• Jeff Matthews

Let Congress Fly With the Riff-Raff

Lawmakers on Recess Take Wing for Distant Shores By Brody Mullins and T.W. Farnam —The Wall Street Journal

Rep. Nick Rahall (D., W.Va.) is island-hopping this week in the Pacific. Rep. Keith Ellison (D., Minn.) is tweeting from Kenya. Sen. Richard Shelby (R., Ala.) is preparing for a three-week trip to Europe with his wife.

These are among more than a dozen taxpayer-funded trips by lawmakers during Congress’s monthlong summer recess. Financial reports on lawmaker travel expenses aren’t due for 30 days. Even then, details on hotels and meals don’t have to be disclosed….

Ah, the hypocrisy of Congress in the morning!

After abusing the CEOs of three then near-bankrupt auto companies for their appalling lack of propriety in taking private jets to Washington to ask for a bailout, Congresspersons of all political denominations jet across the globe on military jets…their wives and who knows what significant others in tow.

And they don’t even have to tell us where they stayed and how much they paid for that great bottle of wine.

But it is not the amoung of time that Congresspersons spend outside Washington to which we here at NMTU object.

In fact, we think Congresspersons should spend as much time as possible outside of Washington D.C. in order to actually understand what happens when they decide to pass a law.

Anybody in the investing business—at least, anybody who makes a living as an investor rather than as a trader—knows that the way you find great investments is not sitting in an office staring at a screen talking to other people sitting in offices staring at screens.

It’s getting out and seeing the world.

Back in day, for example, it was hard to see why Wal-Mart at 30-times earnings was a better investment than Sears at 10-times earnings—unless you met Sam Walton and his crew of wildly enthusiastic and unabashedly penny-pinching managers, and then spent time with the buttoned down bureaucracy that was Sears…and for good measure visited a few stores, compared prices and watched the traffic.

After that, you got it.

Today, for example, so low are their approval ratings that certain Congresspersons are calling for another stimulus plan—even though the last stimulus plan hasn’t done much of anything to date except pave a few roads.Yet they might not be so worried if they got out of town more frequently, or at least paid attention to some of the conference calls from the recent batch of quarterly earnings—such as Packaging Corporation of America.

What Packaging Corp does is make, well, packaging—most especially corrugated boxes. Your order from Amazon or eBay or Sears or Williams-Sonoma comes in a corrugated box, as does nearly everything shipped anywhere in this country.Thus PKG, the stock ticker it goes by, is about as good a proxy for the economy as any company in America.

And here’s what CEO Paul Stecko had to say a few weeks ago:

As we reported on our first quarter earnings call, our corrugated products volume had increased significantly during the first half of April over our first quarter shipments. The question at that point was, would this pick-up in volume be sustained? Well, it was sustained, not only in April, but also through the entire quarter.

Our corrugated products volume was up 10% or 40,000 tons over the first quarter, which was much higher than our normal seasonal demand pickup of 2.5 to 3% over these two quarters. This pickup in demand has carried into July…. Not one given to hyperbole or fancy language, Mr. Stecko elaborated later in the call when pressed to identify the source of the demand pickup:

The overwhelming majority of our increase in volume is more business from existing customers. They have had more business, they need more boxes, we sell them more boxes.

Of course, Congresspersons have no time to listen to earnings calls—they’re too busy holding hearings about things that happened two years ago.

Still, we think they should be encouraged to travel outside Washington as much as possible.

But they should do it the same way their constituents do it: schlepping to Reagan National or Dulles, going through security and getting asked to step out of line once in a while for a bag search, then buying their own food to eat instead of the free bag of potato chips on the flight before waiting on the runway for five hours…and—when they finally get to the hotel—finding stuff was stolen out of their luggage at the airport.

And then, just maybe, the next time somebody decides to create a Department of Homeland Security, for example, somebody in Congress will raise their hand and say, “How will this make what we do any better?”

Let the military fly military. And let Congress fly with the riff-raff.

Jeff Matthews I Am Not Making This Up © 2009 NotMakingThisUp, LLC

The content contained in this blog represents only the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice, and should never be relied on in making an investment decision, ever. Also, this blog is not a solicitation of business by Mr. Matthews: all inquiries will be ignored. The content herein is intended solely for the entertainment of the reader, and the author.

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GENERAL

The content contained in this blog represents only the opinions of Mr. Matthews. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. The content herein is intended solely for the entertainment of the reader, and the author.

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