The numbers are so huge they can not be comprehended. The projected size of the annual deficit under the proposed budget of President Obama and the Democrat congress is so large that the American public can not grasp its immensity. As a result, Obama and the Democrats are not forced to justify its size, or even explain how it will ever be repaid. It has proved difficult for the Republicans to criticize that which the public can not understand. Over the course of the next four years, President Obama and the Democrats will double the national debt and triple the national debt in the next ten years. The Democrats, even under their overly optimistic financial projections, will borrow more money than the total accumulated debt of every administration in over 200 years!
The consequence of this debt will be devastating. The burned on our children, and our children's children, is immoral. The result will be the bankruptcy of the country or hyperinflation that will destroy the financial assets of all Americans.
Perhaps the only way to truly make Americans understand, or even care, is to explain that massive spending by President Obama and the Democrats in Congress will destroy the Social Security system. Social Security will go bankrupt. That Social Security check that you are expecting to get after turning 67 (or maybe 70) won't come. If you get any check at all, it won't be worth anything. You are on your own. Hope you saved something or invested well. Because if you were counting on Social Security, you will be destitute!
Wake up America. And Republicans, you had better start explaining to your voters what is in store for them if they don't turn out the Democrats at the next election and reverse course.
Tuesday, May 12, 2009
Monday, February 2, 2009
New Storyline: Old Media Is Dead
I was shouting at the screen, infuriated that I couldn't enjoy the game without the unwelcome commentary of the maddening broadcasters. You see, I am passionate about college basketball and an avid fan of the Gonzaga Bulldogs. I had been looking forward to the game for weeks. St. Mary's and Gonzaga were meeting for the first time in conference play, both undefeated in the West Coast Conference, and both meeting for the first time in history as ranked opponents. The victor would take command of first place in the league and gain solid advantage in the race for to be regular season champion. St. Mary's was led by Patrick Mills, a great shooter who performed very well in the last Olympics for his native Australian national team. Gonzaga students camped out in frigid temperatures for days prior to the game to get a seat. This was a huge game.
As I sat down with my family to watch the game, broadcast by ESPN, we immediately knew what ESPN's storyline was going to be: Patrick Mills. For the next two hours, the name of the St. Mary's point guard was the sole topic of conversation. It was quite evident that the ESPN broadcasters had not done their homework because they would barely say a word about anybody else on the court. How many times could they repeat in one game that Patrick Mills had played admirably in the Olympics. How many times could they marvel about his shooting ability...or his leadership...or his speed...or his passing...or his shoe size. Had you been listening to the game and not watching you might have thought that Patrick Mills was playing one-on-one with...Patrick Mills. You would hardly know that Gonzaga won the game. And to make it all the more infuriating, Patrick Mills left the game with three minutes left in the first half due to injury and never returned to the game. And yet, he is all they talked about. It was one of the worst broadcast performances I have ever seen.
It got me wondering about the media in general. If the mainstream media has a storyline, how on earth could the other side of the story ever have a hope of breaking through? The Arab/Israeli conflict is a case in point. It is quite obvious that the storyline of the major media, led in print media by the New York Times and in broadcast media by ABC, CBS, NBC, CNN, and the BBC, is that the Palestinians are resisting an illegal occupation by the Israelis any way then can, and the Israelis use disproportionate force to repress and murder, indiscriminately, innocent Palestinians. Pictures of dead Palestinian women and children (made available by Hamas) regularly populate the front page of the Times and lead the evening news broadcasts. The story of terrorized innocent Israelis never make the news. Pictures of Palestinian militants deliberately launching rockets from civilian areas rarely make the news. You see, they don't conform to the mainstream media's storyline. Are mainstream media outlets really concerned with presenting a fair and balanced story in context? Obviously not. They are only interested in promoting their world view. In other words, they are only interested in broadcasting propaganda.
For this very reason, more and more Americans are turning away from mainstream media outlets and get their news and commentary from other cable news outlets, like Fox News, and the new media. While traditional media laments their waning influence and ability to filter the news for public consumption, I believe that the new media (internet news services, blogs, YouTube, etc.), absent the filter of the main stream media's liberal world view, is often the best source for untainted news and the broadest perspective.
Take, for example, this amazingly engaging video below posted on YouTube by a young teenage Israeli girl as she gives a perspective to the Arab/Israeli conflict that you will likely NEVER hear in the mainstream media:
Having rarely heard such a compelling and heartfelt testimony from the Israeli point of view, I feel absolutely cheated by traditional media. I do not share the mainstream media's liberal, anti-American, anti-Israel world view and am offended by their continuing overt attempts to form public opinion to conform to their ideology. For that reason, I look forward to the demise of opinion-makers like the New York Times as it continues to careen toward bankruptcy, a victim of the public's turn toward new media...and truth.
As I sat down with my family to watch the game, broadcast by ESPN, we immediately knew what ESPN's storyline was going to be: Patrick Mills. For the next two hours, the name of the St. Mary's point guard was the sole topic of conversation. It was quite evident that the ESPN broadcasters had not done their homework because they would barely say a word about anybody else on the court. How many times could they repeat in one game that Patrick Mills had played admirably in the Olympics. How many times could they marvel about his shooting ability...or his leadership...or his speed...or his passing...or his shoe size. Had you been listening to the game and not watching you might have thought that Patrick Mills was playing one-on-one with...Patrick Mills. You would hardly know that Gonzaga won the game. And to make it all the more infuriating, Patrick Mills left the game with three minutes left in the first half due to injury and never returned to the game. And yet, he is all they talked about. It was one of the worst broadcast performances I have ever seen.
It got me wondering about the media in general. If the mainstream media has a storyline, how on earth could the other side of the story ever have a hope of breaking through? The Arab/Israeli conflict is a case in point. It is quite obvious that the storyline of the major media, led in print media by the New York Times and in broadcast media by ABC, CBS, NBC, CNN, and the BBC, is that the Palestinians are resisting an illegal occupation by the Israelis any way then can, and the Israelis use disproportionate force to repress and murder, indiscriminately, innocent Palestinians. Pictures of dead Palestinian women and children (made available by Hamas) regularly populate the front page of the Times and lead the evening news broadcasts. The story of terrorized innocent Israelis never make the news. Pictures of Palestinian militants deliberately launching rockets from civilian areas rarely make the news. You see, they don't conform to the mainstream media's storyline. Are mainstream media outlets really concerned with presenting a fair and balanced story in context? Obviously not. They are only interested in promoting their world view. In other words, they are only interested in broadcasting propaganda.
