PATIENCE WEARING THIN

The FED has all but run out of verbiage to use in its famous FED statements. It is the most widely read government agency press release and its probably the most difficult to interpret, even though its only 2 paragraphs long and contains a mere 143 words. The FED has couched its policy moves in a few of those words. Specifically, "considerable period", "patience", and now, "measured". My guess, along with everybody else's, is that the next statement contains the word "raise" prior to the words "federal funds rate". That would be the signal, that in fact, the FED would be raising rates. Until then, we all wait.

What is very interesting in the recent statements, is the fact that the FED still says that "the committee continues to believe that an accommodative stance of monetary policy...is providing important ongoing support to economic activity." That implies that the recovery and subsequent strength in the economic data is NOT self-sustaining. Clearly, the FED still believes that after three quarters of what normally would be considered healthy growth the economy still has not entered an economic cycle that is powering itself. And thus, still needs historic low interest rates to keep the economy supported. Interest rates that in fact, were put in place specifically to counter the effects of the terrorist attack on 9/11/01, the subsequent war on terror, and the ongoing recessionary environment which followed the bear market in stocks. Most of which is far behind us.

Why would the economy still need that "important ongoing support"? How can that be explained and why haven't they explained it more thoroughly? Slack resource use is the verbiage used, but why would that be? Hasn't the excess capacity been absorbed yet? Haven't companies started to rehire all the laid off workers? If not now, when?? What does that say about the health of the economy? What does that show about the FED's policy up until now? Has all the "easy money" been used to just to keep us from falling apart? And how does the FED unwind the situation without slamming all the borrowers on the head? They just told us to get adjustable rate mortgages. Revolving credit is "revolving" faster than ever. Auto loans at 0% are critical to the auto industry, and 35% of automobiles on the road are 'upside-down'.

Many well known and well respected pundits, strategists and economists have been calling for the FED to start raising rates to begin the unwind and to head off inflation. They are reading the same data as the FED, yet they have a different interpretation of the data. These people must see more strength than the FED. The FED has resisted and has in fact disregarded many suggestions, jawboning and signs that they should be moving rates higher to get ahead of the so called curve. Nonetheless, the FED did nothing. It seems they are either scared or confused, or maybe they know something that everybody else doesn't. They certainly are not showing leadership or insight, as many of their strongest supporters are saying that they don't understand what the FED is waiting for. Even Larry Kudlow called out Mr. Greenspan to get moving on rates.

Now we will patiently remain patient as the FED does its calculations and data collection. August is the next FOMC meeting, and they will have lots to digest between now and then. I can't wait to see the next statement, if only for the fact that there will be some different words in it.

Casualties of War

It is totally unamerican and quite ridiculous that our government, which decided to invade and take over a country 8000 miles away in the name of democracy and FREEDOM, is now trying to hide the reality and consequences of its actions. Good, bad, or indifferent, for the right reason or fabricated ones, in the name of democracy or anything else, for the bush administration to now try and shield the american people from the casualties of the war is absurd. We are supposedly fighting this war in iraq to free the iraqi people and spread democracy.

So far, the results are terrible. We've closed down a newspaper in iraq because we didn't like what it was saying. We are preventing the american public from seeing the dead soldiers. We have captured the evil dictactor and the country is in virtual chaos. The iraqis and the rest of the arab world has not embraced what we are trying to do, and they are not helping us at all. They resent us now more than ever before and hatered for america is growing. The so called coalition is a coalition of one...the US. The only objective is to secure the second largest oil reserve in the world so that we can secure enough oil to maintain our standard of living and continnue driving gas guzzling SUV's and heat out McMansions! Our country is quickly becoming a mockery, and even our closest allies are questioning our intentions. As for hiding the flag draped casckets of our dead soldiers...shame on you George Bush...god will not forgive you for this or any of your other deceptions or lies. You lied to get us into the war. Now you lie about what is going on in Iraq. And I can only imagine the lies it will take to get us out.

If I were a dead soldier, I would want the truth to be shown and told. The controversy about shielding the American public and the world from seeing photos of coffins is just another in a long list of the casualties of war, which was started under false pretense and mis-information. I hope this all ends soon and without totally destroying our great country.

