Monday, November 24, 2008

Citigroup - what was known and when?

This year Christmas has come before December, especially if you are a money center bank, a brokerage house, insurance company, or car manufacturer. For regular people though the holiday may not arrive at all. Such is the way things happen when the Government gets involved.

The news is out now that Citigroup will receive another $20 billion, with guarantees for $306 billion in assets, before the holiday season ends. In fact they should have the money, your money, in hand before the holiday season officially starts this Friday. Santa it seems has a 401k.

The good part of this is that Citi should not fail. Thus money will be stable in over 100 countries around the world, for the time being. Another bonus that New York City officials must love is that Citi will not be sold off in parts, and thus tens of thousands of additional jobs should be secure. And there is a better than 50% chance that many of the major bonuses that help the Big Apple float will be paid out (contractual obligations don’t end when the company gets a Government bailout). And in all honesty that is a good thing for the U.S. economy too, as long as they spend the money and not hoard it in fear of future layoffs.

The bad thing is that none of the officials tasked with resolving the financial crisis the nation is in foresaw this event. Chriss Dodd and Barney Frank didn’t see it coming, not because they were asleep at the wheel like when they promised Fannie Mae and Freddie Mac would be ok, because they were too busy blaming anyone but themselves for missing the problem. Treasury Secretary Paulson missed it. Fed Chairman Ben Bernanke missed it too.

Not one of these men, each tasked with identifying this continuing problem, envisioned this problem. They have dozens of staffers and hundreds working behind the scenes crunching numbers. Yet they all missed the chance of this happening. And the public is left to assume that it was so sudden they couldn’t have known.

Not true.

“I believe that the move to junk rating of ACA, the probable $6 - 12 billion loss at JP Morgan [significantly higher than expected], eventual losses from Citigroup - which reinsures itself, oil breaking $100 a barrel, and the multiple overseas investments will all hit the market in mid-January 2008. Thus I think a move to 11,000 is more than probable.”

I said that in December of 2007. That’s without being a stockbroker for years, without financial racords, conversations with CEO’s, discussion of the Fed, data from international sources, or Congressional committees. Just me reading the news and analyzing the public information.

I in fact went on to say

“Will those experiencing deflation outweigh the inflation fears? And if more people lose their homes how much of our financial institutions are we willing to sell to avoid the harshest realities of a crash?”

I knew Citigroup was in trouble a year ago. I knew there would be a major crisis from the mortgage industry, and that a bear market would hit the stock market. And I defined it several times, months in advance, in detail. The main thing I have been wrong on is the severity and speed at which all these things happened.

My point about this is simple. If I can figure out how bad things were, and most likely will continue to get, then what the hell were all these people whose only job is to figure this out doing!?

If they can’t get off they political posteriors, open their Government entrenched eyes, and understand the degree of a problem that is apparent to a guy on a computer in Binghamton – without even a stock ticker – they why are we giving them control of $700 billion and more? How can we expect that a single dollar of that money will be put to a use that is effective?

Case in point. Citigroup is in big trouble. They insure themselves internally. They are failing. So what is the value of the $306 billion in assets today, what was it yesterday? Are we guaranteeing a value that was intially set for these assets, the current market value of these assets, or are we getting to pick up the debt and bad loans of Citigroup mixed in with actual assets? The difference is very important. And I doubt if Barney Frank and Chris Dodd are even aware that this question should be asked.

I asked how much are we willing to sell to avoid a problem a year ago. Today I am looking forweard and I have to ask a different question. How much of the American capitalist system the nation functions on are we willing to lose to avoid the pain of this crisis? And if we are willing to comnpromise the basis of our economy, how do we prevent losing the freedoms a solcialist nation cannot tolerate?

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Monday, October 20, 2008

Nancy Pelosi wants 2nd try at stimulus plan failure

Just one month ago Nancy Pelosi was advocating a mortgage bailout bill that would give nearly $1 trillion to Treasury Secretary Paulson and use any potential profit or repayment for pro-Democratic groups including federally indicted ACORN instead of the public. Also in that initial bill was a quiet attempt to add $50 billion dollars as a stimulus plan for normally pro-Democratic segments of the nation.

