Wednesday, October 31, 2012


Sydney M. Williams
Thought of the Day
October 31, 2012

It’s been two weeks since I last wrote about the attack on our consulate in Benghazi on September 11 (“Bumps in the Road” October 15). As I wrote at that time, we may disapprove, but understand the error of omission in not providing adequate security. That security was inadequate is obvious in that four Americans died. While we can argue as to who, if anyone, should bear responsibility for the deaths, the cover-up of the causes of the attack bear one signature – that of the President.

It is, of course, almost impossible to keep all embassy staff members and others totally safe at all times in dangerous parts of the world. And, in the fog of battle, when decision makers are thousands of miles away, one can even accept, perhaps skeptically, the excuse as to why reinforcements were not provided when asked for – a lack of “Intel”, according to Defense Secretary Leon Panetta. Yet, it is also totally understandable why a devastated Charles Woods, father of Tyrone Woods one of the SEAL team members killed by mortar six or seven hours into the firefight would be so upset with Mr. Obama. His son had requested reinforcements, yet received none; so died on a roof top in Benghazi early in the morning of September 12.

But what remains incomprehensible and inexcusable, and what has been ignored by most of the mainstream media, is the obvious cover-up as to the cause of the attack in Benghazi – a cover-up that lasted for several weeks. It is beyond doubt that the reason for the deliberate lying as to the cause is because it did not accord with the President’s persistent campaign message that Osama bin Laden was dead and Al Qaeda was in retreat. There is little doubt, given the reams of information that have surfaced over the past several days, that the Administration was fully aware that the attack on the Consulate in Benghazi was deliberate and pre-planned, that it involved Muslim extremists with ties to Al Qaeda. It was not a spontaneous populous uprising in response to an admittedly abusive video. But why, then, did Secretary of State Hillary Clinton refer to the anti-Muslim YouTube video when she met with family members at Andrews Air Force base on the 14th? And why did the President, who now claims he did refer to the incident as “an act of terror” on September 12th, send his UN Ambassador Susan Rice on Sunday September 16 to five TV talk shows with the message that the attack was provoked by that same video?

And why did Mr. Obama persistently order his Press Secretary Jay Carney to consistently relay the same message to the Washington Press Corps? Why did Mr. Obama say the same thing to David Letterman on the 18th, a week after the attack? And why did the President, in a prepared speech to the UN on the 25th, a full two weeks after the attack, refer to the video six times, yet never mention the term terrorists?

There can be only one answer: he was deliberately misleading the American people as to the cause of the attack that killed an American Ambassador and three others. Part of Mr. Obama’s claim has been that he has been ruthless in the fight against Al Qaeda, that he had killed Osama bin Laden and that Al Qaeda was on the run. To have to admit that Al Qaeda remained a force to be reckoned with would diminish his claims and the image he was projecting.

It is a sad state of affairs for the President, for he deserves credit for aggressively pursuing bin Laden and for killing so many of its leadership. But he should have heeded President Bush’s admonition that the war against terror would take generations – that it could not be over easily or quickly. He should have re-read the history of the Watergate years and the damage a cover-up can bring to an Administration and the country. In battling Muslim terrorism, we are not fighting a country, but rather an ideology that knows no borders. It resembles the Hydra of Greek mythology, in that it is capable of regeneration. The American people understand that the death of bin Laden did not mean the death of his despicable dreams. Nevertheless, Mr. Obama chose to fabricate a convenient story that would help him get through a tough election. The American people can forgive blunders, even actions taken in error but where the intent was honorable. What they cannot forgive is a deliberate misrepresentation.

A friend who was in the Ford White House is intimately familiar with Nixon’s engineering of the Watergate cover-up. He recently wrote me of the similarities between that cover-up and Mr. Obama’s. He noted: “Nixon did not know about Watergate beforehand, but he did engineer the cover-up in order to have an unblemished election.” In like manner, it would be hard to pin the blame for security lapses in Benghazi on Mr. Obama. Even responsibility for the decision to not respond to the requests for help that evening may not be the President’s. He is, though, the one who sets the moral standard for his Administration.

The election is deflecting attention from this issue. That is unfortunate, for this is a big story. It speaks to the character of the President. “He is,” as my friend wrote, “making the same mistake as Nixon.” The truth will come out eventually. It is a story that will have legs, for what was done was so blatant and obvious. It will be better for the country if this story becomes more publicized before the election. My friend sensibly added: “Romney should stay on the high ground and remain removed from this issue, but all other conservatives [and I would add all truth seekers] should hammer this issue over the next week.”

Misjudgments are understandable and excusable. A deliberate attempt to mislead the American people is grounds for impeachment.

Tuesday, October 30, 2012

"Sandy, and Other Storms"

Sydney M. Williams
Thought of the Day
“Sandy, and Other Storms”
October 30, 2012

A storm with the breadth, power and intensity of Sandy is awesome to behold. Its very strength contrasts with the relative insignificance of man. Lear, coming upon a naked and dirty Edward in the midst of a violent storm, asks, “Is man no more than this?”

Science today allows us to track storms, with reasonable accuracy, and to measure their intensity. Warnings allow us to prepare. For local officials, that means urging evacuation if necessary, closing public buildings, schools and meetings. It means suspending or cancelling transportation; it meant closing the NYSE yesterday and today. For individuals, it means lawn furniture be stored; windows and doors secured, and water, food and flashlights purchased. Boats are brought ashore. It means ensuring the generator works and that there is enough fuel to keep it going for a few days. Each of us battens down our respective hatches. Yet there is nothing we can do to alter the direction or the intensity of the storm. From time to time, the boy-who-cried-wolf syndrome is experienced. False warnings bring complacency. After last year’s bout with Irene, officials in New York, New Jersey and Connecticut took Sandy more seriously.

Man’s capacity to do harm is legion. His search for bigger and deadlier weapons seems non-ending. But all the lethal weapons scientists have been able to develop pale in comparison to what nature can deliver with such apparent ease. Man’s capacity to do malice, while presuming to do good, can also be destructive. There are storms of a political nature that we can see coming, yet are often ignored by those in positions of responsibility. The fiscal cliff, coming in January is one; the printing of dollars with no explanation as to how to painlessly stop the process is another; and the exorbitant level of government debt is a third. Unlike Sandy, which we can only observe in awe, these other storms are preventable. But, to do so takes a will, which Congress and the President have not demonstrated, and a plan, which, if they have one, has never been disclosed.

The New York Times and the President sounded relieved (and even elated) that the economy in the third quarter grew at 2%, versus a more dismal 1.3% in the second quarter. However, such a poor showing three years into recovery is almost unprecedented. But the number exceeded expectations; so the President was able to say that recovery is underway. “We have come too far to turn back.” No one, least of all Mr. Romney, wants to turn back. He, like most of us, wants to move forward, but at a more rapid pace. Most of us would rather jog than amble. And making things worse, a fiscal cliff looms. Left alone, tax rates for everyone will rise, and sequestration will cut federal spending for many government programs especially Defense, but significantly, as the winds of Sandy roar around my house, it will cut $900 million from the Federal Emergency Management Agency (FEMA.) The combination of tax increases and cuts in government spending will almost assuredly send the economy back into recession. At any rate, 2% GDP growth is too minimal to reduce unemployment, not to mention it is too little to absorb the natural increase in the labor force.

A second pending storm was created by the Federal Reserve – their ballooning balance sheet. There was no question that the Federal Reserve helped stave off what could have been a total credit collapse in the autumn of 2008. The quick response of Treasury Secretary Hank Paulson, Fed Chairman Ben Bernanke and then New York Fed Chairman Tim Geithner did help avoid what could have been a disastrous event. Contrary to what Mr. Obama would have one believe, the system was saved before he took office. The TED Spread – a measurement of one bank’s willingness to extend credit to another – had fallen from 480 basis points in September-October, 2008 to 131 basis points on December 31, 2008. But since those dark days, Mr. Bernanke has increased the size of the Fed’s balance sheet more than three fold to just under $3 trillion. A recently announced third level of quantitative easing will add another $40 billion a month to the Fed’s balance sheet – almost half a trillion dollars more over the next twelve months. While aggressive Fed action was clearly warranted in late 2008, recent easing has increased asset prices, but has not restored confidence in the economy. Forgetting about the unfairness of interest rate-price fixing on America’s seniors, unwinding that monster without tipping the economy back into recession will be a more difficult task than that facing Con Edison in the aftermath of Sandy.

Federal debt levels are worrisome and are likely to create a storm that will make Sandy appear a walk in the park. The most obvious (and likely) path for government to take is to pay future obligations with depreciated dollars – a regressive tax that will fall hardest on middle income Americans. In the past, when governments had to borrow heavily, as did the United States during World War II, they relied on issuing as much long term debt as possible. In contrast, today, not only has our federal debt reached levels not seen since the 1940s, we are borrowing in the short term markets. Thus, when rates do rise, as they most assuredly will, the effect will be felt almost immediately; federal deficits will climb. Low interest rates are an aphrodisiac, and the Obama Administration has been imbibing; it will be left to the taxpayers to pay for rehabilitation.

The easy availability of debt is critical to economic growth, but too much debt causes economies to falter. In the Bush years, we saw that phenomenon with a too-rapid expansion of consumer debt. Today, we are seeing it, even more dramatically, in the rise in federal debt. (And none of what I have discussed in this essay includes the massive entitlement promises Congress has been so happy to grant constituents, while responsibility for repaying will be left to future generations.) If Congress and the Administration are serious about getting the economy growing, they will have to work on improving confidence among small and mid-size businesses. Cash on corporate balance sheets approximates $2 trillion. Getting that money back into circulation through investment should be the focus of government. Doing so will take tax reform and more sensible regulation, and confidence that policies will have some permanence.

