Sunday, April 26, 2009

Get Your Boots On (Cause the Bull S**t is getting deep)

The U.S. equity market has responded well to policy and jaw boning.  Nothing in the fundamental picture changed during the past 6 weeks.

Larry Summers was out yesterday trying to cool off expectations - and he should, or at least somebody from the administration should.  

Yet he is still making prognostications based upon past experience:

Summers said the economy will pick up as manufacturers rebuild depleted inventories and consumers replace aging cars. “These imbalances can’t continue forever,” he said. “When they are repaired they will be a source of impetus for the economy.”
Larry Summers knows that we have overcapacity everywhere in the system.  If consumers need to replace aging cars, we have nearly 1 year's worth of inventory at today's rate of sales unsold and stored in ports the world over.  Even if this were not the case, will consumers replace aging cars at a pace sufficient to cause a recovery as defined by the administration?  Maybe, but I have my doubts.  This will be entirely dependent upon the volume of imported oil, and my bet is that over the next 5 years, imports will continue to decline - perhaps precipitously.

If it wasn't for the Federal Government, Chrysler, along with G.M. would have been liquidated earlier this year.  The Feds can keep anything going that they want to keep going.

The simple fact of the matter is that if we want G.M. and Ford to survive, Chrysler must die.


Labor leaders and U.S. officials seeking a way to pay for Chrysler LLC's and General Motors Corp.'s benefit programs for retirees might find an important source of aid in an obscure federal subsidy covering certain retiree health-care costs.

Under the provision, known as the health-coverage tax credit, the federal government can pay health-insurance premium costs for early retirees -- those between 55 and 65 years old -- if their former employer runs into financial problems and can't pay promised benefits. In recent years, some early retirees from the troubled U.S. steel industry have used the tax credit, which was created by Congress in 2002. Now some retirees from auto-parts makers also want to take advantage of it.
If a small business owner like myself falls upon hard times the government will NOT be there to pick up my healthcare costs - despite the FACT that small business owner's paid FAR more in taxes than UAW employees.  Small business people have not organized like the UAW - yet. If the government keeps up this type of political favoritism it risks REAL upheaval.


Last year I read John M. Barry's "The Great Influenza", a powerful narrative of the circumstances and outcomes of the 1918 flu that killed 50 million people.  I recommend the book highly.

I have no opinion on the Mexican swine flu other than to say that if it is something bad, or worse, it could not come at a more inconvenient time for politics,  the economy, or the markets.

Mentat (at) yahoo (d0t) com

A Little Humor

I received this from Steve in Sarasota:

Humor worth passing along...

Here is the Washington Post's Mensa Invitational which once again asked readers to take any word from the dictionary, alter it by adding, subtracting, or changing one letter, and supply a new definition.

Here are the winners:

1. Cashtration (n.): The act of buying a house, which renders the subject financially impotent for an indefinite period of time.

2. Ignoranus : A person who's both stupid and an asshole.

3. Intaxicaton : Euphoria at getting a tax refund, which lasts until you realize it was your money to start with.

4. Reintarnation : Coming back to life as a hillbilly.

5. Bozone ( n..): The substance surrounding stupid people that stops bright ideas from penetrating. The bozone layer, unfortunately, shows little sign of breaking down in the near future.

6. Foreploy : Any misrepresentation about yourself for the purpose of getting laid.

7. Giraffiti : Vandalism spray-painted very, very high

8. Sarchasm : The gulf between the author of sarcastic wit and the person who doesn't get it.

9. Inoculatte : To take coffee intravenously when you are running late.

10. Osteopornosis : A degenerate disease. (This one got extra credit.)

11. Karmageddon : It's like, when everybody is sending off all these really bad vibes, right? And then, like, the Earth explodes and it's like, a serious bummer.

12. Decafalon (n.): The grueling event of getting through the day consuming only things that are good for you.

13. Glibido : All talk and no action.

14. Dopeler Effect: The tendency of stupid ideas to seem smarter when they come at you rapidly.

15. Arachnoleptic Fit (n.): The frantic dance performed just after you've accidentally walked through a spider web.

16. Beelzebug (n.) : Satan in the form of a mosquito, that gets into your bedroom at three in the morning and cannot be cast out.

17. Caterpallor ( n.): The color you turn after finding half a worm in the fruit you're eating.

The Washington Post has also published the winning submissions to its yearly contest, in which readers are asked to supply alternate meanings for common words.

And the winners are:

1. Coffee , n. The person upon whom one coughs.

2. Flabbergasted , adj. Appalled by discovering how much weight one has gained.

3. Abdicate , v. To give up all hope of ever having a flat stomach.

4. Esplanade , v. To attempt an explanation while drunk.

5. Willy-nilly , adj. Impotent.

6. Negligent , adj. Absentmindedly answering the door when wearing only a nightgown.

7. Lymph , v. To walk with a lisp..

8. Gargoyle , n. Olive-flavored mouthwash.

9. Flatulence , n. Emergency vehicle that picks up someone who has been run over by a steamroller.

10. Balderdash , n. A rapidly receding hairline..

11. Testicle , n. A humorous question on an exam.

12. Rectitude , n. The formal, dignified bearing adopted by proctologists.

13. Pokemon , n.. A Rastafarian proctologist.

14. Oyster , n. A person who sprinkles his conversation with Yiddishisms.

15. Frisbeetarianism , n. The belief that, after death, the soul flies up onto the roof and gets stuck there.

16. Circumvent , n. An opening in the front of boxer shorts worn by Jewish men

Saturday, April 25, 2009

Mutually Exclusive Events

In mathematics there is a term: 

"Mutually exclusive events".  Two things that cannot happen at the same time, within the same event horizon, or that force an environment that whereby the remaining event cannot occur.

For instance, remember part II of the Law of Matter?  "Two objects cannot occupy the same space at the same time".

Before your eyes glaze over with the remedial math lesson...

Now, back to mutually exclusive events...

This is the problem with any analysis using disparate data sources.  I am ready to pull my f**king hair out...  


Thursday, April 23, 2009

This Should get your Attention

The following is from the quarterly earnings release transcript of Potash of Saskatchewan, Inc. (POT - NYSE), the world's largest fertilizer company (entire article here).

A year ago, concerns over world food shortages were headline news and little has changed to alleviate the pressure on food supply. The world's population continues to grow. Economies in countries like China and India, although not as robust, keep expanding giving their people more money to spend on food. At the same time, global grain inventories remain historically tight.

This was brought to the forefront again earlier this week as G8 officials called for increasing public and private investment in agriculture citing growing concerns over the global food supply. A dangerous game is now unfolding around the world. Fertilizer applications are being reduced at unprecedented levels, with our estimates for North American potash applications falling as much as 30% to 35%, phosphate by 20% to 25% and nitrogen by 5% to 10%.

To put this in context, U.S. applications this fertilizer year are expected to be similar in total volume to the 1983 pick year while farmers now need to generate 90% more production than in 1983 and will plant 25 million additional acres of corn, the most fertilizer intensive crop in the U.S. Clearly, nutrient replenishment will suffer.

This level of reduction has never been seen before. No one can state precisely what the impact will be on the world's food supply immediately or over the longer term, but we know with scientific certainty that nutrient under application damages both crop yields and quality.

