The Iowa GOP debate beer poll

August 15, 2011

The Republican presidential debate in Iowa was last night and the scoreboard was lighting up this morning. So are the commentators. So far the candidates have all won and all lost. How can this be?

The content of the debate was not very substantive. But the canned responses were very good. The efforts of the questioners to get away from the canned responses was feeble (Bachmann was asked what is means to be a submissive wife).

So who said the magic words that would propel them over the top of the other candidates? Or better stated, does anyone really care who said what? The answer does not have to be based on the opinions of the people who watched the substance of the debate. To find out why, review any of the recent speeches made by Mr. Obama. Those speeches also lacked substance, but many people liked them. Mr. Obama is popular despite his recent low showing in opinion polls. This is because he looks and sounds really good.

 You could have 1 beer with Mr. Obama.

So to find out who really scored last night, I again watched the debate, but this time with the TV’s sound off. I then graded the candidates by deciding who I could have a beer with. This is America after all. Here is my rundown:

Mitt Romney: He looks presidential and smiles. Who cares if he drinks beer? I bet he has a lot of well rehearsed drinking stories and he would certainly buy as he has the money. He rates 4 beers.

Herman Cain: He looked good making his statements. He looks like he would be fun to have around. I rate him 3 beers.

Rick Santorum: He acted as if he had a real need to call attention to himself. Thus he would buy and be entertaining. He rates 2 beers.

Michelle Bachmann: I always buy beers for ladies, and she looks both strong and pretty. So I will gladly buy her 2 beers.

John Huntsman: Ignoring the fact the he might not drink, I would still have a beer with him. But just 1 beer as he looks standoffish.

Ron Paul: He acts as if he needs me to buy him a beer. OK, I will buy him one. He rates a negative beer.

Tim Pawlenty: He looked irritated with Michelle Bachmann. Then he looked frustrated. He needs at least 2 beers to calm down.

Newt Gingrich: He does not look like much fun, and I know that I would have to buy. He rates a negative 2 beers.

So I am going out on a limb and predict that Mitt Romney will be the next nominee. But wait! Using the how you look and would I have a beer with you barometer, we will have to wait to see if Matt Damon or George Clooney declare for the Presidency!


Our leaders: A critique fo their performance on the deficit reduction plan

August 3, 2011

August 2, 2011

Well, the debt crisis is over. I do not know what this means as I never believed that there was a crisis. But since politicians always spin a positive out of a crisis, most Americans initially felt terrific with the crisis ending. Of course, within a couple of hours many columnists wondered who won, and then decided who won. We turned the “crisis” into a sporting event. For many Americans, it was more important to see if their side had won, rather than to think about how the political settlement affected their lives.

I think that a good settlement is one where no one gets everything they wanted. So here is my opinion on who won the “crisis”.

President Obama: More and more people are finally finding out that he is a conciliator, not a leader. He is good at standing back when the Democrats are not getting their way, thus making it look like others are failing, and also good at taking the credit when it appeared as though there was a settlement that favored the Democrats. Usually, when he takes a position, he frames it so that it appears the position is for the good of the country, but this time, by attempting to look like he was leading, he boxed himself into a corner such that he had to produce by the drop dead date of August 2, and so he settled for the scraps that the Democratic congressional leaders were fed by the Republicans. He also made it appear that all of his actions were centered on is 2012 election by insisting that the debt ceiling be adjusted so that it was not a problem until after the election. His move of calling the leaders to the White House for several meetings was based on his personal belief that he can talk anyone into anything. But he lost it when he told Eric Cantor not to call his bluff. Cantor correctly realized that the statement, to have credibility, means that there is a bluff to be called. Cantor and the Tea Party called it.

John Boehner: Within his party he looked as though he pulled enough votes together to get the deal done. He did the deal with no increase in taxes, and most of what the Republicans wanted. He did not impress all of the Tea Party folk though. But an analysis of the bargain looked to many commentators, and to many Democrats, that he had the better part of the deal. But he will lose in popularity as will the Republicans. While his backroom work was commendable, his front room work was terrible. He is not a likable speaker. He does not understand practically [but he probably does intellectually] that Obama will bounce back from his low popularity because people like him, because the issues are too complex for the average voter, and because Obama is a passable speaker. Boehner is not likeable, does not look sincere as he talks about the issues, is not passionate, and is a boring speaker. He is a leader within his party, but not a leader of the Republicans. He should have had, and still needs to have, someone who has the talent to speak with the likability of Obama so that he could have turned that speaker loose on the public.

Mitch McConnell: He looked like a sleazy backroom senate lifer who cannot be trusted. The worst job in the world would belong to the staffer who is given the job of making this guy look both intelligent and trustworthy. He did a good job of backroom work as a minority leader. I doubt that in the long run he will lose popularity as he was true to his sleazy self, and voters know that he is what he is.

The Tea Party: The party is not really organized, but the specter of small government, no new taxes, a balanced budget, and the appearance of the guts to confront the powers in Washington make them formidable. They kept Boehner from caving into the Democrats. They are a force to be respected which is what the Republican sub-leadership did.

Harry Reid: I personally do not like this kind of insincere manipulator, but you have to give him credit for making his speeches with a straight face. He was able to present a near McConnell plan and call it a new plan with reductions to the deficit based on a side plan to use money from the termination of the Iraq and Afghanistan wars, which he assumes will happen, at least for purposes of his plan. Just like McConnell, he will not lose from this adventure as his popularity in Nevada since 2007 has been low. Note – he wins reelection because he has the money and power to get voters who do not favor him to vote for him anyway.

