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December 30, 2003

The Fog of War or Hold on to your Wallet

 


As 2004 approaches investors should bear in mind a few salient trends and keep a sharp eye on cracks in the structure of things.


First off, it's human nature for some of us to be optimistic, especially on the eve of a New Year.  It's what keeps us going in the face of heavy odds.  And so we shall try, while keeping in mind that all the optimism, faith and trust in history that we imagine permeated the inhabitants of Bam, Iran couldn't keep their walls from crashing down.  To make a point, it’s easy to see that Bam literally had a structural problem: non reinforced masonry being particularly susceptible to the kinds of swaying movements produced by earthquakes.  And yet, Bam had a long historical record on its side, since it was a very ancient city and unlike, say, Pompei, no such disaster had befallen it before.


And so, even as we look ahead, we won’t entirely lose sight of the possible tectonic movements of the vast monetary imbalance we so mundanely term the US current accounts deficit, which today is measured in little more than a gradual shift in dollar value of assets worldwide. No one knows (and I wager that includes Alan Greenspan) whether the daily erosion of $1.5billion mainly to the Far East is little more than a cyclical ebb and flow or whether there are more dire movements brewing in the mindseye of the market gods.


We wonder how a consumer driven economy --nearly 70% of GDP results from consumer activity-- can be sustained as those very same consumers steadily lose decent paying jobs (2.5 million in the last 3 years).  Not to worry, say the chattering class," the ingenuity of the American people has never failed before. Jobs get lost and new jobs get invented."


How, we wonder can a debt-ridden public continue to rack up even more debt (per family non-mortgage debt averages nearly $8,000, up 7-fold since 1960) when real wages hold steady or even decline. For George Will on ABC yesterday, there was little to worry about. For George, "losing your job nowadays is just not such a big deal anymore."  We have to wonder when George got this insight.  It's hard to imagine he's run into any laid-off factory workers as he made the round of Washington cocktail parties this Christmas season, talking points at the ready.


Now, if the consumer weren't such a critical part of the economy; and if, instead, savings were being poured into new plants and equipment in this country (not Asia) then George might be right.  But, we're afraid here, that indeed we have become a country of consumers spending dollars we haven't yet earned that flow mainly into the hands of entrepreneurs and poorly paid workers living half way around the world. But, to worry, we will try not.


The dollars, of course, are cheap to print and are backed with nothing more or less than the good faith and credit of the United States of America. Foreigners are welcome to invest those dollars back into our economy and up to now they have continued doing just that even though they could earn more interest –not to mention gains-- if they converted them to say, Euros or the Aussie dollar. In fact rather than earning less than 4.3% on a 10 year T-Bill, in dollars that have lost nearly 40% of their value in the last few years, these same investors might have found better ways to recycle them.  But, perhaps they haven’t yet noticed.


We, as Bill Bonner of the Daily Reckoning www.dailyreckoning.com likes to echo Blanche in saying, "are living off the kindness of strangers."


And then, of course, there is that little matter of the domestic deficit.  Our government in its own lack of kindness to generations to come, insists on creating more spending programs while collecting fewer taxes, with the neat result that we are running deficits as far as the eye can see of more than a half trillion dollars per year.  But, of course, we only pass those down to our children.


And then there is that even littler matter of the reconstruction of Iraq in the face of popular hostility among those who would benefit from our generosity. How much will it really cost us now that we know that there is little chance Iraq's vaunted oil reserves will come back on line any time soon?


But just as the American consumer is undaunted in his never ending quest for more gadgets and SUV's, so too is the American stock market investor in the face of valuations to earnings ratios that are normally only seen at a bubble's peak.


This  time it’s different, we are reassured.  Not because things are structurally so hot, no one would really argue that.


And so that brings us to our newly invented election year theory.  Perhaps the American investor in his great wisdom is betting on the following scenario: with George the Second’s future at stake the Fed will not do anything to raise interest rates even if it means letting the dollar sink to around $1.50 to a Euro. China and Japan will support this by continuing to recycle at a loss because they have everything to lose should the dollar crash (their reserves are in US dollars, not gold) and the Europeans will stand idly by clasping their collective hands in wonderment of how their socialized economies had gotten so rich without having to give up any of their paid holidays or social benefits. Meanwhile, US multinationals will report higher profits as they measure their European business in fattened Euros and that will improve P/E ratios and….. you get it.  The bet is that prices will hold still, interest rates will remain low, Americans will continue to run up debt and a lowering dollar won’t rock the boat.


Meanwhile, Saudi Arabia (and the rest of the OPEC) will stand still and keep pricing their oil in sinking dollars because they know first hand what happens when you cross the Bushes.  And US manufacturers will finally have a price edge over their ritzy Euro-competition and they’ll finally start hiring American workers at top wages!


Yes, this is an election year, Virginia, and the amount of hyping and huffing and puffing on the sidelines will make the usual legions of Wall Street hypesters seem like a bunch of bookies in the face of the Parimutual. Why just yesterday we heard from Bush’s former chief economic advisor, Larry Lindsey, that "Tax rebates are the antidote to lower wages." 


This may indeed be the year in which we turn around, start creating real jobs, bring down the the foreign and domestic deficits and defy the law of gravity when it comes to stock prices.


Our advice: Hold on to your wallet!


 rmb


 

Posted by dymaxion at 03:36 PM


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December 24, 2003

The Cooing and Purring of Hypesters


 


At the Dymaxionweb we take the cooing and purring of the hypesters (David Brooks recently in the NY Times is one egregious example) with more than a grain of salt. In keeping with the spirit of the season we reward them with a stocking full of coal. For those who would see the "best of times", we look at the steady drain of decent paying jobs and wonder from what miraculous new ranks, the heroically indebted consumer will be recruited. In a year in which the dollar has lost some 30% of its value vs. the euro and pound, we wonder just how low it will sink and, what exactly, might be the consequences of a very weak reserve currency.


We look out at a consumer driven economy, "the world's economic engine", and wonder just how long the rest of the world will make up for the $1.5 billion dollars a day it takes in devalued chits. Will China and the US be the only economies still standing at the end of the year? Will the dollar sink to $1.40 to a euro? No, at DW we do not see "the best of all possible worlds". In the coming year, we will talk about what we do see and, more importantly, what you see from your unique vantage point.


Happy holidays,


rmb

Posted by dymaxion at 04:36 PM


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December 11, 2003

Nothing Like the Good Ol’ Bank of Japan

Gold, and particularly gold mining stocks have fallen back over the last few days, and in the case of the mines, the reaction has been fairly drastic. Even as the price of yellow stuff climbed to a record $411 an ounce, there was a sell off in the mining stocks, which, after all, have increased in price much faster than the metal itself (there’s a logic to this, since the price of extraction remains flat, the mines’ profits begin to rise with each bump up in the price of the end product). 

