Wednesday, October 31, 2012

Folkie Tom Paxton at 75

Some of the warmest memories I have of the early days with my firstborn is singing with him, mostly singing to him, softly, on our glider late in evenings after a long day at work.  We had a small repertory of songs he liked, some standards like Old McDonald and many tunes familiar from Raffi.  But there was one old personal favorite of mine that I sang a lot.  No doubt the appeal was the father-to-son-to son theme, spiced up by bursts of onomatopoeia amusing to both son and father.
That song is The Marvelous Toy, profound I think in its deceivingly superficially simple and silly way.  It was composed by a young man – in the Army, somewhat incongruously, at the time.  He went on to a memorable career as a singer-songwriter in the “folk” genre, starting off as part of the Greenwich Village scene.  I saw him perform once in the mid-80s or so in Chicago – at The Quiet Night on the north side, I think.  His songs are many – my particular favorite is The Last Thing on My Mind, and a version of his powerful Jimmy Newman by the late Chicago folkie Fred Holstein deserves special mention.   

He’s done a lot of satirical, topical political stuff from the usual simplistic, child-like leftist point of view, and I wonder how his antipathy to warmongering and allegedly corporatist presidents is holding up against such disorienting developments as Obama’s personally directing ongoing drone murders (no due process!) of scores of people all over the Middle East and Obama’s sinking billions of taxpayer money into Solyndra and other failing companies controlled by his political pals and sponsors.  Mature, three-dimensional intellectual thought has never been a strong suit of tres chic lefties, and I suppose we cannot expect any more of this man.  We take him and his music for what they are as they come.   
Born in Chicago 75 years ago today – Tom Paxton.   

Richard Balsamo

Monday, October 29, 2012

Floating Rate Senior Bank Loan Closed End Funds – Still Have a Place?

Readers of this series (link) of posts know that my investing strategy has for a while focused a great deal on leveraged closed end funds (CEFs), which borrow at short-term interest rates and invest the extra dollars in more securities to generate higher returns.  As I have written before, that leverage seems modest by “financial wheeler-dealer” standards – at most, one borrowed dollar for every one of investor equity.

Of ongoing special interest are those CEFs that primarily hold floating rate bank loans, which are usually senior in the capital structure, are secured by specific assets, and are often amortized so that a little of the principal is paid back all along the life of the loan (avoiding a surprise at the end of the term).   

Bank loans are made by banks to businesses for a variety of reasons and are typically aggregated into larger pools which are then sold to funds and other institutional investors.  Typically the interest rate on such loans is tied to the 3-month Libor interest rate and resets frequently, so that as short-term interest rates rise, so does the interest rate on such loans.  Bank loans are commonly below investment grade, but since they are typically are senior and secured (hence the acronym SSBLs) the recovery on a default is high, and defaults have been unusually low for a while, perhaps reflecting the stronger balance sheets of companies that have survived the Great Recession.

A unleveraged bank loan ETF, BKLN, currently yields almost 5%.  But for every dollar of equity in such a fund, why not borrow say 35 cents at less than 1% interest and invest that into more bank loans yielding 5%?  Both your leverage and your principal are floating to the same reference index, so the spread shouldn’t change.  With such leverage one takes on more credit risk but not more interest rate risk.  Add to that professional management, which has the ability, if so desired, to add some credit default insurance, and you have a Bank Loan CEF. 

Many bank loans today have interest rate floors, so they are yielding much more than the 3-month Libor.  Now, if interest rates wind up staying low for many years, as the fed has indicated and as the market currently believes, then these loans may not be the best investment at the current time for either current yield or total return.  But to hedge my bets in case short term interest rates rise sooner than expected, these SSBL CEFs have a reasonably good-sized place in my portfolio.  I find the credit risk reasonable and the interest rate risk negligible, and I find for all that I’m getting attractive annualized yields at roughly 6.0 to 7.5%.  Not bad.

As with all debt CEFs, among other things I look for net investment income (NII) to exceed the distributions, positive undistributed net investment income (UNII), a positive or at least stable quarterly NII trend, and a low level of the riskier level 3 assets.  I also like to see a positive, acceptable, and competitive total return on net asset value in recent time periods.  Ideally I like to buy when the market price is at a discount to the fund’s net asset value, but I will buy at a modest premium if I think market conditions suggest the NAV will be stable or rise. 

Senior secured bank loan CEFs have run up in price lately, and bank loans have risen and are now trading roughly almost at par, so they are no longer real bargains.  Nevertheless, I like them as a portfolio hedge against rates rising earlier than expected and with acceptable distributions for that hedge.

My major SSBL CEF holdings right now are TLI (6.7%), JFR (7.2%), JRO (7.5%), PHD (6.6%), and EFT (6.3%), with the current annualized distribution yields noted.  I like to diversity across sponsors whenever possible, and these five funds come from four different sponsors.  At the moment all these CEFs are trading at single-digit premiums -- their attractiveness as buys to some investors may vary with the degree of discount or premium, which varies day-to-day. 

