GDP: Are we in decline and, if so, who's to blame?

I have wondered, as many of my readers have, about the apparent decline of our economy in recent years. Many, especially the far right in the Republican Party, have blamed President Obama for this and many on the left have blamed George Bush for this. Are these points of view true? Let's look at the facts over time. The fact is that our economy has been in decline now for many years. The first chart below shows GDP for the period of 1960 to 2011. I have drawn red lines at the top GDP levels after eliminating the highest value for each line segment. So for the period of 1960 to 1979, I did not draw the line at the one highest point of 15%, but rather of the several lower ones at 10%. Imagine that, a several quarters of 10% GDP or greater. back then we were just like China today!

You can see from the 3 red lines that we have steadily dropped in GDP and that the years from 2000 to 2011 are the lowest GDP periods in the past 50 years. In fact the lower GDP period has mostly been for all of the years of the Presidency of George W. Bush and the years with President Obama. The facts are still unknown whether President Obama will be any better or worse than President George Bush was. Right now they look the same to me, but there isn't enough data to be conclusive. Let's look a little closer at the years from 2000 to 2011 and see more closely where we are. The next chart below shows this period. I'll let you interpret what you are observing here. But before you look, be aware that your point of view will determine what you see! Be honest with yourself here, as it is a great learning point.

What have you learned? Can you be honest with yourself and be an objective observer or are you biased to your original point of view. I say this to both Republicans and Democrats. Dare to make a comment on your learning? I invite you to make a comment below. But let us know if you are a Republican or Democrat in those comments. It makes the comment so much richer and interesting.

One last chart. below, I just had to post and this one is of GDP since 1947. It is similar to the chart from 1960. Charts constructed from data fromTradingEconomics.com.

Thanks! And while you are at it, take my Mini poll on the right margin.

China and the U.S.relations, as seen through a narrow lens

I thought I would step up the conversation about the two countries and how we view each other. I was listening to the various news reports today, regarding the visit of Chinese President Hu Jintao. One announcer was citing China's significant spending on their Defense Budget and how it has been steadily increasing. They asked the Chinese Defense Minister why China was building an Aircraft Carrier. He replied, "We don't have any. The real question is why you have so many?" I realized that many people in the US view China with fear and apprehension and that therefore they must have ambitions beyond their sphere of influence now and want to expand it across the world. I don't know if this is true and neither does anyone else really. This did force me to look at our relationship with China not our viewpoint, but from their viewpoint.

First, let me state that I am totally aware of China's expansion into Tibet, Macau, Hong Kong and their claims on Taiwan. I especially didn't and don't like what they did to the gentle people of Tibet and their right to practice their religious beliefs and preserve their culture and traditions. And every time the Dali Lama is acknowledged and/or received by our President, there is an outcry from the Chinese government.

But if my history of China is at all representative and accurate, let's take a look at the comparisons of our two countries:
- The Chinese have never started a war. They are not a warlike people. Their military strategy is based upon the book, The Art of War by Sun Tzu. In this book the following principles are at the heart of the approach of the Chinese military thinking:
The importance of intelligence.
The importance of manoeuvring so your enemy is hit in his weakened spot.s
The importance of morale.
How to conduct diplomacy so that you gain more allies and the enemy lose allies.
Having the moral advantage.
The importance of national unity.
All warfare is based on deception.
The importance of logistics.
The proper relationship between the ruler and the general. Sun Tzu holds the ruler should not interfere in military affairs.
Difference between Strategic and Tactical strategy.
No country has benefited from a prolonged war.
Subduing an enemy without using force is best.

This explains much of how the Chinese have behaved these past 50 years. Now let's look at he contrast.

- We seem to have a predisposition of starting wars and invading others, although we don't like to stay in those countries as an occupying force and run them. i.e. Vietnam, Iraq and Afghanistan
- We even are a warlike and belligerent people as measured by the fact that people here have more guns than any other country in the world by far.
- We seem to exist and view the world from a place of fear, rather than from a place of something to embrace and appreciate others differences. Just listen to all the fear language about our government. Many say things like, "We need to take back our government!". We seem to see the "bogey man" everywhere. Some even see fear from our President. Some may not be able to accept the idea of a Black man as president and hope he is thrown out of office and legitimized. That's partly what's at play with the Republican controlled Congress now wanting to investigate everything this Administration has done.

