Ackoff's Fables

"Without changing our pattern of thought, we will not be able to solve the problems we created with our current patterns of thought."
--Albert Einstein

The title of this piece by John Mauldin does not accurately reflect his primary subject. After weighing in on the Dubai situation, John shares thoughts on why he's optimistic about the future.

While I may not see eye to eye with him on some of his assertions, John offers a nice reminder about the dangers of extrapolating trends into the future. Using dark forecasts made by some during the stagflationary 70s as an example, John argues that nature (and particularly humans) adapt to difficulty (the difficulty serves as a stimulus for change). This adaptation will likely change the trend.

This reminds me of a talk I once heard by systems theorist Russ Ackoff (who sadly passed away a few weeks ago). Dr Ackoff cited numerous examples where forecasters missed the mark when predicting the future based on past and current data. The reason is that actors in complex systems change and adapt when challenged, rendering straight line forecasts of little use--particularly when forecasting future behavior inside of social systems.

John offers some plausible examples such as electricity as a viable substitute for gasoline powered cars.

When extrapolating distressing trends into the future, one needs to think about how people and the systems they live within might adapt.

Shades of Gray

I got nine lives
Cat's eyes
Usin' every one of them and running in wild
--AC/DC

The past couple of days I drove by or thru a number of suburban Cincy shopping districts (Kenwood, Beechmont, Eastgate, Milford, Rookwood). Traffic was surprisingly thin--even for a bear like me.

Anecdotal to be sure, but these data suggest a low end Black Friday wkend. Casts some doubt on the 'upside surprise' holiday spending scenario when extrapolating forward.

AA Update

Just try to understand

I've given all I can

'Cause you got the best of me

--Madonna

Current asset allocation after selling down most of my stocks and chunking a couple big end of yr mortgage payments:

cash 56%

real estate 22%

precious metals 11%

fixed income 5%

stocks 2%

short 2%

currencies 2%

Have set my sights on paying off my mortgage. Hope to get this done in 2010.

The Forgotten Depression

"All the penalties will not be light. Nor evenly distributed. There is no way of making them so. There is no instant step from disorder to order. We must face a condition of grim reality, charge off our losses and start afresh. It is the oldest lesson of civilization."

President Warren Harding, inaugural address 1921

Interesting piece by Tom Woods on the Depression of 1920. This inevitable deflationary bust followed the inflation sponsored by War War I and the newly formed Federal Reserve.

His primary message is that recovery following the downturn was quick precisely because there was minimal governmental interference with the cleansing process. No subsequent downturn has been privy to the 'hands-off' approach that characterized the 1920 situation.

The article includes a couple of snippets from Warren Harding's speeches following his acceptance of the Republican Party's presidential nomination in 1920 and inauguration in 1921. Here's a piece of the 1920 speech:

"We will attempt intelligent and courageous deflation, and strike at government borrowing which enlarges the evil, and we will attack high cost of government with every energy and facility which attend Republican capacity. We promise that relief which will attend the halting of waste and extravagance, and the renewal of the practice of public economy, not alone because it will relieve tax burdens but because it will be an example to stimulate thrift and economy in private life.

"Let us call to all the people for thrift and economy, for denial and sacrifice if need be, for a nationwide drive against extravagance and luxury, to a recommittal to simplicity of living, to that prudent and normal plan of life which is the health of the republic. There hasn't been a recovery from the waste and abnormalities of war since the story of mankind was first written, except through work and saving, through industry and denial, while needless spending and heedless extravagance have marked every decay in the history of nations."

Downright stunning vis a vis the blather emanating from modern day bureaucrats.

Dubai Dubai Do

"You reap what you so. You have heard of this, no?"

--Nasir (Kingdom of Heaven)

Dubai's default on nearly $60 billion in debt found most overseas mkts down big last nite and has clipped 2% or so from major domestic indexes so far this am. Should serve as a reminder that debt/credit issues have not disappeared--rather they've been papered over and in hiding.

