Updated:  Saturday   December 13, 2003              "News with a twist of money..."

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China:  Development's Downside

There's a short article from AP today which points out one of the downsides to China's massive industrialization:  The country is suffering from a lack of power:  http://www.newsday.com/news/nationworld/world/wire/sns-ap-china-dark-days,0,1512408.story?coll=sns-ap-world-headlines

The lack of power and periodic outages drives home an extremely important point:  The world is running on the downward part of the energy supply curve.

Banks and Gold Update

About half a dozen readers called their banks yesterday and got a resounding "No, we don't care what goes in your safe deposit boxes" and among them was a Washington Mutual customer, so we're going to lower our level of concern to zero.  Still, this weekend or early next week, we will stop by our bank of choice and ask them for a copy of the safe deposit box agreement and see if there is anything that restricts what we can put in there.  This could be interesting..  Thanks again all who called their banks to check.

Saturday Update:  I just checked with my personal bank.  They said while it's legal to keep whatever I want in my safe deposit box, they said my gold coins are not covered by insurance...so it looks like the reader report was a set of crossed wires somewhere, so I'm trying to track down details.  I'll let you know if I find anything.

Friday's Rally

Forgive me for being so openly skeptical of the market.  Despite the decline of the dollar, the Dow managed to rise, and as we pointed out earlier in the week, the Dow may just be doing what real estate has.  Namely, go up in price (not to be confused with value) due to inflation. From Monday's close around 9965, with the morning dollar conversion at .819 Euro, to Friday's Euro .813, the market could theoretically rise to 10038 on the currency shift alone.  We ended four points above that.  What might this mean?  It might imply that we could have a high degree of inflation and still not crash the Dow - at least for a while.  When gold is popping up more than $5 on Friday and the stock market moves in the same direction, it seems to signal the old inverse relationship between precious metals and paper representing shares of ownership has fallen apart.

Swastika out of Office 2003

Ever willing to do the right thing, Microsoft has pulled a font set that had inadvertently included a one-time Nazi symbol: http://www.nypost.com/business/43840.htm

Anti-TV Revolt?

Nearly half a million people are expected to join an anti-television watching "viewers strike" in Italy this weekend, in a story that has to send shiver around the board rooms of America's networks -  who have brought a something akin to Italy's trash TV to our land.  Is lowest common denominator TV in trouble? http://news.bbc.co.uk/1/hi/world/europe/3313187.stm.  Hey!  Speaking of Cyclops, next time there's a GWB appearance with members of his cabinet in the background, watch their faces as the boss speaks.  Most curious.

Arab Challenge to Cessna

Looks like a new Jordanian aircraft builder will be coming out with a light general aviation trainer in the near future - which would make it the first private aircraft company in the Arab world: http://english.aljazeera.net/NR/exeres/05AF906A-2342-4D51-9ADC-4AF98492C215.htm Wonder if they will make any unmanned drones on the side?

Flu for You Too?

The flu is making its arounds and CDC says it will get worse before getting better. http://www.cnn.com/2003/HEALTH/12/12/sprj.flu03.flu/index.html  More than half of the reader's who have written in have expressed an opinion that they won't get flu shots.  I've been asked my advice, too.  My standard response is that I don't give medical advice. My personal choice (and Elaine's too) is that we're not getting the flue shots.  I'm allergic to Thimerosal, which is a mercury-derived preservative.  I also read a report that said if you had a flue shot every year from 1970-1980 your chances of getting Alzheimer's were 10 times that of the the "unprotected" population.  Also, there's a question about whether the vaccine is totally effective against Fujian Flu.

Great Christmas Gift

I've arranged for a Christmas special for people who have not subscribed to Inside Report.  For a limited time, you can subscribe to Inside Report and get a copy of Prechter & Frost's "The Elliot Wave Principle" for just $50, plus $5 shipping.  The book sells for $24.47 at Amazon (plus shipping).  If you haven't subscribed, or you want to give the book and subscription to a friend, here's your chance.  Click here for more details.

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This coming weekend's report: The Debtor's Prison Without Walls

Smaller Credit Cards

ICICI Bank in Mumbai has done something really innovative.  They're coming out with a credit card which is 43% smaller than a regular credit card.  It's be a Visa branded card: http://www.hindu.com/thehindu/holnus/00613160021.htm.  I can see a lot of people in America going for the smaller cards.  I can't tell you how often Elaine has mentioned that my wallet is too thick.  It just seems to be a collection point for everything.  I've got my eye implant cards, a ham radio and commercial radio license, my ARRL.org membership card, my local ham radio repeater card with the access code for the autopatch which lets users make free phone calls without a cell phone bill, several discount coupons which haven't expired, brokerage account card, health insurance card, Port Supply discount card left over from our serious boating days, a Winn Dixie discount card, an American Golf discount card good for $20, half a dozen business cards I haven't entered in the computer system yet, two lotto tickets (cheaper than options and about the same risk level) two bank transaction slips, two car insurance cards, a driver's license, a company credit card, one gas card and a personal credit card.  Well, you got the idea, right?  Elaine, on the other hand can get out of the house armed only with a driver's license and a couple of $20's. We have the same issue with keys.  I seem to end up with a locksmith's shop on mine, while she has two: house & car.

