Updated: Friday, Nov. 19, 2004
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Web Site Construction Book Released
I've had many requests from friends for a booklet that will help you step-by-step to build a web site. Something that would let a person with no "programming" experience get a presentable site built. So, as a result, I've written a 92-page guide to walk you through the task. With an easy-to-follow "recipe" approach, this Adobe .PDF booklet starts at ground zero and presents the skills (in logical order) to build a site. Click the button on the left to order. I will be increasing the price to $35 in December - this is a special offer for regular readers of the the site and won't last forever at this special introductory price. Please visit our new bookstore page at www.urbansurvival.com/usbooks.htm for more details including the table of contents...
You may also be interested in our booklet Search Engines and Set Theory - it's all about using search engines more effectively. Second down "Buy It Now" button on the left.
Weekend Report (updated sporadically over the weekend)
Some Market Action
There are three schools of thought on the market's action on Friday. The Bull's case is that it was a normal consolidation of profits after an excellent run that stretched from well before the election. The Bear's case is that it was a critical failure to post new highs, and that in a world driven by energy news (such as China scouring the globe for oil LINK ) such a failure can only mean the end is near.
The third view, which we expound on for readers of our Inside Report series of in depth reports, is that while the future direction is not clear, we might find some guidance in our unique view of program trading statistics in the context of a large, slow-motion, economic collapse lasting twice to three times the 11-years of the 1930's.
So is the top in for now?
Possibly: I have two reader emails suggesting that the reversal in the market this last week is THE top of the first decline down from the Wave B bounce following the big A down from the March 2000 peak. For example, our contributing fractal guru G. Lammert who's a medical fellow by day and suggests that the cardiology term "twisting of the points" (torsade de pointes) is what the markets are going through now:
George, The twisting of the points appears to have occurred on last Friday with oil prices rising, equities falling, and interest rates increasing. The major devaluation of the equities is immediately ahead of us. From 1998 the first monthly equity cycle was 22 months. 2.5 times this base is 55 months, which ends in December 2004. The second equity sub cycle is 16 months in length ending in September 2001. 2.5 times 16 are 40 months. 16 plus 40 minus 1 for doubling counting the last month of the first sub cycle and the first month of the second sub cycle is 55 months with a synchronized predicted low in December 2004. On a weekly basis the first cycle is 95 weeks and the second cycle is 68-68.5 weeks. The simple math for the predicted low in terms of weeks can be determined using this data. The revised base cycle length with an extra month and extra 3-3.5 weeks over my original cycle base length figures would allow both for this recent very appropriate equity blow off of 19 trading days and a total of an additional (15-18days) x 2.5 or 37-45 trading days over the terminal point of the original estimation. This would leave about 17-25 trading days left before the bottom of the primary devaluation. As I have stated in the original synchronization paper, I expect this devaluation to be similar to the 1929 devaluation with lower lows over the subsequent months. The fractal hypothesis of investment area valuations restated is specifically that the valuations of the debt, commodity, and equity markets follow rather precise fractals and trading patterns with growth saturation points and subsequent decay to lower decay valuation saturation points governed primarily by the available credit for those markets.
The overriding factor - the overriding factor- in a contracting credit system that makes the fractals so precise is the enormous debt that burdens the US and world credit system at this point in history- debt that must be serviced or attempted to be serviced. In the US there is an estimated 37-40 trillion dollars in financial, corporate, private and governmental debt. At an average of 5 percent interest this represents an annual debt service load of 1.8 trillion dollars in yearly interest payments in an economy growing only by .35-.4 trillion dollars annually. Importantly recent growth of the US economy has occurred primarily via additional debt expansion rather than by new US product manufacture for foreign consumption. Add to the 1.8 trillion in interest payments an annual of .35 trillion in federal government debt with the surplus of the social security trust funds paying down the .55 trillion in real debt. Add to this interest and federal debt related amounts, the overhanging behemoth burden of future unfunded pay-as-you-go social security entitlements and the perhaps equivalent or greater burden of unfunded massive generous pension plans for federal, state, and local employees encompassing over 30 percent of the total US work force. Add to this, the burden of generous pension plans of the large established US industries such as GM, Ford, US Steel, the airlines, et. al. All of these pension plans are dependent on either the equities maintaining their historically extremely high valuations or on funding via newly issued corporate bonds.
Money, i.e., US dollars, although seemingly created in vast quantities in the recent years, is, in fact, in relative short supply in relation to the ongoing amount needed to service the massive debt load. This mismatch between a finite number of dollars and the ongoing debt servicing requirements, is the ultimate cause for the 'twisting of points' recently described in previous pieces. Corporate bond markets; local, state, and federal bond markets, credit card markets; et.al., are all vying for a finite number of dollars. From where will these dollars come? Ultimately the US consumer must either increase his debt load or produce something of value for foreigners to purchase. Something both interesting and seemingly paradoxical is about to happen regarding the value of the dollar in respect to other foreign currencies. Because dollars are in relative short supply; the greatest amount of world debt is denominated in dollars; and debt must be repaid, the US dollar will transiently become a valued entity and the dollar's massive fall against major currencies WILL temporarily cease and the dollar Will rise for a 9-12 month period. With a higher valued dollar and less dollars/credit available for investing, commodities including precious metals will fall during this time period. The monthly commodity fractals are consistent with this scenario. This prediction is supported by an inspection of the out months in the commodity futures which shows very little to negative growth in the oil and precious metal commodities.
Finally to my mind a retrospective review of the equity markets reveals a perfect fractal pattern. The Yin and Yang of growth and contraction at the top of the major indices valuations since January 2004 are most remarkable with a 38/95/75 of 76 day (x,2.5x,2x) cycle. As well on a weekly basis last week was week 60(2x), with a 30-week base for nearly all of the major indices including the FTSE, DAX, and CAC. In the terminal portion of a contracting credit system a 2x length of a second cycle would be very appropriate. G. Lammert
Another reader does it in a much less analytical form, but to the same conclusion:
This is the break to load the boat short -- it could be the big one.
Either way, we are still looking for the big oil shock predicted by the web bots in their final run, which was pointing to late next week for the arrival of the next big shocker. We mentioned this two weeks ago - and now we're at the inflection point. The market is either up smartly, to new highs, or we crash in early December.
Calendar Note: Be sure to call your broker the day after Thanksgiving - traditionally that's the heaviest phone call day in the industry.
The Sport of Violence
The sociologists are going to love this one: Violence at sporting events seems to be on the increase with two stories out this weekend. In one, a couple of Detroit Pistons marched into the stands for a slugfest with fans: http://apnews.myway.com/article/20041120/D86FL6H00.html and in the other, soccer fans are down to hurling racial slurs against black players: http://www.thesun.co.uk/article/0,,2-2004532921,00.html Couple this with how some sports fans are behave after major wins and you have a picture of sports turning rotten. While we expect fans will be cajoled to "engage in sportsmanlike conduct after major games" we also notice that the majority of crackheads and gangstah wannabe's we see on the streets of LA's tough neighborhoods seem to be wearing sports apparel.
