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Duncan	12-Mar-06, 09:20 AM (GMT)
"humility"
Hamish McRae: Goodbye, easy money: public spending has peaked and the only way is down Published: 12 March 2006 Budgets, like nostalgia, aren't what they used to be. We are just 10 days from what is potentially Gordon Brown's last set piece as Chancellor, yet there seems little sense of excitement or even fear. Not much is going to change. The basic rates of tax and VAT will not be altered. There will be no major structural change in spending. Even the economic forecast this year will be uncontroversial, for after grossly overestimating growth last year, the Chancellor will be more cautious. There will be the usual string of "initiatives" - small dollops of spending on pet projects - and some tweaks to tax, designed to crank a little more out of the system. But nothing big. This is, in a way, welcome. It is a relief that governments no longer make judgements about the economy and then try to fiddle with it. So Budgets no longer try to generate artificial pre-election boosts to demand, or post-election ones to cool the economy. Interest rates will not change, for that power has been unloaded to the Bank of England. Yet this Budget is important, hugely important, because it will mark an era drawing to a close - not so much Mr Brown's time in the job but the end of the period of easy money, the fat years of large increases in public spending. As it has turned out, spending has been strongly anti-cyclical over the past few years, but that was largely unplanned. In the early years, spending was held down in response to fears of a return to Labour's 1970s fiscal disasters, and more recently it was increased because of the Chancellor's aim to boost public services. The resulting deficit has been much larger than projected, mainly as a result of shortfalls in revenues. You can see the way the big numbers have unrolled in the left-hand graph. One of the most surprising things to many people will be that taxation as a percentage of GDP is pretty much where it was when Labour came to power. True, Treasury projections show that it will rise, but I'm not sure I believe them: in practice, it may be hard to get the money in. More about that in a moment. Spending, as you can see, is also projected to level off. Indeed, we are pretty close to the peak now on those projections, which come from an Institute of Fiscal Studies analysis. In fact, the big slowdown may already have begun. The right-hand graph charts what has been happening to GDP over the past year. Every month, the National Institute of Economic and Social Research makes an estimate of growth, sector by sector, so we get an early indicator of what is happening to the economy before the official three-monthly data comes out. Three things stand out. One is the weak but bumpy performance of manufacturing, for all the growth in the economy has been elsewhere. The second is the growing strength of private sector services. And the third is the way in which public sector growth, which had been strong in the early part of the year, has recently tailed off. The reason for that fall-off in spending growth is that the Treasury is desperate not to break its own golden rule on the deficit, for Mr Brown's credibility would be on the line. So the word has gone round the spending departments that it would not be good for their career progression if civil servants permitted any overspending. I suspect the early resignation of the head of the NHS was, in Voltaire's phrase, "pour encourager les autres". Looking ahead, there seem to me to be two main questions. The first is whether the spending plans as set out can be sustained; the second, whether tax revenues can rise as projected. They are interconnected, of course. If the money does not come in, the spending cannot happen because borrowing is close to the practicable limits. It is actually above the Maastricht limit of 3 per cent of GDP. So the issue of the taxing capacity of the country is a real one. Here you head into political territory: what is the most appropriate balance between private and state spending depends on people's political view of the world. This is a pity because dispassionate observations can be made. One is that different countries make different decisions about the appropriate levels of spending and tax: most of Scandinavia operates with a level of both that would not be acceptable elsewhere. Another is that small countries can adopt a more nimble fiscal policy than large ones - Ireland's low corporate taxation and the Baltic states' flat-tax regimes. Still another is that appropriate levels of individual taxes change over time: the high income tax rates of the 1950-75 quarter century have been abandoned everywhere. What is less appreciated is that there has to be consent about taxes. If they are seen as unfair, people find ways round them. That is why high earners the world over are particularly sensitive to changes in tax rates. They will already have assets in several jurisdictions and will move their business arrangements around to take advantage of incentives that governments create for them. But consent is also important among lower earners. We saw that the country has reached the limits of road fuel tax. Prices are now higher than at the time of the fuel blockades but that is accepted because everyone knows the oil price has gone up. Not accepted is a government taking advantage of people who have to drive in their daily lives. What worries me is that people in the UK feel highly taxed when the overall tax burden has not risen much, if at all. This suggests that, far from being skilful in his management of the tax system, Mr Brown has actually been rather clumsy. Stealth tax has had a perverse effect. How? The best explanation may lie in the growing complexity of the tax system. If people have to cope with more paperwork at every level, they spend more time on tax matters. If they are spending more time, they may also feel they are spending more money. Those who use professional advisers are spending more money - though on advice, insurance against investigation and so on, rather, maybe, than in actual taxation. And if these concerns only affect perhaps the top 10 per cent of earners, well, they are the ones who pay more than half the income tax. The public finances have seen a last-minute surge in corporation tax this year. But while overall revenues have been all right, they have not been as strong as Mr Brown expected a year ago. The Treasury has consistently overestimated the revenues it can collect for several years now. Maybe the efforts of the tax gatherers can raise the take further. But at best the big growth in public spending is coming to an end, and at worst it will be hard to fund the levels we have now. Pride comes before a fall: it happened to Japan, it could do to us Japan's long experience with deflation seems to be over. Prices are rising again, just, and the Bank of Japan has signalled it will end its policy of zero interest rates. For those watching Japan from afar, this is all rather other-worldly. If we could borrow at zero interest, we would all go on a spending spree. Imagine what would happen to house prices then. But Japan has had 15 years of falling prices, in property as well as in the shops. Why rush out to buy a home if it is going to be cheaper next year, and the year after and the year after that? So people didn't spend. If all that sounds just too far removed from our own experience, consider this. Japan at the end of the 1980s was enormously self-confident, even arrogant. Its business leaders thought they would sweep the world. Property prices in Tokyo were so inflated that the theoretical value of the land under the Imperial Palace was more than the whole of California. To join one of the swisher golf clubs cost a million dollars or more. Then came a long period of relative failure. The economy stagnated, living standards fell and Japan's perception of itself declined too. The arrogance went and although the best of its companies continued to prosper, some allowed themselves to be taken over. Nissan is now run, successfully, by Renault. Apply these lessons to the rest of the world and note how the Chinese perceive themselves now that they have passed the UK to become the world's fourth- largest economy. I don't think they face a Japanese reversal but clearly bumps lie ahead. Note, too, how the extraordinary growth run of the US is built on something of a bubble, although again, nothing like the scale of the Japanese bubble of the late 1980s. And us? Are we just a touch too self-confident - the Chancellor boasting about the longest period of uninterrupted growth since records began, and all that? Let's celebrate the fact that Japan is doing better at last, but let's also retain just a little humility and a little caution about our own ability to fail. We have plenty of experience of that. © 2006 Independent News and Media Limited
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Duncan	12-Mar-06, 11:25 AM (GMT)
1. "R-word"
Japan 1990 - Unites States of America 2006 The past as a window on the future Part 1 of 5 Japan in retrospect As 2006 takes shape, there is in some quarters concern that all is not as well with the US as what seemingly an overwhelming majority of observers of its economy believe. In an attempt to discover what really lies ahead for the US, this essay looks at the situation in Japan as it was in 1989/90, when Japan's economy was the envy of the rest of the world. What has happened in Japan since then is well-known. The question to be examined here is whether the US, also perceived to be at a pinnacle of success, will maintain its success story better than what the Japanese could achieve. The essay, in five installments, to be released about 2-3 days apart, looks at what Japan was like in 1989/90, at what brought about the severe changes that have been observed since; it then extrapolates this insight to examine conditions in the US in 2006. And to speculate about the future. Introduction Over a period of three decades, from the 1960's to the 1980's, Japan was the envy of the rest of the world. It blazed a trail of economic success for other developing countries, such as South Korea and what became known as the SE Asian Tigers. Japan performed exquisitely in terms of all parameters used by economists. Growth in GDP remained near double digits over this whole period; their consistently large trade surplus helped to keep interest rates low and was bringing in wealth upon wealth; inflation spiked following the 1973 oil crisis, but was brought under control by historically high interest rates, enabling low rates to return so that the economy extended its growth. The stock market boomed; by 1989 the Nikkei had increased 10-fold over its value in 1970. The Yen was strong, boosted by the strong economy and the healthy trade balance. In 1972, when currencies were set to float following Nixon's unilateral abrogation of Bretton Woods, it traded at ¥357 against the US dollar; by the end of the 80's the Yen was at ¥123 to the dollar, a 65% gain in value for the Yen, (and then it firmed to just ¥80 a mere 5 years later - with the dollar down by more than 77% against the Japanese currency!). Japanese innovation and productivity in industry were being copied all over the world, to the extent that foreign cultures made this practice possible; as it happened, success for the transplantation of some Japanese business solutions to the western world was quite rare. By 1990, Japan owned nearly 10% of all of the US, by value, and analysts were creating scenarios in which by year 2000 Japan owned 50% of the property in the country with the largest economy of all. Then, on the last trading day of 1989, the Nikkei 225 index in Tokyo reached its all time high of 38 957 points, before closing the day, the week and the year at the high of 38 916 points. Since then, it could not remotely approach that record. A year later the index had lost nearly 40%, on its way to 'achieving' a low of 7608 points in April 2005 - a loss in value to investors of over 80% from the high. Even so, the Nikkei fared marginally better in its collapse than the Dow Jones Industrial index managed in the aftermath of the 1929 debacle. The Dow Jones had an initial value of 40.94 in 1896; in 1929 it reached a high of 381.217, only to plummet to a close of 41.22 in July, 1932; only a fraction above its opening value 48 years earlier and all of 89.2% down from the high 3 years earlier. Following the collapse of the Tokyo stock market during the early 90's - which also saw the pricking of their property bubble - Japan entered a 16 year period of near constant recession and deflation. This debilitating state of the economy is still not fully resolved, even though the situation recently showed some signs of improvement. It is still too early to confirm whether Japan will grow its economy out of their 16 year slump; its precarious financial system conceals massive bad debts as a consequence of the collapse of the property market. However, Japanese ingenuity and some escape routes in legislation have enabled the banks to successfully brushed the bad debts under the carpet, as discussed in "A Japanese Tale Parts 1 & 2", where by all accounts these still reside to gather dust. One could speculate that, even though well-concealed, this load of bad debt could resurface in reaction to an external shock to make the financial system very vulnerable. While Japan's economy and growing wealth were the envy of the rest of the world, no analyst protective of his reputation dared disregard consensus to suggest that the euphoria about Japan could not last. Potential problems, such as extreme valuations on the stock exchange, were rationalised away; such as by saying Japanese investors cared little for dividends, that their only interest was in increasing capital gains, which meant that the high valuations had become irrelevant. (This again became a familiar theme during the 1990's hi-tech bubble, with similar lack of lasting power!) Yet, despite all the earlier optimism, starting in 1990 the Japanese equity and property bubbles deflated steeply to ring in an extended period of stagnation. As we enter 2006, the US in a number of respects reflects the situation Japan had worked itself into, 16 years ago. Optimism of a new golden era is widespread, despite portents of doom from a small minority who typically anchor their pessimism in a rampant increase in the amount of debt owed by all sectors of the US - by households, corporates and the government; debt that is owed both internally in the US and externally to foreign lenders. This essay attempts to consider these factors in relation to what had happened in Japan after 1990 as a means to cast some light on the future of the US. Conditions in Japan, at the beginning of 1990, are compared to the current situation in the US, in order to provide grounds for speculation about what lies ahead for the US. Given the many similarities, allowances yet have to be made for significant differences between the two countries - economic and also cultural - which implies the US will not follow the exact same path Japan had done over the past decade and a half. Please observe that while some statistics and graphs are essential, the idea is not to dazzle with lots of tables and graphs; this essay is intended to provide an overview for a general readership of what has happened in Japan and what might happen in the US, rather than for more academically inclined readers. Japan in the making, to 1989: The Japanese For outsiders looking into Japan, the Japanese people are perceived as being 'different'. Their isolation from the rest of the world during much of their history, the geography of their islands and their demographics, meant they developed an own, unique set of cultural characteristics, different even from their nearby neighbours on the Asian mainland. A long history of internal warfare coupled to the dominant role of the samurai caste, made them a warlike people, even though only a small fraction of the population had samurai