GasFrac -- a short update about the NY decision

I was asked this afternoon if I thought that the decision by NY to ban hydraulic fracturing on gas wells would be helpful to GasFrac, a company about which I have written repeatedly. My answer is that the stupid decision by New York will help GasFrac, but not in the way that most people think. I doubt that GasFrac will be hired in the near future to complete any wells in New York, since there won't be any such wells drilled. Instead, the hysteria emanating from New York may lead drillers in other locales to try the liquid petroleum gas completion method pioneered by GasFrac as a way of avoiding any question about the purported problems with hydraulic fracturing. Having an hysterical response in a place like NY that has no drilling still puts the issue into the minds of all those in the field. So, GasFrac may benefit, but it won't be in NY.

New York and the triumph of the enviro-morons

The New York legislature has passed a bill banning the use of hydraulic fracturing on gas or oil wells drilled in the state until at least May of 2011, supposedly to allow more time to study the effects of that procedure on the environment. It is a triumph of the use of scare tactics by know-nothing environmentalist morons. Instead of watching as the shale gas that underlies much of Western New York is developed bringing wealth and jobs to upstate New York, the people of that state will instead watch as the anti-capitalist progressives from New York City and its suburbs "protect" the water supply from non-existant dangers.

Hydraulic fracturing is the completion method used for drilling in the Marcellus and other shale strata; this method has allowed the Marcellus to be transformed from a very minor gas play into a super major gas field with enough reserves to supply the entire country for a few years. Fortunately for the USA, most of the field is in Pennsylvania or West Virginia, states where the wacko environmentalist lobby does not have total control. Hydraulic fracturing is not a new method for completing wells, however. It has been used for decades at other locations around the country. During that time, fracking (as it is known) has been used with essentially no major problems. To be sure, there have been mistakes made, just as there are with essentially any other industrial process. The point, however, is that fracking has already been proven to be essentially safe and clean when it is properly employed.

For the New York lefties, however, any process that might produce energy (other than solar or wind) is suspect and clearly polluting. These folks know in their bones that big oil (or here big gas) is inherently evil and that it must be stopped. There is no rationality on display here. After all, the natural gas that would be produced is much cleaner and produces a much smaller carbon footprint than the oil or coal that the gas would replace. In other words, the gas would greatly cut pollution, the supposed goal of these folks. But that does not matter, they do not want to be bothered with the facts.

In Pennsylvania, the natural gas industry has created cn enormous number of new jobs in the last eighteen months. Small farmers and other landowners have received sizeable payments which have made their lives easier and which have further increased economic activity in the Keystone State. And all of this economic activity in Pennsylvania is accelerating. On the other hand, New York is getting none of these jobs and none of the accompanying economic growth. New York's anti-business atmosphere will prevent development of the gas in that state for a long time to come.

It is truly strange that the people of New York consciously choose to prevent job development and economic growth. that, however is the choice these folks have made. The enviro-morons have won in NY. Now all New Yorkers will have to live with the result.

Surprise, Surprise, Surprise!

Many decades ago, there was a character on the old Andy Griffith show named Gomer Pyle whose trademark comment was "surprise, surprise, surprise!" That is how I feel today after the completion of the big meeting at the White House between president Obama and the congressional leadership of both parties. the main topic was supposed to be dealing with preventing the impending tax increases scheduled for January 1, 2011. Not surprisingly, there was no agreement. Even though the American people made clear their preferences on election day, Obama and his Obamacrat allies are still pushing the same job killing strategies that failed to work for the first two years of Obama's term. Oh, the spin is out there with Obama and most of the congressional leaders saying what a good meeting it was and how there will be further efforts to reach a consensus, but the main point is that nothing was agreed to at a point when there is only a few weeks left to act. The truth is that it is time for obama to recognize the new reality. Remember Mr. President, as you kept telling us in 2009, "Elections have consequences." (And you did not win!)

On another note, the current importance of Harry Reid is best illustrated by this passage from the AP story on the meeting:

"Obama promised to invite the leaders to Camp David, an offer that he said especially pleased Senate Majority Leader Harry Reid, D-Nev., who pointed out that in his 28 years in Congress he had never been to the presidential retreat in the mountains of northern Maryland."

The Crime Wave on Metro North

I passed by the Greenwich Time yesterday at a news stand and saw a large headline about a mjor crime increase on Metro North. Later in the day, I had time to actually read the article. It was another masterpiece from the Greenwich Time. The first paragraph of the article breathlessly announces that there was a 40% increase in all crime on Metro North trains and in Metro North stations with a 78% (gasp!) increase in robberies. Later in the article, one learns that total robberies on the Metro North system went from 9 to 16 so far in 2010 and that this was mostly the work of one person who has been active in the Mount Vernon area. So, far from there being any cause for alarm for train riders, the real truth is that the system is exceptionally crime free and safe. I understand that an article with the headline “Trains are Safe” will not sell papers, but there is a point at which it becomes ridiculous for Hearst to hype non-existent crime in order to sell copies of its paper.

Strange Times – 2

Last Saturday, I wrote about the article in which the New York Times says that the new strength for Republicans in Congress will likely be harmful for Israel and its friendship with the USA. The position of the Times is laughable, but now comes a further confirmation. The Wikileaks release of diplomatic cables reveal that last Spring, the Chairman of the Senate Foreign Relations Committee, John Kerry, told the leaders of Qatar that there needed to be a Palestinian state with Jerusalem as its capital. Kerry further said that Palestinian control of the Temple Mount was not even negotiable. This site holds Al Aqsa Mosque, a Muslim holy site, but it is also the site of the Jewish Temples thousands of years ago, the holiest site in Judaism. Democrat Kerry has no trouble declaring such a site non-negotiable or giving away part of Jerusalem, a city sacred to Jews. Kerry went on with more ideas sympathetic to the Arabs but not the Israelis, but you should get the picture. In short, the Times has it exactly backwards when it says that Israel has something to fear from the Republican takeover. The truth is that continuing Democrat control would be much worse for Israel.
While I am talking about the NY Times, it is worth repeating a point made in many other places about the Wikileaks subject. Last year when the Climategate e-mails were released to the public, the Times refused to print them because they were obtained “illegally” and were private. Now, the Times has no problem printing cables that were obtained “illegally” and which are not only private but classified as well. I would love to hear a rational explanation for that one.

A Small Move

President Obama is going to announce today a freeze on the salaries of federal workers for the next two years according to the AP. This is supposed to save $5 billion over those two years, and it is a symbolic move to show that Obama “gets it” with regard to the public concern about the size of the deficit.
Let me first say that I applaud the move by Obama. Any action that reduces federal spending to more manageable levels should be encouraged. This is just a tiny step, however. A wage freeze is not enough. There needs to be a reduction in the number of federal workers by at least 10%. Since Obama took office, the number of non-military federal workers has shot up to a record high. Indeed, by returning to the level of workers that were employed by the federal government just two years ago, the savings would be about $100 billion over the next two years compared to the $5 billion that results from Obama’s pay freeze. If Obama cannot bring himself to go all the way back to the levels when he took office, he could at least cut half for a savings of $50 billion. This is real money. It would be a meaningful step, not just a political gesture. The pressure needs to stay on Obama to do the right thing for the country for once.
The next step that is needed with regard to the federal work force is a reduction in salaries and benefits so that these items closely align with salaries and benefits in the private sector. Right now federal workers make nearly double what private workers earn. It is ridiculous for government workers to earn such a premium over what their counterparts in private industry make. And, by the way, if someone tells you that the difference in pay is due to the higher quality or education level of the federal workers, ask them about the high quality and qualifications of the TSA workers doing searches at the airports. I bet they all took college level courses called “Patting Down with the back of the Hand 101”.

