5/24/03 The Congress And The Administration Did Not Make The Cut
This is about telling the truth, focusing on reality, and acting responsibly. Please take a moment to read these remarks made by Bill Frist, the Senate Majority Leader: "Economists tell me that the economy is like a great ship. It cannot be turned around quickly." Another time during the day he said the tax stimulus package will "provide immediate relief to millions of American families and businesses and indeed states. And it will, it will, create jobs." Notice he stammered when he mentioned creating jobs. The Administration said it will create 1 million jobs in the next 12 months. It should be noted that 2.7 million jobs have been lost since Bush's first $1.35 trillion tax cut in 2001. If you want a tax cut to have meaning across all income levels, then the social security and medicare taxes should have been cut. I said that a year ago, and I repeat myself today.
Just think. With this new tax cut, small businesses will be able to immediately write off $100,000 in new equipment purchases. The Administration might consider getting a grip on making the reality cut. Businesses are failing daily. Jobs are being eliminated daily. How many businessmen do you know have the extra jack to buy new equipment? How many have the confidence in future business conditions to buy new equipment? The good news is that businesses will be able to expense half their investments this year, such as, new brakes on the business car.
If 9 million fake Lipitor tablets can be recalled, and Ford can recall 185,000 pickups and SUVs, then why can't fake and faulty politicians be recalled? If researchers can find the Civet cat-SARS link, then why have they no clues to unlocking the irresponsibility link to government spending?
Our forefathers were truly geniuses. They knew the true reason to have a vice president- to deliver tiebreaking votes. Clearly, the reason could not be to run the country in a crisis situation. There was only one Harry Truman.
A recent study shows 1 in 5 women are depressed during pregnancy. I think the reason might be that the child tax credit was only raised to $1000 per child per year, and we know this doesn't even cover the cost of delivering a child into the world.
With 5 new cases, SARS has raised its head again in Toronto.
For the first time since 1991 Microsoft CEO Ballmer sold stock in that company. This week he sold about $950 million worth. He still owns over 431 million shares.
Since 2001, the Fed has lowered rates 12 times. Maybe in June they'll make it a baker's dozen. Maybe they'll also buy long term treasuries. However, their short and long game are not up to par. 4Cast director Alan Ruskin said "Greenspan has always been known for asking the question 'What's the least worst decision I can make?'" Unfortunately, the Congress and the Administration did not ask that question. They didn't even make the cut.
Friday, May 23, 2003
5/23/03 Getting A Crawford
'It's always nice to have a nice quiet dinner with a few friends." That's how the President described his first political fundraiser for the 2004 elections on Wednesday night. It might have been a nice quiet dinner but, after a 20 minute speech, Bush did not stay to eat. About 7400 people paid-in $22 million for this Republican gala. In Texas the aformentioned is described as getting a Crawford.
Yesterday the House passed $330 billion in tax cuts and $20 billion in aid to the states. Now it goes to the Senate for approval, and then the President will sign off on it. The dividend tax cuts have been approved only on a temporary basis. It would not have been approved on a permanent basis. That was tried and it failed several times. However, after the temporary measure is signed, Bush will push for it to be permanent and then he will go around the country pressing for another trillion dollars in tax cuts. It's a little like asking others to pay about $3000 a plate to have a quiet dinner with you, and then you walk out before the dinner is served. It leaves a bad taste before the food arrives. The Congress and the taxpayers are about to get a Crawford after Bush signs this tax bill. Let me make one thing clear. I am very much against taxation in the first place. For over three decades I have had only one sign up on my office wall. It is an 1819 quote from Chief Justice Marshall: "The power to tax is the power to destroy."
If the Congress made an attempt to reduce spending, we would not be at the debt ceiling limit again. The Congress has shown an unwillingness to cut spending. It is time, in my view, to open the discussion again on a balanced budget amendment but with new features. Unlike most Acts of Congress, the proposal of an amendment does not involve the President of the United States. Once passed by two-thirds of both houses of Congress, the proposed amendment is sent directly to the Office of Federal Register at the National archives, and there a "slip law" is prepared and sent to governors with notice to refer it to the legislatures of their states. When 38 states have ratified a proposed amendment, the Archivist of the United States proclaims it as a new amendment to the Constitution. The last amendment to be so ratified was the 27th in 1992 and concerned congressional pay increases. It should be noted that details of the ratification process are left to the states themselves.
What I am suggesting is an add-on to the 1992 Bill of Rights (TABOR) passed by Colorado voters. It has served to keep their state government spending in check and to have control over surpluses should they be created by the tax payers. The Colorado state legislature must seek voter approval before it can collect taxes above the TABOR limit. Any taxes collected above this limit must be returned to taxpayers in the form of rebates. The TABOR law limits the amount of tax revenue the state can keep each year to the sum of inflation plus population growth. Between 1997 and 2002 Colorado residents received a tax rebate every year, for a total of $3.2 billion over the five-year period. I would suggest an add-on to Colorado's TABOR. I would recommend that, prior to the tax rebates, 20% of any yearly surplus of funds be utilized towards the paying down of this country's debt. Such an amendment would serve the taxpayers, the members of Congress, and the President well. While other states are in dire trouble, Colorado has been able to keep its head above water.
Initial claims for state unemployment insurance benefits rose 7000 to 428,000 in the May 17 week. This is the 14th consecutive week jobless claims have been above the 400,000 mark. Yesterday more layoffs were announced: Boeing 1150; Silicon Graphics 400; Legato 100; and IBM 65.
Yesterday Congress approved a $400 billion defense spending budget for next year. This was $800 million more than the Pentagon requested. The mass exodus continues with the retirement announcement by Tommy Franks. In Washington DC they are calling it the resignation virus. No cure is on the horizon.
In 2002 mortgage lending set a record of more than $2.6 trillion.
With the enormous debt level in this country and oversupply dwarfing demand, it is no surprise that the dollar traded today at $1.18 per euro.
New data from Gartner Inc. shows that IBM's share of the database software market exceeds Oracle's by 36% to 34%. The overall database software market fell by about 7% in 2002.
Warren Buffett: "If past history was all there was to the game, the richest people would be librarians."
According to an analysis conducted by Pembroke Consulting, deflation may pose a serious threat to the profits of an estimated 25,000 U.S. industrial distribution companies. "Over the last decade, wholesale prices for industrial products increased a mere 1.4% per year and were actually deflating in early 2002. Personnel costs for distributors are growing at 4% per year. If this scenario continues over the next three years, we estimate a typical industrial distribution company could experience profit declines ranging from 25% to 50% or more. Imports from Asia are an important force behind price deflation as industrial supplies account for approximately 25% of domestic imports," said Pembroke Consulting President Adam Fein, Ph.D.