So hats off to ICICI Bank for some real innovation.  All they need to do is drill a hole in the card so it will fit on the key ring and then get Bank America to use the size for it's MasterCard and I'd be set.  I wonder if there's any way they could make the monthly bills 43% smaller, too?

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Friday

Israel's Wall of Worry

Israel's walling off the West Bank will torpedo the US-back peace process says a Palestinian leader: http://english.aljazeera.net/NR/exeres/7D9878D2-9763-4725-A3F2-01ADA69E72E9.htm.

Why it's Not a Real Rally

Listen up.  Although it's only 6 AM (when I get up to write these quick little morning briefs for you) there are some things that you should be able to see as clear as daylight - at least by the close of trading today.  In a nutshell, here's why gold should close up three bucks today and why the stock market should see a 50-100 point loss on the Dow.  I call this game currency trader roulette.  The way it works is this:  Let's say that you have a Euro and on Wednesday morning trading, you see that the buck has dropped as low as 81.25.  Now faster forward to Thursday, when the financial miracle of the century appears to have happened, with the dollar increasing to 82.25 or so during trading. Thats a change of 0.8%.

Now let's look at the Dow.  Pick a convenient close like Wednesday's 9126 or so and then plug in the currency shift (with the buck becoming more valuable) and what happens?  The numbers suggest that in Thursday's trading should close at 1.00858 times the close 9921.86, if this wild theory is right.  That means the Dow should have closed yesterday by this reckoning at 10,007.03.  Markets being fickle and all, the Dow really closed at 10,008.16, which is about a point off perfection, but what do you expect for a bunch of noisy traders?

Here's what you should be paying strict attention to:  The WalBuck is dying and today has hit an 11-year low. http://biz.yahoo.com/rb/031212/markets_forex_2.html. This means that although it looks like the Dow is going up, at least some portion of the present decline is just the Dow being revalued because of pent up internal inflation and external declines in the purchasing power of the buck.  The rest?  Oh, how about investments being made by the drug lords of Afghanistan - where Donald Rumsfeld was visiting just a week or two back?  Read this, and figure out the investment implications yourself: http://www.fromthewilderness.com/free/ww3/121103_afghan_poppy.html.

A Confirming Indicator?

Go check out the chart of WalMart's chart at http://ichart.yahoo.com/t?s=WMT and tell me what you see.  When I look at the three-month chart, what I see is a decline from the middle fifties to the low 50's.

There are a couple of stories floating around this morning which might put some of WalMart's stock action into perspective.  First, there's a report that within 4-years, China will be importing half of its crude oil.  http://news.xinhuanet.com/english/2003-12/12/content_1227511.htm and we all know that energy is a major cost component in everything, so that may put upward price pressure on WalMart's purchases from China.

The next story relates how China is lifting oil import quotas, and what the likely effects will be: http://news.xinhuanet.com/english/2003-12/12/content_1227062.htm. 

Last, but certainly not least, comes Sir Greenspan's rap that China's currency is not costing U.S. jobs (which is a crock, as we've been watching job flee all years-G).  Even richer?  His comment that China's continued peg of the Yuan to the WalBuck might cause China's economy to overheat.  Like it hasn't already: http://news.xinhuanet.com/english/2003-12/12/content_1227986.htm.   Considering he personally architected the largest financial bubble in the history of the world, regardless of what he once said about gold, this this classic Greenspan: the pot calling the kettle black. 

Second Read of Double Talk?

Greenspan's latest speech: http://www.federalreserve.gov/boarddocs/speeches/2003/20031211/default.htm   Out of context quotes:

• Yet, in our roles as consumers, we seem to relentlessly seek the low product prices and high quality that are prominent features of our current frenetic economic structure. In particular, America's discount retailers have responded by learning to profit as intermediaries between consumers and low-cost producers, whether located in Guangdong province in China or Peoria, Illinois. (Who's a big manufacturer of hard goods in Peoria, Al? - G)

• The American economy has been in the forefront of what Joseph Schumpeter, the renowned Harvard professor, called "creative destruction," the continuous scrapping of old technologies to make way for the new. (Make you feel better? -G)

• Disoriented by the quickened pace of today's competition, some in our society look back with nostalgia to the seemingly more tranquil years of the early post-World War II period, when tariff walls were perceived as providing job security from imports. Were we to yield to such selective nostalgia and shut out a large part, or all, of imports of manufactured goods and produce them ourselves, our overall standards of living would fall. In today's flexible markets, our large, but finite, capital and labor resources are generally employed most effectively.

• A likely fall in wage incomes and profits could lead, ironically, to a fall in jobs and job security in the shorter term. So, yes, we can shut out part or all foreign competition, but we would pay a price for doing so--perhaps a rather large price.  (Like we're not paying now???-G)

Russia - North Korea Fears

Sounding a lot like our invasion by illegals from Mexico, Russia is getting amped about the possibility of trouble walking west from North Korea and squatting on Russian land: http://english.pravda.ru/main/18/87/346/11521_refugees.html  Perhaps the Russians, unencumbered by the weakness of will to defend their borders - such as we suffer - may draw the line and defend it.