What Could Have Been Agreed Upon

The lame duck session of Congress resumes today. There are many issues which confront the country and require immediate action. First, is the issue of taxes. Absent action by Congress in the next two weeks, there will be millions of middle income taxpayers who will become subject to the Alternative Minimum Tax for 2010. Still other middle and low income taxpayers will lose certain credits for child care. Some businesses will also lose tax credits that promote investment and job creation. Second is the issue of government expenditures. As of today, none of the necessary appropriations bills have been passed by Congress even though the fiscal year began months ago. Indeed, unless continuing resolutions are passed, the government will have to shut down for lack of funds. Third, there are the tax issues that only affect 2011 and beyond. The Bush tax cuts expire as of the end of December, so without action by congress, everyone will have a tax increase starting in January.

So with such important issues facing the Congress, what is it to which the Democrats are giving their attention? The answer is simple: repeal of “Don’t Ask, Don’t Tell” and the Dream act which gives some young illegal immigrants a path to citizenship. During an expected two week session of Congress, the Democrats have set aside two days for hearings on DADT. According to Senator Graham of South Carolina, the votes are not there to approve repeal of DADT in the Senate. Nevertheless, the Democrats who still are in complete control of Congress until January have made it the signature issue for the remaining session. The Dream Act also lacks sufficient support to pass the Senate, but Harry Reid is pushing a vote on this bill even though it takes up valuable time that would be better spent dealing with taxes and spending.

The sad truth is that action on taxes and spending is needed if the economy is ever to start generating jobs in sufficient numbers to lower the unemployment rate. Lack of attention to bread and butter issues is what led the Democrats to disaster in the last election. One would think that after that drubbing they would have gotten the message. Apparently, however, they somehow missed it. The millions of people who may get stuck paying the Alternative Minimum Tax are the very people who the Democrats claim to represent. The truth is that the Democrats only care about power. By pushing DADT repeal, they hope to cement their standing in the gay community. With the Dream Act, the Democrats think that they will lock up the Hispanic vote. They are wrong, however. People who see the irresponsible behavior from the Democrats will not vote for them. Jobs and the economy are what is important. Maybe that should be said louder: JOBS AND THE ECONOMY ARE WHAT IS IMPORTANT!!!!!!
It is indeed sad that nothing will get accomplished. We all have the Democrats to thank for this mess.

Chicken from the Turkeys -- North Korea threatens the US-south Korean naval exercises

The latest news from Korea is that the North Korean military has placed surface to air missiles along it coast facing the joint US-south Korean naval exercises. In addition, Samlet and Silkworm anti ship missiles have also been armed and placed along that coast. Silkworm antiship missiles were used to great effect by Argentina in the war it had with the United Kingdom during the 1980s about the Falkland Islands. Missiles of that sort sank British ships and damaged others. These missiles have a range of about 60 miles. Let's hope that the US/ROK joint exercise stays further from the coast than that. Were the North Koreans to fire such a missile at the fleet, the most likely target would be the US aircraft carrier in the center of the battle group. A direct hit could be catastrophic and would inevitably lead to a renewal of hostilities with North Korea. Even Obama could not ignore a direct attack by a foreign power on a US naval vessel resulting in a significant loss of life.

Let's hope that the crazies in North Korea have not totally escaped from the asylum.

Will Issa Miss?

Congressman Darrell Issa is the incoming Republican chairman of the House Oversight and Government Reform Committee. As such, he will be in charge of most investigations over the next two years concerning problems of fraud, waste and corruption within the government. The prospect of those investigations is giving progressives agita of major proportions, so they are already trying to innoculate the Obama administration against these "partisan political" hearings. Witness the recent piece from Howard Kurtz in the Daily Beast in which Kurtz paints a picture of an overzealous political operative who sometimes talks nicely, but whose main goal is to embarrass the administration.

Ulitmately, none of the attempts to head Issa off or even to blunt his effectiveness will have any success unless congressman Issa himself allows himself to wonder into the nonsensical or hyper political. Suppose, for example, that Issa launches an investigation into how effective Obama has been in gathering up that half of a trillion dollars of fraud and waste in Medicare that is supposed to fund half of the costs of Obamacare. Could anyone object in good faith to the relevance or importance of that inquiry? The answer is clearly NO! Or suppose Issa looks into the waste or fraud in the Stimulus law. Again, could anyone object to that in good faith? The answer is again no, provided that Issa does not focus on nonsense.

For the last two years, there has been no congressional oversight of the administration, and Obama has used that fact to his advantage. Issa's committee is part of the checks and balances that are supposed to keep each branch of the government in line under our constitutional structure. Issa can abuse that power, but so long as he does not go off the deep end, he has an important role to play. Let's hope he does so wisely.

Greenwich Schools and the "brain drain"

In an unintentionally funny piece in the Sunday Greenwich Time, the "news" is announced that a large percentage of students in Greenwich go to private schools. Supposedly, because of these students who the Time alarmingly calls a "brain drain", the performance of the Greenwich school district on standardized tests is lower than it should be. I wonder what is next? will the Time write a piece on how the rotation of the Earth causes dark periods called the "light drain"?

I have lived in Greenwich for almost 30 years. during that entire time, a big chunk of all the kids went to private schools. There is nothing new here. Indeed, when I moved to Greenwich in the early 1980's, one of the main reasons that my wife and I chose the town was because of the high quality of the public schools. Of course, for the next 17 years, I had children in the private schools. My daughters went to Putnam Indian Field school, Whitby School and Greenwich country Day School (although that was for summer day camp). Only when they got to high school did they both go to Greenwich High School. In all that time, however, the same schools served roughly the same number of students with one notable exception: the Stanwich School was established and picked up a student population which came in part from Greenwich. in other words, the number of students in the private schools in town has not changed much over the last 30 years. Oh, there have been ups and downs with the numbers of total students, and there have bigger and smaller percentages of kids from outside Greenwich at the local private schools. For the most part, however, the enrollment has been relatively stable. That is why I find the article in the Time about a "brain drain" so funny. They write about the private school attendance as if it were big news. It's not! And, to the extent that there are problems in the Greenwich schools (which I do not believe), the fault lies with those schools and not with the 'brain drain".

Why is it that when a government unit does not do as well as it should, liberal newspapers like the Greenwich Time look for purported causes outside the institution itself? Why can't they gring themselves to admit that governments have many failures. Is the belief system that all good comes from the government so strong that they cannot perceive the truth? It would do the school system and the town a lot more good if the time would focus its energies on actual problems instead of manufacturing excuses out of thin (very thin) air.

Armanino -- Short term buying opportunity?

I have been recommending the purchase of Armanino Foods of Distinction (symbol AMNF on the pink sheets) for seven months on this blog. During that time, Armanino has risen from 48 cents to 70 cents, an increase of 46%, and it has paid a dividend at the rate of about 7% on the original investment to boot. Nevertheless, I believe that there is a short term buying opportunity in the stock. Some time in the next week or so (most likely on December 1) Armanino should announce its dividend for the current quarter. If the past is any guide, this announcement should increase the current current quarterly dividend by a substantial amount. There may also be another special dividend paid this quarter, although that seems less certain to me. Should either of these events happen, I expect the stock to react with yet another rise. Indeed, if the company includes some positive indication in the dividend announcement with regard to the sales and/or earning for the current quarter, the rise could be large. Depending on the actual numbers announced, the stock could push right past the 80 cent mark and keep going a bit more towards the end of the year.

