Facetime is Out; The Web is the Cure:

Since September 11, 2001 it has been said again and again that things are different. After SARS things get different by an order of magnitude. It's one thing to fear some pencil-necked extremeist with a bulge at the torso, it's another to fear anybody reaching for a handkerchief. By extension, the fear of the space occupied by the handkerchief weilding assassin may just make retail bricks and mortar edifices untenable. Similarly an upgrade to 1st class on an airplane seems like a lateral move. How about an upgrade to my own bottle of oxygen for the duration of the flight?

Prominent stocks and indices in this country have risen above and held at levels above flattening 200 day moving averages for long enough to question the persistence of the bear trend of the past three years. Yes things are different. The obvious financial victims of SARS (air travel, lodging, leisure travel) were already zeroed out in terms of their impact on the indices by The War on Terror. But what wasn't obvious is that if we hope to avoid the raging contagion, we're a whole lot more likely to become users and customers of all things Internet. Suddenly, getting groceries anonymously online sounds sensible. And so does a whole range of web-based goods and services. While it is a stretch to posit the cure for tech wreck it is becoming clear that many firms are about to enjoy increased demand for their cyber products and services.

When the going gets different, the different turn pro.

I Think I'm Turning Japanese; I Really Think So:

Used to be Europe/Great Britain was the leading indicator of securities trends here in the USofA. No longer. Asia now leads the curve in investment trends and the time lag appears to be around a decade. 1990 began with the Nikkei 225 Index at its zenith ~39,000. Think bubble. Think of Japan unable to get out of its own way for 13+ years. http://www.nipponstock.com/visitor/apps/html/indexe.html Sky-high taxes, corporate malfeasance, structural rigidity, low liquidity and the associated high gearing ratios, regulatory/political collusion, and the absence of political will to restructure. Long bonds at unthinkable yields combined with a volatile and ultimately declining currency. Insurance companies insolvent due to negative portfolio returns. Sound familiar? It gets better.

Let's call this background for securities price discovery in Japan. Everyone in the bull camp for US securities now hangs their hat on one time tested guage. The Three Year Rule. American stocks never go down more than three years running. We endured three years eating grass and dirt and now for the bulls there surely is an up year in the cards for 2003.

Back to Japan. Nikkei didn't make it in year four but year five was a marginal improvenent. Five years before a plus tick! The bad news: Year ten was a pretty decent one in percentage terms though it essentially went nowhere. Dear Reader, Nikkei is still building a base thirteen years on and it is at twenty year lows! So much for retained earnings and free cash flow.

Market participants are getting scarcer but those who will admit to being stock or index traders here speak of failed rallies and breaks. Trying times for sure. But just the beginning, if Japan is any indication. From 1992 to 2000 Nikkei traded in a range between 15,000 and 21,000. Which indicates that the Nikkei was able to mount 30% rallies and 25% breaks but money was steadily flowing out and making serious yen was unthinkable.

And then it tanked. At ~8,000 it's on the low side of one half of the 9 year congestion area.

In the US we mark time to a Japanese Karaoke tune. Bonds go higher, but slowly, and the currency punishes all investors inexorably.

There is a way out. One that the Japanese lacked the will to implement.

Money goes where it's well treated. Can anyone doubt this? Raise interest rates and slash taxes. Reward investment thereby. As capital flows in, in anticipation of its pampering, an optimism will accompany it that negates the ennui of the last thirteen years in Japan and adds the marginal investment yen which in turn fuels additional optimistic flows. Here in these United States were we to slash tax burdens and raise interest rates capital inflows could cure Japanese Disease in its acute stage before it becomes a chronic affliction.

The Japanese Disease is not without an antidote.

From today's WSJ: Syria, meanwhile -- which has been accused by the U.S. of experimenting with chemical weapons and charged by Israel with hiding Iraqi chemical or biological weapons -- said it would propose to the U.N. that the Middle East be declared a zone free of weapons of mass destruction. The move was pointedly aimed at Israel, which is widely believed to have nuclear weapons.

I think this is worth a letter of support for this initiative. Send a letter to your representatives in support of disarming both Israel and Iran. Then it's off to Pakistan, N Korea, and India.

Imagine Whirrled Peas.