In the meantime, Sandy persists on her path. I am writing this in mid-afternoon on Monday. The tide remains high, but is slowly retreating. The next one is not due until midnight – October’s full moon! The eye of the storm is still off Atlantic City; so we have not yet felt her full brunt. Even so, wind gusts have already knocked down a couple of branches and, if reports are to be believed, we have another thirty-six hours to go. The NYSE has already decided to close on Tuesday, the first time the Exchange has closed for two consecutive days due to weather related problems since the Blizzard of ’88 – 1888 that is! There is little we can do regarding Sandy, except watch, hope and pray. Our house is about 900 feet from the river; about half that distance is marsh. We sit about 30 feet above sea level, so I don’t worry about being flooded. Yet it is unnerving to watch the tide creep ever closer. Tonight and tomorrow it will likely rise even higher.

With the storm having moved west and north, this morning’s tide is back to normal. But, like millions of others in the region, we lost power. The generator, however, is doing its job; so I am able to finish this on my I-Pad.

When it comes to man’s relationship with nature, Shakespeare had it right. Amidst nature’s storms, man does seem insignificant, and he becomes a victim of circumstances. But when it comes to self-created storms, such as those described above, the responsibility for success or failure is man’s alone.

Monday, October 29, 2012

“UN Observers to Watch U.S. Elections”

Sydney M. Williams

Thought of the Day
“UN Observers to Watch U.S. Elections”
October 29, 2012

The Left has long played the innocent victim to the Right’s cold-hearted fiend. Casting blame, for example, has been a regular part of President Obama’s methodology. Recently, claiming that the voting rights of minorities and immigrants are being suppressed, Leftist groups requested the Organization of Security and Cooperation in Europe (OSCE) to monitor the 2012 elections. While the OSCE has been minimally involved in U.S. elections since 2002, their presence in 2012 will be considerably more significant. This has rankled conservatives, who do not feel that the involvement of a group that includes among its members some of the least democratic states in the world is necessary to ensure fair elections in the U.S.

The OSCE is a United Nations-backed group that includes among its 56 members, countries like Serbia, Ukraine, Russia, Belarus and Kazakhstan. It does, however, also include nations like France, Germany, the UK and the United States.

The request for observers in this election was precipitated by Leftists concerned about the requirement by an increasing number of states for some form of ID to prove that the voter actually is who he or she claims to be. Georgia was among the first states to require photo IDs in order to vote. (They did so in 2005.) A recent study of voting patterns in that state conducted by the Atlanta Journal Constitution, showed that turnout among African-Americans and Hispanics actually increased from 2006 to 2010, dramatically outpacing population growth for the same groups over the same time. In other words, rather than inhibiting minority voters, the IDs seemed to serve as a reminder of the sanctity of one’s vote and its value in a democracy. Voter IDs don’t seem unreasonable to most people, and they should help curtail voter fraud. Over 100 nations require voter ID cards and 30 states require some form of ID. About 15 require a state or federally issued photo. After all, we show picture IDs to board planes, enter most buildings and to cash checks. Friday’s Wall Street Journal had a photograph on its front page of President Obama showing his drivers license to poll workers in Chicago before he voted last Thursday. He did not appear reluctant to do so.

Nevertheless, a coalition of “civil rights” groups, such as the ACLU, the NAACP, the Leadership Council on Civil and Human Rights and re-branded ACORN organizations, sent a letter to the OSCE warning of “a coordinated political effort to disenfranchise millions of Americans – particularly traditionally disenfranchised groups like minorities.” NAACP President Todd Jealous stated late last year, when he petitioned the UN about states’ efforts to prevent fraud by requiring voter identification: “It’s been more than a century since we’ve seen such a tidal wave of assaults on the right to vote.” How quickly one forgets history! Mr. Jealous appears to have overlooked the 1950s when progressive Americans of all stripes, marched to enfranchise African-Americans.

The right to vote is a sacred aspect of American citizenship. It should not be denied, but neither should it be abused. Certainly there have been denials and abuses over the years, from both those on the Left as well as those on the Right. But on balance the system has worked well. Both Parties have, in the past, worked by way of the legislative process to improve voting standards. Both Parties, one presumes, will do so in the future.

Regardless, there will always be disagreements. In 2000, Democrats felt that Republicans “stole” the election in Florida. (In response the Bush Administration invited the OSCE in to observe the 2002 and 2004 elections.) In 1960, many Republicans complained of fraud in Illinois voting. Democrats were accused of having denizens of Cook County’s cemeteries vote in that election. In my state of Connecticut, some Republicans were upset in 2010 when late tallies in Bridgeport swung the gubernatorial election from Republican Tom Foley to Democrat Dannel Malloy. In 2008, members of the New Black Panther Party were caught on film wearing commando uniforms and brandishing weapons outside polling booths in Philadelphia, allegedly to intimidate conservative voters. No formal complaints were filed. We do have differences. But we have always settled them internally. To claim that fairness is only served when we rely on outside observers sends a message of doubt regarding our elections and breeds suspicion among Parties. It inhibits rather than aids our ability to work in a bi-partisan fashion.

In 2012, the OSCE plans to send 100 observers to the U.S. The groups requesting their participation asked that particular attention be paid to voter suppression allegations “in states like Colorado, North Carolina, Ohio, Pennsylvania, Florida, Texas, Virginia and Wisconsin.” Those eight states are all considered battleground states, with most now even or leaning Republican. As for the OSCE, following the elections in 2004, their typically sanctimonious statement read: “The elections mostly met OSCE’s commitments for democratic elections.” One observer, Konrad Olszewski of Poland (and sounding like Jimmy Carter) said that he preferred the voting systems in Venezuela and Serbia to that of the U.S. (Mr. Carter praised the Venezuelan system as “the best in the world” in a speech on September 18, 2012 at the Carter Center.) Despite being the only nation on earth founded on the principle of individual freedom, there remain those who see only America’s faults.

Texas Attorney General highlighted the controversy when he sent a letter to the OSCE warning the organization that its representatives “are not authorized by law to enter a polling place” and that it “may be a criminal offense for OSCE’s representative to maintain a presence within a hundred feet of a polling place’s entrance.” The OSCE put out a press release in which they seemed to side with Leftist organizations, saying that “stricter voter identification laws have become highly polarized.” Nevertheless, as Mr. Abbott pointed out, “The OSCE is entitled to its opinions about voter ID laws, but your opinion is irrelevant in the United States, where the Supreme Court has determined that voter ID laws are constitutional.” (In Crawford versus Marian County Election Board, the Supreme Court said that Indiana’s laws requiring voter IDs did not violate the U.S. Constitution.) In my opinion, the real reason for calling in the OSCE is to lend international support against the movement toward required photo IDs.

Should we feel better about our country and our voting system because observers from Azerbaijan, Kyrgyzstan. Turkmenistan and Uzbekistan will be among those watching our polling stations? Or should we agree with Florida’s Republican Congressman Connie Mack when he said about these observers: “Every American should be outraged by this news. The only ones who should ever oversee American elections are Americans.” The answer seems obvious to me.

The United States is not perfect by any means and we certainly should not isolate ourselves from the rest of the world. We should engage in international communities, alliances, treaties and trade, but we also need to know that we have the capacity, the will and the ability to govern ourselves. We have a Constitution that allows us to amend and create laws. Americans should not be made to feel our political system is inadequate of repairing itself or is inherently unfair. For our government to function equitably, we do not need the help of Pecksniffian observers, some from countries with political systems that make a mockery of democracy and justice.

Wednesday, October 24, 2012

“The Ascendency of Mitt Romney”

Sydney M. Williams

Thought of the Day
“The Ascendency of Mitt Romney”
October 24, 2012

The world loves an optimist, but the optimist must be a realist. In his wrap-up statement at Monday’s debate, Mr. Romney spoke of his belief in his country and its people, but he also spoke of the necessity to right America’s sputtering economy and to reduce its deadening debt.

Our primary system is flawed. As the New York Observer noted in their editorial last week endorsing Mitt Romney, primaries “reward strident rhetoric and hyper-partisanship,” so that “candidates tailor their messages to fringe elements in small, unrepresentative states.” Growing up in New Hampshire, I take some exception of that description of my home state, but agree with the thesis. However, one has to admit that despite this “flawed” system, with its heightened partisanship, it did produce the most moderate and electable candidate. Would Republicans be so close to potentially electing the next President if the candidate had been Michelle Bachman or Rick Santorum?

Voters must differentiate between what is said by a candidate to secure the nomination from what is their true philosophy. For Mr. Romney that was easy, in that we he had a record. Maureen Dowd, in my opinion, is just wrong when she writes in this morning’s New York Times: “Mitt may have made so many compromises to get the prize that he doesn’t have a true sense of self anymore.” We have his experience and ability to reach across the aisle as Governor of Massachusetts, as well his success managing the 2002 Winter Olympics in Salt Lake City. We know of the experience he gained in managing Bain Capital, and of the compassion and dedication he showed as a leader in his church. We can fault candidates for misleading the electorate, as the New York Times is wont to do when their favored candidate is at risk, but must understand that deception is common to both parties in primaries – and sometimes not just in primaries! On the other hand, newspapers like the Observer, the Washington Post (which has not endorsed either candidate at this point) and the Orlando Sentinel (which has endorsed Mr. Romney) have the capacity to place in context comments made during primary contests. At this point, what is imperative is to elect a President who will put ideology aside and focus on the imperatives of reviving the economy and repairing the nation’s balance sheet. Mr. Romney, in my opinion, is that man.

There is no issue facing the United States as critical as our fiscal mess. For four years we have run deficits in excess of a trillion dollars. That suggests an enormous mismatch between government’s revenues and outlays. The problem did not originate with Mr. Obama, but it has worsened considerably under his watch. We must first determine what we want government to provide. Then there are three steps that are necessary. Most importantly, the economy needs to be rejuvenated. Spending curbs must be imposed. Tax revenues must be increased.

