Al Armendariz leaves -- It changes nothing

Quick! Do you know who Al Armendariz is? Wait, it is not fair for you to google the name. Think about it. Do you know who Al Armendariz is or not?

Here is a hint: Armendariz is very involved with the cross.

No, he is not a cardinal. Armendariz is the EPA regional adminstrator who said that the regulatory goal of the EPA was to crucify a few oil companies in order to keep the whole group in line. He likened the EPA enforcement to the practice of the ancient Romans who would enter conquered cities and take five men at random and nail them to crosses in order to frighten the rest of the populace.

Armendariz was a political appointee of president Obama. After the video of his remarks regarding crucifixion surface last week, Al apologized. Apparently, the apology was not enough for the Obama campaign, so Armendariz has now been pushed out -- excuse me -- he "resigned" today.

The truth is that the departure of Armendariz changes nothing. For years it has been clear that EPA cares more about preventing oil and gas production and less about clean air and water. Armendariz just had the bad timing to be taped while he confirmed the obvious.

A thorough housecleaning is needed at EPA. Someone has to teach the agency that it is supposed to be serving the American people rather than terrorizing them.

No More Dog Fights?

For the last six months, we have been treated to periodic stories in the main stream media about the time, decades ago, when Mitt Romney loaded up his family in a station wagon for a vacation and put the dog in a pet carrier lashed to the roof. The story had no message other than a simple one: Romney must hate dogs! The story was used to mock Romney on all sorts of media. Then about ten days ago came the responsive story. In his first autobiography, president Obama mentioned that he had eaten dog as a boy growing up in Indonesia. The story made various internet sites and talk radio. It got no mention, however, in the main stream media. All those shows and papers that had discussed Romney's dog on the roof were just silent. After all, putting a dog on the roof for a few hours does not hold a candle to actually eating a dog, even if Obama was a boy when he did it.

Over the weekend, Obama blew the story out of the water; no one could keep a lid on it now. At the press dinner Saturday night, Obama joked: "What is the difference between a hockey mom and a pit bull?" This is Sarah Palin's famous joke from the 2008 Republican convention acceptance speech. Palin's answer was "lipstick". Obama changed the answer; his answer was "a pit bull is delicious!"

So Obama himself is now joking about his eating dogs. It was no accident. Let me translate this into political reality. Someone in the Obama campaign determined that dog lovers would much more easily forgive Romney for putting the dog on the roof than Obama for eating Fido or Spot or whatever the dog's name was. The campaign had to put an end to the whole story line immediately or it would come to haunt Obama. The decision was to turn it into a joke.

I think it was not a great decision. There are some people who cannot forgive cruelty to dogs and eating one is about as cruel as can be. This joke provides big publicity for a story that otherwise might have faded away. There is, of course, always the good news. At least Obama did not serve dog at a state dinner.

Is Oil an Addiction?

Merriam Webster defines "addiction" as follows:

compulsive need for and use of a habit-forming substance (as heroin, nicotine, or alcohol) characterized by tolerance and by well-defined physiological symptoms upon withdrawal; broadly: persistent compulsive use of a substance known by the user to be harmful

So, is America addicted to oil? Is this a substance that we know is harmful? I don't think so. It is an energy source, nothing more and nothing less. Americans are not addicted to water even though we all drink the stuff daily. We are not addicted to food either. These are necessities of life, they are not the subject of an addiction. We need a source of energy to continue living above a stone age style. Remember, even cavemen had wood burning fires. Energy is essential to human life.

I am writing about this today after reading an article on Politico by retired brigadier general Steve Anderson in which he lauds the decision to stop the Keystone XL pipeline as a means to fight our addiction to oil. It is just wrong headed and foolish. The only result of squeezing the supply of energy to American consumers will be to raise the cost of living to a point where millions will suffer. Jobs will be lost and economic growth will be sacrificed as the cost of energy rises. If you doubt this, take a look at the California economy since that state mandated using major chunks of expensive "green" energy instead of fossil fuels. Growth is anemic in California despite the enormous advantages that the Golden State possesses. Businesses are moving out and heading to Texas or Nevada or some lower cost state. The middle class is squeezed and many, too, are leaving. Those left are either very rich or very poor. It is amazing that in California, the triumph of progressive environmentalism will be the creation of the very 99%-1% society that much of the progressive movement decries on a regular basis. There will only be the very wealthy and also the poor. Income equality will just go out the window. But I digress; let's get back to the Keystone pipeline.

The main points about the pipeline are these:

1) Completion of the pipeline will mean an addition of about three quarters of a million barrels of additional oil supply in the world each day. This amound would constitute close to ten percent of the oil imported into the USA. It would make our oil supplies much more secure. The additional supply would put downward pressure on world oil prices.

2) Completion of the pipeline will mean hundreds of thousands of jobs in the USA, both in constructing the pipeline and also in refining, transporting and using the oil and its products.

3) The discussions of the environmental effects of the pipeline are jibberish. Failure to build the pipeline only means that the oil will get sent instead to China. Chinese refineries are nowhere near as efficient and clean as American ones. In other words, if the pipeline is cancelled and the oil is sent to China, there will be more rather than less pollution. Further, the oil will get to China by tanker, a much more dangerous method of transport compared to the pipeline itself.

And while we are at it, let's talk about America's need for oil. I think it is safe to say that everyone would like to see an alternative to expensive imported oil. The answer, however, is not to make the imported oil more expensive as the general suggests. The answer is to find an alternative fuel like natural gas to power our vehicles. Oil, right now, is used mainly for vehicles and, to a lesser degree, home heating. Almost no electric power in the USA is generated from oil anymore. Alternative energy, however, has to be relatively inexpensive; all that moving from expensive oil to more expensive solar or wind will do is to send us back into another severe recession. We need to remember that the goal here is not to destroy the American economy or to punish the rich. The goal is to find a reasonably priced energy source on which we can all continue our life style. We just do not want to go back to the Stone Age or even to live like its 1900. The goal is get more for the people not to take things from them and force them to suffer for the "common good" as would be the case in the progressive ecology world.

Obama and Osama

In a rather tawdry campaign video, president Obama's team is now claiming that Obama should be re-elected because he made the decision to go after bin Laden and Romney would have decided the other way. Unbelievable. Other than Joe Biden (who already told us that he was against the raid that got bin Laden), it is hard to imagine any American president who would have said no to that strike. Had George Bush done it, the same folks who are now promoting this video would be telling us that Bush is a cowboy. But the truth is that any American president would have done it. As a result, the campaign video is really tacky.

What is truly funny about the whole thing though is this: in the video, there is no shot in which Romney says he would not have sent the seals after bin Laden. Instead, there is video of Wolf Blitzer asking Romney whether or not his criticism of Obama's handling of the relationship with Pakistan means that he [Romney] would not have gone after bin Laden. They do not even bother to show the answer.

Is there Another Warning in the GDP Numbers?

According to the Commerce Department advance estimate of first quarter GDP released yesterday, the economy grew at a rate of 2.2% in January through March. Much has been said and written about this already. One additional note, however, deserves comment.

The most troublesome piece of the report was the decline in nonresidential fixed investment. This had been growing in 2011 and it suddenly went into decline in 2012. Some analysts believe that the sudden shift to decline is the result of differing rules for depreciation of equipment put into service in 2011 and 2012. This may have an effect, but on closer review, I believe that something entirely different may be at work here. Specifically, we may be seeing the first effect of the coming mega-changes to the tax structure that are due to kick in as of January of 2013. At that time, the Bush tax cuts expire, the payroll tax holiday expires, the AMT kicks in fully, and a few other provisions also hit which, taken together, will pull something in excess of half a trillion dollars out of the economy. Most individuals do not even have this event on their radar, but businesses are far more aware of future tax structures. Most business investments are viewed through the lens of the long term. In other words, companies look at prospective investments to see how long it will take for them to pay off and what the rate of return on the investment will ultimately be. A company looking four years ahead has to make an assumption as to what the tax rates will be during that time in order to come to a conclusion as to what the results of the investment will be.