 

According to Reuters, the fall off in price reflects an anticipation of end-of-year maneuvering as traders lock in profits.  The dollar has also stopped its crazy skid and actually moved back up a penny or so from its low with the Euro.  It seems the Bank of Japan has been soaking up dollars from the world market in order to keep the Yen at a price that allows them to not loose market share to countries whose currencies are locked to the dollar, namely, of course, China.  Not so, for the Brits’ Pound, which continues to climb.

 

The Brits, it seems have been borrowing and spending nearly as fast as their Yank cousins according to a report out from the Bank of England today, which puts household debt at historic highs.  The difference, it seems, is that Blair is not up for re-election this year and the adults there have decided to do something to slow things down by raising interest rates on government bonds which are now in the 10-years some 60 basis points higher than US T-Bills.  Risk-adverse money –it seems there are a few of us still around—has been flowing there like the melting of the glaciers at the North Pole.

 

Of course, in the US, we have invented a new kind of recovery, one in which fewer people do more business.  At the height of the greatest government cash push in history (all, BTW, borrowed from the future), jobless rates once again were up this week.  What will Alan Greenspan do next?  Who knows what Carl Rove will cook up!

 

In Japan they went so far as to have negative interest rates –which in real terms is what we have in the US—in which they paid people to borrow.  Unfortunately, the strategy backfired as it served to drive down prices, thereby encouraging the thrifty Japanese to put off purchases in anticipation of even lower prices the following year.

 

Not to worry about the Americans, though.  It seems we bought even more SUV’s this November than last.

 

Bush, of course, caved first to the Europeans on steel when they had him by the balls:  they had targeted retaliatory steps against products coming from key electoral states.  The dirty secret there, anyway, was that the tariffs were keeping steel prices artificially high thus raising costs for American manufacturers and actually costing more manufacturing jobs than they were saving steel jobs that have no future in any case.  I hope you followed that!

 

Then he caved to the Chinese on Taiwan on a little issue like democracy.  Maybe even he has finally realized that if the Chinese ever wise up and start spreading their reserve assets around, the whole pyramid scheme on which he has bet his re-election will come tumbling down.  And that’s the rosy outlook on DW today.  So, I wouldn’t make any medium or long-term bets long on the dollar.  Meantime, I think I will run to the cash machine and pull out Euros today while the getting is, well not exactly good, but better than, say, $1.25, which is likely to soon be the situation.  Thanks BOJ!

 

Bucky Balls

 

Now, a word for our godfather, Buckminster Fuller:  Bucky’s legacy, as incorporated in his invented word, Dymaxion, emphasizes the non-static nature of reality and secondly the power to be derived from the infinite simplicity that is the essence of Nature’s grand design.  Standing in the Pantheon, as impressive a testament to the enormous advances the ancient Romans made in architecture –the brick and mortar dome is actually larger than the cast iron one on the Capitol in Washington—you can lean your hand against the massive stone pillars weighing thousands of tons that hold up the structure.  Compare that to Bucky’s best known structures, the geodesic domes that can be fitted together, even for large structures with fewer people and in less time than it would have taken to move just one of the Pantheon’s granite pillars from the quarry to the city.  It’s hard to imagine the size of the crews that worked on these ancient monuments but the dynamic is the force of a great institution –in this case, the most powerful state ever known on earth.

 

Bits and bytes have for all practical purposes no friction as they pass through copper and fiberglass conduits at nearly the speed of light.  As the number of users and uses increases, the costs diminish.  The great machines of the corporate media, like the columns in the Pantheon, adsorb massive infrastructure and personnel resources.  For such, they need to behave like the great empires of the past.

 

In the Dymaxion world, change is inevitable, information is crunched into something useful, spin turns static, talking heads become so many trophies on the screen, like marble heads in a mausoleum.

 

The real infrastructure of the web is as light and malleable as the lines of code that support the communication and distribution system.  We look forward to seeing what these dynamics are going to bring together but I am confident that the need to cut through the bullshit is so enormous that given the kind of persistence and optimism that characterized the original Dymaxion man, this will become a valuable and cherished resource.

 

 

 

 

rmb

 

dymaxionweb@verizon.net

 

Copyright 2003 Richard Mendel-Black All Rights Reserved

 

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Posted by dymaxion at 04:02 PM


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December 10, 2003

No Time for Naysayers

 


 



  • This is the Best of all Possible Moments for the Economy

 



  • Everything is Poised for the Next Great Bull Market

 



  • Stock Prices Still Relatively Low say the Experts

 


I know, I am supposed to drop my suspicions, sell all my gold stocks, get out of commodities and jump into the great bull market of the new millennium.  How can I possibly imagine that the Fed hasn’t been turning all the right knobs and that easy money combined with innate (and superior to the entire world) American ingenuity will do the rest?


 


Buy the momentum, they say, and then just sit back and forget about it!  We live in the best of times!  Or better yet, they show me the long-term charts that prove that you can’t go wrong buying stocks if you hold them long enough.


 


Forget about a lousy war gone bad, they tell me.  It only stimulates the economy.  I am reminded by some of the good old days in the Johnson administration when guns and butter drove one of the great rallies of the 60’s.  The American consumer and Alan Greenspan are the heroes of the moment.  Between 13 interest rate drops, a rising housing market and a plastic spending rush like nothing ever seen in history, we have pulled out of the dip from the Tech Bust and moved to a new plateau.  For some reason –it has nothing to do with the trade deficit, which now means we spend $1.78Billion  a day more than we take in—Face it, I just haven’t got it!


 


Perhaps, spending a few weeks here in Old Europe has turned me into the kind of eurosnob who wants to see his capital evaporate in value (it’s in dollars) like one of those masochists who marched through the Middle Ages with a chain slamming himself on his bloody back every few minutes!


 


But no, I will try to salvage what little of my reputation still remains:  I do have rational reasons for my skepticism and, believe it or not, that have more to do with what I don’t see happening in Silicon Valley and the other tech hotspots than what I do see in New York restaurants where the help wanted signs are starting to be posted in the windows.  Not that I’m implying that ex tech wizards are filling the waiter jobs in Manhattan (I bet there are a few exceptions, though) but I could not help but wonder when I saw the following in today’s New York Times:


 



Restaurant Hiring May Lead the Way to Wider Job Gains
By SHERRI DAY
Restaurants have gone on a hiring spree the last four months, suggesting that broader gains in the job market could be on the way.