I could go on but you get the picture. America is full of fear and as a result is causing fear from a country like China. They don't understand us while still admiring what we have accomplished in a short 20 plus years. I do understand their fears and why they are doing some of the things they are doing. It is protectionism and a cautionary reaction to us. We are the ones who have ships over in Asia patrolling the waters off China and the rest of Asia. We are the ones who told many we will protect them, like Japan, Taiwan and others. We think we are protecting them from China. But China is looking at us as interfering in their general area of influence. How do we report news that China is building a relationship with Venezuela, Cuba and other southern hemisphere countries? Think about it. This is similar to how we offended Russia when we were going to put a missile defense system into Eastern Europe. Wisely, President Obama saw the Russians concerns and decided not to embark on that course and he said he would not deploy the system.

Since that decision, we have approved the Start treaty with Russia and Russia has been helping us with Iran and North Korea. If we just weren't so afraid, defensive and belligerent, maybe we would find more friends in the world. I'm willing to try a little honey to warm relations vs a slap in the face. If the Congress passes any legislation calling out China for currency issues, it will be a slap in the face. They move slower than we do and maybe that's a good thing. Maybe we should continue the approach of making peace with China and seeing them as a partner.

Facts about the 2 countries:

Size: U.S. 9,826,675 sq km, China 9,596,961 sq km (roughly the same size)
Population: U.S. 310 Million, China 1,330 Million (10 times more people for China)
GDP: U.S. $14.7 Trillion, China $9.8 Trillion (40% more for U.S.)
Per Capita GDP: U.S. $47,500, China $7,400 (almost 7 times more for US)

What do you think? What is the best way to think about them and us, with paranoia or courage?

Here's a video supplied by my friend Kirk of NBC's Saturday Night Live which was timely and appropriate as a way to see our mindset about our partner, China.

Enjoy!

G-20 meeting: Effect on markets, Gold and currencies

As most of you know, the past few days has seen the G-20 meeting convene of Finance Ministers and their pronouncements that they would pledge to avoid weakening their currencies to boost exports and to let markets increasingly set foreign-exchange values.. Hopefully that means of the U.S. Dollar as well, as we seem to be on a tare to drop the value of the dollar, as fast as we can. In advance of any stock market trading this week, I thought a few charts were in order. I noticed that the on the last 3 trading days in anticipation of this meeting, there has been a slight shift upward on the ratio of the Dow/Gold ratio, as is seen in the chart below. Whether this is a reversal in trend or not is too early to say, but I will be watching it closely next week.

Now see if you can tell what has caused this movement up. Is it because the Dow has moved up or because Gold has dropped? This is important because Gold is tied to all currency valuations and is reported here in terms of U.S. Dollars. Below are the 2 charts in question.


You know there has been a lot of pressure put on China to raise the value of its currency, the Yuan, as they have kept their currency relatively low for many years. It has risen less than 2% in the past year, while Japans currency, the Yen, has been forcefully dropped by the Japanese recently as a counter to the dollar dropping. You can see from the chart below how the value of the Yen has been rising against the U.S. Dollar going back many years.

So let's assume you have a constant currency value as is the case of China and an ever steady Yuan, in this equation where currency is in the numerator and the price of Gold in the denominator, you can see that the resulting ratio goes lower and lower.

It is difficult to compete with people who get paid less than a dollar a day. Most of the world is finding out just how difficult it is. And yet, we all knew this much before the economies of the world went Global. Remember we too had someone, Ross Perot, who warned us of the giant sucking sound of jobs leaving the U.S. but the business leaders in this country thought somehow they could sell more goods in these foreign lands or at least get cheap labor to build their products here, rather than hire U.S. workers. That began the end of the Middle Class in America. We are all now suffering as citizens because of this folly. Business people do not have real concern for the common person. Their concern is totally based on Profits. That is why the Healthcare system in this country is so messed up save but a few Not for Profit endeavors which struggle every day to survive.

Market comments for Oct. 14th, 2010

Data released this morning shows that Initial Jobless Claims were higher at 462,000. Expectations were of 450,000. Last week the numbers reported were only 450,000, so this spike is in the wrong direction. However, as usual, they adjusted the prior week's data up from 445,000 to 449,000. Continuing Claims came in at 4.399 Million vs 4.511 Million the prior week. But the 4 week moving average is up to 459,000. When you really think about it, Americans are losing jobs to the tune of greater than 450,000 a week and have been doing so for a very long time! How sad for American workers and their families. This is not a good report for President Obama going into the elections in a few weeks.

