It's Not About You

“It’s not about you.”

These are the opening words of the Rev. Rick Warren’s best-selling book, “The Purpose Driven Life,” and the sentiment may be comforting to everyone affected by this unhappy economy.

To wit, we are all in this together. As much as folks who have lost their jobs or seen their incomes and retirement funds shrink may feel alone in the storm, in fact every one of us is touched in some way.

Of course, this is somewhat distinct from Warren’s intention of the words – he advocates a life of service to others with a higher meaning in mind – but the interconnected nature of our travails is worth a look.

In Canada, manufacturers and exporters were having a difficult time even before the current downturn began, owing in part to an inflated currency that made our goods more expensive. But now that our international trading partners, including and especially the United States, find themselves in financial turmoil and unable to buy what we are selling, times get even tougher. This translates to share price declines and massive job losses – 129,000 in January 2009 alone – which means that whether you are an investor, a worker, or both, you got hit.

On Parliament Hill, opposition parties have pledged to force an election if Prime Minister Stephen Harper and Finance Minister Jim Flaherty do not turn around the country’s economic fortunes by June. This is Olympic-calibre silliness. One hopes, certainly, that Canada’s economy rebounds in the next three months, but many of the factors affecting that outcome are beyond the powers of any Prime Minister or his cabinet. International trade and the global nature of our economy dictate that recovery or recession depend in large measure on the health of our trading partners. If other countries do not have the demand for our commodities and manufactured exports, the rest is just so much chin music.

As for the United States, the markets have rendered their verdict on the high tax, spending and borrowing prescriptions of a new president and Congress, and it is not good. Indeed, the Dow Jones Industrial Average shed 20% of its value in the six weeks after Barack Obama became Commander-in-Chief and began to re-centralize the American economy.

Markets don't take things personally. The market has no politics, per se. What you see in the Dow and other indices is an objective assessment government policy and where it could lead. This is distinct from a poll or a vote in that investors’ assets are at stake, not their ideas. Opinions on abortion or government-funded television do not steer the markets; that is the task of steely-eyed pecuniary interest. So when a president announces higher taxes and unprecedented borrowing, market downturns occur as night follows day.

The good news is that this can be remedied, and whether you are in government, invested in the markets, or just working day-to-day, there are reasons for hope and steps you can take.

For example, companies that emerge from this period intact will be leaner and healthier than they were before this started. Bad news and cutbacks are announced and effected during such times, so when companies start to generate income again, it goes straight to the bottom line.

The task for investors, then, is to find the best companies in the best industries and buy with discipline and careful planning. For managers and workers, be brave and alert, ready and willing to adapt to new realities, in the form of concessions and improvements. Lastly, if you are in government, by all means spend and regulate where you must in order to get us out of this fix in the short-term, but then get out of the way and let people’s innovation and initiative lead on. One hopes that somewhere in this list of prescriptions, readers will recognize themselves.

It may seem like cold comfort to be reminded that the global downturn is not something that is happening to you, personally, but it is nonetheless true. More important, bleak as things may seem and despite the blame-laying on all sides, bear in mind that we as a society, a system, and a family of nations will get out of this mess the same way we got into it – together.

theo@theocaldwell.com

Theo Caldwell, President of Caldwell Asset Management, Inc., is an investment advisor in the United States and Canada.

Words Are Important: Stimulus and the Environment

In recent years, as brutal winters rendered the spectre of “global warming” a punch line, environmentalists have edged their argot toward the catch-all term, “climate change.” In the United States, a similarly subtle rhetorical shift has occurred regarding the so-called “Stimulus” package that President Obama and Democrats in Congress are pitching to the American people.

To wit, as the nearly trillion-dollar monstrosity lurching through the legislative corridors of D.C. is revealed to be primarily concerned with stimulating government, rather than the economy, its proponents have taken to calling it by the official short-form, “American Recovery and Reinvestment Act.”

Words are important, and since not even the silver-tongued 44th president of the United States can explain how an omnibus appropriations bill that allocates billions to the ballet, hanging gardens, STD prevention and “neighbourhood stabilization activities” will do the first blessed thing to stimulate the economy, he and his colleagues must appeal to the greater good of “Reinvestment.”

