It is my understanding that Obama's inaugural speech will include a discussion about a return to responsible behavior. WSJ.com When you look at America today, the more appropriate description would be a nation pursuing what has become an inalienable right to be free from responsibility. In fact, both freedom from responsibility and an overall lack of personal accountability are so prevalent today that they might just as well be enshrined as one of those "penumbra" constitutional rights. One of benchmarks of true conservative philosophy is that freedom must be accompanied by responsibility, moored together and inseparable.
I will listen to Obama's speech. I doubt that he is using responsibility in exactly the same way as I do. Instead, it would expect him to mean being responsible for each other rather than being responsible for your own behavior and accepting the consequences for bad decisions.
For example, it would not be responsible for government to embark on an expensive new health care program, basically expanding a medicare type insurance program to all Americans, a most desirable objective, when nothing has been done to shore up and pay for the existing medicare and social security programs. So, while Obama may talk a good game, it is important to walk the walk when talking the talk. One descriptive word that could never legitimately be used in connection with U.S. government spending is responsible. It is just ludicrous moreover to call it a tax and spend policy.
Another fundamental characteristic of freedom from responsibility is that consequences have received a divorce from personal behavior. In its most extreme form, bad decisions are actually rewarded and an elaborate system of rewards are established to encourage bad behavior. There are certainly no consequences being visited on those financial wizards who are largely responsible for the current worldwide recession, unless you view being relieved of your position with a large severance package to be a consequence. The Board and senior officers of Bank of America have not yet resigned in disgrace. The members of Citigroup's Board were not asked to resign by the government as a condition for receiving the taxpayer bailout. For individuals, like the government, borrowing and spending have become inseparable, as if it is no longer necessary to be prudent and responsible, even foolish to be responsible, for everyone has an inalienable to receive something for nothing or next to nothing. As I said, freedom from responsibility and a lack of accountability must have been elevated to a constitutional right along with the other rights contained in the Constitutions, right there next to freedom of speech.
Individuals who took on too much debt buying a house that they could not afford and filling it with stuff which was far more than they could afford, did not make bad decisions, for which they should bear personal responsibility, but are instead classified as victims deserving to be rescued from improvident decisions made in exercising their freedom. In a more perfect world, those who borrowed more than they could afford to pay along with those who facilitated the flow of money to them would both suffer the consequences of their improvidence. The persons involved in funneling easy credit, for the most part, have kept the money earned from their involvement in the chain of blame. For the individuals who borrowed too much, many but not all with no skin in the game, the assets acquired with easy credit may be lost but that may be the extent of the bad consequences visited on them. For others, they will be rescued from the consequences. In the end, the people who pay for irresponsible behavior in our society are not the ones who received something of value, including the wizards of Wall Street who reaped hundreds of millions of dollars by providing or arranging the financing for easy credit, the home builders who enjoyed a few extra years of profits, those who originated the mortgages including the brokers and mortgage firms, the firms who rated toxic trash as AAA to enable the spread of the disease around the world, but the responsible saps who received nothing.
I did vote for Obama because he is intelligent, willing to learn with an attention to details, flexible, analytical, at least capable of exercising good judgment and seeing shades of grey rather than just black and white, and a good listener, all characteristics totally foreign to people like Sarah Palin and George Bush. I did not vote for him because I agreed with most of his espoused positions. If I voted on that basis, I would never vote. So, I wish him well, and hope that he will be a better President than W who never had any of the qualities that I look for in a leader.
One of the stocks on my small cap monitor list is Graham (GHM). I have not purchased it yet and its earnings are scheduled for release on 1/30. I see no reason to buy anything ahead of earnings this quarter. This company does have many favorable characteristics that stoke my interest, but it is probably not reasonable to expect a good earnings report.
Under the circumstances, Johnson & Johnson had a good quarter, earning $.94 excluding charges and gains, compared to $.82 in the 4th quarter of 2007. J & J did lower forecasts for 2009 a few cents below expectations, down to a range of $4.45 to $4.55
The most troubling part of this earnings release was the 4.9% decline in revenues. Medical device sales fell 2% and a 11% drop in pharmaceutical sales, led by Risperdal losing its patent protection and consequently losing market share to generics.
Regions Financial continued the parade of awful earnings releases from banks.
This bank, like so many regional banks in the south, saw opportunity in helping to finance the speculative real estate boom in Florida, and I do not believe that any consequences have yet to be visited on the senior management and board for their bad decisions. A similar foray into to speculative construction lending in a "hot" market, just in time to realize large losses, came from First Horizon. TheStreet.com FHN has eliminated its cash dividend while RF still has a nominal dividend for its suffering shareholders.
After breaking below 6 this morning, BAC is getting much closer to its lows in October 1990 and in October 1987 after the crash. I do not believe that the market is being irrational in pricing BAC now.