Earlier today I was listening to an interview on NPR of Robert Baker, a contributor to The New York Times. He is writing a book about The House of Representatives and talked about The Tea Partyer effect.
Before I continue, I thought I would post a response from a dear friend, fellow memo reader which helps frame what I want to say. My friend also happens to be very generous, a very bright guy who is politically quite rational and a superb investor. He was responding to my memo about how Tea Partyers are being tagged terrorists. This is what he e mailed: "They are terrorists because they whipped the Democrats' butts." This also from him. (See 1 below.)
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I will now continue. Baker pointed out since Republicans no longer approve of 'earmark goodies' added to proposed legislation and we are closing post offices etc. there is less candy to go round to buy or change votes.
That said, I want to re-post what was said previously by a 'terrorist' who now occupies the Oval Office: "The fact that we are here today to debate raising America's debt limit is a sign of leadership failure. It is a sign that the US Government cannot pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government's reckless fiscal policies. Increasing America's debt weakens us domestically and internationally. Leadership means that "the buck stops here". Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better".-- Senator Barack H. Obama, March 2006.
I presume after that speech Obama went out and played golf and missed the vote but I cannot prove that to be the case.
But I do know this. Because Obama is a Democrat and not a member of an organized Tea Party but is a member of the disorganized Democrat Party, what Obama said in 2006, did not cause him to be branded a terrorist by the media, press or their likes. I daresay, Obama was probably applauded for his foresight and courage and subsequently suckered voters into believing he was fiscally responsible.
The 'terrorist caller's' argument goes as follows: 'The debt ceiling has been raised numerous times in the past without a challenge so The Tea Partyers are the terrorist fly in the punch bowl for doing now so.'
That is a fairly suspect argument because we are where we are because everyone went along in order to get along. In other words, the one who yells "the king is naked" is shot, or in this case branded a terrorist, for being the messenger of what no one wants to hear.
Well, we know the history of "whistle blowers." They endure a lot of abuse and a movie was even made about a courageous 'terrorist' woman who complained about a particular utility despoiling the water for which she was vilified.
As far as I am concerned, I am delighted. We finally have a committed group willing to apply brakes to our run away government, a government gone wild. I hope they will continue to stand by their principles. It will not be fun for them because they will be attacked by The New York Times, Soros, the bleeding heart community et al for being "Grinches" who stole Christmas - remember that one?
Why? All because 'Tea Party Terrorists' are asking questions about whether the fiscal mess we are in is connected, in any way, to our decline as a nation in terms of what we produce or no longer produce, how poorly we educate future generations, how we have become an overweight dependent society which looks to government to wipe our very noses.
Another argument is that 'terrorist Tea Partyers' have an obligation and must show more compassion to those less fortunate as if after being constantly raped the victim is obligated to the rapist and need show compassion. Americans have been raped for years by politicians recklessly spending what was entrusted to them and was due to be placed in trust funds for future payment and they spent it to buy votes and get re-elected and blah blah blah.
Another dear friend and fellow memo reader, knowing my love of the PC crowd, challenged me to post the following: "An annual contest is held each year at University of Idaho called for the most appropriate definition of a contemporary term.
This year's term was: "Political Correctness."
The winner and a great definition was submitted by a Student who wrote:
"Political correctness is a doctrine, fostered by a delusional, illogical minority, and rabidly promoted by an unscrupulous mainstream media, which holds forth the proposition that it is entirely possible to pick up a piece of s... by the clean end."
I responded: "I had posted this almost a year ago in a previous memo and said he should not read my lips but should read my memos more thoroughly."
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Three of our grandchildren are coming for a weekend visit and my wife is returning from a trip with her Atlanta girl friends shortly (just arrived) so I am going to give my readers a respite over the next few days.
Have a great weekend.
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Dick.
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1)Fwd: Worth reading EMR CEO comments on conference call that just ended. Remember that he is among the first to comment that things have weakened in July. You can feel his frustration.
