Stock Market and Political Commentary

Cracks in the Dam?

Does the poor demand at recent treasury auctions indicate the dam holding back this flood of deficit spending is developing cracks that will lead to catastrophic failure in the future? 

http://www.cnbc.com/id/32201716

J. Cogburn

Earnings Reality for US Companies

To hear the mainstream news media tell it US companies are earning so much money now they don't know what to do with it all... most of the companies "beat expectations" they say.  Well whoopty doo.

Let's now look at the reality:

The composite second-quarter earnings for companies in the Standard & Poor's 500 Index are expected to drop 31% from a year earlier, compared with a decline of 35% predicted last week. The composite is calculated from actual results as well as estimates for companies that have not yet reported.

Declines are expected in nine of the 10 sectors in the S&P 500 Index from a year earlier. The health-care sector is the only one expecting an increase in earnings, of 2%.

Nine is the highest number of sectors with lower earnings since Thomson Reuters began tracking sector growth rates in 1998.

The biggest decline, 72%, is expected in the materials sector, which includes chemicals and steel, followed by energy, down 66%, and industrials, down 37%.

http://online.wsj.com/article/BT-CO-20090724-714776.html

Let's get real folks.  Even with this stock rally since March most people in the US are still down 30 to 40 percent from 2 years ago on their 401Ks and investments.  Their homes have also lost a tremendous amount of value.  And worst of all, many have lost their job or are afraid they are going to lose their job before this recession ends.

The stimulus money is simply sucking oxygen out of the financial system and is doing nothing to create any type of productive economic activity that leads to actual wealth creation tied to increased goods and services.

Add to that the fact that taxes will be going higher and interest rates will likely do the same as the reality of this 2 trillion in extra government debt in a single year with more on the way starts to take hold down the road.

Most earnings of these companies have been better than expected because companies are cutting costs like crazy in an effort to stay in business.  But their revenues have fallen, not increased.  And who exactly is supposed to do all this spending to create a new boom when half the net worth of most Americans have been wiped out over the last 2 years, the baby boomers are nearing retirement, and now many have lost their job, are afraid of losing their job, or are now working part time instead of full time if they still have a job?

I hope I'm wrong, but I simply do not see the type of conditions that would lead this economy back into any type of strong recovery anytime soon.  Maybe we will bottom out before long, but I'm not even sure of that if this Cap and Trade and/or health care bill is passed.  

The biggest thing we have going for us is that recessions are normally over by now and if the capitalistic structure of our society is not totally demolished by the community organizer then perhaps the American people will find a way to keep us from sliding into a depression.  Most everyone believes that is all off the table now, and I sure hope it is, but to me you still cannot rule it out.  Why?  

Because this massive debt in our society that caused a lot of the problems we saw last year has not been erased.  On the contrary... the government is piling up even more debt at an unprecedented and unsustainable rate.  Somewhere down the line the music will stop and so will the economic merry-go-round.  It may be stopped by higher interest rates, inflation, or a currency collapse.  But unless this fiscal madness is stopped soon I predict our trip to the circus will not have a happy ending.

J. Cogburn

Interesting Interview

The link below is an interview on July 28 with Allan Keyes that some of you might be interested in.

Notice how logical and clear minded Allan Keyes is.... then think back to the stumbling, stammering Obama when he is off the teleprompter.... in his prime time health care address Obama advises us to take the red pill instead of the blue pill if it's half the price and does the same thing (this man is a genius), etc.

http://www.ustream.tv/recorded/1886760

J. Cogburn

Mangled History

I'm still amazed even though I have pointed out in various commentaries for almost a year now that Obama is wrong on basic historical facts every time he speaks without a TelePrompTer.

What's more jaw-dropping is that he is often wrong when he speaks with a TelePrompTer..... does this man not have anyone in his staff that is capable of checking basic historical facts?  Does the fact that he can't even get simple historical facts right give you confidence the man knows what he is doing.... on anything?

During a recent TV interview, when President Obama was asked about the prospects of victory in Afghanistan, he replied that it would not be victory like in World War II, with "Hirohito coming down and signing a surrender to MacArthur." 

I think his ignorance is on display almost every time he opens his mouth.  This is simply another example of what I'm talking about and more evidence the man is an empty suit or as I say a complete and utter airhead.

Hirohito did not come down and sign a surrender to MacArthur!

So at the same time he slapped all our military men and women in the face by saying we are not seeking victory in our war against terrorists he also mangled history to boot.  Pathetic!

http://www.history.navy.mil/photos/events/wwii-pac/japansur/js-8.htm

J. Cogburn

Car Company Comparison

Now children let's see how the car companies are doing as measured by stock prices.

Let's consider 3 car companies, GM, Ford, and Toyota.  The government began to get involved in November of 2008 so we'll see what has happened from that point.