This terminology adjustment is part and parcel with the political rudiment that whoever frames the question wins the debate. Throughout the sales process for this package, President Obama has chosen for his opponents straw men of his own design, refuting arguments that were never made. In his first White House news conference this week, Obama repeatedly chastised those “who believe we should do nothing,” as if opposition to this particular legislation were tantamount to declaring government has no place to address market failure. He spoke heart-wrenchingly of a school in South Carolina, where nearby train tracks disrupt classes, saying this package would help them. The president’s logic seems to be that if you oppose giving another $850 million to Amtrak, as the Reinvestment Act provides, ipso facto, you don’t care if kids learn to read.

Indeed, alternatives to this package, including a prominent role for government, have been suggested and summarily rejected. Senate Republicans cobbled together a mere $445 billion proposal that began by considering the most pressing causes of the current crisis – the housing meltdown and credit market freeze – then determining what should be done to remedy them. But Obama and Congressional Democrats prefer to stick with their method of dreaming up the largest dollar sum they can, then deciding after the fact how to spend the money.

Further similarity to the environmental movement can be seen in the urgency with which the Reinvestment Act’s supporters press their case. There is no time to debate, environmentalists have warned for years, the planet will incinerate if we do not switch to hybrid cars and unicycles by the end of the week. Likewise, Obama has set a deadline of February 16 for the Reinvestment Act, as though $650 million for digital TV coupons or $6.2 billion for the Weatherization Assistance Program could not wait one more day.

But crying wolf on a mass scale is always a risky proposition. As weeks pass and birds aren’t bursting into flames in mid-air, more and more people begin to question the purple-faced predictions of the green-savvy friends in our midst. Similarly, if Americans discover that the Republic can stand until, say, March, without spending $7.6 billion on “rural community advancement programs,” Obama may have a problem.

Speed and a lack of scrutiny serve the purposes of the Reinvestment Act’s advocates. For example, would House Appropriations Committee Chairman David Obey prefer America to linger on a bill that awards $1.7 billion to the National Parks System, for which his son, Craig, is the chief lobbyist?

Most important, once this massive spending is enacted, Americans will be stuck with it for decades to come. In Washington, government spending increases are used as baselines for subsequent years, making huge expenditures very difficult to undo.

As Milton Friedman observed, “There is nothing so permanent as a temporary government program.” If President Obama and Congressional Democrats insist on “reinvesting” in haste, the nation will repent at leisure.




theo@theocaldwell.com

Theo Caldwell, President of Caldwell Asset Management, Inc., is an investment advisor in the United States and Canada.

Simple Tax Relief and a Capital Holiday

One hopes the January 27 Federal Budget will allow Canadians to keep more of their own money and invest it with confidence.

Cuts in personal and corporate taxes, as well as a holiday from the capital gains tax (which would be relatively painless, since not many Canadians are fretting about how to offset gains just now), would place billions of stimulus dollars in the hands of private citizens and go a long way toward helping our country through its economic troubles.

While theyʼre at it, letʼs hope the government extends the end date for income trusts past 2011. Setting aside the questionable wisdom of cancelling the trusts in the first place, our economy was rather different when that decision was made. The price of energy was heading for the stratosphere and markets were in reasonable shape. It may seem awkward for the Tories to change course on this issue yet again, having repeatedly promised to leave income trusts untouched before reversing themselves completely, but inconsistent wisdom is preferable to intransigent folly. To wit, flip-flops can be forgiven, so long as you land the right way up.

Finally, when it comes to letting Canadians keep their own money, donʼt gild the lily. Make a tax cut a tax cut, not a credit where a person has to reinvest in government-approved silly-bears then run to the Parliament Hill parking lot and touch the hood of Michael Ignatieffʼs Thunderbird before getting any benefit. For once, make Canadian tax relief comprehensive and simple.



theo@theocaldwell.com

Theo Caldwell, President of Caldwell Asset Management, Inc., is an investment advisor in the United States and Canada.

