Mar 28, 2010

Cyclical Recovery in a Secular Bear Market

Cyclical Recovery in a Secular Bear Market

“Industrial capitalism has generated the greatest productive power in human history. To date, no other socioeconomic system has been able to generate comparable productive power.”—Peter L. Berger

Weekly percentage performance for the major indices
Based on last Friday’s official settlement...

INDU: 1.01%
SPX: 0.58%
COMPQ: 0.87%
RUT: 0.75%


Despite what many (including this writer) have chided as irresponsible government policies, the market continues its death defying (OK, that is a bit of hyperbole) rise. Amazingly, the US market has overtaken those of China, India and of other faster growing countries as they begin to battle emerging bubbles while the US is keeping the pedal to the metal. US investors, never ones to sneeze at accommodative Fed policy, continue to support their market with fervor and zest. In a foreign version of ‘don’t’ fight the Fed’, capital has been flowing out of these foreign markets and into the US as the Fed appears willing to keep rates low for much longer than necessary in an effort to kick start housing and re-inflate assets. Unfortunately, recent policy changes such as the new healthcare bill will ensure higher unemployment rates over the long run while the Fed will more than likely be successful in not only re-inflating assets, but fueling another round of inflation, possibly as early as late 2011.

If you believe, as we do, that the US is experiencing a cyclical bull market recovery in a secular bear market, then its time to own mid-cycle stocks and domestic securities over early cycle and foreign securities. Consumer issues, financials, and industrials should benefit from this mid-cycle environment. If employment truly kicks up, then consumer stocks should shine.

Remember this comes with a backdrop that we are still mired in a bear market which began ten years ago, March 2000. Our view is that this bear market, punctuated with powerful bull market rallies, may not end until 2014. Only time will tell, but caution is virtuous when it comes to markets.


Actual Consensus Prior
Existing Home Sales 5.02 mil 5.00 mil 5.05 mil
Durable Goods Orders 0.5% 0.6% 3.9%
Durable Goods ex-Autos 0.9% 0.6% -0.6%
New Home Sales 308K 315K 315K
Continuing Claims 4648K 4562K 4702K
Initial Claims 442K 450K 456K
GDP-3rd Q4 estimate 5.6% 5.9% 5.9%
GDP Deflator-Q4 0.5% 0.4% 0.4%
Michigan Sentiment Indicator 73.6 73.0 72.5

New home sales fell to an all time record low in February, 308K. Existing home sales also came in soft, down 0.6%. The weakness was focused in single family homes while condominium sales rose 5%. Prices continue to be weak, and inventories were up again. The weather in the east was especially bad in February, but these numbers are reminders that despite spending trillions, the problems plaguing the housing industry are not over.

Durable goods orders (see chart below) increased 0.5% vs. the consensus estimate of 0.6% in February after increasing 3.9% in January. Transportation (motor vehicles) was once again weak as orders outperformed the consensus 0.9% to 0.6% excluding autos. Business investment rebounded strongly after being very soft in January. Orders of nondefense capital goods rose 1.1% after falling 3.9% in the previous month.

Government Economics-the New Math

Let’s see if this makes sense. There are reportedly 32 million uninsured Americans, of which 10 million are eligible for Medicaid but haven’t enrolled; another 12 million make $50K or more but choose not to have insurance, which leaves 10 million people (excluding 12-20 million illegal immigrants) who need health care coverage. We are going to spend $1 trillion to cover those 10 million uninsured, which works out to roughly $100,000 per person.

That’s a pretty pricey solution. Nice going Congress!

Treasury Yields Rise
Treasury yields rose on the week, with the TLT (a measure of the 20 year Treasury) falling 2.5%. Why? There are a number of plausible reasons.

First, this could be an indication that the global investors are saturated with low yielding US paper, and will demand higher yields to offset the risk of owning debt in one of the most levered countries in the world. Huge issuance for the week, $120 billion, with the likelihood of another $1.8 trillion in the pipeline, had to have some impact on rates.

Second, investors may be sniffing out higher US economic growth, which could be reflected in higher yields. A few months ago we discussed a rise in yields from a stronger economy which could eventually force the Fed to raise rates.