After months of analysis, Chrysler will not build a new manufacturing facility in Windsor, Canada. Said Chrysler Group President and CEO Dieter Zetsche, "The state of the automotive market has created a formidable hurdle...competitive pricing, ongoing incentives, and increasing overcapacity in North America led us to conclude that this is not the time to add new capacity."
Yesterday Paul Dean of Dow Chemical testified before the House Subcommittee on Water and The Environment and said "Since 1940, water consumption has quadrupled and will continue to increase as the world's population grows." According to the UN Geo 2000 Report, four billion of the world's people are expected to have insufficient water by 2050. Maybe, over time, water will become more valuable than oil. We can do without oil but we are unable to survive without water.
As I read the Congressional proceedings concerning the pending temporary tax cuts, I recalled a passage from John Kenneth Galbraith's "The Culture of Contentment":
"The controlling role of taxation continues. The only effective design for diminishing the income inequality inherent in capitalism is the progressive income tax. Nothing in the age of contentment has contributed so strongly to income inequality as the reduction of taxes on the rich; nothing, as has been said, so contributes to social tranquility as some screams of anguish from the very affluent. That taxes should now be used to reduce the inequality is, however, clearly outside the realm of comfortable thought. Here the collision between wise and social action and the culture of contentment is most apparent."
'It's always nice to have a nice quiet dinner with a few friends." That's how the President described his first political fundraiser for the 2004 elections on Wednesday night. It might have been a nice quiet dinner but, after a 20 minute speech, Bush did not stay to eat. About 7400 people paid-in $22 million for this Republican gala. In Texas the aformentioned is described as getting a Crawford.
Yesterday the House passed $330 billion in tax cuts and $20 billion in aid to the states. Now it goes to the Senate for approval, and then the President will sign off on it. The dividend tax cuts have been approved only on a temporary basis. It would not have been approved on a permanent basis. That was tried and it failed several times. However, after the temporary measure is signed, Bush will push for it to be permanent and then he will go around the country pressing for another trillion dollars in tax cuts. It's a little like asking others to pay about $3000 a plate to have a quiet dinner with you, and then you walk out before the dinner is served. It leaves a bad taste before the food arrives. The Congress and the taxpayers are about to get a Crawford after Bush signs this tax bill. Let me make one thing clear. I am very much against taxation in the first place. For over three decades I have had only one sign up on my office wall. It is an 1819 quote from Chief Justice Marshall: "The power to tax is the power to destroy."
If the Congress made an attempt to reduce spending, we would not be at the debt ceiling limit again. The Congress has shown an unwillingness to cut spending. It is time, in my view, to open the discussion again on a balanced budget amendment but with new features. Unlike most Acts of Congress, the proposal of an amendment does not involve the President of the United States. Once passed by two-thirds of both houses of Congress, the proposed amendment is sent directly to the Office of Federal Register at the National archives, and there a "slip law" is prepared and sent to governors with notice to refer it to the legislatures of their states. When 38 states have ratified a proposed amendment, the Archivist of the United States proclaims it as a new amendment to the Constitution. The last amendment to be so ratified was the 27th in 1992 and concerned congressional pay increases. It should be noted that details of the ratification process are left to the states themselves.
What I am suggesting is an add-on to the 1992 Bill of Rights (TABOR) passed by Colorado voters. It has served to keep their state government spending in check and to have control over surpluses should they be created by the tax payers. The Colorado state legislature must seek voter approval before it can collect taxes above the TABOR limit. Any taxes collected above this limit must be returned to taxpayers in the form of rebates. The TABOR law limits the amount of tax revenue the state can keep each year to the sum of inflation plus population growth. Between 1997 and 2002 Colorado residents received a tax rebate every year, for a total of $3.2 billion over the five-year period. I would suggest an add-on to Colorado's TABOR. I would recommend that, prior to the tax rebates, 20% of any yearly surplus of funds be utilized towards the paying down of this country's debt. Such an amendment would serve the taxpayers, the members of Congress, and the President well. While other states are in dire trouble, Colorado has been able to keep its head above water.
Initial claims for state unemployment insurance benefits rose 7000 to 428,000 in the May 17 week. This is the 14th consecutive week jobless claims have been above the 400,000 mark. Yesterday more layoffs were announced: Boeing 1150; Silicon Graphics 400; Legato 100; and IBM 65.
Yesterday Congress approved a $400 billion defense spending budget for next year. This was $800 million more than the Pentagon requested. The mass exodus continues with the retirement announcement by Tommy Franks. In Washington DC they are calling it the resignation virus. No cure is on the horizon.
In 2002 mortgage lending set a record of more than $2.6 trillion.
With the enormous debt level in this country and oversupply dwarfing demand, it is no surprise that the dollar traded today at $1.18 per euro.
New data from Gartner Inc. shows that IBM's share of the database software market exceeds Oracle's by 36% to 34%. The overall database software market fell by about 7% in 2002.
Warren Buffett: "If past history was all there was to the game, the richest people would be librarians."
According to an analysis conducted by Pembroke Consulting, deflation may pose a serious threat to the profits of an estimated 25,000 U.S. industrial distribution companies. "Over the last decade, wholesale prices for industrial products increased a mere 1.4% per year and were actually deflating in early 2002. Personnel costs for distributors are growing at 4% per year. If this scenario continues over the next three years, we estimate a typical industrial distribution company could experience profit declines ranging from 25% to 50% or more. Imports from Asia are an important force behind price deflation as industrial supplies account for approximately 25% of domestic imports," said Pembroke Consulting President Adam Fein, Ph.D.
After months of analysis, Chrysler will not build a new manufacturing facility in Windsor, Canada. Said Chrysler Group President and CEO Dieter Zetsche, "The state of the automotive market has created a formidable hurdle...competitive pricing, ongoing incentives, and increasing overcapacity in North America led us to conclude that this is not the time to add new capacity."
Yesterday Paul Dean of Dow Chemical testified before the House Subcommittee on Water and The Environment and said "Since 1940, water consumption has quadrupled and will continue to increase as the world's population grows." According to the UN Geo 2000 Report, four billion of the world's people are expected to have insufficient water by 2050. Maybe, over time, water will become more valuable than oil. We can do without oil but we are unable to survive without water.