When politicians talk of cutting spending, it is important to remember they are not talking of spending less next year than the year prior; they are speaking of reducing the automatic increases in spending. Politicians find it easy to give, but almost impossible to take away. It is the reason why the term “third rail” has been assigned to any attempts to reform Social Security and Medicare. It accounts for the brutalization by Democrats of Paul Ryan when he attempted to raise the issue. Yet, if we do not address the long term costs of these programs they will either go bankrupt, or they will be funded by greatly depreciated dollars. The latter seems most likely, if nothing is done. But there are some relatively easy solutions to at least get a start that Mr. Romney and Mr. Ryan have recommended, such as means testing and gradually increasing the age of eligibility.

An improvement in the economy will automatically increase revenues, but that alone may not be enough to offset the spending gap. Baked into the DNA of Congressmen and women is a gene that causes them to spend any additional funds that come over the transom. The most proven way of jump-starting the economy is to streamline regulation and simplify the tax code, both ideas that Mr. Romney has proposed.

But it is possible that revenues may have to increase at a rate higher than the natural increase that comes from an expanding GDP. Two alternatives for raising tax revenues have been offered. Mr. Obama has proposed raising taxes on those making more than $250,000 – what he calls “millionaires and billionaires.” Mr. Romney has suggested lowering nominal rates, but then reforming the tax code in such a way to limit deductions to something, for example, like $17,000 on high income earners. Despite Mr. Obama’s objections, that would be meaningful. Average deductions on incomes above $250,000, according to the IRS for the tax year 2008, were $137,000. Limiting deductions, despite lower nominal rates, would certainly increase the amounts paid by the wealthy.

The advantage of raising tax rates on high-income earners is that it is relatively easy to do; as such a tax would affect only 2% of wage earners. The negatives in doing so are that the very wealthy, those like Warren Buffett, have the means of hiding income, thus the tax increase would not have the desired affect. Additionally, thousands of small businesses file as individuals, thus any tax increase would negatively impact hiring by thousands of small businesses and, consequently, economic growth. Europe pays for their welfare societies by means of a VAT, which is enormously regressive, but which is where we will be headed if we do not curtail the path we are on.

The greatest benefit awarded Mr. Romney from the recent debates was not the failure of Mr. Obama in the first debate; it was the opportunity for Mitt Romney to showcase the fact that he is not the extremist, cold-blooded, woman-hater that mainstream media has presented. Millions of voters who get their news from network television, CNN and MSNBC, and the New York Times were exposed for the first time to an obviously intelligent man who is not the immigrant-hating, war-mongering anti-feminist person he has been portrayed. Mr. Obama looked outright silly claiming that the sober and cool Mr. Romney would provide “wrong and reckless leadership” and that he was a man who had “never offered the right opinion.” At the last debate, as the Washington Post put it, Mr. Romney began “by striking an elevated tone – only to encounter an aggressive and slashing opponent.” Such condescending aggression may work in Chicago, but it does little in terms of successfully working with Congressional leaders from across the aisle, as we learned from Mr. Obama’s failed attempts over the past four years.

While there is no question in my mind as to which man would be best for the long term interests of the United States, I am not a fan of Mr. Romney’s trashing of China and his accusing them of currency manipulation. It strikes me as a case of the pot calling the kettle black. There are few countries that have been as aggressive as the United States in artificially keeping interest rates (and thereby the Dollar) at extraordinarily low levels. In the almost four years Mr. Obama has been President, the Dollar has declined about 7% – a regressive tax on consumers. However, as Mr. Romney noted in Monday night’s debate, both in relative and absolute terms, the U.S. is more important to Chinese exporters than is China to U.S. exporters. So we do have some leverage, but trade wars should be avoided at all costs.

Other than a declining sense of personal responsibility and what Victor Davis Hanson has referred to as a nihilistic attitude toward federal debt, social issues in my opinion take a decidedly back seat to financial concerns. It makes no sense to me to save every spotted owl on the planet if we allow Social Security or Medicare to go bankrupt. There are some pretty basic problems that need to be addressed and solved before we go tilting at windmills or being seduced by solar panels. It may be that Mitt Romney will not be able to address what is a very difficult situation, but there is no question that four more years of Mr. Obama’s policies will result in a deeper and darker hole.

There are some who feel that we have not been presented a great choice for November 6. Again, I disagree. Does Mr. Romney reflect all of my wishes? Of course not. But does he represent a considerable improvement over the incumbent. I answer that with a resounding yes. An enormous quantity of debt is weighing unfairly on future generations. Unfunded entitlement programs risk turning our nation into a Greece. Our economy risks descending back into recession. Confidence in government has eroded. Partisanship has become heightened. The sunny optimism which is so characteristic of our nation is hidden behind a curtain of pessimism.

Mr. Obama’s election four years ago represented a great turning point in our nation, as I wrote last week and as I wrote four years ago. Every re-election is a referendum on the work performed by the Administration in power. If their performance merits retention, we should keep them. When it does not, we should try something new. Three Presidents in the post-War period have not had their contract renewed by the electorate – Gerald Ford, Jimmy Carter and George H.W. Bush. All were considered good and honorable men. But all exited the scene early because things were not working well. When such is the case, it is not only our right, but it is our obligation to try someone new. This November is such a time.

Tuesday, October 23, 2012

“The Debate – Act III”

Sydney M. Williams

Thought of the Day
“The Debate – Act III”
October 23, 2012

If there had been any question as to who had been ahead in the polls going into last night’s debate, any doubt was dispelled by the manner in which each handled the questions posed by moderator Bob Schieffer of CBS News. President Obama was contentious, persistently interrupting Mr. Romney; he was on the attack most of the night. The question for the public: was he properly aggressive or simply boorish? Governor Romney, knowing that the trajectory of recent polling favored his candidacy, was determined to portray himself as moderate, sober and presidential. Again, the question: did he succeed?

Yesterday was the third act in the Presidential debates. Mercifully, we are now only two weeks away from the election. Other than the media, whose coffers have been swollen by the, literally, billions of dollars in ad spending, the rest of the country is exhausted from too much exposure to disingenuous politicians – who, because of our peculiar primary system, must appeal to a few outliers at the expense of the rest of us.

Despite the New York Times suggesting that the two rivals offer “starkly different views of the world,” the truth of the matter is that the differences are not that great when it comes to foreign affairs. Both men have the safety and security of the American people as their first priority. Both recognize the changing dynamics in the Pacific region, and both see the need to get Iran to stop their pursuit of nuclear weapons. The differences are more in form than in substance. Supporters of both men came away comfortable their man had won.

Lynn University, in Boca Rotan, was the venue for the final debate. While the college is relatively young – its roots go back to 1962 – has a relatively small student body (2049 enrolled for 2012) and a low graduation rate (33% in 2007), it holds the record for the highest paid college president. In 2006, the last year of his thirty-five year presidency, Donald Ross was paid $5,738,422. His son, Kevin, is the current president. As an aside, it is curious that none of the debates have been held at one of the nation’s fine public state universities; they all have been held at private colleges with annual costs ranging from $48,000 at Lynn University and Hofstra University to $55,000 at the University of Denver – highlighting the reality of the cost of an education.

The line many Democrats seemed to like was when the President appeared to be giving a lesson on modern military weaponry to Mr. Romney, when he said that bayonets are no longer used in the army. Thus bayonets join binders and Big Bird as part of Democrats’ lexicon. (Not surprisingly, the President seemed unaware that the Marine Corps still uses bayonets and that the OKC-35 bayonet replaced the M-7 and M-9 in 2003. (One of my favorite lines – and the only time I laughed out loud – was when the Mr. Obama said, “…and we have ships that go under water – you know, nuclear submarines.”)

It was interesting that early on, Mr. Romney did not take the bait about Benghazi. It was a ploy by the President and an obvious, deliberate plan by the Governor not to stoop to gutter politics. The crime, and I suspect there was one, as to what happened in Benghazi on September 11th was one of a cover-up – difficult to discuss in a debate on foreign policy. As I watched the debate, it seemed to me that Mr. Romney was smart to keep the discourse more elevated. Gutter politics are better suited to Chicago politicians than to Northeastern moderate Republicans.

Mr. Obama has obviously been listening to his close friend and political advisor, David Axelrod. He repeated ad nauseam his memorized lines: “Governor, you are all over the map.” “This is not the 1980s or the 1950s.” The President attempted to portray Mr. Romney as reckless and invoked the names of Dick Cheney and George Bush in the hopes that some of their bellicosity fame would rub off on the contender. Mr. Romney wouldn’t stoop. He responded at one point, “Attacking me is not an agenda.” As one commentator put it, “Mr. Romney went large; Mr. Obama went small.” When the Governor confronted the President about his ‘apology trip’ to the Middle East early in his Presidency (when he spoke in Cairo and, infamously, bowed to the Saudi king, but avoided going to Israel) Mr. Obama petulantly responded, “I haven’t apologized.”

Among my more favorite lines from Mitt Romney were: “We do not dictate to other nations; we liberate them,” and in regard to Mr. Putin: “I won’t give you so much flexibility after my election.”

In terms as to who won, both sides claimed victory. Democrats liked the more aggressive Mr. Obama, while Republicans seemed to feel that their man appeared competent and unflappable. If this were a fight, I would have given the first rounds to Mr. Obama and the latter ones to Mr. Romney. Mr. Obama, burdened by his domestic record had to be on the attack. But, in his persistent interruptions, did he come across as defensive? Mr. Romney needed to come across as a thoughtful Commander-in-Chief. He did not want to get into a fight, especially one sought by the more belligerent Mr. Obama.

