Sunday, September 18, 2011

Market Advice, II

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About a month ago I passed along some investment advice from a few of the folks who help me in that department. One of them, Lisa Detanna from Wedbush, was working on a white paper at the time and she sent it my way a couple days ago. I thought a few people might care to take a look at some of her suggestions and the reasoning behind them. She starts out by reminding is that in July and August the U.S. stock market dropped by almost 20%. That's huge-- and volatility was the worst since Bush's economic policies crashed the markets in September, 2008. People are scared. Is it a time to sell stocks? Buy stocks? Something else?

Lisa doesn't believe you can time the markets-- negating the old adage about buying low and selling high-- and, she adds, you can't even do it when the markets are behaving rationally. Like many in the investing business, she's certain that the crisis of confidence that's causing the Wall Street roller coaster ride isn't about fundamentals-- rather, it's about the always changing perception of the moment concerning macroeconomics and political paralysis. "And," she points out, "if you try timing now-- when the markets are driven by fear rather than fundamentals-- it’s more likely you’ll end up selling low, then having to repurchase high to get back into the market." OK, what do you do? Let's look at the bullish underpinings first:
*Interest rates are at historic lows, and the Fed’s decision to keep them low through 2013 is positive. It means the Fed is committed to not stifling any economic recovery.

*We [she means Wedbush] foresee little to no risk of inflation.

*Corporations are sitting on large amounts of cash. Earnings are strong-- over 70% of companies have reported numbers that were better than expected. We anticipate earnings will continue to exceed expectations because companies are leaner and have deleveraged significantly.

*Stocks are trading at historically low price-to-earnings ratios-- a result both of stronger profits and depressed stock prices.

Don't rush out and start buying everything in sight yet. There's a bearish case as well:
*U.S. economic growth is weak. Recent government statistics indicate the Great Recession was deeper than originally believed. Hence, recovery will be slower and more painful.

*The European debt crisis continues to create uncertainty and instability throughout the global economy.

*The housing market-- a major economic driver-- remains depressed. The collapse of the mortgage market is still working its way through the economy, and some economists fear the decline isn’t over yet.

*Unemployment remains stubbornly high, and it is expected to stay there for some time.

OK, OK, what about me? She gets around to that too. Starting with avoiding any impulses to time the market. Wall Street convention wisdom for a time like this happens to be extremely self-serving: "It's time to re-examine your portfolio. Ensure it is properly diversified by asset class and industry and is designed to achieve your long-term goals-- both quantitative and qualitative. Make sure you are not overly concentrated in an individual stock or sector. You need to know where you are and where you want to go." Lisa-- probably most brokers-- suggest you rebalance your portfolio by asset class and by broadening your industry exposure. She suggests taking advantage of dips to average down in the market, which sounds very much like a form of market timing.
During the current market pullback in equities and the confusing bond market, consider creating yield or income with stocks that pay high dividends and with alternative investments.

S&P’s downgrade may force politicians to put aside posturing and deal with the twin issues of reining in debt while stimulating the economy back to life. But that may be wishful thinking, with political parties so intransigently divided on even the most fundamental questions, including the appropriate role of government in society and the economy.

Interestingly, not much longer than a month ago, brokers were getting guidance from their home offices that the Republicans would absolutely agree to raise taxes because it was so obvious that there was no other sane way forward. Once I heard that naïve analysis from 3 or 4 unrelated advisors, I decided to move a significant portion of my own assets out of equities. Can anyone actually be that clueless? Nice to see they seem to be grappling with something that looks marginally more like reality this month. I'd love to see a Wall Street firm come right out and say it though-- the Republican Party wants the markets to crash and the economy to fail so they can win the 2012 elections and impose fascism on America. I'm not holding my breath though.

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Saturday, August 13, 2011

Financial Advice

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Right-Wing con-artist Grover Norquist

Sometimes I mention something I got from "my financial advisor." If he sounds like a conflicted mess, it's because "he's" half a dozen different people from 4 different institutions. Yesterday, the sanest one, who left her career as the finance director for a big Wall Street firm in 1997 to start her own boutique firm (which is not attached to any banksters) sent me a note responding to a post we ran Thursday about the reaction in England to the Conservative Consensus/Austerity movement there. She had just been watching Ron Paul on TV when she read it. Paul, a darling of the paranoid and deranged militia types, was saying how he felt violence was an imminent threat here in America. My financial advisor wrote:
I do find it amazing how no one has rallied the populace regarding the fact that no one has gone to jail for anything to do with the prior collapse let alone this one. They get people who have no chance of ever having to worry about the estate tax to fight against it. That’s why we particularly need you to keep pushing for progressives.
 
The 24 hour media cycle is being exploited to scare the %^& out of people. People’s perceptions are that things are as bad now as they were in 2008. I’m not saying this is a barn burner, but things are more stable. Hopefully the crazy right won’t take over everything.
 
Investment wise, this is an interesting time as the macro issues are the bear cause. The corporations themselves are earning and flush with cash. Even if we do double dip (which I don’t think is going to happen), corporate earnings should hang on due to global pull. 
 
We’ve had twelve years of this!

Another one of my advisors-- who I've worked with for decades, is Lisa Detanna at Wedbush, a mid-sized firm based in L.A. that seems to keep a healthy distance from Wall Street groupthink. She's been all over TV lately and this was her on CNBC this week:



She and I have steered my investments in a much more conservative direction ever since Bush started playing fast and loose with the economy. Obama being elected president didn't make me any less cautious; his policies are basically an extension of Bush's in (too) many ways.

