Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.

Download Podcast | iTunes | Podcast Feed

On today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech are joined by Governor Jon Huntsman to discuss entitlement reform, China, the EPA and more.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

Huntsman, the Moderate, Endorses Ryan Medicare Plan
Comparing the Entitlement Reform Plans of the GOP Presidential Candidates
Huntsman slams Romney for pandering to voters on economy
Jon Huntsman’s Bold Plan for Health Care Reform
Huntsman, Schwarzenegger ink global warming pact
Western Regional Climate Action initiative details
Jon Huntsman’s campaign site

Follow Brad on Twitter
Follow Ben on Twitter
Follow Jon on Twitter

Subscribe to The Transom

The hosts and guests of Coffee and Markets speak only for ourselves, not any clients or employers.

You already know this, but it bears repeating. Last night, 60 Minutes aired its blockbuster report on possible insider trading by Members of Congress. Of course, being CBS, they tried to throw as many Republicans into the mix as possible, even stretching a pretty minor issue with Speaker Boehner as something suspicious. It isn’t. But, the actions of GOP Rep. Spencer Bachus and House Minority Leader Nancy Pelosi warrant a lot more scrutiny. Many more explosive details in Breitbart Editor Peter Schweizer’s book, on sale tomorrow.

Et tu, John Kerry?

BusinessInsider is especially shocked by Bachus’ trading history.

To the extent dubious groups may be surrounding Herman Cain to profit from the arrangement, it will likely hurt his fund raising ability. Donors may thin they’ve given when, in essence, they may not have helped him as much as believed.

Fundraisers show little cash for Cain – A second group exploits his name

A felon once imprisoned for fraud is raising money in the name of Herman Cain and profiting off of it through a company he owns. It is the second group raising large amounts of Cain cash that has a history of collecting millions of dollars through politically charged mailings and spending hardly any of it on politics.

Draft Herman Cain is the latest from two California men who have raised tens of millions of dollars cashing in on causes such as breast cancer and illegal immigration, with little to show for it except payments to fundraisers and themselves, an analysis by The Washington Times shows.

Don’t look to Congress for profiles in courage. Unfortunately, that is not a surprise.

WASHINGTON — With a little over a week left to reach a deal, members of the Congressional deficit reduction panel are looking for an escape hatch that would let them strike an accord on revenue levels but delay until next year tough decisions about exactly how to raise taxes.

(more…)

The Supreme Court has announced today that it will hear the challenge to President Obama’s signature health care reform law. The Court is expected to hear oral arguments in February or March, with a decision given by June of next year.

A key issue of the challenge, brought by 26 states, is that of the individual mandate in the new health care law, which requires nearly all Americans to purchase health insurance by 2014 or receive penalties. Many economists, as well as states, have strongly suggested that the law cannot stand without the individual mandate.

As the oral arguments are heard at the same time the presidential race heats up, it will be interesting to see how Republican candidate and former Massachusetts Governor, Mitt Romney, who supported an individual mandate in his state’s health insurance reform plan, distances himself from the mandate on the federal level. Mr. Romney has said that, if elected President, he would repeal Obamacare.

Last night, 60 Minutes aired its report on possible insider trading by Members of Congress. A principal focus of the report was House Minority Leader Nancy Pelosi and her participation in an IPO of Visa, one of the hottest IPOs in recent years. Reporter Steve Kroft questioned Leader Pelosi recently at a press conference about her investment and its possible impact on credit card legislation before the House during her term as Speaker.

I will have much more to say on this soon, as the legislative maneuvering around the recent credit card bill is a rich narrative and suggests there may be something to Kroft’s suspicions. For now, though, I have a more fundamental question: How did Nancy Pelosi get access to Visa’s IPO in the first place?

Participation in a stocks IPO, i.e. Initial Public Offering, is one of the more sought after trades on Wall Street. Often, an IPO investor is able to get into a stock at a relatively low price and realize an almost immediate gain once trading commences, especially if the IPO is “hot” or, rather oversubscribed, meaning more investors wanted shares than were available. Visa’s IPO was blockbuster-level “hot.” As reported by The New York Times:

Visa‘s blockbuster initial public offering is currently oversubscribed for its expected trading start on March 20, Scott Sweet of the research firm IPO Boutique told MarketWatch.

