Thursday, February 25, 2010

The "Tea Party" and the GOP: Mixing Oil and Water?

The "Tea Party" movement has reached a critical moment.

This loose and spontaneous movement, which seeks to
unite Conservatives under the principles of "limited
government", "free markets", and "individual liberty",
has now grown large and loud enough that it is attracting
serious attention from both major parties.

And the GOP, the so-called "Conservative" faction in our
two-party political monopoly, is making a serious effort
to court the movement. Last week in Washington, GOP
National Committee Chairman Michael Steele met with
thirty leading "tea party" activists, to explore "ways in
which the GOP and the Tea Party movement can work
together to further our mutual goals".

And here's where The Thinking Nationalist is going to
issue a warning to both sides: be very careful about
who you are about to jump in bed with.

First, for the Tea Partiers:

1) The GOP, as it currently exists, is no longer the
party of Limited Government, Free Markets, Sound
Money, and Individual Freedom. Rather, the GOP
is the party of Wall Street bailouts and bonuses,
big banks and transnational corporations, real
estate and stock market bubbles, vast unchecked
illegal immigration, a diminished social safety net,
outsourcing and job exportation, and endless
inconclusive wars against "terror";

2) Owing to "numbers" (i.e., there are
many fewer wealthy than there are middle
and working class), the GOP has always had
to co-opt "social conservatives" to obtain
an electoral majority. This has been true
ever since the days of Richard Nixon's
"Southern Strategy". Once in power,
Republicans forget the "social" issues
and become "Big Government" conservatives,
taxing, spending and otherwise using government
to reward the powerful and the privileged;

3) Even out of power and in the minority, the
GOP marginalizes "social conservatives" as
rural, uneducated rubes while proposing
"strategic alliances" with groups that
normally vote "bloc Democratic"
(Hispanics, Gays, Asians, etc.).

In short - the GOP has no principles other
than gaining power, and no goals other
than aiding and comforting the top 1%
of income earners.

Tea Partiers - be careful.

And the GOP should be careful too. No
credible national political party should
ally itself with loose coalitions of dissenters
who have no national program, no manifesto,
and no credible national leaders.

I'm sorry - but Sarah Palin and the talking heads
from the Fox network don't qualify in this last

And the last time the GOP allowed itself to be captured
by a loose "libertarian-conservative" coalition, the result
was the presidential nomination of Barry Goldwater.
And we all know how that turned out.

And the last time I looked, the GOP doesn't really need
the Tea Party crowd to succeed. Just saying "No" to
anything the Democrats propose has already resulted in
by-election victories in Virginia, New Jersey, and

But in all three cases, the victories were decided by
mainstream American voters of both parties who turned
out in droves to register their disgust with "politics as
usual" . Both the Tea Partiers and regular GOP voters
were minor factors in each case.

But the tea party movement is not going away anytime
soon. And if it is to succeed, it will need to come up with
a credible national-level leadership and a message that
reaches out to the largest disaffected group in the country-
independent, non-partisan voters equally displeased
with both major parties.

And until that happens, mixing the tea party movement
and the GOP will be like mixing oil and water . There
may be a temporary emulsion, but it will all come
apart sooner rather than later.

And that won't be beneficial for either side.

Monday, February 22, 2010

Trouble in the Eurozone - Of Greece, PIGS, and STUPIDS

The Greek Debt Crisis has been much in the news lately.

The financial media has been dominated by such
headlines as "Greek Default Imminent" , "Europeans
say "NO" to Greek Bailout", and of course, as expected,
"Goldman Sachs helped Greek Government hide debt,
avoid EU regulatory scrutiny".

Wow - talk about a juicy topic. It's got everything.
Greeks, Default, The European Central Bank, Bailouts,
and everyone's favorite financial pirates, Goldman Sachs,
at the center of it all.

But there's more to it than that. When it comes to
extreme European financial crisis, Greece is not alone.

