American Egyptologist – Breasted & The Oriental Institute

Jeffrey Abt has written a fascinating and detailed account of the life of James Henry Breasted, the much celebrated University of Chicago ground-breaking epigrapher and founder, at UChicago, of the Oriental Institute.  Abt thoroughly covers Breasted’s work in epigraphy and archaeology, and also many interesting aspects of UChicago’s early history.  The book is exhaustingly researched, and is handsomely bound in rich, dark blue cloth by the University of Chicago Press (at one time, and maybe still, the largest university press in the world).

Breasted was foremost an epigrapher, studying ancient inscriptions and language, and though not trained as an archaeologist he became one by necessity, given the need to find, excavate, and explore ancient sites.  Working from the 1890s into the 1930s, his primary focus was ancient Egypt, and as a young man, struck by the deterioration of the known sites, he began a lifelong project to record and interpret the inscriptions.  In time, Breasted became famous; he was, for example, at the opening of the chamber containing the sarcophagus and mummy of King Tutankhamum.  He emphasized studying not just past events but past conditions and institutions, which seemed novel for the time. 

Breasted also became, through books and lectures, a very well-known popular educator about ancient Egypt and early Eurasian civilizations.  In his teaching and writing, he was a pioneer in the use of visual, diagrammatic displays of information, and coined the now well-known term “fertile crescent”.  He was one of the first to appreciate the important influence of Egypt’s ancient civilization on that of Greece.  The Oriental Institute’s projects eventually encompassed all the civilizations of the Near East and the field work spread out accordingly; its museum displays one of the finest collections of ancient Near East artifacts in the world, and I have enjoyed many a desultory stroll through the exhibits.      

The Oriental Institute at the University of Chicago

Breasted was born in Rockford, Illinois, in 1865, and grew up in Chicago’s western suburbs.  He started out in pharmacy, of all things, and graduated from what is now North Central College in suburban Naperville.  He eventually turned to theology (at the Chicago Theological Seminary), then to languages (studying Hebrew at Yale), and then finally to epigraphy which became his life’s work.  As his career moved on, he became as much an administrator and fundraiser (Rockefeller money) as researcher and educator, and at that point in the story the book gets dry with detail I imagine not of particular interest to the casual reader, who I suspect might be inclined to tread lightly over those sections.  An abridged version for the general reader would not be misplaced.

Breasted was the first archaeologist to be elected to membership in the National Academy of Sciences, and became so well-known that he made the cover of Time magazine in 1931.  When he died at 70 in 1935, his memorial service at Rockefeller Chapel on the UChicago campus featured the Chicago Symphony Orchestra and was broadcast nation-wide on CBS radio.  He was buried in Rockford, with a large granite cube from ancient Egypt placed as his tombstone.  Years later, when a film maker was creating the fictional story of a young, dynamic epigrapher, he placed his character at the University of Chicago’s Oriental Institute, no doubt because he figured where else would you find someone like Indiana Jones. 
 

American Egyptologist:  The Life of James Henry Breasted and the Creation of His Oriental Institute
By Jeffrey Abt (University of Chicago Press, 2011)

Richard R Balsamo

Related Posts at this blog:
The Oriental Institute of the University of Chicago
Ancient Assyria & the Transience of Economic Strength
The Oriental Institute's "Striding Lion" of Babylon

La Boheme at the Lyric Opera

Original Poster for La Boheme

Everyday people (sort of), everyday life (mostly), and an everyday love story (maybe not quite).  Opera Verismo.  Certainly not grand opera, not an Aida or even a Lucia.  But rather a small, simple love story, direct and tragic, encased in some of the most beautiful melodies in opera.    

The other day with family and friends I took in the first of two Lyric Opera ensembles performing Puccini’s La Boheme this winter at Chicago’s Civic Opera House, with Ana Maria Martinez and Dimitri Pittas very enjoyable in the leads.  I first saw Boheme at the Lyric around 30 years ago, with Pavarotti in the male lead role.  The strength, depth, and breadth of his voice seem to have almost been unique, and other tenors since then have sounded a touch thin, but that’s just me. 

Mr Pittas is a New York native who is quoted in the Program saying that he was first turned on to opera listening to the collection of duets by Bjorling and Merrill.  Well, for 30 years I myself have been enjoying those duets, coincidentally given to me by a dear friend also at the performance that night, and anyone who can listen to them and not want to hear more is a lost cause, operatically speaking.

Main Hall of Chicago's Civic Opera House

Unfortunately the set was underwhelming, and we know just whom to blame – owned and constructed, says the Program, by the San Francisco Opera, clearly a budget conscious outfit.  The garret shown in Acts One and Four consisted of a small elevated platform in the middle of the stage with a large border around it that took up most of the space, so that it all looked like a small painting in a frame three sizes too big.  But it’s La Boheme, after all, where the characters and the music get all the attention, which, of course, they should.

R Balsamo

Brokest Illinois Dems Go On Spending Spree On Themselves

In the Utopia called Illinois, controlled for generations by Democrats and the occasional Democrat-like Republican, something has gone wrong with the model -- it's the brokest state with the lowest credit rating in the brokest country in the world.  Its debt is staggering.