History Repeats: Eason Jordan's Op-Ed piece from April 11 ( http://www.nytimes.com/2003/04/11/opinion/11JORD.html?ex=1050638400&en=ea21e8c88feae21c&ei=5062&partner=GOOGLE ) reminds me of Stalin's relationship with the press. Reporters found it convenient to report on the idea of collectivisation and omitted the realities on the ground. Missing the destruction of millions of civilians. Once again the organs of media are full of beans. What's different this time is that they report on their own news. Jordan gets a news coup. I beg to differ: This guy should be on his way to jail, soon. Good riddance. Not reporting real news in order to attain exclusive American network access for one's news network could play out in multiple motifs. Let's to the President's Press Conference. You toe the party line in there or they don't take your questions. Maybe networks shade truth domestically on a similar scale. Will we ever know unless they confess?


Don't hold your breath.

US State Department As Full of Beans As Ever: Today Undersecretary of State, James Bolton proved that State has it backwards, again. While kissing rings at the Vatican, he's quoted in today's Washington Post as follows: "We are hopeful that a number of regimes will draw the appropriate lesson from Iraq that the pursuit of weapons of mass destruction is not in their national interest".

One of the reasons we mugged Iraq is because they have 0 nukes. Pakistan has left India powerless to act precisely because they have the bomb and the missles to deliver them. The bad guys aren't stupid. After all, they're still on top of the heap in their corners of syphilization. Only Uncle Sam can afford to employ people disingenious enough to not understand that Iraq's fall and Pakistan's survival revolve around the ownership of nuclear capabilities. The race is now on in earnest. The lesson of Iraq. Now when your totalitarian neighbor get nukes what is your option? Don't call Bolton.

The mouse roars.

"When the full stories of these two incidents (1993 WTC Center bombing and 1995 Oklahoma City bombing) are finally told, those who permitted the investigations to stop short will owe big explanations to these two brave women (Middle East expert Laurie Mylroie and journalist Jayna Davis). And the nation will owe them a debt of gratitude."

- Former CIA Director James Woolsey, "The Iraq Connection" - Wall Street Journal, September 5, 2002

http://www.benadorassociates.com/mylroie.php
http://www.jaynadavis.com

Fundamentalists In Our Midst: It isn't just rioting Hindus at Ayodhya or Muslim zealots in madrassas who have passed on reason for large doses of revealed truth. Between 21 & 27 January, Harris Interactive ( www.harrisinteractive.com ) polled more than 2000 individuals online regarding their religious beliefs. The virgin birth held sway at about 78% regardless of race and ranged from 84% of those with high school or less on down to 60% of post grads. Hell was big in everyone's belief system at 69% of adults. But Democrats were somewhat more forgiving than their Republican counterparts: 63% versus 82%. In all fairness, Republicans believed in Heaven more ( 89% ) than Democrats ( 80% ).

What a rareified response is "Don't know". When it comes to where folks expect to end up after departing this vale of tears, 75% of Christians expect to enter the Divine Kingdom while only 1% figure to rate eternal damnation. Only 12% "Don't know".

Praise the Lord....and pass the ammunition.

Medicare: What I don't know about Medicare doubtless fills hundreds of volumes of rules and regs. I lose 3% of my income to these folks ...no matter the level of income. Why should individuals who engage in risky behavior, healthwise, get these services at the same cost as those folks who don't become unhealthy from avoidable behaviors? No really. Go to an airport and see how pasty folks look. I'm sure you know what I mean. Obiesity, a disease? Smokers? Cardiovascular abuse?

These types are legion in the system. They risk their own health and add enormous burdens to our shared medicare expense. They consume scarce resources through their own behaviors. Let them bear the added cost to healthcare that they represent. Demonstrate the true costs of such behaviors to practitioners of them with a market based approach.

Increase the supply of healthcare and favorably impact its cost as well.

First Policy Statement: Characterizing idealogues and policies as left or right of center obscures perception. A continuum from anarchy to totalitarianism better describes the where of any political actor or action. On the ground there is no distinction between communist and facist. They're both bad for your health. Of course the other end of the continuum sounds attractive but it is practiced in few places. Try the southern Caucasus.

Moderation in all things, including moderation.