Election year.........

Folks, it is an election year. The people have let their views be known via those Congressmen and women who are up for reelection this fall.

Barney Frank blaming the Republicans is great comedy. Look, America needs to shut down these politicians. Congress needs term limits and they need them now. They need to shut off the spigots of the lobbyists. Congress, Wall Street and the inept regulators (SEC, FINRA) are all to blame besides those ungodly Americans who did all the lying on their mortgage applications the past few years. The government is not the answer. Government got us into this mess. Maybe they should legislate the Community Reinvestment Act out of existence for starters.

The stock market looks to be trading just fine. Sellers are meeting buyers at lower prices.

The Democratic leaderships response to this vote is as expected. Priceless rhetoric blaming everyone but themselves. Listening to these Congressmen tell the media about how hard they worked all weekend up until 1 a.m. on Sunday morning is also great comedy. Just the hours of about any small business person in America.

History repeats itself..................

The budget should be balanced, the treasury should be refilled; public debt should be reduced; and the arrogance of public officials should be controlled. -- Cicero, 106-43 B.C.

Soros: Just Say No To Blank Check ‘Hanky’ Panky

Hank Paulson’s $700bn rescue package has run into difficulty on Capitol Hill. Rightly so: it was ill-conceived. Congress would be abdicating its responsibility if it gave the Treasury secretary a blank cheque. The bill submitted to Congress even had language in it that would exempt the secretary’s decisions from review by any court or administrative agency – the ultimate fulfillment of the Bush administration’s dream of a unitary executive.

Mr Paulson’s record does not inspire the confidence necessary to give him discretion over $700bn. His actions last week brought on the crisis that makes rescue necessary. On Monday he allowed Lehman Brothers to fail and refused to make government funds available to save AIG. By Tuesday he had to reverse himself and provide an $85bn loan to AIG on punitive terms. The demise of Lehman disrupted the commercial paper market. A large money market fund “broke the buck” and investment banks that relied on the commercial paper market had difficulty financing their operations. By Thursday a run on money market funds was in full swing and we came as close to a meltdown as at any time since the 1930s. Mr Paulson reversed again and proposed a systemic rescue.

Mr Paulson had got a blank cheque from Congress once before. That was to deal with Fannie Mae and Freddie Mac. His solution landed the housing market in the worst of all worlds: their managements knew that if the blank cheques were filled out they would lose their jobs, so they retrenched and made mortgages more expensive and less available. Within a few weeks the market forced Mr Paulson’s hand and he had to take them over.

Mr Paulson’s proposal to purchase distressed mortgage-related securities poses a classic problem of asymmetric information. The securities are hard to value but the sellers know more about them than the buyer: in any auction process the Treasury would end up with the dregs. The proposal is also rife with latent conflict of interest issues. Unless the Treasury overpays for the securities, the scheme would not bring relief. But if the scheme is used to bail out insolvent banks, what will the taxpayers get in return?

Barack Obama has outlined four conditions that ought to be imposed: an upside for the taxpayers as well as a downside; a bipartisan board to oversee the process; help for the homeowners as well as the holders of the mortgages; and some limits on the compensation of those who benefit from taxpayers’ money. These are the right principles. They could be applied more effectively by capitalising the institutions that are burdened by distressed securities directly rather than by relieving them of the distressed securities.
The injection of government funds would be much less problematic if it were applied to the equity rather than the balance sheet. $700bn in preferred stock with warrants may be sufficient to make up the hole created by the bursting of the housing bubble. By contrast, the addition of $700bn on the demand side of an $11,000bn market may not be sufficient to arrest the decline of housing prices.

Something also needs to be done on the supply side. To prevent housing prices from overshooting on the downside, the number of foreclosures has to be kept to a minimum. The terms of mortgages need to be adjusted to the homeowners’ ability to pay.
The rescue package leaves this task undone. Making the necessary modifications is a delicate task rendered more difficult by the fact that many mortgages have been sliced up and repackaged in the form of collateralised debt obligations. The holders of the various slices have conflicting interests. It would take too long to work out the conflicts to include a mortgage modification scheme in the rescue package. The package can, however, prepare the ground by modifying bankruptcy law as it relates to principal residences.

