Monday, May 10, 2004

SWAN shallow as can be

Yes, yes I know I'm behing in my blogging about economic issues. This is because currently I'm staying at my mom's a few days in order to help her out with yard work. My references, etc., are back out of state at my home so the pieces I'm afraid will just have to stay delayed until I get back in a few days. Now that my dad's gone, I've volunteered as eldest in order to help out around the house. So I did the spring raking and weeding today, and will put out the garden hose for my mom, and then sand and laquer a window frame. We'll probably have to replace the frame anyway, but I want to stem the damage until we can get that garage window pane replaced.

One thing I've noted though is that the DJIA as I've predicted has gone beneath 10,000. In addition, I say MCI decided to lay of 15% of the work-force.

We had two good months of job growth, but I fear in a few months we may be back in negative territory. The falling dollar has been a mixed result strategy. On one hand its caused energy cost inflation, as the dollar's devaluation relative to other currencies makes the purchasing power of crude oil fall - unless the price is raised which is what is happening.

On the other hand, it's repositioned the United States to outsource jobs from Europe where structural labor costs are higher still than here. Yes, that's right. Unfortunately right now proponents of globalization and free trade as is are celebrating the job growth. What they haven't acknowledged is that the model is still fundamentally flawed. All these currency valuation shennanigans aren't creating jobs, they're just shifting them from a higher cost location to another.

In addition, it's an extremely dangerous gamble. Japan and China hold combined over a trillion dollars of US treasuries. Even Greenspan has warned that this can't go on forever. China will be forced to choose between it's exchange rate peg with the United States and its monetary tightening policy. It can't do both, not at the same time. The synchronous tightening of monetary policy by the Fed might ease that pressure between the two choices, but it will also cut off the credit to a lot of dodgy financial companies and arrangements - these derivatives that Buffet among others have warned about are especially dangerous.

The ideal situation is that China and the Fed cut together and China is able to tighten monetary policy while retaining or allowing to float upwards its exchange rates. However if the Fed misreads the situation and the value of the dollar were to drop, the whole scheme would unravel. If China were forced to dump Treasuries because of a sharp decline in their prices and were to switch to gold and oil futures instead, there could be a big unwinding in the marketplace. This would only occur if the Chinese and the Federal reserve failed to coordinate their monetary policy tightening, or perhaps a third party player such as Japan found itself unable because of its growing economy and declining foreign hard currency reserves to continue purchasing enough dollars to keep the Yen stable to it. At that point, the Japanese would have to sell Treasuries - some of their $600 billion worth - to get enough liquidity in order to maintain their exchange rate of about 110-130 yen to the dollar which is the main range it has been trading in.

This is a very tricky situation, and if these trades were to unravel the damage would be catastrophic. You'd think that people would be prepared for a situation like this, but my reading is that BOJ and others aren't. Hence the liklihood that it might actually happen.

One final note, tonight the judges showed themselves as the shallow superficial people they truly were in the SWAN. There were two contestants. One was Marnie, who was a depressed whiny b**** who couldn't keep up with her program and was always shirking, but because she started out better looking ended up looking better despite that her plastic surgery results left with with a few flaws - like that "too sharp" or "angular" look that plastic surgery sometimes gives people. Then there was the second contestant, Dawn, whose plastic surgery came off wonderfully and she ended up looking much better than when she began and her attitude toward making the changes in the program was much better through out the program. By the end of the program, I was sure the judges would pick Dawn who even though she didn't look as good as Marnie - because of genetics really - her discipline and work on the program was much much better.

Instead they picked the whiney b**** Marnie who was better looking.

This only goes to show how truly shallow this entire program inside. What a bunch of crock.

As a male let me say, looks ARE important to men. However, the "After" Dawn was pretty decent looking even though she was as knock-dead as Marnie. Given the choice between a pretty woman who is nice and reliable, and a whiny depressed moody unreliable and lazy b**** like Marnie, you always pick pretty but nice and reliable over gorgeous and bitchy any day.

That's just how life works. You're not going to be thinking how pretty she is when she's disappointed you AGAIN and let you down, sold you out, or just plain flaked out, etc. as these moody whiny women who trade on their looks can be. Trust me, that's experience talking.

There's a proverb in the Bible that says better a crust of bread and peace in your household, than bitter arguments underneath a gilded roof. Amen to that!


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