In an age of latchkey kids, we wonder at the quality of souls children raised by Cyclops (TV) video games, and sports-branded clothing that signified membership in one gang or another. As we've held for a long time, crime is a business-generation system unto itself. Why crime's better than anything else as increasing demands for three flavors of lawyers (prosecution, defense, and judicial) not to mention more cops, which means more Tasers, guns, body armor, and more challenges to our cherished Constitutional rights. Oh yes, and did I mention how it justifies the every increasing tax burden on the common folk?
Plague of Locusts
Sounds almost Biblical, huh? Story
For a War that's "Over"...
We read with interest that the war in Iraq is about to increase manpower deployed in the region: http://news.bbc.co.uk/1/hi/world/middle_east/4027591.stm Now increasing commitment of forces doesn't sound to me anything like "peace" or "victory" that George Bush declared how long ago?
Speaking of the war, a little follow-up story. Seems Elaine's son who we've mentioned before was three-quarters drown in the Tigris when his squad's HumVee was shoved down a bank, and has spent the past couple of months in Germany, Walter Reed, and now back in Arkansas, had a little run-in with the local police this week. He has finally gotten better, to the point where between changing dressings on his wounds, which included lung surgery to get after a bad stain of Iraq lung infection spores, that he could at long last get his pick-up truck relicensed.
So there he is, on his way to get new tabs on it, when he is pulled over by a female cop. He got out of his truck to get his wallet out - because he can't get it out when sitting down because of the injuries and that set her off. She ordered him to get back in the vehicle.. He tried to explain: "Look, I'm on my way to get new tabs and I'm just back from Iraq.." he tried to explain. She responded with "Yeah, sure..." The officerette proceeded to run a computer check, wrote him a ticket. "After I sign this ticket, I want you to write your supervisor's name on the back of the ticket," he said. He got the name, but in a out of spite, she took his license plates.
Well, Elaine's son is not exactly shy, so he followed the officerette to the police station where he filed a complaint with the superior - and as of yesterday - had yet to hear back from anyone. The cops still have his plates and are effectively denying him the use of his pickup.
As part of his National Guard training, he trained seven members of the police department on sniper tactics and is an honorary deputy sheriff.
Is there a point to this story? You bet. If you're an injured Iraq War vet, don't expect any slack from a particular female officerette of this particular Arkansas police department. Fresh Purple Heart or not. Apparently, the training in recognizing the good guys from the bad guys (or community relations) isn't real thorough round for the police department involved.
Friday Edition
A Hurricane WHERE?
In Russia. Now maybe I am reading too much into this, but the idea of a killer hurricane along Russia's Baltic just doesn't sound like "normal" weather to me: http://www.mosnews.com/news/2004/11/19/hurricane.shtml Besides, they probably meant "tornado" but still...
Other Troubles
If weather isn't enough of a problem, the U.S. figures that al Qaida will be setting up a base in Russian Chechnya to help fighters there http://www.mosnews.com/news/2004/11/18/binladenchechnya.shtml Once again, more hardening of positions.
Greenspan Warns on Trade
Sir Alan is sounding the warning again, not that anyone will listen this time either, about the growing balance of trade deficit. Here are some highlights from his comments today:
"More generally, globalization of trade in goods, services, and assets continues to move forward at an impressive pace, despite some indications of increased resistance to that process and the evident difficulties in completing the Doha Round. The volume of trade relative to world gross domestic product has been rising for decades, largely because of decreasing transportation costs and lowered trade barriers. The increasing shift of world GDP toward items with greater conceptual content has further facilitated increased trade because ideas and services tend to move across borders with greater ease and speed than goods.
Foreign exchange trading volumes have grown rapidly, and the magnitude of cross-border claims continues to increase at an impressive rate. Although international trade in goods, services, and assets rose markedly after World War II, a persistent dispersion of current account balances across countries did not emerge until recent years. But, as the U.S. deficit crossed 4 percent of GDP in 2000, financed with the current account surpluses of other countries, the widening dispersion of current account balances became more evident. Previous postwar increases in trade relative to world GDP had represented a more balanced grossing up of exports and imports without engendering chronic large trade deficits in the United States, and surpluses among many other countries.
How far can the decline in home bias and the increase in the variance of current account balances be expected to proceed, and where will it lead?
Current account imbalances, per se, need not be a problem, but cumulative deficits, which result in a marked decline of a country's net international investment position--as is occurring in the United States--raise more complex issues. The U.S. current account deficit has risen to more than 5 percent of GDP. Because the deficit is essentially the change in net claims against U.S. residents, the U.S. net international investment position excluding valuation adjustments must also be declining in dollar terms at an annual pace equivalent to roughly 5 percent of U.S. GDP.
Net cross-border claims against U.S. residents now amount to about one-fourth of annual U.S. GDP. A continued financing even of today's current account deficits as a percentage of GDP doubtless will, at some future point, increase shares of dollar claims in investor portfolios to levels that imply an unacceptable amount of concentration risk.
This situation suggests that international investors will eventually adjust their accumulation of dollar assets or, alternatively, seek higher dollar returns to offset concentration risk, elevating the cost of financing of the U.S. current account deficit and rendering it increasingly less tenable. If a net importing country finds financing for its net deficit too expensive, that country will, of necessity, import less."
However, he's sounding hopeful when he says...
"Net cross-border claims against U.S. residents now amount to about one-fourth of annual U.S. GDP. A continued financing even of today's current account deficits as a percentage of GDP doubtless will, at some future point, increase shares of dollar claims in investor portfolios to levels that imply an unacceptable amount of concentration risk.
This situation suggests that international investors will eventually adjust their accumulation of dollar assets or, alternatively, seek higher dollar returns to offset concentration risk, elevating the cost of financing of the U.S. current account deficit and rendering it increasingly less tenable. If a net importing country finds financing for its net deficit too expensive, that country will, of necessity, import less. "
On his remarks and a resume in the decline of the dollar, the buck is worth $0.766 Euro as we go to bytes today.
Federal Raises: 3.5%
Does this sound like the cost of living to you? Federal workers may get a 3.5% wage increase thanks to congress: http://www.drudgereport.com/flash2.htm Now, don't get me wrong, we think federal workers deserve a raise, but then again, so does most of the working population in the county. The question of fairness comes up when you look at what union folks are being given as their cost of living basis and what the Congress is doing for federal workers. We note the labor department pegs the CPI at 3.2% for the rest of us - not 3.5%
Bye Bye Yukos
The Russian government has set a price and time for the break-up of Yukos: http://news.bbc.co.uk/1/hi/business/4024607.stm Not that we will be making a big on this. But the former execs are yowling about it as government organized theft: http://www.mosnews.com/news/2004/11/19/theede.shtml
Speaking of oily messes: The BBC is out today with a list of companies that may have been scammers in the Iraq Oil-for-food deal prior to the U.S. overthrown of Saddam Hussein's government: http://news.bbc.co.uk/1/hi/world/middle_east/4025057.stm
Development Costs
China's protests over the relocation of 100,000 people to make room for a dam project is having its fallout: http://english.aljazeera.net/NR/exeres/D192CA83-7248-4242-930B-4AA3CADE7982.htm Long and short of it is the dam project is on hold for a bit while the social pressures are dealt with.
Watch Item:
A report out that 60 policemen have been kidnapped in Iraq: http://news.xinhuanet.com/english/2004-11/17/content_2231001.htm
UFO's for Utah
Word circulating today that Utah may be home to a new government secret testing facility like Area 51 in Nevada: Link Location: Dugway Proving Ground.