GM

Action: Government takeover and 50 billion (yes billion) dollars in tax money to help them survive.  The government involvement and takeover of the company began in late 2008

Result:  Stock has dropped almost 90% since November 08

GM Stock Chart

  

Ford

Action:  Also in tough financial shape late last year due to the severe recession and asked for line of credit from the government, but as I understand it decided not to use it.  The company stayed under private ownership and management.

Result:  Stock has more than doubled

Ford Stock Chart

Toyota

Action: Lost a lot of sales, but did not ask the government for involvement or rescue.

Result: Stock price up about 30%

Toyota Stock Chart

Now class.... any questions about what happens when the government gets involved in running corporations?

Are there any questions about how well the government would be able to run health care?

I didn't think so. Class dismissed.

J. Cogburn

The Mask Is Coming Off

I argued long ago that a man who said himself his toughest task in life has was paying off student loans has narrow shoulders and a thin skin and should be nowhere near the oval office.  It's easy to be cool when you think you can do whatever you want and the majority of people will still adore you.

But when the reality of life as an airhead in the oval office begins to sink in the community organizer will not be such a pleasant and happy camper.... I now tell you this again with evidence in hand after just under 6 months in office.

What will he do if either of the Cap and Trade or Health Care bills are not passed?  Will he throw a little temper tantrum for us?  Will he stamp his foot?  Perhaps he will just blame the Republicans.  He's already getting agitated and the vote has not even been taken yet.

My guess is that not only will he be like a little kid who didn't get his way, because emotionally I think that is exactly where this "man child" is, but he will try to still get his way by some other means.  Will it be another Czar or an executive order perhaps that he uses to continue his reign as King? 

Only time will tell if these bills are defeated. I still think they will likely pass because of the huge majority of democrats in Congress, but his job approval rating is dropping fast so there is still a small chance of defeat through the congressional process.

In the meantime, examine the evidence now supporting my position of long ago that this guy is a narcissist of the highest order and will not take defeat or even criticism from his own party on any of his grand ideas in a dignified manner that would be consistent with the office he has fraudulently obtained.

See Exhibit A

J. Cogburn

Two Icebergs Ahead

Two huge and ominous icebergs lay in the waters just ahead as the good ship America steams ahead at full speed even though it is already taking on water from an economic standpoint at a rapid rate.

The first iceberg is Cap and Trade.  The second iceberg is nationalized health care. Both would significantly raise taxes on the American people and if you think it will only be on the rich you really are ignorant or a fool.

Our economic ship might still be saved if we turn hard to starboard now... if not she's going down and it will be a long and painful experience for most Americans.  Already the actions of the last few months of the Bush administration and the first few months of  the Obama Kingdom have greatly damaged America's economic ship by taking on unprecedented debt, trashing contract law, nationalizing several industries, projecting weakness abroad, etc., etc.

Obama is determined to smash headlong into these icebergs at full speed ahead.  He will pull out all the political stops, promise the moon, and do whatever is humanly possible to hit these bergs.  Whether it is because he is a total airhead or because he wants power and a legacy or some other reason is irrelevant at this point.  Whatever the reason, if he succeeds we will all pay the price in taxes and lost opportunities in the job market for years to come. 

The only hope is that Obama's popularity drops far enough and fast enough to get the attention of enough democrats and bolster their courage to the point they will not vote for these looming economic traps just waiting to be sprung.

The odds are against it, but there is still a small chance..... but I must emphasize it is a small chance that we can avert this certain disaster. Most likely we will collide with at least one, but more likely both of these economy killing bills.

J. Cogburn

An Economic Poem 2009

I'll bet you readers did not know I was a poet, eh?  Well I am, but only on occasion (see below).

 

I had kind of a rap melody in mind as I wrote the words so when the poem is recited to a rap tune it will make it snappy you know.

 

I'm not quite sure why this was since I don't listen to rap music, but of course have heard it from ads, etc. from time to time.

 

Could it be that I have some black ancestry from many years back and now this latent DNA is manifesting itself in unexpected ways?  This could be a great discovery... just in time for reparations!

Before you watch this video, let me set the mood with a short but patriotic poem I wrote for this occasion.....

 

One if by land, two if by sea...

If you've not been screwed yet

You soon will be!

 

For Obama, Pelosi, and Reid have a plan

To tax you as much and as fast as they can

 

If Cap and Tax don't get you

Then government health care will

They say its all free

But we will all pay the bill

 

So one if by land, and two if by sea

You voted for the democrats

Now down goes the country

 

Unemployment's rising and taxes are too

Opportunity is dropping like a worn out shoe

 

The country we knew, you can kiss that goodbye

Because all of their policies are pie in the sky

 

They've been tried before without any success

The result is always the same

The citizens live with less

 

So we'll try it again, you know Obama is so smart

But soon you may be living

From an old shopping cart.

 

You won't have a home and you won't have a car

But you will have health care where ever you are

And now for tonight's exciting feature..

 

http://www.youtube.com/watch?v=jeYscnFpEyA 

 

J. Cogburn

--
Making Money Fast is Fun
http://www.QuickProfitStockTips.com/