Now that the crisis has been unleashed a large-scale rescue package is probably indispensable to bring it under control. Rebuilding the depleted balance sheets of the banking system is the right way to go. Not every bank deserves to be saved, but the experts at the Federal Reserve, with proper supervision, can be counted on to make the right judgments. Managements that are reluctant to accept the consequences of past mistakes could be penalised by depriving them of the Fed’s credit facilities. Making government funds available should also encourage the private sector to participate in recapitalising the banking sector and bringing the financial crisis to a close.

The writer is chairman of Soros Fund Management

Watching this Senate Banking Committee hearing on the bailout plan is like enjoying the music on the Titanic deck chairs.

This plan needs to be thought out over several weeks, not a quick vote.

Our republic is in danger. These loons are speaking out of both sides of their mouth.

My America versus socialism

I was talking to a friend of mine's little girl, and she said she wanted to be President some day.

Both of her parents, liberal Democrats, were standing there, so I asked her, 'If you were President what would be the first thing you would do?' She replied, 'I'd give food and houses to all the homeless people. ''Wow - what a worthy goal,' I told her. 'You don't have to wait until you're President to do that. You can come over to my house and mow the grass, pull weeds, and sweep my yard, and I'll pay you $50. Then I'll take you over to the grocery store where the homeless guy hangs out, and you can give him the $50 to use toward food or a new house.'

She thought that over for a few seconds 'cause she's only 6. And while her Mom glared at me, she looked me straight in the eye and asked, 'Why doesn't the homeless guy come over and do the work, and you can just pay him the $50?'

And I said, 'Welcome to the Republican Party.'

Her folks still aren't talking to me.

Montana 2008 Antelope

I’ve been a bow hunter for a long time; I just took a long time off. As a kid on my grandparent’s farm near Hancock, MN I played “Indian” with a long bow. It was good training in trying to sneak up on rabbits and squirrels and fire off an arrow. While in college I shot a Ben Pearson recurve.Fast forward to 2008. With the difficulty in obtaining rifle tags for deer and elk in many states I made the decision to start bow hunting again. I’m not alone. Shut out of the fall big game rifle season in Montana, a pal and I put in for antelope archery tags. I ordered a couple of Hoyt Katera’s for my son, Hunter, from my friend at the Outdoor Connection in Crossville, TN to get back in the groove. Shooting 60 pounds of draw we enjoyed some good practice sessions this summer. A buddy of mine from Georgia and I were successful in the antelope archery draw and we headed to Montana with high hopes of ventilating a great “speed goat”. Having shot plenty of antelope during my high school days on various Indian reservations I grew up on and having helped raise a baby antelope on the ranch I worked on while in high school near Ismay, MT I knew antelope and their unique behavior. Bow hunting them is tough and this hunt was without a doubt one of the most challenging and frustrating hunts I’ve been a part of.It started with a 4-hour flight delay on DELTA (Don’t Ever Leave The Airport) and on arrival into Billings, MT we hit the Wal-Mart for a list of vitals and vittles. On the drive out to the east central Montana ranch we were staying at we only saw 1 antelope when all the years of making that trip we would see hundreds of animals. Last fall (2007) I literally saw hundreds of dead antelope on a large property north of Ingomar, MT.

The dead antelope were victims of EHD, the disease that took about 75% of the whitetail deer population on the river between Melstone and Roundup. Those antelope carcasses were a smorgasbord for so many Golden and Bald eagles. It was special to see both species sitting on carcasses and feasting together. I was able to obtain access to approximately 16 sections of private ground and we met the rancher on Day 1 in the local café for maps and permission slips. Eastern Montana this year is literally covered up with clover and grasshoppers. Trillions of hoppers to be exact. You couldn’t take a step without a dozen rising up and out of the grass to “fly” and “buzz” out of the way. We were pre-rut with some minor “chasing” just beginning to get going. Antelope numbers were down by half at least in my guesstimate and that of the rancher so we knew we had our work cut out. Stalking antelope in the hills is tough. Their eyesight and wary nature didn’t allow for mistakes. It was our intention to split up and head off in different directions to try and locate a bedded buck that was “stalkable”. You have to find them before they see you.