But hell, what's the use of being a liberal Democrat if you can't spend like one.  The Illinois Senate and House, both controlled by Democrats with super-majorities, and the Democrat Illinois governor have just all enacted a new spending bill of about $1.6 billion that the state doesn't have, no doubt all going to Dem constituencies and Dem donors.  Illinois voters sure like Democrats.

That's new Democrat spending of $1.6 billion, after just having fallen further behind in 2012 on state employee pension obligations despite a recent 67% hike in the state personal income tax and an almost 50% hike in the state corporate income tax.  

The Chicago Tribune says (link) the "Republicans decried the measure as including ill-timed, pork barrel money."  So what else is new. 

From a commentator to the Trib article:

$10,000 to the Life Center Church of Deliverance for infrastructure; $28,461 to the Chabad Living Room (?)for infrastructure improvements; $528,000 for Wings Program to buy a building; $225,000 to Fulfilling Our Responsibility Unto Mankind for infrastructure improvements; $100,000 to the Uhlich Children's Advantage Network to buy a building; $1 million to the Children's Museum Foundation to buy a building; $115,000 to the Illinois Basketball Hall of Fame. The list goes on and on. Don't these people know that Illinois is broke? That Illinois owes billions of dollars to doctors, pharmacies and others providing services to residents? Owes billions of dollars to its delinquent pension funds, aka its employees? WTF?

Not for nothing is Chicago's unofficial motto (with outstretched palm) "Where's mine?" as in "Where's my share of the loot?"  Something that can't go on forever won't, and the end to this graft and madness will not be pretty.

John M Greco

Obama's Latest Nominee a Big Obamacare Supporter -- For Her Competitors But Not For Herself

Well, she was for it before she was against it.  She still thinks Obamacare is right for you and me, just not for her.

From the Daily Caller (link):

President Barack Obama’s newly-named nominee to run the Department of the Interior, REI CEO Sally Jewell, sought and received a waiver from Obamacare requirements for her outdoor clothing and equipment company [REI] in 2011....  Obama welcomed Jewell to the White House in 2009 to jointly argue for the passage of Obamacare.  Obama held REI up as a model company.

But after passage, Obamaphile Jewell's not so hot on Obamacare for her own company.  Better that her competitors spend the money to comply.

Two years later, Jewell secured an exemption from the law for REI.  REI received an Obamacare waiver around the same time that nearly 20 percent of the businesses in House Minority Leader Nancy Pelosi’s Northern California district received waivers.

So that's the scam.  Pass an onerous law expensive to comply with, then give your friends, but to be sure not their competitors, a pass.  Reminds me of how the Democrats in Illinois play this same game.  They recently passed an almost 50% hike in the state corporate income tax, then welcomed the stream of supplicants from big companies and selectively passed out various exemptions, all of course behind closed doors.  If you're a midsized Illinois company not making contributions to Democrats, either because of cost or ethics, you're screwed.

John M Greco

Obama Says It Is "Legal, Ethical, and Wise" For Him To Kill Americans (But Bush's Waterboarding Was Reprehensible)

Latest Dispatch from the Obama Wonderland:

It is “legal, ethical and wise” (link; link) to kill American citizens suspected of terrorism on Obama's say-so without a shred of due process, but it is morally reprehensible, if not clearly illegal, for the US government (i.e., George Bush) to waterboard for 10 minutes captured foreign terrorists who are reasonably felt to hold vital information about future terrorist plans.

Perhaps Obama feels he's doing those "suspected" American Muslim terrorists a favor by facilitating their deaths in the cause of jihad, whisking each one to heaven to frolic for eternity with his very own 72 perpetual virgins.  Or maybe Obama feels Americans are better off not trying to capture and interrogate suspected American terrorists and learning their current contacts and future plans, since that could only serve to cause some Neanderthals among us to look askance at a non-assimilated Muslim or two, and what could be worse than that?

Obama's crack team of lawyers say Obama's ordering of killings -- assassinations -- is all fine and dandy under US law, but remember Obama came within a hair of prosecuting Bush lawyers who said waterboarding was OK. 

And countless liberals and foreigners who want George Bush tried as a war criminal for waterboarding say what to all this?  The sound of silence.  

John M Greco

Obama's Ultimate Agenda

Orwellian was the very word that occurred to me when I read how, in his Second Inaugural Address, Obama used the language of America's founding principles in which to couch his socialist, collectivist true agenda, as a kind of misdirection confidence game to fool the rubes, the masses who need governing by wise elites.  For Obama, the Constitutional limitations on government power must be subverted.

The meaning of Obama's speech has been covered by many, of course; some particularly worthwhile analyses are here, here, here, and here.  Now, at National Review Online Michael Auslin has posted a particularly trenchant commentary (link), excerpted here, that to me gets at the root of the matter:

Perhaps the keynote of Obama’s second inaugural address, the Magna Carta of the new liberalism, is this line: “Preserving our individual freedom ultimately requires collective action.”  The line was certainly banal, as well as Orwellian. But it would be a mistake to ignore it as a rhetorical weapon. What Obama hopes to achieve, above and beyond his policy goals, is to move American society to a point where he won’t even have to give lip service to concepts such as “individual freedom,” at least when talking about his statist agenda. Today, he must still use such traditional American concepts, must still appeal to what one hopes is deeply rooted in our national psyche....  While he was certainly more unbound in his second inaugural, ... one can see where he is still constrained, perhaps by an understanding (distasteful to him, no doubt) as to how far he can push without stirring some deeper unease among even those sympathetic to his less far-reaching goals. 