warrior status; the rest, mostly peasants and merchants, from early youth learnt to be obedient and subservient to avoid the consequences of perhaps inadvertently offending someone of the warrior caste or, worse, a noble lord. Their wrath in response to perceived disrespect was immediate and terrible. Pervasive discipline, self and externally imposed, over time, transmuted into strong type-casting, almost stereotypes, that affected everything from speech patterns to dress codes. Each demographic layer in their society was molded into predetermined, fixed patterns of dress, customs, how one behaved generally, even where one could live, from which there was little chance of escape to different circumstances. Conditions of daily living in over-crowded towns and cities, in flimsy housing structures, placed a premium on showing respect for another's right to privacy and demanded that people conform to the norm in terms of their behaviour - a significant attribute of which was to avoid giving offence or becoming a nuisance to others. Further, sheer pressure on peasants and merchants to survive during frequent periods of upheaval and hardship - man made, such as being recruited into an army for the frequent warfare over 800 years of civil strife or finding themselves living in the way of an army on the march, or, else, due to various natural disasters to which these tiny high-population islands are prone - taught them to remain aware of risk, to be prepared for eventualities through hard work and productivity. Thrift and care in the management of assets were of high priority in the household, where the women traditionally controlled family finances. In this way, a strong culture of conformity developed over many centuries, while a risk averse philosophy in the management of household finances was passed from mother to daughter and came to permeate all of society. Individually, these are not all unique qualities, but their combination in one people and the degree to which all of society adheres to these principles are not matched elsewhere. Japan post WWII - The rising sun Following the ignominy of the disastrous defeat in the Second World War, the Japanese started to rebuild their economy with typical will to work. Their industry and dedication paid off and well before the end of the century the Japanese economy had moved into the second spot behind the United States, that it still maintains despite what had happened since the collapse of their markets that started in 1990. By the late 1980's, Japan was on top of the world. The stock market was at a breathtaking high; the Japanese economy, driven during preceding decades by an absolute explosion in both innovative business methods and productivity, was the envy of the rest of the world. No wonder Japanese business practices were being copied all over the developed world in an attempt to emulate what Japan had achieved since the devastating defeat at the end of the Second World War. The property market had been screaming skyward since the late 1950's, so that by 1990 the land value of Greater Tokyo exceeded the total land value of the US by 20%. Japan was in fact by then the owner of about 10% of the US, by value - a minor investment in property, compared to the land value of Japan. No one knows what may have been the situation by the end of the century if the wheels in Japan did not come off in 1990/91. Any attempt to project the trends to the end of the century is likely to result in a scenario that would seem totally implausible today, in the light of what really happened. The sun at midday The story of the run-up to this state of affairs in Japan, with the focus on the real estate bubble that had formed, is told in the author's first internet essay, published at Gold-Eagle early in 1999. "A Japanese Tale" recounts the inflation of the property bubble and what was done to deal with the mass of bad debts after it was pricked. A key consequence of the deflating stock market and property bubbles was that financial institutions sat with a heavy load of bad debt at the same time as their capital base was eroded by the reduced value of their stock market investments. Historical facts and some conclusions of the original essay that are relevant to this review, include: • The Nikkei stock index lost 24% during the first 4 months of 1990, dipping to a loss of 50% after 9 months - during which time the property bubble was also pricked • When property prices halved during the first 12-18 months after the peak, companies as well as individuals who had mortgages close to the original value of their property - which meant a good fraction of all households and a large proportion of businesses, with the latter using the mortgages to fund working capital - simply stopped paying monthly installments, knowing full well that the mortgage holders would not, in fact could not, re-posses all the delinquent properties • It was reported at the time that, since the rules said a mortgage that was delinquent by 6 months had to have the whole amount of the mortgage assigned to bad debt, banks were under pressure to protect their capital base, else they would not meet the capital requirements to continue operation. One solution was to offer delinquent mortgagees who were 5 months behind an interest free loan, repayable after the full mortgage had been paid up, provided the loan was used to pay the installments that were due. When both parties knew full well the mortgage would never be repaid, there was no risk in accepting the offer; however, doing so achieved two objectives - the property was not at risk of foreclosure and bad loans did not erode the bank's capital. • Using rough estimates for the amounts involved, the conclusion in 'A Japanese Tale' was that institutions faced a potential $2.5 trillion in bad debt. • At that time, the author naively thought once this vast amount of bad debt in a major economy became visible and had to be dealt with, it would inevitably lead to major ramifications; perhaps even a near collapse of the global financial system. Of course, this did not happen, perhaps for two reasons. The ingenious Japanese were successful in their use of various means to conceal the true extent of the black hole in the banks' books and secondly, nobody who knew the full extent of the potential crisis wanted to give wide publicity to these facts and perhaps be known as the person who triggered a global financial melt-down • Another solution to conceal the true extent of bad debt, was a stratagem that could be employed over and over by a small group of banks. A report at the time explained how a such a group would collude to get rid of bad debt by floating off a company in which each of them parked some of their bad debt, yet each bank was to own too small a share in the new company for the rule to consolidate its financial statements with those of the owner banks to come into effect. Doings so moved bad debt off the books of all participating banks into limbo. It was reported that around the turn of the century one major Japanese bank listed an interest in more than 2400 such synthetic companies housing nothing but bad debt! • By 1980 the Tokyo stock market had been in a long term bull trend. The final and also steepest phase started at the time when Wall Street finally turned bull - in mid 1982. By then the Nikkei had already almost tripled since the early 1970's, while the Dow had spent 16 years unsuccessfully trying to break above 1000 points. By the end of 1989, the Nikkei had improved by another 450%, which easily eclipsed the 240% gain achieved by the Dow Jones over this period. As the Nikkei stormed to its peak, PE ratios for the larger part of the market climbed to 80 and higher. The generally accepted explanation why this could be sustained, was that Japan had become a new economy and could not be evaluated by outdated measures. Japanese investors, so it was said, did not care about miniscule dividends, because they were only interested in capital growth. Low darkening clouds over the landscape For Japan, the good times came to an end with a bang when both the equity and property markets collapsed in 1990. The Japanese people reacted as they have always done during tough and uncertain times; households fortified themselves financially against risk from all quarters by becoming even more thrifty and risk averse. Purchases were limited to little more than what was essential and to save as much as possible became of overriding importance. This reduction in consumer spending triggered a deflationary recession that was to last on and off for 15 years; the worse conditions became, the greater became the incentive for the Japanese to save and thus prepare for more inclement economic weather. Yet, for the vast majority of Japanese households the financial threat posed by recession was not imminent nor significant. Total household savings during those years were about $12 trillion, or about $100 000 for every man, woman and child. This provided a useful buffer for financial survival of the household during the worsening economic climate. Tradition is very important in Japan. Despite widespread (and growing) presence of some elements of western (US) culture, predominantly among the young, many Japanese still adhere to cultural guidelines and mores that stretch back hundreds of years. In times of adversity, tradition becomes even more important, since, among other things, it offers time tested rules of how to deal with risk and uncertainty. However, the Japanese also have their valued way of dealing with failure and 'loss of honour'. In the aftermath of the economic collapse of the 1990's, many businessmen suffered a 'loss of honour' that in their Bushido tradition could only be expiated by the commission of seppuku, also known as hara-kiri - that is, ritual suicide. By the mid-1990's it was estimated that as many as 33 000 Japanese had committed ritual suicide in response to failure of their businesses as a consequence of the collapse of the markets and its effect on the economy. This statistic is included here to give readers an idea of how much Japan even today still values its traditions. Summary The main points we can learn from this review about the situation in Japan in 1989, at the cusp of its period of rise, to be followed by decline, include: • A long history of excellent economic growth that induced a widespread belief among most Japanese that the good times would not come to an end, only get better • A sustained bull market in equities, with very high PE ratios, which were discounted by market analysts on grounds of a widespread investor preference for capital gains, not for earnings or dividends • A booming economy, partially fueled by debt; in Japan, with large household savings and successful businesses, this was almost exclusively mortgage based since property values were astronomically high, rates were low and 100% mortgages easy to obtain in the climate of ever rising property prices • Low - although not yet super-low - interest rates that made Japanese businesses and households confident there are no dark clouds on the economic horizon • A strong currency and positive trade balance that kept the economy pre-eminent in relative global terms, even after the collapse in local markets; these factors cushioned the economy against the negative effects of the implosion that began in 1990 • Widespread belief in national moral and economic superiority, nurtured by sustained world class growth and no lasting economic setback to rupture that belief, at least not until the bubbles deflated and the Japanese retreated into traditional risk averse mode • A strict and rigid social class structure developed over centuries around a tradition of strong self-discipline and being highly self-reliant at household level; with a history of coping with all kinds of adversity with equanimity and the use of own resources, rather than relying on the authorities for relief and assistance In the third part of this essay we examine how Japan was affected by the situation as it developed post 1990, but first we take a look at comparative conditions in the US today. Part 2 follows (c) 2006 daan joubert All rights reserved daanj@telkomsa.net ////// ECONOMICS, POLITICS & TIME OF A PETROLEUM SHORTAGE by Richard K. Brawn March 11, 2006 It’s going to get all balled up. We can expect politics and economics of the petroleum depletion to become completely rolled up together in the very near future. It is already happening and a current example is the use of the word ‘shortage’. Shortage is a politically charged word meaning what I want costs more than what I am willing to pay. In economics, shortage does not exist. The big reason is that economics defines demand as want plus the ability to pay. The three variables: price, supply and demand; must always be in balance. If the price of petroleum goes to $200 per barrel, price, supply, and demand will be in balance. Where is the shortage when supply, price, and demand are in balance? Continuously, the free-enterprise system optimizes the balance among supply, demand and price. To be sure other economic rules apply. Probably the most germane rule for the new era of petroleum scarcity will be that outrageous profits produces equally outrageous competition. This is a rule that causes high technology businesses to vie so strongly to be first to market with a new product. Technologies to accommodate petroleum depletion are already on the world stage. They are: gas to liquids, solids to liquids and upgrading heavy petroleum. Focus on the problem Let’s keep our respective eyes on the ball. We need energy to do work. Ideally we would not bother with fuels, just move energy around like we do with electricity. But we are far from being able to move raw energy effectively. So, instead of weightless energy, we are stuck with moving fuels (gas, liquid and solid) with the enormous weight and volume that entails. The amount of energy contained in fuels is the key to competition among fuels. To replace high-energy fuel, low energy fuel is needed in greater amount. The extra bulk/volume adds additional cost. Two technological challenges must be overcome to graduate from a fuel-based to an energy-based civilization. First will be the means capture the energy, then the means to move energy to where it is needed, and third will be the means to store energy. In all respects we are in the equivalent of the Stone Age. I mention this only because breakthroughs can never be anticipated and any such a breakthrough would make petroleum, coal and nuclear power obsolete. As petroleum gets more and more scarce what will we see? To state the obvious, we will have to adjust and adapt our machines for other fuels or adapt the fuels to our machines. The economic opportunities will be found in bottlenecks within the adjustment process and relief of those bottlenecks. The adjustment process will involve creative destruction, as the old is made obsolete by the new. Politics will address this adaptation as gouging, shortages, and all other imaginable emotion-driven words. The world will have to go through ‘creative destruction.” As this happens, we will have to remember that free enterprise means freedom to adapt. Politics will do everything possible to maintain the status quo. Political and economic interests will conspire to thwart the transition. Why? Because people dislike change, change makes some rich and some poor, it rearranges power, it simply changes everything and people do not like change. So, free enterprise will be the whipping boy for all manner of social ills coming from the adaptation process. OPEC will whipsaw the price of petroleum to destroy nascent competition from non-petroleum energy sources. To be sure, countries with government-controlled economies (especially those with government controlled energy distribution) will stumble badly as politics and economics get all balled together. For the United States, the Federal Reserve Bank is our potential stick in the spokes. If the Federal Reserve Board facilitates the free enterprise adaptation process then America will do very, very well compared to others. If, the