First of all, there are the truly depressed economies
of the Eurozone's southern tier - a group of nations
(including Greece) that have been called the PIGS -
Portugal, Ireland, Greece and Spain. And, there's a
second group of nations, some in the EU and some not,
who are likely to follow in the PIGS' path, owing to
heavy Euro-denominated external debt. These nations
I'll call the STUPIDS (Slovakia, Turkey, Ukraine, Poland,
Italy, Dubai, and Slovenia).

And the "root causes" of their problems? The same ones
that we in the U.S. have:

1) Huge, ongoing Government budget deficits, with no
realistic plans for fiscal balance;

2) Bloated, unionized public sectors, both in absolute
terms as a percentage of total employment and in
terms of wages and benefits when compared to
equivalent private sector employment;

3) Uncompetitive goods-producing sectors ( manufacturing,
mining, and agriculture);

4) Heavy exposure to "boom-bust" economic sectors
(real estate, hospitality, and tourism);

5) Lack of modern infrastructure for competitive
service economies;

6) Significant untaxed, "informal economies".

And, in the case of the PIGS and Italy, extreme concentrations
of wealth and influence in the hands of oligarchies, with the
attendant problems of capital flight and tax evasion.

And virtually none of these problems were envisioned when
the EU was established with a common currency and common
fiscal, industrial, and social policies. It was as if
with European unification, sixteen nations would become
Germany overnight.

And that's a big, under-reported part of the problem.

Germany is the leading economy of Continental Europe -
its leading exporter with world-class technology and service
sectors, Europe's best-trained and educated workforce, and
modern infrastructure that in many respects is the envy of
the world. And with traditional German traits of industry
and thrift, its budget deficit is minor - in fact, it is in the
awkward position of having to avoid large surpluses to
help keep the Euro from becoming too "strong", which would
hurt the exports of the entire group.

Greece, though, is a different story. Its current budget deficit
is currently 14% of GDP, its total outstanding foreign debt
is 156% of GDP, and its percentage of sovereign (government)
debt to total public and private indebtedness is an astounding

Translation: while the Greek private sector is relatively
conservative and under leveraged, the Greek government
spent like crazy. And now the bill has come due.

And Greece doesn't have a lot of options. As part of the
Euro zone, it no longer has control of the printing press;
inflation is not an option. Neither is default - were Greece
to default on its external debt (most of which is held elsewhere
in the EU), it would trigger a run on all Euro-denominated debt
and on the Euro itself. Neither Germany nor France will tolerate
that. And a Bailout? By overwhelming margins, the people of
the other EU nations are saying "No".

But, a solution is in the works. Recent pronouncements and
developments from both the Greek government and
The European Central Bank indicate that despite all denials,
a "fix" is at hand. Here's why:

1) The ECB, the Greek central bank and the finance ministry
have all requested "Technical Assistance" from the IMF;

2) Despite the fact that the IMF ( the world's sovereign
"receiver in bankruptcy"), normally doesn't intervene
when a country is part of a currency union, the IMF will
have a large say in how Greece will restructure;

3) Greece has already announced a draconian "Austerity"
program including layoffs and pay cuts for public workers,
downward "adjustments" for pensions and benefits, tax
hikes on the middle class and wealthy, and an unprecedented
crackdown on the "informal" economy by virtually outlawing
cash transactions above 1000 Euros;

4) And, most importantly, Greece has just replaced the head of
its debt management agency with a former Goldman Sachs
Europe Managing Director. That means the "deal" is likely to go
down soon.

And here's what will most likely happen:

1) Greece is planning an auction of €17 billion sometime
in the next 30 days to roll over existing debt, with a
coupon somewhere in the 9-11% range and a Moody's
rating of BB- or lower. The auction will fail
(not be fully subscribed);

2) While normally this would be "an event of default",
the ECB, instead of lending money directly, will now
provide a "conditional guarantee" of the rollover,
providing Greece meets the austerity conditions it has
negotiated with the IMF. This will permit the auction
to go through, but this time with interest penalty clauses
that would be triggered if Greek government debt is further
downgraded in the markets;

3) The austerity program, which will be imposed
immediately, will lead to strikes and riots in the streets,
mass poverty and unemployment, and further capital flight
by the wealthy;

4) The continued unrest in Greece will lead to a further
downgrade in Greek debt, triggering the penalty clauses.
At this point, with Greece unable to meet the mandated
interest charges (150-200% of the coupon rate), the
ECB guarantee will come into play, at which point
Greece will have to surrender its treasury and taxation
powers to Brussels.

