10/25/03 Seeing And Deciding
Hermes is an asteroid. For real. It was first observed in 1937. Since that time, it had circled the sun 31 times. However, Hermes was not seen again until October 15, 2003. As Mel Allen would have said, “how about that!” In actuality, Hermes was found to comprise two objects, and they orbit one another. Pretty cool. However, never before have the orbiting objects been of the same size. This is a first. Their spin is such that they present the same face to one another on a constant basis. Way cool. Researchers have found that Hermes comes within 378,000 miles of Earth, about 1.6 times the distance from Earth to the moon. The last such approach was in 1942! Astronomers never noticed. So I ask three questions. Do you have to see to believe? Could what you see hide the identical object and make it invisible? On what basis would you make a decision?
There is an art to decision-making. The more decisions you make the greater the chance of making a wrong decision. That’s simple. That’s why so few people make money day trading. I am certain everyone credits oneself with attempting to make good decisions. I know I do. I try to limit my investing decisions. As such, I sit on my hands a great deal. Since I weigh over 200 pounds, that’s a lot of weight on my hands. So, when a decision is made, it had better be a good one. Otherwise, my hands have paid a stiff price for nothing. Last year I did make a good decision. I placed my liquid funds in the New Zealand dollar. That didn’t make me anti-American. It was good business. This week the New Zealand dollar reached its highest level versus our dollar in six years, and is up 16% in 2003 versus the dollar. That’s not chump change. Our Federal Reserve has pegged its short-term rate at a 45-year low of 1%. The comparable rate in New Zealand is 5%. The GDP in New Zealand has risen for 10 consecutive years. Their exports are growing, and they account for 30% of their economy. In sum, I made one decision. I switched my dollars over to New Zealand dollars, and they have remained there. In hindsight, it was a no-brainer; however, it took me some time to arrive at that decision.
Did you know that Australia is the third-biggest gold producer? I didn’t. With gold at $389, Australia’s gold mining companies must be coining it. In addition, yesterday Australia and China signed a free-trade agreement. Over the past six years, Australia’s trade with China has trebled on an annual basis, and now approximates $16 billion a year. Its currency also hit a six-year high versus the dollar this week.
Every week I write about unemployment. I would like to discuss another aspect to hiring and then firing. One of the growing reasons for the reluctance to hire is the increased unemployment tax rates. (I am not ignoring rising costs for benefits.) Let’s look at the state of Washington. Employers in that state will see their taxes rise by about 12% on average in 2004. The state’s unemployment trust fund shrank 34% between September 2002 and September 2003, triggering a law that increases the rate to protect the trust fund in bad times. The state paid $1.62 billion in unemployment benefits to jobless workers between June 2002 and June 2003, a period when the state’s unemployment rate has remained among the highest in the nation. On average, businesses with employees who earn more than $30,200 will see their taxes per employee increase from $741 in 2003 to $863 in 2004, a 14% increase. The unemployment insurance trust fund was at $1 billion as of September 30, 2003, about $216 million less than the balance necessary to keep the 2003 tax rate.
John Challenger: “There’s no business that can constantly be growing. There are always cycles.” Bowling Green Spinning Co. has been a family owned operation in textiles dating to 1902. Citing the rising cost of cotton and competition from low-cost imports, they are closing by year-end and laying off 160 workers. AK Steel is a Middletown, Ohio manufacturer of flat-rolled carbon, stainless, and electrical steel. They announced a big loss and are cutting 475 employees or 20% of the workforce. They cited continuing high prices for raw materials and energy, lower production volumes, a less favorable product mix, and rising pension and retiree health care benefit expenses. Their CEO said “the rules have changed and so must we.”
On Friday two U.S. soldiers were killed in Iraq and four more wounded. The deaths bring to 108 the number of American soldiers killed by hostile fire since Bush declared an end to major combat May 1.
President Bush: “If you are a CEO in corporate America, you’re responsible for telling the truth to your shareholders and your employees.” I agree with that. President Bush is the CEO of this nation, and he is responsible for telling the truth to the citizens of the United States.
Friday, October 24, 2003
10/24/03 Not A Crisis. Only A Concern
How could a stockholder be concerned when a company has $52 billion in cash? How can you be concerned when sales and earnings exceed expectations and forecasts for the fiscal year are raised? I should have such a crisis of confidence! The only area on Wall Street that is priced to perfection would be the salary for the analysts. That’s for another morning. Today is simplifying the Microsoft information. It’s really doesn’t take much. Their PC and server business exceeded expectations; however, and some say it is a big however, Microsoft had expected unearned revenue or long-term licensing revenue to business customers to decline by about $250 million in the latest quarter. The actual decline was $768 million. Microsoft’s CFO said “in hindsight, our forecast for the September quarter was a little too optimistic. Corporate IT spending, especially in the enterprise segment, was not quite what we had forecast. I wouldn’t say we have a crisis. I would say we missed the forecast, so you should have a concern, but we feel pretty good about what the next three quarters look like relative to the market and relative to competition.” While analysts focus on the unexpected larger drop in unearned revenue, I am a bit more concerned on the revenue from Microsoft’s Windows operating system that was flat and the 1% growth in revenue from its Office line of software. The latter two areas are the company’s cash cows.
It’s Friday. It’s layoff day at Boeing. Another 860 leave the company payroll today, and they will also distribute 60-day layoff warning notices to 115 more workers today. You can expect additional layoffs in the future. Marshal Larsen is CEO of Goodrich, the company that supplies landing gear for all Boeing models except the 100-seat 717. Yesterday Larsen said “landing gear is long lead time, and we expect further drop in Boeing next year.” In other words, you can expect Boeing to state they will not meet their goal of building 280 jets in 2004. Consequently, there will be more layoffs at Boeing.
When will the taxpayers in this country stop rewarding mediocrity (and I am being generous)? Do you get a raise every year? The U.S. Senate yesterday voted themselves a pay raise for the fifth year in a row to about $158,000 in 2004. Last month the House of Representatives voted to accept a 2.2% pay increase. Over the last 5 years, members of Congress will have received a raise of $21,000. It should be noted that federal employees received an even greater raise of 4.1%. Medicare recipients received a cost of living adjustment of about 2%. When it comes to Congress, do you think you are getting value for your tax dollars?
Talking about taxes, next week Houstonians will be receiving tax bills, and the increase will be 9% higher than in 2002. They can thank soaring home valuations. The owner of a $132,000 home, the community average, will pay $2,928 in property taxes for 2003. That’s nearly double the tax bill in 1997.
Today a U.S. soldier was killed in northern Iraq and 13 troops were wounded in a mortar attack. The death brings to 106 the number of American soldiers killed by hostile fire since Bush declared an end to major combat operations May 1. Since the war began in March, approximately 2,000 soldiers have been wounded in Iraq, many quite severely. Of that amount, about 1,600 were wounded in hostile fire. These numbers come through U.S. Central Command and the Pentagon.