Third, PIMCO’s Bill Gross noted this week that the present value of the US unfunded social insurance expenditures (Social Security and Medicare) totaled $46 trillion! He feels that is why the 30 year now trades 360bps above the 2 year note. He also asserts that the new health care legislation will add to, not reduce, fiscal deficits. We agree and feel that the new healthcare bill is destined (and designed) to add hundreds of billions to the deficit and will result in higher tax rates, lower employment, and more sluggish economic growth in the future (think Europe).

Finally, China could also have been a cause. China, whose fiscal house is seems to be in better order than that of the US, has had to endure a verbal berating from the Obama Administration over the handling of their currency. The Chinese hold over $1 trillion in US debt and over $2.4 trillion in foreign reserves. They may have been sending a signal this week to the US that we should back off or face a debt issuance future devoid of Chinese participation. Given we will be issuing close to $2 trillion in debt this year and with plans to increase the deficit dramatically with another entitlement program, Mr. Obama would help his cause by catering publicly to our biggest creditor, as opposed to just bowing down to terrorist countries.

As always, watch the bond market as a leading indicator to the stock market. The Clinton’s learned early that the bond market should be heeded.

Top 30 CEOs

This weekend’s Barron’s released their list of the thirty most respected CEOs. I am happy to say that six of the members of this list are readers of this note. While I don’t release the names of readers, given my past areas of coverage it shouldn’t be hard to figure out the six.


Unintended Consequence of Healthcare Reform
From the Sound Off section of

"This is cool. I'm just going to drop my insurance now, pay the $700 yearly fine, and then pick up insurance when I get sick since insurance companies can't deny me." "I'll save a bundle of money every year."

"I suspect this is what most 'smart' Americans will do. And then guess what? Insurance companies will collapse because they'll have no pool of money to pay for the claims that start coming in, and we'll be in a world of hurt again."

Look Who’s Talking Now
Fed Chairman Ben Bernanke said the U.S. government should not be in a position in which it is forced to extend state aid to major financial institutions. "It is unconscionable that the fate of the world economy should be so closely tied to the fortunes of a relatively small number of giant financial firms," Bernanke said. "If we achieve nothing else in the wake of the crisis, we must ensure that we never again face such a situation."

To me this sounds like a call to repeal Graham Leach Bliley.

The chart below, courtesy, show the median price of a single-family home over the past 40 years in the US. Housing prices have dropped 35% from the mid-2005 top, and are now at levels comparable to the peak of the 1980 bubble.


Jim Fickett of ClearOnMoney provided the following chart. “Serious delinquencies continue to rise – in the 64% of the market covered by Mortgage Metrics, there are now about 3.4 million loans either seriously delinquent or in the process of foreclosure. Completed modifications actually declined in each of Q2-Q4 of 2009. Foreclosures have been flat. Thus, as this chart suggests, the various programs amount to little more than window dressing hiding the underlying weakness of the Real Estate market.”

Cost of Healthcare
Farm machinery maker Deere, with headquarters in Moline, Illinois, said in a statement that the new health care law will increase its expenses by $150 million this fiscal year. Caterpillar said it expects to record a charge of about $100 million as a result of the law. AT&T expects to take a $1 billion charge related to the new legislation.

So much for job creation!

More Health Care Hocus Pocus
“Fantasy in, fantasy out,” writes Douglas Holtz-Eakin who held the CBO Chair from 2003–2005. Front-end loaded revenues and back-end loaded expenses promote the fiction that a program that will cost $950 billion over the next 10 years actually reduces the deficit by $138 billion. After all the details are analyzed, Mr. Holtz-Eakin’s numbers affirm a vigilante’s suspicion – it will add $562 billion to the deficit over the next decade. .

Mortgage Fallout
Ambac, created in 1971 to insure debt sold by states and municipalities, announced (again) that it may have to enter bankruptcy on the heels of being taken over by state regulators. The company lost its top credit ratings and 99% of its stock-market value after expanding from its main business into guaranteeing bonds backed by riskier assets and CDOs. The company guarantees $256 billion of the $1.4 trillion in insured municipal issuance, according to Bloomberg.

The Wisconsin insurance commissioner on Wednesday ordered Ambac’s main operating subsidiary, Ambac Assurance Corp., which is based in that state, to set up a segregated account for policies related to risky structured finance transactions.

The Ever Shrinking Euro
The euro traded near a 10-month low versus the dollar after European Central Bank President Jean- Claude Trichet said that aid for a euro-area nation from any outside group such as the International Monetary Fund is “very, very bad.” Leaders of the euro region met in Brussels to debate a French-German contingency plan for a mix of IMF and bilateral loans to help Greece deal with its budget deficit.