Mr. Sweet told the publication that the I.P.O. is drawing “extreme demand.”

It is very difficult for any individual investors to participate in an IPO, as most of the shares are reserved for major brokerage clients, institutional investors and pension funds. It is so difficult, in fact, the SEC has published an “FAQ” on why it is so difficult for individual investors to participate in IPOs:

(more…)

From the Associated Press:

Protesters appeared to put up little resistance to the raid and officers could be seen leading some handcuffed demonstrators away from the downtown plaza where the camp had been set up. Warnings from Oakland authorities had been similar to those issued before officers raided the encampment on Oct. 25 with tear gas and bean bag projectiles.

The action came a day after police drove hundreds of anti-Wall Street demonstrators from weeks-old encampments in Portland, arresting more than 50 people.

(more…)

From Newsweek:

One of the more dramatic episodes in the book recounts the trading activity of Republican Rep. Spencer Bachus, of Alabama, who, as the ranking member of the House Financial Services Committee, was privy to sensitive high-level meetings during the 2008 financial crisis and proceeded to make a series of profitable stock-option trades.

Bachus was known in the House as a guy who liked to play the market, and in fact he was pretty good at it; one year, he reported a capital gain in excess of $150,000 from his trading activities. More striking is that Bachus boldly carried forth his trading in the teeth of the impending financial collapse, the nightmarish dimensions of which he had learned about first-hand in confidential briefings from Treasury Secretary Henry Paulson and Fed chairman Ben Bernanke. On Sept. 19, 2008, after attending two such briefings, Bachus bought options in an index fund (ProShares UltraShort QQQ) that effectively amounted to a bet that the market would fall. That is indeed what happened, and, on Sept. 23, Bachus sold his “short” options, purchased for $7,846, for more than $13,000—nearly doubling his investment in four days.

(more…)

Much like their AWOL counterparts at Occupy London, the brave activists of Occupy Harvard–whose presence has caused Harvard Yard to be closed to the general public–apparently prefer the comforts of their dorm rooms to sleeping in their expensive tents.

A Harvard blogger visited the site, only to find Occupy Harvard was strangely… unoccupied:

On the first morning of the encampment, the Harvard Crimson did a photo essay on how things were going on Day 1, which documented about half a dozen protesters on site at around 9 a.m. (here).  So I wondered, how are things going on Day 3? Especially on a day on which classes were not in session, so the members of the movement are able to devote their full attention to the encampment, would a larger contingent of space occupants be on site? Perhaps dozens of space occupants?

So what did I find?  Nothing!  When I arrived shortly before 10 a.m., I found no space occupants at all.  On site were just 2 photographers (including myself) and 2 Harvard University police officers…

Meanwhile, according to the Harvard Crimson, Harvard faculty and students who support the Occupy movement are objecting to the security measures established by the university to keep activists from outside the university from joining the protest.

(more…)

Chicago Teachers Union President Karen Lewis recently appeared before the Northwest Teaching for Social Justice group and laid it on thick.

Lewis, who is also a vice president of the American Federation of Teachers, leveled a cheap personal attack at President Obama’s Education Secretary Arne Duncan.  See it, courtesy of EAGtv.

Speaking with a manufactured speech impediment in order to mock Duncan, Lewis said:

“‘Education is the civil rights issue of our time.’  Now, you know he went to private school ‘cause if he had gone to public school he would have had that lisp fixed.  I know – that was ugly wasn’t it?  I’m sorry.”

I thought we taught children not to mock or make fun of others.  Apparently the teachers are exempt from such lessons.

It is interesting to witness the vitriol from union leaders aimed at Democratic leaders who have proposed tepid, incremental education reform and school choice.

(more…)

The 60 Minutes report was just the tip of the iceberg. Expect a lot more over the coming weeks.

U.S. Representative Spencer Bachus (R-AL) had access to highly sensitive financial information during the 2008 bailout debates that may have helped him earn tens of thousands of dollars by trading stock options, even as most Americans’ portfolios took a beating.

