Why Does A Higher Minimum Wage Lead To Higher Prices?

The main reason why prices tend to rise with wages is that public corporation stock prices are tied to their quarterly/annual earnings. Corporations that desire their stock prices to rise are always looking for ways to increase their profits and show earnings growth.
Increased wages raise expenses for a corporation by a factor of its total workforce affected by the wage increase. This lowers earnings/profits, and causes a chain reaction (via analyst downgrades) that results in their stock price declining. An obvious candidate for making up for the lost profits is to raise prices and/or find cheaper labor (Asia/Mexico) and cheaper materials/ingredients.

One complicating factor is that a general workforce with higher wages has higher purchasing power. Yet, as the workforce exercises this power in the market place, it signals higher demand which tends to trigger both higher prices from current suppliers and the entry into the market of alternative suppliers who try to compete on price and volume.

Not saying any of this is good or bad. Just pointing out the general mechanism. Perhaps someday we can return our society back to a 1950s/1960s business mentality when "maximizing shareholder value" wasn't the A#1 priority of corporate CEOs.

On Obamacare and the Free Market

Many of my contemporaries are posting and blogging about the PPACA, also known as "Obamacare", which rolled out its public health insurance marketplace in October. The most consistent complaint I read about the program is that it sets a new precedent of governmental intrusion on private citizens by requiring us all to purchase a product, namely: a health insurance policy. The law is set up this way so that the economics of heath insurance underwriting will work -- healthy individuals' premiums today cover sick individuals' costs today and provided a reserve for the costs of tomorrow.

It is worth considering how we as a county find ourselves crossing this precedent of intrusion. You would think (wouldn't you?) that industries operating in a free market would police themselves from a standpoint of enlightened self-interest so as to not require regulatory intervention. But in case after case, industries have failed to do so.

Take the revelations about the US meat-packing industry in 1905 that led to the founding of the (precursor to) the FDA. Or the 1910 phosphorus match industry study that produced high taxes, forcing the industry to innovate a safer technology for their workers. When the harm done by an industry flying the free market banner outweighs the benefits of waiting for the unseen hand to remedy the situation, governments have acted and always will act.

You may not be of the opinion that there was a crisis in healthcare access (via premium inflation or underwriting restrictions). However, a sober survey of business articles from 2003 until the housing crisis shows that US health care costs were consistently cited as one of the top problems threatening the US economy.

When you consider the trend of US demographics going forward toward the next 30+ years, it becomes less surprising that the PPACA is the new FDA or SEC of our time.

Fall 2013 US Economic Prediction

I am beginning to convince myself that the US economy is headed for a 3-5 year window of high sustained growth. Here are a few reasons why:

Recall that 2008 was the last year that people with terrible credit could obtain easy housing credit. 2008 + 5 is 2013, which means that this is the last year that banks have to deal with uncertainty about large numbers of borrowers with cheaper 5-year Adjustable Rate mortgages going through foreclosure. The orderly winding down of these toxic assets will enable local and national banks to open up their reserves for legitimate business lending more freely.

Also, competition for high-tech workers is really heating up in the job market. I'm getting the kinds of unsolicited phone calls and emails I got back in 1998 and 2005. Yes, this portends a future bubble-burst, but one that is several years out, with the actual, you know, bubble, in the meantime.

Finally, the stock market has shown uncanny resilience in the face of multiple fiscal crises from Washington over the past 10 months. The right kind of stocks are heading in the right direction: temporary worker companies like Manpower and for-profit education companies like DeVry.

(disclaimer: I don't have any financial interest in either of the stocks mentioned except perhaps accidentally via my employer's 401(k) benefit)

Wrapping Your Head Around the National Debt, Deficits, Surpluses, and the Debt Ceiling

The following is not a perfect explanation of the concepts of our national debt, deficits, surpluses, and the debt ceiling. But hopefully my readers will find it helpful in understanding what these terms mean and how they differ from one another.

Lets say we start a country and we have zero debt. In the first year, we collect $10,000 in taxes and spend $10,000. So we had no deficit, because all the bills were covered. We had nothing left over, so no surplus either. And we did not borrow any money, so no debt.