On another note, the PPI came in at +0.4%. This was the same data as reported for August. The Core PPI, year over year increase, is up only 1.6%. The Trade deficit came in at -$46 Billion versus -$43 Billion last month. Expectations were for improvement to being down to -$40 Billion, so this too was in the wrong direction. With China's currency resisting world pressure to appreciate because they have an unfair advantage I believe they will continue to defy the world and will keep their currency as low as they can. Why not, they are in the drivers seat and they know it. Even if the whole world dropped their currencies they couldn't get it low enough to match where China's currency is because their population works for under a $1 a day. We just can't compete with them nor can anyone else.

Foreclosures reached a record 100,000 last month, and the background story, which emerged a week ago, was that an investigation of Banks and their foreclosure process is being conducted. Bank of America had stopped all foreclosure processes in 50 States pending an investigation by them.

Futures are close to unchanged or slightly lower after the release of the data.

It is now clear that with the sizable debt this country has, that the way we are dealing with it is to devalue our currency so that the value is half of what it was so we can pay the debt off in cheaper dollars to China, who holds our debt, as does Japan. That is why Japan is trying to lower its currency as well so they get paid eventually relatively equivalent dollars and why China will not inflate its currency. The major world powers are in a Currency war right now. This game is going to end very badly as wealth is being transfered out of the United States.

But we are all happy now because the stock market appears to be rising, right?! How naive the American public is. That is the price we all pay for a poor education of our kids who someday grow up and are fooled by the talking heads in Washington and vote against one's own personal interest.. Education is the one answer to get this country back on track and we haven't even begun to get serious about improving education yet. That is why we get the Government we deserve.

Sanctions against North Korea? How many are in the U.S's bag?

OK, every time North Korea does something we don't approve of, and the pursuit of Nuclear Weapons seems on the top of the list, we threaten them with new Sanctions. So here's my question. How many more sanctions could we employ? Let the American people and North Korea see what we are considering in total, rather than in piecemeal. If you want to stop someone from doing something and you are threatening them with some action, wouldn't it be wise to share all of what sanctions we are considering if you wanted to get them to stop. Otherwise they continue to build more nuclear material for bombs and also Missiles to deliver them. We either can or can't influence them, short of war. Oh and while we are at it, what about what we are willing to do regarding China and her role in this? You see I think it is all nothing but show for the American people as we are not willing to go to war over this, unless North Korea used a Nuclear Missile. I don't even think we would go to war with them if they shared the technology with others, because they already have with Iran and now Miramar (Burma). Quite honestly, I think Americans are getting tired of this strategy used by every Administration, Republican and Democrat alike. Don't you?

Monday June 21st Stock Market outlook (with Updates)

They say big news is driving the markets around the world today and that is China's currency move, the Yuan. It has been allowed to move and it means a short rally in stocks. However, it means the Dollar will be hit again and it will cost more for the US to pay its debt.

Merideth Whitney was on CNBC earlier this morning and stated unequivocally that the Housing market is in for a double dip down. She said she sees the 2nd half of the year as trouble for earnings and markets and the beginning of another leg down in housing prices. She said there are a lot of rotting assets on Bank books too and that Banks have tightened credit availability for Consumers. Not a good thing for Small Businesses.

So I see a short Rally ensuing today and approaching the earlier high target I had set for the Dow at 10,600. That will form the right shoulder of the "W" pattern in this 1 year Dow Chart. Then we will head down again, as you notice that the "W" pattern is slanted down on this chart. It turns out that 10,600 is where the Dow 50 day Moving average crosses the axis. This next drop should coincide with the earnings season which starts around July 12th with Alcoa. Please notice that with the exception of Friday's Volume of Options Expiration day, the volume in this rally up has been at the expense of lower volume than the drop to the low. Low Volume and rising prices are very bearish so don't get caught up in the hype this is the time to get back into the market. I don't believe a word of it.

I will not sell my shorts, but instead add to my positions at these cheaper prices. Stay calm and be patient is my motto, as nothing has really changed in the world to be optimistic about. The currency move by China prevented a Trade war which was brewing because Congress was playing tough on the issue with much antagonistic language towards China. I will update this post as the day unfolds so come back.