Quake Worries

You probably think I'm going to continue my rant about how USGS won't mention Amchitka Island in their Alaska earthquake reports, even when a quake happens right there.  Why?  Because Amchitka hosted three nuclear weapons tests in the 1960's and 70's..  Instead USGS refers to obscure islands.  Nope.  Not going to go on and on about that.  What is worth mentioning is that the Seattle area is at risk of a massive 9.0 according to a report from Wired News: http://www.wired.com/news/technology/0,1282,61322,00.html?tw=wn_tophead_2.    For the real inside dope on quakes check http://seismo.ethz.ch/redpuma/redpuma_ami_list.html not the USGS list.  More quakes reported by the Swiss global listings...

Bonus or Bone Us?

Every once in a while, a story comes along that just screams to be shared because it gives a particularly keen insight into the real operation of Western Capitalism.  Not that I'm not a dyed in the wool, profit seeking fellow myself, mind you.  But this is just classic:

Thursday

Iraq: Dead Civilians Don't Count

Not that we should be surprised by this A.P. report, but it's still a bit of shock to see it in print:  Iraq's Health Minister says they've been told to stop counting dead civilians: http://cnews.canoe.ca/CNEWS/World/2003/12/10/283106-ap.html  Still, life goes on in Iraq, although today comes word of gas rationing in the country: http://english.aljazeera.net/NR/exeres/862210BA-8C71-4AE5-BFE2-84E0539E6367.htm. Also in our nearly acquired state (they have a Governor, right?) there was a demonstration yesterday against terrorism http://washingtontimes.com/upi-breaking/20031128-084446-3715r.htm but which terrorists were being protested wasn't stated.

Terror Trials

In Detroit, one of the post-9/11 cases may be derailed: http://ap.tbo.com/ap/breaking/MGADYG2J2OD.html.

Numbers Stewed

We're back into numbers again this morning, retail sales and such, but the integrity of the numbers is a little hazy to us.  But then come to think of it, so is Fed thinking lately.  I've found myself sitting for hours asking how the FOMC statement could say "robust underlying growth in productivity" in one paragraph and one paragraph later refer to "with inflation quite low and resource use slack."  Perhaps there is a free lunch after all, but with unemployment for about 2-million who were on extended UI ending in 10-days, it won't be a merry Christmas at all.

University of Michigan never did write back and tell me how much of the Michigan Confidence subscription revenue comes from obvious government sources - the Fed and the usual suspects.

Regardless of the early hype which will follow "better than expected" numbers, we might get word later today which bond fund is in the sights of regulators.  Check out the report in the NY Post this morning at http://www.nypost.com/business/13134.htm. Also in the holiday clean up department, five ex HealthSouth execs have been sentenced: http://www.nypost.com/business/13122.htm. Lightly. The male got 5-months while the four females received four years of probation and six-months of home detention. We won't do anything but report the genders and sentences...you're a grown up.

New Target:  Spitzer's latest: predatory lending and the exemption of national banks from certain consumer protection requirements.  http://www.nypost.com/business/13131.htm.  Hey Eliot!  This is not about consumer protection, brother, this is about banksters making money...

EO Costs

Environmental Oddities (EO's to readers) cost about $60 billion this year http://news.bbc.co.uk/1/hi/world/americas/3308959.stm And we're still a week away from more solar flares if our work is right...New report today of high altitude auroras which has a few whiz kids stumped: http://ap.tbo.com/ap/breaking/MGA32DGK2OD.html.

Mercury Rising

What do Charlie Tuna and the Mad Hatter have in common?  Apparently the correct answer is higher than safe levels of mercury. The Washington Post says look for warnings for those pregnant or nursing  http://www.washingtonpost.com/ac2/wp-dyn/A54516-2003Dec10?language=printer.  Journalism Crusade de Jur: Why the press habitually  puts the term "women" or "woman" after the word "pregnant" causes us concern.  All in favor of adding gender identification only if a pregnant male is involved, say aye.  Motion carries.

Photons in the Freezer?

Harvard scientists have reportedly frozen light.  http://english.aljazeera.net/NR/exeres/99763358-0B40-477A-9B03-9F658B05DDF9.htm. Besides the obvious application in computing (if you had a freezer the size of Midtown to cool it) other uses escape me.  100 candlepower Popsicles?

Crime Tips

Here's a good article that explains how toll payments and cell phones are helping police investigations: http://ap.tbo.com/ap/breaking/MGAKM09K2OD.html.

Mugabe's Web

We've always half admired the forthright speaking of Zimbabwe's Robert Mugabe, ever since he told the international banksters not to get their knickers in a knot because they were loaning only "paper".  His latest?  Pushing for more global equality, web access, etc. http://news.bbc.co.uk/1/hi/world/africa/3303129.stm.

Does Sex Sell Votes?

We might have a chance to find out with the unveiling - or should we say defrocking? - of a new political web site called http://www.babesagainstbush.com/. The site apparently is selling a calendar, and is promising to send a portion of the proceeds to help defeat GWB's re-election bid.  I thought the "Bring Back Bill" picture was particularly inspired.. I guess we'll know soon enough how successful the effort is.  But we have to give it five stars as a sho-nuff creative way to make a buck.  If this a great country, or what?  Bet me a beer there won't be a "national emergency" of some kind to postpone (indefinitely) the elections, anyway.

Wednesday

Not Exactly Bank Runs, But...

