2/11/13…blame it on the Postal Service and the Loonies

From the Friars Club Encyclopedia of Jokes: “We need guns…suppose a man comes home early and finds another man with his wife. What’s he supposed to do, poison him? How about suicide? Can you imagine trying to beat yourself to death with a stick?      Let’s be objective about this. Guns are not the real problem. The real problem is bullets. – Pat Paulson

TB’s Quotes of the Day from John Maynard Keynes, arguably the most maligned economist of all time: “The day is not far off when the economic problem will take the back seat where it belongs, and the arena of the heart and the head will be occupied or reoccupied, by our real problems — the problems of life and of human relations, of creation and behaviour and religion.” – Lord Keynes…here are some more:

“The long run is a misleading guide to current affairs. In the long run we are all dead.”

“The old saying holds. If you owe your bank a hundred pounds, you have a problem. But if you owe a million, it has.– tell that to Jamie Dimon!

There is no harm in being sometimes wrong — especially if one is promptly found out”

“When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals.”

“The love of money as a possession — as distinguished from the love of money as a means to the enjoyments and realities of life — will be recognised for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease … But beware! The time for all this is not yet. For at least another hundred years we must pretend to ourselves and to everyone that fair is foul and foul is fair; for foul is useful and fair is not.” Note the ‘love’ of money, it is not the root of all evil! TB

Bloomberg Quote of the Day: “Every man dies. Not every man really lives.” – William Wallace

This week’s economic calendar is fairly light. The highlight of the week will be the January Retail Sales (Wednesday). We will get January Treasury Budget (Tuesday), January Import & Export Prices, and December Business Inventories (Wednesday), February Empire State Manufacturing, January Industrial Production, and February Consumer Sentiment (Friday). Courtesy of Economics Advisory Service

Most importantly Friday is options expiry!!! With the recent volatility it could be exciting…especially with complacency about the looming artificial  fiscal cliff!!! TB

Bloomberg Top Stories:

*Fed End of Easy Credit Becomes Internal Debate Focusing on Escape From QE3 – right, they are going to stop while Congress destroys the economy? Pullease!!! TB

*Stocks Fall in Europe With Spain, Italy Bonds as Yen, Commodities Weaken – they can use the same headlines and just substitute ‘Rise’ and ‘Fall’ as needed. TB

*G-7 Said to Weigh Currency Statement to Calm Competing Devaluation Concerns – TB knows some Libor traders who could handle it for them…for a small fee…

*Black Market Dollars Put Egypt Government on Alert as violence Escalates

*Apple’s Margin Squeeze Has No Easy Fix Amid Worst Share Drop of 33%

*Spanish Budget Deficit Haunts Rajoy Defying Junk Bond Status

*Putin Turns Black Gold Into Bullion as Russia Buys More Than Rest of World

*Benedict to Quit on Feb. 28 in First Papal Abdication in Almost 600 Years – !!! – echoes Gregory XII’s Departure Six Centuries Ago

*Three Shot at Delaware New Castle County Courthouse; Suspect Is in Custody – if only more guns would have been there, this would not have happened, right NRA???

*Stampede Kills At Least 36 People at Indian Festival Attracting Millions

*Paterno Family-Commissioned Study Faults Findings of Freeh’s Investigation – DUH!

Total NYSE Volume plunged to 2.96B – lowest volume of the year after being stagnant at 3.48B-3.59B since last the two day tie at 3.9B shares, highest in nine sessions, as stocks put in a solid up day ranging from +0.4% on Dow Industrials and Transports to +0.9% on the Nasdaq Composite, +1.1% on the 100 and +0.6% on the Russell 2000. Real NYSE volume plunged to 573M from an already weak 664M shares, lowest since 12/28!!! NYSE Financials rise 0.7% despite BofA declining by 0.7%??? The NDQ 100 was up 29 points with Apple adding 5.5 and 7 others more than 1 point. 4:1 were up!  Advance/Declines and Breadth were positive, +2% or so vs -1.3x to -1.9x.The VIX which plunged a week ago Friday by 1.38 to 12.90 then reversed itself climbing 14.67, highest since Jan.2, and felly by .48 to13.02 – a perfect transition to this weeks options expiration…heed!!! VIX range is 13.7% – in a week!!!

European and Asian stocks mixed: UK +0.2% vs +0.5% vs -0.4% vs -0.2%; France +0.3% vs +0.8% vs +0.1% vs -1.7%; Germany -0.2% vs +0.4% vs +0.3% vs -1.4%. Japan closed vs -1.8%!!! vs -0.9% vs +3.8%!!!, Hang Seng +0.2% vs +0.2% vs -0.3% vs +0.5%, Kospi closed vs +1% vs -0.2% vs -0.1%, India +0.3% vs -0.5% vs -0.3% vs -0.1% vs -0.5% vs -0.2%, U.S. stocks opening weak: DOW -38; SPX -3; NDQ -8.40.