Obviously, there is no guarantee that the dividend will be increased, but it has been at this time of year in the past that the board of directors has chosen to act on this front. Further, barring unforeseen difficulties, Armanino seems on track to earn about 9 cents per share over the next year, making the current Price/earnings multiple less than 8 at the current price of 70 cents. My target for the next 18 months remains $1.30, so even if the dividend is not increased at this point, a purchase at current prices still makes sense.

Armanino is one of those jewels which have not yet been discovered by the market. At some point, more folks will wake up to this stock which provides great current income while maintaining a large upside potential.
This week, however, may well be the last time when you can still buy the stock in the range of 68-72 cents.

Disclosure: I remain long Armanino. It is one of the largest holdings in the accounts I manage.

Another Misunderstood Teen (or should I say "A Homeland Contingency Operation"?)

We have now had yet another attempted terrorist attack here in the USA. In that hotbed of radical Islam, Portland Oregon, a Somali born American citizen tried to detonate a truck filled with what he thought were explosives at the site of a large Christmas tree lighting ceremony. Fortunately, the FBI had already learned of this guy and had gone along with his plan, even selling him the fake explosives, to gather evidence against him and to prevent danger to anyone from his actions.

Given the site of the attempted attack, I expect that the Progressives from the Obama administration will issue a statement highlighting the dangers of Christianity and warning against the use of Christmas trees and particularly attending lighting ceremonies for Christmas trees. Anyone planning to attend the large ceremony at Rockefeller Center in New York had better prepare for strip searches.

Strange Times

The New York Times ran a column the other day that promoted the position that Israel had much to fear from the new Rpublican majority in the House. Tp put it mildly this is a strange idea. According to the Times, the Republicans are against foreign aid and this will hurt Israel. The Times, however, did not give any evidence for this allegation. Further, the truth seems to be quite the opposite. The real problem for the Israelis has been the hostility of president Obama and his administration. For example, the never ending nonsense coming from Obama about so-called "settlements" which are actually construction in the various neighborhoods of Jerusalem has scuttled any hope for meaningful talks between the Israelis and Palestinians. The US is also going to Durban III, a UN conference that is billed as fighting racism but which is organized to promote anti-semitism. Canada has announced that it will boycott the conference, but Obama still has the US going. The US has also supported the recent decision of UNESCO to remove Rachel's Tomb and the Cave of the Patriarchs from the list of historic sites; indeed the tomb of Rachel is now designated as a mosque by that UN agency. These sites which have been revered by Jews for literally thousands of years cannot be changed by a decision of UNESCO and for the US to support such nonsense is nothing more than another anti-Israel move by Obama.

Strangely, in the course of the article, the Times admits that the new Republican leadership in the House is more pro-Israel than their Democrat predecessors. Indeed, it seems that the Times' main point in the article is really a message to Jews who may have left the Democrats to vote for the Republicans in 2010; the message: you may have hurt Israel. While this fits with the general electoral goals of the Times, it has no basis in fact. It is just propaganda, and not even good propaganda at that.

Where do they get this stuff?

Wikileaks is the site that has been disclosing classified US date from Iraq, Afghanistan and soon (allegedly) from diplomatic channels. The documents released are said tototal over 1.5 million pages. If all of this tuff is classifed, I have a question: where do they get this stuff? Clearly, these documents are not available to the public. Are there people in the government who are leaking all of this? If so, why? And, if so, why are they not being stopped? Is the obama administration really that incompetent?

The Euro -- will it fade away?

One of the biggest developments in the last twenty five years in the world economy has been the development of the euro as the common currency for most of Europe. Now, that currency may not be around much longer. Conventional wisdom is that the Europeans will do whatever is necessary to keep the euro, but that is a rather simplistic view. How much longer can Germans be expected to pay to bail out less wealthy and less successful countries like Greece, Ireland, Portugal and Spain when the benefit is the maintenance of a common currency? How much longer can the folks in Greece, Ireland and the others be expected to endure harsh austerity when the benefit is mainenance of the euro? After all, if Ireland had been able to devalue its own national currency instead of being stuck with the euro, the Irish might now be able to pay off a devalued debt burden with taxes resulting from the increase exports selling due to the new cheaper pricing. the same is true in all the other debtor countries. On the other hand, the Germans might be able to use their more powerful currency to buy Irish assets and the like and thereby to increase the wealth of Germany. Clearly, there would be a whole host of winners and losers. Irish bondholders would suffer major losses from a devaluation, but the system would more quickly be restored to equilibrium meaning less damage on the whole. ON the other hand, the current system of bailouts really just transfers the pressures from country to country while building up to the ultimate explosion. Hopefully, there will be a way to release pressure before there is an insurrection in many parts of europe.

Pier 1 -- a stock for December

Pier 1 Imports Inc, (PIR) is a stock in which I have invested in the last two months. It has risen nicely (I bought most at 7.62 in mid October and it is now 9.92), but the real test is in front of it. Pier 1 sells an ecclectic mix of imported home furnishings, tableware, linens, gifts and other items that sometimes defy classification. It had fallen on hard times a few years back, but it has rejuvenated its stores and seems to be on the road to stardom again. Beginning today, however, the company needs to do very well with its seasonal sales to really re-enter the ranks of the successful. Right now the stock is selling at roughly 14 times estimated earnings for the next twelve months. The company will report third quarter results on December 13, but it is the next quarter that truly matters. According to the estimates, PIR will earn 41 cents out of an annual total of 71 cents during the current quarter. Pier needs to outperform during that quarter to get the estimates for the year raised and to convince the market that growth has returned to these stores.

Another reason that I like PIR is that it has high option premiums. Buying the stock and writing the March 11 calls in the area of 90 cents will reduce the downside risk and will still allow a gain of roughly 75% on an annualized basis over the next four months if the stock is successful. There are many other option strategies strategies for PIR as well.

Perhaps the main reason that I like the stock, however, is that I have seen the change in the Pier 1 stores myself. The merchandise selection is much better than it was during their time of troubles. The stores seem more crowded (about the most annecdotal bit of evidence anyone will ever offer), and the market for less expensive items like those at Pier 1 should be fine at the moment. My extimate is that the company will surprise on the up side when the Christmas season report comes in. We could see a big rise in this stock in the next six months.

One last note: Pier 1 is not a stock in which to put the mortgage money. It has a high risk and the possibility of a high reward. It can also go down rather rapidly if things do not work out well.

Disclosure: as noted above, I am long the stock and have numerous option positions as well.

Thanksgiving –2

Well another Thanksgiving has come and gone with many of the usual events. The sink in the kitchen clogged up at 9:30 the night before Thanksgiving with many hours of cooking still to come. That was one quick trip to buy liquid plumber. Right after the meal, the dishwasher stopped working and I learned how to take it apart and put it back together according to instructions that must have originally been written in another language. Despite that, I got it fixed. I ate too much. I drank too much. I ended up exhausted. Still, it was truly a great day. I got to see family members and friends who we just do not see as often as I would like. I got my whole immediate family together working as a unit to get the dinner and all the accoutrements ready. Ultimately, I think that the reason that Thanksgiving is so popular is just that: it is about family and friends. There is nothing political about giving thanks for what we have. In every ideology gratitude for what one has is appropriate. It was a great way to spend my birthday!

Another Obama Success Story

After the attack by the North Koreans on South Korea, the administration announced that it would stand by the South and that the best course would be to work with other world powers to deal with the crisis. The US made immediate contact with China, the patron of North Korea, to try to bring pressure to bear upon the NK's. It has not taken long to get a clear picture of the Chinese response. As reported by the Washington Post, "China’s Foreign Ministry spokesman Hong Lei told reporters in Beijing today it was evident that North and South Korea disagreed on which side started the clash. Premier Wen Jiabao yesterday reiterated calls for stability on the Korean peninsula, without ascribing any blame to the North."

