Another missive from one of my dearest and brightest friends and most loyal memo readers:
"Dick: Your figures in your last email contemplate $14.3 trillion in national debt. The figure is actually $16.3 in operating debt. The unaccounted for debt for Social Security and Medicare are not included in that amount. The present value of that debt is another $122 trillion, at least according to this website, which should be bookmarked by everyone following the debate: http://www.usdebtclock.org/
This is the present value of the funds we will have to spend in the future, not the amount of funds we will have to spend in the future. As this site notes, every taxpayer now owes more than $1 million. Wealthy taxpayers probably owe more like $20 million, because they and their descendents will wind up making those payments (if the debt is actually paid). If you are an optimist, you are not paying attention.
The Republicans had better get ready for a lot of opprobrium. They will be vilified. People will not like them. Get used to it. Are they ready to go over the cliff to save the Republic even if it means they could lose control of the House in 2014? (I don't think they will, but it is a significant risk.)
Herman Kahn used to provoke thought during the Cold War by asking the question, "What must we do to make the Soviets think we are serious?" Let's say the Soviets had attacked an ally. Maybe nuclear weapons had already been used once. Maybe they were threatening Germany with nuclear war if it did not merge with East Germany, and things were getting hot with Soviet troops massed on the border. What could the US do to make the Soviets think we were serious?
His answer: Start evacuating your major cities.
Does anyone believe now that the Republicans are ready to cause a default, even if technical in nature? It's a joke. Even some who talk about it, like Rep. John Campbell, say that they don't know if there are enough votes to force the government into a technical default. If the Republicans want to be taken seriously, they should start doing some things that would make the Democrats believe they are serious. They should be on talk shows and CNBC talking about what a technical default means, assuring the markets that any interruption in interest payments would be technical or temporary, and that a special court of claims could be established to cover losses once additional borrowing parameters could be agreed upon. Only if they show they are ready to deal with the aftermath will they be taken seriously.
Obama will not take any of this seriously. The more crisis he can provoke, the more power he can arrogate to himself. If we don't start acting and talking like adults, we will not be able to negotiate with this I-want-it-all child."
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Hagel and his animosity? You decide. (See 1 below.)
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Why the market could do well. So much justified pessimism thus creating a high wall of worry.(See 2 below.)
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Joe L a decent man without a party.
Unlike Joe, Obama is not a decent man. Obama is a product of an environment where affirmative action, corrupt practices, deceit and luck pushed him forward. Now he is top dog bent on proving this to those he defames and those who helped shape his personality and thinking. Obama believes in punishing. He is a man on fire.
God help America! (See 3 below.)
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Dick
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1) Hagel: 'Let the Jews Pay for it'
Alana Goodman - Commentary Magazine, January 4th, 2013
Adam Kredo reports that Chuck Hagel’s anti-Israel animosity was obvious well before his career in Congress. While heading up the USO, he clashed with Jewish leaders over a USO port in Haifa:
Hagel, who served as president and CEO of the World USO from 1987 to 1990, expressed intense opposition to the USO Haifa Center during a tumultuous 1989 meeting with Jewish leaders, according to multiple sources involved in the fight to keep the post open.
“He said to me, ‘Let the Jews pay for it’,” said Marsha Halteman, director for military and law enforcement programs at the Jewish Institute for National Security Affairs (JINSA), which led the battle to keep USO Haifa operational. …
“He essentially told us that if we wanted to keep the USO [in Haifa] open—and when I say ‘we’, he meant ‘the Jews’—he said the Jews could pay for it,” said Halteman, who recalled being taken aback by the comment.
“I told him at the time that I found his comments to be anti-Semitic,” she said. “He was playing into that dual loyalty thing.”
Eventually, a Jewish member of the USO board helped bring in money to keep it open, reports Kredo. But the fact that Hagel went out of his way to oppose the Israeli USO port–over objections from the pro-Israel community, the Navy, and Congress–is part of a pattern. His response about the “Jews” paying for it, because it was in Israel, is also revealing. While Hagel’s supporters will likely argue that this happened back in the late 1980s, that hardly means it should be discounted. In fact, it shows how deep-seated Hagel’s hostility toward the Jewish state has been.
| 2) Why the Lousy Outlook is Good for Stocks in 2013 | |
| by Alexander Green, Investment U Chief Investment Strategist Friday, January 4, 2012 | |
USA Today recently ran a column reviewing the 2013 stock market forecasts of Wall Street's leading firms. It was a tad underwhelming.