Nancy Pelosi was shot down in her first attempt, but she did not give up. Though ACORN is now recognized as a bad choice for more federal funding, especially as a substitute fro repaying the public bailout of financials, Pelosi is still trying for her stimulus plan. And you have to give her credit, she has increased the amount she wants to spend to $150 billion now (or more if she can get it). And she is now getting support from Fed Chairman Bernanke and the White House it seems.

Long-time readers will be familiar with the fact that I thought the first stimulus plan was a waste of money. It was a complete failure in every objective it was hoped it would deal with. It did not stimulate anything, it did not bring stability to the housing markets, it did not prevent the failure of several banks and brokerages, and it did not alleviate the credit crunch.

Another stimulus plan will have the same effect. Nothing. Any funds being used to give to the public will be used to pay down bills and debt, again. Even moreso now with such uncertainty.

And we need to get this into perspective. Nancy Pelosi has presided over the worst Congress ever. It was her Congress that failed to see the crisis from the start. It was her Congress that as late as July denied any problems, in the words of Barney Frank. It was Paulson and Bernanke that have been playing catch-up. It is the current fiscal plans that are causing real inflation to grow, and business to slow – which is the only reason oil prices have dropped. And they want to make it worse by doubling down.

Pelosi is confident that she will get another stimulus plan, if Obama is elected. She plans to wait til then to really push for this useless plan.

“But we can get something signed — please, God — when Barack Obama wins the election.”

That is just blatant polispeak. But what it also means is this. An Obama Administration will bring in $832 billion in new spending, we are spending $700 billion on the bailout, we have spent over $200 billion on prior bailouts, and we will be spending another $150 billion or more on another stimulus plan while businesses will be saddled with 10% higher taxes, and investments will be shutdown with another 15% in capital gains taxes.

Given these facts, I cannot see how anyone will not have their taxes increased. And I don’t mean the 3% increase that Obama and Democrats have voted for and tried to pass in March of 2008. If anyone thinks that business will not slowdown further, and jobs will be lost while inflation grows under these economic plans, they have never done well in basic math – in my opinion.

Nancy Pelosi is decidedly a partisan and underhanded politician. She promotes wind energy without disclosing her substantial stock investment in wind energy companies. She has refused and block discussion on domestic drilling. She has wasted the taxpayers money on trying to point blame on Republicans, admittedly where no laws have been broken. She has had a Congress that has accomplished the least ever, while maintaining a majority in both Houses. And now she wants to make things worse.

I hope people in California wake up and vote her out of office. But the fact is she will hold power long enough to cause damage that will last years. And considering that she has enabled a Congress to willfully damage the nation via inaction and inattentiveness, I can only have nightmares about the damage she will be able to inflict on the nation with a Democratic, left-wing, President as banks and healthcare is socialized.

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Wednesday, October 01, 2008

Politics today: what troubles you the most?

Considering everything that is going on in America today I’m just not sure what is the most troubling thing happening.

Of course the major media is hyping the mortgage crisis bailout, which has now become dubbed a ‘rescue plan’, and politicians are making the most of this coverage to promote their political party’s Presidential candidate while blaming all the woes of creation on the other Party. But it’s the other things the major media isn’t talking about that has me equally as distraught.

There is the fact that the Bush Administration has quietly approved a $25 billion loan to the auto industry. There is the fact that Senator Obama is feared to be incapable of winning the election in just over a month, not because of his political views or plans for the nation but because he is Black. There is Barney Frank and Chris Dodd screaming that anyone and everyone else but their banking and finance committees are to blame for the current crisis, or for not seeing the impending problems as late as this July. And there is House Speaker Nancy Pelosi.

Nancy Pelosi is special. In a kind of special needs kind of way (and I don’t want to insult those with such needs by associating Nancy Pelosi with them).