Mike Parenti

Sunday, October 28, 2012

The Cuban Missile Crisis at 50

A Russian Missile
For two weeks Kennedy and Khrushchev and their surrogates and supporters stared down each other while across the States lots of kids (such as I) were led in daily disaster drills to sit on the floor with our heads at our knees and our arms over our heads.  Like that would do much good if the Reds dropped a big one on top of us.  Some neighbors, more cautious or more pessimistic or more foolish or more sensible, built bomb shelters in their back yards. 

In a few short years, “missile gap”, “mutual assured destruction”, “ICBM”, and “U-2” popped into the common lexicon.  Sputnik had scared us and Khrushchev (and his shoe) had alarmed us, and then suddenly we discovered Russian missiles being positioned in Cuba – pointed our way.  They say now Kennedy’s earlier diffidence at the Bay of Pigs led the Ruskies to be bolder – apparently weakness is provocative to one’s enemies (hasn’t that just come up again recently?).  The blockade ensued and suddenly I found myself curled up under a desk for what seemed like hours on end.  It was, in retrospect, they say, the closest the Cold War ever came to becoming a hot one.  Then as suddenly as it began it was over.   

The two week Cuban Missile Crisis ended 50 years ago today.

John M Greco

Tuesday, October 23, 2012

El Alamein at 70 – “The End of the Beginning"

Memorial to the Australian 9th Division
at the El Alamein Cemetery
Today marks the 70th anniversary of the beginning of the WWII Battle of El Alamein in the western Egyptian desert.  It was the first great successful Western Allied offensive of the war, and marked the turning point in Allied morale.  It placed Rommel’s famed German Afrika Corp on the run – for good.  It marked the first appearance in battle of the newest American tank, the Sherman, which would finally give the Allied troops a tank with which to counter those of the Germans.  The victorious British Eighth Army Commander Montgomery became "Viscount Montgomery of Alamein" when he was knighted after the war.   

Some years ago, eight to ten perhaps, on a long late evening flight from Los Angeles to Chicago I found myself sitting next to a small, quiet man who sat peacefully in his seat.  Somehow we struck up a conversation, unusual for me on such flights, where I preferred to rest or read.  We spoke quietly so as to not to disturb (much) our fellow passengers.  I discovered he was an Australian from Tasmania off to visit his son in Rhode Island, and was an avid sailor (like his son if I recall correctly).  Turned out he had been in the Eighth Army and served at El Alamein and later Italy, a courier or messenger as I vaguely recall.  His stories were remarkable, and I wish now I had a tape recorder with me.  We talked and talked and suddenly four hours later the plane was landing at O’Hare.  One of those remarkable little, memorable life experiences, so unplanned and so unexpected.   

Veterans of the battle, the few left, and others gathered at the British war cemetery in Egypt to commemorate the battle (link; link).  I can only wonder if my plane-ride acquaintance made it.   

About two weeks after the start of the battle a large American and British force would land in western North Africa and ultimately trap the Germans between the two advancing Allied armies.  Then on to Sicily and Italy and points beyond.  But it was about this protracted, bitterly fought, but ultimately successful battle, when all had been looking so grim for the Allies, that Winston Churchill famously said: "This is not the end.  It is not even the beginning of the end. But it is, perhaps, the end of the beginning."    

R Balsamo

Obama the Infanticide President

A friend writes and mentions that some liberal acquaintances of hers are in denial over Obama’s advocacy for infanticide – the deliberate killing of infants.  With the “mainstream” liberal media shielding Obama from this disgrace, and from many others, only political conservatives who get their news and information from non-liberal sources know the truth.

Obama played a leading role, when he was in the Illinois legislature, in blocking adoption of an Illinois law that would require doctors and nurses to try to save infants born alive after a failed abortion attempt, as they would try to save any other infants who required medical care.  Obama led the fight to preserve the practice of denying infants born alive after failed abortion attempts any medical care and simply putting them in a closet without food and water and medicines to die – in short, he fought to preserve infanticide.  Readers up on this subject are familiar with the stories of Jill Stanek, the nurse at Christ Hospital (of all names) in suburban Chicago who cradled and comforted in their final hours living infants left to die by Christ Hospital doctors in utility closets after being born alive.  Obama and his Democrat confederates, which included many Irish and nominally-Catholic politicians from Chicago, successfully beat back every attempt to outlaw this despicable and barbaric practice. 

Obama the radical abortionist won – a man so radical in his support for abortion, and so fearful that any restriction would threaten it, that he took a leadership role with fellow Democrats in the Illinois legislature to defeat a bill that would have outlawed the killing of living babies.   

As I have previously referenced on this site, here is Peter Kirsanow writing at The Corner blog at National Review Online in a series of posts from 2008: 

Obama's 2002 vote against the Induced Birth Infant Liability Act ("IBILA") [occurred] while he was in the Illinois state legislature.  IBILA would have extended the same medical care to babies born after surviving an abortion attempt as is enjoyed by all babies born alive. When a similar measure, the Born Alive Infant Protection Act ("BAIPA") was introduced in the U.S. senate not one senator voted against it. Even NARAL didn't oppose it…. 

