NASDAQ to Eat London?

Not yet, because an initial move on the past of NASDAQ to acquire the London Stock Exchange has been turned down.  NASDAQ reportedly put a $4.2 billion dollar offer on the table and the Brits said "No..."  Still, as these things usually go on for a while, we might see the London Stock Exchange become an object of competitive bidding..

Iraq Parliament Plans

It now looks like parliament will be getting underway in Iraq on the 19th of this month, at least that's the latest plan.  This as the factions in the country need to meet and chill out a bit according to the US envoy.

Meantime, Islamic web sites are carrying what they say is "al Qaeda's last warning before "2 operations that will bring America to its knees."  Considering what the future predictive software has been saying about March 21-29 (with a week either way) , this is indeed a worrisome development.

About Time

Homeland Security seems to have done something right: Using deportation as a weapon against spreading gang violence in the US.  Of course, the flip side is that the hard working Border Patrol Agents still need heavy weapons and more manpower to effectively close the porous southern border, but deporting gang members makes a lot of sense. It's a good start.

Port Fallout

With the collapse (for now) of the Ports deal, George Bush says this could send an unfavorable message to our trading partners.  Here in Texas, our neighbor across the road has been sending letters to the editor again:

"Now that the Dubai port firestorm is dying down and everyone in Washingtin is acting like they won the gold medal, I have a question:  Where was the firestorm when president Clinton gave away former naval bases on the West Coast to China?  Keep in mind that all business in China is run by the Chinese Army.  having been in both China and Dubai, I fear China a lot more than Dubai..."

Good point!

White House HR Issues

Not only has the White House HR office tripped up by appointing a 28-year old to a key national security post (with little other than White House experience under his belt), but now comes a report that George Bush's top domestic policy advisor (who just resigned last month) is facing theft charges.  So what would drive a guy making $161,000 a year to do such things, if proven true in court, we wonder?

The HR office might want to get back to basics: read resumes, ask questions, that sort of thing...

Peoplenomics

This week our premium service, Peoplenomics.com, serves up a who article around the idea of basic electronics/communications competence.  It's almost enough to get a ham radio license with.  What's even more amazing is that I wrote the whole thing without slipping into electronic jargon (resistors, capacitors, dual-gated MOSFET's [which I know you already knew were metal oxide silicon field-effect transistors, not to be confused with GAS-FET's, but not everyone is as smart as you. especially on Monday.].  Subscription information here: Readers tell us every week what a bargain the site is...

Cheap is Good

"How to live on $10,000 a year or less" continues to lead sales at our Peoplenomics.com bookstore.  Good place to browse and look over tables of contents and such.

Pass It On

If you enjoy this free daily report (6-days a week) please tell all your friends about it, by clicking here and inserting their email address(es).

Friday March 10, 2006

Port Deal - Dead?

After hearing from republican lawmakers that he wouldn't be able to win this one, we have to wonder how George Bush feels about the ports deal, now that Dubai has backed out.  The BBC reckons Bush hit a political iceberg on this one.  Why?  The public isn't as stupid about homeland security as spinmeisters would have Bush believe.  Yeah, the public thinks, even through the largely spun news.  (A high five to Lou Dobbs on this one.)  You can still be a patriot and oppose bad policy, at least for now.

Is it really over, though?  Maybe not.  While Dubai promises to transfer control to "a US entity", we have to remember that there are lots of US entities which have foreign owners.  So, it's a possible weasel wording issue.  The proof of the pudding will be when the public finds out which US entity will be taking over, and then, what portion of the US entity is US owned.

The idea being that any foreign national who wants to can come in to the US and set up a corporation: Countries generally have laws about people that are much tougher than their laws about corporations. And, even if a foreign national runs in to a problem with "foreign ownership" there is always the "local nominees" - people who (for a fee) will lend their name and citizenship to whatever enterprise you want.  Such things are common among the Caribbean banking countries.

Needless to say, we will be watching this closely to see which US entity takes up the project.

And, oh by the way, George Bush's approval rating has fallen to a new low with nearly 70% of the people asked, responding that Bush has things on the wrong track.

Church and State

George Bush has been talking up how the federal government has given $2.1 billion in federal grants to religious charities in the past year.  The People's Economist is in a quandary on this one because, like any issue in the land of the Beltway Bandits, there are two sides to this.

• On the one, it's hard to disagree with the president's claim that. "I repeat to you, you can't be a faith-based program if you don't practice your faith."

• But, on the other, it could be argued that the government is (in effect) paying certain groups to practice their faith with my tax money. 

Not that I can offer any breakthrough thinking since the Thomas Jefferson discussion with the Danbury Baptists.  In 1801, the Baptist group wrote to Jefferson saying in part "Sir, when we reflect on your past services, and see a glow of philanthropy and good will shining forth in a course of more than thirty years we have reason to believe that America's God has raised you up to fill the chair of state out of that goodwill which he bears to the millions which you preside over." 

They also wrote that the Constitution was not precise in its separation of powers: "But, sir, our constitution of government is not specific. Our ancient charter together with the law made coincident therewith, were adopted as the basis of our government, at the time of our revolution; and such had been our laws and usages, and such still are; that religion is considered as the first object of legislation; and therefore what religious privileges we enjoy (as a minor part of the state) we enjoy as favors granted, and not as inalienable rights; and these favors we receive at the expense of such degrading acknowledgements as are inconsistent with the rights of freemen."

Jefferson's response is often pointed to as a key interpretation of separation of Church and state where he responded: "I contemplate with sovereign reverence that act of the whole American people which declared that their legislature should make no law respecting an establishment of religion, or prohibiting the free exercise thereof, thus building a wall of separation between church and state."

As this morning's second cup of coffee, I will try to sort out (privately, for such is the proper domain of such deliberations) whether the administration is merely pushing good works, or trying to buy back support from religious groups prior to the difficult 2006 elections this fall. There are cases to be made for both arguments.

The Failing Consumer

A reader just sent in a note this morning point to yesterday's column where I suggested that "If the consumer falters, the world ends."  The reader pointed to a new poll just out suggesting the End is perhaps coming into sight as confidence falls.

Period of Great Danger

We've been reading the occasional story on military spending for the war, such as Time's good piece last weekend, and critical stories about how Homeland Security is passing out money for projects that make no sense to us.  For example, why Dillingham Alaska needs 80 security cameras, while thousands of people a day are illegally entering the US from Mexico, doesn't compute in our part of Texas. But maybe the spooks have discovered that Osama's boys are caribou and moose hunters, who knows?

But let's pause for a minute in here and add up the score card for this morning's report so far:

• Bush loses the Dubai Ports deal.

• Bush approval ratings fall to new low.

• Bush struts money giveaways to religious charities.

• Consumer confidence falling.

Are you getting the picture here?  If there's even a remote chance of another terror attack on America, all we would need would be a serious decline of the Dow over the next week or two to set the stage for another "orchestrated event."  Admittedly, it's a horrible thing to contemplate, but most people know that WTC 7 didn't fall over from being hit by an airplane and it has never been explained how it came down.  The WTC investigation was a Warren Commission clone, and most can see that. 

