar dynamic is at work with Medicare.

In the meantime, America’s great medical entrepreneurs and doctors and scientists (some from outside America too) have figured out how to extend our lives to the point where we are now living not 2 – but 15, 20 or 30 years past the point where the government starts paying benefits. So we need to either decrease life expectancies, which seems rather evil, or move the retirement age out to be in line with our ever-increasing life spans. The blunder the government made at program inception (and one they seem to make with every program in one way or another, do they not ever learn anything?) was not to index the age at which benefits start to life expectancy. It is just as stupid as not indexing other benefits for inflation. The Germans have already taken steps to address this. Are we less capable than Germany? The obvious solution is to move the retirement age out to be more in line with increased life expectancy. Is that so hard? See here for a discussion of how some countries have done this.

Instead we have Demunists trying to take over health care which will have the nearly immediate effect of reducing life expectancies. While that might help in the long run, it is not the optimal solution I would submit. And it does not address the other driver of our entitlement crisis, the fact that health costs rise faster than economic growth. It actually makes it worse. The country senses this. Is it any wonder that Commocrats will get wiped up in the fall elections? Not that I trust the Republicans to do the right thing. But with them any legislation will likely be only marginally destructive rather than utterly destructive as it will be under the Demunists.

Demunists Hanker for the Glorious Clintonian Past

t0mmy berg — Fri, 08 Jan 2010 15:56:39 +0000

Steny Hoyer was just interviewed on CNBC and I just love to hear the nonsense that spills out of Demunist leaderships mouths whenever they open. Speaking about the state of employment and the Democratic shift to prioritizing jobs in an election year, he went on about how if we could just get the policy mix we had in the Clinton years back in place we could counter all the damage done in the Bush years. Obviously he is referring to marginal tax rates and Demunist’s desire to fleece everyone who has anything to fleece of whatever is fleeceable. It really makes one wonder whether there is a brain or a Democratically preprogrammed computer in his head.

To anyone who remembers the golden 90’s, one is struck by the differences with our currrent circumstances. In the 90’s, we had the Peace Dividend with the fall of Communism and a general rightward tilt in terms of economic freedom worldwide, the elimination of the S&L Crisis, the development and dispersal of a wide variety revolutionary new technologies in the Internet, cell phones, computing and medicine, and conclusion of the Uruguay round of world trade talks which set the stage for globalization. In other words, there were gale force tail winds which Clinton expertly sailed. These tail winds allowed him to raise taxes without killing the golden goose. In fact that was a prudent tightening of fiscal policy for the time as it helped reduce the level of growth that otherwise would have taken place and helped keep inflation from getting out of hand.

The economy, with such strong underpinnings, succeeded wildly DESPITE the tightening of policy that tax increases represented. Demunists like Hoyer for some reason believe that higher taxes CAUSED the prosperity of the 90’s. A stunning misreading of history for one at the highest levels of policy making in our great country, and one that sadly pervades the Democratic worldview.

Now fast forward to today. I will agree for the sake of argument with the left that the Iraq war, while it had the positive benfit of ridding the world of Saddam Hussein, was nevertheless ill-considered in that it enatngled us for years in the middle east with great cost and with an arguably deleterious effect on our standing with many friends and foes, with whom we now find ourselves at a loss of traction on subsequent issues ranging from sanctions on Iran to combatting terrorism and many others. Economically the problem is that it just costs alot and thus increases pressure on the federal budget and hence on the need to raise taxes. In so many other ways the current situation also differs from the 90’s. Rather than Tail Winds we have gale force Head Winds.

First is obviously the epochal credit crisis and its aftermath. Rather than being on the cusp of a great surge of global wealth creation, as we were in the 90’s, we have just witnessed spectacular wealth destruction. Demographically we are on the cusp of a bubble of retirement and have promised the retirees massive state pension support in the form of social security and medicare. Foolishly, as is usually the case with Washington, the age for retirement was not indexed to life expectancies, which have lengthened greatly since the programs were enacted. So we now can expect to pay many more years of benefits to tretiress than was contemplated at program inception. Other head winds include the fact that there are increasing numbers of religious fanatics who want to end the way of life of the West. The general tilt of politics has been towrd less freedom rather than greater for the last 5 years globally. It would take years to overcome these head winds under the best circumstances.

But of course America elected Barack Obama and a Democratic congress. So we are not going to have the best circumstances for growth. Instead we have people who believe that raising taxes will somehow spark risk taking. It won’t. We have people who believe that more regulation will spark risk-taking. It won’t. We have people who believe that it is a good idea to send 100s of Billions of Dollars to the third world to atone for climate changed caused by our past development and as if that wasnt bad enough, to double the cost of energy to our own economy and then try to tell us that there will be a net benefit in the form of “green jobs”. There won’t.

Will raising taxes and returning to the glorious Clintonian past by tightening fiscal policy be the right prescription in the current circumstances where we have Head Winds rather than Tail Winds? It won’t.