Weekend Reading:
Matt Simmons, of Simmons & Company International, has published his latest energy overview - and if you aren't up on the global energy picture, you don't have one of the major signposts for investment decisions under control. So click over to http://www.simmonsco-intl.com/files/Deloitte%20&%20Touche.pdf and study up!
Web Book Out Monday
A while back I told you that in my spare time I would write a really simple - easy to read - book on how to build a web site. Well, the book will be released Monday. It's more than 90 pages and will be delivered as an electronic file (Adobe PDF) for just $10. It has all the information needed to build a site like this one (or even greater complexity) and I've made it a simple set of step-by-step "recipes" so you can pick up and run with it.
Inside Report: This weekend we look at how much of what's going on in the economy can be explained as Taking Back the New Deal. Subscription info.
Reader Feedback
On the Russian "hurricane" story:
"George,take a look at the US satellite map and look at the size of the storm crossing the US..You may have to go back a few days, but local( no, global warming will have no effect on OUR weather) weatherman was saying,," look at the size of this system"..I would make a concerted effort to plant trees, as a storm buffer, for the day when these things really turn nasty...Person I know, just built a house on top of a tall hill.Great big pixqure windows for da view, ya know...Am wondering when they will be blown in..Sorry for being long winded, but the Artic Tundra is giving up its CO2 and methyl hydrate,the nice politically correct view of gradual temperature rise over the long term is going to be here a lot sooner than we realize.Sit down, say what if, and get prepared for very interesting weather.."
And on Federal employee raises:
"RE: federal raises
I'm a federal employee (who enjoys your website), and I for one would rather not get a raise at all this year - or at the very least, a much smaller raise. Many, many of us feel similarly. Federal employees began working here because it's a good job, in general, but there is always a bit of "service-to-my-country" behind staying with it as well. No one will ever get "rich" here but, from what I've seen, in many locations throughout the US it can be one of the best jobs in a poor community.
My feeling about it is that a raise will be used as an excuse to outsource more federal jobs to private contractors in order to "save money" a few months down the road. Think IRS contracted out to collection agencies, for example.
More importantly, our country's debt is so breath-taking right now, a raise in pay should be as counter-intuitive for those giving it as it is for those who'd receive it.
But what I think doesn't matter - I'm a 48-percenter, and they'll be comin' for me soon."
I hope folks like this never leave federal civil service - they are the real backbone of government...
Thursday
The Sagging Buck
The US dollar hit new lows this morning against the Euro: http://biz.yahoo.com/ap/041118/euro_dollar_5.html But we don't look for this decline to be a "straight down" affair. It has to be managed to prevent the markets from entering into outright panic. Thus, we expect a drop in gold for a day or two and dollar strength, perhaps based on some interpretation that U.S. inflation returning is actually good.
One Nation, Under Debt
Already officially tapped out, the government yesterday received congressional permission to go even further in the hole financially with an increase in the national debt: http://apnews.myway.com/article/20041118/D86DVIG00.html Once again, what you and I would go to jail for is a perfectly acceptable practice. Try being a CEO of a company and borrowing from retirement funds, like the government has been doing of late, and see where it lands you.
Justice DeLayed
Republican Congressman Tom DeLay is reportedly under investigation by a Texas grand jury. So what do Republicans do? Answer: Shield him from responsibility: http://www.cnn.com/2004/ALLPOLITICS/11/17/delay.ap/index.html You talk about breaking the faith of the people (again).
Iran War Pimping
We find that there's more discussion today about how "Iran is working to build a nuclear bomb" in stories like http://www.msnbc.msn.com/id/6516658/ What's so very curious is not the reports from partisan groups that Iran is building a bomb, but that the American public and Congress so far are not asking tough questions of the neocon cabal that rules White House policy. The intellectually honest might want to ask "Why wasn't this such a big deal when India went nuclear, when Pakistan started building warheads, and for heaven's sake, what about North Korea?" The answer is in two parts: A: They didn't have oil and B: They weren't in the sights of the Israel lobby in D.C. Iran fitsthis high priority profile.
Revisionista Historia
So the Clinton Library opened this week. One way to read the press coverage is that this is an attempt to clean up the Clinton image enough so Hillary can make a run for the White House next time around. One source calls it the Whitewater Whitewashing: http://www.washtimes.com/national/20041118-120251-1146r.htm Not that Hillary would be a viable candidate: Our reading is that a good chunk of honest democrats are becoming tired of being led around by the nose - forced to heal to a party that's as much a sell out to jobjacking corporatists as the other name brand party.
Afghan Narcostate: Foreign Policy Screw-up
Don't want heroin in your city? Good luck. A UN report says that Afghanistan is about to become the world's first "narcostate" - a country where narcodollars and the crime syndicate mentality runs things: http://news.bbc.co.uk/1/hi/world/south_asia/4022197.stm Opium production is up 66% this year. Hold it! Let me go back over this for you because I don't want to be subtle about this: Afghanistan, where the U.S. has poured billions into the country, and where U.S. soldiers are serving today, is turning into a narcostate.
Not that Condi Rice will do anything about this turn of events, which has been orchestrated for a long time by the banking cabal and the narcodollar interests. However, when you hear the hype about the successes of the Bush administration, you might want to ask, "Gee, what kind of president loses 8 Cabinet members in two weeks and then has to appoint other insiders to fill key roles?" Where are the new faces, new ideas, and breath of fresh air? I feel like Diogenes when I go through the news headlines and find stuff like this.
China Dissent Simmering
Good coverage by BBC of the social/political pressures brewing in the China cauldron: http://news.bbc.co.uk/1/hi/world/asia-pacific/4021901.stm China, trying to grow the standard of living has more than a few handfuls of political dynamite to deal with. Remember when you read about China that it's not the homogenous culture - although that's the image sold in the West. There are dozens of sub-cultures within China and given an economic set-back chaos like Russia in the late 1980's is a possibility.
Iraq to get Worse?
The Arab press is reporting that the US outlook for fighting after the near leveling of Fallujah is not especially optimistic: http://english.aljazeera.net/NR/exeres/9460A4FC-FB5F-4203-8E53-FDEBE97B6014.htm The report, in a nutshell says the area and scope of insurgent fighting will increase.
SUV/SIV's Attacked
OK, we own a small ranch in Texas. If anyone was going to be in favor of SUV's it oughta be me. But it's not. SUV's while they sound neat are not really as useful around the ranch as a good solid pickup truck (and even without four-wheel drive). If you need three barrels of diesel, you just throw them in the pick up truck and off you go to the diesel dispensary. You can't do that with an SUV. And you sure as hell can't get a tractor over the cargo to lift it out. As to off-roading, it's hard to beat a CJ-5 with big winch on the front and maybe even one on the back. But urban SUV's that live inside the city limits are something I've labeled as SIV's: Socially Irresponsible Vehicles.
Today it looks like someone else has figured out the scam: A British group says "We are a grassroots campaign with the aim of uniting environment, consumer, road safety groups and CONCERNED INDIVIDUALS in an alliance against the growth of urban Four Wheel Drive vehicles on our streets." http://www.stopurban4x4s.org.uk/
Among the moronic apologies for SUV driving, I've heard: "I need the cargo room." They don't have much more (and sometimes less) than a mid-sized car. "I need the all wheel drive." Except for a few snow days, these people must not be able to drive, right? Plus a lot of SUV's don't come standard with the safety features required of regular passenger cars - they masquerade as trucks and sakte on fleet mileage rules.