The politicos have misjudged the wisdom of the American people, I reckon. At some point, they'll have to regulate the internet.  Too much freedom just can't be allowed common folk.

While our future predictive software says the whole world will be going through a "context change" by the end of the month, software genius Cliff and I were genuinely hoping that yesterday's NASA "big story" might be IT. But, sadly, NASA finding possible water on a moon of Saturn is not a big enough story to result in the kind of context shift seen coming.  We're expecting something BIG.  HUGE. And life changing, just as 9/11 was a life changer. 

Might it be something else?  Sure.  Could it be the arrival of bird flu?  Maybe.  Canada is talking about the "shortages that will result" from bird flu's arrival.

Thus, I'm on pins and needles praying that we make it to April 15th with no change in the current status quo, but the odds seem long against it.

M3 Going

From the Federal Reserves web site, the latest update on plans to do away with the M-3 money supply report which is a tip off that the Fed has lost control of M-3:

March 9, 2006 H.6 (508)

Discontinuance of M3

As announced on November 10, 2005, the Board of Governors will cease publication of the M3 monetary aggregate on March 23, 2006. The Board will also cease publishing the following components: large-denomination time deposits, repurchase agreements (RPs), and Eurodollars. The Board will continue to publish institutional money market mutual funds as a memorandum item in this release.

Measures of large-denomination time deposits will continue to be published by the Board in the Flow of Funds Accounts (Z.1 release) on a quarterly basis and in the H.8 release on a weekly basis (for commercial banks).

M3 does not appear to convey any additional information about economic activity that is not already embodied in M2 and has not played a role in the monetary policy process for many years. Consequently, the Board judged that the costs of collecting the underlying data and publishing M3 outweigh the benefits.

On March 23, 2006, the Board will publish a final set of historical data on M3 and its components. The Board will continue to publish historical data on M1, M2, M3, and their components in the current format through March 16, 2006 (www.federalreserve.gov/releases/h6/hist/). Beginning today, each week the Board will publish historical data on M1, M2, and their components (www.federalreserve.gov/releases/h6/hist/newformat.htm) .

What we're waiting to see if there will be a preliminary publication of February M-3 before shut down.  When the private cabal that sells paper to the federal government won't keep open books, you'd think the public would be in an uproar.  But, the sheep do sleep, eh?

Korea Danger Mounting

North Korea is making serious progress in developing strategic missile strength - that's the word from General B.B. Bell in Washington hearings this week.  It echoes our long-standing concerns that a paranoid (or whatever leader) is more dangerous a rational one.

Not that China isn't a danger.  Jim Sinclair's site reported yesterday that China has set up a base in the Antarctic from which is can disable US satellites.

Iran's Next Leverage Point

As the diplomatic efforts to talk Iran out of enriching their own uranium continue on several fronts, we notice that Iran will be holding natural gas price talks with India and Pakistan next week about a proposed gas pipeline.

This is an interesting development (although it has been in the works for a long time).  What's so interesting to me is that both Pakistan and India presumably have uranium enrichment operations because both have nuclear weapons. I wonder if there's any "backroom negotiating" going on.  Hmmm..

Diplomacy in Trouble?

The UN is the last place you would expect the staff to rise up in opposition to the plans of the boss, but that's pretty much the libretto at the UN where Kofi Annan's administrative overhaul plans has hit the rocks.  One of the key issues is outsourcing.  Is this delicious irony, or what?  Wouldn't it be a hoot if some of the third world bureaucrats were outsourced?  Taste the globalism, boys!  Bitter, huh?  You oughta feel what it's like in Michigan...

Thursday March 9, 2006

Guns and MRE's - continued

We're going to have us a serious talk this morning, usually the kind of thing reserved for subscribers to our $30/year Peoplenomics.com website.  Our story yesterday about the evolving shortages of bulk ammunition received a huge number of emails.  Here's a typical report from a reader:

I'll get to the point....I have a friend that works in a large hunting store here in Morris County NJ, and they sell a wide array of fire arms. What is interesting here is that he told me he is amazed and the amount of guns being purchased recently and especially since 9/11. I said what do you mean? He told me that every time someone wants to buy a gun (in NJ), he has to run a NIX check (another background check at time of purchase) and the system identifies the check and assigns a number to it . The number starts at zero for the start of the day (for the entire state) and then increases by one on each check. He said on average when he calls in a NIX check it is between the range of 80+ - 100+, this is per day. ( quick math average, 90*300 days = 27,000) But he said this is only per person, not per gun. He had a fella there last week buying 3 guns!

Ammo shortages... Yes I have also noticed that I cant get my favorite 9mm PMC 115 grain. Good job I keep a stash and I wont' be wasting them at the range anytime this month given the shift that's coming.

Another reported in on our report that fresh MRE's aren't generally available as they have been:

I'm a reader of the Urban Survival site, and saw your comments about the lack of availability of ammunition and MREs. I sat up and took notice because a couple of weeks ago, it was on the local tv news that there is a huge underground storage facility here in the Midwest, near me (in western KY). I did a google on it and found the one they were talking about http://www.marengowarehouse.com/index.html 

and another one near Louisville, KY. http://www.kybiz.com/lanereport/issues/march98/feature-storage.html 

They said in the TV news tidbit that the Marengo facility is the largest in the Midwest, something most local people aren't aware of, or the fact that it's even there at all (I wasn't). Among other things, it was said that the military is storing MRE's there.

I tried to do a search to find the info given in the newscast, which was from an Evansville TV station, but no luck.

Well, it may be nothing out of the ordinary, but thought it was interesting how I saw the storage of MRE's in the news and then see your report on the same topic. I sometimes think there is more to the news reports than they actually say.

What's even more interesting is that we're starting to look more and more like this could be the leading edge of the web bot's predicted "encounter with scarcity" due this summer, according to our friends with the 'future predictive' linguistics software.  Solar panels, for example:

I was just reading your post on the shortages. I do not have the link but several months ago there were a few news stories floating around about how the Pentagon had basically run through their entire stock of ammunition and were buying up every round they could find in the entire world. I think the article specifically referred to buying ammunition from France and Taiwan among other places, but I seem to recall the article said the Pentagon was virtually cornering the market.

I remember the article because I was thinking how stupid the people in DC had to be to start a war and they didn't even have enough bullets to put in the guns so they could shoot at people.

But I meant to write this just to say that I had noticed recently when trying to price solar panels that a lot of them seemed to be on back order. One website said something like "due to the worldwide shortage of PV panels, your order may delayed indefinitely".

So I just thought I pass that along as more data.

No, this doesn't mean that solar panels are not available, it just means that prices are going up quickly - if you can find them.  Now, the little panels that run 2-bit radios (or the cheesy garden lights like we have around the place) aren't the problem. But go looking for the 100-watt and up class or modern panels and prices have been going up much faster than the prevailing rate of inflation, or so it appears.  I remember a few years back BP was thought to be nuts when they built (or was it Arco?) some huge solar panel plants.  Not nuts at all, turns out - experts at planning.

