This blog is called Stocks & Politics which means occasionally I will venture into a political discussion. I am now using highlighted summaries of topics so that a reader can avoid a topic of no interest. I would maintain that a big picture understanding of political events is important in making investment decisions. When I venture into political discussions, however, I will generally manage to raise the ire of members of both political Tribes, sometimes in the same sentence. I call my political affiliation the Ornery Party, and I am the titular, self designated head of that party.
1 Fiscal Irresponsibility Run Amok: New Social Programs Will Be Created With Nothing Done to FIX & Fund the Ones That We Already Have: Admittedly, I am watching Washington from a safe distance and have almost no faith in politicians acting in a fiscally responsible manner. What can you really say about a budget deficit that will just about double in one year the accumulated deficit incurred from the birth of the U.S. to Reagan's presidency. The irresponsibility of both parties is just mind boggling, as if other countries will subsidize the spending habits of Americans and our government for decades to come. Just the interest on the debt is a staggering sum, and likely to become much worse as interest rates start to rise again. Ben Stein wrote an opinion piece in the NYT on Sunday, partly tongue in cheek, where Chinese historians were writing about the demise of the U.S. eighty years from now. The gist of Stein's point is that the path that we are currently pursuing will result in fiscal ruin. NYTimes.com There are really several paths being followed, when combined, will all lead to the same destination.
One path is the improvident, irresponsible, incompetent, and reckless decision making by the Bush Administration that caused the nation to invade Iraq, a venture that could easily cost the nation over one trillion dollars when all of the costs of that invasion and occupation are totaled up. Boatloads of High Yield/HIgh Risk Opportunities/VIX ARTICLE BARRONS/ Going to War Decisions: Conservative or Liberal vs. Competent or Incompetent?
Another is the desire of the Democrat party to embark on the creation of new social programs that will ultimately cost hundreds of billions, while the ones that we currently have are already underfunded. The most recent program, which may become a reality later in the year, is a nationwide health insurance program. Yahoo! News While there will be representations that increasing taxation on the rich, and squeezing health care providers and drug companies, will pay for most of that cost, the end result will be another federal program costing the taxpayers trillions over the ensuing years.
The creation of new programs is coming at a time when the overseers of Social Security and Medicare have recently claimed that both Medicare and Social Security will go broke sooner than expected, with the Medicare fund being depleted in just 8 years, much faster than previously expected, at a time when the baby boomers will start to make claims. Trustees: Medicare Funds Will Be Depleted By 2017 : NPR Social Security will go bust in 2037, much earlier than expected. I would anticipate that both of those dates will end up being sooner than expected for years to come. In fact, "sooner than expected" and "broke" will often occur in the same sentence in the years to come when responsible people discuss the solvency of those two critical social programs. So, it is clear that politicians can not even come to grips with funding the social programs that we already have, let alone news ones that have recently been adopted, such as the recently added prescription benefit for Medicare recipients, or the soon to be added national health care program.
As a reminder, when Congress was debating adding prescriptions to Medicare, the vote was very close. To secure the passage with some Republican support, which was critical, the Bush administration represented that the ten year cost of this new program would be 434 billion. After passage, that number was raised by 100 billion. It was reported that the Medicare Chief Actuary was threatened with termination if he disclosed, prior to the vote, that he had estimated the cost to be over 100 billion higher than the cost claimed by Bush. Salon.com Within a few more months, the cost was raised to 1 trillion dollars. Medicare Prescription Drug, Improvement, and Modernization Act - Wikipedia, the free encyclopedia I would submit that it would be irrational to assume that politicians from either party are fiscally responsible, capable of just saying no, or able to deal in any meaningful way with the underfunded Social Security and Medicare programs, with a few exceptions. One lesson to be learned from this piece of history is that the politicians will never properly describe the true cost of a program before it is adopted, and once adopted it will be impossible to eliminate. Instead, as the history of social security and medicare have shown, a new program is likely to expand into new areas after the original passage to meet popular demand or to satisfy some constituency, all without regard to the cost.
Personally, I would like to see every American have health insurance and access to affordable health care. Random Observations: Sarah, Vietnam, Unemployment and Disney In that earlier post, I referred to the Democrat's health care plan to be a "noble goal". I understand how important Medicare has been to millions. There is also a time and place for everything, and now is not the time to increase our budget problems. I would simply suggest that a nation running close to a 2 trillion dollar annual deficit, and already showing an inability to deal with the funding of Medicare and Social Security for the baby boom generation, has no business even discussing a new social program that costs more than a few bucks.
It does not help matters when politicians constantly inform the public that the U.S. is the richest country on earth. That reminds me of the real estate wheeler dealer who always calculates his net worth by excluding the debit side of the ledger sheet. I am not just talking about the ballooning federal deficits, but debt at all levels, including that held by consumers as well as state and local governments.
2. Republican Party Resurrected by GITMO?: Whenever a political party starts to be viewed by large number of swing voters as dominated by ideological extremists with narrow agendas, I would simply suggest that it is in big trouble. Such is the case with the current GOP, viewed by many as the party of Rush Limbaugh and Jerry Falwell apparatchiks. Once they cease talking about AK-47s for everybody, tax cuts for the rich, banning privacy rights, and gay marriage, some would say that their ability to discuss anything else just evaporates. So, I found a NYT article interesting about how the GOP leaders thought the issues relating to the closing of GITMO would somehow lead to their resurrection. NYTimes.com Admittedly, this kind of issue allows Sean and Rush to rouse the True Believers into a frenzy, with allusions to some terrorist being housed in a local jail, but I suspect that it is more than a little delusional for the GOP to expect much mileage with this issue with more circumspect voters. Terrorists are already being housed in the U.S., and no one has ever escaped from a federal maximum security facility. PolitiFact PolitiFact
3. China & North Korea: I wonder if North Korea's recent actions, shooting missiles over Japan's mainland, and causing earthquakes with underground nuclear explosions, will ultimately cause Japan and South Korea to arm themselves with such weapons rather than depending on the U.S. for protection. NYTimes.com China could exercise more influence but apparently has chosen not to do so. Condemning North Korea in diplomatic lingo is obviously not going to result in an alteration of behavior. Only more concrete actions undertaken with the support of both Russia and China can have the possibility of success. One such action would be worldwide support to interdict weapons shipments by the North that is its main source of trade and revenue. So, I would assume that the failure to take any meaningful and concrete action now means that China is okay with what North Korea has just done, notwithstanding diplomatic statements to the contrary. It is difficult to comprehend the value in trying to negotiate a treaty with North Korea.
4. Sonia Sotomayor: Obama appoints Sonia Sotomayor to the Supreme Court. I know little about Sonia, except that she is a judge on the U.S. Court of Appeals for the Second Circuit. She graduated summa cum laude from Princeton and from Yale law school, probably the hardest law school to gain admittance. She was editor of the Yale Law Journal. Obama liked that no doubt since he was an editor of the Harvard Law Journal. She grew up in a housing project in the South Bronx. Her father died when she was 3 and her mother, a nurse, raised both Sonia and her brother who is now a doctor. Sonia's story is a good and inspiring human interest story. Her picture at Wikipedia has the "Look" Sonia Sotomayor - Wikipedia, the free encyclopedia NYTimes.comWhat is the Look, well compare her picture with some at his page in my blog. A MULTI-GENERATIONAL LOOK: THERE HAS TO BE SOMETHING IN THE GENES
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