You may recall a couple of days back, we asked for reader comments on anecdotal reports that bank customers were being told that they could not withdraw more than a small amount of cash without making prior arrangements.  This is an area which we have been watching closely, because if our underlying theory that we're in a Second Depression - a stealth one at that so far - is true, then one of the things we should see would be bank runs.  Unlike the 1930's, the runs on banks today are being carefully prevented by regulations that set fairly low limits on how much actual cash you can get out of your bank at any one time without prior notice.  Here are some reports from readers on bank withdrawal limits they have personally encountered that may prove eye-opening:

Navy Federal Credit Union  2500.00.  I tried to withdraw 15k and they looked at me like I was a criminal.  They also said that they did not have that much in all of their drawers.  I eventually withdrew 8k and had to sign some sort of paperwork to do it.  There are bad days on the horizon.

-----

I enjoy your web site. I recently made a 17,000 withdrawal from one bank to put in in another for various reasons. I asked for a cashiers check. The bank said it would be a 15.00 charge for the cashiers check. I said OK, I will take it in cash (since I was only going to a another bank across the street). She brought her manager out, you should have seen the look on their faces. They quickly, waived the $15.00 charge.      

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Called the bank, told them i wanted my 10,000 dollars out of savings today. they said THREE TO FIVE DAYS.

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I could get $5000. if I want to wait a couple hours they will send hundred dollar bills from main branch, (have 20k there in savings and cd's). I always told people, I'll be the first guy in line when the time comes, looks like that's not good enough now, very scary. The bank is HVFCU (formerly ibm employee credit union)...

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Tried to take out $5000 from my local bank account.

They acted shocked. Had to get a manager and

mentioned, "I'm not sure if we have that much on hand,

you may need to wait a day or two". They did have it

and gave me MY money but I was surprised by what I saw.

-----

I was having restoration work done on my house and I was withdrawing $9,000 in cash every week for a month (I got a better deal by paying the contractor in cash...). I only called one time to ask them if they needed advance notice and all she wanted to know was what time I was coming to withdraw the money. This was at a Wachovia bank in Charlotte, NC. So, no I had no problem with no advance notice in getting a lot of cash withdrawn at a branch bank.

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(Bank One) $3,000.

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My bank is a fire-proof strong  box inside a floor safe.  It allows me to take out all the cash I need until it is empty.  Given the amount of gold and silver coin in there, hopefully that will be some time.  The best part is that I didn't have to sign any contracts to open an account, there is no such thing as a bank holiday, and with the falling dollar and rising gold prices, I am making a better return than any other bank in the nation.  [This was our favorite - GU]

-----

Is this a defacto bank run?  One could argue the point.  But what's beyond argument is that as the financial condition of the country continues to unravel, pushing the dollar down to 60¢ of two-year-ago values or even lower, the Fed is sure to rely on the ease with which digital dollars can be created.  Us?  We convert cash into gold and silver as fast as we can.

Foreign CD's? Not So Far...

Meantime on the banking front a source in the Northwest reports that at least one bank layoff land has held meetings with state regulators about having CD's denominated in a foreign currency (like Canadian dollars).  Regulators are saying no so far.  Let me see: If the U.S. M-1 goes up 8% a year and interest is 2.5%, then putting money into a CD loses only....5.5% per year!

Fed: The BIG Squeeze on Japan

You can tell the impact of the Fed meeting yesterday which is neatly summed up by two stories.  The first one is that Japan's Nikkei closed under 10,000 overnight: http://biz.yahoo.com/rb/031210/markets_japan_stocks_10.html  The second story is about how the Dollar has made a sharp rebound today due to purchases by...you got it...Japan!  http://biz.yahoo.com/rb/031210/markets_forex_2.html. Here's the deal:  If Japan doesn't keep the U.S. healthy, the Honda and Toyota factories will throttle down.  When that happens, Japan's earnings go down...so the Fed's hoping to pressure part of Asia to share our pain.  Of course you know the bottom line is just to keep the game of musical chairs going for another verse..

Pipeline = Peace?

India and Pakistan are warming up again, thanks to the Pakistanis saying they will protect and defend a gas pipeline through their country - a pipeline India desperately needs to fuel continued expansion: http://english.aljazeera.net/NR/exeres/E250E862-1D9D-4E84-85C6-0C4EB7967B15.htm

U.S. Paybacks...

The U.S. is about to spend $18.4 Billion to rebuild oil production and other facilities in Iraq.  But word today is companies from Germany, France, and Russia need not apply for any of these contracts: http://news.bbc.co.uk/1/hi/business/3305501.stm  Spoils of war. Don't it put you in the Holiday spirit knowing that we get to pay for the bombs and now the rebuilding, too?  Say, this war was really about oil, so how come the oil companies aren't footing the bill, huh?  I guess we don't call him President Oil for nothing...

Been There, Done That, Long Ago...

There's a report out today that says humans have been damaging the environment not for 50 or 100 years, but more like thousands of years: http://ap.tbo.com/ap/breaking/MGAVNIZ51OD.html.  Meantime, we continue to remind anyone who is interested that the global warming issue is probably 10% man-made and 90% increases in solar output.  But hey, why resort to science when hype is so handy?

Quakes & Shakes

Taiwan: 6.6 http://www.reuters.co.uk/newsPackageArticle.jhtml?type=worldNews&storyID=419046&section=news

Oklahoma City: 1.7 http://media.oudaily.com/pages/ou_drudged.html

Richmond, VA 4.5 http://news.yahoo.com/news?tmpl=story2&cid=519&u=/ap/20031209/ap_on_re_us/eastern_quake_3&printer=1

There Goes Christmas, Part II?