She is the most powerful woman in politics right now, if you can believe it. She is 2nd in line for the Presidency if anything happened to President Bush before the election. Yet she has run an extraordinarily expensive budget in her position as Speaker, with a Congreess that has achieved the least in at least recent memory. She presides over a Congress that has the lowest approval rating since ratings have been kept.

But that is not enough. She has tried to block any discussion of domestic drilling, like Pharoh forbidding the name Moses from being spoken. Which is fantastic for her since she makes money on that delay because she owns stock in alternative energy companies. She also helped to write a bailout plan that allowed the Treasury Secretary to wield sole control over virtually a trillion dollars. When that failed she helped write another plan that took any repayments and gave them to a Democratic pet project, ACORN, which is under federal investigation. And now we learn that paid her husband just under $100,000 from political donations – which she voted to ban in 2007.

“Financial Leasing Services Inc. (FLS), owned by Paul F. Pelosi, has received $99,000 in rent, utilities and accounting fees from the speaker's "PAC to the Future" over the PAC's nine-year history...

FLS is on track to take in $48,000 in payments this year alone - eight times as much as it received annually from 2000 to 2005, when the committee was run by another treasurer [which is now her husband].”

So we have Democrats that won’t cross racial lines, asleep while watching the nations money, pushing to give people homes they can’t afford, spending money they don’t have without control, blocking the near-term solutions of America’s energy needs for personal profit, and violating laws they are supposedly trying to pass, while doing the least work in Congress possible. You have to admit it is an impressive cluster of failure all at once.

And Senator Obama has no intention of not spending another 800 billion dollars in new spending, nor failing to raise corporate taxes in a decidedly negative economy. But he will speak with Iran about not building nukes – pretty please. And he will tell Russia that they are being bad when they invade other nations, after he thinks about it for a while.

Honestly I don’t mind Obama’s inexperience that much. In combination with his other plans for the nation means that things will get worse though. But the supporting cast that would come with him, especially if Democrats were to win the Congress again, really spells “Danger Will Robinson, danger!” (Those older readers will get the reference).

But I wonder for those that don’t follow politics everyday, that aren’t up at 5am reading the latest political news, what bothers you most?

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Thursday, September 25, 2008

The bailout and mortgage crisis: Where did it start, who screwed up, who tried to fix it, and when

I just can’t step away from the most pivotal issue in the election and the lives of Americans right now. The spin in the media is that Senator McCain is avoiding Senator Obama on a debate of foreign policy – something McCain has experience at for decades and Obama has a speech in Germany. And many are calling the deep desire of McCain to serve the nation, as was called for by Harry Reid yesterday, a political stunt. Though they ignore the school boy-esque scolding that Obama received when the President called him to the White House today.

But I am tired of hearing Democrats and some media pundits running around blaming every economic woe of the nation on Republicans. There is certainly more than enough blame for all the politicians in Congress, which is why it has the lowest approval rating ever. Republicans have screwed up and spent more than they should. But Democrats have been no better, in fact those that are critical to the finance of the nation have been particularly blind. Mr. Magoo could have foreseen more with their level of information and influence over the years.

But lest my words be seen as partisan, which to an extent I am sure they are as with any pundit or blogger, I present talking heads from across the spectrum of the cable news media and pundits, as well as politicians themselves. Listen to those that we have elected, and their votes and assurances. Then tell me this is only a Republican caused problem.

And please explain to me why we should believe that those that planted the seeds for this problem, and fostered it to the debacle we are required to deal with today, should be believed when they say they have a solution

History of mortgage crisis back to 2003

Fannie Mae and Freddie Mac contributions – Sept 18 2008

Chris Dodd was watching closely but did nothing – August 2007

Treasury Secretary Paulson progress made – February 2008

Barney Frank – Improving regulation of Fannie Mae and Freddie Mac July 14 2008

Obama accuses McCain of opposing reform

Have Republicans tried to do anything?

S. 190 [109th]: Federal Housing Enterprise Regulatory Reform Act of 2005 - A bill to address the regulation of secondary mortgage market enterprises, and for other purposes.

