2/24/11…three stories

Bloomberg Quote of the Day: “The most incomprehensible thing about the world is that it is all comprehensible.” – Albert Einstein …but human nature is incomprehensible! TB

Yesterday’s volume was 1.33B shares…tied for first with January 28th and beating Tuesday’s 1.33B, now the third highest of 2011…and as TB has said repeatedly: volume does matter, dammit! Especially all of these days have been significant down days while the gensiuses continued to say don‘t worry about the volume even as we crept higher. TB is not saying this is Armageddon, but we all know how easily a theater is filled before the movie but what happens even at the end when they all file out together let alone if someone yells ‘fire!‘ Well someone is yelling fire and guess what? All those positive earnings surprises are being replaced by a lot of misses!

The Dow declined by another 0.9% while the doubting Transports plunged 2.1%, while the Nasdaq Composite dove  1.2%, the 100 -0.9 % and the Russell 2000 another big 1.6%, while the fully-valued (to TB) S&P 500 shed 0,6%. Advance/declines and breadth were -2x on the NYSE, but -3x and -7x respectively on the Nasdaq! That is telling us something. Also those new 52 week highs that had been averaging 400 or so stocks dropped to 115, while new lows surged to 80…not impressive but until Tuesday were comfortably around 20. Please pay attention…at least look at the turmOIL not only in the middle east but in our own country where elected officials thinking they have a mandate take on anyone but their own supporters…the deficits are all the fault of the unions? Oh, please!

As for bonds the rally continues for a third day although it has been only in the long bond and long tip…but is starting to aid the ailing 10 year maturity, with the 30 yr yield declining 20 basis points that is 2.25% since Monday and nearly  3.5% since the auction on 1/28! Crude is up another $1.58 as the middle east and ‘peak oil’ concerns continue. Gold is stalled again at $14.14 while Cotton is down limit again -15% from the record high set just last Friday! …and you don’t believe the these prices have been driven up by speculation?…get a grip!

…TB had two responses to yesterday’s rant…both shocked…shocked…that he prefers Soros’ support of socialism to the fantastic Koch (pronounced Coke and that gives the beverage a bad name…TB suggests another with a suffix added) brothers, who merely love themselves and their money. How much is enough? This is rhetorical of course but he would ask that of any billlionaire he knows who is griping about his damned taxes! Anyway, here are the three stories alluded to in today’s slug:

Over the weekend, and again yesterday, two readers sent TB an article…by Matt Taibbi of Rolling Stone…why is it only they and Vanity Fair are providing useful information. If you recall, Matt had the audacity to disparage the name of Goldamn Sachs…no! This unleashed a firestorm of anger that hit the stock price hard and forced them to go on the defensive, eventually ending with them appearing before Congress…but not to worry they are back to business as usual circumventing the intent of the financial reform bill by all but the top eight officer/partners being allowed to short their own restricted stock…and the nice thing is they don’t have to come up with the collateral as it isn’t a naked short…or is it…since it is subject to clawbacks???

But this time he is attacking the government for failure to send a message to Wall Street. Nobody goes to jail and even if they do it is to a Club Fed when as he says just putting them in an ordinary fed prison for six months would stop their antics – period. Here is the link to the article: http://www.rollingstone.com/politics/news/why-isnt-wall-street-in-jail-20110216

The second article, actually one by David Brooks, yesterday in the NY Times along with an editorial are closely related: Brooks says ’make everybody pay’ and that is what Governor Walker has failed to do…attacking his opponents the unions, when as the Times editorial points out, surveys show that ending collective bargaining would only cut 5-6% off  the budget. But the truly alarming thing is that the unions offered concessions and he flat out rejected them proving this is not about fiscal austerity but removing a thorn in the side of the GOP – union support for their opponents. So the wealthy Koch brothers are to be represented thru their massive contributions and non-profits but workers are not? This has nothing to do with balancing the budget and everything to do with political advantage.

What Walker has done is rather than seek sacrifice from everyone…why shouldn’t all government employees AND elected officials take cuts and pay more of the cost of their health insurance…are you listening Congress? This amounts to class warfare at it worst. (For the record not only is not pro union he is not nor has he ever been one (right, Joe McCarthy who should be the poster child of the new improved(?) GOP), and just out of the Navy dodged the shop steward for his entire six months there so as not to be forced to join.)

The third and possibly most helpful article was by Tom Friedman…a great thinker in a sea of morons. Friedman talks of the hypocrisy of the U.S. over spreading democracy as so long as a country has something we want…namely oil or transportation access and protection of Israel as Mubarak had…we turn our heads on the suffering of the people…democracy can wait…until it bites us in the butt as happened in Iran, Egypt and now it is spreading all over the sick Arab world. Friedman proposes a new tax on gasoline of $1 a gallon beginning in 2012…and phased in at the rate of 5 cents a month (do you see the logistics problems with this?).

Friedman argues correctly that this would give people a chance to alter their driving habits and more importantly their choice of new vehicles…this is the only way to force Detroit and other car makers to stop producing gas guzzlers.

This should have been done long ago as the tax, which at the time was significant has been minimized by inflation. TB would go one step further and impose a 30% tax on gasoline so the more the price rises the more the government collects. This would make an incredible improvement in the deficit…but don’t look for the GOP to get on board…not when their supporters are the oil companies and the Detroit that we just bailed out of oblivion for some unknown reason.

So Americans…stop wearing your holier than thou mitres and realize that this is all our problem and that you who are screaming at public employees (when the real problem is the high, exempt state and local employees…especially overpaid police and fire chiefs), benefited from it in the faux strength of the economy from the 1990’s to 2008…a mirage built on readily and stupidly available credit that never should have been offered in the first place.

A friend and conservative said he believes in personal responsibility…so does TB…but that implies corporate responsibility of not reaching for earnings at the long-term expense of their companies, shareholders, and in the end the American people. This means disclosing terms of financing in a manner…and size…that the average person can at least decipher.

TB was kindly given tickets to today’s performance by the San Francisco Symphony of Mozart’s Requiem…looking forward to it but hoping it isn’t a prophecy for America.

Live each day as if it might be your last…sadly for some it is,

TB

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3 Comments »

  1. spotturn said

    Thanks for your insights into the US politics! Your blog is one of my daily reads as it gives another view beside all these uninteresting entertainment-like MSM “news”.

    Some info about gasoline prices in Germany for comparison reasons:
    1 litre of Gasoline costs currently about 1.50 €. The price in many other european countries (France, Italy, ..) is in the same range.

    Of this 1.50 € there is
    0,222 € VAT
    0,654 € Gasoline-Tax

    This makes with todays exchange rate a price of 1.50 EUR/litre*1.38 EURUSD*4.54609 litre/Gallon = 9.41$ per gallon.

    Now you get an idea why smaller cars are sold in Europe along with the big BMW’s and Mercedes’s for those who can afford them.

  2. spotturn said

    I just recognized, that I used the imperial gallon instead of the US-gallon (3.785411784 l) in my calculation.

    So it makes only 7.84 $/Gallon. Also the taxes are a little bit higher as written, as the webpage I got them from used 1.38 €/l to calculate them (the price some weeks ago).

    Apologies for the confusion.

    • traderbill said

      Having rented cars in Europe on many occasions I continue to be shocked at how the U.S. continues to subsidize the oil industry. Once when I arrived at Heathrow EuropeCar told me that they did not have the economy model I had reserved but would give me a Mercedes 300 at the same price. I thought I had struck it rich…but we were going to the Lake District where not only the size of the car made driving difficult on narrow rock-lined lanes but our fuel cost was exorbitant.
      Thank you so much for reading and especially your comments

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