We told you that last weekend's snow in the East would put a hole in Christmas sales - and we told our Inside Report subscribers to keep an eye on the long range forecast for this weekend.  Well, now it's moving East - another storm.  The severity of this one will depend how much tropical moisture is pumped up from the south in advance of its arrival: http://ap.tbo.com/ap/breaking/MGA37R591OD.html

Web Bots Right in the End...

Remember a few months back how the web bots were going on and on about a female whistle blower leading to a huge financial scandal?  And we were wondering whether the digital critters had lost their minds?  Well, several sharp-eyed readers spied this pice (and similar reports) and said "Aha!  It does fit!!!"  http://money.cnn.com/2003/12/09/funds/fundsfire_harrington.reut/index.htm

Also remember when we forecast the Northeast Power Outage parameters three weeks in advance and the bots tagged that as an al Qaida attack (which was what we sent them off looking for)?  http://www.urbansurvival.com/bothit5.htm  (When you read this page, the type in black was done 3-weeks before the black out and the blue is the fit after the fact. )  Well, turns out that it might not have been al Qaida but may have been the U.S. HAARP program and its Canadian peers.  Read this eye-popper at http://new.globalfreepress.com/article.pl?sid=03/12/07/0017246   We continue to be amazed at how little official notice the bots have received...

Mortgage Rumor

Rumor only at this point (thanks to tipsters) A new Mortgage Industry forecast for 2004 says Total lending may drop from $3.22 trillion this year $1.55 trillion next and refi's will drop from $2.2 trillion to maybe only $434 billion next.  Dissenting opinion in the report:  Lending may drop as be up to 10-times as great and refis could be under $200 billion.  Worse: Long interest rate on the 30-fixed is expected to hit 7 1/2 % next year.

"You've Got Fired!"

AOL layoffs: http://news.yahoo.com/news?tmpl=story2&cid=509&u=/ap/20031209/ap_on_bi_ge/aol_jobs_1&printer=1

Baiter?

Ted Koppel under fire for how the presidential hopefuls debate was handled.  Write up in the Washington Post says it all http://www.washingtonpost.com/ac2/wp-dyn/A50994-2003Dec9?language=printer.

Sautéed Number's Reminder

Before you get all excited about the productivity numbers when they're released, go read Gary Shilling's piece in Forbes at http://www.forbes.com/columnists/free_forbes/2003/1222/224.html.  Excellent piece of work.  Two great quotes:  "In the seven quarters since the recovery supposedly started, through Sept. 30, real gross domestic product was up 6.2% and payroll employment was down 0.8%." and "I foresee a profits decline next year with S&P 500 operating earnings down 9% to $49 per share and reported earnings down 13% to $39. What a blow to investors who believe S&P's estimates of $62 per share for operating earnings next year and $56 for reported earnings."  Hey, cheer up!  That only translates to a 15% market decline, and 8,500 is a lot closer to reality than our "10-minutes at 10,000."

Our Kind of Sport:  Lingerie Bowl Update

A controversial Super Bowl Halftime show called the "Lingerie Bowl" apparently won't have lingerie in it, but sports bras instead: http://money.cnn.com/2003/12/09/news/companies/lingerie/index.htm. Female players, seven on each side, are scheduled to play at halftime.  $19.95 PPV and in 4-4.5 million households is the target.  TV marketing execs have to be watching this as a prototype - standby for Naked Tennis and Strip Golf...

Tuesday

Fed: Up?

If there's anything to be learned from the stock market, it's the old saw "buy the rumor, sell the news."  If that really holds true, then yesterday's ridiculous 100+ point run up should tell you to expect something at least unsettling from the Fed meeting, which we expect to be a  "stand pat but talk real tough" message when it comes out about 2:30 Eastern.  As John Crudele points out in today's NY Post, the Fed's in a box with falling dollar values and a way over priced market: http://www.nypost.com/business/12907.htm.  We halfway expect that if the Fed doesn't move rates, might see $440 gold by week's end and the dollar will crater faster.  Our suggestion?  We could learn something from the Chinese about integrity of financial reports.  In China, if an official diddles with the numbers, it's a crime against the State and they've gotten as tough than any SEC showcase or government "report" in this country so far: http://news.xinhuanet.com/english/2003-12/08/content_1220155.htm

Bowing To China

Speaking of numbers and China, it's significant to note that GWB is rolling out a 19-gun salute for the Chinese Premier's visit. All this before lunch, too: http://sg.news.yahoo.com/031209/1/3giuk.html.   Why the pomp?  Simple:  China is a keystone to the U.S. remaining a viable world power.  They've been collecting Wal-Bucks and are trying desperately to find ways to spend them while they still have value.  With this in mind, check out the comments on four major commodity trends offered by our colleagues at http://www.halfpasthuman.com/HPHUE_METALS.htm.  They all add up to massive economic change.  The danger, as is always the case when discussing currency exchange, is people think that inflation is prices going generally up, when nothing could be further from the truth.  Inflation is purchasing power of currency going generally down.  Prices seem to go up, but the real deal is that the purchasing power of money goes down.   It's the biggest lie fed consumers, ahead of even the term 'credit card" which is really a DEBT card...but don't get me started.  I don't want to ruin Christmas for you. Here, let me offer something positive:

Christmas Shopping Tip:  Bored with your spouse taking to long at Wal-Mart?  Here's a time sink for you:  Walk around Wal-Mart and calculate the ratio of (non-food) U.S. made goods to imported goods. That may put into perspectives why we will occasionally refer to the U.S. dollar as the Wal-Buck.  (It's been added to our New Economic Reality Dictionary, too.)