Consumption Crash?

There's no mistaking the intent of the Japanese Central Bank:  They are planning to end the zero-interest policies that have driven much of the world's economic activity (that and wild consumption by consumers who seem bent on collecting nothing but more and more junk).

The initial reports today are that stocks may move higher in reaction to the Bank of Japan changes (BOJ), but let me put on my People's Economist hat for a minute. 

There are two ways this can work out.

• The preferred scenario by the powers that be would go something like this:  The BOJ move means that the days of "free money" for the Yen carry trade are over, so the whole world goes through a slight upward adjustment of interest rates.  In this process, goes the pipe dream, there is a small bit of weakness in late 2006-2007 as we get through the outcome of the recent (and continuing) yield curve inversion, but in the end, the global synchronized inflation efforts of the G7/8 result in precisely the Fed desired work out.  Specifically, wages will go up slightly less rapidly than inflation, and because the refinancing scramble seems to be slowing, lots of people will own houses which would continue to appreciate and thus they would be able to make their house payments with progressively cheaper dollars - happiness prevails.    Now, as you scale this who inflation scam up, here's what happens to bail out the republicans:  The extraordinary price of the war in Iraq (and Iran next) could be paid back with cheaper dollars, too.

• But, as we have been warning this week, there's a dark side to the real events of the world, namely that there's a chance that the consumers could put their own spending habits on hold too quickly.  That could cause a drying up of sales of computers, cars, big ticket items in general, and could lead to a collapse of the housing bubble.  Now, while this is clearly not our preferred outcome, this is precisely why the "encounter with scarcity" meme is so darned important.  If even spot shortages spook the herd, then we are in what Gary Lammert points out (following the trade wreck article) as a near enough clone of 1929 conditions that the whole house of cards could fall in.

So, how do you play it?  That's a matter of personal choice, of course, and this site doesn't offer financial advice - only commentary and perspectives that you may use to open your own additional lines of inquiry to help you reach the decisions that will be best for you and your loved one.

But what we're on the lookout for right now is the "context shift" which, if it arrives as the wrong moment, will negate all of the "engineered economy dreams of the banksters" and will have them lamp-posted by mobs of angry consumers.

Trade Wreck

Here's the whole story in a nutshell:

The Bureau of Economic Analysis this morning announced the latest bad news on international trade - although as explained above, the consumer is all that's keeping the Titanica afloat right now:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total January exports of $114.4 billion and imports of $182.9 billion resulted in a goods and services deficit of $68.5 billion, $3.4 billion more than the $65.1 billion in December, revised. January exports were $2.8 billion more than December exports of $111.6 billion. January imports were $6.2 billion more than December imports of $176.6 billion.

 

 

In January, the goods deficit increased $3.2 billion from December to $73.4 billion, and the services surplus decreased $0.2 billion to $4.9 billion. Exports of goods increased $2.6 billion to $81.7 billion, and imports of goods increased $5.9 billion to $155.1 billion. Exports of services increased $0.2 billion to $32.7 billion, and imports of services increased $0.4 billion to $27.8 billion.

 

In January, the goods and services deficit was up $10.2 billion from January 2005. Exports were up $12.2 billion, or 12.0 percent, and imports were up $22.5 billion, or 14.0 percent.

The Ultra/Uber Rich are looking at a once in many decades chance to swindle the whole Baby Boom generation out of its savings, a temptation that's almost too much to good to be true to a crook's heart.   On the other hand, there are people in government (and one or two like Ron Paul in Congress) that genuinely are looking out for the common good of America.  And that's the framework:  The honest folks below versus the crooks at the top.

Curiously, even the crooks are divided.  Some see a gigantic windfall for their existing schemes - which is why banksters and broksters are putting big money out to "privatize social security."  It will give them more "greater fools" to sell puffed up paper to.  But others would just as soon crash the system now, and take back (as owners/agents of mortgage holders) existing property, stealing equity, so it could be sold again later, thus perpetuating the wealth of those at the top.

So to me, the key indicators are consumption and confidence.  And, I would hasten to add, the existing problems of the Iraq war that you see on television are not the real issues.  The real issues are that military families, being kept divided, aren't making their normal investments in family formation and the country has been past the federal budget ceiling joke for weeks (go look at the Treasury Department Public Debt to the Penny).

The War in Iraq pales in comparison to the War on Perception.  I can only recall that the Titanic was "unsinkable" too.

Braced for Disaster?

The Fractal Doctor is back and he's got what reads to me like sound advice: tighten seat belt, prepare for rough ride - this is likely to be the month of Crash 2:

George, an ironclad ... ironclad.. short term prediction about the near term directional behavior of US equities... can be made ... using the principles of fractal growth and decay analysis. Readers and the scientific community can realize the power and simplicity of fractal analysis as a predictive tool.

Is the macro economy at the brink of collapse? Most linearly thinking economists do not believe so. The renown Economist Irving Fisher made his linear prediction of continued growth a month or so before the 1929 primary decay.

The signs of early macroeconomic decay were present in the summer of 1929 with falling auto sales and falling exports. The debt burden and forward consumption on credit of American workers at the end of the Roaring twenties weighed against continued growth.

March 2006 parallels the macroeconomic conditions of 1929. The unchanged linear thought processes of current renown economists are following the same 77 year old echoes of their predecessors. The nonlinearity characterized by fractal progression remains in the darkness of the ante room, just out of sight.

The parallels are there. The current US economy is maintained on a termite infested wooden foundation of gargantuan debt. The listed ongoing valuation of assets are only as good as the continuation of the promised IOU's of a new service worker class, whose jobs are as tenuous as the economy they exist in. Anyone who can not conceive of a coupled feedback unraveling of jobs and asset valuations, would do well to study the devolution process in the early 1930's.

Is the global economy at that critical point? While no one really knows and time will tell its story, long term fractal analysis suggests that to be the case. Nevertheless.. in the short term... an ironclad prediction can be made for the next two trading weeks, using the principles of fractal analysis.

An exquisite evolving and interlocking fractal series and sub series has two interlocking second fractal growth series ending within two days of each other. Second growth fractals, as you know and have witnessed repetitively, end with nonlinear gap drops to lower valuations.

While this fractal pattern can be seen in the Wilshire, the NYSE which makes its trading debut today, as a trading index, illustrates the perfect pattern. This is well worth the time to go to BIG CHART's and do the daily count....

The first fractal series begins 20 October 2005 and ends on 30 November/1 December 2005

First fractal = X = 6/15/10-11 days y/2.5y/1.6y/ or for a base of 29-30 days.

The expected end for the second growth fractal is 2.5x or 73-75 days with A nonlinear drop between day 59-60 to day 75.

Notice day 30 and day 60 , X and 2X, of the potential 75 day second fractal sequence are exact highs.

The first sub fractal of the second fractal starts on 30 November 2005 and is a x/2.5x/2.5x rolling fractal 4/10/10 with a base length of 22 days ending on 30 December 2005.