Hope at High Noon

At noon today, Barack Obama becomes the 44th president of the United States. Here’s hoping that he is such a smashing success that he gets busted onto Mt. Rushmore and his face knocks Thomas Jefferson’s right off the nickel.

The presidency is always a heavy burden, but I have profound respect and compassion for anyone who would take on the leadership of the free world at this particular time. The economy is in ghastly shape and, around the globe, very bad men continue to plot the death of civilians in general and Americans in particular.

Here, one might cue the rubbish and rhubarb about how badly George W. Bush botched the last eight years, getting the nation into this fix. But many of these problems were decades in the making and are larger than one man. In any case, as the United States turns the page, one hopes the 16-year national pastime of hating the president (Bush Derangement Syndrome having been preceded by two terms of Clinton Hatred) is at an end.

Right now, America needs a president who has the endorsement of a majority of its citizens. Whatever your politics, Obama is that man today. The foreign and domestic problems facing the United States are such that a peaceful consensus is a necessary first step to solving them. Whether folks supported candidate Obama or not – and few commentators in Canada were as critical of him as I was – he is president now and we will all be better off if he does well.

I was wrong about Obama in many ways – not least, about his prospects for getting elected – and I hope I continue to be. To wit, he has shown signs of being a thoughtful pragmatist – advocating business investment tax cuts and retaining Robert Gates as Secretary of Defense, for example – rather than the left-wing ideologue he seemed to be during the primaries. Moreover, he has already made many of the right people mad. Rep. Barney Frank (D.-MA) is upset that Rev. Rick Warren is giving Obama’s inaugural invocation; Sen. John Kerry (D.-MA) is upset that he is not Secretary of State; Sen. Harry Reid (D.-NV) is upset about being Sen. Harry Reid (D.-NV). With these folks up in arms, Obama is off to a good start.

He has reached across the aisle, attempting to secure Republican support for his proposed stimulus package. To be sure, this is largely a political manoeuvre, to provide bipartisan cover for the 2010 midterm elections in case the legislation fails to right the economy, but it is a sensible approach. A week ago, Obama had a two-hour private dinner with conservative commentators at the home George F. Will. It was an informal, off-the-record meeting for the purpose of exchanging ideas. Such early-administration overtures have been tried before with middling success – recall Bush inviting Sen. Ted Kennedy to the White House for movie night in 2001 – but it is still the right thing to do.

Over the next four or eight years, there will doubtless be cause to criticize Obama, and I will likely sing a solo or two in that chorus. I prefer to think that such disagreement, whenever and for whatever reason it comes, will be based on legitimate policy, in contrast to partisans who refuse to give the man a chance. Step-on-a-crack silly-bears is no kind of loyal opposition. For example, to those conspiracy-minded stragglers who still obsess over whether Obama was born in Hawaii or a manger in Burkina Faso, I suggest moving on. The Constitution and people of the United States are satisfied that Obama is a natural-born citizen and anyway, what a man chooses to do with his life means more than how and where it began. Obama is a bona fide success story and his opponents would do well to recognize his qualities.

On his first day in office, there is such widespread adoration for the man that one wonders: Whither Obama’s admirers when it is revealed, inevitably, that he is less than perfect? No one can know for certain, but loyal Americans, and all those who hope for peace and freedom in the world, should wish this new president Godspeed.



theo@theocaldwell.com

Theo Caldwell, President of Caldwell Asset Management, Inc., is an investment advisor in the United States and Canada.

“How do I raise my children not to hate?”

JERUSALEM -- “How do I raise my children not to hate?”

This was the question posed by a prominent Israeli journalist whose eldest son is now serving on the front lines in Gaza. In reflecting on bringing up his children amidst suicide bombings and rocket attacks, he was particularly concerned with their teen years: “As if it isn’t tough enough to raise teenagers.”

Faces here are filled with sorrow and resolve. Israelis know they are in the midst of a war they must win, waged by the most beloved among them – the young.

Quite reasonably, one might ask about the plight of Palestinian children, and it is a cruel irony that they are victims of the same violence. If only the grown-ups influencing them placed the same priority on barring hatred from their hearts. Instead, they are inculcated with perverse histories and vicious notions of murder and martyrdom from their earliest years.