Lisa-- and most people I've spoken to in the financial services industry-- seem to think that when push comes to shove the Republicans will do the right thing and compromise. I think they don't watch the day to day escapades, don't understand the hold of the teabaggers over Boehner and don't know who or what Grover Norquist is. Lisa says the "S & P downgrade is forcing government to react and not be so political." Lisa and others in her industry know more about investments than about politics. I'm nervous that the Republican intransigence the S&P blamed for their downgrade will tank the economy. It's beyond the comprehension of most serious people that members of Congress could be nihilists who want to tank the economy and want to burn down the whole house so "we can start over again" (as in start in 1950 and stop the clock right there). People in that industry are just starting to come to grips with it. After Bachmann's insane rantings in the Iowa debate Thursday night S & P tried to make it clear enough for even someone as congenitally stupid and willfully ignorant as she is to understand. Greg Sargent:
A Standard & Poor’s director said for the first time Thursday that one reason the United States lost its triple-A credit rating was that several lawmakers expressed skepticism about the serious consequences of a credit default-- a position put forth by some Republicans.

Without specifically mentioning Republicans, S&P senior director Joydeep Mukherji said the stability and effectiveness of American political institutions were undermined by the fact that “people in the political arena were even talking about a potential default,” Mukherji said.

“That a country even has such voices, albeit a minority, is something notable,” he added. “This kind of rhetoric is not common amongst AAA sovereigns.”

Let’s try to wrap our heads around this. Bachmann’s opposition to raising the debt ceiling is one of the most important planks in her presidential platform. She has touted it in two ads, presenting it as a sign of her courage. She repeated it again last night at the debate, asserting that opposing the hike is “the right thing to do,” and even cited Standard and Poors’s downgrade as proof of her superior grasp of our fiscal dilemma.

Less than 24 hours later, S & P confirmed that it was precisely this opposition to raising the debt ceiling, and the cavalier attitude towards default exhibited by the likes of Bachmann, that led to our downgrade.

The question of what led S & P to downgrade our credit rating is a matter of verifiable fact. And S & P has now confirmed that one of the central rationales of her candidacy is a key reason for their downgrade. What will she say when confronted with this fact? How will she explain it away? Will anyone even ask her to try to explain it?

In a rational universe, this would be devastating to her candidacy. Of course, the world of GOP primary politics is anything but a rational universe.

Mukherji, by the way, was referring to Paul Ryan (R-WI). So here are some notes for an outline Lisa sent me of what she's going to be sending to her clients Monday:
Although we have reduced our expectations of GDP growth globally and in the US we
are not anticipating at this point a double dip recession to the magnitude of 2008 – 2009.

Interest rates are at historic lows

Corporate profits are high
75% of corporations have reported positive or 10% better than expected numbers
Companies are lean and have deleveraged ahead of people and governments and continue to exceed expectations

Stocks are trading at historic low level PE’s not only from price decline but growing earnings as well

Balance sheets of banks are better now then they were in 2008
Capital ratios are better then they were at US banks in 2008 2009 Interest rates per the fed will remain low for two years

Oil prices lower

Commodity prices taken pull back but expected to climb as economy stabilizes and EU and US finalize and agree and have plan-- global demand strong

EU needs to address
Bail out of banks
Bail out of weaker EU countries

US
Pass budget that reduces deficient spending

And then to close the week-- as the stock market closed above 11,000 again-- one overall bit of advice from still another financial advisor:
What a week!

I had to wait until the market closed today (Friday) as it isn’t over until it’s over these days. In the first four days of this week, the Dow Jones Industrial Average moved at least 400 points each day. That has never happened before. We had two big ups and two big downs. On a percentage basis, the index moved at least 3.9% in each of the four days, a phenomenon we saw just once in 2008 and once in 1987, and before that 1933. So no doubt our heads are spinning.

As I read in one commentary on recent events, the media doesn’t like it when planes land safely. So while this last week has been incredibly harrowing, I would like to provide a little perspective on where the markets stand. While this correction has been unusual in its swiftness as I mention above, we have been through gyrations before. Just last year as a matter of fact. Last May the S&P 500 dropped 8.2% followed by a 5.4% drop in June. That wiped out all the years gain. The market had Greece, the BP oil disaster, the flash crash and China slowing down to deal with then. The market is dealing with many of the same issues in this year’s downswing as well as the debt ceiling drama in Washington and the S&P credit downgrade and a current flood of rumors surrounding European banks.

But corporate profits and balance sheets were strong in 2010, the financial system was working and the economy was stabilized. So 2010 ended with the S&P up 12.8%. It was not smooth getting there however.

Though it probably doesn’t feel like it, the market is well ahead of where it was one year ago. Versus August 31, 2010 the S&P is up 12.4%. That is despite the 8.9% drop of this August. So most portfolios are still ahead of where they were one year ago.

There are an awful lot of variables at work in the market today. On a very practical note, this turmoil is occurring when many people in the US and even more in Europe are on vacation. The lack of a full complement of market players can exacerbate volatility and allow program computer trading to impact short term results.

Despite the headlines, there is truly a good bit of debate out there about the state of the US economy. Japan (the third largest economy in the world) was largely offline after the tsunami. This created huge supply chain disruptions in the US which led to layoffs and shutdowns. As things return to normal, there may be upside in the coming quarters. Also the consumer sentiment numbers get a lot of play. Personally, I can’t imagine consumers being confident after the display of ineptitude from our esteemed politicians. What doesn’t get reported often is that US consumers report one thing but often do another. Consumer spending as evidenced by retail sales continues to surprise on the upside.