Our little old Daewoo sedan picks off 30 MPG highway, and I guess if you want to get half that in mileage, that's your prerogative. But with lines forming to buy hybrids and now this British group, I would suggest that a big SUV (SIV) might not be something you'd want to guarantee the lease residual on three or four years from now. Think about $6 gas. The only one SUV/ I'm even thinking about is the RAV-4 because it gets 29 MPG under the best conditions - and that'd be a buy, not a lease.
Long Siberia Winters
...are being made warmer by the first adult channel going on the air in that part of Russia: http://www.mosnews.com/news/2004/11/18/erotictv.shtml I'll take this as a near complete Westernization of the Russian people. All they lack is Tivo for the masses, a few reality shows in Russian - and maybe more troops in the Middle East.
Another Mystery Drug
Elaine and I were watching the Cyclops last night and there was an ad on for Imitrex - at least I think it was spelled that way. I had no idea what the drug was for, and again the image was a group of women being told to "ask you doctor if Imitrex is right for you." I guess I'd start with "What is it for?"
Then there was another ad, right after it, for some other patented treatment - and it was a collection of coupons offering me lots of discounts. Being a cheapskate, I was interested. Again, no clue what the drug was - and to make it worse there weren't even references hinting whether it was for male or female users.
Are we the only people left to who aren't hooked on anything stronger than a glass of wine with dinner a couple of nights a week?
Pacific Meteor Watch
You might see a few more shooting stars than normal over the next few days: http://news.xinhuanet.com/english/2004-11/18/content_2233674.htm Better odds if you happen to be in China...
Wednesday
11:45 AM PST Update
Putin's New Nuke - No Secret to us...
Although there are lots of reports bloating the internet today about how Russia is busy developing a new kind of nuclear weapon, the reports miss a crucial and obvious point. Our analysis is that what Putin is talking about in stories like the one http://apnews.myway.com/article/20041117/D86DLRLG0.html has nothing to do with new warhead technology, but has to do with adapting Russia's substantial lead in low-apogee (flat trajectory) hypersonic missile technology.
The policy issue that will soon confront (and perhaps confound) the US weapons designers is that the ABM system is designed for defense againt the high-apogee (sub-orbital trajectories) used by earlier generations of missiles. While the US and Russia seem to be palsy-walsy at the moment, a resurgence of international testosterone over Iran's nuclear program, or perhaps an expected showdown on oil resources in the future, could quickly return us to Cold War thinking, but with reaction times cut to less than half of their current 20-minute missile flight times.
While China's missiles, such as the Long March series provide for today's strategic defense, the odds seem near certainty that a flat-trajectory system is under development in China.
Anyone want to place bets that this Russian project is an outgrowth of the P-80 Zubr (SSN-22 Sunburn) and P-100 Oniks (retracing fin Sunburn) or the P-170 hypersonic target drone?
Want to bet a second round that this Russian saber rattle is in response to the US test this week of the 7,000 mile-per-hour scramjet?
7.4% Annual Inflation Rate in CPI Figures
Before we pass along the latest on the CPI this morning, you need to know that the Bureau of Labor Fantasies keeps two sets of books. One is something called the CPI-W (which reflects what goes on for workers and clerical workers that make up 32% of the US population) while the other number is the CPI-U which supposedly represents all "urban" consumers. Here's the "official" deal - if you work, prices are going up at a 7.44% annual rate, but if you aren't part of the workers and clerical pool, your rate annualized is 6.2%. The rich get richer, right?:
---
The
Consumer Price Index for All Urban Consumers (CPI-U) increased
0.5 percent in October, before seasonal adjustment, the Bureau of Labor
Statistics of the U.S. Department of Labor reported today. The
October
level of 190.9 (1982-84=100) was 3.2 percent higher than in October 2003.
The Consumer Price Index for Urban Wage Earners
and Clerical Workers
(CPI-W) increased 0.6 percent in October, prior to seasonal adjustment.
(G Note: that's over 7.4% annualized before the fudge factors are pumped in)
The October level of 186.5 was 3.2 percent higher than in October 2003. (!!??)
(G: This is a wet dream of someone who doesn't pay the bills at home!)
The Chained Consumer Price Index for All Urban Consumers (C-CPI-U)
increased 0.5 percent in October on a not seasonally adjusted basis. The
October level of 111.1 (December 1999=100) was 2.7 percent higher than in
October 2003. Please note that the indexes for the post-2002 period are
subject to revision.
CPI for All Urban Consumers (CPI-U)
On a seasonally adjusted basis, the CPI-U increased 0.6 percent in
October, following a 0.2 percent rise in September. Energy costs, which
had declined in each of the preceding three months after advancing sharply
in the first half of the year, increased 4.2 percent in October,
accounting for over half of the advance in the overall CPI-U. Within
energy, the index for petroleum-based energy increased 8.5 percent, while
the index for energy services declined 0.9 percent. The index for food,
which was unchanged in September, rose 0.6 percent in October. The index
for food at home rose 0.8 percent, reflecting a 6.0 percent increase in
the index for fruits and vegetables. The index for all items less food
and energy advanced 0.2 percent in October, following a 0.3 percent rise
in September. The indexes for lodging away from home and for used cars,
which accounted for more than half of the September increase in the index
for all items excluding food and energy, registered small increases in
October. This moderation was largely offset by upturns in the indexes for
household furnishings and operations, for new vehicles, and for apparel.
Table A. Percent changes in CPI for All Urban Consumers (CPI-U)
Seasonally adjusted Un-
Compound adjusted
Expenditure Changes from preceding month annual rate 12-mos.
Category 2004 3-mos. ended ended
Apr. May June July Aug. Sep. Oct. Oct. '04 Oct. '04
All Items .2 .6 .3 -.1 .1 .2 .6 3.4 3.2
Food and beverages .2 .9 .2 .2 .1 .0 .5 2.6 3.4
Housing .4 .4 .3 .2 .2 .2 .2 2.3 2.9
Apparel .0 .3 .2 -.8 -.2 .0 .2 -.3 -.6
Transportation .1 1.7 .8 -.8 -.3 .2 2.3 8.8 5.9
Medical care .4 .3 .3 .3 .2 .3 .4 3.9 4.5
Recreation .2 -.2 .3 -.2 -.2 .2 .1 .4 1.0
Education and
communication .3 .0 .2 -.1 .1 .4 -.3 1.1 1.4
Other goods and
services .1 .1 .1 .3 .2 .3 .2 2.7 2.2
Special Indexes
Energy .1 4.6 2.6 -1.9 -.3 -.4 4.2 14.8 15.2
Food .2 .9 .2 .3 .1 .0 .6 2.6 3.4
All Items less
food and energy .3 .2 .1 .1 .1 .3 .2 2.3 2.0
During the first ten months of 2004, the CPI-U rose at a 3.9 percent
seasonally adjusted annual rate (SAAR). This compares with an increase of
1.9 percent for all of 2003. The index for energy, which increased 6.9
percent in 2003, advanced at a 22.5 percent SAAR in the first ten months
of 2004. Petroleum-based energy costs increased at a 41.4 percent annual
rate and charges for energy services rose at a 4.5 percent annual rate.