The expected end of its Second sub fractal growth period is 2.5 x 22 = day 55 with a nonlinear drop between day 44 and 55. Notice that 22 + 55 = 76 (Subtract one day for double counting)

Also note that day 22 and day 43, x and 2x, represents the highs of the 22 day base sub fractal's second growth fractal.

The end of both fractal series end within two days of each other, and both has an expected nonlinear drop.

The first fractal series count is 30/67 of 75 for 8 more trading days and the second sub cycle series making up the second fractal of larger series is: 22/46 of 55 for 9 more days.

An fractal ironclad prediction can be made for a nonlinear drop, with an opening trading day gap lower the previous day's close which will occur within the next 8-9 trading days.

A subsequent failure to close this gap would provide technical confirmation that the great devolution of debt and asset implosion has commenced consistent with the recurrent theme of maximal X/2.5X/2.5X fractal growth progression seen in March 2000 technical Right Shoulder.
- Gary Lammert http://www.economicfractalist.com/

Go Read Fleck

Think I'm nuts about some of the numbers?  Then go read Bill Fleckenstein. "Fleck" is always a good read - especially since lately his columns about expected future financial developments seem to have the tone of the writings around here - dismal.  One of his best: "The Numbers Behind the Lies.".

The Wall St. Poet

My tastes in poetry generally run to short Robert Service pieces with a good glass of scotch - I'm still sipping the occasional dram from a fine Christmas bottle courtesy of an Arkansas reader.  (You won't find me making typically Texan remarks about Razorbacks being an inferior species of football player.  Their hospitality is beyond reproach. )

But a sip of scotch and a short poem go well together.  So with the kind permission of Mike Silverstein (www.thewallstreetpoet.com), here's a poem that to me really seems to capture the mood of the country quite succinctly:

Mother's Milk (The K Street Poem)

Money, Money is what talks,
No one in the Beltway walks;
Nothing tops the mighty power
Of this endless dollar shower.

 

Need a special taxing break?
Legislators soothe the ache.
Having trouble with a reg?
Heavy hitters need not beg.
Money, money, is what talks,
No one in the Beltway walks.

 

Year by year the anger grows
‘Bout these tawdry money flows.
Pols beat breasts and wring their hands,
When they1re done the old way stands.
Money, money, is what talks,
No one in the Beltway walks.

 

All imbibe this mother's milk,
Feeling not a twinge of guilt;
They're convinced it's well deserved,
Look at all the hours they slaved.
Money, money is what talks,
No one in the Beltway walks.

 

Worse than favors and collusion,
Legislators' self-delusion;
From their sellout ‘public service'
Maybe only God can save us.
Money, Money is what talks,
No one in the Beltway walks.

 

©2006 http://www.wallstreetpoet.com

Normally, our morning columns run more to headlines from hither and yonganistan.  But the foot dance with Iran isn't going anywhere, quickly.  These wars take time to lay out.  Besides, the big picture right now is of overwhelming importance. If the consumer falters, the world ends.

 Peoplenomics

This week our premium service, Peoplenomics.com, serves up a who article around the idea of basic electronics/communications competence.  It's almost enough to get a ham radio license with.  What's even more amazing is that I wrote the whole thing without slipping into electronic jargon (resistors, capacitors, dual-gated MOSFET's [which I know you already knew were metal oxide silicon field-effect transistors, not to be confused with GAS-FET's, but not everyone is as smart as you. especially on Monday.].  Subscription information here: Readers tell us every week what a bargain the site is...

Cheap is Good

"How to live on $10,000 a year or less" continues to lead sales at our Peoplenomics.com bookstore.  Good place to browse and look over tables of contents and such.

Pass It On

If you enjoy this free daily report (6-days a week) please tell all your friends about it, by clicking here and inserting their email address(es).

Wednesday March 8, 2006

Bulk Ammunition Shortages in USA

Bulk ammunition and MRE shortages have apparently arrived in the USA.  We're advising you of this now, because we expect this will become become a huge story in coming months - one that the future predicting web bot project (www.halfpasthuman.com) has been alluding to for more than a year in a software "entity" called "encounter with scarcity" due to arrive in full force this summer.

Let me lay out the facts.  I received the following email from a reader yesterday that reads as follows:

"The 7.62x39 ammo is all but dried up according to my firearms dealer.

And: .223 ammo has gone up in price dramatically according to the same dealer. He said that the ammo manufacturers are of course dedicated to the military. It is available but he said some of what he normally orders went up 14%. (more than his profit margin) He said that his December and January was the best Dec and Jan he has ever had. And those months are usually extremely slow!

He mentioned that prices on firearms have gone up allot after the shot show was over, but it doesn't seem to be stopping people from buying. He said, people are worried what is going to happen, here in this country.

Just thought I'd pass it along for your information, in case you need to pick up anything."

Because we have a fair bit of land out here in East Texas to defend from, among other things, wild pigs, coyotes, skunks, panthers, and such, we like to have a little ammo on hand.  So I started checking around for 7.62 X 39 rounds for the SKS.

• At Cabelas (www.cabelas.com) I found when I tried to order 7.62 X 39 154 grain soft points in the 500 round bulks pack (Item IG-215187) they were on back order.  So were the 1,000 round boxes.  Also, the 7.62 X 39 hollow point rounds in quantity (500 and up) are back ordered.

• No problem, I thought - I'll just go to Cheaper Than Dirt (www.cheaperthandirt.com) and buy some there.  Anything in quantity (and some special use) 7.62 has the "check status" warning - indicating back ordered. 

• At Sportsman's Guide (www.sportsmansguide.com) I was able to find some sealed cans of 7.62 full metal jacket (FMJ), but when I tried to add it to my shopping cart, look at the lead times:
  

Being curious as heck about this, I called tech support for one of these stores and asked the obvious question: "What gives?"  The answer was surprising.  "Well, the military has been buying up all kinds of ammo - it's not just the 7.62 - it's other stuff too, like 9 millimeter pistol ammo in quantities.  We get a few boxes in now and then, so you might want to call back every few days. But like I said, the military is buying everything they can get."

So I brought this up to Panama Bates (our resident retired SF/Ranger security chief).  "Funny you would mention that...I haven't been able to find MRE's either."  Bates, a retired soldier, usually has a stash of MRE's about (we have a few here and there, too).

I was surprised to hear about MRE's though, so I put in a quick call to Scotty at out Emergency Essentials (www.beprepared.com, 1-800-999-1863) to find out if MRE's had in fact "gone missing."  Turns out Scotty was out till this morning, but his staff advised me that yes, they are out of MRE's - and they also were kind enough to advise me that the ones that may still find on eBay could be old stock (be sure to get dates!).

On the other hand, Emergency Essentials operates their own freeze-dried operation, so they have good supplies of those (plus things like the 50-pound super pails of wheat, long term stored yeast, etc. that we use here).  We'll try to let you know when Emergency Essentials gets MRE's back in stock. Remember, we advised you to buy MRE's and storage foods quite some time ago.

Now, here is what I've some to as a possible "bottom line."