It's easy to wonder this event reverses the dollar carry trade and the speculative trends it's fostered. Toddo offers a few scenarios.

Also interesting is that this event occurs on a thin and abbreviated holiday session here in the US. The tape should be susceptable to muscle in either direction. Indeed, it looks like they're trying to take 'em higher out of the gate.

Will be interesting to see where this winds up.

position in SPX, USD

Separate Ways

We are matching spark and flame

Caught in endless repetition

Life for life, we'll be the same

--The Fixx

In technical analysis, a divergence is when two series or variables that are usually in sych aren't.

Major stock indexes such as the S&P 500 Index (SPX) have been marching steadily higher. The bank index (BKX), however, has not kept pace. Instead, it's been moving sideways to slightly lower over the past 3 months.

Given the centrality of the banking sector to our finance based economy (and economic problems), it will be interesting to observe how long this divergence continues. Seemingly, either the banks break higher (note that resistance rests immediately above at 45ish) and play catch up with the general market. Or the banks pull the general markets lower.

position in SPX

Higher With Vengeance

"John, in the back of the truck you're driving, there's $13 billion worth in gold bullion. I wonder would a deal be out of the question?"

--Simon Gruber (Die Hard With a Vengeance)

Back in midsummer when gold wasn't making much headway, it felt to me that perhaps we were putting in an intermediate top. So much for my feel, as gold has exploded higher and is marking records almost daily.

That said, the gappy nature of the recent price action certainly gives me pause, as does the 'twisty' overbought nature of the oscillators.

The primary motivation behind gold's run up is worry about the dollar. After all, the Fed has been generating supply to stem the current economic malaise. And indeed the dollar has been dripping lower.

I find it interesting, however, that the gold:dollar relationship is not has well correlated as one might expect. Sure, gold is going up while the USD is going down. But gold's increase is hyperbolic while the dollar's decline is pretty much linear.

Long term, I'm as bullish as they come w.r.t. gold. However, the technical action draped against my deflationary backdrop makes me much less sanguine about gold in the near term.

I'm currently playing it with bullion only (which isn't tradeable for me). No paper gold.

position in gold, USD

Carrying Cost

"Somedays, you just can't get rid of a bomb."
--Batman (Batman)

John Mauldin makes the case that the Fed's cheap credit policy is facilitating a monster dollar carry trade. Folks are borrowing dollars for virtually nothing and investing them in risky assets of all sizes.

Essentially, those involved in this trade are short dollars. Should something spook this trade, a large dollar rally should ensue (as folks buy back dollars to cover their short position). And, of course, they'll have to sell all of those risky assets (stocks, bonds, commodities) that the original dollar proceeds purchased.

Carry trades work well in high risk appetite environments. When folks collectively become risk averse, then the carry trade works in reverse, causing correlated price declines across asset classes.

John thinks there's a potential market accident waiting to happen should the dollar carry unwind.

Me too.

position in USD

Ticket to Ride

I think I'm gonna be sad
I think it's today, yeah
The girl that's driving me mad
Is going away
--The Beatles

The sell tickets have been flying over the past few sessions as I've been busy unwinding most of my stock exposure. Most of this exposure has been in pharma companies Merck (MRK) and Pfizer (PFE).

These names have seen a nice runup and are registering overbought signals (as well as some DeMark trend exhaustion signals).


One strategy for making sales into upmarket environments is to stick a stop underneath current prices and roll those stops up if prices trend higher. If successful, this approach reduces the chance of premature exit and help you ride trends closer to the top.

This approach has always been hard for me to do when things get moving like they are now, since there can be significant overnight 'gap risk' (where stocks can open way lower than the previous day's close).

Instead, my preferred strategy is to make sales on the way up. Depending on the size of my position, I might divide my sales into 4-5 pieces. Using this approach, you hope that 'your first sale is your worst sale' as you ride the uptrend to piece out more stock. This approach often finds me leaving the party early but at least I know my exit price and I've flattened my risk.

