Senate Confirms Bernanke For Second Term

Senate confirms Bernanke for second termOn Thursday, the Senate voted to confirm Ben Bernanke for a second four-year term as Federal Reserve chairman, ending speculation from both sides of the aisle that his nomination was in jeopardy. The Senate voted 70-30 to reappoint Bernanke, the closest vote ever for a nominee for the position.

Over the past two years, Democrats and Republicans alike have criticized the Fed hairman for not recognizing the signs of the impending economic crisis of 2008 and for failing to prevent the housing bubble from bursting.

"Chairman Bernanke was asleep at the switch while Wall Street became the largest gambling casino in the history of the world and hurtled into insolvency," said Senator Bernard Sanders (I-VT.), quoted by the Atlanta Business Chronicle. "His failure to adequately regulate financial institutions should not be rewarded with a reappointment."

Supporters of Bernanke argued that the way he handled the economic crisis is the very reason that he should be confirmed for a second term, Fox News reports.

Meanwhile, Senator Judd Gregg (R-NH.), a proponent of Bernanke’s reappointment, said that President Obama is responsible for much of the ill will directed toward the Fed chairman, stating that he "threw kerosene on the fire [that] unfortunately blew back on his own nominee."
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Sarah Palin And John McCain To Team In Upcoming Campaign

Sarah Palin and John McCain to team in upcoming campaign Senator John McCain (R-Ariz.) has asked his running mate in the 2008 presidential elections to help raise money for his reelection campaign, and they will appear together at a couple of events next month, according to media reports.

Palin is set to stump for McCain in Arizona on March 26 and 27, and her appearances will include a Phoenix fundraiser and a public event, most likely a rally, USA Today reported.

"I’m looking forward to getting back on the campaign trail with my former running mate, and I know my fellow Arizonans will welcome her, as well," McCain said.

"Sarah energized our nation and remains a leading voice in the Republican Party," he added.

At the moment, McCain’s primary challenge seems to be coming from conservative right, as former GOP congressman J.D. Hayworth, a conservative talk-show host, announced he will run against the incumbent for the republican nomination.

The primary election will be held on Aug. 24.

Meanwhile, Palin is also reported to be getting ready to hit the campaign trail in the coming months for other conservatives, including Texas Governor Rick Perry and Representative Michele Bachmann (R-Minn.).
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Tiger, Super Bowl Tickets, the Tax Code and Presidential Pandering

*Tiger replaced by a… frog? Accenture, one of Tiger Woods’ major sponsors, announced that the golfing legend would be replaced in their future advertising by a surfboard-riding elephant, a leapfrogging frog and other computer-generated animals. This time their $50 million annual budget will be spent on images they can control. Can’t say I blame them.

*Does that include a private jet? The Wall Street Journal ran a feature last week on how much it would cost to nab a seat at this year’s Super Bowl. In their research, bidding site eBay.com scored both the cheapest resale (still a hefty $1,750) and the most expensive package—a private box whose “buy now” price was a staggering $373,750. And no, it did not include transportation to the game by a private jet.

*Even the IRS commissioner needs help. This shouldn’t surprise you, but in a recent interview, Internal Revenue Service (IRS) Commissioner Douglas Shulman says he doesn’t even try to fill out his own tax return. “I find the tax code complex,” Shulman said. When asked why he didn’t help make the tax laws less complex, the commissioner put the blame on Congress. “I don’t write the tax laws,” he replied.

*Barack Obama’s populist pandering. No doubt the president’s promise to “tax those darned banks” will get the support of many voters. But consider: Many of his targets, such as HSBC, never took any bailout funds. Others, such as Wells Fargo, only accepted because they were forced to… and paid back every penny as soon as they could. Of course, such political favorites as Fannie Mae, Freddie Mac and the auto companies—which were the largest recipients of government funds—will be exempt from the special tax.

Chip Wood

The Death of Obamacare

Well, how about those voters in Massachusetts? They just elected a Republican as the new senator from the Bay State. Scott Brown defeated Martha Coakley for the seat Ted Kennedy held for more than 40 years. Brown’s victory has the left stumbling like a punch-drunk fighter who’s taken one too many hits to the head.