Let's chalk this up to yet another great success for Obama. He cannot even get the Chinese to admit that the NK's were the aggressor in the attack. I wonder what great success is next?

Thanksgiving

Happy Thanksgiving to all! Let's give thanks for all of our blessings. Let's devote ourselves to making sure that everyone has a better year in the coming twelve months than they had in the last.

Korea, Iran, China, Russia, and even Afghanistan

I was thinking about the attack by the crazy North Koreans on the South Koreans and the fact that the NK’s clearly do not fear or even care about the reaction of the USA. Without a doubt, the NK’s expect Obama to make a speech or two on the subject and then to do nothing else. I realized that the North Koreans had joined the ranks of the Iranians, Chinese, Russians and even the Afghans who no longer seem to worry about the reaction of Washington to their actions. Iran develops nuclear weapons and goes about killing US servicemen with no retribution from the US. China and Russia behave as if they have no care about the US. Even the president of Afghanistan is moving closer to the Taliban and away from the US. These countries perceive the incredible weakness and lack of clarity of purpose that is projected by Obama. Hopefully the American people perceive this as well and will take action in 2012 to remedy the situation.

The TSA mess

For the last week, the airwaves have been filled with a never ending stream of stories about body scanners and pat downs at airports. The arguments are at once idiotic and important. First, it is idiotic to discuss whether it is worse to have terrorists get on planes or to have people searched and scanned in order to get on planes. Clearly, the choice has to be to keep people alive rather than to protect their dignity. Nevertheless, it is important to realize that those are not the only choices. Indeed, only in a politically correct world is it necessary to put everyone through these searches. Behavioral profiling could reduce the number of folks who need to be searched to a great extent.
The Israelis have done this for decades with great success. The first time I flew on El Al, the Israeli airline, I was going abroad to meet a group of students for a low cost tour. I was supposed to fly to Israel and meet the group in the airport when we landed. I got to the airport and the baggage folks for El Al looked inside my bag. (It was before there were baggage scanners) I had batteries for my electric razor, so they asked me where I was going in Israel. I told them that I was going with a group and did not know where we would be exactly. They then asked me who else was in the group and who was the leader. I told them that I did not know. That led to a rather thorough search. But that made sense. I was a young guy with suspicious things in my baggage who could not explain where I was going or with whom.
Maybe if the government applied intelligence instead of political correctness to the problem, we could all have avoided this unnecessary upset.

Not really a dream

Supposedly, Harry Reid is going to put the Dream Act on the agenda of the lame duck session of congress after Thanksgiving. With so many issues that must be addressed like taxes, spending and the debt ceiling, one has to wonder why Reid is choosing this moment to stick in a controversial immigration bill. During the two week lame duck session, Congress has to fund the government or face a shutdown during the first week in December. congress also has to act to prevent an enormous tax increase for all Americans starting January 1, 2011; the Democrats do not yet even have a coherent plan ab out how to handle that problem. In addition, congress has to raise the debt ceiing or the ability of the government to borrow money will end within the next month as well. These are each extremely important.

So Harry Reid is pushing an immigration bill with essentially no chance of success,and he is putting political gain ahead of what is good for the country, indeed, what is necessary for the country. Is the Dream Act at least a good idea? In a nutshell, the Dream Act gives illegals brought here by their parents before they reached age 16 a path to citizenship. At the same time, however, it provides all sorts of benefits for illegals like in state tuition rates for illegals at state universities. One of the paths to citizenship for illegals under the Dream Act is service in the US military. Clearly, any person who enlists in the military and serves this country deserves to move to the head of the line for citizenship. There is no clearer commitment than such service, and the country needs to respond appropriately. On the other hand, attending college, the other path under the Dream Act, is not any reason to let someone jump to the front of the line. In short, the Dream act needs to be reworked in a rational and sensible manner. This cannot be done in a two hour window during a lame duck session. Reid should not bring this bill forward.

GasFrac – update 2

I have written twice before about GasFrac Energy Services Inc. (Symbol GFS.V or GFS:CA). In view of recent developments, I remain bullish on the company. First, there was a concern that the low pricesfor natural gas might reduce the drilling activity in that field with the result that GasFrac would suffer. This risk was addressed in a rather convincing fashion by the company’s management in its earnings conference call. Essentially all of the wells that are being completed with the use of GasFrac’s LPG system are now wet, that is, they are either oil wells or gas wells with a heavy component of natural gas liquids. Unlike natural gas, oil prices have remained high and can generate a great deal of new drilling. The same is true of the natural gas liquids. Thus, it seems that GasFrac will not fall victim to the low market price for natural gas.
Second, there was a concern that there has not been any big push for the use of the gasFrac completion system as a method to guarantee that the ground water in the area of the wells remains unpolluted. While it is true that there has not yet been a big push on this issue, it may just be a matter of time before the system breaks through into the “environmental” consciousness. For example, in the portion of the Marcellus that lies under New York State, there has been no drilling allowed due to the concerns of possible ground water contamination. While such fears are grossly overblown in my opinion, they remain a characteristic of the marketplace. Drilling is not banned per se in NY, but each well needs its own approval before it will be allowed to proceed. The effect is to drive the cost way up and make drilling unprofitable. A drilling company that gets approval for the gasFrac system, however, might actually get the jump on everyone else. Imagine having the only approved method for drilling in all of this field that lies under New York. It is only a matter of time before some enterprising company brings this method before the NY authorities and obtains such an approval. Pressure regarding possible pollution from wells completed using the standard water method will not be going away anywhere, and that should provide a continuing boost to gasFrac.
Third, the company will be completing its latest expansion by the beginning of 2011. At that point, it will have the capacity to generate much higher revenues and earnings. Most likely, these additional revenues and earnings will not affect the stock price in a material way until after the earnings for the first calendar quarter of 2011 are released.
In sum, gasFrac remains highly likely to succeed. Two questions about its prospects have been answered in a favorable manner and there is a likely bump to its revenues and earnings coming in the near future as well.

Disclosure: I remain long GasFrac. In addition to a large core position, I have been trading in and out on a short term basis to take advantage of some rather nice gains in the recent past. For example, during the past week, I was in and out for about a 14% gain over 5 days.

How to understand the progressive left

I normally read Salon.com each day in order to understand what is being said among the wacky left that calls itself “progressive”. After years of studying this group, I believe that I have come to understand them and how they communicate. There are only a few rules that you need to follow to get through to them.
• Be abusive and make sure to call your opponents names. It also helps a lot to question the sanity of those who disagree with you.
• Repeat like a mantra that the government has not done enough.
• Point out that all those who disagree with you are either racist or sexist. If that does not seem applicable you can always use homophobic.
• Remember that all problems with regard to foreign relations stems from the Arab - Israeli conflict and are the fault of the intransigence of the Jews.
• Point out always that the problem of terrorism is an aberration confined to just a few people who happen to be Muslim. Always remember that the terrorists have valid grievances that arise from the odious acts of the United States.
• To the extent that Israel cannot be blamed for world problems, they all stem from US imperialism.
• Those who are not progressive are morons.
There is more, but if you limit yourself to these basic rules, you will have made a good start towards becoming a true progressive.

Please Stop! It’s not 2012 yet!

In the days since the elections, I have seen articles and news features that discuss at great length the presidential election of 2012. All I can say to the press is STOP!!! It is important that we as a country not view everything that happens through the lens of the 2012 presidential election. There are too many serious problems facing the country to get caught up in another endless round of electioneering. It would serve the country and all Americans to put the 2012 election aside as a topic of discussion and deal instead with a discussion of how to overcome the obstacles in the country’s path. Let’s start with a debate about what to do NOW to help revive the economy. We can follow that with a debate about whether or not to repeal Obamacare. Oh, let’s not forget the nukes soon to be appearing in Iran under the control of that country’s nutjob government. Maybe we could also talk about how to cut off the flow of illegals entering the USA. Maybe it would be a good time to talk about restructuring Social Security and medicare to insure that these programs will still be around in ten or twenty years. Bringing down the deficit is another big subject to address. In 2011, each of these subjects is a hell of lot more important than the jockeying for position with regard to the presidential election.