It’s been some time since I discussed the West Nile virus. According to the latest data from the CDC, at least 155 people in the United States have died from West Nile and more than 7,000 others have been infected this year, and this represents the worst outbreak since the virus first surfaced in this country in 1999.
I could never figure why Nestle’s wanted to become majority owner of Dreyer’s Ice Cream. It’s not exactly Ben and Jerry’s. Yesterday Nestle’s said they would close the Union City plant and eliminate 221 jobs. Dreyer’s had been making ice cream there since 1928. Nestle’s said that Dreyer’s has too many plants in the state of California.
The Administration is attempting to have Congress approve $87 billion for the Iraq reconstruction. Should the taxpayers be informed that Iraq already has a debt load of about $120 billion, and would be over $160 billion when including compensation claims for Hussein’s invasion of Kuwait? It’s one thing to support the troops, and quite another to know other monies are dropping into a deep black hole. I thought the U.S. was the most indebted country per capita. Not true. Iraq is.
The Snowman: “I would stake my reputation on employment growth happening before Christmas.” That statement could present a problem. Richmond Federal Reserve Bank President Albert Broaddus Jr. said “many firms can meet sizable increases in demand without hiring new workers.”
A recent report from the USDA indicates that more than 80% of U.S. soybean fields are planted with genetically modified seeds, and the latter account for nearly 75% of cotton and 40% of corn grown in the U.S. A Food Policy Institute study reveals more than 80% of processed foods contain some genetically modified crops.
How could a stockholder be concerned when a company has $52 billion in cash? How can you be concerned when sales and earnings exceed expectations and forecasts for the fiscal year are raised? I should have such a crisis of confidence! The only area on Wall Street that is priced to perfection would be the salary for the analysts. That’s for another morning. Today is simplifying the Microsoft information. It’s really doesn’t take much. Their PC and server business exceeded expectations; however, and some say it is a big however, Microsoft had expected unearned revenue or long-term licensing revenue to business customers to decline by about $250 million in the latest quarter. The actual decline was $768 million. Microsoft’s CFO said “in hindsight, our forecast for the September quarter was a little too optimistic. Corporate IT spending, especially in the enterprise segment, was not quite what we had forecast. I wouldn’t say we have a crisis. I would say we missed the forecast, so you should have a concern, but we feel pretty good about what the next three quarters look like relative to the market and relative to competition.” While analysts focus on the unexpected larger drop in unearned revenue, I am a bit more concerned on the revenue from Microsoft’s Windows operating system that was flat and the 1% growth in revenue from its Office line of software. The latter two areas are the company’s cash cows.
It’s Friday. It’s layoff day at Boeing. Another 860 leave the company payroll today, and they will also distribute 60-day layoff warning notices to 115 more workers today. You can expect additional layoffs in the future. Marshal Larsen is CEO of Goodrich, the company that supplies landing gear for all Boeing models except the 100-seat 717. Yesterday Larsen said “landing gear is long lead time, and we expect further drop in Boeing next year.” In other words, you can expect Boeing to state they will not meet their goal of building 280 jets in 2004. Consequently, there will be more layoffs at Boeing.
When will the taxpayers in this country stop rewarding mediocrity (and I am being generous)? Do you get a raise every year? The U.S. Senate yesterday voted themselves a pay raise for the fifth year in a row to about $158,000 in 2004. Last month the House of Representatives voted to accept a 2.2% pay increase. Over the last 5 years, members of Congress will have received a raise of $21,000. It should be noted that federal employees received an even greater raise of 4.1%. Medicare recipients received a cost of living adjustment of about 2%. When it comes to Congress, do you think you are getting value for your tax dollars?
Talking about taxes, next week Houstonians will be receiving tax bills, and the increase will be 9% higher than in 2002. They can thank soaring home valuations. The owner of a $132,000 home, the community average, will pay $2,928 in property taxes for 2003. That’s nearly double the tax bill in 1997.
Today a U.S. soldier was killed in northern Iraq and 13 troops were wounded in a mortar attack. The death brings to 106 the number of American soldiers killed by hostile fire since Bush declared an end to major combat operations May 1. Since the war began in March, approximately 2,000 soldiers have been wounded in Iraq, many quite severely. Of that amount, about 1,600 were wounded in hostile fire. These numbers come through U.S. Central Command and the Pentagon.
It’s been some time since I discussed the West Nile virus. According to the latest data from the CDC, at least 155 people in the United States have died from West Nile and more than 7,000 others have been infected this year, and this represents the worst outbreak since the virus first surfaced in this country in 1999.
I could never figure why Nestle’s wanted to become majority owner of Dreyer’s Ice Cream. It’s not exactly Ben and Jerry’s. Yesterday Nestle’s said they would close the Union City plant and eliminate 221 jobs. Dreyer’s had been making ice cream there since 1928. Nestle’s said that Dreyer’s has too many plants in the state of California.
The Administration is attempting to have Congress approve $87 billion for the Iraq reconstruction. Should the taxpayers be informed that Iraq already has a debt load of about $120 billion, and would be over $160 billion when including compensation claims for Hussein’s invasion of Kuwait? It’s one thing to support the troops, and quite another to know other monies are dropping into a deep black hole. I thought the U.S. was the most indebted country per capita. Not true. Iraq is.
The Snowman: “I would stake my reputation on employment growth happening before Christmas.” That statement could present a problem. Richmond Federal Reserve Bank President Albert Broaddus Jr. said “many firms can meet sizable increases in demand without hiring new workers.”
A recent report from the USDA indicates that more than 80% of U.S. soybean fields are planted with genetically modified seeds, and the latter account for nearly 75% of cotton and 40% of corn grown in the U.S. A Food Policy Institute study reveals more than 80% of processed foods contain some genetically modified crops.
Thursday, October 23, 2003
10/23/03 Another Economic Pothole
According to the Mortgage Bankers Association, the value of mortgages will fall from $3.3 trillion in 2003 to $1.6 trillion in 2004. Naturally, such a significant drop does not make headlines. Often, information gets released through other means. Washington Mutual is a highly successful lending institution; however, their mortgage area has created a profit drain in recent quarters. Today, the bank is cutting 4000 jobs in its nationwide home-loan operations. A total of 22,000 employees work in this area. It was only in August that Washington Mutual had announced a job cut of 1500 people. I have a feeling that many other mortgage lenders will be axing employees. It would not surprise me to see the cuts exceed 100,000 in coming months.
