Two Candidates That Will Not Get My Vote (nor that of Dave Ramsey). And it has nothing to do with politics. 7/16/15

Posted on July 16, 2015 by Fairlington Blade
I have long considered myself to be socially liberal and fiscally conservative (personally and politically). Personally, that means you live within your means and save up for the big stuff (cars, kids’ education, retirement). Politically, that means you pay for whatever government you want. You’re a small government conservative? Fine! Set taxes accordingly. You’re a big government liberal? Ditto! Make sure that current taxes cover current expenditures and capital expenditures are covered appropriately. If you sell off your toll highways to pay off a short term deficit, congratulations. You just took out a payday loan on the back of your taxpayers. With that as preamble, let us consider two case studies in fiscal liberals. Or, as Dave Ramsey would put it, freakin’ morons.
 
Ladies and Germs, I give you two candidates who could never get my vote.
 
On my right, let’s give a big hello to Marco Rubio. Republicans will regularly warn you that Social Security is a giant Ponzi scheme. Hence, you should prepare for funding your own retirement. I heartily agree with the latter portion of this and have socked away for retirement ever since I started making decent money in 2001. As Dave Ramsey says, live like nobody else now so that you can live like nobody else later. So, what did Senator Rubio do when he faced some cash flow problems. He cashed out his retirement funds! That’s roughly like borrowing money at 35% interest (10% penalty plus your tax rate). And what emergency did he face? Tell us, Marco:
 
“We wanted to have access to cash in the coming year both because I’m running for president but also my refrigerator broke down. That was $3,000. And I had to replace the air conditioning unit in our home,” the Florida Republican said on “Fox News Sunday.”
 
I hope you liked that fridge, Marco, because it just cost you $5000 ($5000 – 10% = $4500 * 2/3 = $3000). Senator Rubio evidently has no idea how to fill out a budget. I do sympathize, having just needed to replace our refrigerator (that we bought new when remodeling). As a fiscal conservative, I checked out the Fourth of July sales and picked up a very nice Samsung for a hair under $1,000 (with French doors no less). That $68,000 IRA that he cashed out probably would have grown to about $750,000 when he retired. But, hey, he’ll have a little mad money on the campaign trail.
 
To my left, a big round of applause for Martin O’Malley. What was his financial sin, you ask? He borrowed over $300,000 so his daughter could go to Georgetown. He utterly failed to save anything for his kids’ college education. When little snookums wanted to go to Georgetown like Grandpa, did he say, “Sorry baby girl, but we have an excellent university in College Park”? No! He went down to the bank and signed on the dotted line. And then he makes a campaign issue of student debt. Here’s a thought, Martin. If you can’t afford it, don’t buy it. I’d love to be tooling down the road in a Tesla right now. I don’t have the scratch, so I’ve got a 10 year old RAV4 (after our 15 year old Solara finally gave up the ghost).
 
Both Rubio and O’Malley are high earners and I’m sure will be able to make up the difference. However, for making two of the worst financial errors you possibly can, they’re dead to me. If you can’t be trusted with your own money, I’m sure as hell not going to trust you to be a responsible steward of my taxes.
 
BB

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Morning Report: Housing Starts Tomorrow

Posted on July 16, 2015 by Brent Nyitray

Markets are higher this morning as Greece will get another shot of aid for its banks. Bonds and MBS are down.

The EU agreed in principle to a 7 billion euro bridge loan to Greece which will keep the lights on while Tsipras negotiates a bigger bailout loan. The deal still has to be approved by a number of countries, and the vote was actually more contentious that people were thinking it would be.

The Iran deal faces some opposition in Congress, but it will probably end up passing. I don’t see a major economic effect, aside from some pressure on North Sea Brent oil prices, which really only affects the East Coast. The rest of the country is based on West Texas Intermediate, and the two types of oil are not fungible. While the Republicans generally view the deal as a capitulation, the Democrats are split between the pro-Israel bloc and the far left bloc.

Initial Jobless Claims fell to 281k last week from 296k the week before. The Bloomberg Consumer Comfort Index slipped to 43.2 from 45.5 as well.

Janet Yellen continues her trek to the Hill today, and will appear before the Senate this afternoon. Yesterday’s testimony in front of the House was pretty uneventful. She didn’t deviate from the what she said after the June meeting – they want to get off the zero bound, but will be data-dependent.

The NAHB Housing Market Index came in at 60, the strongest reading since early 2007. While builder sentiment has remained buoyant, it hasn’t really translated into housing starts. Typically, sentiment leads housing starts, and if the chart below is any indication, starts are lagging but need to catch up. I suspect they will as prices remain high and inventory remains tight. Note: we will get housing starts tomorrow morning. The Street is forecasting a 1.1 million run rate.

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