Solid Economic Policy: can be expressed in five one-syllable words: Get. Out. Of. The. Way.

Our floundering ‘federal family’

Excerpt:

The economic policy the “federal family” should adopt can be expressed in five one-syllable words: Get. Out. Of. The. Way. Instead, Energy Secretary Steven Chu, whose department has become a venture capital firm for crony capitalism and costly flops at creating “green jobs,” praises the policy of essentially banishing the incandescent light bulb as “taking away a choice that continues to let people waste their own money.” Better to let the experts in his department and the rest of the federal family waste other people’s money.

Comment: George Will ... read the whole thing!

Greek Default ... what could happen

Eurozone: A nightmare scenario

Excerpt:

...

the talk among investors and some European politicians this week has been of Greek default. The graphic below outlines the likely consequences of a default by Greece. It is a description, not a prediction – a description that includes the possibility of the break-up of the eurozone

Comment: Very interesting. Graphic is a screen capture from the interactive graphic

CVS should hire him!

Walgreens pharmacist fired for using gun to foil robbery

Excerpt:

You'd think the suits at Walgreens would be grateful. Instead, they fire a dedicated employee who foiled a robbery using a concealed weapon he carried.

The bizarre reason? Walgreens has a "no escalation" policy on robberies:

One week later, after being praised for staving off the suspects, Hoven was fired. His attorney, Dan Swanson, says a Walgreens District Manager fired Hoven, citing a "non escalation policy."

Comment: Walgreens pharmacist fired for using gun

The 2012 Election Will Come Down to Seven States

The 2012 Election Will Come Down to Seven States

Excerpts:

President Obama is assured of 175 electoral votes from 12 deep-blue states and the District of Columbia: California (55 electoral votes), Connecticut (7), Delaware (3), Hawaii (4), Illinois (20), Maryland (10), Massachusetts (11), New Jersey (14), New York (29), Rhode Island (4), Vermont (3), Washington state (12) and Washington, D.C. (3).

Three more states are not quite as certain, but still likely Democratic: Maine (4), Minnesota (10) and Oregon (7). Even though Minnesota is competitive enough to vote Republican under the right set of conditions, it is the state with the longest Democratic presidential streak, dating to 1976

Four other states usually vote Democratic for president, but they're hardly a sure thing: Michigan (16), New Mexico (5), Pennsylvania (20) and Wisconsin (10). A low Hispanic vote in 2012 could flip New Mexico, as Al Gore carried it by only 366 votes in 2000 and a dedicated effort by George W. Bush flipped it in 2004. In Michigan, economic problems might cause voters to cool on Democrats. Wisconsin, narrowly Democratic in 2000 and 2004, is a cauldron of unpredictable countertrends. And although Pennsylvania has frustrated all GOP attempts to win it over since 1988, recent polls have shown weakness for Mr. Obama there. These 51 electoral votes will be GOP targets if conditions in the fall of 2012 approximate today's.

Meanwhile, the Republicans have their own firewall. Almost any sentient GOP nominee will carry Alabama (9), Alaska (3), Arkansas (6), Idaho (4), Kansas (6), Kentucky (8), Louisiana (8), Mississippi (6), Montana (3), Nebraska (5), North Dakota (3), Oklahoma (7), South Carolina (9), South Dakota (3), Tennessee (11), Utah (6), West Virginia (5) and Wyoming (3). These 18 states have 105 electoral votes.

The Obama forces have bravely boasted that they can turn Arizona (11), Georgia (16) and Texas (38), mainly because of growing Latino voting power. But with the economy in the tank, electoral claims on these big three will likely go the way of John McCain's early declaration in '08 that California was within his grasp. Count another 65 red votes here.

Four years ago, even optimistic Democrats didn't think they would pick up Indiana (11), North Carolina (15), or an electoral vote in Nebraska (which like Maine awards one vote per congressional district), yet all three went for Mr. Obama by small margins. In 2012, Indiana is likely to desert him, as is the one Cornhusker district. To keep North Carolina, the Democrats chose Charlotte for their national convention and will make a big play statewide. As of now, it looks tough for them. Thus Republicans are in the lead to win 26 more electors. Missouri was the sole squeaker that went for McCain; few believe it will be tight next year, so the GOP will likely have those 10 votes, too.