Over the next few days, we will see what the polls will show. The goal of both men is to corral the undecided voter. I suspect both achieved what they wanted. My guess is that the debate did not alter the trajectory of the path Mr. Romney appears to be on. In my opinion, this is a critical election. The country is in an economic and fiscal downward spiral. As Mr. Romney pointed out, heavy debt owed to foreign creditors and a weak economy at home limit our abilities to influence events overseas. That becomes the crux of the election.

Monday, October 22, 2012

“End of the American Dream?”

Sydney M. Williams

Thought of the Day
“End of the American Dream?”
October 22, 2012

There has been a lot of ink spilt over the end of the “American Dream.” We hear politicians talk about a permanent underclass, and we read Pundits writing of a widening gulf between rich and poor. A year ago “Occupy Wall Street” took the streets highlighting the plight of the 99%.

There is an element of truth to these concerns. A recent study found that 65% of those on the Forbes 400 were born to well-to-do parents; thus had a head start. Others have argued that a child born poor in Europe has a better chance of making it to the top today than one born in the U.S. Certainly one could argue that the children of the wealthy in places like New York City are, in many respects, more isolated from average citizens than they were in the 1950s.

The reasons are myriad. Explanations provided often depend upon one’s social standing, financial well-being, or political bent. But regardless, four reasons seem immediately obvious. The first is that money can more easily move from one country (or one state) to another than ever before – from a high-tax location to a low-tax haven, thereby helping to preserve wealth. A second explanation is that the complexity of the tax code favors the wealthy. They can afford the accountants and lawyers to help burrow their way through several thousand pages of tax regulation, regulations that often have been written specifically for them. Thus, they are better able to hang on to their money. A third reason is that the decline of private sector unions has adversely affected middle-income earners. However, the reason for the decline is because unions became uneconomic. Global competition has only exacerbated the problem. In other words, as we have seen most recently in the auto sector, unions were a principal cause for the bankruptcy of General Motors. The greed of union bosses caused the downfall of the system and the people they were charged with protecting. But the fourth reason is, to my mind, the most obvious and most important, and that is the sorry state of too many of our public schools.

Raghu Rajan, professor of finance at the University of Chicago, recently wrote: “To restore legitimacy and support for the [capitalist] system, industrial economies have to restore opportunity to the middle class, by working hard on improving education…” In Friday’s Wall Street Journal, Brad Smith, executive vice president and general counsel of Microsoft had a provocative op-ed: “How to Reduce America’s Talent Deficit.” Mr. Smith noted that there are too few Americans with the necessary math and science skills to meet companies’ demand. He points out that Microsoft has, currently, 6000 openings – 3400 of those jobs are for engineers, software developers and researchers. In an environment with unusually high unemployment, it seems particularly shameful that Microsoft is having difficulties finding qualified applicants. We are just not training enough students in math and the sciences.

INSEAD, the European Institute of business, now global with alliances at U.S. business schools like the University of Pennsylvania and Harvard, ranks 141 nations on 100 factors related to innovation. This year, the U.S. ranked 10th versus 7th in 2011. In K-12, the U.S. ranked 31. In terms of higher education, the United States ranked 2nd in terms of enrollment, but 74th in terms of students graduating with science and engineering degrees. The National Science and Math Institute, in a survey they conducted, had U.S. high school students finishing 25th in math and 17th in sciences, of 31 countries surveyed. They estimate that 60% of the new jobs that open in the 21st Century will be related to science and technology. To remain competitive, the U.S. must do a better job educating its youth.

All of these surveys must be taken with a grain of salt, but the direction is obvious. The biggest problem in public school education has been unions that have paid teachers on seniority, rather than on performance. Unions, by their nature, are tied to the status quo; whereas schools must look to the future. The focus should always be on the student. While there are some signs of change, each year that goes by means that another 4 million students graduate from high schools, too many of them inadequately (and unfairly) prepared for the world they must face.

Peter Marsh, a British journalist who writes for the Financial Times, has just published a new book, The New Industrial Revolution. The book is fascinating, not only for its telling of the historical events that led to the Industrial Revolution, but for its predictions about manufacturing in the 21st Century. The book is subtitled, “Consumers, Globalization and the End of Mass Production.” He has a chart in which he depicts 30 critical, general purpose technologies from the domestication of plants in 9000 BC to the development of nanotechnology in the 20th Century. Half the developments that he identifies have occurred in the past 200 years, and two thirds of those happened in the 20th Century. He expects that rate of change to accelerate. For example, Mr. Marsh believes that large plants, with efficient, unending production lines, like many of those in China, will be replaced by smaller plants, more conveniently located to their customers. These factories will increasingly produce tailor-made products for specific clients or needs. As a consequence, the study of math, engineering and the sciences will importantly differentiate winners from losers over the next hundred years.

In the book he cites four previous industrial revolutions, all of which overlap in one way or another. The first was the original Industrial Revolution, which began in England and dates back to about 1780. During that period, standardized design and production methods were first developed. Agrarian communities were converted to industrial ones. The second revolution he identifies as the transportation revolution, beginning with the steam engine and railroads a little after 1830, and into the jet age. The third period he calls the scientific age, beginning around 1860 with the advent of electricity, which greatly reduced the cost of manufacturing of steel, aluminum, chemicals and pharmaceuticals. The fourth age began around 1950, with the development of the computer. Factory processes could be controlled. Automated assembly lines using integrated control systems would be one example. Large computers morphed into PCs, and now into tablets and hand-held devices. A consequence has been the internet.

He argues that new technologies will lead the new age, with R&D facilities linked directly to customer needs, and that mass manufacturing will give way to smaller facilities controlled by highly skilled employees who can be located nearer their customers. We are already beginning to see this happening. With communication so much easier, products can be assembled from parts made all over the world. The demand for personalized drugs, for example, will affect the way pharmaceuticals are produced. It will be an age of innovation that should prove exciting. Reading the book almost made me wish that I had gone into a business that actually produced something.

In like vein, Walter Russell Mead, in an op-ed in last Tuesday’s Wall Street Journal, argued that those who want to spend more public funds on infrastructure are assuming, from a transportation perspective, that the 21st Century will resemble the 20th. Professor Mead teaches foreign affairs and humanities at Bard College. He notes that the internet has greatly reduced the importance of distance in human affairs, that e-mail has made the Post Office virtually obsolete. (At my home it would be, were it not for all the junk mail I receive. The Post Office loses billions of dollars every year. Think of the billions we spend to have delivered an item we immediately send to the recycling bin!)

Technology has always advanced through individual initiative. It is true that government has at times financed that development, but innovation and aspiration are characteristics of individuals, not government. Creative people, taking risks, have always been the driver of new products. Government’s role should be to ensure that the environment remains conducive for individuals to take risks with ideas and with capital. (It is the strongest argument for a lower tax rate on investment income – first that the dollars being invested have already been taxed once as income and, second, any investment carries with it the risk of loss.)

The U.S. remains in the forefront of technological advancement. An abundance of natural gas, embedded in shale, is now extractable with fracking and horizontal drilling. Such cheap energy provides the United States an enormous competitive advantage in the generation of electricity and in operating manufacturing facilities. I believe it was the New York Times that recently did an article on vertical farming, which would save millions of acres now devoted to food production. Our grandchildren and great grandchildren will live lives we cannot imagine. The products and services they will both produce and consume, and which we cannot conceive, will be designed, manufactured and distributed by people all across the globe. There is no reason to believe that the American Dream is dead, but there is no reason to believe it will be there if we don’t compete for it. Robert Samuelson, writing recently in the Washington Post, said the “Dream backfires when government tries to guarantee that every American will live better than his parents.”

Importantly, the American Dream is not a gift; it is an opportunity to be seized. It is a consequence of a free country where everyone is offered an opportunity. But, it requires hard work, dedication, some smarts and a dose of good luck. It often means going against conventional wisdom and taking a chance. One must understand the risk of loss, and know that neither ‘Uncle Sam’ nor one’s family will necessarily be there to make one whole. The Dream is living in a society that reveres the individual, not the state. A lesson of our very recent past is that house prices do not rise to the sky and that a college education may guarantee one a lot of debt, but not necessarily a job. “In the real world,” Robert Samuelson wrote, “not everyone can succeed.” That is a true statement of fact. Nevertheless, success in any endeavor should always be one’s goal. Just knowing that the future will be different presents opportunities for those who are creative and hard working, for those who have aspiration and a willingness to take risks, – that is the American Dream.

Friday, October 19, 2012

“A Descendent President Obama”

Sydney M. Williams

Thought of the Day
“A Descendent President Obama”
October 19, 2012

It’s okay not to vote to re-elect President Obama. In 2008, I found Mr. Obama’s associations – with those like the Reverend Jeremiah Wright, Michael Pflegler, Frank Marshall Davis, Bill Ayers, Professor Derrick Bell – too radical for my tastes. However, I could understand why so many did vote for the charismatic, articulate Illinois Senator. His beautifully delivered, thrilling messages of change were inspiring. The country, in the fall of 2008, was depressed. It was deeply mired in a financial crisis that had been years in the brewing and had bubbled over with the collapse of Lehman Brothers on September 15th. A recession had begun the previous December. Unemployment was rising and the country was just beginning to extricate itself from an unpopular war in Iraq. After the election, the country gave the new President almost universal backing. It had elected its first African-American President. On November 5th, I wrote: “At this moment, America should feel proud.” Following his inauguration, I added: “Expectations are high; the current economic situation requires bold action and provides the opportunity for a long-remembered success. We all hope he succeeds.” We all did. But he hasn’t.

Candidate Obama had made me wary. He was a man who had stood before 100,000 adoring fans at the 2008 Democratic National Convention, proclaiming to be able to halt the rise of the oceans and to heal the planet. Millions had fallen for the seductive tones of his speeches, listening as much to the cadence, as to the words. People heard what they wanted to believe. Mr. Obama’s speech, “A More Perfect Union,” on March 18, 2008 was a superb example of his speaking prowess, yet it was typical of all his speeches. It served to deflect, not explain, his twenty-year association with the Reverend Jeremiah Wright. Nevertheless, the soaring words of that speech in Philadelphia did a lot to secure his nomination five months later.

