Pre Presidential Election wisdom

I know I have been taking a sabbatical from posting on my Blog, but I found myself compelled to break my silence regarding the 2012 elections. With all the PAC money being poured into both Republican and Democratic efforts to gain your vote, you need to make their attempts a waste of their money. I can't think of anything better to show the voice of the American people than not only to be silent from now on until the November election, but to also turn a deaf ear to listening to and watching all those biased commercials. Take a stand for America and when an election commercial airs, change the channel, shut off the TV or go get some popcorn while muting your TV. I have my preference for President and my local officials running for office, so I don't need the time nor do I need to listen to any biased ads compelling me to change my mind. They all lie. Do yourself a big favor and tune out the blabber this coming election period. Stay focus on who you believe has the most interest in your issues and then vote accordingly in November. Let those flush with no other way to spend their cash than to try and buy your vote, through PAC commercials, throw their money down the drain. Go fishing, enjoy the summer and the wonderful outdoors, go to the Library for a nice book to read on a rainy day. Do anything but listen to the garbage they will try to influence you with. I'll be back again when the moment moves me. Enjoy SUMMER.

Ending the gridlock: Market comments for Sept. 2nd

It looks like a very bad day for the markets worldwide. The August Unemployment rate was unchanged at 9.1%, but the US Non-Farm Payroll number came in at 0 (zero). That was the lowest number seen since 1945. Also troubling was a decrease in Hourly earnings for workers from +0.5% in July to -0.1% for August.

The issue we have in our economy is that there is no demand for Goods and Services. Therefore the Unemployment rate has no hope of recovering until there is more demand. Cost cutting does not increase demand. Debt reduction does not create demand. Giving more money to banks does not create demand. Giving incentives to business to hire will not necessarily create demand. Decreasing taxes for the wealthiest Americans doesn't create demand.

What creates demand? Why haven't the Bush Tax cuts for the wealthiest Americans created demand, as many have argued it would? It's real simple, people who are wealthy already have pretty much what they want and desire, so there is no need. Middle Class Americans and the poor have many needs and the more disposable income they have, the more their needs would be satisfied by purchasing goods and services. We have more of a political problem right now because the Republicans and Democrats are at a logger jam and it seems the Republicans are saying no to any compromises.

How do we get them to work together for the good of the country? They seem to only be interested in serving there Corporate donors, who donate to their political campaigns and own these folks lock, stock and barrel! There doesn't appear to be any way to get them to come to agreements for the common good. But I believe the reason for this is that they are complacent to the plight of average Americans and until they have skin in the game, they won't work together. "The real question we should be asking is, "How do we get them to get skin in the game?" I have an idea that I think would work and I want you to think about this seriously for a minute.

What if there were a sudden significant drop in the Dow, say 1000 points in a day, followed by a second day of another 750 points? Do you think it would get their attention? I can tell you this, it would get the attention of the wealthiest Americans who own most of the stock anyway. They would be demanding action, just like when the banks collapsed. It would get the President to sit with Congressional leaders and get them to take some actions for the good of the country. We need a real crisis that gets us to all come together.

This could be created by all of us selling some of our stocks and as it builds up steam others would add more in panic selling. This could do it. The Fed has tried to protect the market when it should have allowed the market to fall as it should and by now these problems would have been addressed. Instead, our problems are still ahead of us. I really believe this will happen anyway down the line, but we could help it along by selling stocks en masse. Anyone can help this along by selling their stocks, either today or early next week, especially just before the President speaks on Thursday night. Remember, if you sell your stocks, you can eventually buy them back cheaper if what I am saying will happen does happen. You can help your country right now. And tell your friends to do the same! ACT in honor of Labor Day!!

Simple ideas for getting America back on track

I was recently asked by a former client, what I might do to solve America's unemployment problem. I told them that I had several ideas which have not been tried. The first solution is a unique one based upon the fact that Republicans don't want to continue paying for Unemployment benefits ($$$) for the unemployed, especially the people on unemployment benefits for 99 weeks or more. And Democrats want to just help them by giving them extended benefits.

My solution is to require work from the unemployed to receive benefits. For example, many schools need painting, windows repaired or replaced, security improvements like video cams around the grounds, Teachers helpers, installing air conditioners, etc., etc., etc. I believe this would help those unemployed for so long start to feel better about themselves, have some resources to pay their bills and prevent foreclosure of their homes. We could even pay them more than the benefits might provide and we would still be ahead of the game, as this would increase some consumer spending and raise taxes somewhat in local communities that have a Sales tax.

Getting something back from giving extended benefits would help take the sting out of giving perceived handouts.

The next idea I had was to change our Educational system, by having school go year round. I would provide students a week or two vacation, but not the whole summer off. I would have them get air conditioning for schools and installed by those working above. I would then change teachers salary to reflect a full time job. We could have all teachers making $100,000 and above a year but we would be attracting more teachers with this salary level from many different backgrounds.

We need to think outside the box in tackling our issues. But it starts with a willingness to put some ideas out there and see if anyone picks them up and improves on them. I have, so where's your's?