Another paradox, despite the US downgrade, someone out there still thinks the US is the safest place to invest as evidenced by the flight to US Treasuries during the height of the panic. The 10 years note was paying 2.09%, an incredibly low rate absolutely and relative even to the other countries still triple A.

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Wednesday, August 10, 2011

Republican Freeloaders

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This week Boehner has been raising campaign money from wealthy backers on the links at super-posh Muirfield Village Country Club in the hope of keeping the GOP in control of the House. One of the perks is a golf ball the classy drunken Speaker, according to Politico, gave out to his cronies-- a golf ball with Nancy Pelosi's face on it. Meanwhile Wall Street's boy in Wisconsin, Paul Ryan, is urgently asking rightists to send him money so he can advertise... in Iowa. Ryan doesn't exactly need grassroots contributions since he's taken $2,416,997 in legalistic bribes from the Financial Sector, far more than any other politician in the history of Wisconsin. Ryan and Boehner have been desperately running around to every open mike either can find to insist that the S&P downgrade they forced the country into-- and which was cheered by their teabagger followers (and which resulted in the current stock market crash)-- wasn't their fault; it was Obama's fault! If Obama can be faulted in any way, it was for having too much patience with their nihilism, treason and willful, obvious agenda to destroy the American economy in the name of the 2012 campaign.
Ever since the credit rating agency S&P downgraded U.S. credit to AA+ on Friday night, Republicans have desperately trying to pin the blame on President Obama, even though, as National Journal put it, “it’s hard to read the S&P analysis as anything other than a blast at Republicans.” S&P called out the GOP for using the debt ceiling as a political football and for its flat refusal to consider new revenue as part of any plan to reduce long-term deficits.

Earlier this week Rep. Allen West (R-FL) claimed that the S&P downgrade “has nothing to do with increasing revenues,” while some Republicans have said that passing a Balanced Budget Amendment would have prevented the downgrade, both of which S&P disagreed with. House Speaker John Boehner (R-OH) yesterday jumped into the same pool, saying that the downgrade could have been avoided if only Democrats had embraced the House Republican budget and its plan to eliminate Medicare:

House Speaker John Boehner (R-Ohio) blamed President Obama and the Democrats Tuesday for the recent downgrading of the U.S. credit rating, saying that if Democrats had joined with Republicans in passing the GOP budget, which the House passed in April, “it’s unlikely anyone would be talking about the United States being downgraded today.”

Both Boehner's and Ryan's states' citizens pay about the same in federal taxes as comes back to them from the federal government in terms of services and infrastructure. Yet both lead the Republican squawkbox against federal taxes that basically subsidize the freeloader Republican states, especially Mississippi, Alabama, Arizona, West Virginia, the Dakotas, Louisiana, Alaska, and South Carolina. The state's the give far more than they get in return include Minnesota, New York, Illinois, New Jersey, Connecticut, Delaware... all blue states. PoliticalProf, who lives in Illinois, wants his money back:
Most people don’t understand that the federal government doesn’t really take taxes to put in a gilded room in DC to buy teak desks for Senators. Rather, much of the federal government’s operations are a pass through program, meaning taxes taken today are sent out to program beneficiaries today. Both Social Security and Medicare work this way, for example-- and that’s over 40% of the US budget.

As it happens, it is usually the case that the citizens living in a state do not receive the same amount in total benefits and other federal spending as they contribute. The citizens of some states—the ones in various shades of green in this map-- pay more in taxes than they receive. The ones in red receive more federal tax money than its citizens pay.

While the pattern is not perfect, a few things stand out here. First, many “conservative” states are in fact net tax recipients-- e.g., they get more than they pay. Many such states have lots of poverty, farms, military bases and retired persons, and such persons and programs get lots of federal tax support.

Another thing that stands out here is that, in general, the “rich”-- or net tax contributing-- states are those with the United States’ major cities: NY, California, Illinois, Texas, Georgia, etc. (The latter two are exceptions to the “conservative = welfare states point I made above.)



UPDATE

Turns out Boehner wasn't the one handing out the Nancy Pelosi golf balls. Politico reported the story wrong; it was some other right wing idiot.

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Americans Need Jobs, Not A Right-Wing Austerity Agenda To Make The Rich Even Richer

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Trustfund jerk Harold McGraw III uses the company his grandpa built to crash the stock market to bolster his pal Mitt Romney

Worldwide stock markets crashed Monday as determined and uncompromising right-wing nihilism was being factored into everyone's economic calculations. Oddly enough, U.S. treasuries, the target in the S&P downgrade, actually improved. But no one seems to care about that odd detail. Yesterday Paul Krugman asked his readers to behold the power of a stupid narrative, which seems impervious to evidence.
1. US debt is downgraded, sparking demands for more ill-advised fiscal austerity

2. Fears that this austerity will depress the economy send stocks down

3. Politicians and pundits declare that worries about US solvency are the culprit, even though interest rates have actually plunged

4. This leads to calls for even more ill-advised austerity, which sends us back to #2

Meanwhile, the Mitt Romney supporter who controls the S&P, Harold W. McGraw III, hereditary grandson of the McGraw-Hill founder, and like most hereditary grandchildren, a rapid right-wing moron with a tiny little dysfunctional brain, has now started downgrading municipal and state bonds as well.
While not unexpected, the move has far-reaching implications for thousands of local governments already burdened by steep deficits.