Obviously, not all investments will be ruled out because of the upcoming tax changes and the resulting uncertainty. But it does not require all investments to be stopped to have a decline of 2.1% in real nonresidential fixed investment like that which the Commerce Department reported; only a small part of the investments need to be prevented.

When one looks at the components of the investment numbers, the likely effect of the so called Taxmageddon is even more apparent. Investments for efficiency are still growing, while those for increased capacities are declining. In other words, investment for equipment and software grew by 1.7% while investment for nonresidential structures declined by 12%. Companies are not building as many new plants or other buildings; these take time to build and are clearly subject to the vagaries of 2013 and beyond. Hence, the enormous drop in this categoy.

The truly scary thing about this point is that Taxmageddon is getting close, and nothing is being done about it. Rather than even trying to come to some consensus or compromise about how taxes will be levied in 2013 and beyond, president Obama is busy campaigning on the Buffett Rule and purported "subsidies" to oil companies. Meanwhile, American business is voting with its dollars, or, more precisely, American business is voting by withholding its dollars. This may mean that Obama's plan to use demagoguery on the tax issue to win the election will actually turn out to seal his defeat. After all, if business investment continues to fall, unemployment will rise and the economy will sputter and then decline.

Obama needs to put the good of the country first and his re-election second. Wow! Just writing that sentence made me laugh. It is like calling for snow in July.

Hey Tom -- Should We Give Chen Back

Tom Friedman is the myopic New York Times columnist who write about how the Chinese system of government is better than the American one. Today's news must really present Tom with a dilemma. Activist Chinese lawyer Chen Guangcheng has escaped from house arrest and made his way to the American embassy in Beijing. Chen's "crime" against Chinese society was that he advocated for the handicapped and for families subjected to forced abortions required to maintain the Chinese one child rule. He was convicted in a phony trial in 2006, and after serving his term, he was kept in house arrest without charges for the last three years.

So we have a blind Chinese lawyer who is struggling for families that want children and the handicapped. He sure sounds like a dangerous guy to me. Tom Friedman must be worried that the USA might somehow spirit Chen out of China and get him to America. We cannot have that! Imagine, this is a guy who was fighting against abortions. He cannot be let into the USA. Oh wait. Chen was fighting against forced abortions. There is no way that president Obama will bring him here. NARAL would be upset and this is an election year.

The real truth is that Mr. Chen has revealed once again a simple truth. China is not free. China remains a totalitarian state. China is not a role model for the USA or the world. Oh, and Tom Friedman -- he is an idiot.

The Orthodox Left Looks at the Economy and Obama's Performance

Writing in the New Republic, Noam Schreiber has this to say about the current state of the economy and president Obama's performance:

There are two fair conclusions to draw from the recent run of middling economic data, culminating with today’s disappointing GDP number. First, contra Mitt Romney, this is not an administration with a failed economic record, at least not as we sit here today. In almost every way—job growth, housing, GDP—Obama has presided over a vast improvement in the economic situation he inherited. Second, having said that, the administration clearly undershot in a variety of ways, and that undershooting has left the economy dismayingly vulnerable three years after the recession officially ended.

In a nutshell, these four sentences summarize the unreal distortions in the way that the left looks at the economy. I was originally going to write "the way the left understands the economy", but I cannot. Clearly, the left does not understand the economy at all.

Schreiber tells us that Obama has not failed because things are better in a variety of ways than when he took office. Really? Every student of economics learns about a concept called "the business cycle." It is not a particularly difficult concept. In short, the business cycle is the series of ups and downs in a normal free market economy. Periodically, one or another part of the economy will get out of whack and there will be an economic contraction called a recession. While steps can be taken to minimize recessions or to postpone them, they are an unavoidable part of a free economy. We were in the midst of a recession when Obama took office.

Another key part of the business cycle is the "recovery". In other words, after the recession has persisted for a while, there is unsatisfied demand from folks who did not make purchases during the recession either because they had lost their jobs or feared such an outcome. Two good examples of this are housing and cars. During a recession, consumers hold off buying homes or cars, but one the recovery starts, these folks come out and make the necessary purchases. People still need a place to live or a car to drive. This extra demand works to speed up economic growth, so the recovery is a time of an increased growth rate, a mini-boom that pulls the economy back on its long term trajectory.

Obama's economic policy has failed not because he continued the recession. It failed because he strangled the recovery. We have not really had a recovery since Obama took office. Indeed, Schreiber seems to have noticed this when he points out the the economy is still "dismayingly vulnerable three years after the recession officially ended". Dismayingly vulnerable is an understatement. Since the Second World War, the USA has never had a recession after which total employment had not recovered to pre-recession levels by four years after the start of the recession. The extra demand of the recovery period has always pushed growth strongly enough to get back all of the lost jobs and more by now. In the current recession, the USA still has about 3.8% fewer jobs than were in place at the start of the recession that began about four and a quarter years ago. While 3.8% may sound like a small number, remember that this means there are about five million fewer jobs today than there were prior to the start of the recession. That means five million folks without work as a result, even ignoring all the additional people who joined the labor force over the last four years. It is a human disaster, a cliff over which millions of the very people about whom Obama claims to care have been pushed by his policies.

Obama has managed to strangle the recovery by injecting fear into the economy, by tamping down the new businesses that might sprout up to help create new economic growth, by actually talking down and, indeed, attacking those who would bring us faster growth. Fear comes from huge increases in federal spending with the accompanying deficit spending. People may not spend their days reviewing the federal budget, but they understand that spending five trillion dollars that one does not have is not a good thing. It will have to be paid back. That means higher and higher taxes as well as increasing interest rates at some point. In other words, it means a future of lowered expectations and a decline in the willingness of folks to take a chance on prosperity. Businesses which struggle year after year with increasing health care costs understand that a federal take over of the health care field (like Obamacare) will not reduce costs. Nothing that the federal government does ever reduces costs compared to private industry. Businesses also understand that new financial regulations like Dodd-Frank which prevent small banks from competing with big ones and which prevent small businesses from getting loans from any banks will mean that the likelihood of success for a new venture has been reduced. In other words, many businesses just do not get started due to fear, and the jobs that they would have created are lost.

And for the businesses that actually do get started, what did Obama do? Well, if you were a company that wanted to produce energy from domestic sources in the USA, you were hit with all sorts of attacks from the EPA. Obama told us in 2008 that he would make it so that anyone starting a coal fired power plant would necessarily go bankrupt. He has been working hard to carry out that plan. Obama has also let the EPA attack natural gas producers non-stop on the basis of the dangers of fracking. Fracking, of course, is the method that has allowed the USA to find enormous deposits of natural gas, enough to fuel the entire country for a century. But Obama's troops in the bureaucracy have been too busy crucifying natural gas companies for no reason at all to see that their efforts are reducing economic growth.

Let's not forget the Obama attack on those who are successful in business. If you gain your wealth in movies and contribute to the Obama campaign, you get invited to the White House. On the other hand, if you make money by being successful in business, then you get attack for not doing your fair share. Starting a business, working seventy hours a week for decades and giving employment to tens, hundreds or even thousands of other Americans is evil in the Obama world view. Imagine, some folks who pay every penny of tax which they owe are evil capitalists who avoid contributing to society; and why -- because they only pay what the law requires. You see, when Obama himself pays tax at a lower rate than his secretary (which is the case) it is a coincidence. When some CEO pays tax a rate less than his secretary, he is evil incarnate.