Farmers in the southern hemisphere reduced their potash applications for the current crop just now being harvested and the timing could not have been worse. Potash is a quality nutrient. It improves the taste and nutritional value of food. It enhances water retention, raises yields and helps plants fight disease and drought.

With less than ideal growing conditions this season, those farmers in Argentina and Brazil are now experiencing a substantial decline in yields. We would not be surprised to see farmers in other major producing regions having similar declines this year. After two record world crops in 2007 and 2008, the year 2009 could be a completely different story.

The most valuable part of a farm is the quality of its soil and large amounts of nutrients are mined from the soil with every harvest. Every time farmers grow a crop without replacing the nutrients, it's like borrowing money with no repayment plan, and there is no magical bail out for lost fertility in the soil bank.

We believe farmers' decisions to cut back applications are not being made out of fiscal necessity as tight grain fundamentals continue to support crop commodity prices; farmer returns are well above historical averages. The reduction in fertilizer applications is more about psychology than economics and the sudden slow down in volumes is forcing producers to make some tough decisions about production and price.

If you think "economic issues" are a problem... money pales in comparison to food.  The government can "issue" more money.  They cannot issue food.

It is far more likely that food shortages would affect the American people indirectly, in the form of civil unrest in third world trading partners, than directly in the form of domestic food shortages - though nothing is impossible.

Americans have no idea of just how dependent we are on fertilizers.  Our dependency on Oil is not even close.  

Yours for a better world,

Mentatt (at) yahoo (d0t) com

New Blog

I have a blog on my farm:

for those of you interested in self sufficiency and homesteading.



To be "Free" in America means debt"free".

That is the beauty of being "rich". "Rich", of course, is a moving target. It helps to define a "target" if you hope to hit the thing. I live in one of the wealthiest enclaves in the U.S. Palm Beach County. (The reason Bernie Madoff came here to pull off his scam is because "that's where the money is".) With all of their wealth, people here, for the most part, are not "rich".

It is all how you define it. Forget "happiness". That abstract cannot be defined. I define "rich" as having enough resources available so that your lifestyle would not be impacted for say... 10 years, if you stopped earning. No, that is not hop in your G4 and do lunch in Rome rich, but the peace of mind that comes with not sweating 10 years worth of bills is incalculable. There are 2 variables: Income and OVERHEAD.

Here is where I am going with this.

I keep hearing members of the Obama administration in the media extolling the "need" to get more "credit" (every "credit" is some contra party's debt) out into the "economy". I want to ask them:

Who's "need"?

Certainly not the American people's "need". They need more debt like a hole in their head.

No, the government "needs" you to go into and stay in debt. The crisis that the government really fears is that folks will actually figure out how to live happily and comfortably with smaller homes, less stuff in those homes, smaller cars, shorter commutes, less fuel consumption, no credit card debt, G-d forbid people actually got GOOD at gardening, planted fruit trees instead of ornimentals, and had backyard chickens - not to mention living together in extended families, thus undercutting "household creation".

This is what the administration truly fears. Because then the economy would "collapse" on "their watch". Never mind that these things will all come to pass in any and EVERY event. The administration has decided to "stay the course" of the past 4 or 5 administrations (nary a difference between them), and they want YOU (I can just see the Uncle Sam poster of Obama in Red, White, and Blue top hat and pointing like Apollo Creed "I want YOU!) to get into debt and stay in debt.

(Ever see the movie "accepted"? Ridiculous, childish, and campy but there is a show stealing scene by Lewis Black tells the parents of a student at his college:

Look, we throw a lot of fancy words in front of these kids in order to attract them to going to school in the belief that they’re gonna have a better life, and we know that all we’re doing is breeding a whole new generation of buyers and sellers, BUYERS AND SELLERS! Pimps and whores, PIMPS AND WHORES! and indoctrinating them into a life long hell of debt and indecision!

If you can find it on the web watch it, otherwise it is almost worth sitting through the movie just to see that one scene.)

Don't fall for it. "Freedom" is being debt free.

Mentatt (at) yahoo (d0t) com

Wednesday, April 22, 2009


I missed the rally in the equity market for the most part.  It began when I was on vacation and ran for 5 weeks.

I am not very constructive on U.S. equities at the moment (some tech companies are tempting and I even bought some precious metals miners... though I did hedge them with covered calls).  I am waiting for a retest of the February/March lows.

I don't like banks as I think they are doomed.  I don't like retailers as I think they are doomed.  I don't like insurance companies as I think they are doomed... get the idea?  

I don't even like energy equities at these prices.

I don't like any of the non precious metals commodities until Oil firms up, and I don't see Oil firming this year... at least not above $60 to $65.

I am long Gold and Silver (I usually have these positions hedged with covered calls) and rather than equities, I am long short term treasuries and am shopping around for short to mid term corporate paper (notes and bonds).

Oil inventories continue to build, and that just ain't a great sign for the economy.  Natural Gas is in worse shape.  At some point the price will drop so far below the cost of production that an opportunity will develop... but for my money we are not there just yet.

This was from today's EIA inventory report (complete report here):
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 3.9 million barrels from the previous week. At 370.6 million barrels, U.S. crude oil inventories are above the upper boundary of the average range for this time of year. Total motor gasoline inventories increased by 0.8 million barrels last week, and are above the upper boundary of the average range. Finished gasoline inventories fell last week while gasoline blending components inventories increased during this same time. Distillate fuel inventories increased by
2.7 million barrels, and are above the upper boundary of the average range for this time of year. Propane/propylene inventories increased by 0.6 million barrels last week and are above the upper limit of the average range. Total commercial petroleum inventories increased by 11.3 million barrels last week, and are above the upper limit of the average range for this time of year.
The last line gives me the heebie jeebies.  Imports and domestic production are down BIG - yet inventories continue to pile up BIG.  I have no idea how somebody can see "Green Shoots" given the lack of energy consumption... but what do I know.  Yes, I know you are supposed to buy when things are bleakest - but right now it feels like I am the only guy on Wall Street that sees things so bleakly.

In any event, I will be taking a position in Oil for delivery several years out at some point - just not yet.


I see things pretty much the way the writer of this article sees things... and if he and I are correct, the big banks, and many, many smaller banks, will need to be nationalized in some way.  This won't be good for the equity markets under any circumstances.  Less obviously, this will prove a DISASTER for the municipal bond market.

Many cities, are at this very moment, coming to the conclusion that the only way out for them is a Chapter 9 Bankruptcy Filing.  Municipalities in California, Florida, New York, Nevada, and Arizona will be the worst offenders - but there will be plenty of others.  The states cannot avail themselves of Chapter 9, only local governments have that option.  That does not mean you are that much more safe in state issued paper...  I will have to do some more research on that subject... and so should you, if you or somebody near and dear to you is relying on tax free muni bonds.


"Freddie Mac Finance Chief Commits Suicide"


The entire world's financial system may very well end up where Iceland is RIGHT NOW.  The probability of that outcome is a number far greater than Zero, even more probable than the low probability/high consequence outcomes people insure themselves against.  

Yours for a better world,

Mentatt (at) yahoo (dot) com

John Q. Public

John Q. Public is mad.