The market doesn’t care that “France and Germany are saying they have the framework to a plan to support Greece including the IMF,” said John Curran, a Toronto-based senior vice president at Canadian Forex. “It’s like ‘Yeah, OK, great, I have a plan for winning the lottery, too.’ Show us something that works.”

The Death Panels are Gone, But Look at This!

Tucked inside the 2400 page health care bill is a 43-page measure that may have a far greater effect on medical care than any other portion of the bill. The overhaul creates an institute, funded with $500 million or more annually, to spur studies of which drugs, devices and medical procedures work best. The boost for comparative-effectiveness research will increase scrutiny on treatments used by millions of Americans.

“The findings may add scientific rigor to doctors’ decisions sometimes influenced more by marketing,” said Jeffrey Lerner of the ECRI Institute, a nonprofit that conducts such research.

According to UniCredit SpA, oil prices will jump almost 20% this year, driven by demand from China and emerging markets. The chart below, courtesy Bloomberg, shows Chinese crude oil imports, in blue, have surged 66% since 2004 and that oil prices, in red, have more than doubled over the same period. Prices may rise to $95 a barrel in the fourth quarter and $115 by the end of 2011 from $81 today, said Jochen Hitzfeld, an analyst at UniCredit in Munich.

Demand from emerging markets, which accounts for 56% of global crude oil consumption, “continues to be underestimated,” Hitzfeld said. “China adds an incredibly large share in terms of energy demand. That’s one reason why crude oil prices will trend towards $100 a barrel in the second half of the year.”

Why Did Health Care Stocks Rally?

Many predicted that health care stocks would fall if the bill was passed. We have written that the stocks would react positively over the short and medium term. Why? Because, as the bill is written today, the negatives (think higher taxes and fees) being charged to health care companies are already known and priced into the stocks. More negatives will only come as Congress rewrites the bill over the next couple of years.

What are some of the positives? Think Big Pharma, which rolled over when they calculated the bill had a chance of passing. Instead of fighting it, they helped craft the legislation to their benefit. Certainly they have to pay a large fee ($80 billion, I believe), however, they were successful in keeping generic competition out of biologics. Biologics are the next wave of drugs coming to market, carrying price tags which often exceed $100K per year per patient.

Big Pharma’s profits on biologics will eventually surpass their profits from their existing portfolio of drugs.

Social Security-The Next Big Problem

The Congressional Budget Office said Social Security payments will outstrip money paid into the program this year. Until recently, contributions were expected to cover the payout until at least 2016. Stephen Goss, chief actuary of the U.S. Social Security Administration, said the CBO's projection is probably correct.

Wow! It doesn’t seem like a good time to be adding another entitlement program when the most popular one goes cash flow negative.


The most important event in the market this week will be Friday’s unemployment report. The stock market will be closed that day for Good Friday, so only the bond market will be able to react to the release. The estimate calls for job growth of 190K (thank you Census). The timing of a positive number would be ironic given the recently announced jobs bill.

Have a great Easter. I will not be publishing on Easter Sunday, see you in two weeks.


“The same people who transferred the too big to fail firms toxic liabilities onto the taxpayers’ balance sheet are now going to write legislation so that firms can't be too big to fail....yet they are now the principles of the largest levered financial services firm in the world, i.e. the US Government, and think they’re too big to fail...throw all these bums out!”—an anonymous reader

Mar 22, 2010

Are You Surprised by Obama?

Are You Surprised by Obama?

“We make a living by what we get; we make a life by what we give.”—Winston Churchill

Weekly percentage performance for the major indices
Based on last Friday’s official settlement...

INDU: 1.10%
SPX: 0.86%
COMPQ: 0.29%
RUT: -0.40%


Actual Consensus Prior
Industrial Production 0.1% 0.0% 0.9%
Capacity Utilization 72.7% 72.4% 72.6%
Housing Starts 575K 565K 591K
Housing Permits 612K 610K 621K
PPI -0.6% -0.2% 1.4%
Core PPI 0.1% 0.1% 0.3%
CPI 0.0% 0.1% 0.2%
Core CPI 0.1% 0.1% -0.1%
Philadelphia Fed 18.9 18.0 17.6
Leading Economic Indicators 0.1% 0.2% 0.3%
Initial Jobless claims 457K 455K 462K

The net position in the economy is that manufacturing measures continue to come in strong as businesses maintain their inventory rebuilding and end demand shows signs of life. Capacity utilization remains well below inflationary levels, and the inflation measures (PPI and CPI) continue to be contained, which bodes well for the investing environment.

