Archive for October, 2009

Is Wall Street right? Are things really getting better?

Thursday, October 22nd, 2009

Wall Street might think its right, but its really turning left, and a left turn  isn’t good for Capitalism.

Our investments are doing very well !

The Dow is currently holding above 10000.

And this is a  great achievement when you compare it to last March, but very sobering when you realise that this is where it was in the Spring of 1999. This kind of progress could drive a sober person to drink.

When you factor in the fact that the buying power of the dollar is only 70-75% of what it was in 1999,  a case could be made for investors being down 25-30% during the last decade.

“Hot Dog! Are we running backwards, or what!”

In real terms, almost 15% of us  are unemployed, and home prices continue to fall .

Foreclosures are increasing at close to a  5% rate, and the numbers are growing despite various government sponsored and ineptly initiated bailout plans.

What will the future bring? Are things really improving, or is this a sham perpetrated with mirrors.

The Obama presidency has hit some serious bumps in the road, and his future as a viable President is being affected.

A case in point is the Governors race in New Jersey.New Jersey is a traditionally very blue state, and one that Obama carried by better than 15% .

Despite a highly  uninspired campaign, Chris Christie the Republican candidate is running neck and neck with  Governor Corazine.

The panic in the Democratic ranks is evident by the parade of heavy hitters arriving in New Jersey to try and boost Corazines reelection chances.

In the last week, we have seen Vice President Biden, Former President Bill Clinton, and now the President himself, stump the state in an attempt to engender excitement for Corazine, yet the polls continue to signal a dead heat.

This is not a good omen .

A Democratic loss, or even a close win is a repudiation of the Obama policies, and an abandon ship warning from the moderates in his party.

Obama is stuck in a quandary. All the money spent, and the promises made, leave his presidency in a very difficult position.

Going forward is impossible and going backward is unthinkable.

He can’t back away from his promises to rescue the U S economy, if he does the whole country will loose the glow of hero worship, and the historic election will turn into quite a different meaning.

On the other hand, going forward with his expensive rescue and stimulus programs will take $ trillions additional. Since he doesn’t have the money, he will have to borrow or print more .

He has already used up half the trees in North America printing all this money so far. Who knows how many more trees will have to be sacrificed to the voracious printing presses.

The best hope for a successful resolution for the President would be an economic recovery.This way Obama wouldn’t have to do anything, and he would be able to retain his mantle of invincibility.

That is not going to happen, no matter how much the media and the insiders try to run this rally.

“Why not?” You ask.

If you have followed my writings you already have the answer.

Our system is broken, the recovery is an illusion, and the reality is that we are headed into a much more serious recession/ depression.

The consumer credit economy is dead.

The banks aren’t lending to consumers, and the consumers don’t want to borrow anyway.

Consequently demand is shrinking.

Wall Street has managed to keep its rally going by posting higher profits , which they trumpet, yet lower gross sales, which they whisper.

They call it reduced overhead, but what they mean is employee layoffs, and shrinking benefits.

Rest assured, this recovery is a fraud, and the illusion for recovery is a sham.

The Lazy Little Squirrel who refused to gather nuts, a parable about incentives to work

Monday, October 19th, 2009

Stanley squirrel was enjoying his first summer.

He had learned to leap from tree to tree using the spring of the branch to launch himself to his next target.  The feeling of exhilaration as he flew through the air was liberating.

All the first year squirrels liked to play together, chasing butterflies, splashing through the shallow creek and sunning themselves in the warm summer sunshine.

The older squirrels cautioned the newlings, ” play is fine, but as squirrels, we all must spend our time gathering acorns and other nuts for the cold winter when food becomes scarce.  If we don’t work together, we will all go hungry.”

Stanley, being somewhat stubborn and simple-minded , rebelled against the elders.

” I live to play,” He said.  ” I don’t know what winter cold is, but I’m sure it can wait a few more days.  After all, we are young and healthy and food is very plentiful…Why worry?”

Stanley and his siblings resumed their play, pretending to not hear his mothers screech of anger.

Summer passed quickly and the early fall brought cooler nights, but the days were  warm and the sun shone with a  brilliant clarity. Stanley continued to ignore the admonishment of the adults, playing and sleeping instead of gathering nuts for the winter.