Yesterday was also not a very good day for the unemployment rolls. Merck, the second-biggest U.S. drugmaker, announced plans to cut about 4,400 jobs or 7% of the company’s workforce. In addition, GE, in its power systems division, plans to cut 1,000 jobs. This division has been having profitability problems. Surprisingly, nurses did not avoid the layoffs. Grays Harbor Community Hospital operates two hospitals in Aberdeen, Washington. The hospital’s skilled nursing facility has been losing more than $100,000 per month. As such, 60-day layoff notices were given to 80 on staff, and most of the affected employees are nurses.
Chinese President Hu Jintao said keeping the yuan exchange rate stable “serves China’s economic performance and conforms to the requirements of economic development in the Asia-Pacific region and the whole world.”
Donald Rumsfeld: “It is pretty clear that the coalition can win in Afghanistan and Iraq in one way or another, but it will be a long, hard, slog.”
Lt.Gen. Ricardo Sanchez said the average of 20 to 25 attacks daily in Iraq had increased over the last three weeks “to a peak of 35 attacks a day.” After the Gulf War, Dick Cheney, then the U.S. Defense Secretary, said “once you’ve got Baghdad, it is not clear what you would do with it. It’s not clear what kind of government you would put in. How much credibility is that government going to have if it’s set up by the U.S. military?” A year later, General Colin Powell, the Chairman of the Joint Chiefs of Staff, said occupying Baghdad would have come at an “unpardonable expense in terms of money, lives lost, and ruined regional relationships.”
Yesterday the British pound rose to its highest level in almost five years versus the U.S. dollar. Currently, the Bank of England’s key rate is at a 48-year low of 3.5%. However, four of the nine Monetary Policy Committee members voted to raise rates while the majority voted to maintain the current level. It appears that their rates might increase in a few months.
Michael Belkin: “The contrast between bullish equity-market psychology and deteriorating private-sector credit conditions is bizarre. The point of a bear-market rally is to make everyone bullish again just before the market does its next swan dive.”
Robert Prechter: “After this bear market is finally over, almost no one will remember the Pollyanna psychology that existed in the summer of 2000, the spring of 2002, or the fall of 2003. The S&P and the Nasdaq will look like one big slide with a few rallies along the way, and historians will probably not even imagine that investors could have been stark raving bullish during any one of them.”
By now, everyone is asking where is the good news. It’s on the way. It’s pumpkin time. We are going to use the technique I explained from two days ago in our sausage and spinach dish. Today we will use only one pound of the sweet Italian sausage without the fennel. We will brown on both sides simmering in the water and pricking the sausage after it has been turned. Now it’s cooked. Please set it aside. In a separate, large non-stick skillet that has been heated on medium high, place one teaspoon of olive oil, 5 cloves of chopped garlic and 1 large sweet onion that has been diced. Saute for at least five minutes. Do not burn the garlic. The onions need to be tender. Add a cup of dry white wine. It should be a wine you would drink and not garbage that’s been sitting open for one year. After about four minutes the wine should have been reduced by about one-half. Add to the pan one cup of drained canned pumpkin and one cup of chicken stock and a pinch of red pepper flakes. Stir. When the sauce begins to bubble, turn the heat to low and add ½ cup of heavy whipping cream (do you want it to taste good or not?) and ¼ teaspoon of cinnamon (it shouldn’t be from a can that has been open for 10 years) and ½ teaspoon of fresh ground nutmeg (if not fresh, don’t shoot yourself) and two pinches of sea salt and three full round grinds of pepper. Return the sausage (now cut into bite size chunks)to the skillet. While the sauce is simmering for ten minutes, we will cook a pound of penne. If it’s fresh penne, it will cook in about three minutes. If it’s in a box, the directions will be provided. The idea is to cook the penne al dente. Before draining the pasta, take a a large spoonful of the pasta water and put it in the sauce and stir. Then drain the pasta, return the penne to the pasta pot, pour the sauce over the penne, stir and cook for one minute only at a low flame. Serve with grated pecorino cheese.
According to the Mortgage Bankers Association, the value of mortgages will fall from $3.3 trillion in 2003 to $1.6 trillion in 2004. Naturally, such a significant drop does not make headlines. Often, information gets released through other means. Washington Mutual is a highly successful lending institution; however, their mortgage area has created a profit drain in recent quarters. Today, the bank is cutting 4000 jobs in its nationwide home-loan operations. A total of 22,000 employees work in this area. It was only in August that Washington Mutual had announced a job cut of 1500 people. I have a feeling that many other mortgage lenders will be axing employees. It would not surprise me to see the cuts exceed 100,000 in coming months.
Yesterday was also not a very good day for the unemployment rolls. Merck, the second-biggest U.S. drugmaker, announced plans to cut about 4,400 jobs or 7% of the company’s workforce. In addition, GE, in its power systems division, plans to cut 1,000 jobs. This division has been having profitability problems. Surprisingly, nurses did not avoid the layoffs. Grays Harbor Community Hospital operates two hospitals in Aberdeen, Washington. The hospital’s skilled nursing facility has been losing more than $100,000 per month. As such, 60-day layoff notices were given to 80 on staff, and most of the affected employees are nurses.
Chinese President Hu Jintao said keeping the yuan exchange rate stable “serves China’s economic performance and conforms to the requirements of economic development in the Asia-Pacific region and the whole world.”
Donald Rumsfeld: “It is pretty clear that the coalition can win in Afghanistan and Iraq in one way or another, but it will be a long, hard, slog.”
Lt.Gen. Ricardo Sanchez said the average of 20 to 25 attacks daily in Iraq had increased over the last three weeks “to a peak of 35 attacks a day.” After the Gulf War, Dick Cheney, then the U.S. Defense Secretary, said “once you’ve got Baghdad, it is not clear what you would do with it. It’s not clear what kind of government you would put in. How much credibility is that government going to have if it’s set up by the U.S. military?” A year later, General Colin Powell, the Chairman of the Joint Chiefs of Staff, said occupying Baghdad would have come at an “unpardonable expense in terms of money, lives lost, and ruined regional relationships.”
Yesterday the British pound rose to its highest level in almost five years versus the U.S. dollar. Currently, the Bank of England’s key rate is at a 48-year low of 3.5%. However, four of the nine Monetary Policy Committee members voted to raise rates while the majority voted to maintain the current level. It appears that their rates might increase in a few months.
Michael Belkin: “The contrast between bullish equity-market psychology and deteriorating private-sector credit conditions is bizarre. The point of a bear-market rally is to make everyone bullish again just before the market does its next swan dive.”
Robert Prechter: “After this bear market is finally over, almost no one will remember the Pollyanna psychology that existed in the summer of 2000, the spring of 2002, or the fall of 2003. The S&P and the Nasdaq will look like one big slide with a few rallies along the way, and historians will probably not even imagine that investors could have been stark raving bullish during any one of them.”
