Thursday, January 31, 2008

Bring it on Obama Girls

He’s gonna need her and her.

Hope is better than Billary – Just say NO – to Bill and Hillary Bush!

And you couldn’t possibly vote for McCain?!  If he wasn’t running for President, he’d be dead by now.  71 years old!?  WTF!?

Isn’t it time for a President close to your own age (he’s 46; I’m 45)?

Sometimes one thing is enough…  To my knowledge, no majority white country has ever elected a true minority President:

Black = 12%

Woman = 53%

Do the math!  One is a true minority and the other is just more of the same, regardless of gender.

Wednesday, January 23, 2008

A Worker's Bill of Rights

Now that the U.S. economy verges on recession, if not depression, through the sheer stupidity and greed of a minority with too much influence over international monetary and investment policy, I have proffered a way forward

Despite what corporate media says, our problem is not foreign competition.  It is not anti-competitiveness in developed versus developing nations.  It is not excessive taxation.  Instead, the real problems are excess concentration of corporate power, secrecy and unjustifiable wage inequity leading to near total worker disenfranchisement.

Thus, in an effort to fix our American economy, as a worker, I submit the following principles essential to remaking the American economy by providing real equity to workers.

It is not the Federal Reserve's responsibility to "insure" wealth by sustaining a floor under the stock market. 

In a market economy, equities must be subject to the same ebb and flow that workers encounter in their employment status, wages, benefits and household budgets.  When wrong decisions are made and stupid business practices ensue -- e.g. sub-prime lending crisis, bogus debt ratings and absurd underestimation of risk in credit default swaps -- then investors must suffer fairly.  This principle includes consistent rates of taxation for all income regardless of its source.  How one earns income, actively through wages or passively through investments, is irrelevant.  Income should be taxed gradually and consistently to fund basic government services (courts, police, defense, transportation, education and healthcare) deemed essential to enforcement of contracts which promotes new investment that is necessary to raise living standards.

Every salary in America should be public, visible at job sites and available online.

Secrecy is anathema to both Democracy and sound economics.  Every worker deserves the right to know explicitly his rank, relevance and contribution to his employer's bottom line.  Without openness and honesty, worker mobility is tacitly restricted and disincentivized.  Without a public scale to measure upward mobility as a fair reward for effort and merit, our economy has become weak and exploitive.

No "boss" should earn more than 1000 times an average worker's salary.

If a CEO or other leader wishes to earn more, then quite obviously that person must increase profits and payroll collectively in order to deserve more.  It is obvious, for example, that the top 1000 corporations in America could lose their CEOs tomorrow, continue to function, and perhaps thrive.  By contrast, if those same companies lost their workers overnight, they would immediately cease to exist.  Thus, in the larger context, workers are more valuable than leaders and as such more deserving of increased compensation as fair reward for top or bottom line growth.

Stock options should be provided to every employee or not at all.

For at least two decades, excess weighting of compensation at the top through stock options has distorted business practices to emphasize increasing stock prices, in many cases by diverting profits -- that might otherwise raise wages and reward investors -- to buy back company stock to increase or sustain its price.  This lack of foresight has lowered living standards for workers relative to inflation even as overall business profits previously soared.

But today it is obvious that such short sighted financial engineering has failed.  For example, several renowned Wall Street investment banks, having existed and mostly profited for nearly a century, lost 25% of book value in 2007.  Such catastrophic mismanagement and inability to perceive risk would not have occurred had these businesses concentrated less on transaction fees, quarterly profits and annual bonuses and more on prudence, sustainable investments and long term growth -- growth of the kind their advertisements promote to potential investors and clients.

Private funding of political campaigns has corrupted American Democracy. 

Under the U.S. Constitution every citizen has a legal right to petition the government.  But corporations are not individual citizens.  Companies are entitled to certain individualized rights under contract law, but this should not be equated with citizen status.  Through private interference, American representative democracy has become too expensive for the average citizen to meaningfully participate or even to be heard.  Thus petitioner's rights have essentially been auctioned -- for sale to the highest bidder.  This is not Democracy.  At this stage of advanced corruption, only public funding of political campaigns with free media access for candidates can insure a fair and democratic hearing of all ideas, ideals and candidates -- not just those deemed acceptable to the rich and the powerful.

Inheritance is un-Democratic.

Inheritance has led to a modern economic equivalent of Feudalism because it creates irrevocable title in much the same way as Feudal titles were once transferred by birth prior to the signing of the Magna Carta.  If you are talented, smart or lucky enough to become rich in America, upon your death, your wealth should not be an irrevocable title to your heirs.  Entitlements diminish creativity, productivity and desire to work under an economic system built on success through effort not entitlement.  In much the same way as private campaign financing, familial wealth transfer unbalances Democracy which in turn undermines confidence and diminishes productivity among the vast disinherited majority.  A 100% inheritance tax could supplant many or all essential infrastructure shortfalls in every budget for every Federal, State and Local government agency. 