At this point, Greece will cease to be an independent
nation and become an EU "colony", with its finances,
taxes and government revenues totally in Brussel's

And who will benefit from this? The usual players,
led of course by our favorite financial pirates, the
Squid Nation of Goldman Sachs. The Squid, along with
JP Morgan, Citicorp, and Morgan Stanley ( and European
banks Societe Generale and Deutschebank), have been
quietly buying up CDS's on Greek debt, and shorting
existing Greek issues in the market which means
that the worse the situation gets, the more they profit;

The banksters can't lose. If the Greeks default completely,
both their shorts and CDS's win. And if it looks as if the
guarantee will pay off, they'll be in position to scoop
up the debt at pennies on the dollar and get paid in full.

It's the same hustle The Squid pulled off so successfully
with AIG, Fannie and Freddie in the U.S., although not
quite so large and profitable.

And can the EU do anything about it? They can make some
noises about "audits" and "banning Goldman Sachs from
European markets" , but that's about it. Were they to
even try to take punitive action against The Squid, they
would be guaranteeing that all of the weaker EU economies
would be open to unrestricted speculative attack.
Moreover, to rein in Goldman and the others, they would
have to get co-operation from Washington - which will most
likely not be forthcoming.

Besides, speculators, vultures and pirates serve a useful
corrective function in the marketplace; when companies
and countries falter, the speculators are there to enforce
financial discipline, and the consequences are usually
painful for the people involved.

It's just too bad that that pain can't be visited on the
Greek government as well.

Saturday, February 13, 2010

Crisis Or Opportunity: Which Way On Global Warming?

Global Warming.

It's a problem and an issue that won't go away.

And this issue is one that isn't just a pet conceit of
Western elitists - it's something that is definitely
happening, and it's something we have to do something

But there's two ways of looking at this - as either Crisis
or Opportunity. And all we've heard so far is just the
"Crisis" side of the argument.

Now to be sure, the proponents of the Global Warming
crisis meme have been at times been their own worst

First, there was "Climategate" - the expose that some
climate researchers had fudged some of their data to
reach a predetermined conclusion. Naturally, this
inspired some commentators, most notably Glenn Beck
and Rush Limbaugh, to hint rather strongly that the
whole issue is just another elite conspiracy to "Blame America
First" and should be disregarded by "right-thinking" folks.

However, as a writer on economic and political issues,
I deal with all kinds of people where "fudging" the data to
reach a predetermined conclusion is nothing new.

To the politician, bankster, or economist, fudging
the data and lying about it is an everyday tool of the
trade - so why should I be surprised when some environmental
scientist does it? I'm not. And in fact I was a skeptic - until I
read in U.S. Naval Institute Proceedings about the potential
strategic effects of climate change .

That changed my mind. That convinced me that Global
Warming is a fact. But, I am still skeptical that "Global
Warming" is entirely man-made. And it seems that a lot
of otherwise sensible people aren't buying it either.

The anthropogenic theme was what Barack Obama
took to Copenhagen last year - and the BRIC coalition
of newly industrializing countries promptly shut him

They sense - accurately, in my view - that "Global Warming"
and the mechanics of a proposed new "carbon control" regime -
Cap and Trade, carbon sequestration, new carbon taxes,
carbon-neutral trade - are nothing more than a plot
by Western nations to re-arrange global trade patterns
in their favor. China bluntly told the world it will continue
to burn coal - of which it has a 300-year supply - in its drive
for manufacturing dominance. And the others - Brazil, India,
and Russia - showed no willingness to "compromise" with a
West they view as fading, decadent, and corrupt.

