Happy Birthday and Magic Tricks

Hope everyone had an enjoyable 4th of July weekend. On the occasion of our nations birth I always try to read something from the founders and this year I settled on some of Madison's Federalist Papers #51. I have read this many times but each time seems different. The particular passage I like best starts "If men were angels, no government would be necessary". The passage concludes " the great difficulty lies in this : you must first enable the government to control the governed ; and in the next place oblige it to control itself". Seems like something worth considering today.

The past quarter was the best in several years. No one knows what the immediate future in the markets might be but over time discipline is rewarded. The deficit, debt, jobless rate etc. all weigh on the markets so the path to progress will not likely be straight.

I read a piece this morning on the subject of the pending approval of GM's emergence from bankruptcy. Viola! Abracadabra ! Seems like the government has elected to rely on a series of magic tricks instead of actually correcting the problems. Unlike most bankruptcies where pensions are modified and everything is changed going forward, the GM pension obligations remain hugely underfunded. The company has not made a contribution to the pension plan since 2003. The pension benefits are likely unsustainable and sooner or later will have to be brought into line for the firm to avoid yet another bankruptcy