For this very reason, more and more Americans are turning away from mainstream media outlets and get their news and commentary from other cable news outlets, like Fox News, and the new media. While traditional media laments their waning influence and ability to filter the news for public consumption, I believe that the new media (internet news services, blogs, YouTube, etc.), absent the filter of the main stream media's liberal world view, is often the best source for untainted news and the broadest perspective.
Take, for example, this amazingly engaging video below posted on YouTube by a young teenage Israeli girl as she gives a perspective to the Arab/Israeli conflict that you will likely NEVER hear in the mainstream media:
Having rarely heard such a compelling and heartfelt testimony from the Israeli point of view, I feel absolutely cheated by traditional media. I do not share the mainstream media's liberal, anti-American, anti-Israel world view and am offended by their continuing overt attempts to form public opinion to conform to their ideology. For that reason, I look forward to the demise of opinion-makers like the New York Times as it continues to careen toward bankruptcy, a victim of the public's turn toward new media...and truth.
Wednesday, January 28, 2009
Conservative in Hollywood: The New Cool?
In case you hadn't noticed the changes in media over the last election cycle, the internet has become the new and most prominent battleground in the war of ideas. As print newspapers continue their descent into the ash heap of irrelevance, conservatives have finally begun to realize that the future of our movement lies in mastering the power of the internet to distribute ideas and promote communication on issues political, social, and economic.
One who gets it is Andrew Breitbart and Big Hollywood. Big Hollywood is a great new site dedicated to conservative thought in media and supporting conservatives in the liberal dominated entertainment industry (yes, surprisingly, they do apparently exist - that's the point). I find it wonderfully entertaining and demonstrative of the liberal bubble in Hollywood.
Big Hollywood is also a source for information you will find great difficulty seeing anywhere else. For example: If you haven't see this before you have to check out this new video by Macho Sauce Productions called "The Pledge?" It is fantastic:
Macho Sauce Productions was founded by Alfonzo Rachel. Alfonzo, where have you been?! If this keep up, conservatives are well on their way to competing for attention in today's pop culture. Edgy. Funny. Satirical. Potent. Right on target.
Could conservative be the new cool in Hollywood? Well, that might be a stretch, but, I continue to dream.
One who gets it is Andrew Breitbart and Big Hollywood. Big Hollywood is a great new site dedicated to conservative thought in media and supporting conservatives in the liberal dominated entertainment industry (yes, surprisingly, they do apparently exist - that's the point). I find it wonderfully entertaining and demonstrative of the liberal bubble in Hollywood.
Big Hollywood is also a source for information you will find great difficulty seeing anywhere else. For example: If you haven't see this before you have to check out this new video by Macho Sauce Productions called "The Pledge?" It is fantastic:
Macho Sauce Productions was founded by Alfonzo Rachel. Alfonzo, where have you been?! If this keep up, conservatives are well on their way to competing for attention in today's pop culture. Edgy. Funny. Satirical. Potent. Right on target.
Could conservative be the new cool in Hollywood? Well, that might be a stretch, but, I continue to dream.
Tuesday, January 27, 2009
Stagflation Train Wreck
The Democrats in Congress, led by Nancy Pelosi and Harry Reid, are debating a stimulus bill that is, by definition, designed to stimulate the economy. This is pure Keynesian, demand side, economic theory: spend massive amounts of "government" money to stimulate demand in the private sector. The only problem is, however, that Keynesian economics never works and there is virtually nothing stimulative in the roughly $825 billion bill.
So, what is the probable outcome of passing a stimulus bill substantially similar to the one being debated right now? A bill that spends close to $1 trillion of taxpayer money, that we don't have and our children will have to pay for, that produces little growth? Just think about it: no growth and huge amounts of dollars pushed into inefficient government programs and projects? We have the makings of a massive stagflation train wreck! Think late 70's Jimmy Carter economic stagflation.
But how can we design a stimulus bill that promotes growth (government never creates growth), promotes job creation (government never creates jobs), and avoids stagflation? Well, quite simply you have to design the bill to address the problems in the economy. For example, we have a financial crisis that has led to a massive contraction of available credit. Any stimulus bill should therefore include measures to stabilize the balance sheets of the banks (get rid of mark-to-market accounting and institute mark-to-model accounting) and increase liquidity in the financial markets (zero capital gains rate for at least the next two years and double IRA and 401K contribution limits) (see December 9, 2008 post). It might also include measures to stabilize the housing market (reduce real estate transaction costs or provide house purchase tax credit). Measures to increase demand and promote productivity in the private sector (research and development tax credits, accelerated capital expense depreciation, and pass free-trade agreements) would also be a vital elements.
My point is you have to write a bill to take care of the real problems. Unfortunately, solving the problems with the economy comes a distant second to the interests of politicians who are more concerned with spending taxpayer money on their favorite pet projects so they can show up at a ribbon cutting ceremony or to pay back their favorite constituent interest groups. So keep in mind that the next time a politician says they are going to create jobs and grow the economy, they are either delusional because they think can (only the private sector creates jobs) or think you are stupid enough to believe them. Then do your own due diligence to see if the bill they are voting for actually promotes growth and long-term sustainable demand. Chances are, if the politician believes in Keynesian/New Deal economics, and most Democrats do, it won't do either. The current stimulus bill doesn't do either and will be an absolute train wreck and will lead to horrible consequences for our country.
So, what is the probable outcome of passing a stimulus bill substantially similar to the one being debated right now? A bill that spends close to $1 trillion of taxpayer money, that we don't have and our children will have to pay for, that produces little growth? Just think about it: no growth and huge amounts of dollars pushed into inefficient government programs and projects? We have the makings of a massive stagflation train wreck! Think late 70's Jimmy Carter economic stagflation.
But how can we design a stimulus bill that promotes growth (government never creates growth), promotes job creation (government never creates jobs), and avoids stagflation? Well, quite simply you have to design the bill to address the problems in the economy. For example, we have a financial crisis that has led to a massive contraction of available credit. Any stimulus bill should therefore include measures to stabilize the balance sheets of the banks (get rid of mark-to-market accounting and institute mark-to-model accounting) and increase liquidity in the financial markets (zero capital gains rate for at least the next two years and double IRA and 401K contribution limits) (see December 9, 2008 post). It might also include measures to stabilize the housing market (reduce real estate transaction costs or provide house purchase tax credit). Measures to increase demand and promote productivity in the private sector (research and development tax credits, accelerated capital expense depreciation, and pass free-trade agreements) would also be a vital elements.