1. The military (and not just the US military, I was told) is indeed buying up huge amounts of ammunition.  Not the kind of thing I would expect if the war in Iraq was going at all well. I read the ammo part of the story as "more war - bigger war - to come."

2. The food purchases are also worrisome because it indicates to me that the current levels of military activity (or higher) are to be continued for some time.

Again, the web bot project has been predicting an "encounter with scarcity" this summer (along with two major international crisis to come, war in September and so forth).  The question the pragmatic economist must ask today is whether this recently developed lack of availability of quantity ammunition (and it's not just 7.62, as you'll find if you do some serious research) and the lack of available current run MRE's is the leading edge of scarcities of other commodities yet to come.

Regrettably, given the track record of the future predictive software, we expect this will turn out to be the case. We might be picking up the odd extra roll of Charmin, bleach, and soap, too.  While we're cognizant that such a report may be a bit unsettling - and might be blamed later for shortages we expect to see coming, the evidence is already on the table (at least in ammo and MRE's) that scarcity may have started to arrive.

We report this story as a duty.  The Second Amendment to the Constitution instructs us that: "A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed."

Iraq's (not so) Civil War

The US Ambassador admits today that the US has "opened Pandora's Box" and that unless there's a breakthrough soon, the whole country could descend into civil war. The US is trying to broker a political solution acceptable to both Sunnis and Shia Muslims, but if that doesn't come together, we expect that much of the "missing ammunition" in our previous story will be used on humans, not game.  Adding fuel to the fires: 23 bodies were found today, killed gang land style.

Iran Nuke Talks

The UN agency charged with overseeing such matters is debating the Iran issue today.  The US has made it clear that Iranian enrichment is not an option as far as we're concerned.  On the other hand, he who has the oil calls the tune, others would argue. Iran says the US might suffer consequences instead of the other way around...

The other nuclear nightmare is North Korea which has dug in its heels and says no more talking about nukes until the US raises its economic sanctions.  Fat chance of that...

Cheney on Hamas: "No Terrorism"

VP Dick Cheney is saying that the US won't support a terrorist Palestinian state.  The problem here is delicate.  Hamas won the elections fairly (at least by Florida standards), but they have also made threats against Israel.  In turn, the Israelis have turned off financial support, which in turn drives Hamas to become more hard-headed. Now Israel says the head of Hamas is a "fair target."  Unlike a spreadsheet where circular references are just called such, and operations halted, both sides here are working their own agendas - such that at some point I expect a misstep will result in either a full on return to violence or the outbreak of peace.  The latter sadly  being the long shot..  Again, refer to our ammo story above.

Oil Flowing

Despite the obvious collision of interests in some areas, the West and the Middle East are locked in an economic dance involving oil.  As OPEC meets today, the odds are that they will do nothing to upset the apple cart.  If the West's economy tanks, OPEC's follows - because they are addicted to Western money, just as the West is addicted to oil (as GB is so fond of saying lately).  While it's in OPEC's interests to keep pumping, the caveat is that as long as the US doesn't do anything too stupid, such that OPEC would be backed into a corner, or worse, unless OPEC had a few members step out on their own (think Iran and Venezuela).

The Printer's Ink

Oh, it's a delicious relationship that Alan Greenspan has with printers ink.  Not only did he engineer the many Fed interventions in the markets (with little more than paper and ink) but now, his latest "adventures with ink" will get him more than $8-million dollars - for his memoirs.

Speaking of the Fed:  You might want to hop on over to the Federal Reserve's web site and download their M-3 data.  The report, currently part of the H.6 Money Stock Measures reported weekly is due to "disappear" later this month.  Why?  Oh, because it shows monetary inflation running double digits. Maybe the Fed has lost control of money?  Wanna bet on whether the report will give out preliminary February M-3 numbers before going bye-bye for good?

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Not True

No, George Bush has not ordered the bombing of the Canary Islands to halt bird flu!  (Got a smile out of it, thought you might too - the events of the day are waaay too serious...)

Thanks

Here's a reader email that makes getting up every morning and posting the daily update worthwhile:

"Farewell, 11,000? This post was probably your best yet (I've been reading your site for at least 3 years including whenever I could while deployed in Iraq!). I think it really makes it easy for the average person to understand what's happening, or not happening, with the markets. If people also paid attention to the change in the US$ relative to the E and the CAN$, they'd also see that something is going on that does not bode well for our future as a nation.

So far, the music just keeps playing and a chair gets removed from the crowd of people milling around eating and drinking as if nothing is going to ever happen to them. One day people will wake up to find the last chair is filled --and it's occupant flying to Europe....or Dubai...."

On the Way to the Office

Every morning before I leave for work ( a 60' walk to my office building from the house) I go through a routine surveillance of the property.  This morning, I was greeted by a skunk who has taken to living under our deck. No, he didn't get me - I think the light I was using disoriented him a bit. So my morning traffic obstacles now include a skunk besides the armadillo and the deer.

Tuesday March 7, 2006

Farewell, 11,000?

As you work your way through that first cup of coffee this morning (or have you lost count already?) I want to remind you of a few of the "founding principles" of this web site.  First and foremost is that it was started in about 1995 or 1996 based on the premise that the world would shortly into a Second Great Depression, the likes of which would make the 1930's look like "the good 'ol days."

Over the intervening years, a number of colleagues and friends have dismissed my economic researches as a "Waste of time!" and "You're a doomsayer" while admitting now and then that "Even a broken clock is right twice a day."  That last sentiment was around in 2001 even before the 9/11 attack.

Still, I'd argue that by any measure of their weak recovery post 9/11, the US financial markets have come nowhere near the all-time high of the Dow (the week of 1/14/2000) around 11,723 on a weekly closing basis.

Using the Federal Reserve's own inflation calculations (a link to their online inflation calculator is in the left margin), you'll see that just to break even, a Dow of 11,723 in 2000 would need to be worth 13,785.76 today.  But with my People's Economist hat on, I'd argue it's actually worse than that. The all time high was approached in late 1999 and so we might want to use 11,497.1 from late 1999 which would put us at 13,974.57 today.

Market technicians have dismissed my efforts to point out this lack of advance on an inflation-corrected basis by dismissing the notion that the Dow is just completing its first post-Crash II bounce of about 80%. Yet when I use the aggressive 13,974.57 number versus the recently weekly high actual 11,115.3 (week ending 2/19/2006), the purchasing power bounce of the market pencils out at 79.53%.  When I use 2000 date instead of the 1999 inflation basis, I get 80.62%.

It's more than slightly troubling that the mid-point between this two values is just about smack on for an 80% retracement on a purchasing power corrected basis which the Fed Inflation Calculator should capture.

Now, depending on which stock you picked, the purchasing power equivalency may be off a bit because you might have owned stocks that paid a dividend.  But even if you include those, the bulk of stocks aren't paying dividends, and as Warren Buffett so eloquently pointed out in his annual letter to shareholders of Berkshire Hathaway this past week, it may be why stock buybacks have been so favored by the CEO's running things.

