So What is the Good News?

In the post below, I mentioned that we needed some good economic news this week. I got a very interesting comment from David Schantz who writes A Republic, if you can keep it. (If you don't go to his blog on Sunday's for the Question of the Week, you should).

I'm going to print the comment here because I think it exemplifies one of the basic points that I refer to from time to time which is that this economic expantion is not benfiting the average American.

I guess this would be good news. I heard from an old friend a few days ago, I hadn't talked to him in over twenty years. He is now buying and selling (high$) homes in the Daytona Beach, Florida area. Sounded to me like he was doing very well for himself. He said that I have a place to stay anytime I'd like to come for a visit.Sounds like a plan to me.When we were talking it was 80 degrees in Florida, it's suposed to snow in Missouri tomorrow. All I need to do is come up with the needed gas money to drive a 1993 half ton Chevy pickup (4x4) from Missouri to Florida.

Now I don't mean to say that David is an average person.... not by a long shot. But as you can see from the post, he is an American with an average income. He works hard to support his family. His friend on the other hand, has been making huge cash, and even if the economy takes a turn for the worse, his friend will still be sitting pretty. David, on the other hand, is likely to have his hours cut, or maybe he will even lose his job if the economy takes a sudden turn for the worse. But hey, at least his rich friend will put him up for a good time in Daytona Beach. I guess those of us who aren't rich can expect that our rich friends will help us out when the time comes..... but I wouldn't count on it.

So, did we get any good news this week so far? Well, Q3 GDP was revised upwards to 2.2% from an initial reading of 1.6%. That is good news (if you own stocks). Bernanke made a very upbeat report on Tuesday to the Italian American Association about the health of the economy, assuring all the rich people at the luncheon not to worry about the slowing growth because it is a natural for it to slow in this stage of an economic recovery. However, Bernanke warned that inflation is still a concern.

Consumers however don't seem to share Bernanke's optimistic view. Although new home sales came in higher than expected, prices are dropping rapidly. The drop in prices is what is fueling increased sales, and the real price drop (as Bernanke explained) is much more than the numbers indicate because sweateners offerered by the builders are not included in the price data. Builders are offering more free items than ever before, but there is no way to measure that on an official basis. Furthermore, inventories remain quite high and cancellations are not added into the inventory numbers.

Sales of durable goods were down nearly 9% in October, and consumer sentiment is softening accross the board. Today's data on initial jobless claims sent up some red flags as well. While the market expected claims to come down to about 312K from last week's 321K, the number came in at 357K and last week's number was revised slightly upward to 323K. This is two weeks in a row when actual jobless claims were higher than expected. If we get a similar surprise next Thursday, expect the mother of all data (Non-Farm Payrolls) to come in well under the expected 145K on Friday next.

The market had expected the PCE core deflator (the Fed's favorite measure of inflation) to ease slightly to a 2.3% year on year pace, but it came in the same as last month at 2.4%. Thus, as the job market tightens, and consumption eases, inflation remains the same. To make matters worse, the Chigago PMI (a regional manufacturing survey) came in well under expectations at 49.9. This is crucial because the 50 level means economic stagnation. All eyes will be on the nation-wide ISM number which is released tomorrow. The market is now gearing for a disappointment because of the Chicago data coming in below the Mason-Dixon line of 50 (if only just) for the first time in almost 4 years.

So as a result, the dollar has lost another 1.5 cents to the Euro. It will now cost you $1.3250 to buy one Euro, and $1.97 to buy one U.K. Pound (a 14 year high). The dollar index is down almost 10% in one year, and the dollar has lost 6 cents to the Euro in one month. It looks like we are racing to the all time high (or low if you are an American) of $1.3667 with reckless abandon. The Dow also took a fairly sharp drop on the Chicago PMI news. If the nationwide ISM index number reflects the Chicago reading from today, expect further losses for both the dollar and the Dow.

Furthermore, the ten year note dropped below 4.5% which can not be emphasised enough. If this closes the week below 4.5% the Fed is in quite a spot. The inversion of the yield curve is now at .75% and despite all the Fed's warnings to the contrary, the market still believes that the Fed will lower rates soon. However, without some relief from the inflation data, this will be impossible.