 


The tech bust as everyone knows, and especially we who lived through it, was inevitable.  Never, in so short a time had so much excess been gathered in one place.  When someone presents a business plan to a bunch of seasoned pro’s suggesting that the world needs a 16th web site where they sell pet food on line but get their strategic advantage by selling ads on their delivery trucks and then walk out with a check for several $million in their hand, there’s got to something wrong.  BUT, and this is such a big but that I put it in caps, BUT this kind of exuberance came on top of what was the astounding emergence of a whole new industry that clearly had implications for all the world.  While the rest of the world was busily doing its thing (mainly doing what they already knew how to do) we in Silicon Valley and then in Austin and Reston and even lower New York, were inventing a new world that would take advantage of the greatest interactive communications system ever known.


 


If you are among those skeptics who doubt this, just ask Howard Dean how he has come to the point of nearly sewing up the Democratic nomination even before the first primary vote is cast.  Howard has raised so much money in small donations through use of that mere communications device, the Net that he has, in a swoop, wiped out the Republicans’ advantage in individual donors –the kind who can write $2,000 checks without thinking twice.  Howard –and a whole bunch of stuff I won’t get into-- has vindicated those of us who saw this great shift to what Andy Grove called an epoch-making “disruptive’ moment.


 


The reason I bring this up is not to bore you with stuff many of you already know but to use it as a handle in presenting my deep-seated skepticism on where we are right now in the economic cycle.  Money, talent and brains flowed into Silicon Valley and the rest of the country during the Tech Bubble.  Money was made and taxes collected. Remember that in the last Clinton years we had gone from an enormous deficit –the legacy of the supply-siders whose progeny the present bunch of monkeys claim to be—to running a surplus.


 


Okay, so here’s my point.  America found its way out of the rust-belt downer of the Carter years to the country that everyone in the world wanted to emulate by taking advantage of Moore’s Law.  Don’t kid yourself, the Internet would still be mainly the realm of academia on a bunch of dumb terminals if it weren’t for the dispersion of cheap and powerful PC’s.  The critics are correct in saying that the Internet is just a communication network.  But, it is communication that first got us past the dark days of successive cosmic disasters and it was communication that allowed us to spread across the planet in small, determined groups.


 


My point --yes, I have to interrupt myself to get to that point—is that the US economy lives and dies on the dynamics of its technology-based economy.  And beat me with a stick but I just don’t see any real recovery here.  Sure, there’s consolidation; EBay, Yahoo and Amazon, to name a few, but where are the new companies, the ones that are supposed to be leading the way to the next round of real growth? 


 


Rather, we see Europeans and others pulling their capital out of the US in droves, we see Indian entrepreneurs packing their bags and newly earned riches and heading back to India where there is a natural economic advantage through the large pool of cheap well trained labor that used to head to the US.  The business of the US is intellectual property (I will write about the entertainment industry, the other leg in this picture in another blog).  Even at the height of the last boom, we were already transferring much of the fab and build side of the industry overseas.  But anybody who lived through the gold rush days knows that intellectual property and the power behind it had nothing uniquely to do with a bunch of smart American-born and trained techno-entrepreneurs.  In fact, the cubes and the front offices were full of people from all corners of the world who came to the Valley because people there knew what it took to get a business launched and had the capital to back it.


 


An economy built on spending what you don’t have on things you don’t need: NAHH, you can’t convince me.  


 


Rome  December 10, 2003


 


rmb


 


dymaxionweb@verizon.net


 


Copyright 2003 Richard Mendel-Black All Rights Reserved


 


If you would like to receive the DymaxionWeb musings directly to your e-mail box, please write to dymaxionweb@verizon.net with the word Subscribe in the Subject field.  We will be happy to put you on our list.


 


 


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Posted by dymaxion at 03:36 PM


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December 09, 2003

The New Roman Empire: Bread and Circus


  • If You Are Buying Stocks at these Prices, You Shouldn’t Be Reading This

 



  • Dollar Continues to Flop as Gold Rises

 



  • Have You Checked the Price of Beef Lately?  Maybe You Should Start Thinking Commodities

 



  • US Spends a $Billion a Day More than it Takes In.  Does the Bush administration have the guts to put on the breaks before it is too late?  Read below for this writer’s opinion.

 



  • The Fed will Get its Inflation Even if it Kills Us

 


Someone I read today posited that the only way US consumers can get out of their overwhelming debt ($600 billion in new mortgages this year not to mention car payments, credit cards, etc.) is to start receiving rapidly rising wages in a cheaper currency.  So the dollar continues to fall like a coin in a fountain against the Euro and Pound and sooner or later either the Chinese will bail out of the Faustian bargain that keeps them buying our ever depreciating T-Bills (at interest rates that don’t even come close to cover the depreciating value) or the OPECkers will stop pricing petroleum in dollars which they may not soon be accepted even by a street merchant hawking ripped off Gucci handbags.


 



  • Italy’s La Repubblica headlines: “The Super-euro flies above $1.22: Never has it been so strong

 



  • Just try giving a Roman taxi driver a dollar and see if he takes it!  Two for a euro, he says. 

 


 


 


The New Roman Empire:  Bread and Circus


 


Italian television ran an Italian produced show starring Peter O’Toole and Charlotte Rampling on the first Roman Emperor, Augustus and his wife, Livia.  The emperors, of course, didn’t need to please the voters directly, since from Augustus on out the dream of returning to a republic faded into the mists of history.  But the emperors did know that in order to keep their hold on power they did have to control the streets of Rome.  The people, after all, could vote en masse by turning over the city in an uprising.  And so they came up with a very particular political strategy that came to be called “bread and circus”.


 


If you saw the movie, “Gladiator”, you might remember that Marcus Aurelius’ son Commodus declared 123 days of games in honor of his assuming his father’s throne.  What this meant is that not only would nobody have to go to work for the next third of a year but they would be entertained by some gory spectacle being held in the Coliseum every day.  Quite a good deal, you might say, so no wonder the plot to get rid of the despotic son went nowhere with the people.  They liked the spectacle!


 


I say this as I hear the first word of US jobs report for the month of November.  After all the spectacle that has been going on for the last month is that the heavily sugared bread of the last 3 years diet was finally having the stimulus it was supposed to have.  First we heard that the economy grew at the fastest pace in 20 years and that was quickly followed by the productivity report, which came in at an unbelievable 9.2%


 


So?  Well, of course, the paid shills all started the pump noise going.  Up with the price of everything, they shouted!  Amazon at 93 times earnings! Just watch it really grow as sales begin to take off.  In the White House the corks were popping.  They didn’t care that the price of champagne had gone up against the weak dollar.  Why should they, it looked like 4 more years were in the bag!