Unintended Consequences and Health Care

t0mmy berg — Thu, 29 Oct 2009 15:36:34 +0000

One of the reasons Demunists trot out to justify their insane proclivity to destroy our health care system is that in the current system too many people go bankrupt and lose their homes due to health expenses they cannot handle. And to some extent this may be true, and perhaps we should do something about it. Unfortunately, the solution they have proposed, while it might save some of the people who would otherwise have been impacted thus, will in fact create others who would not have been bankrupted by health expenses, but now will be by the mighty hand of government.

One of the main tenets of Commocratic health care is the mandate that ALL Americans purchase health insurance or face fines. Whether you have purchased a qualifying plan or not and thus whether you must pay a fine or not will be tracked by the IRS. Putting aside for a minute the outrageous invasion of privacy that will result from the IRS having godlike powers to inspect our personal lives, this will mean for many people that they will be subject to tax penalties when they cannot afford the mandated insurance. And of course, once they cannot pay these taxes, they will have usurious additional penalties piled on top of those. The IRS makes credit card companies look like pussycats when it comes to tacking on fees and penalties for non-compliance. And in the end, the IRS will put a lien on your house and you may lose your home. Not a nice result.

Watch CNBC? Switch to Fox Business Channel Instead

t0mmy berg — Mon, 14 Sep 2009 22:03:51 +0000

As a full time market participant, I have been accustomed to keeping CNBC on next to me all day long. I don’t any more. Read this article which suggests that General Electric CEO Jeff Immelt has put pressure on the network to be less critical of President Obama, I believe he has. There is much more pro-Obama speech there now. Anchors now defend the insane health care legislation. That was what clinched it for me. Mark Haines started snorting derisively about those who speak of ‘death panels’. Mark, I bet you have not read the work of Ezekiel Emmanuel (Obama’s health care advisor and member of the Comparative Effectiveness Research board authorized and funded in the 2009 ‘Stimulus’ package) , have you. Read it and then tell me that Death Panels is too strong a word for what Demunists are trying to do.

To be honest, I do still watch it until 9AM Central. The Fox Business News host in the morning is just awful. I miss Rick Santelli and Larry Kudlow and Art Cashin, but you cannot have everything I suppose.

Why would Jeff Immelt put the screws to his business media outlet? Well, it could have something to do with all the green energy work that GE is going to get from the government. That will mean GE sells a lot of wind turbines. In exchange for becoming an Obama supporter, Immelt got a seat on the Economic Recovery Advisory Board and the promise of fat government contracts for the “Smart Grid’ and green energy projects. And GE needs it to stay afloat. I puke when the GE commercials touting the smart grid come on, you know, the ones with the scarecrow suggesting the Wizard of Oz? And what about the commercials where the ‘GE Employees’ sing awful 80’s movie soundtrack tunes. My God those are painful. Those commercials are ‘paid for’ by US tax dollars. GE Capital was a major recipient of federal bailout funds under the ‘Stimulus Plan’ and TARP (actually the Temporary Liquidity Guarantee Program). While that probably made some sense, because the commercial paper markets were dead, it still reeks because in advertising for all this feel-good green energy work they are doing they are recycling dollars they will earn from supporting the outrageous cap-and-trade legislation which will bring our country to its knees and result in massive government intervention into the everyday lives of Americans.

Switch to Fox Business Channel and do not buy GE appliances or anything else made by GE or its subsidiaries.

Pelosi Calls The Kettle Black, and Un-American To Boot

t0mmy berg — Wed, 12 Aug 2009 18:27:04 +0000

It is rather rich to hear Pelosi and Hoyer call those who are shouting down their congressional representatives and others at Town Hall meetings Un-American. Those with by far the worse reputation for shouting down those with whom they disagree tend to be liberals, especially campus liberals. They do what they can to stop those with whom they disagree from appearing in the first place, and failing that, even at really fine institutions like Columbia University, they just shout them out.

The paranoid left believes the recent protests are orchestrated, when they clearly are mostly not orchestrated. They profess to wonder why we cannot have a rational debate. The president bemoans the fact that there is so much misleading information and gosh-darned erroneous rhetoric out there; please just report it to us when you see it.

What you do not see in the press is any acknowledgment of WHY reasoned debate is pretty much impossible, on either side. Talking to a member of Congress or the Administration is like talking to a brick wall. They show up with canned and irrelevant politic-speak. They are not really going to listen to you or take account of your views or even think, much less actually READ the history changing legislation on which they are casting votes. They, almost without exception, speak from a talking point sheet composed by their leadership. In other words, it is all bullshit. And then Claire McCaskill (D-MO) asks, apparently in all seriousness, “Don’t you trust me?” Bwah ha ha ha ha ha ha (tears rolling down cheek and falling heavily to the floor). You have got to be kidding.

It is no wonder then that the only reasonable approach to changing the outcome is just to shout the loudest. Just say No, No, No or some other slogan that can be chanted over, and over, and over…. Pelosi and her ilk have only themselves to blame.

Obama Says No Free Lunch, Then Gives Out Free Lunch

t0mmy berg — Thu, 16 Jul 2009 14:48:56 +0000

As reported here, Barack Obama, the man currently pretending to be the President of the United States of America, said when discussing his insane nationalization of the health care system that will bankrupt the country while simultaneously reducing the quality of care and taking a giant leap toward a country like the one presented in the movie Logan’s Run : “The American people have to realize that there’s no such thing as a free lunch.”