My stock exposure has been cut from over 30% of assets to about 3% as of this am. Last Friday and this morning's action had that frothy feel to it--often indicative that the final 'panic' phase of a trend is in full force.

They may indeed continue higher from here. But I'm content to have reduced my risk profile and watch the action from the sidelines.

positions in MRK, PFE

Creepy Crawlers

Look he's crawling up my wall
Black and hairy very small
Now he's up above my head
Hanging by a little thread
--The Who

Ron Paul has it right in his criticism of the health care proposal. The ineffectiveness of intervention, in health care or elsewhere, always has politicians arguing for more intervention down the road.

A few voiced similar concerns before Medicare/Medicaid was passed in the 1960s. Now, that government-sponsored program is predicably falling apart.

But rather than just toss those disasters of The State on the scrap heap of history, we're looking now looking a larger version of bureaucratic waste staight in the eyes.

Twister

"Better get under cover, Sylvester. There's a storm blowin' up, a whopper. Just speakin' the vernacular of the peasantry. Poor little kid, I hope she gets home all right."
--Professor Marvel (The Wizard of Oz)

This article remains me of the old saying that you can't tell the players without a scorecard. Right is Left. Conservative is Liberal. And vice versa.

Labels that reflect classical liberalism have had a wild ride over the past 100 yrs.

Also suggests the need for carefully defining terms before getting into an idealogical discussion.

Jolly Rogers

Ooh it's too easy to live like clockwork
Tick tock watching the world go by
Any change would take too long
So dry your eyes
--Genesis

Part 1 of a four part interview w/ Jim Rogers. Not too much new except he seems to be long the USD for a trade, citing lots of near term pessimism.

Seems like we're both on the same page. Near term bullish, long term bearish.

He continues to sense some major issues in currency markets on the horizon.

position in USD

Paint It Red

Oh but ain't that America for you and me
Ain't that America somethin' to see baby
Ain't that America home of the free
Little pink houses for you and me
--John Cougar Mellencamp

About one in 7 US mortgages were either in foreclosure or delinquent in Q3, a record. An amazing stat when you step back and think about it.

Foreclosures are now chewing into the 'high quality' fixed rate tranche.

Big Mack Attack

The telephone is ringing
I say, hi it's me, who is it there on the line?
A voice says, hi, hello, how are you?
Well I guess I'm doing fine
--Rolling Stones

Very interesting recount by Morgan Stanley (MS) CEO John Mack of the week following Lehman's bankruptcy in Sept 2008. While there are many noteworthy remarks, the heart of the story is his pushback against government attempts to sell MS to JP Morgan (JPM).

While Mr Mack's nose is not totally clean (his firm subsequently did take $ billions in government funds), his resistance to government intrusion in private affairs is exemplary.

Another takeaway from Mr Mack's presentation is the degree to which the State is willing to meddle in such private matters. Whether the rationale is to maintain stability or for the greater good, seeking to prevent firm bankruptcies, stem stock market crashes, or mute economic downturns for that matter, such intervention is simply not the role of government as defined by the Founders.

no positions

Vital Signs of Health Care

You're watching movies trying to find the feelers
You only see what we show you
We're the slaves of the phony leaders
Breath the air we have blown you
--The Who

A couple of useful reference slides related to health care. First, national health care spending has tripled from about 6% of GDP in the mid 1960s to about 17% today.

Second, for those who believe the US health care system is based on 'free market' economics, they need to review how much spending come from government sources. Current, Medicare, Medicaid, and other public sources account for about 45% of national health care spending.

One data point that's missing, and one that proponents of government sponsored health care don't want to show, is a time series showing the increasing fraction of government sourced health expenditures over time.

Over the past 100 yrs, government health expenditures have gone from low levels (covering war vets and gov't employees) to nearly half of the overall health spending pie today.

It should be no mystery, then, why health care expenditures consume 3x the GDP that they did 40+ yrs ago. State intervention has broadened access and scope of coverage, thus more resources are consumed thru health care channels. Plus, the inevitable State bureaucracy has constrained efficiency and innovation.

