Dazed and Confused

I have two thoughts for today. One thought has to do what what I wrote about Canada the other day. Maybe I am all wrong in my assessment, but every time I encounter Canadians and Europeans who have strong thoughts "aboout" our foreign policy and the general "tenor" of our economy, I always get the impression that I need to be "taught" something. For instance, the recent Bush election.....

BUT...If Kerry had been elected, my social security taxes would have been raised significantly, as I am self employed. So, I voted for Bush, it is really as simple as that. In this last year, my property taxes went up a whopping 46%, because of gentrification, so I find my annual property taxes to be the equivalent of three mortgage payments. I pay gas bills in the range of $1,000 per month during the cold winter months. I can't afford Billionaires who want to increase my familial overhead, it is really that simple. But, I am told by my Albertan cousins, I have made a "stupid" choice, I am arrogant, and my choice has reconfirmed their conviction that I come from a country of "stupid" people. So I think the following excerpt from Neil Steinberg's column says it well....


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Neighbor above looks down on us below
December 1, 2004
BY NEIL STEINBERG SUN-TIMES COLUMNIST

Opening shot

Imagine a difficult, unpleasant task. Changing a flat tire on a rainy stretch of road, say. You're outside, drenched, cold, kneeling on gravel, grimacing, putting your weight on the tire iron, trying to crack a lug nut. A car stops. The window rolls down. And a smug voice calls out, "You know, if you rotated those tires regularly, like you're supposed to, they wouldn't wear out so quickly -- and keep a poncho in the trunk. Just a tip." Then the car drives away in a spray of gravel.

That's Canada. Misplaced superiority dipped in a thick coat of contempt. President Bush is there now, trying to slake Canada's endless thirst for American attention.

Fat chance. Does the American gaze that Canada ordinarily craves make it happy? Of course not. Our frosty neighbor to the north is convulsed in protest because the U.S. is actually engaged in trying to address the woes of the world, instead of sitting on its thumbs and complaining.

I've met Canadians, and while they can, with effort, muster periodic bursts of charm, and even express an occasional amazed, who'd-a-thunk-it appreciation of the United States, their general attitude is that of an elderly dutchess who has used tongs to pick up a bug from the Oriental carpet and is examining it through her lorgnette with open, nose-wrinkling disgust as she transports it to the dustbin.
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And Where's the JOBS?? My little blog obeservation of yesterday has proven to be absolutely correct. With non-farm payroll growth at a rather tepid rate, Fed tightening looks even less likely. Hence, a full point and a half higher in 30 yr prices and a collapsing dollar. In other words, previous trendsa are reasserting themselves. Gotta love those "kneejerk" reactions.

Thankyou Professor Scherer...Glad I studied Economics.... Too bad I didn't have the conviction to ride this out through the numbers. Next time I'll do it with options premium.

I have been having a good time of it debating the pros and cons of a falling US dollar
versus the Euro with my European colleagues. The popular contention is that the Dollar is in a freefall, and because Bush was re-elected, this will usher in some sort of financial Armegeddon.

But, few people seem to realize that much of what we import is tied directly to the US dollar in terms of dollar pegging, and I am specificaly referring to the Asian currencies. And this can be used as a weapon against European manufacturers, because their labor costs inflate as their currency revalues. Thus, cheap Asian goods flood Europe, keep a steady price to Americans,
and auto producers (such as Mercedes) are forced to lower earnings estimates.

The cheaper dollar has the benefit of helping stimulate the US economy, which already looks quite solid for the fourth quarter. And especially, this helps out the beleaugered rust belt states because they can produce more autos, steel, etc.

So, watch for Europe to be forced to loosen monetary policy by decreasing rates, instead of the Fed significantly having to tighten. The USA is a Pacific rim country in terms of trade already, so the press overblows the implications of an expensive Euro to the average consumer.

(Once again, we see that John Francois Kerry was absolutely out of his fricking mind....)

See the following Chicago Sun Times column:
Coxe: How to stop worrying and love the tumbling greenback

November 29, 2004

BY MARY WISNIEWSKI Business Reporter

The once-mighty U.S. dollar declined against the euro for a 7th straight week last week, falling to almost $1.33. That's bad news if you're planning a trip to Paris.