One by one, all of his playmates left to join the rest of the squirrels in preparation for the coming season.

Finally it was only Stanley, and his special friend, bushy tailed, Stephanie.

” Look at all those fraidysquirrel’s, running to gather nuts” said Stanley.” We squirrels take care of each other. If we need food, the others will share their wealth,meanwhile we can play.”

Stephanie flicked her tail in his face and sprang away, with Stanley in hot pursuit.

Time passed, and late Fall turned into early Winter.

 The first snowfall of the season hit the forest. Everything was covered with a thin white blanket, and the crystals shone brightly in the morning sun.

Stanley and Stephanie sat on a bare branch of their favorite Oak tree. ” The others are still looking for food” said Stephanie, her black eyes wide with alarm.

“Don’t worry”, said Stanley,” we will look for food tomorrow.In the mean time,  the others will share their wealth with us  if we need it. ”

“Tag you’re it!” he shouted,  and sprang from the branch, sending a shower of snow to the ground below.

A few days later, Winter set in with a vengeance. The snow fell for 2 days, and the winds blew huge drifts against the trunks of the trees.

” I’m hungry ,” whined Stephanie.” All the nuts and berries are gone. What will we eat.”

 Stanley looked around.” Yes I’m hungry too. Lets go ask the others to share their wealth.”

They scampered off and went to see the Top Squirrel and the other elders.

” Can we please have something to eat.” They asked in unison.” We are hungry, and there is no food to be found in the forest.”

The Top Squirrel looked at them sadly, and shook his head.” We have been working all summer and all fall to gather enough food to keep us alive during the long cold winter.”

 He stamped his front paw.” That’s what squirrels do. We work as a community to provide the food to keep us alive. Everyone must contribute or we all die.”

Stanley hung his head.” We didn’t know..” His dark eyes opened wide.” I always thought we were part of a community of squirrels.

All for one and one for all.

From each according to his means to each according to his needs.

Share and share alike

We should be be taken care of by the Community of Squirrels.”

The Top Squirrel shook his head. His eyes blazed with anger.” By ignoring  our warnings, and playing instead of working, you have jeopardised our community.

Everyone must work together for all to survive.

I’m sorry. You and Stephanie must find your own food.

We have only enough to feed those who helped gather the food. If we feed you we all starve. ”

THE MORAL of the STORY: Redistribution of wealth only works if there is some incentive to contribute to the common good.

The Straw That Broke the Camel’s Back, a Parable about An Economy in Distress

Wednesday, October 14th, 2009

There is an old Middle Eastern tale about a poor farmer.

He lived in a  mud and straw hut , with his wife and three teenage daughters.

He owned 3 old camels .

Twice a year, at the Spring and Fall solstice,  he would pack the camels with large bags of straw and wheat.

He would kiss his wife , hug his three daughters, and then he would set off  for the 10 hour trek to the market at Dandalia.

This was a very important trip for the poor farmer, who  hoped to sell his produce and earn enough money to keep his family alive for the next 6 months.

Upon arriving in Dandalia , he would join with farmers from all over the Province . He would then set up his assigned booth, and displaying his wares.

The market would last for two full days,.The crowds were boisterous and the din was deafening. By the end of the second day, the farmer would count up his meager earnings, repack the now  empty hemp  sacks, and  tie his three camels into a caravan.

The return trip home was always much quicker, because he and Gabor, his young helper could ride the tired old camels.

One morning the farmer awoke and  found his two neighbors waiting for him in the front yard.

They offered the farmer  bags of straw as additional produce  to bring to market.He could keep 50% of the profits for his trouble.

The farmer was excited. With the extra money he could keep his family secure and comfortable.

The day before Spring Solstice was  cool, with a brisk gusty wind.

The farmer brought out the three old camels, and proceeded to load his bags of straw,

He looked at the camels. They were  pretty well loaded, but he was determined to pick up the additional freight from his neighbors.

He arrived at Abmar’s yard and found 8 additional bags waiting for him.

The camels were  loaded with much argument and posturing.

The farmer and the heavily burdened camels walked to  Fardeneen’s yard

There he found Fardeen and five additional bags of straw.