The food index has increased at a 3.0 percent rate thus far in 2004,
following a 3.6 percent rise for all of 2003. Excluding food and energy,
the CPI-U advanced at a 2.4 percent SAAR in the first ten months of 2004
after increasing 1.1 percent in 2003.
The food and beverages index increased 0.5 percent in October. The
index for food at home advanced 0.8 percent, reflecting a 6.0 percent
increase in the index for fruits and vegetables. The indexes for fresh
fruits and for fresh vegetables rose 6.3 and 8.8 percent, respectively.
The index for processed fruits and vegetables rose 0.4 percent. Increases
in the indexes for cereal and bakery products and for other food at home--
up 0.4 and 0.3 percent, respectively--also contributed to the October
advance. Partially offsetting these increases were declines in the other
three major grocery store food groups--for meats, poultry, fish, and eggs,
for nonalcoholic beverages, and for dairy products. The indexes for
meats, poultry, fish, and eggs and for nonalcoholic beverages each
declined 0.3 percent. Within the former category, the indexes for beef,
for pork, and for poultry all declined in October. During the last 12
months, however, poultry prices have increased 8.3 percent, beef prices,
7.4 percent and pork prices, 5.3 percent. In October, the index for dairy
products declined 0.2 percent. Fresh whole milk prices, which registered
sharp increases earlier this year, declined for the fourth consecutive
month--down 2.2 percent in October. The other two components of the food
and beverage index--food away from home and alcoholic beverages--increased
0.3 and 0.1 percent, respectively.
The index for housing rose 0.2 percent in October, the same as in
each of the preceding three months. A sharp upturn in the index for
household furnishings and operations, coupled with a smaller decline in
the index for fuels and utilities, was offset by a smaller increase in
shelter costs. Shelter costs, which advanced 0.4 percent in September,
rose 0.1 percent in October. The index for lodging away from home
increased 0.2 percent in October after advancing 2.9 percent in September.
The indexes for rent and owners' equivalent rent each increased 0.2
percent after advancing 0.1 percent in September. The index for fuels and
utilities fell 0.2 percent in October. Increases in the indexes for fuel
oil and for natural gas--up 9.4 and 0.6 percent, respectively--were more
than offset by a 1.6 percent decline in the index for electricity. (Prior
to seasonal adjustment, charges for electricity fell 6.0 percent,
reflecting the shift to off-season rates in some areas.) During the last
12 months, the indexes for fuel oil, for natural gas and for electricity
have advanced 42.6, 8.0, and 0.9 percent, respectively. The index for
household furnishings and operations, which was unchanged in September,
increased 1.0 percent in October.
The transportation index, which rose 0.2 percent in September,
advanced 2.3 percent in October. An 8.6 percent rise in the index for
gasoline accounted for about 85 percent of the October advance. As of
October, the price of gasoline was 0.3 percent lower than its peak level
registered in June. The index for new vehicles turned up in October,
increasing 0.4 percent. (About 30 percent of the new car sample in
October was represented by 2005 models.) New vehicle prices are 0.4
percent lower than in October 2003. The index for used cars and trucks
advanced for the fourth consecutive month--up 0.2 percent in October--and
is 1.3 percent higher than a year ago. The index for public
transportation turned up in October, reflecting a 1.4 percent increase in
airline fares. Despite the October advance, airline fares are 4.1 percent
lower than a year ago and 8.3 percent lower than in the month prior to the
terrorist attacks in 2001.
The index for apparel, which was unchanged in September, rose 0.2
percent in October. (Prior to seasonal adjustment, apparel prices rose
2.4 percent, reflecting the continued introduction of fall-winter wear.)
During the last 12 months, the index for apparel has decreased 0.6
percent, with declines in prices for men's and boys' and for infants' and
toddlers' apparel more than offsetting a small increase in prices for
women's and girls' clothing.
Medical care costs rose 0.4 percent in October to a level 4.5 percent
higher than a year ago. The index for medical care commodities--
prescription drugs, nonprescription drugs, and medical supplies--increased
0.4 percent. The index for medical care services also rose 0.4 percent in
October. Charges for professional services and for hospital and related
services increased 0.1 and 0.4 percent, respectively.
The index for recreation increased 0.1 percent in October. Increases
in the indexes for admissions to sporting events and for newspapers and
magazines--up 0.9 and 1.5 percent, respectively--were largely responsible
for the October increase.
The index for education and communication decreased 0.3 percent in
October. A 0.4 percent increase in educational costs was more than offset
by a 0.9 percent decline in the index for communication. Within the
latter category, the index for telephone services fell 0.7 percent,
reflecting a 2.0 percent decrease in long distance charges. The index for
personal computers and peripheral equipment declined 2.7 percent.
The index for other goods and services rose 0.2 percent in October.
The index for personal care increased 0.3 percent, more than offsetting a
0.1 percent decrease in the index for tobacco and smoking products.
Within personal care, the index for miscellaneous personal goods--
stationery, stationery supplies, and gift wrappings--rose 1.0 percent in
October.
CPI for Urban Wage Earners and Clerical Workers (CPI-W)
On a seasonally adjusted basis, the CPI for Urban Wage Earners and
Clerical Workers increased 0.6 percent in October.
Table B. Percent changes in CPI for Urban Wage Earners and Clerical
Workers (CPI-W)
Seasonally adjusted Un-
Compound adjusted
Expenditure Changes from preceding month annual rate 12-mos.
Category 2004 3-mos. ended ended
Apr. May June July Aug. Sep. Oct. Oct. '04 Oct. '04
All Items .2 .7 .3 -.1 .1 .2 .6 3.5 3.2
Food and beverages .2 .9 .2 .3 .1 .0 .5 2.4 3.4
Housing .3 .3 .4 .3 .2 .1 .2 2.0 2.7
Apparel -.1 .2 .0 -.7 -.4 .3 .3 .3 -.3
Transportation -.1 2.1 .7 -.9 -.2 .4 2.3 10.3 6.4
Medical care .4 .3 .3 .3 .2 .4 .3 3.7 4.5
Recreation .0 .0 .2 -.3 -.2 .2 .1 .4 .8
Education and
communication .2 -.2 .2 -.1 .0 .4 -.3 .4 .7
Other goods and
services .2 .1 .1 .4 .2 .3 .1 2.3 2.1
Special Indexes
Energy -.1 5.0 2.7 -2.0 -.5 -.3 4.3 15.1 15.8
Food .1 1.0 .1 .3 .1 -.1 .5 2.4 3.4
All Items less
food and energy .2 .1 .2 .1 .1 .3 .2 2.3 1.9
Consumer Price Index data for November are scheduled for release on
Friday, December 17, 2004, at 8:30 A.M. (EST).