Year 2, we still collect $10,000 in taxes on $10,000 in expenses but we also decide to light a new national Christmas tree. This will cost $300 extra for tree, lights and electricity. We print 10 pieces of paper with the words "IOU $30.00" printed on them and tell people we will pay back $30 plus some interest on them in 5 years. 10 people buy our bonds, so we now have the $300 to cover the Christmas tree. Result: no deficit, no surplus, but now we have a $330 debt (including a flat 10% interest rate on the $300).

In year 3, we will need to set aside a little more than $10,000 (around $66 more) to make sure we will have the $330 ready to pay back the people who bought our bonds when they come due. However, if we still only bring in $10,000 in taxes, we will incur a $66 deficit for the year. The way we cover that is to print more IOUs and sell them so the money is set aside and our creditors believe we are taking our responsibilities seriously. So we see that the deficit incurred this year causes the debt to grow.

Skip ahead 230 years... We now have a military, a department of social services, tons of federal employees in each, etc, etc. All of these programs were approved over time by the people's representatives -- including the financing schemes to pay for them over time with future tax receipts. The amount of all the bonds we've permitted ourselves to print and sell (to cover our past and future spending commitments above the taxes that have come in) is our "debt ceiling".

Let's say the total amount we've agreed to pay above all of the combined tax income so far is now $17 Trillion. That's the debt. If, in this year, we incur more expenses (including payments on the debt) than we bring in from taxes, we have a deficit for the year. If we had a deficit last year and we have a deficit this year, but the amount we went "over" this year is half of what we went over last year, we have cut our deficit in half. If we bring in more tax revenues this year than this year's expenses, it is a surplus - but that doesn't help us pay down the debt unless we agree to apply some or all of this year's surplus toward paying off the total debt.

10 Meals For Under $10

In my ongoing quest to eat meals with good nutrition at a reasonable cost, I have experimented with cooking in bulk and freezing the results as individual meal portions.  The recipe/process I'll detail below yields me 10 meals at (or under) $10.  I'll store most of the meal portions in the freezer with around 3 of them in the fridge.  When I'm ready to eat, I pull one meal out of the fridge and transfer one of the others stored in the freezer down to the fridge so that I always have a supply there ready to heat up.  When I'm left with only 2 meals in the fridge - it's time to go shopping to set up the meal rotation again!

This whole procedure only takes me an hour - from pre-heating the oven to storing the meals and cleaning the pans.

The equipment you'll need to follow this plan is as follows: An oven, a stove top, a large baking tray (with a lip around the edge) that fits in the oven, a large stove top steamer, and a utensil you can use to stir what's in the steamer - I use a large serving spoon.  An oven mitt or thick pot holder.  Finally, you'll need 10 plasticware sealable containers to store the meals in individual portions. (see image below)  Having a timer (even your smartphone) helps.

Also, it will be best to arrange for room in your freezer for seven of your plastic containers - not stacked, so the portions freeze more quickly.

Here are the groceries to buy:

1 pack of 10 chicken thighs (or 20 drumsticks) - around $5.50
1 large 64 oz bag of broccoli florets - around $2.50
1 large 80 oz bag of mixed vegetables - around $2.50
Note: the large bags of veggies will last for several rounds of this recipe, so the cost is lower per run.

Optional:
Several varieties of sprinkle-on spices (for the chicken)
1 large can of Old Bay seasoning (for the veggies)




Procedure

• Preheat oven to 350 degrees Fahrenheit
• Place all of the chicken, skin up, on the baking tray.  (Optional: sprinkle bottled spice mix on each chicken piece)  Put the chicken into the oven and set a timer for 30 minutes
• When the timer goes off, leave the oven alone.  Put an inch of water in the bottom pan of the steamer and set it on a stove burner that you crank to "High".  Place the top basket of the steamer into the bottom part on the stove.
• Set a timer for 15 minutes.  Fill the steamer basket, half-way with frozen broccoli florets, half-way with frozen mixed vegetables.  (Optional: sprinkle Old Bay seasoning over the frozen veggies, but do not stir)  Cover the steamer.  Turn the burner down to Medium once it begins steaming vigorously.
• When the timer goes off the second time, turn the oven off with the chicken still inside.  Turn off the stove burner.  Lift the lid of the steamer and press down on the veggies so they expel extra water down - out of the upper basket into the bottom part. Stir the veggies well.
• Take the baking tray with the chicken out of the oven and set it on a level surface.  If the drippings from the chicken have burned onto the bottom of the tray, your oven temperature was too high.  Try a lower setting (by 25 degrees) next time.  Use your utensil to gently push each piece of chicken so it un-sticks from the bottom of the cooking tray.
•  Set out your 10 plasticware containers and put one baked chicken thigh in each.  If you cooked drumsticks, place two in each.  Pour some of the drippings form the baking tray into each container.
• Spoon portions of the steamed veggies into each container.  Let them sit out, uncovered for 10 - 15 minutes so they cool somewhat closer to room temperature.
• Cover each of the containers.  Put seven of the 10 into the freezer - not stacked at first, so they freeze more quickly.  Put the remaining three containers into the fridge.

