Earnings, Markets and Policy

So, Goldman Sachs manages to make billions in the face of the crisis.

Companies from every sector are reporting better earnings than projected by some of the sages on the Street as well as by their own CFO's or CEO's or whomever they determine should trot out the numbers.

Markets are moving up and everyone is saying the recession is over and we are on the path to recovery.

And, in Washington the administration is busy reshaping---well, just about everything from American capitalism and society all the way out to reshaping themselves.

Most apparant is Mr. Obama's shift from the great change artist and bipartisan fence mender to Washington business at more than usual (multiples of the same) and a simple statement of his that says it all., "I won".

So, we can all breathe a collective sigh of relief, put this one in the history books and get back to business! Right?

We'll see, goes an old Oriental proverb.

Let me put some clarity to things in a condensed version, just in case you buy into all of this and have some shopping to do.

Goldman made money the old fashion way--at least what is old fashion for them.

The government moved about $1 trillion dollars over the last 9 months, AIG got right at $200 billion of that and we can run the list.

What does this have to do with Goldman? Everything folks.

When a trillion dollars moves around the US economy, especially when the origin of that money is from the US government (in reality it is from you and me and millions of other citizens who have lost control over their tax dollars going to Washington), Goldman is at the center of those movements. Quietly and covertly in some cases and Goldman does not offer their services cheaply. That is even more true today given the relative lack of competition they now have to deal with.

Close to $30 billion of the AIG bailout went to bailout Goldman on some paper it was holding. By the way, unlike most of the rest of the world that had to take a reduction on similar paper they were holding, Goldman was paid 100% of what they were holding.

Mr. Paulson let Lehman fail, they do not exist anymore. Not a stretch to see Goldman do so well when it's fiercest and largest competitor is no longer alive. By the way, the decision to not bailout Lehman was a singular one (despite all the talk) made by Mr. Paulson, who by the way came to his Treasury position from Goldman and who, when he was at Goldman had a warlike posture with Lehman.

His boldfaced lie that the only reason he let Lehman fail was because he did not have a buyer for it is more than disingenuous since he also did not have a buyer for AIG when he decided to give them $160 billion! There is still no buyer for AIG.

I won't go on, I think you get the picture. But there is just one other point you might have missed or are unaware of---- Goldman was the largest contributor to Mr. Obamas' campaign.

Any dots get connected now?

Now for the markets.

The first thing one should realize is that the game currently being played in respect to earnings is one where all expectations for earnings have been lowered so then it stands to reason that it should be easy to improve on those projections.

Kind of like advertising a 40% off sale for tomorrow and having all the employees stay late tonight and mark up the goods by 50% so it looks like a bargain in the morning.

Next is a bit of an illogical equation where simply because things are less bad than projected that scenario turns out to be "good" or a positive when in truth it is simply not as bad as projected or expected.

Some of that thought process helped get people to where they are now.

The market is a forward looking animal, or so the story goes. But, it has to be because the traders cannot trade on the past, even if it is a nanosecond old. Once the price is printed or the trade is made, that is it. But, at the moment most traders are ignoring forward analysis and are trading on the day. Please keep in mind that they have billions of dollars sitting still in Treasuries earning little to nothing and the year is half over. They have to put that money to work and they are and have been for many weeks.

Pour billions of dollars into anything and if you are buying with those billions prices will go up.

However, these professionals have advantages over you that make it dangerous to try and follow them for too long or blindly in the direction they are trading.

At the same time they are buying, they can and do very often use derivatives to limit or essentially remove their risk. Something you have a hard time doing if not due to the restrictions you have trading your 401K plan funds or IRA or Roth accounts (you cannot short, you cannot leverage as they can and in many cases you cannot buy options) just because you do not have the sophisticated software and trading programs to be able to do what they do.

In fact, most of the time, these guys are making money on the way up and on the way down, telling everyone that they are bullish and see green shoots or the worst being over.

That unfortunately folks is the market. It is not an innate institution. The market is made up of people (well human genome carrying entities) and these particular people are interested in one thing and one thing only--- profits, bonuses and momentum in one direction or another.

The game they play each and every day is one in which for every dollar earned by someone, there has to be a dollar lost by someone at some point.

Who do you think they elect to be the one losing the dollar? It won't be themselves I can assure you of that.

Sounds very cynical I know and forgive me for throwing cold water on the parade but, please, for your own sake, be careful of what you are doing and who you are listening to and do some thinking and simple math for yourself.

Earnings at this time are more a function of the tremendous cost cutting and cut backs in employees that many of these companies are reporting than any kind of major improvement to their businesses. That is unsustainalbe and in reality if you look down through it long enough should be a reason to be concerned looking into the future.

Even if business activity picks up any time soon, some of these companies will not be able to take advantage of the pickup due to the cutbacks in personnel along with what is still plaguing many companies, a lack of credit to drive their businesses.

And, just in case you are not certain, credit is still harder to find and obtain than the winning powerball numbers and with the new standards being adopted for lending, many will not qualify even if and when credit becomes more available.

Add into this mix the varied and many accounting tricks that can be played to push numbers around to produce earnings and you want to read more of the earnings reports than you want to listen to how the companyh or the analysts are spinning things.

Next point is, everyone at the moment involved in the markets have become ten percenters whether they will admit it or not. If they put a position on and get a 10% gain, many are selling that position, booking the gain and moving on to the next potential ten percenter.

That by the way is the strategy that I have been advising people to adopt in terms of the markets. Have been telling people that for the past 5 months. I am also telling them to add gold ETF's into their portfolios on drops, crude oil ETF's (DIG)on drops and to build a position in the ETF's that will profit when the market falls as part of their long holdings, (QID, SKF).

Why? Whatever happened to the buy and hold theory of investing?

It is no longer valid folks and anyone trying to stick with that is opening themself up to getting hurt and in some instances, depending on the company you decide to buy and hold because it is cheap, you could lose your entire investment.

Now to the crux of the matter.

Policy.

Read this as decisions coming out of Washington these days at a rate that is spellbinding not to mention the dimension of change these policies hold for America and its' capitalist structure.

This administration and the Democrats have well over 30 years of pentup socialistic changes that they have been waiting to unleash in order to achieve the social change they seek.

They now have the opening to do it and by using fear tactics on an already stunned American populace, they are rapidly getting more and more citizens willing to give up freedoms and self-determination in order to have the government promise to take care of everything for them.

Between these socialistic changes, growth of government and entitlement liabilities, by the time this administration completes this term, the US will have become a nation that will make France's socialism look like capitalism and the US tax rates could well have gone beyond 80%!

In truth, this is perhaps the most dangerous element I see but, that is a subject of another blog.

No matter how smart of a market maven anyone is and no matter what may be going on inside the markets themselves in the current environment and in the current economic crisis we face, governmental policy is the ultimate determinate of what anything is worth that trades on the exchanges.

Don't believe that I know. Harder even to write. Worse still will be living with the results this administrations' policies have the potential of unleashing.

Just consider for a moment some of the policy decisions already made and those that are being pushed through congress now and do some math.

By the time Mr. Obama finishes this term, the US will be in debt to the tune of $12 trillion dollars (some analysts say more, but, let's be kind). If the economy continues to contract or not grow at the projected rate they are using now (3% GDP growth year over year) that will represent pretty close to the total one year GDP of the US economy.

Add on to that what some estimates are of the costs for another stimulus, Cap and Trade costs to the economy, health care reform, entitlement program payments and we will have somewhere around another $4 to $7 trillion of added costs over these same years we will be waiting for this administration to exit Washington (one can only hope).

Add another $70 trillion of unfunded liabilities the boys and girls in Washington will have starring them in the face year some of it starting to impact the budget in 2010 and all of a sudden we are at multiples of debt burden over our annual GDP!

In short, the US is bankrupt. By 2015 just the debt service of the $12 trillion dollar debt we will have at that time will be more than any other nation on the planet.

Can you understand why China is exiting the dollar and not so slowly as some would like to think or that has, up to now been their plan?

It is also why they are more focused on building their own internal consumer base as opposed to counting on a resurgence of the US consumer.

Chna is not alone in this but is the primary concern given their holding of US debt. And, it is not so much the debt they now hold that is the problem, although it is serious. It is the issue of how much more and for how much longer will they be willing to continue to buy the new debt being issued by the US.

This is where the policies of this administration will take us, if they are not stopped and new policies put in place to prevent this from happening.

The best starting policy point is to stop the growth and expansion of government.

Next, tax cuts not tax increases across the board in order to spur economic activity and create jobs. It is the height of error to be adding taxes on top of an economy in the condition we find the US economy at this time.

