Obama

I took one for the team last night. While waiting for 60 Minutes with President Obama and Governor Romney to start, I felt like the guy waiting for the hot girl that was 45 minutes late.

There was a football delay (at least the Jets and the Texans won) and commercials (geez, they must have shown 30 in a row before 60 Minutes started). But it was worth the wait.

As usual, viewers enjoyed sixty minutes of pure journalistic intensity, this time targeted at our two presidential candidates. Only 60 Minutes could turn Mike Wallace into a sex symbol, and make viewers wait for it like a guy in heat. But it was worth it.

The show was divided into halves, one per candidate. Key issues discussed per half follow below.

Governor Mitt Romney (journalist: Scott Pelley)

caricature of mitt romney 1 Sept 23rd 60 Minutes Recap   Sixty Minutes in Heaven with Obama and Romney

  • On Taxes:

    Plans to reduce all tax rates by 20%, and lower the corporate tax rate. Wants to limit deductions and exemptions for high-income earners while removing taxes on investment income for middle-income earners.

    I liked the specifics here. But why do an across the board reduction when the country needs revenue to pay down debt? Also, high-income earners can ignore deductions and exemptions and still pay a low tax rate (which Governor Romney did last year). Middle-income earners pay little in investment income tax, so that cut isn’t a big deal.

  • On Social Programs:

    Wants to repeal “Obamacare” as part of reducing government spending. Plans to move government programs such as Medicaid, food stamps, and housing programs to the state level and cap program growth. Believes these changes will save the government $100B per year.

    A number of states are having trouble managing their current budgets and programs. In fact, many have used their phone a friend option and asked the government for help. It’s like forcing your child to make their own dinner, but having to step in and help before they burn down the house.

  • On Social Security and Medicare (specifically):

    No changes for current retirees and soon-to-be retirees. Wants to reduce Social Security benefits for higher income earners, and execute other means-testing policies. Also, wants to eliminate non-critical programs.

    I agree that higher income earners should have reduced benefits. However, I would be happier if the Governor gave more insight into the means-testing standards. A person could have been rich while paying into Social Security, but broke later on in life and in need of Social Security. I’m talking to you, athletes. I won’t even express the doubt I have about the judgment and compassion of a private equity alum in determining which non-critical programs should be cut.

  • On Foreign Affairs:

    Agreed with portions of the President’s policies. Wants to apply pressure to Egypt – in particular, over protecting US embassies. Plans to take a cost-benefit point of view towards going into battle.

    I like his cost-benefit point of view. But some choices won’t be black and white. This is where Romney’s judgment and values come into play. And that is at the heart of why people are uncomfortable with Romney since it’s not clear who he is inside.

President Barack Obama (journalist: Steve Kroft)

barack obama caricature Sept 23rd 60 Minutes Recap   Sixty Minutes in Heaven with Obama and Romney

  • On Hope and Change:

    Asserted that when he took office, our economy was losing 800K jobs per month. Stated that we have had 30 months of job growth, and sectors rescued.

    I’m personally pleased that we have a robust manufactoring sector — a sector where we’re actually making and selling things. The President will be the first to admit that he overpromised the hope and change part. But who could’ve predicted the exent to which the Republicans would oppose everything he did?

  • On Taxes:

    Stated that taxes are lower on middle-income earners than they have been for the last 50 years. Maintained that middle-income earners have an average savings of $3600 per year now. Wants to raise taxes on the wealthy to reduced government debt. Does not want to cut a deal with Republicans to change policies on middle-income earners instead of raising taxes on the wealthy. Policy changes proposed by Republicans include raising student loan rates, asking seniors to pay more for Medicare, and repealing Obamacare.

    Middle-income earners should have the President’s poster hanging on their bedroom walls. He should be on the cover of Teen Beat and that AARP magazine. He’s on the side of middle-income earners. However, raising taxes on the wealthy is a great thing to say during a campaign–and I believe that the President wants to do it. But I would be surprised if it actually happened. As a result, I would feel more comfortable if he discussed a plan B should raising taxes on the wealthy get blocked.

  • On Jobs:

    Reminded viewers that his Jobs Act may have provided an extra one million jobs if it didn’t die in Congress.

    Inability to bend the Republican Congress and use fiscal policy to improve domestic issues may be the hole in the armor of his presidency. Folks wonder if “Rahmbo” Emanuel would have helped with this dealmaking once the Democrats lost their majority.

  • On Foreign Affairs:

    Reminded viewers that he achieved his foreign policy objectives: he ended the Iraq war, got Bin Laden, and decimated Al Qaeda.

    Questions persist about the next steps with halting Iran’s nuclear program. Iran controls 20% of the world’s oil supply and a key international trade route via the Strait of Hormuz. Plus, tensions in the Middle East have been on the edge since the Arab Spring erupted in 2011. The President does not want light a powder keg and enter into another war in the Middle East to stop Iran’s nuclear program, which contrasts Romney’s apparent inclination.