THE BLUR OF DECEPTION

In the course of the last 6 weeks the constant leaks, and at times flood, of new and startling information has brought to light the truth about what really happened before and after september 11, 2001. Even more outrageous, are the revelations of what and how our government proceeded after the attack on our country, and how it convinced the american people and the world what it was doing was a justified response to the attack and was necessary to prevent a future attack on our homeland.

It has become a blur of deception and misinformation strewn with hidden agendas, unsubstantiated claims, twisted motives and unknown outcomes. It was based on faulty information riddled with incorrect evaluations mixed with outright lies and subsequent cover-ups. Almost too much to understand or believe. If you aren't keeping a running tally of who said what to who and when, or who knew what and why they didn't disclose it sooner, or how this leader or that diplomat did not know or not think to ask...it is just utterly incomprehensible.

So many hearings with so many important government officials answering questions and telling stories of what has been happening in the most powerful place in the world, washington d.c. and how it has all led us to where we are today. Important people coming forward with vital information painting a picture of incompetance and mistakes made at the highest levels of our government and intelligence agencies. Failings that began way before 9/11 and continued well through the start of the war in iraq and seemingly continue today.

A blur of deception has confused the american public. As time goes by and all the information has a chance to get digested and understood i am sure many will become outraged. I am proud to be an american citizen and i feel lucky to live in america, but I am not proud of what happened in this country before, during, and after 9/11/01.

TIME TO GET CONTRITE

Martha Stewart was found guilty on 4 counts of conspiring and lying to the government during the investigation of her illegal sales of stock in Imclone Corporation. In the aftermath of the verdict, her arrogance was unbelievable. It is clear to the public and the jurors in this case, that she did something wrong and then lied about it. Martha Stewart committed these crimes with full and complete understanding of the consequences and with the knowledge of the rules & regulations of the stock market system.

You see, Martha Stewart wasn't your everyday, run of the mill CEO. She was at one point in her illustrious career a licensed stock broker. In order to obtain that dubious distinction, and license, one must take a 40 hour course and pass a 4 hour exam. It is known in the industry as Series 7, and if passed allows a person to become a stock broker and get all the spoils that come along with it. An important part of the course and the exam are the concentrated on the rules & regulations regarding insider trading. Martha knew what she was doing was wrong when she did it and afterwards when she lied about doing it.

In addition to the fact that she was a stock broker, with the knowledge that comes along with it, Martha was a sitting Board member of the New York Stock Exchange. I do not know what it takes to become a NYSE board member, but I have to believe it requires a pledge of honesty and integrity, along with a committment to be truthful when giving any type of testimony under oath, especially when it is with the Self Regulatory Organization that governs the NYSE.

Martha knew what she was doing and she deserves to be punished for what she did. She clearly thought she was above it all and was not subject to the rules & regulations that govern fair market activity. She risked her reputation, carrer, and $400,000,000.00 fortune for a mere $240,000.00 of speculative (if she were to lose her entire Imclone investment). She lost that gamble and deserves what is now happening to her. It is very unfortunate that her company employees are going to suffer as well, yet as the decorating diva, she had no regard for their trust either. In hindsight, it was probably never deserved.

Martha Stewart, in her statement after the verdict said, "I am obviously distressed by the jury's verdict but I continue to take comfort in knowing that I have done nothing wrong and that I have the enduring support of my family and friends. "I will appeal the verdict and continue to fight to clear my name. I believe in the fairness of the judicial system and remain confident that I will ultimately prevail." She is still unwilling to admit that she lied and tried to game the system. Her next book will be called..."How to Decorate 12' by 8", and she will write it from inside a Federal Penetentiary. Maybe when she gets out she will tell her adoring fans the truth.

THE DUMBING OF AMERICA

For many years it has been obvious that asian americans have been excelling in many areas of technology and science, trumping the american born population. Morgan Stanley's chief economist Stephen Roach warned in a note Monday that U.S. workers may already be behind in educating themselves, citing statistics showing the number of Asians getting science and engineering degrees has jumped more than 50 percent in the past two decades while the number of Americans getting similar degrees has been stagnant. Roach went on to write, "The United States has long drawn comfort from the quality differential of its educational system. However, in the Internet Age with its ubiquitous diffusion of knowledge, innovation, and technological change, that may turn out to be an increasingly false sense of security."