As I read the Congressional proceedings concerning the pending temporary tax cuts, I recalled a passage from John Kenneth Galbraith's "The Culture of Contentment":
"The controlling role of taxation continues. The only effective design for diminishing the income inequality inherent in capitalism is the progressive income tax. Nothing in the age of contentment has contributed so strongly to income inequality as the reduction of taxes on the rich; nothing, as has been said, so contributes to social tranquility as some screams of anguish from the very affluent. That taxes should now be used to reduce the inequality is, however, clearly outside the realm of comfortable thought. Here the collision between wise and social action and the culture of contentment is most apparent."
Thursday, May 22, 2003
5/22/03 Investing In A World Gone Temporary
Mike Todd: "I've never been poor, only broke. Being poor is a frame of mind. Being broke is only a temporary situation." Mike Todd would have understood the temporary world of today: "little bitty" tax cuts are temporary; historically low interest rates, mortgage rates, and low-interest home equity loans are temporary; temporary job security(a misnomer); a temporary rise in consumer confidence; all government budget surpluses are temporary; reduction in the size of government is temporary; decreasing inflation is temporary; covering retiree health care costs is temporary; the Social Security trust fund surplus is temporary; unemployment benefits are temporary; aid to state and local governments is temporary; and savings on the part of consumers is temporary. What's permanent? Government spending, taxation, bankruptcies, foreclosures, home runs, strikeouts, and belief in the tooth fairy.
According to the book, "businessThink", by the end of your first coffee break today 46 businesses will be shut down and 3 will file for bankruptcy. By the time you leave the office, over 2100 businesses will close their doors and accounts for the long unemployment lines. This makes me want to give up coffee and to work at home.
Sales at U.S. chain stores fell 0.1% last week, the third decline in the past four weeks.
South Korea's economy fell for the first time in two years. They have plenty of company.
The Head Start program serves about 1 million at-risk children in communities across the U.S. Why would the Administration want to turn over the program to cash-strapped states and therby limit the comprehensive services now provided? SaveHeadStart.org provides a wealth of information on this subject.
Taiwan reported 65 new SARS cases yesterday and 8 more people died.
Roger Clemens needs just one more win to reach 300.
U.K.'s economy grew 0.2% in the first quarter. A three month sterling deposit yields 3.54%, and this is quite attractive when compared to the yields available in the U.S.
Houston's West Nile season began on May 14.
Since January, we have imported 90,000 head of beef cattle from Canada. Our government tells us not to worry. I always believe what the government says.
Warren Buffett: "In the end, we want to get further and further ahead of our customers. We do what needs to be done and we do it fast."
Paul Allen's Vulcan investment firm cut 100 employees or 20% of its workforce. A bear market impacts everyone. Charter Communications, Metricom, and others have taken a toll.
As I have said so often over the years, when they raid the whorehouse, they take all the girls.
Mike Todd: "I've never been poor, only broke. Being poor is a frame of mind. Being broke is only a temporary situation." Mike Todd would have understood the temporary world of today: "little bitty" tax cuts are temporary; historically low interest rates, mortgage rates, and low-interest home equity loans are temporary; temporary job security(a misnomer); a temporary rise in consumer confidence; all government budget surpluses are temporary; reduction in the size of government is temporary; decreasing inflation is temporary; covering retiree health care costs is temporary; the Social Security trust fund surplus is temporary; unemployment benefits are temporary; aid to state and local governments is temporary; and savings on the part of consumers is temporary. What's permanent? Government spending, taxation, bankruptcies, foreclosures, home runs, strikeouts, and belief in the tooth fairy.
According to the book, "businessThink", by the end of your first coffee break today 46 businesses will be shut down and 3 will file for bankruptcy. By the time you leave the office, over 2100 businesses will close their doors and accounts for the long unemployment lines. This makes me want to give up coffee and to work at home.
Sales at U.S. chain stores fell 0.1% last week, the third decline in the past four weeks.
South Korea's economy fell for the first time in two years. They have plenty of company.
The Head Start program serves about 1 million at-risk children in communities across the U.S. Why would the Administration want to turn over the program to cash-strapped states and therby limit the comprehensive services now provided? SaveHeadStart.org provides a wealth of information on this subject.
Taiwan reported 65 new SARS cases yesterday and 8 more people died.
Roger Clemens needs just one more win to reach 300.
U.K.'s economy grew 0.2% in the first quarter. A three month sterling deposit yields 3.54%, and this is quite attractive when compared to the yields available in the U.S.
Houston's West Nile season began on May 14.
Since January, we have imported 90,000 head of beef cattle from Canada. Our government tells us not to worry. I always believe what the government says.
Warren Buffett: "In the end, we want to get further and further ahead of our customers. We do what needs to be done and we do it fast."
Paul Allen's Vulcan investment firm cut 100 employees or 20% of its workforce. A bear market impacts everyone. Charter Communications, Metricom, and others have taken a toll.
As I have said so often over the years, when they raid the whorehouse, they take all the girls.
Wednesday, May 21, 2003
5/21/03 Hazards Create Susceptibility To Triple Bogeys
The mad cow might have been grazing in the low country. A cousin of the West Nile virus, Eastern equine encephalitis, has infected nine horses in South Georgia and killed six this year. I hope Canada has put an import ban on our horse meat. If SARS should infect dogs, then China is in real trouble. Things have gotten so bad that I am participating in a meditation class this afternoon. No, I will not be contemplating my navel. We must now turn attention away from food.
Our economy has one thing in common with Alberta's mad cow- they both reside in the low country. The U.S. fixed income market is at 45 year lows in yield; consumer prices ex food and energy rose at the low rate of 1.5% in the 12 months ending April, the lowest since 1966; the latest GDP growth of 1.6% is low; the latest Philly Fed Survey indicates that growth rates for the second quarter will stay low as the forecast was cut from 2.7% to 1.8%; the U.S. April budget surplus was a very low number due to lower than anticipated tax revenues; the value of the dollar is low vs the euro, the yen, and the Swiss franc; Congressional fiscal restraint is low; cash balances in the U.S. Treasury are low; our ability to attract foreign capital is low; cushions for entitlement programs, such as, Medicare and Social security, are low; state and municipal coffers are low; the ability of the Fed to maneuver is low; many foreign countries hold us in low esteem; our ability to compete in several areas against China and India, for example, is low; the free cash flow of our consumers is low; the capacity utilization of our factories is low; the hours in the work week are low; selective hiring is at a low level; voter turnout is low; the paper trail on our election systems is low; the President's handling of the economy has a low approval rating; global aggregate demand is low; the corporate pension system has a low level of capabilty to cover funding; there is a low level of confidence in the fairness of the public marketplaces and their corporate CEOs; business investment remains low; Kodak's senior unsecured debt rating is a low "BBB"; import prices are low; and the savings rate remains low. What does this all mean? Does it indicate business will do a uturn and get strong? I suggest the economic terrain makes it much more likely for us to shoot a triple bogey rather than a par. If I am correct, then the Dow and the Nasdaq are still much too high. Whether Bill Gross is right about a Dow 5000 or Bill Fleckenstein is right about a Dow 4000, I don't know. If my name were Bill, I might suggest a Dow 3000.