My point is you have to write a bill to take care of the real problems. Unfortunately, solving the problems with the economy comes a distant second to the interests of politicians who are more concerned with spending taxpayer money on their favorite pet projects so they can show up at a ribbon cutting ceremony or to pay back their favorite constituent interest groups. So keep in mind that the next time a politician says they are going to create jobs and grow the economy, they are either delusional because they think can (only the private sector creates jobs) or think you are stupid enough to believe them. Then do your own due diligence to see if the bill they are voting for actually promotes growth and long-term sustainable demand. Chances are, if the politician believes in Keynesian/New Deal economics, and most Democrats do, it won't do either. The current stimulus bill doesn't do either and will be an absolute train wreck and will lead to horrible consequences for our country.
Sunday, January 18, 2009
Some Common Truths About Trees
1. Man-made global warming is a fraud. The focus on curbing carbon dioxide emissions is a complete waste of time and fortune. Concern for the environment is totally legitimate, however, the taxing of fossil fuels and regulation carbon emissions will serve only to take money out of our pockets and give it to the government and those they deem more deserving of our money. It will do nothing to curb climate change. It will do nothing to help the environment. It will condemn billions of the world's population to eternal poverty. The world's temperature has never followed changes in greenhouse gasses. There is no legitimate reason to think they will in the future. Everything you have been told about man-made global warming is a lie.
2. Government run health care is an inevitable failure. The government never runs anything more efficiently than the private sector. The only way governments save money on health care is by rationing care. The result is always reduced services, less innovation, longer waits, and less accountability. If you want to pay less for health care, join an HMO and accept less access to specialized medicines and someone else making health care decisions for you, or, better yet, start a Health Savings Account (HSA) and buy a high deductible health insurance policy which gives you responsibility for minor health related issues yet protects you from catastrophic losses. Isn't that what insurance is for after all? The reason why third party insurance is so expensive is because it is really health care financing.
3. The U.S. Constitution is the foundation of America's greatness. It established in word, for all to see, our country as one made of law, not of man, and governed for, by, and of the people. When we stray from that ideal, when we cease to become a country governed my law but rather by man, we endanger the very future of our country and the uniqueness of American experiment. I believe that America is worth preserving for future generations. So, how do we endanger the constitution? When we neglect to interpret the constitution according to the words and their original intent. Words mean what they say. When we decide to ignore what they say because their intent is inconvenient or counter to what we desire, we are saying that the words don't mean what they say and, therefore, the rights the constitution enshrines for us, given by God, do not exist.
For example, the Second Amendment of the Bill of Rights gives all able-bodied individuals (understood as the militia) the right to keep and bear arms. That right was enshrined because the Founding Fathers were supremely suspicious of the power and authority of the countries from which they came, countries governed by the rule of man. They also understood that it was possible for the government to cease to govern according to its own constitution. They, therefore, recognized in the bill of rights the natural right of individuals to keep and bear arms for their own protection and, if necessary, to hold the government accountable if it failed to govern constitutionally. The Second Amendment does not exist so hunters and sportsmen can keep a shotgun to hunt or shoot skeet!
Many people quite reasonably believe that individuals should not have the right to own handguns. That is a legitimate opinion to have. It is not legitimate, however, to simply "reinterpret" the constitution to say that individuals should not have that right because the founders could not have envisioned they way we live in this day and age. The constitution establishes the means to change through constitutional amendment and it is appropriately difficult to do. If you want to change the constitution, change it. But when we say that the constitution may be reinterpreted to reached a desired outcome, we are in effect saying that the words don't mean what they say. If that is the case then none of the words mean what they say, they are not natural rights given by God, and our rights do not exist.
2. Government run health care is an inevitable failure. The government never runs anything more efficiently than the private sector. The only way governments save money on health care is by rationing care. The result is always reduced services, less innovation, longer waits, and less accountability. If you want to pay less for health care, join an HMO and accept less access to specialized medicines and someone else making health care decisions for you, or, better yet, start a Health Savings Account (HSA) and buy a high deductible health insurance policy which gives you responsibility for minor health related issues yet protects you from catastrophic losses. Isn't that what insurance is for after all? The reason why third party insurance is so expensive is because it is really health care financing.
3. The U.S. Constitution is the foundation of America's greatness. It established in word, for all to see, our country as one made of law, not of man, and governed for, by, and of the people. When we stray from that ideal, when we cease to become a country governed my law but rather by man, we endanger the very future of our country and the uniqueness of American experiment. I believe that America is worth preserving for future generations. So, how do we endanger the constitution? When we neglect to interpret the constitution according to the words and their original intent. Words mean what they say. When we decide to ignore what they say because their intent is inconvenient or counter to what we desire, we are saying that the words don't mean what they say and, therefore, the rights the constitution enshrines for us, given by God, do not exist.
For example, the Second Amendment of the Bill of Rights gives all able-bodied individuals (understood as the militia) the right to keep and bear arms. That right was enshrined because the Founding Fathers were supremely suspicious of the power and authority of the countries from which they came, countries governed by the rule of man. They also understood that it was possible for the government to cease to govern according to its own constitution. They, therefore, recognized in the bill of rights the natural right of individuals to keep and bear arms for their own protection and, if necessary, to hold the government accountable if it failed to govern constitutionally. The Second Amendment does not exist so hunters and sportsmen can keep a shotgun to hunt or shoot skeet!
Many people quite reasonably believe that individuals should not have the right to own handguns. That is a legitimate opinion to have. It is not legitimate, however, to simply "reinterpret" the constitution to say that individuals should not have that right because the founders could not have envisioned they way we live in this day and age. The constitution establishes the means to change through constitutional amendment and it is appropriately difficult to do. If you want to change the constitution, change it. But when we say that the constitution may be reinterpreted to reached a desired outcome, we are in effect saying that the words don't mean what they say. If that is the case then none of the words mean what they say, they are not natural rights given by God, and our rights do not exist.
Thursday, January 8, 2009
Vaclav Klaus: A Profile In Courage
Vaclav Klaus, the President of the Czech Republic, is a man of great moral courage. Jailed by the communists for being an outspoken critic of the failed ideology, he spent many years in prison only to lead his country's break from the Soviet bloc and hasten the crumbling of the iron curtain. Because of his extraordinary leadership millions live in freedom. Yet, even as communism has diminished as a threat to the liberty of people the world over, it has been replaced by the voracious power-grab of those who wish to gain domination over the actions of others in the name of global climate change. Even as millions willingly forfeit their economic liberty to others in the name of saving the planet, Vaclav Klaus is one of the very few political leaders with the moral courage and integrity to voice his opposition to the myth of man-made global warming and the cult of environmentalism.
