When investing in the “Stock Market,” expect the unexpected

Maybe I am an eternal optimist but I believe the stock market is getting ready to move. It is not just the optimist in me that believes this. As an investor (I am not a trader and there is a crucial difference) I see the upside as unlimited. Well at least new highs, then higher highs and still higher highs.

Dow Jones Industrial Average will close above the record level of 14,164.53 sooner rather than later. The scene is set. There is mass pessimism. You cannot have a conversation in the course of a day and have several discussions with people who believe the market is coming down and coming down fast. These investors are awaiting a bottom to form. and I say what the hell are you waiting for. The bottom has formed baby. Besides, nobody ever hits the very bottom. Getting close is good enough in the market.

Unfortunately, the market has a herd mentality. As President-elect Barack Obama referred to “Group Think.”

And what is most amazing is that the investing public will start buying too late. And amazingly, billions have gone into these short-term treasuries that yield nearly zero for “safety reasons.”

In fact, the buying starts when the market makes new highs, then higher highs and still higher highs. The next great market advance will start at, oh say, above the record level of 14,164.53. And all that pent-up demand will take the market to near 20,000 on the Dow.

Don’t be afraid. The greatest opportunities occur when the situations look bleakest. That is just how it has always been. Reading on Walden Bookstore.

Military troops on US soil for domestic security

The Founding Fathers must be rolling in their graves.

The U.S. military expects to have 20,000 uniformed troops inside the United States by 2011 trained to help state and local officials respond to a nuclear terrorist attack or other domestic catastrophe, according to Pentagon officials.

The long-planned shift in the Defense Department’s role in homeland security was recently backed with funding and troop commitments after years of prodding by Congress and outside experts, defense analysts said.

The most disgusting piece of news I have read in the past 5 years. We are an occupied nation.

India and Pakistan to war?

It looks as if India and Pakistan might have an excuse to finally go to war with each other:

MUMBAI (Reuters) - The fallout from a three-day rampage that killed nearly 200 people in Mumbai threatened on Sunday to unravel India’s improving ties with Pakistan and prompted the resignation of India’s security minister.

New Delhi said it was raising security to a “war level” and had no doubt of a Pakistani link to the attacks, which unleashed anger at home over the intelligence failure and the delayed response to the violence that paralyzed India’s financial capital.

Hillary Clinton could have been the Chairman of Approriations . . . but

Hillary Clinton could have been the Senate Chairman of Approriations Committee, but instead chose to become the next Secretary of State.

WASHINGTON - Hillary Clinton passed on becoming boss of the superpowerful Senate Appropriations Committee to pursue the more prestigious secretary of state job with President-elect Barack Obama,the Daily News has learned.

As chairwoman of the panel that controls the nation’s purse strings, Clinton could have pumped billions in federal dollars into the Empire State.

Instead, as Obama continues to piece together his cabinet, Clinton is poised to become the third female secretary of state, following Madeleine Albright and Condoleezza Rice.

52 Days From the White House Obama Needs to Reassess Expectations

Fewer than five weeks ago then Senator Barack Obama followed Bruce Springsteen onto a Cleveland stage, characteristically calling for “hope over fear” and “unity over division.” Yet during this November 2nd speech, as in those of the previous week, Mr. Obama qualified his pleas for reform in Washington, arguing—even as he stood by prior proposals for nearly universal tax cuts—that altering the federal government’s social agenda would come with a price. Being only two days from the election, Mr. Obama forestalled estimating such a cost.

Over the past twenty days news of Germany’s first recessionary quarter in five years has surfaced, Treasury Secretary Paulson has unveiled plans for an approximately $300 billion bailout of Citigroup Inc, and stock markets have collectively frowned at the prospect of an Obama presidency. Meanwhile Mr. Obama, coming under fire for not reversing the global economic downturn from his Senate seat, has repeatedly reminded Americans of the Constitution’s strict “one president at a time” policy and resigned his from his elected position.

As supporters reexamine the practicality of Mr. Obama’s proposed quadruple-bracket tax reductions among his ardent support for a second financial bailout, many have begun to worry he will renege on past promises for expanded social and educational programs. Even if Mr. Obama does put his nationalized health insurance plan before Congress come February, he will need to put-off tax cuts in the short term. In the long term—if he governs from the White House the same way he does as President-elect—he will need to footnote President Reagan as a primary influence; the philosophy with which he pursues government intervention in the financial sector—attempting to prop up the economy from the top bracket—more resembles trickle-down Republicanism that he criticized during the campaign than the bottom-up populism he advocated.