And last but certainly not least, oil has popped back up above $63 on news of a sharp drop in gasoline and heating oil inventories. A cold winter could put further upward pressure on oil prices which will further drive inflation.

Put simply, despite evidence of a slowing economy and a weakening housing market, the Fed will be unable to reduce lending rates, as the market expects it to, due to inflation pressures. As it becomes clear that the Fed will not cut rates, there will be serious fallout for the equities market and the housing industry. Both the Fed futures market and the Bond market expect a rate cut, and in fact more than one. I can't imagine that I am smarter that the market, but I just don't see how the Fed can justify a rate cut until inflation pressures start to ease.

What am I missing here?

Back to Basics

As I am feeling quite uninspired to write, I am going to report on some money matters.

While most Americans were eating turkey last Thursday, their currency was evaporating. The dollar is down 2 to 3% accross the board, and it will now cost you over $1.31 to buy one Euro. This is a level that has only been seen once before for about 6 months at the end of 2004 and beginning of 2005. The EUR/USD pair had been trading in a $1.25 to $1.2950 range for nearly six months. Fortunes had been lost on option expiries that predicted a break of the psychological $1.30 mark a couple of months ago, and just when the markets had given up on a break of $1.30, the dollar took a major downturn.

Light trading over the Thanksgiving holiday was partially to blame, but more importantly the drastic drop in housing starts and permits are at fault.

The European Central Bank is having a bit of a hard time deciding what to do. On the one hand, a stronger Euro will ease inflation pressures as the cost of imports (especially energy) will drop for consumers. On the other hand, a strong currency puts pressure on the EU's export-led expantion. I agree with the analysts who now predict the ECB will raise rates to 3.5% by the end of the year and will then go on hold.

The Fed will now be pressured to raise rates as a weak dollar will increase inflation pressures. Oil will be very important to watch in the coming weeks. It has been pivoting at about $60 a barrel, but a weak dollar may pressure the upside. If the Fed is forced to raise rates, the already beleaguered housing sector (and the financial sector by proxy) will suffer further.

The Dow is down about 130 points in the first two hours of trading and as I mentioned in the link above, I think we will be happy to see the Dow stay above 12,000 by year end.

This is not the end of the world, but it is a concern and shows that fundamental weakness in the U.S. economy still presents problems and we are not out of the recession woods just yet. Data starts pouring out of the U.S. tomorrow and there will be an increased focus on the numbers as the markets decide whether to re-establish dollar positions or continue to short the dollar further into the abyss.

We could really use some good news.

On a Personal Note

Last weekend I decided to quit smoking pot. I don't know yet if that means for ever or for a week, but it just seemed like the time to make a change. So what is different? Not much really. Ironically, the things most people associate with pot smoking are now creaping into my life whereas before they were not a problem. Let's have a look.

I'm finding it a bit harder to concentrate and stay on task. I haven't been blogging much since I quit for two reasons. Firstly, the one I just stated, and secondly, I just don't seem to have any good ideas. I don't know if this has anything to do with quitting, but I do know that most of my ideas for stories have come to me under the influence. I liked to smoke, let an idea hit me and then roll with it. I found it easy to stay focused for a long period of time on one idea and give it the thought and work it deserved. Now, not only do I seem to lack any good ideas or angles, even when I do get one, my mind wanders away from it before I feel inspired to write anything about it.

I'm a bit more moody. I've always been fairly arrogant and rude and I found that pot helped me temper those qualities to a great extent. It tends to humble me and make me see the error of my ways. This week, however, I feel quite righteous even though in my heart I know that is not the case. I haven't blown up at anyone or anything like that, but the hypocricy that surrounds me (and the rest of us) seems much harder to bear.

I'm bored out of my mind. Pot tended to give me the sense that what I was doing was engaging and fun even if it was rather pedestrian. This week everything seems quite tedious and boring, unless I've had a few drinks.