How California is Hooked on SUV's
There is a really telling story about how government gets "hooked" on revenue and then changes rules in mid-stream developing here in California. As you may know, the Golden State is suffering more than its share of economic woes and the roads here just plain suck - the effects of many earthquakes, a wide range of temperatures and just plain heavy use. In the past, California had been paying for roads with a fixed rate gas tax - taxes here total about 50-cents a gallon, much higher than elsewhere in the country. Now that people are actually starting to conserve a bit with hybrids becoming sales sensations and the like, the new director of the state's department of motor vehicles is talking about a mileage-based tax. http://abclocal.go.com/kfsn/news/111604_nw_gas_tax.html Put another way, the state is hooked on getting so much revenue to the point where if they don't get it, they will take away the fair apportionment implied through the flat rate tax and just tax drivers based on mileage driven each year. While the environmentally aware residents of the state are looking for leadership, they are not likely to get any from Governator Arnold: He drives a Hummer and would be among the elites who drive 8-MPG SIV's (socially irresponsible vehicles) that would benefit from the switch in tax regimens.
India, Pakistan Stand Down
It looks like the hair-trigger nuclear standoff between Pakistan and India may be chilling out a bit as reports are circulating this morning that both sides have about had it with the border skirmishes around Kashmir: http://news.bbc.co.uk/1/hi/world/south_asia/4018313.stm
March to $450 Gold
The march might be over this week - we noticed that gold has traded over $445 this morning. All of the inflation seems to be coming in things people really need (or desire as an inflation hedge) but while that goes on, we hear stories about bargains in things people don't need. Of course the return of inflation was blamed for most of yesterday's action: http://www.nypost.com/business/20638.htm although an uncomfortable number of alleged journalists still make stupid statements like "the move was caused by profit taking" - not realizing that for the truly wise operator, a down day is just as profitable (even more so many times) than an up day. If you read a report that says "profit taking" toss the media and find some other source that knows that they're talking about.
I have to mention a conversation I had last night with bond/mortgage whiz Howard Hill. He offers the unusual insight that although the main premise of this site (that we're in a Second economic Depression of similar scale to the 1930's) is correct, it will take a lot longer than the relatively short 8-years from the top in 1929 to the bottom of the secondary Depression in 1937. "Look for it to go a dozen years or more.." he observed of the long slippery slope down. He also sees less risk in mortgages as he thinks people will fight to keep the family home this time just like in the last Depression. But that's middle class housing - the same will not likely hold for the million dollar plus category.
Howard also suggested a topic for this weekend's Inside Report that I have started to research. The premise: Almost all economic decisions and trends today seem to make sense if you take the whole Roosevelt-era New Deal and try to take them back. So far, it seems to pencil out - and it's a useful perspective we'll explore in depth over on the more research oriented subscriber side this weekend. Subscription Info.
Ohio Recounting
Looks like Ohio's recount will happen after all: http://www.wcpo.com/news/2004/local/11/16/recount.html Meantime, there are reports that the Green Party and others will keep pressing for more full disclosure of voting irregularities and be seeking additional recounts.
K-Merge Sears-Mart
It was only a short while back that K-Mart was in trouble - but now it looks like the folks who did the deal so well have their eyes on a bigger prize - a merger with Sears to the tune of $11 billion: http://abcnews.go.com/Business/wireStory?id=259240
Mountain of Evidence
If you didn't believe that big chunks of the Matterhorn were being destroyed by global warming, here's another mountain to add to your "endangered mountains" list: Everest. Seems as things heat up, the mountains crumble: http://news.bbc.co.uk/1/hi/world/south_asia/4018261.stm
Report: Russian Troops to Iraq
Ask yourself why would Russia send troops to Iraq - even a few - and only if just to protect oil infrastructure? http://www.mosnews.com/news/2004/11/17/iraq.shtml We have a simple theory that explains it. By having troops on the American side of the border, the chance of US forces getting a nod to head into neighboring Iran without prior notice drops. Strategically, we have to call the Russian move a brilliant play on the world's corporatist structure - which is sweetening the deal with talking of WTO membership for Russia in 2005: http://www.mosnews.com/news/2004/11/17/ruswtodeal1.shtml
Corporate Takeover of Iraq Continuing
Sure, you know that at least some portion of the Iraq war was about gathering control of oil supplies in the region. And, yes, you know that another portion of the war decision was based on Saddam Hussein's stated intent to sell his oil for Euros. But now that we've pretty well leveled Fallujah and are setting up to do the same in Mosul, ( story ) here is one hell of a story about how the "government" of Iraq is now forcing farmer to suck up to the corporatist ways.
Specifically, the report says, farmers will have to get licenses in order to save their own heritage seeds that they have harvested for generations. And you know who sells seeds to those who can't afford the licenses, right? Big corporations in the business of patenting the very food you eat: http://www.rense.com/general59/newiraqlawoutlaws.htm What a fine scam it is all around- and don't bother trying to find the tie-in between corporate contributions to politicos from the purveyors of patented seeds - that's old news.
That Darn Iran Excuse
The idea that the right-wing radio blathers and the neocon prompters have been pushing - that Iran has a secret nuclear program that could threaten Israel and other U.S. interests, is being slowly deflated by the International Atomic Energy Agency. Of course this won't make headline in the U.S. but it is making headlines in China: http://news.xinhuanet.com/english/2004-11/16/content_2223889.htm which recently signed a $70-billion oil deal with Iran. Oh, no, we don't expect the "all talk, no hat" crowd to change their rap - they have demonstrated, as in the case of Iraq WMD's and the non-existent link between Saddam and al Qaida that a lie repeated often enough becomes a fact. A lesson from early Nazi Germany, I might add.
Word for the day: FLOSS
What it means, in IT & programming circles is the free/libre open source software movement. There's a whole litany of papers over in the current issue of First Monday - one of the best sources of trend information we've found on the net for the net's future. In particular, this paper sounded like it might be worth reading:
The controversy surrounding the "off–shoring" of IT jobs from the United States to other countries, in particular to India, has become a focal point in American political discourse and has been widely represented in the media. Disturbingly, little attention has been paid to this occurrence beyond its implications for American employment opportunities. Representing Indian and American IT workers as unified groups whose interests are mutually exclusive and opposed to one another is problematic given the material realities that propel "outsourcing." Among the potential benefits of growing demand for, and supply of, skilled IT workers is increased participation in the Open Source Software (OSS) movement. Expanding global involvement offers a significant opportunity for developing countries to influence the direction, importance, and future of OSS. http://www.firstmonday.org/issues/issue9_11/odonnell/index.html
This raises an interesting point. Yes, it is possible that increasing the universe of programmers will mean more people will have time (while unemployed) to pursue file-swapping (which is what open source is at its core) but the notion that open source initiatives will reduce costs anywhere near enough to make up for the decline in standards of living that accompany over-supply seems ill-founded at best. Nevertheless, with millions of IT people out of jobs, open source is growing a bit. But whether the best ideas in programming, let alone best practices in enterprise software or IT projects, can be realistically expected to arise from developing countries seems a stretch.
What we see from the standpoint of the people's economist is that from an economic standpoint, is that a world awash in IT and programmers would break the back of the corporatist lock on software, not that it matters though when corporations are busily patenting food, water supplies, and damn near everything else, in order to foist off artificially created shortages on sheeple unable to think for themselves.
From our perspective, we've had a computer revolution and now we're seeing corporate hijacking of what could have been a generalized improved standard of living. Outsourcing continues in our mind to be a way to exploit workers who don't yet fully appreciate their worth.
Tuesday
21% Wholesale Inflation Annual Rate!
