Streetwise

Lauren Rudd

Sunday, September 11, 2011

Ode to 9/11

Over time, the primary purpose of this column is to provide a degree of intelligent discourse on the subject of investing on Wall Street, decorated with a bit of economic analysis and yes, an occasional straying into some of the political pressures that can play havoc with even the best of ideas.

To that end I have discussed the merits of investing in companies whose primary business model entails delivering up a seemingly never ending stream of military hardware, companies such as Oshkosh (OSK), General Dynamics (GD) and Raytheon (RTN). The embodiment of those companies being to provide a security net over the country that hopefully will protect us from those with combative designs on our freedom.

Overall this has worked quite well. Yet, as the tragedy of 9/11 demonstrated only too vividly, a few rogue individuals can undo even our best laid plans. The result was the death of over 3,000 innocent victims.

Unfortunately, a desire for revenge, tainted to a degree by the richness of Iraq’s oil wealth and the potential earnings that would naturally accrue to those that feed the war machine, not to mention a large modicum of stupidity on the part of Congress, has resulted in nearly twice again the number of deaths that occurred on that fateful day in September.

The number of just American combat casualties in Iraq since March 19, 2003, is 3,529. Interestingly, the number of combat casualties in Iraq since Obama took office is 125. And of course there was no evidence other than meaningless saber rattling by a sadistic dictator to indicate that Iraq was involved.

Recognizing that Afghanistan was playing a role by sheltering the ilk of those responsible, we instituted actions that as of September 6 have resulted in 1,340 combat deaths, of which 932 have occurred under the current administration. The official out-of-pocket cost of both conflicts through the 2011 fiscal year is $1.29 trillion dollars, all of which was funded by deficit spending rather than revenues. And the economic cost...in excess of $3 trillion dollars.

Should we have gone after Osama bin Laden? Absolutely! Those that revel in taking innocent lives must come to realize that justice, while not always swift, is sure. However, a more measured technologically enhanced response may have eliminated much of the collateral damage. And consider what could have been accomplished domestically with that $1.29 trillion, in addition to not sacrificing 4,869 American lives. Hopefully, they were not sacrificed in vain.

Dollars flow like water through Congress to the Pentagon. Meanwhile, many of those in Congress, or those who yearn to run for Congress, or who covet the White House, have advocated abolishing programs such as Medicare and Medicaid in the name of fiscal responsibility. Their idea is to rely on the use of major insurance carriers in combination with some sort of tax credit or voucher system.

Insurance companies are only interested in the healthy. A 24-year-old Cincinnati father died from a tooth infection because he couldn't afford his medication. When his face started swelling and his head began to ache, Kyle Willis went to the emergency room, where he received prescriptions for antibiotics and pain medications. Unable to afford both, he chose the pain medications. The tooth infection spread, causing his brain to swell. He died Tuesday, August 30.

Social Security surpluses have reduced the federal deficit every year but one. Nonetheless, there are plans afoot to replace much of Social Security with a program whereby you would invest your contributions on Wall Street. From experience I can assure you that given the public’s average level of investing expertise, unmitigated disaster would be inevitable.

Furthermore, there is no let up on the seemingly endless torrent of abuse directed at President Obama. Unrealistic expectations were that he would somehow, in the blink of an eye, magically solve a series of economic problems that were many years in the making.

Yes, I understand the frustration. I have seen it in my students, heard it from readers and from organizations at which I am asked to speak. However, many of those who complain the loudest would be better served by expanding their knowledge of basic Keynesian economics.