 


The whole thing is so easy.  Give them the spectacle of the president standing in front of a huge American flag a la George Scott in Patton –too bad Bush couldn’t have a pearl handled revolver tucked in his belt—then go out and print some more money.  It’s great to be king!  And even greater to control the world’s only “Reserve Currency”.  We print it and they take it.  It reminds me almost of that sign over the bridge in Trenton, NJ.  “Trenton makes and the Whole World Takes.”  Only, what is it that we make in Trenton these days that can’t be made cheaper some where in Asia?


 


It’s good to print money.  It stimulates the economy like sugar does to the appetite.  Low interest rates make it easy to borrow more to buy more.  Nothing to worry about, we can practically order the Chinese and Japanese to buy our bonds at low interest rates denominated in a currency that loses value now on a daily basis.


 


So how come, no job growth?  All the stimulus in the world didn’t help Japan.  Of course they couldn’t just print their money and they still sell more goods to the world than they buy from abroad.  Not quite the same, one would say.  Both the US and Japan depend upon their technical mastery, their advanced electronic communications systems and their headstart as centers for the global economy to have a natural advantage over the rest of the world.


 


But no amount of stimulus could jumpstart the Japanese economy and pretty soon prices (and the Yen) just started to fall, and fall, and fall.


 


Can the fall of the dollar be stopped or are we in for a long decline?  As an investor, when you see a true imbalance between what is evident and what is being portrayed on the electronic circus, therein lies true opportunity.


 


 


 


 


 


 


 


 


 


 


 


Regards,


 


rmb


 


dymaxionweb@verizon.net


 


Copyright 2003 Richard Mendel-Black All Rights Reserved


 


If you would like to receive the DymaxionWeb musings directly to your e-mail box, please write to dymaxionweb@verizon.net with the word Subscribe in the Subject field.  We will be happy to put you on our list.


 


 


If you would like to reproduce any of RMB’s postings you


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Posted by dymaxion at 01:59 PM


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December 08, 2003

It May Be Too Early to Say that a Peak has been Reached in World Stock Markets but Then Again

Monday December 8, 2003


 



  • A Cold Wind Sweeps Across World Markets

 



  • Dollar back down to $1.22 for 1 Euro, 11 Year Low against the Pound

 



  • Gold at $408 per ounce

 



  • It May Be Too Early to Say that a Peak has been Reached in World Stock Markets but Then Again

 


Major Asian and European markets are all down today as are Dow and NASDAQ futures.  This comes on the heels of US employment figures that came out last Friday.  In order to just stay even with new entrants into the job market, the US needs to add over 150,000 new jobs per month.  Instead, only 75,000 new jobs were added in November according to the latest report and for the 40th straight week, there were critical losses in manufacturing jobs.  What that means is more jobs at Wal-Marts at the minimum wage and fewer quality slots.  Meanwhile, the jobless numbers were said to have declined as in the previous couple of months.  Our suspicion is that any decline in the jobless figures has more to do with people giving up and no longer seeking work than any positive reason.  Remember that literally incredible gain in productivity that came out earlier in the week? Could it really be more production on the backs of fewer employees?


 


All this comes despite the greatest binge of debt spending in the nation’s history --outside of World War II, that is-- and the fastest decline of the dollar in recent memory.  Now that the tax cuts have worked their magic in consumer spending and 13 interest rate cuts by the Fed have helped impoverish a good portion of retired Americans who depend on a safe and steady return on their safe government backed investments, what we have to show is a bump up in activity that hasn’t been reflected in business spending or, more importantly, hiring.


 


How, you might ask, does a consumer society deep in personal debt continue to spend, spend, spend, when few good new jobs are being offered.  The only excuse for reckless fiscal and current account policy is that it eventually jump-starts the economy.  What we have got is a steaming hot stock market full of overvalued stocks and maybe, though, we hope not, an economy that acts like a diesel engine in sub-zero temperatures.


 


Meanwhile the gold bugs have at least temporarily taken a sigh of relief as the shiny metal pushed its way over $400 and never looked back.


 


Tomorrow, I want to muse on how important high technology and particular, intellectual property, are to the US economy.  But today, one more reality check on consumer activity in this corner of Old Europe.


 


Here in Italy, today is a holiday.  Which one it is, I can’t say but everybody else seems to know.  I’m not sure there is a pertinent investment lesson to be drawn from the Rome experiment in cutting off all traffic but it is certainly worth noting.  For those of you who haven’t had the pleasure, Rome has been built not in a day but on over two thousand years of ups and downs.  The old or “Historic Center” covers a good 15 square miles of mainly winding cobble stone passages, alleys and streets.  Every powerful family –usually belonging to a reigning Pope—has its own palace or two with accompanying fountain and square.  The more imposing take up large city blocks, causing everybody else to detour around them.  Every important cardinal felt impelled to build his own memorial by adding a church or two to the scene so that in this limited area often one finds one large dominating church on a square facing one or two other smaller ones.  Having up most blocks, you’ll find a smaller church or ruin; there is no city like this in all the world!


 


When I first lived here some 30 years ago, it could have been said that the traffic problem was so bad that the addition of one more car threatened to bring the city to complete gridlock.  Of course, where there is gridlock there is also massive pollution often abetted by the sweet, soft Mediterranean climate the city enjoys.  The Romans are by nature a flexible crew used to muddling through problems, if at all possible.  After all these years, they have come to the conclusion that it’s better to “magna, dormi, fa l’amor” or eat, sleep and make love, than to get overly worked over by anything but the most pressing problems.  And so, things tend to happen gradually.


 


So, it seems, has the traffic problem.   You can imagine the downtown merchants in the beginning screaming that they would lose all their customers if they couldn’t somehow drive into town.  And the single metro line into town was taking centuries to build since every time they moved a foot or two forward they would hit another archeological find and have to stop everything until the scientists had their say.  Rome is, after all, built right on top of the ancient city whose walls, at its height, pretty much match the dimensions of today’s more baroque and neoclassical central city.


 


Yesterday was the second shopping weekend of the holiday season and special in that it was part of a three day holiday weekend when everyone is out getting their gift purchases done.  It was a cold, rainy Sunday –in contrast to the mild days we’ve been having for the last couple of weeks—and yet the city was swamped by pedestrians.  Not only were the main shopping streets, around the Corso, Fratina, Condotti chic streets swarming but everywhere you went people were out five across and strolling about.  You might have thought it was at the absolute height of the tourist season and half the tourists in the world had all descended on the Eternal City, as they like to call it, I suppose for its proximity to the Holy See.  But no, these were just shoppers!


