Tuesday, March 31, 2009

Legalize drugs, hell ----- Yes!

I'll bet my kids would think I would say no. Not now, not given the mess we've made of things in our society. Parents shirk parental duty in teaching their children about the opportunities and pitfalls life holds for them. Unfortunately I ended up teaching my kids by example. However taking control of drugs, reduces the need for crime, reduces the need for accessibility. Use the money saved to mount education, get parents involved, learn again the concept of neighborhood and I have a feeling we will reduce the horrendous impact drugs are having on our society. Drugs are prevalent in other countries, but why does the U.S. seem to have such a huge problem?

However, when the large majority of Americans support social reform, why do our politicians act as though they aren't responsible to the will of the people. I do not hold out great hope for this shift in our society, but I think it is the right thing to do. Legalize drugs - Hell yes.

Some countries seem to handle societal issues with a more enlightened approach than America. Could it be the so called moral majority's retarded concept of how to deal with society's issues.

Tuesday, March 24, 2009

What is going on?

Yesterday driving back from work I met a small caravan of three pickup trucks hauling three new grain augers to some destination. At the corner of Highway C & N and U.S. 412 a farmer has his equipment sheds. Many times there are vehicles or equipment for sale on his property and they seem to move pretty well. Yesterday he had a fairly new John Deere cotton picker for sale and a Module Maker beside it. I wondered if he was getting out of the business or had he upgraded to a new piece of equipment I started to see in this area last year which is a combination cotton picker module maker made by both Deere and Case. Sure enough, there back in one of the equipment sheds sat a great big new John Deere picker with the module maker extension on the back end. So he upgraded.

A friend who is a John Deere dealer here in Paragould had let his inventory of equipment drop to very low levels last fall. When I talked to him about that he said he was very uncomfortable to see his inventory that low, but he had to do it from and economic standpoint. This spring driving past his dealership I see his lot is chuck full of new combines, pickers and sprayers. Big stuff, high ticket items. Now that could be because Deere is making incentives available to dealers that allow them to obtain large amounts of inventory, but Deere has been in this game for many years and knows the danger in artificially generating sales. Case damn near went bust of that issue back in the 70's.

Bo Adams, a very rich man who owns 48,000 acres of prime delta land is propping up his farm renters by forgoing rent charges. He will take a piece of the action at harvest time, but he will weather the storm.

My cousin Maureen who is a loan originator in California is back at work full time instead of one day a week a month ago. The low mortgage rates are stimulating all kinds of refinancing activity. Used home sales were up over 5% last month when experts predicted a fall. Even though much of the activity was in foreclosed homes I take that as a price adjustment to an over inflate housing values in the market as opposed to any other sign. The Real Estate boards aren't going to admit to an inflated market. They are a bunch of parasites as responsible for driving the price of homes up by 6% for every transaction along with the forces of greed that operated in house flipping strategies. In many large markets in this country everyone was forced into paying inflated prices for homes because of these forces.

So what does all this say to me. I think the economy has made its adjustment. There may be some more downward swings, and perhaps our little sample of what's going on is not correct. I just don't get the feel we are living in as desperate times as some pundits make out to be.

Saturday, March 14, 2009

Times are a-changing

Some mixed signals lately in the economy. The saving rate has risen from almost zero in fact we had a few months of a negative saving rate to 5%. That seems like a phenomenal change. Retail sales were better than expected in February, although negative if you take out the impact of home sales there was actually growth. The government says that January retail was better than originally estimated. GM reported an increase in cash due to cost cutting that means they will not be taking a $2 Billion loan from the government they originally thought they would. The stock market had four "up" days in a row. One major bank reported the possibility of a profitable quarter in the first quarter of this year.

Is not the time to dump some money into the stock market? Hmmm!!! Is the economy really as bad as all the pundits say it is or are they over stating their argument to make sure necessary steps to reinvigorate the economy are being taken? Will we simply ignore the bank disaster and skirt the issue? I do not doubt that there must be a major shift in the housing market. I believe that in many areas property values are based on perception and not actual value. For those of us who do not live in California it is hard for me to see why a 3 bedroom home on a city lot with a bath and a half should be worth $500K. I realize that location makes a difference, but with the improvements in communication and the move to working from remote locations does that not spell a decline in property values for those areas now viewed as central to conducting one's business? I hope there is a readjustment. The values our society seems to be willing to pay are too high in my mind and contribute to the larger view that money has value beyond the purchase of subsistence.

Friday, March 13, 2009

What Woud I Have Done?

Bernie Madoff is in jail. Good! The extent of his crime is not known, it is in the billions, but who knows what the final tally will be or if it will ever be determined? What we do know is that many people, charities and rich friends are severely damaged or even financially ruined. Shame on Bernie. He said he is sorry as he plead guilty to 11 counts of criminal activity. Bernie will also perhaps spend the rest of his life in prison, and he should.

Yet what do experts tell us about investing? Keep a balanced portfolio. Now mine is not, however I accept that my investments are 401 (k) type with reputable firms. So many of Bernie's victims violated one of the basic rules of investing.