Republicans therefore are a lock or lead in 24 states for 206 electoral votes, and Democrats have or lead in 19 states for 247 electoral votes. That's why seven super-swing states with 85 electors will determine which party gets to the magic number of 270 electoral votes: Colorado (9), Florida (29), Iowa (6), Nevada (6), New Hampshire (4), Ohio (18) and Virginia (13).

Comment: Consider earlier post: 2012 Electoral Math. Check out http://www.270towin.com/ and play different scenarios

Where the teleprompter meets the road

The grander the stage, the smaller Mr. Obama comes across

Excerpts:

When Mr. Obama entered office, he told us unemployment would not rise over 8% if we passed his stimulus. Now his economic advisers have just told us that unemployment will not fall below the 9% mark through next year. As if to underscore the grim news, the latest jobs report—released in time for Labor Day weekend—shows zero net job growth for August.

The politics requires not only that the president address the economy's dismal jobs performance but that he be seen by the American people to be doing it. And that's where the teleprompter meets the road.

The truth is that there is practically nothing Mr. Obama could do to gin up better jobs numbers before next year's election without massively increasing the deficit—and the Republicans won't let him do that. Even with the word "stimulus" banished from his remarks this week, no one will be fooled by new calls to "invest" in roads and bridges and infrastructure. Or by the expected hodgepodge of other proposals from extending the payroll tax holiday to tax credits for new hires.

...

In music there's a saying about a performance that was "too small for the house." That's becoming true of the president. There was a day when Mr. Obama's taste for the marvelous—a campaign address in Berlin, the faux presidential seal, the Greek columns that surrounded him during his speech accepting the Democratic nomination—all seemed to herald something exciting and historic.

Even inside the Beltway, however, substance ultimately tells. Three years into his presidency, the grander the stage the smaller Mr. Obama comes across.

Comment: My wife (and many others) says - "he never says anything". He used to have style without substance and now even the style is gone! Image source: Obama Uses Teleprompter to speak in 6th Grade Class

On evaluating stocks

The 4 Basic Elements Of Stock Value

Excerpt:

• The Price-to-Book Ratio (P/B)
  
• Price-to-Earnings Ratio (P/E)
  
• The PEG Ratio
  
• Dividend Yield
  

Comment: The P/B ratio is only significant if the company goes out of business. If you think they are going to go out to business don't invest in it! Other ratios have value. The P/E looks back at earnings ... the PEG looks forward to earnings. A robust website for these ratios is MacroWorld

Car drama

We are parking in the street this week as we had our driveway repaved and are not to drive on it for 7 days (or park on it for 14)

Today as we left church, Kathee noted a pool of fluid under the car. I wasn't convinced it was anything but when we got home there was a similarly sized pool where we had parked on the street.

After lunch we purposed to drop the car off at Lupient for repair on Tuesday. Kathee drove the Buick and I followed behind with my truck. About 3/4 the way there the Buick overheated so Kathee stopped and turned off the engine. We called a tow truck and waited.

A very nice gentleman was mowing his grass there. He brought out iced-water and we chatted for almost an hour.

Finally the tow truck arrived.

I think we are OK because I looked at the owener's manual and we have a 4 year / 50,000 m warranty. We are at 3 years and 37,000 miles.

Vikings Stadium: Let the people vote!

Referendum could be deal-breaker - Politicians are messing up the Vikings' stadium proposal, and the team would move if it falls through.

Excerpt:

The Vikings have done a lot of work to convince politicians in the Legislature of the benefits of the stadium and to vote in favor of it. The Wilf family is putting in more money to build the stadium than most other franchises have contributed that have recently built new facilities. But we still have Senate Majority Leader Amy Koch and House Speaker Kurt Zellers calling for a referendum in Ramsey County on the proposed half-percent sales tax needed to fund the stadium.

I suggest Koch check with her Buffalo constituents on how she would fare in a future election if the Vikings, who are in the last year of their Metrodome lease, decide to move to Los Angeles or some other place if they can't finalize this deal.

