Must Watch

As regular readers know, I really don't have time to blog properly anymore.

I will, therefore, only bother with things I find really interesting or really funny. This is mostly the former, and a little of the latter.

Seriously, watch it. Then, please give me your thoughts.

This thread could be a long one..... I hope.

Still No Time

There was a time way back when, when you might say I was cool. I crafted my dancing skills through punishing partying at "rave" parties and clubs. I was (and still am) an avid follower of music. I even got paid to DJ in some clubs in Prague.

This is me now.......




I'm studying "Economic Analysis for Managerial Decision Making." I'm drawing supply and demand curves, finding the equilibrium level, figuring elasticity, and generally being a nerd.

I kind of like it though.

School Time

So, I don't really have time to blog, as I'm back in school right now. But let me tell you this.

I got to speak with my professor of Managerial Economics over beers tonight. After some pleasantries, we got down to business. We explored the idea of world economic systems, and agreed that there was not one solution. He gave me a lot of leeway on a theory that we are living in an era of an overreaction to the last failed system which was based on central planing.

It is accepted, today, that free-markets and democracy are the best idea for economics and politics respectively. Now, they may well be the best we've come up with so far, but there is never a static state of human affairs. That is to say, if you come upon some solution that appears to be better than all systems which came before it, that is not cause to disregard other approaches to the human condition, even if they resemble the failed ideas of old.

The fastest growing economies in the world are nearly all directed by political systems that are inherently undemocratic. To say that central planning, one of the most important tenants of communism is a failed idea, is to throw out the baby with the bathwater. Planning is an integral part of every business. Businesses listen to the market, but in the end they plan. The more organized a company, or a country, can be, the more efficient it will run.

Now the market has a way of determining things at more nuanced levels for which there is not currently--and likely will never be--any substitute. To ignore consumer demand and the other principles of market economics, is at this stage pure suicide. But to profess that these forces are the end all, the solution to everything, is pure folly.

As human beings, we decided, we must always realize that the current system is imperfect. That systems that work in one place well, may work poorly in the next. When everyone starts thinking the same way, that is when everything will collapse. But, this will not happen so long as the spirit of open thinking, and acceptance for others customs and different ideas about how to do things, remains alive.

We must never get so satisfied with ourselves, or think that we have the answer. NO! We must always strive to incorporate the best, or most relevant parts of any system, past or theoretical, into the current one. There is no ultimate answer to the question of politics or economics. If there was, life would be boring.

Trade Defict

My Uncle believes that the media is biased and that if the drop in the trade deficit to "only" $58 billion last month had happened during a Democratic administration it would have been front page news.

I think this chart puts things in perspective. You can just barely see the drop from $61 billion to $58 billion on the far right hand side of the chart. Does that look like front page news to you?

While we are on the economy, I think the smart money is taking some off the table.

Oh, and don't miss this piece. The link will only be good for a couple of days. This helps confirm my suspicion that inflation will continue to be a problem looking forward, rates will not get cut, and the stock market will have to come back to some sort of reality.

This is in direct contrast to my all-knowing reader's contention that rates don't matter, inflation will remain low, and the current levels in the stock market correspond to realistic earnings potential.

Of course, when I'm proven right, my dear reader will contend that he never said that.

UPDATE: Looking at the chart, I want to be clear that the small down turn in at the very right of the chart is not that noticeable slope on the last half inch of the screen, but rather the almost invisible little down turn that represents about a millimeter at the very far right. Literally, you have to squint to see it.

Yummy Czech Export

Man, I'm hungry now.

Jefferson: Not Guilty?

Rep. William Jefferson has pleaded not guilty to over a dozen felony charges that boil down to one simple thing: corruption.

Now, I'm one to consider people innocent until proven guilty, but when it comes to politicians, I usually write them off upon indictment, with few exceptions. This is not one of the exceptions. I think in this case, the shear magnitude of the charges tells me that he has to be guilty. Oh, and then of course there is the $90,000 in cash in the freezer. I mean, seriously, who in their right mind could accept any explanation for that?

Jefferson proclaims his innocence in a way that makes him sound guilty.

This is not who we are. This is not who I am. This is not what I have done.