The LEI increased at its slowest reading in a year, and the components looked very similar to those of a year ago. Positive contributions came from interest spreads, money supply, and vendor deliveries. Negative contributions came from jobless claims, stock prices, factory workweek, consumer expectations, and building permits.

Job growth remains non-existent, but may be showing some early signs of life. Barron’s noted this weekend that Monster Worldwide CEO Sal Iannuzzi feels that the job market is at an inflection point. “There’s a very different psychology at play. Companies have held back for so long, they just can’t anymore. They are looking to hire.”

The Finanacial Times notes that the US Census Bureau is hiring 1.2 million workers to carry out its once a decade population count. Hiring 1.2 million in a short period of time allows the government to pretend that the economy is creating jobs. There are two problems with that theory. First, those jobs are just temporary. Second, it's the government doing the hiring, not the private sector economy. ISI noted this week that the Payroll employment would have to increase by over 200k per month for twelve years for the ratio of employment-to-working-age-population to get back to its 1999 level. The chart below, courtesy Gluskin Sheff, shows the decline in the percentage of people in the US actually employed.

The other weak spot in the economy continues to be housing. Builders broke ground on 575,000 homes at an annual rate last month, down 5.9% from January. Mounting foreclosures are making it harder to clear inventories, keeping pressure on prices and discouraging new construction. The economy has yet to create the sustained job growth that could invigorate housing demand. Barclays Capital is estimating that the number of homes held by banks and mortgage investors increased by 4.6% from December to January.

It’s all in the Water

China's economic growth is creating a demand for water that has outstripped the nation's supply. A reservoir that once provided much of Beijing's water is too polluted to drink. The government is drilling wells at a breakneck pace, but the pumping is causing the water table to fall. A large water-diversion project was canceled after an earthquake illustrated the dangers of crossing fault lines.

First China, Now India

The markets were surprised this past week as India raised its key borrowing rate in response to strong economic activity. With China also attempting to slow its economy, two of the world’s biggest contributors to GDP growth are now trying to slow just as the US teeters into its recovery mode.

Greece Part Deux

The Eurozone finance ministers finally committed to what we all knew they would do-rescue Greece if necessary. If Greece were allowed to fail without their partners saving them, it would destroy the Euro permanently.

Sound Familiar?

Greece's complicated system of awarding early retirement in at least 580 job types has played a big part in the government's inability to rein in spending. For decades, a weak government negotiating with strong unions agreed to early retirement for about 14% of the workforce. Pension obligations will increase sharply in the next few years, economists said.

Sounds like Kalifornia to me.

Federal Land Grab

A Letter from Senator Jim DeMint

You'd think the Obama administration is busy enough controlling the banks, insurance companies and automakers, but thanks to whistleblowers at the Department of the Interior, we now learn they're planning to increase their control over energy-rich land in the West.

A secret administration memo has surfaced revealing plans for the federal government to seize more than 10 million acres from Montana to New Mexico, halting job- creating activities like ranching, forestry, mining and energy development. Worse, this land grab would dry up tax revenue that's essential for funding schools, firehouses and community centers. President Obama could enact the plans in this memo with just the stroke of a pen, without any input from the communities affected by it. At a time when our national unemployment rate is 9.%, it is unbelievable anyone would be looking to stop job-creating energy enterprises, yet that's exactly what's happening.

The document lists 14 properties that, according to the document, "might be good candidates" for Mr. Obama to nab through presidential proclamation. Apparently, Washington bureaucrats believe it's more important to preserve grass and rocks for birdwatchers and backpackers than to keep these local economies thriving.

Administration officials claim the document is merely the product of a brainstorming session, but anyone who reads this memo can see that it is a wish list for the environmentalist left. It discusses, in detail, what kinds of animal populations would benefit from limiting human activity in those areas. The 21-page document, marked "Internal Draft-NOT FOR RELEASE," names 14 different lands Mr. Obama could completely close for development by unilaterally designating them as "monuments" under the 1906 Antiquities Act.

