Two things bother me: First, the country is being run by someone who’s never run a business and has never met a payroll, and is spending money like a drunken sailor. Second, there’s no long-term “Vision.” There’s no national highway system. There’s no race to the moon. And the “Visions” we’ve had have been disastrously managed. There was ethanol. There was solar. There was wind. Remember energy independence. All mismanaged. There’s nothing today we can all get behind and invest our energies and our shekels. What we have are two expensive wars that make no sense and a revamping of the healthcare system that could bankrupt the country. My favorite is the health-care legislation will forbid the insurance companies from taking pre-existing conditions into account when setting prices or extending coverage. Heck, that’s like telling the president of a car insurance company that he has to insure the guy who’s just killed five people under DWI, and, worse, his premium should be the same as someone who doesn’t drink and has never killed anyone (like me). Someone once said that Washington was eight square miles surrounded by reality. Boy, were they ever right today.
We’ve had at least three booms and busts in the last 10 years. They’re sort of meant to happen under capitalism. But this time has been very different. We bailed out the failures. They should have failed, so the new with brighter, better ideas could have taken over. Worse, we continue with this nonsense that financial markets work best when they’re not regulated. And now, with ultra-low interest rates, we’re encouraging everyone and their uncle to load up on borrowing. And rewarding the banks for trading (i.e. the carry trade), not lending to real businesses.
Most upsetting to me personally are the 20% or so of us Americans who are unemployed or underemployed. These people are losing their homes, their families and their lives. The psychological stress is unfathomable. Yet, we’re doing so little for them and for us. In the last few months I was out west and saw a number of superb projects which the WPA (Works Projects Administration; I saw gorgeous highways in Colorado. I saw a a lodge on Mount Hood in Oregon. The WPA built projects which generations of Americans has since enjoyed. Wikipedia explains it, “WPA was the largest New Deal agency, employing millions to carry out public works projects, including the construction of public buildings and roads, and operated large arts, drama, media and literacy projects. It fed children and redistributed food, clothing and housing. Almost every community in the United States had a park,bridge or school constructed by the agency, which especially benefited rural and Western populations. Expenditures from 1936 to 1939 totaled nearly $7 billion.”
I think of the billions we spent “saving” AIG, Citigroup, Bank of America, GM, etc. I wonder if we couldn’t have cleaned up Detroit, sped up the railway system, etc.
Each year we buy oil, which Saudi Arabia,Iran and now Nigeria and others use to fund our enemies, and make us less safe. Where is the Vision to fix that obvious insanity? Not out of Washington. In fact, it’s only gotten worse in recent years, as our payments for overseas oil have skyrocketed.
Enough already.
Another worrier is Richard Russell, that 85-year old doyen of stockmarket newsletters. Here are excerpts from his latest missile:
We’re on the path for fireworks in 2010. The reason I say that is because the federal deficits are running into the trillions of dollars. The roll-over of debt coming up in the next two years defies comprehension. For instance, in the next two years the US must roll over $2.5 trillion. Worldwide, banks during the coming two years will have to roll over $7 trillion. On top of that commercial real estate in the US has $750 billion to roll over. Whether all this debt can be successfully rolled over is doubtful, but one thing is clear — interest rates will go up. This will have an immediate impact on housing. Nobody can negotiate a mortgage now — and worse, nobody has the money to buy a house for cash.
In the face of the deflationary events described above, the Fed will have to create a massive torrent of money. This should be highly inflationary — on top of the forces of deflation and semi-depression. Thus the base will be set for an inflationary depression, during which time the very viability of the dollar will come under suspicion.
Since the dollar makes up a part of almost every nation’s reserves, the worth of every fiat currency will come into question. There will be a frantic search for a currency that will preserve the purchasing power of one’s wealth and assets. The money that can do that is gold. Consequently we may see a total panic for physical gold. Secondary beneficiaries will be silver and platinum, which may be “reclassified” as monetary metals.
Question — Russell, under your frightening scenario, why will interest rates rise?
Answer — The bond market is much more sophisticated than the stock market. The bond market is mortally afraid of inflation or a falling dollar. With trillions of dollars in debt due to be rolled over, the Fed has no choice but to print new trillions of Federal Reserve Notes. This process will be highly inflationary, and the bond market will protect itself by sinking. As bonds sink, interest rates will rise, which will mean a squeeze on the whole US economy.
Thus we will be thrust into an “inflationary depression” with business hitting a brick wall while asset prices will probably head higher.
Question — Russell, I find it difficult to accept your scary scenario outright — I want to see hints of it in the markets. What’s happening in the markets that might possibly back up your scenario?
Answer — Fair question. It’s the crumbling bond market that’s putting the fear of God into both the markets and the economy.
As to what we as investors do? That I’m still mulling. Clearly, it’s a little gold, lots of investing overseas (see yesterday’s column) and lots of hard assets. It also means that we’d better think about simplifying our overly complex lifestyles. The family comes first. Skip some of the obsession with finding that “perfect” investment.