There goes the Democrats’ filibuster-proof majority in the Senate. There goes Harry Reid’s (D-Nev.) ability to bribe and bluster his way to getting healthcare passed. There goes Barack Obama’s plan to socialize the rest of the United States economy that Uncle Sam doesn’t already control.

And in all probability, there goes Obamacare.

To all of my friends and colleagues on the right, go ahead and gloat a bit. You deserve it. And it’s been a long time since you could.

Massachusetts has long prided itself on being one of the bluest of the blue states. Barack Obama defeated John McCain there by a 26-point margin. Democrats outnumber Republicans in the Bay State by almost three-to-one.

Ah, but independents in the Bay State are the ones who determine political victory. And like a majority of voters in the rest of the country, they are sick and tired of growing government, massive deficits, a sick economy and politicians who lie to them.

There has been a boatload of explanations offered for what happened and what it means. Some on the loony left even insist that Brown’s victory—and his campaign promise to help kill the healthcare bill—shouldn’t make any difference. They insist the Democrats still have enough votes to pass a healthcare bill on a “reconciliation” vote.

In case you’re not familiar with this parliamentary maneuver, essentially it’s a gimmick by which a simple majority in the House and Senate can approve the final version of two similar bills which were previously approved by both branches of Congress.

Rep. Chris Van Hollen (D-Md.), chairman of the Democratic Congressional Committee, has been quoted as saying, “Even before Massachusetts and that race was on the radar screen, we prepared for the process of using reconciliation.”

Frankly, I’d like to see them try. If you think there’s a lot of anger at Congress in the country now, just wait until you see what would happen if they forced Obamacare into law. The uproar would be so loud and long I doubt if many who voted “aye” would dare show their faces in public for months.

In the face of Scott Brown’s stunning victory, many Democrats are reconsidering their positions. Barney Frank (D-Mass.), an ultra-liberal congressman, says bluntly that Congress “will have to start over on healthcare.” House Speaker Nancy Pelosi (D-Calif.), who once claimed that everything was “on course” for a speedy passage, now says she doesn’t have the votes to get the Senate’s healthcare bill approved.

Bart Stupak (D-Mich.), whose anti-abortion plank was crucial to getting Obamacare passed in the House, showed he looks at his mail when he declared: “Sweetheart deals and backroom negotiations may have secured 60 votes in the Senate, but it has left the American public disillusioned.”

Sen. Evan Bayh (D-Ind.) has warned his fellow democrats that ignoring the lessons from Massachusetts will “lead to even further catastrophes” for their party. “There’s going to be a tendency on the part of our people to be in denial about all of this,” Bayh said. Then he added, “If you lose Massachusetts and that’s not a wake-up call, there’s no hope of waking up.”

Speaking of denial, here’s the most incredible comment on the Massachusetts election I’ve heard yet: “Here’s my assessment of not just the vote in Massachusetts, but the mood around the country: The same thing that swept Scott Brown into office swept [Barack Obama] into office.”

If you find that almost laughably absurd, wait until I told you who said it. Here’s a hint: Instead of “[Barack Obama]” in the sentence above, substitute the word “me.” Yes, it was none other than our illustrious president, in a recent interview with George Stephanopoulos.

As unbelievable as that statement was, listen to the excuse that followed: “We were so busy just getting stuff done and dealing with the immediate crises that were in front of us,” the president explained, “that I think we lost some of that sense of speaking directly to the American people about what their core values are and why we have to make sure those institutions are matching up with those values.”

The problem is that the president hasn’t communicated enough with the American people? Give me a break. The Obama Administration is the most media-obsessed group ever to occupy the White House. CBS News ran some statistics revealing just how much time our Teleprompter in Chief has spent in front of an audience since he took office:

  • In his first 365 days in office, Obama made more than 400 public speeches. Some 52 of them were devoted to healthcare.
  • Obama has held 42 press conferences, four of them in prime time and broadcast on national television. That’s twice as many press conferences as George W. Bush held in his first year.
  • Thus far, Obama has given 158 exclusive interviews to various reporters, far more than any of his predecessors in the White House.
  • Plus, the president has conducted an additional 23 town hall meetings around the country to drum up support for his programs.