Federal Reserve Board instead orients on the politics of employment, we will join the other government manipulated economies in prolonged misery. Fixes are here, but… Amenable to technology are the capture and use of energy derived from fuels other than light sweet petroleum. Some are in pilot projects. But, one must appreciate the length of time it takes to go from discovery to application of technology. If we assume technology will unlock the energy from heavy liquids and solids, some opportunities will present themselves. Other opportunities will come from identifying sources of scarce materials necessary for the transmission and use of electricity (until something emerges to replace electricity.) Finally, one must consider the intellectual properties that will eliminate the current impasses to effective adaptation. Nothing is going to happen over night no matter how we would wish it. Perspective of the timeline may be gained by looking at just a few of the necessary steps: Obtain funding for basic research 1-2 years Time to make new discovery 2-5 years Engineering the discovery so it can be used 3-5 years Funding the testing of the engineering 1-2 years Pilot project 1-2 years Funding small scale industrial production 1 year Integrating full scale plants with resources 2 years Funding - Bank 6 months Funding - Government 2 years People (hiring, training, etc.) 6 months Materials (sources, contracts, delivery) 1 year Government permitting (urgent conditions) 1-2 years Building the infrastructure 3-5 years Building the full scale industrial plants that make the product 10 years Of course, combining steps and speeding up process can help. But, each step is necessary to make sure what is being developed will not only work in conjunction with other elements being developed, but that it will be competitive with whatever else is coming available. Finally, it must be what people want. The development of drugs gives some idea of the time lines for truly crucial products. However, and this is important, the entire drug industry is in full bloom, our transition has hardly started. The cost will be incredible. See my previous editorial Cost Per Capita for Liquid Fuels Deficit. This cost will have to be added to the debt and unfunded liabilities of the United States. Where the financial resources will come from is another issue entirely. Have some fun, ask your legislator!! But more seriously, doing just that may be a way to research where we stand in the mix of politics, economics and time. © 2006 Richard K. Brawn Editorial Archive CONTACT INFORMATION Richard K. Brawn, CCGA, MPA Petaluma, CA USA Email California Certified General Appraiser (CCGA) and Master Public Administration (MPA) ////// March 12, 2006 Bubble Busting Phoenix by Mike Shedlock Congratulations are in order to Bill Buckner for breaking the story about 14,601 Vacant Homes in greater Phoenix area. Recently, it was reported in the Phoenix market that the number of homes available had jumped from apx3400 homes January 05 to over 30,000 this January. As we watch some of the markets around the country, looking for signs of "the bubble", this number was astounding. As a member of the "Arizona Regional Multiple Listing Service"(ARMLS) I thought I would check for the accuracy of this claim. By the way ARMLS is known to the local realtors as "armless". Funny. In running some stats this morning, there are 33,270 active listings in the MLS. This covers greater Phoenix as well as a bit of outlying area. Another 1,225 are active/contingent. Under contract, but still being marketed for a buyer. There has been a lot of talk of speculation in the Phoenix market, which made me wonder, how many of these homes are vacant. Of the 33,270 active listings, 14,601 are vacant. 14,601, almost half. Wow. Why?? A lot of the "flippers" that bought new homes did not want to put tenants in, so the homes could be marketed as new, never lived in. Move up buyers bought first for convenience/speculation, putting the old home on the market later. People buying 2nd/speculative homes. The high number of vacant homes appears to be the result of this speculative fever that has hit Phoenix, just like many markets. This has led to the unsustainable increase in home values, as the investors no longer enter the market. And a 10 fold increase in inventory as the speculators decide its time to get out while the gettins' still good. I have no year over year comparison for the vacant homes, or info on what is "normal", just a gut feeling that this doesn't bode well for the market. Ben Jones picked up the story on The Housing Bubble Blog. Here are some of the comments: Ben Jones: I had tried to ask this MLS if the rumors were true and they wouldn’t reply. Arizonadude: It is a dust bowl here today. The wind is roaring and kicking up dust everywhere from the plowed fields around gilbert. It is an unbelievable scene here right now. Driving home from barnes and noble I was worried my truck would have the paint sand blasted off. There are 50 homes for sale in my subdivision and most are at least 50000 overpriced. More homes keep coming on the market everyday. AzGolpher: Just for fun I looked up the number of houses for sale in Queen Creek. 2,200. If you look on Craigslist there are dozens of them and most say “new home, never lived in". The Craigslist ads are starting to sound desperate. The New York Times is reporting In Phoenix, Even Cactuses Wilt in Clutches of Record Drought. PHOENIX, March 9 -- Thursday began like the 141 days before it, sunny and crisp, dust settling everywhere except on the record -- set again -- for the number of days without rain. "We have cactus dying from lack of water," Mr. Woodard said. "We have well-established mesquite trees that are in a lot of trouble." Small animals are too dried out to do what comes naturally. "None of the animals, none of the birds are having offspring this spring. No baby quail, no baby bunnies," Mr. Woodard said. An alarming result of the drought is the condition of the air. On Thursday, Arizona's Department of Environmental Quality posted its 25th pollution advisory of the winter, a remarkable number. Last winter -- the opposite of this one, with abundant rainfall -- there were no such days. There is no rain to knock the dust and particles out of the air and wash them away. "We've just had this large, dry, stagnant air mass hanging over the area since November," said Steve Owens, director of the environmental agency. "It used to be, you'd come to Arizona if you had breathing problems because of the air quality. Now, I think you'd have physicians who would say, 'Don't come to Arizona.'" What happens if the La Nina dust bowl pattern lasts for another year? What about 5 years? Heck, what happens to the water table in 10 years even IF things return to normal? Perhaps those in the snow belt get the last laugh. Talk Back Mike Shedlock / Mish http://globaleconomicanalysis.blogspot.com/ Michael Shedlock (Mish) worked in the financial services industry for 20 years at some of the top institutions in the country including Harris Bank, the Bank of Montreal, Bank One, First National Bank of Chicago, and First Data Corp. Mish is currently doing economic and investment research for a number of clients. Copyright © 2005-2006 Mike Shedlock ////// Market Update New files posted at www.ConspiracyPenPal.com. (3/10/06) See today's rant, "Crash Course in Propaganda" (streaming mp3). Today is the third in a row that metal prices have been hit hard. Friday through Tuesday saw the move downward that we normally see made on Fridays, which is done by the government's illegal gold manipulators (the "PPT" correlate for metals) so that the average investors have the weekend to sweat the price of gold. Last Friday saw no such big move, just the second day of a minor retreat which continued on Monday and Tuesday, and now we know why. Wednesday was the really big hit, followed by smaller, though significant, hits yesterday and today, designed to leave us mere mortals wondering over the weekend if we shouldn't dump all our metal stocks, sell our bullion and buy government bonds. Don't be fooled. They obviously planned a major push for this week, for some distinct reason, but it appears to be at an end. The key is in today's sudden turnaround in the stock prices of mining companies, which gapped down at the opening bell, then turned and raced upward. Gold Corp (GG) is up $2 with three hours to do in the day's trading session. Somebody knows something. First, they know the metal assault is over. Second, they know something is coming, something which likely will result in a BIG runup in the prices of precious metals and, of course, mining company stocks. Is the metal bull merely reasserting itself or does all this portend something significant internationally? Time will tell. The Iranian oil bourse is due to open in ten days. If allowed to do so, the dollar will begin its final swan dive, of course, with a pause only after it falls by at least 50%, whereupon the American empire will be at an end and the official beginning of Depression II will be called. Will our NWO masters allow that scenario? Probably not, but they may be unable to prevent it, even by laying waste to Iran. At the very least, they can be expected to distract us and mask the fiscal nightmare bearing down upon us with war, just like always. Conveniently, Iran has provided itself as a target. Note how the Administration has been telling us about Iran's ability to first cripple us with ICBM-launched hi-altitude nuclear EMP bursts, then how they could decimate our cities with nuclear launches from ships sitting just off shore. Recall how they told us about Saddam spraying poison toxins over our cities just before invading Iraq? These are interesting times, indeed. The next week or two should prove to be most interesting. If you have not yet done so, this would be an excellent time to back up the truck, boys and girls. I still like Gold Corp (GG) and North American Palladium (PAL), neither of which carry any hedging contracts whatsoever. I also like a couple of moly plays: Golden Phoenix (GPXM), as well as two juniors - Adanac Moly (ANCGF) and Win-Eldridge Mines (WIDMF). I own modest amounts of all except GPXM, for which I stubbornly am awaiting its stock price to fall back under 35 cents per share before buying any. All three molys are penny stocks and thinly traded, thus can be volatile. I think the potential for molybdenum is greater than that for the precious metals, even their poor relation, palladium. GPXM is established and producing, but you have to look at both Adanac and Win-Eldridge as nothing but pure flyers (albeit with better fundamentals than most). For bullion and numismatics, I don't think you will find a better day than today to call Steve at the Spokane Coin Exchange (800-577-8332). I've had a number of rave reviews from list members who report how well treated they were by him and how surprised they were by his pricing. I use him myself. I've said, "back up the truck" a time or two in the past three months, and for good reason each time, but you have not yet heard me say the following: This very possibly could be the last chance you will have at the prices you see out there today. -ed -- Posted Sunday, 12 March 2006 //////// d gbp is on the year lo to the usd; http://quote.barchart.com/quote.asp?sym=BPM6&code=BSTK //// http://business-times.asia1.com.sg/sub/money/story/0,4574,188775,00.html? Show Me The Money Published March 11, 2006 The R-word: what investors should know There's a correlation between the use of 'recession' in news and market returns By TEH HOOI LING SENIOR CORRESPONDENT Email this article Print article Feedback THE Economist has a R-word Index. For each quarter, it counts how many stories in the New York Times and the Washington Post include the word 'recession'. The magazine has found that over the past two decades, the R-word Index has been good at spotting turning points in the American economy. Unlike GDP figures which appear only after a lag, the numbers are instantly available. I am curious about the R-word Index in Singapore and its use as a stock market indicator. So I went through our electronic library system, going as far back as 1990. For each month since 1990, I have calculated the number of stories in The Straits Times and The Business Times that contained the word 'recession'. I then matched the numbers to the SES All Shares Index and the Straits Times Index. In the last 16 years, the highest monthly count of articles with 'recession' was 614. That's an average of 20 articles with the R-word every day in the two local dailies. And that month was October 1998 - the tail end of the Asian financial crisis. And the lowest count of the R-word in a month was 22, in October last year. By plotting the article count against the stock market indices, it appears that periods when the R-word was most rampantly used usually coincided with the troughs of the market. It occurred in October 1998 and again in October 2001. The higher the number of times the word "recession' appears in the newspapers, the higher the stock market returns three, six and 12 months later. In the last two years, the R-word has made pretty rare appearances in the two local newspapers. It averaged 48 a month between 2004 and February 2006. Before this, the stretch of period when there was a low R-word count was between October 1995 and September 1997. The average was 67 a month. So if those numbers are any indication, it seems people are generally more comfortable about the economy today than they were in 1995 to 1997. I then matched monthly R-word count to the SES All Shares and STI returns three months, six months and 12 months later. There is a positive correlation, and a regression analysis shows that the R-word count is positively and significantly correlated with the stock market returns three, six and 12 months later. In other words, the higher the number of times the word 'recession' appears in the newspapers, the higher the stock market returns three, six and 12 months later. The correlation is the highest for returns 12 months later, at close to 0.5. A correlation of one means that the two sets of numbers are perfectly correlated and that one set of numbers can be used to predict with 100 per cent accuracy the second set. A correlation of zero means the two sets of numbers have no bearing on each other. In October 1998, when the R-word count was high, the STI return a year later was 115 per cent. Meanwhile, periods of low R-word counts have in the past seen low or negative stock returns six to 12 months hence. (See charts 1B, 2C, 1C and 2C) However, in the last two to three years, the Singapore economy has been on a sustained expansion and asset reflation trajectory. The result: generally positive outlook which is accompanied by decent stock market returns. What leads? So which is which, do the repetitive mentions of the R-word cause investors to be extremely fearful and thus dump their shares indiscriminately, and this in turn results in a strong rebound six to 12 months down the road? Or does the media's use of the R-word merely reflects the sentiment in the market, and that when everybody has turned bearish, that marks the turning point for the market? I think both forces are at play - a concept George Soros refers to as reflexivity. An expectation of a recession influences consumer behaviour and eventually causes a recession in the economy. Mark Doms, from the Federal Reserve Bank of San Francisco, and Norman Morin, from the Board of Governors of the Federal Reserve System, did a study on the relationship between consumer sentiment, the economy and the news media, which was published in July 2004. They created an R-word Index like The Economist's with some modifications. First, they required the word 'recession' or 'economic slowdown' to appear in the headline or first paragraph of the article because they found that these articles tended to portray some negative aspect of the economy, such as high unemployment, budget difficulties, low profits, and how people cope when the economy sours. They also extended their index to include 28 papers in addition to the Washington Post and The New York Times. Also, they were able to compute a similar index from the nightly news broadcasts for ABC, NBC, CBS, and so on. Messrs Doms and Morin also created a 'layoff' index in a similar manner to the R-word index. Like the recession index, articles that mentioned 'layoff' or similar phrases such as 'job cuts' and 'firings' in the title or first paragraph tended to focus on some negative aspect of the job market. They found that layoff and recession indexes entered significantly into models for many measures of sentiment. Specifically, the various sentiment measures are negatively related to the recession and layoff indexes (high recession and layoff indexes coinciding with low consumer sentiment measures) and positively related to the economic recovery index. They found there were periods when reporting on the economy had not been consistent with actual economic events, especially during the early 1990s. As a result, consumer sentiment was driven away from what economic fundamentals would suggest. During these periods (in early 1990s and early 2001), sentiment models that contain the newspaper information do a noticeably better job of explaining the drop in consumer sentiment. They also found evidence supporting that consumers update their expectations about the economy much more frequently during periods of high news coverage than in periods of low news coverage. And incidentally, high news coverage of the economy is concentrated during recessions and immediately after recessions. (The data I presented earlier is in line with this observation.) Degree of stickiness This, according to the authors, implied that 'stickiness' in expectations is counter-cyclical. In other words, consumers are likely to have the most bearish views during the depth of recession, when the worst has been factored into asset prices, and vice versa. They concluded that the news media affects consumers' perceptions of the economy through three channels. First, the news media conveys the latest economic data and the opinions of professionals to consumers. Second, consumers receive a signal about the economy through the tone and volume of economic reporting. Last, the greater the volume of news about the economy, the greater the likelihood that consumers will update their expectations about the economy. 