Alternatively, at or before death, individual wealth could be entrusted to the greater public good through not-for-profit entities (e.g. The Bill and Melinda Gates Foundation).  But it should no longer be unproductively transferred to heirs having nothing to do with earning it.

 

Absent a reinvigoration of the American economy through fair, logical and self-evident principles such as these, our Capitalist system is likely to end the way all top-down, Soviet style, spirit and innovation crushing (you pretend to pay us and we'll pretend to work) political-economic systems end -- in chaos, war and collapse.

Tuesday, January 22, 2008

PANIC

Too many dollars.  Too many wars.  Too many idiots.

Heading for yen/dollar parity.  100 yen = $1. 

Nice work Shrub. 

You've killed us all!

Sunday, January 20, 2008

My dog is smarter than I am...

Hillary has won again!

And on the economic front, we have, from John Mauldin’s most recent accredited investor email…

Credit Default Swaps: The Continuing Crisis

As noted above, I said three weeks ago that the big story for 2008 would be the counter-party risk for credit default swaps. That story is coming faster and larger than I thought.  Bill Gross of Pimco suggests that the ultimate cost could be another $250 billion dollars on top of the $250-plus billion in subprime losses. That means we have only seen the tip of the iceberg in write-offs in the financial sector.”

Now, remember when I said several months back (gut feeling based on unprincipled and unsound lending practiced beginning 2003) that (same amount) $0.5T would be lost? Please note now how many “experts” presently seem to agree with this half-trillion number.

Also note that Mauldin seems to have abandoned his “muddle through economy" view for the foreseeable future and this week displayed a 10 year s&p500 chart –obvious implication being that we are just now entering another bear market cycle similar to the 2001-2003 period (at least). Many perma-bears (e.g. David Tice) have argued we began a secular bear in 1999-2000 and that 2003-2007 was a mere upward blip on the radar. The basic argument here can best be summed up by paraphrasing a commentator I overheard on CNBC on last Friday “… when virtually all world markets come off 75 years highs, it’s hard to imagine where the bottom is.

But, as I have said on many occasions in the past, the “powers that be” (Bush/Greenspan/Iraq War/Iran War?) seem invariably to “fix” these seemingly worst-case scenarios – though few seem to realize (or care) that the “fix” is a sham (e.g. stock market goes up 20% -- but food and energy costs rise 40% and US dollar falls 25%...).

Such is the “powers that be” response to what can best be described as the “moral hazards” of economics – e.g. simply compare the economic policies of e.g. FDR (print money and “create” jobs until the presses run dry; then run them until they disintegrate, if you have to; and BTW get into a huge war for the future of civilization so we have something to do with all that stuff) versus Hoover (most people are fools; let them suffer! and may the strongest survive).

I have always generally been in the Hoover camp, unless of course I become un/under-employed. Unfortunately today, under stagflation, we are all under-employed (except for maybe 1% - e.g. Warren Buffet). So in short the “trickle-down” or "supply-side" argument that attempts to invert the basic law of supply and demand -- that believes that supply creates demand; that ambition is always good; and that progress has no consequences -- seems to once again, if only temporarily, screwed its pooch.  But that isn’t to say they won’t keep trying -- Hillary and Barak included.  After all, suffering (which I would instead describe as as self/societal restraint but which in American middle class terms means not having a new V8 Cadillac to blow down the road at 100MPH) never works politically in America.

So where to from here…

Factors leading to deflationary economic collapse

· Aging human population in developed world

· New technology may one day solve the fossil fuel conundrum.

· Young segment of world is largely Muslim – i.e. not especially friendly to US, given the history of its foreign policy.

· Huge, seemingly intractable social liabilities ($51T): Medicare, SSA, $9T current account deficit – at some point debt must be paid down. Therefore it will be paid down. Therefore spending will collapse.

Factors leading to inflationary economic collapse

· Inflation is a deceptive form of economic collapse, especially on a day-to-day basis – but in the end, after all: the icecaps are melting; 1B people are without potable water, not to mention food; etc. etc. etc.

· Younger population in emerging world begins to apply (already happening obviously) US/western economic ideals to “liberate” individual greed and consumptive excess which leads to innovation (more greed) and economic growth.

· Rising commodity prices: peak oil leads to peak h2o which leads to peak food which leads to no peak, ever in global instability.

Personally I favor crushing deflation and economic slowdown/collapse (but obviously not anarchy) as IMO the only thing that could help now is a massive, massive slowdown causing each of us to rethink what it means to be a human being and how to go about becoming enlightened, self-contained and localized instead of a globalized destroyer/consumer. Primarily this is because I have spent many years saving dollars and hope one day not to be proven the chump that his practice has proven me thus far. (What worked for your father, and his father, unfortunately, may not work for you at all).

The alternative (inflationary collapse) IMO redounds to a world that undoubtedly looks much like Soylent Green.