By now, everyone is asking where is the good news. It’s on the way. It’s pumpkin time. We are going to use the technique I explained from two days ago in our sausage and spinach dish. Today we will use only one pound of the sweet Italian sausage without the fennel. We will brown on both sides simmering in the water and pricking the sausage after it has been turned. Now it’s cooked. Please set it aside. In a separate, large non-stick skillet that has been heated on medium high, place one teaspoon of olive oil, 5 cloves of chopped garlic and 1 large sweet onion that has been diced. Saute for at least five minutes. Do not burn the garlic. The onions need to be tender. Add a cup of dry white wine. It should be a wine you would drink and not garbage that’s been sitting open for one year. After about four minutes the wine should have been reduced by about one-half. Add to the pan one cup of drained canned pumpkin and one cup of chicken stock and a pinch of red pepper flakes. Stir. When the sauce begins to bubble, turn the heat to low and add ½ cup of heavy whipping cream (do you want it to taste good or not?) and ¼ teaspoon of cinnamon (it shouldn’t be from a can that has been open for 10 years) and ½ teaspoon of fresh ground nutmeg (if not fresh, don’t shoot yourself) and two pinches of sea salt and three full round grinds of pepper. Return the sausage (now cut into bite size chunks)to the skillet. While the sauce is simmering for ten minutes, we will cook a pound of penne. If it’s fresh penne, it will cook in about three minutes. If it’s in a box, the directions will be provided. The idea is to cook the penne al dente. Before draining the pasta, take a a large spoonful of the pasta water and put it in the sauce and stir. Then drain the pasta, return the penne to the pasta pot, pour the sauce over the penne, stir and cook for one minute only at a low flame. Serve with grated pecorino cheese.
Wednesday, October 22, 2003
10/22/03 Louise K. Hanson
Mrs. Hanson, 90, died Sunday night. She and her late husband, John. K. Hanson, lived most of their lives in Forest City, Iowa, the home of Winnebago Industries, the company they founded in 1958. The Hanson estate retains ownership of 23% of the company’s outstanding shares, and that is after the buyback of 1.45 million shares held by the estate at a price of $44.12, a discount of 15% from Friday’s closing price of $51.91. Yesterday, Winnebago shares closed at an all-time high of $56.23. The repurchase reduced the outstanding shares by 8%. This is one of the more favorable buyback of shares I have ever seen.
John Hussman is the manager of the Hussman Strategic Growth Fund and the Hussman Total Retrun Fund. When measured by the Sharpe ratio, a ratio that gauges return according to the risk taken to achieve the return, his strategic growth fund ranks No. 1 in three-year performance out of more than 5,500 diversified domestic funds. About 50% of his strategic growth fund is hedged in case the market declines. He said “stocks are not cheap here and therefore are likely to deliver below-average long-term returns. When stocks have been as richly valued as they are now, there’s always been some period between four and 17 years later when stocks have reached a durably low valuation. During that time, the returns have been dismal.” He says that, despite the market fall since 2000, the market stands at about 20 times peak earnings.
In the November issue of Business 2.0, there is an article entitled “Why This Tech Bubble Is About To Blow.” These are the words expressed: crazy valuations are back with the Nasdaq 100 trading at 97 times expected 2003 earnings; momentum investing is back; day-traders are back; and buying on margin is back. “You hear a lot of managers saying, ‘Yeah, I know the market is crazy, but I have to buy it,’” says Cliff Asness, who runs $6.5 billion AQR Capital. Asness remarked “we’re in this world where mutual funds compete against benchmarks and hedge funds compete against anything that’s going up.” Talking about the most recent bear market and what has been learned, Asness stated “but if all we learned is to be quicker on the trigger, then we are all in very big trouble.”
According to a report released yesterday by the Commonwealth Fund, workers at large companies made up 25% of the uninsured workforce in 1987. Today, they account for 32% of all uninsured workers.
On Jan. 5, 2004 GM plans to eliminate one of four shifts at their Lansing plant, a move which could affect up to 1,400 hourly UAW workers and 150 salaried employees. The Alero and the Oldsmobile lines will be discontinued in 2004.
Since 2000, California’s worker’s compensation insurance rates have risen 89%. They are expected to rise by 12% in 2004.
Number portability will finally arrive on Nov. 24. Please mark your calendar. After 13 years, the FCC will require carriers to let customers keep their mobile-phone numbers even if they switch service providers. I feel confident that many will be changing providers. Too many have expressed dissatisfaction over the years, but did not want to lose their original number.
Yesterday Intel CEO Craig Barrett spoke before a Gartner tech conference. He ruled out any further expansion in the state of California. He mentioned that 70% of Intel’s markets are outside the United States and that “our investments are following our customers.” He further stated that India, China, and Russia together account for more highly educated knowledge workers than in the entire United States.
In 2002, the Investment Company Institute reported that a net $140.4 billion flowed into bond funds, more than half again as much as in any of the previous 12 years. Meanwhile, almost $28 billion flowed out of stock funds during this time. Two years earlier stock funds experienced record inflows of over $309 billion. Over the past six months, money has once again been flowing into stock funds. It’s unfortunate the inflow didn’t occur one year ago in October. Stock prices were much more favorable on a risk/reward basis at that time. Then again, what do I know from momentum buying? Absolutely nothing.
Mrs. Hanson, 90, died Sunday night. She and her late husband, John. K. Hanson, lived most of their lives in Forest City, Iowa, the home of Winnebago Industries, the company they founded in 1958. The Hanson estate retains ownership of 23% of the company’s outstanding shares, and that is after the buyback of 1.45 million shares held by the estate at a price of $44.12, a discount of 15% from Friday’s closing price of $51.91. Yesterday, Winnebago shares closed at an all-time high of $56.23. The repurchase reduced the outstanding shares by 8%. This is one of the more favorable buyback of shares I have ever seen.
John Hussman is the manager of the Hussman Strategic Growth Fund and the Hussman Total Retrun Fund. When measured by the Sharpe ratio, a ratio that gauges return according to the risk taken to achieve the return, his strategic growth fund ranks No. 1 in three-year performance out of more than 5,500 diversified domestic funds. About 50% of his strategic growth fund is hedged in case the market declines. He said “stocks are not cheap here and therefore are likely to deliver below-average long-term returns. When stocks have been as richly valued as they are now, there’s always been some period between four and 17 years later when stocks have reached a durably low valuation. During that time, the returns have been dismal.” He says that, despite the market fall since 2000, the market stands at about 20 times peak earnings.
In the November issue of Business 2.0, there is an article entitled “Why This Tech Bubble Is About To Blow.” These are the words expressed: crazy valuations are back with the Nasdaq 100 trading at 97 times expected 2003 earnings; momentum investing is back; day-traders are back; and buying on margin is back. “You hear a lot of managers saying, ‘Yeah, I know the market is crazy, but I have to buy it,’” says Cliff Asness, who runs $6.5 billion AQR Capital. Asness remarked “we’re in this world where mutual funds compete against benchmarks and hedge funds compete against anything that’s going up.” Talking about the most recent bear market and what has been learned, Asness stated “but if all we learned is to be quicker on the trigger, then we are all in very big trouble.”