So I also ask this, If Senator McCain did not go to Washington D.C., if the President did not call Senator Obama to the White House, are you sure there would be a resolution to the bailout crisis? Would that resolution be in the best interest of the nation?

Is a debate, that could be easily rescheduled, more important than the potential of 4 out of 5 Americans losing their homes and jobs?

And lastly, isn’t it a bit hypocritical that Democrats claim that the debate must happen because America wants this; yet they defended Senator Obama when he refused for 2 months every request that was made for Obama to join McCain in speaking directly with Americans at town hall meetings across the nation?

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Presidential candidates work on bailout and political images

It’s amazing how in the last 24 hours the Obama political machine has spun around and launched polispeak that turns almost a 180 from yesterday. All of this revolving around the bailout that is being worked on today.

Yesterday, Warren Buffett compare the current financial crisis to a Pearl Harbor event in America. He strongly felt this was a serious threat to the well-being of America. President Bush called for television time at 9pm to put pressure on Congress to get the bailout done, by speaking to the public about the status. And then come the Presidential candidates.

At 8am yesterday, Obama suggested a bi-partisan announcement to support specific controls in the bailout plan. At 10am Warren Buffett made his comments, at 11am the President made plans to speak with the public. At about 2:30pm McCain made a press statement

The Obama campaign immediately releases an email that clarifies their position at 8am. At 4:40pm Obama has a press statement that states

And since that time the polispeak wheels have been spinning. Democrats have been stating that the Senators are not needed. That the bailout will be resolved without them. That they have no need to do the jobs they were elected to office to do. Or at least they should be working on both situations.

Now maybe it’s me, but if this bailout could cause a depression equal to the Great Depression as many of the best financial minds believe don’t you want the next President and your Congressional representatives to be doing their jobs? Do you believe that this is their first priority?

President Bush believes it is. And thus he asked both candidates to come to the White House, along with both Parties Congressional leaders, to ensure a deal can be made as quickly as possible. Because as Warren Buffet said yesterday in various interviews, this is not something he would want to see take weeks to resolve. It’s too important and dangerous. So bi-partisan agreement is required.

But it seems the Obama campaign is ok with dividing its attention. And supporters are trying to make this seem like McCain is not doing his job and acting on America’s benefits first. They are questioning why Gov. Palin is not continuing the campaign in place of McCain. The answer to that seems obvious, she is not running for President. And since Senator Biden also needs to do his job, it is more bi-partisan to allow both campaign to stop while both work on this.

Yes, a President multi-tasks each day. Yes you must deal with many events at once. But priorities are important. And approving political ads or practicing for debate questions while you speak with say Chris Dodd on the phone about what compromise or terms of repayment are ok for the bailout presents itself as the wrong kind of order to me.

But I asked an average guy about this today. He is a cable repairman, doesn’t follow politics much, and I have no idea of his politics. He heard of the bailout, but had no idea how that could affect him and America. He heard about what McCain and Obama were planning to do. In his words

“They both sound like politicians to me. It’s all just political showing off.”

I asked him about the bailout, and he mentioned he wasn’t sure what it meant to him. I clarified the point, giving him the comments of Warren Buffett (who he had heard of) and detailing what a Depression would mean – 4 out of 5 people he knows would be without jobs, and possibly homes, within 2 months. That is the worst case scenario.

I asked him again, based on that severity, and the fact that all 3 Senators involved in the Presidential race still have jobs in Congress, how he felt. He still could see the political nature of both their actions. He further said

“But that [Obama] doesn’t seem right, if it’s that important.”

How important could it be? Well in a press conference on the 23rd it was stated that several Democrats would not vote on the bill if McCain did not (5:05)

If this bill must be bi-partisan, and it must be resolved as quickly as possible, and it should hold safeguards that ensure that the crisis is ended and we won’t need to spend another trillion dollars in a month, then both Presidential candidates need to work on this and not their campaigns. I think so.

And I really think that Obama should have thought so too, and not need the President to call him to bring him back to D.C. to do the job he was elected to the Senate to do.