Don't you think a steady return level of above 40% would send up the old warning flag of "if it seems too good to be true it probably is." Yet, one of the funds I am invested in had an over 100% return back in the dot com bubble, but then so were a lot of tech funds achieving unheard of results. I should've been smarter to move my money earlier before dot com tanked. However, I think a steady diet of above 40% returns would've made my timbers shiver.

In the end, there is a likely possibility that had I invested with Madoff I would've stayed in the game. There are stories of people networking with those who knew Bernie so they could put in a good word and maybe Bernie would take them on. Holy smokes, people actually standing in line to be fleeced.

We can blame old Bernie for his dastardly deed. Don't the victims also bear some shame for allowing greed to blind them to what appeared to be "easy money." Even worse, what would I have done?

Sunday, March 8, 2009

Creative Destruction

Economists talk about a concept they call "creative destruction." Essentially it says that cyclical movement in the economy does not lend itself well to evolution. As a society (race) we seem to like to maintain a comfort zone and resist change, yet forces far beyond our control force change upon us. The greater the change, the greater the upheaval. The NY Times recently published an article that talks about the severe and sudden job loss as being a harbinger of a fundamental economic shift in the U.S. Perhaps not only in the U.S. but the world. I graduated with a BA in Economics. I am not an economist, I do not pretend to know the models used by economists in trying to understand market forces. However one thing I do remember is that all of the economic models I studied did not function well in extreme conditions. There was always a tendency that moderation seemed to work best. The current economy is due an adjustment. The extremes in this economy generated by an overheated housing market, lack of restraint in money creation, and our focus on technology moved our economy to an extreme edge that is simply not sustainable.

Now comes creative destruction. The old will be destroyed. The automotive market in the U.S. must under go fundamental change. If another plant opens to produce SUV', large vans, or these tricked out pick'em up trucks we have not learned our lesson. GM is facing bankruptcy and frankly I think it should be allowed to go bankrupt. It will generate huge "creative destruction" forces in the U.S. as parts suppliers are suddenly put into severe production under capacity situations. The market will have to adjust. People will be hurt, those who husband their resources and are capable of doing for themselves will survive. Others who rode the wave without a foundation will founder. So it is with the nature of things.

I say bring it on. I'm excited to see what happens. I hope I live long enough to see a fundamental shift away from gadget technology, away from over priced homes and under supported lending institutions, I hope to see a strong move toward alternate forms of energy. I do not like governement interference because the fundamental purpose of government is to preserve the status quo. I do not believe the government will be able to stem the tidal forces about to over take us because the world is involved and there is now a player in the world with more economic clout than the U.S., namely China. We cannot act solely in our best interests, and perhaps this is a step that will start us down the road to world peace. Otherwise it will end in world war and the destruction of mankind will result in either case, from the consumption of all of our resources or we will blow ourselves to smitherens.

Friday, March 6, 2009

Just Tain't Fair

The recent bailout on mortgages is irritating. I bought my property in Arkansas in 1988. I've paid on it for a little over 20 years which includes one refinancing for additional funds to do some fixing up. In March of 2009 I will make the final payment. I've been through some difficult times where both my wife and I were laid off at the same time and had to finance living with credit cards. I've had some good times where I had a job for 18 months that eliminated the debt I'd accumulated during our unemployed times. I have pushed hard to pay down on our mortgage, so we could pay it off early, mainly because in a few years I am going to retire and it is part of retirement strategy to have those kinds of expenses gone.

Now, persons who bought a home in a bad market and are upside down on their value are going to get bailed out. People who's mortgage is greater than 31% of the gross income are going to get a deal. Bullshit!

The market forces operate pretty effectively rewarding those who are both lucky or diligent and punishing those who are foolish or unlucky. Market forces aren't fair, no one has ever said they were, but propping up the market can make the volatility even more erratic. This bailout is tantamount to providing loser insurance to those who frequent casinos. I'll have worked hard to pay my mortgage off, but I'll not bow my head because some government entity had to bail my ass out. I got myself into trouble, I've gotten myself out of trouble. It still angers though to see some who were not wise in their efforts or tried to catch a market on the way up are getting bailed out. It would be painful, but the market should be left to adjust itself.

Wednesday, March 4, 2009

What the fis going on?

An article in our local paper today talks about the increase in gun sales, ammunition sales and a big increase in concealed weapons permits that started about two weeks before the election last fall. A local gun dealer is reporting a hard time keeping up with the demand. WTFIGO? Are we just nuts in the country. We are worried over the economy so the poor shall become criminals and that means the guy down the road has designs on my property. Is Obama going to bring retribution on whites? Are we just goddamn idiots?

It is true that criminal activity in the form of theft go up as the economy goes bad. But experts say that a bad economy generates more interest in flea markets, pawnshops, and the secondary economy where stolen goods can be sold. The increase in market potential usually spells increased activity by persons already engaged in crime, not new criminals coming into that endeavor.

I don't understand. Like what are we going to do, shoot Halloween trick or treaters who approach our property for fear of unrest in society. Then we wonder where the anti-gun lobby gets its traction. Guns are not toilet paper, they blow someone's ass away not wipe it. Maybe I should buy stock in Remington or Winchester, I might make a killing.