Tuesday, August 19, 2014

Rob Astorino's Jobs Plan Is a Home Run

I suspect that fewer than one in one thousand New Yorkers can guess as to how Rob Astorino and Andrew Cuomo might differ with respect to their economic policies, so in releasing his economic plan Mr. Astorino likely aims for long-term legitimacy rather than a quick uptick in the polls.  Given Governor Cuomo's bumbling ineffectiveness, Mr. Astorino's long-term thinking is admirable.  New York's economy will perform better with a competent governor.  

Mr. Astorino proposes to reduce regulation, reduce taxes, build infrastructure, offer tax credits for technology start-ups, and eliminate the chief job-killing regulation in New York: the fracking ban. Mr. Astorino would reduce incorporation-and-partnership fees, reduce utility taxes, and relieve mandate requirements.

Mr. Astorino points out that construction costs in New York are needlessly high because of a long history of crony-motivated regulation. Astorino proposes to eliminate some of them, such as the Scaffold Law. Although New York City's big construction unions favor the Scaffold Law, Crain's New York Business says that a study done by SUNY's Rockefeller Institute of Government found that the Scaffold Law increases the number of accidents and increases construction costs.  New York State's code is filled with unnecessary, cost-increasing laws like the Wicks Law, which alone probably increases public construction costs by about 15%.

Mr. Astorino also proposes to set up councils that enhance communication between high schools and employers so that job-training programs at high schools and community colleges can be better tailored to real needs.


Monday, August 18, 2014

Democratic Party Journalists Question Cuomo's Ethics

Cuomo's claim that the chairman of his Moreland Commission denied that Cuomo influenced him may lead to additional ethics wrinkles. The question is in part whether Cuomo influenced the chairman to lie.  The chairman said that Cuomo did not attempt to influence him when the commission discovered that Cuomo was engaging in the same kind of corruption as the other politicians whom it was investigating. If Cuomo influenced him to say this, then that opens the door to the very investigation that the denial aimed to avoid. Somehow Cuomo's machinations remind me of those Escher stairways that go up and down at the same time. 

Two Democratic Party-affiliated journalists, Theodoric Mayer and Blake Zeff, question Cuomo's policies on a Democratic station, MSNBC.  ProPublica's Mayer questions Cuomo's decision that New York State employees must delete all emails after only three months even though the state has enough cloud memory to retain emails for many years.  Other states require that state employees keep their emails for several years. Zeff, a reporter for Capital New York, says that Cuomo is in the habit of micromanaging decision making, so the email deletion policy must be his.  The lack of transparency is nothing new.  Like Obama, Cuomo claimed that he was for transparency in government. He limits that theory to Republicans, though.

The question that intrigues me is why staunch Democrats like these are attacking Cuomo.  The answer is probably that many of the interests that are linked to the far left of the Democratic Party, the state employees' unions and the banks that benefit most from big government,  have been unhappy with Cuomo.  Republican Rob Astorino might be able to use a division within the Democratic Party to his advantage.  A far-left insurgent from within the Democratic Party, Zephyr Teachout, has received backing from the Greenwich Village Democrats in the primary. This seems to reflect a rift between de Blasio  and Cuomo. The Daily Beast writes this:

Just as the Tea Party has wrested control of the Republican Party from the Beltway establishment, progressives have been trying to pull Democrats to the left and purge the party of pols too willing to coddle corporate interests. These progressives have cheered the victories of Elizabeth Warren in Massachusetts and Bill de Blasio in New York City, and taken heart in a smattering of congressional wins around the country.

This might work well for Rob Astorino if one of three things can occur.  The first and seemingly impossible would be a primary win for Teachout.  The second and more probable might be a split within the Democrats so that a sizable number is alienated from Cuomo, so they don't show up on election day.  That would be especially great if a large number of gun owners and victims of the Democrats' economic illiteracy show up. The third would be Teachout's third-party run. Any of these can syphon left-wing votes from Cuomo.  The second-best thing wealthy Republicans can do is support Teachout. The first is to support Astorino.

That leads me to a conundrum:  If the GOP is the party of the rich, why does Andrew Cuomo have $30 million in his bank account while Astorino has $2 million ?

Saturday, August 16, 2014

Opposition from Giuliani, Christie Suggests That Astorino Is a Man of Character

Big-government Republicans like Rudolph Giuliani and corrupt ones like Chris Christie have chosen to either support Andrew Cuomo or avoid supporting the small-government GOP candidate, Rob Astorino.

The New York Daily News reports that on July 24 Christie gave Astorino the brushoff because he doesn't think Astorino can win. Unlike Democrat Andrew Cuomo, who is facing a corruption investigation concerning the Moreland commission,  Astorino probably isn't corrupt enough for Christie.  Like Cuomo, Christie is under a corruption investigation:  Christie's close aides have admitted to closing lanes at the George Washington Bridge because the mayor of Fort Lee, Mark Sokolich, didn't endorse Christie in 2013. Christie has allowed his aides to take the blame, but why on earth would anyone believe that he didn't know?  The Newark Star Ledger adds that Christie's private attorneys have billed New Jersey taxpayers $6.5 million for legal services in his private defense.