More Weapons for Saudi Arabia

The Obama administration has entered into a deal to sell Saudi Arabia some $60 billion of advanced weaponry. The deal is the single biggest arms sale in US history. It gives the Saudis enough arms to more than adequately equip their military. Indeed, the Saudis may start distributing tanks to their citizens to use as ornaments for their front yards.
I truly wonder if any portion of these weapons will be used against US troops. After all, it is widely believed that the 9-11 terrorists received assistance from segments of the Saudi government. Maybe a few hand held anti aircraft missiles might somehow make their way into the hands of those we are fighting in Afghanistan. Such missiles were favorite weapons of the mujahidin who fought the Soviets in that country in the early 1980’s.
Obama timed the sale so that Congress (which has 30 days to oppose and stop such a sale) would be adjourned for the elections and therefore not likely to act. Once again, Obama has sought to put himself above the congress and to usurp more power for himself.
Weapon sales of this magnitude are too important for them to proceed by means of political games. I long for the day when our president has enough honor and decency to grant congress the deference to which it is entitled as a co-equal branch of government.

See you all next week

I will be away and not posting until Tuesday. Until then...........

Katrina wants Obama to ignore the people

In her latest in the nation, uber-liberal Katrina Vanden Heuvel proclaims the need for president Obama to govern by executive decree. Congress will be too gridlocked according to Katrina for much to be accomplished; Obama has to do it all on his own.

Vanden Heuvel's plea for "executive" action is antidemocratic enough, but when one looks at her wish list for Obama's tasks to perform, the true nature of the left's agenda shines through. First on her list is "Use EPA regulatory authority to reduce greenhouse-gas pollution by 17 percent by 2020." In other words, after cap and trade was rejected in a Congress top heavy with Democrats and after voters made clear that they did not want to see it put in place, Katrina wants the folks ignored and for him to go ahead with that hair-brained scheme anyway.

Second, Katrina wants Obama to "Launch the new Consumer Financial Protection Agency with aggressive rulemaking to protect and empower consumers." In English, this means Katrina wants severe restrictions placed on banks and financial institutions. This will help curtail growth and hiring in the financial industries with New York taking a heavy hit as a result, but Katrina wants Obama to move forward with this anyway. Apparently, Katrina did not get the message from the election that voters want job creation more than anything else.
Another of katrina's wish list is for Obma to "use the authority of the commander-in-chief to mitigate DADT’s impact, should Congress fail to repeal it." If repeal cannot pass congress, she wants Obama to ignore the law and limit the policy anyway. How authoritarian.
Another biggie on the list is for Obama to "direct agencies to require automatic mediation to avoid foreclosures where possible." Now Katrina wants Obama to change contract law without even getting authority from Congress to do so. It is doubtful that even Congress could constitutionally and retroactively change mortgage contracts, but Katrina says to do it by decree.
One last item from the wish list deserves attention; that is for Obama to "use his executive authority to advance labor organizing". This one is so far out that Katrina does not even bother to tell us how Obama is supposed to do this.

The real truth here is that true progressives do not care about the will of the people. They want their agenda put into effect and if authoritarian and antidemocratic methods have to be used to accomplish this over the opposition of the majority of people, they are fine with that.

Katrina Vanden Heuvel is a confirmed airhead, but she still performs a valuable service for the country. Every time that the left pretends that it cares about what people think, she brings us back to reality. The left is not democratic even though they are Democrats. When the Democrats pushed through Obamacare over the objections of a large majority of the country, it was not a mistake and not a one time event; it was just business as usual for the liberals.

The evils of obamacare

The big news about Obamacare these days is that the feds have now given out 111 waivers to certain big companies and unions so that they do not have to follow the rules set forth for obamacare. If there was ever a doubt about the unfairness and, indeed, unconstitutionality of Obamacare, this should remove it. Simply put, if Obamacare is really the great benefit that Democrats claim, why is it that these same Democrats are busy letting the big guys out of following it? Many of the unions who have now gotten waivers were big supporters of Obamacare, but now they want waivers so that they can continue to provide healthcare benefits for their members. Instead of increasing coverage for Americans, obamacare without these waivers would be decreasing coverage. Even more important, the waivers have gone to companies and unions big enough to hire lawyers and lobbyists who can get them waivers. Small businesses and individuals could never afford that route. So there are two legal structures that the Democrats have put in place: one for the rich or powerful and one for everyone else. That is inherently unfair, but more than unfair, it is a denial of equal protection of all citizens. These waivers are unconstitutional in my opinion. I hope that there soon is a challenge to the waivers on that ground.

Acquitted on all but one count

In the biggest legal embarassment to a prosecutor since the OJ trial, the first Gitmo terrorist tried in federal court was acquitted on all but one of over 280 counts brought against him. The result was not a surprise since the judge had previously ruled that a key witness could not testify since his name had been uncovered in an interrogation that did not meet all of the required safeguards afforded to regular US criminal defendants. Indeed, this is the very reason that it was a crazy decision by the Obama Administration to try the terrorists in civilian courts.

It is hard to imagine a bigger embarrassment on this front for the Administration. I suppose that there could have been an acquittal on all counts for this man who admitted that he bought the explosives and helped carry out the attacks on the US embassies in East Africa in the late 1990's. A great many people were killed, but the defendant was acquitted of murder. This is one of thos cases for which Eric Holder said that failure was not an option. Now failure is the result.

Hopefully, this result will push Obama into trying KSM before a military tribunal and ending the silly move to try the terrorists in civilian courts. These are not regular American defendants who are entitled to all sorts of constitutional rights. These are enemy combatants who are bent on killing the innocent as part of their battle plan.

Beyond the move back to the military tribunals, it would also be a good idea for Obama to get rid of Holder. In two years as AG, Holder has just been trouble. I was trying to remember any success he had, but so far his biggest victory has been against the state of Arizona in trying to overturn a valid law passed there.

Time to say Thank you

There is a group called the salute heroes project that provides help to American veterans wounded in Iraq and Afghanistan. Right now, they are raising funds to help the families of these veterans buy dinner for Thanksgiving. Sadly, this help is needed since, among other things, there is often a delay of six months or more in the government starting veteran's disability benefits. If you would like to contribute, the web site to do so is https://www.saluteheroesproject.org/

Clicking on the title to this post will take you there directly.

Congratulations to the Congress

One message that came through loud and clear in the election was the low regard with which the voters hold the congress. Turnover is so great that about 20% of the members of the new House will be first time members of congress. In the Senate, more than half of the senators are now in their first term. So, I feel compelled to congratulate Congress on its just completed leadership elections in which all of the leaders in both parties were re-elected. For Republicans, there is at least the argument that they have now been chosen by the people to put forth their solutions so that the carry over leadership are the bearers of new policies. For the Democrats, however, the re-election of everyone in the leadership is an announcement to the American people that as a party congressional Democrats do not give a rat's behind for the views of the people. So once again, Is say congratulations and thanks for making your contempt for the American people so clear.