Does it matter what Greenspan says about the economy today? What is the Fed going to do? Lower interest rates to zero? Buy long bonds? They've been printing money at about a 7% rate for the last year, and it hasn't improved demand. A year ago I wrote the Fed was behind the curve. Now I believe the salaries of the Fed presidents and its chairman should be reduced. In my view, their lack of performance warrants this cut.
How come the Republicans can't agree on spending cuts? Maybe they fear the electorate only supports local pork programs.
The pay for local supervisors, for state office holders, and those in Congress are anything but low, and the same can be said for their medical and pension plans. Does performance mean anything today?
Carl Tannenbaum, chief economist at ABN Amro North America Inc. in Chicago said "We have deflation in a wide swath in the American economy. It is causing the kinds of distortions the Fed and others would be worried about."
Gold rises to $366 per ounce.
The World Health Assembly, comprised of 192 countries, unanimously approved its first ever international treaty against smoking, and this includes an eventual advertising ban.
The pound has fallen almost 10% against the euro this year.
What impact does the terror alert color orange have on consumer confidence? I wonder whether a survey has been compiled.
There is good news out of Washington. The government has found a way to cut expenses. The Administration is closing embassies in Saudi Arabia. This is our new reduce the budget gap policy.
If the Fed is woried about deflation, they should all move down to S.Florida where consumer prices are rising faster than anywhere else in the nation.
How awful. Microsoft maintains that, only twice in the last year in Europe, has the company used discounts to win business. That's why the stock hasn't gone anywhere in months. They need to compete harder and offer more discounts. I say beat the crap out of the competition.
The mad cow might have been grazing in the low country. A cousin of the West Nile virus, Eastern equine encephalitis, has infected nine horses in South Georgia and killed six this year. I hope Canada has put an import ban on our horse meat. If SARS should infect dogs, then China is in real trouble. Things have gotten so bad that I am participating in a meditation class this afternoon. No, I will not be contemplating my navel. We must now turn attention away from food.
Our economy has one thing in common with Alberta's mad cow- they both reside in the low country. The U.S. fixed income market is at 45 year lows in yield; consumer prices ex food and energy rose at the low rate of 1.5% in the 12 months ending April, the lowest since 1966; the latest GDP growth of 1.6% is low; the latest Philly Fed Survey indicates that growth rates for the second quarter will stay low as the forecast was cut from 2.7% to 1.8%; the U.S. April budget surplus was a very low number due to lower than anticipated tax revenues; the value of the dollar is low vs the euro, the yen, and the Swiss franc; Congressional fiscal restraint is low; cash balances in the U.S. Treasury are low; our ability to attract foreign capital is low; cushions for entitlement programs, such as, Medicare and Social security, are low; state and municipal coffers are low; the ability of the Fed to maneuver is low; many foreign countries hold us in low esteem; our ability to compete in several areas against China and India, for example, is low; the free cash flow of our consumers is low; the capacity utilization of our factories is low; the hours in the work week are low; selective hiring is at a low level; voter turnout is low; the paper trail on our election systems is low; the President's handling of the economy has a low approval rating; global aggregate demand is low; the corporate pension system has a low level of capabilty to cover funding; there is a low level of confidence in the fairness of the public marketplaces and their corporate CEOs; business investment remains low; Kodak's senior unsecured debt rating is a low "BBB"; import prices are low; and the savings rate remains low. What does this all mean? Does it indicate business will do a uturn and get strong? I suggest the economic terrain makes it much more likely for us to shoot a triple bogey rather than a par. If I am correct, then the Dow and the Nasdaq are still much too high. Whether Bill Gross is right about a Dow 5000 or Bill Fleckenstein is right about a Dow 4000, I don't know. If my name were Bill, I might suggest a Dow 3000.
Does it matter what Greenspan says about the economy today? What is the Fed going to do? Lower interest rates to zero? Buy long bonds? They've been printing money at about a 7% rate for the last year, and it hasn't improved demand. A year ago I wrote the Fed was behind the curve. Now I believe the salaries of the Fed presidents and its chairman should be reduced. In my view, their lack of performance warrants this cut.
How come the Republicans can't agree on spending cuts? Maybe they fear the electorate only supports local pork programs.
The pay for local supervisors, for state office holders, and those in Congress are anything but low, and the same can be said for their medical and pension plans. Does performance mean anything today?
Carl Tannenbaum, chief economist at ABN Amro North America Inc. in Chicago said "We have deflation in a wide swath in the American economy. It is causing the kinds of distortions the Fed and others would be worried about."
Gold rises to $366 per ounce.
The World Health Assembly, comprised of 192 countries, unanimously approved its first ever international treaty against smoking, and this includes an eventual advertising ban.
The pound has fallen almost 10% against the euro this year.
What impact does the terror alert color orange have on consumer confidence? I wonder whether a survey has been compiled.
There is good news out of Washington. The government has found a way to cut expenses. The Administration is closing embassies in Saudi Arabia. This is our new reduce the budget gap policy.
If the Fed is woried about deflation, they should all move down to S.Florida where consumer prices are rising faster than anywhere else in the nation.
How awful. Microsoft maintains that, only twice in the last year in Europe, has the company used discounts to win business. That's why the stock hasn't gone anywhere in months. They need to compete harder and offer more discounts. I say beat the crap out of the competition.
Tuesday, May 20, 2003
5/20/03 The Debt Limit Road Map
Yesterday was the third trip around the debt limit track. This is the last time the Treasury has enough gas, they maintain, to pay bills. Of course, they said this on Feb. 20 and then just a couple of months later, and now yesterday. Let me make this clear. The facts are still the facts. The Treasury can rob Peter to pay Paul just so often. There are a limited number of loop-holes in the government trust funds and accounts. The government is out of money, and that makes for a dangerous and volatile economic landscape which is not a platform for a bull market in stocks and bonds. Listen to Brian Roseboro, assistant Treasury secretary for financial markets, who said yesterday "We have had to disrupt the Treasury bill market, which we do not like to do. We were able to justify the last $20 billion but we are at an end. We have exhausted every prudent and legal fiscal management thing we can use." The $20 billion will only last until May 28. No, Mr. Roseboro, there are a few prudent fiscal management things you could use- cut expenditures and start with the Snow man's salary. Reduce salaries in every government office by 5%. If that isn't sufficient, then layoff employees. I assure you there will be no difference in productivity.
