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Mr. Cyna is an accomplished investor in the Canadian public markets for over 20 years, and has managed significant portfolios. He is a financing specialist for private and public companies, and has expertise in real estate and debt obligations. He has assisted private companies accessing the... More
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  • The Resurgence Of Reason In US Politics 0 comments
    Sep 18, 2012 12:10 PM

    As an observer of the current USA Presidential election, while listening to the rhetoric from the Democratic and Republican camps, certain encompassing observations are inescapable.

    The Move Towards the Center
    The rhetoric of the Tea Party has moved the Republicans to the right - seemingly. In fact a fiscal 'conservative', U.S. Congressman Paul Ryan, has been nominated as the Republican's candidate for Vice-President, supposedly to attract those on the far right. A closer look reveals a more interesting shift to the center.

    Reaganomics
    We start with Reaganomics, which among other policies, promoted lower tax rates and lower deficits. This has become the battle cry of the far right Republicans. Yet, as Ronald Reagan himself remarked, the increase in the US National debt during his Presidency was the greatest disappointment of his presidency. So a belief in the far right, that defies the facts, is that under Reagan the deficit was brought under control. In fact the opposite happened.

    As a strategy to reduce inflation and lower nominal interest rates, the U.S. borrowed both domestically and abroad to cover the Federal budget deficits in the Reagan years, raising the National debt from $997 billion to $2.85 trillion. This led to the U.S. moving from the world's largest international creditor to the world's largest debtor nation. The "trillion dollar deficits" did not start under President Bush (as claimed by the Democrats), nor under President Obama (as claimed by the Republicans). As we all know, repeating a belief over and over makes that belief a fact, regardless of the truth.

    Health Care
    The Democrats brought in ObamaCare, and are proud of it. It was the first time a national health care provision came into being, however flawed. The Republicans have turned the word Obamacare into almost a swear word, with derision and scorn.

    Yet look who their candidate is for President. A man that believed so strongly in health care for the people, that while Governor of Massachusetts brought in a health care insurance reform law, informally referred to as Romneycare, enacted in 2006, which mandates that nearly every resident of Massachusetts obtain a state-government-regulated minimum level of healthcare insurance coverage and provides free health care insurance for residents earning less than 150% of the federal poverty level (NYSE:FPL). The bill aimed to cover 95% of the state's 500,000 uninsured within a three year period.

    How interesting that both he and his supporters are now so fervently against health care for all. Sounds like 'Political Speak' to satisfy the right wing until elected. It would seem that the core values of the candidate do not differ that much from the that of the Democrats.

    Cut Income Taxes to Help You Lose Weight
    Obama in his acceptance speech this week, made fun of the Republican platform which pledges to cut income taxes to cure all problems. He remarked "Have a surplus? Try a tax cut. Deficit too high - try another. Feel a cold coming on? Take two tax cuts, roll back some regulations, and call us in the morning." Quite funny actually.

    Many commentators have remarked that when Reagan cut taxes, the deficit grew. It did not decrease as Republican now believe. On the other hand, Obama's beliefs are not that different. He actually cut taxes for most of the population. Only for those earning taxable income above $250,000 (not earnings, but taxable earnings") would taxes increase. When one stands back a bit, the policies are not that different.

    Tax Havens and Tax Avoidance
    It takes one to know one. If Romney used tax havens, who better to close them. Romney is criticized for avoiding unknown amounts of Income Tax by using tax havens. Tax havens are ways that rich people cheat their homeland which gives them all of their benefits and citizenship.

    While the morality of doing this is highly suspect, the legality is within the law - unfortunately. SO it is hard to criticize Romney, when he followed the law. But now the outcry to attack and close these immoral loopholes is growing. Who better to accomplish this, than an expert in how to use tax havens?

    The Class Battle
    A comparison is often made between the party that cares only for its members' own wealth and power (the wealthy Republicans), and a party that represents the downtrodden, underprivileged, minorities, and immigrants (the Democrats). However human nature being what it is, the choice is not so simple.

    As an example, the Kennedy clan, which became wealthy and powerful through the hard business ethics and tactics of Joe Kennedy, gave rise to John F Kennedy, considered a friend of the needy, to Bobby Kennedy who would have been president and who was a social advocate, and to Ted Kennedy, a life long advocate of the needy and the disadvantaged. Great wealth accumulated in free enterprise usually creates future generations of noble and socially conscious heirs, and the money is eventually used for good.

    Sometimes the current generation does this. Look at Bill Gates, or Warren Buffet.

    A surprising thing happens when someone is empowered with great responsibility. They do what is good for America. Of course, it is their opinion as to what is good, but the underlying rationality is a social responsibility. So the fact that Romney is a very successful capitalist, can be a very good thing. It can be a good thing from both a reality as to how the world works, and a reality as to how a person who succeeded then acquires a social conscience. It is a fact of human nature. The choice between Romney and Obama is not as clear cut as pundits would have us believe.

    The People's Champion
    People hoped that Obama would be a champion of the people, that he would combat greed and private interests, that he would combat partisanship, and he has valiantly tried to do this, in spite of a determined effort by the Republicans to defeat anything Obama suggested, simply because Obama suggested it. For some Republicans, Obama became the devil incarnate.

    Most American presidents came from money and power. Most political power comes from money. Somehow, every campaign attracts enormous sums of money. The latest campaign has something called Political Action Committees (NYSE:PAC). Thinly disgusted supposedly independent funding groups, who in reality are simply methods of funding unlimited sums of money to candidates of choice. People hoped that the election of Obama would end these deceitful practices, yet the political machine was too powerful.

    The Choice for President
    In spite of the strident rhetoric from both camps, and the massive distortion of the truth from both sides, which by the way is a time honored American tradition, there are now two excellent candidates for President. It is likely that either one will direct the USA in the path of reason. The debt will be dealt with and start reducing - it is only an argument of the speed of reduction that is the issue.

    Health care for the 40,000,000 poor will be a reality, although perhaps disguised in some fashion.

    Tolerance for minorities, for the disadvantaged, for those in need of assistance will grow.

    Political influence worldwide will more and more take into account the realities of the effects on USA budgets and the political realities of yet another economic power in the world. Now there will be the USA as Number One, followed by the EU, China, Japan and Russia, the order of which will vary from time to time. The numbers of centers of economic power continue to increase.

    The power of the Wall Street bankers is forever diminished. The unconscionable bonuses that the executives took to reward themselves for out-scamming the politicians, will never be forgotten. Regardless of the political rhetoric about reducing regulation and all that, regulations and rules governing the banks is increasing, and will increase further.

    Obama has been a good president, in a very difficult Presidency. Yet his actions have been thoughtful and moral. Romney is also tested and experienced.

    Both are excellent candidates and both, in spite of the rhetoric, seem to be approaching the middle ground. Whichever one is elected, the next economic cycle is now budding in the USA and economic prosperity is returning.

    The views expressed in this blog are opinions only and are not investment advice. Persons investing should seek the advice of a licensed professional to guide them and should not rely on the opinions expressed herein. This blog is not a solicitation for investment and we do not accept unsolicited investment funds. Larry Cyna and/or the CymorFund may have positions in the shares of com

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