Loading the camels required a ladder, a makeshift pulley assembly and also a great deal of  discussion.

Each camel in turn staggered as the additional burdem was placed on its back. Their knees trembled, and they shifted unsteadily.

“Well,” said the farmer,” I guess I’ll be on my way.” He shook his head,” I don’t think these camels could carry another ounce of freight.”

Just then, Fardeen’s 12 year old daughter, came running out of the house. She was holding a large straw doll wrapped in a scrap of pale grey cloth. It was 2 feet tall, and had been made by weaving stalks of straw together, then dyed and clothed.

“Daddy, Daddy” she gasped, her arms wrapped around the doll’s body to hold it steady. ” You promised I could sell Esmerelda at the Solstice Market. I need the money to buy cloth for my new clothes.Mother says I am turning into a little woman, and need larger more appropriate dresses.”

He turned to the farmer,” Well ? Will you take  the doll and sell it for my Mindlee?”

The farmer looked at the three ,seemingly unsteady , overburdned camels.” I’m afraid to add any further burder to these camels. They are important to feed my family. I don’t think they can carry another thing.”

Fardeen looked at the farmer. “Come on Hamoken, share the wealth. Give my little girl a chance to get some pretty cloth for dresses. We can’t afford the cloth unless she sells the doll.”

He shook his head. ” I don’t want to disappoint  you but these camels are carrying the burden for our entire community. Let someone else share his wealth. They can’t carry any additional burden.They’ll break down.”

The farmer looked up, and spied the local tax collector approaching from the East.

Tax collector Sninndl looked at farmer Hamoken and smiled. ” I am here on the Governors business. As I’m sure you know, the irrigation project failed due to sabotage from our enemies. We are now  faced with many new poor and starving residents.

It is the Governor’s decree, that a 25% tax will be placed on all new business above last years totals.

 New business is to buy you a  luxury .That new wealth should be shared with those citizens who have the need.”

The farmer looked distressed.” After the extra cost for a slower trip and paying for the extra market space necessary, it will not be worth anything to carry all this extra weight.”

The tax collector sneered.” The Governor has already been told of this extra tax on your load in our report to his scribes. You will have to carry the load to earn the money to pay the tax, even if it does not pay you very much.”

The farmer’s shoulders sagged. He knew he was stuck. He was being forced to do all this extra work .

He turned to Mindlee and gave her a half smile.” Come on, give me your straw man, if we can carry all these taxes for government giveaways, we can carry a little more straw. After all, straw is so lite.”

He took the straw doll, and placed it carefully on  top of the lead camel’s pile of straw filled bags.

The camel turned its head toward the farmer, and gave him a long sad look.

They heard a crack, the camels back broke, and it keeled over…dead.

The moral of the story.Too much taxation is a backbreaker


One World Economy Who’s World will it be?

Friday, October 9th, 2009

      Hi. I’m Charlie Champion and I am coming to you as a write in candidate for President.

     I have chosen to run as a write in candidate for President because I have grown to distrust out political system.

      It feels like there is a very sneaky , subversive  agenda  being fostered on the American public.

     The Socialization of our society is in full swing, robbing the individual of incentive to achieve and create.

     With the development of International corporations, and  the globalization of  wealth and production,  our leaders, both Republicrats and Demopublicans  have been leading us on a long sloping path towards a One world economy.

      Out sourcing, open borders, NAFTA, CAFTA, the elimination of duty on many imports, the clues are everywhere.. The money funding so many of our politicians   and their political campaigns appears to pour in from foreign sources.

     Our major industries are being nationalized. The banks, the Auto manufacturers, now they are after health care .

     The ascendancy of socialism has empowered the labor unions, and their loyalty transcends borders.

     If not a world economy, then certainly a North American Union, possibly Western Hemisphere.

    International corporations survive and prosper but how about us?

       Natural resources from Canada, manufacturing with cheap labor in Mexico or Central America is great for corporate profits and wealthy  CEO’s, but what happens to  your Everyman USA citizens? What do we get out of a World wide economy?

      Nothing good!!!  Very little is manufactured here anymore. We are being turned into a nation of  working drones ..Our freedoms are being eroded, and  our living standards are dropping , while   World leadership and World Economic Emperors of Industry get richer and more powerful.
         Unemployment is growing, our home values are crashing, yet our leaders point to an artificially inflated Stock Market as a sign that all is getting better .

