August 30, 2008 – Obama, McCain and Palin

by JDH on August 30, 2008

Well, that’s was a fun political week. If you haven’t done so already, read the discussion about the effects of current political issues on financial matters over on the Buy High Sell Higher Forum.

First, we had Barack Obama making his big acceptance speech. The discussion on the Forum was somewhat mixed. Some were happy that he mentioned nuclear energy and appears to want to keep taxes under control. Others weren’t so sure. I though he was talking out of what appeared to be both sides of his mouth. Here are some quotes:

“Through hard work and sacrifice, each of us can pursue our individual dreams but still come together as one American family, to ensure that the next generation can pursue their dreams as well.”

His policy is “that we are responsible for ourselves, but that we also rise and fall as one nation” and we must mix “individual responsibility and mutual responsibility.”

Okay, so that means we should all work hard, and if we do, our efforts will be rewarded, but we should also look out for others. But if we are all working hard, there is no need for anyone to look out for us.

In Joe Biden’s speech he talked about how his working class father reminded him that “anyone can make it if they try” and “when you get knocked down, get up.” But then he follows that with the comment that he had “never seen a time when Washington has watched so many people get knocked down without doing anything to help them get back up.”

So what his father really meant was “when you get knocked down, wait for the government to pick you back up?” That makes no sense to me.

I understand that some people need help. I understand that some people are born with, or develop, mental or physical limitations, and they can’t survive on their own. But does that mean that government must help them? Is government the answer? I think it would be better if we each helped each other. We should help our family members; we should help our friends; we should help our employees; we should support charitable organizations that help others. I do. If we are all truly helping each other, we don’t need the government to help us.

Politicians pursue one objective: power. Will we ever see a politician recommending the elimination or reduction in the size of government? Will we ever see a politician that says the role of government is to maintain the judicial system and the police force, and the military to protect us from other countries, and perhaps some essential services, like the fire department, and that’s it?

Nope, it will never happen, because if it did, the politician would no longer have power.

Government spending is higher than it’s ever been. Have we eliminated poverty? Have we eliminated disease? Is the world a better place than it was 100 years ago?

I don’t know, I wasn’t alive 100 years ago. I know that we have more technology today than we did 100 years ago. I know that we live longer. I don’t know if we are healthier today than we were 100 years ago (we certainly get less exercise, eat more junk food, and are much more obese than we ever were, so I have my doubts). But here’s the question: are all of the goods things that have happened in the last 100 years the result of government?

How much technology did the government actually create? And improve? Are improvements in agriculture, manufacturing, and mining the result of government, or are they the result of the hard work and effort of individuals?

I just ask questions; I don’t have any answers, but I sense an ever growing sense of entitlement amongst the masses.

The car industry is collapsing, so the solution: the government should bail out the car companies, or restrict foreign competition. That’s great. Let’s reward the idiots who’ve been building SUVs in the face of obviously increasing gas prices, and punish the few who have bought small, sensible cars, or who rely on mass transit.

Fannie Mae and Freddie Mac and Bear Stearns and Lehman Brothers made a bunch of really stupid investment decisions. The solution: let’s use taxpayer’s money to save them. Let’s punish the prudent among us who have saved our money and invested wisely by raising taxes to pay for the mistakes of the stupid. Great.

Here’s another Obama quote: “Now, many of these plans will cost money, which is why I’ve laid out how I’ll pay for every dime – by closing corporate loopholes and tax havens that don’t help America grow. But I will also go through the federal budget, line by line, eliminating programs that no longer work and making the ones we do need work better and cost less – because we cannot meet twenty-first century challenges with a twentieth century bureaucracy.”

Of course there’s a lot of waste in government; that’s the point. By trading one bureaucracy for another misses the point; it’s still a bureaucracy, and that’s the problem.

Will McCain be any better? Probably not. He’s been in Washington so long it’s hard to break old habits. He’s so out of touch he apparently doesn’t even know how many houses he owns.

However, I thought his pick of Sarah Palin as his vice-presidential running mate was, politically, brilliant.

Virtually everyone acknowledges that McCain has no chance in November, because he’s a Republican. So if you are likely to lose anyway, you risk nothing by risking it all. She is not battle tested in national politics, and so is guaranteed to make a number of big mistakes. But, she is a woman, so some of the disaffected Hillary supports will vote for her. And the conservative base will love her, more than they love McCain (whom they don’t love at all).

Obama will argue that she is too young and too inexperienced to “be one heartbeat away from the presidency.” That may be true, but she is young and inexperienced enough to not yet be corrupted by Washington, and that to me is a good thing.

What will happen in November? I have no idea. The pick of Pallin means that Obama is no longer a lock to win, and if she performs well at the convention this week, the race may be very close.

It appears that we will be going through a Canadian election this fall as well. We have a Parliamentary system in Canada, so if the government falls, or if the Prime Minister wants to have an election, we have one. No-one in Canada wants an election; our minority government for the last three years has worked out perfectly well, because the government hasn’t done anything.

Unfortunately, our Prime Minister knows that with a new American President on the way, NAFTA will be on the table for discussions. Americans want to re-open NAFTA because they think it’s hurting their manufacturing industry. The Prime Minister wants to re-open NAFTA because he believes it gives the Americans better access to our natural resources, such as water and oil and natural gas, than is warranted.

What’s the point of all of this:


I suspect that by November there will be a new government in Canada (probably with the same Prime Minister) and a new President in the U.S.A. (that’s a given). Government will continue to grow bigger, deficits will increase, and taxes will rise. The dollar will continue to be debased to buy votes. Gold will soar.

Gold: Three Year Chart

Gold: Three Year Chart

In fact, it appears that gold has bounced off long term support. It may test that support again, and it may fall further, but I believe we will look back on the summer of 2008 as a great buying opportunity for gold. Gold may be the most manipulated market in the world, so it could fall further, but it’s more likely the next stop is $1,000, not $600 (where it was a year ago).

September is traditionally a very strong month for gold, so my plan for this week is to gradually increase my gold holdings, and to ignore the political convention this week.

Enjoy the long weekend, and keep up the good work on the Buy High Sell Higher Forum.

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