If you're in a rush, you can just eat a portion cold - like leftovers.  To heat one, however, I've found it best to pop it in a microwave for 2 mins 30 secs on 70 percent power.  One minute at 100% works a little less well.  Be sure to open the lid on the container before you microwave it.!

Fall 2012: Prelude To Recession

In my opinion, the U.S. economy has begun a slide into probable recession. This prediction is based on a technical reading of the major stock market averages (Dow Industrial, Nasdaq, S&P 500) as well as analysis of several recent shocks to our economic system. I have "called" these economic movements in the past and occasionally been correct about them. I want to give you, the reader, an opportunity to understand what I'm seeing, so I will use this blog to explain the analysis that happens behind the predictions.

In stock charting, we don't just show the price points making up the chart. We usually also draw a line on the chart showing the average price of the last 50 trading days. Additionally, we draw a 200-day moving average. Taken together, these moving average lines depict the longer-term direction of the price that is being tracked.

In a healthy stock market, the prices of the major indexes stay above their 50-day moving average lines (and the 50-day moving average lines stay above the 200-day moving average lines). This indicates the price is increasing and its long term trend is upward.


Thanks to stockcharts.com

Here is a daily price chart of the S&P 500 Index from late May 2012 to the date of this blog post. We have healthy behavior in portion 1, within the green circle, where the daily price lines are moving upward above the blue line, which is the 50-day moving average line.

A few weeks ago, in portion 2, (yellow circle) we have a warning indicator. The daily values have dropped below their 50-day moving average, but they are still above their 200-day moving average. Stocks and indexes occasionally bread down below their 50-day moving averages but then recover above them. That is not what has happened here.

A few days ago, in portion 3, (red circle) we see a serious warning that the S&P 500 index may have begun a longer-term downward trend. The daily values have crossed below their 200-day moving average. Notice that the index has remained below the warning level for several trading days. The Nasdaq 100 and the Dow Jones Industrial average are both also below their 200-day moving averages and have been there several trading days longer than the S&P 500 index has.

so we start with the facts - reality - the three major indexes have all fallen into the danger zone, and have not recovered so far. To be sure, there have been occasions in the past when they all crossed below the danger thresholds then recovered back up into healthy territory. On the other hand, every recession in this country dating back at least to the Great Depression, has been signaled by the major indexes of the day slipping below their 200-day moving averages and not recovering.

In concert with the stock market danger zone, we have: 1) the "fiscal cliff" of tax hikes and federal spending cuts looming, 2) continuing uncertainty regarding solvency in Europe, 3) a recent swell of unemployment due to the destruction from Hurricane Sandy, 4) thousands of troops returning from foreign wars also joining the pool of the unemployed, and 5) Atlas Shrugged - in the form of pissed off Republican business owners retaliating for four more years of Barack Obama by cutting hours and positions to protest what they see as a slide into Socialism.

A deal on the fiscal cliff would certainly give a positive jolt to the economy but it remains to be seen whether that, alone, would provide enough impetus to restore it to the path of slow, gradual growth it had been on prior to November.

Weighing Separate Wisdom Paths: Business Choice 2010

It's springtime in the American economy - time to plant seeds of enterprise that may, with some luck and a good bit of determination and skill, bring forth a bountiful harvest as the recovery kicks into high gear over the next few years. And I've been reading and listening to a lot of great business educational material lately. I find that there are two broad categories of advice with regard to the choice of a business.