Emerson Electric Earnings Call
Now, why did we call out last week in our orders that things are getting weaker?
Because they are.
They are weaker.
We have always been very open in our communication to our shareholders and to our investors and when we see fundamental change, we call it out.
There's no reason to hide it. It's the facts.
And we did it. Our underlying orders grew only 6.5% for the last three months.
That is outside the range that I have been talking about for several months in the 7 to 10% range.
And yes it's against tough comps but I saw fundamental weakness happening over the last 60 days.
And then couple days later, they announced GDP.
GDP in the US grew in the first half less than 1%. Let's get that.
Less than 1%. You look at all the facts that have been coming out the last couple weeks, the economics have been weakening.
It's not new news.
We have to deal with it. We have to position the Company to deal with those things.
Then we have a government situation.
Their inability to deal with the real gut issues of excess spending and debt.
All we hear out of government is we're going to raise taxes, we don't like corporate planes, we're going to sue Boeing, one of the most strategic companies we have in this country for building a new plant in South Carolina.
We have no desire to really go after corporate tax reform which would fundamental change this country and encourage people to invest and reinvest and create jobs in this country.
But rather, . Be it corporations and people that are successful.
We have a difficult issue right now to deal with in this country and the same is going on in Europe.
They are in no better condition.
So as I look at what's coming at us in the second half this year, I do not see the catalyst that would say the economy will be fundamentally different in the second half than we saw in the first half.
Maybe the gross GDP will grow a little bit more in the second half but fundamentally there's nothing going on in the US right now that would encourage corporations to ignore the excessive regulations coming at us, not to mention the new Dodd-Frank bill relative to whistleblowers.
We have to publish now what minerals we use.
You look at the new healthcare bill.
You look at the last week we. On the day that we announced less than 1% first half GDP growth in the US economy.
I would say Washington is arranging the chairs on the Titanic the way I look at it. So we're dealing with realism here in this company.
We're looking at slower growth.
We don't know exactly what that growth is. We will manage accordingly.
Our orders in the industrial world will stay up. I can't tell you right now what the second half will be. I can't tell you what 2012's going to be so don't bother to ask me, because I will not tell you.
If you tell me -- you ask me what 2012 is the first thing I'm going to ask you what is your forecast for the second half of GDP and what is your forecast for GDP in the first half of 2012. Let me know and I'll tell you what my forecast will be. As a Company we have strong operating cash flow.
Our balance sheet has been in great shape.
We've made strategic acquisitions.
We are integrating those acquisitions of. We don't have a lot of acquisitions under way right now.
I do not see a lot of acquisitions under way in the near term.
We're using our cash to pay back a dividend.
We just announcedded a record 55 years of increasing dividends.
We increased our share repurchase.
We're now object track to do over $900 million of share repurchase, returning back to our shareholders.
And we will continue to generate the earnings and the best growth we can in a very difficult market on a global basis and reinvest for future growth and creating shareholder value.
The Company will perform in a very difficult environment as we have.
We'll set record levels of cash.
We'll set record levels of earnings, margins, and we will continue to drive forward.
That's where we are right now.
We are dealing very uncertain times and we will manage those accordingly.
I feel good about where the Company sits right now.
We are performing at very high levels.
All companies hav issues we have to deal with but we're dealing with them.
Our price cost is close to being equilibrium and we will be there in the fourth quarter.
Our margins right now are running at very high levels and we will set a record this year.
And our earning growth is good, as is our cash.
So I want to commend the operating executives and the corporate executives for what they're doing in this very difficult time period and we will play with the hand we're dealt with and we'll play the best hand we can.
And that's where we sit.
So now we can open up for questions.
But I will not talk about 2012 because I have no visibility into 2012 at this point in time, given what's going on around this world, both in Japan, in the US, and in Western Europe.
And that's where I sit.
Thank you very much.
The floor is yours.
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