This? Not these charges are false, but "this is not what I have done"? If there is a this, doesn't that mean that it is? If "this" is not what I have done, then who did it? Did someone plant that money in your freezer Mr. Jefferson?

If the man had any honor (which obviously he doesn't) he would keep his mouth shut and take his punishment like a man. Instead we get this...

They can attempt to break one, psychologically and financially . . . No matter what, the truth will always come to light.

Let's hope.

Some Quick Bits

So the Dow is down nearly 200 points today. That is a total of 400 points down since Friday's close. This is still a drop in the bucket. What did I say yesterday? Oh yeah, 1,000 point drop is in the cards in the coming months. Well, 800 to go now. I'm still tickled pink that what I knew last summer, the professionals are realizing now. Forget about a rate cut. If anything, worry about a hike.

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Putin suggested putting the missile defense system in Azerbaijan. Brilliant move on Putin's part. He offered to cooperate on a system that would be much more effective against Iran in a location that Russia has access to by way of treaty. Even Hadley admits this makes sense. President Bush?

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I'm getting much more quality hits. I'm pretty lazy about checking my meter, but since I don't pay and can only look back on the last 100 hits, I have to check every other day to keep up. For some reason Google is rating me pretty high on some quite general searches like "Czech Missiles" for instance. I am getting a visit from the Naval Ocean Systems in Washington DC pretty regularly now. Not via searches either. They have me bookmarked apparently. Welcome, whoever you are. Leave a comment sometime. Also, the EU commission in Brussels checked me out for about five minutes yesterday. I hope they come back.

I guess my persistence is starting to pay off. Maybe I should do some advertising..... Nah!

Traders Come to Their Senses

All three major indices (Dow Jones, Nasdaq, S&P) ended down nearly a full percentage point today as traders finally realized that the Fed will not be cutting rates any time soon.

I've been saying since the last hike nearly a year ago that a cut is not imminent and that the risk for a further hike still exists. Stubborn inflation indicators including increased unit labor costs will continue to influence Fed action for the foreseeable future. Strong resource utilization (low unemployment) is probably the most important factor driving inflation at the present time, but persistently high energy costs should not be ignored.

Morgan Stanley issued a "triple sell" recommendation for European stocks citing their analysis that European markets are as much as 14% overvalued. Traders fear that U.S. equities may be similarly overpriced.

It is satisfying to know I've been right all along. If only I knew how to profit from that, I wouldn't have to work.

This is a healthy correction, but I believe that the Dow could easily drop another 1000 points in the coming months as bond yields continue to rise reflecting the reality of a hawkish rate regime.

The Eagle has Landed

George Bush is in the country becoming the first American president to twice visit the Czech Republic in his official capacity.

Pictured with him is president Vaclav Klaus and his wife, and of course that is Laura Bush hiding behind the president.

While most people think the cold war ended in 1989, and that recent developments mark the start of a new chilling of U.S./Russia relations, George Bush declared just today that the cold war is over. What a relief! Who knew?

This weekend I spent some time talking to some older Czech folks regarding their feelings about the missile defense system. The conclusion I kept hearing is that although they don't particularly like Russia, they understand Putin's concern. "Why wasn't Putin consulted first? Why not put the defense system IN Russia?"

I think Klaus may have brought these points to president Bush's attention. Today, president Bush said...

My message will be Vladimir — I call him Vladimir — you shouldn't fear a missile defense system. As a matter of fact, why don't you cooperate with us on a missile defense system.

That message would have carried a lot more weight about six months ago. Yet another foreign policy blunder that president Bush has committed. This one, however, is at the direct expense of my resident nation.

Let's just hope Vladimir is in a forgiving mood.

UPDATE: Two good articles on the subject (1, 2) Thanks to Abi for the first one and my friend Matthew (who doesn't blog) for the second.

China Leads America on Climate Change?

China has just announced that they plan to drastically reduce greenhouse gas emissions by 2010. Bush had been prodding China to reduce its greenhouse gases and has given lip-service to doing the same at home, but no specific policy prescriptions are forthcoming.