But this is clearly a gambit to shift the country’s political philosophy ... by utilizing the vital role of rhetoric. Changing how we talk is a prerequisite to changing how we think, shaping reality through our words. Over the next four years, how far will Obama, with the support of the media, universities, and popular culture, have succeeding in changing forever our national rhetoric, where the liberal statist conception of the American collectivity supplants our timeless appeal to individual freedom? 

[Obama’s] thrust to more subtly shift how we think of ourselves and our relation to the state is a necessary ingredient for softening current and future opposition to the expansion of government and the dependency society. Even more insidiously, it is a bid to redefine the American character, from which all else flows.

John M Greco

Tough Times in Democrat Utopia Illinois – How’d That Happen? And When's the Rally?

The breakdown of the Democrat Party social model continues apace, and the day of reckoning draws ever near. 

Illinois has just been recognized as the brokest state in the Union, with the worst credit rating of all.  In Chicago, a city with some of the strictest anti-gun regulations in the country, gun violence continues to set new records (link).  No more Second City! 

Illinois should be a liberal paradise after a generation of almost complete control by Democrats and the occasional liberal Democrat-like Republican.  That’s Democrat-like as in fiscal irresponsibility, social license, and corruption. 

The latest skirmish just broke out in Chicago’s Hyde Park neighborhood, home to the private University of Chicago, which has just opened an expensive, new hospital sans a trauma unit.  Even the ultraliberals now in control there understand that shouldering most of the burden on the South Side for caring for gang banger shooting victims is a sure path to bankruptcy, especially since the Democrat-controlled state is beyond broke and can’t even make timely payments on Medicaid claims, the rates for which are of course paltry compared to private insurance. 

Democrats know just what to do, what they’ve been doing for decades about all the serious problems that are much of their own making – hold a protest (link).  But now they’re just protesting against themselves, their own social model, but are too dim to realize it.  Touchingly, a sweet little old white lady from the neighborhood complains that the lack of a trauma center affects not just bullet-ridden black gang bangers but people like her, perhaps though not able to realize that there are likely 25 insurance-less gang banger cases for every one with a patient like herself, who is by the way as a Hyde Parker statistically highly likely to be a lifelong Democrat voter.  Fifty years of destructive liberal social policies and attitudes and excuses have ruined cities and communities, and the money is gone, long gone, and it’s just smoke and mirrors now.  Chicago’s new top cop, a fellow named McCarthy new mayor Emanuel found somewhere on the East Coast, blames (link) racism and Sarah Palin for the escalating gun violence (I kid you not); not mentioned were liberal policies.  Doctors will tell you that effective treatment requires the correct diagnosis, but then these Democrats aren't brain surgeons.  Next up, no doubt – a rally! (link)

John M Greco             

Naked City Redux

In this time of economic instability, escalating global Islamic terrorism, and an increasingly imperial presidency, one savors pleasant distractions wherever they can be found.  In recent months I’ve caught some episodes of the old TV series Naked City, a police drama set in New York City which a cable station has been airing of late. 

The plots often move slowly, but the window into the mores, language, and look of the time, and the many great outdoor shots of NYC, can be captivating.  The show was recognized, even at the time as I vaguely recall, for its gritty realism.  The stories often, if not usually, revolved around the guest stars, and one can see in vivid black and white young actors, unknown at the time, who later became stars; Robert Duvall and Sandy Duncan are two I’ve seen lately.  The writing was character-driven and has a larger component of psychological drama than later cop shows like Kojak (who loves you baby?).  Naked City can seem a bit brooding, almost noirish, as it brought to television a gritty realism, almost documentary-like in parts.  In retrospect, a simpler time, not that they thought so then.

Said in the famous voice-over narration, by producer Herbert Leonard, at the end of each episode, referring presumably to the population of New York City:  "There are eight million stories in the Naked City. This has been one of them."  Unfortunately, there turned out to be only 138 of them, all told.

R. Balsamo

Will Illinois Dems Snooker Repubs on Pension Reform? Don't Answer That

Despite a recent 67% hike in the personal income tax flat rate and an almost 50% increase in the corporate income tax rate, Illinois is sinking deeper in debt because the increased revenues are not keeping up with ever-increasing pension payments.  For years, Illinois Democrat politicians, abetted by the occasional Republican, have rewarded their state employee party supporters with salary and benefit packages that are not only higher than the private sector but unaffordable.  For years, in a state that has been dominated by Democrats for generations, Democrat pols have used fiscal chicanery and massive borrowing to hide the debt and delay the day of reckoning.  But that day is just about here.