I'm back! Here's my take on the Debt Ceiling crisis

I've been away on vacation for about 10 days so I apologize for not posting during that time, but you know that there are some remote places where there is no internet access. But I'm back now and ready to comment on this debt ceiling crisis.

I think there is now a 50% chance that both Parties in the Congress and the President will not come to an agreement to raise the Debt ceiling by Aug. 2nd. You know how this will affect the country in a negative way so I won't waste your time with those details. It seems obvious to me that President Obama has boxed himself into a corner as have both Republicans and Democrats over this issue. It seems to me the only thing left is for this President to make the unprecedented move to raise the Debt Ceiling using the 14th Amendment of the Constitution as the reason for this. This is what the 14th Amendment says:

""The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned." Many read this to say the President has the authority to guarantee payment since the Treasury of the United States reports to the President and is a Cabinet position.

I think that this President needs to consider the possibility that this may be the only way to guarantee the debt ceiling is raised in time. Politically he most likely would not want to make this choice, but he might just have to because it is clear to even the most casual observer that the House Republicans are demanding things that can't pass the Senate and the Senate are demanding what the House Republicans won't pass. So we have an impasse. This issue has held government hostage unnecessarily and never before in history have we ever come to this point. If you are into the blame game, you can either blame or praise the Tea party Republicans for where we find ourselves today. Those praising their stance on this, I hope you still feel this good when government spending is significantly reduced at a time where spending is required to keep this economy from relapsing into a Great Recession of worst, Unemployment rises, the cost of borrowing increases significantly and causes the housing crisis to get worse. This Republican Party with its Tea party activists will more than own the economic problems and crisis going forward, because in their zeal to ensure President Obama is a one term President, as Sen. Mitch McConnell has repeatedly said. God help us all.

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.

Market comment for June 7th

As I said on my post over the weekend, this week i most critical and if we broke below the current uptrend line, we were heading much lower. Well we did go below that line and broke below some key levels. For the S&P 500, it was the 1300 level, for the Russell 2000, it was 800 and both those were broken today. The Dow key level is 12,000 and we are close to breaking below that level as well and on the Nasdaq it is close to going below 2700.

From the chart below of the Dow, you can see that the steepness of the drive down has accelerated as is shown on the 3 month chart and the 2 trend lines drawn in Red.


Expect this drop lower on the Dow to continue as we are going to test the previous low of 11,600 soon. And in my view, this is just the beginning inning of the correction. Don't forget though that markets don't go just straight down. Expect a bounce up but it will be a lower high than previous points followed by new lower lows.

I must make one statement about Rep. Anthony Weiner. The truth is I don't care what he did in his personal life regarding taking and sending photos of his crotch. What did bother me was his lying about it from the beginning. He would have been better served to tell the truth form the beginning and gone on with his life. Instead, he now is living with the embarrassment he tried to avoid from the beginning except now, we know he also lies. It doesn't change the facts that he has been a very good voice for the Democrats, which now has been silenced, at least for a while.

Market commentary: Looking ahead to a critical juncture in the markets and the country

Before giving an outlook for the week ahead, I think it important to review where we are now and as usual I will be using a number of unique charts to se where we are and see if any trend emerges for a higher probability market call. To start this off I would like to focus first on the Dow.

In the chart below I have made a custom chart of the Dow from January 1st, 2010 to the close of the market yesterday, June 3rd. You will notice that I have drawn 2 blue trend lines showing the uptrend of the Dow one starting in July 2010 and the other more vertical line starting around Sept. 1st 2010. We are currently touching this line and will see whether we break below it next week or not. If we do break below it then the other lower line becomes the next major support level. You will notice that this week there was also a Volume spike with the selloff this week as is indicated in the lower chart. You will also notice that I have placed several dates on this chart which will be important to look at on a chart of the Put to Call ratio in my next series.

You can see from the chart below of the Put to Call ratio for the same period of all of 2010 and to the close of the market yesterday, that the Put to Call ratio closed yesterday at a reading of 1.24 and that the Put to Call ratio had not gone that high since 9/10/10. Compare that date on this chart to the chart above of the Dow and what happened after that high a reading was reached. The Dow started its climb which lasted almost a year.

The key to me here is to look at the Put to Call ratio for 1/2 the time before the 9/10/10 date. It was a period of higher variation in the ratio and correspondingly a wilder time in the Dow. There was a higher Put to call ratio of 1.53 during that period as you can see on the chart from a Dow of 11,200 down to a Dow of 9,800.

This next week is very critical for the market. If we break below the current uptrend line we could go much lower. With all the lack of action by the Congress on raising the debt ceiling, this is just adding gasoline on a potential firestorm. Within the next 30 days, Moody's is going to consider whether to lower the U.S. rating from triple AAA causing huge problems around the globe. This is an irresponsible action of Congress. Playing chicken with the debt crisis is similar to what Newt Gingrich did during the Clinton Presidency and shut down the government, but much worse. Back then it only affected U.S. workers and the American people some of which didn't get their Soc. Security checks. But this time we are giving the middle finger to the world and especially those who hold our debt and will not be so eager to fund our debt in the future should we default. These are very dangerous times.