But why?

in "Retirement Dreams Disappear with 401(k)s", a very worthwhile piece to read, the author doesn't find it hard to go out and find people that are disappointed about their investments and prospects and are only too happy (or angry) to blame someone, anyone, other than themselves. 

Yes people are mad, but as I asked before: WHY?  

Other than the obvious, that life is not fair, maybe, just maybe, John Q. Public is most angry because our unreasonable expectations are not going to be met.  We are not all going to be rich, and famous, and good looking, and thin, and healthy, and have fair haired, white toothed, angels for children that marry the perfect soul mate who "completes" them and completes the cycle, breeding a new family of Stepford wives and children.

Where did John Q. Public get the idea that his retirement, future health, business, job, whatever was going to be bigger, better, happier, etc... "world without end, Amen"?

From the Media.  Primarily Television, but also from Magazines, Movies, etc...  For the most part, we are not starving (looking at the folks living near my Tennessee farm waddle around on their fallen arches I'd say that was rather obvious), our needs are being met... But that is not our expectation.  T.V. told us that we would all be able to retire comfortably, happily surrounded by our "Leave it to Beaver" families... that Big Brother or Big Corporation would always be there to look out for our financial, healthcare, and dental needs, and that after 30 years of "working hard" we should expect to live another 30 years in comfortable retirement living off of the production of everybody else.

And now our collective bubble has been burst by the reality needle - and boy! Are we pissed off.

I want to go out and give the angry, depressed folks in the article a hug.  I want to introduce them to the teachings of Diogenes of Sinope (who famously told Alexander the Great to stand out of the rays of the sun (so that Diogenes could continue to work on his tan) after Alexander told him "Ask of me anything".  Diogenes replied "I ask you to stand aside, you are blocking the light"), I want a lot of things... perhaps I have unreasonable expectations, too.

There is no sweeping this under the proverbial rug.  The spell of mass delusion provided by endless hours of watching T.V. has been broken.  Maybe some will be philosophical enough to recognize that the recipients of welfare and food stamps enjoy a better "Standard of Living" than did Diogenes; yet Alexander the Great remarked that even though he owned the world and everything in it, Diogenes was the wealthier man - because Diogenes strove only to be happy.  Maybe others will recognize that sitting in front of a T.V., engaging in endless our hours of passive mind control... a "luxury" created by industrial wealth whether you are wealthy or not, was not nearly as rewarding as laboring at whatever task it is that provides for yourself and your family.


I must confess that I am a regular reader of "Granny Miller".  I have never met her, but she is a self described overweight depressive.  

I find her brilliant and inspiring.

Anyway, I found this link and video on her site.  I hope you will read the post and watch the video (the spokesperson is easy on the eyes).

I am thrilled to see people normally associated with greater government intervention in our daily lives get hopping mad about government intervention.

You may not be following the American Agriculture story - YET.  You will be, trust me, as I firmly believe that will be the real crisis of the coming decade.  I find it amusing that the same political affiliates can understand that the government cannot be trusted to do the right thing in Agriculture CAN BE TRUSTED to do the right thing on social policy.

It is a start.  At least there is hope.

Mentatt (at) yahoo (dot) com

Sunday, April 19, 2009


During the four week period ending 5/25/2007 Oil imports into the U.S. peaked at 14,419,000 barrels per day ("bpd").  During the four week period ending  3/27/2009, not quite 2 years later, imports into the U.S. averaged 12,466,000 bpd, roughly 2 MILLION barrels per day less than 2 years ago.

U.S. Oil Imports first exceeded 14,000,000 bpd in August 2005.  They will never exceed 14 Million again in any 4 week period, ever again (and then 13MM, then 12MM, then 11MM, etc...).  

And I am pretty confident it was the egg that came before the chicken here...  That oil supplies sparked the contraction (with the aid of plenty of dry tinder in the form of a Real Estate/Credit bubble) we are experiencing and will continue to experience for years to come.  And it wasn't the price of oil that tipped it over, it was the supply.  The price would not harm the "world" economy - for every importer being injured there was an exporter benefiting.  The Oil market is a zero-sum game.

Think back to August, 2005.  The price of Oil traded between $53 and $67, give or take.  That was during a period of economic expansion.  This month Oil has traded between $50 and $55 - in the midst of the worst economic contraction in the post WWII period.  Something doesn't add up.

The talk around Wall Street is that OPEC has been surprisingly disciplined in sticking to their production cuts.  My comment:  BULL SH*T!!

OPEC is producing as much as they can on a sustainable basis, in my humble opinion.  "Discipline" is being forced on them by powers beyond their control.  THAT is why the price has held above $40 for 95% of the oil traded over the past 7 months (since the world fell apart).  The price is the clue as to whether it is the chicken or the egg.

And don't believe that BULL SH*T about how low oil prices have shut in conventional Oil production.  That might be true for the Tar Sands or deep, hot oil under 6 miles of impacted salt in the Tupi fields, but there isn't a spec of truth in that statement as regards on land production.

I am not a geologist, but the price action and the import data lead me to one inexorable conclusion.

Peak Oil is upon the United States of America.  

Somewhere out there is a very sharp geologist by the name of Jeffrey Brown who should be taking a bow right about now.  Jeff predicted the import contraction facing the U.S. and the rest of the world's oil importers in 2005.  Even gave his model a catchy name:  The Export Land Model.

We are going to hear a great deal from the media, our corporations, and our government about why this isn't so.  You are going to hear that "Demand" peaked.  Or that the recession caused a drop in demand.  Or that the American people have suddenly all become environmentalists.


Let your eyes glazeth over when you hear this mealy mouthed BS.

Peak imports have happened to the U.S. and the other major importing nations.

Stay tuned.  I have much to flesh this out with, but I got to put the kids in the tub and get them to bed.

Yours for a better world,



The following is from my October 17, 2007 post on what Peak Oil will mean to Americans:

1. New Orleans will never be rebuilt, nor will any other future major natural disaster of similar scale (are you listening Florida and California?).
2. American children born in 2007 will not need a driver’s license when they are 30.
3. Your 401k will become a 201k, and then a 101k, and then just a k…
4. Social Security and Medicare will fail.
5. America’s farm labor workforce will be 33% of the population by 2030, not the 1.5% of 2007 (Texas A&M might actually be a better bet than Harvard for junior after all).
6. Student loans will be a future credit crisis. (Borrowing $200k for a literature degree will, in retrospect, not appear to be an intelligent investment.)
7. The luxury car you now drive will be a very nice pottery holder in your garden.
8. But, your milk goat is really going to appreciate those fine leather seats, and your chickens will really enjoy perching on the engraved wood steering wheel.
9. You’ll be using dollar bills to light candles on your birthday cake because they are cheaper than matches.
10. Homes will come with only 1 zone heating and AC - your bedroom.
11. You’ll be thin again!
12. Home cooking!
13. Your wife’s depression/personality disorder, junior’s ADHD, and your alcohol problem… cured, with all that fresh air and sunshine instead of driving everywhere.
14. South Florida’s housing crisis will never be resolved.
15. The Southwest water problem will no longer be academic.
16. You won’t feel so rushed anymore. You won’t be spending time going to the gym, filling up the car, commuting…
17. No problem not fulfilling your new year’s fitness resolution as walking and biking will no longer be optional means of transportation.
18. You will care far more about who is Mayor than who is President.
19. You will get to know the neighbors, one way or another.
20. Conspicuous displays of consumption or wealth will not be good for your health.
21. The response time for 911 is going to be a great deal longer than it is now.
22. The end of Feminism, Liberalism, Conservatism, etc… these were luxuries of the cheap fossil fuel era.
23. No more keeping up with the Jones’. Keeping up will be quite enough.
24. Flush it and forget it will be replaced by compost it and fertilize with it.
25. You will never have to mow the lawn again, ‘cause your gonna need that hay.
26. You won’t have any trouble finding a parking space.
27. No more road rage, you will truly appreciate the use a of vehicle.
28. You are going to look fabulous in designer jeans while working in your garden, fixing your bike, etc…
29. Golf courses will become community gardens or farms and that home on the 9th hole will likely become a home in the Spinach field or pumpkin patch... and you will be working on your swing all right – for your hoe, your scythe, your axe…
30. The demand for lawyers, stockbrokers, accountants, insurance agents, realtors, hair -dressers, massage therapists, psychologists, etc… is going to dry up in ways I am not poetic enough to describe (and I own a brokerage firm).