Here is a simple truth: when the president of the United States consistently attacks an activity, we get less of it. So when Obama spends day after day attacking business, the country gets less of it. Given a choice to locate a new facility in the USA or in another country that welcomes the business, the investor makes the obvious choice, and the recovery is thwarted.

The good news is that the pent up demand for goods is still there under the surface of the American economy. The bad news is that so long as Obama continues his policies, that demand will stay under the surface.

Under Obama can the USA have an actual Foreign Policy?

Last September, the Palestinian Authority went ahead with its plan to seek admission to the United Nations despite the objections of the USA and some other nations. Since it has been a long agreed and fundamental part of the so-called Roadmap to Peace that the final configuration and creation of the Palestinian state was to be negotiated between Israel and the Palestinian Authority, the USA saw this attempt to join the UN as directly contrary to and undermining of the peace process. President Obama issued his usual statements, but Congress actually acted; it passed a law that barred any American funds from being given to the Palestinian Authority if it went ahead with the attempt to join the UN. When the PA went ahead with its effort nevertheless, American funding of the PA was cut off.

Since that cutoff, the PA has come to a tentative agreement to join with Hamas for a national Palestinian government. Hamas, of course, is the terrorist group that controls the Gaza strip. When the Israelis were convinced to give Gaza to the Palestinians, instead of any sort of gratitude or even understanding, Israel got a base for terrorists to shoot rockets into Israel. Hamas still calls for the total destruction of Israel and the PA is supposedly going to merge with this group. In other words, the PA is moving in exactly the wrong direction if peace is the goal.

So now Obama is getting back into the act. Obama has notified Congress that he is granting the PA a waiver from the law that cut of American funding of PA activities. That's right, Obama is freeing up just under $200 million dollars for release to the PA. America asks the PA to follow the agreed course towards peace, and the PA ignores us. America labels Hamas a terrorist organization and the PA plans to merge with Hamas. So, Obama decideds to reward the PA. It makes no sense, none at all. Indeed, it would be like having Obama decide to give rewards to those committing crimes. Violate the rules and get a reward.

The truth is that in Obama's America, those who are punished are only the successful. If one makes a lot of money, he must be punished for what must be evil behavior. If one creates many jobs, he must be stopped. If one helps the economy grow, then perhaps he should be in prison. On the other hand, those who thumb their noses at the rules and, indeed, at the law must be rewarded.

I guess it is time for the usual ending: OBAMA HAS GOT TO GO!!!!

Just one more note on Syria

I had to write just one more time to congratulate president Obama on his policy regarding Syria. Today in Damascus, a suicide bomber detonated explosives just outside the Zeen al-Abadeen mosque at the conclusion of the Friday prayer service. Seven died and at least 20 were wounded. No one is sure if this was the Assad regime trying to prevent those leaving the mosque from going to demonstrations against the regime or if it was the work of anti-government forces striking against those in the security aparatus. Either Assad is now killing his foes openly in the capital or the opposition is turning to violence in a big way. No matter which is the truth, it is a bad result. But it is the result of a dishonest and incompetent American policy which has dissuaded the world from helping get rid of Assad and prolonged the killings of thousands in Syria.

Who knows? Maybe Obama can slow jam the names of all 11000 dead in the fighting so far.

The Road We Really Traveled

Over at Halt The Assault, they have posted an extremely funny parody video in response to the Tom Hanks' narrated campaign video from the Obama team. It is about 9 minutes long and fun to watch. Here is the link.

First Quarter GDP -- Another indicator of trouble ahead?

The estimate from the government of growth in the Gross Domestic Product during the first quarter of 2012 was released this morning. It showed growth at an annual rate of 2.2% during the quarter. Most of the articles about this number tell us that the rate missed the expectations of the "experts" who had predicted growth of 2.6%. This, however, misses the main point in my opinion. We already know that there was unseasonably warm weather across much of the USA during the first quarter and that this had a big positive effect on many businesses. For example, Panera Bread reported earlier this week that its business during the first quarter rose by an extra 2% due to the warmer weather. Indeed, consumer spending across the country was raised as a result of better weather. The rate of growth of consumer spending in the first quarter was 2.9% according to this morning's report. This is an increase from the 2.1% rate in the fourth quarter of 2011. And this consumer spending was the main driver of GDP growth, again according to the report. If unusual weather caused the growth of consumer spending and then consumer spending growth caused a 2.2% growth in GDP, what will happen once the normal spring weather arrives? Will we see a slowdown of GDP growth? Are the recent upticks in weekly unemployment claims and the weak March job creation numbers simply a manifestation that the inflated growth rate due to warmer winter weather is ending? It is a difficult question to answer; we may need to just wait and see.

Let's be clear, however: a growth rate of 2.2% is unacceptable. It means few new jobs. It means high unemployment stays high. It means no growth in personal income. It means no growth in tax revenues that could pay for the enormous expenditures of the federal government under Obama. In other words, this anemic growth rate mean MORE OF THE SAME.

Something has to be done to grow the economy at a faster rate. We have all watched as Obama tried stimulus spending, green energy programs, and all manner of wasteful activities to get the economy moving. None of it worked; we get essentially no growth coupled with a huge debt. Admittedly, the Obama efforts were almost comical in their incompetence. Nevertheless, this is too serious an effort to be left to the amateurs in Obamaland.

Obama's Big Dilemma on Climate Change

Since the failure of the Cap and Trade bill to pass a Congress which had lopsided Democrat majorities, president Obama has had little, if anything, to say about the issue of Climate Change. (For those of you who may not recall, Climate Change is the new name for Global Warming.) Now, in a recent interview in that journal of national issues, Rolling Stone, Obama has returned to this theme of his 2008 campaign. Here is what he had to say:

“I suspect that over the next six months, this is going to be a debate that will become part of the campaign, and I will be very clear in voicing my belief that we’re going to have to take further steps to deal with climate change in a serious way. That there’s a way to do it that is entirely compatible with strong economic growth and job creation.”

So we are back at the point where Obama is going to "save the planet" just like he promised in 2008. Remember when he told us that his election would be the moment when the oceans stopped rising? But remember, if Obama is going to make climate change a big issue in the campaign he will need first to answer these questions:

1) What did Obama do during his first three and a half years to combat climate change? (This is not a trick question. The answer is that Obama gave billions of dollars of taxpayers' money to his big contributors to fund startup ventures in green energy businesses that failed for the most part. Indeed, the few that seemed to work created all their jobs in countries other than the USA.)

2) What exactly is Obama's plan to combat climate change in a way that will create jobs and economic growth? (Again, not a trick question, but surely one that will be difficult for Obama to answer.)

3) Finally, if this is such an important issue and Obama has a clear solution, why has he said nothing about it for approximately two years? (This is a trick question, since there is no possible coherent response.)

In short, climate change is one of those issues that is like most items at a garage sale, it looks good from a distance, but when you actually examine it you can see it is nothing but junk.

Krauthammer on Syria

Writing at National Review Online, Charles Krauthammer takes president Obama to task for his failure to act or even to be honest regarding the ongoing slaughter in Syria. The column is too good to miss. Here is the opening:

Last year, President Obama ordered U.S. intervention in Libya under the grand new doctrine of “Responsibility to Protect.” Moammar Gaddafi was threatening a massacre in Benghazi. To stand by and do nothing “would have been a betrayal of who we are,” explained the president.

In the year since, the government of Syria has more than threatened massacres. It has carried them out. Nothing hypothetical about the disappearances, executions, indiscriminate shelling of populated neighborhoods. More than 9,000 are dead.

Obama has said that we cannot stand idly by. And what has he done? Stand idly by.


The entire column is a must read. Here is the link.