As we await the arrival of the context changing predicted by the web bots for less than 3-4 weeks from now, I'd suggest that if you plan to have anything left of your retirement savings, that you at least consider battening down for what could be a financial maelstrom in the weeks ahead.  We're also looking for two major international crisis this summer and an outbreak of war [perhaps as a global event] at the end of August/early September timeframe.

---

Around the periphery of the day-to-day headlines, we're catching some indications of what other countries are doing.  I'll use China as an example because they are the newly ascending Super Power according to many analysts.

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While China has been getting a few headlines for, among other things, warning the US to rein in arms supplies to Taiwan, off in the lesser read pages, we see articles about how China is planning to open the world's biggest gold mine late this year.  China is also planning to open a large series of strategic oil reserve bases over the next couple of years. China is working on coal development. And should the US do something as silly as turn Israel loose on Iran, we would be stepping hard on China's toes, because they are planning on 300,000 barrels of crude per day from an Iranian joint venture.

China is also looking at food resources:  They are learning to bake French bread as France is trying to peddle them wheat. But then so is Australia.

China is also looking at development partnerships which will provide a more resilient industrial base.  As an example, look what they are doing with Germany's industrial gas giant, Linde.

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I know that a few readers question why Elaine and I would "skip out" of the corporate mainstream life.  It's been 2 1/2 years now since I owned my last Porsche.  Elaine, once a "daily shopper" now goes into town maybe a couple of days a week.  Days are filled working for clients (me) headhunting (E), and doing things like walking the property with a timber outfit's owner to see if we can't maybe make a little money when we turn a few acres into potential goat fields.

What a lot of folks miss is the idea that when you step back from the picture a little bit, you'll see that I'm making the same kind of strategic investments that China is in the process of making.  Like China, we are stocking up on energy and reducing demand through home improvements, we've been in precious metals and plan to stay there, and we have acquired enough tools (welders, metal cutting bandsaw. air tools and the like) that we have a fair amount of resilience industrially to go with our gardening.  We now own two rototillers - an acknowledgment that with our heritage seed collection (and a few guns and rounds for self defense of the place).  The guns and ammo?  We could within a year or two (or less) of a place where global fighting over food could take place.  We plan to keep eating.

Where we're investing in our own lives is a microcosm of what China is doing. It may not be something that has occurred to most people, but the idea that China has been around for several thousand years longer than the West seems to argue that one could do much worse than mirroring their investment strategies in our personal lives here.

So this morning's thought distills to this:  Pick a country.  Mirror its policies as your own investment plan, and expect a similar outcome.

Another "Snow Job"

In keeping with today's theme (who cares about mainstream media?) a hawk-eyed reader sends this along:

Here's piece in yesterdays Washington Post - Treasury Secretary John Snow notified Congress on Monday that the administration has now taken "all prudent and legal actions," including (stealing! lets call it what is!!) tapping certain government retirement funds, to keep from hitting the $8.2 trillion national debt limit. Gee I guess they would never think of maybe cutting back government spending.....NAW!!

http://www.washingtonpost.com/wp-dyn/content/article/2006/03/06/AR2006030600635_pf.html 

PS Cant beat your daily update, its the best 5 minute read on the web. Keep up the the great work!

Off in the background, we are seeing more ink (or is that bytes?) devoted the plans of Japan to end their "free money" carry trade.  All of which goes to my notion explained more thoroughly for Peoplemics.com subscribers that the global central bankers are trying like mad to inflate the money supply while they still can.  Otherwise, when the shortly arrive recession gets here, there will be no way to "pump" the monetary system and inflate their way into a new round of usury.

Silver ETF Launch

There's a lot going on in precious metals (I mean China aside).  For example, the London Stock Exchange is planning to go ahead with the launch of the Silver ETF which should track the price of silver.  I don't know that we really need such a fund.  But, as Wall Street loves to move in on a good game, we think it will certainly stir up interest in silver.

Triple Witching Next Week

My friend The Gold Trader, now living on the "right coast" sends along this reminder:

"This is our quarterly report coming at you from downtown Wall Street. The witches are flying and starting to circle the wagon trains of small traders monies. Take care to clear positions in metals and currencies, or at least lighten your loads and keep your gunpowder dry. These past warnings over the last few years have helped most traders (I hope) and those of you that know this take heed. Triple Witch Week is upon us, the third Thursday of every quarter. That's next week on my calendar. Check yours too -The Masked Gold Trader "

So if you see a little weakness in silver and gold between now and then, so what?

Lammert (Interpreted)

The latest from Dr. Fractal:

George, the debt market like all asset markets is a cash flow dependent growth and decay process operating in terminal exquisite fractal patterns. [{paper} Money fuels the fools]

Just like the composite equity market with its very distinctive daily fractal pattern along the final edge of the terminal crest of a senescent tidal wave that has been slowing building for 148 years, so too is the long term debt market with its finale last most and topmost along-the-edge fractal activity. [Debt instruments have been in their own bubble in the shadow of the stock bubble.]

Most technicians recognize yesterday's finale exhaustion gap for the long term debt instruments. Buying debt instruments, just as with the buying of all asset classes, transiently becomes saturated and disappears at regular fractal intervals - interest rates then increase, buyers return and reenter the market, and interest rates are driven lower by competition. [Be wary of a herd piling into debt instruments!]

26 October 2005 gapped higher and began the final crest for the long term debt instrument tidal wave for TNX and TYX. The deteriorating fractal growth pattern along the endmost crest was/is 16plus/41/33 of probably 33 rather than 33-41. 6 March TNX's and TYX's exhaustion gaps were a good contrarian buy for the long debt instruments. Ideal fractal theory would take interest rates lower for the next 1.5-1.6 times the base of 16-17 days or for the next 24-25 or so trading days, matching the expected devolution of equity valuations.  [ready for a month long headache in the markets?]

The wobbly fractal growth pattern along the nth stage of the tidal wave's final crest for the equity composites was completed as posted in the previous EF note. The deluge for all asset classes is awaiting in the ante room..... [If you're in paper instruments, grab ankles and show no surprise... I'll maybe remind you of this May 1st or so...]

Taking On Hillary

Should mention KT McFarland (republican in the Reagan days) is running against Hillary Klinton.  Hmmm...as much as I cast all republicans with the same disdain lately, I'm tempted to send a small check.  Lesser of two evils, says one part of my brain.  "Yeah, but you just encourage them," says the more rational part.  Hmmm...

Pakistan's Issues

The fighting continues today in Waziristan where Pakistani government forces claim to have killed 140 militants. Meanwhile, Pakistan and Afghanistan have started word-slinging.

Gossip

No, we try not to publish "gossip."  So in this way, we're much different than mainstream media.  What this site is about is the focus on news events - now and pending like the "context shift" later this month - which will have a major bearing on your finances and your life. If you know anyone who might have an interest in these topics (and who doesn't?)  Please click here to send them an email and tell them to drop by daily.  You may be interested to know that more than 20,000 people a day read our daily updates last week, something that I consider pretty good for a "One man economics newspaper."