Update: 9:30am PST

As you can see from the chart above, the market had a nice open and then has been sliding continually. As I have shown with the Red line under the latest "W" pattern, it is sloping down and therefore the market will continue down until another new pattern emerges. I hope you took some profits this morning as the Dow has hit a high today of 10,594, which is pretty close to my Dow 10,600 prediction. We are going to test the previous resistance levels which is at 10,512. So as the market drops down to this level we will see if it holds or goes lower. The next level the market will go to will be to test the lower level of 10,481, if we don't hold at 10,512.

Update 1:10pm PST

The Dow did drop as predicted and the market closed negative in all 3 indexes, the Dow, S&P 500 and the Nasdaq. Hope you took profits early in the day as I recommended earlier. Also it was a great time to buy more TZA Calls and Puts on selective stocks. The Dow finished at 10,442 clearly breaking below previous Resistance levels and is now around the Pivot Point of 10,452. Support is at 10,422 and S2 is at 10,393 so watch these levels the next day or two.,

In trying to decide what to do each day, I keep in mind that the mood of investors is bearish, not bullish and the charts reinforce this view as I have shown on earlier posts. From a long term perspective, we are forming the right shoulder of a Head and Shoulder pattern, or "W" pattern as I like to call them for short, which is 30 years in the making. See previous posts showing this chart of the Dow and make up your own mind. See you here tomorrow!

What would China do?

So here is the question of the day: What would China do if it encountered the same OIl spill we have in the Gulf? We in the US tend to think about China, as inferior when it comes to Environmental issues. But when the Chinese have a crisis, they surely know how to mobilize their people, and they have plenty of them, to react to a natural disaster. Any man-made disaster would meet equal force. So I ask you to think creatively here and ask yourself what would China do if they had this Oil mess? They changed the course of the Yangtze River, they built the Great Wall and they gave us all a treat of perfection in the opening ceremony of the Olympics. Why can't we be that good? And why aren't we doing better? Is it beyond us to ask for help from others who might have equipment to deal with this Oil spill or are we too proud as a country to even consider asking others for help? Who are we anyway?

China helps Haiti with a Pledge, but just match Angelina Jolie and Brad Pitt's donation.

Ok, I was looking at the list of countries pledging donations to help Haiti in the aftermath of the 7.0 earthquake. The news said China had pledged $1 Million dollars and had sent 60 rescuers to help save people trapped in buildings. I am thrilled they sent the rescuers but was appalled that China pledged only $1 Million dollars. As I said in the title of this Blog post, Angelina & Brad donated $1 million and the Chinese could at least pledge $10 million given the world came to its country to help in their earthquake not long ago. China needs to learn how to express compassion during a crisis proportionate with their status a a leader on the world stage. Heck, just pledge the money in U.S. dollars if you are worrying, since you worry they may be worth less anyway. While I am at it, let me praise Angelina and Brad for really stepping up to the plate and donating so much money to help the Haitians. God help those poor people suffering beyond imagination.

The greed of Wall St. and the Banks have put US second to China

The headline news today is from Paul Volcker. Here's some excerpts from Bloomberg's article:

Volcker Says China’s Rise Highlights Relative U.S. Decline
By James Tyson and Michael McKee

Sept. 29 (Bloomberg) -- Former Federal Reserve chairman Paul Volcker said the rise of China and other emerging economies has underscored a decline in the comparative economic and intellectual leadership of the U.S.

“I don’t know how we accommodate ourselves to it,” Volcker, an economic adviser to President Barack Obama, said in an interview with PBS’s Charlie Rose taped yesterday in New York. “You cannot be dependent upon these countries for three to four trillion dollars of your debt and think that they’re going to be passive observers of whatever you do.”

The former Fed chairman also said unemployment at 9.7 percent will slow the pace of recovery from the U.S. recession as Americans default on mortgages and consumer loans. Moreover, commercial real estate loans are likely to cause further losses for banks.

“This recovery will be slower,” he said. “We can’t just pump up consumption and pump up housing again.”

Most of the people who did this to America were leaders in the financial system of our country and they have ultimately relegated our country to a more diminished place in the world economically. Yes, we still have strong Military power, but eventually this sellout of our way of life because of their greed will affect Military spending too. We have no other choice. We're broke while the wealthiest of Americans participated in this scam on America. They were supposed to be so smart, but couldn't they have seen derivatives produced no real products for consumers or really added any substantive assets to our country. It was all just paper (money) and it made our real wealth disappear as we have now nothing but debt and we owe it all to China.