It says all kinds of animals would be better off by doing so, like the coyotes, badgers, grouse, chickens and lizards. But giving the chickens more room to roost is no reason for the government to override states' rights. Rep. Robert Bishop, Utah Republican, made the memo public because he didn't want another unilateral land grab by the White House, like what happened under former Presidents Bill Clinton and Jimmy Carter.

Using the Antiquities Act, President Carter locked up more land than any other president had before him, taking more than 50 million acres in Alaska despite strong opposition from the state. President Clinton used the authority 22 times to prohibit hunting, recreational vehicles, mining, forestry and even grazing in 5.9 million acres scattered around the country. The law allowed him to single-handedly create 19 new national monuments and expand three others without consulting anyone. One of the monuments President Clinton created was the Grande Staircase-Escalante in Utah, where 135,000 acres of land were leased for oil and gas and about 65,000 barrels of oil were produced each year from five active wells. But, President Clinton put an end to developing those resources. President Obama could do the same in other energy-rich places unless Congress takes action.

At least 13.5 million acres are already on his Department of Interior's real estate shopping list. This includes a 58,000-acre area in New Mexico. The memo said this should be done so the lesser prairie chicken and the sand dune lizard will be better protected. Are these animals going extinct? No. The bureaucrats wrote that the land should be locked up to "avoid the necessity of listing either of these species as threatened or endangered."

In Nevada, the Obama administration might make another monument in the Heart of the Great Basin because it, supposedly, is a "center of climate change scientific research."

In Colorado, the government is considering designating the Vermillion Basin as a monument because it is "currently under the threat of oil and gas development."

Americans should be wary of any plans a president has to seize land from the states without their consent. Any new plans to take away states' freedom to use land as they see fit must be stopped.

That's why I sponsored an amendment to block Mr. Obama from declaring any of the 14 lands listed in the memo as "monuments." Unfortunately, the Senate, led by Democrats, rejected it on Thursday evening by a vote of 58-38. It was particularly disappointing that the Senate Majority Leader Harry Reid, of Nevada, voted against the amendment. The government owns more than 80% of the land in Nevada and the unemployment rate there is 12%. Surely it would help job prospects if more land were open for business. This is a nationwide problem. The government currently owns 650 million acres, or 29% of the nation's total land.

Federal bureaucrats shouldn't be wasting time thinking up ways to acquire more, especially in the middle of a recession. Taking the nation's resources offline will stifle job creation and dry up tax revenues. If anything, the government should be selling land off, not locking more up. By voting against my amendment, the Democrats tacitly endorsed Mr. Obama's secret plan to close off millions more acres to commerce.

If enacted, the plan would mean fewer jobs for Americans.

The Democratic Congress refused to stop it, but one sure way Americans could help block it is if they decide some Democrats should lose their jobs on November.


I was at a meeting this evening, and a very smart friend made the observation that “no one should be surprised by Obama’s playbook. He told the world what he was planning on doing during the election. Now he’s just doing it.”

With the health care bill passing the House this evening, people have begun asking what it will mean to the economy and the market. The big impact will come from huge, anti-growth tax increases affecting companies (Caterpillar estimates their costs of compliance at $100 million per year); individual investors (Medicare tax rates of 3.8% on capital gains); and those earning over $200K (who get hit with another Medicare tax increase of 0.9% to 3.8%). The fiscal benefit will be additional tax revenue while the expenses of the plan are back-end loaded so far out of the planning horizon (most kick in after 10 years) that the majority of those voting for the plan will be living on the government dole or able to plausibly deny their vote when the bills start flooding in.

The immediate benefits, outside of some temporary deficit reduction, are that children can remain on a parents’ health care plan until the age of 27, and no one can be denied coverage for a pre-existing condition. The irony is that both of these benefits could have been accomplished with a one page bill, not a 2700 page bill.

US Debt
The Financial Times is reporting that Standard & Poor's issued a warning that the U.S. needs to adopt a plan to rein in spending or its triple-A credit rating will be in jeopardy. There is a risk that "external creditors could reduce their U.S. dollar holdings, especially if they conclude that Eurozone members are adopting stronger macroeconomic policies," S&P.

Jobs Bill

The jobs bill passed this week. Key components include an accelerated depreciation of capital equipment, community credits for infrastructure projects, and a payroll tax holiday on new hires.