I agree with Ramsey County Commissioner Tony Bennett, who has been pushing hard for the Arden Hills site, that a referendum would kill the stadium proposal. And if there wasn't a referendum for the Twins' Target Field, which has been such a major success, why have one for the Vikings stadium?

If a referendum took place and voters defeated the tax-increase proposal, believe me, it's a cinch the Vikings would move. The team would be stuck in the Metrodome with no chance to take in the necessary revenue to compete with other teams.

All signs point to two teams moving to Los Angeles to play in their proposed new downtown stadium. The Vikings could be one of them.

Comment: Sid Hartman at it again.

Canadian Banks: Investment Safety in the Far North

Canada banks face storm clouds after good quarter

Excerpt:

Canada's banking sector is dominated by a half dozen big banks which are both protected from foreign takeovers and prevented from merging with each other. They generate billions in profits from their domestic branch-bank businesses and required no bailouts during the 2008-09 crisis.

...

Europe's banks are in the grip of a debt crisis, while U.S. banks are selling assets to build up capital.

Even Canada, which has ridden a strong housing sector to a relatively even-keel economic performance over the past two years, experienced an unexpected economic contraction in the second quarter, data this week showed.

Through it all, Canadians have kept borrowing, enticed by rock bottom interest rates that have proven a double-edged sword for the banks.

Comment: I've been investing in Canadian Banks. I regard them as financial utilities paying steady dividends. Now investing in Bank of Nova Scotia (BNS)

Stadiums: Not trusting the voters

Dayton: Get stadium done

Excerpt:

Gov. Mark Dayton said Tuesday that he doesn't care whether Ramsey County voters get to decide on a sales-tax increase for the proposed $1.1 billion Minnesota Vikings stadium in Arden Hills, he just wants to make progress on building the team a new stadium.

And he dangled the possibility of calling a special legislative session to address the stadium issue in November.

"I don't have a problem with [a referendum], but I'm not advocating it," Dayton said. "I want to get this stadium project done."

The governor's comments clarified remarks from Monday at the State Fair where he said he would support a referendum. Dayton said those comments were twisted.

"I'm not supporting it, per se. I'm not opposed to it. If they pass legislation and the Legislature goes along with it, I'll support it," he said of the referendum.

The Ramsey County Charter Commission is meeting Wednesday night to discuss a possible ballot question on the sales tax. The deadline for 2011 has passed so the question, if approved, wouldn't be on the ballot until November 2012.

The Vikings want the issues resolved sooner. They say they have waited in line while others got new stadiums and now it's their turn.

The referendum question is critical because Ramsey County voters likely would reject a sales-tax increase. St. Paul voters, who make up more than half the county, soundly rejected a sales tax proposal to build a Twins stadium in 1999.

Comment: Let the people vote on this! (I live in Hennepin Co so this does not directly impact me)

I support the Plymouth Mosque

Plymouth weighs in on mosque

Excerpt:

Muslim families in the northwest metro suburbs, who for years have moved from one place to another for prayer services, were waiting to see Tuesday night whether they would get permission to open a mosque at Plymouth's soon-to-be-closed post office.

The Plymouth City Council was to decide whether the Northwest Islamic Community Center could buy and move into the building. The center plans to remodel it for family activities and to serve the worship needs of about 40 Muslim families centered in the Plymouth area.

The center would be open for daily prayer and may begin a Sunday school program, said Najam Qureshi, a database manager who chairs the Islamic center's board. Activities will be offered to the broader public, including tutoring sessions for kids.

The post office has been scheduled to close, but the Islamic center proposes to keep open the customer service counter by leasing part of the building back to the U.S. Postal Service. Most other operations at the post office were moved last year to St. Louis Park.

"Overall, we're united as a community here, the broader community," Qureshi said. "This is not a divided neighborhood. ... It's a disappointment that people look at this as controversial. It isn't."

Last week, Plymouth's Planning Commission unanimously approved the plan after considering how the building, across the street from City Hall, would be used and whether it has adequate parking and access.

Scores of people attended last week's hearing, with two reportedly criticizing the Islamic center's plans. They were said to be concerned about Islamic infiltration of the United States.