Among those affected so far:

• Tacoma, WA.

• Atlanta Downtown Development Authority, GA.

• The Board of Governors of the University of North Carolina

• Miami, FL.

Additional federal debt was also downgraded, including some issued by The Architect of the Capitol and the Department of Transportation.


A report from Reuters was more optimistic on muni bonds:
Two positive factors give the market a shot at hanging onto last week's sparkling gains, when yields on some top quality bonds tumbled as much as 40 basis points: the lack of supply and the safe-haven bid for Treasuries.

"It's so hard to predict, but I don't foresee this announcement by S&P as being a catalyst for selling," said Robert Nelson, managing analyst for Municipal Market Data, which is part of Thomson Reuters.

"The possibility of this downgrade was already known to this marketplace as it traded up so aggressively last week," he said.

Though the municipal market only partly shared the Treasury market's extraordinary rally, analysts say the tax-free market is getting some safe-haven buying from investors unnerved by the stock market's plunge last week.

On Monday, Standard & Poor's is expected to downgrade the ratings of pre-refunded municipal bonds, U.S. mortgage agencies and other credits tied tightly to the federal government. Late Friday, S&P cut the country's credit rating to "AA-plus" from "AAA" and gave a negative outlook to the long-term rating.

Perhaps the downgrading of the U.S. rating might have had more impact on municipals in previous years, when there was a bit of an expectation that the U.S. federal government might ride to the rescue of beleaguered states or cities.

..."I think we've heard from a number of officials in the federal government, and I think that at the same time the federal government is not in any position to bail out states, so in the muni market I think most recognize that the notion of the federal government as a backstop has been pretty largely discounted," Nelson said.

The immediate market impact of the U.S. credit downgrade might be somewhat muted by the tax-free market's traditional strengths.

Many of the tens of thousands of tax-free issuers, from states to counties and schools, raise revenue from their own taxes and fees, independently of the federal government. The default rate historically has been under 1 percent.

"I don't see a tremendous flight out of municipals; you might see credit spreads widening for lower-rated issues, but we also think a lot will hold their ratings," said Evan Rourke, a portfolio manager with Eaton Vance in New York.

"Our feeling is that you can still have an AAA-rated credit ... you could have AAA-rated credits in an AA-plus-rated country," he said.

Wall Street's "solution" is to sell off Social Security and Medicare and leave the elderly to their tender mercies. That isn't likely to happen if the voters elect progressives next year instead of conservative Democrats or reactionary Republicans, the double-headed enemy of America's working families. Carol Shea Porter is running for her old seat in New Hampshire, now that voters there have had a shocking taste of what happens when you trust Republicans with the keys to the car. She has a very different view of the debut "crisis" and what to do about the economy that the conventional anti-family "wisdom" on Wall Street.
Washington is awash in congratulations and claims of noble compromise. House Republicans are bragging about becoming fiscally responsible while maintaining a morally responsible budget. There’s just one problem. It's not true. The only thing they should feel good about now is their vote to keep the United States from a catastrophic default.
 
The national debt is a staggering 14.3 trillion dollars. The debt ceiling deal they struck with Republican Tea Partiers (who the very conservative Wall Street Journal called "tea-party Hobbits") will only reduce the yearly deficits. It will not vigorously take on the debt. That's like paying the new monthly bills on your credit card each month without significantly reducing the overall balance. And most importantly, it will hurt the already struggling middle class and the poor, and drastically reduce the city and state government services our citizens need and rely on. It also will not create jobs; rather, it will eliminate jobs.
 
In order to properly function, this country must raise revenue. And Republicans in Congress have made it perfectly clear that they would have let this great nation crash into default and ruin our credit rather than raise revenue. They would not ask their campaign benefactors to do what the overburdened middle class has been doing for years-- pay up. Republicans refused to close tax loopholes for oil companies and other corporations. They refused to take subsidies away. They refused to give up the Bush-era tax cuts. Just last year, they convinced the president and Congress to extend them as part of a deal to continue long-term unemployment benefits, even though, as the Center on Budget and Policy Priorities demonstrated, the rise in debt would stop if they simply let the Bush tax cuts expire. They know that the top 1% doesn't need those tax cuts since they already receive almost 25% of all income and control more than 40% of the nation's wealth, but Republicans refuse to reclaim that much-needed revenue that could help the debt problem. Republicans also refused to change the tax code, which, as the General Accountability Office warned us back in February of 2009, allowed 67% of US corporations and 68% of foreign corporations to pay zero income taxes. That's right. Zero. Republicans simply would not raise any revenue. This is equivalent to the head of a family simply refusing to earn income, telling the family to instead just stop spending on essentials.

The Republicans refused to raise a single dime to pay down the debt, and President Obama could not get them to compromise at all. They refused to listen to Ronald Reagan's former Director of the Office of Management and Budget, who warned them last summer, "If there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing." They refused to listen to any plea for more revenue, but this country needs everyone, not just small businesses and the middle class, to pay their fair share if we are to reduce our debt.
 