World opinion has long since swayed in favour of creating a Palestinian state. The outgoing and incoming presidents of the United States, as well as leaders in Canada, Britain, and many citizens of Israel are on board with the concept, provided it can lead to some good end. No one needs another Syria – or worse – on Israel’s border, and it would be naïve to assume that simply conferring statehood on the current arrangement would quell the violence here. So to whom would the state be granted? To Hamas, the Palestinians’ elected leaders who have launched 3,000 rockets at Israel in the last year alone? How about no.

Indeed, one of the saddest aspects of the current conflict is the waste that the Palestinian leadership has made of the Gaza project. When Israelis withdrew completely from the territory in 2005, they left behind greenhouses, infrastructure and the makings of a community. Within days, however, Gaza became a staging ground for rocket attacks on southern Israel. The greenhouses are gone and the misery has returned. As much as many of us advocate the creation of a Palestinian state, we must recognize that no responsible Palestinian leadership exists to shoulder it.

The refusal of Palestinians and their leaders to move beyond grievances and make the most of their opportunities is a source of frustration to some Israelis, who recognize that their own country has managed to survive and thrive against towering odds. One Israeli privately remarked of the Palestinian failure to establish a place in the world: “If they spent time and energy building up their own state instead of trying to destroy mine, they might have something.”

A woman in Jerusalem echoed former Israeli Prime Minister Golda Meir in lamenting, “We can forgive the Arabs for killing our children. We cannot forgive them for forcing us to kill their children.” As Meir perhaps had done, the woman spoke the first of these sentences with sadness; the second, with a touch of anger.

Certainly, there are Palestinian moms and dads who care for their children, just as Israeli parents do. Trouble is, those decent folks have no voice in their leadership. In Israel, meanwhile, the armed defense of the nation touches parents deeply.

Military service is prevalent in this country, where young people perform a mandatory three years, and decades in the reserves often follow. All over Israel, families are fretting for loved ones in harm’s way, as active duty troops have been deployed and tens of thousands of reserves have been called up or notified to prepare.

With parents desperately worried, the Israel Defense Forces have taken the precautionary step of confiscating cell phones from troops. There are two principal reasons for this. First, it is a case of good old-fashioned, “Loose lips sink ships.” To wit, even the most innocent revelation of military locations can be overheard or intercepted and lead to lost lives. Second, there is no percentage in having panicked parents all across the country. Knowing that their grown children are without means to communicate, Israeli parents do not want their phones to ring, as they assume it can only be bad news.

Such is the reality for families here. Israelis accept it with courage and determination. Most important, even as they live in the shadow of death, they teach their children to love life.


theo@theocaldwell.com

Theo Caldwell, President of Caldwell Asset Management, Inc., is an investment advisor in the United States and Canada.

Peace Through Victory

JERUSALEM -- Israel’s determination to continue its military campaign against Hamas terrorists in Gaza, despite tragic civilian losses, serves as a reminder that peace is the second-most important goal of geopolitics. Only freedom – which for Israelis means the elemental liberty to exist – matters more.

Ideally, of course, Israel would like to have both. Decent folks yearn for peace just as all people thirst for freedom, and it is truly tragic when leaders are forced to choose between them.

Over more than six decades of conflict with murderous neighbours, Israel has tried numerous tacks, from bursts of astounding force, to occupation, to land-for-peace, to humanitarian aid, to total withdrawal, in its quest for peace.

With this history in mind, observers may ask, isn’t this recent war in Gaza just another chapter in the apocryphal “cycle of violence”? What can Israel do differently? What is it about this conflict with this particular enemy that presents the potential for peace, at last?

For Israel, a prerequisite to peace is victory. And in achieving it, they must make an example of terrorist thugs who menace Jews and Muslims alike, including their own, long-suffering people.

In Canadian parlance, Israel must expose Hamas like a weak goaltender. Show them and their would-be recruits, as well as those of Hezbollah in the north, that the job satisfaction and benefits package for Iranian dupes are thin. Changing hearts isn't always about holding hands. Sometimes, it means extreme attitude realignment, accomplished with explosives. For Israel, this is such a time.

