THE GREAT DIVIDE!
August 14, 2003
Terrorism in political circles today is another word for “radical Islam”. And, it appears that more and more of the Muslim world is radical.
We’ve known for decades that our relationship with Saudi Arabia is one of mutual need rather than respect and philosophy. If Saudi Arabia had their way, they’d never sell the U.S. another barrel of oil! They’d invade Washington, D.C. and convert everyone to Islam. So, 9-11 has now changed everything and made it more clear. The Saudis are no longer allies. Were they ever?
The Saudi support of Arafat, their own Wahabbi sect, and other world-wide radical Muslim groups is well documented. King Fahd is nearing 80 and failing in health and behind him is an even more radical leadership.
So, America needs to come to grips with the reality that Saudi Arabia supplies us with 17% of our daily oil needs. How and where are we going to replace that large an amount particularly when so many Democrats are against drilling anywhere near Alaska or America?
The great division between what America stands for and what Saudi Arabia believes in is becoming painfully clear. And, it will have consequences- soon!
DO IS & ARE MEAN “IS & ARE”?
August 13, 2003
On the eve of “Certification Day” it seems as though not everyone is speaking TRUTH or at least we’re not getting the same story out of both sides of the mouth.
Wednesday is the day that some 7-900 firms have to certify that what their numbers ARE is what they ARE! In other words, we’ve got a carry over from the Clinton days in which we need to make sure that IS really means IS, and doesn’t mean ISN’T!
Now while corporate CEO’s will have to sign off on the fact that they really KNOW what IS from what ISN’T, the ones who are SELLING us on their stocks (the brokerage houses) aren’t quite sure what really IS: or they AREN’T saying.
ARE you following this?
Here’s a case in point. Charles Schwab has placed a full page ad in several major newspapers saying, “History Suggests Markets Recover. We’d like to suggest some ways you can be READY. There’s never been a better time for Charles Schwab”. Wow, sounds like the market is really ready to take off!
But, if that’s the case then why does the New York Times carry an article (page 2 of the Business Section) saying, “Charles Schwab is shutting down one of it’s five customer call centers, eliminating 345 jobs, and looking to see where they can save $200,000,000 while it braces for an extended slump in trading by investors.” Also, in the last 18 months Charles Schwab has eliminated 7,500 jobs.
You see this is exactly part of the problem! What exactly IS going on or what IS said that IS going on ISN’T! Hopefully we ARE seeing that the brokerage houses AREN’T being honest with us! 
FINGERPRINTING & BOXCARS!
August 13, 2003
Almost everyone will remember the date 9-11, but some will remember it for something other than the destruction of the Twin Towers. Starting next month, the Justice Department will begin fingerprinting tens of thousands of foreign visitors to these shores of America. To make matters even worse, we’re going to specifically go after Muslims and citizens from other predominately Muslim nations: Iraq, Iran, Libya, Sudan, and Syria.
Okay ACLU, get your big guns out. Let’s go after this puppy with all the firepower that can be mustered. How dare the government fingerprint anyone! It’s just another right-wing John Ascroft plan to take away our civil liberties.
I don’t have any porblem with the plan. What I do have a problem with is that we’re always going after the OBVIOUS and leaving alone the paths that most criminals take. Take our borders as an example. I wrote on this months ago but nothing has changed. With our pourous borders, criminals and terrorists are coming in by the hundreds each day. They are paying as much as $25,000 to be escorted over the Mexican border. They are walking across the Canadian border. And, they are riding in boxcars in droves.
Many farms and ranches in the deep Southwest are no longer habitable due to the rampant crime and numbers of criminals and terrorists coming across the borders. But the largest transportation of choice are those thousands of empty boxcars that cross our broders from the North and South every hour of the day.
In fact, the Tohono Indian preserve along the Mexican border is being overrun with illegal traffic from Mexico. More than 3,250 abandoned cars have been towed away in the first six months of 2002, and some 56,000 illegals were apprehended in the last twelve months just in this one 76 acre reservation.
Fingerprint? Yes! But let’s get serious and clamp down on things other than those coming in through LEGAL means!
Striking Out?
August 11, 2003
I guess we shouldn’t have too high of expectations. Why should baseball be any different than the stock market? Why can’t baseball players get more and more each year? Why can’t the owners and the public keep paying players more each year?
Why should the average baseball player only get $2.4 million annually? How can a guy live on such minimal wages?
Taking my tongue out of my cheek, let me say that the baseball gods are this day deciding whether or not they want to STRIKE, again! In this day and age, I would say go ahead and strike. Maybe one day the public will get enough of it and say…”THREE STRIKES- YOU’RE OUT!”
Maybe we shouldn’t blame everything on the greed of Wall Street. Maybe they’ve taken enough of a beating. Could it possibly be the fault of the government? Could it be that with all of the ENTITLEMENTS that our government hands out (50% of the entire federal budget now) that everything thinks that they are entitled to more each year. There’s never enough hand-outs.