According to a report released yesterday by the Commonwealth Fund, workers at large companies made up 25% of the uninsured workforce in 1987. Today, they account for 32% of all uninsured workers.
On Jan. 5, 2004 GM plans to eliminate one of four shifts at their Lansing plant, a move which could affect up to 1,400 hourly UAW workers and 150 salaried employees. The Alero and the Oldsmobile lines will be discontinued in 2004.
Since 2000, California’s worker’s compensation insurance rates have risen 89%. They are expected to rise by 12% in 2004.
Number portability will finally arrive on Nov. 24. Please mark your calendar. After 13 years, the FCC will require carriers to let customers keep their mobile-phone numbers even if they switch service providers. I feel confident that many will be changing providers. Too many have expressed dissatisfaction over the years, but did not want to lose their original number.
Yesterday Intel CEO Craig Barrett spoke before a Gartner tech conference. He ruled out any further expansion in the state of California. He mentioned that 70% of Intel’s markets are outside the United States and that “our investments are following our customers.” He further stated that India, China, and Russia together account for more highly educated knowledge workers than in the entire United States.
In 2002, the Investment Company Institute reported that a net $140.4 billion flowed into bond funds, more than half again as much as in any of the previous 12 years. Meanwhile, almost $28 billion flowed out of stock funds during this time. Two years earlier stock funds experienced record inflows of over $309 billion. Over the past six months, money has once again been flowing into stock funds. It’s unfortunate the inflow didn’t occur one year ago in October. Stock prices were much more favorable on a risk/reward basis at that time. Then again, what do I know from momentum buying? Absolutely nothing.
Tuesday, October 21, 2003
10/21/03 That Dirty Dog
Barbara Bush granted her first solo interview since her son was elected president. This, to me, is more important than any poll. It reveals that the president’s mother senses re-election troubles for her son, and that the negative sentiment is becoming too loud a noise. She wanted to do something about this, and expressed her opinions Monday on NBC’s “Today” show. There was something important to learn, and it wasn’t her telling her son after a run to get his feet off their table in the bedroom. Barbara Bush said the current president frequently declined to do what she said, and remarked “He still doesn’t take my advice, that dirty dog.” She had stated emphatically in advice to her son not to invade Iraq without a strong coalition and commitments from many other countries. He didn’t that his mother’s advice. According to a Pentagon statement, one U.S. soldier was killed and six others were wounded after being ambushed by small-arms fire and a homemade bomb near Fallujah in central Iraq. The soldier’s death brings to 104 the number of U.S. military members killed in action since Bush declared the major combat of the war over on May 1.
Yesterday Towers Perrin reported that the average pension plan in the U.S. was 77.5% underfunded at the end of 2002 versus 120% overfunded at the end of 1999. Corporate executives are increasingly concerned about pension-plan investment returns. Pension plan contributions as a percentage of cash flows more than doubled in 2002 to 7.3%. Such contributions are one more reason for the lack of pick-up in capital expenditures. Towers Perrin said companies increasingly are allowing pension liabilities to build, hoping that a market recovery will boost portfolio returns. Since March 11, 2003, that has been working. However, Towers Perrin observed “at these levels pension expense and contributions represent a looming cloud over many companies’ future financial results, potentially limiting their ability to invest in the business for future growth.”
Navajo Proverb: “You can’t wake a person who is pretending to be asleep.”
Richmond Federal Reserve President Alfred Broaddus said yesterday that many of the U.S. jobs cut in recent years are gone permanently because of economic changes. He described current conditions as a “job-challenged recovery.” He mentioned that some of the recent economic improvements could be the result of the tax cuts, and he said, “there’s some question, I think, in how long that stimulus is going to be there.” I think he doesn’t have to wait until November comes around. For the first time in six months, September’s index of leading U.S. economic indicators declined. The 0.2% fall was larger than what had been anticipated by economists. That’s not surprising. What might prove important was the index of lagging indicators, which includes the duration of unemployment and the ratio of installment credit to consumer income. That index fell 0.5% in September after having no change in August. That change was abrupt and sharp. One more item in the report went mostly unnoticed. Delivery times shortened in the month of September. This suggests that vendors had an easier time keeping up with orders. Since the inventory to sales ratio is at a record low, I find this very interesting.
Residential Services, Inc., a private, non-profit organization providing residential options for individuals with developmental disabilities, opens the first continuing care retirement community for senior citizens on October 25 in Durham, North Carolina. It is the first such facility in the country devoted to seniors with developmental disabilities and the unique needs of an aging population.
The weather will soon be turning wintery, and that means more time inside. Since I’m not doing cartwheels about any stock in particular, let’s try something a bit different. Cooking and investing have some similarities. In order to have pleasing results it’s necessary to start with good ingredients. They don’t have to be the most expensive. You don’t need to buy a $100 stock to make money, and you don’t need to buy a $100 bottle of balsamic vinegar. You need to shop carefully, and be patient for the price level to represent good value, and for the ingredient in question to get the job done without spoiling the broth, so to speak. Let’s start off with a dish that is guaranteed to make you look good in the kitchen. Just follow along. It’s easy. Please pay attention to the details. You cannot cut corners. We are going to visit Sicily. I figure most of you haven’t been there. This is a simple Sicilian dish. It’s pan-fried sausage with fresh spinach and garlic. The Italian sausage will be sweet; it must have at least 20% fat or the sausage will get hard. The casing must be thin. It should come in a coil with the sausages connected. Do not disconnect the sausages. We will be cooking the sausage the Sicilian way- fritta in l’acqua. It requires lengthier cooking, but wou end up with a plumper sausage and it has a crustier skin. Buy 2 pounds of sweet sausage without fennel. Here we go. In a large and deep frying pan, place the coil of sausages in one-third inch of water. Do not prick the sausages. Bring the water to a boil, and then reduce the heat to low, and cover the pan. The water will simmer for about 15-20 minutes until the water has evaporated. Then prick the sausages with a fork. This will release the fat from the sausages. Continue to cook over the same low heat in the covered pan until the sausage bottoms are brown and crusty. Then turn the sausages and prick them again and cook over the low flame in the covered pan for another ten minutes or so. Stir in one cup of water and this is important. Scrape the browned bits in the pan and mix with the water. Add 8 large cloves of garlic which have been cut into large dices. Sprinkle evenly over the sausages. After 1 ½ pounds of fresh spinach has been carefully washed and rinsed and the moisture drained (this is done prior to the start of the dish), spread the spinach evenly over the sausages. Sprinkle with salt and red pepper flakes. Cover and simmer until the spinach has wilted-about 15 to 20 minutes Transfer and disconnect the sausages to a platter and surround with the spinach and spoon the juices over the top. Please note the salt is not optional but the red pepper flakes are.