In stalking antelope that are bedded, wind is your friend. As a bow-hunter, it’s not a real close friend. The sun was bright and the wind a steady blow out of the northwest. I had glassed a bedded buck about a mile off to the southwest in a sage bottom. About half way there, crossing a nice cut, just sheer chance, a sixth-sense, call it what you want, I took a glance over my shoulder and saw a brown patch that didn’t look right---putting my Kahles 8x32’s up it was a great buck bedded alone facing into the northwest wind away from me. I dropped into the gully (gully’s are your best friend in this part of Montana for bow hunters) and kept low. I had probably 500 yards to cover. I creeped up to where I figured he would be near but no antelope. I didn’t move, just slowly looking for the black horns or white hair that would give him away. I moved slowly, not showing myself and through some sage brush glassed him, still looking up into the draw to the northwest and away from me. I was fearful of two things, one, swirling wind to let my scent get to him and two, clouds of grasshoppers that if detected by him, could mean a predator was moving in close. I eased up within 40 yards, the hot wind gusting. I laid back trying to make the decision of what to do. Try to take him lying down or wait until he stood up knowing that at such close range he would be full-tilt in a nanosecond thinking that wind would blow my cover at any second. 99% of my practice distance was at 40 yards or better. My patience wore thin. My daily practice regimen didn’t include kneeling shots in a strong wind on a steep incline. I came to full draw, knowing I had to get my pin on him pronto as I crested the sage. Unfortunately, for whatever reason the buck had turned in his bed and was looking straight at me when I came up. I needed another 2 seconds, maybe 3. It wasn’t to be. So close, so far. What a beautiful animal. That’s hunting.The next couple of days were more of the same. Lots of sweat, dusty miles, glassing and busted stalks.

I had 2 shots over the next couple of days, one arrow missing as the buck went to a trot from a walk at 47 yards (which looked to be 27 yards, the distance so deceiving in the MT air), the other arrow sailing inches under the “boiler-room”, it’s tough holding steady in the wind. The difficulty was finding bucks in stalkable beds without a doe group present. Those eyes are lethal when together and if you know antelope you know bucks use those does for protection. Out of all the miles I covered I saw only 1 diamondback---what a nice “buzz” he had.

The ground I was on had water galore and I didn’t have the luxury of time in patterning water holes or stock tanks. The sights of prairie Montana never grow old, sandhill cranes, avocets, sage grouse, porcupines, red fox, eagles, mule deer, howling coyotes and a trillion stars at night. Watching marsh hawks and sparrow hawks work the wind for mice is always a treat. On Day 4, either my hard work paid off or I got lucky, maybe a combination of the two. One of the facets of my shooting practice was to hurriedly get an arrow out of my quiver and on the string quickly for another shot. That practice made the difference. This mid-day stalk started with spotting a small herd and working around the other side of them to come upwind. I had excellent cover for once and the herd was feeding toward me. One time they ran back 60 yards and looked around but some does turned back toward me and continued to feed and the buck was bringing up the rear. I had great cover in some yucca plants to see through and just laid back to let them get in close. As they approached my range finder told me about 35 yards. I mentally rehearsed what I had to do, came up slow and “pinned” the closest animal. Timing is everything and all I can say is that in the nanosecond between release and the Easton carbon getting there the animal moved. I missed. The herd snorted but didn’t run. I ducked, well hid, knocked another arrow and sat tight. I knew I had a “now-or-never” shot on the closest animal. My release felt good and the orange fletching buried into the animal. Hunching and walking slowly, it was about 60 yards before going down the first time.

