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Mark's Market Blog

7-20-14: The Border Issue Heats Up

By Mark Lawrence

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Another flat week. The market is having trouble going up, and can't go down.

S&P 500 January 18 2014 to July 18 2014

Microsoft announced they are laying off 18,000 employees, mostly employees of their phone subsidiary Nokia. They also ordered Nokia to stop selling all Android phones. Microsoft stock promptly rose to its highest price since the dot com bubble. Buy back massive stock, buy a sinking and irrelevant phone company, keep selling the same old last-millennium crap, even your founders jump ship and your stock goes up. Irrational exuberance.

Here's what Ukraine airspace looks like today:

Home sales are improving, especially in California where unemployment is nearly the highest in the nation. How? Easy: the Chinese are now the single biggest buyer of US homes. $22 billion worth last year, a third of that in California. They're looking for a second home, a place for their kids to establish residence. My take: This is just like 1989 when the Japanese thought our real estate was cheap and were buying anything immobile. I would be thrilled to sell my house to a Chinese, especially for a 10% - 20% premium. In a few years China will have a massive banking crisis and a lot of these properties will be dumped at fire sale prices.

Some time ago I wrote about Jose Antonio Vargas who was sent here illegally as a 12 y/o kid, attended the University of California for free, went to law school for free, passed the bar exam, and was finally allowed by the California Supreme Court to practice law. Apparently he's a bit unclear on what I consider some basic legal concepts. He flew down to McAllen Texas to help publicize all the thousands of poor, innocent undocumented children who fled undocumented gang violence in their own undocumented countries. Now he's stuck there. The entire camp is ringed by immigration patrols and officials and you don't get out without papers. Spider Robinson said it best: "If a person who commits a felony is a felon, then God is an iron."

Back in January the feds put out a request for bids for transporting illegal unaccompanied children - up to 65,000 of them. How did they know? This crisis is completely manufactured. The presidents of the home countries have all spoken out and said there is no excessive violence or gang activities in their countries. Companies applying had to certify their employees with drug tests. No armed escorts allowed. No drug tests for the children, of course. . And if this is a manufactured crisis, then what's the purpose? Ads run in southern cities like Murietta CA promise $854 / month to take in a foster "unaccompanied refugee minor" under the age of 16, and $1008 per month for over 16. The ad also says "If you have a 5 bedroom house and can take in as many as 6 children, you can receive reimbursement of up to $6,054.00 per month tax free." To qualify you have to take four classes and have your house inspected. No one seems to care if the foster homes are held by illegals. Needless to say spanish speaking homes will be preferred. IMO This is a clever way to get some serious money into the spanish illegal underclass. Obama has asked Congress for $3.7 billion additional funding for HHS to provide for programs like this. Sen. Tom Coburn (R., Okla.) said "We're putting a lot of kids at risk. Remember, this is organized crime that is selling this in these three countries that you can get them here then they'll be here, and they're extracting large amounts of money and then abusing children as they carry them up here. It's terrible. The best way to stop that is to have airplanes landing every day bringing these children back to their country of origin. The president just asked for $3.7 billion. For less than $20 million we can fly them all back first class."

Within 25 miles of any border, Homeland Security authorities can institute roving patrols with broad, extra-constitutional powers backed by national security, immigration enforcement, and drug interdiction mandates. There, the Border Patrol can set up traffic checkpoints and fly surveillance drones overhead with high-powered cameras and radar that can track your movements. Customs and Border Protection agents can enter a person's private property without a warrant. Motion sensors, radar systems, and cameras mounted on towers, as well as those drones, all feed their information into operational control rooms throughout the borderlands. There, agents can surveil activity over large stretches of territory on sophisticated (and expensive) video walls. This expanding border enforcement regime is now moving into the 100-mile border zone. State Department whistle blower Peter Van Buren has dubbed the "Post-Constitutional Era." We now live in a time when, he writes, "the government might as well have taken scissors to the original copy of the Constitution stored in the National Archives, then crumpled up the Fourth Amendment and tossed it in the garbage can." The liberals are just now getting that Obama has no respect for the Constitution? Wow. And in this case, to some minor affect, our borders are finally being protected. Me, personally, I'm ok with all this. I would have no problem being stopped within 25 miles of the border, answering a few questions, allowing my truck to be observed. Thanks to 20+ years of zero border enforcement we're a nation under siege.

Obamacare faces its strongest challenge to date. The language of the 2500 page bill states subsidies may be provided "through an Exchange established by the State." However, 38 of the states use the Federal exchange, not their own state exchange. The average subsidy if 3/4 of the cost of the insurance - Obama signed up 7 million people by giving them insurance at 25% of what you and I pay. If this lawsuit succeeds in shutting down the subsidies then 5 million people are going to have to actually pay for their insurance. To date the Feds have spent over $1 billion on their glitchy website - enough money to make the three most expensive movies ever, Avatar, Pirates of the Caribbean: At World's End and The Dark Knight Rises. The difference is, of course, after spending $1 billion on those three movies Hollywood brought in just short of $4 billion. The Feds have used their $1 billion system to give away $16.5 billion. I have to tell you I could have given away $16.5 billion a lot more cheaply.