"Failing" in Syria

How would you describe a cease fire plan worked out by the UN in Syria on a day when in just one attack alone by the Assad regime in that country over 70 civilians were killed and many more wounded? In testimony before a congressional committee, a State Department official said the UN plan was probably failing. Using the best diplomatic language I can so that the State Department will understand the meaning, my response is "D'oh!" (H/t to HOmer Simpson)

How in the world can our government describe wholesale slaughter of civilians as probably failing? We are way past failure here. How about an "unmitigated disaster"? Maybe we could call it a "war crime" or is that too judgmental? Let's leave war out of it and call it a "foreign contingency action crime."

The killing just goes on and on. And the world sits by and watches. How many have to die before someone takes action? It is a disgrace. The Assad regime which is the close ally of Iran is on a murderous killing spree. It has been for nearly a year. It is time to do something about it.

The Weekly Unemployment Claims -- The clouds get darker

This morning, the government reported 388,000 new claims for unemployment were filed last week. This is about the same as the previous two weeks and it is a bad sign. In February and March, it looked as if the economy had finally turned the corner and would be producing enough new jobs to keep up with the growth of the population. The weekly claims number got to the point where the average was just above 350,000 which, coincidently, is the figure at which most economists agree there is decent job growth. Now, we have been just under 390,000 for three weeks in a row. This is not enough to say that the April unemployment figures will be poor or that the job creation in April will be paltry, but it is certainly a warning that such bad results may be coming. Indeed, if the next few weeks keep the unemployment claims at this level, it will be a sign that the economy is starting to sputter again.

Lighting Science -- Big news should help the stock

Lighting Science Group (LSCG.OB) announced news today about a new product: a street light that used LED lighting and which competes favorably on cost with the high pressure sodium lights that are normally used on roads today. According to the company, the high pressure sodium lights normally require replacement of the lamps between 4 and 6 times over the useful life of the fixture. The new LED lights offered by LSCG cost less to operate since they use much less power to provide the same light. Further, the LED lights do not require new lamps during their useful life, so they become less expensive than the high pressure sodium fixtures once the first new lamp is place in those lights.

This is big news for LSCG. The market for street lighting is enormous. According to the Clinton Foundation there were 37.9 million street lights installed in the USA in 2009 and about 220 million globally. Switching these to LED would save enormous amounts of energy every day (or night) and would also cut the long term costs to the governments everywhere. In the past, switching to LED lights has been a long term benefit for municipalities, but the up-front cost has dissuaded many from making the switch. With the cost of the lights coming down to the new level, however, we should see an accelerating switch over to LED in the next year or two.

Lighting Science is already selling these new lights to Puerto Rico which is installing the first 4000 of the lights in the coming months. My best estimate is that these lights will only be the first of many, many more. These street lights give Lighting Science a product that can explode onto the market in a big way.

In the last year, LSCG has been a very poor performing stock. It has lost over half of its value as the initial promise of the technology has wilted. Today's news, however, is significant enough in my opinion that the stock merits another look. It is very far from a sure thing, but it does have the potential for a big payoff.

DISCLOSURE: I am long LSCG.

This May Explain a Lot -- Obama is learning economics from someone who is delusional

In the latest Rolling Stone, president Obama gives another of his re-election interviews. There is not that much noteworthy about the piece, but this question and partial answer caught my eye:

Do you read Paul Krugman?
I read all of the New York Times columnists. Krugman's obviously one of the smartest economic reporters out there.

For those of you who do not know, Krugman is a professor of economics and a columnist for the New York Times. He won the Nobel prize for economics due to his work regarding international trade. Despite the prize, Krugman puts forth positions in his columns which could never be called economic analysis. In truth, Krugman is willing to distort accepted economic theory in order to promote a liberal political agenda. If you have any doubt about this, I suggest that you read some of my prior posts about Krugman here or here.

The United States is in trouble if Obama is listening to Krugman. Wait, the USA is in trouble! Obama has got to go.

The Argument on the Arizona Immigration Statute

This morning the Supreme Court heard argument about the challenge to the constitutionality of the Arizona statute regarding illegal immigration. One thing is certain: the justices were not very impressed with the government's argument that even inquiring about immigration status is improper. From the questions asked, it sounds like that section of the law will be upheld. The fate of the rest of the statute seems more iffy. There did not seem to be any strong support for the challenge to the statute, but five of the justices seemed to be in the middle. Depending on how they break, the law will either stand or fall.

What was important about today's argument, however, is not the ultimate outcome regarding the Arizona statute. No, what was critical was to hear the justices of the Supreme Court go about their jobs considering the statute on the merits of its constitutionality. No consideration seemed to be given to the political effects of the decision. None of the many distortions about the statute were argued by the government. All that was before the court was the actual facts or as close as either side could come to stating them. It will be a decision on the merits of the arguments, not on whether or not it helps or hurts the Obama re-election campaign. Thank God America still has institutions that are not yet politicized.

Time for a Real Plan

This week, the government reported on the status of the three main entitlement programs: Medicare, Social Security and Medicaid. The news was not good; the dates by which the programs are projected to run out of money have moved forward by a year or two. If nothing is done, all three programs will be out of funds within about a decade. This is a major catastrophe in the making. Essentially all Americans over the age of 65 rely for both subsistence and health care on these programs. The poor across the country get their health care from Medicaid. Millions of disabled and widows/children also rely on these programs. In short, all the people that president Obama claims to care about are now in serious danger.

One would think that Obama would recognize this problem and would be working diligently on a solution. Of course, that is wrong; Obama is ignoring the issue. Like the grasshopper in the old children's story, Obama is busy playing aroung with his re-election while making fun of the ants (here the GOP) for working towards a solution. Millions of folks are hearing Obama tell us everything is fine. Indeed, the only thing needed to correct our problems is for us to raise taxes on the wealthy. But that does not work. Even were the Buffett Rule to be adopted and the Bush tax cuts for those earning over $250,000 to expire, nothing would be done to help the entitlement programs. In fact, Obama's soak the rich solutions do not even pay for the rest of the federal government; the situation would get worse, not better.

Obama is supposed to be president of all Americans. He acts as if he is president of none. He is just not bothering to do his job, and yet, he is asking America to extend his contract. Would you extend the contract of a doctor who refused to treat his patients? Would you extend the contract of a sanitation worker who refused to recognize refuse left for collection? How about a miner who would not work in the mines; would you keep him on?

Where is Obama's plan for the future of entitlements? He cannot change the subject. I do not care if Mitt Romney once put a dog on the roof of his car or if Obama once ate a dog in Indonesia. I want to know how Obama plans to fix entitlements. I do not care if Sandra Fluke pays for her own birth control pills or not; she will earn an enormous salary at some lawfirm once she graduates and is not one the edge of existence like those on entitlements. I want to know how Obama plans to fix these entitlements.

It has been three and a half years of silence from the great orator of the 2008 campaign when it comes to entitlements. SILENCE!!! Where is the plan? I have to assume there will never be one. Aparently, Obama studied history only far enough to hear the great dictum of Louis XIV of France: "Apres moi, le deluge."

If there's more nights like last night, Romney wins big

Here is the link to the speech that Mitt Romney gave last night after winning the primaries in Pennsylvania, New York, Connecticut, Delaware and Rhode Island. It was a wonderful speech. In a few short minutes, Romney laid out a clear and positive vision for America, a vision that none of the negative campaigning by Obama can tarnish. There will be ups and downs for the campaign in the next six months; that is a certainty. Another certainty, however, is this: if Mitt Romney can stay on this message, he will be unstopable.

