Tis Only My Opinion

November 2001 - Volume 21, Number 11

Halloween is not as Scary as the Economy or the Government's willingness to destroy our Constitution and the Bill of Rights!

How scary is it?

Are we talking Halloween or the Economy or the loss of the Bill of Rights? In our neighborhood, the thinking is that Halloween will see a far fewer number of Trick or Treaters this year than in previous years largely due to the events surrounding the WTC tragedy and the anthrax scare. Talk about paranoia . . . sometimes, I wonder about the collective common sense of the citizens of this country!

However, I imagine that the goblins, ghost's, pirates, Cinderella's, Spiderman, and Werewolves will be out in force trying to get something to feed their sweet tooth craving this year as every other year.

Now, we fought the War of 1812, the Civil War, the Spanish American War, World War I and II, the Korean War, the Vietnam Police action, and the Gulf War without the necessity for destroying our civil rights! Politicians, please, get a grip!

Both the USA and PATRIOT Acts have become law! The camel's nose of slavery is now under the tent!

Human nature and its appetite for "freebies" has not changed despite the admonitions of the government and the passage of bills that have destroyed the freedom which the citizens of this country have enjoyed since the Bill of Rights was enacted.

Gone is the Fourth Amendment and you hardly heard a whimper! Must be tough on those terrorists. The fact that the Patriot bill does not solve the problem is of little consequence if we can just control our own people. Of course, the terrorists are not American citizens. But searches are now authorized without the necessity for search warrants, wiretaps can be obtained on a whim, money transfers can be monitored with impunity, habeas corpus is basically suspended, the right to a swift trial denied, detention without charge will become commonplace and sniffers in computers are authorized without a court order. Talk about a complete change in our way of life, the USA and PATRIOT acts have provided the government with unprecedented authority to intrude into our lives. Anyone who disagrees is now a potential terrorist and that could be you or me!

Gone is the Second Amendment. Making criminals out of a large section of the American population which have rifles which might be considered "Military weapons" (and of course, there is no definition of what is a military weapon) makes most gun owners a potential criminal. From the International Forecaster comes this:

"Next on the agenda is gun confiscation. Marxist Koki Annan, UN general Secretary said on 10/1/01 in his address to the General UN assembly, "We need to strengthen controls over other types of weapons that pose grave dangers through terrorist use." This means gun confiscation, because anyone with a weapon is a threat to the new world order. Anyone who disagrees with the elitists is a terrorist. Even though habeas corpus has been suspended, we will soon have warrantless searches and seizures and we can be detained indefinitely simply because George W. Bush thinks we may be terrorists."

We now have National Guardsman at the airports augmenting the minimum-wage rent-a-cops! Of course, they don't have bullets in their weapons or in many cases, even magazines for bullets. What a laughable deterrent! But the FAA head and Tom Ridge of the newly-organized "Homeland Security" department all insist that it is necessary to prevent terrorists acts! Honestly, do you expect those of us who have been in security and counter-security efforts to actually believe that hogwash!

But I guess that you think the dumbed-down sheeple will follow your lead right into the concentration camp in their desire to be safe. After all, it is for the children, the loss of our most valued asset, our freedom!

Of course, just like when the Asset Forfeiture laws were enacted, the stated purpose is to assist the government to only fight one class of criminal. Tell that to all the people who were not involved in drugs but have had their lives turned upside down by the application of the Asset Forfeiture laws to them. Does anyone believe that these acts (USA and Patriot) will actually be sunsetted in four years. Why VP Cheney has stated that the War against Terror won't cease in our lifetimes.

"The war on terrorism will not be over in our lifetime. It is different than the Gulf War was in the sense that it may NEVER end. At least not in our lifetime. The way I think of it is, it's a new normalcy."

A quote from Vice President Cheney on October 21, 2001.

Now that is such a defeatist attitude and unbelievable coming from Dick Cheney! Well, many of us are not willing to give up our freedoms which we and our forebears fought and bleed and died for! Homeland Security is just another word for a national prison under the New World Order!

What is the solution?

In the next election (assuming that they don't decide to not have it), throw out every member of the House of Representatives that voted for these two acts and on the Senate side, every member up for re-election!

In this case, the cure is vastly worse than the disease!

What would these old guys think?

The signers of the Declaration of Independence are turning over in their graves at the destruction of the document they executed and the Bill of Rights which followed. The USA is no longer a beacon of "freedom, independence and peace" as John Quincy Adams stated was our original intent on July 4th, 1821.

Rather with the passage of these two laws, the government has now become an out-of-control creature who in the name of making it citizens safe takes away their freedoms. Unfortunately, even prisons are places where people get killed by the inmates. The threat of nationwide identity cards are another aspect of control to eliminate the freedoms which the citizens of this nation have enjoyed. With today's technologies, there is no such thing as a national identity card that can not be fraudulently created despite Larry Eliason's belief! If one person can dream up a technique, fifteen others will find a way to defeat it!Take that to the bank!

The Economy is headed to the tank!

During the first half of the year, consumer spending was the only thing holding up this economy. In August, it slowed and with the events in September, it dropped out of sight. And the guru's on Wall Street and the Fed are still articulating the same old garbage that the economy is just fine! They are, however, now beginning to admit that the recovery might not occur until 2002.

