Food Stamps up 32% Since 2007

The Number of Americans receiving food stamps has increased by 10 million over the past two years, resulting in a program that now feeds 1 in 8 Americans and nearly 1 in 4 children.




http://www.nytimes.com/interactive/2009/11/28/us/20091128-foodstamps.html

Glen Beck and the Dollar Carry Trade

Remember how a couple of days ago I was explaining how this runup in the market is nearly perfectly correlated to the decline/debasement of the USDollar? Well for those of you who want things explained as simply as possible Glen Beck does an excellent job. Love him or hate him he really got it right this time. Please Make sure to watch all 3 parts.

This is what "Made In China" really gets you

Not $20 DVD players, not cheaper toys, not cheaper clothes or steel but the kind of pollution that ruined American waterways for more than a half century and in some cases permanently. This photojournal is what you should think of the next time you pick up an item that is made in China. In some way shape or form someone is paying.






Please click over and see the rest.

Buy American or European and pay for someone increasing their quality of life instead of ruining the land they live in.

The State Of Commercial Real Estate

Hey citizens of Pontiac you know that $55.7 Million we took from you?

Pontiac -- Nearly 35 years after taxpayers spent $55.7 million building the Pontiac Silverdome and a year after a $20 million sale fell through, city officials have sold the arena once called the most desirable property in Oakland County.

The price: $583,000.

Niiiice.

99% depreciation over 35 years, plus of course all the money poured into property taxes and maintenance.

"The citizens of Pontiac deserve better," Seay said. "This is pennies on the dollar (of what it cost). It goes to show how bad times are ... Worse, we don't even know who bought it."

This sale is emblematic of the general state of Commercial Real Estate. Bluntly, too many people built too much crap on wishes and dreams - dreams they financed with other people's money, either the taxpayer's (in this case) or with some poor fool who believed the prospectus on some CMBS deal that screamed "PRIME Commercial Space!"

Well, perhaps. But there are only so many business interests that can inhabit a given area and turn a profit, especially when you send all the good jobs overseas to CHINA and INDIA, rendering unemployed the middle-class call-center employee who used to make $30,000 a year but now makes zero while the Indian or Chinese employee makes $2/day.

Worse, all real estate (that has buildings on it anyway) has a carrying cost, meaning that if you don't have a revenue-producing use for it the value is actually negative. In the case of the Silverdome basic maintenance on the building and grounds is about $1.5 million a year. If you can't make enough to cover those costs, "ownership" just bleeds you out.

Welcome to the "new normal."

If this doesn't send a shiver up your spine on the "quality" of regional banks that are stuffed to the gills with commercial real estate loans made in the last few years, you're not paying attention.

Don't worry, you soon will be, as nearly all of these deals are interest-only and have to roll over between now and 2013.

They can't and won't.

Rail Traffic - A very bullish sign?

The most interesting weekly statistic last week was rail traffic, which held steady. Why is that interesting? Because by now rail traffic should be well into its seasonal decline (last year the decline was a "cliff dive"), but traffic has generally held steady at September-early October's levels or even improved, as shown on this graph:



This is a bullish sign for the economy if this keeps up.

Market Trivia

Since first closing above 10,000 (March 29, 1999), how many times, on a closing basis, has the Dow Jones Industrial Average traversed that level?


Answer: 29 Times (Highlight over the blank area to get your answer)

Barrons: US Government = Worlds Worst trader

From Barrons

THERE ARE SOME LISTS YOU WANT TO SEE your name on, and others you'd rather not. It would be nice to make the Forbes 400, for instance, but not so great to be mentioned in the obituaries.

When listing the worst traders of all time, many of you would include some sports teams that made infamous deals. In football, the Atlanta Falcons traded Brett Favre to the Green Bay Packers. In baseball, you can debate whether the Chicago Cubs trading Lou Brock to the St. Louis Cardinals for Ernie Broglio was worse than the Philadelphia Phillies trading Ryne Sandberg and Larry Bowa to the Cubs for Ivan DeJesus. As bad as those swaps were, there is one that's far worse.


To paraphrase my friend Mark Fisher, founder of MBF Clearing and one of the biggest energy trader/brokers in the world, the federal government let the trade of the century slip through its fingers at the depths of the financial crisis. Worse, Warren Buffett had already drawn up the perfect blueprint, in steps so easy even a Treasury secretary could follow. Doesn't that make the government a candidate for worst trader of all time?

Long before his acquisition of the Burlington Northern Santa Fe (ticker: BNI) railroad, the Oracle of Omaha agreed, on Sept. 23, 2008, to invest $5 billion in Goldman Sachs (GS) through a purchase of perpetual preferred stock. The shrewd chairman and CEO of Berkshire Hathaway also got warrants to buy up to $5 billion of Goldman common shares at $115 each, some 8% below where the stock was trading at the time.

In a single bold stroke, when Goldman and the global markets needed it most, Buffett put his money and reputation on the line. He stood to own roughly 10% of the bank, and his convertible shares also pay a fat 10% dividend.

Yet even with this trade serving as a very public model, what did then-Treasury Secretary Hank Paulson ask for? When the Wall Street giants had their backs to the wall, he gave them billions of our taxpayer dollars for a relative pittance. In mid-October 2008, Goldman and Morgan Stanley (MS) each got $10 billion from the Treasury; Bank of America (BAC), Citigroup (C), JPMorgan Chase (JPM) and Wells Fargo (WFC) each got $25 billion.

Fast-forward to Oct. 21 of this year, and now Paulson's successor at Treasury, Timothy Geithner, is telling us what a great investment the government made in Goldman. His office touts the 23% return on our $5 billion in taxpayer money. Let's compare that with what we might have gotten with terms similar to Buffett's.

Goldman was trading at $115, so a $5 billion stake bought the taxpayers 43 million shares. With the stock subsequently running up to $180, that $5 billion stake would be worth $7.8 billion, a gain of $2.8 billion. But wait, it gets better -- or worse, depending on your view. Given the added kicker of warrants on another $5 billion, 8% under the market, we'd also own warrants for 43 million shares at $105. So we'd have made another $3.2 billion.

Thus, the total gain before dividends would be $6 billion on a $5 billion investment. Last time I checked, that's 120% on our money, versus the 23% that Hank got us. I didn't go to Dartmouth, as Secretaries Paulson and Geithner did, but I think Buffett got the better deal.

Gold at $5000+?

They are all making good points but I'm leaning towards this being a contrary indicator. My friend sold a plain old ordinary oz of gold on Ebay last week and it sold for $1600.



Might be interesting to see where these next 3-6 months trade in the metal.

Why are you wrong?

People often ask me what my opinion about the stock market is and when I tell them my theory they often express their disagreement. My theory has always been that over the next 3-5 years the market will hover in a range between 1100 and 700 and I would be a seller of stocks right now. Most people are near term thinkers with the "what have you done for me lately" mentality. They have long forgotten that the market is still well off its highs and at the same level as it was in 2003-2004 and are focused on the tremendous rally from the March lows. I have been suspect all along of this rally and here's another data point to consider. The following Chart is the performance of the S&P vs the US dollar. It is almost perfectly inversely correlated.


Now you wonder why Bernanke et all aren't pushing a strong dollar policy and are happy enough to see our dollar tank. The question I pose to you readers is how much further can the dollar trade lower before it becomes a hugely crowded trade and we get a violent short squeeze? What do you think will happen to US equities?