For now, Mr. Obama has begun to temper expectations. Perhaps his message of hope and optimism was too successful or perhaps recent financial turmoil has put a ceiling on his own ambitions. Either way, Mr. Obama does realize that he’s up against unrealistic expectations and an angered public looking for executive bloodshed. And if he continues to hand out golden parachutes to departing Wall St. CEOs, Americans might find him a suitable severance package.

Charlie Rangel the Tax Evader

Interesting. Charlie Rangel looks like a tax evader:

First there is the Washington Post’s revelation that Rangel inappropriately claimed a tax break on his D.C. townhouse by claiming it was his primary residence. The five-year charade only netted the congressman from Harlem about $1,500, which is relatively small potatoes. But it nicely dovetails with two other Rangel escapades of late: That he failed to pay taxes on $75,000 in rental income from his luxury beach villa in the Caribbean because he—ahem—didn’t know it was income; and that he scored several rent-stabilized apartments in New York, each of which he must claim as his primary residence. Taken all together, it looks like the top tax-writer in Congress is a tax cheat.

Henry Ford on bailouts

February 11, 1934: “Let them fail; let everybody fail! I made my fortune when I had nothing to start with, by myself and my own ideas. Let other people do the same thing. If I lose everything in the collapse of our financial structure, I will start in at the beginning and build it up again.”

Happy Thanksgiving

Happy Thanksgiving from the Political Inquirer.

The Stock Market Rally, The Inevitable Crash, And Why We’re Here

Today’s stock market rally was predicted by blogger Vox Day last week. I have read his blog occasionally for the past few years but only recently did I start seeing posts about Austrian economics and notice that he really does understand how the market works. The truth is the market has a long way to go before it bottoms out. Martin Feldstein’s assessment of the market is much more accurate than what the talking heads and pols are going to tell you. Given how wrong the experts have been in the past 3 years, it is probably safe to assume that they will continue to be incorrect. The main reason for this is because of their complete lack of understanding. If they knew how much capital and resources have been wasted due to extremely low interest rates (I don’t know if this can be measured numerically), they would think twice before disagreeing with Feldstein. The market has to bottom out–it is still too easy to get loans and interest rates are still too low.

At some point the market will be so low that people will be ready to accept one of two paths: freedom and prosperity, or socialism and the road to serfdom.

The road before us was laid out by Ludwig von Mises over 70 years ago. It is impossible to have a “regulated, middle-of-the-road, interventionist” economy. Regulated capitalism cannot last. The inevitable result will be a disaster that will force the population to reject all government intervention or to accept totalitarian control over the economy.

Freedom or tyranny is the only answer. There is not an inbetween. We are suffering the consequences of the “inbetween” option chosen by the generations preceding us.

Goldman-Sachs lives on!

Interesting thing to note: The new administration will continue the Goldman-Sachs bailouts and benefit packages as they hire an ex-Goldman-Sachs CEO. Henry Paulson will not be the last GS CEO to work in the White House.

The Real Meaning of Thanksgiving: The Triumph of Capitalism over Collectivism

A great article on the real meaning of Thanksgiving:

The less industrious members of the colony came late to their work in the fields, and were slow and easy in their labors. Knowing that they and their families were to receive an equal share of whatever the group produced, they saw little reason to be more diligent their efforts. The harder working among the colonists became resentful that their efforts would be redistributed to the more malingering members of the colony. Soon they, too, were coming late to work and were less energetic in the fields.

Story of the Day

Maybe the judicial system should just start making more “punishment fits the crime” sentences.

Noise violatiors in Fort Lupton sentenced to listen to Barry Manilow

FORT LUPTON — Barry Manilow’s “I Write the Songs” may begin with the line, “I’ve been alive forever,’” but for noise ordinance violators, listening to Manilow may feel like forever.

Fort Lupton Municipal Judge Paul Sacco says his novel punishment of forcing noise violators to listen to music they don’t like for one hour has cut down on the number of repeat offenders in this northwestern Colorado prairie town.

About four times a year, those guilty of noise ordinance violations are required to sit in a room and listen to music from the likes of Manilow, Barney the Dinosaur, and The Platters’ crooning “Only You”

Is the US government trying to bankrupt itself?

The government just promised $7.4 trillion dollars to bail out the financial mess. The government is already in debt. The bailout was already unaffordable. We are already teetering on the brink of destruction. Are our government officials trying to bring us down as fast as they can?

This number is staggering. Our entire “national debt” is only $10 trillion or so (less the $50 trillion in unfunded liabilities to Medicare and Social Security).

In one fell swoop the government doubled the debt. Rome cannot continue at this pace.

Funny Comment

Sunday’s funny comment from Christopher Manion:

I was reminded of something Michael Reagan said a couple of weeks ago when he was in DC:

“If my dad were in the White House, Barney Frank and Chris Dodd wouldn’t be chairing committees, they’d be dodging federal prosecutors.”