Qureshi, who has lived in Plymouth since 1994, said families have met for worship at a variety of community centers from Maple Grove to Hamel. "It gets confusing for people and also expensive," he said.

Qureshi said they had looked at several locations in Plymouth and the surrounding area. A good possibility in Maple Grove was rejected because it was too close to a liquor store, he said.

The group needed to get a conditional use permit from the city because it will use the facility for religious purposes. Muslims conduct prayer services every day.

The 30-year-old post office building has 10,500 square feet. It's listed for sale for $800,000.

Comment: Freedom of Religion, Freedom of Speech, Freedom to Assemble. It's in the Bill of Rights

Imploding "The Harmon"

MGM Folds Vegas Tower

Excerpt:

Designed by famed architect Norman Foster, the Harmon fronts the Las Vegas Strip at CityCenter, which MGM owns with Dubai World and includes multiple condo and hotel towers as well as a casino and a mall.

The development has been beset with problems, including the deaths of six construction workers and financial losses since it opened at the end of 2009. Those losses have narrowed more recently.

Now MGM and general contractor Perini Building Co. are locked in a legal dispute over around $200 million that MGM says it shouldn't have to pay Perini and other contractors due to severe construction failures at the Harmon.

According to a release Monday from MGM, a court order prohibits alteration or destruction of the Harmon while the legal dispute continues. As a result, MGM management is hoping that county approval of the demolition plan will help it in seeking relief from that order.

Perini contends that MGM's portrayal of the Harmon as a practically irreparable public safety concern is fear-mongering to get out of paying bills for a building it no longer needed after condo-buyer demand dried up and the tourism market slowed.

In a letter to Clark County Director of Development Services Ron Lynn, CityCenter's senior vice president of facility improvements, William Ham, wrote: "CityCenter has decided to abate the potential for structural collapse in case of a code-level earthquake.... CityCenter will demolish the Harmon Building."

Comment: Wiki: Harmon Hotel

August 15th, 1971 - the "Nixon Shock"

Nixon Shock

Excerpt:

To stabilize the economy and combat the 1970 inflation rate of 5.84%, on August 15, 1971, President Nixon imposed a 90-day wage and price freeze, a 10 percent import surcharge, and, most importantly, "closed the gold window", ending convertibility between US dollars and gold. The President and fifteen advisers made that decision without consulting the members of the international monetary system, so the international community informally named it the Nixon shock. Given the importance of the announcement — and its impact upon foreign currencies — presidential advisers recalled that they spent more time deciding when to publicly announce the controversial plan than they spent creating the plan

Gold-standard debate back, 40 years after Nixon

Excerpt:

Exactly 40 years ago Monday, the U.S. dollar formally became a fiat currency, as then-President Richard Nixon “closed the gold window” and ended the greenback’s precious-metal guarantee.

And though a market price for the dollar was soon accepted as the new normal, the debate over a return to the gold standard has now resurfaced in a way we haven’t seen in the four decades since.

Many practical hurdles to a gold dollar exist — most significantly the tremendous difficulty in defending a metal-backed currency, even if the new gold standard opened with a major devaluation for the U.S. unit.

Abandoning the gold standard was a seminal moment, and one we're now all paying for

Excerpts:

On 15 August 1971, with the US public finances straitened by the cost of the war in Vietnam, Richard Nixon finally cut the link between the US dollar and gold. Until then, the US Treasury was duty bound to exchange an ounce of gold with central banks willing to pay them $35.

Suddenly, for the first time in history, the level of the world's currencies depended not on the value of gold or some other tangible commodity but on the amount of trust investors had in that currency. Central banks were allowed to set monetary policy based on their instincts rather than on the need to keep their currency in line with gold.

It was one of those seminal moments whose significance has only gradually become apparent, obscured as it was at the time by Vietnam and then Watergate. But the more one examines economic history, the more obvious it is that this was one of the most important policy decisions in modern history.

...

Let's start with first principles: for as long as anyone can remember, politicians have sought to spend more than they can afford. Since the invention of money they have discovered ever more ingenious ways to do so.

