Stocks dropped on the first two trading days of the year. Is this the highly overdue 10% correction? I doubt it - it didn't start with much fear or conviction. Personally, I expect this drop to persist for another several days, perhaps a couple weeks, and hit a bottom around 1780-1810 or so. Then continue on up some more. Feel free to keep track of this prediction and use it to see how (in)accurate I am.
Europe has a serious problem. Most of Europe is running largish trade deficits, meaning they're importing BMWs and exporting jobs. The solution to this problem is a cheaper Euro. But Germany is running a massive trade surplus, exporting BMWs and importing jobs. This argues for a much stronger Euro. What's the answer? In the short run, lift the rug and sweep. In the long run it's hard to see Europe as a viable idea unless they either invent a mechanism for individual countries to devalue or, like the US, they have a strong benevolent central government that taxes everyone and sends money to the disadvantaged. In this case, the disadvantaged would include Greece, the inventors of science and democracy; Spain and Portugal, who once divvied up the entire world under the Pope's direction; Italy, who gave us Pizza, Gelato, Ferraris and Italian women; and France, who thinks they still run the world. An interesting list of "disadvantaged."
Latvia is about to become the 18th member of the EU. The baltic states - Latvia, Lithuania and Estonia - are in an unfortunate place, geographically speaking, and historically have been invaded almost as often as Afghanistan. At least this time they're choosing to do it to themselves. Still, I can't see this as a positive move for Latvia.
We used to wear watches, that's all over now - your phone tells you the time and has a nice calendar function too. We used to buy a phone and a GPS unit for our car. GPS is almost gone, people drive around with their phone talking to them. There were efforts to sell people on laptops that were internet connected in your car, but phone screens got bigger and that's kinda dead now. We bought little portable game boys to keep our kids quiet in the car; now we buy them $10 worth of game apps on our cell phone and hand it to them. And now the makers of small digital cameras haven't made any money in a couple years. Phone cameras are pretty decent these days - some are even better than that - and pictures you take with your phone go in seconds into email, facebook, flikr, text messages, whatever. And if you have Android or an iPhone they're instantly backed up on the web. Steve Jobs saw this coming eight years before I did. He was shipping iPhones all over the world and I still didn't get it. Now I do. These phones with the 4"+ screens are simply too kewl. Netbooks, btw, are simply oversized phones - you can even get an app to make phone calls with them.
Last week I noted that a federal judge ruled gay marriages legal in Utah. Utah asked the judge for a stay pending appeal; he declined. They then asked the 10th circuit court in Denver who also declined. Hundreds of Utah gay couples have obtained marriage licenses since the Dec.20 ruling, in a state where 2/3 of the residents are Mormons. Utah is now appealing to Sotomayor, the supreme court justice with "Latina sensibilities" who voted to overturn the Defense of Marriage Act, for a stay pending appeal to the Supreme Court. Good luck with her. A single liberal judge is currently invalidating the constitutions of 30 states and several other judges are backing him up. They say the greatest crime against democracy is assassination, as you're effectively voting for so many people. Judge Shelby just voted for 194 million Americans - in my mind he's as big a criminal as John Wilkes Booth, Lee Harvey Oswald, or Sirhan Sirhan. Interesting how the "democrats" are so very skeptical of democracy. Fun Utah facts: when Utah applied for statehood, they asked that their state be rectangular and named "Deseret." Their application was not even considered for several decades until Utah agreed to a law that defined marriage as between one man and one woman. Meanwhile congress disincorporated the Mormon church and confiscated their holdings. When their application was approved, congress took a chunk out of Deseret and gave it to the Wyoming territory, and then renamed the state to "Utah" after the indigenous Ut indians, the Mormon's blood enemies. Every Utah boy learns this in elementary school; every time they look at a map they're reminded. Now, after bowing to the Feds' demand on the definition of marriage, the Feds tell them their definition is unconstitutional. I like Mormons, they share my intense skepticism of benevolent central government.
Bloomberg's weekly U.S. Consumer Comfort Index tracks the economic outlook of various demographic groups. A positive reading means more survey respondents are feeling positive than negative, whereas a negative reading means the opposite. The only demographic group that has a positive consumer comfort reading is Americans making over $100,000.