I encourage you to watch the following video:
I found it ironic that the BBC interrogator accused Vaclav Klaus of being arrogant. Who do you think came off as the arrogant one? So now it is arrogant to fight for freedom and liberty? It is arrogant to stand up to the ridicule and the contempt of the mainstream media and political power? It is arrogant to think outside the box? Mr. Klaus made a great point: Who is more arrogant than Al Gore and his demand that there is a scientific consensus that global warming is man-made (there isn't) and accelerating (it isn't), and all debate must stop?
I plan to post soon about the science that demonstrates that man-made global warming is a myth, but I thought this video was very illustrative of the political pressure the mainstream media, environmental socialists, and liberal politicians place on those that voice opposition to their new religion of environmentalism.
Climate change is the trees; more government control in the name of the environment is the forest.
I encourage you to watch the following video:
I found it ironic that the BBC interrogator accused Vaclav Klaus of being arrogant. Who do you think came off as the arrogant one? So now it is arrogant to fight for freedom and liberty? It is arrogant to stand up to the ridicule and the contempt of the mainstream media and political power? It is arrogant to think outside the box? Mr. Klaus made a great point: Who is more arrogant than Al Gore and his demand that there is a scientific consensus that global warming is man-made (there isn't) and accelerating (it isn't), and all debate must stop?
I plan to post soon about the science that demonstrates that man-made global warming is a myth, but I thought this video was very illustrative of the political pressure the mainstream media, environmental socialists, and liberal politicians place on those that voice opposition to their new religion of environmentalism.
Climate change is the trees; more government control in the name of the environment is the forest.
Monday, January 5, 2009
Buy and Hold: Alive and Well
I find it interesting that so many stories have been popping up in on television, the internet, and investing magazines proclaiming the death of "Buy and Hold" as investing strategy. It is perfectly understandable after the horrendous performance of virtually all world stock markets. I assure you, however, that properly understood and implemented, buy and hold remains a viable and productive investment strategy.
First of all, buy and hold doesn't work for all types of investment assets. It works perfectly well with broad market index mutual funds and exchange traded funds as well as well-diversified and well-managed stock and bond funds. It does not work well with cyclical stocks that pay little or no dividend. It works very well with fundamentally strong companies in non-cyclical or defensive industries that pay good dividends. In fact, it is exactly times like these that make buy and hold work so well with the right kinds of assets.
How can buy and hold work well when the market goes down? Reversion to the mean. Let's look at a simple example. Say you buy 100 shares of company XYZ at $20 per share for a total investment of $2000. Let's also say that XYZ pays a 5% annual dividend, or $0.25 per quarter per share. After three months let's say that XYZ has lost 25% of its value. That would leave you with 100 shares of XYZ at $15 per share plus $25 in dividends reinvested at $15 per share for a total of 101.67 shares. Now let's say that XYZ continues to slide to $10 per share in a severe market downturn, yet it remains a fundamentally strong company. After reinvesting the quarterly dividend you would now have 104.2 shares of XYZ at $10 per share for a total value of $1042. In the second half of the year the market starts to recover bringing shares of XYZ with it back to $15 per share. Now after reinvesting the quarterly dividend you would have 105.94 shares of XYZ for a total value of $1589.10. And now by the end of the year the market has regained its original level bringing XYZ with it back to $20 per share. After reinvesting the dividend you would have 107.26 shares of XYZ at $20 per share for a total value of $2145.29 for a total return of 7.3% in a market that went nowhere in 12 months. Had you not reinvested dividends the return would have simply been the 5% dividend. Had you invested in a stock paying no dividend your return would have been zero for 12 months.
If you know the stock is going to go down, why not just wait and invest at a lower price per share? Well, that makes complete sense, but who knew before the fact that the stock market was going to be down so much in 2008? In fact, if you know a stock is going to go down, why not just short it? Hey, simple! But you know it is not really that simple. I know of no major investment analyst or columnist that knew that world markets were going to perform as poorly as they did in the last year (aside from a few gold-bugs that have been predicting armageddon every year for the last 15 years - even a broken clock is right twice a day). How about if you were a trader and set stop-losses or bought puts, etc.? Who knows? Depends upon your level of expertise, skill, timing, and trading strategy, however, studies show that the vast majority of traders under perform that market averages.
The above example shows pretty clearly why not all stocks qualify as good candidates. Stocks that pay little or no dividend do not present the opportunity to profit from reinvesting at lower levels. Stocks of companies that are not fundamentally strong reduce the likelihood that they will at least perform as well as the market over the long term. Financially strong, market leading companies with strong competitive advantages and good management can actually use severe market downturns to gain market share from weak rivals and may in fact benefit over the long term. And well-managed, defensive/non-cyclical companies tend to outperform the market in severe downturns and present stock patterns with more of an upward bias compared to deep cyclical companies.
So, does this mean you should never invest in non-dividend paying companies? No, not at all. It just requires a slightly different strategy. For example, I own Cisco Systems (CSCO), the large networking equipment company. I realize that technology companies are cyclical, but I still consider them a growth industry compared to, say, chemical companies, like DuPont or Dow Chemical. CSCO pays no dividend but they are fundamentally very strong with billions in cash on their balance sheet. In severe market downturns CSCO tends to use their strength to acquire competitors and take market share by offering financing to customers while continuing to invest in research and development. In the last 12 months, CSCO is down from about $27 to about $17, with a 52 week low of $14.20. While I have not benefited from reinvestment of any dividend as CSCO doesn't pay one, I have used the drop in the share price to add to my position in the stock. When CSCO recovers, which I believe it inevitably will, I will participate in its recovery. Could a trader outperform me? Sure, its possible. But statistics say it is tough. A better strategy might be to use options, but that doesn't come without a cost.
Have you heard the expression, "Buy when there is blood in streets?" What that is basically saying is that you make money in investing in the stock market when the market is so bad that nobody want to own stocks. In other words, the best time to buy is when the conventional wisdom is to sell. Well, right now might be the time to sell the idea that "buy and hold is dead" and buy "buy and hold."