Syria -- I guess I spoke too soon

Yesterday, I wrote that president Obama had done a good thing in imposing new sanctions on the Syrian regime. At the time, I was relying on news reports rather than on the text of what Obama had actually said. The setting yesterday was the Holocaust Museam in DC. Obama was introduced by Elie Wiesel for a ceremony commemorating the Holocaust. Then Obama spoke. You can read the speech here. In true Obama style, the speech is mostly about Obama. But Obama finally tells the assembled folks that

Last year, in the first-ever presidential directive on this challenge, I made it clear that "preventing mass atrocities and genocide is a core national security interest and a core moral responsibility of the United States of America."


Obama also says

Now we’re doing something more. We’re making sure that the United States government has the structures, the mechanisms to better prevent and respond to mass atrocities. So I created the first-ever White House position dedicated to this task. It’s why I created a new Atrocities Prevention Board, to bring together senior officials from across our government to focus on this critical mission. This is not an afterthought. This is not a sideline in our foreign policy. The board will convene for the first time today, at the White House.

This is truly amazing. Last year Obama announced that stoping atrocities was a core interest of the USA. Since then, 11,000 or more civilians in Syria have been slaughtered by the forces of ruthless dictator Bashir al-Assad. In all that time, Obama did next to nothing, even though stoping atrocities is supposed to be a core interest of the USA. Now, the Atrocities Prevention Board will have its first meeting?

Did the Joint Chiefs of Staff wait for six months to meet after Pearl Harbor? Did the UN do nothing for eight months after the North Koreans invaded South Korea in 1950? Did George H. W. Bush wait around for a year to see how that Iraqi invasion of Kuwair would unfold in 1990 before considering what to do? Did America ignore 9-11 for even weeks? Of course not, all of these events dealt with core interests of the USA. As a result, there was a response from America. But atrocities and genocide in Syria, which violated that core interest of the USA, are only now going to be considered by some new bureaucratic Board in Washington. Is Obama kidding?

Some day Obama will learn that it is not enough just to say something; one has to actually act. That is true both for presidents and countries alike. If stopping atrocities and genocide is actually a core interest of the USA, then Obama has to treat it as such. The usual blather just won't cut it.

Today in Syria

Today, president Obama issued an executive order increasing the sanctions on Syria and those who help the Assad regime continue the killing of civilians (now up to 11,000 dead). I rarely say this, but Obama did something right. Finally! The need to pressure the Assad regime is paramount, and using UN negotiations has proven futile. The Syrian regime must be led to understand that their behavior will lead to their destruction.

Always Seeing Just One Side

Reuters has a story on the wires headlined New Curbs on Voter Registration Could Hure Obama.

According to the story, various Republican Legislatures in various states have enacted onerous restrictions on registering to vote, and this will reduce participation by minorities and youth in the upcoming elections. Of course, buried in the story comes this section:

Another factor expected to drive down voter registration totals this year: the absence of the Association of Community Organizations for Reform Now, or ACORN, which registered more than 1 million mostly low-income voters in 2008.

Thousands of those registrations were for people who did not exist, submitted by ACORN-hired workers who were paid based on how many names they registered to vote.

The scandal helped lead to the demise of ACORN and inspire some of the anti-fraud laws affecting registration drives this year.



Imagine! The state legislature are concerned because thousands of phony people were registered to vote by ACORN. While Reuters says "thousands", other tallies bring that total to close to 100,000 phony registrations. but if the legislature tries to stop fraudulent registrations, it is discriminatory. What utter BS. Anyone who wants to register to vote in the USA can do so just by walking into the local government office during the appointed hours and bringing ID. Oh, the horror! How can we ask citizens to do that! The truth is that Reuters only sees voter fraud as an issue regarding what it may do to Obama's re-election chances. There is another side to the story. After all it is call voter FRAUD for a reason.

Panera Bread -- Update

Last week, I pointed out that there had been extensive changes in the highest management of Panera Bread (PNRA) and that it was a good time to take profits on the stock and certainly not to buy. Since then, the stock is down about $9.50 to $147.40 as I write this. For anyone who shorted the stock or bought puts after reading my post, I am now writing to suggest that it is time to close that position. Panera will announce its earnings tomorrow. I strongly suggest that you do not go into that announcement short the stock.

Over the years, Panera has had the uncanny ability to surprise on the upside in a major way just when folks were starting to expect bad news. Tomorrow's reports may be another of these instances. Remember, aside from the executive departures which were troubling, there is nothing out there which indicates a bad report. If you are short, close the position and take the profit.

DISCLOSURE: I have no interest in Panera and no intent to start one in the next 72 hours.

Why Won't They do Their Job?

Fifty years ago, the media consisted of three TV news organizations, two wire services, many large newspapers and a few magazines that dealt with the news. Today, there are at least eight TV news organizations, enormous numbers of internet news sites, one wire service and still countless newspapers. There is also radio news sources like talk radio which are hybrids between news and entertainment. In other words, in the last 50 years there has been an explosion of news sources for the public. Logically, one would think that with all these news providers added to the mix, the public would have a much better idea of what issues face the country and how the parties and their candidates propose to deal with those issues.

So here are three questions to answer quickly:

1) What is president Obama's energy policy? Do not tell me the goals (like energy independence); tell me the specific steps he wants to take to achieve those goals.

2) What is Obama's plan to get the economy moving again? Again, do not tell me the goals; it is the specific steps that you need to tell me.

3) How does Obama plan to deal with the impending bankruptcy of the three largest entitlement programs: social security, medicare and medicaid? Focus on the specific steps Obama recommends.

Here are the answers: On energy, Obama has not put forward specific steps that would constitute an energy policy. Regarding the economy, Obama has been a bit more specific, but he still only talks about goals rather than how to achieve them. He has pushed for raising taxes, but no responsible economist believes that raising taxes promotes economic growth. Indeed, if all the tax increases currently scheduled for January of 2013 go into effect, the consensus view is that the economy will lapse back into recession. Obama has no plan to deal with the entitlements. So far, he has cut $500 billion from medicare to put that money into Obamacare. Obama has also cut many hundreds of billions in funding for social security with the payroll tax holidays. In other words, Obama has made the condition of the entitlements worse, not better.

How can the American people decide who should be president if they do not get an informed choice? Shouldn't the media be out there every day pushing the Obama campaign to announce the specifics of what it plans in these critical areas? Shouln't someone be making an issue of the resounding silence from Obama on these points? I know that Obama does not want to talk about his record; it is not a good one so he is avoiding it. That is bad enough, but not talking in a meaningful way about the future is even worse. The election is a choice for the future, not the past. American voters need to understand what it is that Obama sees for his second term. The media are the folks who are supposed to be pushing for those details.

Why won't the media just do their jobs?

When is a Billion not a Billion?

Today's riddle asks when is a billion dollars not a billion dollars? The answer is simple: a billion dollars is not a billion dollars when it is the fund raising goal of the Obama re-election campaign.

Anyone who paid attention to the campaign for most of 2011 heard repeatedly how president Obama was planning to raise one billion dollars for his re-election campaign. In the years up to 2008, presidential campaigns were run on public funds. Each side received about 85 million dollars for the general election. During the primaries, candidates also got matching funds comensurate with their donations from private individuals. The really big money was pushed out of the presidential race. Then in 2008, Obama pulled out of public funding at the last moment. McCain stayed with the public funding while Obama raise much, much more and outspent McCain in a big way. For 2012, Obama made clear he was going even bigger; hence, the goal of 1 billion dollars.

Well now there has been more than a year of fund raising completed. Obama has already attended more fund raisers than George W. Bush had in his entire re-election campaign in 2004 and it is only April. Of course, the problem for Obama has been that many fewer folks are giving and those who are giving are making smaller donations. That's right, Obama is having money troubles. Obama has already told both campaign committees for Democrats in both the House and the Senate that they will get no money from the DNC this year; everything will go to his re-election campaign. That move was unprecedented; imagine the national party not giving to any of the candidates of the party for the House or the Senate. Now, the campaign has "announced" its fund raising goals: Obama will raise $750 million and that will include all funds raised by the DNC. Translated into English, that means that Obama is actually now shooting for half of what was the goal at the start of the campaign. The campaign is also throwing in the DNC funds in order to make the miss on fund raising look smaller.