What would I do different on this hunt? Several things. One, go later to catch better rutting/chasing activity and have bucks far more decoyable. Two, scrap the Cabela’s bought decoy for one from the Montana Decoy Company. Three, practice making contorted kneeling shots on inclines. Four, invest in better camo rain-gear. Five, adapt my Badlands fanny pack to carry my bow and get the weight off my arm. My pal arrowed an antelope as well to make for another memory-making hunt.At 54, I need to keep my health intact to keep making memories, realizing my Creator has everything to do with that. I know I’ll get my share of animals ahead it’s the frustration of the “so-close, so-far” that differentiates bow hunting from rifle hunting. God willing, I’ll have plenty of time in the western prairie country I love among some of the finest, friendliest people I have ever known. Their spirit, positive outlook and determination are what any good antelope archer needs. I hope some more Montana grit rubbed off on me on this trip. May there be many more hunts ahead with my sons.
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S&P 500

The Standard and Poor's 500 Index continues to forecast an earnings recovery in 2009.

The current forecast for 2009 operating earnings per share is $108.26.

That is 35% higher than their current forecast for 2008.

9.11 Never Forget

My son stayed late at Milton HS last night to help his teammate on the swim team, Michael Smith put out flags in commemoration of 9.11. May my sons and their generations never forget the hate and horror of that day.

ALPHARETTA, Ga. -- The front lawn of Milton High School is blanketed with flags as students arrived to school. "I am at a lost for words really," said Milton High School junior Michael Smith. For many, the impact is immediate, visceral. 2, 977 flags remind every student at Milton High School of every life lost.

"It really shows you how big of a catastrophe that was," said Smith, who organized the tribute.
8:46 A.M. The hall intercom cracks with the announcement "now, we are going to hold a moment of silent reflection for the September 11 victims." The halls of Milton High School fall silent. "Really every American was affected by it," said Smith. This time 7 years ago, the high school students sat in elementary school, too young to understand then, what they simply cannot forget now. "We must not let our resolve to be weaken with the passage of time," said a student's voice over the intercom. "I was in 4th grade. I just remember seeing the expressions on my teachers' faces," said Smith. "And coming home and watching my mom cry, turning on the TV and seeing the images." Smith was only 9 then, but that memory brought him to help organize the "9/11: Never Forget" Memorial at Milton.

For more than 4 hours the night before until 11 p.m., Smith -- with the help of dozens of others -- created a poignant memorial to each 9/11 victim -- one-by-one. So the students remember, and Smith says, the memorial in front of his school a reminder, "to never forget."

Milton High School was one of more than 180 high school, college, and university campuses, who participated in the "9/11: Never Forget Project."

Optimism and Markets..............

The greatest single enemy of long term investment success is not ignorance, it is fear. Fear leads to panic and panic breeds the inability to distinguish between temporary declines and permanent losses. When investors panic they don’t discriminate. All stock market declines have been temporary in my lifetime, and all advances have been permanent. The key to investment success is not found in intellectual babble such as standard deviations, quantitative analysis or chaos theory. Successful investing in the stock market is about time in the market. The single greatest thing you can have going for you is time because no on can successfully forecast market gyrations over the short-term. Long term the market always goes up.

Stock market success is a function of two things: first, recognition that the markets will go down and sometimes go down a lot and two: preparation to regard declines as a non-events and never as an occasion to sell in a panic.

The simple lesson to remember is that markets are not logical or reasonable; they are emotional and unstable. Markets are crowds of people. Today the black boxes at a handful of firms scan the exchange order books every millisecond and automatically execute algorithmic trades, ripping any conceivable advantage away from the public. The market is not an exercise in calculus. It is primarily an experiment in crowd psychology. Stocks are on sale, we are in a recession. The 40 point S&P decline last Thursday was the fourth largest decline on a Thursday ever and being down 12 out of the last 14 trading sessions doesn't feel good. This isn' the time to throw stocks out of your portfolio. Believe it.