     The best Nation in history is being taken away from us.


     We are being turned into a Nation of  slaves many working from paycheck to paycheck. We are becoming mindless workers!


     I DON’T THINK SO!!! I’m no DRONE!!!!


     I’m mad as Hell at what I see coming !! Enough is enough.

    Vote for Charlie Champion for President . This insidious plot must be thwarted.

    Free enterprise not socialism.

     America the Beautiful.

Seeing the Beauty in Nature Helps Define the Soul of Man

Wednesday, October 7th, 2009

 Ever since the day when our  first primitive Human ancestors stood up on two legs and surveyed  the world which would one day belong to His descendants,  Man has been struggling to control  his  environment.      

    Nature has ever been a source of conflict and danger.

    Competition with other animals for  food was the key to avoiding extinction.

    To eat and not be eaten, has always been a primary rule for survival.         

     Becoming a skilled hunter was important.  

     Developing the skills to avoid becoming the prey was a good idea. Life is much easier if you  live at the top of the food chain.        

     Humanity has learned to insulate itself from some of the ravages of nature.

     Animal skins, and other  types of clothing. helped Man to adapt to and survive more extremes of nature.          

     The Human Animal has always been inventive, utilizing the bounty of Nature to elevate Himself  above the other competing species that inhabit his world .

     Caves and trees as safe havens for shelter. 

     Bodies of water as  boundry’s and barriers for protection.

     Rivers as a means of transportation.   

     Sticks and rocks made effective weapons in the hands of an upright biped with a moveable  thumb     

     As human brain capacity evolved, humanity became the dominant species  on the Planet and was able to excert more and more control of  His environment.          

     The evolution of man’s soul and the emergence of his consciousness saw Man begin to develop an awareness of himself as an individual  entity, enabling him to relate to his peers as well as to the natural environment which was his home.

     Having evolved from nature, Man must learn to live in harmony with his world.

     Domination is a responsibility as well as a privilidge.

A stock market rally like no other

Monday, October 5th, 2009

The current 7 month rally on Wall Street is unusual for a number of reasons, first and foremost being the lack of statistical relevance.

The underlying fundementals for  publicly traded companies generally provides a reality check that engenders a modicum of sanity to a roaring bull market.

Earnings and the P/E ratio(Price easnings ratio) historically give a focal point for evaluating a reasonable trading range for a companies stock.

This is not currently the case. Most companies have improved their balance sheets by reducing overhead, shedding employees, and reducing inventory.

These factors are admirable ,as corporate America attempts to weather the perfect storm of a heavy recession, an ultra left wing economic policy, real unemployment over 17%, and an arguably ineffective policy of squandered stimulus and corporate bail outs.

“Then why”, you might ask ,” is the market still going strong?”

This rally has no legs to keep it running.

Observations and interaction with the public has made me suspect that the retail public has not been the fuel for this rally.

This suspicion was recently confirmed by a report released by TrimTabs.

In the last 6 months only $ 2.5 billion has been placed into equity mutual funds, while almost 12 times that amount has gone into bond funds, an indication of conservative saving not speculative risks.

The U S investor has watched this rally rather being the fuel for its excess.

Who’s  behind the speculative excess which has seen this unworthy market gain over 50% from its march lows, defying all underlying realities.

The answer has to be hedge funds. institutional speculators, the investment bankers with their TARP money and access to treasury funding as newly accredited banks.

These Go Go managers have a different perspective on the rally.

If indeed the rally turns out to be real, and they miss it, their jobs and reputations are toast.

If the rally fizzles and fails, they are risking someone else’s money.

The risk reward is in favor of maintaining the speculative push.

The danger in this type of speculation is  extreme.

As they jumped into the rise, they will be willing to bail at the first sign of a negative reality.

We saw a free fall market last Fall.

Let unemployment continue to increase.

Let the next round of Prime Adjustable Rate mortgages begin to default.

Let the commercial real estate market crash due to the flood of small and medium sized companies being forced to close.

Let the perfect storm flood the boat.

You have heard the phrase , sink like a rock.

Let the little investor BEWARE.