Michael Cannon, a previous guest on our radio show and the Director of Health Policy Studies at the Cato Institute, talks about the problems with Obama’s health care plan:

Interesting commentary here from the Cato Institute’s Richard Rahn on who you elect to Congress and the impact on your stock market investments. 

Key Quote:  ” … over the last quarter century when the Republicans controlled both houses of Congress, the stock market rose by an average of about 20 percent per year.  When the Democrats controlled both houses of Congress, the stock market only rose an average annual rate of 6.9 percent for the Dow Jones and a tepid 5.1 percent for the Standard & Poor['s] 500.”

For those of you not familiar with the Cato Institute, they are a leading advocate on promoting the principals of liberty, free markets, and limited government.  Cato is the best organization I know of at getting this message out to mainstream America.  Here is their website, blog, and Twitter feed. 
 

Being an owner with your long term investment capital is never about following a short path to riches. 

It is nearly always about the compounded power of many market sessions.  Times like these are what challenge investors’ discipline and day by day we hold on past the doom-and-gloomers waiting for the breakout to emerge.

REALITY CHECK:  So here we are near the bottom and it seems that most of our peers have become overwhelmed and left the building.  Today being an owner often leads to second guessing … “you aren’t still investing in the stock market, are you?” … “that isn’t safe” … “I moved my money to cash and bonds” … but the market session that is right around the corner, THE bottom and the rally that follows, reaffirms once again that common stocks, over the long term, are the highest total return asset class of all.    

Reston, VA – North Dakota and Montana have an estimated 3.0 to 4.3 billion barrels of undiscovered, technically recoverable oil in an area known as the Bakken Formation.

A U.S. Geological Survey assessment, released April 10, shows a 25-fold increase in the amount of oil that can be recovered compareed to the agency’s 1995 estimate of 151 million barrels of oil.

Technically recoverable oil resources are those producible using currently available technology and industry practices.  USGS is the only provider of publicly available estimates of undiscovered technically recoverable oil and gas resources.

New geologic models applied to the Bakken Formation, advances in drilling and production technologies, and recent oil discoveries have resulted in these substantially larger technically recoverable oil volumes.

~ From the U.S. Geological Survey

Here’s editor Adrian Van Eck– who I’ve followed for many years – on the the latest news out of the housing market:

A wonderful example of the new positive thinking breaking out in U.S. real estate and mortgage banking can be seen in Tuesday’s call by the U.S. mortgage bankers association for the Federal Housing Finance Agency to boost the limit for Fannie Mae and Freddie Mac purchases or guarantees to $625,500, helping strengthen the housing market.  This would increase the current guarantee by 50% from the $417,000 current limit on purchases or guarantees.  It will, if accepted, offer a giant boost to the upper-middle single-family housing, including many McMansions.

Congress actually okayed mortgage loans bigger than $625,000 as part of the Housing and Economic Recovery Act passed in July.  But that limit was declared to be temporary, and as such it never really was taken seriously by lenders, realtors and would-be home buyers.  But the new proposal by the mortgage bankers is cut from a different bolt of cloth.  It would be permanent and thus more likely to affect both near-term thinking and long-term planning.  Garry Cipponeri, Senior Vice President of Chase Home Finance LLC of New Jersey, says this of the proposed permanent hike in the mortgage cap to $625,000:  “It will be stimulative.  This market needs liquidity.”

When the Federal Government took control of Fannie Mae and Freddie Mac the purpose was to save the stimulate housing.  So far the bulk of attention appears to have been directed to save the banking and mortgage industry.  Billions of dollars of what are called toxic loans are slated for purchase to help clean up the balance sheets of some very poorly managed banks.  But we hear remarkably little talk about taking steps that would open the spigots of big and small lenders.

Yet we have shown that Americans have piled up several trillions of dollars in savings under the low Bush tax rates on upper incomes.  Note that I said trillions of dollars and not billions.  The media, in its determination to swing the presidential election, has pumped fear into the public mind, making people believe that we may be about to plunge over a precipice into a new Great Depression.  That is so far removed from reality that I choose to focus on facts and not on fancy.  I believe that once the election is over the media will reveal the true story.

I can tell you right now what some of the financial analysts who love to get their faces on TV may be getting ready to say in a few weeks.  They will note that we have been concentrating far too much on what is a quite minor story and have largely ignored a set of major facts that are actually impressive.  To talk of a depression is nonsense, they will suddenly announce.  Unemployment is only about a fifth of the rate in 1933.  The mortgage banking industry then was faced with a total collapse of home ownership.  Not so today.  Numbers coming this week out of the mortgage bankers at their annual conference in San Francisco shows that only 2.5% of homes have been foreclosed.