La Plata County, CO Sheriffs have a new "rescue" vehicle. In the Army these are called a "Maximum Protection Vehicle." I wonder who they're going to rescue? And from whom they will rescue them? Some of my customers continue to stockpile guns to protect themselves from the government. Guns aren't going to do it against guys in these things. If you think the various police are buying these to protect you, just ask yourself this question: when it all goes down, will you be inside one of these or outside?

U.S. District Court of Orange Country Judge Cormac J. Carney, a George Bush appointee, declared the death penalty unconstitutional. While 900 prisoners have been sentenced to die in California since 1978, only 13 have actually been executed, he noted in his opinion. These delays have transformed the death penalty, "deliberately imposed" by juries, into a sentence "no rational jury or legislature could ever impose: life in prison, with the remote possibility of death." Personally, I'm opposed to the death penalty. When the mandatory appeals are added up, it costs about $1m to sentence a guy to life without parole, and $7m to kill him. I think we should ship the lifers off to Sheriff Arpaio or a Georgia chain gang and get some use out of them. They're not worth an extra $6m to kill.

Japan has recently announced that they will now support friendly countries in military actions. Friendly countries would include Korea, the Philippines, Taiwan, and likely Vietnam - all of the countries that China is pissing off with their attempted ocean grab. China was predictably livid accusing Japan of militarizing and threatening China.

Florida oranges have a bacterial infection being spread by an asian bug. There's currently no cure for the infection and it's destroying Florida's entire citrus industry - no kidding, if someone doesn't figure out how to kill this bacteria Florida will have zero functional orange / grapefruit / tangerine trees. Here in the People's Republic of California we're heading off this pest at the pass: none of the asian bugs has been seen here, but a million Pakistani wasps are being released each year to eat any of the citrus bugs that show up. Also several companies are working on a genetically modified orange tree that includes a virus deadly to the asian bug. Of course the virus has no affect on humans or honey bees or puppy dogs or kittens. . . I think it's great when they experiment with an entire segment of the food industry.

A couple weeks ago I wrote about the new genetically modified bananas that include vitamin A. Now we also have GMO rice, called "golden rice" 'cause it too now has vitamin A and iron. It's going to be tested soon in the Philippines to see if this will help the Filipino population expand even faster. While they're at it, why don't they spike the rice with birth control pills? Ahhh, maybe that wouldn't work in the Catholic dominated Philippines.

Lars Hornuf of the University of Munich and Dan Ariely, Ximena García-Rada and Heather Mann of Duke University ran an experiment last year to test Germans' willingness to lie for personal gain. 250 Berliners played a game where they could win up to $8. The game was designed so that you could beat it by lying. They found those who had been raised under socialism lied twice as much as other Germans. I wonder what this means for Obamacare, for those in our country who are multi-generation welfare dependent, for all the new people placed onto social security disability because of stress or back pain.

In 2008 the California voters approved proposition 8, which defined marriage as between one man and one woman. Prop 8 was found unconstitutional in 2013 making gay marriage legal, perhaps even obligatory in California. This week governor Jerry "Moonbeam" Brown signed a bill that removes the words "husband" and "wife" from the california family code and replaces them with "spouse." Conservatives are livid. Me, I think this ship has sailed, it's a little late to be upset about the little rainbows and kittens painted on the hull. Besides, with the words "husband" and "wife" stricken from the code it leaves the door open now for lawsuits about men getting a reasonable chance at custody - after all, we're just another spouse.

Virginia native Jeremiah Heaton recently traveled to a remote, mountainous patch of desert between Egypt and Sudan to claim one of the last ungoverned pieces of land in the world. Heaton took the land to make good on his promise to make his daughter a princess. He says he plans on turning his land into a living, working kingdom called North Sudan. The claimed piece of land is known as Bir Tawil, an 800-square- mile mountainous region that has remained ungoverned and unclaimed because of a border dispute between Egypt and Sudan. To be considered a state under the common definition used by international law, North Sudan would need a) a permanent population; b) a defined territory; c) government; and d) capacity to enter into relations with the other states.

Tiger missed two majors getting back surgery. How did that work out? At the British Open this weekend he had a very decent first day then collapsed. Mysteriously he chose, starting on the 2nd day, to use his driver. This led him to several bogies and double bogies. Previously at the Open he controversially used only his wood to trade off control against length. Tiger finished 69th in the field of 72, leading three other guys that you've never heard of. Tiger hasn't won a major since 2008 when Obama was elected (conspiracy?), and Jack Nicholas' record is looking more and more safe. Except. . . Ireland's Rory McIlroy just won the British open in rather dominating fashion, making him only the 3rd person to win three masters by age 25. The other two are named in this paragraph of course.

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