And I'm not surprised. The professional "environmental"
movement has many times, on issue after issue, been
embarrassingly and consistently wrong. Whether the
issue is overpopulation, global warming, resource exhaustion,
or otherwise, the causes are always the same - Western
(that is American) lifestyles, Capitalism, and Democracy.

Blame and Guilt are not good selling points to a skeptical
and distrustful audience.

So, despite all the evidence, we might well be alone on
this issue. If that's the case, and especially if it comes
to light that the principal causes of global warming
are not anthropogenic, what do we do?

Doing nothing is not an option. The evidence of
"global warming" is both widespread and plain to
see even for the layman. And I don't think it's wise
policy to be only a volcanic eruption or two away
from a truly catastrophic climate situation. So
what do we do?

First of all, we have to accept that Global Warming and
Climate Change are facts. Even if the causes are not
all man-made, our response will of necessity have to be.
And the first thing we must do in this regard is to
change our mindset to view "Climate Change" not
necessarily as a Crisis but rather as an Opportunity.

And, in my view, there are some things we can do right away
to start taking advantage of the opportunity and in the
process start correcting things.

First of all, Reforestation. Biomass - trees - may well be our
best friends in ameliorating climate change. And deforestation,
especially in Africa and Brazil, may well have contributed to
the present situation. Trees are a natural carbon sink; and all
the good we might do here in reducing carbon emissions
might well be undone by overharvesting the Amazon
rain forest and traditional African slash-and-burn
agriculture. But we in the U.S.are not entirely without
blame - the recent mudslides and floods in Southern
California can directly be attributed to the failure to
reforest the areas burned in the fires two years ago.

And why wasn't this done? The environmental impact
report required to replant these burned areas won't be
completed for another year, if at all.

Second - phase out burning coal for power generation.
Clean coal? No such thing. Besides, as a solid hydrocarbon,
coal may well be more valuable as a chemical feedstock
material in place of increasingly scarce oil. We already have
the technology to convert coal to these other uses - why
not use it? The same thing applies to natural gas, which though
clean and abundant, is more valuable as a feedstock than
a fuel;

Third - let's lose our unwarranted aversion to nuclear
power. If we're serious about a limited-carbon future,
nuclear power will have a huge role to play, whether we
like it or not. Thanks to the unyielding opposition of
the same folks people pushing the Global Warming
alarms, we are currently stuck at Nuclear Power
Technology 1.0. Meanwhile, France, Japan, and China
are currently at Nuclear Power Technology 3.0, with
the fourth generation in the planning stage. And the
French and Japanese have the technology to recycle
spent fuel rods into more usable fuel. We don't. We
have a long way to go here if we are going to catch up;

Finally, if we're serious, we have to do more to wean
ourselves from oil-based motor fuels. Methanol is
both renewable and cleaner burning than gasoline,
and becoming available in more and more places.
However, it is highly corrosive, and cannot be used
in most cars without major modifications to both
the engine and the fuel system. A few years ago, most
of the major manufacturers produced a few models
that were "flexible fuel" - could burn either methanol
or gasoline, or any mixture thereof. Today, they don't -
except for fleet vehicles such as taxis and delivery
vehicles. And CNG and propane have the same problem
as methanol - limited availability of vehicles, and a limited
number of fuel outlets. For these reasons, these are both
dead-end technologies;

But once again, foreign nations are showing us the way.
For the last three years, Europe has had diesel hybrid
vehicles, which take current hybrid technology and marry
it to a small-displacement, clean-diesel engine. And later
this year, Audi will bring the first clean-diesel hybrid
to the U.S. If the Toyota Prius was hybrid technology 1.0,
the forthcoming Audi Tdi Hybrid is hybrid technology 2.0.
Go to the alternative-fuel diesel hybrid, and you have hybrid
technology 3.0; vehicles that can get 40-50 mpg on clean,
renewable fuel. They are not in the market yet, but they will
be soon;

If there's a common thread to all this, it's this. All of the
things I've just mentioned are doable now, with technology
we currently possess. Even if they won't completely solve
the climate problem, they will make a considerable start.
But when it comes to actually doing something , we have
been sold short by our elites, especially those now making
the most noise about climate change and "Global Warming".

