A Disaster of a Disaster Bill
Pelosi & Co. on Thursday passed a nanny state bill regarding disaster insurance. The bill drastically would expand the federal government’s role in underwriting natural disaster risks and in funding the payment of claims.
Here’s how they voted:
219 / 222 – 99% – Democrats in favor of more gumbmint
39 / 191 – 20% – Republicans in favor of more gumbmint
3 / 222 – 1% – Democrats opposed
152 / 191 – 80% – Republicans opposed
258-155, in favor.
The Senate may or may not take up this bill during this term. In any event, obviously there’s not nearly enough votes to override what will be a guaranteed veto.
Here’s a link to the Prez’s statement on Thursday regarding the media/Democrats’ blatant politicking and stall tactics concerning that needed legislation to shield the middle class from the dreaded Alternative Minimum Tax.
As they say, read the whole thing.
BTW, for obvious reasons the chances of the media fairly and accurately reporting that issue to the general public are zero.point.zero.
Speaking of taxes, here’s a link to a fascinating article about Tennessee’s so-called “crack tax.”
Tennessee imposes a tax on illegal drugs. In other words, first they can sanction you criminally for sitting around on your couch smoking gange or base, then they can follow that up with tax assessments that can lead to separate liabilities which, at the minimum, are quasi-criminal in nature.
Me thinks that scheme is bogus. A lower court thought so too, but Tennessee is appealing to its state supreme court. Hopefully that case eventually will go all the way to the U.S. Supreme Court. That would make for an interesting set of opinions.
Despite a big bounce on Friday, Washington Mutual’s share price has fallen by 55% — in the past five months!
The company’s price-to-book ratio is 0.7. In other words it’s trading at a large discount to book value. The company’s trailing P/E ratio has been pushed down towards 6. The company’s dividend yield has been pushed up beyond 11%. In other words WaMu’s dividend yield is much greater than the yields afforded by junk bonds even in perpetually-depressed industries, such as U.S. automotive and textiles.
WaMu is the country’s largest S&L. With its recent acquisition of Dime Bancorp the company also has a viable retail banking business. WaMu’s scale, asset portfolio and market cap make it an obvious takeover target.
As alluded to above, the media/market Lemmings have been falling over themselves selling or short-selling this company.
1. Read “The Theory of Investment Value,” by John Williams.
2. Read “Security Analysis” by Ben Graham.
3. Be guided accordingly.
Speaking of stocks, the markets this week generally were as depressed as a gaggle of inherited-wealth liberal college students.
In any event, hopefully the markets not only will drop further but with luck the pace of their overall declines will accelerate with such ferocity that casual investors will proceed to liquidate their entire holdings in a wild panic. That would indicate stocks finally, mercifully, have become cheap enough to purchase, en masse.
Why Can’t We Be Friends?
Merck announced it was settling the lion’s share of remaining Vioxx claims for a few billion breadsticks.
I’ve been wondering whether the Vioxx litigation would go the way of those breast implant and Fen-Phen cases (mostly settled) or conversely the way of those lead paint and DES cases (fought to the bitter end).
This strategy makes sense. Merck was the only target of these claims. Settling now allows the company to take a big, one-time charge and then to move on. Plus they weren’t winning every case, they were batting 70/30 or thereabouts.
BTW, if you had purchased Merck shortly after the Vioxx scare became public — a time during which Merck was getting sold off with extreme ferocity — you would have made out very, very well:
$ 27 – October 2004 – market Lemmings selling Merck in a wild panic
$ 56 – October 2007 – market Lemmings ignoring Merck; selling financial stocks instead
Plus three years of dividends to boot