So why did I quit? Well, I am quite familiar with addiction. I kicked a pretty serious speed habit in my mid teens and I also kicked a very serious cocaine habbit in my early twenties. With the speed, I felt like I couldn't function without it, and I didn't want to be a slave, so I quit. With cocaine, I finally succumbed to paranoia (which I had always thought was a sign of weak-mindedness in others) and I was convinced I was going to die of a heart attack. I never went to meetings or counceling for these addictions. People say it is rare that someone kicks these habbits without counceling or hospitalization or both and thus I have a lot of will power. To that I say, if I had so much will power, how did I let myself get addicted in the first place? Life is all about choices. If you get addicted to something you have no one to blame but yourself. If you want to quit, you have no one to turn to but yourself. It is all about choices.

So with the pot, although it wasn't messing up my life like the other two drugs had, I felt like I had become dependent on it. Addiction is much too strong a word as anyone who has actually been addicted to something can tell you. I don't believe it is possible to become addicted to marijuana, but it can become a crutch and a habbit. It can become something you turn to for satisfaction instead of the things in life that healthy people turn to (like friends and family for example). When I realized that I couldn't simply cut down, I knew it was time to quit.

Now I am curious to see if there will be any benefit. Will I be able to think more clearly? Will I perform better at my job? Will my interpersonal relationships improve? Honestly, I doubt it. The other time in my life when I smoked a lot was in college and I managed to get strait A's for the most part. There were even times I remeber (yes pot heads do remember things) trying in vain all night to put together a wealth of information into some comprehensible form and while sober I was unable to get the ideas to click. Then I would smoke and about a half an hour later everything would fall into place and I would go to sleep feeling confident. Then I would wake up in the morning, go to school and ace the test.

The point I'm trying to make is that smoking pot has never prevented me from learning or thinking: quite the opposite. What it has prevented me from doing is acting like an arrogant prick and a cynical, depressed, attention-span challenged alcoholic which seems to run in my family. I've always said I could quit whenever I wanted to and so as I tend to challenge most people to do, I'm putting my money where my mouth is.

I'll let you all know how things progress.

Angry Rant Aborted

I had half a mind to go off on an angry rant tonight.... half a mind.

Instead I'm going to widdle it down to a couple of basic points.

My right-wing readers believe I should be deathly afraid of terrorism. Well, I grew up in a time where mutually assured destruction was always just around the corner. I'm not talking about a couple of big buildings going down, or even a dirty bomb going off in a city. I'm talking about the end of the human race in a matter of hours.

I watched a movie depicting this event and I woke up in a bad mood. My aunt told me I was sentimental. Well forgive me for being sentimental about the destruction of my species. I'm sorry.

And so in 1984, Ronald Reagan was elected on a platform of building even more bombs and a simple question: are you better off now than you were four years ago?

For most, the answer was yes. The oil shock and recession was over, and the cocaine economy was in full swing. Here, have a line of cocaine, wait 5 minutes. Now, do you feel better than you did 5 minutes ago? Yes? Great, vote for me and the devil may care what awaits around the next corner.

I went through high school thinking every moment could be my last, and now I'm supposed to be terrified that some Islamic crazies might blow up a building or blow up a city with a dirty bomb? Well forgive me for being complacent. On second thought, don't forgive me. Ronald Reagan was elected because our pocketbooks were fatter. But now we should ignore our pocketbooks and our civil rights because of terrorism?

The risk posed by our enemies seems quite pedestrian compared to the one I learned to deal with as a child and young adult.

They wonder why I'm not afraid while praising the bravery of our troops.

I praise the troops for their bravery as well. The difference is, I'm just as brave as they are.

I'd rather die than give up my way of life. Hell, I'm on borrowed time as it is.

Time to Worry

This chart shows the annual rate of new housing starts in the U.S. The shaded areas are recessions.

Last month, a slight upturn led many conservative economists to claim the housing market was stabilizing. They have since changed their tune. Alan Greenspan also claimed that the worst was behind us, but left the caveat that the housing downturn was not over. He was half right.