If this is not the single most declarative statement of which candidate will act for America first, which has their political gain first then I don’t know what is. No amount of polispeak can hide bi-partisan action, and a politician doing the job they were elected to do. But if you disagree, I would love to hear that argument.

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Wednesday, September 24, 2008

More thoughts on the proposed $700 billion bailout

I just got off the phone with a friend of mine. He too was a former stockbroker, and concerned about the bailout. He believes that the $700 billion should be approved, because we cannot let this go on for a prolonged period of time.

I was informed that Jim Cramer was on cable television discussing how this bailout must be approved lest 5 million homeowners hit the market all at once. I was informed that other stockbrokers we know are looking at the potential for the market to drop up to another 1000 points if this bailout is not approved immediately. And I was reminded that this is not a situation that will resolve itself.

My friend remembered that this problem did not start last moth, or this year, or last year. He was clear in that this is far beyond politics. That we as a nation are facing the serious potential of a depression if this is handled wrong.

But as I listened, and reflected on my previous thoughts on this issue, and all the news that has been made available I was reinforced on my opinion.

The bailout as it stands is not in the best interest of the nation. Throwing money at a problem will never resolve it. Politicians and regulators have no understanding of the depth or causes of this crisis. Had they any understanding they would have seen the problem over a year ago. In January they would have reacted properly, but they all had no clue. Giving them even a Trillion dollars will not end the problem.

The bailout is meant to be an investment for the public. But this investment currently has no established value, no terms of repayment, no system of repayment, nor any assurance that future repayment will not be needed. I have a problem with that.

Honestly this is not like getting a credit card or a loan. In both of those cases you are assuming part of the cost of those that fail to make their payments in the interest rate you pay. You are provided documentation that states how you share in that coverage. It’s a system maintained by the private business that created the system.

The bailout, as proposed, is a mortgage – for some like me a 2nd mortgage – to which we receive no benefit other than the security of knowing the financial system might continue for another day. And while my friend believe that the next President will not directly raise taxes in the wake of this bailout, I believe that must. My friend believes that we will see social programs cut, and on that I agree as well.

The next President will have to raise taxes. While I doubt they will ask for the $5,000 to $10,000 that is estimated for the bailout from each American taxpayer, I do believe that taxes will increase for everyone by 5% at least. Because of the bad decisions of some people and several businesses. And that does not take into account some of the very costly programs one of the Presidential candidates wants to implement.

I also believe that no matter what the terms of the bailout ends up as, the market will lose over 1000 points from where it is now. With the eventual return of short-stock trades, a 4th quarter for retail companies that will by abysmal, and increasing costs for crude oil and heating oil, the market will have little choice but to turn down. The picture is dire. But taking blind action is no better than inaction.

We need time to figure out what to do, and how. To determine the full cost, and how the public can be repaid. To unravel the actual valuation of these properties, and to decide how many homeowners in default will be allowed to lose their homes – because the only way some will not is in a dreamworld.

I believe that some $200 billion should be used to fill the water in the tub, and then time spent to find the actual leak. Before the 4th quarter ends we should be able to answer the big questions facing us now – how much, how long, will we be paid back, and how to get the money back.

Maybe I am wrong. Maybe my friend, Cramer, and others are right. But I have to tell you that I am afraid, not of what happens if this works but what happens they are wrong.

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Mortgage crisis bailout - Buffett in, but should we join him?

Warren Buffett has made a significant symbolic action in our economy. He has invested $5 billion into Goldman Sachs, the bank. Not the investment bank but the commercial bank that it has now become. The difference may sound small but it’s huge.

In doing this he has signaled his long-term belief that the American economy will weather this storm. Which few doubted. But this one act is hardly enough to resolve all the issues between now and his normal 5 – 7 year investment window.

Now I realize confidence needed to enter the markets. And the doubt of the bailout plan did not help anything. This is a great stabilizing factor. But the bailout plan is not a smart bet, and will not benefit the nation near-term.