As anyone who can count past three could easily tell, the problem isn’t that we’ve heard too little from the president. The problem is that he’s tried to do too much that most Americans don’t like.

We were promised “hope and change.” Instead, we got a bait and switch, with every single proposal coming out of the White House costing more money and building more government than Americans wanted.

Will the President now shift to the right? His State of the Union message will contain some clues. I have to submit this column before I’ll get to hear it, however. So look for an analysis in this space next week.

Five months ago, I wrote a Straight Talk column predicting that the public would get fed up with the President’s radical effort to push this country to the left. The title of that Sept. 4 article was “How Barack Obama Will Destroy Liberalism.” In it I said, “To put it as succinctly as possible, Barack Obama seems determined to preside over the most radical transformation of the Federal Government this country has ever seen. And the American people don’t want it.”

Then I added, “I think we are witnessing the beginning of the end of liberal domination in Washington. I think Harry Reid, Nancy Pelosi, Barney Frank and Barack Obama have badly underestimated the American people. They lied about what they’d do and they badly misjudged how much we would endure. The counter-revolution has begun.”

And I concluded by saying, “Yes, the era of big government will soon be over. And we’ll have Barack Obama and all of his over-reaching cronies to thank for it.”,

Thanks to the people of Massachusetts for bringing that time one day closer.

Until next time, keep some powder dry.

—Chip Wood

Low Vitamin D Levels Linked To Higher Number Of Relapse Attacks In MS Patients

Low vitamin D levels linked to higher number of relapse attacks in MS patientsA new study has found that insufficient vitamin D levels may be associated with a higher risk of relapse attacks in patients who developed multiple sclerosis (MS) during childhood.

Researchers at the University of California, San Diego followed 110 patients who first exhibited MS symptoms as a child and found that high levels of vitamin D corresponded to a 34 percent decrease in the rate of relapse attacks.

The study suggests that raising the level of the compound in people with MS by 2,000 IU per day can conceivably cut a patient’s relapse rate in half, according to lead author Ellen Mowry.

"This is an exciting finding because it indicates that it is very possible for vitamin D supplementation to have a profound impact on the course of this disease," said senior author Emmanuelle Waubant.

The next step for the research team is to conduct a randomized clinical trial of vitamin D supplementation in MS patients as well as a study to determine the mechanism by which the compound affects the inflammatory process.
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‘Bush-blaming’ Strategy Less Successful In 2010

'Bush-blaming' strategy less successful in 2010On the heels of shocking losses in traditionally liberal states, many Democrats have begun to question the strategy behind negative political campaigns that compare Republican challengers to former President George W. Bush, Politico.com reports.

Democratic nominees for governor in New Jersey and Virginia and for the Senate in Massachusetts, all ran smear campaigns that compared their opponents to the former president. All three Republican candidates upset their liberal counterparts.

"Voters are pretty tired of the blame game," said Democratic strategist Steve Hildebrand, a top aide on Obama’s presidential campaign, quoted by the news source. "What a stupid strategy that was."

Meanwhile, Obama, who ran a successful presidential campaign criticizing then-President Bush, has continued to point blame at the previous administration more than a year into his first term.

Fox News reports that Obama and his top advisors have negatively mentioned the Bush administration seven different times since last week’s upset in the Massachusetts Senate election.

"The same thing that swept Scott Brown into office swept me into office," Obama said last week. "People are angry, and they’re frustrated. Not just because of what’s happened in the last year or two years, but what’s happened over the last eight years."
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Arrival Of Haiti Orphans Focuses Attention On American Children Waiting For Adoption

Arrival of Haiti orphans focuses attention on American children waiting for adoptionAs the government flew some 50 orphans who survived the earthquake in Haiti to Pennsylvania for adoption, a state agency says there are thousands of American children waiting to find a family.