So what would I do right now? I would be defensive right now. I wouldn't be a buyer of stocks until the trend became clearer. I would take some money off the table so if the market drops, I have locked in any profits I have gained over the past year. Watch the Put to Call ratio daily and see if we are going higher. While normally a 1.24 reading would be a Buy signal, we could get much higher Put to Call ratios in the near term and all they might be saying is not to be a buyer quite yet as there is a lot more downside.

Also, look at the Treasury Bond yields just from April 25th. I have been recording the data daily and this chart says that all interest rates have dropped, from a 3 month to a 30 year and I might add rather quickly. Ask yourself this question, why has the Fed wanted the interest rates so low and going lower? People on Fixed income are getting creamed. It's like the Fed is trying to get everyone to look for riskier investments and get their money out into circulation to "stimulate" the economy more. the 30 year Treasury Bonds are at only 4.21%.

Now that the Fed and our Government has taken on all the risk, they seem to want to unload that risk on you and me and our children and grandchildren's lives. There is a temporary solution to this. If we could come up with legislation to increase the debt limit, which must be raised no matter what else we do, then that would calm the markets. Then the Congress needs to identify a minimum of $4 Trillion it is going to reduce the national debt and still invest in certain growth ares where we must. Republicans and Democrats need to stop the idealogical battles and start to put the country first and find savings across the board. Defense must be trimmed, healthcare needs simplification and technology improvements, Foreign aid needs not to be routinely given, but subjected to new criteria as to whether they do something for America There should be some strings on repatriation of corporations funds abroad, so that if corporations are allowed to bring money back, they must create meaningful manufacturing and service jobs here to compete better in the world and ensure the survival of our Middle Class and our economy. We need high speed rail in America. It would mean less emissions and less pollution from cars. And the wealthiest Americans must pay more taxes! Let's get on with it!

Market comments and a little of politics for Memorial Day weekend.

OK, the stock market month of May ends after the close of trading on Tuesday. Yesterday the Put to Call ratio closed at the lowest level since January 13th, Friday closing at a 0.70 reading. Also the Intraday low of that day, hit 0.56 at 10:00am EST. This might be another signal that next week expect a selloff to a lower low of at or below 12,200 on the Dow, at or below 1300 on the SP 500, at or below 2700 on the Nasdaq and 800 or below for the Russell 2000. If this happens, you can count on a continued decline with lower highs and lower lows occurring as we approach the critical legislation required to increase the debt limit ceiling for our Government. This legislation must be approved no later than the first week of August.

On a side note, it is ridiculous that this debt ceiling legislation is being held hostage by Republicans because even if Democrats folded and agreed to every single debt reduction the Republicans want to make, including destroying Medicare, the debt ceiling would have to be raised.

I want to salute all those who have served in the service of our country and especially the Armed Forces and various branches of our Military. We have paid a dear price in blood and treasure for our freedoms, even while several freedoms have been restricted for the sake of fighting the "War on Terror". Even this week an extension of the Patriot Act was enacted by Congress and signed by the President. You would think with the ability to Wiretap and listen into conversations both domestic and foreign, we would have built some strong cases against those on Wall Street who have scammed the government and the American people of Trillions in tax dollars. Most in the Middle Class are struggling to survive because of the financial crisis, caused by these so called professionals. The only person in jail is Bernie Madoff. It makes me sick. But for now, enough of politics for the moment. :)

Market comments for May 26th

Initial Jobless Claims for the week of May 21st unexpectedly rose to 424K, while expectations were for only 400K, and the previous week's data was revised higher from 409K to 414K. This recent rend over 400K is going in the wrong direction for a sustained recovery, but the Futures market seems to be shrugging off the news. Dow Futures are up in premarket +21 points for the Dow.

Next Thursday we will see what these 4 weeks of numbers back above 400K Initial Jobless Claims ha done for the May Unemployment rate, but I suspect it is going to tick up to 9.1%.

The 3 Month chart of the Dow below, shows that, while the market gained yesterday, we are still below the 50 day Moving average. Notice yesterday's volume was lower than Tuesday's volume. On a rising day, if you are a Bull, you want the volume to exceed the previous down days.

GDP for the 1st Quarter came in again at only 1.8%, which is far below what is needed for a sustained recovery. I think the facts are starting to emerge that the Fed's QE2 has not done much more than to keep us from sliding back into a recession, but just barely this past year.

European markets are mixed this morning, so that it seems their debt issues don't appear to be taking down their markets today, so we may follow suit. There is less than 0.5% movement in any of the European exchanges at this time.

Monday the markets here are closed, as it is the Memorial day weekend. And remember this about the debt level, it has not been resolved. Politicians on both sides seem to be locked in their positions, with Republicans saying they will not accept any tax increases as part of debt reduction and the Democrats saying they will not accept any reductions in the debt regarding entitlements without some tax increases. All this while the clock is ticking for our government to face default by August. What madness!

Healthcare: The argument!