ConocoPhillip's Big Score

We would expect the Christmas parties to be a little brighter at ConocoPhillips with the signing of a $3-billion dollar natural gas liquefaction plant deal by Qatar: http://english.aljazeera.net/NR/exeres/D064C98D-6786-408B-8465-CCA22467CA3F.htm.  But while it's "business as usual in the oil boardrooms, the violence continues in Iraq with 41 U.S. soldiers injured in a car bomb attack which was sort or thwarted.  Had sharp-eyed sentries not been on the ball, it's likely hundreds could have been killed by the attack: http://news.bbc.co.uk/1/hi/world/middle_east/3302629.stm.  In Russia meantime, 5-dead from a female bomber http://news.bbc.co.uk/1/hi/world/europe/3302765.stm , all of this is evidence to us of the continuing titanic struggle between Islamic fundamentalists and Western consumerism which are locked in a violent dance.  The Middle East needs our money, or it's back to famine and caravans, and we need the oil.  Afghanistan is a front, too.  While a large U.S. led operation got rolling there today, a UN report predicts failure without more forces: http://english.aljazeera.net/NR/exeres/B16E67BE-A46E-4CDE-A08C-6C9FA48410A2.htm.

Rat Island Rats

More earthquake activity near Amchitka - 6.1 today but the USGS reports will not call it Amchitka because of past nuclear blasts there and local fears of pollution.  But apparently the Tsunami Warning system folks didn't get the word on how to be PC:

TO ALL TSUNAMI WARNING SYSTEM PARTICIPANTS

SUBJECT - TSUNAMI INFORMATION MESSAGE

WEST COAST AND ALASKA TSUNAMI WARNING CENTER/NOAA/NWS

ISSUED 12/09/2003 AT 1255 UTC

...THIS IS AN INFORMATION MESSAGE...

EARTHQUAKE DATA

PRELIMINARY MAGNITUDE - 6.1

LOCATION - 51.1N 179.3W - 80 MILES SE OF AMCHITKA-AK.

125 MILES SW OF ADAK-AK.

35 MILES DEEP

TIME - 0344 AST 12/09/2003

0444 PST 12/09/2003

1244 UTC 12/09/2003

EVALUATION

THE MAGNITUDE IS SUCH THAT A TSUNAMI WILL NOT BE GENERATED.

IN COASTAL AREAS OF INTENSE SHAKING LOCALLY

GENERATED TSUNAMIS CAN BE TRIGGERED BY SLUMPING.

THIS WILL BE THE ONLY BULLETIN ISSUED.

THE LOCATION AND MAGNITUDE ARE BASED ON PRELIMINARY INFORMATION. WEST COAST AND ALASKA TSUNAMI WARNING CENTER - HTTP://WCATWC.ARH.NOAA.GOV. FURTHER INFORMATION WILL BE ISSUED BY THE U.S. GEOLOGICAL SURVEY - GOLDEN CO - HTTP://WWWNEIC.CR.USGS.GOV - OR THE ALASKA EARTHQUAKE INFORMATION CENTER - UAF GEOPHYSICAL INSTITUTE - FAIRBANKS ALASKA - HTTP://WWW.AEIC.ALASKA.EDU/.

If it's not one thing...

...it's another for Gov. Arnold.  He's facing a sexual harassment suit: http://www.cnn.com/2003/ALLPOLITICS/12/08/schwarzenegger.suit/index.html.  We would like someone to answer the question  "Would this suit have been filed if Arnold had not run for governor?"

Gore Backs Dean

It's not exactly a Papal blessing, but close:  Al (I really invented the Internet) Gore has decided to back Howard (There's nothing in those state records about me that I sealed) Dean: http://news.bbc.co.uk/1/hi/world/americas/3302595.stm

Missile Builder Cools His Jets...

Remember that feller down in New Zealand who was going to show the world how easy it is to build a cruise missile, using commonly available parts anyone can order off the Internet?  Government pressure wins: http://news.bbc.co.uk/1/hi/world/asia-pacific/3302763.stm

Reader's Writes:

With Congress trying to cobble up anti-spam legislation, a thoughtful reader has some suggestions:

The idiots in Congress are getting their shoelaces tangled again over

anti-spam laws. As usual, they will do little to help and a lot to

hinder. Why not try the free market?

1 - Start a new class of email accounts which are secure from the stupid

SMTP absence of passwords. This allows ISP's to verify the source of

incoming email.

2 - The new email accounts will only accept email from new email accounts.

3 - Ban all direct email clients like ****** etc. All email goes through

secure email servers.

4 - Let the cheapskates use their free email accounts of garbage ISP's

that won't pony up to the new standard. They can eat spam. You get what

you pay for.

5 - The new email servers charge postage. I think a low rate would work,

say 1 cent per email (for each 100kb or fraction thereof). This would be a

trivial expense for legitimate users.

6 - The servers all trust each other (i.e. a clearinghouse) and have to pay

postage to each other to forward email.

7 - Any spammer would be reported. Their ISP would police them. Any ISP

that doesn't would get blocked outright or have to pay penalties for all

emails.