Our elites are very good at creating ponderous studies and
calling for action on this problem or that, but they fail
utterly on implementation. Being primarily creatures of
thought, they instinctively recoil from people of action, who,
culturally benighted though they might be, just might come
up with workable solutions for the problems.

And if they do propose solutions, it's almost always this tax,
that regulation, or the totally unworkable "Cap and Trade"
scheme that thankfully died a quick and unlamented death
in Congress. No plan of action - no Manhattan Project or
Apollo program - just more carping, pointing with alarm,
and more urging for someone else to do something.

Small wonder that when we talk to the rest of the world
about the climate change problem, they don't take us
seriously. We shouldn't be surprised.

But that is not to say that the rest of the world isn't
concerned. They are. For the most part, they see
solving the climate change problem (or at least
adapting to it), as a tremendous opportunity.

The French will do their bit by proceeding to go
100% nuclear and hydroelectric for power generation
by 2020. Unlike us, they see "wind" and "solar" as
ephemeral technologies unsuitable for large-scale
application. The Chinese have embarked on an
Apollo-program-scale project to be the world's
technology leader in batteries for hybrid and
electric vehicles. And the Japanese are years
ahead of everyone in the technology of
processing nuclear waste into nuclear fuel.

And the prime market these countries see
for their innovative technologies? The United States.

If these sound to you like the "green shoots" of the
"new economy" that the President was talking
about, you're right. But as usual, these high-wage,
high-skill, "jobs and industries of the future" will
happen elsewhere - not here. For when it comes to
"green jobs" and industries suitable for Americans,
the President is talking about weatherstripping
homes or recycling bottles and cans.

And that's a development you can thank our
anti-industrial, anti-manufacturing elites for.

So, when the President, Al Gore, or some left-wing
Hollywood celebrity talks about "Climate Change"
or "Global Warming", I'm skeptical. The discussion
is all problem - no solution.

But when I hear Rush Limbaugh, Glenn Beck,
Sean Hannity, Ann Coulter, or Bill O'Reilly talk
about the issue, I'm encouraged. While they may
dispute the details, they are also quick to emphasize
that if there is in fact a problem, there's also a solution,
one that can and should be turned to America's
advantage in a competitive world.

Technology? New Industries? Jobs of the Future?
Sorry, but that's part of the problem; not part
of the solution according to environmentalist

And that's why I'm with Rush on this one.

What Happened To Toyota?

It's another black eye for Japan, Inc.

In this case, it's Japan's "National Champion" global
automaker Toyota, Inc. which last year overtook a
weakened GM as the world's largest automaker.

The problems started back in early 2007, when reports of
sticking accelerators in certain Toyota models began to
filter back to Toyota's headquarters. But, as these incidents
were isolated and didn't affect the home Japanese market,
they were dismissed as minor and handled through the
warranty process. But later that year, there was a premonition
of problems to come when 2 million 2002-2005 U.S. market
Toyota Camrys were recalled to fix a seat belt assembly that
could detach from the car floor in a crash. This one was
caught early and handled relatively quickly.

But a year later came the real problems. Two million
2005-2007 Camrys sold in several markets were recalled
for sudden unintended acceleration, a problem ultimately
traced to accelerator pedals and throttle linkages that
became worn and would become trapped in the floor
mats, which themselves were poorly designed.

And now came the real problems. Two million more
Toyotas, this time including several models, have been
recalled not only for the previous "floor mat and pedal"
problem, but for problems with the electronic throttle
module. And, unlike the older models, these cars come
with electronic pushbutton starters - which means
if the car gets away from you, you can't shut it off.