Set aside the notion that Hamas and its fellow-travelling radical Islamists have any claim to a divine cause. Hamas' strategy for attaining a ceasefire without offering concessions is to bring about enough casualties among Palestinian civilians, achieved by storing rockets and weapons caches under hospitals and schools, such that Israeli strikes will kill innocent people and sway world opinion. Any god who would be alright with that has no business being worshipped.

Dismiss, also, the popular idea that Hamas’ attacks are somehow about land. We are four years removed from Israel’s complete withdrawal from Gaza, yet Hamas has continued to lob rockets at Israeli towns – 3,000 of them in 2008 alone.

For Hamas, the bar for victory is relatively low. To win, they must accomplish two aims: survive, and attain some measure of international legitimacy. This second ambition may take the form of the opening of its waterways and crossings with Israel and Egypt, two countries with excellent reason not to trust Hamas. Egypt’s President Hosni Mubarak, now prominently involved in ceasefire discussions, well remembers that it was Muslim radicals who assassinated his predecessor, Anwar Sadat, in 1981, and Mubarak himself has been on the business end of several such attempts. Hamas and their ilk are demonstrably dangerous not only to Israelis, but to anyone of whom they disapprove.

An encouraging sign is that, for the moment, the Israeli people and leadership seem united in their resolve. Even prominent political figures who have embraced the land-for-peace experiment in the past, or the 2005 Israeli pullout from Gaza, such as President Shimon Peres and Foreign Minister Tzipi Livni, today speak matter-of-factly of their country’s intention to see this current campaign through to its end.

But to do so, Israel finds itself in a ghoulish race against time. To wit, they must accomplish their objectives before civilian casualties, largely engineered by Hamas, turn domestic and international opinion against the operation. Military experts here suggest that the aims of Israel’s ground offensive against terrorist leaders will require weeks. For the sake of the Palestinian people, and for the freedom of all nations that stand against tyranny, one hopes that Israel will have the time and will to win its peace.




theo@theocaldwell.com

Theo Caldwell, President of Caldwell Asset Management, Inc., is an investment advisor in the United States and Canada.

Insipid St. Not Allowed

(a poem) by Theo Caldwell

If someone you know says what can and can't be,
And insists you matter less than some endangered rainforest tree,
If she or he declares you're just a face in a crowd,
Then you might have had a visit from Insipid St. Not Allowed.

Insipid lived long ago, when people were still allowed to do and say things,
When holidays were holy and not just children's playthings.
Of course, children are important, and Insipid knows that too,
Which is why St. Not Allowed wants to raise them instead of letting you.

Left to your devices, you'd teach them nonsense about Easter and Lent,
Instead of the most important things: Self-esteem and the Environment.
You'd teach them there's right and wrong, as if you could judge,
Instead of embracing their open minds and giving them organic, low-fat fudge.

“What’s wrong with an open mind?” Insipid asks, and it’s a fair point,
And if the Saint’s words meant just that, no one’s nose would be out of joint.
But “open mind” means shut your yap, you exclusionary lout.
In the name of tolerance and diversity, your beliefs must be stamped out.

If you don’t teach your kids that the marriage of two Rons is alright,
Then Insipid will do it for you, and please don’t put up a fight.
You may win on Election Day, but Insipid won’t be done yet,
The Saint will come for your house, your church and your pet.

Insipid is a Saint in the most modern way,
With no God but the Earth and only gender-neutral things to say.
In Insipid’s time, firemen were men, not combustion intervention counsellors,
But the Saint killed off differences, as the Patron of language heptachlors.

Insipid loves all people, but the Saint keeps a list,
Of non-recyclers who don’t know that Columbus was a racist.
“No free speech for hate speech,” Insipid says, and it’s really true,
That if you look ‘round and don’t know who the oppressor is – it’s you.

Insipid was martyred by having to choke,
On the intolerance of others and a plume of secondhand smoke.
But whenever some pure soul tells you what you can’t think or say,
Rest assured that St. Not Allowed still lives to this day.