According to Bloomberg data, S&P 500 companies had a 5.1% drop in sales per employee in 2002 while net income per worker plunged 73% and employment was lowered by 1.5%. How is it that the U.S. government reported productivity gains of 4.7% in 2002? The S&P 500 companies have audited financial statements. Who audits the government numbers?
Our U.S. Health Secretary said there are likely to be some SARS deaths in Europe and the U.S. later this year. He said "I don't think SARS is going to go away."
Matsushita temporarily closed its two plants in China after experiencing an outbreak of SARS.
My methods for looking at markets is a bit different. My thinking is a bit different. I know I know. Enough already. Any way, I look at the market leaders. For the Nasdaq I focus solely on Microsoft. They are the dominant player in technology for my money. For starters, they must be doing something right with $45+ billion in cash in the bank. They don't need to juggle the books to get there like our government does. They earned it. Microsoft's market cap is about $266 billion. Look at the stock at $24 and change. The Nasdaq bottomed in roughly mid October of last year. Microsoft was $22. Sure it rallied to $29 but it also dropped in March back to $22 and change. What I'm saying is simple. For about 11 months the stock with all the gyrations is still roughly the same. The leader has not been in a new Nasdaq bull market. On the N.Y. Stock Exchange my proxy is WalMart. Yes, it's my favorite company. It should be. It's got the best record on the Big Board. WalMart has a market cap of $230 billion. The stock is at $52 and change. In October it traded down to $48. It was $46 in March of this year. Roughly a year ago the stock was the same as it is now. The leader has not been in a bull market. Microsoft has 50,000 employees and the average salary is $77,000. They make a difference economically in this country. WalMart is our largest non-government employer with 1.4 million employees. They dominate the consumer landscape with sales which dwarf any other company in America. The point is simple. If the leaders aren't in a bull market, how can we be in a bull market? You may not share my viewpoint. That's ok. Maybe you run a hedge fund and think you're hot stuff. Actually, according to the HedgeFund.net-PerTrac Universes, hedge funds year to date gained an average of 3.40% while the S&P is up over 4% since the start of the year. These figures were taken from a universe of 2400 hedge funds.
For the very first time a head of the Fed appeared in a public service announcement. Greenspan was on radio and TV and pleaded with consumers to be careful with their finances. He said "Making informed financial decisions about what to do with your money will help build a more stable future for you and your family." Now listen to this. Fed Governor Gramlich said "Educated consumers know how to save for their goals, use credit wisely, and avoid getting in over their heads." Shouldn't Greenspan and Gramlich be preaching to the Congress and the Administration? Doesn't the Fed realize the government is way over its head in debt? It's ok to preach to the public but not to those employed by the public?
The drug industry won a court order in October 2000 blocking the Maine discount-drug program. The 1st U.S. Circuit Court of Appeal later upheld the Maine program. Yesterday the Supreme Court let Maine begin their Rx program. It's straightforward. There are 325,000 uninsured individuals in Maine. That state wants to provide the uninsured with the same discounts the insurance companies provide the insured, and that is about a 20-25% discount. I expect this program to become popular in all of our states. There isn't a law which sets income limits on those eligible to buy discounted drugs. The pharmaceutical industry will make a great many enemies should they fight this ruling in other states.
On Sunday it was reported that three U.S. troops were killed and four injured in Iraq. Yesterday it was reported that a Marine Corps transport helicopter crashed in central Iraq with at least four aboard, and there were no survivors indicated. Does this sound like the war is over? How many more of our soldiers need to be reported dead before Americans realize we no longer belong in this country? I would love to know the cause for which our soldiers are now dying? Liberation? WMD? Maybe to free Iraq of foreign debts? If that's it, please bring our soldiers home. We have big big debts to free at home.
Oregon has the highest unemployment rate in the country. Today ends a mail-in election. Portland voters are considering a temporary countywide income tax. It would mean a resident with $45,000 in taxable income would pay more than $440 a year in taxes. The slogan at tax campaign Portland headquarters reads "Sometimes even pigs must fly." Oregon has no state sales tax. The personal income tax generates 87% of the state general fund. The temporary tax is basically a school tax in order to prevent significant teacher layoffs.
Yesterday was the third trip around the debt limit track. This is the last time the Treasury has enough gas, they maintain, to pay bills. Of course, they said this on Feb. 20 and then just a couple of months later, and now yesterday. Let me make this clear. The facts are still the facts. The Treasury can rob Peter to pay Paul just so often. There are a limited number of loop-holes in the government trust funds and accounts. The government is out of money, and that makes for a dangerous and volatile economic landscape which is not a platform for a bull market in stocks and bonds. Listen to Brian Roseboro, assistant Treasury secretary for financial markets, who said yesterday "We have had to disrupt the Treasury bill market, which we do not like to do. We were able to justify the last $20 billion but we are at an end. We have exhausted every prudent and legal fiscal management thing we can use." The $20 billion will only last until May 28. No, Mr. Roseboro, there are a few prudent fiscal management things you could use- cut expenditures and start with the Snow man's salary. Reduce salaries in every government office by 5%. If that isn't sufficient, then layoff employees. I assure you there will be no difference in productivity.
According to Bloomberg data, S&P 500 companies had a 5.1% drop in sales per employee in 2002 while net income per worker plunged 73% and employment was lowered by 1.5%. How is it that the U.S. government reported productivity gains of 4.7% in 2002? The S&P 500 companies have audited financial statements. Who audits the government numbers?
Our U.S. Health Secretary said there are likely to be some SARS deaths in Europe and the U.S. later this year. He said "I don't think SARS is going to go away."
Matsushita temporarily closed its two plants in China after experiencing an outbreak of SARS.