Even the most pessimistic analysts were surprised at October's tragic numbers. The market had expected a reduction in housing starts and permits, but the actual numbers were off by over 3 times what was predicted and were accompanied by downward revisions to August and September's numbers. This leaves housing starts down 27% year on year and an incredible 34% decline has been witnessed since the January 33 year high.

Last month I said, "The housing market continues to weigh on markets and I expect that effect to accelerate over the next few months." Well, I was half right. The housing market should be weighing on markets because it's performance is worse than anyone predicted, but yet the Dow continues to set new records.

The Dow is in uncharted territory which renders technical analysis nearly useless. The Bollinger band has been broken and there isn't really any technical resistance left to stop this bull run. Furthermore, as investors fear the housing market, the Dow becomes a more attractive option.

How far can this go?

I will be surprised if the Dow breaks 12,500, but the one thing I have consistently underestimated is the resilliance of the U.S. equities market. Still, I think we are getting very near a top, and although a big correction is unlikely, I think most investors will be happy if the Dow finishes the year above 12,000.

The good news is that thanks to a drastic drop in oil prices, which continued Friday, inflation data is allowing the Fed to put off any more rate hikes. Currently the Fed futures market predicts a rate cut around June of 2007 and one more cut, to 4.75%, by the end of 2007. With the latest housing data, the odds of these cuts kicking in are increasing. Let us hope that energy prices continue to moderate. This should help keep inflation in check and may allow the Fed to cut rates. Otherwise, we haven't even begun to see the bottom of the housing market.

On This Day in History

17 years ago today, in 1989, Czech students took to the streets of Prague demanding truth, openess, and freedom from the oppressive communist state. In typical totalitarian fashion, the government ordered the the police to confine the marchers to a certain area, near Národní Třída, where a confrontation became inevitable. Several students were beaten severely, but instead of scaring the people into submission, this enfuriated the general public, and a general strike ensued.

This was the beginning of weeks of demonstrations which led to the fall of the communist regime and the election of Václav Havel as the new president two months later.

The students were right, and they had the courage to stand up to the oppression of the government. We must always listen to what the young are saying because they usually have a clear perspective, unclouded by the years and the biases that the older generations suffer from.

Long live freedom!

Transportation

As it turns out, the company needed something urgently picked up from Uvaly, which is about 30 Km (18 miles) due east from the center of Prague. I work in Liberec, about 100 Km (60 miles) to the north east of Prague. So what I did was take a short cut off of the drive to Prague to arrive in Uvaly this evening. I parked the truck and got on I a train. In 28 minutes I will be in the center of Prague. I paid $1.10 for a ticket that will be also valid for the entire public transportation in Prague for another hour and one half when I arrive. The train is clean and quiet, but the rails are a bit bumpy. These tracks share time with the big cargo trains coming in from the east.

I could have driven into Prague and driven back out in the morning, but the drive is demanding and long. In the morning I can make it back out here in about the same time as I would driving from my house. I will save gas, and instead of driving in Prague, I’m writing this with a nice jam rollin’ in the headphones.

The truth be know, when I got to Uvaly I had missed a train by about 15 minutes. As a result I had to wait about 45 minutes. I found a small outdoor/indoor hut where they served beer. I had a half liter of good Czech lager ($0.70) and got to catch the first part of the Czech national football team playing Denmark. I met some nice people and then headed for my train.

There is something about mixing with people and not being confined to the car. It is like you have to practice life all of the time. There is no escaping.

Baker on Tap

With the Baker commission nearly ready to issue their report and the president having already been briefed on his options, there will be serious choices to be made. Baker's commission will issue a series of recomendations on what to do in Iraq. I imagine that there will be certain key words which may reveal the general plan. Let me consider three key words that we might hear: unity, seperation, and cooperation. Which will be the most likely to be heard, and what will it mean if we hear it?

Talk of unity will probably mean a coup on al-Maliki and the instalation of a strongman as this moonie times article suggests. I think this is unlikely because the "unity government" was the old path, Bush's path, and it isn't working. Installing a secular Shi'ite might be an improvement, but only marginally so. A secular strongman reeks of Saddam, and in the end will just mean a new boss and the same old problems. Some new path has to be entertained.