The first wisdom path is the "Do What You Love And The Money Will Come" school of thought. This line of reasoning dates back at least as far as Confucius (500 BCE) who was the first person we know of to write, "Choose a job you love, and you will never have to work a day in your life." It is tempting to take this advice just to prove to myself (and to my slice of the world) whether or not it is really true. If, as Deepak Chopra writes, I choose the path that I would have chosen anyway (were I already rich), the path that most completely matches my gifts to the needs of the world, I would unhesitatingly choose to become an author and speaker in the field of personal development. (AKA "Motivational Speaker") I've got a great life story that already sounds like something you'd read in a movie script and it lights me up to pass on the wisdom that had made such a dramatic difference in my life. Any of my close friends could attest to the truth of these assertions.

I've recently gone far enough along this path to create stubs for chapters of a book that I think would be timely and relevant to America's current economic situation. It's entitled, "How To Thrive During The Recovery". It has specific, practical advice about how to take advantage of our developing economic upturn - whether the reader is interested in employment, business, real estate, or stock investing. I've also created the opening portions of a free, 90-minute seminar that I could give in cities as the book is launched to help introduce it to the public. (as well as enroll people in future advanced seminars offered for pay)

The drawback with pursuing the first path is that I'm currently a completely unknown commodity to the public. Even though I feel confident in the value of what I have to say, I'd be starting from scratch without the benefit of having created a "brand" as a person of well-known or easily researched accomplishments. To say it more plainly, it would be a heck of a lot easier to put butts in seats and sell my books if I'd already developed a certain level of authentic celebrity. There would be hard work involved either way but there's nothing wrong with having as many factors as possible in your favor when you attempt something big.

The second broad wisdom path says, "Find out what the market wants, crunch the numbers, and then choose the opportunity with the best bottom line." Jim Rohn would say something like: Don't worry so much about discovering your passion; find a great opportunity and then pour your own passion into it. When I crunch the numbers, it is obvious that the field of wealth management offers me the greatest upside potential for financial success given my marketable skills. While it is true that I'd be starting as an unknown commodity in this field as well, the rewards of doing well over time dwarf the rewards I could reasonably expect from a speaking career or even starting up a new tech company. My close friends could also attest to my skills in the stock market, so I feel some confidence in my abilities here. I'd have a lot of growing to do to sell and market my services successfully, but I view that as a growth opportunity, not a problem. And I'd need to develop these skills for the motivational speaking career anyway.

It's by no means a done deal, but the second wisdom path looks more and more attractive to me. Assuming I created a wealth management practice and did well with it, I could use that track record later as the marketing springboard for the motivational speaking/writing career. Although this seems to be common sense, I have an innate sense of aversion to anything that looks like putting a dream on hold for a mythical "someday" when one is finally ready to get started on it. So I'm still percolating on these things. Maybe this time around the lesson will be to overcome that aversion and go with the practical path for a change. No matter which one I choose, I intend to devote my sole focus to that choice for at least the next decade or longer. This is why I'm sitting with the question for now... The outcome of this process will mean saying "No" to something I'm very interested in pursuing, whichever choice wins out. And (simply as an acknowledgement of my lack of omniscience) until I decide, I am open to discovering an even better path than the ones I'm currently considering.

I don't intend to take long to decide. Springtime doesn't last forever. One is better served by planting seeds and getting some crop than by staring at the field for too long wondering which crop would be best.

Fall 2009: Stock Market Likely to Decline

If you have exposure to the stock market, you may want to dial it back to a money market fund or cash. Both the S&P 500 and the NASDAQ composite indexes pierced below important levels of support today. (their 50-day moving averages) This often happens when the market is going to decline for a period of time.

All in all, not a terrible run since March when the market turned positive: a 58% increase for the NASDAQ and a 45% increase for the S&P 500.

Several companies declined sharply this week after reporting earnings that just barely missed estimates. Some declined even though they beat their earnings estimates. This is typical behavior when the market is turning south, when even good news is not enough to keep stocks moving up.

I have sold all the stocks in my personal portfolio and am looking now for opportunities to make money on declines.

Remember - don't blame the government or your retirement plan company if you fail to keep an eye on your nest egg!