I have been seeing this unfold now for the past 6 months to a year. Because we have a huge budget deficit we all know we must cut spending. I have also argued here that we need to increase taxes on the wealthiest 1% of our population. Today, Republican Rep. Paul Ryan came out with his major spending cut proposal which focused on getting rid of Medicare as we know it in favor of a voucher system for the elderly to purchase health insurance. The Democrats are already out there saying the Republicans want to kill Medicare, funding for Planned Parenthood and PBS and aren't even considering taxing the wealthy or cutting subsidies for the Oil companies and Banks.

I wouldn't be surprised that a compromise might be proposed, whereby Democrats agree to some cuts in Medicare, while Republicans agree to small tax increases on the wealthy. But I am afraid that this will not be enough to close the gap in our debt. We can't use the argument that taxing the wealthiest will cost jobs as they will have less money to help grow and invest in America. They aren't really helping now nor have they through the entire time they have had the Bush tax cuts.

Milestone achieved for me. 1500 Blog posts written!

Yes, I reached a milestone yesterday as I have posted 1500 Blog posts. I couldn't believe it until I saw it on my counter. In had never ever written a thing before starting this Blog. I didn't think I could do it and if I started it, I wasn't sure I would keep it up. I started this Blog in May of 2005 because I was angry about what I thought Bush and Cheney were doing to ruin our country. My first post was written questioning the wisdom of John Bolton's selection as Ambassador to the UN. I think looking back my fears were warranted as he turned out to be a terrible UN Ambassador.

I also wrote in that month with my objections to changing the Senate Rules about the Filibuster. It is interesting that back then it was the Republicans wanting to eliminate the filibuster rule but it took 14 brave Senators including some Republicans to join Democrats in stopping the effort. Interestingly, the same issue was proposed by a Democratic Senate recently but cool heads prevailed and several Democrats joined Republicans to keep the current Rule.

So this has been an adventure for me over the 6 years and now my blog includes stock market views as well as political views. Thanks to all of you who have visited and those who took the time to leave a comment. I have had well over 65,000 visitors in these 6 years who have read over 125,000 pages of my Blog. Hooray! :)

Let's just face it!

Many of my friends are depressed after the election of a Republican majority in the House of Representatives and the picking up of more seats in the Senate. I tell them to get over it, it was inevitable. They believe they didn't tell their story correctly, of the many successes they had. I say it had nothing to do with that. They ask me then, "What was the reason?" I tell them, it was their DNA! Let me explain.

Democrats traditionally have been the party against wars. They were against the Vietnam war, the Iraq war and more recently the Afghanistan war. They consider themselves Peace makers, non-violent activists, "for the people" and for the Middles Class and against the corruption of big business. They are compassionate for the situation of Illegal immigrants, because they see them as just trying to help their families survive. I think that's a fair assessment any, self respecting Democrat, would agree with.

Now let me describe the Republicans. They not only don't fear war, they embrace it. They are very good at the "language of war" and can convince people to vote against their own self interests, because it's "best for America!". They use well crafted language to create the dialogue and, through inference, the oppositions dialogue. For example, the use of the phrase, "Death Panels" was a label they used for late life counseling in the Healthcare debate. Democrats are left defending, they are "not Death panels," as an argument. They use language such as "2nd Amendment remedies", "take them out" and other language of war.

The object of war is to beat/destroy or conquer your enemy. The Senate Minority leader Mitch McConnell has defined President Obama as the enemy, and, therefore, any action taken that can do that is fair, because it is war. He got away with it and was actually rewarded for his stance, with the Republican election victory on Nov. 2nd and saying No to Democrats for every piece of legislation they put forward. Let's take a look at his enemy and make a comparison.

President Obama is an "intellectual" who uses positive language, and tone, to inspire others. He wrote the book, The Audacity of Hope" as an example of that view of life. He doesn't really want war and did get us out of Iraq and wants to get us out of Afghanistan too. But in order for Republicans to have a war against him they must first demonize him. That is why they have piled on to the claim he was not born here and therefore was elected President in error, and then they link the fact that according to the Constitution you must be born in the U.S. to be President. That last phrase is to get the ignorant and uneducated to believe therefore it must be so because they said he wasn't born here, even though he was born in Hawaii. He must not be a legitimate President. Of course what they don't say is, he's black and you know we don't like a black President because we are still fighting the Civil war here in the South against those yankees who should have just minded their own business in the first place. They still have their Confederate money saved for that moment when the South will rise again. That is why they have no concern that Fed Chairman, Bernanke, is destroying the U.S. Dollar's purchasing power. They don't care. They still have their Confederate money! Let me get back to my points as I have taken a detour that is sure to offend some.

Since our enemies of war have been defined as "Muslims" by the Republicans, not just "terrorists", we are to be at war with Muslims as that who attacked us. You could carry that logic to an even farther extreme by saying they were men not women and so we must be at war with all men. You see once they define the enemy all are expected to be against them. They used President Obama's middle name "Hussein" to demonize him further as an attempted link to Muslims and therefore terrorists, our enemy. You can see the absurdity of this linkage, but it fooled about 40% of the population into believing President Obama is Muslim.

So for the next 2 years you will hear we are at war with the President and his "Socialist agenda". The Democrats must master the language of war if they are going to get the upper hand here. You see for Republican leaders they really are at war and being a peace maker will get you killed when the other side wants to be in war with you. Let's just face it, they have been rewarded for being at war with this President. Let's see what Democrats have learned in the coming months and years. I think it is not in their DNA to be at war and therefore President Obama may be a one term President after all.