'We find evidence that all three of these channels affect consumer sentiment,' they said. As mentioned by the authors, there's a circular flow in the entire process. Newspapers report what is happening in the economy, and then publish opinions and interpretations from experts and market observers. The latter may influence consumer sentiment, which in turn affects consumer behaviour and that eventually will be fed back into the economy. But the starting point has to be a news report of what was actually taking place in the economy. Opinion pieces and forecasts from experts carried in the newspapers may provide that extra boost to the market momentum in either directions. After all, newspapers are written by humans and all humans are afflicted by the same cognitive flaws of linear extrapolation, over-confidence, and so on. So investors will just have to keep reminding themselves that when times are bad, it doesn't mean they will continue forever. And similarly, when the outlook is the rosiest, watch out for that lone dark cloud on the horizon. But, of course, there will always be mitigating factors and exceptions to the rule. Will it prove to be different this time round? Perhaps. For one, asset prices are still not too excessive. So maybe, just maybe, the positive momentum will continue a while yet. Unless, of course, investors are so conditioned to the volatile markets of the last ten years that risk aversion has risen significantly. In which case, past patterns will repeat itself sooner rather than later. Previous articles of this column can be found in volumes I and II of the book entitled Show Me the Money, available at major bookstores. The writer is a CFA charterholder. Her e-mail: hooiling@sph.com.sg © Copyright Singapore Press Holdings 2005. ///// d to mh http://www.point-hotel.co.uk/ building was pre 95; a bombed out huge coop store, in grubby part of edin an architect managed to buy it, with an associated company and get permission for change of use to hotel then made income stream from the hotel these big deals can be done keep at it kind regards duncan http://www.shortorlong.com/ From: Duncan Robertson ///// an official warning (recently) to bankers (from the federal reserve) about commercial real estate loans, is always the kickoff to a recession. d to mh you may not believe, above but i do i have seen it, before in fact, i personally am aware of a guy, who had built up a property portfolio worth 5 mill; however he had a decent loan book (liability exposure set against property portfolio, at variable rate terms, subject to call in, at the lenders request, anytime); and when the recession came, the bank forced the sale of the properties (they do that; believe me; they really do; wouldn't you if you were the banks) to get there money back (at fire sale prices of course) net result, was the guy moved from, a net worth of about 2mill to a net worth of 0 hard to believe but i have seen it understanding what is going on, helps that rules out, most folk kind regards dunc http://www.shortorlong.com/ From: Duncan Robertson /////
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Duncan	12-Mar-06, 11:57 AM (GMT)
2. "it hasn’t been used"
Nat Fraser set to walk free By Liam McDougall and Judith Duffy NAT Fraser, convicted in 2003 of murdering his wife, is set to walk free from jail within weeks after it emerged that crucial evidence was kept secret at his trial. The Sunday Herald understands that the Crown Office will not now challenge Fraser’s impending appeal against his conviction, triggering his release. The disappearance of Elgin mother Arlene Fraser led to one of the largest criminal investigations ever seen in Scotland. Fraser was jailed for life for her murder, although her body was never found. Details of the “hidden” evidence have not yet been revealed but the Sunday Herald understands it relates to the disappearance and subsequent reappearance of Arlene’s wedding, engagement and eternity rings, which were described as the “cornerstone” of the prosecution case. Lord Advocate Colin Boyd described as “a matter of serious concern” the fact that the evidence was not made available to the defence prior to the trial. The Procurator Fiscal for Glasgow, Catherine Dyer, has been asked to conduct a full investigation into the matter. Strathclyde Police chief constable Ricky Gray will lead a separate investigation into the handling of the murder inquiry by Grampian Police. Nat Fraser, 46, was jailed for life in January 2003, after a jury at the high court in Edinburgh convicted him of murder. The trial judge, Lord Mackay, branded Fraser evil and ruled he should spend a minimum of 25 years in jail . Fraser’s legal team lodged grounds for appeal in 2003, but it was January 2004 before Lord Mackay completed his report on the case for the court of appeal. A spokesman for the Crown Office said yesterday: “In preparing the Crown’s response to this appeal, Crown Counsel learned that evidence which was relevant to the case was not made available to the defence or to the court at the time of the trial. Crown Counsel considered that this evidence should be made available to the defence under the duty which the Crown has to disclose evidence which undermines the prosecution case or may assist the defence.” He added that Arlene’s next of kin had been advised of the development. Last night, lawyer Gary McAteer, who acted for Fraser at his trial, said the latest news was a “remarkable development”. He added: “If, as the Lord Advocate says, this is a matter of such serious concern then Fraser should be given bail and released immediately. He should be freed pending his appeal.” Kenny MacAskill, SNP justice spokesman, called for prosecutors to be “open” about the development. He said: “It is vital to justice that the Crown Office prosecutes cases without prejudice. There is a duty to be open and frank with the defence.” Last night no member of Arlene Fraser’s family wished to comment. They said they had been advised to pass all calls on to Grampian police. 12 March 2006 ///// Like father, like son ... the smuggling scams of Marco Milosevic By Gabriel Ronay SERBIA remains a safe haven for everyone – including indicted war criminals and racketeers – connected to Slobodan Milosevic’s nationalist regime. In the fifth year of the ex-president’s war crimes trial, the Milosevic name still works its magic. Among fugitive “Serb war heroes”, disgraced nationalist politicians and unemployed paramilitary gangsters, Marco Milosevic’s smuggling racket is the talk of the town. Marco (below) has been running Belgrade’s biggest contraband cigarettes scam, netting €76 million during a seven-year accounting period alone. According to a report by the Serbian Department Combating Organised Crime, the Marco gang has cornered the cigarette smuggling market “with the backing of the State Security Service, top Customs officials and several politicians in close contacts with them.” The old Serbian state apparatus is looking after its own. Ratko Mladic, Radovan Karadzic and Marco Milosevic are just the tip of the iceberg. And murder has not posed much of a headache for the nationalist racketeers. Recently Ratko’s supply lines ran into trouble in Bulgaria after he fell out with the kingpin of that end of his racket. Ivan Todorov was shot dead in his Porsche in Sofia last month. It was the second attempt on his life. Sofia sources suggest he knew too much about the Belgrade end of Marco’s scam. According to Belgrade’s investigative television programme Insider, Marco and Todorov began their operation through the Black Sea port of Burgas and the border checkpoint of Kalotina in 2003 with the connivance of Bulgarian and Serbian officials. But Marco’s cigarette racket actually began in 1996. Brankica Stankovic of the Insider programme revealed that, in spite of several Serbian police investigations, “Marco’s classic cigarette smuggling via Bulgaria had earned him €76m between 1996 and 2003 alone.” Sofia police have arrested Velin Dobrev–Velata, a professional assassin, and charged him with Todorov’s murder. The investigation is offering a brief glimpse of the Serb nationalists’ close links to the Balkans underworld. Dobrev-Velata admitted shooting Todorov for €40,000 but offered to turn state’s evidence. According to Sofia’s Darik Radio, Marco took out a contract on Todorov. The contract was with the Marguins, a Sofia “Murder Inc” run by the underworld figures Krassimir and Nikolay Marinov who paid Dobrev-Velata the €40,000. He admitted receiving the same sum for two other notorious murders. Plamen Minev, former head of Bulgarian Customs, said in an interview: “Bulgaria has become the transhipment point for cigarettes and the process is completely regulated. In this way Serbia remains the only end-user for contraband cigarettes.” Until Todorov’s murder, the Bulgarian authorities looked the other way. Marco is no novice in the gangster stakes. During his father’s rule, his many underworld “businesses,” based on the Milosevic family’s home town of Pozarevac, flourished. After the collapse of the regime, Marco was driven out of town. But people are still too terrified of the old guard to act against their murderous former leaders. However, under relentless EU pressure, the Serbian state’s secret protection of the Milosevic old guard is rapidly becoming too costly for Belgrade. 12 March 2006 ///// Catching the wind Hydrogen Car: Fuel cell breakthrough from remotest Scottish island By Matthew Magee The small, green car that buzzes around the twists and turns of Scotland’s most northerly roads certainly does not look like a piece of history, nor like Shetland’s future as most people would imagine it. Yet this, the only road-licensed hydrogen fuel cell car on Britain’s roads, is the evidence of a quiet energy revolution being led by a company with its roots in a small community project Spurred by the particular problems of its remote location on the Shetland island of Unst, the Pure energy centre has solved one of green energy’s most pressing puzzles: how to store wind energy. It is believed to be the only company in the UK, and possibly Europe, which has worked out how to create fuel cells using renewable energy. Hydrogen fuel cells have long been touted as green power because they create no carbon emissions when used. The problem has been that to create a hydrogen fuel cell you must use energy, and gas and electricity from traditional sources has been used to date, meaning that a fuel cell still has a reliance on fossil and nuclear fuel. But for the first time in Britain, wind power is being used directly to create fuel cells and Pure’s Sandy Macaulay is the man who captured the wind. “We have this incredible wind resource,” he said. “The British average load factor of wind power is 29%, and here we get 51%, which put us in the Guinness Book Of Records.” The question for Shetlanders, though, is: what to do with the power? “We are not on the grid, and our own grid has a maximum demand of 50MW,” said Macaulay. “So we put 5MW into it, but we can’t put in any more without destabilising the system, so we had to find a way of storing the rest.” Macaulay’s answer was to try to connect wind turbines directly to systems for creating hydrogen fuel cells without any recourse to gas, oil or the electricity grid for power. What had deterred others from such a seemingly natural next step in the green energy market had been the problems caused by the inter mittent nature of wind energy. “We managed to make a system that takes a renewable energy input – it’s wind but it could be solar or marine – and produces hydrogen directly,” said Macaulay. “It goes down to 3KW and up to 15KW and it is not affected if it is switched on and off or if energy is available or not.” The innovation could provide a lifeline to wind farm developers in the Highlands who have planning permission and funding in place but who are being told by the National Grid company that they must wait up to 10 years for a grid connection. Pure’s fuel cell conversion offers them the opportunity to make their energy available stored in fuel cells. “It is no coincidence that the people who are looking at hydrogen fuel cells are people in peripheral areas,” said Macaulay. The company has just received equity funding from Highlands and Islands Enterprise and the Community Energy Company of £300,000, in return for a 24% stake. Some 52% of the company is held by the community, while the remaining 24% is held by founders and staff. Following a recent trade visit to Japan, Pure is in talks with Honda about using its system and possibly even Unst itself as a testbed for future fuel cell cars. In the meantime, it has developed a sellable version of its technology, which comes in a 20-foot container, called a Hypod. “The market just now is public sector and communities: it is other demonstrator projects,” said Macaulay. “People just want to see that it works.” The Hypod will allow anyone to plug renewable energy devices into it in order to turn the energy into hydrogen fuel cells. Previously scientists and researchers were concentrating on proving the viability of fuel cells, so used any power that came to hand. Fuel cells have been criticised by green campaigners because of this use of fossil fuels, while researchers have struggled to make fuel cells work with renewable devices. Macaulay, though, said that the technology itself is not new, it is just the application that is novel. “This was first done in 1830. It is just electrolysis,” he said. “The technology has been known for a long time but because there has been cheap and plentiful energy supplies, it hasn’t been used.” 12 March 2006 //////
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Duncan	12-Mar-06, 02:21 PM (GMT)
3. "mental capital is the most important."