We have become a society that is complacent about what we have. Our children have become confused by television. They see images of what life is like, yet it is a fabricated and in most cases unrepresentative portrayal of what it takes to succeed and how to go about becoming successful. The new reality show "The Apprentice" is the most striking example of what we are showing our children and ourselves about what it takes to make it in the American business world. Sports figures, super models, musician and singers get idolized while teachers are paid less than sanitation workers and are mired in overcrowded classrooms and delapidated schools. Children and adults are being blinded by a twisted sense of what it takes to earn a "good living".

Immigrants are building our homes and office buildings, they harvest out food and clean our homes. White collar jobs are being sent overseas or eliminated due to redundancies. Blue collar, lifetime jobs are being replaced with technology and machines. Doctors are overwhelmed with high insurance costs and HMO's that don't pay them promptly or adequately for their skills. Service jobs are abundant as our society thinks its entitled to eat out, shop, and travel regularly. Leisure is a constitutional right and work is a way to make money to pay the interest on the credit cards. People are retiring later in life and are taking up jobs that previously went to entry level workers starting out in the job market.

Since we have stopped educating ourselves and our children to be the best and smartest, others have filled the void to the detrement of the next generation of workers. Most Americans have become job snobs, only seeking out those positions with lots of perks, good health care benefits and a good paycheck. Otherwise, it makes more sense to stay at home and take care of your children. Some have decided to get a job selling some sort of skin care product in a multi-level business. Some opt for collecting disability insurance as their previous career careened off track and made them unable to function in the new technological age. And as a last resort, unemployment insurance and welfare are better than the menial jobs offered at fast food restaurants.

As our good paying jobs continue to get downsized or outsourced, the working population has had a harder and harder time finding jobs that are acceptable. Whether we like it or not, the trend will continue and illegal immigrants will continue to take our labor jobs, and white collar workers will have a much more difficult time finding the job they desire.

The unemployment rate and jobless claims do not reflect the structural changes in the jobs market in the US. The next generation will see major changes and challenges getting good jobs going forward, and the baby boom generation will have to cope with the repercusions of less workers paying social security taxes. Retirement may never come for most as they will need to work longer to pay their medical bills.

The current "jobless recovery" may be just the beginning of a structural change in the US economy and jobs market that will last well into the 21st century. Educational will be a key factor in determining if the next generation has a job or not.

WHILE THE FED's AWAY BUBBLES TO PLAY

The warnings are getting boring. Like the 5, or was it 6, Orange Terror Alerts, that have all ended with no attack. The Bears on Wall Street, myself included, continue to point out the warning signs and dangers that abound in the economic "chatter", yet the equity markets continue to reach higher and the investing public keeps going about its normal business of pumping money into their mutual funds. The dishonest economic propaganda that comes from the Bush administration daily fuels there confidence and hopes. All the while, seemingly smart and informed economists and strategists jump up and down warning that an attack of sorts is imminent.

Morgan Stanleys proverbial chicken little recently opined that the Feds easy money policy, while being effective near term, has unfortunately resulted in some unwanted by-products. In his words, "this approach has another worrisome by-product: It has become a breeding ground for a string of additional asset bubbles that have come on the scene in the aftermath of the burst equity bubble. That’s not just true of property but also of bonds, credit instruments, emerging market debt, and tech stocks (again). This multiple-bubble syndrome is strikingly reminiscent of the moral hazard play that became central to the Great Bubble of the late 1990s — the recognition on the part of investors and speculators that Fed accommodation was here to stay. As long as the Fed takes interest-rate risk out of the equation, one bubble begets another. "

I know we have been hearing about bubbles for awhile now, but eventually, the reality of the matter will become apparent, and as usual it will be in hindsight and will hurt that much more. So as the FED has promised to be "patient" it is also allowing the animal instincts to run wild and encouraging the stock market to inflate. When the FED decides to come home and take away the liquidity, there will be hell to pay for all the bubbles they blew.