Monday, July 6, 2015

"The Month That Was - June 2015"

                        Sydney M. Williams
                                                                                                                                    July 1, 2015
                                                                                                             
The Month That Was
June 2015

“Spring being a tough act to follow, God created June.”
                                                                                                                                Al Bernstein
                                                                                                                                American sportscaster

June is the month – at least in the Northern Hemisphere – of the summer solstice, the day when the sun reaches its highest point. Subsequently, the sun retreats south. Days shorten, until six months later we experience the longest night of the year, the winter solstice. The calendar is a reminder of the ever-changing world in which we live.

For Greece, of course, the sky turned darker as the month wore on, culminating in a decision to close banks for a week. For years, it has seemed that, ultimately, the only answer is for Greece to abandon the Euro and then enter detoxification. (As of early this morning, it appears that Greece has, with conditions, accepted the terms of its creditors.) Nevertheless, Greece is addicted to spending what they do not have. Much of the rest of Europe is in a similar boat, but farther upstream. So is the United States, and we are gaining. The problem is cultural: too much dependency on the state. Its manifestations are more debt and little or no economic growth. The example that should be followed is the one set by Canada in the early 1990s. Finance Minister Paul Martin laid out three principles: 1) Focus on spending cuts, not tax increases; 2) Focus on realizable short term goals; 3) Assume the low end of all economic forecasts. Like an alcoholic who needs his next drink, the Greeks (like many of us) are dependent on a welfare state – one that has run out of money.

Red lines are drawn in shifting sand. In the case of Greece, it appears that any decision will be deferred until after Sunday’s referendum, but default and exit from the Euro seem likely. The ephemeral nature of red lines can also be seen in the Iran-nuclear agreement that has been put off until next week. While the peripatetic John Kerry scrambles hither and yon in search of the illusive grail that is a nuclear deal, the Mullahs keep their centrifuges spinning. Iran has also been successful at incorporating Iraq into their orbit. ISIS was busy during the month. Three attacks on a single day marked the first anniversary of their announced caliphate (June 29, 2014). Sixty-seven people died in those attacks. In France, the man killed at an American owned chemical company had his severed head impaled on a post outside the factory gates. In a bit of good news, Turkey’s President Recep Erdogan’s party lost its majority in Parliament. During the month, the Kurds, who were principally responsible for Mr. Erdogan’s defeat, also proved to be the best fighters against ISIS. They took back two Syrian towns, Tai Abyad on June 16 and Ain Issa on June 23. While the U.S. has stepped up support for the Kurds, it is doing too little.

In early June, the Office of Personnel Management (OPM) acknowledged that Chinese hackers got into the personal files of “at least” four million current and former federal employees. That number was later revised to eighteen million. In Congressional testimony, it was disclosed that the number could reach thirty-two million. Back in November, according to an article in the New York Times, the inspector general at the OPM described the agency’s computer security system as “a Chinese hackers dream.” It was. (More on this in a later Thought of the Day.)

The Supreme Court was busy announcing decisions they had made in the session just ended. In a 6-3 decision, the Affordable Care Act will continue. While I believe ObamaCare is a white elephant that will result in less medical care at higher costs, change to the law should come through the legislative process, not the courts. In the matter of gay marriage, the decision was 5-4 in allowing gay marriage throughout the United States. If there has been, as Edward Luce of the Financial Times put it, “a vertiginous shift in U.S. society” toward gay marriage why not let such laws be decided in legislatures, as the Constitution demands, rather than accepting the judgment of nine people? It is ironic that many on the Left feel that traditional marriage – that is a union between a man and a woman – is too confining, but that marriage between two people of the same sex is necessary! Marriage, it seems to me, is almost always a good thing, no matter the participants, but especially when children are involved – both natural and adopted. In both instances, the Court, it seems to this non-lawyer, assumed the mantle of legislator, rather than adjudicator. On the penultimate day of the month, the Court voted 5-4 against the EPA, in a decision we should celebrate, at least those of us who care about the cost of energy.

The President did get two bills passed, both with the help of Republicans: the re-authorization of the Patriot Act and fast-track authority that should allow passage of the Trans-Pacific Partnership. Speaking of Republicans, there are now fourteen announced candidates, and two likely, but unannounced – Scott Walker and John Kasich. Of the sixteen, eight are current or former governors; five are current or former Senators; there is one doctor, one business woman and one clown. Indicative of the reach of the Republican brand, the candidates include two Hispanic-Americans, one woman, one African-American and one Indian-American. As a group, they are much younger than their Democrat counterparts. This is not your father’s Republican Party. Democrats seem intent on nominating Hillary Clinton, despite her dubious character and propensity to lie. Nevertheless, and perhaps just for kicks, three other Democrats have announced: Bernie Sanders, Lincoln Chaffee and Michael O’Malley. Should Joe Biden toss his hat into the ring, he and Bernie Sanders will be among the oldest men ever to run for President.