Yet, here we are considering even greater State influence over this system.

Carry On

Once I rose above the noise and confusion
Just to get a glimpse beyond this illusion
I was soaring ever higher
But I flew too high
--Kansas

In the past couple of weeks, the number of articles about the dollar carry trade has increased considerably. A carry trade is when you borrow money at low cost and you invest it in positions perceived to provide attractive returns. Investors seek to make money on the 'spread' between the rate of return and the cost of funds.

The emerging thesis appears to be that, because the Fed is likely to keep rates low for a long time, speculators are likely to borrow huge quantities of cheap dollars and speculate with them--perhaps lighting a persistent bid under asset prices.

Could it happen? Sure. But keep in mind that those who borrow cheap dollars and then buy other assets with them are effectively short the dollar. At some point, they'll need to buy those dollars back to close out their trade. Late last year the dollar rallied on the back of big closure of dollar-denominated debt projects.

If/when another round of deflationary risk aversion sets in, then the dollar carry is once again likely to shift into reverse.

position in USD

Cars R Us

You got a fast car
And I got a plan to get us out of here
--Tracy Chapman

An account of the auto bailout from the car czar. Not a bad look thru the eyes of central planners. Note all the levers these folks pull once they tune out market forces.

The chances of bureaucrats getting these decisions correct--and then correctly adjusting their decisions as markets evolve--are miniscule.

All we've done is propped up large inefficient operators with resource sets that, if market forces were permitted to rule, would be redeployed to more efficient ends.

Consequently, standard of living suffers.

And at some point those market forces will rule despite attempts to intervene.

Goal for Goolsbee

Capt Robert Hatch: "Where do I stand for a corner kick?"
Capt John Colby: "At the far post, facing the ball."
Capt Robert Hatch: "Thanks. For a while there I thought you were keep it a secret."
--Victory

White House economic adviser Austan Goolsbee doesn't believe that the repeal of Glass-Steagall was (note pervasive use of past tense now) a primary cause of the financial crisis. This is one of the few intelligent statements I've heard from this administration's economic team.

Lack of regulations over operations is not a problem.

Rather, protecting sellers and buyers from market-imposed penalties for poor risk-taking is a significant problem.

And this is what we've done.

Wrong Rights

"I think that when statesmen forsake their own private conscience for the sake of their public duties, they lead their country by a short route to chaos."
--Sir Thomas More (A Man For All Seasons)

Some people in this country believe that they have claim on certain goods and services (e.g., food, shelter, jobs--or at least an income, and, now, healthcare) even if they do not acquire these things via productive work and exchange. They rely on political means--on government--to coercively take property from others and redistribute it accordingly.

Supporters justify this approach as providing for 'basic human rights.'

Over the past few centuries thinkers like John Locke and Frederic Bastiat have reasoned that the natural rights of people cannot include the redistribution of property by government. One problem involves deciding just how much wealth to appropriate from one individual and give to another. Perhaps more importantly, once government gets into the wealth distribution business, the historic tendency is for government to consolidate power and suppress individual liberty.

Instead, these thinkers have argued that the redistribution of wealth by government actually violates the few basic rights that endow the human condition. What are these rights? Most fundamental is the right to life. Murder, for example, violates an individual's most fundamental right to live. But so is incarcerating an individual who refuses to comply with government's wealth redistribution scheme. A 10 year jail sentence for such an act subtracts that much from an individual's productive life.

Second, an individual has a right to his/her own productive capacity. These are the talents, skills, and work choices that enable an individual to produce and create wealth. An individual is free to direct personal productive capacity as he/she sees fit. No one else has claim. Mandatory schooling, for example, that seeks to impose a particular skill set or work approach on an individual violates this basic right. Moreover, when an individual must toil months out of each year to produce output that will be confiscated and given to others, that individual is effectively enslaved to others for that period of time.

Finally, an individual has a right to the property earned from their productive labor and exchange. Confiscation of this wealth violates an individual's property rights.

When these three rights are respected, then an individual is free.