The initial method involved debasing the currency. Henry VIII earned his nickname "Old Coppernose" because he added so much copper to what were supposed to be silver coins that eventually it would show through on the nose of his portrait.

These bouts of debasement typically end in disaster, as faith is lost in the currency, inflation shoots through the roof and the economy collapses, after which politicians introduce a new, more credible system.

After trust evaporated in gold and silver coinage, we had the gold standard and then the Bretton Woods system and now, today, fiat money – but the routine is painfully familiar. The main difference with fiat money is that whereas under the gold standard it was all too obvious when politicians were spending beyond their means (they would simply run out of gold reserves), these days it is slightly more difficult to tell quite how close the system is to breakage.

Nonetheless, as we look back at the chaos of the past few weeks, it is quite clear that our current version is on its last legs. This, in essence, was the point Sir Mervyn King tried to make again and again in the Inflation Report press conference last week: 2008 was only one stage in a far bigger crisis of confidence in the way we have structured the world economy.

Over the past 40 years, in the absence of a coherent international monetary system and under the veil of floating currencies, countries which would otherwise have been penalised for doing so were allowed to borrow enormous amounts (eg. The US and UK, or Greece). Other countries (eg. China or Germany) indulged them by lending enormous amounts. In the meantime, investors convinced themselves that the apparent economic growth fuelled by this debt was genuine rather than an artificial product of a binge.

The 2008 crisis represented the first recognition that those increases in asset prices and economic growth were chimerical. The recent relapse represents a recognition that the losses have merely been transferred on to sovereigns' balance sheets.

But what next? The Panglossian answer is that those imbalances are slowly but surely put right: indebted countries borrow less and repay their creditors. But countries rarely go gently: what seems more likely is that the next stage of the crisis represents a crisis of confidence in the very system which, founded as it is on trust rather than measurable yardsticks, has no reliable, inbuilt way of righting itself.

So are we nearing the end of this economic era? All the hallmarks are there. We've been through the periods of faith in the system, peaking with the certain belief in the 1990s and early 2000s that inflation targets really would help keep governments on an even keel.

We've had the financial crisis that usually marks the beginning of the end of established monetary systems. And now we are seeing the debasement.

Consider the price of gold, which has recently scaled new highs. Since the 1970s the price per ounce has risen from below $40 to an astonishing $1740. The price reflects many factors, including economic growth, but chief among them is a diminishing faith in the ability of fiat currencies to maintain their value.

Ignore the oil price shock and the mild fluctuations over time: it is no coincidence that the price really started to spike (in other words faith in currencies versus gold plunged) in 2001, which just so happens to be the year central banks first started experimenting with quantitative easing (QE) – in Japan.

Comment: Consider: Gold standard and Bretton Woods system. I long for the days of "Silver Certificates" and the gold standard

I won the Lottery!!!

ASIA PACIFIC 2011 WINNING NOTIFICATION


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The Lucky Numbers.
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CONGRATULATIONS!!!

All 25 winning email addresses were selected randomly from the World Wide Website through a computer draw system and extracted from over 50,000 email addresses & official addresses, that are listed online from Asia, Australia, New Zealand, Europe, North and South America, Middle East and Africa, as part of our International Promotion Programme. This promotion takes place yearly.

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Comment: From my Spam inbox

On replacing smoke detector batteries

We had a dinner guest Saturday night and during dinner one of our detectors (not near the kitchen) started going off. Wow that was annoying! We have five Kidde i4618 and one carbon monoxide detector. Kathee dragged the ladder in from the garage and waved her hand around what we thought was the offending detector - no luck. I suggested that she vacuum inside of the detector. No help. I ran out to the local convenience store to buy one 9 v battery (wow - $ 5.69. The Battery Plus next door had just closed). Kathee replaced that battery. No change. I looked at the owner's manual on-line and suggested that we should replace the other's batteries too. At that juncture I thought we had 4 total not five. Our dinner guest and I drove back to the convenience store to buy 3 more 9 v batteries. We we returned, Kathee informed us that we had 5 detectors not 4. So back to the convenience store for the fifth one. After replacing all five batteries, we found out that it was the carbon monoxide detector, not the smoke detector. It was in close proximity to the first detector and with the noise we were not able to discern that was going off not the smoke detector. So 6 batteries and an hour and a half latter we finally got all resolved. Note to self ... replace these batteries annually and buy in bulk - I could have bought 8 Duracell Coppertop Batteries's for under $ 20 from Amazon. Instead I paid $ 5.69 each at the gas station convenience store.