Coming from the leader of the Frree Lunch party that is pretty rich. Under Obama’s leadership, the number of taxpayers that pay no income tax will breach 50% for the first time. Yet many of those 50% that pay no taxes whatsoever will benefit from the programs, like nationalized health care, that Obama proposes. Is that not the quintessential definition of a free lunch? Obama’s slickness is starting to make slick Willie look positively tacky.

America, Meet Your Fascist Overlords

t0mmy berg — Thu, 02 Jul 2009 17:52:53 +0000


Antichrist’s Adjutant: Henry Waxman	Dumb as a Rock, but just as dangerous when thrown at your head – 3rd in line for the Presidency, House Speaker Nancy Pelosi

These are two of the most powerful Demunists and Commocrats in Washington, Waxman, Chair of the House Energy Committe, and Nancy Pelosi, Speaker of the House of Representatives. Waxman is from Beverly Hills, 90210 country, California. Pelosi is from San Francisco. Obviously their state is governed so well, that we should use it as a pattern for the country. Oh, wait, their state issues IOUs to pay people that banks will not even accept. Their state is bankrupt as a result of Demunistic and Commocratic, stars in your eyes,, blinders-on, incapable of thinking of the consequences mismanagement.

Here is the language of Obama’s chief political advisor, David Axelrod: “Ultimately, this is not about a process. It’s about results.” In other words, in words reminiscent of Stalin-era communism, “The ends justify the means.”

Or take the language of Nancy Pelosi speaking about the need to reduce carbon output on her spring 2009 trip to China. “Every aspect of our lives must be subject to inventory.” How do you do that? You send jackbooted ACORN “community organizers” around to gather the GPS coordinates for your home in the process of gathering census data, so they know where you live.

Or take the Cap and Trade bill sponsored by Henry Waxman. Before you can sell your home, you will have to prove to government auditors that you have made it energy-efficient. What will they do if you haven’t? Maybe fine you? Maybe take a lien on your home? I do not know.

I have argued that when fascism comes to America, it will come from the Left, not the Right (see Liberal Fascism). So it is.

The Chicago Cubs Blow 2009

t0mmy berg — Thu, 18 Jun 2009 18:23:40 +0000

With the news today that the Tribune Company has reopened negotiations to sell the team with a second bidder, I thought it time to opine on the Cubs chances this year.

A couple of years ago I had a letter hand delivered to Andy MacPhail by a friend of the family who was in town to watch a Cardinals game in MacPhail’s box at Wrigley. In the letter I offered to be the team’s Moneyball guy, as I have some ideas on what it takes to make a winning baseball team. I did not know that MacPhail would soon be gone. My letter made its way to Jim Hendry and I have his reply letter in which he kindly declined my offer of assistance.

Things would be better for Cubs fans had he not declined my offer. Recall that last year the Cubs had arguably the best team in baseball. They ended the season with a whimper in the first round of the playoffs against the Los Angeles Dodgers due, I submit, to the fact that Lou errantly failed to start the electric Reed Johnson in Center Field in favor of the aging Jim Edmonds, and started Fukudome in right. Fukudome did nothing, Edmonds failed to spark the team, Johnson did not even have a single defensive inning or at-bat and the Cubs predictably but unnecessarily disappointed fans who had really believed that 2008, the 100th year of Cubs futility, would be the year they redeemed all those millions of fan-years of expectations.

So in the off-season, you might expect Hendry to keep the team together for a repeat. Though I had resolved not to give a damn about the Cubs going forward, I did tune in in mid-April. I was surprised when I saw the damage done to the team. Not only did they not keep the team together, they traded away its heart by dealing away Kerry Wood and Mark DeRosa. The clubhouse chemistry between DeRosa and Theriot was the core of what made the Cubs a contender last year. Gone. The feel-good story which had Kerry Wood in a comeback role as closer was finished. Gone. Wood was not the best closer in the game, but certainly he did a serviceable job, and he has a winning disposition. Also a good part of the team chemistry.

Why did Hendry deal these two players? According to news reports quoting Hendry, it was to make room for… Milton Bradley?!?!#?*!? Aaron Miles at second for DeRosa and Kevin Gregg for the Closer?!?!#@?!? Where to start. Gregg has proven to be several notches below Wood in the closing role. Aaron Miles is a serviceable player, but he does not have the spark with the rest of the team that causes guys to play above their baseline capabilities. And to top it off, they acquire the games biggest head case and worst clubhouse guy (possibly excepting Manny Ramirez) who comes in to hit … .110. You could not have made worse moves. It just isn’t possible.

So it is too bad that I am not working for the team. And it is too bad that Cubs fans will have to wait more decades for a shot to see the Cubs win the fall classic. I will be surprised if the Cubbies finish above .500 on the season. And then their other core players like Derrek Lee and Aramis Ramirez will be past their winning years. Once upon a time I was a Cubs fan. Now I am an angry ex Cubs fan.