My methods for looking at markets is a bit different. My thinking is a bit different. I know I know. Enough already. Any way, I look at the market leaders. For the Nasdaq I focus solely on Microsoft. They are the dominant player in technology for my money. For starters, they must be doing something right with $45+ billion in cash in the bank. They don't need to juggle the books to get there like our government does. They earned it. Microsoft's market cap is about $266 billion. Look at the stock at $24 and change. The Nasdaq bottomed in roughly mid October of last year. Microsoft was $22. Sure it rallied to $29 but it also dropped in March back to $22 and change. What I'm saying is simple. For about 11 months the stock with all the gyrations is still roughly the same. The leader has not been in a new Nasdaq bull market. On the N.Y. Stock Exchange my proxy is WalMart. Yes, it's my favorite company. It should be. It's got the best record on the Big Board. WalMart has a market cap of $230 billion. The stock is at $52 and change. In October it traded down to $48. It was $46 in March of this year. Roughly a year ago the stock was the same as it is now. The leader has not been in a bull market. Microsoft has 50,000 employees and the average salary is $77,000. They make a difference economically in this country. WalMart is our largest non-government employer with 1.4 million employees. They dominate the consumer landscape with sales which dwarf any other company in America. The point is simple. If the leaders aren't in a bull market, how can we be in a bull market? You may not share my viewpoint. That's ok. Maybe you run a hedge fund and think you're hot stuff. Actually, according to the HedgeFund.net-PerTrac Universes, hedge funds year to date gained an average of 3.40% while the S&P is up over 4% since the start of the year. These figures were taken from a universe of 2400 hedge funds.
For the very first time a head of the Fed appeared in a public service announcement. Greenspan was on radio and TV and pleaded with consumers to be careful with their finances. He said "Making informed financial decisions about what to do with your money will help build a more stable future for you and your family." Now listen to this. Fed Governor Gramlich said "Educated consumers know how to save for their goals, use credit wisely, and avoid getting in over their heads." Shouldn't Greenspan and Gramlich be preaching to the Congress and the Administration? Doesn't the Fed realize the government is way over its head in debt? It's ok to preach to the public but not to those employed by the public?
The drug industry won a court order in October 2000 blocking the Maine discount-drug program. The 1st U.S. Circuit Court of Appeal later upheld the Maine program. Yesterday the Supreme Court let Maine begin their Rx program. It's straightforward. There are 325,000 uninsured individuals in Maine. That state wants to provide the uninsured with the same discounts the insurance companies provide the insured, and that is about a 20-25% discount. I expect this program to become popular in all of our states. There isn't a law which sets income limits on those eligible to buy discounted drugs. The pharmaceutical industry will make a great many enemies should they fight this ruling in other states.
On Sunday it was reported that three U.S. troops were killed and four injured in Iraq. Yesterday it was reported that a Marine Corps transport helicopter crashed in central Iraq with at least four aboard, and there were no survivors indicated. Does this sound like the war is over? How many more of our soldiers need to be reported dead before Americans realize we no longer belong in this country? I would love to know the cause for which our soldiers are now dying? Liberation? WMD? Maybe to free Iraq of foreign debts? If that's it, please bring our soldiers home. We have big big debts to free at home.
Oregon has the highest unemployment rate in the country. Today ends a mail-in election. Portland voters are considering a temporary countywide income tax. It would mean a resident with $45,000 in taxable income would pay more than $440 a year in taxes. The slogan at tax campaign Portland headquarters reads "Sometimes even pigs must fly." Oregon has no state sales tax. The personal income tax generates 87% of the state general fund. The temporary tax is basically a school tax in order to prevent significant teacher layoffs.
Monday, May 19, 2003
5/19/03 The Facts Are The Facts
Often I am criticized for describing the facts as I see them. Actually, that is not true. I describe the facts as the facts are, and then and only then, do I entertain thoughts going forward. A perfect example is SARS. Maybe I have an advantage in that I have had a health care business for several years. However, the facts were presented for everyone to see. This was and is a virus similar to AIDS. Yes, there are differences, but the fundamental similarity made this virus lethal. There would be serious social and financial implications from this virus. There is no entity that can hide the truth forever- no government and no group of individuals- especially in this wired world. As such, one could project forward from the SARS facts. To date, the world has gotten off relatively easy. Yet, just when you get overconfident, the virus returns as it did yesterday in Singapore. It was the first case in 19 days. Taiwan was also doing ok for awhile, and then wham. Now there are 4 hospitals closed in Taiwan, another one 25 miles west of Taiwan, and there were five more deaths yesterday and 36 new cases. It is wise to keep a watchful eye out for the facts and often the bad news is not what we wish to see or hear. Overconfidence is an achilles heel for those possessing it.
Circumstances change and public opinion with them. The question is whether all situations are neutral and whether only our opinions make them otherwise. About 20 years ago many experts suggested American industry might be better served by mirroring the Japanese where companies were coining it and the Nikkei was flying higher and higher. Years later, how many nice words does one hear about the Japanese economy and the Nikkei? I am hardly an expert on Japan but I do recognize certain facts. Real estate in certain sections of Tokyo was being valued by the inch and that real estate was an important source of collateral. I found these circumstances difficult to fathom. Of course, I am often criticized for my emphasis on risk/reward and value. As I said just yesterday, my investing vision is highly limited and this I recognize. I wish I were smarter but I am not.
Why do I bring up Japan and recognizing facts? I was criticized for my views on Japan and I am criticized for my views on the United States and questioning the stability of our economic system. Please do not tell me this is heresy. I am projecting forward based on the facts as the facts are. We have a $9.5 trillion GDP. Our budget deficit will be at least $400 billion this year and even the CBO says it will be at least $300 billion next year. The trade account deficit will also be at least $400 billion. The expenditures for entitlement programs, such as, Medicare and Medicaid, exceed the combined number for the budget and trade account deficits. As such, the deficit as a percentage of our GDP is considerably higher than what is reported in the press or deemed in the acceptable historical range. In addition, we know that the facts state the U.S. imports more than we export. Therefore, a weak dollar can only create a net negative impact rather than one which is positive. Additionally, we do not live in a perfect world. If we have deflation, that doesn't mean all prices have to go down at once. The vast majority are. I paid $1.39 for regular unleaded gas yesterday at Arco. At the same time I know natural gas has been rising in price. Mortgage rates are at all-time lows while the affordability of a home based on income levels maybe at all-time lows in certain regions of the country. Health care costs keep rising and so do auto insurance rates as incentives offered on new cars keep increasing too. The facts reflect though, that net net, prices are coming down. That paints a deflationary picture. Interest rates on U.S. treasuries are at all-time lows. They are credit obligations. Moody's and Fitch rate corporate bonds and other country bonds every day. When was the last time anyone took a hard look to see whether the U.S. treasury bonds should have their credit rating changed? They look at N.Y.C. and the state of California. I say the facts, just the facts, reflect a weakened financial state for the U.S. and I believe that is one of the reasons the dollar keeps dropping to new lows against the euro, and if it weren't for Japan supporting the dollar, it too would be much lower against the yen. It's not just that the facts state that bonds are overpriced. It's much more serious than that. We have been able to roll over some of our debt (with the help of lower interest rates) but we can no longer reduce our debt. In fact, when the debt ceiling is increased by the Congress that refuses to reduce spending, our ability to rollover the debt will be lessened. The higher the debt the higher the risk. The higher the risk the higher the payment should be for that risk. Ten Cents A Shine may have been a bad bet at 15-1 but it was a lot worse at 6-1. It was a bad bet at any price- that's in hindsight. Japan, in hindsight, was a lousy bet too for the past 20 years. The facts are the U.S. dollar should state "hope springs eternal". Unfortunately, you can't take hope to the bank. I am not asking anyone to accept my thoughts. Aristotle, after all, said "it is the mark of an educated mind to be able to entertain a thought without accepting it."