The big focus by this Administration ignores one fact: investment in transportation infrastructure doesn’t have the same impact as it does in less developed countries. The positive impact from transportation spending initially comes from short term job creation to build the infrastructure, but in the long run greater mobility makes the workforce more productive and allows labor to easily move to where the jobs are. Thus transportation spending is not as efficient in the US given we already have the best transportation system and most mobile workforce in the world. If our country were the size of Europe, a rail system would make sense; however, the US is roughly 3x the size of Europe, with a population density less than 1/3 that found in Europe.

While introducing the plan the President finally admitted that the private sector creates jobs, government only lays the foundation for job creation. Now if he starts acting in that manner, maybe hiring can actually begin.

China Bubble
China is in the midst of “the greatest bubble in history,” said James Rickards, former general counsel of Long-Term Capital Management. The Chinese central bank’s balance sheet resembles that of a hedge fund buying dollars and short-selling the Yuan, said Rickards. “As I see it, it is the greatest bubble in history with the most massive misallocation of wealth,” Rickards said at the Asset Allocation Summit Asia 2010 organized by Terrapinn Pte in Hong Kong yesterday. China “is a bubble waiting to burst.”

China has pegged the Yuan to the dollar since July 2008 to help exporters weather the global recession. The central bank buys dollars and sells its own currency to prevent the Yuan strengthening, driving foreign-exchange reserves to a world- record $2.4 trillion as of December.

China is poised to overtake Japan as the world’s second- largest economy this year, according to the International Monetary Fund, and Nomura Holdings Inc. forecasts it will contribute more than a third of global growth. The nation has surpassed the U.S. as the world’s largest auto market and Germany as the No. 1 exporter.

California Economics 101

California teachers met over the weekend and came up with their own strategy for solving the education budget crisis in the Golden State. Their solution attacks same criminals identified by President Obama and the DC leadership-high income earners “who have benefited more than others in society, and now should give back their fair share to pay for education.”

Hello! Are these the same people we are paying to teach our students? Have any of them ever studied economics or the actual fiscal structure of this state? If they had they’d realize that the “high income earners” not only pay their fair share of taxes in California, they actually pay more. The top 10% of earners pay over 70% of the taxes while more than 50% pay no taxes at all.

I would be happy to teach a basic economics course for those disadvantaged teachers who seemed to have missed this part of their education.

High Yield Debt

Analysts are worried that corporate borrowers that have issued more than $700 billion in high-yield bonds will hit a "maturity wall" between 2012 and 2014, triggering another wave of business defaults and bankruptcies. This year, only $21 billion in high-yield bonds is due. That amount is expected to soar to $155 billion in 2012, $212 billion in 2013 and $338 billion in 2014.

This should be a huge fee generator for Wall Street firms.

Real Estate

The U.S. housing market is facing what could turn into another wave of foreclosures, possibly destabilizing the market and cutting off price increases that have shown up in recent data. Between 5 and 7 million homes have a delinquent mortgage and are vulnerable to foreclosure. Mortgages with at least three missed payments are increasing as people who had a job and good credit find themselves unable to pay.

More Real Estate

The Federal Housing Administration will need a government bailout because it did not take into account the consequences of job losses and declining property values, U.S. lawmakers were told. New York University professor Andrew Caplin told a House panel that the FHA disregarded the risk presented by borrowers who were underwater but got refinancing through an FHA-backed mortgage.

This is Healthcare?

The legislation also includes a House plan to revamp the college student loan program. The measure would cut federal subsidies to student loan providers such as Sallie Mae by $61 billion over the next 10 years and use the bulk of those savings to expand Pell college tuition grants, which go to students from low-income families. Students would borrow money directly from the federal government rather than private lenders.

The CBO analysis shows Democrats are relying on the savings generated by cutting federal subsidies to student loan providers to help make up for the cost of the health-care provisions enough to produce the required savings.

Another closet tax.


The Health Care debate isn’t over, but the boat is sinking fast. The Dems really need job growth or they’ll get routed in November after pushing a plan that the majority of Americans oppose, supporting a President whose approval rating is not only less than 50%, but is for the first time below his disapproval rating.

The problem and beauty of a two party system is that when one party messes up so badly (think Bush 2), it gives the other party a chance to mess up as well.

Have a great week.


About taxation, Louis XIV’s finance minister, Jean-Baptiste Colbert, once said that the art is in “so plucking the goose as to obtain the largest amount of feathers with the least possible amount of hissing.”