No, this won’t happen overnight, but that is not the point. The point is that it WILL happen. Things will change, and since “for the better” or “for the worse” is an abstract I have no comment on either. Things will change and some people will be the “winners” in the new paradigm, while others will be the “losers” (sorry, more abstractions), and it is up to you to decide where it is you would like to be and what actions you plan to take to execute your plan.


Thursday, April 16, 2009

Wrong State, but right idea...

If you have been reading my stuff for a while, you know that I think some pretty unthinkable things could happen politically - I have written several posts about the possibility of States in the West, and in particular California, seceding from the U.S.

(Please keep in mind a don't write about what I "hope" will happen.  I write about potential outcomes and their varying probabilities.  I love and value my country and our freedoms and rights. -  I merely bring to the attention of people (the LEFT for the most part, but the RIGHT, too) that don't think that some of their policy drives might have some very unpleasant unintended consequences another point of view.)

California and Texas will, in my opinion, not last the century as members of the U.S. in its current representative form from a combination of historical errors (the Missouri and Connecticut compromises) and demographics (DNA wins ALL wars, eventually).  The Framer's could not have envisioned a population distribution that would lead 1/8 of American's with 2 Senators (California), and 1/12 of American's with another 2 Senators (Texas).  

Hopefully, a Constitutional Crisis can be avoided through some future compromise.  Hopefully, too folks on either extreme of the political spectrum will grasp that their activities may work in ways not intended.


We now have just a bit more than 1 quarter's data on oil imports and domestic production.  The picture is getting clearer and is no prettier than last year.  "Total net Imports" have declined 2.3% during the first 99 days of 2009 when compared to 2008, and were down over 8% in 2008 when compared to 2007.  "Total Products Supplied" is down 4% for the first 99 days of 2009 from 2008.

This is how investment in productive capacity in commodities is supposed to work.  The price went down, and domestic production went down even faster than imports.  After all, we are the high cost producer.

Regardless of how "its supposed to work", the reality is that our economy, as presently constructed, cannot "grow", irrespective of who is doing the counting, if energy supply/consumption is declining.  

So which came first?   The chicken or the egg?  The recession has had its starting date recast as December of 2007.  What a coincidence.  Peak oil imports into the U.S. were either Q3'07 or q4'07, depending on who you want to listen to, the IEA or the EIA.  Did the imports decline as a result of the economic contraction, or did the contraction result from decreased oil availability?  Probably not a black or white kind of thing, but grey, and that would indicate that Oil, or lack thereof, contributed to our economic circumstances.

To my mind, all commodities, with perhaps (and only perhaps) the exception of Gold, are led in price by the real cost of Oil.  Want to know where corn is headed?  Look to oil.  Wheat?  Look to Oil.  Copper?  Look to Oil, etc...

But back to the above link... Notice anything funny about the break down of total products supplied?  Gasoline is relatively unchanged, while Jet fuel has had its back broken and distillates (diesel) has been rocked as well.  It would seem to me that American's have not cut into their driving just yet, but have cut back on travel and consumption (diesel moves goods).  Of course, not all of these numbers jive with the Vehicle Miles Traveled number or inventories.  (That's what makes this job so much fun - tongue squarely in cheek).  Ahhh, but then you scroll down Table 1 to the area headed "Petroleum Stocks"... notice gasoline is first totaled, and then broken out into reformulated, conventional, and blending components?  Anybody care to bet me that "blending components" are mostly made up of ethanol?  (If you doubt this just look up to  "other liquids new supply" in paragraph 2 of Table 1.  Up 71% year over year.  You know of anything other than ethanol that's supply could be up 71% in a year?  Yes, the government could make this data far more transparent, or at least not so purposely opaque, but then they would not be being the government, now would they?)  If I back that number out, it would appear that we are not really so flush with gasoline, after all, perhaps even dangerously low considering that now is the time to be building inventories for the summer driving season - if you CAN, that is.

Stocks of the industrial fuels, diesel (distillate) and propane are rising fast - which, to me, would again point to a continued contraction in the U.S. (and world, the U.S. is 25% of it) economy.

Lastly, the decline in domestic production of 17% for Natural Gas Plant Liquids would dovetail nicely with Matt Simmons argument that last years surge in production was the blowing off of "gas caps" in superannuated wells.

It is pretty amazing, when you stop and think about it... just how much data is out there at your finger tips.  Now connecting the dots is whole other story...


That's just to make people feel better.  Truth is, they will NEVER be rebuilt. 

And that is a shame.

I was in the towers on September 10, 2001 and caught a flight out after midnight from LaGuardia on September 11 - one of the last flights out for over a week.  I was with a handsome young man and his lovely fiance at a funeral that weekend (9/11 was a tuesday) named Mike Armstrong - unfortunately, Mike worked for Cantor Fitzgerald and was killed in the attack.  Wall Street is a small community.  I knew a lot of guys from Cantor and Sandler ONeal that did not survive that day.  The story might be in the past for many Americans, but for some families it is the defining moment in their lives.

Perhaps just another example of the unintended consequences of policy decisions that echo for decades.

Mentatt (at) yahoo (d0t) com

Monday, April 13, 2009

"Peak Demand"

The "Peak Demand" story was making its way around Wall Street trading floors today.  

The price of crude fell as did the equities of the refiners.  After all, if we had "Peak Demand" in 2007, what do we need all that refining capacity for?

Exactly!  Sort of.

"Demand" can never exceed "Supply", as "Price" brings each into equilibrium.  The financial media might want to spin this whichever way... that does not change the likely fact that 2007 was "Peak Oil" for the U.S.

I am and have been of the opinion that each and every recession since 1966, including the one we are currently experiencing was caused by a surge in oil prices.  Now, those nice folks over at the Wall Street Journal have published an article providing me with a little bit of cover - perhaps I am not a fire breathing whacko after all.  

I think we are in the storm that will last for the next 10 or 20 years.  A "storm" I define as an ongoing contraction of REAL economic output that will have some very hard timing to predict, as well as the rate of change, but the ultimate outcome is not much in doubt to my mind.  Whether deflation or hyper-inflation (either not enough money, or too much money) our lifestyles won't know the difference.