This episode of 60 Minutes vividly showed the differences between the candidates. It was the kind of appetizer that made you impatient for the main course: the debates.

Just don’t keep us waiting too long for that, okay?

Image Credits:
Mitt Romney: JoshFerrin.com
Barack Obama: Kevis S. O’Brien via Flickr

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palin wink500 Sept 23rd 60 Minutes Recap   Sixty Minutes in Heaven with Obama and RomneyIt’s fun to watch Sarah Palin.  From her ability to get the media to chase her bus tour like a gaggle of puppies to her soliloquies that aren’t quite right at times but nonetheless immensely watchable, she never fails to deliver a firefly-to-light quality news clip everytime she steps outside of her home.

Sarah Palin in this capacity — e.g., delivering commentary, being interviewed, and pondering a run for office — I’d venture to say is not a bad thing.  She’s like catnip to the media, with the ability to become an instant headline or a story that absorbs almost a full segment of news.  As a result whenever the media is covering Sarah Palin, as a side-effect they’re talking less about the market and the overall economy.

There are reporters who do an excellent job covering the economy.  And we need those reporters to hold parties accountable.  Unfortunately, there are others who dramatize drops in the market causing viewers heart rates to rise and confidence to drop.

Some folks may not admit the impact that media outlets have on the collective psyche of our people, but the truth of the matter is that the media still has the ability to alter the mood of the country with its reporting.  In an area of the economy like investing, the mood and confidence of its investors makes the difference between buying and selling.

As the economy attempts to correct from almost two years of gains and adjust its footing as new industries are developed to replace obsolete ones, anything that distracts a news outlet from simplifying and dramatizing a complex situation can’t be bad.    Once again, there are excellent reporters — but as with most things, there are players at the other end of the spectrum yelling fire for ratings.

Back to Sarah Palin.  As long as she’s pondering a run, she’ll stay in the headlines and be the shiny ball that distracts certain news outlets from negatively impacting the mood of the country as the economy adjusts.  Even if Sarah Palin decides to run, she’ll keep delivering addictive soundbites.

The closer she gets to being in the office, however, the more we may see unintended effects on the mood of the country since she can be a very divisive figure.  As long as she stays in today’s sweet spot, the economy has a chance to adjust and correct without the kind of attention that could lead to a panic.

Economics and market operations should be kept a staid topic, and not made to be a caffeine-driven lead story.  Right?  You betcha.

View on The Wall Street Geek’s business website Price Capital.

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financial derivatives and too big too fail Sept 23rd 60 Minutes Recap   Sixty Minutes in Heaven with Obama and Romney
If you had money invested during the financial crisis that began in 2007, you may still be recovering from the bungee jump you may have experienced in the global financial markets largely brought about by the unwinding of complex securities held by a handful of large banks.

The crisis also shined a spotlight on the fact that several banks were operating in gray areas — for example, selling clients investments via one department that the bank itself was betting against in another department. Or that banks had the ability to profit from trades placed with deposits from their clients.

To enable better oversight and ideally prevent these types of events from happening again, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act (“The Act”) into law in July 2010.

It’s a wide-sweeping law seeking to prevent “too big to fail” scenarios as well as to protect consumers from predatory practices. It’s so sweeping that one has to ask if there’s any way this Act could fail?

So far, The Act is actually causing an impact with provisions that aim to put a roach motel in every corner of the room. Let’s look at proprietary trading as an example.

Proprietary trading desks at banks previously could have made highly speculative bets with client deposits, and it didn’t matter if the bets were in line with or against positions that the banks knew their clients held.

The Act — with help from the Volcker Rule — tamped down on these activities. As a result, we began to see proprietary trading desks shutter and traders teaming together to form independent hedge funds which in the past have had less oversight than other Wall Street entities.

But in a brilliant move, The Act also requires that hedge funds now explicitly document, retain and report to the SEC what bets they’re making. Hedge funds must now make quarterly to annual regulatory filings that outline the geographic exposures, counterparties and extent of leverage in their positions. The only thing left in my opinion is standardizing how each item is reported so that the SEC is comparing apples to apples.

The jury is still out on whether The Act will ultimately create transparency for the good of investors and consumers, or if The Act will cause more obscure techniques to be created for banks to make profits. The former may actually cause Wall Street to shrink for the good if bankers leave being unable to create alpha like in days past, but the latter could cause another bubble in 3-5 years.

Or perhaps we’ll see another HBO movie in a few years also called “Too Big to Fail” but this time starring Senators Dodd and Frank, and Volcker.  I’ll be watching this story unfold.

View on The Wall Street Geek’s business website Price Capital.

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