On Sunday, Rep. Bachus’s trading behavior came under fire in a 60 Minutes report based on Throw Them All Out, the book by investigative journalist and Breitbart editor Peter Schweizer that has triggered a political earthquake in Washington. Schweizer, who is also a Breitbart editor, devotes a significant portion of the book to exposing possible congressional insider trading.

Bachus’s trades during debate over the Troubled Asset Relief Program (TARP) raise serious questions about whether he invested based on information he acquired as a result of his political power.

“Here’s the rub: all too often his trades coincided with his congressional work,” says Schweizer. “Bachus was neck-deep in crucial financial decision-making at the highest levels.”

BigGovernment.com has obtained and reviewed Rep. Bachus’s Fidelity stock options trading records. The dates of the congressman’s trading patterns paint a troubling picture.

In the summer and fall of 2008, Rep. Bachus–who is the current chairman of the House Financial Services Committee–was then the ranking Republican on the committee. That gave him access to high-level private meetings and phone conversations with then-Treasury Secretary Henry Paulson, among other senior financial officials.

From July to November 2008, by executing well-timed, highly risky options trades throughout the turbulent period, Congressman Bachus made at least 40 options trades that netted him as much as $50,000 in capital gains. (more…)

Former Speaker of the House–and current Minority Leader–Nancy Pelosi apparently bought $1 million to $5 million of Visa stock in one of the most sought-after and profitable initial public offerings (IPO) in American history, thwarted serious credit card reform for two years, and then watched her investment skyrocket 203%.

The revelation appears in Throw Them All Out, the new book by investigative journalist and Breitbart editor Peter Schweizer, which was the focus of 60 Minutes on CBS this evening, and which is featured in this week’s issue of Newsweek.

Schweizer’s investigation of Pelosi and other members of Congress–from both parties–raises a critical question:  should it be legal for lawmakers to buy stocks in companies directly affected by their legislative efforts?

In early 2008, Nancy Pelosi and her real estate developer husband, Paul, were given an opportunity to buy into a Visa IPO. It was a nearly impossible feat–one that average citizens almost certainly could never achieve. The vast majority of purchase opportunities went to institutional investors, large mutual funds, or pension funds.

Despite Pelosi’s consistent railing against credit card companies, on March 18, 2008, the Pelosis bought between $1 million and $5 million (politicians do not have to report the exact amounts, only ranges) worth of Visa stock at the IPO price of $44 per share. Two days later, the stock price rocketed to $65 per share, yielding a 50% profit. The Pelosis then bought Visa twice more. By their third purchase on June 4, 2008, Visa was worth $85 per share.

How did Nancy Pelosi snag one of the most coveted initial public offerings in history? The facts are still emerging. Yet according to Schweizer, corporations that wish to build congressional allies will sometimes hand-pick members of Congress to receive IPOs. Pelosi received her Visa IPO almost two weeks after a potentially damaging piece of legislation for Visa, the Credit Card Fair Fee Act, had been introduced in the House. If passed, the bill would have cut into Visa’s profits substantially by lowering so-called “interchange fees,” the 1% to 3% charge retailers pay Visa when customers use Visa cards for purchases. Interchange fees are a critical source of revenue for the four credit card companies–$48 billion in 2008, to be exact.

(more…)

In Portland, in Salt Lake City, and across the nation, the elected representatives of the 99.999 percent are finally tiring of the antics of the .001 percent.

Live stream from Occupy Portland (2:46 pm PST):

Yes, THAT Gene Simmons, from The Sun (UK):

This mess is our fault — corporations have no responsibility.

Capitalism is the best thing that ever happened to human beings. The welfare state sounds wonderful but it doesn’t work.

Governments hand out more money than they have to support welfare and they land in debt.

Then they have to borrow money — and then there’s interest on top of that.

That’s bad business. And it has created a culture of entitlement.

(more…)

This week, Crossroads Grassroots Policy Strategies (Crossroads GPS) targets Massachusetts Senate candidate Elizabeth Warren and her self-professed ties to the #Occupy movement in a new television ad running in the Boston, Springfield-Holyoke, and Providence, RI markets for a total buy of $596,000.