Often I am criticized for describing the facts as I see them. Actually, that is not true. I describe the facts as the facts are, and then and only then, do I entertain thoughts going forward. A perfect example is SARS. Maybe I have an advantage in that I have had a health care business for several years. However, the facts were presented for everyone to see. This was and is a virus similar to AIDS. Yes, there are differences, but the fundamental similarity made this virus lethal. There would be serious social and financial implications from this virus. There is no entity that can hide the truth forever- no government and no group of individuals- especially in this wired world. As such, one could project forward from the SARS facts. To date, the world has gotten off relatively easy. Yet, just when you get overconfident, the virus returns as it did yesterday in Singapore. It was the first case in 19 days. Taiwan was also doing ok for awhile, and then wham. Now there are 4 hospitals closed in Taiwan, another one 25 miles west of Taiwan, and there were five more deaths yesterday and 36 new cases. It is wise to keep a watchful eye out for the facts and often the bad news is not what we wish to see or hear. Overconfidence is an achilles heel for those possessing it.
Circumstances change and public opinion with them. The question is whether all situations are neutral and whether only our opinions make them otherwise. About 20 years ago many experts suggested American industry might be better served by mirroring the Japanese where companies were coining it and the Nikkei was flying higher and higher. Years later, how many nice words does one hear about the Japanese economy and the Nikkei? I am hardly an expert on Japan but I do recognize certain facts. Real estate in certain sections of Tokyo was being valued by the inch and that real estate was an important source of collateral. I found these circumstances difficult to fathom. Of course, I am often criticized for my emphasis on risk/reward and value. As I said just yesterday, my investing vision is highly limited and this I recognize. I wish I were smarter but I am not.
Why do I bring up Japan and recognizing facts? I was criticized for my views on Japan and I am criticized for my views on the United States and questioning the stability of our economic system. Please do not tell me this is heresy. I am projecting forward based on the facts as the facts are. We have a $9.5 trillion GDP. Our budget deficit will be at least $400 billion this year and even the CBO says it will be at least $300 billion next year. The trade account deficit will also be at least $400 billion. The expenditures for entitlement programs, such as, Medicare and Medicaid, exceed the combined number for the budget and trade account deficits. As such, the deficit as a percentage of our GDP is considerably higher than what is reported in the press or deemed in the acceptable historical range. In addition, we know that the facts state the U.S. imports more than we export. Therefore, a weak dollar can only create a net negative impact rather than one which is positive. Additionally, we do not live in a perfect world. If we have deflation, that doesn't mean all prices have to go down at once. The vast majority are. I paid $1.39 for regular unleaded gas yesterday at Arco. At the same time I know natural gas has been rising in price. Mortgage rates are at all-time lows while the affordability of a home based on income levels maybe at all-time lows in certain regions of the country. Health care costs keep rising and so do auto insurance rates as incentives offered on new cars keep increasing too. The facts reflect though, that net net, prices are coming down. That paints a deflationary picture. Interest rates on U.S. treasuries are at all-time lows. They are credit obligations. Moody's and Fitch rate corporate bonds and other country bonds every day. When was the last time anyone took a hard look to see whether the U.S. treasury bonds should have their credit rating changed? They look at N.Y.C. and the state of California. I say the facts, just the facts, reflect a weakened financial state for the U.S. and I believe that is one of the reasons the dollar keeps dropping to new lows against the euro, and if it weren't for Japan supporting the dollar, it too would be much lower against the yen. It's not just that the facts state that bonds are overpriced. It's much more serious than that. We have been able to roll over some of our debt (with the help of lower interest rates) but we can no longer reduce our debt. In fact, when the debt ceiling is increased by the Congress that refuses to reduce spending, our ability to rollover the debt will be lessened. The higher the debt the higher the risk. The higher the risk the higher the payment should be for that risk. Ten Cents A Shine may have been a bad bet at 15-1 but it was a lot worse at 6-1. It was a bad bet at any price- that's in hindsight. Japan, in hindsight, was a lousy bet too for the past 20 years. The facts are the U.S. dollar should state "hope springs eternal". Unfortunately, you can't take hope to the bank. I am not asking anyone to accept my thoughts. Aristotle, after all, said "it is the mark of an educated mind to be able to entertain a thought without accepting it."
Sunday, May 18, 2003
5/18/03 There Was One Undervalued Entry And Too Many That Were Overvalued
Once again, the Preakness reminded me so much of the stock market. It was a schooling day for me, and I learned more than I have in a very long time. For that I can thank the horses and the betting public. I am limited by the scope of my investing intelligence. My focus is risk/reward and value. Often what saves me is my willingness to change on a dime as values and risks evolve. The early morning line on Ten Cents A Shine was 15-1. As I have said, I am not a handicapper. The duo of Lukas and Bailey plus a good workout changed that betting line despite the horse's last three races which produced consecutive eighth place finishes. By the time I started watching Breakfast at the Preakness, the morning line had been reduced to 6-1 and the horse went off at 7-1. This wasn't value. To begin with, the risk was high and now anyone investing $2 or more on this horse was not getting paid for that risk. This is not said in hindsight. When we first turned on the TV, I mentioned to my family how nuts 6-1 was. I decided to cut back on what would have been waggered at 15-1. The opposite was true with Funny Cide. At 9-5 there was value. I figured the horse might go off at 6-5 with Peace Rules the second choice. The odds made it a different wager. In the end, I left with a tiny loss even though Peace Rules finished out of the money and Ten Cents A Shine was still running.
Changing on a dime comes with experience but, more importantly, it comes when you leave your ego out of investing. Making money requires disciplined thinking. You can't get attached to a pre-conceived idea or get stubborn because you won't accept being wrong or conversely that circumstances, as you see them, will prove you correct. Either you're on the right horse or you're not. When they turned for home yesterday, the jockey on Peace Rules knew he was in trouble. He admitted it after the race. Funny Cide made it look easy. As it turned out, there was only one horse to beat and that was himself. The same can be said for investing. You are only competing with yourself. Only you can beat yourself. The market is never wrong. Only you can be wrong. A horse must finish in the money to make money. To come out ahead the investor does not have to be in the top three or four. As such, maybe we're lucky not to make a living as a four-legged animal!