European market economic data update: They are hurting too!

According to news reports today, Unemployment rose to 9.4 percent in June, the highest since 1999. More than 3 million people have joined the euro region’s jobless rolls in the last year, and the Organization for Economic Cooperation and Development expects the unemployment rate to reach 12 percent in 2010. The highest rate was in Spain, which came in at an unbelievable 18.1% rate. Prices in the euro region dropped 0.6 percent from a year earlier, the most since the data were first compiled in 1996.

What does this mean for the U.S.? It means it will be difficult for Europe, a large trading partner for us, to purchase U.S. products, thus keeping our revenues pressured for U.S. Corporations and earnings going forward. We are counting now so much more on China than we ever have been, a dangerous move and a critical partner of our future economic stability, that we have increased our risk for recovery. And on that note, U.S. stock futures erased gains after the government said personal consumption slumped more than forecast last quarter.

Savings Rate vs. Consumer Spending: What will the future bring?

Below, I have a chart of the U.S. Savings rate going all the way back to 1970 and comparing year over year growth, which I read in an article titled, "Global Growth Likely to Stagnate Through Summer". The economy has been built upon Consumer Spending contributing to 70% of our economy for at least the last 20 to 25 years. But now that trend seems to be in reverse, as is shown on the chart. If this is true for our economy, the big question is whether our exports can increase sufficiently to fuel our economic growth and take the place of our Consumer. We find ourselves in the very same place as the Japanese did in the early 1970's, which ultimately led to their lost decade of the 1990's.



No one knows what will ultimately happen here in the U.S. But we need countries like China and India to help fuel our economy and we had better get used to it. We need to build a closer economic relationship with China and that is in our national interest, or we could have our lost decade as well. It isn't going to be easy, as we are not as aligned with China because of their Human Rights record, but we need not to meddle in China's internal affairs as the way of showing our displeasure. We have learned much from the latest trouble in Iran and how technology has given them a chance to raise their collective voices in opposition to what they deem as an injustice by the Supreme Leader and government they trusted. We must let technology do its magic in China and learn to be more patient as a people. Otherwise, we and our children have a dark economic future. We can't keep spending like we have for the past 25 years. It is time to save and it looks like we may have finally learned that lesson.

Market outlook for Jan 23rd and into next week: The first dose of fear

Markets are set to go down today. The Dow is down about 137 and the S&P500 is down 13 at 4:30am PST. It appears to me that we are going to go try another retest of the lows of 7,300 on the Dow and 750 on the S&P500 starting today and going into the coming days next week. The fear level is rising about the economy, the banks and what's happening to constrict the economies in Europe and China. Some are predicting instability in China because of the slowdown in the economy and the possibility of social unrest.

It is too late to venture in and buy the ETF Ultra Shorts SDS and TZA in my opinion because this market can turn the other way on a dime. Volatility has been rising since the beginning of January, as measured by the VIX. It was at 39 and closed yesterday at 47, for a 20% increase and I expect it to go higher.

The Put to Call ratio closed yesterday at 0.88 and I expect it to go lower to 0.80 or lower which would be a signal to sell more. We are now in a cycle, where bad news does drive the market lower. A few weeks ago many had declared that the market was handling bad news very well. That has now changed. Fear is starting to come back again. Gold is rising again. In my view this is not bad as I wrote earlier in the week. We need a little fear right now so President Obama can get his changes approved by Congress. I also wanted to report that my read on the charts for the Dow actually shows a distinct sloping uptrend lines starting with the low in the year 1988 and going to 1995. This line crosses the axis today at 7,300. But if you go back to 1983, which is the year the Dow started to rise after the recession of 1982 and connect that point with the 1988 data point, you get an uptrend line which crosses today at about 5,200. If we break the 7,300 level on the Dow and can't get above it, we will be heading for a Depression, not just a bad recession. Let's all hope this 7,000 level can hold. As we get close to it fear will rise almost to a panic state again. When you watch the financial news on outlets such as CNBC, you will start to hear the fear bounce between hosts and guests. Sorry again for the gloomy outlook but in a way we need this fear to help get the changes implemented. Otherwise it will be business as usual.