Per the Wall Street Journal (link) on January 7:

Illinois is wrestling with a $95 billion pension gap that has left it neck-and-neck with California for the worst state credit rating in the country. The Democrat-controlled legislature has been stalled over how to reverse its failure over decades to adequately fund pensions for state workers.... Several states are struggling to right their pension funds, which have been battered by lackluster investment returns, increases in benefits paid out and chronic underfunding. But Illinois stands out as the worst, with only 45% of assets needed to meet future obligations based on 2010 data....

After the Democrat governor and the state House and Senate, both with Democrat super-majorities, failed once again to enact some kind, any kind, of reform, the governor came up with a bold new plan.  A "bipartisan" commission appointed by the super-majority Democrats and the rump band of surviving Republicans that would come up with binding changes.  That's right -- pawn the whole mess off to a committee that Dems would give, for once, equal representation to Republicans so the latter can take equal heat for cuts to the over-generous pension benefits.  Do Democrats possibly think that Illinois Republicans could be stupid enough to fall for such a transparent ploy?  ... Don't answer that question.

From the Chicago Tribune (link) yesterday:

The Illinois House adjourned this afternoon without even voting on Democratic Gov. Pat Quinn's desperation pension reform plan. Quinn threw his support behind a bill that would set up a commission to decide how to fix Illinois' financially failing government worker retirement systems. Conventional efforts to craft a compromise on pension changes have gone nowhere during the lame-duck session. The new measure filed today would set up an eight-member commission appointed by the four legislative leaders. The panel would issue a report on pension system changes that would become law unless the General Assembly voted to overturn it.

One way or another, pensions will be reduced, though I feel for honest retirees.  But public employees vote heavily Democratic, so in some large sense it's their own fault, to say nothing of the rampant abuse like final-year salary spiking that guarantees by formula a higher, undeserved pension.  What is unsustainable will end, and what can't last forever won't.

John M Greco

Conflicting Views of Radical Islam

Victor Davis Hanson writes (link) that recent Obama nominees Hagel and Brennen give us clear insight, if any more was needed, into Obama's view of the meaning of radical Islam and America's culpability, if any, in its rise:

First, Hanson summarizes what he calls the “Standard View”, one I share:

....radical jihadists and Islamists scapegoated the West for the mostly self-inflicted wounds of the Middle East. Endemic tribalism, gender apartheid, statism, corruption, religious intolerance, fundamentalism, and an absence of transparency — in a globally connected world that is progressing without these burdens — best explain why the region is a remarkably poor place, despite enormous natural wealth.

In rage at the more successful systems abroad — who, after all, should not be successful given their obvious decadence and absence of piety — the Islamists call for a reactionary return to centuries-past glories. These mythologies are based on solutions found in sharia and the Koran rather than in liberalizing their societies. 

....Finally, hatred and violence is usually directed at the U.S. — and not to the same degree at Russia or China, whose records on Islama are far more intolerant than that of the West — largely because such grievances against the world’s superpower better resonate worldwide, and because a self-critical America is so bothered by such dislike in a way not true of a Putin or the Chinese Communist Party.

Hanson then contrasts the “Standard View” to that of Obama’s (and, I would add, that of many American liberals):

...jihad, Islamism, and Muslim intolerance are largely ... a product of either Western ignorance of Middle East customs or willful [Western] prejudices. A far better approach than a “war on terrorism” or zero-tolerance of Islamic hate-filled extremism toward the United States, or constant calls for Middle Easterners to reform, is a more subtle understanding of what drives such hatred — poverty, hopelessness, illiteracy — for which to some degree the West is culpable and therefore obligated to be patient with and understanding of otherwise incomprehensible rhetoric and violence.

Obama's view to me is that The West is over-reacting to a problem in Islam of significantly their own making and so must be understanding, patient, and self-effacing in response -- what to me seems to be an attitude of "It's the West's fault" and "Muslims will be Muslims." 

 

John M Greco

The New Tax Deal Just Dents Debt

The so-called fiscal cliff avoidance federal tax deal is done, and both parties caved on long-standing positions.  After almost a decade of claiming the Bush-era temporary tax cuts were responsible for all things bad, budgetarily speaking, Democrats supported a deal that made those cuts permanent for over 98% of taxpayers.  That’s right – just as with the “fierce moral urgency” when GW Bush was president to closing the Guantanamo terrorist prison and stopping renditions, which is still open and still going on, respectively, after four years of Obama – the Democrats were just posturing. 

The new tax scheme will raise revenues a relatively small amount compared to what is needed to reduce and pay off the debt, which is growing every day.  The federal government could confiscate all of the wealth of the top 1% of Americans and most of the problem would still be there.

As an aside, Billionaire Warren Buffet has debased the debate, which should be about reforming spending, to claim that the rich were not paying their “fair share” and using half-truths to spin a lie.  In fact, as one can simple ascertain from official government data (link), the top 1% of earners take in 20% of all income but pay 38% of all taxes, and the top 10% of earners take in 46% of all but pay 70% of all taxes.  How’s that for tax-paying fairness right now in the Warren Buffet top 1% cohort – earn 20% of all income but pay 38% of all taxes.  Now, Buffet may want the top 1% to pay, say, 50% rather than 38% of all taxes, but he lies, and he knows he lies, when he says the top 1% of earners are not paying their fair share, because paying anything above a flat rate for everyone is already their “fair share”.  And again, confiscating all of the wealth of the top 1% still leaves most of the debt problem unsolved.  Buffett prefers to stoke the flames of raw envy for his own moral preening and to ingratiate himself with regulation-happy Democrats so he can get special treatment from them, and get pretty, young CNBC TV hosts to travel to Omaha to fawn all over him.         