Although a few people have called this site a "blog" I prefer to label it something else.  What, I'm not sure, but blogs that I read don't have references cited for most of their stories - and to me, that's the difference between a content aggregator (Drudge is the category leader) and opinion sites.  Not that a few comments and headlines won't form an opinion, mind you, but I take great pains to provide links for most of our material, except proprietary things like the web bot reports out of www.halfpasthuman.com (worth every penny - if you like to get a sense of the future in advance) to which we have a more than entrée' or access.

New Reader Note

This site is published Monday through Saturday.  Week days, the daily update is usually dished up at 7:55 AM Central Time (with updates when major news breaks during the day) while Saturday is usually posted by 9 AM.  Except for unusual events (like the ones coming later this month) we normally don't post on Sundays as that's when we spent most of the day writing our subscriber reports for Peoplenomics.com. 

Now: What's worth an update?  Anything that changes our fundamental outlook about matters economic going forward.  For example, you generally won't find things like murder trials and crooked CONgressmen discussed here often.  They are "fixtures of the mediascape." But if someone at the Fed were to say "There will be no rate hike at our next meeting" when everyone on earth is figuring 25-basis points to be a shoo-in and 50-basis points a 25-35% probability, then that's that we call news.

Monday March 6, 2006

The Biggest Story of the Week

No, it's not the president being on the road, or something the Fed might say/predict/ (or hide like M-3 soon).  Nope.  THE financial story of the week to us is likely the annual letter to shareholders from Warren Buffett, the legendary Chairman of Berkshire Hathaway. 

While you're welcome to click on the whole letter here, to me the highlights were as follows.

First, Buffett shares our view that America is in a whole world of financial hurt due to the balance of trade and excessive government spending.  When I rant about such matters, a lot of folks write me off as "Oh, that's just George).  But when Warren Buffett expresses a similar thought, people pay attention.  Such is the power of billions:

"The U.S., it should be emphasized, is extraordinarily rich and will get richer. As a result, the huge imbalances in its current account may continue for a long time without their having noticeable deleterious effects on the U.S. economy or on markets. I doubt, however, that the situation will forever remain benign. Either Americans address the problem soon in a way we select, or at some point the problem will likely address us in an unpleasant way of its own."

For a lesson on management - and the insanely high paychecks of underperforming executives, Buffett offers some key insight on how the game is played:

Too often, executive compensation in the U.S. is ridiculously out of line with performance. That won’t change, moreover, because the deck is stacked against investors when it comes to the CEO’s pay. The upshot is that a mediocre-or-worse CEO – aided by his handpicked VP of human relations and a consultant from the ever-accommodating firm of Ratchet, Ratchet and Bingo – all too often receives gobs of money from an ill-designed compensation arrangement.

 

Take, for instance, ten year, fixed-price options (and who wouldn’t?). If Fred Futile, CEO of Stagnant, Inc., receives a bundle of these – let’s say enough to give him an option on 1% of the company – his self-interest is clear: He should skip dividends entirely and instead use all of the company’s earnings to repurchase stock.

 

Let’s assume that under Fred’s leadership Stagnant lives up to its name. In each of the ten years after the option grant, it earns $1 billion on $10 billion of net worth, which initially comes to $10 per share on the 100 million shares then outstanding. Fred eschews dividends and regularly uses all earnings to repurchase shares. If the stock constantly sells at ten times earnings per share, it will have appreciated 158% by the end of the option period. That’s because repurchases would reduce the number of shares to 38.7 million by that time, and earnings per share would thereby increase to $25.80. Simply by withholding earnings from owners, Fred gets very rich, making a cool $158 million, despite the business itself improving not at all. Astonishingly, Fred could have made more than $100 million if Stagnant’s earnings had declined by 20% during the ten-year period.

 

Fred can also get a splendid result for himself by paying no dividends and deploying the earnings he withholds from shareholders into a variety of disappointing projects and acquisitions. Even if these initiatives deliver a paltry 5% return, Fred will still make a bundle. Specifically – with Stagnant’s p/e ratio remaining unchanged at ten – Fred’s option will deliver him $63 million. Meanwhile, his shareholders will wonder what happened to the “alignment of interests” that was supposed to occur when Fred was issued options.

Buffett also has some insight into derivatives and the danger they pose to the world (not to mention Berkshire Hathaway's balance sheet):

"Long ago, Mark Twain said: “A man who tries to carry a cat home by its tail will learn a lesson that can be learned in no other way.” If Twain were around now, he might try winding up a derivatives business. After a few days, he would opt for cats.

 

We lost $104 million pre-tax last year in our continuing attempt to exit Gen Re’s derivative operation. Our aggregate losses since we began this endeavor total $404 million.

 

Originally we had 23,218 contracts outstanding. By the start of 2005 we were down to 2,890. You might expect that our losses would have been stemmed by this point, but the blood has kept flowing. Reducing our inventory to 741 contracts last year cost us the $104 million mentioned above."

The rest of the Buffett letter to shareholders is on the company web site.  While it covers areas like succession, Buffett's folksy common sense is refreshing and Berkshire it seems is headed for still more growth.

MBS Dangers

First, you need to know that MBS's are "mortgage backed securities" and the way they are supposed to work is this:  You buy a home, take out of mortgage, which is "seasoned" for a few payments, and then your mortgage and a pile of others are bundled and the whole lot is sold almost like a bond.

Well, this is all fine and dandy, as long as the price of housing remains in a steady-state.  But when the market stops expanding, and let's say there are problems with secondary mortgage insurance, what's the outlook then?  Dicey says the Bank for International Settlements.  Key quote about credit worthiness of today's new home buyers:

"At the same time, more than 75 percent of new loans issued by private lenders now went to borrowers who missed out on the top "prime" credit rating and who often paid higher interest rates as a reflection of the added risk of default."

General Comments

General Peter Pace's general optimism about the outcome in Iraq is making headlines.  Not because he doesn't admit that "anything can happen" in Iraq, but because many feel the General is not seeing all the problems that men under his command see.

Threatening Iran

I think of the current round of US badgering of Iran on their enrichment programs and "Nukes and Consequences."  The way the game is played is this:  The people of Iran have oil, keep talking about an oil for Euro oil market, and it is alleged, have been supplying some of the insurgents in Iraq.  The US is saying "There will be consequences.."

Oil: Out of Rigs

WorldOil.com has a great article on the 2006 petroleum outlook from Matthew Simmons, known as one of the key investment banker to the oil industry.  Two quotes from the article to be aware of (and reading the whole article here is recommended):

"Until 2005, OPEC had risen to the occasion and supplied constant surges in unexpected demand. Now it is clear - for anyone closely studying OPEC production announcements and other data on the true status of OPEC oil output - that the countries comprising OPEC membership are all producing at maximum levels. Over a dozen giant oilfield upgrades are underway throughout OPEC, but few will add significant new supplies before 2009."