Nancy Pelosi: She did a terrific job of staying on the sidelines, making no substantive statements, keeping out of the news, and generally disappearing until it appeared that the settlement would pass the House of Representatives. Then she took a position that was against the settlement because she did not “like” it, but for the settlement “for the good of the country”. This was an excellent job of doublespeak, and one that will increase her popularity. For someone with a limited intelligence and no real interest in the details of an agreement, she has excellent political sense.

Presidential candidates: With the exception of Michele Bachmann, the candidates did a good job of keeping their mouths shut, until the debate was over. The Republicans could have gained if they had unleashed Bachmann and Eric Cantor as both sell well in front of the media.

The deal itself: A subject for another time.

Possible credit rating downgrade if default occurs.

July 29, 2011

August 29, 2011: There is great fear being propagated by both Democrats and Republicans about the potential default of the United States on August 2, 2011. Default is simply the non-payment of interest and principal on outstanding United States debt. Technically it is not related to the real problem of the Treasury claiming that it does not have the money to pay all of its bills. Further, the new bond sales will have to be at a higher interest rate, thus raising interest rates for banks, citizens, and everyone else. This is because the Democrats and some Republicans are afraid that the rating agencies will lower the credit rating of the United States.
Standard & Poor’s have assigned the AAA rating to the following: Australia, Austria, Canada, Denmark, Finland, France, Germany, Liechtenstein, Luxembourg, the Netherlands, Norway, Singapore, Sweden, Switzerland, the United Kingdom and the United States.
Countries that have a lower rating include Japan and China which have a rating of AA-, the fourth highest rating.
Does a rating make a difference? According to economists, it affects the risk of repayment of the money that is borrowed by the country. Because there is more risk, there is a higher interest rate. So in theory interest rates will have to go up.
But I disagree.
Here is the situation in the bond markets worldwide as of July 29, 2011.
Country Credit rating Latest yield Spread vs bund Spread vs T-bonds
Australia AAA 4.91% +2.28 +1.95
Canada AAA 2.88% +0.25 -0.07
France AAA 3.26% +0.64 +0.31
Germany AAA 2.63% — -0.33
Japan A- 1.08% -1.55 -1.88
Switzerland AAA 1.45% -1.18 -1.51
UK AAA 2.98% +0.35 +0.02
US AA+ 2.95% +0.33
If you are an investor, where do you put your money for maximum benefit? Your money is safest in Switzerland but you yield is also the lowest. Your best yield is Australia, but that yield should fall as the price of Australian bond prices go up. Japan’s rating is the fourth lowest, but, contrary to theory, its yield is very low. Let us say it ends at a yield of 4%. Your other option is to buy European, but that sector is getting ready to both save the Euro and the countries of Greece, Ireland, Portugal and Spain. Thus European prices will change but it is not possible to predict which way. An investor will also have to deal with foreign accounting rules. The United States will always pay their obligations. What the United States will not pay are some of the programs that the Obama Administration controls. So where do you go if you are an investor. That is why at this time that Wall Street is not really concerned.
Thus the threat that the credit of the United States will be adversely affected by no deal as of August 2, 2011 is in the real world – hollow.

Debt default 7-15-2011

July 15, 2011

July 15, 2011
I keep thinking about the Democratic position that most American voters are stupid. Now I am beginning to think that Republican leaders are stupid.
Remember when President Bush proposed private personal Social Security accounts which would have allowed people to control the investment in their Social Security accounts? Vice-president Gore and the then Senator Obama called that a risky scheme, and defended the social security system by saying that there was enough funding in the system to carry beneficiaries, even if social security collected less taxes, until 2026. After all, the Social Security system was set up to be self-funding. Consequently it is off-budget – it does not count in the United States budget. The taxes collected are placed in a trust fund and cannot be used to pay anything other than social security benefits. President Obama said so.
Now Obama is threatening that, if the debt ceiling is not raised, that social security checks may not go out because there is not enough money to pay them. So how can the President say on one hand that there is enough money in the Social Security account, but on the other hand that there is not enough money in the social security account?
Well, it could be because the President believes, and lives by the rules, that he can say contradictory statements and regardless of inconsistencies, and the American people will believe him. It also could be because he is inexperienced, but I doubt that because the Social Security Trust Fund is a subject of Econ 101 in most universities. My guess is that he has always known that there is no money in the trust fund, only U. S. Treasury bonds. What Obama is saying that there is not enough money to allow the treasury to redeem its bonds, and thus no money for social security.
Now, since the trust fund is a non-budget item, why not make the trust fund a non-debt item. All congress has to do is pass a law that says that the Trust Fund cannot be counted toward debt. Thus it has to be paid no matter what the debt ceiling is, and by taking it out, it effectively lowers the debt ceiling by the amount of the obligation. Alternatively, keeping the same debt ceiling effectively raises the debt ceiling. Thus both Democrats and Republicans can claim victory, and Obama can claim to be a leader.
And President Obama can argue that he did not lie to Americans because the ability to parse words allows a person to make to contradictory phrases in the same sentence.
You ask, how can this occur if there is no money? The answer is that Monetary Policy as implemented by the Federal Reserve allows the Fed to print money and use that money to buy Treasury Bonds. They have been doing this during the recession and that is how the Fed helps fund the stimulus program. Chairman Bernanke indicated as much on July 13, 2010.
So why are Republicans stupid? Because they realize that by telling the truth, working for a good political solution, that they cannot match Obama’s diatribe. They need to support Eric Cantor and attack.