As a candidate, Mr. Obama had promised change. He would fix the financial crisis and get the economy working. He would bring unemployment down to 5.4%, by the end of his first term. He would restore America’s reputation that had been sullied by wars in Muslim countries. He would fight global warming and bring affordable healthcare to the millions who are without, and do so at lower costs. He would champion renewable energy. He would unite a divided people. And, best of all, to the coastal elites, he was an African-American with an Ivy League pedigree.

A fawning Press and a Nobel Peace Prize, awarded him not for what he had done but for what they hoped he would do, helped further an illusion of Barack Obama. The truth is that that illusion is as faux as the faux columns before which he stood when he accepted his Party’s nomination in 2008. What is real about the man is his desire to increase the reach of government, and thereby his own power; it is to redistribute income, thus increasing dependency and devaluing the individual. Mr. Obama sought to achieve his goals by demonizing the wealthy and thereby further dividing an already divided country.

Early in his first term, in advancing his social programs, Mr. Obama ignored the needs of an economy still struggling. Having little understanding as to how economies work and wealth is created, he pushed through a stimulus bill that did more to ensure public union workers kept their jobs than to lift the economy. He signed a massive healthcare bill and a financial reform act that collectively comprise more than 5000 pages and added hundreds of new regulations. He surrounded himself with those whose philosophies were similar to his own, people like Valerie Jarrett, his senior White House advisor and “Van” Jones, who was Mr. Obama’s Senior Advisor for green jobs – people with dubious past political affiliations. As business advisors, he listened to crony capitalists, rather than small businessmen and women who are the engines of economic growth and the creators of jobs. In “saving” GM, he violated basic principles of contract law by placing the demands of unsecured creditors (unions) ahead of secured creditors (bond holders.) He left in place banks that were too big to fail, and has contentedly watched as they have become even bigger.

Mr. Obama is a man who becomes incensed when he feels that some (the one percent) are not playing by the same rules as the 99%. Yet he has no trouble rewriting the rules when it suits his own purposes. A case in point is the furor over the Libyan terrorist attack on September 11th. I detailed the timeline in a piece entitled “Bumps on the Road” earlier this week. Suffice it to say that after last Tuesday’s debate the Obama campaign has changed strategy. Mr. Obama now claims he called the attack a terrorist attack on September 12th, which is as much of a definitional stretch as was Mr. Clinton’s when he tried to define the word “is.” The world knows that thirteen days later, on September 25 when addressing the U.N., Mr. Obama made five references to the YouTube video and did not once utter the word “terrorist” or “terror.” In the interim, the White House and the State Department had been doing all they could to spin the story of the attack, so that responsibility fell on the YouTube video.

On Sunday, September 16, Susan Rice, U.S. Ambassador to the U.N. was sent out to five TV talk shows. She attends these shows at the instruction of the White House. Her message was that the video, not terrorists, was responsible for the death and violence in Libya. Jay Carney, White House press secretary repeated the same line over the next several days. The reality, I am sure we will discover, is that the truth was inconvenient to the refrain Mr. Obama constantly repeated as he campaigned: “Osama bin Laden is dead and al Qaeda is in retreat.” Others have stepped into bin Laden’s shoes, and al Qaeda is surging. At the debate, instead of coming clean, Mr. Obama dug a little deeper and got a little dirtier, as he tried to place the blame on a nonplussed Mitt Romney. It was a shameful and deceitful tactic by a falsely indignant Mr. Obama, who was aided by an extraordinarily partisan Candy Crowley. The timeline and the unconscionable lack of security deserve further investigation. Fortunately for the President, but not for the truth, any official investigation will be conducted after the election.

A great irony of Mr. Obama is that under his watch, the middle class, the poor and the elderly have suffered significantly more than the wealthy. The Fed’s monetary policies, which Mr. Obama appears to endorse, have kept interest rates low, thereby giving a boost to commodities, bonds and stocks. And, low interest rates (along with exorbitant deficits) have caused the dollar to depreciate – a not-so-subtle, regressive tax. Since Mr. Obama took office, the Dollar has declined 7%, which is startling as the U.S. is usually considered the least risky place to invest. Incredibly, given the severity of Europe’s problems, the Dollar has declined versus the Euro thus far in 2012. The poor have been helped modestly with expanded unemployment benefits. But the fact that the growth in disability roles has been double the growth in new jobs, and the addition of 17 million to food stamp roles, attest to the paucity of the President’s efforts for the very people he purports to help. And, of course, very few have suffered as much as the elderly who have always relied on their savings to augment their Social Security. While low interest rates are a boon to borrowers, they are a bane to savers.

Last week, the New York Observer, not a paper known for its conservative leanings, officially endorsed Mr. Romney, noting the country is experiencing a crisis of leadership. Four years ago they endorsed Mr. Obama. In this week’s editorial they wrote: “His election four years ago truly was a milestone and, rightly, a cause for celebration.” They have become disenchanted, however, with Mr. Obama’s lack of progress on the economy and his demonization of the wealthy. The editorial added: “In fact, it is Mr. Obama who has lost sight of the fact that American capitalism is the greatest anti-poverty program in human history.” In contrast, they note that Mr. Romney has shown “that he is moderate to his core – he is a manager and a listener…”

Most importantly, Mr. Obama’s policies regarding the economy are not working. He has neither defended his record, nor offered any prescription for the next four years. His entire campaign is about bashing Mr. Romney. We are amidst the slowest recovery in the post-War period. Unemployment, when one adds back those who have given up looking for work and those wanting to work full-time but only able to find part-time work, amounts to more than 23 million people, or over 14% of the workforce. GDP growth in 2012 has been less than it was in 2011, which in turn was lower than 2010. Median incomes for middle income workers have fallen in the past four years, while debt and deficits are at record highs. It is not a pretty picture.

The decision on November 6th should not be difficult. Ideology and charisma should give way to common sense, clothed in human decency. It is certainly okay not to re-elect the President.

Wednesday, October 17, 2012

“The Debate – Act II”

Sydney M. Williams

Thought of the Day
“The Debate – Act II”
October 17, 2012

The President did what he had to do. He stopped the bleeding. Mr. Romney also did what he needed to do. He remained poised and confident. Pundits have given Mr. Obama a slight edge, but my sense is that it was more of a case of “the most improved.” I would score the debate a tie. At one point, when talking about drilling (or not drilling) on federal lands they came face to face, each pointing a finger at the other and talking over one another. For those of us that have been watching and reading about the campaigns there was not a lot of new material. Mr. Obama brought up, as expected the 47%, Big Bird and used the refrain, “Osama bin Laden is dead.” He also proclaimed, in case we had forgotten: “I am the President.”

In the first few minutes, Romney distinctly seemed to have the edge, but as time went on Mr. Obama seemed to relax and once or twice pulled a Joe Biden, with a toothy smile, while shaking his head, as though reprimanding a naughty but not bad child, though I thought he was looking a little testy at times.

This was the second of the three Presidential debates, and was conducted in the manner of a town meeting, with questions coming from the audience as well as the moderator, Candy Crowley. Four years ago, the town hall-style meeting was held at Belmont University in Nashville, Tennessee on October 8. At that debate, moderator Tom Brokaw unabashedly (and without bias!) set the stage by stating that since the first debate ten days earlier a lot had changed in the world, “and for the worse.”

In my opinion, Mr. Romney missed a couple of chances to score. On a question regarding Libya, Mr. Obama, in response to a question, said that it was he, not Hillary Clinton, who was responsible for the diplomatic corps – that ambassadors were his personal representatives, which they are. And he added that he had spoken of terrorists the day after the attack. That was, at best, a stretch. What he actually said was: “No act of terror will ever shake the resolve of this great nation.” Mr. Romney could have then asked why, two days later, his Secretary of State blamed the YouTube video, with no mention of terrorists, while standing over the coffins of the four who had been killed. And why did his Ambassador to the U.N., Susan Rice, blame the attack on the video when she spoke on five Sunday talk shows, or why did he (Mr. Obama) never use the word terror or terrorist when he spoke before the U.N., yet mentioned the YouTube video five times.

Another missed opportunity, in my opinion, was when the President unnecessarily, and somewhat patronizingly, brought up the fact that Obamacare would provide free contraception to women. The image of Sandra Fluke flitted before my eyes, fortunately dissipating quickly. While women were a targeted audience last night and contraception is important, the issue of “free” has raised questions with Catholic organizations and, in a world facing critical financial concerns, the question of birth control pills, which are important but not especially costly, seems trivial. But perhaps, in a politically correct environment, the issue is too sensitive to contest – an indictment of our society.

Where Mr. Romney did score with this audience was when he iterated the many failures of four years Of Obama policies, including the fact that there are 3.5 million more women living in poverty than four years ago, that 50% of college graduates cannot find jobs, that there are 23 million under and unemployed, that GDP growth in 2012 is slower than 2011 and that 2011 was slower than 2010, and that 12 million have been added to food stamps.

At one point I thought that the President’s nose would, like Pinocchio’s; noticeably lengthen when he straight-facedly proclaimed: “I believe the free enterprise system is the greatest engine for growth the world has seen.” Mr. Romney’s proboscis might have experienced something similar, as he was talking of increasing Pell Grants.