As for spending our way out of this, there are enough failed attempts at this and enough credible expert economists warnings that even the spin being attached to this plan is starting to sound laughable.

Next, rather than continuing stimulus in these pork laden, misguided programs we have seen up to now, programs by the way that have not worked, grants and funding for new technologies in energy, non crude based transport fuels, environmental programs that have merit and will form the new economy where America could lead but is rapidly losing any hope of leading at the moment.

Programs and research into the new era of energy supply worldwide needs to come from and be lead by American ingenuity and companies as no economy can grow in a sustained manner without adequate and reasonably priced energy.

So, before you become a believer in any of the current hype coming out of Wall Street, K Street or any other street, look into some of this for yourselves and if you find yourself in agreement with what you are hearing and reading, follow the boys and girls on Wall Street and K Street.

If, however, you find some areas of concern, then adopt a reasonable trading approach to the markets, don't get stuck holding things for too long for now, add some of those ETF's mentioned above and write your representatives about what you think makes sense in the policies being put forward, most of which do not right now and need to be halted.

Someone had to say it. I just did!

Now is the time for Leadership

It is now up to the Republicans to clearly address to the American people the faults and fallacies of the administrations healthcare plan.

More importantly, they have the obligation to put forward an alternative plan that will address the concerns now clear to all of the populace while at the same time keep us from having to incur the massive costs of what is being proposed.

In order to be seen as something other than being just opposition and obstructionist, it is important to begin addressing this and the other major issues floating around the Beltway at this time.

This is an opportunity to offer leadership and an incredible chance to demonstrate that the Republicans are in tune with what is of uppermost importance now, and it is not healthcare. Unless of course the administration is permitted to spin healthcare up to being the central most important item on the agenda, which it is not.

The economy and jobs are and that is what the Republicans should focus on and bang the drum about and, at the same time, prove to the American people that healtcare can and should wait until the economy is on solid ground showing recovery.

There is no reason to permit the Democrats to push through this healthcare legislation at a time when the economy is continuing to grind down, only to be driven further into the pit with this plan requiring yet another layer of taxation.

Cutting taxes is the most immeditate action that could be taken at this point to impact each and every citizen and to spark recovery.

The administration does not get it and that is the opening that the Republicans have to walk through.

No matter who you are in America it is now evident that the administration will be increasing taxes on everyone and impact everything and this plan should be wrapped in that tax increase paper along with the others and thrown into the garbage where it belongs and where the bulk of voters would put tax increases and all associated with them, programs and politicians alike.

Someone from the Republican side needs to take the leadership role on this issue and get the focus off of what the administrations' agenda is and back onto what is of concern to everyone in the Nation.

Now is the time for true leadership and the line in the sand has to be drawn with the economy at the center.

Obama and his crew have no idea what to do to get the Nation on a path to recovery, it was never and is not now part of their agenda which was from the start to consolidate power and create a Nation of citizens (voters) dependent on Washington for the important elements of their lives and those citizens (voters) viewing them as the providers.

Unless this gets changed, we are all going to be sitting in a much deeper hole in every aspect of our lives and the status of the Nation will continue to decline.

There are times when politically there is not much to be done other than to let the other side have it's way and let the consequences be hung around their neck.

This is not one of those times and the reason for that is that once a program like this healthcare plan gets implemented it will be virtually impossible to end and it will grow into the kinds of monsters social security, medicare and a host of other government programs that by their DNA can do nothing but become cancers threatening the very life of the Nation.

This is a failed plan out of the box and it should be the start of a Republican resurgence.

There are no other two issues of such significance and diverse importance that can and should show the Nation who does and does not have the wellbeing of the Country at heart.

Someone had to say it. I just did!

Ownership and Responsibility

There comes a time when, as a parent or an adult one tires of a child or another adult laying blame on someone else and the lesson all responsible parents and adults want their children and other adults to learn.

You cannot get by in the world by blaming things on others.

There comes a time when no matter what or how, we all have to step up and take ownership of our lives, our decisions and our futures.

It is long past time for Mr. Obama and his administration to do exactly that.

Even some well intentioned and idealistic voters who crossed over to vote for this pretender of a president are now finding it hard to continue to listen to the continuing chorus of whose fault all of this is.

Presidents ultimately are defined by how they handle what they are given to govern and lead no matter what the predecessor may or may not have done to leave him with no work to do.

So, for the record, it is now time for Mr. Obama to take ownership of the US he governs and was elected to lead and "change". It is time for all of us to demand an accounting of his leadership to date and not permit him or the media to continue to lay blame at the feet of anyone from the past.

The first thing he should do is look himself square in the mirror and say, " I am really not a saviour and am just a man". If he can start one day with that statement and believe it (mostly because he will have said it) then he can move from the mirror and perhaps begin a process of ownership, both of the leaders' mantle he was inappropriately given but now has and the results and consequences of the decisions he has made to date and is about to make over the next three plus years.

One other thing he needs to do, review some of the video of his television appearances and then review some of Fidels' and Hugos' and see if he doesn't get a sense that he needs to do less television time and dedicate more time to actual analysis of some of the things he says and some of the plans for "change" he believes in because at the end of the day, those plans and consequences are what are going to define him and are really what he is going to be held responsible for and have ownership of as he progresses through his term of office and into history.

For the record, right now he is a dismal failure both as a leader and for the "change" he promised the American people.

Someone has to day it. I just did!

Three Storms Brewing

There is a risk in writing articles on a continuing basis that point out invalid and inconsistent information being supplied by the administration.

One quickly is tagged as a malcontent or of being partisan to a point of not seeing anything positive.

I understand it and take the risk.

I admit that I never wanted Mr. Obama as my President. For that matter, I didn't want Senator McCain either but, I would have accepted him and could get behind some of the policies he said he favored.

That now being said, we have to look out on the horizon and see the next storms that are headed our way and if nothing else, get prepared so that if and when they hit, we have something left.

Here are the three storms I see brewing on the horizon.

1. Another hit to the credit markets and the financial system.

The housing market collapse is viewed as the primary cause of the subprime meltdown, but, the truth of this collapse had at it's core an overleveraged lending environment wildly driving up prices paid and valuations of all things related to housing.

Around that particular grain of the economy we had the Wall Street crowd layering all types of instruments that noone seems to be able to explain and which to date no one has found a cure for the systemic toxicity they represented.

One thing we do know is it has taken close to $1 trillion dollars in the US alone to hold that leg of the stool up and generations yet to be born will have to find a way to pay that debt off.

But, there are the other legs of that same stool that are in a similar position and pose equal or greater risk to the financial markets if, for no other reason that it has cost so much to prop up the housing leg of the stool.

Those legs are commercial real estate and consumer credit. Together they equal or exceed the size of the housing leg of the stool.

Commercial real estate went through the same leveraging and dramatic if not dizzying upward pricing spiral as did the housing market and the same types of loans and instruments were happily and gleefully structured into this market.

Many property owners are going to start facing the same uncomfortable calls and letters from lenders that homeowners have been receiving and will find, much to their pain, that the same problems homeowners faced when trying to deal with the covenants of their loan documents and the corresponding spike in interest rates and the resulting payments they would be facing and the inability of refinancing their loans because values had plunged and banks were not making the same types of loans they once were, the only option was to give the keys back to the lender.

That same scenario is about to start being played out across the country. In a small way, it has been going on since the bubble burst it is only because of the attention to the housing market that not too much has been made of it up to now.

But, the clouds are now easily visable on the horizon and they are dark and looming large!

Beginning in September of this year well over $2 trillion dollars of commercial property loans are going to be at the point where they have to be repaid or refinanced and the properties do not have the values to enable them to be refinanced for what is owed on them.

Additionally, due to the economic collapse, many properties have lost significant numbers of tenants and so even if the values were still there, the revenue streams to support the debt are not.

This is going to put substantial new pressures on banks and lenders at a time when they have not yet recovered from the storm of the housing market/subprime collapse.

This same scenario in a different fashion has also been playing alongside of the housing and commercial real estate market debacle in the consumer credit markets.

With the rising values of their houses and the banks creating what in effect was ATM access to the "equity" the homeowners had, 60% of American homeowners plundered that "equity" and went on a spending spree unseen in modern times. Everything from a second (or in some cases a third) vacation homes, upsized cars and boats, vacations to anywhere, and on it went.