Unlike the "doomers", I don't believe the world is going to end. Many people here in Tennessee are already making significant adjustments in their lives - there is a brisk market for heirloom vegetable seeds, laying hens, milk goats, miniature cattle, etc... (just go to or and look at the ads for this stuff if you aren't interested in attending this weekend's farmer's flea market).  SOMEBODY is doing some sort of adjusting.  Mostly these are folks that are on SNAP, formerly known as Food Stamps, and have figured out that they need to stretch their food budget by growing some of their own.  Rather than being seen as a bad thing, I view this as VERY hopeful and empowering.  

Most people have lost all of their financial assets, or are very close.  They will not be making any kind of comeback any time soon.  If you still have some financial assets left, you had better become an excellent interpreter of your environment.  Those that interpret their environment incorrectly will be joining the masses in their poverty.  For better or worse, you will know soon enough how well your interpretive skills were operating.  

In fact, the only folks that have not lost a big portion of their financial assets are those whose primary asset is a pension from a government source.  

And therein lies the rub.

In the 1980's corporations got away from pension liability by dropping benefit plans in favor of contribution plans like the ubiquitous 401k.  Not so governments.  In fact, in order to please the voters of the public pension systems, politicians continued to increase the pension benefits of these unions members - with a concomitant increase in the liability of taxpayers. Taxpayers, who were themselves losing these self same benefits at their private employment.

And now the die is cast.  The fates of these 2 competing and intertwined interests is ineluctable.

The Tax Revolt Cometh.  This won't be easy, or quick.   That is not how our system works.  Our various governments will continue their extortions for as long as possible.  The best thing that YOU can do for yourself is: Don't put your foot down.  Property taxes and state income taxes will be the extraction point.  You CAN vote with your feet and not live or own a home in the places.  Already stuck?  Don't do anything to increase your exposure... like buy a home.

I have been pounding away at this for years, and by looking at the blogsphere it would appear that this issue is coming into its own this very moment.  Everybody is writing about it.  It won't be long before it breaks into the mainstream media, and from there will come the public reaction.

Mentatt (at) yahoo (d0t) com

Obama Administration commits to high speed rail

President Obama has suddenly and unexpectedly ear marked $8 Billion toward a high speed rail system in the U.S.

Though it may be a mere drop in the proverbial bucket, if it begins the commitment to high speed rail that the eastern U.S. so desperately needs I want to trumpet this to the heavens. This is the first time and American president has commited to what is arguably one of the most important investments America can make.

Unfortunately, if Administration is serious about this commitment, the price tag will be somewhere in the $500 Billion to $1 Trillion range. But if you are going to enact "make work" projects, this is one of the best places to do so.

Notice in the article that libertatian think tank The Cata Institute is against it? I guess even superior political scientists can be in the dark on the U.S.'s energy future.

Mentatt @ yahoo (d0t) com

Sunday, April 12, 2009

Highly Recommended

Over the weekend, after 3 grueling weeks of working on our fund's and my personal tax duties, I rewarded myself and read what I firmly believe to be one of the more important books of American vintage.

No, not some New York Times spine tingling lecture on politically correct whatever, nor who-done-it... but an instructional narrative titled:

"Handy Farm Devices - and How to Make Them", first published in 1909, now published by Lyons Press.

Got that?  The book is a collection of illustrated ideas for DIY (where there any other kind?) American farmers at a time when less than 1% of American's agricultural output came from gasoline or diesel power.  A time when people lived by their wits, credentials were few, and the income tax had not been enacted.  A time when 1/3 of the American work force was employed in Agriculture (today it is less than 3%), when wood was the primary source of heat "energy", and a time before antibiotics, pesticides, and chemical fertilizers even existed.  A time when every food market was "organic".

While reading it one can just imagine the "aha" moment, and the challenges each thinker faced.

It also was laced with a series of memorable quotes that would appeal to the late 19th/early 20th century independent, self-sufficient, frugal, anti-government, hard working, family oriented, down-on-the-farm hard ass that the book was targeted to and written for.

"The first years of Man must make provisions for the last." Samuel Johnson

"Knowledge is proud that he has learned so much. Wisdom is humble he knows no more."

"Taste the joy that springs from labor."  Longfellow

"Earth is here so kind, that just tickle her with a hoe and she laughs with a harvest."  Douglas Jerrold

"You must cut your coat according to your cloth." Unknown

"Kindle not the fire you cannot extinguish." Unknown

"Keep your shop, and your shop will keep you." Unknown

"Love thy neighbor, yet pull not down thy hedge."  Unknown

and my personal favorite...

"They must hunger in frost that will not work in heat."

A stunningly real look at life and times with limited Oil and Natural Gas resources.


Libertarianism Coming (like it or not)

Budgets for "Law Enforcement" nationwide will simply not be sufficient to pay people to investigate, arrest, try, imprison, supervise, etc... as many people as the "Justice Complex" had in the past. We are going to have to make some decisions on how we want to spend our Law Enforcement dollars.

Do we want the "Sham Wow" guy, or Eliot Spitzer, arrested for soliciting prostitution?  Or do we want to spend our limited resources on violent crime?  Will we be able to afford the expense of arresting a grown man for possessing a single marijuana cigarette?

(Several years ago a broker working for me was arrested for the possession of a single marijuana cigarette during a traffic stop.  As a matter of fact, his 8 year old daughter was, at the time of the arrest, at our office playing on a computer waiting for her father to return from his appointment.  So, for the price of a singe marijuana cigarette, society lost the services of my office while we scrambled to get in touch with a family member to care for the daughter while our erstwhile "pothead" spent the night in jail, the services of the police officer who spent, by my estimation, 20 hours on the incident, the judge's time, the court reporter, bailiff, jail workers, etc... I could go on a LONG TIME - you get the idea.  Taxpayers probably got stuck with a $5,000 to $10,000 bill - all to end up dismissing the case...  But the Legal Profession (LOLOLOLOL) was happy - the incident cost our "perp" $5k in legal fees.

Did I mention that the officer drew his weapon during the arrest?  Does anybody think that marijuana is worse for an individual than having a gun pointed at that individual?  Does anybody else see the potential liability involved in this policy?  Would you want someone to point a gun at your child for the offense of carrying some plant residue?)

The sad fact is, we have spent hugely on Law Enforcement, and have created the "gift that keeps on giving" to the budget's of Law Enforcement.  Our Drug Laws.  The U.S. has the largest percentage of its population in prison in HISTORY - the Soviet GULAG system PALES in comparison - and the repercussions were never remotely considered:  Where 90 days in a local jail might have sufficed for a non violent offense our society went for the "tough on crime" sell, and handed down 7 to 15 years of hard time.  Now, we have created an educated, well connected criminal who also suffers from Post Traumatic Stress Disorder, and have sentenced any of his children that were dependent on him for support into a life of destitution and crime.  BRILLIANT.

(Note to the political LEFT:

Anytime you enact a "Law" or a "Regulation", by necessity, you create a need for "Enforcement".  You know, those nice folks in every society that are willing to dress up in scary costumes and then sic their attack dogs go on:

Civil Rights Marchers

Abu Graib Residents

Auschwitz Victims

Of course, the pee brained members of the "Enforcement"community, when called on the carpet, demure and say they "were just following orders".)

