SIMPLY OUT OF THIS WORLD!

January 13, 2005

As I’ve said on several occasions, the power of the presidency is an awesome thing to come up against. Whoever is president can gain the attention of the entiere U.S. and most of the world in a heart beat.

Today, the president got the world’s attention by announcing that we’re returning to space! We’re headed to the moon and from there, on to Mars! Of course all of this is 20-25 years away (Mars), but it’s the dream that matters. How are we going to pay for it all in light of incredible deficits is another story.

It’s not the moon and planets that are simply out of this world, but the U.S. deficits. Oh yes, and stock evaluations are out of this world too, but that doesn’t seem to bother the gamblers as they rushed in and moved the Dow up another 110 points Wednesday.

Next week, we’ll have the State Of The Nation address and rumor has it that Bush is proposing something like $1.5 B for marriage enhancements. And you can bet that the Union message will have so many things in it (it’s an election year you know), that the tab for the whole package will make the moon and Mars seem like just a walk across the street.

Written by Ernie · Filed Under Daily Commentary

STRANGE BEDFELLOWS-

January 12, 2005

Can anyone make sense of politics these days? What’s Bush doing giving illegals from Mexico, legal status but not calling it amnesty? And, seeing Fox and Bush talk about how together they are now on the war in Iraq makes me shake my head in wonder; however, the puzzle of all political puzzles is the Paul O’Neill flap.

First he wrote in his book that Bush is a blind man among deaf cabinet heads. Then he goes on TV and declares that Bush was intent on going to war with Iraq from day one- two years before 9-11. Talk about a scorched earth policy.

When Bush is asked what he thinks of O’Neill’s trashing him, he’s more than polite, thanking Paul for his two years of service. Then today, O’Neill says he will most probably vote for Bush, and that he wished he could retract some of his comments. Say what?

O’Neill was about as far away from being on the same page with Bush as Hillary was, so why was he taken on board as Treasury Secretary in the first place? Why was he so publicly and harshly fired? I know there probably aren’t any sane answers because if there is a truism, it’s that politics make very, very strange bedfellows.

Written by Ernie · Filed Under Daily Commentary

WHO IS FOOLING WHO # 2

January 11, 2005

As a follow up to my last comment, let me say that observing a problem and offering constructive solutions are two different things. So, my last comment was a definition of the situation: problem. Let me now offer four solutions.

So, how do we handle the massive growing national debt? At least for this year, the FIRST solution is to raise taxes, pay the bills, belly up to the responsibility bar, and get fiscally real! Now, do you think Bush is going to raise taxes in an election year? Duh!

On to solution #2 and one that Bush and team might consider as an outside chance: SELL OFF US ASSETS! There are sure a lot of national parks that could be sold to the general public or private corporations. Whenever the IMF goes in to help a nation in financial trouble, they demand that the government sell-off some of it’s assets. Howe about us taking our own medicine?

The THIRD strategy is the one used by Argentina recently- just repudiate the debt. Just say you aren’t going to pay it or put it off for a couple of decades. It’s not a great move, but it’s been used a lot down through history.

Finally, the FOURTH strategy just might be the one that America is quietly going about administering today. Just PRINT as much money as you can. Germany (The Weimar Republic) did it and of course it worked for awhile, which is exactly the problem with the current temporary solution. At some point, it all falls apart.

Eventually, nature will take it’s course and nature will correct what man refuses to correct. Read about America in 1929 if you’re not familiar with what I’m talking about. In the meantime, let’s keep hoping there is a bigger fool than we, that will buy the overpried stocks that we foolishly keep buying.

Written by Ernie · Filed Under Daily Commentary

WHO IS FOOLING WHO?

January 10, 2005

Okay, let’s look at this prosperity premise that the stock market is saying is fueling the market. The 3Q GDP was out of sight- up 8.2%. Based on that 20 year best piece of data, the Dow has been going up ever since. But, let me ask you a fundamental question. Is this real prosperity or false?

Let me ask another question. If I were to give to you a couple of credit cards with an UNLIMITED credit line, with no interest and no payments until 2010, do you think you could change your immediate lifestyle? Could you make your neighbors think that you were doing well? Duh!

Well, our government BOUGHT that 8.2% GDP with just such a credit card. Our government bought what looks like prosperity with a near $400B shortfall this year and a $500B deficit this year. So, what’s the big deal or who’s fooling who?