Prior to the collapse, the continuing rise in housing values made it easy to manage. Rather than paydown the debt and recover some of the home "equity", the lenders came up with the enticing program of "we will leverage you even further and let you have even more access to the "equity" in your home because, in the last two months your home value has gone up by 10% or more so, sign here and check the box that says you want the debt from now rolled over to them to add on top of the new funds they will provide against the increased "equity" of the home. This went on and on to a point where the debt load was virtually at 100% of the stated value of the homes and now they are facing the calls and letters from the credit card issuers who provided the ATM cards and many calls are not answered because the owner of the house where that "equity" resided has been foreclosed or lost his/her to dispose of and try to recover what is owed.

No one has yet given an honest assessment of what that number is or exactly how far into this legs' collapse we are but we do know that American consumer debt soared to an historic level in the last decade and that pile of debt is well over $ 7 trillion dollars. The percentage of default on this particular leg of the stool is likely to increase due to the income loss of the people currently unemployed and those yet to be unemployed or underemployed as this crisis continues.

2. Interest rate increases and a spike in inflation.

No matter how things are cut and to what level you believe that the economy is recovering and we have "seen the bottom", one fact remains and forms the second storm.

With the current fiscal deficiet and what is seen to be the level the US will have reached in the next 4 years (in excess of $10 trillion dollars!) pressure on interest rates is going to become more and more a factor in the economy of the country.

We have already seen a dramatic spike up in the spread between the short end of the yield curve and the long end. To the uninitiated this may not mean much, quite honestly, many who should know the significance of this do not but, just so you are aware, this is an indication of pending future inflation and a vote of no confidence in the US long term debt.

In effect, purchasers of US debt are shifting to the two year or less segment of the market and that has produced a spike in the back end of the yield curve (10 years and out) against which the majority of loans are based.

This fact alone is a huge risk and at the end of the day will cost the US economy dearly and could choke off any meaningful recovery and worse.

The burden of debt service the US has now and will have into the next generation(s) is rapidly reaching a point where it will require over 25% of the total gross domestic product of the US!

This is what has some experts sounding alarm bells about the triple A rating of US debt and is driving the more open discussion by other countries about an alternative currency for international trade.

China has already begun to reduce it's purchases and holdings of dollar instruments and has openly chastised the administration for its' fiscal condition. The country has been increasing the level of purchasing gold which is a subtle shift away from the dollar and a hedge on the inflationary pressures likely to be felt on the remaining holdings.

There are still enough of us left that remember the last spike in interest rates where prime reached over 19%, something that would be more catastrophic today than it was then, and it was pretty bad then. This time around the risk is greater because of the current condition of the economy and the potential for this issue being part of a convergence of other events that together could plunge the economy into a death spiral.

The level of new taxation (hard and soft taxes) that this administration is planning and will have to impose will be of a level that will hinder economic development, job creation within the business community and will reduce the standard of living for virtually every American.

With this burden on the economy one could predict with a high degree of certainty that whatever benefits the "stimulus package" had will not materialize anywhere in the real economy of the US but only in the media devised reports of the values being acheived.

The "green shoots" we keep hearing about, even if real, will not reach maturity with the pressures of rising interest rates and inflation combined with the kinds of taxes that will be layered onto virtually every aspect of American life and economic activity.

Example: Mr. Obama claims that so far the stimulus has saved or created 150,000 jobs and the media sing the praises loud and continually. But, if we just look at last month's statistics, we "only lost" 353,000 jobs in May! In my math, that works out to a net loss of 203,000 jobs to be added to the already almost 10 million already lost.

That produced a 34% drop in IRS tax receipts so far this year and we are not finished yet. Many of the States are in worse condition and are cutting back services of every form and increasing costs on everything from traffic tickets to birth certificates.

Where I live these costs have more than doubled just this year and some critical services (emeregency response and fire fighting to name two) have been pared back more than 30% and there is still a budget deficiet of several tens of millions of dollars yet to be found.

We still have the GM and Chrysler job losses to come, plant closings that will pressure more communities and municipal budgets, California's pending bailout or bankruptcy and what will most certainly be negative impacts from the great pretender's healthcare reforms.

All of this give current calculations of US debt rising to well over $12 trillion dollars by the end of Mr. Obama's current term. And that is if they stop now, which I hope you know will not happen.

Look at his latest escapades and narcistic use of his power.

Date night in New York at a cost of yet undisclosed amounts.

A trumped up visit to France following Cairo's apology stint and the entire Obama clan being whisked off from D.C. to Paris for the weekend.

All at a time when some families who voted him into office are scrapping together coins to try and pay for the next meal.

Please don't get me wrong. A president does enjoy a certain status with which comes privelege but, a true leader would not be doing things like this at a time like this. If for no other reason than to spare himself and his Party the potential attacks that should rightly be brought by the opposition.

But, he is above that thought process, feels unassailable and is arrogant enough to basically thumb his nose at any critic or opposition because "he the man".

The GM executives and the bankers were all roasted big time in every paper and on virtually every news program for their "arrogance" for going to Washington to ask for billions in bailouts while flying in on private jets, as well they should have been.

But, now we see a pretender as President doing even worse. He is compromising future generations with TRILLIONS of dollars of debt burden and feels that he can spend taxpayer money for date nights and weekends in Paris.

Folks, we have a presidency that is even worse than the Wall Street crowds' arrogance and extravagance and no one is saying much about it.

You better start!!

3. Geopolitical risk.

While it may seem proper and a means to security to continue apologizing and denegrating American actions to Mr. Obama and his media crowd, it is not at all positive to the security of the country and in truth the rest of the world.

What is happening with every "apology tour" Mr. Obama plans is a furthering of evidence to those we should be concerned about that American might is all but snuffed and the restraints that many nations and groups have had to practice out of concern of American determination to defend itself and to act in a preemptive manner should enough of a threat be perceived or evindenced are not as necessary at this time.

North Korea has certainly determined that there is not much to fear from the administration and I am certain that all of you know that Iran watches every test with glee and a view of the future they can anticipate as regards their march to obtaining a nuclear capability.

I believe that Hugo Chavez also watches with a certain gleem in his eye and some money in his pocket. Especially now that he has a new friend in Mr. Obama.

After the Cairo speech the parents of the generations being born in Europe and the US today should start planning on getting courses in Arabic and looking for the proper translations of the Qur'an they will have at home because the only view the Muslim world can have, especially the radical portions of that "peaceful society" Mr. Obama declares we have a duty to protect and defend along with ourselves is that America is ripe for picking and now is the time for the harvest.

Now that we won't use measures at our disposal that helped to keep additional attacks from being launched successfully, that terrorists are no longer labeled as terrorists and given access to the rights of domestic criminals, and most astounding, can be released into the very country or countries their leadership wants to attack, whatever prayers of thanks they offer most certainly will include the name of Mr. Barrack Hussein Obama--not hard for them to do, he is their brother!

So, in the midst of the greatest financial and economic crisis of modern times, with the US economy hobbled and looking like it will be kept so for decades, an attack here or elsewhere of enough significance could produce the culminating event of the end of American economic and democratic influence around the world.

If you or I were living in countries where people are still held in tyranny and looked at what is taking place in the US today, we would think twice about following that example and model of what democracy delivers.

We cannot suffer for much longer with the situation we have unfolding each and every day. We can see that just in these last 139 days we have reached a fiscal slide that will take decades to manage if things just stopped where they are now let alone where we are headed in the next 139 days (a nationalization of health care, many tens or hundreds of billions more dollars to be spent on bailouts and "stimulus" to name just a few) and where we as a Nation will be at the end of the 4 years this inept, unprepared, socialistic and spineless administration has been granted.

We are still living in the midst of the first storm that has hit and not doing too well, these are formed and on the horizon and headed our way.

Get ready, it is not going to be very calm for sometime.

And for those of you who look at the market to determine if the economy is improving, forget it. The market at the moment is being played and traded by all the money managers who have to do something with all the funds that they have on deposit and against which they earn fees and bonuses to get some type of return above the Treasury bills they put everything into starting last year and it is now June with September and December getting closer every day. Nothing more than this and what you are seeing is a rally in a bear market that is temporary until these guys can get a level of return they can use to justify their charges to their clients.

They will get out or run as these storms get closer.

Someone had to say it. I just did!

Stimulus: Spin and Spun

If you want some insights into the disdain that the folks in Washington D.C. have for the rest of us and our intnelligence, read the report released today that puts a spin on the use of the stimulus funds that is laughable.

I won't get into much of it but here is one example:

$60 million to fill potholes in Peoria, Illinois producing a cost for each temporary job to fill those potholes of around $63,000 per job.