http://bigpicture.typepad.com/comments/ Dennis Gartman's Rules of Trading in Investing | Markets | Trading via John Mauldin, comes Dennis Gartman's "Not-So-Simple" (But Really Utterly So) Rules of Trading R U L E # 1 Never, ever, under any circumstance, should one add to a losing position ... not EVER! Averaging down into a losing trade is the only thing that will assuredly take you out of the investment business. This is what took LTCM out. This is what took Barings Brothers out; this is what took Sumitomo Copper out, and this is what takes most losing investors out. R U L E # 2 Never, ever, under any circumstance, should one add to a losing position ... not EVER! We trust our point is made. If "location, location, location" are the first three rules of investing in real estate, then the first two rules of trading equities, debt, commodities, currencies, and so on are these: never add to a losing position. R U L E # 3 Learn to trade like a mercenary guerrilla. The great Jesse Livermore once said that it is not our duty to trade upon the bullish side, nor the bearish side, but upon the winning side. This is brilliance of the first order. We must indeed learn to fight/invest on the winning side, and we must be willing to change sides immediately when one side has gained the upper hand. R U L E # 4 DON'T HOLD ON TO LOSING POSITIONS Capital is in two varieties: Mental and Real, and, of the two, the mental capital is the most important. Holding on to losing positions costs real capital as one's account balance is depleted, but it can exhaust one's mental capital even more seriously as one holds to the losing trade, becoming more and more fearful with each passing minute, day and week, avoiding potentially profitable trades while one nurtures the losing position. R U L E # 5 GO WHERE THE STRENGTH IS The objective of what we are after is not to buy low and to sell high, but to buy high and to sell higher, or to sell short low and to buy lower. We can never know what price is really "low," nor what price is really "high." We can, however, have a modest chance at knowing what the trend is and acting on that trend. We can buy higher and we can sell higher still if the trend is up. Conversely, we can sell short at low prices and we can cover at lower prices if the trend is still down. However, we've no idea how high high is, nor how low low is. R U L E # 6 Sell markets that show the greatest weakness; buy markets that show the greatest strength. Metaphorically, when bearish we need to throw our rocks into the wettest paper sack for it will break the most readily, while in bull markets we need to ride the strongest wind for it shall carry us farther than others. R U L E # 7 In a Bull Market we can only be long or neutral; in a bear market we can only be bearish or neutral. In a bull market we can be neutral, modestly long, or aggressively long--getting into the last position after a protracted bull run into which we've added to our winning position all along the way. Conversely, in a bear market we can be neutral, modestly short, or aggressively short, but never, ever can we--or should we--be the opposite way even so slightly. R U L E # 8 "Markets can remain illogical far longer than you or I can remain solvent." The University of Chicago "boys" have argued for decades that the markets are rational, but we in the markets every day know otherwise. We must learn to accept that irrationality, deal with it, and move on. R U L E # 9 Trading runs in cycles; some are good, some are bad, and there is nothing we can do about that other than accept it and act accordingly. Thus, when things are going well, trade often, trade large, and try to maximize the good fortune that is being bestowed upon you. However, when trading poorly, trade infrequently, trade very small, and continue to get steadily smaller until the winds have changed and the trading "gods" have chosen to smile upon you once again. R U L E # 10 To trade/invest successfully, think like a fundamentalist; trade like a technician. It is obviously imperative that we understand the economic fundamentals that will drive a market higher or lower, but we must understand the technicals as well. When we do, then and only then can we, or should we, trade. R U L E # 11 Keep your technical systems simple. The greatest traders/investors we've had the honor to know over the years continue to employ the simplest trading schemes. They draw simple trend lines, they see and act on simple technical signals, they react swiftly, and they attribute it to their knowledge gained over the years that complexity is the home of the young and untested. R U L E # 12 In trading/investing, an understanding of mass psychology is often more important than an understanding of economics. Markets are, as we like to say, the sum total of the wisdom and stupidity of all who trade in them, and they are collectively given over to the most basic components of the collective psychology. The dot-com bubble was indeed a bubble, but it grew from a small group to a larger group to the largest group, collectively fed by mass mania, until it ended. The economists among us missed the bull-run entirely, but that proves only that markets can indeed remain irrational, and that economic fundamentals may eventually hold the day but in the interim, psychology holds the moment. And finally the most important rule of all: R U L E # 13 Do more of that which is working and do less of that which is not. This is a simple rule in writing; this is a difficult rule to act upon. However, it synthesizes all the modest wisdom we've accumulated over thirty years of watching and trading in markets. Adding to a winning trade while cutting back on losing trades is the one true rule that holds--and it holds in life as well as in trading/investing. > Dennis Gartman: This is what I have learned about the world of investing over three decades. I try each day to stand by my rules. I fail miserably at times, for I break them often, and when I do I lose money and mental capital, until such time as I return to my rules and try my very best to hold strongly to them. The losses incurred are the inevitable tithe I must make to the markets to atone for my trading sins. I accept them, and I move on, but only after vowing that "I'll never do that again." > Source: The Rules of Trading John Mauldin Safe Haven, January 21, 2006 http://www.safehaven.com/article-4471.htm Sunday, March 12, 2006 | 08:05 AM | /////// g There is just to much paste and copy on he DC and its getting worse. I cant see anyone reading it. d you mean content; that is the word, you seek you mean the content, has developed good and the web stats say, many people click many eyeballs look at sol and eyeballs count they increase as sol perseveres and why would that be any idea? but more importantly sol does much for me understanding acceptance and i read the content before i post it there might be something to that in a positive context //////
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Duncan	12-Mar-06, 03:36 PM (GMT)
4. "no lo risk entries"
Good Morning, Please find here the link to the latest issue of the Investment Commentary. Please download the pdf file by clicking on the following link: http://www.samariumgroup.com/downloads/Investment-Commentary.pdf (The link has been checked for viruses and worms, and does not contain any mailicious software according to the latest scan) Sincerely, Dr. Volkmar G. Hable ////// Reuters Port row will affect investment in US: UAE cbank Sunday March 12, 7:40 am ET By Will Rasmussen ABU DHABI (Reuters) - The Dubai Ports furor will color foreign investors' perceptions of the United States and affect future investment decisions, the United Arab Emirates' central bank governor said on Sunday. ADVERTISEMENT The governor's comments were the first from a senior UAE official since state-owned Dubai Ports announced on Thursday that it would transfer six U.S. ports to a U.S. entity, to allay concerns that the deal posed a threat to American security. Governor Sultan Nasser al-Suweidi said the row kicked up by U.S. lawmakers over the ports deal betrayed a double standard. "It is against the principles of international trade ... which the U.S. was instrumental in making. They are contravening their own principles in this respect," Suweidi told reporters. "Investors are going to take this into consideration ... They will look at investment opportunities (in the United States) through new binoculars." While Suweidi made no specific reference to Arab investment, his remarks underscored growing concern of a backlash among Gulf Arab investors. Governments in the world's biggest oil exporting region are diversifying away from U.S. assets, as record oil prices drive up cash available for foreign investment by about $180 billion a year -- about 16 percent of the external funding needed to cover the U.S. current account deficit. Without making a link to the ports affair, Suweidi said the central bank was looking to convert up to 10 percent of its foreign exchange reserves from dollars into euros -- double the target the bank had previously set. UAE central bank foreign reserves -- estimated at $23 billion in December -- are held virtually entirely in dollars. The bank said in July it was looking to convert 5 percent of that into euros. "Yes it's an increase. The euro will become more attractive definitely and once it becomes more attractive the decision will be to shift but in a reasonable way," Suweidi said. He said bank executives would consider the shift at a meeting in April. The central bank controls only part of the official foreign exchange reserves of the UAE, an oil-exporting federation of seven emirates. Other major holders include the investment arms of the emirates' governments. Speculation that major central banks were looking to trim their dollar holdings reached fever pitch during the dollar's slide against the euro in the three years to 2004, but eased as the U.S. currency regained ground last year. ///// d i plan to get flat on my long pos mon /////
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Duncan	12-Mar-06, 04:19 PM (GMT)
5. "understand The Tipping Point"
Milosevic death mystery persists UN chief war crimes prosecutor Carla del Ponte News conference Slobodan Milosevic feared he was being poisoned just a day before he died in his cell at the UN war crimes tribunal in The Hague, his lawyer has said. Zdenko Tomanovic told reporters Mr Milosevic had complained of "strong drugs in his system only used for treating leprosy or tuberculosis". An autopsy is under way on the indicted former Yugoslav president, who died on Saturday. He had had heart problems. UN chief prosecutor Carla del Ponte has scorned claims of suicide or poisoning. "Until we have precise results it's rumours," Ms del Ponte told journalists, referring to the autopsy in The Hague, which is being observed by a Serbian doctor. Plea to Russia Mr Tomanovic later showed journalists in The Hague a copy of Mr Milosevic's hand-written letter - addressed to Russian Foreign Minister Sergei Lavrov. HAVE YOUR SAY Former Yugoslav President Slobodan Milosevic Slobodan Milosevic and the Serbs were certainly no worse than the people he opposed John Tiller, Toronto Send us your comments "He said: 'They would like to poison me. I'm seriously concerned and worried'," Mr Tomanovic said, adding that Mr Milosevic had been citing a medical report from 12 January. Mr Milosevic had requested permission to travel to Moscow for medical treatment, but the tribunal had refused, fearing that he might not return to The Hague. The tribunal also argued that Mr Milosevic was getting competent medical supervision in The Hague. He died aged 64, just months before the scheduled end of his trial for war crimes in the Balkans in the 1990s. Mr Milosevic's family blames his death on The Hague tribunal. Most-wanted suspects Ms del Ponte said she expected initial results of the autopsy on Mr Milosevic on Sunday evening or Monday morning, although she noted that results of toxicology tests could take longer. MILOSEVIC TRIAL FACTS 295 witnesses testified 5,000 exhibits presented in court 466 days of hearings Death divides Balkan press She said Mr Milosevic's death made it even more urgent for Serbia to arrest the most wanted Bosnian Serb war crimes fugitives, Ratko Mladic and Radovan Karadzic. "Now more than ever I expect Serbia to finally arrest and transfer Mladic and Karadzic to The Hague as soon as possible," she told a news conference. "I deeply regret the death of Slobodan Milosevic," she said, explaining that it "deprives the victims of the justice they need and deserve". Mr Milosevic had been held at the UN war crimes tribunal since 2001. CHARGES AGAINST MILOSEVIC Genocide, relating to the massacre in Srebrenica, Bosnia Crimes against humanity, relating to Bosnia, Croatia and Kosovo Grave breaches of the Geneva Conventions, relating to Bosnia and Croatia Violations of the laws or customs of war, relating to Bosnia, Croatia and Kosovo He was on trial on charges of war crimes and crimes against humanity for his alleged central role in the wars in Bosnia, Croatia and Kosovo during the 1990s. He also faced genocide charges over the 1992-95 Bosnia war, in which 100,000 people died. Ms del Ponte defended the length of the trial, saying the Balkan war crimes had affected hundreds of thousands of people. Correspondents say the tribunal's monitoring of inmates is under scrutiny because Mr Milosevic's death came within a week of the suicide of a former rebel Croatian Serb leader, Milan Babic. Funeral questions Both Mr Milosevic's widow Mirjana Markovic and son Marko have blamed the tribunal for his death. They are living in Moscow and both face fraud charges in Serbia, so it is not yet clear whether Mr Milosevic's funeral will take place in his homeland. His daughter Marija, now living in Montenegro, would also face criminal charges in Serbia. The allegation that he may have been poisoned appeared on the front pages of many Belgrade newspapers on Sunday. One headline in a tabloid said simply "Murder!" while another stated "Milosevic killed by The Hague". But the BBC's Matt Prodger in Belgrade says Serbian state television led with the memorial service for the reformist Prime Minister Zoran Djindjic, who was assassinated exactly three years ago. His government sent Mr Milosevic to The Hague. Few Serbs lament the passing of Mr Milosevic, our correspondent says, and there is now a debate about whether to accord him the honours befitting a former president. ///// Corsican MP shot dead at airport Robert Feliciaggi (2001 photo) Feliciaggi came to politics from a successful business career A rightwing Corsican politician and casino boss, Robert Feliciaggi, has been shot dead in an airport car park in the French island's city of Ajaccio. He died in hospital hours after being shot in the head several times in a car park by a hooded attacker who escaped in a waiting car, police say. He was attacked as he was loading his luggage into his car boot after arriving on a flight from Paris. The motive for the attack on Friday night was not immediately clear. Mr Feliciaggi, 64, was a member of a rightwing breakaway faction of the centre-right UMP party in the Corsican Assembly, according to the French news agency AFP. This was an ambush staged by professional criminals who were clearly well informed and were waiting for the victim in the airport car park Jose Thorel French prosecutor He was also mayor of the village of Pila Canale in the south of the Mediterranean island. Nicknamed the "African", he was a successful businessman with interests in casinos in Cameroon, Gabon and Congo as well as in France. He was also viewed as an ally of former French Interior Minister Charles Pasqua. Mr Feliciaggi was investigated for corruption in 2002 over the purchase and resale of a casino but he always denied the charges against him. Investigators into his killing are working on the theory that the attackers stole their getaway car and later burnt it to destroy evidence, Reuters news agency reports. "This was an ambush staged by professional criminals who were clearly well informed and were waiting for the victim in the airport car park," said prosecutor Jose Thorel. According to Le Monde newspaper, the killing is the first in 15 years of an elected politician in Corsica, which has seen separatist violence in recent decades. ///// Hamas