HURRY!

It is getting boring. In capitalism, you always have to sell more of whatever it is to be successful or at least make more money. You can do this in two ways, get consumers to want ever more or enlarge your market globally. Of course there are those companies that do both. How do you get consumers to want ever more? Advertising! You advertise something as being on sale and to try to stampede the public into buying it you add, "Hurry, this is a limited-time offer." or "Hurry because availability is limited." or some such and maybe even mention a deadline. How many people are suckered into buying because of the HURRY?

I suspect that the public is inured to this approach by now. And in fact if you wait, there will be a new promotion next week or month that might be even better in the event you want the product. I hope we all take our time and don't HURRY.

But think how much of our economy is built upon advertisements. Essentially the entire radio/TV industry is built upon it, to say nothing about junk mail. So most of us are inundated with advertisements, and, if one doesn't get us, another may. There is all this wonderful stuff that would be fun to own. The net affect is consumers that forever want more. But HURRY!

CAN IT HAPPEN?

There are Republicans and members of the heirarchy of the Tea Party that would like to do away with things like Social Security and Medicare, and, of course, Obamacare. Others would just like to reduce them to help balance the budget, something that must be done at some point. But would it be possible to do away with them? It is not clear that at the grass roots level that Tea Partiers share this goal, for instance (http://campaignstops.blogs.nytimes.com/2011/12/26/whose-tea-party-is-it/?nl=todaysheadlines&emc=thab1).

Suppose we got a clever Republican administration like that of Bush-43 that wanted to do away with them. I imagine that first a part of your Social Security payments would go into something like a 401k. Then more and then more until the whole thing was a 401k. Also somewhere along the line it probably would be made voluntary. So Social Security would be no more.

Medicare would suffer something equivalent to Social Security. It, no doubt, would start with vouchers as in the Ryan plan. With time because of inflation the vouchers would pay less and less of your medical expenses. And of course, it would be made voluntary at some point. And perhaps at some point the vouchers would just be discontinued.

Now the Bush-43 like administration would concentrate on convincing the voting public to go along with this plan, and they would use all the wiles they used to get us to go to war in Iraq to getting rid of Social Security and Medicare. I'm not sure what they would do, but truth would be no object just as it wasn't with us going to war in Iraq. Could this happen? I don't know, but the current candidates for the Republican presidential nomination certainly sound like they would like to do this. Perhaps they could somehow make it unpatriotic to be against doing away with Social Security and Medicare just as they did with the Iraq war.

Could it happen?

CONGRESSIONAL CONFERENCE COMMITTEES

When the Senate and the House pass the same bill but with some different wording or content, the two houses are to form a conference committee to iron out the differences. Perhaps few people realize that anything can happen in "committee." Many a bill has died in committee even if they passed both houses by wide margins. And the bill coming out of committee can look quite different than the one passed by both houses. I recall one year my Bureau ended up getting more out of conference than either house allotted. That is unusual as they usually split the difference, but this one time, at least, they gave us more. Once the conference committee resolves the language of the bill, it is voted on again by both houses but usually only in an up or down manner. It can be sent back to conference.

For a more detailed account of conference committees see: http://www.aacn.org/WD/Practice/Content/PublicPolicy/intro.pcms?menu=Practice

REPUBLICAN PRIMARIES

It still seems to me that the most qualified Republican candidate for president is Jon Huntsman. He was an outstanding governor of a Red state and balanced the budget, he is pro life, pro guns, and has been Ambassador to Singapore and , more importantly, China, our biggest rival and creditor. I think he faces several problems. This is his first time running so I think he lacks name recognition. He has referred to himself as a center right candidate, but he is a true conservative. His Abassadorship to China was under president Obama, and he made the mistake of saying some nice things about him. And of course, his Mormon religion probably counts against him. He has thrown his full effort into New Hampshire. If he should win, he might take on some steam. He is gaining in the polls.

I think Iowa is wide open and the caucuses are only a few weeks off. I don't know of any poll that has ranked candidates by their likelihood to go to the caucuses. As Gingrich doesn't have much of an organization in Iowa, I doubt he will win in Iowa. But right now, the "red meat" Republicans are in charge and like the idea of someone who can beat up on Obama. Eventually, I believe saner heads will prevail.

What has happened to Machele Bachmann? She has sounded rational for a few weeks now, even if I don't agree with her views. I do agree with her that the payroll tax cuts are a bad idea. It just makes the funding of Social Security and Medicare that much harder in the future. How many will she fool? Iowa is her place. It's there or never.