The ad, “Foundation,” can be viewed here:

To the extent that the Occupy Wall Street crowd has a core cause, it is an economic one.  However, its title and location are the only real clues, because when it comes to demonstrating their vast economic knowledge, these people cannot.

They claim to be among the 99% of Americans who are victims of various legal and moral crimes committed by the financial sector, and that has risked their futures.   But, what sort of future do they have?

Does Che know how well off he is?

What they are truly demonstrating is the vast failure of the education system.  They have no global perspective or understanding of their historical position.  They fail to understand THEY are the 1%.  My Che Guevara looking friend to the left here stands to earn $1.6 million more in his lifetime than his high school party buddies who did not go to college.    This means, on average he will earn $35,500 more a year than his high school counterpart will, and this is just the American part of the story.  The average world citizen earns $7,000 a year right now and that is highly skewed, the median income is much lower.  Only 19 percent of the global population lives in a country with mean per capita earnings greater than $7,000.  Che is among the 20 to 25 percent of Americans that attend college and, assuming he graduates, will be in the upper income strata, likely the upper 20 percent.  So, Che here is in the upper 20 percent of the upper 19 percent, which means, globally speaking, he will be among the wealthiest 4 percent in the world.  Just like his Woodstock grandparents who became the BMW driving yuppies, he will protest and rail against the man or rage against the machine or whatever and then go earn a very good living over his lifetime and all of it brought to him by capitalism.

Historically, his case is worse.  The fact that he has the time to go and camp out and not have to hunt, forage or farm speaks volumes that his twenty years of schooling do not seem to have prepared him to realize.  While he is standing on the pavement thinking about the government and what it owes him, he does not realize that his urban camping trip is costing more than most people who have ever lived earned in a lifetime.  As Deidre McCloskey points out in her book Bourgeois Dignity, Americans spend on average $120 a day, if this were 200 years ago the figure would be lucky to be $3 a day in current dollars.  Living before the advent of wide spread free market capitalism would be like trying to live in the current economy on $3 a day, Che’s visit to Starbucks cost more than $3.

The sad aspect is not so much that Che is protesting but that he does not know any of this.  His teachers and professors either do not know it or do not believe it.

(more…)

From the Associated Press:

Oakland officials had issued written warnings similar to Saturday’s eviction notice before officers raided the encampment on Oct. 25 with tear gas and bean bag projectiles, arresting 85 people. Oakland became a rallying point for demonstrators when an Iraq War veteran was injured during the clash.

Tensions were also high in Portland, Ore., where protesters with the movement dismantled large sections of their encampment amid a heavy police presence Saturday. Demonstrators faced a midnight deadline to clear out of two downtown parks following a month-long protest.

Mayor Sam Adams ordered the camp shut down by midnight Saturday, citing unhealthy conditions and the encampment’s attraction of drug users and thieves. Paramedics treated two people suffering from apparent drug overdoses, one on Friday and one on Saturday, bringing to four the number of nonfatal overdoses inside the camp, police said.

(more…)

Be sure to tune into 60 Minutes tonight at 7pm EST. (Yes, we really wrote that sentence.)

Within our own country, the Founders and Framers understood that there has to be a balance between individual rights and the rights of the community. They were under no illusions that in a country this large that everyone could hold the same beliefs and goals. They wanted to create a place where, to the largest extent possible, people could be free without imposing on others. You could say their end goal was freedom. In creating the U.S. Constitution, they created a document that would maximize freedom and minimize conflict. For example, rather than elevate one religion over others by sponsoring it by the state, they included the First Amendment, which reads:

“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof…”

What is meant by this is that the FEDERAL government will not become involved. They knew better than to tell the states to what level they become involved in religion or whether or not the states should even sponsor any particular religious practice. By the same token, if one religion imposed its beliefs on others, this would be abridging the free exercise of a faith and that would not be acceptable. Remember, the idea is to maximize freedom and minimize conflict.

The US Constitution was based on the philosophy of government laid out in the Declaration of Independence, which declares:

“All men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”

The U.S. Constitution was established to protect these truths and it was agreed to by the citizens of this country as explained in the preamble to the U.S. Constitution. (more…)