So this is what the Democrats are doing

I have been criticizing the Democrats in congress for failing to move forward with stopping the huge tax increase scheduled for January or even to fix the Alternative Minimum Tax problem for 2010. These failures threaten to drive the country back into a full recession, but the Democrats have not even put forward a bill that sets forth their position. Now comes word as to what is actually occupying the Democrats. the Senate voted today on a cloture motion regarding the so-called Paycheck Fairness Act. this poorly named statute would require all business to file with the government yet another report breaking down the work force by sex, national origin and race and listing the pay levels for each grouping. The bill would also place the burden of proof on the employer in cases where wage discrimination is alleged. In other words, it would no longer be required that an employee show that he or she was the victim of discrimination; now, the employer would be liable just because wages were not equal unless the employer could prove that this was not the result of discrimination. The bill would also make it much easier for lawyers to bring suit against employers regarding claims of discrimination; class actions would also be presumed valid in situations where pay levels were not identical across race, gender and national origin lines. In short, the bill is a big blow to the ability of a business to function profitably in the USA as well as a gift to the trial lawyers.

Fortunately, the Democrats lost the vote thanks to the united opposition of the Republicans. But the big news is that one week after the worst defeat that the Democrats suffered in over 60 years, they are right back at it; they are pushing a law that would probably cost hundreds of thousands or millions of jobs and make growth in the economy that much harder to come by. These folks just don't get it, and I doubt if they ever will.

The Left still has nothing to say

One week after an election that was most notable for the fact that the Democrats had no major issues on which they ran, it seems that nothing has changed. I checked lefty issue central (otherwise known as MSNBC) last night and found that there was still a lack of both substance and truth. On one show, I heard again (for what seemed like the ten thousandth time) that the Bush tax cuts in 2001 and 2003 were tax cuts for the rich and that these should not be allowed to continue. It is funny that the left keeps making this claim as it has now been thoroughly discredited. We all know that the cost over the next decade of continuing the tax cuts for the middle class is approximately 3.3 trillion dollars. The cost of continuing the tax cuts for the rich over that same time is about 700 billion dollars. So the Bush rates gave tax cuts that were almost five times larger to the middle class than to the rich, even though the rich pay 40% of all the income taxes. This means that the middle class got much larger tax cuts than the wealthy. Given that, I have to wonder why the Democrats continue with their endless mantra that Bush's cuts were for the rich.

On another show, I heard that noted economic "expert" Rachel Maddow explain that the ban on earmarks was a sham that would not affect the budget. Although Maddow had a solemn looking "expert" come on to agree with her assessment, she never bothered to explain why the ban was a sham. Maddow did, however, explain that the amount of spending included in earmarks is small and that it really will not cut the deficit much. Any idiot listening to Maddow would know that the earmark ban was the first step by the GOP in its budget reduction plans. Maddow ignored this.

The simple point is that a week after the election, the Democrats still had nothing to say. I had suspected during the election campaign that the Democrats must have had issues that they wanted to deal with, but which they were avoiding during the campaign. Now, I have begun to doubt this. It truly seems that the Democrats have no idea what they want to do other than to stay in power.

Tax Increases and the Fools in Washington

The news today is that the meeting between obama and the leaders of congress to discuss extension of the current tax rates has been pushed back from tomorrow until November 30th. Additionally, news reports say that Senate Democrats are in disarray on the issue of taxes and some are quoted as saying that they do not even know what the alternatives are. This mess is unbelievable. Absent action by Congress, millions of people will pay the alternative minimum tax this year and others will not be able to get the various credits for childcare and similar items. This is wholly apart from the massive tax increases scheduled for everyone for 2011. the conventional wisdom is that something will get done before the end of the year, but I am not that sanguine. The Democrats who totally control Congress have not yet even put forward a draft bill, any draft bill, that would deal with taxes. What the hell are they doing?

In the election, one of the reasons that Democrats lost so much is that they failed to listen to the American people. Do they now think that hiding from the decisions is the way to proceed. They have had two years to come up with positions in this session of Congress. I know the GOP position: extension of all of the current rates at least for two years. From the Democrats we only hear bits and pieces from different groups but this is coupled with Obama saying he is ready to negotiate. Mr. President, despite what your advisers are saying this is not a poker game. This is a life and death decision for many in this country. The CBO estimates that under the position that you espoused during the 2008 campaign (which you make clear is no longer you fixed position), there will be over a million fewer jobs in the country. Can you please tell us whether you still favor killing that million jobs or if you now agree that the tax rates cannot be raised in the middle of hard times. Show some leadership for once!

Scapegoating Federal Workers – an American Prospect Fantasy

In the American Prospect, Paul Waldman writes at length about how conservatives are improperly attacking federal workers just because they are union members. It is not true, says Waldman, that federal workers make more than Americans who toil in private industry. It is just misinformation spread by the conservative media machine.
Waldman’s article and argument is so far off base that it is comical. First, let’s go to the facts that Waldman himself cites. Federal workers have an average pay of $81,258 while those in the private sector have average pay of $50,462. Waldman also agree that Federal workers have much higher benefits than those in the private sector. Again, these are not my statistics; these are the numbers that Waldman cites to show that federal and private sector workers make the essentially the same thing. Somebody ought to explain to Waldman that the number for the federal salaries is 60% higher than the one for those in private industry.
Waldman’s answer for the disparity essentially boils down to the fact that federal workers are unionized and private workers mostly are not. As Waldman puts it, “more important, this isn't about reducing the budget deficit; it's about attacking unions.” So those evil conservatives are just vilifying the federal workers as overpaid since the conservatives want to hurt the unions. In other words, Waldman takes the issue of whether or not America can afford the high cost of federal workers and changes it into whether or not unions can survive. Given that the overarching issue in government today is how to reduce costs to manageable levels, Waldman’s argument seems to come from another planet.
Waldman does have some other points. For example, Waldman points out the federal workers are a smaller percentage of the population today than they were during the Kennedy Administration. This is true, but the reason for the change is that the armed forces are now less than one-half as large as they were in the days of JFK. In other words, the lower percentage of federal workers in the workforce does not mean that the federal workers have gotten more efficient, just that the US has moved to a different defense posture.
Waldman also argues that federal workers are more skilled and better educated than private sector workers. Of course, he gives no proof for this assertion.
The truth is that the issue here is deficit reduction, not attacking unions. Waldman is a fool who is prepared to spout nonsense to support his views. Nevertheless, there does need to be a close look taken at the level of federal salaries and benefits. In addition, the staffing levels are also due for a critical review. In private industry, a periodic downturn and the profit motive force employers to get rid of the unnecessary and excessive employees. In government, there is no such thing as a down turn. The impetus to look for redundant or overpaid workers has to come from public pressure. Contrary to Waldman’s thesis, this is good for the country. An efficient government helps everyone.

Rangel thinks he was treated unfairly

In one of those moments that can only happen in politics, congressman Charlie Rangel was convicted today of eleven separate ethics violations and responded by claiming that he was not treated fairly. To Rangel, it is more important to be a victim than it is to be honest or ethical. The amazing thing is that Rangel actually thinks that people will buy the garbage that he is peddling as the truth. Rangel's whole pitch is that the committee was unfair because he was not present for the trial and had no legal representation. Well, Rangel was not present because he walked out of the proceedings. Rangel had no lawyer because he fired his attorneys after they had prepared for months for the trial. My guess is that these attorneys told Rangel he would lose and that Rangel decided to move into full victim mode. The sad thing is that many of the folks in Rangel's district will believe that he is truly a victim.