Nouriel Roubini, renowned economist from NYU, predicts more bad news

I usually don't copy and paste a news article on my site but this one merits I change that position as it is about the economist, Nouriel Roubini, who predicted the mess we are in years ago The article comes from Bloomberg.com and here it is:

Roubini, Edwards Predict Slump in S&P 500 on China (Update1)

By Michael Patterson and Adam Haigh


Jan. 23 (Bloomberg) -- Stocks will retreat around the world because of shrinking demand from China as growth in the third- biggest economy slows, said Nouriel Roubini, the New York University professor who predicted last year’s financial crisis.

Global equities will fall 20 percent this year from current levels as China, which contributed 19.5 percent to total growth in 2007, contends with its slowest expansion in seven years, he said. Wall Street strategists predict the Standard & Poor’s 500 Index, down 8.4 percent so far, will rise 17 percent in 2009.

Roubini, an economics professor at NYU’s Stern School of Business, said China already is in a “recession” despite government data showing a 6.8 percent fourth-quarter growth rate, as power output declines and manufacturing shrinks. “Demand is falling in China, they’re over-invested in capacity and there’s a global supply glut,” Roubini, 50, said in a telephone interview. “It has very, very important implications.”

Roubini’s view is shared by Societe Generale SA global strategist Albert Edwards, who was correct in forecasting in March that a U.S. contraction would spur a bear market in equities. Edwards says the China slowdown will reduce earnings at industrial, energy and raw-materials companies, sparking a selloff in emerging and developed-market stocks that may send the S&P 500 down 40 percent to 500.

Emperor’s Clothes

“People should be thinking really hard about this rather than sticking their heads in the sand,” said Edwards, a London- based strategist and member of the top-ranked global investment strategy team in Thomson Extel’s surveys the past three years. “We’re just pointing out when the emperor doesn’t have any clothes on.”

The consensus among 11 strategists surveyed by Bloomberg is for the index to end the year at 1,056. The S&P 500 fell 1.5 percent yesterday to 827.50.

China’s economy grew 9 percent for all of 2008 after a 13 percent expansion in the previous year, the fastest in the world. China’s CSI 300 Index retreated 0.3 percent to 2,037.63 at 11:09 a.m. in Shanghai, after falling as much as 1 percent. Commodity producers led declines after Aluminum Corp. of China Ltd. and Yunnan Copper Industry Co. reported lower profit.

Chinese shares traded in the U.S. tumbled to their lowest level in two months yesterday. The Bank of New York Mellon China ADR Index, which tracks American depositary receipts, fell 4.8 percent to 236.43, the lowest since Nov. 20.

Rogers, Mobius Buying

Economists at JPMorgan Chase & Co., Citigroup Inc., the World Bank and the International Monetary Fund all predict China will grow at least 7 percent this year, while investors Jim Rogers and Mark Mobius are buying Chinese shares on expectations the government will bolster economic growth with interest-rate cuts and fiscal stimulus. The IMF said China’s contribution to global growth increased to 19.5 percent in 2007 from 17.2 percent in the previous year.

China, which has $1.9 trillion set aside in the world’s largest reserves, plans to spend at least 4 trillion yuan on bridges, housing and tax breaks to boost the economy. Chinese President Hu Jintao has pledged further measures to maintain stable growth in the face of “serious challenges and difficulties.”

Rogers, who predicted the start of the commodities rally in 1999, recommends investors buy China’s agriculture, water treatment, power generation and infrastructure stocks because the companies won’t be hurt by the nation’s slowing economy.

China Recession?

“China could be in recession, I have no idea and it’s not relevant to me because I’m using my judgment as to what will happen six months from now,” said Rogers, who authored books on investing including “A Bull in China: Investing Profitably in the World’s Greatest Market.” “There is a lot happening in China and there will be those that will hold up well.”

China’s economy will grow 6.3 percent this quarter from a year earlier, according to the median estimate of nine economists surveyed by Bloomberg News after yesterday’s GDP report.

China’s electricity output declined 7.8 percent in November from a year earlier and fell 3 percent in October, the first declines since February 2002, according to China Economic Information Net data compiled by Bloomberg. Manufacturing shrank for a third month as the deepening global recession cut demand for the nation’s toys, clothes and electronics.

‘Manipulating’ the Yuan

Edwards said rising unemployment among factory workers will fuel social unrest, threatening the Communist Party’s survival and increasing the risk authorities will devalue the yuan to boost exports.