But Donald Coxe, chairman and chief strategist of Harris Investment Management Inc., says the decline is good in the long run for the U.S. economy. In a wide-ranging conversation, Coxe explains why he thinks oil prices are so high, why some Americans feel pinched, and why we should stop worrying and love the falling greenback.

Q. Oil prices are up as high as $50 a barrel, causing havoc for the airline and other industries. How did it get so expensive?

A. It's Economics 101. We have failed to discover enough new oil, and now we have China's consumption. China's consumption is up 140 percent in two years. This is an astounding number. It's been calculated that when, not if, the coastal regions of China have the same percentage ownership of automobiles that South Koreans have today, we'll need two new Saudi Arabias to meet their demand.

Q. Will oil prices keep going up?

A. No. When you get oil at $50 a barrel, it slows down the global economy. I'm seeing a trading range between $35 and $60 on the assumption the economy is going to slow down. If it doesn't, we're looking at $60 to $70.

Q. Why did so many good jobs leave the U.S.?

A. There are three ways we can't compete. One is the dollar is too high-priced -- that will be solved by the market. Number two is the gigantic burden of employers having to pay for health care, which no other country imposes on employers. We're not going to solve that problem. Number three is we have this tort system which no other country in the world has which is a terrible burden on our manufacturers...

Frankly, today, I don't know why an American company would want to build a new plant in Illinois. ...To create the kind of good paying jobs that we need -- not jobs working at Wal-Mart or working part-time for some tech dot-com on the edge of bankruptcy -- we need to devalue the currency and that's what's happening.

Q. How worried should we be about the budget deficit?

A. The budget deficit will go near zero again once we get the trade deficit down. The trade deficit [at 5.7 percent] is the source of the budget deficit, because we don't create the good paying jobs at home to pay taxes on....

China's number one in the trade deficit now. China exports a vast array of goods -- literally half the stuff at Wal-Mart that isn't food was made in China. Our biggest exports to China are used newspapers and scrap metal.

Q. What is one impact of rising interest rates?

A. For Americans who maxed out their credit cards, it will be catastrophic. We'll have more personal bankruptcies. But those excesses will have come home to roost anyway. You shouldn't operate a system to subsidize those who spent beyond their means and need low interest rates to survive...

Q. Will a devalued dollar mean that stuff costs more?

A. If you lower the value of the dollar, everything you buy at Wal-Mart will cost you more. What that does is create a pricing umbrella for American companies to operate.

Q. What does the growth of the Asian middle class mean for us?

A. When [former Chinese leader] Deng Xiao Peng was around, there were 5 million Chinese at the most who had indoor plumbing, indoor heating, and electricity. It's 100 million now. We're going to be three-quarters of a billion in 10 years. There's no precedent for that. ...India's coming on even faster than China.

So what we have then is a situation where it's a wonderful thing that they're getting to share the great American way of life. But they're bidding up the cost of what we use because they need it immediately. But what they aren't doing is buying stuff from us. They're creating wealth by their ability to sell to us. So oddly enough, the more prosperous China gets, the bigger the trade deficit.

You can adopt a [John] Kerryesque approach on this which is that it's Benedict Arnold CEOs who are sending jobs there. Or you can be realistic about it and say we've just got to find ways we can participate and frankly, until the dollar gets devalued, there's very little we can do.

Q. What are your short-term predictions for the U.S. economy?

A. We're going to go through at least two years of adjustments because you don't get the benefits of a currency devaluation for quite a while. We're going to underperform the global economy. My optimism is about the two years after that. ...If we get the dollar down [to $1.60 on the euro], then good American companies will be able to compete.

http://www.drabuzzi.com.half_a%20billion_americans.htm



While screaming for relevance and attention from the US, a bunch of Bush-haters up north have decided to inject a lot of negativity into the recent Bush visit to Canada.


We are "arrogant" because (supposedly), we want our own foreign policy, we want to elect our own government officials without their "input", and we want to run our own affairs without foreign permission.