Money is not the most important thing in political campaigns. If you do not believe that, just look at the Rick Santorum campaign which won 12 states on a shoestring budget. Nevertheless, the level of fund raising is an important indicator of the prospective electoral strength for Obama. In short, Obama is in trouble. Many who were for him last time are not this time. More important, many of Obama's 2008 supporters are no longer enthusiastic enough to contribute. Most likely that also means that many of Obama's 2008 supporters will not be enthusiastic enough to vote. Like I said: Obama is in trouble.

Obama's Campaign Slogan

On the web and the radio both, there have been a great many suggestions for a new slogan for the Obama presidential campaign of 2012. In 2008, you will recall, that "Hope and change", "Change you can believe in" and "yes we can" were three of Obama's biggies. Here are my suggestions for 2012:

1) Instead of Hope and Change, how about "Hope you can spare some change".

2) Instead of Yes we Can, how about "Maybe, you never know!"

3) Maybe Obama could use "Same old, same old".

4) What about "Making Bush look good in retrospect!"

5) Another favorite: "It's still Bush's fault!"

6) Here's one for Obama's new energy policy: "All of the Above (except for most of them)!"

7) Then there are the slogans focused on foreign policy like "Look the other way".

8) Another slogan "He got bin Laden -- Isn't that enough?"

9) Here's the last suggestion -- "Obama -- Let's borrow more from China!"

Communal Conservatism?

Man is a social being. Very few people have lived their lives without substantial contact with other people. Those who tried that course were called "hermits" or later "loners", names that set these folks apart as different from everyone else, the exceptions rather than the rule. We need each other; it is part of our DNA. That is why there were tribes and villages and then nations. People arrange their affairs in conjunction with others. Strangely, however, we have now reached the point where a substantial part of the nation uses the language of involvement to promote the life of impersonal isolation. Think about it! For the last century, we have heard folks being exhorted to get involved. We are all told repeatedly to come together to help the less fortunate. But the main method adopted during that time to help these folks is to have the government do it. The government will feed the poor. The government will provide housing for those in need. The government will educate the children. The government will provide jobs. The government will give health care to those without the means to obtain it themselves. The government will provide birth control. The government will provide phone service. The list goes on and on. The concept, however, is the same: America will help the needy by government action.

So the big question is this: after nearly a century of government action, has it worked? Have the needs of the poor been met? Do the poor have a way to leave that category and join the rest of society? Sadly, the answer seems to be NO! Forty-five million folks get food stamps, but we are still told that one-fifth of all children go to bed hungry. Millions of units of public housing have been built across the country, but many of those units are the worst, most dangerous places that one can live. Even worse, there are still enormous numbers of homeless folks. Hundreds of billions of dollars have been poured into the public schools, but the reading and math scores of the students continue to decline. Hundreds of billions have been spent on Head Start for the last fifty years, but studies show that the program provides no meaningful benefit to the children in the program. More than a trillion dollars was spent by the government in just the last three years to promote job growth in the USA, but there are still fewer people working today than there were at the start of 2009; the unemployment rate is "down" to just over 8%, but if one still counts those who have just given up looking for work, the rate exceeds 11%. These are staggeringly high numbers. Healthcare costs which were supposed to come down as a result of Obamacare continue to soar. More and more folks are losing heath insurance; the number of uninsured is now higher than it was when Obamacare was passed.

Why is this the result? How can this be? A great many trillions of dollars has been spent, but things are just getting worse. The answer may well lie in the lack of involvement by folks with this problem. Let me first quickly say that this point is obviously an oversimplification. There are millions who get involved every day. Charities and assistance projects abound and do great things. On the whole, however, too many folks think that they are "doing something" by voting for a government that throws money at problems while achieving next to nothing. This lets these same folks ignore the problem at every other level.

Look at it this way: problem schools are more likely to be turned around if the parents of the students are involved with the school. This has been found repeatedly across the nation. Voting more money which goes to pay for teacher's health care or pensions does essentially nothing to improve education. On the other hand, parents volunteering to stay in classes to help maintain discipline is a simple step which has worked wonders in improving results. Schools that use the resources of parents to enrich the teaching experience have had even more success in achievements. Actual community works; government money in lieu of community does not.

If an average citizen knows that something has to be done to feed the poor, many will take part in the effort. Caring people will involve themselves in food banks. The whole effort is humanized. Even the recipients will benefit from seeing that it is their neighbors who are helping them rather than some faceless government which dishes out cash in a somewhat haphazard manner.

For centuries, religious institutions took on the role of protecting those in their community that needed help. Much of that structure is still there, but the enthusiasm is long gone. Just think how many folks there are like vice-president Biden and his wife, people who have large incomes but who do not even think of giving anything to charity. After all, why help -- the government will do it.

Things, however, do not have to be this way. Thirty years ago, Jack Kemp was pushing a revision to the way that public housing was managed in the country. Kemp wanted to let residents of this housing acquire the units through what was, in essence, sweat equity. A person could fix up a decrepit housing unit with some assistance from the government but with full involvement from the resident. If that person moved into the unit and kept it in good shape for a fixed period of time (like 5 or 10 years), title to the property passed to the "urban homesteader". This concept involved people helping themselves; it also involved neighborhood groups working together to keep the area in good repair. In other words, Kemp's plan had a real social group that worked together for a common purpose. Of course, there never was an adequate test of the concept. It was easier to let the government do it.

Right now, we have a guiding principle that has been demonstrated to be a failure. The position of president Obama and his party is the usual: he wants to double down on failure. Obama wants more spending on these same failed efforts. Obama wants to use borrowed funds in order to throw good money after bad. It is a prescription for disaster.

We need a major paradigm shift regarding social efforts in the USA. This shift has to start with the education of the public to the failure of the government welfare state. It has to start soon; we do not have much time left until the country is crushed by the failure.

Syria -- UN voting on ceasefire monitors

You are probably aware that the United Nations brokered a cease fire in Syria that has now been in "effect" for the last week. As a result, only 42 people were killed yesterday in the country, the vast majority in the shelling by the Assad regime of the city of Homs. Little is said about the need for a "cease fire" when the opponents are unarmed civilians on the one side and the Syrian army on the other. Only one side has been shooting. Of course, the lack of any help to the civilians is changing this. The army got hit yesterday with a road side bomb, just like the ones used against coalition forces in Iraq. 15 police and soldiers were killed in the blast. My guess is that it will just be the first of many such explosions. The killing will just ramp up further, and in the middle of it all will be the innocent civilians whose role it will be to die for no reason.

Meanwhile back in the fantasy world of the UN, a vote is going to take place to approve sending 300 observers to Syria. Wow! What a step! The press can worry about whether or not the Chinese and Russians will agree to these observers. If they get approved, Obama and the Obamacrats can tell us about the great victory they have won. Then those 300 observers can go to Syria and watch the people getting slaughtered. What a victory.

The time has come for either the UN or some other group of nations to tell the Assad regime that the killing has to end. Either Assad stops killing the people or there will be serious consequences. That means arming the forces opposing Assad. That means bombing the armor and artillery that is shelling the civilian areas. That means imposing a naval blockade against Syria so that no weapons or other supplies useful for the armed forces gets delivered. That means imposing a no fly zone on Syria so that Iran cannot send supplies to Assad by air. In short, it means doing everything against the Assad regime except sending troops into the country.