Give me unlimited credit, printing presses to turn those US$’s out as fast as I can, and I can catch some eyes as well. Growth? Yes, but at what cost? And more importantly, for how long?

Listen, the Bush administration may be able to ‘buy’ the 2004 election by addding massive debt, but George will pay a heavy price in his second term. And you and I will pay an even heavier price. So, who is really fooling who here? You see when you get right down to it, buying and selling stock is a principle of the “last fool in”.

We’re all buying stock today at way over-valued prices on the basis that yes, it may be foolish, but we can find a bigger fool than us to sell it too before the house of cards crashes. What a game!

Written by Ernie · Filed Under Daily Commentary

THE PRICE OF LOYALTY?

January 9, 2005

It appears that the “price” has gone up substantially. Or, maybe the price to be UN-Loyal is just too lucrative.

It was just thirteen months ago that Paul O’Neill got booted as Treasury Secretary. After his dismissal, he said that he had nothing bad to say about Bush or his experience in his administration. A year later, he’s trashing Bush as though he was one of the nine running for President.

In his soon to be released book, The Price Of Loyalty, Paul unloads on the president more than anyone I can remember. It’s one thing to disagree on economic policies, as he did; however, he goes after Bush’s character like a rabid dog. His assessment of a Bush cabinet meeting was, “Bush was a blind man in a room full of deaf of people.”

I’m not sure what his vindictive motivation is, other than money, but, he’s sure taken a stand that’s not going to gain him any favors donwnthe road.

Loyalty? I guess it does have a price today: a high one!

Written by Ernie · Filed Under Daily Commentary

THE BIG BATTLE IS BREWING!

January 7, 2005

Let’s delve into politics for this end of the week comment. When you read the headline above, I am sure that you thought Iraq or presidential politics. Now, if you thought politics, you were right. But, if you thought Democrats versus Bush, you were wrong.

The big battle that is now underway as I see it and it will last for about sixty days unless some events crop up that aren’t now on the radar screen. Come mid-March, the Democrats should have determined who their candidate is to face off against George Bush this fall.

The battle though is the “outsiders” against the “insiders”. In the outsiders corner is Howard Dean who is leading every poll taken. Soon we’ll know if he takes Gephardt and Barbara Streisand out with a victory in Iowa. Right after that Dean can take Kerry out of the picture also with a victory in NH.

But, back to the other corner of this heavy-weight ring are the insiders, otherwise known as the Clintonites and their horse in this race: Wesley Clark. Clark is coming up in the polls and has now overtaken Kerry for second place in NH even though he’s only got 50% of the popularity that Dean does.

Dean has made it clear that when (if) he wins the nomination, Terry, Bill, and Hill are out of the DNC and Democratic headship. The Clintonites have made it clear that they’re going to give Clark all the powder he needs to take the nomination back and preserve the party for the Clinton clan.

So, the really serious and big battle is now beginning to take center stage. It’ll be interesting to see just where it all ends.

Written by Ernie · Filed Under Daily Commentary

TRUTH AND CONSEQUENCES!

January 6, 2005

The economists at the IMF (Internatioal Monetary Fund) said Wednesday that the U.S. deficits and world spending sprees were ‘perilous & dangrous.’ Is anyone really listening? Let me put the TRUTH in the most concise words that I can.

Historical (last 100 years) U.S. debt has run at 130% of GDP. Never in history has a country run a debt that’s 300% of GDP- until now. In order to try and handle the debt burden, credit creation is running at an annualized rate of $3.3T!

It now takes eight units of credit to produce one unit of GDP. And all of the above would not be possible without foreign nations loaning us the money, pretending the game is real.

So, what’s the consequences of the above TRUTHS? Let me quote Richard Russell. “The U.S. money supply can incease $20B in a single week. Is it really wealth creation? Has anything of intrinsic value been created? In the end this system based on fantasy must collapse. The system of irredeemable, paper money is a system based on fantasy and fraud.”

The US$ finally corrected a bit Wednesday dropping gold. Soon gold will pay no attention to what the US$ is doing as people begin to lose faith in the US$. It is happening: it will just greatly accelerate one day.

Written by Ernie · Filed Under Daily Commentary

FROM RUNNING…..TO FLYING!