The reality is that the Government wants to give Ben Bernanke $700 billion dollars to accept the bad debt of the financial markets. This is the same individual that failed to identify or resolve the problems in the financial markets that I saw back in January at least. And he is planning to accept every problem every size bank can shovel into this deal.

Have no doubt that every bank is working out how they can get their debt passed onto the taxpayers. These are individuals that were smart enough to create the derivatives that regulators are not smart enough to see as a problem for over 5 years. And suddenly we think that more regulation will prevent bad decisions and prevent being unable to understand what is happening in the markets.

The Government should not be in the business of owning banks. The Government is not smart enough, efficient enough, nor reactive enough. The Government is not able to take on debt at a realistic valuation since it does not understand the value, and thus every dollar spent on the bailout will be a waste. And the Government has never been able to intervene in the financial markets to the benefit the nation or investors.

I would bet that Warren Buffett was asked by the Government to step into the market. He is too strong a figurehead to be ignored, and thus symbolically stabilizes the markets. And the fact that Goldman had to become a less powerful commercial bank, and thus seek out deposits to shore up its bad books and loan reserves, to get the investment by Buffett is telling indeed.

The fact is that nothing will prevent the markets from going lower in the short-term. They need to. And if there is to be any real confidence we need to see other investors step up and make similar styled investments. I want to see the Blackstone Group, and Apollo Investments to make similar steps. Bill Gates too. But that is not happening yet.

The Government has been given time, to sort out what it will do. My advice would be to let the markets sort out the problem created in the markets and bad decisions. Because all a bailout does is tell the markets that the Government will step in every time they make an overly greedy decision. And if you think I am wrong, go back and look at what the auto industry is asking Congress right now.

But perhaps one of the worst things a bailout will signal is opening the floodgates on mortgages. If we bailout bad bets by financials, why not bailout the home owners that made bad decisions? And if we can help those home owners, how the hell can we not say that people like myself that made a smart decision on their loans deserve help too. Why should my taxes go to help pay a mortgage that is not my own? Especially since all those home owners had to do is read their documents and do the math.

The Government is not responsible for correcting the bad decisions those it governs makes. But in making the bailout a fact that is exactly what it is doing. And that is more than a small step towards a socialist government and away from a Democracy.

In the Star Wars movies there is a scene where it is said that

“This is how Democracy dies. With thunderous applause.”

But I believe that that is not the only way we can lose it. It can die with a funnel of money draining from the people. Not as dramatic or poetic, but perhaps far more effective and deceptive.

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Wednesday, September 17, 2008

Financial stock weaken, but coal looks great

Back when I was a stockbroker (I know, it’s a bad word today) I had a buddy that love to quote this old brokerage saying.

“Bears make money, Bulls make money. But pigs just get slaughtered.”

Obviously the Board members of AIG, Lehman, Bear Sterns, Washington Mutual, and more than a few other financial companies didn’t know that saying.

But the blood is in the water and panic is in the streets. Ok, enough of the sayings. The fact is that the financial markets are screwed right now. We have hit my target of 10,800 on the Dow Jones Index – though not in my timeframe. My target of foreclosures has been exceeded, currently targeted at 9%. And my list of probable factors are being checked off 1 by 1.

So far:

Now that is only 4 out of 15 on my checklist, but they are the big ones. Gold is rising as a hedge to the dollar and to protect assets. As is crude oil. The Dow has nearly hit my December target of 10,200.

So what do we do?

I say buy. There is no greater time for profit than when everything is in a freefall down. Of course picking your time and which stock is essential. I like the financials, because the winners will rally strongly once things settle.

I would avoid Citigroup. They insure their own product and had massive exsposure to bad mortgages. I would avoid Insurance companies since I expect that regulation restricting their abilities to own other assets will be restricted shortly.

But what else is there to buy. In every down market something always goes higher. And there are always leaders on the way back up.

Coal is a great area. Energy is one of the top 5 issues on the minds of voters. Politically it’s a go to industry. Increasing coal use is positive because it means less foreign oil, increased business domestically, increased international trade, and cheaper energy prices to consumers.