In the end, as I have said before, I believe it will be Soylent Green that wins. After all, humans are animals – and it is my experience that as such, invariably, the rules of the jungle, or the barnyard, or both take precedence. In other words, reason fails unless no stomach is empty and each is self-aware, world-aware and willing to sacrifice for the whole and above the self.  And honestly, after more than 2000 years of Christian progress, what are the chances of that?  Who among us chooses to be the next martyr in the cause of human enlightenment -- the next Jesus or Che or Tim Treadwell?  Not me.  Play the game.  Smile as you kill.  A Working Class Hero is something to be.

Meanwhile, I agree with Mauldin that one must go long into (brief, explosive) rallies, then take profit and short ASAP thereafter as rallies are not likely sustained (except through stupidity – which can never be predicted). In short, there seems likely to be more profit short (checkout short interest on financials during 2007) than long in 2008 (possibly through 2010/11), depending on the fixes our great and glorious leaders provide, coupled with the continuing delusions and brute stupidity of the herd.

Money is surely the root of all evil.  But I was born into this stock yard and am slowly drowning in my feces and that of others.  My bunker remains unfinished.  My funds must be preserved and grown if possible.  But the end is inevitable.  And at moments like this I marvel at how stupid I am for caring; for dreaming of the kind of world envisioned by Jesus, Che or Tim Treadwell, when I could be rubbing my genitals instead.  Even my dog is smarter than me.

Wednesday, January 16, 2008

How to get aHEAD in the GOP

OK.  I can't hold it any longer.  WTF is that bulge on the side of John McCain's head?!

I can't help but think it's an alien life form.

No, wait, it's the ghost of Ronald Reagan. 

And one day soon that bulge is going to grow a little bitty mouth.  And the little bitty mouth is going to start talking... "Tax cuts for the rich!"  "Your CEO needs another pay raise!"  "OIL is good!"  "WAR is good!"  "Trickle down... trickle down..."

And then America is going to vote for John McCain.

Friday, January 11, 2008

IT'S OVER AND WE LOST!

No matter what anyone thinks or anyone says -- STOCKS HAVE GOT TO COME DOWN FROM HERE. 

There is just no way to undermine the entire U.S. (world) banking/financial system for the next 1-3 years while the Bush/Greenspan legacy plays out and have it somehow NOT materially affect every company, every government and every single person on this planet.  P/E doesn't work when E <= 0 (division by zero) or when E can’t buy anything you really need (food, oil, open heart surgery, etc.).

Osama Bin Laden has proven to be the most brilliant strategist of the 21st century. 

Look at your paycheck

Look at your financial future

Look at the price of a barrel of oil. 

Look at the price of an ounce of gold

Pray you never get sick.

By any objective analysis, Bin Laden has played Bush, Congress, and every one of us for chumps... 

We might have won the Cold War (though today I look at the Russian economy and seriously wonder) but we damn sure LOST the war on terror!

Friday, January 04, 2008

SHAZAM!

Funniest newspaper headline of the day: SHAZAM! (Boston Herald) printed over a picture of Mike Huckabee after his Iowa Republican caucus win.

Now for some of you maybe a Gomer Pyle reference is before your time… But when I heard the story on CNBC this morning -- I honestly had to laugh.   How incredibly disrespectful is that?  At least Sex On The City (NY Post headline describing official NY City security details for Rudy’s mistress) was true.

It’s amazing how much Republican elites hate Huckabee (Ron Paul too for that matter), even as he even espouses Steve Forbes' absurdly oxymoronic fair/flat/consumption tax!?  So if their core hates Huckabee that much, then he's OK by me.

Reagan after all, for all of his legacy's working class persecution, always seemed a generally decent human being.  I see Huckabee from that same "America's simplest generation" mold.  And while I'll never understand that world view... Compared to Guiliani?  Compared to "a noun, a verb and 911?" (Joe Biden). 

Compared to a hedge-fund robot like Mitt Romney?  As Huckabee says about Romney, "...he doesn't look like a guy you work with.  He looks like the the guy that laid you off!"

Compared to Droopy, the sad, tired, old neo-clown, John McCain?  McCain!?  WTF!?  Should I seriously care that a guy was a POW in 20,000 BC?  Who needs another 70-something President napping during CIA security briefs with titles like “Bin Laden determined to attack U.S. -- WITH AIRPLANES!”  "HEY!"  "WAKE UP JOHN!"  "America is under attack!"  Just when you thought we couldn't possibly do worse than My Pet Goat!  PLEASE!  NO!  John McCain's moment -- was 30 years ago.

But seeing America elect a black first family -- PRICELESS! I just hope they don't have to spend the rest of their lives as zoo animals in bullet-proof enclosures.  Seriously, it really does give me hope!  If America can elect a hopeful American -- and not assassinate him -- over Bill and Hillary Bush, then I can at least rethink my default position on it sucking so much!