Israeli Settlements – the failure of Obama’s policy

For many years, Israel and the Palestinians have “negotiated” for peace with the assistance of the US. In the last years of the Clinton administration, these negotiations got the farthest. Israel offered Yassir Arafat 99% of what he was seeking, so that Arafat did the only thing left to him. He refused the Israeli offer and started the Intifada that led to many Israelis dead from terror attacks, many more Palestinians killed in fighting stemming from those attacks, destitution for large segments of the Palestinian people who were isolated along with the terrorists, and separation of the West Bank from Israel by a wall that limits the freedom of movement of the Palestinians and hobbles their attempts at commerce. As the eloquent former Israeli foreign minister Abba Eban said, “The Arabs never miss and opportunity to miss an opportunity.”
Over the years, the Israelis were also able to negotiate peace agreements with Egypt, Jordan, and some other Arab countries. There was also cooperation between Israel and the Arabs in dealing with the First Gulf War. During all these negotiations, Israel continued building homes for its people in Israel proper and in some of the territories won in the Six Day War. This construction was never an impediment to the negotiations.
All that changed once Barack Obama and his advisors took over. Suddenly, Israeli “settlements” could have no further construction in them. The hundreds of thousands of Jews living in these neighborhoods (most of which were part of Jerusalem) were no longer to be allowed to build homes or schools or workplaces. Indeed, obama announced this construction as a great obstacle to peace.
I have often wondered which of the “geniuses” surrounding Obama came up with the idea of calling for a settlement construction halt. My guess is that it is one of the leftists who do not view Israel as a sovereign nation but rather who buy into the nonsense that it is just a western outpost imposed upon the native people of the region. There are a sufficient number of these folks in Obama’s foreign policy establishment that there are a fair number of suspects for the idiot who came up with this policy.
Of course, the Obama policy was a total failure. Icy relations between the US and Israel were the result when Obama went ballistic when some new construction began when Biden was in Israel for a visit. Obama put massive pressure on Israel and the Israelis finally relented and put in place a temporary freeze of construction in all settlements but not in Jerusalem. That freeze has now expired.
So what has Obama done now? The Israelis and the Palestinians were back talking. Obama could easily have announced that those discussions should continue with no interruption since the Israelis had already made their good faith clear by the prior freeze. But no, Obama had to go back to the original flawed policy. (is there some proverb that says you need to dance with the moron who brought you?) Obama asked Israel for and extension of the freeze.

Not surprisingly, Israel refused. After all, Obama has been revealed as a weakened leader who cannot even swing a majority in the recent elections. In almost every foreign interaction by Obama in the last few months, there has been a failure by the US to get its position approved by the other side. This was no exception. (And no surprise) So what has Obama done next? He has offered a bribe to the Israelis for a three month extension of the freeze. The latest news reports say that the US will sell Israel 20 additional advanced fighter planes and will support Israel in certain votes in the UN. There may be other items that Obama has given to get this three month extension. (the UN voting issue leads one to think of that other famous quote from Eban, “If Algeria introduced a resolution [at the UN] declaring that the earth was flat and that Israel had flattened it, it would pass by a vote of 164 to 13 with 26 abstentions.”)
For its part, Israel will probably give the extension for every place other than Jerusalem. A three month extension will no change much of anything in the negotiations with the Palestinians. They have no desire for peace and Abbas cannot deliver peace in any event. Israel, however, will get a bunch of “presents” from the US, and not much else will change.
So Obama and his geniuses will have managed to incur the cost of the goodies given to Israel and obtained nothing meaningful in return. Is there nothing that Obama can do right?

Banning Earmarks and the Deficit

The Republican Caucus is going to vote today on whether or not to ban earmarks during the next session of Congress. Some say this will help reduce the budget deficit; John McCain made this a big issue during the 2008 campaign. Others claim that removing earmarks will only let the executive branch determine where spending will take place rather than having Congress do that. The arguments seem to me to miss the point. Earmarks are gateways to corruption and undue influence. They also promote cooperative spending where various congressmen spend more and more in concert with their peers. Both of these lead to out of control spending.

First of all, one needs to review what an earmark is. The term earmark refers to a place holder in a spending bill that allows a particular congressman or senator to insert a favored project for funding after the bill has been approved. In other words, when the Defense Appropriations bill is passed, there may be an item in it (the earmark) that lets a particular congressman (like Charlie Rangel of New York) make a determination how to spend $15 million in his district. If Rangel wants to use those funds for the new library on 135th Street he can do so, but he can also designate those fund to go to the society for the improvement of bowling alleys. The point is that Rangel gets to pick and no one else has anything to say about it. The biggest evil of earmarks is just that – no one but the congressman or senator gets a say in how or where the money gets spent. Congressmen can direct these spending items to their friends and campaign contributors. Imagine that someone who bundles $75000 in contributions to a particular congressman gets the benefit of a project to which that the same congressman directs $15 million under an earmark. It may not be a direct trade, but the corrupting influence of the practice is still there.

Allowing a congressman to direct spending through earmarks is like a narcotic; some congressmen have become addicted to these spending practices. Indeed, many congressmen use earmarks as the basis for a sizeable chunk of their fundraising activities. As they say, “one hand washes the other.”

So all of these congressmen are making sure that they and their colleagues are getting the right to determine more and more expenditures under the earmark programs. Does the country really need a museum to commemorate the discovery of bacon? Probably, an expenditure like that would not pass in congress, but in an earmark, Senator Pork King might well get the money for the project to satisfy an important constituent. A big chunk of wasteful spending gets through in that manner.

The American people are correct in asking congress to review each item of spending so as to stop wasteful projects. Will some get through – sure! But will some of the more outrageous be stopped – you betcha!

The total amount spent on earmarks is tiny compared to the budget deficit, but size is not the issue here. By ending earmarks, the Republicans in Congress will be saying that they are going to treat each expenditure in a way that will require it to stand on its own merits. Cash will not be rushed out on the whim of one member looking for contributions. Perhaps the best way to look at it is like this: when folks wear pink ribbons to combat breast cancer, it really does not stop the disease. Nevertheless, it makes a valuable point that we are all standing together to fight it and to find a cure. Dropping earmarks is the same thing. It will not close the deficit, but it will tell the country and the world that congress will no longer just spend and spend as it has for the last four years. Instead, each expenditure must really be necessary and Congress will look at each one before approving it.

Why can't they grasp the truth

The never ending spin machine called Newsweek is out with a long article questioning whether or not the presidency is just too big to be handled by one man. Funny isn't it? Less than two years ago, according to Newsweek, obama was going to revolutionize the presidency and the country. Every problem from the economy to world peace would be dealt with successfully by the great Obama. Now, the whole country and the entire world has seen Obama's policies fail and then they watched as Obama's agenda was totally rejected by the American people in the election. Would Newsweek ever admit this? No, the problem is not with Obama's agenda according to the spin-meisters at Newsweek; the problem is with the inherent intractable nature of the American presidency.

Thirty years ago, after Jimmy Carter had let the presidency get away from him (with disasterous consequences for the country), we were told by these same geniuses that the job was just to big for one man. Then in came Ronald Reagan who these self proclaimed experts told us was intellectually lazy, ignorant, disconnected from reality, and utterly incapable of handling the presidency. There followed eight years of a man who was able to get nearly his entire agenda accomplished, including, among other things, starting the largest economic expansion ever in peacetime, beating the Soviet Union in the Cold War, and opening up the path to opportunity for millions of Americans who might otherwise have been denied it. Suddenly, the presidency was manageable again.

In 2000, George W. Bush was elected and Newsweek again told us how Bush was in way over his head. He was an idiot who was just not qualified to be president. Yet, when 9-11 came, Bush stepped forward and led the country to safety. As problems arose, Bush was able to come up with workable solutions that moved the country in the right direction. for all the up-turned noses at Newsweek among the all-knowing elites, Bush accomplished much for the country.

In 2008, the Newsweek folks finally got what thye wanted, one of their own became president. Obama would right all wrongs and create nirvana on earth. Of course, he failed. but the story here is not Obama's failure, but the refusal of the cognoscenti at Newsweek to accept the reason for that failure: the policies that Obama espouses and that Newsweek supports do not work! Hence, the claim that the presidency is just too big for one man to handle.