America, through well intentioned but seriously flawed social policy has created a huge underclass that is very much addicted to MASSIVE social programs that subsidized a lifestyle of shirking personal responsibility but provided the free time to indulge in anti-social behavior. THAT is the legacy we have created.  When searching for the ROOT cause of crime - and the Law Enforcement Budget that we can no longer afford - the Law of Unintended Consequences once again rears its ugly head.

Like it or not, the money simply isn't there to continue things as they were.  As Kuntsler is so fond of saying: "We'll have to make other arrangements."


Wednesday, April 8, 2009

State & Local Budget Deficits Continue To Pile Up

New York City is going to resort to layoffs.

New York City is not alone.

In Washington, D.C., where the city’s chief financial officer has projected a $1 billion deficit within three years, Mayor Adrian Fenty proposed 1,632 municipal layoffs in his 2010 budget last month.

Los Angeles Mayor Antonio Villaraigosa warned that the city faces nearly 3,000 layoffs if it could not cut costs to reduce its projected fiscal 2010-11 deficit of nearly $1 billion.

Boston: Mayor Tom Menino’s 2010 budget envisions $2.4 billion in cuts that would require 565 layoffs.
This story is being played out in all of the U.S.'s big cities and counties, and the little ones, too.
Every municipality made promises based on a NEVER ending increase of tax revenues - it was not just the Federal Government.  Those bills are coming due, and the money just isn't there.  There is much jaw boning about when the cycle turns and the economy "recovers" to make people feel better and give them hope.  But those cycles are over - the "reset" button just got pressed and these cycles do not exist in the same way as they once had.  There will be new cycles - but what they will look like are anyone's guess.  

The political ramifications cannot he understood - nor understated.  The "Left" vs "Right" of the past 40 years are like 2 whipping boys beating each other senseless even though the Master of the House is dead.  I feel for the Left - they just got the rug pulled out from under them and broke their hip in the fall.  Imagine spending a life time believing the earth was flat and fighting a group in mortal combat that has as its core belief that the earth was square only to discover that you are both as dumb as a box of rocks (fighting a bag of hammers).

I don't need to beat this dead horse anymore -  there will not be any income left to redistribute, healthcare will be free AND unavailable, and you better come up with a better strategy for providing for your old age other than Social Security.


Remember that "economic recovery" we were supposed to have "later" this year? Weelllllll.... its been put off to 2010, according to the U.S. Federal Reserve.  My bet is next year's "recovery" won't do a thing to help tax revenues, the various budget deficits, or unemployment.  

I would not put money on the other side of that trade if I were you.


Moody’s Investors Service assigned a negative outlook to the creditworthiness of all local governments in the United States, the agency said Tuesday, the first time it had ever issued such a blanket report on municipalities.
And with all of this, the price of Oil is still over $50, higher in real terms than any other boom time, during the worst recession of the Post War era...  just wait till the energy issue arises again.

Here we go...

Mentatt (at) yahoo (d0t) com

Tuesday, April 7, 2009

OMG! A Libertarian in San Francisco?

You gotta read this.  Great stuff.

Crazy thing is, it is from the San Francisco Chronicle.  A liberal newspaper from America's most liberal city.  It opens with a throw away line to their liberal readership... but then it goes on to criticize Obama for carrying out the exact same policies as GWB.

by Sean Olender
President Obama must stop the bailouts and start the prosecutions. It's time to focus on anti-poverty programs to protect the growing unemployed from hunger and homelessness. Stealth payments to billionaire bondholders must cease immediately.

Since the mid-1970s, average Americans' wages have stayed flat when adjusted for inflation. Productivity rose, profits rose, but not wages. To compensate for stagnant wages and the desire to consume more each year, Americans worked more, retired later, spouses went to work, and many burned savings. Then they started borrowing. Debt became America's growth industry.

The scheme collapsed because Americans' wages weren't sufficient to pay the interest on existing debts. The only way out of this is to tighten our belts and pay down debt, the opposite of what our bank-owned government is advising.

Can you believe that? That is stunningly factual and accurate.

The administration and the banks keep talking about a credit crisis, but there isn't one. Banks are lending. If you want a mortgage and can afford to pay it back, you can borrow at low rates today. You can finance a car at low rates for seven years. But most Americans don't want more debt because it is a debilitating path to poverty. The average American family already pays 14 percent of annual income in interest to banks.

To fix this fake crisis, there are fake discussions about what the government must do. The endlessly recycled plan to buy "troubled" assets isn't to get banks lending again, because they haven't stopped lending. The plan seeks for taxpayers to buy worthless assets at high prices to absorb rich investors' losses. That's it. It keeps coming back as a different plan, but with that same goal. There is no goal beyond that one goal: keep rich people from taking losses.

Obama and his economic gurus all chant, "Credit is the lifeblood of the economy," but they don't mean credit. They mean debt. Imagine the president saying, "Debt is the lifeblood of our economy. We desperately need to get more American families deeper in debt." That's what he means, and that's what these bailouts hope to do.

Does the concept in that last line sound familiar? It should, I have been pounding away at that for some time - that a Liberal, Democrat President would extol his constituents to go further into debt.

In a Sept. 14 article in this newspaper, I noted that banks push senators, with the blessing of the administration, to introduce bills that are bailouts, but disguised to appear not to be bailouts. The goal is to accomplish the desired result without risking your bought-and-paid-for representative.

Imagine you bet $500,000 on a stock and it dropped to $20,000. If you owned Treasury Secretary Tim Geithner, he'd get on TV and explain that if the government didn't buy your shares for $500,000, the economy would suffer because you couldn't invest anymore. He'd say the "free market" isn't pricing the stock "right," and we have to "help" the market with taxpayer money to make sure you get the "right" price.

Bailout psychology is destroying the economy. Banks hold off on foreclosures in the hope of refinancing borrowers into government-backed loans that will almost certainly default - at taxpayer expense. I've talked to ordinary people delinquent on credit cards who put off bankruptcy because they "heard" the president was unhappy with unfair bank practices and "help was coming soon." Millions of homeowners desperate to sell are keeping empty houses off the market waiting for a "rebound," flushing a stream of income down the toilet.

"Bailout psychology is destroying the economy"??!!! Is this really the San Fran Chronicle?

Worsening economic figures are being used to confirm that more bailouts are needed rather than that previous ones might be failing. The logic is much like medieval blood letting: The patient died because we didn't drain enough of his blood.

The promise of more bailouts also keeps everyone from doing what's necessary. Millions of houses sit empty, open to vandalism and destruction, while millions of Americans live in cars or on the street. Our tax money is given to banks and speculators to hold houses empty.

"The promise of more bailouts also keeps everyone from doing what's necessary." You mean like "free" healthcare, lifetime pensions, and other silly government promises of freebies?