January 5, 2005

Yesterday the operative word was running, so let’s progress on to flying today. If anything has dominated the news recently, other than Howard Dean gathering endorsements, it’s the number of flights being cancelled from London, Paris, and Mexico.

And what’s up with that flight (233?)from London that keeps getting cancelled or delayed? I think there have been a half dozen cancellations of that flight alone. It seems to me that the terrorists would get a ‘clue’ that they need to take another flight.

When you get down to it, it’s not the ticket counter that I’m worried about but the “ramp” area. You know, that area where the luggage is loaded, cargo is handled, and where mechanics come and go. It didn’t get big play, but twice in the last two weeks, a dead person has been found in the wheel compartment of one of our planes: dead.

Only someone really missing a few screws would hop inside the wheel-well and think they could survive a no oxygen, sub-zero temperature that one finds at 33,000 ft. But that’s not the point. The point is that if a ‘person’ can stow-away, why can’t a person just put a bomb in that wheel-well instead?

Tom Ridge got headlines Monday by beginning the finger printing, picture taking procedure in Atlanta. While we’re making progress in the ‘front-office’, I’m afraid we’ve left the back door open. Flying is still a very vulnerable area for our homeland security.

Written by Ernie · Filed Under Daily Commentary

OFF AND RUNNING …& RUNNING!

January 4, 2005

Everywhere you look things are off an running, and I mean RUNNING. For the first full week, the stock market took off like a rocket posting a triple digit gain yesterday. And I had to ask myself how and why?

You see GOLD took off running and running as well, up more than $8 an ounce, and moving into a 15 year high. You see when gold is running up as it is, the gods are saying there is trouble in River City.

Add to that the fact that the US$ is running, and running DOWN. And you have to ask yourself again, what’s up with the stock market? How can the dollar be diving, and gold rocketing, and the stock market rising triple digits? Oh well, a first day, a first week, does not make a year. Time will tell. Why worry.

Then there’s Howard Dean! He’s running and running, and running the rest of the Democratic presidential hopefuls off the track. Bill Bradley gave his nod to Howard this morning. I expect that before the month is out that you’ll see at least two of the current crop give it up. Soon thereafter, the race could be down to just two or three.

So, we’re off and running in 2004. It’s just day #6 but we’re just like Las Vegas: we’ve got ACTION!

Written by Ernie · Filed Under Daily Commentary

SCRATCH MY BACK AND…..?

January 2, 2005

I bet you can finish the phrase. If you can then you know what’s going on in the world. Let’s look at something that’s very near and dear to us: America’s #1 position in the world.

America is the cornerstone, the king of the hill, and the greatest power on earth. We hold that position because we spend more money on our military than all the other nations of the world combined! We could stop there except we need to ask ourselves where all that money comes from to pay for it all. The US$ is also the worlds reserve currency.

We can run up a half trillion dollar annual trade deficit and pay it off by simply running our printing presses faster. So, how’d we get here, and more importantly, how long can we keep this ‘game’ going?

We can play the ‘game’ as long as China wants to play it. China loves to sell to Wal-Mart (as an example) 85% of their products. China agrees to take our worthless US$’s as long as we continue to buy their products. If we ever stop buying (why would we?), or if China decides it no longer wants to keep taking our fiat, worthless paper, the game is over!

But, that’s down the road a ways. For now, everyone is content to play the game of, “You scratch my back and I’ll scratch yours”.

Written by Ernie · Filed Under Daily Commentary

DAY THREE

January 1, 2005

I don’t know about you but I am still trying to get adjusted to some normal routine. For some reason this holiday season seemed more cluttered, full of events, and elongated.

Maybe things will even out come Monday. For most Americans, it takes until the first credit cards start coming in to get back into the normal mode: the state of worry.

Ah, but there is more to life than worry isn’t there. Isn’t there? Well, we did make it through the terrorist laden holidays without a hitch, unless yu were flying. Yes, the war is still on-going but that has become normal these days any way.

I know what’s missing. It’s exercise, diet, and working some of those holiday pounds off. Hey, maybe we just need to get serious about some new year’s resolutions. Yeah, that’ll do the trick. And then after ‘day three’ we can get a little more serious about life.

Written by Ernie · Filed Under Daily Commentary