Obama sits through testimony that babies born alive after an unsuccessful abortion are left to die alone in a utility closet. The babies are provided neither comfort, care, nor sustenance during their brief lives. When this practice was brought to public attention horrified citizens petitioned their legislators to address the matter. Proposed legislation is drafted, [but Obama votes against it]…. 

Obama supposedly questioned the constitutionality of IBILA…  Obama's rationale for voting against IBILA is questionable at best. What isn't questionable is that Obama, the constitutional law lecturer at U. of Chicago Law School, offered no amendments to cure IBILA's purported defect….  Rather, after voting against IBILA, the bill was referred to a committee he chaired where he killed it by never bringing it up again for a vote. (It's also worth noting that while Obama voted "present" 100+ times in the Illinois state legislature, in this particular case he bestirred himself to vote "no".)  

Another revealing aspect of the issue is Obama's mendacity in claiming that his vote reflected the purported absence of "neutrality language" in the Illinois state version of the Born Alive Act. It's been six years since his vote, there's irrefutable evidence that the state version was the same as the federal version, yet Obama persists in peddling his false explanation. He's probably judged correctly that the media won't call him on it….  Obama insists on calling living, breathing babies no longer in the womb fetuses; he refuses to call them persons.

I think it is possible for moral people to view abortion early in pregnancy as not immoral.  However, abortion late in pregnancy is another thing, especially when the fetus would be viable outside the womb.  And as for so-called partial-birth abortions, where babies are killed while partially outside the mother’s body, and as for infants who survive the “botched” abortion attempt and are born alive but left to die in utility closets beside dirty laundry – these practices are barbaric and disgraceful.  No moral person, either “pro-life” or “pro-choice,” could countenance such despicable acts.  But Obama does.  And the liberal media hides all of this.

John M Greco

Related Post here:

Related Links:
Life Lies – Barack Obama and Born-Alive (link)
Fathering More Lies – Obama's latest spin on Born-Alive (link)
When Obama Voted For Infanticide (link)
Obama’s Abortion Extremism (link)
Obama and Infanticide (link)
Clarifying Obama’s Vote On Born-Alive (link)
Why Obama Really Voted For Infanticide (link)
Obama’s Infanticide Votes (link)
Sean Hannity Interview of Nurse Jill Stanek (link)

Friday, October 5, 2012

Liberalism as Bossism, & the Obamacare Medical Care Rationing Board

I have long believed that the liberal/left/socialist assertion that equality -- numeric equality in economic, racial, gender, and sexual orientation outcomes -- is just a ruse to hide from the rubes the real driving force of the left's intellectual vanguard -- the insatiable desire for control.  Control over everything about you and me, control over us because the controllers believe that the rest of us are too stupid to make our own decisions properly, and they're smart enough to do it for us.  In fact, they convince themselves that it's a moral imperative that they make the "correct" decisions for us.  Their proof -- some people don't vote for them and so prove that these people don't know what's good for them.  All these elites want control, and they're content sometimes to publicly live modestly while expecting to have their private luxurious villas out of sight in the countryside.  Their bargain:  give us control over your life and we'll ensure radical equality for everyone like you, while taking our well-deserved cut to live extra specially.

A great example of this liberal/left belief in control by elites is the provision in Obamacare that creates an unelected "board" of bosses to ration medical care.  It's pitched under the ruse that it's there to identify and promote only that medical care that is really effective.  It's a lie.  The board is there to ration care so to limit spending on medical care and to ensure that money isn't spent on care for people who have outlived their usefulness, in the eyes of the liberal elite.  Turn 65 and need a hip replacement -- fuhgettaboutit.  Hit 70 and need cataract surgery to see -- tough luck.  Need life-saving heart surgery as a health 90 year old -- sorry, too expensive for someone your age.  Want to spend your own money to get that care even if Medicare won't pay for it -- Hahahaha -- think the controllers, the bosses, will let people with money escape their grip and let you get medical care they're denying for a person without money?  Not a chance.  Death Panel indeed.

From Elizabeth Price Foley posting today at Instupundit (link) about that Obamacare rationing board, which goes by the wonky and innocuous-sounding "Independent Payment Advisory Commission (IPAB)" and will probably have an office right next door to the "Ministry of Truth":
....[T]wo extremely bizarre aspects of IPAB that get far too little attention:
(1) The IPAB itself can be disbanded only by a 3/5 supermajority of both houses of Congress, AND
(2) only if the resolution to disband is introduced between Jan. 1- Feb. 1, 2017, and approved (by 3/5) before Aug. 15, 2017. That is a maximum 8.5 month window. After this time period, any attempt at disbandment is not allowed under the statute.
....[A]side from [the constitutionality of these provisions in Obamacare], the salient point is this: Progressives adore “expert” panels like the IPAB because they believe they are better able to make tough decisions about how to cut Medicare spending than our elected representatives. And they love these unaccountable expert panels so much that they attempt desperate measures like “entrenching” them statutorily, writing language that purports to make these boards hard to repeal–and impossible after a very narrow window. This isn’t very “progressive” at all, because such entrenchment presumes that future generations can’t govern/decide for themselves, and nothing can ever be altered or improved. Typical hypocritical, control-freak progressivism.

John M Greco