The government released its wholesale prices report today and it showed prices at the wholesale level were up 1.7% in the month of October alone. You can thank soaring energy prices for more than 1% of that. http://apnews.myway.com/article/20041116/D86D07700.html The Producer Price Index was up 0.6% for the month, or an annual rate approaching 7.5. But that's nothing compared to the 21% annual rate revealed in the wholesale price numbers. Who told you this? Last year, in my December annual forecast, I said inflation (real inflation) would come in at 13% - and here we are with two more reporting months to run and the annualized rates are just about exactly where I thought they would be, or a tad lower, given the number diddling that came prior to a re-election.
By the way, all the jobjacking of U.S. jobs to India has resulted in a wild west sort of economy - with banks in India pegging their main rates near 10.5%. http://www.bloomberg.com/apps/news?pid=10000080&sid=aa5YHWRziS5I&refer=asia
The Next Oil Shock
The price of oil won't be declining much before we get to our next oil shock toward the end of the month, if one of the last bits from the web bot project turns out right. As you may recall, our colleague in the project was forced to scrap the future reading technology for economic reasons, but not before we scored a number of amazingly accurate forecasts. One unfulfilled expectation is for a major shock around Nov. 23-25. We mention this because despite a small decline, the oil situation has remained fairly tight: http://biz.yahoo.com/ap/041116/oil_prices_4.html The threat of terrorist attacks seems to be holding further price declines in check: http://www.turkishpress.com/news.asp?ID=33844
We don't know if the next oil shock will involve a political angle, but we can see by watching the investigation into how Saddam Hussein made $21-billion in illegal oil trade, how some big names might be dragged into the mud: http://news.bbc.co.uk/1/hi/business/4015907.stm
Fannie May...
...loss $9 billion: http://news.yahoo.com/news?tmpl=story&u=/ap/20041116/ap_on_bi_ge/fannie_mae
Prechter's Answer
You may recall that on Saturday I sent a note to Bob Prechter, the man behind www.elliottwave.com - the leading technical analyst group using the ideas of R.N. Elliott. Here's what I asked:
I hope you don't mind that I am posting a copy of this email on my web site, but here’s an incredibly interesting problem from the Elliott perspective. Forgive me for being a bit long-winded here, but I want to do that so my readers - and perhaps yours - can appreciate the problem I'm about to outline.
The next couple of weeks should prove exceptionally interesting in the markets for any number of reasons related to wave counts. Let me give you some of the highlights to be watching for:
· The Dow Jones Industrials, while seeming to display amazing resilience are not as strong as one might otherwise thing. The reason? The effects of the falling dollar. From the perspective of an international investor, consider what happens to the U.S. dollar denominated Dow when the value of the dollar falls - and let's say it falls 10% just to illustrate the point. If the Dow was at 9,500 and the current alone falls 10%, the internal (domestic US price) of the Dow would go up 10%. In other words, because of the currency swing, the Dow could rise 950 points without changing its external valuation.
· This brings me to the second point - about the price of gold. Suppose that we have a price of gold (PG) at $425 an ounce as purchased with U.S. dollars. With our hypothetical currency devaluation, the price of gold should go up $42.50 - to the $467.50 zone in little time at all.
As we can see in the data, the Dow had a weekly close of just over 10,595 the week ending March 4th of this year. At that time, the dollar conversion to Euros was 0.8199. The dollar is now 0.775 Euro.
All of this sets up the interesting question: If we look at the Dow from the Euro perspective, the B high 10,595 would be 8,686 if Euro. Today's currency rates would imply 11,208 for the equivalent of B.
Have you divined any rule that would apply here, because 11,208 would be higher in dollar terms (suggesting a continued rally) but at the same time, it would not be higher from the perspective of Europeans, who could judge the U.S. to be ready for an imminent resumption of C down.
On behalf of my readers I'd like to thank you in advance for any thoughts you might have on this...
George Ure
Bob was kind enough to take time out from his other duties to reply:
"Of course, this is true all the time. Every market graph is simply a RATIO of one thing to another. The DJIA is a stocks/dollars ratio. If you make a Dowstocks/Euro ratio, you have a different graph. What Americans follow is the Dow/dollar ratio.
Sometimes we show a “constant-dollar” Dow, in which the denominator is adjusted by the PPI. I have also shown the Dow/gold ratio, which shows another different picture. But each is what it is, and there is nothing nefarious about their differences.
I think that the fact that the dollar’s fall explains all of the gains in the Dow and gold is bearish because it reveals that these indexes are not in fundamental bull markets; it’s really just a bear market in the dollar. For now.
RP
Fighting Crime Pays Big
There's a typically thoughtful piece from John Crudele in today's NY Post worth reading - it goes into how prosecutors can land high dollar jobs if they're involved in a "big game hunt" kind of case - Martha Stewart, for example would be the kind of "big game" case implied. http://www.nypost.com/business/34207.htm Several examples given.
Better Late than Never?
U.S. Immigration officials are tracking down nearly a half million illegals to make sure they exit the country as ordered: Story
Earth Moving
Every time we read about a major train accident, we're reminded that the earth is on the move, as shown in the recent surge in 7.0 earthquakes. In Australia: http://news.bbc.co.uk/1/hi/world/asia-pacific/4015453.stm Last Thursday in western Colbert County, Alabama: http://www.waff.com/Global/story.asp?S=2571302 In India, the day before: http://sify.com/news/fullstory.php?id=13610678 And the Philippines the day after: http://www.abs-cbnnews.com/NewsStory.aspx?section=METRO&oid=63445 Then there's the high profile cleanup of the bullet train in Japan following their last big shaker: http://mdn.mainichi.co.jp/news/20041110p2a00m0dm009000c.html So the ground upon which we stand is not as "solid" as you might sometimes think.
RFID Follow-up
A reader wrote in, in response to our RFID story yesterday:
Hope that this note finds all well. I was in LA last week and met a highly entertaining character. He told me that the optimists are the ones who expect a global economic collapse. He labeled himself a pessimist and said that he expected the top half of the food chain to die off.
I had been more clever and had more time, I would ave let you know that was in the area. I stayed at friend's place in Pasadena, but he was out of town.
Main point of this note is to comment on the RFID story. I could be wrong, but my guess is that putting a bottle of pills (or any other consumer item) in a microwave oven for a few seconds on high would be enough to take the bark out of the RFID tags.
Not so quick there. Over at www.spychips.com/faqs.html we read that:
Q: Can I microwave products to kill any hidden RFID tags they might contain?
A: While microwaving an RFID tag will destroy it (a microwave emits high frequency electromagnetic energy that overloads the antenna, eventually blowing out the chip), there is a good chance the the tag will burst into flames first. The difficulty of destroying a hidden RFID chip is one reason we need legislation making it illegal to hide a chip in an item in the first place.
Best answer: Remove the RFID tag physically. A little time under the idea tree and you can hatch all sorts of ways to have fun with RFID spy systems.
Monday
Powell's Towel
It comes as no surprise to our long-time readers that SecState Powell is out. We first mentioned this as a result of a GQ piece we cited back in May http://www.urbansurvival.com/nl05072004.htm So, if you've been paying attention, this is one of the biggest non-events of the day. Social Question: will he attend the inauguration this year? That would be telling as to the state of the relationship with the Bush clan..
Show Down Week?
