Wednesday, December 30, 2009

Cliches of Power

The human tragicomedy has certain themes that recur with appalling frequency. Some of these involve the tactics of the powerful. One that is playing itself out in the sad nation of Iran is the repression game.

Human beings, as we all know, are susceptible to corrupt behavior and, as we all know, power corrupts. However, it is well established that human beings also have a profound distaste for being treated unfairly. So, when the corrupt leaders treat the populace too unfairly, opposition develops. How do the leaders deal with opposition? Well they don't want to give up their privileged positions so they try, for awhile, to lie and to spin and to discredit the opposition. This won't work forever (although it may seem like forever to some). Eventually, they will resort to methods of physical repression: clubs, water cannon, noxious gases, imprisonment, torture, and even bullets and bombs. At this tipping point, they are not likely to reverse course; he who rides a tiger fears to get off. This will play itself out in bloody conflict and with uncertain consequences.

A different game is in play in the USA. The Obama administration, having campaigned for change, seems to be opting for very moderate change. It is competent but centrist and very non-confrontational. Given the considerably greater expectations of its base, the administration is beginning to resort to some of the traditional tactics of power, including spin and secrecy. There would be less need for this if the opposition were inclined to go along with moderate change but that is not the case. The banksters and the insurance execs are unwilling to stop their traditional fleecing of the public and they have the money, the lobbyists, the obedient legislators, virtually the entire Republican Party, Fox News, numerous radio gurus, and enough easily manipulated crazies to be very troublesome.

How this situation will resolve itself is unclear. I am inclined to believe that there will have to be a hard fight at some point to minimize corrupt behavior and to restore the equality of opportunity and the social mobility for which this nation was created (well, sort of). Will Obama become a leader for reform or will the Democratic Party be split within the next few years? Boardrooms and four or five star hotels can be very seductive. Many of our senators are good examples of it.

Wednesday, December 16, 2009

My Compliments, Alexander Cockburn

A while ago, I sent you a note including this.

- - - it is time to consider things more soberly. Let me focus on just your final dart: about the president "trying to pass off as 'healthcare reform' a gift to the insurance industry of 30 million new customers, to be required by law to pony up insurance premiums and then be cheated."

At the time, I advised you that the bill was not yet in final form. Well time has passed and it is beginning to smell like a sellout of considerable proportions even though still not finalized. In its present form, the Senate bill looks like a mockery written for the insurance industry by its own lobbyists and a number of bought Senators.

At the same time, the Senate has defeated a proposal to permit the re-importation of American pharma products in order to lower the costs to the American people. Both of the Democratic Senators from my state, New York, voted against it. I have not yet received their explanations. However, there was a deal between the Obama administration and the pharma industry early this year. What the administration got was their promise of a pittance to close half of the "doughnut hole" in the Medicare part D package and to refrain from opposing the health care reform bill. Since then the pharma prices have been increased by about 9 percent but the administration, it seems, remains faithful.

The congressional attempts at financial reform will very likely contain enough loopholes to keep the big banks happy. Washington has not changed. Money talks and the government will not protect the public from more of the traditional fleecing.

The president is courting catastrophe. The people who made their small contributions to his campaign, who rang doorbells for him, and who spent hours on the telephone for him will not return in 2010 or 2012 unless he wakes up and works to make good his campaign pledges. His fruitless attempts at bipartisanship are not perceived as leadership. His obsession with passing a health care bill, any bill, as soon as possible is much like taking a helicopter to board the Titanic. The Democratic party may be split.

I'm sorry to have to say these things but I value objectivity.

Wednesday, December 9, 2009

Health insurance Reform: Details Please!

The two salient needs for health insurance reform are access and cost. What will the public get in exchange for its compromise in giving up the "public option"?

1) People over the age of 54 will be allowed to buy into medicare. That sounds good if just anyone over that age can opt in. If just those who can't get private insurance can opt in, that would be a sellout to the insurers; they get the healthy ones and medicare gets the "preexisting conditions." The devil is in the details.

2) Nonprofits can compete with the industry. Under what conditions and under what management? The US Employees med plan management? The states? The devil is in the details.

3) The insurers will be required to pay out at least 90 percent of their revenues as benefits. That sounds great! But required by whom and does the requirement have teeth? The devil is in the details.

We'll see. Political compromise is the way our country works - when it works at all. However, it won't work if the Liebermans and the Nelsons are permitted to spit in our faces forever.

(I have medicare and good group supplementary insurance. Why do I care? Call it what you will; that's the kind of animal I happen to be.)


Friday, December 4, 2009

The Tao of Investing

It is quite clear that most individual investors would not study quantitative methods of investing because these are not their primary interests in life. Some follow sectors, some just buy and hold, and some practice momentum investing.

The case for momentum investing boils down to this. The prices are primarily controlled by large fund managers for whom quantitative methods are a major interest. If they make a price go up, why not follow their expertise?

The downside of momentum investing is that, when prices start to fall, every momentum investor will scramble to get out fastest and prices can drop precipitously, overshooting the mark. As someone once said "they are all trying to front run each other."

Trailing stop loss orders may limit the carnage but I have no experience with the quality of execution.

Alternatively, one can invest in things, like pipelines, that have well established revenue streams and dividends and live a less exciting life. Having lived through the great depression, WWII, Korea, VietNam, Iraq, the GW Bush administration, and two divorces, I am not looking for vast excitement.

Pipeliners Blues

"Excitement" is a magical word for me ever since I misread the caption of the frontispiece of an old romance novel. I misread it to be "she raised her lips to his and kissed him with mounting excrement."