If the Newsweek folks were coming in for a psychological evaluation, they might be adjudged unfit for duty since they are incapable of recognizing reality. Sadly, the media does not get such evaluations. Of course, the public is not a dumb or credulous as the Newsweek folks believe. that may be the reason why Newsweek was sold for $1 earlier this year. As the saying goes, "You get what you pay for."

Obama and the economy

Two quote from columns in today's papers illustrate much of what is wrong with Obama and his actions with regard to the economy.

Paul Krugman, writing in the NY Times, blames Obama for timidity. Krugman expounds, "Right at the beginning of his administration, what Mr. Obama needed to do, above all, was fight for an economic plan commensurate with the scale of the crisis. Instead, he negotiated with himself before he ever got around to negotiating with Congress, proposing a plan that was clearly, grossly inadequate — then allowed that plan to be scaled back even further without protest."

In another column in the Toronto Globe and Mail, Cliford Orwin says, "The left says the recovery has sputtered because he didn’t pile up enough debt to stimulate it; the right says the debt already piled up has drowned any prospects of recovery. If [Obama] has an answer to either, he hasn’t succeeded in making it heard."

So here we have the most widely read leftist economist blaming Obama for his lack of gumption to do what is right followed by Canadian commentary that focuses on Obama's inability to communicate his solutions (if, in fact, he has any.) The right never accepted Obama's prescriptions for the economy, so now the view is unanimous. Neither the left nor the right like what Obama has done.

The truth is that what we are seeing is the results of Obama's total failure to accomplish much of anything with regard to getting the economy growing again. Because of this, Obama has lost his constituency of supporters who would rally to his side in any battle about what to do next. There ought to be a "middle ground" of growing the economy, but Obama has lost his chance to lead us there since he has lost the support he would need to take any major action. This means that the US will drift under Obama for the next two years. Indeed, it will be up to Congress to propose any major modifications to economic policy prior to 2012; Obama has lost control.

Putting Growth back into the Economy

The proposal that was put forth by the chairmen of the Deficit Reduction Commission highlighted the seemingly intractable problem of balancing higher taxes or lower spending as a way to bring down the deficit of the federal government. Strangely, most of the discussions of this subject ignore the best way to bring down the deficit, namely to grow the economy. Restoring a growth rate of 4% to the US economy would accomplish much towards bringing down the deficit. First of all, a 4% growth rate would mean that jobs were being created at a rate faster than needed to keep up with population increases. The resulting decline in unemployment would necessarily reduce expenditures at the federal, state, and local government levels (assuming that governments could refrain from still more new spending initiatives.) Second, a 4% growth rate would also mean and increase in tax revenues. Four percent growth translates into an increase to the GDP of about $600 billion dollars. If only one-sixth of that gets taken in taxes, it still means an additional $100 billion per year in revenue for the government. In short, the fastest way to bring down the deficit is to grow the economy.

So what can be done to increase economic growth? There are a number of steps that could be taken right away. First is to remove obstacles to growth. These obstacles include uncertainty, restrictive regulations and risky government changes. In the last two years, Obama, working with his party, has injected major amounts of uncertainty into the economy. Obamacare places a big question mark on the cost of healthcare for business as we move forward. There are still so many regulations to come from the government on Obamacare that any sane company has to adopt a wait and see approach, an approach that is a killer of growth and investment. The lack of a coherent and clear tax policy is also hurting growth. Perhaps the best thing that Obama could do to remove this uncertainty would be to change course and recommend that for the next two years, all taxes will remain at 2010 levels with two exceptions: the estate tax which will be brought back at 2009 levels and the Alternative Minimum Tax which will be fixed also at 2009 levels. A longer fix would be preferable, but two years should at least give business a chance to move forward now without worry.
Regulations and new regulatory schemes from the government should also be stopped. Here a good example is the plethora of affirmative action regulations injected into the financial industry by the Wall Street “Reform” bill. It is fine and appropriate for there to be laws that prohibit discrimination in employment. These are part of American society. There is no reason, however, for the government to determine what percentage of investment bankers have to be women, blacks, Asians, Latinos, or any other racial, sexual, ethnic or other category. There is simply no need for this governmental intrusion in the market. It only serves to make it harder for the firms to do business in an efficient and profitable way. By the same token, all manner of intrusive regulations must be rescinded.
As part of the regulatory overhaul, overlapping and overly restrictive regulations need to go. For example, President Obama has spoken of his supposed support for the construction of new nuclear power plants in the USA. Of course, actual construction of a nuclear plant is just about impossible due to the large number of regulations from different bodies that have to be satisfied in order for construction to commence. Imagine how much easier the whole process could be if congress were to pass laws giving the NRC total control over the construction approval process and also specifying the requirements regarding safety, etc. that had to be met. Indeed, there could even be a restriction on court challenges to such regulation by limiting appeals of decisions by the NRC to just one court in the Federal system.
Preventing risky governmental changes means two things: Congress has to cool it for a while with the adoption of new programs that impinge upon the economy. No cap and trade for example. Obamacare should be repealed.
The other half of promoting growth is to undertake programs that actually will stimulate the economy. This is not things like cash for clunkers which just moved sales around. Instead, it is the adoption of programs that will increase investment in the US economy. A good example here would be providing an investment tax credit for investments in domestic energy production. If the desire is to favor “green” energies, the credit can be a bit higher for investments in wind or other renewable energy sources. This is a subsidy to domestic energy producers, but it is a subsidy of new investment which will still need to support itself in the market place. There is no point in providing ongoing operating subsidies since these will just inject inefficiencies into the market. Investment subsidies, however, will allow newer technologies to make it into the marketplace so that they can achieve the economies of scale that will reduce their future costs to a competitive level. These investments would include things like production of natural gas powered cars and trucks, natural gas filing stations, new transmission lines to carry the output of wind turbines from windy locations to places where the power is needed and the like. Investments like these will provide jobs both for their construction and to operate the resulting power generation stations for many years to come.
There is also the traditional item for promoting growth, namely tax reductions. These, however, are already being discussed at great length. Using other methods to promote growth, however, cannot be ignored. The problem is just too big to solve any other way.

The new Fairway market in Stamford

Last week was the grand opening of the Fairway market in Stamford, Connecticut. I made my first visit there this morning. The advertising slogan used by Fairway is "Like no other market!" It certainly is accurate. First of all, the place is enormous; it was so big that I did not even get to see all of it. Second, the range of selection was also extraordinary. The markets already in the area mostly have a part of the selling range in which they concentrate. Whole Foods is high end organic and natural. A&P Fresh is mid range. Stop and Shop is moving down towards the lower range. From what I could see, Fairway covers the high, middle and some of the lower end as well. More important, the prices were lower than elsewhere, something that seems odd to me. It may be that Fairway has lower prices because it has just opened. The low prices may be a lure to get new customers. Nevertheless, products seemed to be about 25% less than the same thing in Whole Foods. Indeed, either Fairway will raise its prices, or the volumes at Whole Foods in Greenwich and Darien will soon collapse. the price differential is just too great.

As best as I could determine, the prices were also lower than those at the A&P. the difference was not as stark as the comparison with Whole Foods, but it was at least 10%.

Not surprising, the place was packed with throngs of shoppers. I asked the cashier at the checkout line if the crowd had been this big previously. She told me that I had come at an off time and that in the afternoons, the crowds were much larger.

I checked to see if Fairway is a public company and have learned that it is not. If it were public, I would invest tomorrow. This is one successful company with a great concept. All I can say is welcome to Connecticut.