First of all, buy and hold doesn't work for all types of investment assets. It works perfectly well with broad market index mutual funds and exchange traded funds as well as well-diversified and well-managed stock and bond funds. It does not work well with cyclical stocks that pay little or no dividend. It works very well with fundamentally strong companies in non-cyclical or defensive industries that pay good dividends. In fact, it is exactly times like these that make buy and hold work so well with the right kinds of assets.
How can buy and hold work well when the market goes down? Reversion to the mean. Let's look at a simple example. Say you buy 100 shares of company XYZ at $20 per share for a total investment of $2000. Let's also say that XYZ pays a 5% annual dividend, or $0.25 per quarter per share. After three months let's say that XYZ has lost 25% of its value. That would leave you with 100 shares of XYZ at $15 per share plus $25 in dividends reinvested at $15 per share for a total of 101.67 shares. Now let's say that XYZ continues to slide to $10 per share in a severe market downturn, yet it remains a fundamentally strong company. After reinvesting the quarterly dividend you would now have 104.2 shares of XYZ at $10 per share for a total value of $1042. In the second half of the year the market starts to recover bringing shares of XYZ with it back to $15 per share. Now after reinvesting the quarterly dividend you would have 105.94 shares of XYZ for a total value of $1589.10. And now by the end of the year the market has regained its original level bringing XYZ with it back to $20 per share. After reinvesting the dividend you would have 107.26 shares of XYZ at $20 per share for a total value of $2145.29 for a total return of 7.3% in a market that went nowhere in 12 months. Had you not reinvested dividends the return would have simply been the 5% dividend. Had you invested in a stock paying no dividend your return would have been zero for 12 months.
If you know the stock is going to go down, why not just wait and invest at a lower price per share? Well, that makes complete sense, but who knew before the fact that the stock market was going to be down so much in 2008? In fact, if you know a stock is going to go down, why not just short it? Hey, simple! But you know it is not really that simple. I know of no major investment analyst or columnist that knew that world markets were going to perform as poorly as they did in the last year (aside from a few gold-bugs that have been predicting armageddon every year for the last 15 years - even a broken clock is right twice a day). How about if you were a trader and set stop-losses or bought puts, etc.? Who knows? Depends upon your level of expertise, skill, timing, and trading strategy, however, studies show that the vast majority of traders under perform that market averages.
The above example shows pretty clearly why not all stocks qualify as good candidates. Stocks that pay little or no dividend do not present the opportunity to profit from reinvesting at lower levels. Stocks of companies that are not fundamentally strong reduce the likelihood that they will at least perform as well as the market over the long term. Financially strong, market leading companies with strong competitive advantages and good management can actually use severe market downturns to gain market share from weak rivals and may in fact benefit over the long term. And well-managed, defensive/non-cyclical companies tend to outperform the market in severe downturns and present stock patterns with more of an upward bias compared to deep cyclical companies.
So, does this mean you should never invest in non-dividend paying companies? No, not at all. It just requires a slightly different strategy. For example, I own Cisco Systems (CSCO), the large networking equipment company. I realize that technology companies are cyclical, but I still consider them a growth industry compared to, say, chemical companies, like DuPont or Dow Chemical. CSCO pays no dividend but they are fundamentally very strong with billions in cash on their balance sheet. In severe market downturns CSCO tends to use their strength to acquire competitors and take market share by offering financing to customers while continuing to invest in research and development. In the last 12 months, CSCO is down from about $27 to about $17, with a 52 week low of $14.20. While I have not benefited from reinvestment of any dividend as CSCO doesn't pay one, I have used the drop in the share price to add to my position in the stock. When CSCO recovers, which I believe it inevitably will, I will participate in its recovery. Could a trader outperform me? Sure, its possible. But statistics say it is tough. A better strategy might be to use options, but that doesn't come without a cost.
Have you heard the expression, "Buy when there is blood in streets?" What that is basically saying is that you make money in investing in the stock market when the market is so bad that nobody want to own stocks. In other words, the best time to buy is when the conventional wisdom is to sell. Well, right now might be the time to sell the idea that "buy and hold is dead" and buy "buy and hold."
Tuesday, December 30, 2008
Obama: Sandbagger-in-Chief?
Dismal consumer sentiment readings. The worst economy since the Great Depression. Vice-President Elect Joe Biden says the economy is in danger of "falling into an abyss." President Elect Obama says it could take years for the economy to recover.
Does anyone get the feeling that the new President and his supporters in the media are sandbagging the American economy? I mean, it would make sense wouldn't it? If they are successful, that would seem to give them free reign to pass a new stimulus package virtually unlimited in size, far beyond what the American public would willingly allow if we were in merely a recession.
I fear that is where we are headed. I expect that come late January we will see a truly gargantuan economic stimulus package with every liberal democrat project you can image. I also expect that shortly after its automatic approval by the new leftist congress we will begin to see stories in the media and from the new White House administration of recovery in the economy. And low and behold, the "reason" given for the recovery will be the Liberal's economic agenda. I can see it now: the fulfillment the new Messiah's "hope and change."
So, what am I going to do about it? I am investing. I think buying the stock of great companies when they are depressed and holding them for the long term is always a great idea. I also believe there are some very good selective opportunities in real estate. For the first time in quite a while it is possible to buy a property a such depressed levels that significant positive cash flow can be achieved with a reasonable down-payment and a conservative assessment of income generation. I continue to believe that if you are prepared to hold you investments for the long term, this could be the buying opportunity of a lifetime in a number of asset classes.
Does anyone get the feeling that the new President and his supporters in the media are sandbagging the American economy? I mean, it would make sense wouldn't it? If they are successful, that would seem to give them free reign to pass a new stimulus package virtually unlimited in size, far beyond what the American public would willingly allow if we were in merely a recession.
I fear that is where we are headed. I expect that come late January we will see a truly gargantuan economic stimulus package with every liberal democrat project you can image. I also expect that shortly after its automatic approval by the new leftist congress we will begin to see stories in the media and from the new White House administration of recovery in the economy. And low and behold, the "reason" given for the recovery will be the Liberal's economic agenda. I can see it now: the fulfillment the new Messiah's "hope and change."
So, what am I going to do about it? I am investing. I think buying the stock of great companies when they are depressed and holding them for the long term is always a great idea. I also believe there are some very good selective opportunities in real estate. For the first time in quite a while it is possible to buy a property a such depressed levels that significant positive cash flow can be achieved with a reasonable down-payment and a conservative assessment of income generation. I continue to believe that if you are prepared to hold you investments for the long term, this could be the buying opportunity of a lifetime in a number of asset classes.