From the liberal Politico (link):  “The staggering national debt — up about 60 percent from the $10 trillion Obama inherited when he took office in January 2009 — is the single biggest blemish on Obama’s record, even if the rapid descent into red began under President George W. Bush. 

Well, even that stern statement from a liberal about Obama’s culpability is a half-truth amounting to a lie.  Budget deficits were actually "rapidly undescending" in Bush’s second term until the Democrats took over Congress. 

As Glenn Reynolds writes (link), “You can blame Bush all you want, and Obama likes to talk about ‘two wars on the credit card,’ but this chart [above on his blog page] illustrates that things were actually improving until we got a Democratic Congress in 2007, and got worse when we elected Obama."  Actually much worse.

John M Greco

By All Means, Let's Go Over the Fiscal Cliff

The so-called federal fiscal cliff is the combination of the expiration of the Bush-era temporary tax cuts, the temporary cuts to the Medicare and Social Security taxes, and a set of previously-enacted "automatic" spending cuts.  The conventional wisdom is that this will all be bad for the economy, and that that US should continue to borrow money from foreigners like to Chinese to spend on ourselves.

Only academics could buy that manure -- that the way to fight the effects of massive, long term overspending, much of it via borrowed money, is to borrow much more to spend more.  They argue that less federal spending will cause people to worry about the economy and, with less money in their pockets via higher taxes, they will spend less and therefore "hurt" the economy.

The US is functionally bankrupt and must cease going into deeper debt to spend on ourselves now.  Plain and simple.  And one reason the bad economy didn't hurt Obama as much as Republicans hoped for is that a huge proportion of the electorate has been shielded from the Obama spending binge because Republicans, those of the Stupid Party, pressured, or were duped into pressuring, Obama to go along with extending the Bush cuts a few years ago.  So taxes stayed lower while spending skyrocketed.

Enough.  Enough.  Although I don't want to pay higher taxes, especially to fund a Democratic party spending binge that primarily serves to increase dependency on big government (the prime Democrat strategy), people have voted for big government and now everyone must pay up.  When voters are fully paying for bigger government maybe then more voters will think twice about voting for it.

Avik Roy and Marc Thiessen agree (link).

John M Greco

Bears Win First de facto NFL Championship Game Indoors -- 80 Years Ago Today

The University of Chicago's "C" Logo

It was 1932 and at the end of the NFL season the Chicago Bears and Portsmouth Spartans finished tied for first place.  A play-off game was scheduled, the first ever NFL post-season de facto Championship Game, in Chicago.  Unfortunately, when the day came a blizzard dropped in and organizers scrambled.  The solution – move the game from outdoors in Wrigley Field to indoors at the Chicago Stadium. 

Yes, the first NFL post-season game was played indoors (link), on a field only 80 yards long.  The local team prevailed, as the Chicago Bears, the second oldest NFL franchise and the long-term, ahem, borrowers of the University of Chicago nickname Monsters of the Midway and football-shaped “C” logo (pictured; link), defeated the Portsmouth Spartans (now the Detroit Lions) 9-0 – 80 years ago today.
 
No doubt sensing a good thing when it saw it, the NFL honchos instituted an official post-season Championship Game thereafter.  The following year the first official one was played, once again in Chicago, and this time at Wrigley Field.  And once again the Bears prevailed, with a game-ending designed trick play (link), this time over the New York Giants.   

But times change.  The Bears have won only one championship in the past almost 50 years – the 1985 Super Bowl Shuffle Bears under former Bear player and Coach Mike Ditka.  They could use a trick play or two now. 

R. Balsamo

Want More Federal Tax Revenue -- Eliminate Deductibility for State & Local Taxes and Stop Subsidy of High Tax Democrat States

In all the "fiscal cliff" talk about how to raise more revenue for the federal government, one sure-fire way is conspicuously absent from the headlines -- removing or at least limiting the deduction for state and local taxes.  The reason for the non-coverge is a combination of Democrat obfuscation and Republican incompetence.  Obama wants more federal money -- OK, let's eliminate the deduction for state and local taxes, worth a cool quarter of a trillion dollars a year to the feds. 

But this will never happen because this "fiscal cliff" kabuki theater is not about tax fairness -- if it was the deduction would already be gone.  For Obama, it's about protecting Democrats by preserving an incredibly unfair aspect of the tax code.  Allowing taxpayers to deduct their state and local taxes from their federal income tax means they pay a lot less, for a given level of income, than taxpayers in states with low state and local taxes.  Deductibility results in a subsidy from low tax states (read -- Republican controlled) to high tax states (read -- Democrat controlled).

From the Wall Street Journal editorial of 12/17/2012 (link): 

·       One post-election budget surprise has been President Obama's resistance to John Boehner's proposal to get $800 billion in new revenue by closing tax loopholes. Here's one likely reason: the high tax rates of his blue-state Democratic brethren.... 