Both New Hampshire members of Congress played follow the leader and took that tea-party/partisan stance, refusing to raise any revenue anywhere on anyone or anything, even if we cut Social Security and Medicare, even if we cut health care, even if we did not repair bridges, even if we cut jobs. These two members have the Republican problem-- they have all signed a pledge, not to their constituents, but to Grover Norquist, the head of Americans for Tax Reform, and they would be severely punished if they violated "the pledge." They would be targeted and attacked on TV, radio, and by mail if they dared to even consider raising revenue from the dodgers.

So here we are, saddled with a Republican majority so beholden to a pledge to protect corporations and the top 1% that they cannot and will not defend the middle class or work to protect essential programs. We have a President who is surrounded by these partisans who threaten to bring down the economy if their demands are not met. And we have an exhausted and all too frequently unemployed middle class that is left wondering why corporations don't have to pay taxes, why the top 1% aren't included in the "shared sacrifice" formula, and why this nation can't pay its debts. But they don’t have to look far for an answer. With this debt-ceiling fight, their Republican leaders just showed the people who they actually work for.

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Monday, August 08, 2011

An Enemy Of My Enemy Can Do The Right Thing Sometimes... Even If He's My Enemy Too

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There's very little positive an honest man can say about the DCCC. They're part of the problem, not the solution to it. This year their recruitment of conservative and corrupt assholes like Marty Chavez in Albuquerque, Val Demings and Luis Garcia in Florida and Ann Kirkpatrick in Arizona, lays bare their hypocritical railing against conservative Republicans for voting the same way their own conservative kennel votes. On rare occasions they stumble into doing the right thing. Yesterday, for example, they went on an online rampage against Medicare destroyer Paul Ryan (R-WI)-- after assiduously protecting his seat for almost a decade.

Afraid to be blamed, as he should be, for the S&P downgrade of American credit-- something that could cost American citizens billions by increasing the cost of mortgages, auto loans, student loans, as well as the cost of anything you are not paying for with cash and by further slowing the economic recovery and screwing up the jobs market-- Ryan is suddenly open to raising taxes, something that would have prevented this disaster just a few weeks ago.
Ryan said on Fox News Sunday that he would be open to a deal that contains $3 or $4 in spending cuts for every $1 in revenue increases if it came through a major reform of the tax code and was large enough.

That was the deal Obama offered the GOP all summer and that the American people favored in every poll-- and that Ryan and the GOP flatly turned down. Maybe they were shaken up by the S&P blaming the downgrade on their intransigence. Tight from the S&P report:
The political brinkmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.

...It appears that for now, new revenues have dropped down on the menu of policy options.

...The act contains no measures to raise taxes or otherwise enhance revenues, though the committee could recommend them.

...Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act.

So... back to the DCCC's new aggressiveness towards Ryan. Supposedly they're going to help Rob Zerban beat him... although I'll believe that when I see it. (Meanwhile, Rob is still counting on you.) But at least they're sending out nice anti-Ryan messages on the Twitter machine, sniping at his lies on Fox:


Today on Fox News Sunday, Republican Budget Chairman Paul Ryan (WI-01) repeatedly and falsely said that he and House Republicans want to “reform” Medicare. 

In reality, Ryan and House Republicans have voted three times to end Medicare and raise health care costs for seniors.

FACT CHECK

Ryan Voted for the Cut, Cap and Balance Plan that is More Extreme than the Republican Budget . The non-partisan Center on Budget and Policy Priorities wrote: “The measure […] stands out as one of the most ideologically extreme pieces of major budget legislation to come before Congress in years, if not decades. […] The legislation would inexorably subject Social Security and Medicare to deep reductions.” [H.R. 2560, Vote #606, 7/19/11; Center on Budget and Policy Priorities, 7/16/11]

Ryan Voted to Deem the Republican Budget as Having been Passed by Congress. Representative Paul Ryan voted to end Medicare by supporting a “deeming resolution” in H. Res. 287 which states “the provisions of House Concurrent Resolution 34 […] shall have force and effect […] in the House as though Congress has adopted such concurrent resolution”. [H. Res. 287, Vote #382, 6/1/11]

Ryan Voted for the 2012 Republican Budget Proposal that Would “End Medicare.” In April, Paul Ryan voted to end Medicare by supporting the Republican budget. The Wall Street Journal reported “The plan would essentially end Medicare, which now pays most of the health-care bills for 48 million elderly and disabled Americans, as a program that directly pays those bills.” [H Con. Res. 34, Vote #277, 4/15/11; Wall Street Journal, 4/4/11]

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Time To Say Buh-Bye To Reactionary Blue Dog Heath Shuler?

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In terms of crucial votes taken in their entire congressional careers, only three Democrats-- Dan Boren (Blue Dog-OK), Jason Altmire (Blue Dog-PA) and Joe Donnelly (Blue Dog-IN)-- have voted more consistently with the Republicans than North Carolina Blue Dog Heath Shuler. And Boren and Donnelly have both announced they're leaving the House. Shuler's Progressive Punch score on crucial votes is 40.73, which means he's followed the lead of Boehner and Cantor on 59.67% of the crucial votes since first being elected to Congress. This year fellow North Carolina congressman, Walter Jones (R) votes more frequently with the Democrats than Shuler does! And no one in western North Carolina was surprised this week when Shuler took a big happy bite of the Satan Sandwich. He almost never votes in the interests of his constituents, so why should anyone have expected him to do so on a bill John Boehner has been bragging achieved 98% of the Republican goals.