---

"The global lack of spare capacity now extends far beyond wellhead capabilities. By late summer 2005, every capable drilling rig in the world was in use, Fig. 2. The backlog of planned, new wells that awaits an available rig is growing monthly. In the offshore market, the rig deficit by the start of 2005 was about 250 drilling months before Hurricanes Katrina and Rita took another 20 rigs out of commission; some permanently, some for just a matter of months. The resultant offshore drilling deficit compared to planned activities might now exceed 400 to 500 drilling months. Every key oil pipeline and processing facility is also at 100% capacity, as is global refining capacity. The oil system has never been so tight. "

Our expectations run to the idea that OPEC won't cut production (as reported in the Washington Post today). On the other hand, there's not a lot of reason to expect that long term resources will be coming on line in any sizeable way this year.  Thus, if I were betting, I'd put the odds of $80-90 oil this year near 100% for later in the year, with the only "way out" being the impact of the restrictions in travel which the web bot project at www.halfpasthuman.com has been talking about for many months.

We might see oil demand falling at a rate similar to the decrease in production which is possible as indigenous peoples who are on the lands where oil is located (Middle East, South America, Falklands and such) are gearing up their opposition to corporate exploitation where they believe they are getting "pennies on the dollar" for resource, without regard to the huge investments that corporations have to make in order to get the oil out of the ground, to market, refined, and distributed.

Not that guerillas in Nigeria care.  What they see is corporate exploitation and "Where's my gun?"

Flu Spread

The kind of thing that would bring about the restrictions on travel might be the bird flue.  We read this morning how an Indonesian has apparently died of the disease, H5N1 has been confirmed in Poland, and in Azerbaijan, 10 are hospitalized with symptoms that might be bird flu.

Couple of the spread of bird flu with rising noodle prices in China, and we see the specter of mass starvation in some parts of the world this year.

What Phone Break Up?

It seems like just yesterday I was reading the judges decision that broke up AT&T into the regional Bell operating companies (RBOC's) and setting AT&T aside as its own business. But that was then and this is now.  AT&T is putting $67-billion worth of paper up to buy (regulators permitting) BellSouth.

Attribution

A reader advises that the original source of the "Outsource Bush" piece we posted last week was Andy Borowitz's site: www.borowitzreport.com

Held Over from Saturday March 4

Its Real: Prison Labor for the Military

We received an interesting news tip yesterday - and one that we find quite interesting.  It has to do with official plans of the US Army to enact something called the "Civilian Inmate Labor Program."  The general idea is that with troop manpower running low, and local demand for prisoner housing running high, the US Army can pick up some cheap labor from the Federal Bureau of Prisons and perhaps State prisons.

As you may recall, we reported a few weeks back that we've heard that troops are in such short supply in Iraq that ordinary seamen off Navy Trident subs are being given quickie training as sentries, rather than serving on strategic missile platforms, and off they go to Iraq.  Now, with the receipt of the Army plans to use federal prisoners for labor, we have to ask what kind of picture this paints of the military's state of readiness?

Specifics of the program, outlined in official Army Regulation 210-35 at http://www.army.mil/usapa/epubs/pdf/r210_35.pdf include some of the following:

• The newest set of changes quietly went into effect 14 February 2005.

• The unclassified regulations describe their purpose as follows: "This regulation provides Army policy and guidance for establishing civilian inmate labor programs and civilian prison camps on Army installations. Sources of civilian inmate labor are limited to on– and off–post Federal corrections facilities, State and/or local corrections facilities operating from on–post prison camps pursuant to leases under Section 2667, Title 10, United States Code (10 USC 2667), and off–post State corrections facilities participating in the demonstration project authorized under Section 1065, Public Law (PL) 103–337. Otherwise, State and/or local inmate labor from off–post corrections facilities is currently excluded from this program."

• "(2) Under no circumstances will the following types of inmates be permitted in the Civilian Inmate Labor Program: (a) A person in whom there is a significant public interest as determined by the corrections facility superintendent in coordination with the installation commander. (b) A person who has been a significant management problem in their current corrections facility or in another facility. (c) A principal organized crime figure. (d) An inmate convicted of a sex offense or whose criminal history includes such conduct. (e) An inmate convicted of a violent crime or whose criminal history includes such conduct. (f) An inmate convicted of the sale or intent to distribute illegal drugs who held a leadership position in any drug conspiracy, or has been involved with drugs within the last 3 years while in prison. (g) An escape risk. (h) An inmate who poses a threat to the general public as determined by the corrections facility superintendent in coordination with the installation commander.  (i) An inmate declared or found insane or mentally incompetent by a court, administrative proceeding, or physician, or under treatment for a mental disease or disorder. (j) An inmate convicted of arson. (k) A Federal inmate convicted while on active duty, presently serving a sentence for that conviction.

In short, this seems to be a low key program, perhaps driven in part by state facilities that are trying to find "creative ways" to offload minimum security inmates because of the huge number of prisoners in US prisons today.  Nevertheless, some of the wording is troubling:

Chapter 3 Establishing Civilian Inmate Prison Camps on Army Installations 3–1.

Policy statement It is not Army policy to solicit offers from correctional systems to establish civilian inmate prison camps on Army installations. Nevertheless, the Army recognizes that these correctional systems may approach installations to lease land on which to build corrections facilities, or to lease unoccupied facilities. The Army will evaluate requests to establish civilian inmate prison camps on Army installations on a case by case basis. These prison camps will house minimum and low security inmates, as determined by the correctional systems. However, the Army’s primary purpose for allowing establishment of prison camps on Army installations is to use the resident nonviolent civilian inmate labor pool to work on the leased portions of the installation.

The regulations are not particularly complex, and are an interesting read if you have worries about the Army building prison camps at which a nonviolent civilian could be impressed. Has as kind of World War II-ish kind of ring to it, doesn't it?

Gitmo List - Sort of

With George Bush on the road, a Freedom of Information Act filing by the Associated Press has forced the release of many names (and home countries) of inmate residents of Guantanamo Bay Cuba.  Key point to the AP story:

"Human rights monitors say keeping identities of prisoners secret can lead to abuses and deprive their families of information about their fate.

About 490 prisoners are being held at Guantanamo Bay, but only 10 of them have been charged with a crime."

There was a time on American soil when no one could be detained indefinitely without being charged.  But that was back when the Constitution was whole. Alternative coverage here. see it, Hil is just a continuation of the same elitist crowd that is now working hard to keep the same old, same old in place in DC in 2008.  For my vote, I'd turn 'em all out and get back to the idea of citizen legislators who believe government is the servant of the people, rather than the other way around.  Something the democrats have failed to stand for and which since Nixon worked for Ike, republicans have disavowed, taking more government lessons from the Kremlin's playbook than our Beloved Constitution. 

Ah, but that's just me wishing for small central government, single worker families, no (or minimal) foreign entanglements, and other globalist threatening ideas that this Great Country was founded upon.

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On to Our Chart!

I only put up one chart a week as my "freebie" site. There are several more weekly charts including our Global index, the Dow of today versus the Dow of the 1929-37 era, and how program trading is going.  To get these charts plus the very serious minded weekly analysis piece, please look at subscribing to http://www.peoplenomics.com/subscribe.htm for the low $30/year cost.

Write when you get rich,

George Ure, The People's Economist