Barbara Bush granted her first solo interview since her son was elected president. This, to me, is more important than any poll. It reveals that the president’s mother senses re-election troubles for her son, and that the negative sentiment is becoming too loud a noise. She wanted to do something about this, and expressed her opinions Monday on NBC’s “Today” show. There was something important to learn, and it wasn’t her telling her son after a run to get his feet off their table in the bedroom. Barbara Bush said the current president frequently declined to do what she said, and remarked “He still doesn’t take my advice, that dirty dog.” She had stated emphatically in advice to her son not to invade Iraq without a strong coalition and commitments from many other countries. He didn’t that his mother’s advice. According to a Pentagon statement, one U.S. soldier was killed and six others were wounded after being ambushed by small-arms fire and a homemade bomb near Fallujah in central Iraq. The soldier’s death brings to 104 the number of U.S. military members killed in action since Bush declared the major combat of the war over on May 1.
Yesterday Towers Perrin reported that the average pension plan in the U.S. was 77.5% underfunded at the end of 2002 versus 120% overfunded at the end of 1999. Corporate executives are increasingly concerned about pension-plan investment returns. Pension plan contributions as a percentage of cash flows more than doubled in 2002 to 7.3%. Such contributions are one more reason for the lack of pick-up in capital expenditures. Towers Perrin said companies increasingly are allowing pension liabilities to build, hoping that a market recovery will boost portfolio returns. Since March 11, 2003, that has been working. However, Towers Perrin observed “at these levels pension expense and contributions represent a looming cloud over many companies’ future financial results, potentially limiting their ability to invest in the business for future growth.”
Navajo Proverb: “You can’t wake a person who is pretending to be asleep.”
Richmond Federal Reserve President Alfred Broaddus said yesterday that many of the U.S. jobs cut in recent years are gone permanently because of economic changes. He described current conditions as a “job-challenged recovery.” He mentioned that some of the recent economic improvements could be the result of the tax cuts, and he said, “there’s some question, I think, in how long that stimulus is going to be there.” I think he doesn’t have to wait until November comes around. For the first time in six months, September’s index of leading U.S. economic indicators declined. The 0.2% fall was larger than what had been anticipated by economists. That’s not surprising. What might prove important was the index of lagging indicators, which includes the duration of unemployment and the ratio of installment credit to consumer income. That index fell 0.5% in September after having no change in August. That change was abrupt and sharp. One more item in the report went mostly unnoticed. Delivery times shortened in the month of September. This suggests that vendors had an easier time keeping up with orders. Since the inventory to sales ratio is at a record low, I find this very interesting.
Residential Services, Inc., a private, non-profit organization providing residential options for individuals with developmental disabilities, opens the first continuing care retirement community for senior citizens on October 25 in Durham, North Carolina. It is the first such facility in the country devoted to seniors with developmental disabilities and the unique needs of an aging population.
The weather will soon be turning wintery, and that means more time inside. Since I’m not doing cartwheels about any stock in particular, let’s try something a bit different. Cooking and investing have some similarities. In order to have pleasing results it’s necessary to start with good ingredients. They don’t have to be the most expensive. You don’t need to buy a $100 stock to make money, and you don’t need to buy a $100 bottle of balsamic vinegar. You need to shop carefully, and be patient for the price level to represent good value, and for the ingredient in question to get the job done without spoiling the broth, so to speak. Let’s start off with a dish that is guaranteed to make you look good in the kitchen. Just follow along. It’s easy. Please pay attention to the details. You cannot cut corners. We are going to visit Sicily. I figure most of you haven’t been there. This is a simple Sicilian dish. It’s pan-fried sausage with fresh spinach and garlic. The Italian sausage will be sweet; it must have at least 20% fat or the sausage will get hard. The casing must be thin. It should come in a coil with the sausages connected. Do not disconnect the sausages. We will be cooking the sausage the Sicilian way- fritta in l’acqua. It requires lengthier cooking, but wou end up with a plumper sausage and it has a crustier skin. Buy 2 pounds of sweet sausage without fennel. Here we go. In a large and deep frying pan, place the coil of sausages in one-third inch of water. Do not prick the sausages. Bring the water to a boil, and then reduce the heat to low, and cover the pan. The water will simmer for about 15-20 minutes until the water has evaporated. Then prick the sausages with a fork. This will release the fat from the sausages. Continue to cook over the same low heat in the covered pan until the sausage bottoms are brown and crusty. Then turn the sausages and prick them again and cook over the low flame in the covered pan for another ten minutes or so. Stir in one cup of water and this is important. Scrape the browned bits in the pan and mix with the water. Add 8 large cloves of garlic which have been cut into large dices. Sprinkle evenly over the sausages. After 1 ½ pounds of fresh spinach has been carefully washed and rinsed and the moisture drained (this is done prior to the start of the dish), spread the spinach evenly over the sausages. Sprinkle with salt and red pepper flakes. Cover and simmer until the spinach has wilted-about 15 to 20 minutes Transfer and disconnect the sausages to a platter and surround with the spinach and spoon the juices over the top. Please note the salt is not optional but the red pepper flakes are.
Monday, October 20, 2003
10/20/03 MicroCHIPS, Inc.
The garage of the Silicon Valley fifty years ago, forty years ago, or possibly even a decade ago is today’s world-wide laboratory. It is the landscape for medical discoveries. The discovery, manufacture, and delivery of pharmaceuticals is changing rapidly. Costs to consumers will be reduced. Revolutionary technology shall be delivered. Let’s take a tour of one of those cutting-edge laboratories.
Have you heard of Dr. John T. Santini, Jr.? He is not make deliveries through Santini Brothers Movers. There is such a company. Bedford, Massachusetts is not exactly known for medical breakthroughs. You will find Dr. Santini there. He is the founder, president, and chief scientific officer of MicroCHIPS. If you think they compete with Intel’s Centrino chip, you would be mistaken. It might prove fruitful for you to remember Dr. Santini and his company. MicroCHIPS has six U.S. patents, 20 pending U.S. applications, and numerous international applications covering their controlled release microchip. This isn’t just any microchip found in a laboratory. This is the real deal. It’s unique, and will, in my view, transform the delivery system of medication. The microfabricated chips contain hundreds of micro-reservoirs. Each reservoir can store and release multiple drugs from a single device. The micro-reservoirs are opened on demand in response to a preprogrammed clock, biosensor feedback, or a wireless signal from a physician or patient. The drug delivery is safe, optimizes drug formulations, and ensures the patient receives the medication in accordance with prescribed drug regimens. The chip is comprised of polymers that are completely absorbed by the body and cleared out of the body. As the polymer cap degrades, an exact amount of drug is released. The release time for each reservoir can be adjusted by changing the composition or thickness of each cap so it deteriorates at a certain rate, releasing drugs at different times without the need for an outside power source to stimulate release. This implantable, degradable delivery system should find many applications. Nature Materials, a scientific journal, will have an article on MicroCHIPS and this new technology for delivering pharmaceutical compounds.