The Republican-controlled North Carolina legislature has gerrymandered the 11th congressional district to make it much harder for Shuler to win again in 2012. It's no secret that Shuler has been feeling out his alma mater, the University of Tennessee, for the open Athletic Director job. His time as the school's Heisman-winning quarterback were his glory days... and he's angling for the million dollars a year, seven year contract. He keeps denying that he's also negotiating with the GOP to switch parties and run for the seat as a Republican. That worked out badly for fellow reactionary Blue Dog Parker Griffith, who switched parties and then was defeated by an even more extreme right-wing Republican in the next primary.

Shuler knows he may not have to worry about how he'd fare in the general election in the newly gerrymandered 11th. After his record of supporting the GOP and after his vote last week for Boehner's unpopular deficit plan, many Democrats just want him out. Last spring we talked about Asheville's very popular and very progressive City Councilman, Cecil Bothwell, challenging Shuler either as an independent or as a Democrat. Bothwell is running as a Democrat and he's the first candidate to be added to this year's Blue America anti-Blue Dog page. I spoke to him this weekend about Shuler's vote for the Satan Sandwich and asked him how he would have voted. "With the 95 Democrats who opposed it," he answered firmly, a man who's sense of self-assurance comes from a coherent purpose of serving the interests of his friends and neighbors in western North Carolina.
The debt ceiling deal approved this week is a disaster. I would have joined the other 95 Democrats who voted against the plan, and I believe the new 12-member special commission it has created will prove to be every bit as problematic as the fracas we've witnessed in recent weeks.

President Obama shouldn't have taken the 14th Amendment solution off the table. He should have told the Republicans that if they didn't go along with a straight up or down vote on the debt ceiling he would be forced to intervene for the good of the nation. He permitted his opponents to drag the argument far to the right and agreed to a solution that is far to the right of popular opinion. A significant majority wants to see tax increases on those making more than $250,000 per year. Handing the keys to any tax increase to the GOP majority in the House is a mistake we will all come to regret.

I note that the agreement has had no good effect on the markets, with the Dow collapsing immediately following the agreement, and now Standard & Poors downgrading our national credit rating.

Bothwell feels he can put together a populist coalition that rejects the transpartisan right-wing agenda that has devastated the America economy and ruined job prospects in North Carolina. He sees the new district being entirely up for grabs and not something that should be looked at in terms of how many votes Obama got and how many votes McCain got-- which is the standard the legislature used in their gerrymander. "I believe," he told me, "there's a new paradigm emerging in American politics and it's very apparent here. Both Progressive Democrats and tea party Republicans exhibit a strong populist streak. Surprisingly, tea partiers support Medicare almost as strongly as do Democrats in national polls. Both are discontent with the corporatist policies of the major parties at the national level. I believe our campaign is getting through to people on both sides of the old political divide and I expect we will win."

If you'd like to help Cecil Bothwell do that, please consider donating what you can to his campaign. I expect we'll be hearing a lot more from him as he keeps North Carolina's worst Blue Dog on the run.

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Sunday, August 07, 2011

Obama Working With The Republicans To... Undermine Obama

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To combat President Obama's goal of bringing down unemployment, the Republican party has systematically-- both in Congress and on a state basis in places like Wisconsin, Michigan, Ohio, Florida, Georgia, Maine, where they have installed fascist-leaning governors and legislatures-- slashed "government" jobs. Obama's tepid, go-slow approach to stimulus, didn't factor in determined Republican opposition to fixing the jobs problem. Why would Republicans do that? Two overriding reasons: to hamper Obama's chance for reelection by keeping unemployment high, "on his watch," and for the reason right-wing parties always oppose full employment-- to keep the price of labor low and the power of unions minimal.

In today's NY Times Emory University psychology professor Drew Westen, author of The Political Brain: The Role of Emotion in Deciding the Fate of the Nation, take a look at the other half of the equation, what happened to Obama? We could have seen what was coming on Inauguration Day.
When Barack Obama rose to the lectern on Inauguration Day, the nation was in tatters. Americans were scared and angry. The economy was spinning in reverse. Three-quarters of a million people lost their jobs that month. Many had lost their homes, and with them the only nest eggs they had. Even the usually impervious upper middle class had seen a decade of stagnant or declining investment, with the stock market dropping in value with no end in sight. Hope was as scarce as credit.

In that context, Americans needed their president to tell them a story that made sense of what they had just been through, what caused it, and how it was going to end. They needed to hear that he understood what they were feeling, that he would track down those responsible for their pain and suffering, and that he would restore order and safety. What they were waiting for, in broad strokes, was a story something like this:

“I know you’re scared and angry. Many of you have lost your jobs, your homes, your hope. This was a disaster, but it was not a natural disaster. It was made by Wall Street gamblers who speculated with your lives and futures. It was made by conservative extremists who told us that if we just eliminated regulations and rewarded greed and recklessness, it would all work out. But it didn’t work out. And it didn’t work out 80 years ago, when the same people sold our grandparents the same bill of goods, with the same results. But we learned something from our grandparents about how to fix it, and we will draw on their wisdom. We will restore business confidence the old-fashioned way: by putting money back in the pockets of working Americans by putting them back to work, and by restoring integrity to our financial markets and demanding it of those who want to run them. I can’t promise that we won’t make mistakes along the way. But I can promise you that they will be honest mistakes, and that your government has your back again.” A story isn’t a policy. But that simple narrative-- and the policies that would naturally have flowed from it-- would have inoculated against much of what was to come in the intervening two and a half years of failed government, idled factories and idled hands. That story would have made clear that the president understood that the American people had given Democrats the presidency and majorities in both houses of Congress to fix the mess the Republicans and Wall Street had made of the country, and that this would not be a power-sharing arrangement. It would have made clear that the problem wasn’t tax-and-spend liberalism or the deficit-- a deficit that didn’t exist until George W. Bush gave nearly $2 trillion in tax breaks largely to the wealthiest Americans and squandered $1 trillion in two wars.