·       One of Mr. Boehner's ideas, taking a cue from Mitt Romney, would impose a limit on annual deductions....  

·       But suddenly liberals are having second thoughts, and our guess is that this is because residents of high-tax Democratic-run states are about twice as likely to take advantage of tax loopholes as taxpayers in low-tax states....  

·       One tax writeoff in particular illustrates the point: the deduction for state and local income taxes.... Because the highest federal tax rate is 35%, the value of the state and local deduction is enormous for high-tax states....   

·       One pernicious effect, however, is to favor high-tax states at the expense of the nine states with no income tax and those with low rates. That's clear from looking at the IRS tax return data for the 50 states and the District of Columbia.  In 2010, the deduction for state and local income taxes for all states amounted to $249.7 billion....  

·       But here's the blue-state kicker: $51 billion of those writeoffs were claimed by residents of one state, California. And five liberal states—California, New York, New Jersey, Maryland and Massachusetts—accounted for about $121.8 billion.  A mere five states accounted for nearly half the federal revenue lost from this tax deduction.... 

·       All of which helps to explain what appears to be the ebbing liberal support for a tax reform that reduces rates in return for fewer deductions.  Democrats in Congress once supported that kind of reform. But these days they tend to represent states with ever-higher tax rates that prop up state and local governments dominated by public unions that demand ever-higher pay and benefits. The resulting state tax burden would be intolerable if much of it weren't passed off on Uncle Sam.... 

·       Mr. Obama wants to raise tax rates, rather than eliminate deductions, so his fellow Democrats can keep raising state and local taxes without bearing the full economic and political cost....  

I would add to the last clip from the WSJ:  “Mr. Obama wants to raise tax rates, rather than eliminate deductions, so his fellow Democrats can keep raising state and local taxes without bearing the full economic and political cost....” and thus continue to play the taxpayers of Republican-dominated low tax states for suckers.

 

John M Greco

When the Going Gets Tough, the Republicans ....

From my somewhat desultory post-election reading, when I can rouse myself out of some eerie combination of disgust and dread, Republicans seem to be losing the public relations battle to the Democrats over the so-called "fiscal cliff" negotiations.  Just one more in a series of issues or sequence of events that should have strengthened the Party, but instead went essentially nowhere.  Despite the innumerable Democrat scandals, mendacity, and repulsive, corrosive behavior, Obama won anyway, narrow as it was, but it would have been a Republican blow out with the electorate of 1980, 1990, or, I think, even of 2000.  Times have changed, and the Democrat leftist/Alinsky strategy of in-you-face viciousness and win-at-any-cost tactics has, unfortunately and disappointingly, paid off, combined with the successful Dependency Agenda, to turn the masses into wards of the state and supporters of the Party of the State -- the Democrats.

The incomparable Michael Walsh sums up the current state of the Republican party today at National Review Online (link), essentially arguing, as he has for some time, that in general Republican Party leaders still have not recognized what they're up against, what the modern Democrat Party has become:

Fortune favors the bold, as the saying goes. The Romney fiasco should be the death knell of the Washington Generals approach to competing against the Democrats, and the whole lot of the Old Guard — starting with weepy John Boehner — should be tossed out and replaced with those who can distinguish between strategy and tactics and who understand that the only acceptable strategic outcome should be total victory over the modern Left and its alien, imported ideology. After all — that’s certainly the other side’s goal.

Of course, that depends on whether you see the current conflict as simply politics-as-usual, in which both sides share the same basic values and aspirations, and differ only in methods (the Boehner approach); or as a struggle between individualism and collectivism, which has been going on in Europe since Rousseau and his evil love child, Karl Marx, but is still relatively new to these shores. But extending the olive branch toward an opponent who’s not prepared to extend to you the slightest shred of moral or political legitimacy is suicidal. Unless, of course, you think it’s all a big game, a racket in which both sides have pretended to fight in order to divvy up the near-boundless swag of the federal treasury and keep the suckers back home happy come election time with a little kabuki and pantomime.

Accordingly, over the past two decades, the establishment Republicans — who knew the Rockefeller wing had such tenacity? — have nominated a string of reach-across-the-aisle types, and where has that gotten them? In the aftermath of 9/11, the author of the No Child Left Behind act was pilloried as a warmongering beast, McCain was savaged by his former “buddies” in the media as the walking dead, and Romney stood by mildly as he was accused by the Democrats of murder and Obama cried for revenge.

You can’t win a fight unless you’re prepared to credit your enemy with the will and the capacity to achieve his stated objectives, and as long as the Republicans continue to treat the Democrats as just a slightly more extreme version of themselves, they’ll continue to lose. On November 6, conservatives received a valuable object lesson in living inside their own bubble, slurping up what Fox News told them and believing that the ghost of Ronald Reagan’s 1980 electorate would once again show up at the polls, like the phantom army in Tolkein’s Lord of the Rings. Meanwhile, in the 40 years since they seized control of the Democratic party, leftist radicals have honed their divisive message and perfected their blunt-force tactics — all in the service of a strategy, as the actions of President Obama make abundantly clear.