A new study is being released today on women in the workforce in the state of Michigan. It is an eye-opener. Women make up 47% of the Michigan workforce and hold one-third of the managerial and professional positions. Men have 93% of the best-paid executive jobs and more than 90% of the directors’ seats on corporate boards. Seventy five percent of the 100 Michigan index companies have no women among their five highest-paid employees. Thirty three per cent have no women at all among either the top officer group or the board of directors.
Projections indicate that employer-sponsored health plans will cost an average 44% more per employee in 2004 than they did three years in the sate of Washington. This problem is not unique to Washington state. How is this problem solved? Do the businesses absorb the increases? That’s not possible with little or no pricing power for businesses today. Do you pass the increased costs onto the employees? That’s not possible because salary increases on average approximate 3%. Does the business stop subsidizing some coverage entirely? That might create work stoppages. The problem can be resolved but it will require give and take on the part of employers, employees, insurance companies, pharmaceutical companies, doctors, hospitals, and other health providers. There is only one pie. Everyone has to eat from that pie. Pigs will not fare well at the table. They don’t do well on Wall Street either.
The garage of the Silicon Valley fifty years ago, forty years ago, or possibly even a decade ago is today’s world-wide laboratory. It is the landscape for medical discoveries. The discovery, manufacture, and delivery of pharmaceuticals is changing rapidly. Costs to consumers will be reduced. Revolutionary technology shall be delivered. Let’s take a tour of one of those cutting-edge laboratories.
Have you heard of Dr. John T. Santini, Jr.? He is not make deliveries through Santini Brothers Movers. There is such a company. Bedford, Massachusetts is not exactly known for medical breakthroughs. You will find Dr. Santini there. He is the founder, president, and chief scientific officer of MicroCHIPS. If you think they compete with Intel’s Centrino chip, you would be mistaken. It might prove fruitful for you to remember Dr. Santini and his company. MicroCHIPS has six U.S. patents, 20 pending U.S. applications, and numerous international applications covering their controlled release microchip. This isn’t just any microchip found in a laboratory. This is the real deal. It’s unique, and will, in my view, transform the delivery system of medication. The microfabricated chips contain hundreds of micro-reservoirs. Each reservoir can store and release multiple drugs from a single device. The micro-reservoirs are opened on demand in response to a preprogrammed clock, biosensor feedback, or a wireless signal from a physician or patient. The drug delivery is safe, optimizes drug formulations, and ensures the patient receives the medication in accordance with prescribed drug regimens. The chip is comprised of polymers that are completely absorbed by the body and cleared out of the body. As the polymer cap degrades, an exact amount of drug is released. The release time for each reservoir can be adjusted by changing the composition or thickness of each cap so it deteriorates at a certain rate, releasing drugs at different times without the need for an outside power source to stimulate release. This implantable, degradable delivery system should find many applications. Nature Materials, a scientific journal, will have an article on MicroCHIPS and this new technology for delivering pharmaceutical compounds.
A new study is being released today on women in the workforce in the state of Michigan. It is an eye-opener. Women make up 47% of the Michigan workforce and hold one-third of the managerial and professional positions. Men have 93% of the best-paid executive jobs and more than 90% of the directors’ seats on corporate boards. Seventy five percent of the 100 Michigan index companies have no women among their five highest-paid employees. Thirty three per cent have no women at all among either the top officer group or the board of directors.
Projections indicate that employer-sponsored health plans will cost an average 44% more per employee in 2004 than they did three years in the sate of Washington. This problem is not unique to Washington state. How is this problem solved? Do the businesses absorb the increases? That’s not possible with little or no pricing power for businesses today. Do you pass the increased costs onto the employees? That’s not possible because salary increases on average approximate 3%. Does the business stop subsidizing some coverage entirely? That might create work stoppages. The problem can be resolved but it will require give and take on the part of employers, employees, insurance companies, pharmaceutical companies, doctors, hospitals, and other health providers. There is only one pie. Everyone has to eat from that pie. Pigs will not fare well at the table. They don’t do well on Wall Street either.
Sunday, October 19, 2003
10/19/03 Tale Of Two Countries
President Bush stated in his Saturday radio address that “today all 22 universities and 43 technical institutes and colleges are open, as are nearly all primary and secondary schools in the country. Earlier this year we said we would rehabilitate 1,000 schools by the time school started. This month, just days before the first day of class, our coalition and our Iraqi partners have refurbished over 1,500 schools.” This effort has been accomplished on the bodies of hundreds of dead, wounded, and injured soldiers and on the backs of the American taxpayers. Meanwhile, in the U.S., there are 1.7 million Americans invested in prepaid tuition plans that are designed to protect families against spiraling expenses at public colleges. Colorado, Ohio, West Virginia, Kentucky, and Texas have cut off enrollment in this plan. Ohio announced last week it was suspending its program for one year because the state was losing money. Prepaid tuition plans are important for many families. They enable those families to purchase tuition credits, based on current rates, in lump sums or monthly payments. The problem is tuition is rising faster than earnings from the states’ long-term investments covering the tuition plan. Charles Bockway, a spokesman for the West Virginia Prepaid Tuition Plan, stated “typically, when you have had periods of high tuition growth you had periods of high inflation. And during high inflation times you can earn a lot in bonds and the stock market is doing well. Our research shows this has never happened before.” Dallas Martin is the president of the National Association of Student Financial Aid Administrators, and said suspended tuition plans were another signal that the burden of financing colleges is being shifted to families. Martin remarked "it leaves people in a situation where they have to find another mechanism" to pay for college. In sum, Americans pay, in after tax dollars, for Iraq’s education system, and, at the same time, are faced with rising college tuition costs that suspend and/or cancel prepaid tuition plans at the state level. Maybe in next Saturday’s radio address Bush should explain this situation. I’m certain he would state it’s the price of fighting terror. That’s his answer for everything.
Since Bush is reluctant to visit Main Street, let’s take a little Sunday drive across the Bay Bridge to the East Bay in the Bay Area of San Francisco. From 1999 to 2003, the average wages in the East Bay rose almost 4% and costs rose double that rate. State figures show that 300,000 of the 1 million wage earners in the East Bay make less than $15 per hour. They are janitors, retail clerks, food servers, office workers, etc. They live on Main Street where the average rent for a one-bedroom apartment is about $1,050 per month. After taxes, from 52 to 72% of their after-tax monthly income goes to rent or house payments. The results show that an adult raising an infant and a school-age child in the East Bay must earn at least $42,000 a year to meet a basic budget. Over 20% of the Bay Area households don’t earn enough to cover their basic needs, and must depend on food pantries, family assistance, and other subsidies. Maybe in another radio address Bush can discuss the problems of the under-employed that play by the rules but can’t make ends meet.