This is the first time that I have actually called for such involvement but we just cannot continue to do nothing in the face of continuing murder. All of the worthless diplomatic initiatives have been tried. They have not worked. Something more is needed.

Less is More --- or -- All the News that Fits the Narrative

I am behind the times, or perhaps, behind the Times. It was only this morning that I noticed that the price of the daily New York Times has risen to $2.50. I happened to pick up a very thin Saturday edition of the Times and noticed that the price was now two and a half dollars. Twenty years ago, that same paper cost fifty cents. So the price is up 400% in 20 years. by comparison, the Consumer Price Index during the same time is up 64%, so the Times is raising prices six times faster than inflation.

The price rise led me to actually buy the Times to see how it compared with the past editions. The most noticeable difference was that the paper was thinner, almost a pale imitation of what it used to be. Minimalism has triumphed at the Times. Less is more!!

I was also amazed in reading the entire paper just how much the news stories are now obviously slanted towards the "progressive" view of the world. It has been a while since I read the entire paper rather than just seeing an article on line or skimming rapidly through looking for stories that interested me. Today, I forced myself to read the whole thing. It was, I am sad to say, an inordinate waste of time. The off beat stories on interesting subjects that used to populate the pages of the Times are no longer there. Sure, it is Saturday and maybe there is more content on the rest of the week. There certainly could not be less. But this paper was clearly a political screed. No longer all the news that's fit to print. Now it is just all the news that fits the narrative.

New York Times, R.I.P.

The latest with George Zimmerman -- Simply Unbelievable

In the last 24 hours, there have been some new developments in the Trayvon Martin death and the case against George Zimmerman, the man who killed Martin. Simply put, the developments are amazing.

First, the photo of the back of Zimmerman's head taken three minutes after gunshots were heard on the 911 call has now become public. The photo shows big cuts on the back of Zimmerman's head with blood flowing across and down his scalp. The cuts look like serious injuries.

Without a doubt, the photo is corroboration of Zimmerman's story that Martin knocked him down and knocked his head against the concrete pavement. We know from the internal data of the I-phone on which the pictures were taken that the photo was immediately after the shooting. Since Zimmerman has consistently claimed that he was acting in self defense after he was knocked down and injured by Martin, the picture is an enormously important piece of evidence.

Why this picture has remained hidden from view until now is something I certainly cannot understand. Had none of the evidence come out before now, I could see that the state was not releasing anything. But we have seen all sorts of evidence in the past.

The reaction of the media to the picture is priceless. My favorite is the way that ABC played it. You may recall that ABC is the organization that splashed a big story across the news that video from the police station showed that Zimmerman was uninjured when he was brought in about a half hour after the shooting. ABC trumpeted that Zimmerman's story about being attacked by Martin was now shot down by the evidence. Of course, other sources then had the video tape enhanced to show detail, and the clearer tape showed two or three wounds on Zimmerman's head. ABC did not miss a beat; it mentioned that it had gotten the tape enhanced (but failed to mention that it had done so after others had first disproved the original ABC story.) With this latest photo, however, ABC said that the picture "might tend to possibly support" Zimmerman's story. In the same story, however, ABC then blamed Zimmerman for Martin's death as a result of Zimmermen "profiling" Martin. Where was the "might" or the "tend to" or the "possibly" when ABC claims racial profiling? The truth is that ABC is still trying to convict Zimmerman in the media even though the evidence is getting weaker and weaker as it becomes public.

The second development today is obviously that Zimmerman was granted bail. This is not unusual particularly for a man with no criminal record, who turned himself in when asked and who has strong ties to the community. To hear the crazies on the internet discuss it, however, the granting of bail was just racist behavior by the judge.

I have not seen all the evidence. No one in the media has seen all the evidence. One thing that I do know, however, is law. It is hard to imagine that a jury will be able to find guilt beyond a reasonable doubt with the new picture there in front of them. Zimmerman says Martin jumped him and beat his head against the ground. The picture confirms part of that story. Absent a witness who testifies to the contrary, there is no way that a reasonable jury could find with the required certainty that Zimmerman's story is false. Since the law in Florida would allow the use of deadly force in self defense, Zimmerman seems likely to walk.

It is sad to think that after all the manufactured outrage, we may find that the system just acquits Zimmerman after putting him through hell.

The Earnings from Armanino Foods of Distinction (AMNF)

Last week I recommended Armanino Foods as a buy in advance of the earnings report due this week either yesterday or today. Well the first quarter report was just released by the company, and it was even better than I expected. Sales were up to $6.7 million, and increase of 14% over last year. Earnings per share hit 2.0 cents, up 23% from the same quarter last year. These numbers would be great results for the second or third quarter, but they are a home run for the first quarter which is usually the slowest of the year. Indeed, the revenues were the second highest quarter in company history.

The CEO comments point out that Armanino is gaining market share in its various regional markets (although no figures are provided for this.) Even the rise in commodity prices is mentioned, but it is not serious enough to cause the company to raise prices.

The stock has already started to move in the twenty minutes since the report was issued. It is up 4.4% at 82.5 cents.

Armanino has historically moved its revenues and earnings in long arcs. In other words, once the company starts to move up it continues on that trajectory for quite a while. This makes it more likely that the big move up with revenues and earnings will continue for the rest of the year. If so, the stock price could easily respond with a further gain of 20 to 30%.

DISCLOSURE: I am long Armanino and have a substantial position in my accounts.

One I Missed Yesterday

I had meant yesterday to write about the bill which passed the House which would require that approval be given for the construction of the Keystone Pipeline. The vote came after president Obama threatened to veto it if passed. Here's the point, the vote came out 293 to 127 in favor. The 293 votes in favor included 69 Democrats who supported the legislation despite the Obama veto threat. In other words, Obama lost over a third of all House Democrats on this issue.

The bill still has to go to the Senate, and last time Keystone was up for a vote in that Democrat controlled chamber it failed to get enough votes to stop the Democrats' fillibuster. Even so, eleven Democrat senators voted for it. That means that an additional three ought to be enough to get the bill through.

This is very encouraging. What it means is that folks are focusing on what the Obama opposition to Keystone really means. Unions are out trying to get their allies to vote for the pipeline. Voters paying extremely high prices at the gas pump are letting their congressmen know just how angry they are about those prices. My guess is that before long, Obama is going to "discover" that the new route for Keystone is now acceptable and he will grant approval for the project. Obama will not want to be forced to back down by a vote in the Senate.

The good point, however, is that Keystone is coming soon.

Too Big to Fail

In 2008, the entire banking system of the USA came close to failing. Panic in the financial markets froze all sorts of troubled assets and this, in turn, froze many other kinds of assets. Banks lost liquidity and we got close to the edge of the cliff. We could not let the enormous money center banks like Citibank or Bank of America fail. To do so would have meant the collapse of the American and then the world economy. The result was the TARP program, an emergency bailout of the megabanks and the concurrent action by the Fed to pump liquidity back into the system.

In 2010, the Democrats and president Obama pushed through the Dodd/Frank law which was supposedly designed to reduce the chances that the USA would ever see another crisis like that in 2008. Dodd/Frank did a lot of things. It added a huge layer of regulations that banks now must comply with at great cost. It also added all sorts of social engineering requirements for the banking industry; for example, banks doing business with the government now must meet diversity requirements and have internal offices to monitor how well the banks are doing in achieving that diversity. What Dodd/Frank did not do, however, is make any attempt to end to problem of "too big to fail." Indeed, because the law makes it much more expensive to do business, Dodd/Frank actually makes it more likely that larger banks will grow at the expense of smaller banks that cannot afford all the additional regulatory costs as well as the big banks can. In other words, for all the oratory and self congratulations by the Democrats, they made the problem worse, not better.

It would not be that difficult to reduce the problem of too big to fail. Here is a five point plan that ought to accomplish just that.