Government's proper role is to protect these rights. When another infringes on these rights in a manner that an individual cannot defend for him/herself, then government intervenes on the defendent's behalf. Such defines the appropriate scope of 'the law.'

Guilt for property rights violatations does not rest with government alone. Indeed, bureaucrats can be viewed as 'hired guns'--the agents of people who require strong arms to pry property away from rightful owners' and deliver it into the hands of the sponsoring thieves.

Medical School

Doctor my eyes
Tell me what is wrong
Was I unwise to leave them open for so long
--Jackson Browne

Commenting on the health care proposal, Ron Paul argues against its passage far more eloquently than me.

Near the end of his missive, Congressman Paul suggests that, should the bill pass, then its operationalization will hasten the day that we have to come to grips with excessive government intervention. Essentially, he's saying that we'll accelerate the speed of the train that is careening toward a brick wall.

While that may be true, the cost of accelerating the process will be measured in a lower standard of living for many millions of people.

Undue Credit

On the corner is a banker with a motorcar
The little children laugh at him behind his back
And the banker never wears a mack
In the pouring rain, very strange
--The Beatles

Laurie Petersen notes that credit card issuers are increasing fees--many in stealthy ways. The implication of many such pieces is that credit card companies are gouging customers and being unfair. As Laurie describes, some even write their representatives in Washington to complain. And there is a bill on the Senate floor seeking to require/regulate credit card issuer behavior in this area.

We need to be careful here. If a credit card issuer has violated a contractual agreement, then it should be subject to prosecution under the law. But if a company wants to abruptly change its fee structure in a manner that does not violate previous agreements, then there should be no regulation that prohibits such.

It strikes me that what the credit card companies are doing is poor business policy. And if it is, then customers should vote with their wallets and go elsewhere.

When instead folks seek regulatory assistance from bureaucrats, they are essentially seeking claims on property rights that are not theirs (i.e., they don't want proprietors to freely make operating decisions). Moreover, by abdicating responsibility to undertake due diligence when purchasing credit, consumers are likely to promote the inefficiencies they claim to abhor.

Classic moral hazard, cookie.

Back to Freedom

Benjamin Martin: "May I sit with you?"
Charlotte Selton: "It's a free country. Or at least it will be."
--The Patriot

George Soros's proposal for a 'New World Architecture' exemplifies the UN-like viewpoint of putting the entire world under a single governing umbrella.

Mr Soros bases his argument on the claim that the US economic model, which he labels 'international capitalism' (but never subsequently defines), is dysfunctional. Rather than offering rationale as to why this model is or became ineffective, he suggests that the world needs to create a new order grounded in global planning and oversight.

Because Mr Soros tends to view the world thru a socialistic lens, he may truly believe that such a structure will lead to improvement.

An alternative view is that the world's economic problems have been driven by escalating levels of precisely what Mr Soros claims we need more of: government intervention. Over the past century, such intervention has increasingly crowded out free markets in favor of centrally planned alternatives destined to fail at some point.

And fail they have.

Because countries represent sovereign entities, it is not the business of others to dictate how a nation should organize economically. The United States has not been innocent in this regard, we have often meddled in the affairs of others.

It's time we stopped this.

America would best serve the world by throwing off the shackles that bind markets from operating freely. Our trade with others should be open and unhindered as well. No special alliances (e.g., NAFTA), no embargos (e.g., Cuba, Iran).

The best policy the U.S. could adopt is one that fully expresses the liberty won by our Founders. For the better part of 200 years, the world observed and learned from the actions of a freedom-loving American people. They saw that we so loved freedom that we were willing to die for it.

We need to get back to actions grounded in the principle of liberty.

A world managed by bureaucratic planners is not what we need. A United States that returns to its libertarian roots is the best contribution that our country can give to the world.

Train In Vain

Well some things you can explain away
But my heartache's in me till this day
--The Clash

The Dow ripped to another high for the year to today. Other major indexes such as the S&P (SPX) aren't quite there yet.

