Stock Market News:
Fed Ex warns, stock is down 7.5%. They are claiming the rising cost of oil as the main factor. This bodes bad for the economy at large. As a result of the Fed Ex warning, Merrill Lynch claimed that this may indicate the the economy was slowing down more than they had anticipated.
Both the Nasdaq and the Dow are down big today (Dow 166 points (ouch!), Nasdaq down 35 from its intraday high). I'm betting that during the next week the markets will go down 3-5%.
The 10 year bond yield is still less than 4% and oil is just under $60 bouncing between $59.20 and $59.95.
Our Government:Four items came about today that remind me that as we inevitably slide into economic ruin, the US government will be there to make sure it's as painful as possible for its citizens.
1) In a hearing designed to throw cold water on two measures winding through Congress aimed at imposing sanctions on China for "unfair trading practices", both Alan Greenspan and Treasury Secretary Snow explained that imposing tariffs would "slow the drive to persuade Beijing to adopt a more flexible currency and won't protect U.S. jobs." "[It's] a misguided effort to protect jobs from competition, would redound to the eventual detriment of all U.S. job-seekers, as well as millions of American consumers [and] action on any of the punitive legislative proposals before Congress now would be counterproductive to our efforts at this time."
This of course fell on deaf ears in Congress where the assembled Senators interrupted Greenspan with trite emotional responses such as this from Senator Evan Bayh, "Workers across the country start each day at a disadvantage, simply because of illegal subsidies and illegal manipulation. It's not right. We must act to correct this situation.''
I guarantee the US Congress will take the steps to impose tariffs on China. It will sour relations and cause a lot more harm than good. The truth to the matter is that we no longer have a manufacturing economy, we have a services economy which is a bunch of smoke and mirrors. China and India are going to kick our ass and there isn't anything we can do about it, however the Congress can make life a lot easier on its citizens by not becoming isolationist and not leaning closer and closer to totalitarianism. Becoming protectionists and isolationist will harm the American, Chinese and world economy.
...and on the totalitarian front:
2) The House yesterday approved a bill for a Constitutional amendment to make it illegal to burn the flag. This is the 5th time such a bill has passed the House and this time it is likely this one will make it into the Constitution. This is a ridiculous bill designed to make idiots feel better but the underlying sentiment is a detraction of free speech rights. It's a piece of cloth. Get over it. What other flammables will be illegal to ignite, or flush or spit on in the future?
3) Our pot clubs were raided in San Francisco. Under the guise of breaking up a money laundering scheme, the Feds (with the help of the SFPD) raided three clubs (we have over 40) and arrested 13 people. They say it was money laundering but all the videos I saw showed cops stuffing pot into trash bags. I don't know if that was B-roll but it was a powerful image and I think the message is clear: Even though California and San Francisco is lenient (and has voted to make it legal) on medical pot use, the Supreme Court's recent ruling has given the conserva-nazis the fuel they need to scratch their punishment itch and it's probable that they won't stop until all the clubs are closed. If you take this example of Federal law superseding State law and grow it out, it is conceivable to come up with all sorts of hypothetical issues on which the Feds would be out of step with a particular state and enforce its laws by force.
4) The Supreme Court ruled today that it's OK to seize private property in the name of economic expansion. In other words, if a developer wants to build a Krispy Kreme where your house sits and he can convince a city council that that is a good idea, that city council can seize your property (after paying you off what they feel like paying) and then they will give it to the developer. Does anybody see the inherent danger here?