Even worse is the expenditure of $550,000 to build an outdoor skateboard park in Rhode Island.

Read the report for yourself, I do not want to go on.

Here is a link: http://www.whitehouse.gov/assets/documents/100-days.pdf

The focus of this blog is the incredible spin on this by the administration and the media, attempting to divert the real cost of this administrations recklessness.

At the same time that this television crazed president was speaking on all the benefits of his policies, the Treasury markets were spiking!

Now, for the first time, we are seeing rate increases onto the shorter end of the curve, whereas up to now, the increases were happening on the 10 year and longer portions of the curve.

This is much more telling on recovery results and the effectiveness of this stimulus than anything else you can read or hear in the mainstream media and the spin being attempted.

That is one of the most damning and damaging results of this president and this congress.

Interest rates are on the rise and will likely continue to rise, perhaps spiral.

The inflation that I have been warning about is going to happen quicker than I expect and for certain, much more quickly than this administration is thinking and it will be part of the reason any hope of any meaningful recovery will be curtailed or snuffed out.

So, do not get spun folks. The nation is on a track towards failure at the moment and there is not enough energy to spin that reality around to be what these spin masters are doing.

The administration has determined that the public is going to buy into whatever Obama will get on television and say and anyone who says differently will be marginalized and referred to as nay sayers or worse yet---put onto the Homeland Security list of threats to the National security!. By the way, this is on the way to happening and the First Amendment will be effectively altered to be managed by these power mongers.

So, listen if you like to the spin but don't get spun.

If you haven't done it yet, get some gold into your portfolio, buy the inflation hedge ETF I mentioned in a previous blog (TBT), buy the DIG which will appreciate as crude oil increases and get the report and read it and send your representatives with your opinion on each and every one of these ridiculous projects contained in the report on the 100 projects the administration is touting.

Someone has to say it. I just did!

Dear Mr. Obama- you sorry example of an American

I am certain that you did not lose any family, friends, associates or people that you actually know or knew in the attacks of September 11th.

The reason I am certain of it is by the totally foolish and irresponsible statements and policies that you have made and are taking with respect to aspects of the aftermath of those attacks and the loss of American lives resulting from those attacks.

It is also very clear to me that you have violated the single most important aspect of the office you hold and the oath for that office that you took--- to protect and defend the United States of America from all enemies foreign and domestic.


You are also not fit for the position of "Commander in Chief" given those same statements and policies.

I, on the other hand, did lose 12 friends and associates on September 11th and want to let you know something you unworthy and unpatriotic farse of a president----


I would have done much more and much worse to anyone, foreign or domestic to have gained information that would have prevented the loss of those 12 wonderful and beautiful Americans!!!

And I do mean anything. Waterboarding would have been the lesser of any tactic I would have used to prevent just those 12 losses let alone the 3,000 plus that turned out to be the total number.

And where I would be holding these killers and enemies of our country would make Gitmo look like a holiday resort for the rich and famous.

Release them if you will but release them into the neighborhoods where you and your friends live and where your children go to school and play. To do otherwise will only expose your hypocrisy further should the media ever determine that they should.

Rather than release the prisoners in Gitmo, release first the other portions of what has been released regarding the tactics used on them and tell us all what information was learned from these murderers and what was prevented with that information and let us then decide whether or not Gitmo should be closed and whether or not we are not at risk or whether or not you and your media hyped platitudes make us feel safer and ask us to vote on whether or not to close Gitmo or to abandon any measures that will gain information the loss of 1 more American life to these bastards!

For all of you out there who will read this, put some names to the list of the dead from 9/11, add some pictures to the fatherless childern that resulted from those attacks, list some widows and widowers with names you know and can identify with personally and then listen again to the speech of this miserable excuse for a president and leader of today and if you are not ashamed of him and of your vote for him (if you did vote for him) then I say the same to you--- you are less of an American and not worthy of what America is about or provides to Americans, less worthy even that this man who is occupying the office of the president.

Then, listen to the speech of Dick Cheney and if for no other reason than this issue, get yourself and anyone you can influence committed to ending this insanity of Obama, Pelosi, Reid et al and get busy in the rescue of America and the office of President and Commander In Chief for one who is deserving of the office and the titles and who will --- protect and defend.

Someone had to say it. I am proud to have said it!

Desperately needed emission reduction levels more from Washington than Detroit

A much more important environmental protection is needed today out of Washington than what the administration is seeking to impose on Detroit and one that has more immediate and significant impact to all of us than the controversial and much disputed effects of “global warming”.

What we need today is not more of the hot air and media designed hype (smells like methane gas or worse to me) from the Obama administration rather, meaningful and properly directed policies on taxes and the economic situation that the Nation faces.

I don’t want to get into all the environmental issues in this blog, they are not relevant and I only used them since the administration used it today for a headline event.

The economy continues to languish despite all the rhetoric going on about “green shoots”, “signals of a bottom”, “signs of recovery on the horizon” and every other form of diversion both the administration and their string controlled media are using to stave off the truth---

That sad and unmistakable truth is, so far, they have done nothing to improve the economy and in fact are letting the situation drift into more dangerous waters while at the same time advancing an agenda that is inherently sinister and dangerous to the American capitalist and social system that we have known to this point in time.

There is something irresponsible about an administration advancing the kinds of policies that will without a doubt be the cause of increasing economic costs and pressuring corporate and individual budgets with new regulations and taxes at a time when we are in a deep hole and the worst economic environment of the modern age.

Policies like Cap and trade, new emission standards that will lead to even more cost to the automobile industry, veiled new taxes on every aspect of our daily corporate and individual lives and policies that will erode any remaining competitive advantage the US may have left.

Continuing governmental intrusion into the fabric of corporate decisions from who the executives should be, what they can and cannot be paid, who should be on the board of directors, what banks can or cannot charge in interest rates to their credit card holders and soon, what medical services you and I will be permitted to have, how wealthy we are permitted to become before facing punitive taxation on levels of earnings or wealth arbitrarily determined by government officials.

I take it very seriously and so should any American when the president takes specific aim at and vilifies American fund managers exercising a legal right within our financial system to not accept a restructuring of debt they hold from Chrysler that the government was attempting to force down their throats and then we see the IRS being used as a threatening and punishing instrument against them and then shortly after a comment (not at all highlighted by the media who, had it been George Bush or any other Republican president would have had 40 pt. bold headlines on the front page of their newspapers or “breaking news” sections of their television pulpits) by this same president that “maybe I should get the IRS after them” , when referring to wealthy individuals who are not supportive and are vocal about their objections to his administration’s policies and programs.

A speaker of the House of Representatives boldly and falsely leveling a claim that the CIA lied to her, the Congress and exposing for all enemies to see, aspects of our National Security complex that has without doubt prevented further similar or worse 9/11 style attacks on the soil of America and getting away with it with virtually no press or outrage is life threatening in my view.

If all this is not enough to get your hackles up, consider the following that should get your hair turning grey or greyer.

The “new normal” under a “new America” in terms of economic results and returns is beginning to take root and it is not anywhere close to the normal many are trying deperately to believe the Country is going to return to. Indeed, lower earnings and lower value multipliers on those earnings will doom most listed companies to rollercoaster style ups and downs to their share values, producing similar instability throughout most of the investment models and retirement plans of institutions and individuals alike.

America is just at the beginning phase of a massive deleveraging across the boards (save for the government) the results of which produced the collapse we are living in at the moment.

It is troublesome to me, an "older hand" to see a lot of the people of my generation going to the media day after day and spewing what I believe to be "false hope" (hate to believe it is just false information) that things are getting better and that they can see some signs of improvement to the economy!! There is no fundamentals to support what they are "seeing".

The current market move has nothing to do with belief in fundamental improvements in the economy. It is first and foremost just a trading market and secondly one that has moved on lack of volume and lack of selling.

First the economy in general and the whole clouded view that things are getting better.

They are not!! It is not getting better when all that can be said is "they are getting less bad"!!.

There is a major difference and it does not take a subtle well heeled investment manager to figure that out.

The country is still in crisis and not at all recovered from the initial wound of the financial meltdown of the banking system and we are rapidly coming up to the point where the next shoe to drop actually drops.

I have hinted at this with my “shoe untied” metaphor in previous blogs.

It is now ready to drop. Here are the stats on this shoe (which is unfortunately not the last one. Remember I have also used a centipede metaphor on what the US is dealing with):

Beginning in June and continuing into 2010, over 9 million homeowners will be facing resets on their ARMs (adjustable rate mortgages) and most of them are going to encounter significant declines in the value of the houses on which those mortgages were set, making it very difficult for many to refinance. It is also important to take into account that many of these borrowers will have likely suffered the loss of either the primary income earner on the mortgage or the second income earner related to that mortgage, making it even more difficult to refinance. Estimates put the total exposure of this segment coming due at over $370 billion but the “stress test” of the government only had $87 billion included.