And perhaps most important, it would have offered a clear, compelling alternative to the dominant narrative of the right, that our problem is not due to spending on things like the pensions of firefighters, but to the fact that those who can afford to buy influence are rewriting the rules so they can cut themselves progressively larger slices of the American pie while paying less of their fair share for it.

But there was no story-- and there has been none since.

In similar circumstances, Franklin D. Roosevelt offered Americans a promise to use the power of his office to make their lives better and to keep trying until he got it right. Beginning in his first inaugural address, and in the fireside chats that followed, he explained how the crash had happened, and he minced no words about those who had caused it. He promised to do something no president had done before: to use the resources of the United States to put Americans directly to work, building the infrastructure we still rely on today. He swore to keep the people who had caused the crisis out of the halls of power, and he made good on that promise. In a 1936 speech at Madison Square Garden, he thundered, “Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me-- and I welcome their hatred.”

...[W]hen faced with the greatest economic crisis, the greatest levels of economic inequality, and the greatest levels of corporate influence on politics since the Depression, Barack Obama stared into the eyes of history and chose to avert his gaze. Instead of indicting the people whose recklessness wrecked the economy, he put them in charge of it. He never explained that decision to the public-- a failure in storytelling as extraordinary as the failure in judgment behind it. Had the president chosen to bend the arc of history, he would have told the public the story of the destruction wrought by the dismantling of the New Deal regulations that had protected them for more than half a century. He would have offered them a counternarrative of how to fix the problem other than the politics of appeasement, one that emphasized creating economic demand and consumer confidence by putting consumers back to work. He would have had to stare down those who had wrecked the economy, and he would have had to tolerate their hatred if not welcome it. But the arc of his temperament just didn’t bend that far.

The truly decisive move that broke the arc of history was his handling of the stimulus. The public was desperate for a leader who would speak with confidence, and they were ready to follow wherever the president led. Yet instead of indicting the economic policies and principles that had just eliminated eight million jobs, in the most damaging of the tic-like gestures of compromise that have become the hallmark of his presidency-- and against the advice of multiple Nobel-Prize-winning economists-- he backed away from his advisers who proposed a big stimulus, and then diluted it with tax cuts that had already been shown to be inert. The result, as predicted in advance, was a half-stimulus that half-stimulated the economy. That, in turn, led the White House to feel rightly unappreciated for having saved the country from another Great Depression but in the unenviable position of having to argue a counterfactual-- that something terrible might have happened had it not half-acted.

To the average American, who was still staring into the abyss, the half-stimulus did nothing but prove that Ronald Reagan was right, that government is the problem. In fact, the average American had no idea what Democrats were trying to accomplish by deficit spending because no one bothered to explain it to them with the repetition and evocative imagery that our brains require to make an idea, particularly a paradoxical one, “stick.” Nor did anyone explain what health care reform was supposed to accomplish (other than the unbelievable and even more uninspiring claim that it would “bend the cost curve”), or why “credit card reform” had led to an increase in the interest rates they were already struggling to pay. Nor did anyone explain why saving the banks was such a priority, when saving the homes the banks were foreclosing didn’t seem to be. All Americans knew, and all they know today, is that they’re still unemployed, they’re still worried about how they’re going to pay their bills at the end of the month and their kids still can’t get a job. And now the Republicans are chipping away at unemployment insurance, and the president is making his usual impotent verbal exhortations after bargaining it away.

...The average voter is far more worried about jobs than about the deficit, which few were talking about while Bush and the Republican Congress were running it up. The conventional wisdom is that Americans hate government, and if you ask the question in the abstract, people will certainly give you an earful about what government does wrong. But if you give them the choice between cutting the deficit and putting Americans back to work, it isn’t even close. But it’s not just jobs. Americans don’t share the priorities of either party on taxes, budgets or any of the things Congress and the president have just agreed to slash-- or failed to slash, like subsidies to oil companies. When it comes to tax cuts for the wealthy, Americans are united across the political spectrum, supporting a message that says, “In times like these, millionaires ought to be giving to charity, not getting it.”

When pitted against a tough budget-cutting message straight from the mouth of its strongest advocates, swing voters vastly preferred a message that began, “The best way to reduce the deficit is to put Americans back to work.” This statement is far more consistent with what many economists are saying publicly-- and what investors apparently believe, as evident in the nosedive the stock market took after the president and Congress “saved” the economy.

So where does that leave us?

Like most Americans, at this point, I have no idea what Barack Obama-- and by extension the party he leads-- believes on virtually any issue. The president tells us he prefers a “balanced” approach to deficit reduction, one that weds “revenue enhancements” (a weak way of describing popular taxes on the rich and big corporations that are evading them) with “entitlement cuts” (an equally poor choice of words that implies that people who’ve worked their whole lives are looking for handouts). But the law he just signed includes only the cuts. This pattern of presenting inconsistent positions with no apparent recognition of their incoherence is another hallmark of this president’s storytelling. He announces in a speech on energy and climate change that we need to expand offshore oil drilling and coal production-- two methods of obtaining fuels that contribute to the extreme weather Americans are now seeing. He supports a health care law that will use Medicaid to insure about 15 million more Americans and then endorses a budget plan that, through cuts to state budgets, will most likely decimate Medicaid and other essential programs for children, senior citizens and people who are vulnerable by virtue of disabilities or an economy that is getting weaker by the day. He gives a major speech on immigration reform after deporting a million immigrants in two years, breaking up families at a pace George W. Bush could never rival in all his years as president.