Friday, December 19, 2008
Horrible Southwest Experience
Any of you who know me or have read my blog can quickly determine that I am a passionate advocate for free-market capitalism and business. I am an honest believer in the ingenuity and ambition of uninhibited entrepreneurship and the enormous benefit it brings to each and every one of us. There are times, however, and this is one of them, that I become frustrated, exasperated, and truly disappointed, when I see a company deliver an awful product or provide extremely poor customer service, to the point of contempt for their customers.
Yesterday, I started early in the morning, departing the airport in Los Angeles at 7 a.m. bound for home in Spokane, Washington, on a full-fare ticket. Flying through Oakland, my flight to Spokane was cancelled after an hour delay due to heavy snow in Spokane and I was eventually re-booked through Seattle. Five hours after my original scheduled departure from Oakland we were airborne once again only to be informed by a flight attendant minutes before landing in Seattle that Spokane International Airport had closed for the remainder of the evening. I could see this was going to be a mess. And to make matters worse, the snow fall had been so heavy that the pass between Seattle and Spokane had been closed to all traffic.
Walking out of the jetway I immediately knew I had walking into a customer service disaster. The lines were already hundreds of people long and far too few gate agents to assist customers. I immediately headed for Alaska Airlines where a helpful gate agent diligently juggled multiple customers' reservations. Despite my best efforts, no flight was available into area cities but I appreciated the efforts the agent provided.
Back to Southwest Airlines. Standing in one of the ridiculously long lines, I called the Southwest Reservations number to expedite getting re-booked. I was told at that time, to my astonishment, that the first flight available for them to rebook me was on December 22, a full 4 days away!
"Okay," I said, "book me on another airline."
"I can't do that. We don't have any agreements with other airlines to do that," the customer service agent on the phone informed me.
"Okay, then get me a hotel for next four days." That seemed reasonable to me.
"We can't do that. We can't be held responsible for the weather," was her reply.
"Hold on a second," I retorted, "No, the airport in Spokane was closed because of the weather. You aren't re-booking me for four days because Southwest cancelled all the flights and made no provision to get your passengers to their destination when the airport opens." After speaking to two successively higher supervisors on the phone I could see I was never going to get anywhere with them on the phone.
After another hour of standing in line I eventually came to a Southwest Airlines customer service agent. To add insult to injury, the agent informed me that she would happily rebook me for the next available flight...on December 23, five days away! Here we go again. Okay, book me on another airline. "We can't," was the immediate reply. Do you know what "we can't" means to Southwest Airlines? It means "we won't because you don't mean enough to us as a customer to make it worth our while to do so." Okay, then pay for my hotel and meals for the next five days. No? Okay, then pay for my hotel and and a rental car until the pass opens. And to each and every request, the response from Southwest Airlines was "No, we can't. It's not our fault. It's because of the weather."
Do you know what? No, wrong answer! Again, the airport in Spokane was closed because of the weather. I am stranded in Seattle for five days because Southwest Airlines cancelled all the flights and deemed it was an acceptable response to not add any flights to get their passengers to their destination! I am stranded for five days in Seattle because Southwest won't take the steps necessary to rebook me on another airline because they don't care that much about their customers! I am stranded in Seattle for five days with no compensation for a hotel, meals, or a car, because Southwest has absolute contempt for their customers! Tell me: What good is an airline that has no commitment to providing that service they are supposedly in business to provide - flying their passengers safely, in a timely manner, to and from their destination and not just somewhere, anywhere, in between? What good is an airline that thinks it is an acceptable answer to strand their passengers and with no regard for their well-being? How can a company with service like this still be in business? How can such poor business people maintain gainful employment? Unreal!
"We can't" is not a solution to a customer's problem. Look, I am a pilot for a well regarded major foreign airline. My company doesn't do that. Though they are by no means infallible, they respect and value their customers and it shows. If passengers are stranded due to weather, they take whatever steps are necessary to get them to their destination in a reasonable period of time, whether it be booking them on another airline or scheduling additional flights. For example, just a couple of weeks ago, protesters in Thailand took control of the airport in Bangkok and shut it down for days. Immediately my company began working on contingency plans. As a result, when the airport was eventually opened some six day later, an unscheduled aircraft arrived to pick up our passengers as well as passengers from other airlines, and fly them Hong Kong so they could continue their travels. It is because of a commitment to service like that that my company is considered one of the best airlines in the world. It should be no coincidence then that they are also one of the most profitable airlines in the world.
Yesterday, I started early in the morning, departing the airport in Los Angeles at 7 a.m. bound for home in Spokane, Washington, on a full-fare ticket. Flying through Oakland, my flight to Spokane was cancelled after an hour delay due to heavy snow in Spokane and I was eventually re-booked through Seattle. Five hours after my original scheduled departure from Oakland we were airborne once again only to be informed by a flight attendant minutes before landing in Seattle that Spokane International Airport had closed for the remainder of the evening. I could see this was going to be a mess. And to make matters worse, the snow fall had been so heavy that the pass between Seattle and Spokane had been closed to all traffic.
Walking out of the jetway I immediately knew I had walking into a customer service disaster. The lines were already hundreds of people long and far too few gate agents to assist customers. I immediately headed for Alaska Airlines where a helpful gate agent diligently juggled multiple customers' reservations. Despite my best efforts, no flight was available into area cities but I appreciated the efforts the agent provided.
Back to Southwest Airlines. Standing in one of the ridiculously long lines, I called the Southwest Reservations number to expedite getting re-booked. I was told at that time, to my astonishment, that the first flight available for them to rebook me was on December 22, a full 4 days away!
"Okay," I said, "book me on another airline."
"I can't do that. We don't have any agreements with other airlines to do that," the customer service agent on the phone informed me.
"Okay, then get me a hotel for next four days." That seemed reasonable to me.
"We can't do that. We can't be held responsible for the weather," was her reply.
"Hold on a second," I retorted, "No, the airport in Spokane was closed because of the weather. You aren't re-booking me for four days because Southwest cancelled all the flights and made no provision to get your passengers to their destination when the airport opens." After speaking to two successively higher supervisors on the phone I could see I was never going to get anywhere with them on the phone.