Nine African-Americans were killed in a horrific shooting in the Emanuel AME Church in Charleston. They were slain by a deranged, 21-year-old White racist. The most remarkable aftermath were the unrehearsed words of forgiveness from the family members of those slain, in an electrifying display of Christian charity. While the President gave a moving eulogy for the pastor, Clementa Pinckney, he should have let someone with a better voice lead the congregation in singing “Amazing Grace.”

The media had a field day (or rather ‘three weeks’) with the escape of two murderers from the Clinton Correctional Facility in Dannemora, New York. Thirteen hundred officers, many with dogs, in hundreds of cars, jeeps, ATVs and even helicopters pursued them through the Adirondack woods. The cost of stopping them was the price of a few bullets. But tracking them cost millions of dollars. Listening to myriad excuses every evening on the news was almost comedic. I am glad that one is dead and the other has been caught. But the real question: Why were they allowed to live the lives they did in what is supposed to be a high-security prison?

The problems with Greece reverberated across financial markets, with stocks falling as the month ended. It is not so much the importance of Greece to economic growth. Their economy represents about 1.3% of the Eurozone’s economy. It is the unknowns associated with default and what exiting the Euro would mean. The yield on the U.S. Ten-year had been rising during the month, but fears brought buyers in as the month ended and the yield fell 140 basis points between the Friday the 26th and Monday the 29th. Gold, refusing to play its role as a “safe haven,” was up six dollars on Monday, but still below where it had been a week earlier. The Shanghai Index had a tough couple of weeks. The index is up 25% year-to-date, but has declined 20% since mid June.

Union defenders of the status quo are doing their best to disrupt disruptive technologies. Organized labor got their allies in the New York City Council to pass legislation that would force non-unionized car wash owners to obtain $150,000 indemnity bonds in order to operate. If the legislation sticks, it would effectively shut them down. The California Labor Commission ruled that an Uber driver is an employee, not an independent contractor. If that ruling sticks, it would be a fatal blow to companies like Uber and Lyft, as well as a defeat for consumers. Creative destruction may have some unpleasant consequences, but competition benefits consumers, and it is the way technologies advance and economies grow.

A year ago California Chrome won the Kentucky Derby and the Preakness. At the Belmont, in June, he lost. The last horse to win the Triple Crown was Affirmed in 1978. There had been a dry spell before – between Citation in 1948 and Secretariat in 1973 – but that was only twenty-five years. American Pharaoh was not the fastest Triple Crown winner, but he won the Belmont going away. The Chicago Blackhawks won their third Stanley Cup in the past six years, and the Golden State Warriors defeated LeBron James and the Cavaliers for the NBA championship. Serena Williams and Stan Wawrinka were winners at the French Open. Jordan Spieth won the U.S. Open. He has now won two of the four major golf tournaments to be played this year. He won the Masters in April and will try for a “grand slam” at the British Open and the PGA Championship. The last player to have won all championships in one year was Bobby Jones in 1930.

Like most months, June had its quirky moments. Indicative as to how far we have traveled as a society, Rachel Dolezal, the head of the NAACP in Spokane, Washington, was outed by her parents for being White. In a front page article, the scornful New York Times made much of the fact that anti-government, white racists have killed more Americans than Islamic terrorists – 48 versus 26 – in the fourteen years since 9/11. The article was conveniently posted after the Charleston shootings. No mention was made of the number of terrorist plots that have been stopped. But most egregious was their not putting those deaths into perspective. In the same fourteen years, approximately 180,000 people were murdered in the U.S., of which about 50,000 were Black-on-Black killings. Our focus should be on families and schools. Cultural dislocations breed despair, distrust, envy and hatred. Despite college men being guilty until proven innocent in campus rapes, women applauded the possible FDA approval for a female “Viagra.” In Japan, a judge ruled that having an affair with someone who is married cannot be considered adultery if it involves the exchange of money.

June is a month of anniversaries. Two of our children celebrated their wedding anniversaries this month. Eight hundred years ago, the Magna Carta was signed. Two hundred years ago Napoleon was defeated at Waterloo. One hundred and fifty years ago, “Alice in Wonderland” was published. Seventy-one years ago allied forces landed in France. Seventy years ago, the United States Marines, after a two-month battle, captured the island of Okinawa. On June 3, 1965, Edward Higgins White became the first American to walk in space.


We move on to July!

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