8 - All of this worked very well, thank you, in the days of BBS's before

the internet crapped everything up.

9 - While we're at it, charge for web page hits so the burden is upon the

content consumer rather than the content provider. This gets rid of

worthless advertising which really slows down everything and seriously

degrades the value of web content. It also automatically deters DOS

attacks, zombies, etc.

10 - To give congress something to do, establish laws that (a) set up

prepaid (accepting checks at a minimum) ISP accounts so you can't be

charged for more than you pay up front, (b) require ISP's to have certified

email and snail mail addresses for cancellations and formal complaints

(i.e. when support doesn't work). I thinks laws have their place - which

is where they improve the world significantly in ways that cannot be

accomplished otherwise without great effort or expense, and hurt nobody

except jerks.

Rich

Another reader writes about the strangeness of animal behaviors:

I live around Reading, PA, in the Northeast area hit with the snowstorm this past weekend.

 

Our streets were still covered with ice and snow Sunday late afternoon.  At 4:00 PM, 12/7/03, temp = 27 deg. F, four Robins, (the red breasted-harbinger-of-spring type birds) were hopping down the road side, looking around like "who moved my worm?" I think robins are one of those migratory animals who orient themselves with an iron rich segment of the brain which is theorized to aid migration through sensitivity to the earth's magnetic field, which you mentioned is now observed to be unstable.  

 

Thought you could add this to the list.   [Done!  Filed under Environmental Oddities and it would fit with the magnetic field of the earth going through changes, as noted previously. - G]

Two Research Requests: 

If you work in the real estate business and know about the relationship between title companies and escrow companies, from state to state, please send me a note with your home number so I can call you this weekend.  A colleague is looking at buying a real estate services company, and in order to offer reasonable advice, I need to understand more about which one drives sales in which states.  It seems like in some states, the title company drives things, while in others the escrow company does.  Click here to send a note.

A second thing, and this maybe relates to that "confused bird story": above, we've been picking up web bot streams that continuously reference moving large amount of materials out of areas that would be downwind of the Yellowstone caldera.  The traffic seems to be along the lines of "so-and-so is a geophysics whiz who's been threatened with immediate arrest if he opens his mouth about Yellowstone."  But here's where research (anonymously of course) is needed.  If you have any first hand knowledge (which would include your son in law who drives a semi) and you know of any odd movement of things like whole office loads from federal buildings within 500-miles of Yellowstone, please drop me a note by clicking here.

Weighty Advice

It's time once again for the government to issue the warning about phony diet scams: http://ap.tbo.com/ap/breaking/MGA6L19PZND.html  The idea that you can lose weight without working at it is certainly attractive, but is it possible?  We put the odds somewhere between zero and winning the lottery. Our suggestion?  Find one statistic in the news that is going under-reported and is genuinely sickening.  Here's an example: 2-million people have been unemployed in the U.S. for 6-months or longer. While this might not cause you to lose weight, it might serve as a reminder to throw some goods in the food bank donation station. You're only rich to the extent you can share...

Monday

Bye Bye Florida:  Global Flooding

A lot of people thought Elaine and I were nuts when we bought our little place near Palestine, Texas.  I've been happily contributing to a software company here in Boca Raton for coming up on 2-years now.  When we sold our sailboat, people asked if we were going to  buy a home in Florida.  When I said, "No thanks, Florida is history because of global warming..."  my colleagues looked at me like I was daft.  Yet today, there's a report that at least three of India's biggest cities will be underwater by 2020  http://www.smh.com.au/text/articles/2003/12/07/1070732073547.html.  In addition, over the weekend a group of German scientists reported that shortly thereafter, the worldwide water levels will rise upwards of 30-feet or more. 

Now let me ask you:  With what is now developing as a scientific consensus, why would anyone in their right mind buy property in Florida, except of course the place is just plain gorgeous?  Ultimately, in 15-years or less, either home prices will fall to zero, or someone will propose a monster construction project to turn Florida into a latter day super-sized Venice.  You talk about "sinking money" into real estate.  No, you don't have to sell tomorrow, but the altitude of Boca Raton's airport is either 16 or 18 feet, which means there will be great fishing there in probably under 25 years.  Who would invest in a 30-year mortgage here?  Are they nuts?

The Ice Cube Analogy:  The problem with global melting is that most people have never devoted more than a few brain cells to the problem.  But here is the simple reason all the projections are probably way off - and global ocean levels will rise much faster than predicted.  I call this Ure's Two Cubes Theory.  I want you to take an ice cube, freeze it, and then keep cooling it until the cube is massively cold.  Say 20-below zero.  Now, I want you to take a second ice cube - only this time cool the cube to only 31 degrees...just a single degree from freezing.  Now put both cubes in a warm room.  You know which one will melt first, right?  The only way, therefore, to accurately predict when global warming will take out this glacier, or that, or the big ice shelf over yonder in the Antarctic, is to do some serious core temperature sampling.  I haven't seen much work in that area, because I don't think many scientists have spent the time watching ice cubes that we have.  Still, you got the point, right?  Florida was a great investment.