There are in excess of another $300 billion of credit card balances that will as of June 1 be at least 60 + days late in receiving any payments (even the minimums due). The “stress test” only accounted for less than $60 billion.

Between 2010 and 2013 over $ 1 trillion dollars of commercial real estate loans will be coming due. They will either have to be refinanced or paid off or, put into foreclosure and liquidated. Not one penny of this cloud was included in the “stress test”.

In the last two Treasury auctions (the process the US uses to refinance itself) had it not been for the Treasury offering higher rates than what they started with and without the shadow support offered by the repurchase of much of those issues by the Federal Reserve the day after the auction, they would have had to be classified at least “troubled” if not an outright failed auction process. This at a minimum means higher interest rates are already upon the market and worse, many of the traditional and expected purchasers of the past are not that confident in the US balance sheet as before and are not going to keep financing the US deficits. In effect, a global vote of no confidence in this administration and its policies.

China is going to (not thinking about it, going to do it) distance itself from the dollar. If anyone needs any evidence of that, other than what I have already provided in an earlier blog this month, look at the alignment done today between China and Brazil. In certain transactions between these two countries, settlement will be based on their two currencies-not the US dollar.

This is just the start, believe me when I say it. There will be many more agreements like this in the future paving the way for other countries to do the same or to require the same of trading partners and import clients.

California is a “failed State” and representative of what many other States are facing and at the end of the day will itself become another “too big to fail” institution that the Federal balance sheet will have to absorb.

The consumer base upon which the US economy was built over the past 20 years is no longer a viable nor recoverable base for the US economic model and is being rapidly replaced by the exporting countries like India and China, who depended upon the US consumer to fuel their economic growth up to now but who can now replace the US consumer with their own internal consumer demographic. Many US companies that produce in those countries will find it better to focus on those new and growing consumer basis rather than continue to be dependent upon the US consumer and with the levels of taxation they will face here in the US could reasonably consider (not tomorrow or even in two or three years, but, within 5 years) moving permanently offshore to these countries or others and receive better tax and regulatory treatment than what is shaping up as the “new normal” of America.

Even if all of the above (and what I have chosen for brevity sake not to include now) turns out to be “Chicken Little” concerns on my part, one thing that all agree with:

The “new normal” of America is going to be less of what it was prior to this collapse and that will also create “new normals” for every company and individual in the US.

We are not in a period of recovery nor have the markets seen their bottoms and this is not the beginnings of another major bull market. It is a trap for anyone who believes that the only place to invest is into American companies. It is not and the future is not investing in American companies. More of your portfolio should be invested into commodities like gold and into ETF's of countries like China, India, Brazil. Buy the BKF rather than Bank of America, if you are not going to retire in the next three years your gain will be much larger on the BKF than on BOA.

We are in the most dangerous period the US economic and capitalist system has faced and it is not correct to compare today to the Great Depression and derive any comfort. The math has changed to a point where the comparison is almost disingenuous. We are almost at the same number of unemployed Americans as the Great Depression (11.3 million was the number for those of you counting).

The unwinding of the strings on the ball of America is just beginning and is going to accelerate due to these steps being taken by the administration.

Volatility is just beginning and it is going to be of a type and nature that even the eldest among us have not witnessed before, even if there are some survivors from the Great Depression.

Can it be stopped?

That answer, like all answers can only be based on the facts available from which one can judge.
Given the fact of the current administration and the plans and programs being planned and implemented, a sad "no" is the only response I can give.

At this time and with these undeniable conditions facing the Nation the administration should be cutting taxes, implementing incentives for both individuals and corporations to invest, reducing spending and defending the dollar and they are doing exactly the opposite and unless they stop and rethink and begin upon a new route they are headed to a cataclysmic drop off the edge of the cliff and a breaking apart of the American model on the rocks below and the pieces will be unrecognizable.

Someone had to say it. I just did!

Falling into holes dug for others

Nancy Pelosi is finished as well she should be and should have been long ago!

There, that being said, let's get past that and her to a more serious issue that has impact to all of us.

The American system is in peril, moreso even than this blithering, lying woman.

Here is why.

America has lost all credibility as a functioning and desirable political, economic and social system. In a sense, America has done itself in and there is likely no rescue package or bailout for this type of meltdown.

Ever since Watergate, the damage to the American political model has increasingly worsened.
We were able to recove from it because despite the events leading to Watergate, in the end, our Nation was seen to have resolved the scandal the way America solves these types of issues--

The wrong doer was ultimately called to task, exposed and forced from power and made to no longer count in the direction of the Nation's business!---

Nixon was forced to resign folks! He was a Republican President forced from office for the wrong he did and as much as all Republicans felt the damage of that, we agreed with it and accepted it as right and proper and the right thing for America.

Clinton escaped a similar fate. His wife escaped a sentence while Martha Stewart was jailed for less. She is now the Secretary of State for goodness sake! What does that say about America?

Now, we will suffer with the resluts of the past election and the incredible pass this unqualified, self-agrandizing and do whatever is politically expedient president (small p intended) and his administration have received from the media and the electorate on major issues for which he and others now occupying offices of power (the secretary of the Treasury for one) should have been soundly disqualified and rejected.

With this incredible waste of current and future generational wealth of the Nation on these massive deficit spending programs aimed at a socialism model that can be seen as failed and unavoidable massive tax increases and interest rates that will have to rise to significant levels, the Nation will be hamstrung for at least the next 10 to 20 years or more.

California is about to become a truly "failed State", in actuality it already is and could be the first State in history to file for bankruptcy.

There is a purposeful and relentless push to punish capitalists and business entrepreneurs and to exert political will and control over them that has seen this president go so far as demonizing and threatening hedge fund managers and private equity groups on National television for exercising their legal rights and fulfilling their fiduciary responsibility to their investors and clients.

The huge push to exert control over the banking and financial system of the country has all but been accomplished via bailouts and governmental intervention into all segments of the corporate and capitalist structures-replacing CEO's of companies, setting compensation, determining which companies are too large to fail while at the same time saying they are in effect too large to be left in private hands because they could fail, which forms part of an agenda of wealth redistribution eventually to only those who will form a voting constituency to continue control over the Nation.

As was made so nakedly evident in these past two days, both by the president and now this speaker of the House, a move to discredit and weaken a part of the very heart of our National security complex that has been proven without a doubt to have prevented attacks similar to those of 9/11 from happening again due to the information obtained from some of the very participants and planners of those attacks. America is on the brink of it's last days as the Nation it was and the precepts and beliefs it once represented to the world at large.

Many countries rightly now say, if that is American democracy we don't want it.

One of the European Union leaders actually said that the American model has failed and is a failure and needs to be changed!! If that doesn't make your skin crawl then you are an Obama supporter and I say-- shame on you!

America now is less than some of the banana republics and failed states that dot history in the eyes of many. Why, our president (small p once again intended) even finds it cozy to be with one of the best examples of a banana leader, Hugo Chavez and of course Mr. Obama's "engagement" of another worse than banana leader- president Ahmadinejad because it is time for America to do so is another example to the world of American loss of resolve and resistence to tyranical regimes. And, let's not forget the new opening of relations with North Korea and the failure to do more than shrug our shoulders at their intercontinental ballistic missle test.

Why is that you ask? Isn't this just getting overly negative about things? Won't America get through this and come out okay in the end?

In other times and other eras one could have expected that but, not this time.

This time the ability to recover is much more diminished due to the burden that is on and still to fall on the Nation.

In today's globalized world, the ramifications both economic and geopolitical are far too complex for the simple recovery model that have kept America in the seat of influence up to now.

Saddled with the level of debt that we currently have and that we will have in the coming years, America is just entering the decline of it's economic system and with some of the programs we have yet to see implemented by this administration, life style will decline and the general well being of every citizen will be reduced.

By the time this administration is finished with these first four years, America will be the largest debtor nation on earth with the highest debt of any country in history. We will be indebted to over 60% or more, of our annual GDP (depending on what that will be in these coming years) and this debt load will be more than can be supported while maintaining some reasonable level of economic lifestyle as we have it today.

America will find it hard to be able to continue to support a defense complex sufficient to protect itself and to carry out the kind of global policing role it now plays which will open the door for challenges on a wide array of fronts from a wide array of currently declared enemies and some new ones still in the shadows.