At the same time, New York City's Mayor Giuliani, a guy who claimed to be for less government but never cut government, has been quietly supporting Andrew Cuomo.  There are so many things that Giuliani might see in Cuomo: the exodus of 400,000 New Yorkers during Cuomo's three years as governor, his attack on the Second Amendment, his failed Common Core school reform, or his narcissistic plan to rejuvenate New York's economy by appointing eight SUNY campuses to house a few well-connected tech firms, then spending $200 million dollars in TV ads around the country that use the dumb plan as a pretext to promote Cuomo himself.

 I rejoined the GOP out of desperation to get Cuomo out, but the GOP's bankrupt leadership is truly a gang that can't shoot straight. Perhaps Astorino would be best off disowning the GOP and using the GOP ticket to run a Libertarian campaign.

Wednesday, August 13, 2014

Is It Time to Buy Socialism Insurance Now That Federal Debt Exceeds GDP?

On April 8 2013 when the gold index fund, the GLD, was at 153, I got out of much of my gold, and I wrote that gold might hit $1,200. The GLD is currently at 127, and gold has already dipped below $1,200.  My guess is that there is still some downside in the gold market, though.  The reason is that the effects of the monetary creation since late 2008 through this year have had stimulative effects on the stock market.  The monetary stimulus of Reagan-Bush-Clinton years had a depressing effect on commodity prices,  which is part of why inflation was not as extreme as it might have been. The Bernanke-Obama monetary creation since 2009 will have larger effects than I initially thought, although I did start buying stocks around Thanksgiving of '09.

One of the characteristics of markets is that they tend to bottom with an overreaction, and we haven't seen capitulation in gold.  The decline has been orderly.  I am therefore still somewhat bearish in gold, although buying gold now will make sense in the long term.   Gold is socialism insurance, and we need socialism insurance now more than ever.  The monetary expansion keeps interest rates low, so gold exploration--along with other natural resource exploration--becomes more competitive, pushing down stocks.

Writing in Seeking Alpha, Kirk Lindstrom points out that federal indebtedness, $17.7 trillion, now exceeds the US GDP, $17.3 trillion, a sign of socialist excess.  Lindstrom posts a revealing chart: Gold has gone steadily down since November '12 while the stock market has gone steadily up since April '11.

The gold market is complicated by additional factors.  The Chinese and other central banks have been buying gold in spite of Wall Street, Warren Buffett, their wholly owned media and academia's persistent hostility toward gold.   Second, the Obama monetary expansion occurred on top of a significant contraction and rising gold price.  Therefore, the deflationary and the inflationary processes are intermingled.  Third, the dollar is heavily subsidized by the world's central banks, so inflation may not come gradually; rather, there is a risk of a sharp monetary correction or collapse.  The third consideration makes owning gold more important than it was in the 1970s--even in a flat or declining market.

I am still waiting for capitulation in the gold market.  My stock investments have been OK, but I made the error of focusing on low-risk (low-beta) stocks that didn't appreciate to the same degree as tech stocks. VNR, Vanguard Natural Resources, is one of my holdings, and it's had a few short-term setbacks, but I'm holding onto it. It yields over 8%, and until the recent setbacks everyone believed the management to be fine, and most still do.  At the same time, there has been good news about Kinder Morgan, which I also own, and the MLP went up almost 30%.  I was also holding Heniz when Buffett bought it.  I had been holding CBI, Chicago Bridge and Iron, but I pulled out when it fell by about 20% on rumors.  I am going to buy it back soon. (It's since fallen another 20%.)  I also bought Kellogg (K) recently. It had fallen on poor Special K sales.  I am holding Philip Morris, Pepsi, and Kimberly Clark, which all had nice price appreciation over the past few years.  I like the MLPs because they pay rich dividends.  I also am making long-term investments in Dollar General, Traveler's Insurance, and Dominion Resources (D).  D is priced high for a utility, but they also hold a considerable amount of energy pipelines, which makes them similar to a midstream MLP.  Critics of D say that the dividend coverage is poor.  Also, I am making an exception to my pe-below-15x earnings rule. At the same time, the company is poised for more rapid growth than other utilities when natural gas prices rise.  The down side to investing in lower-risk companies with low price-earnings ratios is that they don't jump in a hot market like last year's.  However, I am holding Intel, Apple, and Microsoft, which have been doing well this year.  I also bought CSX, the railroad.  The railroads have been a play on energy, and I believe that they still have a way to go.  My stocks have been weak in the past few weeks, but so has everything else.  I have to learn not to listen to Warren Buffett's friend, Mr. Market.  

I am waiting for the gold market to fall. Maybe I'm on a fool's errand, but I don't believe that either the stock market run up or the gold market run down is over.