Tuesday, December 23, 2008

Nursing Home Reading for me in the Future

I mostly write this site so, When I'm older and grey-er (grey for age, gray for color) mostly feeble, mind searching for the past, not even knowing there is a present or future - past driving, hardly walking - shuffling mostly - hardly dressing out of these sweats - I'll have something to read and take comfort - how wonderful the past was, compared to this present time (maybe 2020.)

A summary of thoughts from various people (I respect - there are very few) just before this exceptional time - Christmas 2008:

"This is a truly global recession. We learned overnight that Japanese exports collapsed 26.7% year-over-year in November; that's the biggest drop on record. Shipments to the US plunged at an unprecedented 34% year-over-year rate. Meanwhile, imports into Japan sank 14.4% year-over-year in a sign of weakening domestic demand. A similar story out of Thailand, where exports dropped 18.6% in what was the biggest drop in at least 16 years. In China, interest rates were cut for the fifth time in three months."

"Now that the auto-makers have secured a $17 billion bailout, the next group heading to Washington for government assistance is property developers. Take a look at the front page of today's Wall Street Journal, "Developers Ask US For Bailout as Massive Debt Looms." Developers are warning policymakers that office complexes, malls, hotels and other commercial real estate are headed into default and bankruptcy."

Let's stop here, early in the discussion and point immediate blame to the Financial Industry, mostly in the United States - meaning Banks (loans, mortgages, credit cards) Security Dealers
(theft and manipulation) - derivatives without substance - Insurance Companies - by complicity, and finally Congress - greed thru eating too much "pork" and taking too much loot from the Financial industry - Lobbying - devils work. Big Business through complicity and professionals that support them - Lawyers and Accountants. (remember what Shakespeare said?)

I Digress......(sigh..)

We have 1.2 million unemployed construction workers. We have 123,000 unemployed architects and engineers. We have 83,000 unemployed machinery workers. We have 145,000 unemployed transportation-related workers (and that is just the "legal" ones) no one is counting the undocumented, the "under the table - black market ones) - lets just add 250,000 for them.
So that brings us to close to 2 million in the infra-structure business - Obama's focus.

But - Wait A Minute - the bulk of the joblessness is in financials (up to half a million), retail/wholesale (1.2 million), leisure/hospitality (1.3 million) and health/education (1.2 million) - Wow, another 4 million And if investment bankers, shopkeepers, bell captains and medical chart technicians have anything in common it is that they don't have much experience in shovel-ready activities.

Households have lost over $7 trillion in terms of net worth in the year ending 3Q, and it looks like this wealth destruction will top $10 trillion when the 4Q Fed flow­-of-funds data come out.
Christmas shopping is seeing deflated prices (Real Deflated Prices) an average of 50 to - 60% off listed prices - Just to get some cash, any cash out of their inventory! DEFLATION.

Our Population today is about 3 times that of 1929 - we are in a 1929 nose dive - with a much heavier plane - with more sophisticated (financial) instruments - a dumber government - and in Bad Weather - It has been determined that the Mistake of the Last Depression - the government did not flood the economy with cash - which would lessened the Depression.
So, We'll see...........

We are facing International Trade Protectionism (most countries looking inward) setting tariffs for foreign goods, governments raising money to protect their industries from foreign takeovers, and finally - wars for survival in unstable countries. It's all about self-preservation.

What makes Gold and commodities look so good is the lack of stability for gold and spending on infrastructure for Commodities. Cash is king, however - at least for now. How do you buy Gold
you can't - folks are waiting in line for "real" gold - you can only buy derivatives. "real" gold is well over $1,200 an ounce if you can find it - the derivatives are sold on the market somewhere
around $800+. What is a derivative? A Promise. What caused most of the financial difficulties of the 2008 financial crisis - Derivatives - of financial securities.

Why is the weather so bleak outside today?

Sources: David Rosenberg (primary) John Mauldin, Wall Street Journal, New York Times, Business Week - US Government statistics, Department of Labor, etc.

ps. Shakespeare said, "First, lets kill all the Lawyers" - that's more than 50% of congress, all the judges, maybe 20% of Wall Street - a good percentage of state and local legislators - maybe 10% of corporate leaders. I guess, that's a good starting place.

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