On March 20, 2007, I wrote here that a mortgage bailout was coming and would cost at least $1 trillion, yet not bail out homeowners. As it turned out, the bailout did nothing to stop foreclosures from going through the roof. On Feb. 8, 2008, I wrote here that Fannie and Freddie would be taken into receivership within a year - an event that occurred Sept. 7. I argued here on Sept. 18 that most loan modifications were a fraud and "I optimistically predict that within 12 months half of these refinanced loans will result in default." On Dec. 8, the Office of the Comptroller of the Currency announced that 53 percent of modified loans were in default.

To "fix" all these problems, the George W. Bush administration, and now the Obama administration, have chosen people (or their accomplices) who stole from the public. That's why no one has been prosecuted. Would former Treasury Secretary and Goldman Sachs chief Henry Paulson have pressured for an investigation of Goldman Sachs? Right.

As president of the Federal Reserve Bank of New York, current Treasury Secretary Geithner had a front-row seat during the run-up to the crisis and watched for years while pushing a "no regulation" policy. Why? At that time his friends were winning their bets and making a lot of money.

Why didn't Bush or Obama pick Brooksley Born (the Commodity Futures Trading Commission chair who tried to regulate credit default swaps) or Harry Markopolos (the whistle-blower in the Madoff scandal) to serve as treasury secretary or chairman of the SEC? Because Born and Markopolos are technically competent and possess integrity. Banks would tolerate neither quality in an administration official.

We have a crisis of confidence, because fraud permeates most of our banks and financial institutions. The solution is law enforcement, not handouts. On Jan. 31, 2009, Santa Barbara police held a 53-year-old homeless man on $20,000 bail for shoplifting $7.69 worth of soup and bread. Yet Bush did not move to prosecute a single executive at any of these banks, and Obama likewise doesn't want to be "vengeful" by investigating the crimes of investment bankers.

If the government feels lenient, can't it let alone families campingin a vacant lot in Sacramento, or homeless people stealing bread?

We can stop this by closing our accounts at any bank that took government money. A list is on the Treasury's Web site. Close your accounts and move them. If we do, those banks will suffer receivership or bankruptcy within a few months, and then there will be no need for bailouts. Our healthy community banks will thrive, while billionaire bondholders will have to downsize their G-5 fleets and take a haircut.

The piece is loaded with Libertarian/Free Market concepts and subtleties and is critical of Barak Obama. I have this vision of a "Jerry McGuire" moment when this guy gets fired for speaking too clearly.

Lastly, it is not so much Obama that I am critical of.  It is his supporters - the nit-wits that believed the stuff he, and they, were saying during the campaign...  pure horse s**t, but the true believers practically wrote his name across the sky.  What kind of a curmudgeon would I be if I didn't smack them around for a while?

Mentatt (at) yahoo (d0t) com

Guest Post

Thde following is a "reprint" from the previous post's comments section:

"Yep, we have 48 people dead in spectacular murders. So, it's on the news today, and the anti-gun crowd has new fodder. But murder and mayhem go on every day. It's mostly minorities blowing each other's hind ends off, so no one notices. There will be more robberies and burglaries too. So, let's blame inanimate pieces of metal and ignore the roots of the problem

These spectacular events are the outcome of people cracking under the weight of their reality diverging so dramatically from the expectations that have been set and reinforced by political promises, the media and the entertainment industry. We'll probably see more of these events. Statistically, they are in the noise. The bigger problem is that our society has generated a huge underclass that contains tens of millions of men who have no responsibility. Not for careers, or wives or children or anything that satisfies the male ego and makes them feel worthwhile and important. This is an extremely dangerous and unnatural condition. It has been spawned by a social welfare system that provides cash for bad social behavior instead of opportunity for honest work in exchange for a decent living. Even for the working poor, the life you get is totally inadequate compared to "real life" on TV. Yet, we lay off government workers and increase welfare programs. Go figure. It is a time bomb waiting to explode."

Comment from long time AEC reader "Coal Guy".

Every now and then someone says something so politically incorrect and so absolutely on the money it worth repeating. This is one of those.

Of course, though I have never met "Coal Guy", my bet is he has the benefit of experience (I'd be willing to stake my life he is over 45 years old), has had some kids, and has been around the block a few times. I don't care how much horsepower you have under your cranium... you just don't know at 25 what you know at 50. Of course some people get old and wise, while and others get old and mean, and still others just get old.

Mentatt (at) yahoo (d0t) com

Earnings Season

I cannot give specific trading advice in this forum. I can say that we have had one hell of a rally, earnings season is here, and the economies of the West continue to contract.

Yes, markets tend to bottom before the economy does. "Tend" is not a bl**dy guarantee. The U.S. equity market P/E is nowhere near past ratios at market bottoms. That does not mean all sectors will bottom at the same time, and that some might be close. I am not long much in the way of equities at the moment, though I am not nearly as gloomy about them as I was a couple weeks ago.


We all know the 3 kinds of lies: Mine, yours, and statistics. Well, the government statisticians are among the best when it come deception.

Since they must come clean at some point, it seems to be that they simply understate a problem in the current month news cycles, and then use revisions for months past to bring the data into sync. I do not know the wisdom of this course of action - maybe it serves a purpose of confidence - but it does mean one cannot depend on the data in order to make decisions. This is a big problem, in my opinion, as there is no other entity which compiles the data.


There is no better propagandist than the N.E.A. Your local P.B.A. (police) might not be too far behind, but they PALE in comparison to the MASTER (second only to religion in the false claims and exaggerated promises department) - the National Education Association.

You can't get through a newspaper article it seems without some reference to teachers pay and how they have the most important job in America Blah, Blah, Blah... (BS! PARENTING is the most important job.) Don't pity the poor teachers. Nobody held a gun to their head, and they have more time off than anybody I know. The sad fact is that the Teacher's lobby, the NEA, has held education BACK in America AND extorted one hell of a pension deal in the process.

A pension deal that WILL absolutely, positively be defaulted upon. BUT, not until attempts by our local and state governments to continue this &%^!! mess lead to tax revolts and foreclosures for PROPERTY TAXES. Think about that... putting people OUT OF THEIR HOMES in an attempt to keep the NEA, PBA, etc... happy by continuing an outrageously stupid system of public employee pensions.


I get peptic just thinking and writing about it.

Mentatt (at) yahoo (d0t) com

Sunday, April 5, 2009

The Autos and Housing

If you have been reading my stuff for a while, you know that I have stated time and again:  we (the U.S. and the world) do not need a SINGLE NEW CAR ever again - that the inventory we have is sufficient to finish off ALL of the remaining oil in the world.  And then some.

Today, I was reading Tom Whipple's stuff, as I do every week.  Tom is a retired CIA analyst.  He should have worked on Wall Street - we might have been better informed if he had.  Alas, it was not to be.

But I digress...

The U.S. already has some 250 million 2-axle motor vehicles (cars, light trucks, vans) running around and sitting in traffic jams (and only 200 million licensed drivers). With some tender care and adequate spare parts, this inventory easily could be useful for another 20 or 30 years considering how much less they are going to be driven once gas prices go up. Even the most optimistic do not see how there will be much oil around for powering private cars 25 years from now.

When one considers that we already have in operation more than enough cars and trucks with low mileage internal combustion engines to last us through the rest of the oil age, the only logical thing to do is to stop making more. That's right --- stop building and selling anything that consumes liquid fuels at anywhere near the rate consumed by our current fleet of vehicles.
See... the CIA knows Autos (and everything else  that depends on cheap and plentiful gasoline and diesel - including housing) are doomed.  The CIA reports to the POTUS.  The POTUS at this moment is Barak Obama.  Mr. Obama is, by all accounts, as sharp as a TACK... 