Also if coal is liquified then we see the potential for a fuel that is carbon-nuetral as compared to oil. The cost of this process is about $35 per barrel equivalent to oil. That means a savings of some $55 or more dollars per barrel at current prices. Yet at this moment production is minimal.

And coal is plentiful. At current energy consumption rates there is enough coal to power the entire world for 57 years, or just the U.S. for 164 years. And did I mention that the U.S. has the largest reserves in the world. This says nothing of the coal-bed methane that is a potential energy source as well.

A couple of interesting names in the sector include:

    Arch Coal
    International Coal
    Walter Industries
    Peabody Energy
    Patriot Coal
    Massey Energy
    Alpha Natural Resources

Now if we are seriously looking for options in this difficult market, taking into consideration political advantages, energy needs, stability, domestic economic benefits, and isolation from the turmoil of the financial markets we have to look at coal. It just seems like smart money to me.

The financial industry will be merging and bouncing around. There will be regulation and political fights about who is doing the right thing. The dollar and crude oil and gold will get stronger or weaker and then back. Smart money looks at panic and sees the road to profit in the future.

Eventually, perhaps even now, financial stocks are attractive but you will get lumps in the near-term. Gold is too emotional. Crude oil is where everyone is trying to get away from. But you like to get on the internet right? Like lights at night? Want to watch TV and stay warm? Energy is the answer, and Solar, wind, biomass and other alternative energy sources don’t exist – nor will they for at least a decade.

It makes sense to me. So like I used to say as a stockbroker

I love life!

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Friday, January 18, 2008

Presidential candidates proffer economy fixes, but are they worth voting for?

What a day yesterday was. 300 off the Dow Jones Index, an attempt by a couple of unions to change the course of the Nevada Caucus and Bob Johnson apologizes to Senator Barack Obama. What could possibly happen next?

Well the financial news is something that I expect every Presidential candidate to comment on. There will be more calls for rebates from Democrats, and Republicans will try to promise to keep the tax cuts put in place by President Bush. None of this will actually have any affect on the markets, because only one of them will have any voice on the matter, but that will happen in 2009. That’s a whole year of pain and actions by the Fed and our current President to try to sway the downfall.

As I’ve stated previously, this is neither a surprise to me, nor is there a quick fix that will resolve it. All the hoopla that the various candidates are sure to spin is just an attempt to get panicky voters to choose them.

I restate what I said previously about the ‘stimulus packages’ that have been mentioned to date.

“An example is say you own a home. You are behind on the heating bill, because of the huge increase in oil prices. You spend the money on the heating bill bringing you even, until next month when you have another high bill to pay. That rebate was a waste.”

Plus several of the leading candidates of both parties have all flipped their positions. Democrats that hated the tax cuts and called them ineffective for months are now introducing their own plans to boost the economy. And Republicans that disliked the tax cuts are now in favor of them.

But I’m sure you will hear a lot more about specific plans before Monday arrives.

Just remember this, no matter what plan is announced oil is still nearly at all-time high levels, many mortgages are still failing and/or at risk of failing – and not all of them are sub-prime. Food prices are increasing as ethanol production is diverting corn and wheat to this less efficient alternative fuel source and with recent laws mandating increased usage on a national level we can expect even higher prices. The financial sector is not done writing-off their losses for making the bad loans, and more money will be coming from overseas to prop them up.

Net net, there is no quick fix and any candidate who wins will need to realize they will be walking into a mess. I would suggest you don’t look at who has the best ‘sounds great’ plan, but who can deal with multiple issues best.

Because the fact that attention is now turning to the economy, which has long been a issue of importance among citizens according to my polls, does not remove the importance of all the other issues America faces. Our next President must deal with a difficult economy, illegal aliens, a war in Iraq and Afghanistan, and keeping the nation safe against insane fanatics that want us dead because we exist.

The pundits and candidates may like to address only one popular poll issue but America is more than just one thing. We need to pick the best person for every issue in America, and those that we are not expecting.

You get one vote, make it count.

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