Last night was Barack Obama’s second trip to the David S. Mack Sports and Exhibition Complex at Hofstra University on Long Island for a Presidential debate. This time they debated before 82 allegedly undecided voters. Four years ago the debate at Hofstra was the third debate, in the traditional format. That debate took place in the midst of recession; the DJIA that day were down 733.08 points. Incredibly, in spite of the financial collapse and the unpopularity of then President Bush, a Politico poll of undecided voters conducted over a 15 minute period following the debate showed Obama winning by only three percentage points, 49% to 46% for John McCain. While it may have been indicative of Mr. Obama’s weakness when it comes to debating, McCain’s showing may have been helped by several references to Mr. Obama’s somewhat embarrassing encounter with Joe Wurzelbacher, aka “Joe the Plumber.”

Toward the end of last night’s debate, the President seemed to get under Mr. Romney’s skin when he mentioned that he (Mitt Romney) had investments in China. Mr. Romney replied that his investments have been managed by a blind trust for eight years and that Mr. Obama also likely had investments in China. The President, grinning broadly, retorted that Mr. Romney’s pension was larger. There was something embarrassing about the whole exchange. Unlike many politicians from opposing parties, it seemed quite apparent that these two do not like each other.

Over the weekend, Victor Davis Hanson wrote a piece, “The Obama Breaking Point.” He concluded that the country is largely finished with its love affair with Mr. Obama. The reasons are many-fold. There were absurdly high expectations – “we are the ones we’ve been waiting for.” There have been disingenuous comments about economic progress – the “recovery summer,” “shovel-ready jobs” and “millions of green jobs.” There are the “400 rounds of golf and 200 hundred fund raisers.” There was the decision to hang with Jay-Z and Beyonce, rather than meeting with Benjamin Netanyahu. Liberals appear to have just quietly accepted his adoption of the Bush-Cheney protocol regarding Guantanamo. And they never interfered with his decision to use Predator missiles to legally vaporize American citizens suspected of terrorism.

Whether Mr. Hanson is correct we will know on Election Day. Certainly the President, after last night’s performance, is in the game and mainstream media will trumpet his performance. While most pundits gave the edge to the President, as I wrote at the start, I suspect the award he really won was for most improved. The bar had been set low for Mr. Obama (surprisingly for a man who the media had proclaimed as being “the one”), while expectations were high for Mr. Romney. In an op-ed in yesterday’s Wall Street Journal, William McGurn questioned Mr. Obama’s alleged brilliance. He wrote: “In Denver he didn’t just lose a debate – he lost the carefully cultivated illusion of a larger-than-life figure” Time will tell as to whether the illusion was restored last evening.

Tuesday, October 16, 2012

“You Can’t Go Home Again”

Sydney M. Williams

Thought of the Day
“You Can’t Go Home Again”
October 16, 2012

We live in a fascinating age. It is a period which I suspect will be considered one of the great sea-changes of the industrial world, not unlike the early 19th Century. In 1830, a person living in Chicago who wanted to visit or contact a friend in New York had to do so in a manner that would have been familiar to someone living in the 16th Century. Ten years later the Chicagoan would have traveled east by rail, and would have telegraphed ahead as to his or her travel plans. That remarkable change caused dislocation among stage drivers and others, but the railroad, steam engine and telegraph – all of which appeared in or about that decade – shrunk a nation that had been expanding westward. In like fashion, the internet and instant communication have shrunk a world whose expansion was expedited by the fall of the Wall and the rise of China.

A great benefit of the internet has been the free flow of information and ideas. It has helped increase the globalization of commerce and shown the promise of freedom to subservient people living under dictatorial regimes. Global trade has lifted millions of people from abject poverty and has allowed China to become the world’s second largest economy.

Change is never easy. The ability to adapt is a quality given to some, but not to all. It is that lack of ability for so many to adjust that has helped prevent the economies of the world to bounce back sharply from the credit collapse and recession of 2007-2009. The old medicines of either stimulus or austerity are not working. We have only to look at a splintered Europe or a moribund United States. The risk to economic growth in any age is a slowdown in trade. “What happens,” wrote Kevin Warsh and Scott Davis in yesterday’s Wall Street Journal, “if policy makers remain preoccupied with short-term urgencies to the exclusion of long-term priorities?”

A negative and local consequence of globalization has been an inability for some to compete, generally because they don’t have the skills and/or the flexibility. Competition for our best schools and universities increasingly come from students overseas. The same is true in jobs, where the skills of American workers may not offset the willingness of the less skilled to work for less. Seventy years ago Joseph Schumpeter wrote about the role creative destruction plays in the advancement of technologies and their role in economic growth. These changes make for exciting opportunities, but the transitions can be painful. The fact is that technology has advanced faster than man’s ability to adapt. Ultimately people, economies and nations will respond, and so will standards of living, but, at the immediate point of change, the down escalator may be more crowded than the up. There is no way that outcomes will be fair. Consequently, there is a tendency for policy makers, concerned about labor conditions, to turn inward, away from the world. Government can ease the transition, but they cannot and should not impede it.

Government policies should encourage this changing environment and help lead it. Yet, thus far the results have been poor. In part that is because governments concern for the welfare of their people – those unable or unwilling to adapt – has inhibited the free market’s ability to respond. It is the proper balance that must be sought; world trade numbers suggest that governments have erred on the side of too much intervention, thereby prolonging the down cycle. The current year marks the second continuous year of slowing world trade. At the end of last year, The United Nations published their “World Economic Situation and Prospects 2012.” The opening sentence read: “The world economy is teetering on the brink of another major downturn.” They point out the United States and the European Union form the world’s two largest economies; they account for about one third of world trade and their economies “are deeply intertwined.” Last month, for the second time, the International Monetary Fund (IMF) lowered its estimate for global growth for this year and next, and the World Trade Organization (WTO) lowered its outlook for world trade expansion. In their September 21 press release, the WTO noted that a downside of an interdependent world is that economic shocks in one region can quickly spread to others.

The lowered IMF predictions may prove too aggressive still. They assume, first, that the Eurozone is able to resolve their financial problems and, second, that the United States avoids plunging off the “fiscal Cliff.” The latter seems probable to me; the former doubtful. A couple of weeks ago Jack Bogle, founder of Vanguard and the grandfather of index funds, called the current environment the worst time for investors in his sixty years of being in business.

A few days earlier, the CPB Netherlands Bureau for Economic Policy Analysis reported that global trade volumes for the second quarter grew at 2.6%, versus an average over the past twenty years of 6.1%. Two major West Coast ports, Los Angeles and Long Beach, reported that outbound containers fell 4.1% in August, the steepest decline since September 2009.

History is replete with examples of economic hardships causing countries, like individuals, to turn inward. It is a natural reaction to protect one’s home turf. In the first decade of the Twentieth Century a haze of comfortable complacency spread over Europe. The idea that within a decade that world would be mired in a calamitous war was inconceivable to most people at the time. An early reaction to the economic downturn following the stock market crash of 1929 was to pass the Smoot-Hawley Tariff of 1930, which served only to prolong the Depression.

No one wants to see anyone suffer, yet no government can protect everyone, no matter what politicians may claim. It is an unhappy fact of life. The focus of government, when it comes to the best interests of the people, must be on policies that foment economic growth, and the best way to do that is to get the juices flowing to the private sector. It requires a simplified tax code, with a policy that encourages investment, allows corporate cash to be returned with no penalty from overseas. It must do away with the corruption that has bred the cronyism that infects Washington. Regulation should be streamlined and easily understood. The regulated need to know that rules will be enforced and not subject to change based on campaign contributions. It is actions not words that are needed to restore confidence on the part of business.

From the perspective of a non-economist, the biggest cause for mediocre economic growth has been a lack of willingness of business capital to invest. The Federal Reserve has done what they could to reduce the cost of capital, but governments, not only in the U.S. but in Europe as well, have done very little to rectify the fiscal problems. As a result there is no confidence.

The U.S. and much of the European Union have offered two choices to revive their faltering economies – stimulus or austerity. Stimulus has been tried with mediocre results; austerity has failed where it has been tried, as in Greece and Portugal. Stimulus implies a central role for government, and a growing dependency of its people. Austerity denotes an absence of government, but without the substitution of the private sector. The consequence has been a stalemate. What is needed is a pro-growth strategy, one that endows the private sector with the tools necessary to facilitate growth – tax and regulation reform.

It is comforting to stay with what’s familiar. But instead of adapting the attitude of “if it ain’t broke, don’t fix it,” we must embrace change. For government it must mean unleashing the private sector. For us individuals, it means we must learn to compete in an unfamiliar world. All of what’s happening will ultimately prove very positive. It is a question of moving forward and global trade is a measurement of progress. The prognosis at this time is discomfiting. Transitions, in their early stages, can be difficult, but they provide enormous opportunity to the creative. We are not going back. As Thomas Wolfe entitled his 1946 novel, “You Can’t Go Home Again.”

Monday, October 15, 2012

“Bumps in the Road”

Sydney M. Williams

Thought of the Day
“Bumps in the Road”
October 15, 2012

Joseph Goebbels, Nazi Minister of Propaganda (and perhaps the world’s all-time master of propaganda,) once said: “If you tell a lie big enough and keep repeating it, people will eventually come to believe it.” It is an understanding of human behavior familiar to many politicians. But it should not work in a democracy, especially one with an ever-watchful and skeptical press. Richard Nixon tried it in 1973 regarding the Watergate break-in, but the media – the famous fourth estate – and Connecticut’s then Republican Senator Lowell Weicker would not allow Mr. Nixon’s lies to go unanswered. Unfortunately, mainstream media today seems more complicit in aiding their favorite politicians than in exposing foul deeds, and most politicians are too meek or too partisan to speak up. The media seems far removed from the reporter’s gallery to which Edmund Burke pointed in 1787 when he coined the term, “Fourth Estate.”

Throughout history there have been numerous cover-ups, the most infamous being Watergate. But the Iran-Contra scandal would apply, as would the more recent Fast-and-Furious incident. But the attempt to pin the attack in Benghazi last month on an anti-Muslim fifteen-minute video placed on You-Tube has to rank among the most deceptive. The problem for the President was that this attack by terrorists was detrimental to the refrain he has been singing: “Osama bin Laden is dead and al Qaeda is on its heels.”