Half of those involved were people that had no business buying a home in the first place.  They signed up at a time when loans were made either with no supporting numbers of with no checking of numbers supplied.  A lot of lying took place.  A deliberate effort, pushed by politicians, signed up many people living in public housing.  They had never paid rent.  Their rent was covered with a government voucher.  Apparently they thought the state would do the same for their mortgage payments.  When bankers have tried to rewrite their mortgages, 80% of these people have been foreclosed a second time.  Once the elections are over some of them will likely be returned to the security of public housing.  Incidentally, the mortgage bankers say that 95% of active mortgages are being paid up to date.  Only 5% are late and half of those are not close to being marked for foreclosure.

This sad chapter may soon be concluded.  Then the media will be able to announce that a new burst of confidence has so energized the economy that housing seems to be ready for a major comeback. 

The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt.  People must again learn to work, instead of living on public assistance.

– Cicero, 55 BC

What happens when the voter in the exact middle of the earnings spectrum receives more in benefits from Washington than he pays in taxes?  Economists Allan Meltzer and Scott Richard posed this question 27 years ago.  We may soon enough know the answer.

Barack Obama is offering voters strong incentives to support higher taxes and bigger government.  This could be the magic income-redistribution formula Democrats have long sought.

Sen. Obama is promising $500 and $1,000 gift-wrapped packets of money in the form of refundable tax credits.  These will shift the tax demographics to the tipping point where half of all voters will receive a cash windfall from Washington and an overwhelming majority will gain from tax hikes and more government spending.

In 2006, the latest year for which we have Census data, 220 million Americans were eligible to vote and 89 million — 40% — paid no income taxes.  According to the Tax Policy Center (a joint venture of the Brookings Institution and the Urban Institute), this will jump to 49% when Mr. Obama’s cash credits remove 18 million more voters from the tax rolls.  What’s more, there are an additional 24 million taxpayers (11% of the electorate) who will pay a minimal amount of income taxes — less than 5% of their income and less than $1,000 annually.

In all, three out of every five voters will pay little or nothing in income taxes under Mr. Obama’s plans and gain when taxes rise on the 40% that already pays 95% of income tax revenues.

The plunder that the Democrats plan to extract from the “very rich” — the 5% that earn more than $250,000 and who already pay 60% of the federal income tax bill — will never stretch to cover the expansive programs Mr. Obama promises. 

What next?  A core group of Obama enthusiasts — those educated professionals who applaud the “fairness” of their candidate’s tax plans — will soon see their $100,000 – $150,000 incomes targeted.  As entitlements expand and a self-interested majority votes, the higher tax brackets will kick in at lower levels down the ladder, all the way to households with a $75,000 income.

Calculating how far society’s top earners can be pushed before they stop (or cut back on) producing is difficult.  But the incentives are easy to see.  Voters who benefit from government programs will push for higher tax rates on higher earners — at least until those who power the economy and create jobs and wealth stop working, stop investing, or move out of the country.

~ From today’s column by Adam Lerrick in the Wall Street Journal 

In early September, I began noticing a string of news stories about scientists rejecting the orthodoxy on global warming.  Actually, it was more like a string of guest columns and long letters to the editor since it is hard for skeptical scientists to get published in the cabal of climate journals now controlled by the Great Sanhedrin of the environmental movement.

Still, the number of climate change skeptics is growing rapidly.  Because a funny thing is happening to global temperatures — they’re going down, not up. 

~ From Lorne Gunter in the National Post

Bottom Line:  Global warming is a natural, cyclical phenomenon that is nothing new to our planet.  It is caused primarily from solar activity and is not man-made.  Government has used it as a scare tactic to con the public into accepting more control over our actions and our lives.  So go buy an SUV!

In case you missed John Stossel’s “Politically Incorrect Guide to Politics” that aired last Friday on 20/20, it is now available on YouTube.  Here is the first part:

Part 2 is here, part 3 is here, part 4 is here, part 5 is here, and part 6 is here. 

Billionaire investor Warren Buffett used a guest commentary article in the New York Times on Friday to announce that he’s sticking with stocks. 

Buffett, the so-called Oracle of Omaha for his ability to buy up the right companies at the right time for his holding company Berkshire Hathaway (BRK.A), said the worst may not be over for the faltering economy.

“In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary,” Buffett wrote.

But for that reason, the Berkshire CEO said, he has converted his personal portfolio almost entirely to U.S. stocks.  Previously, he said he owned nothing but Treasury bonds.

Buffett said the fear surrounding the disastrous credit crisis, which has dropped stocks about 36% from their all-time highs set around this time last year, has left equities with attractive purchasing prices.

“A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful,” said Buffett.  “And most certainly, fear is now widespread, gripping even seasoned investors.”

Stock prices have been volatile, to say the least.  Consider what happened this week alone:  The Dow Jones gained 976 points on Monday; fell 76 points on Tuesday; dropped 733 points on Wednesday and then gained 401 points Thursday.  But Buffett says the future is much brighter for stocks.

“Fears regarding the long-term prosperity of the nation’s many sound companies make no sense,” wrote Buffett.  “Most major companies will be setting new profit records 5, 10 and 20 years from now.”

~ From David Goldman’s recent article at CNNMoney.com.

(Hat tip to Dave Blair)