Not-As-Bad No Substitute for Good

After leaving my full-time job in September, my inital inclination was to immediately relocate to a faster growing city. This notion was influenced by two major hypotheses: 1) If I start a business, I want to do it in a market with plenty of demand for my products or services. 2) If I invest in real estate, I want to buy in areas where the rents will produce great cash flow even after paying for the mortgage, taxes, and repairs. Orlando has a lot going for it, but it's been hit pretty badly by our current recession. No. I reasoned that since I had nothing tying me to Orlando, I should select the best US metro area I could find, start from scratch there, and allow its rising tide to lift my boat as well.

A funny thing happened on the way to relocation-ville. As I researched cities according to their US Census Bureau growth statistics and monthly unemployment rates, I got a bit sidetracked from my primary criteria by the noise of the data. At first Atlanta looked attractive due to its high population growth from 2000 to 2008. When I discovered it had a higher unemployment rate than the national average, however, its luster faded. More recently, Austin, TX seemed promising due to its combination of high population growth and lower unemployment rate.

But digging deeper into Austin's data has revealed that while unemployment is lower there, it is still increasing on a monthly basis. "Slower slowing" is not the criterion I started with. I require growth. Data published on USA Today's website from Moody's economy.com shows that it may be well into 2011 before Austin or, indeed, any sizeable US city shows significant jobs growth. This correlates pretty well with our last recession: the market topped in 2000, it bottomed in 2003, and jobs began to return about 18 months later. In the current recession, the stock market topped at the end of 2007, hit bottom in March of 2009 and here we are, waiting for the jobs to show up again.

Let me mention why this is so important. Jobs are what fuel the kind of population increases that are attractive to real estate investors. As jobs grow and populations rise, people become willing to pay the kind of rental rates that can cover mortgage payments, taxes, and repair bills. Ultimately it is the prosperity of an environment like this that creates healthy growth in property values, since more and more people go for the dream of owning a home. On the other hand, when an area is simply losing jobs more slowly than others, you end up with less people in the area than there are rental units. Now your rental property is compared to others solely based on price and nobody wins in that environment.

My strategy remains the same. I will ultimately relocate to a major US metro area based on its growth in population and jobs. However, I'm not going to try to guess in advance which city that will be. I'm going to keep my finger on the pulse of the monthly data and allow candidate cities to emerge in their own sweet time. The second halves of recessions are like that: months and months of seeming inactivity, and then, POW, the heavens seem to open, corporate budgets are expanded, and jobs look like they're falling out of the sky.

A final note. I may yet relocate in the near term. But if I do, it will likely be because there was a better reason to hang out somewhere else during this current non-growth period of time than here in Orlando. I'll keep you posted.

Well That Was A Short Nap

The stock market has come roaring back in the last couple of trading sessions from a mild downturn that only lasted about a month. Now, one or two up days does not a trend make. However, the volume of trade and the percent increase in the general indexes makes it pretty clear (to me, at least) that this is the beginning of something interesting.

I've re-entered the market with positions in travel, retail, rental car, and (I can't get over them) Chinese online gaming stocks. If you have been sitting on the sidelines with your retirement funds, I'd definitely encourage you to speak with a personal finance professional about re-entering the market at this time.

No-load index mutual funds for the S&P 500 and NASDAQ might be relatively stress-free candidates if you agree with me and wish to participate in the market's apparent upturn.

Disclaimer: I am not a personal finance professional and this information does not constitute an offer to sell investment products. These opinions are my own. You are responsible for your own decisions - Hell, I have trouble keeping my own shoelaces tied!

Everybody - Back Into The Pool!

"People fear when they should hope and hope when they should fear." -Jesse Livermore

If you have investment money that you've pulled into cash or a money market account, consider putting it back at risk in the stock market. If you don't want to follow individual stocks, you could consider a no-load S&P 500 index mutual fund available through low-cost online brokers such as TD Ameritrade or Scottrade.

Stocks are now in a bull market and have been for about 3 weeks. This is not hyperbole, the fact is that the major market indexes have been climbing higher for the past 3 weeks. They have all crossed above their critical support lines (50 day moving average) and stayed above them with conviction. The past 10 trading days have been marked by the indexes rising on higher volume and falling on lower volume.