Greenwich, CT homes and what they cost.
Inquiring minds want to know. The most expensive Greenwich, CT home for sale is $50 million. The second and third are $39.5 million and $39 million. If you’d like to buy one, click here. There are lots of photos and lots of questions. What would anyone want ten bathrooms? Maybe they got a serious “going” problem?
My web site’s new look. My son, Michael, the genius hated the “old, tired, boring, etc.” web site. He said, “As a Christmas present, I will make the site sing. It will only take my one hour.” Fifteen hours and much cursing later, we have this wonder.
It has its “charms.” It works with powerful software called WordPress, which, according to Wikipedia powers 202 million web sites. Now 202 million and one sites.
WordPress is a bit like Firefox, the browser. First, it’s free. Second, everybody and their uncle contribute to it. They make “widgets” — like the Apple iPhone apps. One of the widgets is the Stocks We Like chart on the side. I put some indexes in, dropped in some of my favorite stocks and bingo, somewhere out there in the “cloud,” my site links to Yahoo Finance, which links to various stock exchanges and, bingo, you see this cute little relatively timely table.
Like much new software WordPress works totally “in the cloud.” I don’t have any software or files on my computer. They’re on my web hoster, whom, I think, is in Hong Kong, or somewhere. This movement to free software out in the “cloud” will ultimately be Microsoft’s Achilles’ heel. Free Google Docs is replacing Microsoft Office. Google Chrome, the browser, is much better than Microsoft’s Internet Explorer. And soon Google will introduce Chrome the operating system to compete with Windows. The vast bulk of Microsoft’s revenues and profits come from only two products — Windows and Office.
There are some BIG things about this new site: First, you can now leave a comment. Then someone else can comment on your comment. And, finally, we can have a real dialog. Second, everyone can now follow some of the the stocks I like. In coming days, I plan to post more. Third, I wlll put up more of the gadgets I have tested, own, really like and recommend. Readers are always asking about my favorite point and shoot camera, or my favorite whatever. Fourth, I’m trying to “capture” your email address, so, ultimately, I can save you having to remember to visit this site daily. I can send you an email. I’d like to do that with Constant Contact but it seems pricey.
Do I recommend WordPress for your web site? The answer, so far, is a qualified Yes. There’s a somewhat steep learning curve. WordPress has its quirks. For example, it doesn’t have a built-in table maker. You have to code that by hand. Which means fiddling and wasted time. For example, WordPress’s HTML code (the Internet is largely written in HTML) for set right is <div style=”text-align: right;”>. In contrast, Macromedia’s Dreamweaver, which I was using in the old days (before yesterday) uses this code: <div align=”right”>. If you drop the Dreamweaver code into WordPress, WordPress erases it. Yet, both will work perfectly fine on the Internet.
There’s now a “Contact” tab. You can easily send me an email and tell me you love the new site and think my son is a genius. You can also suggest other improvements. If you’d like to peruse further, check out WordPress.org.. Upshot: every business needs a web site. WordPress is among the easier and cheaper ways of getting your own web site. My web site is hosted by ICDSoft.com. I recommend them.
I can’t figure out how to get all the type looking the same and adding spaces between paragraphs. Maybe by tomorrow.
A semi-stupid joke for quiet week. A circus owner runs an ad for a lion tamer and two people show up.
One is a fit looking, older retired navy chief in his mid-sixties and the other is a drop dead gorgeous blonde in her mid-twenties.
The circus owner tells them, “I’m not going to sugar coat it. This is one ferocious lion. He ate my last tamer so you guys better be good or you’re history. Here’s your equipment — chair, whip and a gun. Who wants to try out first?”
The girl says, “I’ll go first.” She walks right past the chair, the whip and the gun and steps right into the lion’s cage. The lion starts to snarl and pant and begins to charge her. About half way there, she throws open her coat revealing her beautiful naked body. The lion stops dead in his tracks, sheepishly crawls up to her and starts licking her feet and ankles. He continues to lick and kiss her entire body for several minutes and then rests his head on her feet.
The circus owner’s mouth is on the floor. He says, “I’ve never seen a display like that in my life.” He then turns to the retired chief and asks, “Can you top that?”
The tough old chief replies, “No problem, just get that lion out of the way.”
Harry Newton
I enjoy reading your column, Harry.
I have read 2 “facts” for years: that the American consumers drive the world economy and that if China diversified only a little out of financing our debt that interest rates would skyrocket.
Here in Florida consumers are cutting back. Many home improvement stores and restaurants are shuttered. I have read that the Chinese are diversifying out of our debt a bit…so what has been the fallout already?
(Re your “what to do”…3 of my neighbors have plowed under their grass and turned their big yards to food production. One gave me an armful of fruit yesterday so I will bring her baked bread today.)
Mr. Newton,
Your new “worry column” is more like a TV show. Get readers to read your site which may contain nothing but BS. You are degrading yourself.
And what is your solution Harry for those who have pre-existing medical conditions then? Where does the money come from for their treatments, or does the status quo of no treatment for them work for you? Easy when you have a few million in the bank isn’t it.