1. Reinstate the old requirement that prohibited commercial banks from also owning investment banks. Let's take the risk of investment banking farther from the commercial deposits of the American public.

2. Set a maximum size for a bank of 3% of any state market. Any bank that was larger than this would have to break itself into pieces. This would add competition and reduce the effect of the failure of any one bank. in other words, the individual banks would no long be too big to fail.

3. Repeal Dodd/Frank and all of its extraneous rules that just make it harder for small banks to compete in the market.

4. Require reserves to be held for all sorts of banking instruments. for example, were someone to issue a collateral default swap, a reasonable reserve would need to be held by the issuer.

5. Set up a banking regulatory body whose approval would be needed before any new banking product could be offered to the market. The approval would be limited to setting (a)reserve requirements for the new product and (b) disclosures required prior to the issuance of that product.

This is a bare bones structure, but one which ought to go far towards ending too big to fail while also promoting competition in the banking industry.

Where is the Line?

I just noticed an site that is running a poll as to whether or not it would be immoral for Congress to cut food stamps for the "poor". Interesting choice of words, isn't it? Food stamps, or as it is now known, the SNAP program, is for the "poor". Phrased that way, who would want to cut funding? We all want to help the poor, don't we? But that sidesteps the main question here: Who exactly is poor?

In 2011, there were over 45 million Americans receiving food stamps at a cost of close to $80 billion dollars. In 1975, when the nationwide food stamp program began, there were 14 million folks who were elligible. Since then, the population of the USA increased by by 44% while the numbers of folks on food stamps have increased by over 300%. So food stamps are growing six time faster than the increase in the population. Are all these folks poor?

Have you ever heard the ads on TV that tell you that one child in five in the USA is going to be hungry? How can that be? We already have one-sixth of the country on food stamps. Then we have all sorts of food banks and other programs that are feeding the hungry. But still we get told about the terrible problem of hunger.

The real truth is that we ought to be promoting a path for people to get off of food stamps, not one where ever increasing numbers depend on the government for their food. It sounds harsh to say that many of these folks will have to work harder if they lost government assistance, but it is not. Those who cannot fend for themselves need to have the safety net to protect them. Those who are just taking advantage of the program should be told to fend for themselves.

Is it Higher Gas Prices or Something Else?

The weekly report on new claims for unemployment came in this morning at 386,000 and the number for the week before was revised upwards from 380,000 to 388,000. This is not good news. It had seemed for a while that this number had gotten down to the range of 350,000 to 355,000. That lower figure is consistent with real job growth sufficient to lower the total number of unemployed. Now, with the number trending back towards the 400,000 that was consistently in place for about eight months at the end of last year, one has to wonder if job creation is slowing further from March's rather anemic growth figure.

These weekly figures are subject to large fluctuations, of that there can be no doubt. Accordingly, one or two weeks' worth of results are far from a trend. They can, however, be a warning of things to come. When these two weeks are added to the poor job growth of March, these reports can be viewed as a serious warning. The economy may be slowing.

Of course, these bad numbers arise now that the price of gasoline is back at sky high levels. Although there are many who have all sorts of explanations why high gasoline prices will not have a big effect on the economy, I do not buy those. We will have to wait to see what the next few weeks bring. I, for one, am worried.

Panera Bread -- Is there Trouble Brewing?

Many years ago, I invested in a company called Au Bon Pain which ran bakery cafes in urban locations. It was my first really large investment in a single stock. What attracted me to the company at the time was a new concept that it had just purchased, a small (20 unit) chain of restaurant/bakeries called St. Louis Bread. In short order, the company sold off its Au Bon Pain unit to concentrate on the new concept. One of the first things that it did was to change the name of both the restaurants and the company to Panera Bread. Since then, the company has grown rapidly and the stock has soared from $3 per share to about $160 today. I sold out the last of my stock in the $70's (with some buys and sells in the interim), but I have followed Panera closely ever since. Lately, there are some truly troubling signs coming from corporate headquarters.

Panera has been changing its management. First the CFO left. While the departure of the CFO is often a red flag that there is a problem, this one just seemed to be nothing more than the ordinary change that any organization would have. Next, however, the retired CEO, chairman Ron Shaich, came back to become, in essence, co-CEO with the guy who replaced him a few years ago. That one was really strange. Imagine, Shaich retired from being CEO and a few years later the board brings him back. Is this just being done for the two guys to "partner" as the press releases say? Or is there some other problem which has arisen but which has yet to show itself to the market? This was troubling when added to the departure of the CFO. Next the company hired an "interim" CFO. Why interim only? Is there something so special about being CFO of Panera that the company could not find a satisfactory candidate in months of looking and had to settle for someone on an interim basis? Or, is there some problem lurking in the accounts at Panera which led the preferred candidates to turn down the position? Now, the Chief Operating Officer of Panera has resigned to go to Friendly's to be CEO. It may be that being CEO of a small bankrupt chain seems better to the departing COO than running the day to day operations of a huge and rapidly growing chain. Nevertheless, this switch, coming on top of all the other officer changes, truly worries me that there may be something brewing at Panera.

Right now Panera is selling at 28 times the expected earnings for 2012. This is not the highest multiple of any restaurant chain. Chipotle is selling for about 50 times expected 2012 earnings. Panera, nevertheless, has a very high multiple based upon years of constant growth and near flawless execution by management. Were a problem to pop up now, that multiple could easily contract and the price of the stock could plummet.

I am not ready to recommend that you short Panera. Over the years, I have seen too many people lose big by doing just that. Nevertheless, I do recommend that you stay away from the company for the time being. If you already own the stock, it may be time to take some profits. I cannot tell you what is wrong at Panera, but the signs sure tell me that something is up.

Disclosure: I have no interest in Panera and no intention of starting one at this time.

Thanks, once again

April is only 60% complete, but traffic to Connecticut Comments has already eclipsed that of the entire month of March which had been the biggest so far this year. In fact, in just the first 18 days of April of 2012, traffic is already up by about 25% over the traffic to the blog in April of last year.

I want to thank all of you for your visits.

Obama's Geography Lesson -- 2

I already wrote about president Obama's inability to tell the difference between the Maldive Islands and the Malvinas Islands. The former is an island chain in the Indian Ocean south of Pakistan. The latter is the name used by Argentina for the Falkland Islands every time that an Argentine leader decides to stir up nationalistic sentiment in Buenos Aires by making claims on that British territory. Obama decided to call the islands the Maldives and to announce that the USA was neutral in the dispute between the UK and Argentina over which nation has sovereignty in the islands.

That Obama has problems with geography goes without saying. That Obama threw the UK under the bus by announcing neutrality in this dispute is also not capable of refutation. It was a disgrace. The people who live in the Falklands have voted to stay part of Britain. The USA should respect self-determination by the residents. More important, however, Obama managed once again to treat the Brits as if they were unimportant rather than as if they were a most important ally. Britain fought in Iraq with the USA. Britain is fighting in Afghanistan with the USA. The "special relationship" between the USA and Britain has endured for 70 years or more. But Obama is casually throwing the Brits under the bus.

Sadly, while American media is silent on this point, the media in the UK is not. In paper after paper in London, stories about the Obama action cover the pages. It is a disaster for Anglo-American relations. Obama gave the Russians a "reset" button. Is he now giving the Brits a button labelled "terminate"?

For those of you who think this is not a big deal, I suggegst that you consider this: What would happen were Obama to visit Israel and state when he came off Air Force One that he was happy to be in Palestine? How would it be received if Obama went to the Indian part of Kashmir and announced that he was in Pakistan? What if Obama said that the USA was neutral in the disputes between North and South Korea?

There are some things which even a minimally educated president has to know. This is one of those things.

Obama has got to go!!!