Today and almost every day since taking office, this administration has demonstrated to all that America is not the lion it was, that America will not at all cost and in all manner defend itself from attack or aggression.

America's projected view of itself as a world leader has been diminished by this president so rapidly in these short few months of his administration and has been permanently altered. No longer do people beyond our shores see us as confident and decisive but rather, apologetic, indecisive (flip-flopping) and retiring. Seeking "engagement" rather than standing firm in our historic position of not yielding or dealing with rogue nations or national leaders who openly call for our demise and the death of our citizens.

Once again I lay a lot of the blame for this at the feet of the Republicans who did not fight to hold their leadership of the Nation and who, so far have done little to present the Nation with a clear and proper alternative to this folly we are witnessing.

Added blame is on the shoulders of every citizen who has chosen to let the media be their guide on who to vote for and what they stand for and what their qualifications and center beliefs are and by which they will lead the Nation.

The results are presidents like Obama, speakers of the House like Pelosi, committee chairmen like Reid and Frank, a Treasury secretary like Geithner, congressmen like Sharpton, senators like Specter, a Secretary of State like Clinton and ultimately we end up with an America like-----

Well, that is where I will leave this and leave you, kind reader.

America will be what you and I will permit it to be either by default or by decisive action and each of us requiring anyone who will stand for public office to be more than what the media can create them to be or permit them to be and by getting involved now and getting the Republican Party off it's ass and into the fight for 2010 and 2012.

Someone had to say it. I just did!

Are You Stressed Yet? You should be!

The question is not related to the governments stress test on the banks. But, if you ever wanted evidence of government gone wild/crazy, this is it!

Get into the guts of it all and I bet you will come to that same conclusion.

Enough on that subject. Here is why you should be stressed.

The new televison personality, Mr. Obama went on national television (soon he is going to rival his new best friend Hugo Chavez for the amount of tv time he takes) to announce that he and his new gang of political terrorists are going to go after and get back all the money sitting in offshore accounts and not paying taxes and bring it home.

To cut through his bullsh-- and the lies he wants to have Americans believe, the primary reason for looking into this is he and his administration have begun to look down the road a bit and have seen the incredible amount of money they are going to need soon to manage all of this debt they are layering onto the US balance sheet and they are beginning to panic.

Why? Because they are worried about the effects that debt level will have on you an me? Not a chance. It is because they know it will sink their re-election ship. Don't believe it or even if you do, dig a little deeper and read a little further.

In effect and assuming anyone in Congress is fool enough to support this idea, should it pass and the IRS start going after these funds it will cost America more jobs, added loss of economic activity (or another way- recovery) and press an even more rapid exodus of American corporations from these shores.

First of all, the money that is there, contrary to what this lying president would have you believe is not there illegally. It is totally legal and part of the US tax system. These provisions were drafted and put into the tax code in an attempt to assist American corporations that were not competitive in the global economy due to the heavy load of taxes here in the US as the global economy was evovling and emerging when these provisions were put into the tax code.

We are still in that same environment in the US and in point of fact, soon we will get the distinction of being not the second highest tax locations for corporations but move into first place, surpassing Germany. By the way, German companies use offshore tax havens and the German tax code to legally smooth their taxes as well. Most all companies do and will.

Why should you be stressed about this?

Today the globalization of all business and economic activities is a reality, no longer in the infancy stage when these tax code provisions were enacted to help US companies be competitive.

It is more critical today that US companies remain competitive than ever and by taking the actions Obama is proposing he is going to damage American corporations ability to compete.

This will fold into something that I have been saying since 2007-- American leadership in commerce is going to fall and will within the next 5 years find very significant contractions of global competitiveness and business activities. Their only option will be to either do a defacto move out of the US or in fact move out of the US, like Haliburton and others have done.

With that will go American jobs and American income at home and a continuing slide in US standards of living.

A statistic for you, for every 0.01% of tax increase to corporations that cannot be offset and actually end up hitting corporate bottom lines, there is either a corresponding increase to the consumer equal to that percentage and a 1% loss in jobs at the corporate level either directly or as an indirect loss somewhere in the job chain that services that corporation.

There is no safe haven from this administration's relentless ride to destruction. Taxes are now increased and will continue to increase. At some point and mark this down because I will remind everyone about it when it happens, these folks will shortly be toying with the idea of a huge VAT style tax as part of their "get the rich to pay for everything" plan.

We are all in the ship known as USS America and this current captain has the ship on a course to shipwreck and there are not enough lifeboats for you and me.

So, get stressed. Get worried and above all, get in touch with your representatives and voice your opposition to this insanity.

Someone has to say it--- I just did.

The Patriotism in Resistance and Defiance

I am going to say it now and say it emphatically folks----



The hedge fund managers who resisted the administrations attempts to push an unfair, unreasonable and uneconomical piece of garbage down their throats in their "plan" for Chrysler are true American patriots!



They are standing in resistance and defiance of a government gone wild and that is in the process of usurping the Nation and is all about removing one of the very fundamental aspects of American capitalism and our economic system.



The government has no business being involved in Chrysler---your tax dollars have no place in the car business or in giving the government control over a private company--none whatsoever!



Chrysler is a private company that made so many errors in mangement it deserved to be bankrupted. The unions made it so uneconomical as a producing car company that they, like most of the American car manufacturers reached a point where they became non-competitive and were trying to sell cars that people did not want to buy and they deserve to have to make the concessions they made. By the way, take the time to read the concessions they made that the media mad, television time addicted President characterized as major. You should be able to call that what it is, in kindest terms it is overreaching, in this blog I can call it what it is-- A boldfaced lie!!

Chrysler is finally where it needed to be and would have been had not the administration become unjustifiably involved. Chrsyler was not an entity that represented any kind of systemic risk to the country. It is where it should really have been long ago, in bankruptcy, reorganizing itself and perhaps it will be able to emerge into something of a company that can survive and compete. I personally doubt it just so I say that as well.


This step by the administration is abject and overt overthrowing of the American capital and economic system.

The President is using his bully pulpit to undermine the heart of America and he and his administration are slowly lining up the heart and soul of America to implement a monstrous change to America.

The banks have now been put into the crosshairs, especially the largest (Bank of America, Citigroup and others) by this "stress test" and will most likely fall into their hands and they will have a choke hold on the banking sector which will be changed into an arm of a government bent on socialism.

We called all of the Founding Fathers patriots for standing up to and defying the tyranny of rulers who wanted control over aspects of their lives and decisions that they believed were God given and inherent rights of anyone born into the world.

I want to keep this short so I am not going to get into all the analysis of how abjectly false most of what the President and everyone from his gang of charlatans are spewing right now about this situation but, here is just one undeniable fact for all to hold in their thoughts----

It is the right of every individual in this country to determine what they will or will not accept into their lives without their government calling them names or marking them as anything other than a citizen exercising their rights.

It is the legal duty of everyone who invests other peoples money to ensure that they defend and protect that money in the best way they can against loss or unreasonable risk. There is a term for that, it is called "Fiduciary duty" and these hedge fund managers were doing just that and this President is totally out of line and out of legal and Constitutional right to tag them and name them in any negative manner.

His agenda is clear and now more exposed, at least to anyone who is prepared to think.

He and his gang are about changing the very fabric of American capitalism and if you don't get to a computer and send some emails or letters to your representatives in the Senate and Congress you in opposition to this you will be tacitly approving their actions. The link for you to find your respective representatives is at the bottom of this blog.


Use it. It is your right. It is your patriotic duty!



Someone has to say it. I just did.

Monarchs and media created Presidents-Wake up Americans!

“Amidst the errors shone forth men of genius, no less keen were their eyes, although they were surrounded by darkness and dense gloom” Petrarch.

The medias investment into the ascension of Mr. Obama and the leftist agenda is such that in the main, Americans cannot depend upon the media to objectively report, analyze or judge what he and his administration has done or will do moving forward.What is needed are some rational and centered eyes and voices to provide insight and objectivity to plans and actions by this or any group of leaders (governmental or corporate) and correctly point out the good and the bad.

The future is much more important than the past. And, for those who have a voice that people can hear, there is a responsibility of analyzing the past, its impact on the present and most importantly, the future.If there was ever a time where there is a significant need to do that it is now. The basis of that statement is the condition of the country, more to the point, the electorate.