claims strong Saudi support Khaled Meshaal, Hamas political leader in exile Hamas is on a fundraising tour across the Middle East Hamas has claimed "excellent" Saudi backing for the Palestinian Authority amid US and EU threats to cut funding after the group's election win. A delegation of Hamas leaders has been visiting Riyadh as part of a tour to enlist financial and political support for the new government it is forming. Saudi Arabia has traditionally been one of the biggest financial backers of the Palestinian Authority. There was no immediate comment from the Saudis after the Hamas visit. We did not go into numbers but they promised excellent support Ezzat El-Resheq Hamas delegate Hamas five-strong delegation, including exiled leader Khaled Meshaal, had talks with Foreign Minister Saud al-Faisal and Prince Muqrin bin Abdul-Aziz, the Saudi intelligence chief. "They affirmed that political and financial aid to the Palestinian Authority and Palestinian people would continue," delegation member Ezzat El-Resheq told Reuters news agency in Riyadh. "We did not go into numbers but they promised excellent support." Unswayed Saudi Arabia earlier rejected US calls to isolate Hamas because of its attacks on Israel. "We hope that as a government, they will represent the interests of the Palestinian people and we are waiting for them to show us what kind of leadership they are going to provide to the Palestinian movement," Prince Faisal said. "We are not prejudging or putting conditions on them." The European Union warned on Friday it would cut funding for a Hamas-led government if it failed to renounce violence and recognise Israel. On a recent tour, US Secretary of State Condoleezza Rice attempted, without success, to persuade Saudi Arabia and other Gulf states to cut funding for the new Hamas-led Palestinian government. ////// Peer nominee in £1.5m Labour loan Dr Chai Patel Dr Chai Patel has donated and loaned money to Labour Chai Patel, the head of the Priory rehab clinics and a Labour nominee for a peerage, lent the party £1.5m last summer, the BBC has learned. The Lords Appointment Commission, which vets nominations for peerages, is said to be against Dr Patel's candidacy. Dr Patel said he made the loan last summer following a request, but never expected anything in return. The Labour Party defended the loan, saying rules set by the commission had been strictly adhered to. The commission said it would expect to be told about any links that could be seen to influence a recommendation. But a spokesman said the independent body would not comment on individual cases. The BBC understands that the loan is still outstanding and was made at commercial rates. Misconduct charges Dr Patel has also given a total of £100,000 to Labour. He said he has been angered by what he sees as the leaking of his candidacy by the commission and has called for transparency. Dr Patel, whose name was submitted by Downing Street for a peerage two months after the loan, said he would not have lent the party the money if he had imagined that the financial support would create such criticism. The Labour party donor was cleared of misconduct charges by the General Medical Council last year. Reputation concerns He had faced being struck off after being accused of running a care home in which elderly patients were allegedly mistreated. But following a hearing last summer, the case was dropped after insufficient evidence was produced and he was cleared of professional misconduct. Recent reports stated that the commission told Tony Blair to withdraw his nomination. They prompted Dr Patel to write a letter to the commission, asking for reasons for its reported objection to his appointment and saying his reputation was being traduced. Reports also claim the commission is unhappy about several other nominees. A Labour Party spokesman said: "There is nothing wrong with donating or lending money to a political party as long as the rules are strictly adhered to. "The issue here, regarding the loans that they have made, is whether the strict rules set by the Electoral Commission regarding the declaration of loans that have been made at a commercial rate, have been fully observed. They have." ////// Alaska hit by 'massive' oil spill An oil spill next to a transit line in Prudhoe Bay, Alaska The spill covers two acres of the snow-covered tundra An oil spill discovered at Prudhoe Bay field is the largest ever on Alaska's North Slope region, US officials say. They estimate that up to 267,000 gallons (one million litres) of crude leaked from a corroded transit pipeline at the state's northern tip. The spill was detected on 2 March and plugged. Local environmentalists have described it as "a catastrophe". In 1989, the Exxon Valdez shipping disaster spilled 11m gallons (42m litres) of oil onto the Alaskan coast. 'Painful reminder' "I can confirm it's the largest spill of crude oil on the North Slope that we have record of," Linda Giguere, from Alaska's state department of environmental conservation, was quoted as saying by the Associated Press news agency. The estimate is based on a survey conducted several days ago at the site where the leak was discovered, officials say. The spill covers about two acres (one hectare) of the snow-covered tundra in the sparsely populated region on Alaska's north coast, some 1,040km (650 miles) north of the state's biggest city, Anchorage. The source of the spill was a hole caused by internal corrosion in the pipeline, officials say. It remains unclear when the leak started. Environmentalists from Alaska Wilderness League said the spill was "a catastrophe for the environment". They said it was "a painful reminder of the reality of unchecked oil and gas development across Alaska's North Slope". They also urged lawmakers to shelve a Republican-led project to allow drilling for oil in Alaska's Arctic National Wildlife Refuge (ANWR). Supporters of drilling in Alaska say it offers an alternative source of energy to the Middle East and so would improve national security. Opponents warn oil exploration would harm a pristine wilderness and endanger a key habitat for migratory birds, polar bears, caribou and other animals. 1989 disaster Alaska's worst-ever oil spill happened on 24 March 1989. Exxon Valdez spill The 1989 spill devastated miles of Alaskan coastline and wildlife The Exxon Valdez tanker ran aground in Prince William Sound, near Anchorage, contaminating around 1,300 miles (2,080km) of coastline. Its captain, Joseph Hazelwood, admitted drinking vodka before boarding the vessel, but was subsequently acquitted of operating a ship while intoxicated. The spill killed an estimated 250,000 seabirds, 2,800 sea otters, 300 seals, 250 bald eagles, up to 22 Orca or killer whales, and an unknown number of salmon and herring. In 2004, a federal judge in Alaska ordered Exxon to pay $6.75bn (£3.9bn) in damages and interest in relation to the spill. ////// Total home control within reach Dan Simmons By Dan Simmons Click reporter Adam Kent's smart home There is more to Adam Kent's home than meets the eye Smart homes are still expensive. But some items are becoming more affordable, and the benefits could encourage more people to turn their dreams into reality, finds Dan Simmons at the Smart Home Show in Birmingham. Adam Kent's country house may look quaint, but it could not be described as old-fashioned. Mr Kent, who runs a business providing the latest smart home technology, has spent the last two-and-a-half years packing as much of it as he can into his own 28-room crib. "The key thing with every room is that it is controlled by a panel," he says. "So each of the rooms has got one in, and this allows you to control all of the devices that are connected to the magic boxes. "We have a couple of satellite boxes, DVD, music, even CCTV." The panels, which can be controlled remotely, are expensive at more than £1,000 each. The perfect smart home is not just about the gizmos; it is also about looking the part. Mr Kent has used a false wall to hide the cables, recess the plasma and house the speakers. So, if you do not mind getting the builders in and losing a little floor space, it is a beautiful solution. Let there be light With 28 rooms, you would expect the lighting bill to be expensive but Mr Kent says smart home technology takes care of this. Control boxes Three boxes in the control room are the hub of the system For example, in the room with the plasma television, the first call for lighting is for the LEDs, he says. "They are ideal for watching the TV, and the best bit is that they are only four or five watts. "If we need any more light then you just select one of the settings. 'Romantic' will be 10% and 'chilled' may be 15%." Mr Kent's lighting software can even predict where he might go next and turns the lights on using the motion sensors in the ceiling. He has chosen to hardwire the system to guarantee the connections rather than relying on a wireless setup. Each panel in the house, as well as the lighting, comes back to three boxes situated in the control room which is "where it all happens". "Each of these boxes controls eight rooms. In a conventional house you would probably only have one in here. We have three. "They are about £4,000 to £4,500 each but that gives you the whole infrastructure for a property." And the rest of the system can be made from equipment that is not so hi-tech, says Mr Kent. Plasma fireplace A plasma that could be stored in a fireplace was on display at the show "The whole beauty of this is that you can use the equipment that you have already got in the property. "For example, we have got two satellite boxes, we have got a music server, DVD and three surround-sound amps. "But there are three cinema rooms in here. Again, conventionally, you would probably only have one." He adds: "What you are giving yourself is the ability to share and control all of the equipment in this cabinet from any room." The cupboard next door houses the lighting circuit boards and it is worth pointing out that each dimmable circuit in the house cost Mr Kent £250. Smart entertainment Mr Kent's children - Faye, Isabelle, and Luke - love the big screens in the three cinema rooms. Bathroom At the show was a heat-resistant, waterproof LCD for the bathroom Ideally, you need wall space and a high ceiling to store the digital projector. Prices for these have dropped considerably in the last two years, and at around £1,000 a set-up could cost less than a large plasma or LCD screen. The speakers in the ceiling also create a sense of space. Alternatively you could get rid of the speakers altogether and have the sound coming straight from the walls. Back at the Smart Home Show in Birmingham's NEC, a mock up uses a series of tiny but powerful speakers which dissipate the sound across the entire wall surface which is made up of a special mesh. The result is surprisingly good. The cost of £5,000 to wire up a small room is not cheap and you will need four hollow walls. How about storing your plasma in your fireplace? The screen is protected from the heat so when it is down you can stay warm. Again, wires are hidden and it means the TV does not dominate the room. The fireplace does that instead. Wireless limitations In the perfect smart home anything and everything can be controlled at the touch of a button. But the advice from many at the show was not to connect the button to a PC. Serious smart homes should not crash, catch a virus or go wandering off to the internet to get software updates. Mirror TV Yours for only £1,900 - a mirror which is also a TV And the fashion of wireless technologies for a whole home was thought unreliable, too; as Gary Cunningham from Sensory International explains. "We are nearly there with wireless, but I think we are a couple of years away from wireless being the complete everything that we need for doing the entire house. I think that at this moment in time, for a single room, wireless is fine. "One of the major issues for wireless is data drop-out, which is not so bad on video and audio as we can use a little bit of buffer time then. "But if we are using a security system, the possibility of losing data could corrupt our system and make it useless." For £1,200, you can fit your bathroom with low-voltage sealed panels and a heat-resistant, waterproof LCD. Another addition to the bathroom suite is a £1,900 mirror which is also a TV. And there is an amazing mirror plasma for £4,000. Or how about a TV towel rail for £2,500? And to round off the visual spectacle, simply plug in your camera's memory card to a digital picture frame, from £550. Mr Kent does not have a mirrored plasma hanging over his bed but he does have something to keep the kids in order, he says. "You know what it's like trying to get the kids to bed. From the bedroom, not only can I switch off whatever television they are watching, I can also switch off the lights." However much the gadgets themselves may cost, total control over your home and kids is surely priceless. ////// d to mh "location, location, location" are the first three rules of investing in real estate, the first two rules of trading equities, debt, commodities, currencies, and so on are these: never add to a losing position. http://www.shortorlong.com/ From: Duncan Robertson ////// d to ts i now look like an Austrian i bot a super shoffel hunting jacket the best Austrian guy in shop told me Hitler wore a shoffel jacket so they we are kind regards Aquarius chart looked good http://www.shortorlong.com/ ////// http://www.gladwell.com/tippingpoint/index.html 1. What is The Tipping Point about? It's a book about change. In particular, it's a book that presents a new way of understanding why change so often happens as quickly and as unexpectedly as it does. For example, why did crime drop so dramatically in New York City in the mid-1990's? How does a novel written by an unknown author end up as national bestseller? Why do teens smoke in greater and greater numbers, when every single person in the country knows that cigarettes kill? Why is word-of-mouth so powerful? What makes TV shows like Sesame Street so good at teaching kids how to read? I think the answer to all those questions is the same. It's that ideas and behavior and messages and products sometimes behave just like outbreaks of infectious disease. They are social epidemics. The Tipping Point is an examination of the social epidemics that surround us. 2. What does it mean to think about life as an epidemic? Why does thinking in terms of epidemics change the way we view the world? Because epidemics behave in a very unusual and counterintuitive way. Think, for a moment, about an epidemic of measles in a kindergarten class. One child brings in the virus. It spreads to every other child in the class in a matter of days. And then, within a week or so, it completely dies out and none of the children will ever get measles again. That's typical behavior for epidemics: they can blow up and then die out really quickly, and even the smallest change -- like one child with a virus -- can get them started. My argument is that it is also the way that change often happens in the rest of the world. Things can happen all at once, and little changes can make a huge difference. That's a little bit counterintuitive. As human beings, we always expect everyday change to happen slowly and steadily, and for there to be some relationship between cause and effect. And when there isn't -- when crime drops dramatically in New York for no apparent reason, or when a movie made on a shoestring budget ends up making hundreds of millions of dollars -- we're surprised. I'm saying, don't be surprised. This is the way social epidemics work. 3. Where did you get the idea for the book? Before I went to work for The New Yorker, I was a reporter for the Washington Post and I covered the AIDS epidemic. And one of the things that struck me as I learned more and more about HIV was how strange epidemics were. If you talk to the people who study epidemics--epidemiologists--you realize that they have a strikingly different way of looking at the world. They don't share the assumptions the rest of us have about how and why change happens. The word "Tipping Point", for example, comes from the world of epidemiology. It's the name given to that moment in an epidemic when a virus reaches critical mass. It's the boiling point. It's the moment on the graph when the line starts to shoot straight upwards. AIDS tipped in 1982, when it went from a rare disease affecting a few gay men to a worldwide epidemic. Crime in New York City tipped in the mid 1990's, when the murder rate suddenly plummeted. When I heard that phrase for the first time I remember thinking--wow. What if everything has a Tipping Point? Wouldn't it be cool to try and look for Tipping Points in business, or in social policy, or in advertising or in any number of other nonmedical areas? 