By the day, sentiment of 'they're better higher' feels like it's increasing. Underperformance anxiety is squeezing both money managers and retail investors into the market as the proverbial train is increasingly seen as leaving the station.

While the possibility for a melt-up into year end certainly exists, these types of situations invariably end in tears.

For my part, I've been making sales into this wave higher. First have been trading positions slapped on over the past month or two. I have two remaining and they are being held for sale.

Next comes my 'core' pharma exposure. Given the weight I'm assigning to a pending deflationary wave, I just don't want to be holding significant positions in any risky asset.

I hope to use price to my advantage and make sales in the days to come.

position in S&P

Extreme Inheritance

"But all you have to do is knock on any door and say, 'If you let me in, I'll live the way you want me to live, and I'll think the way you want me to think,' and all the blinds'll go up and all the windows will open, and you'll never be lonely, ever again."
--Henry Drummond (Inherit the Wind)

Last night I finally had the opportunity to view the 1960 movie Inherit the Wind. The film recreates 1920s legal battles over teaching evolution in public schools.

The movie is billed as featuring a religious right conservative lawyer played by Frederic March against a liberal lawyer played by Spencer Tracy. That billing seems correct only if the 19th century connotation of 'liberal' is employed. Tracy's character argues for individuals' rights to think for themselves and to study what interests them. Our power to reason, he suggests, is what separates us from the rest of world creation.

Essentially, Tracy's character is battling to ensure that the market for ideas, open mindedness, and reason is preserved.

While such a stance is wholly consistent with the classical notion of liberalism, it does not reflect the MO of the modern day liberal. Like their biased conservative foils, today's liberals promote a particular view of the world and bash those who don't side with them.

The newspaper guy who hires Tracy's character, played by (of all people) Gene Kelly, turns out to be a good reflection of today's liberal profile. Thruout the movie Kelly's character animosity against the right extremists escalates. At the end of the movie, Kelly's character explodes in a tirade against the conservatives, paradoxically mirroring the anger and condemnation expressed by the religious zealots thruout the process.

Quite reflective, it seems, of today's circumstance.

Democratic Tyranny

"It's the natural state of men to want to live free...in their own country. I belong to this land. Where do you belong, Arthur?"
--Guinevere (King Arthur)

What is the implication when the government bans or regulates citizen behavior related to drinking alcohol, smoking, eating fast food, texting on your cell phone while driving, etc? As Lew Rockwell notes, such intrusion implies that:

You don't know what's good for you so you must be forced to do what the government thinks is good for you.

People support such intervention because they believe that they are smart and understand what's good and safe, but others do not.

This is a primary avenue by which freedoms could be abolished in a democracy.

RIF Drift

Out in Bethlehem they're killing time
Filling out forms, waiting in line
--Billy Joel

The headline unemployment rate crossed 10% today. Months ago pundits/bureaucrats claimed that we'd never get there. My sense is that we'll head higher still.

The less reported U6 number, which is more in line with how we measured unemployment years ago, is now above 17%. In the 1930s, this number hovered around 20%.

Buffett's Big Bet

"I put it all on Lucky Dan, half a million dollars to win."
--Doyle Lonnegan (The Sting)

A couple days back, Berkshire Hathaway (BRK.A) announced a $40+ billion acquisition of Burlington Northern Santa Fe Corp (BNI). Warren Buffett termed the purchase "an all-in wager on the economic future of the United States."

I (and others e.g., Toddo) find Buffett's actions (and choice of words) interesting. Berkshire will deplete considerable cash to fund this acquisition as well as issue significant stock. This will place Berk in a less liquid, more leveraged state, which may impact the company's credit rating.

The company will also split its B shares 50 to 1 to permit BNI shareholders to more easily participate in Berkshire stock. A stock split is something Buffett long claimed he would never do, since it attracts the hot money trading set.