The most bullish stance comes from Citigroup, which sees the S&P 500 climbing 14%. The most bearish forecast came from Wells Fargo. It sees the S&P 500 dropping 2% in the year ahead. That's not terribly pessimistic. And it underscores the perpetual optimism of Wall Street, which needs clients and customers to buy stocks and do transactions. The stock market could drop a lot more than 2% next year. If I were to hazard a guess, however, I'd say it won't. The market, if anything, may just do surprisingly well next year. Why? Because things are just so darn bleak. Investment legend John Templeton said bull markets are born on pessimism, grow on skepticism, peak on optimism and die on euphoria. Do you know anyone feeling euphoric about the stock market right now? How about highly optimistic? Me neither. And we have more than just anecdotal evidence. Equity mutual funds have been hemorrhaging shareholder money not just for months but for years now. Stocks have more than doubled from the lows of March 2009 but this remains the most disrespected bull market in history. My friends in the brokerage industry say their good clients have mostly sat on their hands throughout this rally. The others cashed out near the bottom and never got back in.
You know what they're thinking because the media saturates us all with it. The economy is weak. Washington is dysfunctional. Uncle Sam is drowning in red ink. The Eurozone is coming apart at the seams. Real estate - while no longer in a free fall - is mired in the muck. Consumers are overleveraged. Banks aren't lending. Businesses aren't hiring.
What these investors apparently don't know is that a dismal outlook isalmost always positive for stocks. Why? Because optimistic investors get complacent and overpay for stocks. Pessimistic investors are wary and leave stocks discounted. That's exactly what we find today. The S&P 500 currently sells for 14.5 times its companies' operating profits vs. the average of 18.9 over the past quarter century. And it's not just that stocks are historically cheap. Interest rates are zero and the Fed is in an uber-accommodative mode. Inflation is M.I.A. Consumers are both saving and paying down debt. Economic output is now back where it was at its peak in 2007. Emerging markets - which contain three quarters of the world's land mass and nearly 85% of its population - are still growing at a 5% to 6% annual clip. Shale gas is creating a cheap, clean energy revolution. Corporate profits are at an all-time record. And so are corporate profit margins. Of course, none of these factors make any difference to investors who - wittingly or not - are responding to fear, not reason. And, while it may be counterintuitive, this is exactly why stocks in 2013 may not just do better than Wall Street's (admittedly tepid) worst-case scenario but better than it's (admittedly tepid) best-case forecast. In short, if bull markets die on euphoria, we can only conclude that stocks are still very much alive. It's the typical investor who is out to pasture. Good Investing, Alex
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3)
Sen. Joe Lieberman made history but retired without a party
By David Lightman
Insists that ambition did not trump his faith when convenient
 ASHINGTON — He was the first Jewish American named to a major-party presidential ticket, and he came within a single Supreme Court vote in 2000 of becoming the vice president. Years later, he was seriously considered for the same spot on the ticket — of the other party.
Joe Lieberman, who retired Thursday, ended his 24-year term in the U.S. Senate and in a political world that's changed around him. He exits as a voice often without an echo, an independent without a comfortable spot in either political party, a man in the middle of a political system that prizes partisanship over moderation.
Lieberman usually voted with Democrats, yet many Democrats can't erase the memory of his enthusiastic support for the Bush administration's Iraq War effort. They remember how the onetime head of the Connecticut presidential campaign for liberal icon Robert Kennedy in 1968 stumped for Republican conservative John McCain 40 years later, how he wound up addressing the 2008 Republican National Convention and criticizing Democratic nominee Barack Obama.
Lieberman, 70, has had constants: unwavering devotion to a muscular defense and stronger environmental and civil rights laws, and a thoughtful approach to issues. The Connecticut senator also will be known, former aide Dan Gerstein said, for his conscience and character.
Faith and fierce ambition have long motivated the deeply religious Lieberman, ambition that's sparked charges that his positions are too malleable, his style too calculating.
Lieberman sat in his Senate office recently, explaining his drive. "I have a lot of values put in me by my upbringing, which was a religious upbringing, and the whole idea we are blessed to be here," he said. "With that comes a responsibility to do tikkun olam, to make the world better. I chose, for various reasons, public service as a way to try to do that. Of course, you can't do it unless you're in office."
He insisted that ambition did not trump faith when convenient. "If you calculate every decision you make based on how it's going to affect your re-election, you're not going to end up doing very much," he said.