Yes, there are 30 Republican governors and the Party hasn't been stronger at the state level for generations, and there are reasons for that strength that should be translatable to the national scene.  But it still is hard not to despair for a culture and politic predicated on promoting and protecting individual liberty, self-reliance, free-enterprise, and the rule of law.

John M Greco

Steve Cortes on the Investing Landscape and Strategies for Right Now

Fellow Chicagoan Steve Cortes, a market maven frequently seen on CNBC, has a valuable new book out on the current investment landscape and the investing strategies best suited to it.  His book is titled Against the Herd: 6 Contrarian Investment Strategies You Should Follow.  He supports each of his theses with a fair amount of facts, figures, and analysis.  The book is well-written and easy to follow, and I find his arguments well-presented.

Cortes thinks that China has peaked and is on the decline: an aging population, a consumer market that has crested, unsustainable fake, “crony” capitalism, and a profound lack of financial transparency in its business and economic data.  So avoid China and those whose fortunes depend on it such as Australia, a major supplier to China of basic resources, and US exporting firms such as Caterpillar, GM, UTX, and Union Pacific.  Japan is going nowhere but down, caught in population and sovereign-bond death spirals.  Cortes is anything but a gold bug; he feels if one believes in significant inflation soon to come one should buy the stock of big multi-national companies with most earnings outside the US (but not primarily China or Japan, or course).  However, Cortes believes that the US faces a more serious threat of deflation than of inflation, and he feels housing will not recover any time soon.   

Cortes makes a good argument, one to which I already subscribe, that most individual investors should avoid, or at least minimize, stocks.  I wish he could pound that into the heads of directors of most 401k plans, which offer for retirement investments mostly stock funds to the exclusion of much access to bonds, bank loans, preferreds, MLPs, and equity REITS.  Cortes says that “In the last 25 or so years, the cult of equities became an easy sell, because three massive macro forces merged into a powerful foundation for a secular rally....  The [current] macro investor, willing to ascertain trends for what they are, not what we might wish, will regretfully conclude that macro forces present in the equity boom that commenced in the 1980s are not only missing now but are very unlikely to reappear in the coming years.” 

Cortes is bullish on the USA and foresees a multi-year rally for the US dollar, catching global capital too exposed to emerging markets and not enough in the USA – “In a world awash with risk, beset by inflationary pressures, and far too pessimistic on America’s prospects, the US dollar represents a woefully under-owned and under-appreciated asset.  I see decades of dollar strength ahead as the emerging market dream becomes closer to a nightmare.” 

Cortes argues that “solid interest earnings represent the best long-term capital growth strategy – a mix of treasuries, corporate bonds, and some municipals makes sense for most investors....  Analysts who cite low annual returns for bonds compare apples to oranges in making analytical mistakes....  In a world of deleveraging and benign pricing, treasuries will shine.” 

Cortes thinks that “treasuries, with no risk, and corporate bonds, with acceptable risks, should make up nearly all the portfolio for nearly every investor.”  As evident from my previous posts, most of my allocation is to debt securities (although not treasuries given their low yield), particularly at this time via a leveraged closed-end fund vehicle.  “Regular” equities, essentially all via funds, make up less than 5% of my portfolio, but midstream energy-related firms, mostly MLPs (via CEFs) plus the Kinder entities KMR and KMI, make up almost 20%.    

I recommend Cortes’s new book – well-written, arguments well-supported, and thought-provoking.  It’s helped my thinking about investing for right now and, no doubt, for the years to come. 

Mike Parenti

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Microcosm of a Romney Loss – Obama Won In Republican Chicago-suburban DuPage County, & Abortion Looms Large

DuPage County sits west of Chicago’s Cook, and is historically Republican with mostly middle to upper middle class suburbs.  It is often the Illinois county with the highest Republican raw vote totals in the state.  And in November 2012 Obama won there in what should have been Romney territory.  Yes, Romney’s national vote was almost that of Obama’s, but his weakness in a typically Republican suburb of a large northern city serves as a microcosm of why he lost.

DuPage County voters historically have been fiscally conservative and socially liberal.  And, like the rest of America, has changing demographics – Democrat-voting emigrants from Chicago and Cook County are moving in,  attracted by the more successful Republican-run communities (yet after they arrive they continue to vote for the same Democrat party responsible for the mess from which they’ve fled (link) – go figure that one.

In Illinois in 2012, a weak, liberal Democrat incumbent governor was challenged by a fiscally conservative Republican, a state senator and an experienced campaigner with a warm persona.  He was, though, pro-life.  Then, as now, Illinois was a financial mess, and voters in DuPage County strongly backed the two Republican candidates running for the state financial control offices – controller and treasurer.  The Republican candidate for controller, Judy Barr Topinka, was a well-known politician strongly liberal on social issues.  She pulled the highest Republican vote total in DuPage County and won the state election.  But Republicans in DuPage County split their vote.  The pro-life Republican candidate for governor, Bill Brady, received about 25,000 votes less than Topinka in the county, but lost statewide by only about 19,000 votes (link).  Had Republican voters in DuPage County given Brady as much support as they gave Topinka, Brady would have been elected.  One big difference between Brady and Topinka – abortion, an issue neither would be able to significantly impact in the positions they were running for.