Like his 'Buy Stocks' call last fall, I find Buffett's actions curious. BNI is no high margin/low capital business. Moreover, I don't see the current macro picture as fitting for making an 'all-in wager' on our economic future.

no positions

Changing Back

Meet the new boss
Same as the old boss
--The Who

Yesterday's elections saw Republican victories in a number of higher profile runoffs. The Right, of course, is hailing this as a new wave of momentum for the GOP.

Another interpretation is that both parties engage in similar interventionist initiatives that are certain to fail over time, thereby causing voters to continually cast off the majority party ('it's this party's fault') in favor of minority ('anything's better than what we have now').

All the while, however, voters merely elect more of the same.

Step Function

Bergman: "Where's the gold?"
Joe Moore: "In the heart of the pure."
--Heist

Pretty chart for the gold proxy GLD as the yellow metal bolted higher for another all time high today. The 'cause' was an announcement that India bought about 1/2 of the IMF's bullion held for sale in a private transaction.


Textbook stairstep pattern since July. Note the volume spikes each time price fires higher.

Unfortunately, my feel for gold prices over the past few months has been awful. TD counts on many time frames continue to suggest trend exhaustion, however.

But perhaps this is The Big One.

position in gold

Bad Bet

"Is there truly no place left in Las Vegas without slot machines?"
--Sara Sidle (CSI: Crime Scene Investigation)

On the surface the 'casino' issue (Issue 3) seems the right thing to do, as it permits commerce in a sector that up until this point in time has been banned by the state of Ohio.

As written, however, this is not a 'market-oriented' proposal.

Issue 3 will grant monopoly rights to a single operator in particular geographic areas. This shuts out competition, which over time will stunt efficiency and innovation.

Moreover, a significant layer of bureaucracy will be created to oversee and regulate the operation. Not only does this sap resources away from productive means, but it creates a condition for regulatory failure and moral hazard down the road. As such, chances of us propping up a too-big-to-fail institution increase.

The right thing to do is to let industry operate freely. Entrepreneurs who perceive an attractive risk/reward profile will allocate capital accordingly. Buyers will ultimately determine whether those resources are being properly allocated.

In free market situations, the real vote happens when buyers vote with their wallets.

Ballot Box

There's nothing in the street
Looks any different to me
And the slogans are replaced, by-the- bye
--The Who

Tomorrow's vote surfaces a couple of thoughts that recur to me each election season. One is the juvenile behavior of many folks w.r.t. politics. Reversion to the playground you might call it.

The second is the human tendency to select information that supports a single point of view. Confirmation bias runs rampant in political process.

We can choose not to do these things.

Million Job March

Brantley Foster: "Whoa, whoa, listen, I'm going to need your help, both of you."
Fred Melrose: "Is this something I could get fired for?"
Brantley Foster: "Absolutely."
Fred Melrose: "I like it."
--The Secret of My Success

Last Friday the Obama administration proclaimed that 1 million jobs have been saved or created as a result of government stimulus programs. Of course, inquiring minds are curious to learn just how such a figure is derived.

One thing we can be sure of, bureaucrats will not be stepping forward to shoulder blame for any of the jobs lost or 'uncreated' during the bursting of the credit bubble. Measured unemployement has increased from 7 million to 15 million since the credit bubble began bursting in earnest in December 2007.

Word Man

"Hey kid, you can stay."
--Eddie Wilson (Eddie and the Cruisers)

Just completed assigning key words to missives scribed on this blog. The resulting list of labels can be found by scrolling down and viewing the right hand column.

In qualitative research, key word lists are often referred to as 'data dictionaries' and form the basis of qualitative analysis. Simple counts of key words can reveal interesting themes.

Counting this missive, there have been 399 posts on this blog since inception. Here are the top 5 labels:

intervention (154)
markets (100)
debt (96)
government (83)
technical analysis (70)

Counts suggest that primary threads of this blog involve markets and government's role in them--particular w.r.t. government interference in market behavior. Thoughts on debt and leverage have also been a dominant concern. Technical analysis reflects attempts to pin thoughts to extant market levels and trends.

Such findings seem supportive of the original intent behind this blog.