As I wrote in this article, it is very easy to miss what is happening today - now - due to fact that our news sources always lag truly current events. Pundits and analysts are still busy trying to decide which industry sector or government bureaucracy holds greater blame for last year's problems. (or greater credit for its triumphs)

I'm asking you not to get caught up in all that. Consider this an inviting you to take a closer look at the data for yourself, along with me, and make the decisions you may have delegated to others in the past. If you lost money in the recent bear market, do whatever you need to do to get the upset from that loss out of your system so that you can do today what is possible to make a better tomorrow.

Disclaimer: I do not currently work as a stock broker or professional money advisor. The views I have expressed are my own opinions. Investing in the stock market entails risk, including the possibility of losing all of your invested capital.

Market Update - Asian Gaming Stocks On The Rise

Analysts from Barrons to Forbes are asking the question, "Does the current uptrend have any legs?" Last week was marked by impressive gains in the Dow, S&P500, and Nasdaq indexes. Although Friday and yesterday were down days, partly due to uncertainty about the the Obama administration's intervention in the auto industry, the volume wasn't all that impressive. On the other hand, today's activity seems to indicate the market has digested the news and is continuing its recent ascent.

I am as concerned as the professionals about the specter of poor earnings announcements and higher unemployment projections for the second quarter. These dynamics could derail the current uptrend. However my stock investing mentor, William J. O'Neil, hails from a heritage whose only sacred mantra is, "Never argue against the market!". Therefore we say that the market is heading up because, well, it is in fact heading up. We can leave the wherefores and whys to the professional analysts while attempting to benefit from the facts of the matter.

One area of impressive growth of late has been in asian stocks that provide computer gaming/entertainment to that part of the world. This morning, I decided to load up on some shares in this sector, we'll see how that goes.

In case you're wondering how my market adventure into stem cells went, I have two words for you: "not well". But I learned a(nother) valuable lesson from Mr. Market about my own tendency to predict which industry groups will lead the market and when. Today's purchases were not about predicting, they were about following what is already leading. (which, when you boil it down, is the main difference between value investing and growth investing)

Not Too Shabby

Recently, I blogged about holding on to a security during the US economic bailout crisis. I can now reveal that I was holding shares of DUG, the ultrashort ETF for US oil industry stocks. I sold my shares yesterday and locked in a 42% gain.

I was confident enough in the weakening demand for oil (due to turbulence in the general economy) that I did not check up on my position while I was out of town last week on my retreat. Yet I knew the market might rally once the wall street bailout went through. It turns out that the turmoil in the European credit markets bought my ETF a little more upside Monday and Tuesday.

Stocks headed lower yesterday as well. But when the Fed announced a rate cut coordinated with rate cuts in Europe, the S&P 500 seemed to rally and at 2:30 PM, DUG was trading near the bottom of its intraday range on higher trading volume. In other words, it looked like more people who held DUG were starting to doubt its value than the ones who felt it would go higher. With all the uncertainty in the economy, I decided to pull the trigger and lock in my gain.

Maddeningly, the general markets turned bearish from 3:30 to 4:00 PM and DUG ended up right in the middle of its trading range today - not a clear "sell" signal after all. Nevertheless, I feel good about following the instincts I've developed as a result of studying the market over the past 10 years. That goes for holding it last week as well as selling it yesterday.

Playing Chicken With Wall Street During the Crisis

I've been a stock investor for 10 years and I personally trade the stocks that make up my IRA.

A couple weeks ago, I closed out a position in a technology stock after making a respectable gain.  Stocks in a different industry sector began to show some signs of weakness, so I used the money that was freed up from selling the tech stock to bet against that industry using what is known as an ultrashort exchange-traded fund (ETF).  This is like a mutual fund that goes up if the stocks it is following go down.  The beauty of these shorting ETFs is that it is possible to trade shares of them in an IRA, whereas regular shorting is not allowed in an IRA.

(No, it wasn't the financial industry I bet against, or you'd be reading now about how surprised I was that the SEC prohibitited short selling of financial company stocks last week)

My position in this ultrashort ETF has fluctuated from being up 20% just before the economic crisis was announced last Thursday to being down 10% today when congressional leaders anounced that there is basic agreement on the framework for an investment banking bailout.  I've asked myself a few times  why I didn't just exit the stock market when the crisis was announced.  After all, there is an old saying on Wall Street: "Bulls make money and bears make money, but pigs get slaughtered."