The majority of the people here re-elected George Bush, to the displeasure of a lot of liberal Canadians (and Americans). Now anybody's view of Bush is just not relevant any more. The reality is that he has been re-elected president in our voting procedure.

As putrid and digusting as I found Chretian to be at the time, I never would have voiced my opinion about him to any Canadian, as I find to do so to be out of line. I do not participate in Canadian elections, Canadians do not participate in ours.

These people remind me a lot of the old farmer protests we used to have in front of the Chicago Board of Trade on LaSalle Street. The farmers would drive their tractors up LaSalle Street, demanding that the CBOT stop fixing grain prices. The spectacle was utterly laughable and not a few investment banker types had a few laughs about it at the private clubs and local bars.

Let us put this into perspective: the USA is Canada's biggest trading partner. We are also its
biggest customer. We Americans buy over 1 billion dollars of goods from Canada each day. And the population of Canada is somewhere in the range of that of the state of California plus Nevada. Put another way, this small country (in population) seems to be just clammoring for relevance in all affairs, but it is about one tenth the size of our own.

It is my opinion that the more shrill the frosty complaints from up north become, the more likely
US public support for economic retribution against Canada ends up. Ponder, for example, the economic implications for Canada of requiring passports and fingerprinting of Canadian citizns at the US border. This would effectively eliminate, for instance, cross-border employment. Windsor is a beautiful place to live instead of Detroit, And strengthening our border may not be the worst idea, because it is unclear to me that Canada secures its own border very well. And a total trade embargo means a currency collapse for Canada, not so for the USA.

The CBC last night on its program "National" attampted to define the country of Canada and its supposedly "diverging paths" with the USA in a number of ways. Mentioned were increased secularism, tolerance of gay issues and drug legalization, and the like.

Interestingly, Canada's population is concentrated in only six metroplitan areas. And the population is largely an aging one. The CBC program attempted to portray these divergences with Canada speaking with a "unified voice!!!" ???? First, Canada speaking with "one voice" is about as likely as Jerusalem doing the same. Newfoundlanders are not the same as the Quebecqois who are not the same as residents of Alberta.

And for example, if Canada's population is really aging, would not Canada become less secular over time? Chicago, for instance has now posted the lowest murder rate since 1965. A dropping crime demographically tends to indicate a wealthier and older population, as is the case in the more urbanized Canada. So maybe Canada is going to over time be "more like" the conservative states to the south in that regard. This means a greater support for law enforcement, savings on investment taxes and maybe questioning issues like gay marriage.

The USA has a porous border to the south. Our immigrants tend to be, by and large, Latin American. Mexicans and Latinos tend to be very strongly Roman Catholic. For all of the sterotyping of the Bush administration and Americans done in the CBC program, one would think the USA has been taken over by fundamentalist Christians from Bugtussle, Tennessee. Yet, part of the strongly anti-crime, pro parochial school mentalities that are starting to pervade in American stratum, partially comes from mass-going Roman Catholics who are Latino. "Blue state" populations in "blue states" are shinking. Red state populations in blue states are growing, and fast down here.

And, it seems to be the case that immigration will not just make America younger, more religious and stronger, but also may burgeon its population to become larger than even all of Europe. The following Economist article forsees the USA having a population of over 500 million within 30 years or so. One can imagine that unless Canadian governments make a real effort to get along and coordinate with future US administrations, the more irrelevant Canadian policies ar interests become to us.
http://www.drabruzzi.com/half_a%20billion_americans.htm

Moreover, until Canada itself reduces it's "social overhead" and the millstone of a non-producing Quebec, the country will continue losing its best and brightest to south of the border.

You have seen our future, it is Bush, it is a far reaching foreign policy that is executed without a "League of nations mentality", it is free market economics, and it is a quasi-Hispanic parochial school going, mass attending society that becomes tends to become wealthy within the first generation of arrival. And for a lot of reasons, Canada may be seeing its own future, south of the border.

So stop with the pontificating already, eh? Or should I say, see you at the beach in Orange County?