The Austrians Were Right

Statement of Congressman Ron Paul
United States House of Representatives
 
 The Austrians Were Right 
 
 November 20, 2008 
 
 Madame Speaker, many Americans are hoping the new administration will solve the economic problems we face.  That’s not likely to happen, because the economic advisors to the new President have no more understanding of how to get us out of this mess than previous administrations and Congresses understood how the crisis was brought about in the first place.

Except for a rare few, Members of Congress are unaware of Austrian Free Market economics.  For the last 80 years, the legislative, judiciary and executive branches of our government have been totally influenced by Keynesian economics.  If they had had any understanding of the Austrian economic explanation of the business cycle, they would have never permitted the dangerous bubbles that always lead to painful corrections.

The Philosophy of Personal Responsibility

I came across Bill Whittle’s site in a link to his piece on harrassment training;  for him, it’s a short piece, but like most of his work, speaks eloquently on personal responsibility and family responsibility for moral character of its members.  Abrogating that responsibility to government gets easier every day and modern government is always happy to take it off your hands.  The more that concept fades from government, business, and everyday life

A good long read of Bill’s is Tribes, which dates back a few years, but is always relevant.  My primary fear about the Obama government is that the ‘Pink tribe’ will rule, not the ‘gray tribe’  However, I am somewhat heartened by the names he’s coming up with for his cabinet; there is more ‘grayness’ there than I originally feared there would be.

Update: More politically incorrect thoughts here.

Another preemptive strike, this time from the “good guys”

A high-ranking member of the House Judiciary Committee, Congressman Jerrold Nadler (NY-08), has introduced a resolution that preempts President Bush from pardoning any members of his administration who were involved in certain acts.

WASHINGTON, D.C. – Today, Congressman Jerrold Nadler (NY-08), Chair of the Judiciary Subcommittee on the Constitution, Civil Rights, and Civil Liberties, introduced a Resolution in the House of Representatives demanding that President Bush refrain from issuing pre-emptive pardons of senior officials in his Administration during the final 90 days of office. H.RES.1531 is in response to President Bush’s widespread abuses of power and potentially criminal transgressions against our Constitution. The Resolution aims to prevent undeserved pardons of officials who may have been co-conspirators in the President’s unconstitutional policies, such as torture, illegal surveillance and curtailing of due process for defendants.

“This Resolution declares that we will not tolerate a last minute attempt by President Bush to shelter his cronies – cronies who may well be guilty of serious criminal offenses – from the full force of the law,” said Rep. Nadler. “President Bush must not excuse his own officials from possibly illegal acts committed outside the context of their official duties. Such pardons would merely obfuscate the truth and amount to a gross miscarriage of justice.”

Beyond preventing pre-emptive pardons, the Resolution also recommends the establishment of a special commission or select committee to investigate the potentially illegal activities – including abuse of pardon power – of senior Bush Administration officials. It also calls for the next Attorney General to appoint an independent counsel to investigate and prosecute any crimes.

It is probably not a legal or binding resolution, since the pardon powers of a President are generally considered “absolute,” but it does send a strong message. And legal or binding, there is more than one way to skin a cat. You go Jerome. Reading on Walden Bookstore.

We are Manly Men Here!

I just put the political Inquirer through the GenderAnalyzer site: 97%!  Man, are we dripping with testosterone around here!

Of course, I had to test the validity of the site, so I put in Michael Yon’s site.  I figure a reporter who drops his camera to pick up a gun to get into a firefight when even a couple of soldiers froze, has got run about 180%.

64%.  My fairly inactive Datatroll site got 71% (I guess I’m the one responsible for the 3% here).   If I got a higher score than Yon, the testing site has definitely been proven to be invalid. (though Michael Totten, another firebreather, got 86%)

• CNN: 89% sure it’s written by a woman (figures)
• MSNBC: 78% written by a man (I guess Chris quit talking about a thrill up his leg.)
• Fox: 62% man (the other 38% Neanderthal, right Reading?)
• Yahoo: 100% woman!

A lot of fun; try your sites and report in.

No real credit crunch

Small businesses are still able to get loans.

The Causes of the Economic Crisis (1931)

Ludwig von Mises wrote in 1931 a little essay on the causes of the economic crisis. It is perfectly applicable to today. Read it here.

The most telling part is to read the Role of Interest Rates section. Parts II and III are the most important to understanding why we are in the situation we have now. I’ll repost Part II here, but make sure you read the rest of the essay.

II
Cyclical Changes In Business Conditions

1. Role of Interest Rates

In our economic system, times of good business commonly alternate more or less regularly with times of bad business. Decline follows economic upswing, upswing follows decline, and so on. The attention of economic theory has quite understandably been greatly stimulated by this problem of cyclical changes in business conditions.