Lieberman was taken aback when offered an example of what critics call his calculating style. He gained national attention in 1998 for his Senate speech branding President Bill Clinton's behavior in the Monica Lewinsky sex scandal as "immoral" and "disgraceful," but he didn't urge impeachment. Critics called that vintage Lieberman, getting national attention but stopping short of a bolder step.
"I thought � the president's action didn't deserve impeachment," Lieberman recalled. Impeachment is a way to eventually oust someone from office, he explains, but Clinton remained popular.
That's trademark Lieberman logic, and sometimes it was a problem. He thought trouble could be overcome by an appeal to reason and a confidence that the world worked in logical ways. Opponents often saw him as a master of calculation, not commitment.
"He was pretty good on labor and social issues, but he never met a war he didn't like. The Democratic Party will not miss him," said Robert Borosage, a co-founder of the liberal Campaign for America's Future.
Lieberman likes to say that life is a series of chapters, and his Washington story had four. His rise began with his arrival in the Senate in 1989 and continued through the 2000 election. He was a different Democrat, aligning himself with Clinton as a center-left alternative to liberal party orthodoxy.
Though he lost the vice presidency in 2000, he returned to the Senate and never hinted at even a trace of dismay.
" 'You just lost an election. You didn't lose your life, and you've got a lot of years ahead of you when you can do a lot of things,' " he recalled his mother saying.
"I'm not haunted by it," he said. "Do I go back to it periodically and feel disappointed, frustrated, angry? Of course I do."
Work and faith were his salves, and this next chapter was arguably the most productive of his Senate career. As the chairman of the Senate committee that oversees homeland security, Lieberman led the fight, and worked closely with Republicans, to revamp the nation's domestic anti-terrorist efforts and create the independent commission that investigated the Sept. 11, 2001, attacks.
The Bush administration resisted the commission. "We went up against the status quo and challenged the status quo," Lieberman recalled, grinning.
Those triumphs were quickly clouded. His bid for the 2004 Democratic presidential nomination went nowhere, and he became the Democrats' most visible supporter of the increasingly unpopular Iraq War. By 2006, even his home-state support had eroded, and he had a primary challenge for his seat from businessman Ned Lamont.
"I thought, 'I'm a Democrat. I've been a Democrat all my life,' " Lieberman said. "I understand how strongly they want us to get out of Iraq quickly, but, you know, I worked so closely with so many Democrats, so I'm going to take this (Senate primary) on. � I'm not going to leave on my own."
They did want to kick him out. He lost the primary on what he called "the most hurtful night of my career."
That night also proved to be the beginning of a new, bumpier, chapter.
He ran for the Senate as an independent. "Election night . . . maybe I even felt better and more excited that night than I did the first night I got elected to the Senate," he recalled, as he won easily.
Lieberman returned to the Senate a pariah of sorts. He caucused with Democrats. But by the time the 2008 presidential campaign rolled around, he felt the draw of his friendship with Sen. McCain, R-Ariz., and supported him, a stunning break for a man who'd been on the Democratic ticket just eight years earlier.
McCain reportedly came close to picking Lieberman as the Republican vice presidential candidate before settling on Sarah Palin as more acceptable to his party's conservative base.
Lieberman praised McCain and Palin — and ripped into Obama — in his convention speech. "He has not reached across party lines to � accomplish anything significant, nor has he been willing to take on powerful interest groups in the Democratic Party to get something done," he said of then-Sen. Obama.
"As I look back at it," Lieberman said recently, "I wish I'd left those lines out. It wasn't my purpose there."
A lot of Democrats saw the speech as an act not of bipartisanship, but of treachery. Adding to Lieberman's new world was a new kind of Senate, in which he wasn't roundly embraced by either party and key legislation passed because Democrats and their strong majority stuck together, rarely reaching across aisles.
"There's no middle anymore," Senate Historian Donald Ritchie said. "That's why people like Lieberman are now seen as mavericks."
Lieberman leaves on a somber note. He delivered his farewell address Dec. 12, and while full of lofty recollections, he conceded that his quest for common ground remained unfulfilled.
"Today, I regret to say, as I leave the Senate, the greatest obstacle standing between us and the brighter American future we all want is right here in Washington," he said.
He'll be succeeded by Democratic Rep. Christopher Murphy of Connecticut, who in the most recent Congress voted with Democrats consistently.
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