Talk of seperation, like the Biden plan outlines, is unlikely to produce positve results and it is unlikely that Baker and his commission will go this route. Biden's plan is to essentially break Iraq into the three obvious groups and high tail it the hell out. Well, you could do that, but it won't be pretty. And in the case of population centers, it would cause massive killing and displacement (yes, even more). Bush will not accept any such plan, nor would the conservative Baker. It is much too bold with too many negative possibilities arising. Baker is a balance of power type and Bush will put his foot down on this option, I believe.

What is likely is that we will hear talk of cooperation. This will probably mean limited autonomy but how that all breaks down I could only guess. Clearly, though, they have some things in mind. Baker said, "I happen to think, and I think it's fair to say our commission believes, that there are alternatives between the stated alternatives ... of stay the course and cut and run."

Well said Mr. Baker. That's just what I was thinking and let's hope you're right. Shall we discuss the failings of a two-party system now?

No, let's not. Because right now I'm waiting with baited breath for your report. It must be hard to finalize with the situation on the ground constantly changing. I'm sure you must have 50 revisions by now to match the 50 hostages taken today....

.....but let's just see what you have.



(Be sure to click on this first link. Take a moment to analyze that photo. A fly on the wall in that room after the press vacated was treated to some choice moments.)

Be Afraid

Just over a month ago, I smelled something fishy about a supposed terrorist plot to take over the synagogue in Prague.

Nothing really added up about the story. This is from the original post above.

Here is what we actually do know. Princ Dobrosi, an Albanian ex-drug kingpin from Kosovo met this summer with Arfan Qaeder Bhatti. As reported in the Prague Monitor, Bhatti is a Pakistani with a Norwegian passport who was arrested last week engaging in an act of terrorism.... in Oslo. So at the exact same time, Prague goes on alert and Dobrosi is brought in for questioning.

Dobrosi and Bhatti did time together up in Norway. Dobrosi escaped, got caught in Prauge, and was eventually released from Norwegian prison. He admits to meeting Bhatti. He even admitts that he thought Bhatti wanted to get in on his cigarette scheme. He says he was surprised at the visit because there was no criminal behavior on the mind. He said he just wanted to see how he lived.

Now I was still trying to give the authorities the benefit of the doubt that maybe Bhatti tried to talk Dobrosi into doing something. But, even if he had, the reaction from the city authorities was way overblown. Once they had talked to Dobrosi and released him, we should be taken off high-alert.

Now we get this (sorry, the link is gone)

Prague, Nov 3 (CTK) - Some Jewish organisations have asked Interior Minister Ivan Langer (Civic Democrats, ODS) to submit reliable evidence to support the claim that the Jewish community in Prague was threatened with a terrorist attack on September 23.

They say they believe that it was nothing but a "media bubble," scare mongering news and a "political media game" designed to divert attention from the scandals of Czech political tops.

They cite that the main dinner that involved most of the Jewish community had already occured on the 22nd of September, and yet the emergency meeting was held on the 23rd.


These groups however were not joined by the Prague Jewish community in their call for an investigation. A very PC Frantisek Banyai told reporters that he trusts the police saying, "We suppose that the interior ministry knows what it does."

That is right, don't make waves in your own bathtub. Let the other organizations apply pressure and stay neutral. Smart move.

What we see here is a clumsy example of the government using fear to acheive political goals. This is of course partially driven by police bureaucrats who want to provide themselves with job security. This then is just a mediocre attempt at this old game, spotted and tagged by the people it affected.

There is a certain peace of mind in knowing how unsophisticated the local authorities are. If they were better at what they do (like in some other countries I can think of) they could have us all scared out of our pants. But here we all pretty much know it is crap and that the politicians are corrupt and people just shake their heads and accept it.

Why make a fuss?

Remembrance Day

Today, the second Sunday in November, is Remembrance Day in the U.K. This is the follow up to Armistice Day which marked the end of the First World War. In place of Armistice Day, Veterans Day is celebrated in the United States. Memorial Day in the United States is what most closely resembles Armistice Day and Remembrance Day throughout most of Europe, Canada, and Australia.