After another hour of standing in line I eventually came to a Southwest Airlines customer service agent. To add insult to injury, the agent informed me that she would happily rebook me for the next available flight...on December 23, five days away! Here we go again. Okay, book me on another airline. "We can't," was the immediate reply. Do you know what "we can't" means to Southwest Airlines? It means "we won't because you don't mean enough to us as a customer to make it worth our while to do so." Okay, then pay for my hotel and meals for the next five days. No? Okay, then pay for my hotel and and a rental car until the pass opens. And to each and every request, the response from Southwest Airlines was "No, we can't. It's not our fault. It's because of the weather."
Do you know what? No, wrong answer! Again, the airport in Spokane was closed because of the weather. I am stranded in Seattle for five days because Southwest Airlines cancelled all the flights and deemed it was an acceptable response to not add any flights to get their passengers to their destination! I am stranded for five days in Seattle because Southwest won't take the steps necessary to rebook me on another airline because they don't care that much about their customers! I am stranded in Seattle for five days with no compensation for a hotel, meals, or a car, because Southwest has absolute contempt for their customers! Tell me: What good is an airline that has no commitment to providing that service they are supposedly in business to provide - flying their passengers safely, in a timely manner, to and from their destination and not just somewhere, anywhere, in between? What good is an airline that thinks it is an acceptable answer to strand their passengers and with no regard for their well-being? How can a company with service like this still be in business? How can such poor business people maintain gainful employment? Unreal!
"We can't" is not a solution to a customer's problem. Look, I am a pilot for a well regarded major foreign airline. My company doesn't do that. Though they are by no means infallible, they respect and value their customers and it shows. If passengers are stranded due to weather, they take whatever steps are necessary to get them to their destination in a reasonable period of time, whether it be booking them on another airline or scheduling additional flights. For example, just a couple of weeks ago, protesters in Thailand took control of the airport in Bangkok and shut it down for days. Immediately my company began working on contingency plans. As a result, when the airport was eventually opened some six day later, an unscheduled aircraft arrived to pick up our passengers as well as passengers from other airlines, and fly them Hong Kong so they could continue their travels. It is because of a commitment to service like that that my company is considered one of the best airlines in the world. It should be no coincidence then that they are also one of the most profitable airlines in the world.
Wednesday, December 17, 2008
Free Market Destoyed by Loss of Faith
We are witnessing yet another "forest for the trees" moment. So often in life the most obvious answer to a problem is the wrong answer. In fact, the most often asked question is usually the wrong question to ask. That is the case right now with the financial crisis we are going through in the United States. The financial crisis is actually a crisis of confidence, and that crisis of confidence has been caused by a loss of faith in the free market system by those who regulate it. The federal government created the problem because they lost faith, or never had it, in the free market system's ability to create wealth and benefit our society.
How did the government create this problem? We only have to go back to the end of the technology bubble in 2000 and the failure of Enron. Many people, including myself, lost money in the subsequent market sell-off. I had faith that the excesses of the system would be wrung out, that capital would be redeployed to those industries and markets most worthy. Shareholders would begin to assert control and implement needed corporate governance actions. Inefficient companies or those with poor management unworthy of investment would be forced to change or face extinction. Sure there would be layoffs and lost jobs and people get hurt, but recovery in a dynamic economy is swift. After a relatively short period of dislocation, the United States would again be on the path toward healthy, sustainable, economic growth, increased wealth, and employment growth.
But our politicians had no faith. Many of their noisiest constituents (and ignorant news media talking heads) were clamoring for action. Feeling a need to be seen doing something, they instituted a number of regulatory "reforms" culminating in the ill-conceived Sarbanes-Oxley bill. One of these ill-conceived reforms was the fore mentioned mark-to-market accounting standard (see Mark-T0-Market Disaster, December 9 2008, post below). There were other stupid moves made by our federal government, particularly the enforcement of the Community Reinvestment Act which forced banks to make mortgage loans to less credit-worthy borrowers in under served communities. Those borrowers made up a large percentage of sub-prime loans that were subsequently guaranteed by Fannie Mae and Freddie Mac under pressure from congress. Those sub-prime loans began to fail in 2007 in increasing numbers which led to the rapid decline in the overheated housing market. Buyers for those sub-prime collateralized mortgage obligations disappeared quickly. Exacerbated by mark-to-market accounting of illiquid securities, financial institutions were forced to post mounting losses driving many into failure and destroying the market capitalization of the survivors. The result: a massive loss of stock market value, a massive contraction of credit, and a rapid decline into recession. The long and short of it all: THE GOVERNMENT CAUSED THE FINANCIAL CRISIS!
Contrary to conventional wisdom and the pronouncements of offending politicians, unfettered capitalism did not cause this financial crisis. It was the regulators that caused the problem. And now we are expected to believe that regulation will save us? Not a chance. How do I know? Because instead of fixing the "reforms" that got us into this mess, the federal government keeps coming up with giant new programs and regulations that do nothing to reverse their previous actions, deal only with resulting credit seizure, and require yet more government control and eventually higher taxes. The use of government intervention to save the free market? Socialism can not save capitalism. Government caused the problems with the "free market." Socialism can't save the free market.
"Okay, smartypants. What should we do then," you say? The first answer is simple: Undo the actions that got us into the problem in the first place. Immediately repeal the mark-to-market accounting standard for assets not held for sale and replace it with mark-to-model accounting. That would immediately make the vast majority of financial institutions liquid and solvent. In fact, they would have too much capital on their balance sheets so lending to credit worthy borrowers would increase very rapidly. The regulator's job would then be to validate the models of financial institutions for asset write downs based upon actual and historical loss rates and cash flow expectations.
The second is more difficult but can be answered by asking the right question: Absent the credit crisis, what are the most immediate problems with the financial markets? The answer: market liquidity, market volatility, and housing values.
1. Market liquidity. How can we help market liquidity? We have to encourage participation in the market. How do we do that? Lower taxes. Immediately reduce capital gains taxes to zero for at least the next two years. Lower capital gains taxes encourage investors to take risk. Money will pour out of money-market funds into stocks, bonds, and mutual funds re-liquefying the market. And a rising market will encourage investment and recovery. How else? Double IRA and 401k contribution limits for at least the next two years. As it is, contribution limits are not high enough for individuals to save enough for a secure retirement. Raising the contribution limits would help. And it would allow individuals who have been so hurt in the last year's decline to participate in the market's recovery.