The big problem facing the economy is the health of the consumer and the consumer debt situation. Beset by layoff's, real inflation, and anthrax anxiety, consumer confidence is falling. The consumer credit market is being hit by serious problems. FED statistics put household debt levels at 15% of disposable income, their
highest levels since 1986 or a doubling. Charge-offs were 3.9% for the third quarter, up from 3.8% in 2000. Charge offs for One Financial MBNA rose to 4.9%, up from 3.9% and Providian 10.33% for the third quarter and the fourth quarter is expected to be over 12%. The ABA says the percentage of credit card holders thirty days or more overdue hit 3.93% in the second quarter, the highest since tracking began 21 years ago. Several banks have loosened the rules under which they report delinquent accounts on the theory that things will get better and there is no need to panic!

In its initial reading of GDP for the 3rd quarter of 2001, the smoke readers at the BEA have come up with a 0.4% decline in GDP. Anyone want to bet that the revisions will be downward from here. Just a glance at the papers since 9-11 should convince you that for the first 10 after 9-11, the economy almost stopped except for the basic necessities. Consumer spending and consumer confidence in September also registered significant drops. So, pray tell me, how do you read the tea leaves to only discover a 0.4% decline in GDP?

The stimulus package presented to Bush by the CEO's is a wish list that will accomplish little or nothing. Imagine, with the manufacturing sector operating at 75.5% capacity (an 18 year low), why would anyone want to invest in more plant and equipment? The problem is the demand side, not the supply side. Oops, I forgot politicians never were good at economics.

One bright spot is oil prices which are going south. But with the airlines struggling with empty seats, it won't help much. The CRB index which has historically been a leading indicator continues to flirt with lower territory. Not a good sign! Copper prices are also down and my mentors often said that as copper goes so goes the economy in six to nine months.

The Balance of Payments is decreasing but why? Exports are down, Imports are down and Capital infusions are decreasing. Not a single good thing showing in the mix. The real risk will come if Capital outflows begin to increase. In 2000 the trade deficit was $375.7 billion. It is projected at $360 billion this year. Now that is a real improvement considering the changes occurring in this economy.

The savings rate went negative in May and June before the government statisticians decided to revise the data. Can't show a negative savings rate. Remember that old bugaboo, if you don't like the figures, fudge them!

Now the Washington crowd at the Fed continue to pontificate that there is no inflation despite the massive increases in the money supply. I guess that either I flunked basic economics or the effect has not shown up yet.

The government has announced that Social Security recipients will get a 2.6% cost-of-living increase next year, about $22 a month for the average retiree. That is down from this year's 3.5% raise, because supposedly inflation has slowed. While inflation is supposedly up only 2.6%, the government is raising Medicare premiums $4.00 a month or 8%. I guess medical costs are not included in the "core CPI."

GAPP reporting is all but dead as the 3Q financial reports come out. One company reported a $.10 per share pro-forma profit to the financial papers while its 10Q reports to the SEC showed a $52,000,000 loss! And the head of the SEC condones the practice! We really are living in a Fairy Tale!

The S&P 500 still trades for 29 times 2001 earnings and for 23 times next year's estimated earnings. That is way above the average for the past 40 years of 14.5 times earnings. And I don't for a minute believe that next year's earnings will be realized. In September, the First Call consensus for the DJIA earnings was for 2002 to be 17% above 2001. In October, First Call was now suggesting only an 8% increase in earnings for the DJIA companies. I wonder what they will predict in December.

Earnings of Dow and S&P stocks could be off 30% in 2002. The current Dow P/E ratio is about 24 times earnings. Historic levels of 12 times for the Dow and 14.5 times for the S&P are normal, thus any sane person would believe the market is headed substantially lower.

One telecom executive is projecting a default of telecom company bonds in the $600 billion range within the next year. That is larger than the Savings and Loan debacle of the 1980's. More companies have already defaulted on their debt this year than last and the amount is substantially greater. We are a long, long way from the bottom in my opinion.

Real estate values are weakening despite lower interest rates. Occupancy rates are decreasing and rents are falling. When falling prices begin to impact the residential market throughout the country, be prepared for many dislocations in the savings and loan and banking industry. The NGP's, Fannie Mae and Freddie Mac, which have been financing a lot of the equity withdrawals during the past 18 months could be in serious trouble.

Layoff's continue unabated with a number of them not being reported. The time to find a job for anyone over 40 is averaging almost a year according to one recruiter to whom I recently talked. And if you are over 50, good luck at finding a job anywhere near your previous salary.

Merrill Lynch is so confident of its future that it has offered one year's severance to 42,000 of its employees. And if the 42,000 don't voluntarily quit before the end of the year, they will be terminated. Sure sounds like the "Thundering Herd" is hearing footsteps of prosperity just around the corner.

The investor is withdrawing funds from mutual funds and placing them in money market funds. Sales of variable annuities were $6.8 billion in the first six months versus $19.5 billion last year.

So excuse me if I don't think the economy is rosy or that I disagree with the actions of our Congress in destroying our Bill of Rights. It is time for this nation and its citizens to take a stand and decide if freedom, prosperity and peace are important and if we are willing to make sacrifices to keep it. Or are we willing to give up our freedoms to have security of the gulag.

But then - 'Tis Only My Opinion!

Fred Richards
November 2001

Corruptisima republica plurimae leges. [The more corrupt a republic, the more laws.] -- Tacitus, Annals III 27

This issue of 'Tis Only My Opinion was copyrighted by Adrich Corporation in November 2001.
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