Election results: Outlook the day after

First some local comments and then a broader National view on the elections last night. So called Liberal California defeated the Proposition to legalize Pot. It could have contributed tax money some estimate in the Billions, to alleviate a shortfall in tax receipts, but it didn't pass. So I don't want to hear anymore about "liberal California" or phrases like "Left Coast." If we were so liberal we would have passed the legalizing pot measure!

Jerry Brown beat Meg Whitman for Governor and Barbara Boxer held her seat for a 4th term. I expected Boxer to win but not Jerry Brown. I personally liked Meg Whitman because she was smart, a very good person and had good common sense. She was perceived not as warm and friendly and approachable for people, but any who knew her, know that she just wasn't a typical politician and she wasn't a phony. She was and is a genuine person who I have a lot of respect for. I knew her when she worked at Bain & Co. at the same time Mitt Romney also was at Bain. I like him a lot too and he is very smart. Bain & Co. was my client for many years and they had a crop of Senior Partners that were and are brilliant.

Nationally, the election unfolded as was expected. The Republicans won the House in a big wave taking many moderate Democrats with them and returning those States to the Republican control. The Tea Party had a respectable night getting about 50% of those races they were competing in. But what does this mean for the country going forward, as the Senate remains in Democratic control? It means that many problems will remain unsolved. If you are looking for legislation coming out of the House that will reverse Obama's policies, it isn't going to happen. The Senate will not pass anything the House sends over, that the Democrats don't believe in, just like the 420 bills the Republicans stopped from passage in the Senate with the filibuster. There is a short window to pass some key legislation from those 420 bills awaiting Senate approval, if the Democrats push some in the lame duck session. But that will take some guts. And I don't know if they have found their balls yet. Maybe Sen. Harry Reid did, as he was reelected for 6 more years, and he doesn't have to worry much now about reelection.

Time will tell but I don't see much changing by the politicians. I see gridlock, not the good kind, but the bad kind.

Market comments for the week

I did not write much this week and you might be wondering why. Some thought because the market hasn't gone down that I didn't want to post but they would have been wrong with that assumption. The real reason was that there wasn't any real news or market change to post. A week ago on Oct. 22nd, the Dow closed at 11,132 and the S&P500 closed at 1183. Yesterday, the Dow closed at 11,118 and the S&P500 closed at 1183 again. You see you could have been on vacation and not missed a thing.

Let's take a look at the charts of the Dow and S&P500 below. You will see clearly we went nowhere and it appears one of two things are happening. The Bull's story goes something like this: We are building a firm base here to go higher after the election. The Bear's story on the other hand goes like this: We are hitting strong resistance at these levels and are unable to break above them. But after the election when it is obvious as to the results, the market will drop on the news (Buy on the rumor and Sell on the news). You can see the horizontal resistance lines in both charts. To me the 200 day averages will be key going forward if there is any correction. If we break below them, the markets will have a meaningful correction. Without a break below that level, the market manipulators are still smoking something because this rally is not warranted in this economy.


I am in the camp of selling on the news and I'll tell you why. This election cycle is no mystery. The Democrats will lose the House but it won't be a complete wipeout of 100 seats, but more like 55, and the Senate will remain in Democratic hands with a slim majority. All the surveys point to this outcome, so the bets have been made and the wager will be collected after it is official on Wednesday. So, no real news yet to move the market this past week. Next week will be a different story as market direction may be more clear. Personally I have been waiting for a major correction so long now I am almost getting tired of saying it. This has been a long extensive run up in the Bear market rally.

Is anything going to change after the election? Yes! Let me tell you.

So it is a foregone conclusion that the Democrats are going to lose the majority in the House of Representatives, but most likely will not lose the majority in the Senate. What does this mean to us and what effect that will have on legislation? I’ll tell you.

You see Republicans and Tea Party advocates believe they will reign in government spending and shrink the size of government, as a result of their victory, and that is what they are selling voters, as to why they should be elected. In fact, that will be far from the reality of what will happen after the election. Let me paint a real possibility of what is possible after this election.

First, there will be a lame duck Congress, as many Democrats will lose their seats, but, and this is the real interesting bit of news, they will feel they have one last chance to pass legislation before Republicans take control in January after they are sworn in. As of October 5th, here is a headline worth your attention: “Frustrated House still waiting for Senate action on 420 bills. Do you think that this fact is irrelevant because they lost the majority? Think again!

You see these bills are awaiting approval by the Senate, which still will be controlled by the Senate and that will still be controlled by the Democrats if projections hold for them holding on to the majority in the Senate.

Do you have any idea what those Bills contain? Let me give you a small sample:
- At the top of the list was the June 2009 cap-and-trade energy and climate bill, which passed the House by a slim margin but never made it to the Senate floor.
- Measures to audit the claims fund set up by BP after the Gulf oil spill and legislation to increase screening for diabetes.
- House leaders drew a line in the sand on holding a House vote on tax cuts set to expire at the end of the year, saying the Senate would have to act first. When the Senate decided to punt the issue until after the elections, the House followed suit, despite protests from liberal members who wanted to cast their vote to extend middle-class tax cuts before they left for the campaign trail.

