Futures Market Blog

The gloomy news from Washington continues snuffing out every rally that is attempted. Every time an elected official speaks the market retreats. We now have "The Obama Indicator" which continues to signal oratorical excellence paired with market depression. As our silver tongued leader speaks the market retreats. So what is a few trillion here or there we will tax the rich to pay for the poor and middle class. All we need are some green tights and Robin Hood will appear. Tax and spend is the mantra for the government and, should the proposed tax increases become law--run and hide will be the mantra for corporations and the wealthier citizens. Speaking of citizens it is likely that both our corporate citizens as well as our wealthier citizens will seek residency elsewhere. Residency in a place that doesn't punish success and seems more equitable. We can remember a recent time when many corporations fled to Ireland for the benefit of a lower tax rate. In truth most corporations will remain domiciled where they are now, but some adventurous companies will decide to leave our shores for friendlier lands with lower corporate tax rates.

Who is going to buy our debt? Why would another country buy our debt with money other than that from the trade imbalance the US has with their country? That means when we buy goods from another country, we pay for those goods and services in US Dollars. The recipient of those dollars can either spend the US dollars or sell them. When the foreign countries spend US dollars it usually is for US Treasuries or US equities/ bonds. As the economy slows down, we are importing less thus, the amount of money invested in the US Treasuries of US funds is diminishing. If we flood the market with currency, in an effort to bail the economy out of its rutt, that will bring down the buying power of the dollar when converted to a foreign currency, and thus cause the foreign governments concern. These are important thoughts that we Americans should think about. Bad enough we are hocking our children's futures but what happens if the rest of the globe decides not to fund our debt. We are aware that we can just print more money, but doesn't that have its problems as well.

We never thought we would enjoy CSPAN, but in this past week's CompliancEX, the February 6th edition, there was a film clip of Representative Gary Ackerman from Bayside N.Y. taking his shots at the SEC. If we could vote for this guy, we would. He minces no word and just attacked the officials of the House Financial Service Committee for their "see no evil, speak no evil, do no evil" attitude. We need more guys like Representative Ackerman who are not afraid to state the public outrage. Too bad he didn't get onto Thain and his 1.25 million dollar office makeover. We would love to apply for Thain's chauffeur's job at $225,000 per year, with no risks, and full benefits.

For all those anxious to see the end of the Bush bashing years, you will have to wait several more months. The economy isn't getting any better, however; we are getting used to the fact that we can live without spending. We shoppers have become or evolved into price seekers and not price takers. We will flit around until we are sure we got the cheapest price for whatever it is that we are targeting. This makes life very difficult of the merchants who, would actually like to make a profit on their sales, but the price conscious consumer is making their lives difficult.

The Madoff scandal and the housing bubble have something in common.....greed. Both scandals were obvious and both scandals were ignored. As a matter of fact, the dot.nothing bubble was based on much of the same greed and piranha feeding. That bubble burst sending interest rates to the floor which inspired the housing bubble which burst and sent the interest rates even lower. So, which is the next bubble to rise to the surface? Remember, it will look okay at first then, will get way out of the realm of reality.