 


This means that if you live in the old city, you might as well forget using your car during weekend days, even though you have a special permit that gives you the right to move in and out.  For everybody else, it’s public transportation or a long walk from one of the underground garages placed around the walls.  But what has been a long and cautious story is starting to really take off.  Clearly, the merchants and restauranteurs --even more numerous than the city’s churches—have nothing to complain about.  In fact, every day it seems new stores and restaurants, bars, wine bars, pubs are opened.  This is no place for a big box mentality; the businesses have to survive in spaces that were often reserved for storage at the ground floor of the old buildings where artisans once labored or the rats held sway.  Needless to say that rents and housing prices here have flown off the charts.


 


The city is now finally cracking down on the millions of scooters that still have the right to come in at will.  For them, there will be inspections and exhaust level testing to cut down on pollution.  Walking in the wake of their fumes, you would no doubt say it’s about time.


 


The lesson to be drawn here is that people like to get out and walk, to see and be seen and, of course, dressers that they are, nobody likes the process more than the Italians. Meanwhile, we couldn’t even get into any of our popular, economic restaurants last night without a reservation.  The Old Europe may be poised to come out its recession and without the artificial pumping that has gone on in the States.  This may be a good thing for the US because demand in Germany and yes, France, could spark some kind of surge that so far has been lacking.  Wouldn’t that be the ultimate iron for George II and his Rummy friends? 


 


 


Regards,


 


rmb


 


dymaxionweb@verizon.net


 


Copyright 2003 Richard Mendel-Black All Rights Reserved


 


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Posted by dymaxion at 03:40 PM


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December 04, 2003

What Makes Europe Tick or not Tick?

 


 


One way to try to determine what’s going on in Europe, particularly “Old Europe” as our Secretary of Defense so diplomatically put it, is to watch what the Eurocrats are doing.  And so the New York Times today dedicates an article to the many stumbling blocks that keep this band of old countries from realizing the dream of a Federal Republic of Europe.  With Sweden and England staying our of the Euro –the Swedish vote was just a few months ago and may even have cost the life of the Swedish Finance Minister who was a supporter of joining-- and less and less talk from London on joining up, it might have come as no surprise last week when France and Germany, the two mega-powers of the currency block selfishly decided to break the rules they themselves imposed on the other member countries by continuing to run deficits of more than 3% of GDP.


 


To make matters worse, delegates meeting in Naples this week to come up with a constitution for the broader political entity failed miserably in making any real progress.  The countries disagreed on even whether the EU should have its own Foreign Minister and thus a joint foreign policy.  Nearly all of the countries balked at this idea even while the military aspirations of certain Europeans (mainly France) to create a third force were subjected to continued NATO dominance, or, one might say the near status quo.


 


All this and more you can read in the newspaper. My perspective is a little different. So by way of hoping you continue reading, let me ask rhetorically; why should you be interested? 


 


I’ll hit the second point first:  you might be interested in European investing as a hedge against a sinking dollar while getting a double bang for your buck.  Pick a good stock trading say in Germany, buy it in Euros today and when it goes up as, say, the dollar continues its fall, and you gain on both ends.


 


  But, of course, the dollar could firm and the Europeans are even hinting today that they may intervene to not let their currencies grow so strong they can’t compete with the US in certain key markets, like airplanes.  That makes sense but as traders like George Soros have taught us in the past, central banks can intervene and use their good money to try to soak up the fast growing pool of dollars floating around out there (the US trade deficit runs at $1.5 billion a day) but the US in an election year can print more dollars than anybody might want to buy.  After all, even countries can get sick of losing money through massive interventions.  It’s like paddling upstream with your hands if, say, US Xmas sales aren’t that hot and, say, businesses continue to improve their productivity by getting more out of fewer workers by issuing pink slips and moving service jobs to India.


 


You may want to consider buying euro-denominated stocks or making pure currency plays.


 


But, what I wanted to point out from my nest high above one of the best open air food markets in Rome located at Campo dei Fiori, is what you see in the stores, on the shelves, in the market stalls and even on the road.


 


Italians, at least in the city here, tend to buy their goods from small stores not from big-box operators.  It’s amazing how little things have changed in this regard.  And even though it is possible to see so-called foreign goods such as Heineken beer and Quaker Oats, most Italians are still mainly consume Italian goods.  You also get the feeling that a lot of the clothes are made here as well.  Certainly, there’s no doubt about the shoes.


 


In other words, integration is more of a slogan than a fact on the ground.  Each Old European country has its own language, customs, uses, etc. that change slowly.  Italian stores are full of the same cakes, cookies and other goodies for Xmas with little penetration for new habits. The number of large retail stores like Upim and Standa have not increased in central Rome in the last 30 years.


 


What has changed is the mix of automobiles.   Back in the 70’s you basically only saw Italian cars on the roads.  Fiat, had practically a monopoly.  In France Renault and Citroen had the same total dominance.  That’s changed a bit with Japanese manufacturers and French and German cars taking much greater market share.  In France, I rented a Czech made Skoda from AVIS.


 


And so what this says to me about this huge community with a combined GDP larger than that of the US is that the advantage goes to the very big multinationals that can eventually consolidate markets.  It’s pretty clear that some of the European automakers, like the airlines, will fall to multinational ownership.


 


The reason the Euro is strong is more one of lack of flexibility than anything else.  Even if the French and Germans push their debt limits a bit above the 3 percent mark, that’s still half of what we’re running in the states, not to mention Japan’s 7% plus deficit.


 


Also, and most importantly, the Europeans are not running a current account deficit –which means that they, in total, sell more goods outside Europe than they import.  At Wal-mart back in the US, the story isn’t quite the same, as we know.  US consumers buy goods made mainly by Asians though German-made cars, for one, don’t do too badly.


 


If you are betting against the dollar, you are mainly saying that American’s won’t stop buying a whole lot more than they sell abroad.  You are also betting that the country will continue to run high deficits.  Nobody is guessing that George Bush is going to raise taxes in an election year, are they?


 


So, of course, no one is feeling sorry for me being in Rome, even if my latest run to the ATM had my bank taking $244 for a 200 Euro withdrawal.  Germany has been in a long decline as it absorbed all those East Germans.  Maybe the muscle guy in Europe is ready for a recovery.  Not that they’ll get rich trying sell their noodles to Italy.