Acting Secretary of Public Welfare Harriet Dichter said that 3,000 Pennsylvania children are waiting for adoption and more than 20,000 live in foster care.

"While the plight of the Haitian orphans has attracted much attention, it is important to recognize the many other children for whom we are always working to find a supportive family and safe home environment," the secretary stated.

In addition to bringing orphaned children from the disaster-ravaged nation, the government has also relaxed immigration policies for Haiti nationals by announcing it would halt deportations of illegal immigrants.

Haitians who are in the U.S. illegally can now apply for "temporary protected status," which will allow them to stay and work in the country for the next 18 months.

Homeland Security Secretary Janet Napolitano said this will provide an indirect form of economic aid to Haiti through remittances sent home by immigrants working in the U.S.
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Obama Defends His First Year In Office In State Of The Union Address

Obama defends his first year in office in State of the Union addressOn Wednesday night, President Obama delivered his first State of the Union address, renewing many of the promises that he made to a joint session of Congress one year ago.

Obama vigorously defended his legislative agenda concerning job creation, healthcare reform, climate change and his economic stimulus plan, while also acknowledging that many Americans have lost faith in his promise of change and are irritated with the partisan squabbling in Washington.

"I know there are many Americans who aren’t sure if they still believe we can change — or that I can deliver it," Obama said matter-of-factly. "But remember this — I never suggested that change would be easy, or that I could do it alone."

The president chastised Congress several times, demanding that they not walk away from healthcare reform and "finish the job for the American people."

However, the centerpiece of Obama’s speech was job creation. He insisted that the Senate craft a similar piece of legislation to the House bill that was passed last year, proposed a tax credit for companies that hire new employees and called for an elimination of the capital gains tax on small business investment.

"I want a jobs bill on my desk without delay," Obama said vehemently.

The president also defended some of his more unpopular political moves, including the Wall Street bailout, banking reform as well as cap-and-trade climate legislation.
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The Supreme Court Got This One Right

Some of the elected class are expressing dismay at the recent United States Supreme Court ruling that overturned much of the McCain-Feingold Campaign Finance Reform law that was passed in 2002. That law limited soft money in campaign financing, issue ads and controversial campaign practices.

Democrat National Committee Chairman Tim Kaine went so far as to call the ruling a decision that “must not be allowed to stand.” He also warned the Obama administration is preparing a forceful response. Senator John McCain (R-Ariz.) declared himself disappointed in the ruling.

Remember this: If the elected class opposes it then the ruling must be good for the American people. And this one is.

McCain-Feingold was an attack on free speech, plain and simple. It was, as some pundits have said, simply an election insurance bill that almost guaranteed the incumbent could waltz into the election against an opponent who had his hands tied. And special interest groups or corporations opposing the incumbent or big government-friendly legislation were forced to remain silent.

After all, if you ban ads opposing certain positions or politicians you have stifled the type of speech the First Amendment to the Constitution protects. And an assault on one portion of one Constitutionally guaranteed right is an attack on all of them.

As Thomas Jefferson wrote: “One of the amendments to the Constitution.. expressly declares that ‘Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof, or abridging the freedom of speech, or of the press,’ thereby guarding in the same sentence and under the same words, the freedom of religion, of speech, and of the press; insomuch that whatever violates either throws down the sanctuary which covers the others.”

Two Contrarian Trades for the Coming Decade

United States stock markets have just come off of their worst decade ever, with inflation-adjusted returns in the S&P 500 dropping as much as 30 percent. That’s a far cry from what investors were expecting at the turn of the millennium. Then, the Internet was creating paper billionaires overnight.

Fast forward 10 years and Nasdaq is still 40 percent below its peak. In addition, the Pew Research Center just designated the past decade as the “worst in 50 years.”
 
But, just as there was a technology bubble in 2000, today there is also a strong “pessimism bubble” about the U.S. economy over the coming decade. And like all bubbles, this one will eventually pop—as will the rising China bubble. Understanding this is the key to ensuring you don’t end up like investors who have spent the last decade waiting for Cisco to “get back up to $80.”