I don't have so much time to post on this properly, but at the behest of my reader, I thought I would at least mention that on this day, we in Europe remember those who have fallen defending the freedom that many enjoy throughout the world. This holiday originated in the U.K. and the celebrations there are the most eleborate. All broadcasters on the English news services wear a red poppy which signifies the blood that was spilled during the trench warfare in World War One and the red poppies that sprung up in the battlefields after the fighting was over.

A moment of silence should be taken by all to remember the brave and the fallen. Let us all think about those who gave their lives so that we could live in freedom.

I certainly am.

The Day After

I don't need to link anything here. We all know that the Democrats will have a decent majority in the House, but nothing spectacular. What was spectacular was the campaign, the effort, and the result of that effort. The Democrats were smart enough to know that they didn't need to risk anything going into this election. George Bush's last two years, and the 109th Congress that followed in lock-step lost this election on their own. "We are not them" was enough to win. That, and a herculean effort by the Democratic party in getting the vote out won this election for the Democrats. No mystery here.

An interesting side note is that the huge problems with voting machines and the stolen election many of us feared never came to pass. Some would say that everyone who worried about it, like Brad for example, have wasted their time (ok, one link, I couldn't help myself). But I disagree. I think that the diligence of people like Brad (see link above, I'm conserving) may have saved this election. There could have been any number of people from either party that may have seen this as an opportunity to steal votes. Let's face it, voter fraud has a long tradition in the United States. But the openness of the society, the work of the people to get enough energy behind it forced the media to actually cover it. This, then, made it impossible for anyone to think about any hanky panky. The spotlight was on, as it should be, and all the people who worked so hard to make that happen should be proud of themselves. This election was a victory for open societies, the larger idea of transparency, and democracy as an institution.

*******

What is really turning out to be interesting is the Senate election. Now that Allen has conceded, there will be no controversy. But the Senate is split right down the middle. They are counting Leiberman as a Democrat? 51-49 is not a sound majortiy. I would look for certain Senators to take the lead in building coalitions. However, the House will dictate what the Senate gets to vote on, so the Republicans are at a distinct disadvantage. But hopefully, people like Chuck Hagel will be part of a moderate coalition that will help sound, moderate policy flourish.

I am filled with optimism that an end to bitter partisanship is in the cards. Only time will tell if I am being over optimisitic.

Congratulations

As I predicted, the Democrats have taken the House. If you don't understand why, all you have to do is watch this.

Voting Day

So it is voting day in America. I will not be voting in this election. I applied for an absentee ballot, for which I have a confirmation, but instead of receiving an absentee ballot in the mail, instead I received a voter registration confirmation on November 1st. In the confrimation it noted that I could apply for an absentee ballot by October 31st.

I'm sure if they had sent this letter to an adress in the U.S. it would have reached me in time. I know, it is a big world, and I don't expect the voting authorities in Mono County CA to understand that it takes a little longer for a letter to reach Prague than it would to reach say, Bishop. In the end, it is my fault for not being there and not being a true American. However, since I am not allowed to vote in the country of my residence, it would be nice to cast a vote for someone, somewhere. Maybe I could vote for UN ambassadors next time. On second thought, I guess the Senate's votes don't even count on that one.

Had I been able to vote, perhaps I would have voted for some third party candidates. There are no Senate seats up for election in California, and district 25 is the model of a Republican stronghold. However, the third party representation in the United States is quite dismal at this point. And why is that?

The biggest obsticle that third party candidates have is the perception that they are helping the enemy. If you take for example Ross Perot's candidacy in 1992, or Ralph Nader's in 2000, you see in both cases a third party candidate taking away votes from the base of one of the big parties. In Perot's case, he received a much higher percentage of the popular vote than any third candidate in recent times, and although most of these votes would have been otherwise Republican, many would have gone Democrat as well. Yet the bulk of the Ross Perot campaign machine was made up of people who would have otherwise helped the Republicans or at least would have voted Republican. Ralph Nader captured a much smaller percentage of the popular vote than did Perot, but virtually all of his votes came directly off of the Democrat's voter rolls. Both were criticized harshly for helping the opposition party win.