And there have been downstream results.  With control of both state legislative chambers and the governorship, Democrats redrew the state Congressional map to strongly favor their side.  Under the new map, four incumbent Illinois Republican Congressmen just lost (Biggert, Schilling, Dold, and Walsh).  

The national economy is a mess, and Romney ran almost entirely on that issue.  It wasn’t enough.  Obama countered with a scare campaign about abortion and birth control pills.  Enough people must still blame Bush for the economy and must fear Republicans on social issues – even in DuPage County.

For years Illinois Republicans have been ravaged by an internecine war over abortion and social issues.  Some Illinois Republicans have savaged moderately pro-choice Republican candidates, only to repeatedly hand victory to  Democrats who are radical on the issue.  Republican anti-abortion zealots have compromised their party’s electoral success, ceding political dominance in the state to the Illinois Democrat party which supports and protects late term abortions, partial birth abortions, and infanticide after live birth botched abortions (link).  Rigid anti-abortion Illinois social conservatives have fought fiscal conservatives over the morning-after pill and have gotten legal infanticide instead.  Time for them to wake up to reality of what they have sown, form a coalition with fiscal, non-social conservatives, and win some elections.    

John M Greco

The 2012 Elections = Thoughts on the Big Night for Obama & the Democrats, and the Implications for Republicans

This election should not have been close given the results after four years of Obama and the Democrats, but not only did Obama win reelection Democrats gained seats in the Senate.  The 2010 Republican resurgence did not last.  How could this happen?  

·         Changing demographics = The American electorate is very different than the one that elected Ronald Reagan and even George W. Bush – ever less religious, ever fewer whites, ever more Hispanics, ever more single women, ever more food stamp recipients, ever more who work for government.   

·         The successful 50-year Democrat Dependency Agenda strategy is working well – to relentlessly increase the percentage of voters who are supported by government, either via a government job or a welfare check.  Add to that the single adult women, who now (I hear) outnumber married women and who look to big government as a surrogate husband, and the Democrats have a growing and reliable voter base.   

·         Romney ran on primarily one issue – the economy.  Apparently, that wasn’t enough.  Romney avoided or went light on most of the Obama scandals, including Fast and Furious, Obamacare and particularly the HHS mandates on abortion and birth control pills, and, surprisingly, Benghazi.  Enough voters seem to still buy the line that the bad economy is primarily Bush’s fault.  Also, after the first debate, Romney seemed to coast on the economy issue and went easy on Obama on all the others.  

·         Obama’s campaign attacked and smeared Romney as a person (rich, out-of-touch white guy who doesn't care for ordinary Americans and probably is a felon who gives people cancer), while Romney attacked Obama’s record on the economy.  As much as I hate to admit it, the Obama smear campaign seemed to have some effect.  Republicans can’t completely play by gentlemanly rules while the Democrats are in the gutter making inroads with low information, easily pliable voters.  

·         The power of the media’s relentless liberal bias is hard to counter, but Romney surrendered and accepted the premise by agreeing to four liberal debate moderators.  Sure, he and Ryan did well enough, but how much better would the results have been with neutral moderators?  Republicans need to aggressively challenge the premise – consistently liberal debate moderators, election after election, are symbolic of Republican self-defeating passivity.  

·         On the whole, social issues hurt Republicans, particularly abortion.  Most voters seem to be pro-choice, at least in the first trimester and after rape and incest.  Romney avoided the issue but the Democrats tried hard to make it a big one, and were significantly aided by the idiotic comments of Akin in Missouri and the misguided comments of Mourdock in Indiana, both Republicans once favored in Senate races but who lost tonight after stupidly falling for a Democrat Rope-a-Dope tactic which got them talking enough about abortion to eventually say something stupid. 

·         The Tea Party movement has brought much energy to the Republican party, but has been dysfunctional sometimes in ousting admittedly squishy Republicans but with good election prospects for more consistently principled conservatives who turn out to be bad candidates who lose elections (O’Donnell in Delaware, Angle in Nevada, and Mourdock in Indiana come to mind).        

·         Obama and many leading Democrats are exceptionally hostile to fossil fuels, yet coal-laden West Virginia and oil and gas-rich North Dakota and Montana today elect Democrats to the Senate.  Figure that out.     

The growing segments of the electorate and the Dependency Agenda voters are generally not sympathetic to the traditional American and Republican principles of limited government, individual liberty and self-sufficiency, and free enterprise.  Republicans who insist this is a center-right country delude themselves.  Some significant soul-searching and new strategies are needed, as well as candidates who will aggressively take issues to opponents.  

Obama may well feel emboldened for these next four years, but determined Republicans in Congress will have their say, to be sure, and will pursue the Obama scandals such as Benghazi, Fast & Furious, and Solyndra-like financial corruption that have been so well suppressed so far by the liberal press.  

Overall, as distressed and despondent as I am about having Obama for four more years, a free America can survive that – maybe not well, but survive it.  But whether a free America can long survive the evolving electorate that decided to double down on Obama's character and agenda worries me much, much more. 

 

John M Greco

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

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

 

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