On Wednesday Bill Gates has Microsoft's annual CEO Summit. Normally there are at least 100 CEOs who participate. It will be interesting to read about the various technology trends envisioned on the horizon.
The Congressional debate on tax reform requires much in the way of reconciliation. The Senate's version incorporates $72 billion in tax increases as well as $20-30 billion in financial aid to the states. A big problem is the CBO analysis which the Republican leadership had requested. The study showed that, the revenue generated by proposed tax cuts, would at most reduce the deficit by 15% over the next 10 years.
I would like to offer an apology. During the heat of battle, so to speak, I said I would never purchase another product made in France because of their government's attitude leading up to the Iraq war. I was wrong. That country is a sovereign nation and entitled to be run the way they so choose as long as it is not harmful to others. A difference of opinion is not harmful. It is unfortunate that our leaders have not reached the same conclusion. The Paris Air Show beginning June 15 is a big deal in France. Our Defense Department is cutting back on the number of people and aircraft we are sending to the Show. Rumsfeld said: "It's not as if people won't be going from the United States. It may be at a certain level." Only lower-ranking officals will be sent. Joel Johnson, a VP at the Aerospace Industries Association of America, said "A quasi-boycott of the Paris Air Show will undercut the U.S. industry and discourage current and future customers."
Yesterday Taiwan reported its biggest oe day rise in SARS cases- 34. There have been 35 people in Taiwan who have died from this disease. Globally, 610 have died and there have been about 7770 cases. In July Honda had scheduled the start of production of subcompact sedans in China. Production is being delayed by one to two months because of SARS. A local paper stated that the disease has made parts procurements in Guangdong province more difficult.
N.Y.C.'s Independent Budget Office (IBO) said that the deficits through 2007 will continue to escalate as the average annual rate of spending will be more than double the average annual rate of revenues. Their report states that the main culprits are growing debt service, rising pension costs, escalating fringe benefits., and Medicaid. Doug Turetsky, a spokeman for IBO, said "We don't see the city economy growing its way out of this problem." Similar words have recently been uttered in Japan and the euro countries. If the Fed, the Administration, and our Congress come to accept that notion, then maybe we have an opportunity to solve some of our problems. A willingness to change can often produce more desired results. You might not come out a winner but the loss can be quite modest, and therefore, it will not require a financial bailout.
Once again, the Preakness reminded me so much of the stock market. It was a schooling day for me, and I learned more than I have in a very long time. For that I can thank the horses and the betting public. I am limited by the scope of my investing intelligence. My focus is risk/reward and value. Often what saves me is my willingness to change on a dime as values and risks evolve. The early morning line on Ten Cents A Shine was 15-1. As I have said, I am not a handicapper. The duo of Lukas and Bailey plus a good workout changed that betting line despite the horse's last three races which produced consecutive eighth place finishes. By the time I started watching Breakfast at the Preakness, the morning line had been reduced to 6-1 and the horse went off at 7-1. This wasn't value. To begin with, the risk was high and now anyone investing $2 or more on this horse was not getting paid for that risk. This is not said in hindsight. When we first turned on the TV, I mentioned to my family how nuts 6-1 was. I decided to cut back on what would have been waggered at 15-1. The opposite was true with Funny Cide. At 9-5 there was value. I figured the horse might go off at 6-5 with Peace Rules the second choice. The odds made it a different wager. In the end, I left with a tiny loss even though Peace Rules finished out of the money and Ten Cents A Shine was still running.
Changing on a dime comes with experience but, more importantly, it comes when you leave your ego out of investing. Making money requires disciplined thinking. You can't get attached to a pre-conceived idea or get stubborn because you won't accept being wrong or conversely that circumstances, as you see them, will prove you correct. Either you're on the right horse or you're not. When they turned for home yesterday, the jockey on Peace Rules knew he was in trouble. He admitted it after the race. Funny Cide made it look easy. As it turned out, there was only one horse to beat and that was himself. The same can be said for investing. You are only competing with yourself. Only you can beat yourself. The market is never wrong. Only you can be wrong. A horse must finish in the money to make money. To come out ahead the investor does not have to be in the top three or four. As such, maybe we're lucky not to make a living as a four-legged animal!
On Wednesday Bill Gates has Microsoft's annual CEO Summit. Normally there are at least 100 CEOs who participate. It will be interesting to read about the various technology trends envisioned on the horizon.
The Congressional debate on tax reform requires much in the way of reconciliation. The Senate's version incorporates $72 billion in tax increases as well as $20-30 billion in financial aid to the states. A big problem is the CBO analysis which the Republican leadership had requested. The study showed that, the revenue generated by proposed tax cuts, would at most reduce the deficit by 15% over the next 10 years.
I would like to offer an apology. During the heat of battle, so to speak, I said I would never purchase another product made in France because of their government's attitude leading up to the Iraq war. I was wrong. That country is a sovereign nation and entitled to be run the way they so choose as long as it is not harmful to others. A difference of opinion is not harmful. It is unfortunate that our leaders have not reached the same conclusion. The Paris Air Show beginning June 15 is a big deal in France. Our Defense Department is cutting back on the number of people and aircraft we are sending to the Show. Rumsfeld said: "It's not as if people won't be going from the United States. It may be at a certain level." Only lower-ranking officals will be sent. Joel Johnson, a VP at the Aerospace Industries Association of America, said "A quasi-boycott of the Paris Air Show will undercut the U.S. industry and discourage current and future customers."
Yesterday Taiwan reported its biggest oe day rise in SARS cases- 34. There have been 35 people in Taiwan who have died from this disease. Globally, 610 have died and there have been about 7770 cases. In July Honda had scheduled the start of production of subcompact sedans in China. Production is being delayed by one to two months because of SARS. A local paper stated that the disease has made parts procurements in Guangdong province more difficult.
N.Y.C.'s Independent Budget Office (IBO) said that the deficits through 2007 will continue to escalate as the average annual rate of spending will be more than double the average annual rate of revenues. Their report states that the main culprits are growing debt service, rising pension costs, escalating fringe benefits., and Medicaid. Doug Turetsky, a spokeman for IBO, said "We don't see the city economy growing its way out of this problem." Similar words have recently been uttered in Japan and the euro countries. If the Fed, the Administration, and our Congress come to accept that notion, then maybe we have an opportunity to solve some of our problems. A willingness to change can often produce more desired results. You might not come out a winner but the loss can be quite modest, and therefore, it will not require a financial bailout.
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