It's painful for those who bought into Obama's campaign themes of Hope and Change but Westen goes on, demanding yo know "why the president seems so compelled to take both sides of every issue, encouraging voters to project whatever they want on him, and hoping they won’t realize which hand is holding the rabbit" and playing right into the hands of very able and very well-financed right-wing propagandists. Westen's several hypotheses explaining Obama's behavior are all tragically unappealing and his conclusion is chilling-- unless you're a Mitt Romney enthusiast-- or a revolutionary zealot ready for action.
[T]he arc of history does not bend toward justice through capitulation cast as compromise. It does not bend when 400 people control more of the wealth than 150 million of their fellow Americans. It does not bend when the average middle-class family has seen its income stagnate over the last 30 years while the richest 1 percent has seen its income rise astronomically. It does not bend when we cut the fixed incomes of our parents and grandparents so hedge fund managers can keep their 15 percent tax rates. It does not bend when only one side in negotiations between workers and their bosses is allowed representation. And it does not bend when, as political scientists have shown, it is not public opinion but the opinions of the wealthy that predict the votes of the Senate. The arc of history can bend only so far before it breaks.



Without digging into Obama's conservative voting record in the Senate, Krugman not only loudly agreed with Westen's analysis today, he wrote that "If you paid attention to what he actually said during the primary and the election, he was always a very conventional centrist. Progressives who flocked to his campaign basically deluded themselves, mistaking style for substance. I got huge flack for saying that at the time, but it was true, and events have borne it out... I went back to look at my own reactions to the inaugural speech; I’m sorry to say that my misgivings at the time have proved all too justified." At the time (January 22, 2009) Krugman wrote in the Times that "I ended Tuesday less confident about the direction of economic policy than I was in the morning. [O]ne wishes that the speechwriters had come up with something more inspiring than a call for an 'era of responsibility'-- which, not to put too fine a point on it, was the same thing former President George W. Bush called for eight years ago. But my real problem with the speech, on matters economic, was its conventionality. In response to an unprecedented economic crisis-- or, more accurately, a crisis whose only real precedent is the Great Depression-- Mr. Obama did what people in Washington do when they want to sound serious: he spoke, more or less in the abstract, of the need to make hard choices and stand up to special interests. That’s not enough. In fact, it’s not even right..."

And Obama still is... and it still isn't right.

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Saturday, August 06, 2011

Will Satan Sandwich Eaters Face The Consequences Of Their Betrayal At The Polls?

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Before the vote on the Boehner/Obama SatanSandwich last week, Blue America announced that no incumbent who voted for it would be eligible for an endorsement this cycle under any circumstances. We also asked the challengers we endorsed to make a public statement explaining why they opposed the deal. Every single one of our challengers made that statement. One House incumbent running for a Senate seat voted for it and although she is still the runaway best candidate in the race in Hawai'i, we took her off our contribution list. Blue America didn't raise money for Obama in 2008 and, after seeing him in action, there was no chance we would ask our donors to contribute to his campaign next year, not that he needed us then or that he will now... not with the gigantic contributions he gets from Wall Street and other financial predators. Yesterday, Nate Silver did a column in the NY Times that seems to indicate Blue America isn't the only one outraged by the congressional betrayal inherent in a vote for the SatanSandwich.


Initial public reaction to the deficit-reducing deal reached by President Obama and Congress is fairly poor. Although there is some variance from survey to survey, on average approval of the deal registers at 38 percent against 49 percent disapproval across four national polls conducted on it so far.

...Of the 63 Republicans running for re-election to the House in districts that the nonpartisan Cook Political Report deems competitive, 56 of them, or 89 percent, voted for the deal.

Democrats have fewer members running in swing districts in the House, simply because they lost so many of them in 2010. Still, among Democrats who are running in competitive races, the tally was 23-to-14 in favor of the bill, whereas the majority of Democrats in safe districts voted against it. ...In the House, members of the liberal Congressional Progressive Caucus overwhelmingly voted against the bill, with 56 of the 70 members voted opposing it, while other Democrats voted for the bill by roughly a 2-1 margin. A 32-to-28 majority of Republicans in the Tea Party Caucus, meanwhile, voted for the bill-- but they were less likely to do so than other Republicans in the House, who approved the bill by a 72-to-19 margin. ... Among Republicans not affiliated with Tea Party, 91 percent of those in competitive districts voted for the bill, while 62 percent of those not running in competitive races did.

...Anti-incumbent sentiment is probably stronger now than at any point since polling began. We don’t know exactly how that is going to play out, and to some extent we are in uncharted territory.

But the polling so far suggests that the risks are particularly acute for Congress-- and even more acute for the Republicans in Congress, who were more likely to vote for the bill and are being assigned more responsibility for it by the public.

Bernie Sanders had a much better idea about how to reduce the federal deficit than the ineffectual gimmicks that make up the SatanSandwich. Take a look:



UPDATE

A little frank Twitter chit chat with the Chairman. Because there are times when nothing will do but tough love-- and this is one of those times:

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