Thursday, July 14, 2011

"Blondes" and Fox "News"/Irresponsible Fools with Power/Taxes and the "Job Creators"/Eliminated Position in ED at 53.7/SOLD 50 MBVT at 26.5

Frequently, when dining in the SUV Capital of the World, I was subjected to listening to Glen Beck's rants on Fox "News". It would be subversive for anyone to read the NYT or to view CNN here in the SUV Capital of the World.  Along with Jon Stewart (see his hilarious imitation of Beck at Conservative Libertarian - The Daily Show with Jon Stewart - 03/18/10), I always found Beck amusing, particularly in his comments about how the republican president Teddy Roosevelt started the progressive disease in America by passing a law requiring the inspection of food, in order to make sure the hamburger meat had no rats mixed up in it. The Reactionary Philosophy of Glen Beck 

While I was sad to see Glen Beck leave, I was pleasantly surprised to see Dana Perino in Beck's slot when dining yesterday. She is certainly attractive and an overall pleasant person. I am willing to overlook her crazy talk, like agreeing with Rush Limbaugh, when he suggested that the BP massive oil spill may have been planned by environmentalists.  Rush Limbaugh suggests environmentalists planned oil spill -

Dana is without question an improvement over the flame throwing ideologue Ann Coulter, another "blonde" whose analysis of the causes for the Near Depression was just breathtaking. Ann claimed that the cause of the mortgage crisis was the granting of loans based on person's ability to hit a jump shot (the usual racial overtones common among those masquerading as conservatives), or having a missing child by the name of Caylee.  That statement was made by Ms. Coulter before Caylee turned up dead. This is the kind of analysis that passes as intelligence among a substantial part of the American population and of course avoids any attempt to address all relevant information (or any) in order to render an informed judgment.  Revisions to top Twelve Causes of the Not So Great Depression (March 2009 Post); Items 1 and 2  Stocks & Politics (October 2008 Post); Item # 3 Stocks & Politics (October 2008 Post); Ideology and Facts: Coexistence Not Allowed (December 2008 Post); Stocks & Politics (October 2008 Post)(referencing Coulter's comments).

Bernanke told Congress yesterday that a failure to raise the debt ceiling could be "catastrophic".

Moody's threatened to downgrade the U.S. debt when and if the limit is not increased by Congress by 8/2. The U.S. has had a AAA credit rating since 1917. But, never before in our modern history have so many fools occupied seats in the U.S. House of Representative. Even a temporary default would likely cause the permanent loss of the AAA rating. Reuters Moody's made that point clear:

"An actual default, regardless of duration, would fundamentally alter Moody's assessment of the timeliness of future payments, and a Aaa rating would likely no longer be appropriate".

This is a link to the text of Moody's statement about the possible downgrade of U.S. debt:  Reuters The fact the ratings agencies are even having to issue those warnings proves the flagrant, in-your-face, irresponsibility of the GOP and their Masters in the Tea Party.

Eric Cantor and his Tea Party mob are not listening to the grownups.

The market fell over a hundred points yesterday after the John Boehner, the GOP Speaker of the House, started to talk to the press. In political speak, Boehner basically stated that the Democrats needed to agree to the GOP's demands, or the debt limit will not be increased by August 2nd. The GOPs approach is to condition their approval of a debt limit increase, a flagrantly reckless and extremely irresponsible act in itself, on the Democrats agreeing to reduce spending on social programs benefiting the poor and the middle class while also accepting the GOPs position of no tax increases for the wealthy. If the Democrats do not accept the GOP's demands to cut that spending by a few trillion dollars with no tax increase on the wealthy, then the Democrats (not the GOP) are negotiating in bad faith, according to the GOP.

Boehner believes that the American people are with the GOP in this endeavor. In short, the GOP believes that Americans want the middle class and the poor to bear the entire brunt of a restoration of fiscal responsibility so that the rich can become richer and increase their shares of the national income.

Yes, when you tell the truth and speak plainly like John Boehner, Americans are all for increasing the wealth gap between the top 1% and everyone else (see Bill Maher's take on the expanding Wealth Gap: YouTube).

Yet, a new Gallup Poll out yesterday shows that only 26% of Republicans agree with the crazies about no new taxes in a budget deal. NYT

Wait until the U.S. loses the AAA rating and then take a poll of the independents, many of whom would likely never vote for a republican again.

I do not believe the market is pricing what irresponsible fools with power are really prepared to do.

U.S. Wealth Gap

1. Taxes and the "Job Creators": Any sensible approach toward solving the U.S. debt problems would include both spending cuts and tax increases, spread out over time. Obama has recently adopted what I would call a centrist approach, one that I generally favor, of substantial spending cuts over the next ten years, including entitlement spending, along with some measured tax increases on the wealthy. This is political in part, as he positions for reelection NYT To win the next election, he will need to bring back independents who abandoned the Democrats in droves during the last midterms. It was those voters who carried him to victory in places like Indiana, Ohio, North Carolina and Virginia. The outline of the President's proposal calls for far more spending cuts than tax increases to meet the deficit goal. Yet, Boehner accuses him for refusing to bargain after Boehner takes any tax hike off the table.