And then finally, came the crusher. Toyota's flagship
product, the innovative 2010 hybrid Toyota Prius,
has been recalled for failure of its regenerative braking
system, affecting some 410,000 vehicles worldwide.
And this time, Toyota's luxury brand Lexus is also
affected, with its IS 250 hybrid recalled as well. To
cap off the embarrassment, this particular problem first
cropped up in Japan, where to their credit the Japanese
Transport and Trade ministries were instrumental in
alerting the U.S. and other markets to the extent of the

This, of course, has resulted in every global automaker's
worst nightmare - a complete halt to both production and
sales in the company's most important markets, while
engineers and safety experts inside Toyota and the U.S. and
Japanese governments feverishly search for solutions.

To my thinking though, something like this was bound to
happen sooner or later. While Japan, of course, has several
global automakers, including Honda, Nissan, and Mitsubishi,
none of these approaches the global scale of Toyota, which
manufactures not just in Japan but in the United States,
Brazil, India, Britain, and China as well. Adding
in countries where Toyota assembles cars from
partially built kits or has joint ventures to manufacture
other brands, Toyota either makes or assembles cars in
twenty different countries and sells them in a hundred

As you might imagine, managing global supply
chains for so many far-flung operations is a huge and
expensive venture, a task that at Toyota was always
under top management scrutiny for cost savings. The
first step in streamlining operations and reducing costs
was to design components and subsystems that could be
used across several different models and platforms - a
common practice among automakers worldwide, but one
that was relatively new to Toyota.

Second, Toyota became a leader in outsourcing the
design, testing and manufacture of these components
to other manufacturers, in order to focus on its "core
competencies" in design and marketing. Many of these
companies in turn further subcontracted their
manufacturing to others, in order to meet Toyota's
demands for "lean inventories" and "just-in-time"

What this means is that the typical Toyota vehicle
assembled in the U.S. may have only 51% U.S. content
(necessary to qualify as a "domestic" vehicle), and the
balance may come from not just Japan but Korea,
China, Brazil, Canada, and Mexico. Indeed, the final
Toyota product may have less than 50% original
Toyota-manufactured content. Contrast this, of course,
to Japanese-made Toyotas, where virtually all content
is Japanese - as prescribed by both law and custom.

And somehow in all the "co-ordination", "supply chain
management" and "global sourcing", Toyota's most
precious asset - its reputation for utter quality and
total reliability - got lost in the shuffle.

To be sure, remedial actions are the order of the day.
Reliable replacement parts are starting to arrive, and
some U.S. Toyota dealers are open around the clock
with help from Toyota to both repair customers' cars
and fix problems with dealer inventory. And Toyota
chairman Akio Toyoda, scion of the founding family,
publicly apologized both on Japanese national TV
and before a committee of the Diet - an unprecedented
loss of face for so important a figure of Japan, Inc.

The likely outcome of all this is that Toyota will, of
course, go on. But I wouldn't be at all surprised if
some of the remedial steps taken include a
"repatriation" of some manufacturing activities
and an "in-sourcing" of some component
design and manufacturing back to Japan.

And I don't think that this will affect overall
U.S. manufacturing employment for Toyota,
as the suppliers for the defective floor mats
and throttle parts, both U.S. companies,
do all their manufacturing in, of course, China.

Sunday, February 7, 2010

Super Bowl XLIV - Who Dat? De Winners, Dat's Who.

Super Sunday was today.

That great 44-year-old All-American tradition, Super Bowl
Sunday, is a big event here in Las Vegas.

Some 280,000 people descended on our fair city, to gather
in the sports books and cocktail lounges, cheer on
either the Indianapolis Colts or the New Orleans Saints,
drop a little cash in the slots or at the tables, and otherwise
have a good time and enjoy themselves.