Ron Paul is doing surprisingly well in the polls in Iowa, but I have a hard time seeing him as the winner. He is just too much. Though some aspects of his foreign policies are well taken, others are just nutty. It is interesting that libertarians side with the Republicans because it is the Democrats that are social libertarians. Apparently it is fiscal libertarians that take precedence.

I'm sorry, but I can't stand Rick Santorum. He lost big in his run for a third term in the Senate. His stands against things like masturbation (of all things), oral sex (even for heterosexual couples), and homosexuals are just too far out. (http://www.americablog.com/2006/06/rick-santorum-its-all-about-sodomy.html) I'd like to see him take a lie detector test on personal masturbation and Justice Scalia too. He is also opposed to contraceptives in health care plans. (http://www.ricksantorum.com/pressrelease/senator-santorum-launches-“faith-family-and-freedom-tour”). Also see: http://stopcontinentaldrift.blogspot.com/2009/12/in-end-liberalism-wins.html He sure wants to get into our bedrooms. It is not a surprise to me that he is doing poorly in the polls.

I still guess that in the end, the Republican nominee will be Mitt Romney. One thing I think we can count on if he becomes president is a large downsizing of the Federal government employees. This was his business career - downsizing. What else he will do is uncertain to me, but I'm sure he will try to be remembered as a great president. After all, this guy has excelled at everything he has done, except possibly campaigning. Why would we expect differently of him as president. So he might be better than anyone expects.

For an earlier assessment of Republican presidential candidates see:http://stopcontinentaldrift.blogspot.com/2011/07/republican-presidential-candidates-for.html

REMEMBRANCE OF A SPRING MORN

A funny thing happened to me the other day. It was about seven-thirty in the morning, and I was going to work. It was one of those wonderful mornings that we have been having lately. The sky was as clear as crystal with only a few big puffy white clouds floating here and there. The sun shown brightly. With its low angle it cast long black shadows through the trees which cut deep marks across the spring grass. The morning was pleasantly cool, and that indescribable smell of spring came through the open car windows. I was just driving along dreaming of nothing in particular, not concentrating on my driving. From time to time I would gulp in huge breaths of fresh air just because it tasted and smelled so good.

All of a sudden I became aware of wheels fast approaching me from behind as if to pass, but they did not. They continued to follow close behind. Probably of all the irksome things I can think of, having a car tail close behind bothers me the most. I looked through my rear view mirror to see how near he was, but I could see nothing. He must have been out in the blind spot that the mirror does not cover so that I figured that he would pass me any moment, but he did not. Finally I stuck my head out of the window and looked back. You know it's very odd, but it was my own tires that I heard.

1952

THE SERGEANTS (Poem)

Who are these sergeants, mostly men,

Dying in such numbers in far off lands?

Iraq, Afghanistan.

More than corporals,

More than privates.

Our top heavy military?

Some sergeants in their 50s.

More in their 40s.

Many in their 30s.

They must have been surprised

To be called at such ages

Into a savage war.

http://icasualties.org/OEF/Fatalities.aspx Figures for Operation Enduring Freedom up to date were 525 sergeants, 339 corporals, 339 specialists, and 341 privates (both Pvt. and Pvt 1st Class).

Total figures from 3/21/2003 to 4/30/2006 only are 738 sergeants, 707 corporals and 339 privates. http://repository.upenn.edu/cgi/viewcontent.cgi?article=1000&context=psc_working_papers&sei-redir=1&referer=http%3A%2F%2Fwww.google.com%2Furl%3Fsa%3Dt%26source%3Dweb%26cd%3D4%26sqi%3D2%26ved%3D0CEEQFjAD%26url%3Dhttp%253A%252F%252Frepository.upenn.edu%252Fcgi%252Fviewcontent.cgi%253Farticle%253D1000%2526context%253Dpsc_working_papers%26rct%3Dj%26q%3Ddeaths%2520by%2520rank%2520in%2520Iraw%2520and%2520Afghanitan%26ei%3DQAeSTqbMMYiltwfjpvSHDA%26usg%3DAFQjCNGwfVq1ubJusyLoQu72R7iOepBz0g%26sig2%3DPqxbeg0852-sVDIXG6Cm0A#search=%22deaths%20by%20rank%20Iraw%20Afghanitan%22