{Karl Rove claims in an editorial published in the WSJ that Obama is basically offering fictitious spending cuts and real "substantial" income tax hikes on the wealthy. The President needs to speak to the nation on those claims. It is not important what the uninformed crazies think, who write vitriolic comments to WSJ articles and  listen to Rush Limbaugh to gather factual information and to acquire their thoughts, since they will of course be voting for the GOP. The next election will be decided by the independents.}

One of the worst periods for jobs creation in modern American history occurred after the 2003 Bush tax cuts which inured primarily to the benefit of the wealthy and contributed to the current deficit problem. PolitiFact  The Bush tax cuts' effect on the deficit in one graph

The extension of those cuts have not yet been sufficient yet to prompt the job creators to actually create jobs. WSJ Article: Bush On Jobs: The Worst Track Record On Record  Lost decade for workers The few jobs created after 2003 were connected mostly to the housing bubble and other manifestations of excessive credit and were soon lost during the Near Depression period. Median household income, adjusted for inflation was lower in 2007 than in 2000 (Census report &  Lost Decade for Jobs & Income Growth Adjusted for Inflation)  See the graph which depicts this failure at The lost decade for the economy.

When asked about the actual eight year relationship between tax cuts for "job creators" and job creation, a republican congressman replied that more cuts for the job creators were necessary and then the magic elixir will start to work.

Some wealthy people do in fact create jobs and personal tax cuts for them may spur them to hire someone, though other factors are usually far more important including demand for their product. One fact neglected by the GOP is that the proposed tax increases do not fall on the vast majority of sole proprietorships, which are the engines of job growth, since the vast majority of them do not have net income, after deductions, of greater than $250,000. Only 2% of the small businesses have net incomes falling into the top two tax brackets. BusinessWeek And for those fortunate enough to be making $250,000 to $500,000, the tax increase would be negligible.  PolitiFact

There is another set of well to do persons who contribute nothing other to fund groups like GOP politicians, the Cato Institute and Heritage Foundation and similar organizations, primarily to avoid paying more taxes on their hoard. For those fortunate souls, it would be far preferable to cut Medicare benefits or student loans for the middle class student, than to increase their tax obligation a tad. But that group at least may pay something resembling their true tax obligation under existing laws.

Then there is another large group of the wealthy who turn tax evasion into an art form, many of whom would no doubt evade paying any taxes on funds secreted in Swiss and other foreign bank accounts than to pay even a reduced marginal rate provided for them under the Ryan budget. Is there any doubt about their existence based on the UBS case?

The senate Republican leader, Mitch McConnell, said earlier in the week that OBAMA was attempting to deceive the American people by offering illusory spending cuts. It would behoove the President to lay out specifically the spending cuts that he is willing to accept, so that fair minded Americans can decide whether or not he is trying to deceive us with smoke and mirrors as claimed by the GOP's Senate leader. And, he could also outline the tax increases that he wants, and the group of people such as hedge fund managers who will pay that increase. Then those of us who are fair minded, and not blinded by cliches, can make a judgment on whether it is the GOP or Obama attempting to deceive the American public.  

Personally, I would question whether the truth is being told by any politician, regardless of the tribe affiliation. I am ready for a third party, viewing the current choices to be primarily an assessment of which one is likely to cause the least amount of damage.  Both tribes are incompetent, each in their own way, with the ideologues and zealots more prone to making grievous errors.

The GOP found out a few months ago that the budget cuts made to avert a government shutdown would only reduce the current fiscal year's deficit by 350 million (fiscal years end in September) and 20 to 25 billion over time, according to the CBO.That estimate is considerably below the 35 billion estimate provided earlier by the politicians. That confrontation almost shut down the government last April when the GOP insisted on cutting 363 million in funding for Planned Parenthood. Zealots and the Budget Process

2. Sold Remaining Shares of  Consolidated Edison (ED) at 53.70 on Tuesday (see Disclaimer): I have been pairing my position in ED shares and only had 53+ remaining. Most of those shares were bought with reinvested dividends and all of those shares were in the profit column. I decided to exit the position and simply wait for a better opportunity to buy back the shares. I am also back into a cash raising mode.

3. Sold 50 of 
Merchants Bancshares (MBVT) at 26.5 on Tuesday (Regional Bank Stocks' basket strategy)(see Disclaimer): This sale bring my realized gains closer to seven thousand for this basket strategy. Item # 3 Realized Gains Regional Banks
I am continuing to consolidate by reducing fifty share positions and then waiting for an opportunity to increase shares in other positions. The MBVT shares were bought at $22.9 (April 2010 Post). 

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