But, as a Vegas local, I tend to avoid the otherwise
overcrowded and overpriced Strip as much as possible -
especially on Super Bowl Sunday, when both the crowds
and the prices go up dramatically. And, since this a
busy weekend for the casinos (and especially their PR
people), I felt obliged to decline a kind invitation from
my friend The Vegas Insider to attend the big VIP bash
at a certain major hotel on the strip.

I'm not exactly the kind of "high roller" he normally
would be working with on this busy weekend.

So, with the "better half" working today, I decided to
have a small group of friends over to the house to
watch the game. First item up is to prepare my share
of the chow. So, into the kitchen I go and an hour later
a huge pot of The Thinking Nationalists' Famous Chili
is bubbling on the stove, together with hot dogs, nachos
and three microwave bags of popcorn. Oh, and plenty
of liquid refreshment courtesy of Anheuser-Busch.

The door bell rings, and in come my friends with more
"liquid refreshment" and more snacks, and at 3:25
all hands are in front of the big screen TV to watch the

Now, for those few of you who don't follow football,
the Indianapolis Colts were somewhat favored, and
this being Vegas everyone has a bet . Today's line
was Colts by five, with the over/under at 56-1/2.
And everyone was betting Colts.

But, even though Indy was the betting favorite,
everyone's heart seemed to be with the New Orleans
Saints - the "Who Dat?" boys. And that's typical
America. Americans love an underdog that shows grit
and pluck - and ever since Katrina, New Orleans hasn't
been shown much love lately.

The game opened in typical fashion with Indianapolis
getting a 42-yard Matt Stover field goal after holding the
Saints to three-and-out on their opening possession.
Then, after a fiercely defensive first quarter by both teams,
Peyton Manning found Pierre Garcon for a 19-yard TD with
0:36 left in the first quarter. After 1 quarter, Indianapolis
is up 10-0 and momentum seems to be going Indy's way.

But the Saints aren't the Aints any longer. They hung
tough, doing the only scoring in the second quarter on
two Garret Hartley field goals of 46 and 44 yards.
Halftime score: Indianapolis up 10-6. And that
elusive lady Momentum seemed to be changing sides.

The fireworks, though, started after the halftime show
this time. On the opening second-half kickoff, Saints
head coach Sean Payton made the gutsy decision to
open with an onside kick - something never before
done in a Super Bowl and only a few times in the regular
season. Drew Brees and company recovered, and took it
in for the score. New Orleans 13-10 and the joint was

But, the game wasn't over. Moving this time on the
ground, Indy came right back and took back the
lead 17-13 on a 4-yard Joseph Addai plunge. The
Saints, though, kept it close with Garrett Hartley's
third 40+ yard field goal of the game. Third Quarter:
Indy up 17-16.

In the fourth quarter though, Drew Brees and
Da Boyz went to work, taking the lead 24 -17 on
a 2-yard pass to Jeremy Shockey in the right corner
and a disputed 2-point conversion to Lance Moore.
The crusher for Indianapolis, though, was Tracy
Porter's 74-yard INT return of a Peyton Manning
pass with 3:16 remaining.

At that point, though there was a second Mardi Gras
going on in the French Quarter, there were some
long faces in the group. But not me.

I had New Orleans and the points.

Thursday, February 4, 2010

The Smell of Money - Learning to Trade Stocks

Continuing Education is a wonderful thing.
No matter what you do for a living, the world is
changing so fast that if you're not keeping up
developments in your field, you're falling behind.
And, even if a requirement for continuing education
apply to you, (say, if you are retired), you
should never pass up an opportunity to flex your
mental muscles.

So, having the benefit of a flexible schedule (one of the
good things about being self-employed), I decided to
enroll in a Professional Stock Trading course, taught
by a reputable broker with a trading floor here in
Las Vegas.