But I digress...

Chrysler is going to be liquidated.  G.M. is going to change its name to General Motorcycle and Moped (credit the Mad Scientist with that one).  Ford will survive as a manufacturer of heavy duty work vehicles.  

And you, my friend, are going to have a new title.  



We met a delightful family from Mexico this week at the farmer's co-op.  I was putting up a sign for a part time farm hand when a young man speaking broken English approached me, and together with my broken Spanish, I solved my problem by hiring his small construction outfit to help with repair work around my place as well as feeding my animals when we are in Florida.  

He invited me to his home, a 5 acre farm which turned out to be the epitome of self-sufficient.  Upon arriving we were treated to Cabritto (Roasted Goat) from his herd.  My wife declined but I fell to with gusto.  Burning hot salsa, fresh tortias, and incredibly seasoned goat flesh with coffee strong enough to clean New York City taxi bumpers under my belt and we were ready to take in the spread.  

Not a square inch was wasted.  Corn grew in 2 acres as well as every nook and cranny.  A 1/4 acre vegetable garden.  Fruit trees rather than decorative bushes surrounded the house.  The remaining area held their goats, sheep, pigs, and chickens.  The farm provided all of the family's milk, eggs, meat, and most of their fruit and vegetables.  

But here comes the good part.

The "family" was my new friend's wife and 3 kids, his brother and his new wife, 2 cousins and their new wives, and his father.  12 people lived in this home that was perhaps 2,000 square feet, and by my reckoning they probably produced half of their own food.  He was planning on renting a neighbor's 10 acres to expand his farming operation.

They slaughter and butcher their animals themselves (I had always contracted out this work). He and his brother are coming over later in the week to help me put 2 goats into the freezer, and to share the family recipe for Cabritto.

These folks are from a remote place in Mexico and were raised without benefit of running water or electricity, but are not Amish about it.  They are very happy to have these services in their present home.

What an eye opener.

Mentatt (at) yahoo (d0t) com

Saturday, April 4, 2009

Recent Violence

4 police officers murdered in Oakland. 13 innocents murdered in a Federal INS building in Binghamton, NY.  Today, 3 police officers murdered in cold blood in Pittsburgh.

What the heck is going on?

Forget your politics for a moment.  Gun Rights, Gun Control...

Maybe, just maybe... we are starting to see people crack under the pressure of mean spirited policies (the U.S. has the greatest percentage of its population in prison in the history of the world): taxes, lack of opportunity, taxes, government threats of regulation, taxes, Law Enforcement parading around dressed like they are about to invade Poland, taxes... throw in 300 million guns (I own several guns, and I hunt and I fish... for a New Yorker, well, go figure) running around our society... and Viola!  Mayhem.

Maybe, just maybe, our society, led by our Federal, State, and Local GOVERNMENTS could try to be a little "kinder and gentler".  

I have spent the last couple of weeks filing this paperwork for my companies with the various states, and that tax form for the Feds, and this form and that form and this and that.... I am ready to shoot myself...

My heart goes out to the families of the victims, and the to the victims themselves.  

Maybe the answer is NOT another government crackdown. 

Mentatt (at) yahoo (d0t) com

Friday, April 3, 2009

(In)Justice Department

Quote of the day:

“What’s happened over the last 10 years is that prosecutors have seemed to have forgotten that their main job is to see that justice is done and instead focused on winning the case at any cost,” said Michael Madigan, a former prosecutor and Washington criminal lawyer who represented one of the former KPMG partners. (Read more about the railroading of U.S. Alaskan Senator Ted Stevens)
Mr. Madigan needs to insert another 0, as in 100 years.

Our legal system has run amok. And the jury system, being "judged by our peers", is failing horribly to protect us. The conviction rate in the Federal system is over 95%! Considering how much the prosecutors over indict defendants, that is indeed a remarkable number.

I am guilty of actually having read the U.S. Constitution. It is a beautiful document - and completely inadequate in protecting citizens from prosecutorial over-reaching. The Framers simply could not contemplate the vast resources commanded by our "Justice" system versus how little in the way of resources that defendants have to defend themselves, not to mention the apparent inability of jurors raised on American Idol and People Magazine, hardly the citizen/farmer/legislator of the Framer's era, to think in abstract terms.

The ONLY WAY to fix this, to right this listing ship, is to CUT THE BUDGETS of these politically motivated and ambitious (Mike Nifong of the Duke "Rape" case, anyone?) prosecutors. Most folks don't know it, but the most famous Prosecutor of the past 30 years, Ruddy Giulliani, had EVERY SINGLE ONE of his convictions at trial for Wall Street white collar "crime" OVERTURNED on appeal.

How could this be? Simple. First, he indicted innocent people and our Grand Jury system failed miserably to protect these folks from indictment in the first place, and; the juries were only too happy to convict rich white guys of ANYTHING. After all, they are ALL criminals, right?

Hell of an impartial jury of your peers...

There was a period in the late 1970's and early 1980's when DNA was not available BUT the physical evidence was saved. 20 years later, nearly 1/3 of the defendants convicted of rape that filed an appeal based on the newly available DNA evidence had their convictions overturned based on the fact that their DNA did not match the "physical evidence" on the victim or at the scene. Most were convicted on eye witness testimony of the victim. Anybody out there think that maybe, just maybe, the police and prosecutors manipulated the victim and then destroyed the defendant's life? Of course, the prosecutors are immune from prosecution or civil liability for their wrong doing.

Some good things are going to come about with the restraints on government budgets - I hope. We cannot continue to fund silly social programs and mean spirited "justice".

Mentatt (at) yahoo (d0t) com

Thursday, April 2, 2009


Is the Glass half full or half empty?

Have I overstayed my welcome in the Bear camp?

Yes, unemployment is a lagging indicator, but new claims for unemployment are a leading indicator. Is the contraction over in manufacturing? Or was this month's data the inevitable bump? The stock market seems to be telling us that things are improving... or is it that inflation has finally been reigited?

The data for Oil inventories still says the world is contracting, and that the world is sending more of its oversupplied Oil to the U.S., which is still oversupplied at the moment... yet oil has caught a bid...

At times like this a trader has 2 options: Go with the trend... or stay out of the game. If you go with the trend, have no patience for positions that go against you.


One of my personal "indicators" is finally getting some press:

"Number of Americans receiving food assistance at all time record"

Nah... it will never make the economic indicators radar screen in Washington or Wall Street, but it should.


Here is a prime example of a social program run awry.

Disability is easily one of the most abused programs in America. We all know that more than half of these claimants are just life's failures: N'er do wells, drunks, addicts, etc... among other things. Yes there are real people that are disabled. Then again, one of the top producing brokers on Wall Street is paralyzed from the chest down - somehow he makes it into work and makes 7 figures every year... The truth is most of these claimants have lost their enthusiasm for work and life, and now they want you to provide for them.

Hell of a program!


The market is burying the shorts alive. Glad I am not short.

Mentatt (at) yahoo (dot) com