 


 


Regards,


 


 


rmb


 


dymaxionweb@verizon.net


 


Copyright 2003 Richard Mendel-Black All Rights Reserved


 


If you would like to receive the DymaxionWeb musings directly to your e-mail box, please write to dymaxionweb@verizon.net with the word Subscribe in the Subject field.  We will be happy to put you on our list.


 


 


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Posted by dymaxion at 04:55 PM


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What Makes Europe Tick or not Tick?


 


One way to try to determine what’s going on in Europe, particularly “Old Europe” as our Secretary of Defense so diplomatically put it, is to watch what the Eurocrats are doing.  And so the New York Times today dedicates an article to the many stumbling blocks that keep this band of old countries from realizing the dream of a Federal Republic of Europe.  With Sweden and England staying our of the Euro –the Swedish vote was just a few months ago and may even have cost the life of the Swedish Finance Minister who was a supporter of joining-- and less and less talk from London on joining up, it might have come as no surprise last week when France and Germany, the two mega-powers of the currency block selfishly decided to break the rules they themselves imposed on the other member countries by continuing to run deficits of more than 3% of GDP.


 


To make matters worse, delegates meeting in Naples this week to come up with a constitution for the broader political entity failed miserably in making any real progress.  The countries disagreed on even whether the EU should have its own Foreign Minister and thus a joint foreign policy.  Nearly all of the countries balked at this idea even while the military aspirations of certain Europeans (mainly France) to create a third force were subjected to continued NATO dominance, or, one might say the near status quo.


 


All this and more you can read in the newspaper. My perspective is a little different. So by way of hoping you continue reading, let me ask rhetorically; why should you be interested? 


 


I’ll hit the second point first:  you might be interested in European investing as a hedge against a sinking dollar while getting a double bang for your buck.  Pick a good stock trading say in Germany, buy it in Euros today and when it goes up as, say, the dollar continues its fall, and you gain on both ends.


 


  But, of course, the dollar could firm and the Europeans are even hinting today that they may intervene to not let their currencies grow so strong they can’t compete with the US in certain key markets, like airplanes.  That makes sense but as traders like George Soros have taught us in the past, central banks can intervene and use their good money to try to soak up the fast growing pool of dollars floating around out there (the US trade deficit runs at $1.5 billion a day) but the US in an election year can print more dollars than anybody might want to buy.  After all, even countries can get sick of losing money through massive interventions.  It’s like paddling upstream with your hands if, say, US Xmas sales aren’t that hot and, say, businesses continue to improve their productivity by getting more out of fewer workers by issuing pink slips and moving service jobs to India.


 


You may want to consider buying euro-denominated stocks or making pure currency plays.


 


But, what I wanted to point out from my nest high above one of the best open air food markets in Rome located at Campo dei Fiori, is what you see in the stores, on the shelves, in the market stalls and even on the road.


 


Italians, at least in the city here, tend to buy their goods from small stores not from big-box operators.  It’s amazing how little things have changed in this regard.  And even though it is possible to see so-called foreign goods such as Heineken beer and Quaker Oats, most Italians are still mainly consume Italian goods.  You also get the feeling that a lot of the clothes are made here as well.  Certainly, there’s no doubt about the shoes.


 


In other words, integration is more of a slogan than a fact on the ground.  Each Old European country has its own language, customs, uses, etc. that change slowly.  Italian stores are full of the same cakes, cookies and other goodies for Xmas with little penetration for new habits. The number of large retail stores like Upim and Standa have not increased in central Rome in the last 30 years.


 


What has changed is the mix of automobiles.   Back in the 70’s you basically only saw Italian cars on the roads.  Fiat, had practically a monopoly.  In France Renault and Citroen had the same total dominance.  That’s changed a bit with Japanese manufacturers and French and German cars taking much greater market share.  In France, I rented a Czech made Skoda from AVIS.


 


And so what this says to me about this huge community with a combined GDP larger than that of the US is that the advantage goes to the very big multinationals that can eventually consolidate markets.  It’s pretty clear that some of the European automakers, like the airlines, will fall to multinational ownership.


 


The reason the Euro is strong is more one of lack of flexibility than anything else.  Even if the French and Germans push their debt limits a bit above the 3 percent mark, that’s still half of what we’re running in the states, not to mention Japan’s 7% plus deficit.


 


Also, and most importantly, the Europeans are not running a current account deficit –which means that they, in total, sell more goods outside Europe than they import.  At Wal-mart back in the US, the story isn’t quite the same, as we know.  US consumers buy goods made mainly by Asians though German-made cars, for one, don’t do too badly.


 


If you are betting against the dollar, you are mainly saying that American’s won’t stop buying a whole lot more than they sell abroad.  You are also betting that the country will continue to run high deficits.  Nobody is guessing that George Bush is going to raise taxes in an election year, are they?


 


So, of course, no one is feeling sorry for me being in Rome, even if my latest run to the ATM had my bank taking $244 for a 200 Euro withdrawal.  Germany has been in a long decline as it absorbed all those East Germans.  Maybe the muscle guy in Europe is ready for a recovery.  Not that they’ll get rich trying sell their noodles to Italy.


 


 


Regards,


 


 


rmb


 


dymaxionweb@verizon.net


 


Copyright 2003 Richard Mendel-Black All Rights Reserved


 


If you would like to receive the DymaxionWeb musings directly to your e-mail box, please write to dymaxionweb@verizon.net with the word Subscribe in the Subject field.  We will be happy to put you on our list.


 


 


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Posted by dymaxion at 04:51 PM


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December 03, 2003

Larry Kudlow Sets the Record Straight


 


Wondering why they seem to pull all of the stops out of the dollar value?


 


I sit here in Europe watching the “early’ market in the dollar and see it freefalling to nearly $1.22 per Euro on Bloomberg’s European satellite channel and can’t help but wonder what the problem is.  But to sooth my battered instincts, I was helped to the real scoop by a quote from Lawrence Kudlow, thanks to the help of J. Christoph Amberger of the 247profits-e-dispatch.  Kudlow, surprise of surprises, has stuck his finger in the wind and felt nothing but warm, tropical breezes from here on in:


 


"The cheapest currency in the world right now is the US dollar.


Watch the greenback strengthen significantly in the years ahead.


High after-tax investment returns, breathtaking productivity


gains, totally awesome profitability, virtually no inflation and


historically low interest rates tell this tale. So do falling


unemployment claims and rebounding manufacturing indexes. A


University of Michigan think tank just predicted a 5.4 percent


unemployment rate for 2004, a 4.8 percent rate for 2005 and 5.2


million new jobs over the next two years.