The attack on the Consulate in Benghazi took place on the evening of September 11, the 11th anniversary of September 11. Two months earlier the State Department had received a cable signed by Ambassador Christopher Stevens requesting additional security, a request which was denied. Earlier that day (September 11,) protesters in Cairo pulled down the American flag which flew over the Embassy. That protest was allegedly instigated by the video. At 8:30PM that evening in Libya, Ambassador Stevens conducted a Turkish diplomat to the gates surrounding the Benghazi Consulate. The streets were quiet. There was no demonstration. Seventy minutes later the compound was attacked by mortars and rocket-propelled grenades (RPGs.) An hour later the Ambassador was mortally wounded.

There are two lines of investigation that Congress and the Administration should pursue via independent investigators, responsible to Congress, not to the Administration or the State Department. One is an apparent request for additional security sent by the U.S. delegation in Libya and why it was denied; the second is a time-line as to who knew what when.

When Americans heard that Ambassador Stephens had been killed on the anniversary of 9/11, most of us assumed it was terrorist activity. Even the President the next day used the word “terror” when he said, “No acts of terror will ever shake the resolve of this great nation.” Lt. Colonel Andrew Wood, leader of a 16-man unit that had been withdrawn from Libya in August, called the hit “instantly recognizable as terrorism.” The next day, Jay Carney, in response to a question as to whether the attack was planned, said, “It’s too early for us to make that judgment.” The very next day [September 13,] however, he appeared more certain: “The protests we’re seeing around the region are in response to this movie.” Mr. Carney does not act on his own. He is told what to say. The cover-up had begun.

On the same day, though, a “senior U.S. official” told CNN that the Benghazi killings were a “clearly planned attack.” He added, “The video or 9/11 made a handy excuse and could be fortuitous from their perspective, but this was a clearly planned military-type attack.” That meant that the instigators, in their planning, had no way of knowing the plans of protestors in Cairo for September 11. At the time the attack was planned, there was no video to provide an incentive. Also on the 13th, Victoria Nuland, State Department spokeswoman, tried to calm concerns: “…we really want to make sure we do this right and we don’t jump to conclusions.” That said, she then leapt: “…there are plenty of people around the region citing this disgusting video as something that has been motivating.”

White House obfuscation and denial continued. On Friday, September 14, Jay Carney spoke: “We were not aware of any actionable intelligence indicating an attack on the U.S. mission in Benghazi was planned or imminent.” The bodies of the four Americans killed were returned to Andrews Air Force Base in Maryland that same day. Secretary of State Hillary Clinton, standing before the four flag-draped coffins at Andrews Air Force Base, said that the rage and the violence aimed at Americans were prompted by “an awful video that we had nothing to do with.” If she was in a rage, as CNN claimed, so was I and so were a lot of other Americans when we heard what she had said. It was already known, as the “senior U.S. official” had made clear and as most Americans suspected that the attack was deliberate and planned. On that same day, I noted in a TOTD: “The fact that the terrorists struck on the eleventh anniversary of 9/11 was surely no coincidence.” The attackers were al Qaeda, affiliates or terrorists imbued with the same sense of hatred toward America and the West. Protestors carry neither mortars nor RPGs. And why did Mrs. Clinton feel compelled to add “that we had nothing to do with?”

The cover-up got worse. Five days after the attack and two days after that sorry scene at Andrews, Mr. Obama’s U.S. Ambassador to the U.N., Susan Rice was sent to four or five Sunday talk shows to make the Administration’s case. She denied that they had any information that would lead them to believe that the attack was “premeditated or preplanned” and she persisted in blaming the attack on this fifteen minute YouTube video. Good and honorable people, in the pursuit of truth and without regard to the consequences, know when it is proper to disobey orders. The cover-up went deeper; two days later, President Obama was a guest of late-night comedian, David Letterman. The President told Mr. Letterman that he rejects the “extremely offensive video directed at Mohammed and Islam.” He added that “extremists and terrorists used this [the video] as an excuse to attack a variety of our embassies, including the consulate in Libya.”

The following Sunday, President Obama spoke on “60 Minutes,” during which he dismissively trivialized the incident in referring to the killings and other incidents as “bumps in the road.” With violence in the Middle East, including that which killed Ambassador Steven and three others, he said he was “…pretty certain that there are going to be bumps in the road because, you know, in a lot of these places the one organizing principle has been Islam.”

Two days later, September 25th, two weeks after the murder of Mr. Stevens, and when the Administration knew full well that terrorists were behind the attack, President Obama addressed the U.N. He spoke of “extremists,” but never mentioned the word ‘terrorists.’ However, he did mention the video: “This is what we saw play out the last two weeks, as a crude and disgusting video sparked outrage throughout the Muslim world. I have made it clear that the United States government had nothing to do with this video, and I believe its message must be rejected by all who respect our common humanity.” Again, the video gets blamed, and there is no mention that the attack was the deliberate action of dedicated terrorists. He did, though, add: “Al Qaeda has been weakened and Osama bin Laden is no more.” Apparently al Qaeda has not been weakened sufficiently and it is obvious that others have risen to replace the dead Mr. bin Laden. Like Secretary Clinton, why did he go to such pains to make it clear that the U.S. government had nothing to do with the making of the video? Who would have thought that they had?

Finally, the State Department, in a briefing last Tuesday, broke ranks with the White House. In that briefing, (from which they pointedly excluded Fox News,) they claimed that while others in the Administration concluded initially that the violence in Libya was based on a film ridiculing the Prophet Muhammad, “that was never our conclusion.” The President, the Secretary of State and our Ambassador to the United Nations either never received that information, or they have been lying. Either conclusion is a travesty.

The cover-up of the terrorist attack in Benghazi is a scandal of enormous proportions. The Administration has been responsible for deceiving the American public as to the causes, with much of the media going along for the ride. Four people are dead, and the only person in jail is Nakoula Basseley Nakoula, the Egyptian-American Coptic Christian allegedly responsible for the video, “The Innocence of Muslims,” that has been so widely publicized,

In a world of seven billion people, or in a country of 315 million, mistakes get made. It is not always easy to get straight answers as to what caused any particular incident, particularly one in a nation like Libya or in a city like Benghazi. But in this case, evidence clearly demonstrates that the Administration knew the real cause, if not the first day, certainly by the second. Yet the lies persisted. The truth was inconvenient to the tale being told by Mr. Obama, as he stumped for re-election.

The bottom line is that four people are dead; people in positions of responsibility knowingly lied, and mainstream media has granted them a pass. Others, like Susan Rice and Jay Carney, either lied or were used. Honor and responsibility are not part of the lexicon of this Administration. While most politicians have become masters of deflecting blame, this Administration has set new standards. The “Great Recession” was the fault of Bush. The failure to mount a real recovery has been the fault of Congressional Republicans. Benghazi is the fault of a video, made worse by Mitt Romney. Mr. Obama and his crew are quick to take credit when it is due, as in the fortuitous killing of Osama bin Laden, but they have yet to accept responsibility for failure of any kind. In this White House, the buck never stops; it slips onto someone else, preferably a Republican. In the meantime, the press has given up their duty as watchdogs holding leaders’ feet to the flames.

In 1973, Lowell Weicker, then Republican Senator from Connecticut, understood the damage a lying President Nixon was causing his Party; so he became the most aggressive of any member of the Senate in seeking the truth about Watergate. It cost him some friendships with other Republicans, but it preserved his honor and earned the respect of his constituents. No Democratic Congressional person has yet stepped forward to play a similar role in Benghazigate. But somewhere in that Party, which has produced so much greatness, there must be at least one person willing to call out that the emperor is wearing no clothes. We could also use a modern-day Bob Woodward and Carl Bernstein who would be willing to put aside partisan reporting in a bid to uncover the truth. Alas, mainstream media has been noticeably mute.

A lie, if it is repeated often enough as Herr Goebbels noted, will eventually be seen as the truth, and we as a people will be far poorer.

Friday, October 12, 2012

“The VP Debate”

Sydney M. Williams

Thought of the Day
“The VP Debate”
October 12, 2012

It was a debate with neither mistakes, nor memorable lines. It was not especially exciting and, other than one line from Mr. Biden, did not reveal anything new. In my opinion, there was no winner, but, importantly for both, there was no loser. Joe Biden was gaffe-free and Paul Ryan remained deferential and unruffled. Of the two, Vice President Biden was the more aggressive. He did not stray from Democratic talking points. Congressman Ryan stayed in character – quietly and competently defending Mitt Romney’s program, citing facts and figures. He never became rattled, despite attempts to unnerve him by the Vice President. Martha Raddatz did not allow either candidate to stray very far from the script.

The line from the Vice President that caused an eyebrow to arch was early in the debate when they were asked about Libya. Mr. Biden blamed the confusion as to the cause of the attack in Benghazi on the intelligence community. He said, “The intelligence community changed their assessment.” And then moments later added, “We weren’t told they wanted more security.” In other words, he tossed the intelligence community under the bus. The State Department on Tuesday changed their story. Jay Carney has changed the White House’s version. However, we have not seen the end of what looks to me to be the worst cover-up since Watergate. And, as nefarious as that one was, it did not result in the deaths of four Americans as did this one.

Vice Presidential Debates are often dismissed as being largely irrelevant as they pertain to Presidential campaigns. On the other hand, they are generally the most fun, as there is a greater willingness to mix it up. Some of the most memorable lines in political history have emerged from their debates. Two of them: “Who am I? Why am I here?” In so asking, Admiral James Stockdale helped sink Ross Perot’s bid for the Presidency, and his own reputation faded into the mists of Neverland. “Senator, I served with Jack Kennedy. I knew Jack Kennedy. Jack Kennedy was a friend of mine. Senator, you’re no Jack Kennedy.” Michael Dukakis and Lloyd Bentsen went down to defeat in the 1988 landslide, but Lloyd Bentsen’s riposte put an end to Dan Quayle’s political career. Last night’s was boring in comparison.