Consumer confidence jumped higher to 78.1, up from 72 last month. People are feeling like spending money. Home prices are also rising quickly - last month the Case-Shiller index rose 1%, a 12% yearly rate. As a result, the number of homes with negative equity is plummeting. Most of the remaining such homes are in Florida, one of the few places that has not recovered from the housing bubble yet. According to Zillow, my home is back to what I paid for it in 2008, after the worst of the housing crash but before the bottom. I like that real well - my middle son is a junior at UC Davis, and so in 2015 I'm selling this thing and most likely leaving the People's Republic of California. Perhaps I'll even make a few hundred dollars on the deal.
From 1953 to 1981 interest rates and inflation increased in this country, and bond prices just went down and down. In 1981 Fed chairman Volker "cured" inflation, and we've been in a bull market for bonds ever since - bond prices have been going only up for 22 years as interest rates and inflation dropped. This has almost certainly swung the other direction now. It appears strongly that bond prices have topped out and we're in for a long period of bond prices dropping and interest rates climbing. The Fed doesn't want this, but they can only influence, not control this market. If interest rates get beyond Fed control and take a jump upwards, the stock market is going to drop rather precipitously. One thing is clear: with 90 day t-bills paying .1%, interest rates have nowhere to go but up. The timing is currently unknowable.
Ohio passed a law last year making it a felony to build a secret compartment in your car with the intent to conceal a controlled substance. Recently a Norman Gurley was pulled over; the "strong smell of marijuana" gave troopers probable cause to search the vehicle and they found the empty compartment. Gurley was arrested and faces up to 18 months in jail. Gurley claims it was a borrowed car and he had no knowledge of the compartment. The ACLU is all over this. The word "intent" in the law makes me think this case is a non-starter.
You've probably heard of MRSA - the bacterial infection you get in hospitals that's resistant to all our antibiotics. There's a new kid in town: CRE - Carbapenem-resistant Enterobacteriaceae. If you get it you have about a 50% chance of dying. This is pushed as evolution, 'cause, you know, everything evolves. Nah. Bacteria share genes with each other. This is just some bacteria that was somewhere near a MRSA bacteria and traded for the appropriate gene. Nothing here evolved from scratch. Anyways, the first case was spotted in N.Carolina in 2001. Today it's been seen in 4% of our hospitals across 45 states. Hospitals are dangerous places. Why don't we have new antibiotics? There are lots of candidates, but it costs about a billion dollars and takes about 8 years to get a drug FDA certified, and antibiotics don't make that kind of money. So about 23,000 people are dying every year of this particular form of FDA protection. Why do conservatives hate big government?
Obamacare will lower costs by getting low income people into regular preventative care and making fewer visits to emergency rooms. Or will it? Starting in 2008 Oregon increased their medicaid rolls by 30,000 chosen by lottery. Harvard and MIT researchers saw this as a great opportunity to test this assumption. Bad news: among these people emergency room visits increased by 40%. They also went to the doctor more. However, there was no change in their blood pressure, cholesterol or diabetes. Spending skyrocketed, health didn't change. 2000 years ago a somewhat famous person assured us, "There will always be poor." So far he's been right on this one.
Deer hunting licenses have just been made available in Washington DC. Unfortunately you have to be a certified sharpshooter to get one. Personally, I'm afraid to go walking around DC - apparently the deer are braver than I.
Conservative? Liberal? Take the 40 second quiz and find out. You'll be unsurprised to hear I scored as a Libertarian.
Boeing is retro-fitting double winglets to 737s. Southwest is getting these double winglets, "split scimitars," put on all their planes; they expect to save $14m per year in fuel costs as a result.
How big are galaxies? Our nearest galactic neighbor, Andromeda, is easily visible on a dark night with binoculars. Unfortunately Andromeda isn't very bright, so you need a decent sized telescope to really see any kind of detail. If we lived on a darker planet and had better night vision, it would look about like the picture below, a composite photoshopped from two real photos carefully adjusted for relative size. But we don't have really good night vision so it wasn't recognized as a galaxy, a collection of hundreds of billions of stars, until Edwin Hubble get the first really good pictures in 1922 using Caltech's 100" telescope on Mount Wilson. And that's a good part of why the orbiting telescope got named after him. Andromeda is about 2.5 million light years away from us, meaning the light in this picture started travelling towards us 2.5 million years ago and just got here.