And yet, there is a reason why I've maintained my position in the shorting ETF.  Even though it has declined a good bit from where it was last week, it has done so on drastically lower daily trading volume than average.  So, far fewer people now think it's a bad idea to bet against this particular industry than those who thought it was a good idea when I got in.  This has intrigued me, and convinced me that the actual destiny of my investment will not become clear until the daily trading volume returns to normal.  

When I look at the basics - the fact that this industry's stocks peaked in price last month, that the recent strength of the dollar caused further erosion, etc - it seems to me that the fundamental reasons for investing the way I did are all still there.  So I'm not blinking yet.  Wall Street has certainly humbled me in the past.  But I feel that now is a good time to "keep your head when all around you are losing theirs..." ask Kipling mused.

The Cure Is Worse Than The Disease

Velcome to Soviet United States of America!

In order for protekting our citizens and their interests, we have establish strong centralized institutions with broad authority over various aspects of their lives. Our latest plan is one of best ever. You vill like.

Effidently, bad, evil, greedy corporations tricked millions of Americans into signink legal contract documents known in the venacular as "mortgages". Ve know this must have been bad idea since etymology of vord "mortgage" transliterates into "death note". No von would ever sign death note, yes? Vell, anyway, by usink of flashy, hypnotizing marketing campaigns, these nasty corporations lured our dear dependents, I mean, citizens, into takink on of financial obligations linked to value of their homes. It is fundamental right for all Americans that home value should go up, up, up, and never hit snag. Somehow, however, snag did occur. We're not too sure who caused snag, perhaps CIA can look into this. It gets compicated and I von't bore you now vith details about how Wall Street firms ended up owning bundles and bundles of these death notes. But anyway, Wall Street firms have been sufferink also from snag.

Normally, businesses are allowed to make bets with their capital, flourishing when bets vin and dissapearink when bets lose. Ve dislike this chaotic arrangement yet citizens showed up in town squares with firebrands and pitchforks when we tried to interfere previously. This time, however, talkink heads on televised finance programs have convinced the people that certain of our Wall Street companies must not to be allowed for dissapearink. So here is plan. We, the caretakers of the American citizens, shall create federal entity. Led by vice diktator Paulson, it vill have authority for absorbink these bundles of mortgages from Wall Street firms. No pesky courts or lawsuits vill be allowed to interfere with vice diktator's dispensing of the death notes. So now, instead of the company dissapearink, only debt from company's bad bets will dissapear. It is thing of beauty, no?

Some organizers of previous pitchfork protests are voicink concern about plan. These are same guys who got upset when we started listenink in on phone calls without warrants, created authority to arrest citizens and not let them tell their spouses or lawyers what the charges were, and used army for toppling of foreign government. Yet it seems that crises mute the voices of dissent. I vonder what crisis will open the door for next big plan. Who knows? But for sure we will be ready for respondink to it with smart ideas for new centralized caretakink.

Do svidaniya comrades, and God bless the USA!

Seeds of an Economic Turnaround?

At this time, the American economy is in a downturn with a good bit of the popular press devoted to subjects such as the sub prime mortgage crisis, the low value of the dollar, unemployment, and the credit crunch. Yet, among the stories on reuters.com today:

* Hedge funds sell oil as ratio to gold narrows
* Gasoline prices retreat, could fall more: survey

And so the seeds of the next epoch of the American economy start cracking open beneath the soil.

It would be easy to miss this information. Most of the economic reports and opinions floating about (at any given time) are lagging indicators. They are based on the good or bad news of the last few months or even years. So it turns out that there's a reason why it always seems "darkest before the dawn". When a situation begins to change, we tend not to notice it because we are busy mentally processing the old bad news. The same holds true for good news too, which is why we also say, "Pride goes before a fall."

By the way, I'm not predicting a turnaround. The stories I mentioned above are merely seeds beneath the soil. They could be wiped out by unforeseen events even before they have a chance to sprout. I'm simply pointing out that since nothing ever stands still, it's useful to pay particular attention to what is presently happening if you wish to develop independent opinions about current events. And possibly even profit from them.