So for a third party candidate to have any real success, I believe that a new direction has to be taken. A party that is liberal socially, but conservative economically seems to be a winner. Having said that, I think it will be easier to convince the conservatives that it is okay to be gay, than it will be to convince the liberals that markets work, and total socialism does not.

We really do have a long road ahead of us. Right now, both parties have their heads stuck where the sun don't shine. The There are exceptions to this on both sides of the aisle, of course, but the general direction of both parties leaves much to be desired. I think that someone with sound conservative economic policies and liberal social policies could get a lot of traction, especially with the younger generation.

If something like that could get started now, maybe in twenty years we could have an interesting election.

If Only the GOP....

....had this guy, they might have a chance of winning this election.

The GOP has failed to make 9/11 the central issue in this election precisely because they don't have people like Dhiren Barot to wheel out before America to prove they are doing their jobs.

In fact, other than the pathetic Moussaui, there hasn't been a single person to face trial in the U.S. that had anything to do with 9/11 or was on the same level as the people who committed the horrific acts of that day.

Instead Saddam Hussein is to be hanged, reminding everyone that instead of catching the people who planned and financed 9/11, we are fighting a war far away from what should be the central front in the War on Terror. Few believe this has made us safer.

Although no one is shedding any tears for Saddam Hussein, what America wanted to see (and still wants to see) is the people responsible for 9/11 in his position, or something like it.

George Bush and his do-nothing 109th Congress have failed the Amercian peoople in their solemn oath to do this.

But more to the point, Americans have not forgotten. Everyone swore on that day to not forget. This fact alone, I think, will turn into some votes of no-confidence against the GOP.

There are plenty of reasons for a vote of no-confidence against the GOP, and Iraq tops the list. I just thought it was interesting how an issue like 9/11, once the darling child of the GOP, is now working against them.

May you reap what you have sown, GOP.

The Biggest Crooks

For those of you who think that markets can't be manipulated.

They most certainly can, as can anything.

Thought for the Day

"Naturally, the common people don't want war, but they can always be brought to the bidding of their leaders. Tell them they are being attacked, denounce the pacifists for lack of patriotism and endangering the country. It works the same in every country."

Herman Goering--Hitler's Reichsmarschall

(H/T Karlo @ Swerve Left)

P.S. Be sure to vote tomorrow.

Saddam Hussein Convicted

It seems like Sunday morning is always the time for big news about Saddam Hussein. Today, I awoke to find that Saddam Hussein is to be hanged. It couldn't have happened to a nicer guy (wink).

Am I imagining it, or is Sunday just not his day? I guess I'm imagining it since he was actually captured on a Saturday. But it wasn't confirmed until later, so much like today, I woke up on a Sunday morning to find that Saddam was having a bad day, kind of like today.

And now I am thinking even further back to a Sunday morning in March 2003 when the president returned from Camp David and held his first news conference since the invation. Something stuck out in my mind from that conference.

THE PRESIDENT: I expect them to be treated, the POWs I expect to be treated humanely. And -- just like we're treating the prisoners that we have captured humanely. If not, the people who mistreat the prisoners will be treated as war criminals.

And war criminals, as we have seen today, are sometimes hanged.

Democracy

My understanding of democracy is that the will of the majority of the people will be enforced. Now of course we must have representatives because it is not feasible for everyone to be involved in the managing of the day to day affairs of the country. Theoretically, our representatives enforce our general will as a people, or at least the will of the majority.

One of the great failings of democracy is the propensity for people to want things that are bad for them. As a result there are some who believe that our leaders know better than we do. More importantly, the president himself has not tried to hide his belief in this notion.

Yesterday, he announced that Donald Rumsfeld will be staying until the end of his administration. This despite the fact that according to the latest CNN poll, a full 52% of people surveyed think he should be fired. That is with 15% being unsure; Only 33% think he should not be fired. Now, I'm not saying that Bush should fire people based on the latest polls, but to give this guy job security at this point is suspect at best.