Adventures of the American Peso

Those darned Russians, anyway.  There they go, right out there in the middle of Pravda, telling the whole world that the U.S. dollar has lost 8% in the past 11 months.  http://newsfromrussia.com/main/2003/12/08/51696.html.  Fortunately, they didn't remind you that when the dollar's overseas purchasing power goes down, the relative price (in dollar terms) of imports like oil and Toyotas goes up - and we mistakenly call that what?  I-N-F-L-A-T-I-O-N!  With dollars dropping in international purchasing power, who wants to buy our bonds?  Especially if our interest rate is not competitive with the rates being paid by stronger currencies, like the British Pound. It puts our Fed in a damned if you do, damned if you don't box.

In order to fully appreciate the declining purchasing power of the dollar, flip over to a good inflation calculator like S. Morgan Friedman's http://www.westegg.com/inflation/  and put a dollar in your pocket in 1934.  You'll find inflation (hidden by the lie that prices go up, not money goes down, which is the truth of the matter) has required printing 13.37 times as many dollars since '34.  Put the other way around:  Just 7¢ in 1934 is a full dollar today.  So now that we're clear on the money-printing game, we can look at tomorrow's scheduled news...

Extracted from this Weekend's Inside Report

Bye Bye Christmas: Fed In a Box

• Weather:  You undoubtedly saw the forecast we had up up on the free side of the site about the chance seeming to be pretty good for a major outbreak of solar flaring activity in the window from December 18-24.  What you didn't see on the public side was the NOAA and other forecasting services are talking the possibility of a second major winter blizzard setting upon the Northeast part of the U.S.  The one that is underway now will almost certainly put a crimp in the Christmas retail trade, but a second one the following weekend would be an economic nightmare.  Sure, there will be some activity in online sales that will partially offset the declines, but those will rely upon delivery services, which could be hosed up due to weather. [Monday link added: http://www.cnn.com/2003/WEATHER/12/08/winter.storm/index.html  ]

• Other Rates:  We've already seen a rise of interest rates at the Bank of England, driven perhaps in part by the Bank of Australia changes.  The pressure from the international perspective falls on the Fed to raise because right now foreign countries are selling dollars and dollar-denominated assets like a house afire because the buck is dropping (predictably) like a rock. 

• If the U.S. goes ahead and raises rates even a small amount, say 25 basis points, the effect will be to cut the tiny jobless recovery off at the knees.

• All of these factors will conspire to drive domestic gold prices higher. 

Limited Withdrawals

By the way, call your bank and ask them how much you can take out of your account without giving them prior notice.  The answer might surprise you....  Let me know what your bank says by clicking here...  You might find a limit of just a couple of thousand or you have to wait 8 days or so...  There's a difference between rich and liquid.

You Know Banks Are Nervous When...

..they start talking about integrating Islamic Banking into mainstream Western (interest charging) banking.  http://english.aljazeera.net/NR/exeres/0E61EDEF-A74E-41FA-AAAC-3B699AA490EA.htm  If you're not familiar with Islamic banking, you may not realize that its banks use buy-sell relations (buy low sell high) to realize fees.  They don't charge interest, which they see as against religious law (Shariah).  So you know when someone in a position of influence starts talking about mainstreaming a system that doesn't charge interest that those 22% credit card boys can see something off in the distance about the credit bubble of their own making.  If you're an economist, and want a dandy paper for a dissertation, how about a title like "Islamic and Western Banking: A comparison of induced economic cycles"  One induces, and one does not, at least to anywhere near the same degree...

Golden Heights

A worthwhile remark from a long time reader especially since gold has passed 409.50 already today:

I listen to a lot of talk radio shows during the day and I have noticed a big increase in radio show hosts advertising and promoting for people to buy gold. The Derry Brownfield show is where I first heard about the upcoming gold boom and that was about 2 years ago. About a month ago many other radio show hosts (Sean Hennedy, Laura,etc.) have just started their gold advertising endorsements, but where were they 1-2 years ago when the gold rush was just starting. I wander if this is a new wave or a new frenzy that is just getting underway that will boost gold up to next level. Remember the Beanie Baby craze a few years ago. When people get on a craze and I don't care if it is Beanie Babies, baseball cards, gold, or silver, they eventually just go nuts at the height of it all. If $400 gold is at the beginning, then I really do think $800-$1000 is very possible at the least. All we have to do is watch for more and more advertisements and the big name endorsers to see just how big the next wave will be. Thanks for you site and the profitable tip on gold a long time ago.

Don't tell Forbes.

Job Grinch Hits MSNBC

'Tis the season to be laid off...  http://www.drudgereport.com/mattms.htm

Not Grinch but Gingrich

Former House Speaker Newt says we have gone off a cliff in Iraq...  http://biz.yahoo.com/prnews/031207/nysu011a_1.html.  Aw, shucks, we still have to build gas gobbling SUV's though, right?

The Problem With Search Engines

We've many times called search engines the "oracle" - able to tell us the future if we just do the right search.  Today, it has come to the attention of the BBC that if you put the search term "miserable failure" into many big engines (like www.google.com) not only does the official White House web site come up first, but most of the returns for the first page are distinctly anti-Bush in flavor: http://news.bbc.co.uk/1/hi/world/americas/3298443.stm  We stand in shock and awe of BBC's web hipness.

News From Elliott Wave International

On to the Charts!

Write when you get rich - or sooner if you feel like it. And always remember:

△ ≠ Ω but, then again, it might 

George Ure

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All contents (c) 1998-2003 by George A. Ure, MBA, except authors as linked or noted