4. Why do you think the epidemic example is so relevant for other kinds of change? Is it just that it's an unusual and interesting way to think about the world? No. I think it's much more than that, because once you start to understand this pattern you start to see it everywhere. I'm convinced that ideas and behaviors and new products move through a population very much like a disease does. This isn't just a metaphor, in other words. I'm talking about a very literal analogy. One of the things I explore in the book is that ideas can be contagious in exactly the same way that a virus is. One chapter, for example, deals with the very strange epidemic of teenage suicide in the South Pacific islands of Micronesia. In the 1970's and 1980's, Micronesia had teen suicide rates ten times higher than anywhere else in the world. Teenagers were literally being infected with the suicide bug, and one after another they were killing themselves in exactly the same way under exactly the same circumstances. We like to use words like contagiousness and infectiousness just to apply to the medical realm. But I assure you that after you read about what happened in Micronesia you'll be convinced that behavior can be transmitted from one person to another as easily as the flu or the measles can. In fact, I don't think you have to go to Micronesia to see this pattern in action. Isn't this the explanation for the current epidemic of teen smoking in this country? And what about the rash of mass shootings we're facing at the moment--from Columbine through the Atlanta stockbroker through the neo-Nazi in Los Angeles? 5. Are you talking about the idea of memes, that has become so popular in academic circles recently? It's very similar. A meme is a idea that behaves like a virus--that moves through a population, taking hold in each person it infects. I must say, though, that I don't much like that term. The thing that bothers me about the discussion of memes is that no one ever tries to define exactly what they are, and what makes a meme so contagious. I mean, you can put a virus under a microscope and point to all the genes on its surface that are responsible for making it so dangerous. So what happens when you look at an infectious idea under a microscope? I have a chapter where I try to do that. I use the example of children's television shows like Sesame Street and the new Nickelodeon program called Blues Clues. Both those are examples of shows that started learning epidemics in preschoolers, that turned kids onto reading and "infected" them with literacy. We sometimes think of Sesame Street as purely the result of the creative genius of people like Jim Henson and Frank Oz. But the truth is that it is carefully and painstaking engineered, down to the smallest details. There's a wonderful story, in fact, about the particular scientific reason for the creation of Big Bird. It's very funny. But I won't spoil it for you. 6. How would you classify The Tipping Point? Is it a science book? I like to think of it as an intellectual adventure story. It draws from psychology and sociology and epidemiology, and uses examples from the worlds of business and education and fashion and media. If I had to draw an analogy to another book, I'd say it was like Daniel Goleman's Emotional Intelligence, in the sense that it takes theories and ideas from the social sciences and shows how they can have real relevance to our lives. There's a whole section of the book devoted to explaining the phenomenon of word of mouth, for example. I think that word of mouth is something created by three very rare and special psychological types, whom I call Connectors, Mavens, and Salesmen. I profile three people who I think embody those types, and then I use the example of Paul Revere and his midnight ride to point out the subtle characteristics of this kind of social epidemic. So just in that chapter there is a little bit of sociology, a little of psychology and a little bit of history, all in aid of explaining a very common but mysterious phenomenon that we deal with every day. I guess what I'm saying is that I'm not sure that this book fits into any one category. That's why I call it an adventure story. I think it will appeal to anyone who wants to understand the world around them in a different way. I think it can give the reader an advantage--a new set of tools. Of course, I also think they'll be in for a very fun ride. 7. What do you hope readers will take away from the book? One of the things I'd like to do is to show people how to start "positive" epidemics of their own. The virtue of an epidemic, after all, is that just a little input is enough to get it started, and it can spread very, very quickly. That makes it something of obvious and enormous interest to everyone from educators trying to reach students, to businesses trying to spread the word about their product, or for that matter to anyone who's trying to create a change with limited resources. The book has a number of case studies of people who have successfully started epidemics--an advertising agency, for example, and a breast cancer activist. I think they are really fascinating. I also take a pressing social issue, teenage smoking, and break it down and analyze what an epidemic approach to solving that problem would look like. The point is that by the end of the book I think the reader will have a clear idea of what starting an epidemic actually takes. This is not an abstract, academic book. It's very practical. And it's very hopeful. It's brain software. Beyond that, I think that The Tipping Point is a way of making sense of the world, because I'm not sure that the world always makes as much sense to us as we would hope. I spent a great deal of time in the book talking about the way our minds work--and the peculiar and sometimes problematic ways in which our brains process information. Our intuitions, as humans, aren't always very good. Changes that happen really suddenly, on the strength of the most minor of input, can be deeply confusing. People who understand The Tipping Point, I think, have a way of decoding the world around them. /////// http://www.nybotlive.com/nybot35nb.html /////
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Duncan	12-Mar-06, 06:00 PM (GMT)
6. "embrace reading & learning"
http://bigpicture.typepad.com/comments/ Understanding Fibonacci's Relative Retracement in Technical Analysis Interesting discussion by MarketWatch's Tomi Kilgore on Fib retracements: A 13th-century mathematician pen-named Fibonacci wrote about a ratio -- 0.618 -- that he found to be prevalent in natural systems ranging from rabbit breeding pattern, a snails shell and flower petals. Given that many see the financial markets as an amalgamation of living traders and investors, chart watchers have adopted this ratio, and other Fibonacci ratios such as 50% and 38.2% (1 minus 0.618), as a guide for so-called retracements. It is believed that until the 61.8% retracement target is surpassed, a market is still governed by the previous trend. Once it is surpassed, a new market is born. At its Jan. 6 high, the Nasdaq had retraced just 30.4% of the decline from its all-time high to the October 2002 low, which is still well short of the first major Fibonacci retracement target 38.2%, or 2,645.67. In comparison, the Dow industrials have at its current level of around 11,070 retraced about 85% of the bear market decline from the January 2000 high of 11,750 to the October 2002 low of 7,197. The S&P 500 Index last at 1,282, has retraced 65% of its fall from the Mar. 24, 2000 high of 1,553.11 to the Oct. 10, 2002 low of 768.67. The Nasdaq still has to climb 38% from current levels to reach even the 50% retracement target of 3,120.51. To get to the 61.8% target of 3,595.34, it would have to run up another 59% from the current price, or more than triple off its October 2002 low. And to retrace the entire move, the Nasdaq still has another 127% to go. That's a long way to go, even for an optimist. Maybe it can be a goal for the tenth anniversary? More than a Pen name, Leonardo of Pisa was (according to Wikipedia) posthumously given the nickname Fibonacci (for filius Bonacci, son of Bonacci) > Source: Nasdaq still has a long way to go One-third full, or two-thirds empty? Tomi Kilgore MarketWatch, 3:30 PM ET Mar 10, 2006 http://tinyurl.com/hvz6x Sunday, March 12, 2006 | 12:37 PM | /////// g I cant see anyone reading sol. d you can see me reading sol why would i want to read so much? i once knew a lady aged 94; who was a QC and i asked her how she learned so much i never stopped reading that was her answer she liked to read and learn so so much she said i was so lucky she said; i really liked to read and learn one has to condition oneself to read mega quantity the masses dont read much and what little they read is crap and most of the sol content is written be people smarter than you and me far smarter and as you should know; but evidently your psyche wont open up too; there are the odd nugget or 2 in deep cover in sol u bet in the land of the blind the one eyed man is king its a long way to Tipperary ///////
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Duncan	12-Mar-06, 09:40 PM (GMT)
7. "the market exists in large measure to transfer money from small investors to large ones"
d some idiot is mail bombing lttf email address i am receiving hundreds of mails daily takes all types total cretin that is doing this anyhow ////// http://www.financialsense.com/fsu/editorials/2006/0312.html ///// March 12, 2006 The Great Gold Conspiracy: A methodology to predict Gold's future? by Eric Noel The basic notion of the gold conspiracy theory is that the central banks and major firms have colluded to artificially suppress the price of Gold, much to their mutual benefit. Whether true or not, this theory feeds the fantasy of the small speculator uncovering a cartel of bandits and using this knowledge to make his fortune. It is David and Goliath all over again. In my humble view, Gold trades no differently than any other commodity such as sugar, coffee, oil or even lean hogs. All of these markets adhere to basic price structure limits and Fibonacci projections in the same exact way. Thus, if Gold is being manipulated, would it not be expected to behave differently than the other commodities? What is meant by manipulated anyway? Those with more power and money will ALWAYS be in the driver's seat relative to those without such advantages. But, for the sake of argument, I will assume that there does in fact exist a gold conspiracy. My question flowing from this assumption is: HOW DOES THIS CONSPIRACY THEORY HELP ONE TO PREDICT THE PRICE OF GOLD? In other words, does it have any value in terms of timing the gold market? I believe the clear answer is that it is NOT a methodology by which to predict market behaviour. It amounts to nothing more than what the news media does every day; that is, attaching a "reason" for price action after the fact. For example, if the DOW is up in the morning, Reuters may issue a blurb stating something like: "Investor's encouraged by high GDP data". Then, by the afternoon, IF the DOW has sold off, they issue another blurb stating: "Investor's worried that high GDP will mean Fed keeps raising interest rates". It is really quite bizarre to behold. Is this any different than what Bill Murphy of GATA has to say? If Gold is soaring and bullish sentiment is high, he may go on financial TV and say: "The Gold Cartel's game is finally over and the levee has broken . . . Gold will be trading at $1000 by X-Mas 2006". If the gold market gets a horrendous sell-off, the conspiracy theorists will then tell you: "SEE! I told you Gold was being manipulated by the Bullion Banks . . . you should listen to me". But the reality of the matter is that the price action in gold is NOT proof of ANYTHING other than futures contracts being bought and sold. All of this amounts to is the natural human tendency to attach reason to that which is emotional, herding behaviour. It is reactive; not predictive. The best fundamental argument that I read most from the Gold Bugs as to why gold is headed straight to 1000 is that "Helicopter Ben" is now in charge and thus the gold market is going straight up as the world's reserve currency is going to be devalued. What one must remember though is that the "throwing cash from helicopters" comment was made during the first phase of the secular bear market in stocks (2000-2003) when deflation was actually occurring: Bernanke's notion is that he can print his way out of a Kondratieff Winter phase once interest rate cuts no longer provide any re-flationary effect. BUT ... if he prints, he destroys the bond market. If he destroys the bond market, he destroys all that easy credit that he tried to push in the first place! The Kondratieff Winter is about purging DEBT and thus popping the credit bubble built up in the Kondratieff Fall. There is nothing he can do to prevent it though he will probably print and this is no doubt good for the gold bugs. The question is WHEN? In my last article on Gold I suggested that the cyclical bull market from 1999 was coming to an end and that piercing the $500 level and falling back beneath might be the sign that it was over. In retrospect, it was not over as gold rallied smartly right up to the $575 (spot) level as the XAU hit an historical band of resistance and failed. Here is what is fascinating about that price to mark a significant top: - The rally lasted a LUCAS 76 months (time) - The rally was EXACTLY a LUCAS 322 dollars from low to high (price) - IF gold were to head back to a LUCAS 199 dollars, it would decline a Fibo 377 dollars back down from the recent high. - The .618 retracement back to the 1999 low is $377 (which is also a fibo number). Other significant fibo retracement levels are also ALL either Lucas or Fibonacci numbers. Yes, this is technical speculation and it is only one of many ordered paths that gold may choose to follow before it ultimately heads over $1000. But, it is possible to speculate further by using stock market technical patterns and blending them with the gold bug's greatest fundamental argument. Here goes: Since March 2003, an economic expansion has been underway and we have had inflation. The fed has been raising rates to "fight" inflation. In my view, for technical reasons, the bull market in stocks that started in 2003 is not even close to a termination point and likely will not be until the end of 2008 - although we are likely going to get a nasty 20-25% correction during the second half of 2006 into the four year cycle low. Thus, this Bernanke "strategy" of printing one's way out of deflation is a few years off in the distance. For this to occur, the stock market must collapse & interest rates must fall to almost 0. The gold market will likely sense a rocketing into hyper-inflation at least a year before it shows up in the stock market. This perfectly fits a gold bottom in 2009 and a bottom in stocks in 2010. A final bear market bottom in gold in 2009 would mean a 29 (LUCAS) year secular bear market in gold from the 1980 high to the 2009 low. This is all fine speculation but one thing is for certain: IF gold hits 199 in 2009, NOBODY will be bullish. This would be great for the few gold bugs left hanging around and fit the market's logic of starting a real bull market when nobody is paying attention. Talk Back Eric Noel LL.B., LL.M. Copyright © 2005 Eric Noel ////// http://www.safehaven.com/article-4761.htm Traders and investors please stand aside. No low risk entries are visible ///// Arguing With The Radio By: Bill Hoyt I was pretty surprised this morning when the preacherman on my radio started talking about inflation. “Inflation,” he said in his impressive Australian accent, “is an increase in supply. And America has lately seen an inflation in the supply of many things, including knowledge, entertainment, and money.” “So far, so good,” I thought. But I was