Riding Herd on the Financial Range - # 13
Congress has turned into the National Nut House
7.2.2009
Howdy Folks,
If you think government is out of control now, you haven’t seen anything yet if the Cap & Trade legislation passes the Senate.
I have compiled the list of those Congressional stooges who voted for Cap and Trade last Friday night. But before I proceed I would like to correct the record.
All Republicans in the House did not vote NO; eight of them hailing from those great pockets of liberal “can't pay for what they spend” states like Illinois, New Jersey, Washington, and California crossed the aisle to sell out America; these people have to go. You will blow a blood vessel when you find out the kind of crap that was put into this bill over and above what already stank. But, yet again, course no one read it.
Here are a just a few examples of our Congress at work that represent the tip of the iceberg of the lunacy that is going to cost you a lot more than what you are being sold.
There is a provision in the bill which says before you can sell your house a federal agency has to do an inspection to determine if it meets energy efficient standards. If it doesn't you must correct the faults prior to sale. Think about that before you read on.
The bill doles out almost a trillion dollars worth of grants (aka "bribes") with the government acting as middleman between citizens and businesses.
• On page 45: All of California's housing standards are to be used to determine new federal building codes.
• On page 92: Commercial buildings are to provide for a plug-in an electric-hybrid vehicle.
• On page 112: Additional credit for Fannie Mae and Freddie Mac housing goals for energy-efficient and location efficient mortgages.
There's even establishment of something called "green banking" centers.
It looks like we will have to buy into GEs smart grid system technology, i.e. smart meters to provide energy rationing. Any wonder GE and MSNBC are marching in lockset with this administration and liberal Congress?
What smart grid visionaries foresee are home thermostats and appliances that adjust automatically depending on the cost of power. This also will require a change in appliances. Great for selling all those GE products.
The availability of $4.5 billion in federal economic recovery money for smart grid technology gives incentives for companies to convert over to the new digitalized grid. It is unclear how the consumer is supposed to bear this upfront cost. Get ready for the Orwellian hand of government to start reaching into your home to control your comforts; not to mention your wallet.
There will be more stringent corporate average fuel economy (CAFE) standards for cars, sport utility vehicles (SUVs), work trucks, and medium and heavy-duty trucks. This is the first increase in the CAFE standard since 1975. This will require new auto fleets to average 35 miles a gallon by 2020, a 40 percent increase from today's 25-mile average. By 2020, the measure could reduce U.S. oil use by 1.1 million barrels a day, more than half the oil exported by Kuwait or Venezuela and equivalent of taking 28 million of today's vehicles off the road.
There will also be the requirement that 36 billion gallons of biofuels be blended with gasoline by 2022, with no more than 15 billion gallons derived from corn.
We're also going to require that every car sold in America has an engine capable of operating on alternative fuel — which shouldn't be a problem given that We The People now own GM (though it may very well be a problem for GM's bottom line.
And if this wasn't enough fun to look forward to, a 98-page EPA study on climate change, was released today which shows global temperatures will decline until 2030. Funny how this was not available before the vote. In fact, vital information was suppressed by the government prior to this vote, and you can read all about Carbongate here at Investor's Business Daily .
Now if any of this disturbs you, you have another chance to stop this madness. As the scheme has also drawn attacks from 28 U.S. Senators, including West Virginia's Robert Byrd and Michigan's Carl Levin, both Democrats, who have criticized Obama for floating the idea that he would attach the measure to the current budget reconciliation process, to avoid a filibuster in the Senate.
So this is not a time to think about it and do nothing. It is time to do something. An open letter signed by the dissident senators declared that "enactment of a cap-and-trade regime is likely to influence nearly every feature of the U.S. economy. Legislation so far-reaching should be fully vetted and given appropriate time for debate, something the budget reconciliation process does not allow." I couldn't agree more.
Cap and Trade will remain a hot topic of discussion, unless you are not sick of the Michael Jackson story. Tell me dear readers, is it a generational thing, or wasn't the greatest singer and King of Everything named Elvis? I don't own any records, CDs, or recording of any kind of this other guy, and what’s with the one glove thing?
It’s a whole new world and big day for California when they start issuing IOUs. Can't wait to hear how the recipients spend them down at the local drug dealer, and whether GE is going to trade them along with Carbon Credits.
Yesterday marked the end of June and the 2nd Quarter. Tuesday was a down day losing 82 points to close at 8447 on the back of lower than expected consumer confidence numbers. I suspect it is because jobless numbers are still moving toward 10% (NFP, a big number we follow is this Friday) and up in spite of hope that previous consumer numbers would continue rising as they have over the last couple of months. Even though the Dow has been relatively flat over the last couple of weeks, and cannot seem to get any further traction, the 2nd Quarter was very good.
To put it in perspective, the stock market hit 12 year lows in early March, then rose 34% from mid March to mid June as everyone talked themselves into an improving economy. This was not based on fundamentals of course, but all the "green shoots" and bad numbers were not as bad as it coulda or shoulda been, etc.
Now the public opinion and consensus seems to be centered on stabilization, and having dodged the Great Depression bullet, and deflation is no longer risk propaganda. I say propaganda because nothing has changed and nothing is working--it is all wishful thinking. Yes the Dow is up 11%; the S&P up 15.2%; and the Nasdaq up 20%, and I am ecstatic that we didn't lose money. I didn't have time to confirm this, but year to date I think we are flat and still a long way to recover the 40% we are down from last September. In any case, I still stand by my prediction that we may get another month before the chickens come home to roost as they say, and we may still get to a close of 9000, but only if Cap and Trade and health care are defeated. But frankly I cannot predict what those lunatics in Congress will do since they certainly are not paying attention to the people I talk to. This means you should still be heavy into trailing stops, if not effecting actual hedges against your portfolio concentrations, or using these sucker rallies to rebalance your portfolio.
I believe the honeymoon is over. You can't keep blaming Bush forever. The stakes are so large and the bets are without limit and so outrageous, that losers will lose everything this next time around. I am however still holding on to a little twinge of faith that the People will stop this nonsense. That is the only green shoot I see out there, besides hyper inflation and a lot more pain.
I still intend to make money off of this insanity so pay attention.
Your humble editor, Russ
About Russ Magarity
Jackson, Wyoming Distressed Patriot Russell Magarity and Chris Janelli, Chief Distressed Patriot, have been business associates and close friends since working together at Chase Manhattan Asia in Hong Kong. Russ grew up in Cuba and Panama and graduated from High School in Peru. He received a BA in International Relations from the University of Oklahoma (Norman), an M.B.A. from the Universidad Autonoma de Guadalajara (Mexico), and a Masters in International Management (with Distinction) from the American Graduate School of International Management (Thunderbird).
Russ spent his career with Chase running countries and managing corporate finance businesses in Brazil, Mexico, Hong Kong and throughout SE Asia. Prior to joining Chase, he served in the US Navy for 9 years first as a Midshipman and Naval Aviator. As a carrier pilot, he served 3 tours in Vietnam and flew over 250 missions
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