Or, could it be OUR fault? Could it be that we citizens have continually voted for the candidates that promised us the most, the candidates that told us how much we deserved.
No, we couldn’t be the blame.
PS. At 4pm CST baseball players association postponed any action until Friday.
Testing The E-Bomb?
August 10, 2003
Okay, so #43 wants to finish the job that #41 didn’t. But, with the world not wanting to rock the boat, what’s America to do?
When Saddam was an economic threat back in the Kuwait attack, Europe wanted to protect their financial interests. Today, most European nations trade with Iraq and so they want to STILL protect their economic interests. Things have just changed. Greed as a motivator has not.
Bush can’t get the kind of commitment that his daddy got in Desert Storm, and he can’t just go bomb the cities and landscape like Clinton did in Bosnia, or that we did in Afghanistan. Saddam is not cooperating by deciding to cede the deserts and fight from the cities. And, it’s reported that he’s set up heavily-fortified underground facilities in places like hospitals. He’s not as dumb as he acts you know.
So, this seems like the perfect time to test out the “E-bomb”! The HPM (high power microwave) devices have the same effect as a lightning strike- except 1,000x as devastating to computers and electronic equipment while not bothering people.
I see Bush as an innovative person. If he can overcome our traditional and staid military, we might see an interesting new development in wars between nations.
IS WAR INEVITABLE?
August 8, 2003
America is King of the mountain and the baddest dog in the junkyard. But, how long will that last? Having moved from Prince Charming (WWII) to King (Desert Storm), there’s a shift in sentiment of the subjects of the land. Everyone roots for the Prince: no one admires the King.
It appears that #43 wants to finish the job that #41 began but that was THEN and this is NOW. Now, few are catering to the whims of the King. Even the most loyal of subjects (England) are backing away from bowing to the desires of the King. Even Texan Dick Armey is questioning his neighbor down the road. Can the King go it alone? Sure and he could win but some victories are very hollow.
Bush may be the last president to really care what others think. Bushie #43 is a black-n-white kinda emperor. He sees things in absolutes. You’re either with us or you’re against us. Actions and people are either right or evil.
But then there’s politics. How clouded one’s thinking becomes when an office like the presidency of the United States is at risk. It will take some kind of provocation for the U.S. to take on Saddam. And, if we have to manufacture one, it’s worth it (so the thinking goes).
So, is war inevitable? Yes! And, it’s not just because of who Bush is but because of who Saddam is. It’s only a matter of time and my timetable says pre October 1, 2002.
THE LAST BUBBLE?
August 7, 2003
Wednesday, I referenced the next-to-last bubble to burst (real estate), and today I want to talk about the last one. When this bubble pops, the stock market will finally reach a bottom and a real recovery will begin. About the time I start talking optimistically, everyone else will be negative. Ahhh- life!
That last bubble is the DEBT bubble! America has been living way over it’s head. I am talking corporately and individually. While the federal debt was being reduced for a few years in the late 90’s, it was at a cost elsewhere like in the trade deficit which was growing leaps and bounds. It will soon be time for the chickens to come home to roost.
The term TRILLION gets lost in the million-billion game, but here are the facts nonetheless. Total government debt (on the books) is $6T, consumer debt is $8T, real estate debt is $13T, private debt is $32T, over the counter deriviative debt is $110T, and then there’s all that off-the-books, hidden (a la Enron) debt.
We are choaking on debt. If (and it looks increasingly like that is what’s happening), Alan Greenspan cannot ignite some serious inflation, there will be a deflationary debt implosion. But with 11 rate reductions last year and a rate of 1.75%, he doesn’t have far he can go, unless he wants tp PAY us for borrowing. America is looking more like a 21st century version of the 20th century Japan.
The last bubble before real values hit Wall Street, before the Dow hits 3-5,000, and before Nasdaq hits 500-1,000? Before CNBC goes off the air?
PS. The PPI was just released this am showing prices are falling. Wall Street will think this good, but it’s just more proof of DEFLATION, that will insure the debt bubble’s reality
THE REAL ESTATE BUBBLE!
August 6, 2003
As promised yesterday, here’s my take on the real estate landscape (no pun intended). I grew up in real estate and I have always cherished it’s place in the world. From the days of the Magna Carta we see the role that real estate has played among the elite especially.
I agree with Richard Russell who says that we’ve seen many a bubble burst in the last three years and that there are only two more to go: the real estate bubble which will cause the last bubble to burst- the deflation bubble.
In America there is about $7.6 trillion in mortgage debt in addition to $3.1 trillion in government backed mortgage debt (FNM and FRE). In fact the simple way to watch the air go out of the balloon is to watch the stock price decline in these two entities. By the way, there were only four red stocks today on my favorites list and FNM and FRE were 2 of the 4. FNM has dropped from $85 to the current $71 and FRE has dropped from $71 to $61.
In the top ten metropolitan areas last year, the average real estate value increased by 26%. Talk about bubbles! Then there’s the San Francisco Bay area where the average sales price is $482,000!