Hypothetically, if Rumsfeld grows horns and a spiked tail at a news conference and starts breathing fire he still gets to keep his job, according to the president.

But more to the point, even if 100% of Americans want Rumsfeld to be fired, our elected servant will simply say that he knows better and Rumsfeld will keep his job. In my view, this is not democracy. In a democracy, a people have a right to have their grievances redressed, or at least considered. But in this case, the president has clearly said that he will not listen to the American people no matter how hard they scream. He is the decider, not us.

With regards to secret programs, whether they be wiretapping or waterboading, the president has been consistent in saying that they will not reveal their tactics so that the terrorist will not adjust. This is the most transparent of lies. I don't know how one adjusts to waterboarding. Perhaps you do waterboarding training, or as Jon Stewart suggested, "maybe they will grow gills." The real reason they won't reveal the programs is that a majority of people would not approve of having that done in their name. This is why originally president Bush said that you need a warrent to conduct a wiretap: he knows full well that a majority of Americans believe this to be so. But now he claims that getting a warrant will allow the terrorists to adapt. Now unless he thinks that al-Qaeda has spies throughout the judiciary, there is no reason not to get a warrant. A known terrorist assumes they are being listened to, just like a mob boss does. Keeping the program secret is only an effort to hide what he is doing because he knows full well that a majority of people do not apporve. He is saying, "I know you would disapprove, but trust me, I know better than you do."

True or not, that sir is not democracy.

It needs a new name. Maybe something like, "elective authoritarianism", or "voluntary serfdom". I'm sure we can think of something.

But please stop calling it democracy.

Market Update

Much to my chagrin, I have been predicting a major slowdown for the U.S. economy starting in Q1. I never did change my tune, believing as I still do that the fundamental factors that have been propelling this market are without solid foundations. These include, but are not limited to, the housing bubble, the practice of drawing equity out of a home and spending it, the negative savings rate (now 13 months strong), and the focus on mergers and acquisitions (in the U.S.) as opposed to organic growth (as in Europe).

Europe's most developed economies (Germany in particular) have been taking it on the chin from analysts for the last few years. Analysts cite slow growth and high unemployment. My view has been that the European economy has been growing at a sustainable rate. German GDP is now growing at an anual pace of over 2.5% whereas the latest U.S. figure is 1.6%. Emerging markets, like the one I live in, are no longer yielding the huge returns that they did a few years ago. Yet despite the median yield on an investment in the Czech Republic dropping from 16% to about 6% over the last several years, another $1.5 billion in foreign direct investment reached the Czech Republic in 2005. But these high levels of investment are starting to moderate as investors see potential in the more developed economies in Germany and France. German real estate in particular is now poised for a healthy comeback, just as United States real estate is deflating.

Yesterday, the ISM index showed that U.S. manufacturing is experiencing minimal growth, almost stagnation in fact. Construction spending is down .3% and since construction accounts for about 10% of all manufacturing in the U.S., this number weighed heavily on the ISM as a whole.

The equity markets were slow to react to this, but the bond market wasted no time as the yield on the 10-year note dropped to just above 4.54%. This is nearly 75 basis points below the Fed's overnight rate of 5.25% which makes the inversion quite extreme. The best quote I heard yesterday from the bond pit in Chicago was this...

The equity market is sitting in the living room watching television thinking everything is fine while the home office (the bond market) is on fire in the next room.

The Dow is off nearly 50 points in the first hour of trading today. Most of the big retailers missed their earnings targets which is weighing heavily on the market.

Does anyone else smell smoke?

Update: Here are the top five headlines from Reuter's business today.

1. Retailers post disappointing October sales
2. Productivity growth stalls
3. Jobless claims rise 18,000 in latest week
4. Apparel retailers suffer through dreary October
5. Wal-Mart sees Nov same-store sales flat

And the Dow is making a comeback. I guess they don't smell any smoke.

Happy Halloween