Americans for the most part have abandoned individual investigation and scrutiny of most of the issues of the day. They have become a society of media controlled and directed individuals. Buying what is placed before them in the most positive and compelling forms available to modern media groups. One only has to carefully listen to some of the preposterous claims made on any infomercial channel or view the incredibly useless products pushed as absolutely necessary for a happy and sound life to see the validity of that phenomenon. Go to any movie and with the magic of a digital operator you will believe you are seeing reality when at the end of the day, we are seeing blue screen armies of incredible numbers, or spacecraft landing on asteroids or anything the mind can imagine or dream.

Depending on the viewer, it is either recognized for the fantasy that it is or, sadly, some people believe it is real.

That is not necessarily anything new. George Orwell panicked the nation with a radio broadcast in his day and with the higher technology available at the time.

Today, we have the equivalent of a “blue screen” and digitized creation of a President and administration that has been portrayed for far more than what it is and in this case, a much more dangerous lulling into a false reality of a large majority of the American people as to what the end of the movie is going to be.

I don’t like the far right scare mongers either and feel that they have had a large part to play in the left and the media’s ability to press the point of marginalizing rational and reasonable questioning of programs and positions of the past administration and this administration.

What is needed at the moment is some credible sources that can and will present via the media fair and rational analysis of this administration and their agenda for change in America.

Credit should be given when and where it is due, rather than attempting to find fault with valuable programs to the Nation. But, there is an even more important need to begin sounding the alarm to Americans who seem to still be asleep and dreaming a dream they were lulled into by much of the media going back into the run up to this past election and point out the major and critical economic and societal changes that are part of this administration platform.

Too much focus is being kept on the banking crisis, not that it is a minor problem but, it is the door through which much of this lurking danger came into the equation and pushed the American electorate and enabled the media to finally get what it wanted, a digitally created President with a virtual lock on the balancing element to the power of his office, Congress, that lines up fully to their furthest leftist programs for changing the American equation, long held at bay.

In these next four years, the level of change that can be wrought to the fundamental structure of what we know as America are at risk of being so dynamically altered that we could well have lost America’s place in the world.As much as some of the bankers and Wall Street "captains of finance" have brought the world economy to its knees.

As much as President Bush is blamed for everything wrong in the world, it is no longer fit or reasonable for Americans to accept the need to overturn the very fabric of what America is or will be.

Make no mistake about it, this administration is on a road of change towards socialism and while Americans sleep or pay nanoseconds of attention to what is happening, there is an ever increasing velocity of change taking place and without much outcry.

While the political leaders and government regulators from past administrations share as much or even more blame for the current state of the economy than the business leaders at the helms of those banks and institutions that plunged us into this crisis, in reality, the current administration is now much more at fault than the past. But, everyone is conveniently heaping the entire fault upon the past which does no good and brings no solutions to these problems.No doubt that the regulators were asleep at the wheel. No doubt that monetary policy and loose lending standards opened the door to the creation of what is now deemed "toxic paper" on the balance sheets of every institution with more than $20 to invest for themselves, their depositors and shareholders, all the while negotiating with the boards that were supposed to control a company's management and direction but instead gave the PIN codes to the bank to these executives and told them to take as much as they wanted and they did but, enough of that already.True leadership will not dwell on or gloat about the failures of past leadership, nor should any American leader and most especially an American President apologize for America. True leadership that told the American people that they had a plan for change, change that could be believed in will stop all of that and produce the change.One would have hoped that the American people would have understood the change being talked about but they did not due to their own ignorance and unwillingness to dig deep into all these promises for change, the experience level of the candidates and rely on a media that was equally unwilling to do its job and dig into the candidate who became President due to the abdication of the media to do the job of objectively making transparent what all politicians try to obscure.

We should have much more concern about the changes that are in the offing and now it may too late for America to have had an opportunity to objectively judge the new leadership that was and is so sorely needed to deal with this problem that was evidencing itself all throughout the election season.

Had that been done and the media even serving the public with something more valuable than the hatred of Bush and his policies and concentrated on forcing each of the pretenders for the leadership of the country to put their plans fully on the table with reasonable and objective analysis of the costs and benefits of those plans, we might be in a different position than we are at this time.America has been taken over by pretenders and charlatans with no real true plan for the change needed in the country that would keep the underlying principals of what America is and its’ place in the world.

We are now saddled with a leader whose agenda for change was never fully disclosed or understood by the electorate, a change of a type that is away from American capitalism and social structure that was and should continue as it is, with all the reasonable and logical controls and regulations that are at the same time controlling and empowering in a capitalistic economy.

For the incredible danger this President represents, we have only to listen to his most current speech concerning the Chrysler bankruptcy filing today.

Let’s step over the outright lies and just let me focus on my primary point.

Certain investment groups and hedge funds were not in agreement with or prepared to make the disproportionate concessions that were being “asked” (more like forced in my opinion) on them. That is their right Mr. President and does not make them demons or un-American. It is also something that the bankruptcy laws of this country anticipates and can deal with. But, this President has chosen to make them the demons and the reason for Chrysler’s bankruptcy and nothing could be more distant than the truth.

If you want a target for another part of American capitalism is going to be attacked, here is the first shot by this President and his administration. It will be the private equity groups and hedge funds. He has demonized them from day one and it is part of the socialistic path upon which the President has set himself and the administration and the Nation.

It is only day 101 for Mr. Obama and his team but, his first 100 days are a huge disaster and nothing more than a media propped and hyped up lie which portends disaster and a permanent and very negative paradigm shift in what America is and will be and its place in the world. The American dream will have to be amended and it will not be anything like what we have had up to now.

Someone had to say it.---- I just did.

100 days to nowhere

By the title of this blog many will not want to read further. I understand that. No one likes to have a dream interrupted or a fantasy destroyed.

But, for those of you who will read further, if any of what I have to say hits any chord of sanity, get involved with the RNC and start working for the upcoming 2010 elections, it will be the one chance to rescue both the party and what will be left of the Nation at that point.

I am not being funny nor am I being cynical (well, just a bit) but, we are in grave danger at the hands of these current leaders and it is real, pervasive and worsening.

I have been saying that this administration is one that is lost and cannot find its way out of the woods, worse yet, a huge percentage of people in this country have gone into those same woods and are now equally as lost and wandering, thanks mainly to a media that will not speak out, save for those who have been very successfully marginalized and portrayed as extremists.

In these first 100 days, despite all of the rhetoric, speeches (many of which being apologies by this unpatriotic President), and media madness, this is what has truly been accomplished:

• A subtle and major tax increase to every American.
• A generational mortgage on the Nation that will exceed $10 trillion dollars
• A governmental usurption of private enterprise in the United States
• A suicidal campaign of Presidential apologies for what America has done and is as a society
• A wreckless embracing of tyrannical leaders who have vocalized their desire for American failure
• A weakened military both in real terms today and more to follow into the future
• A stalled, confused and aimless Treasury "plan"? on the financial system crisis with more shoes yet to drop and little hint that anyone knows it and worse still, no hint of a plan to manage them if and when they occur
• More earmarks on a budget than at any other time in history
• Corrupted politicians being appointed to cabinet posts
• Languishing markets and a meaningless and fruitless stimulus plan
• Failed business leaders still at the helms of many of the "too big and too strategic to fail" businesses, many with no pressure for accountability
• A President who spends most of his time out of the White House than in it-see tomorrow's blog on this matter, you will find it interesting.

Here is the most important one--- The permanent and fatal shift away from American capitalism to a revised form of socialism that will creep and eat its way through every aspect of American society and standard of living until America will have been morphed into a form of European socialism.

In short, in these 100 days and without much fuss, America has been sacked and looted (the looting is just beginning by the way!) and if we are not careful, a form of subtle tyranny will evolve and overtake us all.

We have lost the America those in my generation and those before built, fought and died for and in which we invested everything we have/had.

As a Nation we are now embracing Messrs. Castro, Chavez, Ahmadinejad in talks to "end American error" and to begin a new era of engagement.

We are opening our Nation's courts to terrorists and pirates and ending aspects of intelligence gathering that have kept us from being attacked in similar or worse fashion than 9/11.

Every great nation eventually confronts internal and external elements that have the potential to permanently alter its leadership at home and abroad.

History shows that the internal issues are far more damaging and permanent than those external challenges.

Those internal issues begin with a leadership that is not experienced, unprepared and too focused on power and its own importance and not on the business of the people and hostile to the business leaders and community.

Taxation that is burdensome to the business community and working class for the benefit of growth of government and government programs that spend too much and provide for the enrichment of those in power and that govern.

The center of government becomes unattached to the rest of the Nation.

External enemies (known and suspected) are placated and pandered to.