As our charts below depict, there's a chance that both the Dow and our Aggregate Index could really break out to new highs this week (charts). But there are some serious headwinds, to be sure. One of these is the recently returned weakness of the U.S. dollar. While the administration continues to say "strong dollar" publicly, the fact is that a weaker dollar will do two things. First, it will drive up the cost of imported goods, which means those Toyota Prius Hybrids with long waits will become long waits and higher prices, depending on how far the dollar's purchasing power falls. It will also make U.S. goods much cheaper abroad, so it may improve the balance of trade slightly.
I hate to admit, as the people's economist that there is not particularly good way to play this bout of inflation to come because some of the traditional hedges, such as buying a house with minimum down payment, are already fully priced because of the housing bubble. However, we still think there is a 3 to 4 times multiple to be had in the price of gold. Current Gold Story Our own meager holdings consist of a couple of Krugerands, but the rest is in North American gold (U.S. Eagles and Canadian Maples) because of our belief that "foreign money" (outside of NAFTA) will at some point be labeled verboten by the monetary powers that be.
A few readers have asked that the weakness of the dollar will mean for most of us common folks. Besides the price of foreign-made cars going up, just about everything else will move up a bit, too. Remember that last year in my December annual forecast, I predicted that we would see 13% inflation in 2004 - admittedly a wild claim at the time. But with regard to many consumer items, such as gasoline, we're already seeing 25% increases and more. That's not to say that the numbers will be reported that way, mind you. The hedonics spin is that if gasoline is up 30% over year-ago levels, you will simply drive less, and therefore the price won't fully impact. You know it's a load of crap to think that way, but that's Government crap, not to be questioned.
The one thing to keep watch on closely is any talk of the Chinese to decouple their currency from a strict peg to the U.S. dollar. That could raise prices of companies that rely heavily on Chinese-made goods, such as Wal-Mart, where we might see fewer of those roll-back smiley faces. That's not to single out Wal-Mart, though. There are so few consumer goods made in the U.S. that it's a near certainty that a 10% devaluation of the currency will result in a generalized10% domestic inflation - or more - given that interest rates will be forced up in tandem.
We look for the Treasury and the Knights of the Fed Table to continue trying to keep the economic tide from turning too quickly, on the idea that the consuming public will behave much like a frog being heated up slowly in water until cooked. A gradual enough change and the thought of jumping out of the pot just won't occur to the frog. Or consumers.
Iran Enrichment on Hold
Iran, we think correctly reading the intent of the Bush Administration to give Israel the "green light" to flatten Iranian enrichment facilities, has announced to the world today that they will be putting their enrichment program on hold starting next week: http://news.xinhuanet.com/english/2004-11/15/content_2221962.htm Of course, this will not set well with those who are spoiling for a war with Iran now, rather than wait until the country achieves even a handful of weapons which could be used against already armed to its teeth Israel.
Slate's take on this is similar to ours: Link
Osama's Nukes: Leaky Borders and Religious Sanction
This is not a good thing to report. Over the weekend, one of the CIA's top Osama hunters revealed that bin Laden has attained religious sanction for the use of nuclear weapons from leading Islamic clerics: http://www.broadcastingcable.com/article/CA480149.html?display=Breaking+News
Meantime, there's a report in Time Magazine about how al Qaida had plans to smuggle nuclear devices into the U.S. through our mighty porous border with Mexico: http://www.time.com/time/magazine/article/0,9171,1101041122-782068,00.html
Zionists Threaten Presbyterians
Just when we thought it was safe to brand the militant Islamists are the world's leading perpetrators of violence, along comes a Zionist threat of attacks on Presbyterians who are in the midst of divesting themselves of investments in companies that exploit the West bank situation: http://www.14wfie.com/Global/story.asp?S=2564412&nav=3w6oT7tv All part of the growing polarization between the Dominionist Christian West versus the extreme wings of Islam - something we covered a few weeks ago in our Inside Report series.
No Fallujah Aid
The Arab press is reporting that the U.S. is truning away aid destined for Fallujah: http://english.aljazeera.net/NR/exeres/A800AA57-C2A4-47FB-9BB5-6D6E1B9C3C22.htm This, no doubt, will lead to even more Iraqi's joining in the jihad. We're also watching reports that as fighters escape, they're heading to places like Mosul where another showdown with U.S. forces seems likely in a month of two.
Russia, meantime, says it is cooperating in the probe of the UN - Iraq oil-for-food program: http://www.mosnews.com/news/2004/11/15/iraqoil.shtml
RFID's Pills
Under the guise of helping to attack fraud, the government is approving the use of the controversial devices on pill bottles: Story The problem, of course, is that if you brought such a pill bottle to work, it's theoretically possible for an employer to learn - without your knowledge - of the type of pills you are taking - clearly none of their business.
Hypersonic Race
The U.S. will be testing a hypersonic pilotless plane later today near Edwards Air Force Base here in California, weather permitting. Story What makes this interesting is not whether we can get a 12 foot long plane to fly at more than 7-times the speed of sound, but whether we can quickly re-establish parity with the Russians who seem to have jumped out in the lead with hypersonic weapons. The idea of such machines is that they can attack (like the Sunburn missile) so quickly that no Patriot battery in the world has a chance of defending against them. The era of 5,000 mile per hour weapons is here. http://www.guardian.co.uk/usa/story/0,12271,1350964,00.html
Atkins - Best for Men
Research out today says the Atkins Diet is more effective on men than women: http://news.bbc.co.uk/1/hi/health/4012659.stm We note in passing that this is just one more delightful difference between the sexes...
Tasered 6-YO
How about this: a 6-year old being stunned with a Taser: http://www.theledger.com/apps/pbcs.dll/article?AID=/20041112/NEWS/411120404/1004 Who said common sense was common?
Acrobat 7.0 Out
Adobe Systems has released it's Version 7.0 of the popular Adobe Acrobat program. http://www.ebcvg.com/articles.php?id=350 We put Acrobat in the pile of "must-have" killer aps (along with the Reax version of the Vortex Reader) as things that get us through the business day more quickly than most. Latest from the Vortex Reax discussion group is at http://urbansurvival.com/discus/messages/357/375.html?1098662618
GATA Conference
The Gold Anti-Trust Action Committee has just wrapped up it's conference in New Orleans. Look to the www.gata.org site today or tomorrow to read the always worthwhile comments of Bill Murphy. We note with a certain pleasure that Gold touched $440 this morning. We doubt it would have happened this quickly without GATA gnawing at the heels of the gold-control forces of the central banking cabal. Well done...
Thanks..
To several readers who thought this weekend's report on Social Security titled "Social Security and the Art of Dying" was one of the best ever. Well, it certainly does make the inflationary solution case well, I'll say that... subscription info.
Reading List
If you get some time this week, read the piece at http://www.skreed.com/media/scream.html about how big media killed Howard Dean's shot at the White House. Once again, the wrongly used power of big media in action - which is why the reality-based community here on the 'net is such a breath of fresh air for those who believe in Freedom.
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News from Elliott Wave International
Write when you get rich,
George Ure, People's Economist
Bulldog Editions when noted are the "early editions". Check back later for a more complete update. Bulletins as warranted. Normal byte times are 8:30 AM (or earlier) CDT Monday-Friday. Weekends as the spirit moves us.