Bonds closed slightly higher on Friday, except TIPS and are up little changed overnight with the 10 yr Treasury at 1.95% vs 1.96% and the 30 yr at 3.16% vs 3.17%. The long Tip is 0.53% vs 0.50%. Libor update: 2.48% 3 mos., 4.65% 6 mos. Foreign bond yields little changed except problem credits: Germany 1.60% -1; UK 2.10% +1; Japan 0.76% +1; Italy 4.60% +5; Spain 5.40% +6; Portugal 6.40% +1; Greece 10.84% +14.

Gold took a modest hit again on Friday and is below the 40/50/200 day m/a’s, closing at $1666.90 -$4.40. The $1636 low on 12/21 – lowest since 8/21 is critical support!  Who is the big seller overnight if the Russians were the big buyer in the runup??? It is being beaten to death this morning at $1647.80 -$19.10, with an o/n low of $1644 almost at that critical level!!!. Crude was also off slightly closing at $95.72 -.11. Overnight $95.34 -.38.

Bank lovers will appreciate this article: Excel accounting and value at risk  It is incredible that the most famous bank in the country resorted to this type of accounting (sic).

…kudos to the Postmaster General for challenging Congress on the all-to-often criticisms of the postal service. He said what Congress has refused to accept:

  1. that the post office isn’t mismanaged, they are doing the best with what they have after suffering a 30% plus loss in first class mail due to online bill paying (and communications). TB’s only gripe is that they continued to spend money sponsoring cycling teams (Armstrong), and are still running commercials…why???
  2. No increase in the price of stamps can help them, in fact it will only make matters worse.
  3. Despite Congresses mandate that they fully fund the retirement plan NOW (something not required of any pension fund, public or private – and they are all underfunded), they put aside no money last year. Supposed to be $5 billion
  4. They have laid off 60,000 employees and are now going to packages only to residences on Saturday’s…unless Congress stops them. By the way the Franking privilege which provides free postage to Congress has been cut drastically from $113 million in 1988 to $36M in 2010 to  just $13M in 2012…think email!!!
  5. He also said on January 1st cash on hand was equal to just FOUR days of expenses!

How do we get out of this? We don’t – without a Constitutional Amendment since postal service is mandated. But Congress has thwarted numerous attempts by the USPS to cut costs. A quandary for the GOP, right?

Also, an expense the feds could cut instantly is minting of pennies. Like the post office, more and more money is spent on line. Just stop minting them and round up or down to a nickel on the final bill (on cash transactions only), as the Canadians just did. We loved calling them ‘loonies’ (MN’s state bird is the same), yet they brought themselves back from the brink, did not have problems in the banking crisis due to a strong central bank, and have control over gun violence (and yes, they have the same TV shows and video games we do!). Who is the real loonie? By the way, it has always been the GOP who has refused to eliminate the penny.

Now on the Dem side of the equation: how about some simple social security and medicare reforms…such as means testing:

  1. Minor dependents of those drawing social security should be excluded unless income is below the poverty level. They dole this out without even asking if you want it.
  2. Let Medicare purchase prescription drugs…they would be the biggest buyer in the world and shave that 30% premium they pay over Medicaid to zero.
  3. Let doctors get paid more for treating more than one symptom per visit. Get people well and reduce number of office visits

These are just a few…wake up Dems, you too are part of the problem!

Now to the fiscal cliff…the real one looming in March. Not the debt ceiling but sequestration. Both sides have to get together to prevent this which will put the country back in recession again and the Fed is out of arrows in its quiver. Good luck.

To those of you who continue to say “if not not, when?” please read this article. What is needed is a framework, not austerity. Krugman/kicking the can TB is still troubled by friends who when confronted that it was eight years of Bush 43 and a GOP controlled Congress enacted two rounds of unnecessary tax cuts (and tried to make them permanent), engaged in two wars without paying for them, and enacted Medicare Part D without funding it or allowing the purchase of prescription drugs. It is disingenuous for Boehner to say, “At some point, Washington has to deal with its spending problem. I’ve watched them kick this can down the road for 22 years since I’ve been here. I’ve had enough of it. It’s time to act.” Brilliant, just brilliant and how convenient. You sir, were very adept at kicking the can…perhaps a career in soccer?

Lastly, the haranguing on Sen. Hagel in confirmation hearings where all those astute senators continue to fall back on their ‘responsibility’ as the asked him over 100 times his position on Israel…what about the rest of the Middle East? What about the China/Japan battle over those oil-enriched islands? True, Hagel did not give solid answers or tell them that is enough on the topic, but TB would have looked even worse and been an embarrassment to the president with his terse response after a point.

TB will close with this comment from Lord Keynes, “in the long run we are all dead.” Not also that he, along with Irving Fisher who predicted the crash, both lost their fortunes speculating on a recovery….and then this: Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.

Have a great day/week!


. . .  – – –  . . . (SOS!)  . . .  – – –  . . .  (SOS!) . . .   – – –  . . .  (SOS!)


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