PREFERRED STOCK INVESTING

Yields on savings accounts and CDs less than 5 yrs to maturity do not cover inflation. You can find better yields among common stocks, though at best, at higher risk. Even better yields can be found among corporate preferred stocks at greater safety, though not as great as for savings accounts and CDs (http://www.money-zine.com/Investing/Stocks/Buying-Preferred-Stock/). Getting at least 6% dividends is easy among preferred stocks. Preferred stocks are usually issued in perpetuity but with a call provision after 5 yrs. Preferred stocks are thinly traded and some study should be done before buying them. Many issues are beyond their call date today so may be called at any time. The commonest price - par - for preferred stocks is $25/sh and, if called, you must be paid the $25/sh. During the crash of 2008-2009, some companies offered to buy your preferred stock at less than par, but you didn't need to accept that.

There are two main types of preferred stocks, those whose dividends are cumulative (where I am involved), and those for whom they are not (that I do not touch). An attractive feature of preferred stocks, however, is that so long as a dividend is paid on the common stock, the preferred stock dividend MUST be paid first. For cumulative preferreds, if a dividend is skipped, it must be made up before the company can issue dividends on their common stock. There are also those, mainly banks, who may skip the dividend for as much as 5 yrs, but they must be paid before maturity. If the company should go bankrupt, preferred stocks rank higher than common stock in the proceedings (Actually, I think this is not a very significant feature.).

Preferred stocks are thinly traded so in buying them, it is best to do so with limit orders so you don't pay too much for them. Selling preferred stocks can be a bit tricky, but you can get some protection by selling with stop orders. Because of the thinly traded nature of preferred stocks, in selling you may have orders filled below your stop order if that is the only bid around and sometimes you get your order filled in pieces over several trades. With brokerages such as Schwab, several trades during one day are covered by one fee charge, but, if the trading goes on to another day, you will be charged for each day.

There are a couple of things about preferred stocks that even the pros fear and that is if the company that has issued the preferred is bought out by another company. In this process, your preferred stock may be called at par (usually $25/sh), but, if not, the preferred may not be traded; however, you will continue to get your dividend payments. This is called "Waldenized" after a famous case. Sometimes a "Waldenized" preferred will be offered redemption below par, but you don't have to accept it. The second fear is of inflation. Inflation tends to push down the price of preferreds with their fixed dividend as the bond coupons increase. Thus you may only sell your preferred stock at a capital loss, but if you are happy with the dividend rate, this may not matter and you would keep it. Today with such low interest rates on bonds, savings accounts, and CDs, the dividends on preferred stocks is attractive and many preferred stocks are selling above par. For example, all our preferred stocks are selling at or above par right now, but this could change in a hurry if inflation showed its ugly head.

Preferred stocks may be rated by the rating agencies. To the best of my knowledge, the only preferred stocks getting a AAA rating by more than one rating agency are certain preferred CEFs (Closed End Funds) issued by Gabelli that guarantee a 10% payout of NAV on the ETF shares. Thus they have a mandatory dividend on their common stock so MUST pay the preferred dividend. For example, we have some GAB (Gabelli Equity Trust) with a AAA rating by two agencies. It is past its call date and has had a partial call for some reason.

Many people trading in preferreds, feel that the safest preferred is PSA (Public Storage a REIT - Real Estate Investment Trust investing in self storage). PSA raises money by selling preferreds (the better part of an alphabet's worth) and has no debt. Thus they are not beholden to the whims of the financial industry though they must service lots of preferred issues. We are overweight in PSA-D, for example, the lowest yielding preferred of PSA. It is past its call date so may be called at any time, but, as the lowest yielding preferred stock of PSA, it is likely that others may be called ahead of it. Also it is currently selling a bit above par so the company would call it at a premium to par, and we would get a small capital loss if we bought it at the premium price. If they should call the preferred below the call price, we would get a capital gain.

Much discussion of REIT preferreds and some others is given on: http://boards.fool.com/real-estate-inv-trusts-reits-100061.aspx?mid=29689949. You may look up individual preferred stocks at http://www.quantumonline.com/QuickStart.cfm. You will have to register, but it is free. Look under Income Tables/All Preferred Stocks. If you don't want to deal with the complexity of buying individual preferreds, you could buy a Exchange Traded Fund(ETF). One that I have owned in the past but happen not to at present is iShares PFF. It is a low cost way to acquire a basket of preferreds assembled by some pros.