- The ‘Paycheck Fairness Act’ (H.R. 12) that was one of the first pieces of legislation approved in the House when the new Congress convened in 2009. It won by a vote of 256 to 163. According to sponsor Rep. Rose DeLauro, D-Conn., it will help promote pay equity for women.
But with the post-election lame duck session packed with priorities, like debating the so-called Bush tax cuts, many of the bills passed in the House will simply disappear into the history books. They don’t carry over from one Congress to another and sponsors of these hundreds of measures must introduce them once again. So there will be a lot of pressure to get some of these passed in the Lame duck session between November and January.

If after the election, the Democrats in the Senate have the courage, and this would clearly take courage, they could change the “Filibuster” Senate rule to allow for 56, 55 or as low as 53 votes to move some legislation. The Republicans threatened to do this when they were in power, under the George W. Bush Administration and Senator Bill Frist was the majority leader in the Senate. Also, I believe I had heard that Reid has also considered this move.

So this will be an interesting 3 months ahead. I would expect some new tactics to be used in the Senate to overcome the gridlock. And don’t forget, if Harry Reid gets reelected he won’t be worrying much about what Republicans think, as this most likely will be his last Senate term as he would then be 77 years old when up for reelection. Interesting times indeed!

Where did the vitriol start and who started it? UPDATE

On this day of remembrance of all those who lost their lives unnecessarily in the attack on our nation at the World Trade Center, I gave thought to that time and how we were as a people. After the attack we came together as a nation, even though before 9/11 we were divided politically by the election of George W. Bush by the Supreme Court decision over Al Gore. It was a bitter pill for Democrats and some Independents to swallow and it lasted right up to 9/11. But then everything changed. We were all saddened by the loss of life and angry that we were attacked by terrorists. But there was now our President on the pile of debris from the fallen Towers telling the world we are going to get through this because we are Americans and we are a strong people and that we would find the people who did this and bring them to justice. It was a solemn moment in our history and we were all united as Americans right after that, maybe for the first time for many Americans, but I had seen it before. When President John Kennedy was assassinated in Dallas, TX, we were together then too. The best of the American spirit was shown then too and the outpouring of sadness we all felt and a tribute to the loss of our President and the fact we all knew then the world had changed for us. There were no Republicans and Democrats then. We were all Americans and we were a strong people and that we would find the people who did this and bring them to justice.

Here we are on the Anniversary of 9/11, a very solemn day, and what's on many American's hearts today. I'll tell you, it's idiocy about whether a pastor in Florida will burn the Holy Book of Muslims or not. And, whether the Imam in NY will move his plans for building a Community center, which will contain a mosque, 2 blocks away from the site of the Twin Towers. The Republicans have been connecting the two separate issues even though the Pastor in Fl had not. But then, he finally got there message that there is a connection as Palin, Boehner, and Gingrich have been trying to connect those dots for the weak minded among us for the past week. It's a disgrace. First there is no comparison. Burning anyone's Holy Book is weak minded and not something a so called minister of God would do. But again, he had not connected these dots until these Republican leaders pointed it out to him.

Where do these nut jobs come from? They come from the shadows, where evil lurks all the time but is usually in check when there is balance of spirit and mind between people. But that spirit has been missing for a while now. I was trying to think when did it all change recently? I figured it out. It was when John McCain picked Sarah Palin, as his Vice Presidential candidate. She was not ready for prime time, or any time in my view, but here we are with her leading the whack jobs of the fringe of the Republican party and getting support from the other whack jobs of Rush Limbaugh and Glenn Beck and driving our country into madness. And the fools who listen to them get hyped up and do their bidding and think in the shadows about "coming out". And every once in a while one comes out ie. the Pastor in Florida.

But this vitriol started during the campaign for President and by the selection of Sarah Palin, by John McCain. John McCain, the same leader who said "Country first!" and has abandoned about everything he has stood for over his career as a Senator. The same John McCain who said he was a maverick and now said he wasn't a maverick. Make up your mind please, John. Now it was the perfect storm because opposing John McCain was Barack Obama. That helped bring out the racists among us. But you see Barack Obama, in my humble opinion, has done nothing to fuel this divisiveness. He was born from a white mother and a black father. So what? What's the big deal. Get over it and join the 21st Century. Most kids have. Many don't see color distinction, as their older parents do.

I am afraid we have lost that special moment when we were all together as Americans. But when I think about the meaning to me of 9/11, I wish we could go back to that moment in our hearts and stop this divisiveness. It is killing our country now. How you can help? Change your mindset. If you are still embracing the notion that our country is special and what it means to be an American. then you should think that if someone owns a piece of property and wants to develop it and build anything they want they should be allowed to as long as it follows local ordinances and laws. They have a right to build the Community Center and include a mosque in it if they so choose. We should be pleased we live in a country where we can express our religious freedoms in whatever way we want to as long as it doesn't do physical harm to others. By the way, people have been praying in the existing mosque there since 2009, just to set the record straight.