British dystopia - What does this have to do with America?

Après le Déluge, What?

Excerpt:

At fault in the riots were the distorting effects of the welfare state and a degenerate British popular culture: "A population thinks (because it has often been told so by intellectuals and the political class) that it is entitled to a high standard of consumption, irrespective of its personal efforts; and therefore it regards the fact that it does not receive that high standard, by comparison with the rest of society, as a sign of injustice." Much of what they have is provided by others, but they are not grateful: dependency doesn't encourage gratitude but resentment.

...

What does this have to do with America? What we're seeing on the streets in Britain right now is something we may be starting to see here. It hasn't come together in a conflagration, but it is out there, and I think it's growing. And as in Britain, it doesn't have anything to do with political grievances per se.

Philadelphia right now is under curfew because of "flash mobs." Young people send out the word on social media, and suddenly dozens or hundreds of them hit a targeted store, steal everything on the shelves, and run, knowing no one will stop them or catch them. It's happened in other cities, too. Sometimes the mobs beat people up on the street and take their money. There are the beat-downs in McDonald's, where the young lose all control and the old fear to intervene. There were the fights and attacks last weekend at the Wisconsin State Fair. You've seen the YouTubes of fights on the subways. You often see links to these stories on Drudge: He headlines them "Les Miserables."

...

The normal, old response to an emerging problem such as this has been: The government has to do something. We must start a program, create an agency to address juvenile delinquency. But governments are tapped out, cutting back, trying to avoid bankruptcy. Which means we can't even take refuge in the illusion that government can solve the problem. The churches of America have always helped the young, stepping in where they can. That will continue. But they too are hard-pressed these days.

...

What's needed can't be provided by government. When the riot begins or the flash mob arrives, the best the government can do is control the streets, enforce the law, maintain the peace.

Comment: Après le Déluge = After the Flood. Image from Clockwork Orange. My view ... a post-Christian value vacuum!

"The Shining": recut as a romantic comedy!

Comment: Of course it's not! One of the scariest films I've ever seen. The Shining . More Viral Videos

Investing roller coaster week

Wild Week

Comment: Image capture from Wall Street Journal

Manic Market

The Trading Game Is Causing the Manic Market

Excerpt:

Wall Street no longer views the stock market as a means to invest in companies that they believe are undervalued based analysis of a firm's earnings and growth potential. Instead, it has become a sort of game. The objective is to find ways to buy or sell stocks and make a quick trading profit. Instead of representing companies, these stocks might as well represent race horses.

Comment: Why an investor needs to be a value investor. Example: Don't Fight the Fed, Instead Buy These 20 Blue Chips (Image above is from this article)

1981: The IBM 5150 Is Born

The Modern PC Turns 30

Excerpt:

IBM launched the 5150 PC on Aug. 12, 1981.

It wasn't much by today's standards, or even yesterday's. The 5150 featured a 4.77 MHz 8-to-16 bit Intel 8088 processor. It was less powerful than other processors available from Intel and Motorola, but those were thought to be “too powerful” for a PC. IBM also gave the 5150 a full 64 kilobytes of RAM — expandable to whopping 256 kB — one or two floppy drives (your choice) and a monochromatic display.

The 5150 was developed in less than a year by a team of 12 led by Don Estridge. The project was given the codename “Project Chess” -- which we mention only because it sounds so cool -- and built using off-the-shelf components.

Depending on how you configured your 5150, you'd shell out anywhere from $1,565 to $6,000 for one. That comes to $4,000 to $15,000 in today’s dollars. The success of the 5150 made the IBM PC the industry standard, and before long a whole bunch of "IBM compatibles” and clones jumped into the burgeoning PC market.

Comment: I couldn't afford it on a pastor's salary. In June of 1982, I bought a TRS-80 Model 3 and an Epson printer. With software it was $ 2,500.