Rep. Ron Paul of Texas, Republican: “If there is one thing the history of our intervention teaches, it is the best way for a foreign country to become a financial dependent of the United States is to first be attacked by the United States…Conservatives often proclaim that they are opposed to providing American welfare to the rest of the world. I agree. The only way to do that, however, is to stop supporting a policy of military interventionism. You cannot have one without the other…we are heading full-speed toward bankruptcy, yet we continue to spend like there is no tomorrow. There will be a tomorrow, however. The money we are spending today is real. The bill will be paid, whether through raising taxes or printing more money. Either way, the American people will become poorer in pursuit of a policy that cannot and will not work. We cannot re-make the world in our own image.” In my view, Rep. Paul consistently speaks common sense. He is an excellent representative for his district in Texas. Hopefully, some day, his representation will span the nation.
Saturday night two more American soldiers were killed and one was wounded in a guerrilla ambush. It occurred 160 miles north of Baghdad. There was another attack 35 miles west of Baghdad but casualty reports have not been released.
I find it interesting that the inflation numbers are muted. Yet, prices for aluminum, cattle, cotton, and zinc have reached record highs. Looking over history, one could reach the conclusion that this is the first time such a divergence has taken place.
Often, I read comments by others that it is too late to buy, too early to short, the market is ahead of itself, etc. There are observations for every hour of trading. I can’t say what’s right for you. It’s your money. For me, I sell to the sleeping point and back up the truck buying when I see silver dollars going for 50 cent pieces. Unfortunately, the latter does not happen often enough. A good deal of the time is spent sitting on one’s hands. If you cannot sit on your hands, you should not be an investor or a trader. The idea is have fun and make money. If you force it, you’ll lose.
The deficit virus appears to be making the rounds. In England receipts are growing less quickly than forecast while spending is picking up. I now understand why Bush and Blair get along so well. It was predicted in April that England would need to borrow 27 billion pounds. That number has been increased to 36 billion pounds ($61 billion).
President Bush stated in his Saturday radio address that “today all 22 universities and 43 technical institutes and colleges are open, as are nearly all primary and secondary schools in the country. Earlier this year we said we would rehabilitate 1,000 schools by the time school started. This month, just days before the first day of class, our coalition and our Iraqi partners have refurbished over 1,500 schools.” This effort has been accomplished on the bodies of hundreds of dead, wounded, and injured soldiers and on the backs of the American taxpayers. Meanwhile, in the U.S., there are 1.7 million Americans invested in prepaid tuition plans that are designed to protect families against spiraling expenses at public colleges. Colorado, Ohio, West Virginia, Kentucky, and Texas have cut off enrollment in this plan. Ohio announced last week it was suspending its program for one year because the state was losing money. Prepaid tuition plans are important for many families. They enable those families to purchase tuition credits, based on current rates, in lump sums or monthly payments. The problem is tuition is rising faster than earnings from the states’ long-term investments covering the tuition plan. Charles Bockway, a spokesman for the West Virginia Prepaid Tuition Plan, stated “typically, when you have had periods of high tuition growth you had periods of high inflation. And during high inflation times you can earn a lot in bonds and the stock market is doing well. Our research shows this has never happened before.” Dallas Martin is the president of the National Association of Student Financial Aid Administrators, and said suspended tuition plans were another signal that the burden of financing colleges is being shifted to families. Martin remarked "it leaves people in a situation where they have to find another mechanism" to pay for college. In sum, Americans pay, in after tax dollars, for Iraq’s education system, and, at the same time, are faced with rising college tuition costs that suspend and/or cancel prepaid tuition plans at the state level. Maybe in next Saturday’s radio address Bush should explain this situation. I’m certain he would state it’s the price of fighting terror. That’s his answer for everything.
Since Bush is reluctant to visit Main Street, let’s take a little Sunday drive across the Bay Bridge to the East Bay in the Bay Area of San Francisco. From 1999 to 2003, the average wages in the East Bay rose almost 4% and costs rose double that rate. State figures show that 300,000 of the 1 million wage earners in the East Bay make less than $15 per hour. They are janitors, retail clerks, food servers, office workers, etc. They live on Main Street where the average rent for a one-bedroom apartment is about $1,050 per month. After taxes, from 52 to 72% of their after-tax monthly income goes to rent or house payments. The results show that an adult raising an infant and a school-age child in the East Bay must earn at least $42,000 a year to meet a basic budget. Over 20% of the Bay Area households don’t earn enough to cover their basic needs, and must depend on food pantries, family assistance, and other subsidies. Maybe in another radio address Bush can discuss the problems of the under-employed that play by the rules but can’t make ends meet.
Rep. Ron Paul of Texas, Republican: “If there is one thing the history of our intervention teaches, it is the best way for a foreign country to become a financial dependent of the United States is to first be attacked by the United States…Conservatives often proclaim that they are opposed to providing American welfare to the rest of the world. I agree. The only way to do that, however, is to stop supporting a policy of military interventionism. You cannot have one without the other…we are heading full-speed toward bankruptcy, yet we continue to spend like there is no tomorrow. There will be a tomorrow, however. The money we are spending today is real. The bill will be paid, whether through raising taxes or printing more money. Either way, the American people will become poorer in pursuit of a policy that cannot and will not work. We cannot re-make the world in our own image.” In my view, Rep. Paul consistently speaks common sense. He is an excellent representative for his district in Texas. Hopefully, some day, his representation will span the nation.
Saturday night two more American soldiers were killed and one was wounded in a guerrilla ambush. It occurred 160 miles north of Baghdad. There was another attack 35 miles west of Baghdad but casualty reports have not been released.
I find it interesting that the inflation numbers are muted. Yet, prices for aluminum, cattle, cotton, and zinc have reached record highs. Looking over history, one could reach the conclusion that this is the first time such a divergence has taken place.
Often, I read comments by others that it is too late to buy, too early to short, the market is ahead of itself, etc. There are observations for every hour of trading. I can’t say what’s right for you. It’s your money. For me, I sell to the sleeping point and back up the truck buying when I see silver dollars going for 50 cent pieces. Unfortunately, the latter does not happen often enough. A good deal of the time is spent sitting on one’s hands. If you cannot sit on your hands, you should not be an investor or a trader. The idea is have fun and make money. If you force it, you’ll lose.
The deficit virus appears to be making the rounds. In England receipts are growing less quickly than forecast while spending is picking up. I now understand why Bush and Blair get along so well. It was predicted in April that England would need to borrow 27 billion pounds. That number has been increased to 36 billion pounds ($61 billion).
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