Support Fair Tax

Ok, I'm once again going off the reservation/plantation (from the standpoint of many of my friends) by supporting the Fair Tax. We need a simpler, yet fair tax system. We need to eliminate the huge tax bureaucracy. And I have always found the intrusiveness of the tax system (invasion of privacy) at odds with the notion that government should be "of the people" not above the people. The irony is that, while I lived in Oregon, I opposed creating a sales tax, despite at one point working as an intern for Mayor Goldschmidt, who supported the sales tax idea. If Oregon had a sales tax and no income tax, then I would have been even happier, and certainly would not have wanted to institute an income tax.

Chavez Calls for Workplace Democracy -- BBC link

Here's an article that comparative economic systems students (among others) might be interested in:

Chavez article in BBC

Short Market/Short Oil

Decided to go short the S&P 500 and to hedge by shorting oil, as well. If both the S&P 500 and oil go up significantly, then I will lose a lot of money. Second worse scenario (for my portfolio) is that the S&P 500 goes up significantly and oil is flat. My assumption is that the most likely catalyst for a sharp rise in stock prices is a sharp fall in oil. Under that scenario the hedge keeps me from losing a ton of $$$.

Baidu Bubble

My close friend, Dale, wrote me the following: "This may be the best buy since Linux went public and immediately soared to $320 per share. It`s a bit lower now, at $1.75, but think what you could have made had you bought early!" As you may gather from this, he and I have a similar sense of humor.

Baidu, the Chinese Internet search engine, has joined Google in the stratosphere of the 2005 stock market. (To be fair, Google has a P/E ratio of about 100, which may be speculative, but is not even close to Baidu's altitude.) I think Dale also mentioned that it has a P/E ratio of 2800. At least it has a P/E ratio. Back in the Halcyon days of the Great Internet Bubble, having a positive E was almost a sign of being too old fashioned.

Today was another of those "sucker rally" days, by the way. Should see some pretty good volatility for the rest of August and into September. September is likely to be a rather unpleasant month for longs. We'll see.

Fed Rate Increase --- What Choice Did They Have?

I love hearing all the jabberwocky about the decision of the Fed to push up interest rates, as if they had a lot of choice. The fact of the matter is that the Fed is responding to the weakening of foreign demand for treasuries at a time of continued large scale financing needs of the federal government (military Keynesianism is the growth philosophy of this administration -- take away the war budget and recent U.S. economic growth, the so-called jobless recovery, evaporates). The biggest risk to the gradual upward movement of rates is the Chinese government, which must feel quite put upon by all the anti-Chinese rhetoric coming out of the U.S. Congress and some segments of the corporate controlled media these days. The Chinese administration could, if they wanted to, force the Fed to accelerate the upward movement of interest rates. They probably won't do this. The current Chinese leadership, pragmatic Marxists all, are not prone to drastic moves, but rather to gradual experimentation. They are currently reassessing a decision to pursue a corporate finance strategy to upgrading Chinese firms into full-fledged transnationals, after the uproar over CNOOC making a bid for Unocal (whose assets are largely in Asia!) and other such bids. Haier even called off its bid for Maytag. I suspect they may use their cash horde to buy European and "Third World" assets instead, and perhaps might even make a foray or two into the former CMEA arena, including Russia. But U.S. shareholders may lose out, both because Chinese firms will be more reticent to buy in this country and because the general environment (high interest rates, high commodity prices, a corrupt political leadership in Washington, a continued shift of domestic employment towards lower paid service jobs, etc.) will lead equity prices lower in the not too distant (post summer euphoria) period.

Okay, enough of my own jabberwocky. Here is the link to the Fed's own interpretation of why they raised the target for the fed funds rate to 3.5%.

Martin Sheen for Governor?

Why doesn't Martin Sheen run for governor against fellow thespian, Arnold Schwarzenegger? It would be the most media-licious political campaign in national history. Besides, one wonders why it is that the GOP is the only party that recognizes the value of running these charismatic Hollywood figures for political office. In the 2000 election, Al Gore was the inverse charisma candidate, exuding negative charisma. If he had even a fraction of Martin Sheen's (or Alec Baldwin's or Tim Robbin's) charisma, he would have won the election. While John Kerry had a tad more charisma than Al Gore, it was, sadly, only a tad more, as the late night jokes quite rightly brought to the fore. Speaking of charisma and Massachusetts politicians, where is Joe Kennedy when we need him??? Joe Kennedy has a ton of charisma with no credit to the Hollywood machine, as well as an abundance of intelligence, compassion, and political experience. He also has the advantage of having worked for years to provide energy assistance to the needy (at a time when Bush's oil buddies are pillaging and plundering without restraint --- including getting their "energy" bill through Congress and now (today) signed into law by their president).

Cheers for NCAA

The decision of the NCAA leadership to ban the post season use of racist symbols for competing teams deserves kudos. It is not typical for sports authorities to care about, much less take action against, racism within its organizational ranks. The most glaring example of such racism, the Cleveland Indians red sambo image, has continued now for many years with virtually no reaction from the baseball commissioner(s) or baseball's moguls or even the players. How can any self-respecting players put that symbol on their head or wear a uniform bearing that racist stain? Would they be as passive if the symbol was a confederate battle flag or a swastika? And the same can be said of the "fans" who buy the tickets or, even worse, buy the caps and other racist "memorabilia." I'm sure a lot of these "fans" know full well what statement they are making. In any event, at least the NCAA has taken a bold step. Perhaps this will ignite more interest in other sports organizations, including major league baseball. One can only hope.