As for the whack job Pastor in Fl., it is a very difficult situation for sure. In this 24/7 news cycle with Social Networks bringing pictures and videos all around the world. One could make the case that he is endangering others and it is illegal, just like yelling Fire in a crowded theater. The world won't end if he does this and some may die too as General Petraeus has warned. But that will be on the Pastors head before God as well as those Republicans who have not condemned the possible act, Palin, Boehner and Gingrich. May God have mercy on their souls.

UPDATE: 10:20am PST

I don't know what has happened by the Florida Pastor has decided that God has spoken to him and that he will not burn any Holy Books now or ever. Hallelujah! He has seen the light. One must be grateful for little steps of progress when they come. Amen! Now if the political leaders of Palin, Boehner and Gingrich can see the light, maybe this will be a memorable 9/11 where something good comes out of it.

Where are the Adults?!

As the stock market continues to drop and the mid term elections get closer, the dialogue on the Cable TV and radio stations is heating up to the point where we are going to shut the boob tube and radio off completely and not listen to anything. (That's a good idea anyway!) No matter what station I turn to these days, I hear the anger starting to boil up to the point where people are screaming at each other. There is nothing but blame going on. There is no accountability anywhere for the mess we are in.

The Republicans are blaming the Democrats for the state of the economy, the lack of jobs, the dismal outlook for the housing sector and for not extending the Bush tax cuts for all. The Democrats shriek back on the same points and say the Republicans created all the problems in the first place. This childish behavior must stop on both sides. We need some Adults in both Parties, but I really don't see more than an occasional one, here and there.

I believe we are ready for someone to save us from ourselves, because if we continue on this path we are on, we will have completely destroyed this country, not only for ourselves, but our children and grandchildren. It's hard to get anyone to pay attention and stop it, because they are all to busy being children themselves.

We need a few Adult Americans to stand up and help shake up the conversation and the mindset to help show a new way out of this cesspool of blame and into the sunshine. There are a few adults around. One for instance is Sen. Richard Lugar of Indiana. But he is the only one I can find amongst all 100 Senators. Even the two Independent members of the Senate blame a Party for the problems. In case you can't remember who they are, one is Sen. Joe Lieberman and the other is Sen. Bernie Sanders. In NY, Mayor Bloomberg appears to be one of the Adults. Most politicians and media outlets have gotten caught up in the blame game as well. They think it makes good TV. It doesn't! I am just tired of hearing all the blame, because it does nothing to solve the big problems, which are seminal . There used to be some Adults, when I was growing up. People who could work across the isle in the Senate and the Congress. But not today. We need Adults badly! ARE YOU AN ADULT OR ARE YOU ONE OF THE CHILDREN? Whose fault is that?

Market comments for Aug. 19th. (Update)

The Initial Jobless Claims number was announced this morning with the following headlines. "Initial Jobless Claims rose "unexpectedly" to 500,000, the highest since November of 2009, showing companies are stepping up the pace of firings as the economy slows." That says it all. The only thing I would add to the announcement is that many people, including me, expected the number to increase, not decrease. Signs are all around us that the economy is slowing if people just open their eyes.

The prior week's reading was also revised upward from 484,000 to 488,000 Initial Jobless Claims.

The Dow Futures was up about 50 points before the news as was European markets but after the news all fell into the negative. Now the Dow Futures is up slightly.

I expect the market to sell off today, even though it looks like a moderate gain at the open. This news is terrible for the Average family across America, as it says their jobs are even more at risk and this will have a significant affect on Consumer Spending for this quarter and the remainder of the year. This also sets up the Fall Mid Term elections against incumbents and especially Democrats who will most likely lose many seats in Congress to Republicans. So this could start the expected downturn in the market setting up a bad Sept. and October. Options for August expire tomorrow.

I noticed that not much discussion on CNBC this morning about the topic as they appear to want to hide it or get people focused on other news. Dow Futures now down -1.

Update: 7:05am PST

The Philly Fed Index came in a whopping -7.7 for August compared with +5.1 for July. The market has reacted appropriately dropping down about 150 points on the Dow. Other news was that the Leading Indicators came in at +0.1%, which was expected. I believe this number will be revised down next month.

Senate Republicans holding up Financial Reforms: So what's new.

GOP Senators are holding up passage of the Financial reform Bill worked on since the markets tanked. They continue to do the bidding of their masters, Corporations and specifically the lobbying efforts of big Banks. Republicans argue that we have enough Financial reform and we don't need more as they say this restricts the flow of capital. And their problem with that is what? I thought that is how we got in trouble in the first place. We had unregulated, unfeathered gambling on Wall Street causing $65 Trillion dollars in risky Derivatives and caused Banks to promote bad Sub Prime loans.

We are seeing the same political antics we have seen on every other piece of legislation since the election of President Obama. The Democrats want financial reform, so they proposed legislation in the Banking and Finance Committee, chaired by Rep. Barney Frank, Democrat from Massachusetts, in the Congress and Sen. Chris Dodd, Democrat from Connecticut, in the Senate in early 2009, with the hopes of working with Republicans in a bipartisan effort. Six months earlier, the stock markets had melted down due to the Sub Prime loan problem and Banks had been repackaging them and selling them as Derivatives. The Bush Administration had pushed through TARP at that time as they were worried the banking system might collapse. It was very scary times. This was the background when Barack Obama was elected. What was not known was that Senate Republicans were going to decide not to work with our new President when it came tome to vote for change.