Illegal immigration is uncontrolled and given access to benefits that should only be provided to citizens.

A significant drop in living standards for all save the leadership elite.

If you want to know some nations in history that exemplify this, here you are:

China during the final years of most of the dynasties, ending dynastic rule with the Qing dynasty

Rome in its last 100 years

Greece, especially the City States of Athens and Corinth

Spain, France and England, (interestingly enough starting with the expulsion of the Moors from Spain in 1492)

Germany in the years leading up to both World Wars

The Aztec, Mayan and Inca empires

Enough examples I hope. Any one of these have so many parallels to the crossroads where we stand at the moment it would not take much of a student to develop this into a couple of reams of paper.

So, what to do?

Since we do not have the ability to have a vote of no confidence and we do not overthrow our elected governing officials and have never had a military coup, we are stuck for now.

But, we do have an escape route and it is via the upcoming elections for 2010 and through public pressure of significant numbers and publicity that the will of the people drives the unwilling leaders of the people to back away from certain actions and decisions in time enough to prevent the permanent paradigm shift to a new societal order and national agenda.

Everyone, including yours truly either wanted to or, as a result of the election, had to give this man Obama and his party and administration a chance and/or the benefit of the doubt.

While 100 days does not a full term make, it is enough already!

We have the evidence of the doubt many of us had and it is necessary and urgently so that whatever can be done to muster the opposing political will to stand against them all, create a new proposal to the Nation that will first and foremost point out the dangers of this administration and its plans and direction and demonstrate truthfully where that will lead us as a people, a society and a nation. Equally as important is the plan and direction that is reasonable, rational and responsible first to each and every citizen of this country and then to the rest of the world at large.

We have to call failure, failure. We have to call war, war. We have to call terrorists, terrorists. Tyrants, tyrants. Corrupt leaders (politicians and business leaders alike) corrupt leaders. Right needs to be called right and wrong has to be called wrong.

It is time to leave the fantasy of the press and the uninformed masses and force the issues to be dealt with in reason and responsible leadership that has a root in the America we of this generation know and the America of the generation that raised us and passed on to us the standards and principals every civilized nation on this planet once held dear and as their dream.

One that was worth defending and was defended.

NOT APOLOGIZED FOR BY ANY PRESIDENT OF THE UNITED STATES MR. OBAMA!

And, perhaps more importantly, not apologized for by the citizens.

America was always the light to those outside its borders. It still is in many ways but, it is not so much the corrupt bankers or lawyers that have made our America so shoddy in the world view. Most of the world views that as part and parcel of business and in some parts of the world, hell, it is even expected.

What has made America look shoddy and vile is the corrupt and bankrupt politics and politicians that we have allowed and tolerated for far too long due to an uniformed and ignorant minority driven by a power mad and malignant media whose only purpose is to overturn what America became and is to change it into what they want it to be with no voice other than theirs and no success other than theirs.

If you want to go to the Tea Parties, go. But, on your way, make a promise to yourself and your children and grandchildren to start doing something to direct the outcome of these upcoming elections in 2010 and make an even more fervent commitment for the election of 2012.

I think these will be our last chance to keep our America.

Someone has to say it. I just did, and so should you!

China's gold holdings and recent purchases

For some weeks I have been writing in other professional papers and sites that investors should be adding to their gold positions, taking advantage of the slide in the price of gold.

I have also been saying that it is no small matter that China has become very vocal on their concerns about the mounting US debt, to a point where they have raised the issue of continued new purchases in the amounts they have been as well as reducing the level of US debt they hold.

They, as well as other countries are doing exactly what they said they would do, quietly and without much fanfare but, it is noteworthy and one more indication of the concerns regarding the level of debt the administration is piling on with the bailouts, stimulus and other spending programs known to be part of the Obama administrations' agenda.

China is now, at 1,000 tonnes plus, the fifth largest holder of gold bullion in the world and over the past two quarters have increased their purchases significantly.

Traders got wind of this sometime back and last week some of the Chinese subtle buying moves became more open.

Many countries and several multilateral agencies have been selling bullion in order to create liquidity for programs that they would normally finance but, in the current credit crisis are not all that able to arrange and fund. So, they have no choice but to raise funds by selling off portions of their bullion reserves.

We all know (some of us have known for quite sometime) that many hedge funds and institutions had to sell and are still selling their positions for liquidity needs as well.

This selling pressure along with the general uneasiness in the markets has tended to keep a lid on the price of gold despite the future inflation that anyone with even an economics 101 course under their belts knows is looming as a result of all this spending and bailout madness.

If it were just that China and India and some other countries were buying gold and substantially more than usual, it might be something to just say hmmm about but, this time around I think there is much more to it and more attention needs to be paid than hmmm.

China holds more than $2 trillion dollars in Forex reserves and have now, as I said above, become very vocal about that fact and their concerns about the US financial position. Who could blame them? In point of fact, if anyone here is holding a large portion of their portfolio in US Treasuries because they want safety, you should have some second thoughts about the safety issue, especially if you are in the shorter maturities.

There is a monster bubble in that segment of the debt market at the moment and we all know or should now know what happens to bubbles when the first guy decides to leave. Many analysts are sounding warning alarms about it even though in my opinion it is late. I did not say too late, just that it is late.

Some analyst look at that segment of the market and use it as a basis for why they believe the stock market will rally soon and a new major bull market will be on.

Nothing could be further from the truth in my mind.

There are still many more shoes to drop on the US financial system. I have written about the commercial real estate market recently, which is now beginning to fall and there are many others, but that is not the topic of this blog.

China is increasing its' purchases of gold on three basic positions:

1. By increasing their bullion holdings they are at the moment trying to maintain their traditional position of having 10% of their reserves in gold. This has been the number for more than 30 years. However, I believe that they are not only trying to hold to that percentage but, are in the process of increasing that percentage and I think it is going to be more than just a few percentage points based on their justifiable concerns about the US financial position and the dollar. Many countries in the European Union hold as much as 60% of their forex in gold and some other countries are as high as 70% to 75% in gold. I am not suggesting that China is headed to that level, but, I am convinced that they are going to go above 10%. For now I believe the target is no more than 20%, but even that will require them to spend another $200 + billion in new purchases of bullion.

2. With every new ounce of gold they buy, they automatically reduce their US dollar reserve mountain and we know for a fact that they are doing that and now in a not so subtle manner. They want and need to substantially reduce their dollar holdings and by shifting a portion of those reserves into gold they are not only reducing their dollar reserves but they are also buying a hedge against the impending inflation that is a certainty.

3. They are also into an economic stimulus plan which they will most likely fund by using the dollar reserves they have so as not to have to print too much money and set off a round of internal inflation but, they are still going to have some internal inflation as a natural result of the US inflation that will come and buying gold now is a great way to prepare their balance sheet to help them with some of that fallout.

There is also the possibility of a slight sinister reason as part of all this and that would be to deliver an even greater message to Washington (not that the boys and girls there will get it or heed it before it is too late) but, it is to raise the stakes in some of the upcoming negotiations that the administration is going to have to get started with China and the Chinese like to go into negotiations with the battles understood, planned for and in their minds, already won or at least the outcome they are prepared to accept certain.

Warning shots over the bow of the USS America and people need to pay attention.

By the way, one significant event you will hear about in the coming weeks: The IMF is looking to sell about 400 tons of gold. I don't think they are going to dump it onto the London or New York or any exchange for that matter. I think there will be an "off market" deal with the Chinese.

Pay attention and when you see or hear about that happening, understand that it is a confirmation of the Chinese move away from and out of the US dollar which is a vote of "no confidence" in America and this administration as far as I am concerned.

By the way, if you want to protect yourself and your portfolio a bit and I suggest you think seriously about that, other than buying gold bullion which costs a lot to store (unless you are one of those who bury it in the backyard or put it in a safe in your house), you can buy gold minning company stocks and now you can buy ETF's in gold which trade just like stocks but are valued according to the price of gold bullion. Check with your financial advisor on it. If he doesn't know about them or tells you that you shouldn't do it, I would think real hard about keeping him as an advisor.

The US is in a deep hole and Washington keeps digging with abandon thinking they are digging their way out.

As a boy I used to love the story about digging deep enough and coming up in China. In this case, what is happening is the powers at be are digging and it is deep and most likely the Chinese know it and that is why they are increasing their buying of gold because they know the story too and they know that at some point the hole will cave in on itself long before the diggers come up in China.

Some of the dirt is already starting to fall in on Washington and unfortunately for all of us, we are going to feel it as well unless we can get them to stop digging.

Someone has to say it! I did.