soon thankful that the country roads on which I drive are sparsely traveled in the early mornings, for his next sentence nearly sent my car careening into the ditch. “I’m not talking about monetary inflation,” he said, and I could almost see him shaking his head, silently scolding me for even considering the thought. “Monetary inflation is not a real problem so long as we have a Paul Volcker or an Alan Greenspan at the head of the Fed.” “No,” he continued, but whatever he said about the challenges of recovering the America that has been lost was lost on me. He may have been an expert on culture (at least he was famous enough to be giving a keynote address) but he was certainly not an expert on money. And in missing the point about monetary inflation, he undercut his entire argument. He missed what was perhaps the most important point he could have made. Someone who was an expert on money, James Madison, said a long time ago that inflation and paper money were a moral problem, a problem that undercut morality and culture and government and industry. In the Federalist Papers, a series of essays designed to raise knowledge of and support for our newly-penned Constitution, Madison said: "The loss which America has sustained since the peace, from the pestilent effects of paper money on the necessary confidence between man and man, on the necessary confidence in the public councils, on the industry and morals of the people, and on the character of republican government, constitutes an enormous debt against the States…” -- Federalist 44 Paper money, unbacked currency and the inflation that arises from it, directly undercut the very morality the preacherman sought, yet he was not able to find it, for as another man who knew something about money, John Maynard Keynes, wrote: “There is no subtler or surer means of overturning the existing basis of society than to debase the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which only one man in a million is able to diagnose.” Preacherman was not one in a million: he was just like the other millions for whom our modern, debt-based, fiat monetary system is considered normal, rather than a dangerous fraud that threatens to engulf us all. He abhorred the overturning of the existing basis of society and yet missed perhaps the most pernicious cause: paper money. But what is it about paper money, unbacked currency, and inflation that undercuts the morals of the people, that destroys confidence in industry and government? Paper money is in its very essence dishonest. It is a theft of goods and services, for when paper money is created it promises something for nothing, stealing its value from every other dollar in existence, and from the people that hold them. It creates confusion, necessitates dishonesty, and destroys the character of Republican government by destroying its basis: the necessary confidence between man and man. And paper money lies because it does not hold its value: day after day it buys less and less of the goods it promises, creating perverse incentives, discouraging savings and thrift, and promoting – in a way that but one man in a million can diagnose – the very “live for today” philosophy that the preacherman decried so mightily in his sermon. I tried to tell him. Oh, I laid out in detail how every nation that relied on paper money eventually suffered a breakdown in social order. I told him how the Bible says that false balances are one of those things that God judges, pointing out how Proverbs 16:11 and Leviticus 19:36 state that unjust measures are an abomination. I explained, unwisely ignoring the road ahead of me, how society would cease to function if every day the foot was just a bit shorter or the ton a little lighter, and how a shrinking dollar has the same effect. But he wasn’t listening. If he did listen, he might have asked me where those horrible things are that I say will come from dishonest weights and measures. “If things are as bad as all that,” he might have asked, “why is America still the strongest nation in the world?” And I had two answers from the news this week. The first is a note concerning the work of an archaeologist in Liverpool who is currently undertaking an exhaustive study of the coinage of Rome: Silver coins formed the backbone of currency in the Roman Empire. Roman emperors manipulated the silver content of the coins to solve short-term financial problems frequently caused by government overspending. For the most part, this manipulation involved the reduction of the silver content of the coinage in conjunction with a drop in weight. As the Romans debased their currency in order to pay for government overspending, so have we. As the Roman Empire ended with armies of conscripts marching back and forth over the countryside looting everything of value in order to survive, so will ours. The second is an opinion from Bill Fleckenstein, who this week spent some electrons on the lies the government tells (remember “the necessary confidence in the public councils”?) to cover up the pernicious effects that paper money has on our lives and fortunes, distilling essence of the coming problems into a single paragraph: “Lots of these imbalances have existed for some time, and they haven't mattered. Such macro problems only matter when they matter. Once that point in time is reached, events have a way of swiftly getting completely out of control -- which is why one has to understand the nuances and be alert for potential signs of chain reaction...” A chain reaction: that’s what the preacherman was talking about. He was noting, as I continued my monologue, how causes in one place create effects that undercut public morality in places entirely unexpected. Unexpected, perhaps, for most of the millions; but entirely expected, even considered inevitable, by the few who understand that honest money and public morality are inseparable. Bookman’s Picks: Being the owner of a bookstore, I’m blessed to have a continuous stream of old economics and investment books crossing my desk. The fact that they are old and out of date gives them two advantages over new ones: they are inexpensive (some sell online for literally a penny plus shipping) and the reader can understand which analyses have withstood the test of time. Each month I’ll bring a pair of reviews of old books that seek to answer the same questions investors are (or should be) asking today. “How You Can Profit from the Coming Devaluation,” by Harry Browne, 1970. The world is immeasurably poorer with the passing of Harry Browne this week. The grand old man of hard money and two-time Libertarian candidate for President authored a Solomon’s Treasury of books and newsletters and understood probably as well as anyone the effects of inflation on society. I picked this book of his many because of a single quote (Page 87): “Can you imagine being asked to pay $3500 for a Volkswagen? That’s stretching your imagination quite a bit, I realize. And yet that day may not be very far away”. That day has come and gone. And realizing that a new Volkswagen today runs at least 5 times what Browne predicted clearly illustrates the amount of value that has been stolen from every dollar in our pockets through inflation. As America prepares for another devaluation - this one perhaps leaving the dollar valueless - the advice of Harry Browne has once again become priceless. He will be dearly missed. “Confession of a Wall Street Insider,” by C.C. Hazard, 1972 C.C. Hazard wrote under a pseudonym so he could lay out a truth that might have cost him his Wall Street career: the market exists in large measure to transfer money from small investors to large ones. The mantras of the current market are no different than the mantras of the late 60s bull; they are simply peddled via the internet rather than the phone. The IPO game, the manipulation of charts, and the churning of accounts still exist, and are still used to keep the small investor buying shares that, like the paper dollars Browne decried, are worth less and less as the years pass. No one, especially resource investors, should confuse a bull market with genius, and all should realize that the market consistently rewards those investors who, if they are not true insiders, act like they are. Spending an evening with Hazard is a jading experience; he finds no public morality where the vultures gather to pick clean the bones and retirement funds of the small investor. But it is an education that no investor should deprive himself of, especially with the sharks of the dotcom boom swimming unseen into the growing pool of resource stocks. Bill Hoyt March 10th, 2006 Opinions contained herein are purely those of the author, but he invites you to share them if you wish. Visit his web log, El Borak’s Myopia, for daily commentary and responses to reader email. -- Posted 12 March, 2006 ////// http://news.goldseek.com/RickAckerman/1142197445.php From a technical perspective, stocks looked poised to move higher on Monday. If so, take heart, all you die-hard bears, since shares would be an even juicier short than they were on Friday. One particularly bullish sign was that the broad averages regained traction following the obligatory Friday afternoon sell-off; moreover, they ended the session with an in-your-face short-squeeze, presumably to give bears something to think about over the weekend. The skeptics undoubtedly will give buyers wide berth come Monday morning, assuming there are no mushroom clouds on the horizon to dim the invincible ardor of investors. Lest we face this stampede unarmed and defenseless, let me proffer an extravagant rally target for the Dow Industrials -- just in case optimism runs amok over the next few days: 11232, give or take the usual tick or two. /////
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Duncan	12-Mar-06, 10:36 PM (GMT)
8. "RE: the market exists in large measure to transfer money from small investors to large ones"
the market exists in large measure, to transfer money from small investors to large ones d the above statement is probably the most important piece of information, one has to work with clue (substantial tranfers) however; the term has to be, properly understood and most people, just dont get it and even if they vaguely reluctantly get it they wont accept it not sufficiently and dick and don at the pentagon; they are part of the set up, that lets say, facilitates the 'transfer' get the jist? i doubt many do anyhow /////
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Duncan	13-Mar-06, 08:03 AM (GMT)
9. "The nasdaq and S&P have not confirmed the Dows break-out from four weeks ago, which may indicate a false positive."
Business The Times March 13, 2006 It was bold, it was brutal, but who was proved right in 1981? By Gabriel Rozenberg Lord Howe, the Chancellor handed the task of saving the British economy, thinks it was him. Hundreds of economists begged to differ LORD HOWE of Aberavon, Baroness Thatcher’s first Chancellor, sits amid the Gothic grandeur of the House of Lords and casts his mind back to his critics. “An economist,” he says, with undisguised triumph, “is a man who knows 364 ways of making love, but doesn’t know any women.” His choice of number is no accident. Twenty-five ago today economists at Cambridge began to circulate a letter to their colleagues condemning the policies of the then Margaret Thatcher and Sir Geoffrey Howe as being likely to “deepen the depression, erode the industrial base of our economy and threaten its social and political stability”. By the time that the letter was published in The Times, 364 economists from across Britain’s universities had signed it. The letter was an unprecedented response to a Budget that remains the harshest of modern times. Lord Howe remains unrepentant. So, too, to some extent, do some of his critics. In the first two years of her Government, Mrs Thatcher had little to show for her attempts to constrain the money supply and public borrowing in order to conquer inflation and reinvigorate growth. Inflation had peaked at 22 per cent, unemployment had doubled to two million, interest rates were in double-digits and manufacturing output had slumped. Britain was mired in recession. Faced with such dire conditions, past Governments had followed an orthodox Keynesian approach and had borrowed more money to boost demand and had tried to “spend their way out of a recession” — even if the consequence was more inflation. When the Chancellor delivered his Budget in March 1981, he stunned MPs by freezing income tax thresholds, which with inflation at 13 per cent amounted to a tax increase of £1.9 billion, and by raising alcohol and tobacco duties by 30 per cent. Petrol duty was raised by 20p per gallon, equivalent to an 11p-per-litre rise in today’s money. Mrs Thatcher was to write later: “I doubt that there has ever been a clearer test of two fundamentally different approaches to economic management.” Lord Howe said: “In those days . . . the public sector borrowing requirement was rising from £6 to £9 to £14 billion. It was catastrophe writ large, and we simply had to operate by constraining that. The measures I took, if you look back at them, were astonishing.” He said that now he felt vindicated: a sustained recovery began almost immediately afterwards and growth was maintained throughout the rest of the decade. “Within two years the manifestations of wisdom, if you like, were very plain to see.” Nevertheless, one of the men who organised the letter in The Times in 1981, Frank Hahn, said that it had stood the test of time. “What we said was perfectly reasonable — that in times of high unemployment and rising unemployment, it’s not a time to cut the budget,” Professor Hahn said. “And we predicted the very bad social consequences.” He added that the “tolerance of the British working class” had prevented the strife that he had feared. The academics that he assembled included not only most former chief economic advisers to the government but also some of those who would become the most powerful and influential economists of later decades. One, Amartya Sen, went on to win the Nobel Prize for Economics. Mervyn King, now Governor of the Bank of England, signed the letter, as did Stephen Nickell, today a fellow member of the Bank’s Monetary Policy Committee. In a new collection of essays by the Institute of Economic Affairs entitled Were 364 Economists All Wrong?, Professor Nickell argues that the letter, while not entirely accurate, was broadly correct to say that the Budget was unnecessarily harsh. “Unemployment was easily going to be high enough to bring down inflation to normal levels in a reasonable time,” he writes. Lord Howe was nonplussed by the letter — “it was, in its scale, so overwhelming that it became ludicrous” — and is certain that history has vindicated him. “I had no doubt that our strategic concept was right and the Budget was part of that process,” he says. “And you know, si monumentum requiris, circumspice , as it says on Christopher Wren’s tombstone.” Statement drafted on March 13, 1981: “We, who are all present or retired members of the economics staffs of British universities, are convinced that: (a) there is no basis in economic theory or supporting evidence for the Government’s belief that by deflating demand they will bring inflation permanently under control and thereby induce an automatic recovery in output and employment; (b) present politics will deepen the depression, erode the industrial base of our economy and threaten its social and political stability; (c) there are alternative policies; and (d) the time has come to reject monetarist policies and consider urgently which alternative offers the best hope of sustained recovery.” Signed by 364 university economists ////// http://www.financialsense.com/fsu/editorials/waltzek/2006/0312.html All three of the major stock indexes have been consolidating for about 4 consecutive months. The Dow Jones has shown considerable strength relative to the other two markets by consolidating just above the 11,000 mark. Although the Dow did manage to gain slight ground, the nasdaq fell sharply this week and the S&P was off as well. The nasdaq and S&P have not confirmed the Dows break-out from four weeks ago, which may indicate a false positive. ///////
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Duncan	13-Mar-06, 08:08 AM (GMT)
10. "dax cam"
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