The yuan appreciated about 19 percent against the dollar between 2005 and July 2008 as China redressed what U.S. officials saw as an unfair price advantage for exports. The yuan has since stabilized at about 6.85 per dollar. Timothy Geithner, President Barack Obama’s nominee for Treasury secretary, said yesterday the new U.S. administration believes China is “manipulating” its currency.

“If you amble your way through the analysis, you realize if push comes to shove they will devalue,” Edwards said. That may spur lawmakers in the U.S. and China to increase trade barriers, he said.

Market still fading today. But where is the expected sharp drop?

The jobs report today showed an additional 50,000 job losses and the U.S. Dollar has weakened. These are both more bad news to take the wind out of the sails of the Bulls. If the dollar keeps dropping we are in trouble because foreigners like China won't keep bailing us out and then imagine how a long string of Dominos falls, when just one falls on another. I am sensing more fear creeping back into the market and wouldn't be surprised to see a major selloff here timed to the Senate action, or lack thereof, on the Auto Industry Bridge loan rescue plan.

Watch the auto industry share prices today and tomorrow fall. Ford closed yesterday at $3.25 and GM closed at $4.60/share

So I don't know what is holding up this market. The news continues to be bad but it seems some Institutions are trying to prop up this market with some small wish that some will do Christmas shopping. I guess if you are reading this you aren't shopping either. Bah humbug!!??!

Giving credit where credit is due: The Chinese people did a fabulous job at this Olympics

I have been critical in the past of the Government of China regarding their policies on Darfur and Tibet, but I must give credit here for the absolutely fabulous spectacle of the Opening ceremony of this Olympics. I felt one with the people of China in my happiness and pride to see what humans can accomplish when they work together as one. The creativity to even imagine putting together this once in a lifetime, artistic pageant of epic proportion simply can not be described with mere words. The smiles and joy of the people of China was wonderful. If fear can be replaced with courage, and if a closed heart can be opened, the people of the world could come together for prosperity and love to all. It is a wonderful dream and a glimmer of that possibility was exposed to all this week.

We can come together. Dialogue is the way, trust the means and enlightenment is the reward.

Headline reads: China must find shelter for 5 Million people

Think about this tragedy as compared to Hurricane Katrina and the lack of an effective response by the Bush Administration and the massive effort about to be undertaken in China. My hat is off to Chinese citizens who are tasked with planning and executing this effort, as this is of historic proportions. The world can learn much from their response, both from a good point of view and from the inevitable lessons they will learn from their mistakes. One can only pray for the suffering of the countless homeless, that help is on the way and that there suffering and burden is eased by many trying to offer assistance. As I have said here before, I have been very critical of the Chinese government in the recent past. But the time has come to praise the effort of the people of China and for them to know that the people of the World are saddened by their loss and we pray for your end of your suffering. Think about this one more time. 5 Million people are homeless! God help them all.

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China is doing its best to save lives after earthquake, unlike Myanmar

I have been first to criticize the Chinese government in the recent past. However, my heart goes out to them for there heroic effort to save lives in the aftermath of the 7.9 Earthquake. They have accepted help from Russia, Japan and other countries and have sent tens of thousands of troops on foot to help rescue survivors trapped under rubble and to clear roads and restore some services. There is limited things we can do to help them, but for one thing, we can pray for the families who are suffering.

Contrast this situation and the response by the Chinese government to that of Myanmar. Here we are a full 2 weeks after their disaster and aid still is only allowed to trickle into their country. This is not because the world has offered help. It is due to the paranoid leadership of the country. And while the world still watches, they continue to be resolute. I compare this to the atrocities of Nazi Germany when the rest of the world watched and stood by to see the Holocaust without doing a thing to stop it. The World must act through the UN to end this senseless and unnecessary catastrophe from occurring.

At what point does the world hold China to account for Burma?