2. Market volatility. Reinstate the uptick rule for short sellers. As it stands now, short sellers using massive leverage can destroy the market value of virtually any company in a spiralling down market in a "bear raid," limiting a company's ability to raise capital, and endangering its entire existence as a going concern regardless of a company's intrinsic value or true economic prospects. The uptick rule prohibits a stock from being sold short when the last sale was priced down. It has worked well in the past at ensuring market stability and reducing volatility while enabling the practise of short selling to provide efficiency in market pricing.
3. Housing values. Rich Karlgaard of Forbes Magazine had a great idea (http://www.forbes.com/business/forbes/2008/1208/029a.html). In Hong Kong, when a mortgage borrower's financial situation changes in the historically volatile Hong Kong housing market, lending institutions simply rework the mortgage terms extending mortgage loan lengths to match the payment to the cash flow generated on the property. When cash flow increases, the mortgage term contracts. As a result, mortgage foreclosure is relatively infrequent in a market that is much more volatile than ours even considering the large declines over the last two years. Rather than renegotiating principle reductions or payments on mortgages that have a high propensity to fail yet again, financial institutions should negotiate increased loan lengths to keep people in their homes so long as they have the ability to pay. I spend a lot of time in Hong Kong. I've see it. It works.
What is the common thread here? No massive government intervention in the credit markets and equity ownership. We do not need socialism to save capitalism. We need government to get out of the way and have faith that the free market will continue to provide the most freedom, highest incomes, and greatest sustainable growth possible to this great country.
How did the government create this problem? We only have to go back to the end of the technology bubble in 2000 and the failure of Enron. Many people, including myself, lost money in the subsequent market sell-off. I had faith that the excesses of the system would be wrung out, that capital would be redeployed to those industries and markets most worthy. Shareholders would begin to assert control and implement needed corporate governance actions. Inefficient companies or those with poor management unworthy of investment would be forced to change or face extinction. Sure there would be layoffs and lost jobs and people get hurt, but recovery in a dynamic economy is swift. After a relatively short period of dislocation, the United States would again be on the path toward healthy, sustainable, economic growth, increased wealth, and employment growth.
But our politicians had no faith. Many of their noisiest constituents (and ignorant news media talking heads) were clamoring for action. Feeling a need to be seen doing something, they instituted a number of regulatory "reforms" culminating in the ill-conceived Sarbanes-Oxley bill. One of these ill-conceived reforms was the fore mentioned mark-to-market accounting standard (see Mark-T0-Market Disaster, December 9 2008, post below). There were other stupid moves made by our federal government, particularly the enforcement of the Community Reinvestment Act which forced banks to make mortgage loans to less credit-worthy borrowers in under served communities. Those borrowers made up a large percentage of sub-prime loans that were subsequently guaranteed by Fannie Mae and Freddie Mac under pressure from congress. Those sub-prime loans began to fail in 2007 in increasing numbers which led to the rapid decline in the overheated housing market. Buyers for those sub-prime collateralized mortgage obligations disappeared quickly. Exacerbated by mark-to-market accounting of illiquid securities, financial institutions were forced to post mounting losses driving many into failure and destroying the market capitalization of the survivors. The result: a massive loss of stock market value, a massive contraction of credit, and a rapid decline into recession. The long and short of it all: THE GOVERNMENT CAUSED THE FINANCIAL CRISIS!
Contrary to conventional wisdom and the pronouncements of offending politicians, unfettered capitalism did not cause this financial crisis. It was the regulators that caused the problem. And now we are expected to believe that regulation will save us? Not a chance. How do I know? Because instead of fixing the "reforms" that got us into this mess, the federal government keeps coming up with giant new programs and regulations that do nothing to reverse their previous actions, deal only with resulting credit seizure, and require yet more government control and eventually higher taxes. The use of government intervention to save the free market? Socialism can not save capitalism. Government caused the problems with the "free market." Socialism can't save the free market.
"Okay, smartypants. What should we do then," you say? The first answer is simple: Undo the actions that got us into the problem in the first place. Immediately repeal the mark-to-market accounting standard for assets not held for sale and replace it with mark-to-model accounting. That would immediately make the vast majority of financial institutions liquid and solvent. In fact, they would have too much capital on their balance sheets so lending to credit worthy borrowers would increase very rapidly. The regulator's job would then be to validate the models of financial institutions for asset write downs based upon actual and historical loss rates and cash flow expectations.
The second is more difficult but can be answered by asking the right question: Absent the credit crisis, what are the most immediate problems with the financial markets? The answer: market liquidity, market volatility, and housing values.
1. Market liquidity. How can we help market liquidity? We have to encourage participation in the market. How do we do that? Lower taxes. Immediately reduce capital gains taxes to zero for at least the next two years. Lower capital gains taxes encourage investors to take risk. Money will pour out of money-market funds into stocks, bonds, and mutual funds re-liquefying the market. And a rising market will encourage investment and recovery. How else? Double IRA and 401k contribution limits for at least the next two years. As it is, contribution limits are not high enough for individuals to save enough for a secure retirement. Raising the contribution limits would help. And it would allow individuals who have been so hurt in the last year's decline to participate in the market's recovery.
2. Market volatility. Reinstate the uptick rule for short sellers. As it stands now, short sellers using massive leverage can destroy the market value of virtually any company in a spiralling down market in a "bear raid," limiting a company's ability to raise capital, and endangering its entire existence as a going concern regardless of a company's intrinsic value or true economic prospects. The uptick rule prohibits a stock from being sold short when the last sale was priced down. It has worked well in the past at ensuring market stability and reducing volatility while enabling the practise of short selling to provide efficiency in market pricing.
3. Housing values. Rich Karlgaard of Forbes Magazine had a great idea (http://www.forbes.com/business/forbes/2008/1208/029a.html). In Hong Kong, when a mortgage borrower's financial situation changes in the historically volatile Hong Kong housing market, lending institutions simply rework the mortgage terms extending mortgage loan lengths to match the payment to the cash flow generated on the property. When cash flow increases, the mortgage term contracts. As a result, mortgage foreclosure is relatively infrequent in a market that is much more volatile than ours even considering the large declines over the last two years. Rather than renegotiating principle reductions or payments on mortgages that have a high propensity to fail yet again, financial institutions should negotiate increased loan lengths to keep people in their homes so long as they have the ability to pay. I spend a lot of time in Hong Kong. I've see it. It works.
What is the common thread here? No massive government intervention in the credit markets and equity ownership. We do not need socialism to save capitalism. We need government to get out of the way and have faith that the free market will continue to provide the most freedom, highest incomes, and greatest sustainable growth possible to this great country.
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