It used to be that an 80% loan was the standard, then 90%, 95%, VA backed 100&% loans and of recent, 125% loans! Yep. If your house appraises for $100,000, you can get a $125,000 loan. Why? Why not! Go buy some more stock, cars, gadgets, or anything to keep the good times rolling.
In the meantime, Atlanta has a 20 month supply of $750,000 homes (normally it’s a 4 month supply). Denver has 17,000 homes for sale or twice as many as last year. And, Seattle has 4 sellers for every one buyer. In other words, the air is coming out of the real estate balloon.
Owning a home is still an honor and a wise strategy as long as you’re not spending more than 25% of your gross pay on the monthly note, as long as you put a substantial down payment, and as long as you’re not paying a premium to get in. Otherwise, it will be in foreclosure in the next 24 months and you’ll be looking for a place to rent.
HYPOCRISY & CHICKEN LITTLE
August 5, 2003
Last week I wrote that having the government tell business how to run it’s accounting was like the kettle calling the pot black. Maybe more like the fox saying that he’d guard the hen house for us.
It would be a good thing that when August 14th comes around that our government would have to CERTIFY their books as well. I mean, they’re the model right? WRONG!
Year after year GAAP cannot be applied to our federal government because they have not a clue where the money is or what it’s been spent on. This truth from a Wall Street op-ed column Monday. ” If GAAP (generally acceptable accounting principles) were used for our federal government, the reported surplus last year of $170 billion would have to be reported as a deficit of $580 billion. Off-balance-sheet financing, a la ENRON, is more the rule than the exception in government.” The government has been around a lot longer than Ken Lay or Fastow. Talk about hypocrisy!
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After another triple digit loss in the 200 range people on Wall Street are starting to take cover. The sky is falling, the sky is falling. No, it’s just the Wall Street financial indexes: the Dow, Nasdaq, S&P500, and a host of others.
As the markets make their way down to REALITY (who knows where that is, except a lot further down), it should be no surprise. Bubblemania is over with and it will be for some time to come. It’s just not good ole USA either. From their highs, Japan is down 74%, Sweden down 60%, Germany down 54%, France down 47%, Italy down 46%, Canada down 42% and so on. You get the picture!
We just have two more bubbles to burst. The housing bubble and then finally the debt bubble. At this point, I plan on dealing with the real estate market late Tuesday. It is headed down though. So, in this digital version of Chicken Little, it’s not the sky that’s falling but the entire financial landscape that was falsely erected under the Greenspan-Clinton tour of duty.
TIT FOR TAT!
August 4, 2003
Take that! POW, BANG, WHAM, SLAM, POP! Sound like a Batman episode? I’m afraid not. It’s more like ths sounds coming out of Gaza, West Bank, and Israel.
The Palestinians have made a promise now. For everyone of them that the Israeli’s kill, they will kill 100 Israelis. Ahhh, what a culture. Sounds like the Old Testament taken to an exponential degree. It’s not an eye for an eye, a life for a life, but 100 for one! The game has just gotten a bit more serious. Doesn’t anyone remember that in war no one wins?
I watched Bush this morning as he was interviewed on the 7th hole of the golf course. Is that a paradigm switch or what? From devastation, terror, anarchy, and poverty to the links in Maine. Saying nothing new, he renewed the call for peace and sanity and no one is listening.
We are close to losing control of it all. How long before other nations become involved? How long before that ONE event triggers a chain reaction that cannot be stopped? It’s not that it’s something new. We’re talking about a war that’s been going on for 1,500 years- fifteen+ centuries.
Tit-for-tat has never been a policy worth pursuing, especially when it involves the taking of lives. Will we ever learn?
NINE LIVES or NINE DAYS?
August 1, 2003
The stock market drops 400+ one day and then it falls 200+ for a couple of days. Every time the Dow or Nasdaq rallies, CNBC talking-heads declare the bottom has been reached and the train to heaven is pulling out of the gate. Alllll- board!
Those that keep jumping on board find themselves ready to jump in front of the train a few weeks later. It seems as though my comment of yesterday was right on. Things have been a lot worse than the government told us and much, much worse than Wall Street promised.
I don’t know how many LIVES this cat called Wall Street has, but it seems painfully clear that it’s more than a couple, and it just might be NINE- before the cat bounces no more. Every time there seems to be life and a move up, along comes more bad news, more truth.
Well, there are only NINE more trading days until the CEO Certification day comes (Aug. 14). It’s estimated that there is something like $1.2 TRILLION in debt that’s been parked off the books (like Enron). If everyone moves that back into plain view, well, I don’t want to go there.
Let’s just say that Greenspan doesn’t have the answers. The Fed doesn’t have the answers as they’ve wiped out 95% of the value of the dollar since WWII. There’s just one answer. We must all pay the PRICE for the EXCESSES of the Clinton years- and he’s not totally to blame. He just got the advantages of the times, such as NOT being IMPEACHED with a guilty verdict.
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