Those who doubt mankind's role in global warming and/or feel that the U.S. should not take the lead in reducing emissions have made many arguments to support their case. One of these arguments has just been laid to rest. How many times have we heard that it is pointless for the U.S. to reduce carbon emissions if China will not do the same? It is absolutely absurd to think that the U.S. should be following China's lead on this or any other issue. As the worlds largest economy, the largest producer of greenhouse gases, and arguably the world's conscience, the U.S. has a clear obligation to take the lead on this issue, or abandon it outright. However, those who wanted China to act first on this issue have just got their wish.

Those who argue that global warming is not attributable to man's carbon emissions warn that taking action to restrict carbon emissions will devastate the economy. Again, this argument is well off base as it has been estimated that restricting carbon emissions as currently proposed will reduce world growth by approximately .1% per year. That is hardly what one would call devastating.

Furthermore, even if we assume that global warming is not caused by human beings, would restricting carbon emissions be such a bad idea anyway? Currently businesses are investing large sums of money on research and development of technologies that would reduce not only carbon emissions, but all emissions. We know that investment creates jobs, and this type of investment will create jobs and demand for professionals in the the engineering field. In this era of record corporate profits coupled with less than impressive business investment, throwing a bit of money at this problem could end up being a net gain for the economy. In fact, now that so much investment has been made in anticipation of new regulations on carbon emissions, if government restrictions do not follow, this investment will dry up rendering the earlier investment useless.

It seems clear that since coal is so abundant and easy to use, sooner or later it will all be burnt. It stands to reason, therefore, that the sooner we develop cleaner ways to burn coal, the less pollution will be created in the long term. Another thing we know about technology derived through research and development is that often new discoveries are found along the way which benefit all of mankind in unpredictable ways. We have no idea how many new, beneficial technologies will be unintentionally discovered along the way. Furthermore, one of the most effective ways to reduce emissions is to increase efficiency. So even if man is not responsible for global warming, our efforts to reduce emissions through more efficient technologies will benefit mankind through increased efficiency and the development of new technologies that will likely provide solutions to other problems.

It seems clear that even if human beings are not responsible for global warming, we all stand to benefit from business investment in emission reduction, both in known and unknown ways.

Does it make more sense for the U.S. or China to take the lead in this endeavor?

Missle Defense Debate Heats Up

The most recent poll indicates that most Czechs still oppose the planned missile defense system to be built partially in the Czech Republic. 61% of Czechs now report opposition to the plan, and a full 75% believe there should be a referendum held to decide on the subject.

For those of you who are a little behind the curve, the U.S. is negotiating directly with Poland and the Czech Republic to build a missile defense system in Eastern Europe. The missiles would be located in Poland, whereas the radar system would be located about 30 miles from Prague on a disused military base near the town of Brdy.

Opinions are sharpening on the question as the "Don't Know" responses are dropping with each new poll. One of the main complaints I've heard is that this project is being negotiated bi-laterally between the U.S. and the Czech Republic, and also bi-laterally between the U.S. and Poland. Critics hope to see Poland and the Czech Republic, or ideally the European members of N.A.T.O., negotiate with the U.S. They argue such unity would strengthen Poland's and the Czech Republic's bargaining position.

Meanwhile, Russia has recently conducted a test of a new I.C.B.M. which Vladimir Putin says is a direct response to the missile defense system. Putin had some other choice quotes in the article which are worth reprinting. I suspect the media in the U.S. has not taken much notice of these quotes...

"It wasn't us who initiated a new round of arms race."

"We have signed and ratified the CFE and are fully implementing it. We have pulled out all our heavy weapons from the European part of Russia to (locations) behind the Ural Mountains and cut our military by 300,000 men," Putin said.

"And what about our partners? They are filling eastern Europe with new weapons. A new base in Bulgaria, another one in Romania, a (missile defense) site in Poland and a radar in the Czech Republic," [Putin] said. "What we are supposed to do? We can't just sit back and look at that."

"It's dangerous and harmful," he added. "Norms of the international law were replaced with political expediency. We view it as diktat and imperialism."

And Putin is not the only one complaining about the U.S.'s disregard for the preservation of peace. With George Bush scheduled to visit the Czech Republic just three days from now, a citizen has filed a criminal complaint against him for "suspicion of the criminal offense of propagation of and incitement of war." Of course, this has everything to do with the wars in Iraq and Afghanistan, and nothing (officially) to do with the missile defense system, but the point is clear: George Bush is certainly not perceived by many as a friend to peace.