Harry,
Only issue I have with your comment is that the drunk driver has made personal choices which raise their risk and they should pay a higher rate. For many, lifestyle doesn’t guarantee that you won’t get cancer,in a serious accident or develop a hereditary disease. Should someone lose EVERYTHING they own because they lose the health lottery?
Harry,
Your worries are well justified. One thing that neither you nor Richard Russell mentions is the coming second round of residential real estate problems. These will be in the form of Alt-A and Option ARM loans that were originally made in 2006 – many with low introductory rates. On the surface it may seem like no problem – interest rates are low and everyone can re-finance at these attractive rates. Problem is, the underlying property isn’t worth enough. These loans were made at the height of the real estate boom and now the poor souls who own the homes do not have the equity to re-finance.
I look for continuing or increased foreclosures through 2010. It is possible that the current administration will come up with a plan but give their handling of health care reform, foreign policy, and domestic economic policy to date, I am not sanguine. While inflation waits in the wings I believe that the ongoing de-leveraging process will push the real pain for another year or two.
Best regards,
Greg
Harry, I just want to say that you have been a great personal inspiration to me. Having the discipline it takes to write an informative, interesting column EVERY day & almost always before 9AM EST is truly amazing! And… the new site is great!
– tom
Welcome, at last, to the world of “blogging.” It certainly took you long enough to get here! You should have listened to Michael years ago.
Now, the only question I have is how long it will take you to admit that this is in fact a “blog” and that you are now a “blogger”?!
— Jack Krupansky
P.S., I personally am “graphically-challenged”, so I couldn’t tell you if the layout (old or new) is great or sucks. Just give me text (and some tables, charts, and photos) and I’ll be happy
Hey Harry – Love the new site:
Son Michael’s intelligence – how much do you figure it cost you, per I.Q. point…? tee hee
Know my sons IQ improved with the amount of $ spent – It’s the only anti-inflationary money I’ve ever spent -&- it has improved with time and his income…
I think you may have overlooked the most obvious “Perfect Investment”
It is quite simply, our investment in our family – time, experience and money…
beyond that simply have enough coming in to live comfortably and invest the most in the above.
OUR TIME is often at a premium and too often overlooked, but is free and priceless..
capt.bill
Hi Harry,
I liked the old site better – easier to read on the iphone. Beggers can’t be choosers and I’ll take what I can get. Love the column! I always look forward to reading it!
Thanks!
The website looks terrific. Your son must be a genius and therefore must take after his mother. And sister. One recommendation – a new picture is in order. You are even more beautiful today then you were in the sad and tired old picture. Consider it a facelift without surgery!
Sorry but I like the old style better.
Have read your column for years and enjoy it. One suggestion for the future is to not refer to our government officials spending as a drunken sailor, but rather as “drunken Politions” would be a lot more appropriate, don’t you think?
Thanks for sharing your thoughts and wisdom.
Happy New Year.
Harry,
This is the best column you have written since the Deutsche bank fiasco a few years ago. I really enjoyed that. I agree with your thoughts about the future of our economy. Happy New Year.
Philip
Hi Harry,
As others have said, great content. Tell Michael not to give up his day job.
Happy New Year
Paul
Was also a OLD subscriber of the Technology Investor Magazine, and always love to read your ideas and comments, am not sure if this style will be better, the old one was unique as others have said.
But the fact we can now leave a Comment is great
As a side note, do you know of any Web Site to check out if it is better to pay off my home, or invest the amount, at 69 would be nice to not have house payments.
Rich
Hi Harry,
I really like the new site. Very clean. The slightly larger font makes for an easier read. Yes, Micheal is a genius. I hope you did not teach each other too many new #(@+!! words. Happy New Year to you and yours.
Harry,
Love your column, but don’t like the new style. Previous style was unique to you and more readable than current. Type seems too light in new style, but could be my aging eyes. In any event, it’s the content that important and that’s still great!
All the best for the New Year.
Burt
Burton,
Hit Ctrl and + simultaneously on your keyboard (if you’re using a PC) and the type will get bigger. Do it a couple of times. It will get even bigger. This probably works on a Mac too.
Eh.
Hi Harry,
Nice work on the new look, but it’s your great content that keeps me coming back.
I’ve been a fan since I was a subscriber to your paper version of Technology Investor Magazine.
Formats change, but content is timeless!
Happy New Year,
Ed
This is amazing. It’s actually working. Thanks for all the nice comments. I’ve received a bunch by email also. I’ve recovered from the bike fall.
hi Harry
hope you are not feeling any ill effects from your bike fall anymore.
best to you and your family for the new year
Happy New Year
vito
Generally, the number of columns used in your web design changed the entire view of the website. Vision Care
Harry,
It’s never easy to accept change, I thought I had gone to the wrong site at first today. I’m sure you and Michael will work out the bugs and it will be better than the original. Sometimes we never improve the original. Good luck I love to read your column.
Robert