 


"Of course, inflation worriers point to today's high gold price


(gold is a proven inflation metric). But gold, now near US$400


an ounce, is US$50 too high. Money is not all that loose: The


Federal Reserve is in a mild excess-reserve position, exactly


where it should be as we turn from deflationary recession to


reflationary recovery."


 


I am grateful to dear old Larry for these pearls, first for his confidence in a quick dollar turnaround and second, for having set me straight on what the real price of gold is –or better, should be, since the last I looked it was trading at $3 over the magic $400 mark.  Of course, I don’t know what a mild excess-reserve position is but I trust it has something to do with the money supply.


 


Being the paranoid gold investor that I am and being fully aware that there is always a chance we will see Greenspan wave his magic pinky thereby setting off a major seller of the yellow stuff (it wouldn’t be the first time, according to some very knowledgeable players).  And maybe Kudlow is in on the info.  After all, he is a loyal soldier who has profited mightily in the past from his connections inside the Beltway.


 


As I’ve said before, investing in gold is a little like pissing into a virtual wind.  Most economists will tell you it is just another commodity and an anachronistic one at that since the amount of demand for industrial gold is quite small and even much of that gets recycled when the gadget its non-corrosive characteristics protect, gets thrown into the ashcan.


 


But somehow Ludlow worries about the price of gold, and even goes so far as to say it is a proven inflation metric.  If it was, BTW, it would not have gone into its 20 year swoon in the 89’s and 90’s unless, and you can correct me, that was an inflation free period.  No, gold is something else.  It’s money!  Bring any gold gee-gaw into a jewelry shop that buys old gold and the jeweler will weigh it and base his price on the purity and weight of the object.  Gold stores value, as they used to say.


 


So when the dollar goes down gold goes up.  Even Kudlow contradicts himself by noting that we are experiencing “virtually no inflation” (his words, not mine).  Yep, maybe gold demand will rise in the coming years as China and India step up their economies and new consumers are born.  India is by far the highest gold consuming country in the world and with all those back-office IT jobs moving there some of that wealth is bound to turn into gold bangles and bauds. 


 


My guess is that we are still in the early stages of a secular gold bull market but I do believe that the powers that be in Washington are whispering more than sweet nothings in Kudlow’s well-scrubbed ears.  We might have to get ready for an attack on the price of gold as it approaches its last historical high point of $416.  That was the high water mark back then and it may turn out to be where the line in the sand has been drawn by the invisible hand of the Fed.


 


You can be sure we will be watching closely and looking for signs of manipulation.  On the bullish side, the chairman of one of the largest gold mine holding companies in the world, Peter Munk of Barrick Gold, has announced that henceforth he will stop forward hedging –something that has protected his holdings over the long dips.  In the past the large hedge books, as they are called, of the major gold miners like Barrick, have been seen as a damper on the market.


 


Watch out for fun and games ahead.


 


Still reporting from Rome, where the US markets don’t open until 3:30 PM my time and bemoaning the falling dollar every time I look at my Amex statement,


 


Regards,


 


rmb


 


dymaxionweb@verizon.net


 


Copyright 2003 Richard Mendel-Black All Rights Reserved


 


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Posted by dymaxion at 04:51 PM


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December 02, 2003

The Proboscis Closest to Your Heart

 


 


The Bet on commodity index funds, like stock index funds, which have the advantage of requiring very little overhead –after all, there are few trading costs involved in maintaining the portfolio’s balance since it’s rare for companies to be added or removed from an index—is now being offered by a few companies They are designed to rollover a fixed percentage of holdings based on the weighting the fund presets for key raw materials like petroleum, precious metals, coffee, pork bellies, etc. 


 


For most investors, and I use the term in contrast to “traders”, the buying and selling of various trades for commodities can be a daunting task.  Traders tend to both leverage their bets by using very generous margins and to hedge them by buying both sides of a play.  The trick, often, is not to guess a price direction so much as spot a price anomaly that is bound to break in one direction or the other.  At least, that’s the way it is supposed to work. 


 


Some of these trades are purely technical; others are based on macroeconomic factors.  As investors, it is important to be nimble enough to jump on opportunities where they might arise but we are mainly looking at macroeconomic factors in making our betting decisions.


 


The question here is whether a pure commodities play is a hedge against an overvalued stock market and a falling dollar.  The answer should be yes except that a stagnating economy and drying demand –the buyproducts of a fall in stock markets and the more general economy—will also affect commodity demand.  Some people are betting that internal growth in India and China will propel demand for commodities even if the global economy falls back to stagnation and delation.


 


Is the China story that big?


 


Sometimes, the opportunity lies right under our noses.  For instance, I like to collect old family style cameras and used to pick them up mainly at tag sales and flea markets.  Then came EBay and the range of choices increased enormously.  No longer was I looking at one or two cameras in a month’s time, instead, on any given day I could see 20 or 30 being offered on line.  What’s more, since the offers were so consistent, I could sit back and watch a few auctions to establish a price range in which they seemed to be valued.  Before that, I was subject to the whim of the seller who might guess anything when it came to the object in question. Of course, that sometimes worked to my buying advantage but it also was annoyingly frustrating trying to convince somebody that a, say, $50 camera, could be bought for $15 on most Sundays.


 


EBay ended all that.  It soon became clear that there was a market for these outdated but still quite common objects and that there were more or less desirable ones to be sought based on rarity and aesthetic considerations.  An amazing window had been opened up for butterfly collectors of all stripes!


 


Before long I was becoming great friends with my mailman, not to mention the UPS and FedEx drivers on my beat.  Furthermore, despite everything you heard about the pitfalls of doing business on the Internet, it became clear that most of the sample of people I dealt with delivered what they said they had in a fairly prompt manner at the price determined by the auction.  Sure, it was hard doing transactions without credit cards and intermediaries like Paypal but somehow, even with check payments that had to be first cleared before shipment, the packages would stream to my address.


 


To make my point, here was a system that was working big time.  And it had sticking power because once you hit a certain magic number of buyers and sellers the value of EBay to its overall community increased exponentially.


 


These were the days when there were any number of so called pure internet plays out there and there was much more chatter around, say, Amazon or WebMD, than there was on this flea market auction site where Piz box collectors were known to congregate.