Rarely has the global stature of the U.S. been lower than it is today. A recent Washington Post/ABC poll found that 61 percent of the American people think the U.S. is in long-term decline. In another poll, 44 percent of Americans said that China was the top economic dog in the world, compared with only 27 percent favoring the U.S.

Much of the investment world holds the same opinion. In fact, the world’s top hedge fund managers are piling into gold, betting billions that the U.S. dollar is toast. Meanwhile, 17 percent of the U.S. workforce is unemployed, underemployed or has stopped looking for work.

And that’s music to the ears of contrarian investors.

Contrarian Trade #1: Buy American
After the financial meltdown of 2008, the greatest contrarian trade in the world became a bet on the U.S. But that’s exactly what I’m doing by shifting my own money and my clients assets back into the U.S.

First, investment is a game of expectations. Or as Bill Browder, formerly the largest investor in Russia, pointed out, Russia doesn’t have to turn into Switzerland for him make money. It just has to turn out better than people expect. In 1998, an investor I met in Russia said that he’d rather eat nuclear waste than invest in Russia. Yet, had he invested there, he’d have made 60x his money, just as Browder and his investors did.

Second, having lived abroad since 1991 has only strengthened my conviction that the global economy largely runs on U.S.-generated ideas. (This is not, as you can imagine, a popular position). The American Academy of Sciences estimates that 85 percent of economic growth in the U.S. is now produced by new ideas. In 2007, companies that were founded by entrepreneurs backed by venture capitalists provided 10.4 million American jobs and generated $2.3 trillion in revenues. That’s equal to the gross domestic product (GDP) of France.

Nowhere is the power of ideas more evident than in the case of decidedly unsexy U.S. manufacturing. On one hand, the media bewails that the American manufacturing workforce has shrunk by more than 40 percent since its peak in 1979, with 6 million of those job losses taking place over the last decade. But thanks to innovation and advances in technology, U.S. manufacturing output per worker recently hit an eye-popping $234,220 for each of that sector’s 11.6 million workers. Workers today produce twice as much manufacturing output as their counterparts did 20 years ago and three times as much as in the early 1980s. The U.S. steel industry—left for dead in the 1980s—produces more steel today than it did 30 years ago.

Contrarian Trade #2: Sell China
If there is one surefire way to make quick money in financial markets, it’s to bet on bubbles popping. Noted value-investor John Templeton made his first fortune over a 40-year period by betting on the rise of Japan. He made a bigger and quicker fortune by betting on the dotcom bust in 1999. I believe we are smack dab in the middle of a “pessimism bubble” about the U.S., much like the bubble about Japan 20 years ago, the Internet 10 years ago and China today.

Twenty years ago last month, Japan’s Nikkei index reached its historic peak of 38,916. In 1989, Japan was No. 1, as U.S. business school students pored over Japanese language texts and studied Japanese management techniques. A mere decade later Japan had been long forgotten and the world was in the midst of another frenzied bubble called the “New Economy.” Today, Japan and the Internet have been supplanted by the “China Miracle.”
 
Everywhere you look you see serious experts earnestly predicting the decline of the U.S. and the rise of China. And they will give you incredibly cogent, well-argued reasons for why you should listen to them. Many of these arguments I agree with myself. But the next time you read predictions about what the world will look like in 10 years, consider this. The most widely recommended stocks 10 years ago were America Online, Cisco Systems, Qualcomm, MCI WorldCom, Nortel, Lucent Technology and Texas Instruments. MCI WorldCom and Nortel went bankrupt. And if you invested in a portfolio of the others that survived, you’d have lost about two-thirds of your money. If the fates of Japan and Internet stocks are any guide, a similar fate awaits your “China strategy.”
 
Unlike many of those pundits who are so certain about what the world will look like in 2020, I never took that class on how to predict the future, naively opting for a course on Japanese joint ventures instead. But the two themes I’d bet on over the coming decade are to buy the U.S. and to sell China.

For the sake of my financial future, I hope you disagree.