Paul Ryan evoked the only outburst of laughter from an audience under instruction not to interrupt with applause when he turned to Joe Biden who for the third or fourth time mentioned the 47%. Mr. Ryan said, “Sometimes the words come out of our mouths the wrong way.” The one time Mr. Biden seemed caught by surprise was when he was rhetorically asked if he knew the current unemployment rate in Scranton, Pennsylvania [the Vice President’s hometown.] Mr. Ryan said, “It’s 10%.” Mr. Biden nodded in agreement. “Do you know what it was when you took office?” Mr. Biden did not respond. “It was 8.5%!”

Both candidates, not surprisingly, were most eloquent during their summations. Mr. Biden talked of the need to “level the playing field.” He spoke of his years of fighting for the middle class, and that he just wanted to be able to say, “Honey, it’s going to be okay.” Mr. Ryan emphasized that “this is not what a recovery looks like.” “We have a stagnant economy that promotes dependency.” He deliberately and pointedly added: “We will not blame others.”

A more glib debater than Paul Ryan might have taken advantage of a couple of openings offered by Joe Biden, when the latter, in reaction to comments of his propensity to insert his foot in his mouth, came back with, “…but I always mean what I say.” Mr. Ryan could have asked him to elucidate on the comment that they [the Republicans] will “...put y’all back in chains.” Or he could have asked him why he and Mr. Obama had spent the last four years “burying,” instead of restoring, the middle class.

At times it did seem that a cranky old man was debating an earnest young one. The Vice President complained about the time he was given, though an unofficial time keeper had Mr. Biden consuming about one minute more time than Paul Ryan. He shook his finger more than once at Martha Raddatz. Mr. Biden has what I found to be the irritating habit of smiling, laughing, shaking his white-maned head and frequently interrupting with words like “malarkey,” whenever Mr. Ryan said something that he found incredible – which was during most of the Congressman’s points. To me, it seemed disrespectful and condescending. Chris Wallace, later on, said that he had been watching Presidential debates for four decades and Mr. Biden’s actions were the most egregious display of contempt he could recall. In their summations, Mr. Ryan pointedly thanked Mr. Biden for the opportunity to share the stage with him – a touching mark of respect of the younger man for the older. Mr. Biden did not reciprocate.

This debate was obviously important to both political parties; Democrats, because they want to regain ground they lost last week, and Republicans, because they want to maintain what momentum they gained. Mr. Biden may have stemmed the bleeding resulting from Mr. Obama’s performance last week, while Mr. Ryan did nothing that would halt the momentum of the Romney resurgence. But, I suspect the needle didn’t move much.

But individually, it was far more important for Paul Ryan than Joe Biden. Vice President Biden is well known. He went to Washington thirty-nine years ago at the age of thirty, as the junior Senator from Delaware. He has been in D.C. ever since, the last four as Vice President. Mr. Ryan was three years old when Mr. Biden entered the Senate. Paul Ryan was elected to the House at the age of 28 and has been there since. In four years, Mr. Biden will be 73, four years older than Ronald Reagan, the oldest person to be elected President. It seems unlikely that he will be a candidate. On the other hand, Paul Ryan will be 50 in 2020 – the peak years for most people in any career.

The debate, as I mentioned, could best be termed a draw. But it did provide Paul Ryan the opportunity for the country to see him unvarnished by the paint brush of mainstream media, and that, I suspect, is a positive; for there is more to the man than the insensitive policy wonk that tosses little old ladies off cliffs.

Wednesday, October 10, 2012

“What, Me Worry?”

Sydney M. Williams

Thought of the Day
“What, Me Worry?”
October 10, 2012

For the forty-five years I have been in the market, both the S&P 500 and the DJIA have compounded annual returns at 6.2%, excluding dividends. The last dozen years, though, have seen a gyrating market that first had to digest the collapse of the greatest bull market in the history of the exchanges – August 1982 to March 2000 – and then respond to the greatest credit crisis America and the world has faced since the Great Depression. For many, the last several years have been a “lost decade”, with markets lower than they were a dozen years ago. The ten year CAGR for the S&P 500 has been 5.1%, while the fifteen year CAGR has been a dismal 3.1%. If we go back a dozen years, the S&P 500 is now selling at the same level it then was. People far smarter and more intuitive than me are paid to make sense of a market that, as usual, defies analysis. I feel conflicted.

The market collapse in 2000-2002 wiped out an estimated $6 trillion in equity value. Much, but not all, was made back by October 2007, as the economy was entering both a recession and credit crisis; the S&P 500 subsequently fell 57% before bottoming on March 9, 2009. (The NASDAQ, however, is still 40% below where it was twelve and a half years ago, suggesting that the total value of U.S. equities is probably still lower than it was a dozen years ago.) For the past three and a half years stocks have irregularly bulled their way back; so that the S&P 500 is now down a mere 7.7% from its all-time high. Despite the market’s recovery and in spite of a VIX that is not far off multi-year lows, there does not appear to be a lot of conviction about stocks being a long-term store of value. That can be seen most obviously in a chart depicting New York Stock Exchange composite volume, which shows a decline of roughly 60% over the past four years. What makes those numbers even more compelling is that the same period has seen a rise in high frequency trading. It all suggests that investors, as opposed to traders, have, to a great extent, abandoned the market.

It may be that investor’s apparent lack of interest is the consequence of rational thinking. The world certainly looks uncertain. China’s growth has slowed. Europe is disintegrating, putting band-aids on gaping, open wounds. The Middle East is more, not less dangerous than it was four years ago. The IMF recently lowered their estimate for 2013 world GDP growth to 3.5% from 3.9%. The United States’ economy has been slowing for the past two years and there are suggestions it could be stalling. Third quarter earnings for the S&P 500 are forecast to be down 1.4% year-over-year and about 4% below the second quarter. Margin debt is up 5.4% year-over-year. We are facing a fiscal cliff, which everybody expects we will avoid, but ultimately it is a roadblock we cannot avoid, with debt and deficits sapping our strength. Despite a death-defying credit experience four years ago, regulators have allowed banks to become even bigger, and the Federal Reserve, in one of history’s most egregious examples of price fixing, has kept interest rates at record low levels for a record long time. Crony capitalism is alive and well in Washington and New York. Congress is in hibernation and the President, having given up governing, is campaigning when not appearing on The View.

The consequence has been a spurt in asset prices over the past four years, with the yield on the Ten-Year falling from 3.83% to 1.62% – below the rate of inflation. High grade corporate bonds are today yielding less than what the Ten-Year did three years ago. The yield on High-Yield Bonds has declined from over 25% at the end of November 2008 to 6.7% today. Copper is up by a third; gold prices are up 100%, and silver has almost tripled. Stocks are 132% higher than their low in March 2009. Ironically, since the credit crisis in 2008 the rich have become richer, the middle class, according to Joe Biden, have been buried and poverty has increased. It is not a scenario that lends itself to the confidence that economies need and bull markets rely on.

Efficient pricing theorists argue that markets always reflect and discount all available information. The argument is made by those who argue that it is virtually impossible to beat the market consistently over time. Purveyors of index products use such arguments to peddle their own products. But, it has been my experience that things are never that easy. There are times when markets are more volatile than the news; and there are times like the present when they seem to ignore indications of possible trouble. Over time, multiples, interest rates and equity performance tend to revert to the mean. At roughly 14X current year earnings, the multiple on the S&P 500 is in line with its long term average. The compounded average annual ten-year price return is 5.1%, slightly below the longer term average, while interest rates have been fixed at abnormally low levels.

Fundamental analysis, which largely drove prices during my first three decades, seems to have given way to short term traders looking for an edge in a company’s next quarter’s report (will they or will they not beat consensus?) and quant-driven high frequency traders. I recognize that is an exaggeration. There are exceptional investors who, through diligence, perseverance and savvy find nuggets in what seems a largely unfriendly landscape. Nevertheless, the increase in the buying of ETFs and various index funds suggest a willingness to make geographical, sector or industry bets, but the lack of volume suggests investors are reluctant to bet on specific companies. Additionally, since we inhabit an attention deficit disordered world, requiring instant gratification, patience is no longer considered the virtue it once was.

A confluence of myriad conflicting events confronts investors. On the positive side we can note strong corporate balance sheets, little or no return on “safe” assets, low interest rates and, despite recent market strength, little confidence that stocks, the economy or government are well positioned. On the negative side we see market complacency in a low-priced VIX, corporate margins at peak levels, concerns about a slowing economy, worries about Europe, China and the Middle East, uncertainty regarding the “fiscal cliff” and the election, and what both might mean for future taxes. The combination has created a pushmi-pullyu market that only a Dr. Doolittle could interpret. Should I be worried? I am uncertain.

I am, however, a firm believer that the best way to participate in the long term growth of the U.S. is through equities. At certain points, bonds serve to protect capital, but given the current level of interest rates, they afford, in my opinion, little protection and – when interest rates go up, as they surely will – the risk of sizeable losses. Commodities are either a bet on a declining dollar, or an outright speculation, except where they are tied to economic demand. Given the size of the national debt, and the apparent willingness of the Fed to monetize it, it seems a reasonably safe bet that the dollar will continue to be weak. I am negative on the dollar and neutral on commodities, given their rise over the past decade. That leaves equities. While I worry about the direction of the country (and that complacency isn’t entirely unknown) and the potential for a nasty surprise from the Middle East, Europe or China, it seems to me they represent the best value – not great, but OK, especially if one can find companies paying reasonable dividends with the opportunity to increase them over time. It looks to me like a stock-pickers market.