Now, I know what you're thinking. We've all heard the
story that the best way to make a small fortune in stock
trading is to start with a large one. It's a guaranteed way
to lose money. But, as the instructors make clear, you can
make money
doing this
if you do the following:

1) Take formal classroom training in trading, even if
have professional experience in finance, accounting
securities, or investments. This is different enough from
"investing" in both mindset and methodology that you can
get in real trouble real fast if you don't know what you're
doing. Fortunately, all of the reputable trading brokerages
(E-Trade, Scottrade, TD Ameritrade, Charles Schwab, etc.)
offer both classroom and on-line training (in most instances,
if you open an account), as do many colleges and
universities. In my case, I am taking the course at the local
junior college, taught by instructors from Bright Trading and
Charles Schwab.

2) Make sure that any trading instruction you receive also
covers fundamental security analysis, such as calculating
earnings per share, P/E ratios, free cash flow, and so forth.
You won't necessarily be making trading decisions on this
information, but this information is critical in deciding which
stocks might make good trading candidates and which industries
to focus on;

3) The best way to learn anything is to learn by doing.
So, even if you have no experience in trading, start with
an imaginary account and go ahead and "trade" some
stocks according to what you've learned. Don't be surprised
or shocked if you lose money right out of the gate - that's the idea.
You want to make your mistakes now - not later when there's
real money on the line. Make a simple spreadsheet to track
your daily positions, and keep a log of what you trade.
You should also keep an informal "journal" of why you
picked each stock, what your objective was, and the outcome
when you exited the trade. This will give you a "feel" for what
actual trading is like and if it's for you;

4) Once you have a "feel" for what the trading world is like,
make sure that your instruction leads you to the development
of a Trading System that works for you and that you are
comfortable with. In developing a system, our instructors
stress that simple beats complex every time. One of the big
and expensive mistakes many novices make is developing a
system that relies on two dozen or more different indicators
as to whether or not to trade and when to enter or exit.
Even worse, they immediately sign up for expensive
monthly subscription services that promise to do this for
them. Our course stresses building reliable, simple systems
that are tailored to the needs of each individual and that you
don't need a Phd. in Statistics to understand;

5) Risk Analysis and Position Sizing in Terms of Risk is the most
crucial concept to absorb, whether you are a trader or a
long-term "buy-and-hold" investor. It's one of the first topics
we've covered in class, and it's stressed throughout. This issue
governs your entries, exits, and protective stops, and what to
trade as well;

6) A big part of having a profitable trading system is keeping
expenses down. In this internet age, there's no point in buying
information that you can get free. Yahoo! Finance and Google
can give you a wealth of fundamental and technical information
at no cost. Our instructors suggest that instead of buying
expensive newsletters and "tip" sheets, your money is better
spent on a regular subscription to the Wall Street Journal,
, or Investor's Business Daily. And for technical
analysis, when you open a trading account, you'll get a
Trading Platform that includes all the charts, graphs,
and indicators you'll need to make trading decisions,
and you'll enter your orders online right from the
platform. No need to spend a lot of money on a separate
charting service;

7) Finally, when it's all said and done, and you have a
trading system built, relax and have fun with it .....
especially during the trial phase before you invest any
money. It's informative, exciting, and educational.
Even if you ultimately decide not to trade or invest,
you'll be better equipped and better informed when
you do.

And how did I do this first week? Well, after starting out with
my imaginary $100,000, after eighteen trades (far too many
in the opinion of the instructor), by sheer luck I managed to
wind up right back where I started, with $100,000.

Did I make mistakes? Sure I did - I used the wrong indicator
for the wrong situation about six times, I traded out of good
positions too early twice, and some of my picks were
definitely of the "What Were You Thinking?" variety.
All rookie mistakes. But we'll improve - after all, if
you didn't make mistakes, there would be no need for

Anyway, at this rate I'm in no danger of becoming a
one-man Goldman Sachs - or a Gordon Gekko for that
matter either. But, then, I'm relying on free, published
information - not the kind Goldman and the others pay
out good money for. And, without the ability to to "flash"
trade, I'm not peeking at the other guy's cards in this
poker game, either.

But, just as in poker, if you have system with rules and
stick to it, you'll come out way ahead of the guy who just
tries to "wing it" and bluff his way through.

Well, we'll see. Watch for future developments.