 


But over the long haul and even through the valley of the shadow of death that opened in March of 2001 like the Red Sea being parted once again by Moses, EBay has been a winner.  This is not by any means a recommendation to buy EBay today since even they have their macro growth limitations and a very high valuation already built in.  But to say, when you start ordering the equivalent of your DVD’s from Netflix and the service turns out to function pretty well, then just maybe you might want to consider plunking down a bet.  Just 6 months ago, they had a valuation of little over $60 million dollars.  Since then, that has more than doubled to circa $1.2 billion.  Just a year ago you could have bought a share of Netflix for less than $10.  To get one today, you’d have to plunk down more than 5 times that.  So maybe it’s too late for them.  But keep your eyes out for those things that are right in front of your nose.  Sometimes the proboscis closest to your heart hides more than you think.


 


Regards,


 


rmb


 


dymaxionweb@verizon.net


 


Copyright 2003 Richard Mendel-Black All Rights Reserved


 


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Posted by dymaxion at 04:46 PM


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December 01, 2003

Working Too Hard?

 


Stephen Roach, in an op-ed piece in the NY Times yesterday, talks about the difference between productivity gains and just plain working more hours.  Roach cites a number of statistics regarding employment and productivity to call into question the so-called productivity gains that are supposedly fueling the new round of growth in US activity.  If you remember, for the last bubble of just a few years ago, the explanation of why it was no longer useful to measure a company’s worth in old fashioned terms like assets, earnings, cash flow, etc. –take your choice—was that the new age of computers and, of course, that monstrous champion, the Internet, was making it possible for workers to be much more efficient, thereby creating a new kind of measurement of productivity that included a new magic multiplier: “information”.


 


We were, after all, now part of the “information age”, a time when information becomes currency and assets could be measured in “eyeballs”.  Some of you sitting in your cubes might have wondered if all those hours of computer down time spent on the telephone with tech support were really adding to your productivity.  Others, might have thought about the amount of web surfing done on company time as being just another of the miracles brought by the information age.  It seemed, even if you wasted half the day tracking stocks, ordering your Christmas gifts, or running a business on EBay, you somehow were getting more productive.


 


The information age has brought many miracles, including the ability of yours truly, to sing his song of doom and destruction for the American (should I say, World?) economy, in a forum where interactive communications (Google Search, RSS, Radio Userland Cloud, List server, etc.) make possible an interactive readership.  But, you can bet your bottom dollar that it hasn’t made many of us more productive.  Measure the time you spend working and compare it to a time when people came and went at regular hours and left work with the comfort that they weren’t even vaguely expected to put in another workaday thought until they arrived bright-eyed and fresh the next morning at 9 AM.  Are there many of us left, at the least in the US, who don’t check our emails –not just the personal ones—many times over during the evening?  How people don’t have mobile phones that keep them in business conversations, morning, night and weekend?  Who among us, can say, “I get out of work and if someone sends me a text message on my phone, I won’t answer until I am back on company time tomorrow”?


 


Roach obviously has it right:  We aren’t getting any more productive, just putting in more hours at work.  I had a boss who kept quite strange hours and who would call me every night at around 11 to go over the day’s critical business issues.  Now many of you would say, if you’ve got that kind of a boss and you keep on working there, you deserve to be awakened at any hour of the night by such a maniac!


 


But part of the work ethic is the entrepreneurial zest for start up and ownership.  The stock option, a concept that has been so clearly corrupted by those who inherited the system and brought us the last bubble, is now about to get accounted out of business.  In Silicon Valley there is consternation over shareholders demanding reform.  “How,” the VC’s and entrepreneurs of tomorrow ask, “are we going to get all those zealous (fools, my word) cube-dwellers to give up family life, sane hours, decent meals, sex lives (some would say I’ve gone too far), communication with the outside world?”  After all, it was about reaching the promised land called bonanza, when after all the struggling, the golden spade called IPO was finally viewed by Sir Moses cum CEO, riding, of course, his trusty red Porsche.


 


The plebs worked day and night, burning out in their cubes while the stock options mounted.  Meanwhile, crafty CFO’s and the top investors made sure they held real equity, uninhibited by reserve clauses, that could be flipped should the magic day arrive.


 


The actual purchasers of shares after the IPO, why they were just some turkeys who happened to play in the after market.  They wouldn’t even know how many stock options were granted and how their holdings might be diluted if the plebs in their cubes ever made it to the big payoff.  By the way, if you are new to this game, ask an older friend about the AMT—clue, it’s not a cash machine but a reverse one owned by the government.  The ANT is an income tax the government put in to tax stock option holders on vested shares they purchase, even if those shares can’t be sold for at least a year because of some restriction clause or other.


 


I know of a guy who ended up owing the US tax man $6million, that’s right, 6million bananas! on a stock that tanked before he could sell any.  Poor guy, I wonder what happened to him.


 


So yeah, hard work does make a difference.  But whenever you hear that somehow it is the boost in productivity that is keeping down job growth, think again.  We are borrowing more; credit card debt in the US is up to a per capita $6,000.  That means that, on average, every man, woman in child in the US owes that much in high interest debt.  You might also note that the federal government is spending this year roughly a $half trillion (over $500billion) more than it is taking in and that we, as a nation, are buying about the same amount, $500billion worth, of goods more than we are selling to the rest of the world.


 


Is there anyone out there that thinks that George Bush and buddies will put the breaks on all this before the election?  Not, I believe, if the only cost we have to pay is a very weak dollar that makes all of us dollar holders that much poorer vs. the rest of the world, at least all that part of the world with currencies that can rise against the dollar.  That, of course, leaves our major supplier of manufactured goods, China, out.  They will continue to sell their goods to us and take dollars no matter how little they are worth.  That, somehow, is the bet our leaders are making.  Because if China does feel compelled to raise the value of their currency, the Rmb, against the dollar, then the price of everything will jump and the Fed will have finally got their wish, real inflation again.


 


Hold onto your dollars and find out or, maybe, spend until you are maxed out –not my recommendation, though-- because one thing is sure, you will be paying off those happy holiday debts in cheaper dollars in the future.


 


BTW, too bad the cheaper dollar didn’t help Boeing with the Aussies.  For some reason, even though in theory we have been cheapening the dollar to help bring jobs to Seattle and other big manufacturing cities for that matter, it didn’t work in this case.  Maybe, they will get a few more defense related contracts to make up for it.  Fair and square this time, of course.        


 


Still in Rome (where they don’t work so hard) and suffering every time I hit the ATM (cash-machine),


 


 


Regards,


 


 


rmb


 


dymaxionweb@verizon.net


 


Copyright 2003 Richard Mendel-Black All Rights Reserved


 


If you would like to receive the DymaxionWeb musings directly to your e-mail box, please write to dymaxionweb@verizon.net with the word Subscribe in the Subject field.  We will be happy to put you on our list.


 


 


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Posted by dymaxion at 07:00 PM


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