The tragedy in Burma (Myanmar) is getting the world community very mad at both the government of Burma and now of China, which borders the country. China is the only country with a good relationship with the Military Junta but with the problems of delivering aid to the innocent civilians in that country now more at peril it is about time the world speaks out not only about the Military leadership in Burma but now the role that China is playing here. Too many world problems are connected to China. There is North Korea, Somalia and the Darfur genocide, Tibet, Iran and now Burma. When is the world going to see that all roads lead to China. And with this latest appalling action of seizing the aid from the U.N. and hoarding it from their citizens, the world can not sit by. If China is not immediately helpful here, the Olympics should not be attended by anyone including athletes. China should not get a pass here. This is a humanitarian catastrophe of epic proportion and if China wants to be a part of the civilized world then it needs to act more civilized and use its influence, pressure and threat of hostility if necessary to help the innocent people suffering in Burma.

Wake up!

UPDATE: May 10, 2008

Headlines tonight from Time magazine.com reads as follows:

Is It Time to Invade Burma?

It looks like others are thinking the same thing as I am.

To read their entire article click here.

The Military Junta in Burma makes a big gamble delaying aid.

Here's the gamble the leaders of the Military in Burma are making. As they control the average soldier and even non commissioned officers, many of the soldiers families are going to get really sick and die without assistance. Then ask yourself how loyal do you think the soldiers will be to their leaders. My guess, not very loyal. It's one way how a Coup d'etat gets its start. And add this to the current equation, the people are still in shock and have not yet gotten from shock to anger. That is coming too. The scariest thing the Military leaders fear is to allow foreigners into their country. The fact is, that is their only hope for survival.

UPDATE: May 9, 2008

News this morning that the Military Junta of Burma has seized all the food and aid. Here is a small quote from the story:

" Myanmar's junta seized U.N. aid shipments Friday meant for a multitude of hungry and homeless survivors of last week's devastating cyclone, forcing the world body to suspend further help.

The aid included 38 tons of high-energy biscuits and arrived in Myanmar on Friday on two flights from Bangladesh and the United Arab Emirates.

"All of the food aid and equipment that we managed to get in has been confiscated," U.N. World Food Program spokesman Risley said.

"For the time being, we have no choice but to end further efforts to bring critical needed food aid into Myanmar at this time," he said."

It seems as though they may be trying to help themselves and the soldiers by seizing the aid. This action by the Military leaders will certainly deteriorate conditions in Burma, as air born disease spares no one including the Military leaders and their families. It is a sad day indeed when the world community must stop aiding innocent civilians because of the shortsightedness of a few. Surrounding countries will be affected by the disease that is spawned there and so will their more friendly allies like China.

To read the complete article click here.

What's right with China and lessons we can learn from them

Headline reads: Ex-Party Boss in China Gets 18 Years. The former Communist Party boss of Shanghai, Chen Liangyu, was sentenced on Friday to 18 years in prison for taking bribes and abusing power. This may not sound like much of a big deal but it is. You see the Chinese government does seem to take actions against incompetence and corruption, as this former Party boss observes first hand. We have similar problems here with the Bush Administration, but our politicians don't do the same. I guess they all figure that they have also been guilty of incompetence and corruption, so why call one of their own on it. Someday it may happen to them. So all is forgiven. WRONG!!!

Yesterday, it was learned that Vice President Cheney convened a group of "Principles" including Condi Rice, Donald Rumsfeld, John Ashcroft, George Tenet and Colin Powell, to approve and review specified torture techniques to be used on selective enemy combatants. This is in violation of the Geneva Convention. This report was first published by ABC News. As President Bush has admitted, he approved the new "techniques". According to reports, they got a couple of lawyers in the Justice Dept. to write letters in support of the changes in interrogation techniques. Those letters and findings were later pulled back and nullified by the individuals writing them. But nevertheless, they went ahead with the torture techniques, like water boarding, on those prisoners. If this isn't enough to start impeachment hearings, I don't know what is. Is there no backbone in this country? Is there one brave soul who is an elected official willing to confront this President and Vice President?

Getting back to China for a moment, according to the article which you can read by clicking here, "Mr. Chen, who before his arrest in late 2006 was also a member of China’s ruling Politburo, is the highest ranking government official to be stripped of power here in over a decade.

His sentence was handed down Friday at the No. 2 Intermediate People’s Court in the northern city of Tianjin, where he had recently been on trial."

I know it is hard to believe but it appears we can learn something from China.

Therefore, I am adding a new Poll. The only question: Would you like the House of Representatives to initiate Articles of Impeachment for both President Bush and VP Cheney even if it goes beyond their term of office? I do! If we let their actions go unpunished, we risk losing our democracy and shredding our Constitution for our sons, daughters and grandchildren as well as other generations to follow.