The Republicans kept negotiating with Democrats in hopes of moving them off their "extreme Socialist agenda" and negotiated throughout 2009 on these Committees until Democrats moved off their positions and the Bill was diluted. They continued this approach well into 2010 until, on the Senate side, Sen. Dodd finally gave up and decided to write the Bill himself. He wrote a Bill but did not go back to earlier positions he had. He incorporated the Republican negotiated points into his Bill, less a few minor deletions, but in essence the same Bill. The Republicans as a block have not voted for this Bill and even if it gets passed, because the Bill was diluted, it still will not solve many of the original problems because the Republicans have endorsed all of the Bank Lobby positions. Banks don't really want regulation, so now you understand the problem.

So here we are trying to pass Financial reform as the stock market keeps dropping and the problems have not been totally solved in this legislation and will not as long as the Democrats attempt some bipartisanship. The Republicans can claim the Bill does nothing to resolve some of the issues (They are correct in this but it is because they worked to dilute the legislation). It actually does restrict the flow of capital, as it was intended. It all sounds bad from people who don't understand the issue or the background. In any event this Congress and this President will be blamed for the outcome. The Democrats have been hoodwinked and the Senate hasn't had the courage to change the filibuster Rule and get passed these regulations. I am so tired of Democrats being wimps. You know if their roles were reversed the Republicans would eliminate the Rule in a heart beat! It's a damn shame.

An Open Letter to President Obama and Senate Democrats.

I feel enraged at the lack of compassion the Republicans in the Senate have for the unemployed needing a hand in the form of unemployment benefits which have run out. Yet, these same Republican Senators passed every request by the Bush Administration, without providing the funds for them, including the lack of funding of both the Iraq and Afghanistan wars, unfunded Medicare benefits which they approved, as well as unfunded requirements from the No Child Left Behind legislation they also approved.

They want government destroyed by weighing it down with debt, while they blame Democrats under the Obama presidency for the debt problem. I am outraged that Republican voters allow them to get away with it. Is there no moral compass, where voters know the difference between right and wrong, moral and immoral behavior? The Republican Party used to be a great party. I have voted Republican in earlier years of my life. But the crazies have taken it over and pulled them so far right they are now extreme at their very center. It has caused the Democrats to also go more right and the Progressives are wondering where is the Barack Obama they elected?

The problem has been compounded only because President Obama and the elected Democrats in the Senate have tried to be "bipartisan". This is a character flaw of the leadership and of President Obama. I can forgive them for this up to now. Maybe President Obama needed sufficient data to convince him that the Republicans are serious in their pursuit to defeat him and Democrats. Maybe he needed more data to convince him that they would accept him eventually as President, being half black. Maybe he needed more data to be convinced it was just politics and not a grab for power. He was wrong. It has been a systematic war the Republican leadership has been waging. There has not been one single Republican vote to support your legislation. Isn't that enough data?

It's time, Mr. President and Senator Reid. It's time to get this. It is as real a war as was Iraq and Afghanistan is with its own type of IEDs (Improvised Explosive Devices). These IEDs are placed in front of all legislation that you propose. It is called by a special name, the filibuster. It's time to play war too! It's time to change the Senate Rules and get the agenda passed you were elected to pass. It's time to take the gloves off and put a steel rod in that spine of yours and stand tall. You don't have much time left before you lose the people that got you elected, Mr. President and Sen. Reed. Change the Rules on the Filibuster and let them see you have the spine to do what they had threatened you with, when they were in power during the eight years of Bush/Cheney. It's time for that so called "Nuclear Option", ending the filibuster as we know it. 41 Republican Senators have held this country hostage over the will of most of the population of this country, as 57 Democratic Senators have voted for the will of the American people.

You haven't lost the middle because of the Republican tactics; you've lost more of the Independents because you haven't stood tall enough to keep their respect. You haven't shown them you deserve their support. You have turned the other cheek instead of metaphorically slapping their face. Mr. President, you can change the way Washington behaves, but first you must lead like you want people to follow. YOU must change your style and your tactics. So must Senator Reid.

So far, it isn't working like it should at this point in your Presidency. But you have had a moment of leadership with General McChrystal being removed from duty. And while I'm at it, you need to have another moment of leadership in the Gulf Oil Spill Cleanup. Admiral Thad Allan is a good guy, but he doesn't give the confidence of a "command and control" guy, like General Schwarzkopf has. Get a strong leader to seize control of this mess in no uncertain terms. We are at war in the Gulf too Mr. President. Don't make the error of trying to lead this yourself. You need someone else who has total authority to do what is necessary and understands logistics and has the skill set to manage this catastrophe. I recommend General Schwarzkopf. Now is time to lead!!!! God help us if you don't.

Update: I sent a first person email to the President at the White House with this letter.